Monday, August 15, 2016

Filloon Update On Mega-Fracks In McKenzie County (North Dakota Bakken); An RBN Energy Update On The Dakota Access Pipeline -- August 15, 2016

Filloon Bakken Update: Mega-fracks in northeast McKenzie County average over 200,000 bbls of oil in first 12 months of production. Summary:
  • Northeast McKenzie County is one of the best oil producing areas in the Bakken and Mega-Fracs have been producing excellent results.
  • Low oil prices have motivated operators to move to better well designs in hopes of improving well economics.
  • When calculating production data, it is very important to use producing days and not calendar days as it skews results.
  • The expansion of Mega-Frac usage is not only being seen in the Bakken, but all major US oil producing plays.
His analysis begins:
We recently published an analysis of wells completed in ND using more than 8 million pounds of proppant. We have since expanded our findings to wells completed using 6 million or more pounds. We have also broken data down by middle Bakken and Three Forks locations. This data only encompasses wells completed through July of 2016. We are currently working and plan to release data that is more up to date in the coming months. This will help to provide a better idea of current completions and how well design and production have changed over those quarters. Results have gotten better over the past year, as operators continue to improve source rock stimulation.
There is a total of 407 Mega-Fracs in North Dakota. This includes all wells completed in the Bakken/Three Forks. The data was compiled using and Hartstreet LLC's data on proppant and fluid volumes.
And his conclusions:
In summary, Mega-Fracs are not only increasing in number, but production continues to improve. In higher pressure areas, Mega-Fracs see larger improvements. Lower well costs have motivated operators to improve well design. Lower oil prices have helped to push operators to increase this completion design over a larger number of locations. The increased production per location is partly due to highgrading. This isn't the entire reason, as better well designs have contributed. Mega-Fracs also decline at a slower rate than older completion methods. This is why US oil production has remained higher for longer than analysts expected. This is part of the reason oil prices and the US Oil ETF have remained at lower levels for this long. Northeast McKenzie County may be the best acreage in North Dakota. Middle Bakken Mega-Fracs completed over a year-and-a-half ago are producing more than 200,000 BO in the first 12 months of well life. Operators continue to state that well results are improving. Current Mega-Fracs could be producing 30% to 50% better, than the locations analyzed in this article. We will see if this estimate is correct in 12 months.

Active rigs:

Active Rigs3274194185203

RBN Energy: update on the Dakota Access Pipeline, the northern leg of the Bakken Pipeline System.

Sounds like the Bakken. From Emergent Group:
Diamondback recently completed their first three well pad in Howard county which targeted the Lower Spraberry, Wolfcamp A and Wolfcamp B. The company plans to begin frac operations on the second three well pad this month, all with 10,000 foot laterals and has a third pad planed for the fourth quarter all in Howard county.
Diamondback entered into the Delaware basin in July with the announcement of the company’s acquisition of 19,180 net acres in Reeves and Ward county for $560 million. This adds 290 net identified horizontal locations to their Permian inventory with the possibility of down spacing in the future. This acquisition increased Diamondback’s acreage footprint in the basin by 22% while adding infrastructure like tank batteries, frac pits and pipelines. The company is expecting to add one rig to the area in 2017.
Iraq appoints new oil minister in major cabinet reshuffle.

An OPEC deal is a tough task; expectations are high. Reuters. Regardless of what happens now or in the next six months or the next year, four years from now, Saudi Arabia is either broke or we see oil significantly higher than $100/bbl.

The Market

Mid-day: headline says "stocks hit record highs."
The benchmark S&P 500 and the Nasdaq composite broke above previous intraday highs of 2,188.45 and 5,238.54, respectively, shortly after the open. The Dow Jones industrial average also posted a record high, rising past its previous high of 18,638.34. These records were all set last week, despite the indexes posting just slight weekly gains.
Opening: surges 85 points in early trading. Oil up over 2% and now above $45. Russia says it will work with Saudi Arabia to "stabilize" prices. NYSE --
  • new highs: 163, including Encana, Enerplus, Newfield Exploration, Pioneer Natural Resources, PB, Rosetta Stone
  • new lows: 9, including Noble Energy (NE), and Ruby Tuesday (RT)

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