The Bakken Was A Hard Nut To Crack -- August 5, 2017

Back on October 23, 2010, I posted a list of the operators in the Bakken with a few comments about most of them. About MDU (Fidelity), I wrote at the time:

Of all the operators, [MDU /Fidelity] is the most disappointing; HQ in Bismarck, ND; seemed to have missed the Bakken right in their backyard; "discovered" Cottonwood oil field; sold it to Oasis after some disappointing wells; Oasis became "overnight" success with this purchase; MDU re-entering the Bakken in 2011; doing better; MDU (utility) focused on natural gas; waited a bit too long to shift to oil

Earlier this week, a reader talked about how well Oasis had done because of the Bakken.

Here is my reply, not ready for prime-time, with a few additional notes, in no particular order:

It has become incredibly clear to me that the Bakken was an incredibly difficult nut to crack. There have been very few long-term survivors. Yes, MDU had its challenges in the Bakken but it was not the only one.

1. Hess has survived because it's been in North Dakota forever; and the natural gas story has been bigger than anyone expected; the reader noted that Hess had really deep pockets and knew that technology would eventually win; it always does; winning in the oil business seems to require time and money;

2. EOG: I don't know how much was luck and how much was really, really good work. But they had deep pockets to begin with and moved quickly with huge fracks which was one of the secrets to cracking the Bakken; the reader noted that EOG got into the east side of the field where they had huge wells (huge at the time); that area also had the highest field pressure, perhaps because nothing had yet been tapped

3. CLR: survived because Harold Hamm had bought so many acres over the decades at cheap prices prior to the boom; was incredibly brilliant across upstream and midstream; a survivor but certainly not in a real strong position today if oil stays below $50 another year; the reader noted that CLR focused along the Nesson Anticline figuring that the natural lifting and fracturing of the rock would help them;

4. Whiting: wanted to sell out; get out of the Bakken several years ago; no buyer found; stayed in; probably did much better than expected; again, because of simply getting better and better at figuring out the Bakken. The reader reminded me that Whiting wrote off the entire value of KOG after buying its assets at the top of the boom

5. Statoil: great initial IPs; but really doesn't seem to be particularly remarkable in the big scheme of things; again, deep Norwegian pockets. The reader agreed, suggesting that BEXP and "Bud" goaded all the operators with his 24-hour IPs (which is now the norm in the Bakken); it may not have been the best strategy, going after max IPs based on ultimate EURs, it appears;

6. Oasis: looks like the real survivor -- bought SM Energy's assets; doing very, very well

7. Others all gone -- sold out (KOG, SM Energy, BEXP) or renamed after coming out of bankruptcy (Triangle, others).

8. OXY was never able to figure out the Bakken; they were the poster child for incredibly bad Bakken wells when small independents were drilling incredibly good wells; the location of their play in the Bakken may not have been the best, but certainly not the worst;

9. Chesapeake: another huge company that never figured out the Bakken;

10. Anschutz was in very early; and out, very early;

11. MRO and XTO, both with deep pockets; MRO seemed to take the lead on re-fracks;

12. SM Energy, once said they would never leave the Bakken, recently exited the Bakken to focus on the Permian;

13. Slawson. See comments. I did not include Slawson in the original post but a reader reminded me. Slawson was noted for having incredibly good wells in the early days; a private company, it would not have had deep pockets, so it made every dollar count ... and they got incredibly good wells; Slawson is not only a survivor, but apparently, a successful survivor;

At the end of the day, every operator added something to the Bakken. Some showed "us" how not to do it; others more successful for a variety of reasons.

In Bakken 2.0, some new operators and a few survivors.

The point: the Bakken was a hard nut to crack and operators are still learning.