Correlating Well Completions WIth Production In The Bakken -- April 1, 2018

Looking at QEP's re-frack program it dawned on me that I quit tracking monthly well completions quite some time ago.

Back on June 19, 2015, this note from the Director's Cut (April 2015) data:

• Bakken price in May: $44.70 
• Fracklog: 925 (an increase of 45); I had thought it would have been closer to 1,000 
• Completions: 94 -- a very, very low number; many wells going to SI/NC status  
• To maintain production near 1.2 million bopd: 110 - 120 completions needed each month 
• Statewide flaring: 18%  
• That figure is from Lynn Helms, back in 2015: to maintain production near 1.2 million bopd, 110 - 120 completions need to be made each month.

Disclaimer: there may be typographical and factual errors in the data below, but they will be insignificant and won't affect the comments/observations.

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Daily Production By Month vs Well Completions in That Month

January, 2018

• 1.176 million bbls/day
• wells completed in January: 56

December, 2017

• 1.181 million bbls/day
• wells completed in December: 106

November, 2017

• 1.19 million bbls/day
• wells completed in November: 60

October, 2017

• 1.185 million bbls/day
• wells completed in October: 81

September, 2017

• 1.1 million bbls
• wells completed in September: 70

August, 2017

• 1.08 million bbls
• wells completed in August: 84

July, 2017

• 1.05 million bbls
• wells completed in July: 95

June, 2017

• 1.03 million bbls/day
• wells completed in June: 88

May, 2017

• 1.04 million bbls/day
• wells completed in May: 66

April, 2017

• 1.05 million bbls/day
• wells completed in April: 53

March, 2017

• 1.025 million bbls/day
• wells completed in March: 61

February, 2017

• 1.034 million bbls/day
• wells completed in February: 61

January, 2017

• 0.98 million bbls/day
• wells completed in January: 56

December, 2016

• 0.94 million bbls/day
• wells completed in December: 84

November, 2016

• 1.03million bbls/day
• wells completed in November: 84

October, 2016

• 1.04 million bbls/day
• wells completed in November: 46

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Observations / Comments

It appears that significantly less than 100 well completions are needed each month to maintain production at 1.2 million bbls/day in North Dakota. In October, 2016, with 46 well completions, production was slightly over 1 million bbls/day

Daily production correlates not at all (or very minimally) with the number of well completions in any given month (assuming the number of well completions is in the range of 50 to 100; and that assumption may not be necessary, either)

• October, 2016: 46 completions; production over 1 million bbls
• December, 2016, only two months later: 84 completions; production does not hit the one-million-bbl threshold 
• December, 2017: 106 completions and production did not vary much in the big scheme of things

The single most important metric not provided in the monthly Director's Cut that affects daily production: full re-fracks; even that data would, in isolation, not be particularly helpful -- see below

Other factors affecting daily production (seasonally adjusted):

• wells coming off-line when new wells are being fracked; wells coming back on-line when neighboring wells have been fracked (QEP noted this challenge in the Bakken; a challenge they say they won't see to the same extent in the Permian); 
• mini-re-fracks
• work-overs

Other factors affecting daily production

• weather events

Spot price of crude oil probably has little affect on number of well completions: CAPEX and drilling schedules are in place well in advance of actual well completions; same goes for fracking and re-fracking

Fracking and re-fracks in North Dakota must drive the CFO crazy, as mentioned above:

• wells coming off-line when new wells are being fracked; wells coming back on-line when neighboring wells have been fracked (QEP noted this challenge in the Bakken; a challenge they say they won't see to the same extent in the Permian);
• although the CFOs now have sophisticated formulas to estimate how much oil will be shut in and for how long; and, how much oil will come back on line once a new well is fracked / re-fracked, clearly the operators are significantly challenged in this arena -- QEP has certainly spent a lot of time looking at this issue based on their most recent earnings call
• with regard to how much oil will come back on line when a well is fracked or re-fracked, we are not talking about a single well; we are talking about all the offset wells that were shut in while a well was fracked/re-fracked
• I've seen offset wells shut in for less than 30 days and I've seen offset wells shut in for four months while a neighboring well is being fracked / re-fracked -- I thought that was simply the cost of doing business; apparently in the Permian, QEP has determined this is something