For Newbies: Tier 1, Tier 2, Tier 3 In The Bakken -- February 22, 2019

All information below pertains to the Bakken unless stated otherwise.

Information below is all personal opinion based on my "reading" of the tea leaves.

I wear "oily-covered glasses" when looking at Bakken data.

This is is posted only for conversational purposes. There will be typographical and factual errors. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or think you may have read here.

Wells yet to be drilled: 20,000 to 70,000

Time frame: 20 years to 50 years

It all depends on demand.

Tiers:

• Tier 1: locations in the Bakken that show increased activity when prices stay below $50
• Tier 2 locations move to Tier 1 locations: when WTI trends from $50 to $65
• Tier 3 locations move to Tier 1 locations when WTI trends toward $100

Trending now:

• 12 wells in 1280-acre drilling units in Tier 1 locations
• adding those overlapping 2560-acre units to capture "orphan" oil along section lines
• setback rules have been changed: we might see more re-entry drilling to extend existing laterals; if extended, the wells will be re-fracked; consider it a new well

Formations targeted:

• middle Bakken/Three Forks: about a 60/40 split, I suppose, a "wag"
• CLR is the "only" operator routinely testing the second bench of the Three Forks

Re-frack: "every well" drilled/completed before 2014, maybe 2016, will have to be re-fracked; they will be re-fracked based on many criteria, but Tier 1-2-3 will be a good starting point

Best metric to follow right now: "frack team / rig" ratio; I don't have that number for the Bakken

• in the Permian, it is being reported today that the "frack team / rig" spread is narrowing (increasing number of frack spreads / rigs holding steady or slowly increasing
• 500 rigs
• 150 frack spreads (for newbies: a "frack spread" is oil patch jargon for all the resources required to frack a well -- personnel; equipment; water; sand; ceramic; etc
• Permian frack spread / rig ratio: 30 percent
• Permian rig / frack spread: 3:1

Boom vs manufacturing stage:

• the Bakken is said to be in the manufacturing stage
• the Permian: still in the boom stage

For newbies: the best way to determine when a tight field/basin has transitioned from "boom" to "manufacturing": when pad drilling becomes the norm

• one is definitely in the manufacturing stage when mega-pads (at least 6 wells per pad) become the norm

The Permian:

Production at the Permian Basin, the largest shale play, is set to exceed 4 million barrels per day for the first time in March. As such, this shale play alone significantly exceeds the amounts produced by the United Arab Emirates, Brazil and Kuwait. Only five countries produce more oil than the Permian Basin, excluding the US.