Re-Fracking In The Bakken -- The Returns Are Going To Infinity -- December 30, 2019

With regard to the subject line: yes, I am inappropriately exuberant about the Bakken. My focus is on the mom-and-pop mineral owners in North Dakota.

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. 

Re-posting. This is mostly for newbies. Earlier today I posted:

Shale bust redux.

For those who subscribe to The WSJ, you probably saw the "as shale wells age, gap between forecasts and performance grows" by Rebecca Elliott and Christopher M. Matthews. If the story sounds familiar, it's because it is. This this has been previously posted. From the same writers, almost exactly one year ago, January 2, 2019, also in The WSJ, "fracking's secret problem -- oil wells aren't producing as much as forecast." And then again, September 29, 2019, by the same two writers, RE and CMM, "shale boom is slowing just when the world needs oil most."  Really? Two final nominees for the Geico Rock Award for 2019.

I don't know if the Permian is different than the Bakken when it comes to fracking, re-working, mini-fracks, halo effect, advantaged oil, major re-fracks, etc., but I think the jury is still out with regard to the thesis that Elliott and Matthews would suggest. Below is not an atypical example of what is going on in the Bakken.

In the data below, note:

• from the original completion date, 6/08, to 5/18, ten years, this well produced 123,000 bbls of crude oil; 
• then after the re-frack in early, 2018, the cumulative by 10/19, had jumped to 471,000 bbls of crude oil
• this well, after a re-frack -- and a well that could have easily been written off, abandoned, and plugged -- came roaring back to produce 348,000 bbls of crude oil between in about eighteen months, and with oil about $20/bbl higher -- and the only cost -- the cost of fracking -- at a time when service costs and sand are at record lows

Good, bad, or indifferent, the mom-and-pop mineral owners are probably wondering what just happened when they opened their most recent royalty checks. Good for them.

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A Re-Fracked Well In The Bakken

The well:

• 17100, 240, CLR, Mountain Gap 31-10H, Rattlesnake Point, t6/08; cum 123K 5/18; cum 471K 10/19;

We now have the re-frack data: 57 stages; 13.93 million lbs; test 3/18:

Production data before/after the re-frack:

BAKKEN	9-2018	30	25164	25212	26236	31413	27881	3140
BAKKEN	8-2018	31	35997	35753	45374	42924	42309	210
BAKKEN	7-2018	31	41189	41427	57492	45918	43344	2169
BAKKEN	6-2018	30	52661	52713	63442	57604	52886	4326
BAKKEN	5-2018	17	26682	26410	36450	28245	21100	7145
BAKKEN	4-2018	5	694	694	5436	1379	0	1379
BAKKEN	3-2018	0	0	0	0	0	0	0
BAKKEN	2-2018	0	0	0	0	0	0	0
BAKKEN	1-2018	0	0	0	0	0	0	0
BAKKEN	12-2017	0	0	0	0	0	0	0
BAKKEN	11-2017	0	0	0	0	0	0	0
BAKKEN	10-2017	0	0	0	0	0	0	0
BAKKEN	9-2017	0	0	0	0	0	0	0
BAKKEN	8-2017	0	0	0	0	0	0	0
BAKKEN	7-2017	0	0	0	0	0	0	0
BAKKEN	6-2017	22	171	240	33	88	88	0
BAKKEN	5-2017	31	296	239	37	122	116	6

Production following original frack:

BAKKEN	12-2008	31	2645	2442	285	1430	1430	0
BAKKEN	11-2008	28	3042	3128	407	3416	3416	0
BAKKEN	10-2008	30	4006	3566	1019	3645	3046	599
BAKKEN	9-2008	25	2005	2291	187	1726	1545	181
BAKKEN	8-2008	31	3844	3643	527	3484	3319	165
BAKKEN	7-2008	31	3969	4095	1043	3020	295	2725
BAKKEN	6-2008	30	5914	5648	2002	3903	0	3903
BAKKEN	5-2008	31	160	0	2305	0	0	0