Preliminary Discussion -- Crescent Point, Three-Mile Laterals -- October 15, 2022

I've delayed getting into this one because I don't have a lot to offer yet. Perhaps readers may know more.

A long-time reader sent me this query:

Can you do a report on the 3rd level oil reserves in ND? 

Interests: 158-101(KODA) and 159-101 (Crescent Point)

Crescent Point told reader they would be doing three-mile-long laterals in the "third level oil reserves."

• they say it’s more economical and the NDIC wants companies to drill longer laterals.
• what do you know about this? Does it really payoff in the long run? How much more does it cost to run an extra 1mile horizontal leg? 
• I did notice that Crescent point did a pooling interest in almost all of 158 -101. It seems they are trying to create 3-mile-horizontal drilling units / 3-mile-long horizontals
  

What do you know about KODA?

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Preliminary Thoughts

Crescent Point view, February 21, 2020: link here.
Crescent Point, 2Q22, results, link here. And, here.
Crescent Point, 2Q22, results, corporate presentation.

• unfortunately, over the years, with regard to the Bakken boom, corporate presentations (all operators) have trended toward less operational information and more financial information

1. Yes, it is accurate that the NDIC is pushing for longer laterals, specifically, three-mile long / three-section laterals.

• at the beginning of the boom, the standard quickly became two-mile laterals
• time was of the essence at the beginning of the boom; time more important money
• longer laterals: took more time; NDIC had not approved longer drilling units; subject to increased risk of falling short of planned TD
• it took upwards of 60 days to drill a two-mile horizontal; now they're drilling the horizontal portion in less than six days; not that much longer to drill an extra mile
• Crescent Point says they averaged 14 days/well on a recently completed pad; seems a bit long;
  

2. The cost:

• the big cost is now fracking, not drilling
• drilling: day rates on rigs; time to drill
• fracking: hard to find frack spreads; sand is very expensive; worse: transportation costs are surging -- diesel now trending towards $5 / gallon or more
• if current wells are costing $6 million, could three-mile-laterals cost $9 million

3. Crescent Point is one of the handful of Bakken operators still drilling

4. "Third level oil reserves": I assume Crescent Point meant "Tier 3" (economical/financial term) and not formation (first level: middle Bakken; second level: Three Forks, first bench; third level: Three Forks, second level), but I could be wrong.

5. I will start watching Crescent Point more closely:

• permits
• planned TD (two-mile vs three-mile)
• quarterly reports for well costs

6. KODA

• I can find very, very little on KODA.

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