IRRs and Relative Costs To Complete Wells In The Bakken/Three Forks -- December 27, 2014

Warning: the percentages in parentheses below are for illustrative purposes only. Do not pay any attention to them. They are for my use only. There are way too many factors that affect IRRs to make them relevant in this setting. Again, the numbers inside the parentheses below are for my use only. Do not look at them. Do not make any financial, investment, or relationship changes based on anything you see inside the parentheses or anything you might see anywhere on this page or in the blog for that matter. If this information is even remotely important to you, check the source. Do not rely on anything in this blog to make any investment, financial, or relationship decisions. 

It should be noted that the information below comes from a third-party presentation that was undated. I assume that it is a recent publication -- mid-2014, but it could have been put together in 2008 but I doubt it. Folks have to remember I have no background in the oil and gas industry. If this information is important to you, go to the source. Do not rely on the information at this blog.

In an earlier post, breaking down the Williston Basin Bakken.

Now, some additional information in parentheses, bold.

In 2014, areas that are predominantly "hot" throughout:

3: West Nesson (35%)
5: Williams Core (30%)
6: Parshall Sanish (50%)
7: Fort Berthold (35%)
10: Nesson Anticline (Middle Bakken - 60%; Three Forks - 40%)

Significant portions of the following areas are also "hot":

2: Dunn County (30%)
11: Southern Bakken Fringe
12: Elm Coulee (25%)

Areas that are "hot" along the river:

8: West McKenzie
9: Williams Perimeter

Now, note the additional information in parentheses behind the areas above -- the number in parentheses, bold: IRR.  

The Bakken Nesson Anticline at 60% is the number one area based on IRR of all areas in either the Bakken or the Eagle Ford. The Eagle Ford Karnes Trough (condensate) is #2 at about 57%.

Another slide comparing costs to complete a well among the Bakken, Utica, Haynesville, and Eagle Ford, among the oil plays, the least expensive to drill a well: the Bakken Parshall Sanish (among all plays, oil, condensate, gas, the BPS was also the least expensive).

Among the oil plays, the least expensive areas to drill oil wells, in order: Bakken Parshall Sanish, Bakken Nesson Anticline, Bakken Dunn County, Bakken West Nesson, Bakken Northern Mountrail, Bakken Williams Core, Three Forks Nesson Anticline.

By far, the most expensive wells were in Three Forks Fort Berthold and Bakken Fort Berthold.  

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It will be interesting to see this presentation updated in a few year. Two things change: a) technology; and, b) knowledge.

With regard to the second (knowledge), I feel pretty confident that the middle Bakken is pretty much fully delineated in the Williston Basin. However, I'm not convinced the Three Forks upper bench (TF1) is nearly as well delineated as some would lead us to believe. I feel quite strongly that the delineation of the lower benches of the Three Forks (most importantly TF2 and TF3) are only beginning to be delineated, and whatever exploration was going on with the high density pilots, the latter were severely impacted by the oil price slump that began in late 2014.

Heat Map For The Williston Basin Bakken -- December 27, 2014

In a recent post, thirteen (13) areas were delineated in the Williston Basin Bakken:

1. Sanish
2. Parshall
3. Nesson Anticline
4. Fort Berthold
5. West Nesson
6. Northern Mountrail
7. Williams County, core
8. Dunn County
9. Elm Coulee
10. Williams County perimeter
11. McKenzie County
12. North Williston
13. Bakken southern fringe

A reader sent me a presentation from the premier oil and gas industry consulting firm that also breaks the Williston Basin Bakken into three areas:

1. North Williston
2. Dunn County
3. West Nesson
4. Northern Mountrail
5. Williams Core
6. Parshall Sanish
7. Fort Berthold
8. West McKenzie
9. Williams County Perimeter
10. Nesson Anticline
11. Southern Bakken Fringe
12. Elm Coulee
13. Montana Frontier

There appears to be only one difference between the two groups: one analyst breaks Parshall and Sanish into two areas; the other analyst combines them. Both groups total thirteen. So, what is the "new" group in that second analysis? The Montana Frontier. 
 
The Montana Frontier is essentially Roosevelt County, Montana, west of Williams County (remember, Elm Coulee, is in Richland County, Montana, west of McKenzie County).

The analyst includes an incredible "heat map" of the Williston Basin Bakken.  The "heat map" is color coded, ranging from blue - through green - yellow - orange - red (the ROYGBIV rainbow) with "red" as the best ("hottest") plays.

Red: IP 30 (which I assume is initial production for first 30 days), maximum: 2,400 bbls/day.

The analyst notes that in calendar year 2008, only two areas were "red": areas 6 and 12. 

In 2014, areas that are predominantly red:

3: West Nesson (the entire north half) 
5: Williams Core
6: Parshall Sanish
7: Fort Berthold
10: Nesson Anticline

Significant portions of the following areas are also red:

2: Dunn County
11: Southern Bakken Fringe
12: Elm Coulee

Areas with red along the river:

8: West McKenzie
9: Williams Perimeter

Surprisingly, even a small area in the far north of Divide County, area 1, has some red.

By the way, back to the Montana Frontier. In the first list, the Montana Frontier was not mentioned. In the more recent presentation, the Montana Frontier was mentioned. Interestingly, there is a pocket of "red" right around Bainville, Montana (hard to tell for sure on the map, but I think I am correct). If so, that explains the recent article about the infrastructure problems around Bainville.

The big takeaway from this one slide: as the operators begin to "circle the wagons" in the Bakken, the "heat map" in 2014 is significantly different than the "heat map" in 2008. And not by a trivial amount. 

The presentation was undated (as far as I could tell, but the URL suggested it was a December, 2014, presentation. The slide in oil prices began in October, 2014.

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The very next slide in that presentation is a "heat map" of the Eagle Ford. In the Bakken slide above, the "heat" goes up to 2,400 bopd for first 30-day IP.

In the Eagle Ford slide, the "heat" goes up to 3,000+ of boepd per month. The legend does not specify 30-day month, and it is clearly a condensate play, though one area has evolved into an oil play, the Hawkville Condensate to the far southwest.

Two observations with regard to the Eagle Ford heat map:

• it explains the incredible number of articles RBN Energy has posted on the Eagle Ford condensate tsunami; and, 
• possibly, whether one can reach any conclusion on the relative competition between the Eagle Ford and the Bakken with regard to oil if push comes to shove (oil below $50)

The Permian, of course, is a n oil play, but its horizontal component is "high cost" compared to the Bakken.

Breaking Down The Bakken Based On Break-Even Costs -- December 11, 2014

Updates

December 27, 2014: see also this "heat map."

Later, 5:59 p.m. CT: I provided a map of the areas mentioned at another source with regard to break-even areas in the Bakken. It was my rough guess. It turns out another recent source, and a very good source, is an article by Michael Filloon over at SeekingAlpha. The biggest help was the "West Nesson" area. My map is still a good first approximation, especially if you overlay Filloon's map on mine with regard to the "West Nesson" which is a pretty vague term to begin with. A big "thank you" to a reader for pointing this article out to me; I had seen it; can't remember if I linked it. But now you have it.

Original Post

I assume there are factual and typographical errors in this post. Feedback is welcome.

In an earlier post, a source broke the North Dakota/Montana Bakken into several areas based on break-even prices. A reader asked if I would provide a map of the various areas. I might do a map later on if I get some feedback on my "definitions" of the areas mentioned. There are as many "areas" as there are analysts, operators, mapmakers, geologists, and people like me trying to delineate the Bakken.

The blog has any number of stand-alone posts and any number of links to presentations with various maps delineating the Bakken. One such post, as an example, might be the Hess prospects.

With regard to the Bakken broken down by break-even costs, these are my initial impressions. Again, I am looking for feedback to correct big errors and feedback to further refine areas that are generally correct. 

In bold are the areas of the Bakken that the source at the linked post named. The sites are listed in the order they were provided at the linked site. My comments follow each named area, but I need help on a couple of the areas (see below):

2. Parshall - 1. Sanish: see the Parshall oil field (EOG) and the Sanish oil field (Whiting) on the GIS map server (which, if clicked on, might open a new window in your browser)

3. Nesson Anticline: a vertical rectangle, six miles on either side of the city of Tioga, extending south to the river and north towards Canada, but probably not including most of Divide or Burke counties; Hess and many other operators

4. Fort Berthold: see the GIS map server; it's that big, grey rectangular area with that huge body of water running through it; KOG, WPX, SHD and several other operators

5. West Nesson: in this post, the West Nesson was described as the northeast corner of McKenzie County, south of the river; many operators;

6. Northern Mountrail: Mountrail County northwest of the Parshall oil field, west and southwest of Stanley

7. Williams County, core: east and southeast of Williams County, extending east to Mountrail County, and south to the river

8. Dunn County: see the GIS map server; also, see Bakken, southern fringe, below

9. Elm Coulee: Richland County, Montana; directly west of Watford City

10. Williams County perimeter: I assume they mean northern Williams County and Divide County/Williams county line; CLR, other operators

11. McKenzie County: see GIS map server; it's interesting they split Williams County into about three or four pieces but lump all of McKenzie County into one county; this confuses me a bit; if one divides McKenzie County into four quadrants, the bulk of activity is in the northeast quadrant, around Watford City, extending west to Indian Hill

12. North Williston: wow, they are really splitting hairs; that area between the Williams County perimeter and north of Williston

13. Bakken southern fringe: go to the GIS map server and look for such fields as the Cabernet, Fayette, and Manning which are in Dunn County, but since Dunn County is already mentioned, the southern fringe may apply to the area around Dickinson and Belfield; when I think Bakken southern fringe, I think Whiting

Preliminary map based on reader's request :