Quick Metric

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or what you think you may have read here.  See expanded "disclaimer" here. The notes below are not accurate in any sense of the word "accuracy" and should not be used by anyone to make decisions or opinions about anything. It was simply a quick look for my use only. I assume the numbers are quite inaccurate.

Operator: Market cap: Net acres: Ratio

• American Eagle (AMZG):$198 million: 35,000: $5,657/acre
• Emerald (EOX): $508 million: 48,800: $10,409/acre
• Halcon (HK): $1.85 billion: 150,000: $12,333/acre
• Kodiak (KOG): $3.04 billion: 195,000: $15,590/acre
• Northern (NOG): $966 million: 180,000: $5,367/acre
• Oasis (OAS): $4.48 billion: 492,000: $9,106/acre
• Triangle Petroleum (TPLM): $829 million: 144,350: $5,743/acre

Comments:

• American Eagle: Divide County, Three Forks, northwest North Dakota
• HK: generally Williams, McKenzie
• KOG: Dunn, McKenzie; many of the sweet spots of the Bakken
• Northern: throughout the Bakken
• Oasis: Williams, Mountrail, McKenzie
• Triangle: in one of the newer sweet spots in the Bakken

Really Cool: Rig Productivity -- A New Metric

A few weeks ago I noted in a post that there was either a typo or a new metric. It turned out to be a new metric: rig productivity.

I was particularly happy to see this because I had blogged about this two years ago on one or two occasions. I was trying to find the right word. There was a discussion over at the "old" Bakken Shale Discussion Group about "efficiency" of drilling by different operators in the Bakken. I didn't care for the word "efficient." An operator could be really efficient drilling dry wells. LOL.

So, I went with "effectiveness." I noted that the new H&P flex rigs would be much more effective than the standard, conventional rigs previously used in the Williston Basin.

Then a week or so ago, the US EIA actually talked about the very same phenomenon. If the spirit moves me, I will link my original post. But again, I think I was the first person outside the oil and gas industry to note the need for a new metric: rig effectiveness.

So, today, RBN Energy has a long discussion of this very subject. Again, very, very impressive. Anyone seriously interested in the shale revolution in the US, should be reading RBN Energy daily.

Last month the Energy Information Administration (EIA) debuted a new monthly report detailing oil and gas drilling productivity in six of the largest US production basins. Rather than just being an “after the fact” report telling us what happened in the past, the new report provides a forecast of oil and gas production for the current and next month out in each of the six basins. The initial report indicates that oil production will increase by roughly 60 Mb/d in these basins during November with gas production increasing by 0.4 Bcf/d. The report also highlights continued improvement in rig productivity. Today we begin a series interpreting the new drilling rig productivity data.

Operator Effectiveness in the Bakken -- North Dakota, USA

I'm sure this metric has been discussed by someone elsewhere before but until today I had not seen it discussed, except for my stand-alone post on the subject on June 21, 2011.

Perhaps he discussed it in Parts I and/or II and I simply missed it, but here is what Michael Filloon had to say in today's Part III regarding the Bakken:

Continental (CLR) had 868,900 net acres as of March 2011. 68% of this acreage is de-risked and in development mode. Of its 365 million boe 2010 proved reserves, 42% were in the North Dakota Bakken. Continental has had very good results. The six month total production of wells drilled since 2009 by Continental is 4.145 million boe. Over this time it has drilled 69 wells. Its six month average production as of January, 2011, is 60 Mboe. This trails Whiting's (WLL) 100 Mboe and Brigham's (BEXP) 81 Mboe over the same time frame, while being equal to EOG Resources' (EOG) 60 Mboe. 

(100-60)/60 = 67%. Whiting's production is about 67 percent better than CLR and 23 percent better than its nearest "competitor." A very interesting metric. 

Of, 4 million / 365 million = about one percent. Yup, there's a lot of drilling yet to be done.

Rig Utililization in the Bakken -- North Dakota, USA,

There is an interesting graphic in Whiting's recent corporate presentation.

I noted some time ago that for all the rigs CLR has in the Williston Basin, it seems other drillers are completing wells at a similar rate despite having fewer rigs. It was just a "feeling."

Look at slide 26 of Whiting's most recent corporate presentation (June, 2011), in which Whiting lists about 35 drillers working in the Bakken, number of wells drilled, and six-month total production (MBOE 10); these are wells drilled since January, 2009 (I may be misreading the slide, but this is what is seems to say.) (The number of rigs is my estimate over time; subject to correction)(a select few):

• WLL: 15 rigs; 72 wells drilled; 7,221 mboe 10 -- 6 months total production; 100k/well
• EOG: 8 rigs (varies; bought AEZ); 119 wells drilled; 7,134 mboe 10; 60k/well
• CLR: 22 rigs; 69 wells drilled; 4,145 mboe 10; 60k/well
  
• BEXP: 6 rigs; 20 wells drilled; 1,628 mboe 10; 81k/well
• BR: x rigs; 44 wells drilled; 2,847 mboe 10; 65k/well
• Slawson: x rigs; 35 wells drilled; 2,613 mboe 10; 75k/well 
• MRO: x rigs; 60 wells drilled; 2,187 mboe 10; 36k/well
• XTO: x rigs; 49 wells drilled; 1,950 mboe 10; 40k/well
• KOG: 2 rigs; 10 wells drilled; 571 mboe 10; 57k/well
• Hess: x rigs; 43 wells drilled; 2,148 mboe 10; 50k/well

MRO and XTO stand out. 

It's possible that one rig/Eco-Pad, and the delay in completing the fourth well, is skewing CLR's results.

WLL's impressive 6-month production results are due to the impressive wells it has in the Sanish, and the way WLL is executing its Bakken strategy: at least one Sanish well for every other well it drills.

The graphic on that page lists the drillers in order of average production/well over the last six months:

• WLL: 100k/well
• Murex: 89k/well
• BEXP: 81k/well
• Hunt: 79k/well
• Slawson: 75k/well
• American: 72k/well
• Questar: 71k/well
• SHD: 68k/well
• Zavanna: 65k/well
• BR: 65k/well
• Petro-Hunt: 62k/well
• CLR: 60k/well
• EOG: 60k/well
• Fidelity (MDU): 57k/well
• KOG: 57k/well
• Anschutz (OXY): 57k/well
• SM: 54k/well
• Newfield: 53k/well
• Zenergy: 51k/well
• Hess: 50k/well
• Tracker (Hess): 49k/well
• Oasis: 46k/well
• Peak: 46k/well
• Encore (Denbury): 45k/well
• Sinclair: 44k/well
• XTO: 40k/well
• Lario: 40k/well
• MRO: 36k/well
• Baytex: 32k/well
• Cirque: 30k/well
• Samson Resources: 29k/well
• PDC: 27k/well
• Panther: 21k/well
• Sagebrush: 16k/well

Again, XTO and MRO stand out. One can argue that WLL is an outlier due to its "sweet spot" in the Sanish, but it's hard to defend XTO and MRO. Even companies like Newfield in the Bakken are somewhat disappointing when one looks at this data.

Hopefully, WLL updates this data a year from now.