More On Pad Drilling From A Reader -- December 12, 2021

With regard to Bakken 4.5, pad drilling, a reader writes:

A few years back, some industry executive was explaining some of the economics behind not only 4 to 6 wells per pad simultaneously being drilled/completed, but also the then-emerging trend of simultaneously developing 3 to 4 pads in close proximity.

Interesting perspective. 

Taking those six Bruin wells that you have noted for example, at $6 million per well, Bruin would have 'pre-paid' $36 million before any revenue came back. 

With a cumulative production just over half a million barrels (~511,000) and $50/bbl pricing, Bruin would have already grossed about $25 million in oil revenue and $2 million from the gas ... roughly. 

It may take till the end of a year, but Bruin may be 'in the money' after 12 month's time.

For operators doing this on, say, four pads simultaneously, the capital outlay could approach $150 million prior to any revenue coming in. 

Definitely a game for the Big Boys. 

(That executive also stressed that the logistics could be daunting trying to develop 16/20 wells simultaneously, but the 'discount/efficiencies' could be well worth it when giving a LOT of business to the chosen oil field service contractors).

By the way, there's another way for smaller companies like Bruin to pay for the fracking. [The drilling costs are almost inconsequential compared to everything else, especially fracking.] Some operators will share in the production with the servicing / fracking companies to pay off the costs of the work. I've seen that talked about elsewhere -- overseas? I don't know if it's being done in the Bakken?  

Regardless, once the cash flow starts, it becomes easier to tackle the next big project. 

 

Oasis Aagvik Wells Coming Off The Confidential List This Next Week -- May 5, 2019

The sound of fracking! What a beautiful noise!

Beautiful Noise, Neil Diamond
If this doesn't get you excited about the Bakken, nothing will.

Disclaimer: I'm inappropriately exuberant about the Bakken.

The Oais Aagvik wells are tracked here.

Aagvik wells coming off the confidential list this next week.

34811, conf, Oasis, Aagvik 5298 41-35 15T, Banks,

Date	Oil Runs	MCF Sold
3-2019	23068	76935
2-2019	17818	53613
1-2019	19359	50571
12-2018	23155	44748
11-2018	13371	0

34036, conf, Oasis, Aagvik 5298 41-35 2TX, Banks,

Date	Oil Runs	MCF Sold
3-2019	13474	39371
2-2019	25361	78421
1-2019	20503	51107
12-2018	20532	30468
11-2018	15511	8378

34040, conf, Oasis, Aagik 5298 41-35 6T, Banks,

Date	Oil Runs	MCF Sold
3-2019	20823	65333
2-2019	22850	73685
1-2019	21534	62332
12-2018	20575	42041
11-2018	14015	6195

34039, conf, Oasis, Aagvik 5298 41-35 5B, Banks, 

Date	Oil Runs	MCF Sold
3-2019	29148	111890
2-2019	25376	87240
1-2019	24978	79018
12-2018	26107	58419
11-2018	16355	11170

34037, conf, Oasis, Aagvik 5298 41-35 3BX, Banks,

Date	Oil Runs	MCF Sold
3-2019	32260	83927
2-2019	43880	137960
1-2019	53782	143823
12-2018	59019	100860
11-2018	30408	28130

Wells Coming Off Confidential List This Next Week -- March 4, 2018

Note: over the past few weeks it is clear that a lot more wells are starting to come off the confidential list; still a lot of DUCs, but a lot of very, very good wells. Starting to see more and more results of pad drilling. 

Friday, March 9, 2018:33496, 2,362, Hess, BB-Ole Anderson-LW-151-95-3130H-1, Blue Buttes, 4 sections, 60 stages; 4.2 million lbs; large/medium, a very nice well; t12/17; cum 47K 1/18;
33272, 1,304, Whiting, Nelson 11-18-2TFHU, Truax, 4 sections, 44 stages; 9.7 million lbs a very, very nice well; t9/17; cum 121K 1/18;
31293, SI/NC, Slawson, Serpent Federal 6-36-32TFH, Big Bend, no production data,
29521, 614, Oasis, Twobins 55-1 41-20 7B, Missouri Ridge, a nice well, 50 stages; 9.9 million lbs, mesh, large; t10/17; cum 68K 1/18;

Thursday, March 8, 2018:
33812, SI/NC, Petro-Hunt, USA 153-95-23D-14 3H, Charlson, no production data, 
33705, 1,834, EOG, Round Prairie 27-1523H, Painted Woods, 4 sections, a very nice well for Painted Woods; 56 stages; 14.4 million lbs; all 100 mesh; t9/17; cum 114K 1/18;
33480, 1,320, QEP, Otis 6-28-33BHD, Grail, a huge well; 51 stages; 10.1 million lbs, mesh, medium, small; 46K in first full month; t9/17; cum 123K 1/18;
33478, 2,240, QEP, Otis 5-28-33BHD, Grail, a huge well; 51 stages; 9.6 million lbs, mesh, medium, small; 45K in first full month;  t10/17; cum 126K 1/18; 
33477, 2,116, QEP, Otis 1-28-33T2HD, Grail, a nice well; Three Forks 2nd bench; 51 stages, 10.1 million lbs; 23 K in best month so far; t10/17; cum 77K 1/18; 
32730, 1,183, Whiting, Keeling 31-13TFH, Truax, a very nice well; Three Forks, 42 stages; 9.4 million lbs; large, mesh; t9/17; cum 84K 1/18;
29522, 540, Oasis, Twobins 55-1 41-20 6T, Missouri Ridge; a nice well; Three Forks, 50 stages; 4.1 million lbs; mesh, large, medium, medium ceramic;  t10/17; cum 68K 1/18; 

Wednesday, March 7, 2018:
31994, 769, Bruin E&P, Fort Berthold 152-94-13A-24-15H, Antelope, a nice well;  t9/17; cum 59K 1/18; 
17089, 400, CLR, Bridger 44-14H, Rattlesnake Point, a very nice well; t4/08; cum 247K 1/18; for more on this well, see this post;

Tuesday, March 6, 2018:
33479, 1,708, QEP, Otis 2-28-33T2HD, 4 sections, Grail, a very nice well, 51 stages; 10.1 million lbs; mesh/medium/small; 27K in first full month; t10/17; cum 80K 1/18;
33159, 1,171, Whiting, Irgens 41-17-3H, East Fork, a very nice well; 40 stages; 10.4 million lbs; t9/17; cum 107K 1/18;

Monday, March 5, 2018:
33476, 1,218, QEP, Otis 28-33-32-29BHD, Grail, a nice well, but not great for the Grail; 30K in first full month; t10/17; cum 80K 1/18;
33271, 1,783, Whiting, Nelson 11-18TFHU, Truax, 4 sections, a nice well; t10/17; cum 82K 1/18;
31292, SI/NC, Slawson, Serpent Federal 3-36-32H, Big Bend, no production data,

Sunday, March 4, 2018:
31491, SI/NC, Petro-Hunt, USA 153-95-1A-7-4H, Charlson, no production data,

Saturday, March 3, 2018:
33160, 1,287, Whiting, Irgens 41-17-1HU, East Fork, a nice well; t9/17; cum 91K 1/18;
31995, 1,706, Bruin E&P, Fort Berthold 152-94-13A-24-16H, Antelope, 4 sections, a nice well; t9/17; cum 130K 1/18;

Filloon: Rig Counts In The Bakken Matter Little In Predicting Production -- July 12, 2016

This is great to see. I have opined out loud many times, asking when we would see some serious analysis of this issue -- rig counts matter little in the Bakken.

Today, a Mike Filloon update: rig counts matter little, as horizontal wells have changed how we predict future production.

Summary:

• Given the large differences in oil and natural gas production depending on geography and well design, rig counts do little to predict future production.
• Rigs specific to horizontal drilling in the Permian, Eagle Ford, Bakken, and STACK are under the greatest demand
• Rigs have moved to the best core areas, and now operators have switched from exploration to development mode, drastically improving production per rig
• Higher tech rigs and better techniques have decreased the time needed per well, so more wells can be drilled per rig

The article will be archived. 

Pad Drilling In The Bakken

The Minot Daily News is reporting: (the story was sent to my two readers, thank you)

In 2013, two thirds of the permits issued for drilling wells in the oil patch were for multi-pads, said Alison Ritter, public information officer for the North Dakota Department of Mineral Resources in Bismarck.

The majority of operators in the Bakken are drilling multi-wells on a single pad, Ritter said. "The average number is four on a pad."

But a pad could have eight to 20, she said.

Rory Nelson, of Williston, was named North Dakota's energy impact coordinator last year. Nelson told members of the Minot Area Chamber of Commerce's Energy Committee at a meeting in Minot recently, that by drilling multi wells on a pad more of the formation can be drilled and more oil can be recovered. "It actually makes the infrastructure a little bit easier," he added.

Although pad drilling is being done by most of the Bakken operators, there are some fields with single wells drilled, Ritter said.

Continental was one of the first companies to drill multi-wells on a single pad. The company completed its first multi-wells on a single pad called ECO-Pad in 2010 in Dunn County (four wells from a single drilling pad) from the Three Forks and Middle Bakken Formations of the North Dakota Bakken, according to the company website.

Several story lines follow from that:

• one rig on a pad drilling 20 wells, could take two years to complete; mini-manufacturing site
• two 20-well pads back-to-back (across the road from each other), one rig for both pads: 4 years
• 40 wells x $7 million = $300 million just to drill, complete
• the speed with which operators moved to multi-well pad drilling has been nothing short of phenomenal
• twenty horizontal wells in close proximity leads one to consider different completion techniques
• might operators be able to frack every other horizontal and get about the same production? or frack every third horizontal? come back and frack others later? 

One might get some insight into where completion techniques are headed with Mike Filloon's article over at SeekingAlpha. 

Pad Drilling Vs Density Drilling

I'm in the middle of a swim meet, so I'm not concentrating as much as I should, so take everything I write this morning with "a grain of salt," as they say.

The Dickinson Press has a story on pad drilling today, something regular readers have known about for two, three, four years -- whenever Harold Hamm (CLR) introduced Eco-Pads, a copyright term, by the way, I believe.

In my mind, there is a difference between pad drilling and density drilling. Perhaps one can think of density drilling being a subset of pad drilling, though technically there would be no reason why density drilling couldn't be done on individual well sites, but that would be a real waste. So, for now, in my simple mind, density drilling is a subset of pad drilling. Another way one could say it, I suppose, is that density drilling is facilitated by pad drilling.

Be that as it may, the linked Dickinson Press article is about pad drilling and not density drilling.

Multi-well pads are becoming bigger and a more common sight in the western North Dakota Oil Patch.

The pads consolidate impacts to nearby landowners and the environment to one concentrated spot, rather than single wells being sprinkled across the landscape.

The wells’ coziness doesn’t extend underground though — horizontal drilling allows the wells to start in one spot but spawn in various directions, to wherever the oil is.

So far this year, 60 percent of the wells permitted were for shared pads, up from about a third from 2011, according to Department of Mineral Resources data.

Prindle On Halcon; Filloon On Oasis; Three Forks Benches; Pad Drilling; Bakken Deals

First, Prindle:

Amid fervent concerns of share dilution, the price of Halcon Resources (NYSE: HK) dropped nearly 30% between August 6th and August 20th. Up ~7% from the recent low, it seems the storm is clearing.

Several key metrics suggest this domestic oil and gas (O&G) exploration and production (E&P) company is currently priced at an attractive valuation. Indeed, the shares are skimming above 52-week share price lows, while tremendous production increases and magnified oil prices all suggest eminent momentum.

In this article I will present a bullish case for Halcon Resources. I will begin with an overview of the company and my investment thesis. Support for the thesis will be given in a comparable company analysis that focuses on several key metrics. Afterwards, Halcon's geographic positioning will be recapped, followed by a brief technical analysis. I will end by discussing potential equity movement catalysts and respond to common variant views.

Go to linked article for full story.

Now, Filloon:

Oasis Petroleum has been a Bakken outperformer in 2013. It continues to reel in costs and beat on the bottom line. Like Triangle Petroleum it has a pressure pumping and midstream business. This has kept costs low. Oasis also continues to improve initial production rates. Like Kodiak  it is a Bakken pure play, and its leasehold is in a unique area that has a much larger value than the Street gives it credit. Its most recent acquisition solidifies Oasis' position west of Nesson. This is important, as the majority of this could be best in play with respect to downspacing. Like Kodiak's Liberty acquisition, this purchase could make or break Oasis' year.

But, wow, there is so much more at the linked article.

For newbies, excellent discussion on a) pad drilling; and, b) the lower benches of the Three Forks. 

Energy Links -- Around The Board -- Enbridge Increasing Capacity By One Million BOPD; Cap And Trade Gets Less Expensive In California

Weekly EIA report: US crude oil production rose 91,000 b/d to 7.61 million b/d last week, highest since 7.64 million b/d in October 1989. -- Platts tweet.

Harold Hamm: Keystone XL no longer 'critical." It was probably never critical.  Regardless of whether it was once critical or not, it is now a) only a political issue; and, b) a strategic signal to our closest ally and biggest trading partner. TransCanada's Energy East will do what the Keystone XL was going to do -- get Canadian oil sand to the coast, albeit the wrong coast.

Huge wells in the Bakken -- Motley Fool.

Of course variations do exist. However, holding large reserves that can be developed at a comparatively cheaper rate translates into superior returns. Houston-based EOG Resources has done exactly that. An early mover in the U.S. shale oil revolution, EOG's Eagle Ford exposure has ensured the best returns for a U.S. oil company this year. The company's estimated net reserves in the Eagle Ford are in the range of 1.6 billion-2.2 billion barrels of oil equivalent. The best thing about this shale play is that as the lateral (horizontal) length of the fracked well increases, production rate goes up. According to the company's latest investor presentation, average initial production rate per well has progressively climbed to 1,226 barrels per day in 2013 from a lowly 483 bpd in 2009. Well costs are also falling with an average $5.8 million per completed well in 2013 -- a far cry from the $9.1 million spent per well in 2009.

The company's Bakken wells are superior to even those of Statoil and Continental Resources. The four highest producing wells in this region belong to EOG Resources with production ranging between 2,271 bpd and 1,846 bpd. However, Continental has set the benchmark in well economics in the Bakken by averaging $8.2 million in completed well costs. In comparison, EOG Resources completes a Bakken well for an average $9.5 million. With more than 4,900 drilling locations yet to complete in the Eagle Ford, as well as a 12-year drilling inventory in the Bakken, EOG is expected to have the best in class crude oil growth for the next few years.

Pad drilling -- Motley Fool.

Pad drilling is proving itself very useful in places such as North Dakota, where there are multiple layers of shale over a single site. Continental Resources has indicated that some of its drilling operations are completing as many as 14 wells per pad to target both the Bakken and Three Forks formations simultaneously, and it's looking to bump that number to above 20 for certain sites.

For producers such as Continental, the results of pad drilling are easy to see in the bottom line. A year ago, a single completed well for the company cost $9.3 million. Contrast that with the average cost of a completed well in that same region, which is expected to be below $8 million by the end of the year. With a drilling plan of 110 net wells in 2013, the savings of about $140 million per year means fewer capital expenditures for each barrel of oil. So exploration and production companies can either ramp up their drilling programs to increase production faster, or enjoy the higher margins.

With so much more activity occurring at a single site all at once, exploration and production companies are requiring less equipment and contractors to get the job done. Despite a large uptick in oil production between the middle of last year and today, total rigs drilling for oil have remained relatively flat.

KOG hits a new high.

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here. 

Is Nuverra going to go under? -- Motley Fool. 

First, there is a reason that Nuverra has missed its numbers of late. The weather has been plaguing it all year. In the first quarter it missed the equivalent of 15 working days, while the second quarter wasn't all that better. In fact, the weather is one of the reasons why there are 500 wells in the Bakken just waiting to be completed.

This backlog of completions held back at a lot of companies including Oasis Petroleum, which had been growing production by triple digits annually, but had flat production in the second quarter. The company had 37 wells drilled but not completed. Bottom line, it expects to complete almost as many wells next quarter as it had in the first half of the year, which will lead to a 10% production boost next quarter.

Clearly, the potential is there for the back half of the year to be more heavily weighted for Nuverra's business as well. This is why CEO Mark Johnsrud said on the company's last conference call that the weather issue "is not specific to Nuverra and has had similar impact on other competitors in the region. We believe this revenue is delayed, not lost." If this turns out to be the case, it could lead to a better than expected improvement in its second half earnings.

Is production in the Bakken about to explode? -- Motley Fool

Genscape, which is a leading provider of energy information, recently estimated that June's Bakken daily oil production would skyrocket by 54,000 barrels of oil per day. That would have shattered the the previous record monthly gain of 41,000 barrels of oil per day set in February.

It turned out that Genscape was way off as production only grew by 10,000 barrels per day. However, the gusher it predicted could still come real soon.

There are currently just over 9,000 wells in North Dakota producing a little more than 821,000 barrels per day. However, due to the conversion to pad drilling as well as persistent wet weather, it has created a backlog of nearly 500 wells waiting to be completed. As the industry works off that backlog it has the potential to unleash a massive amount of initial oil production.

Looking at Bakken producers last quarter, there was a fairly consistent theme of production being held back by this backlog. For example, Oasis Petroleum noted that its production was virtually flat last quarter at 30,171 barrels of oil equivalent per day.

However, the company sees its production jumping by 10% next quarter as more wells come online. Oasis had 37 wells drilled but not completed and its sees completions next quarter in a range of 40-45 after just completing 51 wells in the first half of the year.

Oasis is not alone. ConocoPhillips also noted that its production was held back by the wet weather. The company saw just a measly 3% growth quarter-over-quarter to an average of 30,000 barrels of oil per day. However, looking ahead the company has plans to grow its production by at least 50% to 45,000 barrels of oil per day by 2017. Now that the weather has cleared, more of Conoco's newly drilled wells can start coming online and boosting its production.

ENB increasing capacity by a million bopd -- Motley Fool.

Meanwhile Enbridge responsible for transporting two thirds of Canadian oil exports to the United States, has been silently expanding its capacity. Some of the company's major initiatives include twinning its Seaway and Spearhead pipelines, eliminating bottlenecks in the Chicago area, and reversing its Line 9 route. Management projects that these efforts will boost Canadian oil exports by more than one million barrels per day by 2015. 

And while pipeline routes appear blocked to the west and the south, TransCanada announced earlier this month that it will proceed with its Energy East proposal. If approved, the pipeline will ship 1.1 million barrels per day from terminals in Alberta to refineries on the Canadian east coast by 2018. The project already has the support of oil producers but still needs approval from the National Energy Board and several provincial governments. But if given the green-light, Energy East will single handedly replace the controversial Keystone XL pipeline.

Norway to start drilling the East Arctic -- Reuters.

Norway invited oil and gas firms on Wednesday to bid for the first licences to drill in the eastern part of its Arctic waters, three years after it settled a border dispute with Russia.

With oil production on course to fall to a 25-year low this year, Norway is looking to tap reserves further into the Arctic as it runs out of prospects in the North Sea.

The US will continue to remain a spectator.

Cap-and-trade gets cheaper -- Reuters. 

California's largest greenhouse gas-emitting businesses paid $12.22 per metric tonne (1.1 tons) for the right to release carbon this year, lower than expected and down almost 13 percent from the previous sale in May, the state said on Wednesday.

Oil refineries, utilities and market speculators were among those that purchased all 13.87 million current year permits offered at the state's fourth quarterly auction, according to the program's regulator, the California Air Resources Board.

For the first time, the state also sold all future-year permits it put up for sale. All 9.56 million allowances it offered to cover emissions in 2016 sold for $11.10 each at the auction, which was held on Aug. 16.

Excellent Article On Pad Drilling In The Bakken

Unconventional Oil & Gas Center is reporting:

Activity will catch up as the Bakken serves up additional efficiencies in drilling and well completion in 2013. This is the year the play transitions to pad drilling, an important inflection point that shortens the cycle time on generating new wells in unconventional drilling.

A Hart Energy survey found two thirds of Bakken shale wells drilled on pads at the mid-point of 2013. Pad drilling share is expected to grow to 73% of all wells in 2014 as the play moves beyond lease capture and delineation into the resource harvest phase of the unconventional cycle.

The article is chock full of interesting data about pad drilling in North Dakota. I hope the linked article is not moved to archives any time soon. It's a must-read.
There are three main story lines in the linked article

• production was impacted by a very wet spring; but operators will catch up this year
• data points about pad drilling; how it differs from pad drilling for natural gas
• the middle Bakken is delineated; operators are now focused on delineating the Three Forks

That last bullet is the most important.