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North Dakota Output Dropping but Producing Wells Hit Record

The rig counts and production moved into reverse during April in North Dakota but the number of producing wells and prices for Bakken Shale sweet crude pushed forward, the Department of Mineral Resources (DMR) reported Friday.

Producing wells in April totaled 12,537, an all-time record, and three-quarters were unconventionals in the Bakken. At the same time, Bakken sweet crude prices rose to $48/bbl, from an average of $31.47/bbl in March, with $38/bbl and $44/bbl average prices in April and May, respectively.

However, DMR Director Lynn Helms said oil prices are expected to stay weak into next year.

Prices were also higher for natural gas delivered to Northern Border Pipeline at Watford City, hitting $2.45/Mcf in April, an increase of 17 cents/Mcf. The percentage of flared gas at the wellhead dropped to 18% in April, which indicated that gas capture rates on average were 82%, exceeding current state capture requirements.

Oil production totaled 35 million bbls (1.16 million b/d) in April, compared with 36.9 million bbls (1.19 million b/d) in March. Natural gas production was 46.2 Bcf (1.54 Bcf/d) in April, down from 47.1 Bcf (1.51 Bcf/d) in March.

There were 79 rigs operating in the state during April, versus 108 in March and 83 in May, the lowest level since December 2009, Helms said. The state's all-time rig count high was 218 in May 2012.

"The drilling rig count dropped 17 from March to April, eight more from April to May and four since May to today," said Helms, noting that operators have been experimenting with running one to two fewer rigs than their planned 2015 minimum "to see if drill times and efficiencies will continue to improve."

He noted that the current level of rig activity is five to eight rigs below the operators' previous estimate for 2015, if oil prices were to remain below $65/bbl.

Well completions also dropped sharply from March to April, 244 to a preliminary 94.

Helms said "continued oil price weakness anticipated to last into next year is by far the primary reason for the slowdown." At the end of April, there were 925 wells waiting for completion.

To maintain a 1.2 million b/d production level, which the state is now below, completions need to be at the 110-120/month level, he said.

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