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Permian Is Latest Hydrocarbon Romance, But Bakken Still Gets Its Share of Love, Too

While the Permian Basin has attracted a lot of new investment this year, the Williston Basin's Bakken Shale still commands much respect, based on two 3Q2016 earnings conference calls Thursday.

Denver-based QEP Resources CEO Chuck Stanley was bullish about his company's $590 million purchase of 9,340 acres in the Permian, which closed earlier this month, but he still talked up the Williston Basin and drilling QEP has ongoing in the South Antelope and Fort Berthold areas of the Bakken.

In response to a question about whether levels of spending will be held back next near in the Williston Basin relative to the Permian, Stanley said, "there is still a tremendous opportunity in the Williston, and we really have not done the state-of-the-art, plug-and-prove high proppant-loading completions at Fort Berthold, so I think there is a lot of upside potential to help drive growth there.

"I would not say that we are putting the Williston Basin assets in neutral. Far from it; we think there is still a tremendous amount of running room on that asset."

He said the newfound enthusiasm for QEP's expanded stake in the Permian should not give the impression the company plans to "walk away from or starve the Williston assets; it is an important part of our future growth plans.'

Jim Volker, CEO of Whiting Petroleum Corp., one of the largest acreage holders in the Bakken, echoed these thoughts, while talking up potential in the Niobrara Shale play during his company's quarterly earnings conference call Thursday.

"Well performance continues to be excellent with our previously disclosed set of 48 wells, tracking a 900,000 boe type curve. And our leading edge completions tracking a 1.5 million boe type curve," Volker told analysts. "We're ramping up in the Williston Basin, with four rigs running, that's up from two last quarter. A recent central Williston 13-well test saw each well averaging more than 3,700 boe/d, he said.

In the Williston Basin, Whiting controls approximately 443,000 net acres of which 99% is held by production; 92% of the potential drilling locations are in the Bakken core area. Volker said his company is now getting enhanced completions finished for $7 million/well, and they are averaging estimated lifetime production of between 900,000 boe and 1.5 million boe per well.

For 2017, Whiting plans to keep four rigs going in the Bakken as it currently has, and then assess that as the year goes on, Volker said

This past summer, Volker said that with a few quarters at $50/bbl oil Whiting could return to double digit production growth (see Shale Daily,Aug. 3).

Entering the second half of 2016, the Denver-based independent planned to add 16 drilled but uncompleted (DUC) well completions in the Williston Basin, where most of its current production is concentrated.

On Thursday, Volker said that assuming the current 2017 future strip oil price of approximately $53/bbl, he believes "we could easily return to double-digit production growth based on looking at 2016 to 2017 exit rates."

Raising the Whiting executives' optimism is the success they have seen so far with what the company calls "enhanced completions," involving super-large hydraulic fracturing jobs (fracking) to whittle down the DUCs in the Williston and elsewhere.

Rick Ross, senior vice president for operations, said "we're going to try some additional completions in the fourth quarter, the larger ones; probably about 10 of those and continue to watch those. We'd like to see a quarter to two quarters of production and to really understand the EUR [estimated ultimate recovery] picture on them."

Ross said the results Whiting has seen "gives us enough encouragement to continue to do more of these -- not our full complement -- but to do probably 30% to 40% of our fourth quarter completions that way. He and Mark Williams, senior vice president for exploration and development, said the Niobrara has similar potential for enhanced completions.

Volker: I don't expect to see much pressure on pricing really in the Bakken or out there in the Niobrara, until and unless we get $60/bbl prices.

Regarding DUCs next year, Volker said, "We're going to begin completing them in the first quarter of 2017, and we expect to complete about half of them by year-end."

"So, I think we can continue to see enhanced completions by, yes, adding more sand, perhaps some more entry points. Mark has a program that he is working on with Rick to give us even more entry points than we have today."

They've had a 13 million pound sand job and can see getting to 15 million pounds on these enhanced fracking jobs, Volker noted.

Both Whiting and QEP reported continued red ink in the 3Q2016, albeit it lower than losses for the same period last year in the case of Whiting. For 3Q2016, QEP reported a net loss of $50.9 million (minus 21 cents/share), compared with net income of $21.1 million (12 cents) for the same period last year.

For the third quarter, Whiting reported a net loss of $693.1 million (minus $2.47/share), compared to a loss of $1.8 billion (minus $9.14/share) for the same period a year earlier.

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