Touting 165% returns on some wells this year in the Bakken Shale, the president of Continental Resources Corp., North Dakota’s top producer, said Thursday overall returns on new wells have doubled in less than a year.
Continental President Jack Stark, speaking at the Williston Basin Petroleum Conference (WBPC), said the Bakken "rock hasn't changed," but there’s a big difference is the application of new technology and innovations.
The oil patch veteran, who’s spent 26 of his 39 years in the industry at Continental, said all of the gains in Bakken are “structured, performance-driven; none of it is due to prices.”
While Continental was doubling the number of its hydraulic fracturing (fracking) stages and tripling proppant volumes, the returns for new wells on average doubled, which Stark attributed to more perforations.
Continental and other Bakken producers are "just doing a much better job connecting with the Bakken reservoirs, and our recovery factors have substantially increased over time,” he said.
During the first quarter, the Oklahoma City-based independent’s Bakken production averaged 154,503 boe/d, up 53% from 101,012 boe/d in 1Q2017. It also completed 21 net wells. The company had six rigs running in the first three months, a level it expects to maintain through the year.
Continental is recovering 15-20% on new wells, compared with 3-5% last year on a primary basis.
"That's a huge number, and the size of the prize is huge here," Stark said, noting recent estimates on the Bakken reservoir overall holding more than 300 billion bbl of oil reserves. If Continental is able to drill only 1% of the reserves, it would be an estimated 3 billion bbl.
"All this technology is unleashing the true potential of this world class resource we have in the Bakken,” he said.
Stark attributed the decreases in drilling cycle times, i.e. spud-to-total depth, for driving down Continental’s operating costs 55% since 2011.
"This has really taken the Bakken to a whole new level that is sustainable," he said. "This is not happening just at Continental, it's happening across all the companies."
Operating advances also are "pushing upward" the basin’s economics.
The Dakota Access Pipeline (DAPL) has had a positive impact on netbacks for producers too, he said, estimating that Continental’s netbacks have expanded by $7.50/bbl. "That's huge, and it provides a lot of money coming back to us that we can reinvest in the Bakken."
This year, 60% of the company’s capital budget of $1.2 billion is to target the Bakken. To date, Stark added that the company has exported 2 million bbl to the UK and Asia, with plans for more.
He also sees the Bakken holding its own against the Permian Basin. The Bakken is a low-cost producer compared to the Permian, he claimed, as there are more water and infrastructure issues in the West Texas/New Mexico behemoth. "Generally, the Bakken's quality shines through,” Stark said.