QEP Resources Bakken Well Pad Surpasses 15,000 Barrels Per Day!

QEP Resources Bakken Three Forks Acreage Map

QEP Resources Bakken production was down in the first quarter due to the company's transition to pad drilling. That was quickly reversed as the company brought its first four well pad online on its South Antelope acreage in the second quarter.

The four wells had a 24-hr, initial production rate that eclipsed 15,000 boe/d or 3,929 boe/d per well after processing when added together. That's after QEP produced just 17,000 boe/d in the first quarter of 2013.

The first two wells actually eclipsed 4,500 boe/d each and that is from the first two wells the company has drilled in the area. QEP Resources acquired its South Antelope acreage from Helis for $1.3 billion in late 2012.

“I am pleased with QEP`s strong operational results this quarter and I am encouraged by the very strong well results from our first operated multi-well pad on the South Antelope Acquisition,” commented Chuck Stanley, Chairman, President and CEO of QEP Resources. “As anticipated, it has taken some time to transition to pad development, where multiple wells are drilled and cased before completion activity commences.”

QEP operates 8 rigs targeting the Bakken and Three Forks in the region.

Watch for lumpy production rates as operators shift to pad drilling. This is perfect example of how significant volumes can come online all at once.

Read the full operations update at qepresources.com

Kodiak Nearing Completion Of Two 12 Well Pads

Kodiak Oil & Gas Bakken Three Forks Well Placement

Kodiak Oil & Gas is nearing completion of two well pads that will test six wells in the Bakken and six wells in the Three Forks. If successful, you might see a lot of development across the area shift to this strategy.

The Bakken and Three Forks wells are spaced approximately 800-850 ft apart. The wells in the Bakken and Three Forks are not stacked, but offset from each other to minimize interference. Not all six wells in the Three Forks are being drilled in the same zone either. Three are targeting the Upper Three Forks and three are targeting the middle Three Forks.

On one pad in the Polar area, 10 of the planned 12 wells had been drilled and on the other pad in the Smokey area 8 of the 12 planned wells had been drilled as of the beginning of May. The Polar area pad is expected to be completed and producing by late July.

“Kodiak had a solid first quarter and we are making progress towards the milestones that we set out for the year.”

— James Catlin, EVP

Other highlights from the first quarter included:

• Kodiak dropped one completion crew in March & April, but plans to add them back in May
• Production Averaged 21,700 boe/d in the first quarter
• Spending 20 days from spud to total depth
• Oil & gas infrastructure and salt water disposal infrastructure near 12-well pads is nearly complete
• Running seven rigs currently with plans to drop one later in the month

SM Energy Trading Two Bakken Rigs For One Walking Rig

SM Energy Bakken Map

SM Energy plans to drop from running four Bakken rigs to three later in the year. Two rig contracts are up and the company will be trading two for one.

The rig coming in will be a walking rig capable of drilling multi-well pads.

Bakken production was up 3% on the quarter and 18% from this time last year to 12,200 boe/d. The focus of drilling is in the Raven, Bear Den, and Gooseneck prospects in Divide, McKenzie, and Williams counties in North Dakota.

SM Energy completed 11 gross wells on its operated acreage during the quarter.

Read the full press release at sm-energy.com

QEP's Bakken Production Down Due To Transition To Pad Drilling

QEP Resources Bakken Three Forks Acreage Map

QEP Resources produced approximately 17,000 boe/d from the Bakken and Three Forks in the first quarter. That's down from more than 18,000 boe/d in the fourth quarter of 2012.

QEP has moved to pad drilling across much of its acreage and that means longer lead times before wells are brought to production.

No alarms should be going off here. Single wells that would have come online a short time after being drilled now have to wait until three wells are drilled and ready for completion on the same pad. Expect to see similar results from other Bakken operators who are transitioning to pad drilling throughout 2013.

Bakken and Three Forks Development Plans

QEP plans to drill eight wells per unit from two four well pads at the company's South Antelope area. Four wells will target the Bakken and four will target the Three Forks. Pad drilling will be the primary means of development in the South Antelope area.

During the quarter, only one well was turned to sales in the South Antelope area and 11 were turned to sales in the Fort Berthold area. You can read more about the South Antelope acreage in the article - QEP and Helis Reach Bakken Deal For $1.3 Billion

The 11 wells at Fort Berthold include two five well pads that yielded almost 2,200 boe/d and 2,500 boe/d per well on each pad, respectively. QEP's water gathering system is also running at Fort Berthold and the company is saving $5 per barrel in transportation costs.

QEP expects all in well costs to hold below $11 million as the company transitions to pad drilling. Currently, three rigs are running at Fort Berthold and four rigs are running on the South Antelope properties. QEP has approximately 117,000 acres prospective for the Bakken Shale.

Slower Bakken Production Growth in 2013 - Core Labs

Bakken Well Pad

Core Labs' CEO, David Demshur, expressed a belief that the Bakken will grow slower in 2013 on a conference call this past week. He noted the rig count has been down five consecutive months and that production growth has slowed compared to earlier in 2012.

At the peak of growth last year, production was growing by more than 20,000 b/d each month. That has since slowed to just 53,000 b/d of growth over the past five months (almost 50% less).

Mr. Demshur commented, "so the moderation in the rig count probably is going to lead to lower production or gross production gain within the Bakken. Keep in mind that the decline rate first year block in production is about 40%, second year about 25%."

While I believe Mr. Demshur's comments are largely correct, there are a few reasons we can not rely on them solely.

1. Companies ramped up development this past year as crude-by-rail facilities allowed them to realize better prices than ever before. That gave incentive to push the production barrier more than one might in a constrained pipeline environment. Essentially, production grew fast than what should be considered "normal"
2. Operators are moving to pad drilling, so production will come online in a less consistent, more choppy manner. Multiple wells will come on at once versus just one at a time previously.
3. Production growth always slows in the winter. It gets cold in North Dakota and operations are more difficult. Read more in the post Bakken Production Down, But Not Out in November

“He also stated “We’ve gone on record saying we’ll take the under on 1.5 million b/d production projections in 2014.”

Read the company's quarterly call transcript at seekingalpha.com