Continental Plans 26% Growth for Bakken

February 9, 2017 Elizabeth Alford

Continental Resources plans to spend billions in 2017, much of which will be in the Bakken Shale Play.

Continental has released its 2017 budget, with capital expenditures projected to be $1.95 billion. 70% of Continental’s 2017 budget will be used to complete wells in the Bakken at a cost of $550 million. This will include competing 131 operated wells and 35 non-operated Bakken wells. Additionally, the company expects to grow Bakken production by approximately 26% in 2017. Other highlights for the year include:

Maintaining four operated drilling rigs throughout 2017
Drilling 101 gross (57 net) operated wells
17 wells will have an average budgeted well cost of approximately $7.0 million
Accelerated production growth in second half 2017 to an exit rate of 250,000 to 260,000 barrels of oil equivalent (Boe) per day.

“Our disciplined 2017 budget and growth plan will position the Company for multiple years of double-digit production growth. I’ve never been more excited by Continental’s opportunities to realize the value of our premier assets and to deliver exceptional shareholder value.”

— Harold Hamm, CEO

By year’s end, the company expects to increase its daily oil per barrel protection totals from the 210,000 boepd to roughly 260,000 boepd.

Hess Increases 2017 E&P Budget to $2.25 Billion

January 17, 2017 Elizabeth Alford

Hess Corporation has announced it will increase E&P spending for 2017, including adding more Bakken rigs.

Related: Hess Adds Bakken Rigs

For 2017, Hess plans to spend $2.25 billion for E&P activity, a hefty increase from the $1.9 billion spent in 2016. The company will allocate that money to the following:

$700 million for unconventional shale resources
$375 million for production
$825 million for developments
$350 million for exploration and appraisal activities
$425 million of its development budget will be used to drill two wells and complete three wells, install the tension leg platform and progress development of the Stampede Field in the deepwater Gulf of Mexico to achieve first oil in 2018.

“We’re excited about the year ahead. With oil prices starting to recover, we will ramp up our Bakken rig count from two currently to six by year end. We plan to resume drilling at the Valhall Field from the existing platform rig and we will continue to progress our two offshore developments to first production, which will add a combined 35,000 boepd once online.”

— President and COO Greg Hill

Hess will also add additional rigs in the Bakken and predicts the region's net production in 2017 will average between 95,000 and 105,000 boepd.

Fourth Quarter Highlights

Fourth quarter results include a noncash charge of $3.8 billion to “establish valuation allowances against net deferred tax assets as of December 31, 2016, as required under accounting standards following a three-year cumulative loss.”

North Dakota Faces $2 Billion Loss of Revenue

January 10, 2017 Elizabeth Alford

North Dakota lawmakers face a massive loss in revenue as they settle into week two of the 2017 legislative session.

The North Dakota House and Senate appropriations committees heard proposals last week for the coming two-year budget cycle. Details include:

$146 million less in sales and use tax revenue that was included in former Gov. Dalrymple's executive budget from December
Almost $3.7 billion in general fund revenues for the 2017-19 biennium (down 34 percent from the more than $5.5 billion projected for the current biennium)
$1.1 billion less in general fund revenues than former Gov. Dalrymple's proposal
A $67 million reduction in sales and use tax revenues from the December executive forecast
Doesn't include a $200 million transfer from the Bank of North Dakota that was included in Dalrymple's budget.

“Sales tax is the one that hurts us. The biggest thing we need to take care of in this legislative session, from my standpoint, is making sure that the revenue that we expect we actually get.”

— Rep. Jeff Delzer, Chairman of the House Appropriations Committee

The forecast assumes an average oil price of $48 per barrel, a more conservative figure than Dalrymple's $52-53.

For the first quarter of 2016, the North Dakota's Tax Commissioner announced a 33 percent drop in taxable sales. Taxable sales and purchases are a key indicator of the economic activity in the North Dakota. This data has followed the pattern of decline that parallels the drop in low crude prices over the last 18 months.

Bakken Operators Reducing DUCs

December 28, 2016 Elizabeth Alford

Bakken Shale E&P companies are moving forward with DUC reduction programs, according to the North Dakota Industrial Commission.

The North Dakota Industrial Commission issued its latest activity report that predicts operators will increase the minimum number of rigs throughout 2017 as long as oil prices remain between $50/barrel and $60/barrel. Highlights of the report include:

73 well completions for September
45 well completions for October
860 wells still waiting on completion
Estimated inactive well count is 1,503, down nine from the end of September to the end of October.
There was one significant precipitation event, eight days with wind speeds in excess of 35 mph (too high for completion work), and no days with temperatures below -10F.

“Half of the investment has been made, and these wells are likely to be completed when the economics are right.”

— Ron Ness, President: ND Petroleum Council

It appears that E&P companies are committing to higher 2017 capital spending. In June, Continental Resources founder and CEO Harold Hamm told Bloomberg that new drilling in the Bakken won't take place until crude prices pass the $60 before mark. But encouraged by the recent increases, the company is now moving forward to complete their backlog of wells that still need to be fracked.

The Bakken-Three Forks rig count fell by one this week with Baker Hughes reporting 32 rigs running across our coverage area by midday Friday.

Bakken Operators Look Optimistically to 2017

December 20, 2016 Elizabeth Alford

The Bakken rig count remains stalled, but some major operators in the Bakken Shale Play plan to increase activity in 2017.

As the year comes to a close, major Bakken operators are reporting their plans for 2017, with some announcing they will increase spending and drilling activity.

Continental Resources plans to work down its inventory of 29 drilled but uncompleted Bakken wells in 2017. The company expects continued low operating costs in the new year with an estimated budget of $1.1 billion. The company has a new completion design that has resulted in a record 30-day initial rates for Continental-operated Bakken wells in 2016.
EOG Resources is increasing its crude oil organic production growth outlook through 2020, which includes growth in the Bakken. In addition to the growth illustrated in the outlook, the company continues to evaluate high-quality emerging plays through its ongoing exploration efforts.
Enerplus Corp. will increase its North Dakota oil production by 25% in 2017. 70% of the company's $400 million budget will be spent in North Dakota.
ConocoPhillips has seen unexpected production increases and recovery rates from its Bakken operations, which caused the company to speed up their timeline of adding three rigs to the Bakken. The improved characteristics of its Bakken operations pushed the team to secure drilling rigs and pressure pumping crews earlier than its originally scheduled plans for 2017.
John Hess, CEO of Hess Corp. spoke optimistically about the Bakken in the company's third quarter earnings call and indicated they plan more rigs for the Bakken are in the 2017

“Our Bakken team continues to offer excellent operating results and returns in the core of the play that are competitive with the Permian and Eagle Ford. Our high-quality Bakken acreage, industry-leading drilling and completion costs, and advantaged infrastructure position set up our Bakken assets to be a major contributor to the company’s future production and cash flow growth. ”

— John Hess, CEO of Hess Corp.

The Bakken-Three Forks rig count fell by one this week with Baker Hughes reporting 31 rigs running across our coverage area by midday Friday.