Slower Bakken Production Growth in 2013 - Core Labs

Bakken Well Pad
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