Is the Bakken America's Last Oil Boom?

EOG CEO Bill Thomas
EOG CEO Bill Thomas

At the Thirtieth Annual Sanford C. Bernstein Conference on May 29, 2014, EOG Resources CEO Bill Thomas indicated the company doesn't see another shale play of the same magnitude as the Bakken or Eagle Ford on the horizon.

According to Thomas, the Bakken and the Eagle Ford currently produce 75% of all horizontal oil production in the U.S., but he notes the two plays are beginning to mature, and their growth rates are beginning to slow.

Thomas said, “we don’t see another play out there that’s like an Eagle Ford or Bakken that will maintain this tremendous growth that we have had going forward. So production we believe is beginning to slow. In 2012, [production] was about 1-million b/d per year and then last year was a little over 800,000 b/d per year. We are looking at maybe this year 750, maybe in 2016 650,000 b/d per year and really over a fairly short period of time we really believe that the U.S. will be in kind of a very low growth mode. So oil is not going to just go on forever because there is not really another Eagle Ford or Bakken out there.

Thomas' postulation about the Bakken and Eagle Ford, which is likely an accurate depiction, doesn't diminish the impact these plays have already had, or will continue to have on the oil and gas industry, and the U.S. economy. According to the EIA, production in the Bakken Shale has now exceeded the 1-million b/d mark. Recently, Continental Resources, the Bakken Shale's largest producer, released data showing the Bakken field of North Dakota and Montana reached the milestone of 1-billion bbls of cumulative light, sweet crude oil produced during first quarter of 2014.

Read more: Continental Resources: Bakken Hits 1-Billion Barrel Mark

Abraxas Will Run One Bakken Rig and Spend $54 Million in 2014

Abraxas Petroleum will run one rig in and spend $53.8 million in the Bakken in 2014. The company plans to drill 7.2 net wells and complete 6.4 net wells.

Abraxas enters 2014 with a pristine balance sheet and far more profitable and focused asset base. We continue to identify additional opportunities in the Bakken and Eagle Ford and will announce the results of these efforts when it is prudent. We look forward to what promises to be an active 2014 Bakken and Eagle Ford drilling program.
— Bob Watson, CEO

ConocoPhillips Increases Bakken Spending in Its 2014 Budget

ConocoPhillips Bakken Leashold and Mineral Acreage Map
ConocoPhillips Bakken Leashold and Mineral Acreage Map

ConocoPhillips' 2014 budget includes spending $16.7 billion, with 55% of the total allocated to North America.

Within North America, Conoco expects continued growth from the Eagle Ford, Bakken, and Permian plays.

Approximately $4.3 billion will be spent on development drilling in the Lower 48 states. The budget includes increased investment in the drilling programs in the Eagle Ford, Bakken and Permian.

2014 is an important year for ConocoPhillips,” said Ryan Lance, chairman and chief executive officer. “Since becoming an independent E&P company, we have set out to deliver a unique value proposition of 3 to 5 percent volume and margin growth with a compelling dividend.

Conoco has a five-year plan to spend $5 billion in the Bakken to grow production to more than 50,000 boe/d by 2017. The company has over 626,000 acres prospective for the Bakken and estimates a drilling inventory of more than 1,400 wells.

Read more at conocophillips.com

Bakken Deals Account for 33% of U.S. Shale Deals in Q3

Oasis Petroleum Bakken Acreage Map - Acquisition Included
Oasis Petroleum Bakken Acreage Map - Acquisition Included

There were $1.8 billion in Bakken deals in the third quarter and that led all shale plays in terms of dollar value. There were $16.4 billion worth of deals in the third quarter and $5.4 were attributable to assets in shale plays.

The Eagle Ford in South Texas led with seven deals compared to the Bakken's three, but trailed the Bakken in total deal value by $100 million.

PWC only tracks deals with a value of more than $50 million. We actually covered four deals in the quarter:

Read the full oil and gas divestitures report at pwc.com

Notes From Winter NAPE 2013

Geologist Wanted Ad
Geologist Wanted Ad

We spent Winter NAPE (February 6-8 in Houston) listening to the pros discussing their views on energy policy, fundamentals, and investments. The event is centered on North American, but international influence seems to grow each year. A few photos are included below the post. Highlights from the business conference include:

  • At one point in 2012, there were 12-13 federal agencies overseeing some point of the E&P business
  • Alaska is working to create incentives to fuel future exploration. (Only 500 exploration wells have ever been drilled in Alaska. More than 250,000 have been drilled in Texas)
  • Alaska is working to ensure the federal government can't block development the state is in favor of
  • Most of those that oppose "Fracking" oppose oil & gas development in general
  • The industry moving to address all stakeholders. (Not just mineral owners and shareholders)
  • Asia and the US are set to lead global growth in 2013
  • Payroll tax hike will reduce growth, but we should still grow
  • Chemical facilities are expanding for the first time in 50 years ($95 billion in investment planned)
  • Problems in the US are artificial (man made)
  • Brent is expected to trend into the low $80s, with WTI differentials shrinking
  • A Whiting executive believes the Bakken-Three Forks could hold 25-50 billion barrels of recoverable oil
  • Anadarko is 500 wells into the Eagle Ford and still sees upside (targeting a 4.2 day drilling time)
  • Schlumberger shared a study showing 30% of perf clusters don't contribute to production

In previous years, the floor of NAPE has had a general theme. One year it would be the Barnett, the next the Haynesville, then the Bakken. This year there wasn't a single area that seemed to dominate the booths. There were small deals across almost all of the shale plays. I saw several Bakken and Eagle Ford deals, as well as conventional projects around the country. From speaking with the attendees, it sounds like conventional drilling has become unconventional in today's market. The largest operators are investing in big, repeatable shale plays.

The North American Prospects Expo (NAPE) is one of the largest oil and gas gatherings in the wold. E&P companies from across the world come to Houston to showcase the next big oil deal.