Baytex Energy May Sell Bakken Assets

Baytex Energy Bakken Assets
Baytex Energy Bakken Assets

Calgary-based Baytex Energy appears to be on the verge of divesting some of its assets, and the company's Bakken assets may soon be on the auction block.

Recently, Baytex added 22,200 net contiguous acres in South Texas' Eagle Ford Shale through its $2.8 billion acquisition of Aurora Oil & Gas, which closed in June of 2014. Baytex officials say the company conducted a portfolio review of assets late in the second quarter in response to the Eagle Ford acquisition. During that process certain assets were earmarked for divestment, which officials say would be used to pay down debt.

Read more: Baytex Energy - Aurora Deal for Eagle Ford Assets - ~$2.6 Billion

Baytex has not disclosed any official word as to which assets, if any, may be divested from its portfolio. However, the Bakken assets may be a good candidate considering they make up only ~4% of the company's current production. According to analyst commentary in a recent Bloomberg article, Baytex could generate $375 million from the sale of its Bakken assets.

At the end of 2013, the company commissioned contingent resource assessments for some of its assets, including the Bakken. The results revealed the Bakken had the lowest number of contingent resources compared to some of the company's other assets.

Baytex's Bakeen assets are located mostly in Divide County. By the end of 2014, the company plans to drill 15 (9.6 net) wells in the area.


North Dakota & Texas Make Up Half of U.S. Oil Production

U.S. Oil Production
U.S. Oil Production

Combined production from North Dakota and Texas made up nearly half of U.S. oil production according to the Energy Information Administration (EIA) in April of 2013.

Recently, the state of North Dakota hit the 1-million b/d mark for oil, nearly tripling its production over a three year period. The increase in production is directly related to the development of the Bakken Shale. Since April of 2011, production from the Bakken increased 19,000 b/d on average each month, according to the EIA.

Read more: North Dakota Hits the 1-Million b/d Mark

In July of 2014, the EIA predicts the Bakken will produce nearly 1.1-million b/d of oil. June production was 1,074,000 b/d.

Bakken is Major Contributor to U.S. Oil Production Growth

The tight oil and shale gas revolution has changed the face of the energy industry in the U.S., and by 2015, the U.S. is predicted to be the top oil producer in the world, according to the International Energy Agency (IEA). As the country re-asserts itself as a world-wide oil producer, the state of North Dakota is expected to remain in a leading role for oil production.

Texas Leads the Way

The Eagle Ford Shale in South Texas is the only other shale play in the country that can top the Bakken for oil production. State-wide production in Texas was 3-million b/d in April of 2014 according to the EIA. Current production estimates place Texas above the second rated OPEC producing country of Iraq.

ConocoPhillips' Bakken Shale Production Up 80% in Q4 2013 to 43,000 boe/d

Bakken Rig
Bakken Rig

ConocoPhillips Bakken Shale production was 43,000 boe/d in the fourth-quarter of 2013, surpassing fourth quarter 2012 production of the formation by ~ 80%.

In the Lower 48 and Latin America, that accounted for about ~12% of the company's total production.

Read more: Conoco Phillips Increases Bakken Spending in its 2014 Budget

ConocoPhillips Production Growing Rapidly in the Bakken

In the fourth quarter of 2012, Conoco's Bakken production averaged 24,000 boe/d.

At the beginning of 2013, production was only expected to grow by 10%, but with the ~80% increase to 43,000 boe/d, Conoco is well within its 2013 target goal to produce an average of 40,000 boe/d over the next 4 - 5 years.

ConocoPhillips Capital Budget in Unconventional Drilling

In 2014, Conoco will spend ~$9 billion on its North American operations. Approximately $4.3 billion will be focused on the Bakken, Eagle Ford and Niobrara Shale. In 2013, Conoco's production in the Bakken, Eagle Ford and Permian grew 31% from ~167,000 boe/d in the fourth-quarter of 2012 to ~218,000 boe/d in 2013.

Bakken Contribution to Conoco's Reserves

The growth in unconventional drilling has contributed greatly to Conoco's reserves.

CEO Ryan Lance, said, “2013 was a significant year for the company and we achieved several important, strategic milestones... [the company] achieved conventional and unconventional exploration success... [and] our capital program yielded strong organic reserve replacement.

In 2013, Conoco added 470 million boe in Lower 48, primarily in liquids-rich shale plays, including the Bakken and Eagle Ford.

ConocoPhillips Production in 2013 and Plans Moving Forward at a Glance

  • ConocoPhillips Bakken Shale Q4 production up ~80% from 2012 to 43,000 boe/d
  • ~ 12% of ConocoPhillips Lower 48 Production is in Bakken
  • $4.3 billion will be focused on the Bakken, Eagle Ford and Niobrara Shale in 2014
  • 470 million boe in Lower 48 reserves added in 2013, primarily in liquids-rich shale plays, including the Bakken and Eagle Ford
  • 31% production growth in Bakken, Eagle Ford and Permian to ~218,000 boe/d in Q4 2013


Halcon Bakken Well Surpasses 3,000 Boe/d On Fort Berthold Reservation

Halcon Resources Bakken Acreage Map
Halcon Resources Bakken Acreage Map

Halcon Resources is running eight rigs across a 135,000 acre position in the Bakken and continues to implement drilling & completion modifications.

The latest changes look to be paying dividends. The three most recent wells completed on the Fort Berthold Reservation had an average initial production of 2,648 boe/d (78% oil). That's a 38% improvement over wells completed in the first quarter of 2013.

The following completion modifications have been made on recent Bakken wells:

  • Plug and perf completions
  • Ceramic proppant
  • Higher proppant volume per lateral foot
  • Increased stage density
  • Utilizing simultaneous zipper fracks
The most impressive well was completed on the reservation at a rate of 3,060 boe/d (90% oil). That’s a Halcon record.

A second well is being completed on the same pad and is producing more than 2,700 boe/d with just 67% of the lateral contributing. Additional frac plugs will be drilled out and production will likely increase.

Three Forks Wells Improving

Engineering changes are improving Three Forks well performance as well. The past four wells have come online at more than 2,800 boe/d (86% oil) or a 77% improvement from first quarter wells.

Halcon is testing 660-ft spacing in the Bakken and is also participating in Continental Resources' Rollefstad Unit that will test the upper three benches of the Three Forks.

The company has seen well costs average $10 million and is targeting well costs of $9 million by year-end 2013.

Marmon Area Bakken Wells Improving Too

Two recent wells in the Marmon area are projected to have EURs of 462,000 boe or 91% higher than previous wells. New completion designs will likely change the way the Bakken is developed in many areas of the Williston Basin. Well costs in this area are already down to $9.5 million are expected to fall to $9 million as well.

Halcon has 137 wells producing, 14 wells awaiting completion, and 8 wells being drilled across the Williston Basin.

In other areas, Halcon also announced plans to spend more on Eagle Ford development outside of the traditional fairway. Read the company's full operations update at