Bakken Operators Slash Budgets for 2015

Bakken Producers Slash 2015 Budgets
Bakken Producers Slash 2015 Budgets

As the free-fall in crude prices continues, major Bakken operators are expressing their caution by slashing their budgets for 2015.

Marathon Oil is the latest giant to announce that its projected budget will curb exploration spending by a whopping 20% for 2015. Though the company still forecasts spending in upwards of $4.4 billion, the decrease is another sign that the spiraling oil prices are casting a dark shadow over the incredible growth that is taking place in the shale regions.

We remain confident in our investment opportunities in the three U.S. resource plays,” Marathon Oil President and Chief Executive Officer Lee Tillman said in a statement. “Our 2015 capital program is not opportunity constrained but will reflect sound discipline in managing cash flows in the current price environment.

Related: Eagle Ford and Bakken Drilling Permits Fall 30%

This news comes as oil plunged Thursday to an incredible $54.11, prices not seen since 2009. And Marathon is not the only E&P company to back off on growth plans. ConocoPhillips is also shaving 20% off for 2015, by deferring investment in unconventional plays. The company, however, is continuing to affirm its commitment to Bakken region, which continues to be a major source of growth for the company. Bakken’s largest operator, Continental Resources, also seems to be getting skittish as it announced Wednesday it will reduce spending in 2015 by $600 million and delay new rig starts while they wait out the current situation.

For more on 2015 budgets visit Reuters.com

North Dakota's Future - The Legislature Wants to Know

Bakken population will increase ~30%
Bakken population will increase ~30%

Throughout 2014, the energy market experienced unprecedented production along with wildly fluctuating prices in crude, leaving many to wonder about the long-range future of the Bakken Shale region.

The North Dakota legislature recently commissioned a massive study from KLJ, Inc. to analyze the economic forecast and possible trends for 19 counties through the year 2019. This unprecedented study concentrated on areas such as population growth, employment, housing.

The oil boom means more job opportunities in companies directly involved in oil and gas production as well as in industries that indirectly support this production. The study predicts that these jobs will spur a population increase in some North Dakota counties of more than 30%, a staggering number compared to the national average of 1.5%. This increase will add a strain on the already overtaxed housing market in the area, where a great deal of permanent housing has been depleted. In even the most modest scenario, the study anticipates that housing needs will increase by close to 30,000 units for the Minot, Dickenson and Williston regions. This may play a factor in the population projection as workers will have to make hard decisions about whether to bring family along as they move to the area for work.

Permanent population will be largely driven by the supply of permanent housing in the region,” the study says. “Due to a lack of housing, the region will continue to have a total (service) population that is substantially larger than the permanent population measured by the U.S. Census.

KLJ’s study was completed before oil prices began to drop sharply. Analysts will watch closely to see if falling prices affect the accuracy of this forecast.

 

Wood Mackenzie Forecasts $15 Billion on Bakken Drilling and Completions - 2014

Wood Mackenzie Bakken and Three Forks Map
Wood Mackenzie Bakken and Three Forks Map

According to the oil and gas research and consulting firm Wood Mackenzie, $15 billion will be spent on drilling and completion in the Bakken in 2014, second only to the Eagle Ford Shale. This year, oil production is expected to reach the 1 million b/d mark, and grow markedly beyond that figure over the next 5 - 6 years.

Read more: Bakken Production Sets Another Record - More Than 10,000 ND Wells Producing

We expect Bakken/Three Forks oil production to average 1.1 million barrels a day (b/d) in 2014, growing to 1.7 million b/d in 2020,” says Jonathan Garrett, upstream research analyst for Wood Mackenzie.

The firm's analysis shows the Bakken and Three Forks plays hold close to $118 billion in value. Despite infrastructure concerns, estimates indicate operators will recover more than 20 billion bbls of oil reserves throughout the life of the play.

Continental Remains Top Bakken Operator

In 2014, Continental Resources remains the top Bakken operator, with more than 1.2 million acres according to Wood Mackenzie. The value of the company's proved reserves in the Bakken are ~ $14.5 billion.

Read more: Continentals Proved Reserves in the Bakken Valued at $14.5 Billion

In 2013, Continental conducted multiple tests of the Three Forks . Wood Mackenzie indicates the company has the most advanced delineation program in the deeper Three Forks benches.

Wood Mackenzie Analysis of Bakken Three Forks Sub-Plays

Current figures show the highest initial production rates are on the Nesson Anticline sub-play, with 30-day IP rates of 1000 boe/d. Estimated ultimate recovery (EUR) rates are the highest in the Fort Berthold sub-play at nearly 700,000 barrels of oil equivalent (boe).

In the Southern fringe sub-play, wells targeting the Three Forks formation outperformed Bakken wells. Similar results for Three Forks wells were also found in the North Williston and Williams Perimeter sub-plays.

Wood Mackenzie also indicates in their report that infrastructure constraints will not impact the pace of the play's development. Currently, 73% of crude leaves the Williston Basin by rail.

Read more at woodmac.com