Has the Bakken Peaked?

May 13, 2015 Elizabeth Alford

The Energy Information Administration ( EIA) is predicting that oil production in the Bakken will begin to decline in June.

Shale producers have been reducing rigs, cutting budgets and laying off workers for months to compensate for low crude prices. Over the past year, the Bakken rig count has dropped by more than half, but until now production has remained at record levels, with the EIA reported 1.2 million barrels a day in February.

Related: Record Production for Bakken

In the EIA’s monthly productivity report for May, the agency reports that oil and gas production has probably peaked and they expect a 31,000 Mbbl/d drop in oil and 30,000 MMcf/d f drop for natural gas throughout June.

The Bakken had 80 oil rigs running last week zero gas rigs. WTI oil prices continued to climb trading at $59.39/bbl on Friday afternoon, a $.63 increase from the previous week and gas futures trading increased to $2.88/mmbtu.

Newfield Bakken Production Increases 40%, Exceeds 2013 Estimates

March 6, 2014 Kirk Eggleston

Newfield Williston Basin Production Chart

Newfield's Bakken net production in 2013 was ~4.4 MMBOE or ~12,000 boe/d. That's a 40% increase over 2012 production. At the beginning of 2013, the company had only estimated a production growth rate of 15% year-over-year in the play.

In 2014, Newfield will continue its current 4 rig program, and expects to achieve 35% to 40% year-over-year production growth. Capital expenditures are set at $330 million for 2014.

“In a company statement, CEO Lee Boothby said, “in 2013, we twice raised production guidance and once again, exceeded our guidance ranges in the fourth quarter, both domestically and internationally. The 2013 production from continuing operations was 40.1 million barrels of oil equivalent, exceeding our beginning-of-year estimates. The outperformance was primarily related to the Williston and Anadarko basins. ”

Newfield Bakken and Three Forks Activity in 2013

In the Bakken and Three Forks region, Newfield completed 42 wells and lowered average well costs to $8.4 million. The company drilled eight wells in the Three Forks. Seven test wells targeted the first bench and one was drilled in the second bench. The company indicates that it will continue testing these prospective horizons beneath the Middle Bakken.

In the Middle Bakken, 34 wells had an average gross initial production (IP) of 2,233. In the Three Forks, eight wells had an average gross initial production (IP) of 2,091.

Newfield Highlights

Newfield's Bakken net production increased 40% in 2013 to ~12,050 boe/d
Newfield completed 42 wells and lowered average well costs to $8.4 million
Newfield Three Forks drilling tested seven wells in the first bench and one well in the second bench
In the Middle Bakken, 34 wells had an average gross initial production (IP) of 2,233 in 2013
In the Three Forks, eight wells had an average gross initial production (IP) of 2,091
In 2014, Newfield expects to achieve 35% to 40% year-over-year production growth.

Nearly Half of Halcon 2014 Budget Targeting Bakken - ~$475 Million

March 3, 2014 Kirk Eggleston

Halcon is focused on drilling wells in the Fort Berthold area in 2014 and anticipates spending approximately 49% of its total drilling and completions budget in the Williston Basin. Based on previous budget estimates, that's about ~475 million.

The company's plan for 2014 is to focus on its "de-risked" acreage, which includes the Fort Berthold area.

“Floyd Wilson, CEO, said in a company statement, “our focus in 2014 is on drilling wells in the sweet spots of our de-risked acreage in the Williston Basin and El Halcón. We will also begin drilling wells on our newly acquired acreage located in what we believe to be the core of theTuscaloosa Marine Shale. We are primed for growth and have a deep drilling inventory. We are committed to maintaining capital discipline and dedicated to improving capital efficiency.”

Halcon's 2014 Bakken Guidance

In the first-quarter of 2014, Halcon anticipates weather-related production interruptions in the Bakken.

For the full-year, the Company plans to operate an average of 4 rigs and spud 40 to 50 gross operated wells. Halcon also anticipates participating in 200-225 gross non-operated wells, with an average working interest of 3%.

Halcon's Fourth-Quarter Bakken Production

In the fourth-quarter of 2013, Halcon Resource's Bakken production increased by 15% over the third-quarter to 24,125 boe/d, despite adverse weather conditions. Company estimates accounted for weather-related impacts of ~1,040 boe/d.

Halcon's Fourth-Quarter Bakken Activity

Halcon operated an average of five rigs in the Bakken, and participated in 50 non-operated wells, with an average working interest of 3% in the fourth-quarter of 2013.

In the Fort Berthold area, the company spudded eight wells and broutght 10 wells online. For some of Halcon's Fort Berthold area wells, strong results came from the application of the "slickwater frac" technique. The company plans on continuing this practice in 2014.

“At Winter NAPE, Wilson, was quoted, “[the company’s] most recent wells in the Bakken are the best ever.”

Halcón also spudded four wells and put two wells online in Williams County in the fourth-quarter.

QEP Bakken Production Increases in Q4 2013, Despite Adverse Weather Conditions

February 26, 2014 Kirk Eggleston

QEP Resources Bakken Three Forks Acreage Map

QEP Resources grew its Bakken and Three Forks production in the fourth-quarter, despite adverse weather conditions, achieving net average production of 27,700 boe/d (96% liquids). That's a 30% increase over third-quarter 2013 production, which was 21,300 boe/d.

The company brought 26 operated wells to sales in the fourth-quarter, with good initial production rates. 17 of those wells were in the South Antelope, and their average 24-hour initial production (IP) rate was ~3,025 boe/d. The other nine wells were in the Fort Berthold Reservation, with an average 24-hour initial production (IP) rate of 1,850 boe/d.

In 2013, QEP also saw the value of its South Antelope property rise to $2.8 billion from a $1.14 billion investment. Production from this asset grew throughout the year.

“QEP Energy’s capital investment program resulted in a 62% increase in crude oil production over last year driven by a 133% increase in production from the Williston Basin. Crude oil volumes represented 20% of QEP Energy’s production in 2013, a substantial increase from 12% in 2012 and 8% in 2011,” said Chuck Stanley, CEO, QEP Resources.”

QEP Outside Operated Bakken and Three Forks Wells

QEP Resources also participated in 22 outside-operated Bakken or Three Forks wells that were completed and turned to sales during the fourth-quarter. These wells had an average working interest of 7%.

At the end of 2013, QEP had interests in 31 outside-operated wells in the process of being drilled, with an average working interest of 10%. Five outside-operated wells were waiting to be completed with an average working interest of 5%.

QEP Bakken Rigs Running at End of Year

At the end of the fourth-quarter, eight rigs were operating in the Williston Basin. Six of those rigs were located in the South Antelope, and two were in the Fort Berthold Reservation. QEP also had eight operated wells waiting on completion, with an average working interest of 94%.

Enerplus Capital Budget in Bakken - $304 Million - 2014

February 24, 2014 Kirk Eggleston

Approximately 40% of Enerplus's $760 million capital budget for 2014 will be dedicated to the Bakken and Three Forks. That's about $304 million.

The company expects to grow production by more than 30% in North Dakota in 2014.

Enerplus 2013 Capital Expenditures in Bakken

~$308 million of capital spending was in North Dakota, with the majority invested at Fort Berthold. Approximately 70% of company spending in 2013 was directed to crude oil assets.

“VP of Operations Raymond Daniels said, “45% of our capital spending was in North Dakota where we are targeting both the Bakken and Three Forks. Our focus was on driving improvements in capital efficiencies through a reduction in drilling costs and improvement in productivity.”

Capital spending came in slightly lower in 2013 than the original forecast of $685 million, totaling $681 million.

Enerplus Bakken Reserves

25 mmboe of 2P reserves were added in 2013 from North Dakota properties. The cost of this addition was $19.74 per boe including future development capital.

Total 2P reserves increased by more than 17% year-over-year, driven by additions in the Marcellus and Bakken/Three Forks properties.

Enerplus Bakken Initial Production Rates and Total Production

“According to VP of Operations, Raymond Daniels, “our two most recent Bakken wells have been completed using about a thousand tonnes of sand per lateral foot with roughly 40 frac stages. In their first 30 days these wells have produced a record of roughly 4,000 to 8,000 barrels of oil each.”

Enerplus total production grew in the fourth-quarter to 94,167 boe/d, which is up 7% from the third-quarter. Production for 2013 was 89,800 boe/d. That's up 9%.

Enerplus Highlights

40% of Enerplus's $760 million capital budget for 2014 will be dedicated to the Bakken and Three Forks - ~340 million
Enerplus expects to grow production by more than 30% in North Dakota in 2014
~$308 million of capital spending was in North Dakota in 2013
25 mmboe of 2P reserves were added in 2013 from North Dakota properties
Enerplus total production grew in the fourth-quarter to 94,167 boe/d
Production for 2013 was 89,800 boe/d. That's up 9%