Oasis Petroleum, a pure Bakken player, indicated that its slickwater well cost has declined by more than half from $10.6 million in 2014 to $5.2 million in 3Q16, driven in part by a 40% reduction in spud-to-release time. Well-cost reductions and EUR increases have brought single-well finding and development costs down to $4-$5/boe in its core Wild Basin area, a 38% improvement since the beginning of 2016. Despite these efficiencies, Oasis has cut capital spending by 75% from 2014 and reduced its rig count from 10 in the 4Q14 to a current two, causing production to dip in early 2016. The company said it would double its rig count to four in 2017 if WTI oil prices reach $50/bbl and add a fifth rig in 2018. |
Whiting Petroleum, which produced 116,000 boe/d in the Bakken in the 3Q16 (83% of total output), increased its rigs in the play from two to four in 2H16. But the boost is not primarily based on improved economics. Whiting has decreased the number of days to drill a well in the Williston Basin 15 days, down from by 63% from 39 days in early 2012. At the same time, it says its 90-day IP rate for wells completed between August 2015 and July 2016 is 1,038 boe/d, the highest among its nine major peers. However, the company has added one rig each through two JV participation agreements it signed with two private companies, which will pay 65% of the costs to obtain a 50% working interest in a 44- and 30-well program, respectively. On its 100%-owned acreage, Whiting is building an inventory of 22 DUCs, which it will complete when oil reaches $50/bbl. |
Hess Corp. holds an impressive 577,000 acres in the Bakken, which generates about a third of its total production, or 106,000 boe/d in 3Q16. It has also achieved a 64% reduction in drilling days and a 65% reduction in drilling and completion costs over the last five years. But has still sharply reduced activity, going from eight rigs in 2015 to four rigs in 1H16 to two rigs in 4Q16. It has eliminated drilling in Williams and Dunn counties, planning only 22 wells in a sharply reduced core area. The company expects production to decline because of the reduced activity. It said it will increase activity if oil prices recover. |
Continental Resources, the first mover and largest producer in the play, states that its finding and development costs, another measure of improving economics, have declined 70% from $27.40/boe in 2012 to a targeted $8.13/boe in 2016. These F&D results incorporate a $9.1 million well cost in 2012 and a targeted $6 million well cost for 2016, a one-third reduction. At the same time, Continental’s EURs have more than doubled from 405,000 boe in 2012 to 900,000 boe targeted in 2016. But despite these improvements, the company has shifted the majority of its 2016 capital investment to the SCOOP and STACK plays, allocating just 35% to the Bakken despite it generating 62% of its production. It is running four rigs but has stopped completing wells, which will result in an inventory of 190 DUCs by YE16. The company said it would begin completing these wells in 2017 if oil prices reach $50/bbl but would not add rigs unless oil reached $55-$60/bbl. |
