Oasis Petroleum's Bakken Production Doubles in 2012

Oasis Petroleum Bakken Map

Oasis Petroleum grew production from 10,724 boe/d in 2011 to 22,469 boe/d in 2012. That marks the second year in a row production has doubled for the company. The company actually exited the year with more than 27,000 boe/d of production, so reaching a range of 30,000-34,000 boe/d in 2013 shouldn't be a worry.

"We more than doubled production for the second straight year, growing 2012 production to 22,469 barrels of oil equivalent per day," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "The team made significant strides during 2012, laying a firm foundation for continued growth into 2013.......As we transition into full pad development during 2013, we believe we have the right team in place to plan and execute successfully, especially given the complexities associated with this type of activity."

Oasis completed 117 gross (93.3 net) wells during the year, while increasing proved reserves to 143.3 million boe. Approximately 90% of reserves are classified as oil and 49% are developed. Almost 80% of the company's Williston Basin acreage is now held by production and the company expects to conduct 60-70% of its 2013 drilling from pads.

In 2013, Oasis expects to increase production to 32,000 boe/d, while investing just over $1 billion. The company plans to complete 128 gross (92.5 net operated and 10.9 net non-operated) wells, while further testing the potential of the Three Forks-Sanish formation.

Watch for results from the first six well test drilled into a single formation from a single spacing unit.

Oasis also reported:

• Inventory of over 2,000 gross operated drilling locations
• Over 3,000 gross operated and non-operated drilling locations
• 14 year drilling inventory at current drilling levels
• Infrastructure expansion are largely complete
• 80% of oil moves by rail to fetch better prices.
• 1-year expected payback for the $24 million investment in Oasis Well Services

ConocoPhillips' Bakken Production Averages 24,000 in Q4 2012

ConocoPhillips Bakken Acreage Map

ConocoPhillps' Bakken production averaged 24,000 boe/d in the fourth quarter of 2012. Production is expected to grow almost 10% in 2013 and ultimately rise to approximately 40,000 boe/d over the next 4-5 years.

Conoco has a drilling inventory of over 1,200 gross locations and expects to capture more than 400 million barrels of resource potential from the play. The company drilled and participated in 187 gross operated and non-operated wells during 2012.

At year-end, Conoco had over 30 wells drilled and awaiting completing, while almost 15 wells were awaiting gathering infrastructure.

The company stated the following related to the Lower 48 and Latin America:

Fourth-quarter production was 475 thousand barrels of oil equivalent per day (MBOED), an increase of 31 MBOED compared to the same period of 2011. Significant growth continues from the ramp up of core shale plays in the Eagle Ford and Bakken. For the quarter, these shale plays delivered approximately 113 MBOED, a 71 percent increase compared to the fourth quarter of 2011. During the quarter, Eagle Ford averaged 89 MBOED, achieving a peak daily rate of more than 100 MBOED, while Bakken averaged 24 MBOED. Earlier this month, the company announced an agreement to sell its Cedar Creek Anticline properties for $1.05 billion, with closing expected by the end of the first quarter of 2013.

The company also sold Williston Basin assets during the quarter. Cedar Creek Antincline assets were sold for over $1 billion and the deal should close early in 2013. The assets had declining production and simply weren't competitive with the rest of Conoco's portfolio.

Will Continental's Reserves Cross 1 Billion Boe in 2013?

Continental Resources Bakken Production

Continental Resources Bakken assets account for 86% of the company's provded undeveloped (PUD) reserves. That's important because the company just reported proved reserves growth of 54%, an increase from 564 mmboe to 785 mmboe. Over 200 mmboe were added through exploration and development activity and over 80 mmboe were added through acquisitions.

Continental's (CLR) reserves have grown an average of 45% each year since 2009. If that trend continues, Continental will book more than 1.1 BILLION boe at the end of 2013!

"We continue to increase our concentration in high-value, high-growth, crude oil assets, especially in the Bakken," said Harold Hamm, Chairman and Chief Executive Officer. "We are growing the value of our Bakken assets through strategic acquisitions, exploration, and the expanded use of pad drilling, which should improve efficiencies and translate into even better rates of return."

Other items of note from the company's reserves press release include:

• 39% of CLR's proved reserves are proved, developed and producing (PDP)
• Crude oil accounts for 72% of reserves (up from 64% at year-end 2011)
• CLR operates 85% of its proved reserves
• Increased the company's Bakken position by 24% in 2012 (~900,000 acres to >1.1 million acres)
• Total of 1,763 gross (982 net) PUD locations (86% Bakken)
• First reserve bookings from the lower benches of the Bakken-Three Forks

If oil prices hold strong, it looks like 2013 will be another great year for Continental.

Bakken Natural Gas Flaring Should Continue to Fall

Bakken Natural Gas Flaring

Bakken natural gas flaring has risen over the past few years as drilling expanded across North Dakota and Eastern Montana. Flaring hit a peak at the end of 2008, declined through 2009, and has been increasing since that point. Currently, 30-35% of natural gas produced in North Dakota is flared.

Operators are focused on producing oil and have largely defaulted to waiting for infrastructure when it comes to natural gas. Oil accounts for approximately 90% of the production stream in a Bakken well and can be transported by truck or rail, in addition to pipelines. Natural gas, on the other hand, needs a pipe and in North Dakota it needs processing plants. Natural gas produced from the Bakken yields 8-13 gallons of NGLs per mcf (gpm).

Rich gas and a positive production outlook are why Oneok plans to add the Garden Creek III processing plant. When the plant is completed in 2015, the company will have almost 600 mmcfd of processing in the basin.

Bakken Production Down, but Not Out in November 2012

Bakken Well Pad

Bakken production slipped in November for the first time in almost two years. Production was down a little more than 2% when comparing an equal 30 days from October to November. The culprit was likely the snowiest day in over 100 years. Parts of ND had several inches of snowfall on November 10th.

It's hard to move crews and trucks when there is that much snow on the ground and a lot of Bakken crude is gathered by trucks before it makes its way into pipelines and rail systems.

I suspect we'll see a bounce in December and continued growth in 2013. Remember the harsh winter of 2008-2009. Production was a little more than 200,000 b/d in December, but harsh conditions limited operations and production fell almost 20,000 b/d during the winter. It took until May of 2009 to make back the losses. This dip won't be as serious, but if the snow keeps coming you shouldn't be surprised by seasonal dips.

While the Bakken rig count is down 20% from its peak, we don't believe that is enough to cause this decline. More than 200 wells were permitted in November and well spuds peaked in December. More than 290 wells were spud during December 2012. That's almost 40 more wells than the average for 2012. More well spuds with fewer rigs? Sounds like we're about to see just how efficient operators can be as pad drilling expands.