Continental Resources Plans to Triple Production & Reserves by 2017

October 9, 2012 R.T. Dukes

Continental Resources Bakken Development Map

Continental Resources announced plans to triple production from 36 million boe in 2012 to 108 mmboe in 2017. That's an increase from a little less than 100,000 boe/d to 300,000 boe/d. The company's proved reserves are expected to follow suit, increasing to near 1.8 billion barrels of oil equivalent in the same timeframe.

Continental expects 2013 production growth in the range of 30-35% based on a $3.4 billion capital budget accounting for the drilling of 738 gross (300 net) wells.

Production and reserves growth were just two points in the company's analyst day presentation. Highlights include:

Bakken is a true oil field, producing more than 85% oil
Continental accounts for 13% of Bakken production, 10% of the active rigs, and has 10% of potential acreage leased
1.5 Billion boe of potential reserves in the Bakken and Three Forks 1 - additional reserves in the TF 2, TF 3, and TF 4 zones
Accelerating exploration of lower Three Forks
At 160-acre spacing there is potential for almost 14,000 wells and 4.5 Billion boe of resource potential
Elm Coulee exploration has extended the field 8 miles further north
OOIP estimates increasing from 577 Billion boe to 903 Billion boe. Lower Three Forks resource adds considerable potential
Well performance continues to improve - Over 600,ooo boe/well expected today
Results support 320-acre spacing

Bakken Reservoir Study - Marathon Oil SPE Gulf Coast

October 4, 2012 R.T. Dukes

A Bakken reservoir study luncheon was held in Houston on September 27th as part of the SPE's study series. Marathon Oil's subsurface asset manager, Russ Buettner, was on hand to share his thoughts. A few notes from the meeting are included below:

Marathon's EURs have grown from 350,000 boe to 550,000 boe today
Spud to spud cycle times have fallen from 90 days to 28 days
30-stage fracks are the norm, but he's not convinced it's perfect in every situation
Open hole to 20-stage fracks improved 12-month recoveries by 40,000 b0e (41,000 boe vs. 91,000 boe). 30-stage fracks are showing they will be better
8-12 mmbbls on oil in place on a 1,280-acre unit. That grows to 40-60 mmbbls when considering other formations like the Three Forks, etc.
Vertical communication and not tighter well spacing is proving to be key in higher recoveries
Water costs are as high as $20/bbl to handle from procurement to recovery and disposal
A normal frac uses 25,000-50,000 bbls of water
.7 PSI/ft is the expected pressure in their area of the Bakken
Conservative about trying "Hi-Way Fracs" - They know more water is better and HiWay Fracs use less
Producing 43 degree API crude with a 600-1,200 GOR
Enhance oil recovery (EOR) characterization is important to the future of the play.

Marathon has 420,000 net acres targeting the Bakken and estimates its p50 resources at ~450 mmboe on 420-640 acre well spacing. The company currently has 7 rigs running, with plans to drop to 5. Two dedicated frac crews are also working for the company. Production from the area average 28,500 boe/d in July 2012

Tioga Pipeline Gets Regulatory Approval - 2013 In-Service

October 3, 2012 R.T. Dukes

The Tioga Pipeline received regulatory approval on October 1st. Alliance Pipeline has proposed the 12-inch, 79.3 mile lateral from Tioga, ND, to an intersection with the Alliance mainline near Sherwood, ND. From Sherwood, natural gas will be delivered to the Chicago market.

The pipeline has the potential to be expanded, but has been initially approved to transport a little more than 106 mmcfd. The pipeline is supported by a ten-year, 61.5 mmcfd agreement with Hess.

The new lateral will run through Williams, Mountrail, Burke, and Renville counties.

This is a good step toward marketing Bakken Shale gas production. Much of the gas produced to date has been flared due to limited pipeline capacity in the region.

Construction is expected to start immediately with the pipeline being completed in February of 2013. Additional facilities required before the pipeline is placed in service have a target completion of May 2013

Bakken Opportunities Abound - Sioux Falls Seminar

September 25, 2012 R.T. Dukes

Bakken Shale opportunities are plentiful. That was the theme of a seminar held in Sioux Falls earlier in the week. South Dakota businesses are looking to capitalize on the opportunity in the oilfield in ND. To date, most oilfield services are fulfilled by companies from oil producing states on the coasts.

Highlights from the meeting include

Bakken Shale development makes a $20 billion impact on the ND economy, alone
The ND gross state product was $38 and the SD gross state product was $40 billion
Over 9,600 mining workers live in Williams County, ND - The population was only 19,761 in 2000
Housing developers are attempting to judge if there will be a resell market in five years - They've been asking that question for about five years.....
Drilling times are 30% of what they once were and have fallen from 90 days to less than 30 days

Denbury - Exxon Deal Includes Bakken Acreage, CO2, Tertiary Flood Fields, Cash

September 20, 2012 R.T. Dukes

Denbury and Exxon have announced a deal that includes almost 200,000 acres in the Bakken trading hands. Exxon is paying and trading $1.6 billion dollars in cash, operating interests in the Webster Field in Texas, and interests in the Hartzog Draw Field in Wyoming for 196,000 acres in the North Dakota Bakken play.

Denbury is trading its Bakken assets that were largely acquired through the acquisition of Encore for cash and fields with CO2 tertiary flood potential. CO2 floods are the company's focus and a deal for the Bakken assets has been expected for some time. XTO Energy, an Exxon subsidiary, will operate the Bakken assets.

Denbury Acquiring CO2 from XOM

In a separate agreement, Denbury will either purchase CO2 from the LaBarge Field from XOM or will purchase an interest in reserves in the field. The $1.6 billion in cash from Exxon will be reduced by the amount of the CO2 agreement.

Tertiary Flood Opportunity Expands in WY & TX

The Hartzog Draw Field (370 mmbbls OOIP) is located near the Greencore Pipeline that runs from Conoco's Lost Cabin plant to the Bell Creek Field in Southern Montana. The company estimates the field has ultimate potential net recovery of 20-30 million barrels.

The Webster Field (550 mmbbls OOIP) is located just 8-miles from the company's Green Pipeline that delivers CO2 to the Hasting Field south of Houston. DNR estimates the Webster field has ultimate potential net recovery of 60-75 million barrels.