EOG Resources' Bakken Core Acreage Could See 160-Acre Development

EOG Resources Bakken Shale Map

EOG Resources reported improvement in wells after implementing new completion techniques in 2012. In the company's core acreage centered around the Parshall Field, 320-acre spacing success has been confirmed and the company is encouraged by early results at 160-acre spacing. Recent wells are indicating cumulative production over previously drilled wells has improved by a range of 30-70%.

In the North Dakota Bakken/Three Forks, positive results from downspaced drilling tests, together with significant modifications in drilling and completion techniques, further boosted EOG's crude oil production growth.

The first wells tested at 160-acre spacing in Parshall, the Wayzetta 022-1509H and Wayzetta 149-1509H, came online at max rates of 1,185 and 1,265 b/d, respectively.

Notable wells outside of Parshall include:

• The Hawkeye 01-2501H and 102-2501H, Three Forks wells in McKenzie County, were turned to sales at 2,445 and 2,945 b/d, respectively.
• The Garden Coulee 001-1410H, in Williams County, had an IP rate of 1,415 b/d with 1,260 mcfd of rich natural gas

In 2013, EOG expects to complete 46 net wells in the Parshall and Antelope areas. That's up from 28 net in 2012. If the company proves the potential of 160-acre spacing, an accelerated development program will ensue in 2014. Oil price realizations are also improving:

During the fourth quarter and currently our Eagle Ford crude is priced off an LLS index and essentially all of our Bakken and part of our Wolfcamp crude is being railed to our St. James terminal.

Notes From Winter NAPE 2013

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We spent Winter NAPE (February 6-8 in Houston) listening to the pros discussing their views on energy policy, fundamentals, and investments. The event is centered on North American, but international influence seems to grow each year. A few photos are included below the post. Highlights from the business conference include:

• At one point in 2012, there were 12-13 federal agencies overseeing some point of the E&P business
• Alaska is working to create incentives to fuel future exploration. (Only 500 exploration wells have ever been drilled in Alaska. More than 250,000 have been drilled in Texas)
• Alaska is working to ensure the federal government can't block development the state is in favor of
• Most of those that oppose "Fracking" oppose oil & gas development in general
• The industry moving to address all stakeholders. (Not just mineral owners and shareholders)
• Asia and the US are set to lead global growth in 2013
• Payroll tax hike will reduce growth, but we should still grow
• Chemical facilities are expanding for the first time in 50 years ($95 billion in investment planned)
• Problems in the US are artificial (man made)
• Brent is expected to trend into the low $80s, with WTI differentials shrinking
• A Whiting executive believes the Bakken-Three Forks could hold 25-50 billion barrels of recoverable oil
• Anadarko is 500 wells into the Eagle Ford and still sees upside (targeting a 4.2 day drilling time)
• Schlumberger shared a study showing 30% of perf clusters don't contribute to production

In previous years, the floor of NAPE has had a general theme. One year it would be the Barnett, the next the Haynesville, then the Bakken. This year there wasn't a single area that seemed to dominate the booths. There were small deals across almost all of the shale plays. I saw several Bakken and Eagle Ford deals, as well as conventional projects around the country. From speaking with the attendees, it sounds like conventional drilling has become unconventional in today's market. The largest operators are investing in big, repeatable shale plays.

The North American Prospects Expo (NAPE) is one of the largest oil and gas gatherings in the wold. E&P companies from across the world come to Houston to showcase the next big oil deal.

 

Marathon's Bakken Production Grows Almost 50% in 2012

Marathon Oil Bakken Shale Map

Marathon Oil grew Bakken production from 24,000 boe/d in December 2011 to 35,000 boe/d in the fourth quarter of 2012. The company's production stream is approximately 90% oil, 5% natural gas, and 5% NGLs.

While 2012 was an impressive year, production is down slightly in January (33,000 boe/d) due to weather related issues and the company's completion schedule. I suspect the company will revert back to its expected growth trajectory in the coming weeks.

The company reached total depth (TD) on 18 gross wells and brought 18 gross wells to production during the fourth quarter. Drilling time also continued to improve as the company averaged a spud to spud time of just 27 days.

In 2013, Marathon plans to drill 65-70 net wells. In total, the company expects to participate in 190-220 gross wells, with 60-70 of those operated.

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.