Bakken Oil Production Up Slightly

August 25, 2015 Elizabeth Alford

Crude Plunges to Six Year Low — Bakken Production

North Dakota saw increased production in July after slipping for two months.

In April, the EIA predicted that production had peaked across the U.S. at 9.7 million barrels per day, the highest level since 1971. This proved to be true as production fell in May by 50,000 barrels per day and in June, Bakken shale month-over-month crude oil production dipped 1.3%.

This week, Bentek Energy reported a slight increase in oil production for North Dakota in July, saying that the Bakken formation follows closely behind the Eagle Ford Basin in terms of efficiency gains and internal rates of return. Drill times in the Bakken dropped from about 15 days per well in late 2014 to about 13 days per well during the second quarter of this year.

“Bentek analyst, Sami Yahya, explained “Substantial cost savings protocols alongside reduced drill times have kept internal rates of return in the Bakken shale formation among the best in the country. Current rates of return in the Bakken shale formation are around 15%, which is comparable to the 18% found in the Eagle Ford Basin.”

Crude oil dropped below $40 this week, adding strain to a difficult situation. Second quarter earnings for many companies showed signs that they are shifting their priorities from growth to survival.

Shell: Profits fell sharply, resulting in cuts to company’s capital investment and an elimination 6,500 jobs
Chevron: Its upstream businesses were particularly hard hit and they will lay off roughly 2% of its global workforce
ExxonMobil: Profits fell 52% and company announced it is taking steps to mitigate the harsh climate for oil and gas majors and capital expenditures were cut 16% last quarter
BP: Revenue and profits were all lower than expected and company announced it is positioning itself for a period of weaker prices

Can Bakken Break Even at $30?

August 19, 2015 Elizabeth Alford

Crude oil has fallen to a six year low in recent weeks, but even at the current price of around $43, analysts speculate the Bakken will remain strong.

Related: Oil Plunges to Six Year Low

West Texas Intermediate crude is now down more than 30% in just the last few months after a 50% rebound earlier this spring. Bloomberg reported this week that a lower profitability point from producers has allowed U.S. oil production to remain near a 40-year high.

“Bloomberg Analyst, William Foile said, “A single break-even price doesn’t actually exist. Rather, what the model indicates is that at a realized oil price of $29.42, half of wells will generate returns exceeding 10%. This price is considerably lower than the $70 breakeven estimated by industry watchers at the start of the oil price slump.”

In McKenzie County, North Dakota, one estimate is that the median breakeven price is a little more than $29 a barrel. Producers are verifying this low price point including EOG Resources Inc., who says it can make a 30 percent after-tax return on $50 oil and Whiting Petroleum Corp., the largest Bakken producer, said it’s preparing to be able to grow production at $40 to $50 prices.

The federal Energy Information Administration (EIA) announced that it had lowered its 2016 forecast price for U.S. benchmark oil (Brent) by $8 to $54 per barrel in 2016 and its 2015 forecast by $6 to $49 per barrel. The agency said it expects Brent to average about $59 per barrel in 2016 and about $54 per barrel in 2015.

Continental Resources: Excellent Q2

August 11, 2015 Elizabeth Alford

EOG Releases 2015 Q1 Report — Continental Resources: 2015 Q2

The second quarter of 2015 delivered “excellent results” for Continental Resources, especially in light of the prevailing low crude prices.

Continental reported a Q2 net income of $0.4 million and anet production of 20.6 million Boe, or 226,547 Boe per day, a sequential increase of 10% from first quarter 2015 and 35% higher than second quarter 2014. This included 149,897 barrels of oil per day (66% of production) and 459.9 million cubic feet (MMcf) of natural gas per day (34% of production).

“Jack H. Stark, COntinental’s President & Chief Operating Officer said, “Looking to the second half of 2015, we expect production will decline slightly in the third quarter and level off in the fourth quarter, reflecting a lower level spend that we have planned. Our year-end 2015 exit rate is projected to be 210,000 barrels to 215,000 barrels of oil per day and there may be some upside to this number as efficiencies continued to build.”

Bakken Q2 Highlights Continental’s Bakken drilling program is focused on core leasehold in Williams, McKenzie, Mountrail and Dunn counties, targeting an average estimated ultimate recovery (EUR) of approximately 800,000 Boe per well. Other highlights include:

Production averaged 140,988 Boe per day an increase of 4% compared with first quarter 2015 and an increase of 30% compared with second quarter 2014.
Completed 56 net (159 gross) Middle Bakken and Three Forks wells
Operated an average of 10 rigs and three completion crews in the Bakken
The company estimates it has at least 10 years of drilling inventory, with wells averaging 775,000 Boe per well in EUR, in the core of the Bakken.
95 gross operated Bakken wells drilled and waiting on first production, compared to 115 at the end of first quarter 2015

Whiting Plans to Drop Bakken Rigs

August 4, 2015 Elizabeth Alford

Whiting petroleum announced second quarter earnings this week that highlighted record production and plans to complete 40 to 50 wells in the Bakken.

Whiting posted a record quarter with total production at 170,000 BOEs per day. Company operations in the Bakken/Three Forks region represented 80% of total production at 136,000 BOEs a day.

“CEO James J. Volker said, “With the recent decline in commodity prices, we have elected to drop an additional three rigs in the second half of the year and run an eight-rig program. In 2016, at a $50 NYMEX oil price, our capital budget and cash flow should be equal, with a relatively flat production profile when compared to Q4 2015. Our budget is flexible. If oil prices are higher than anticipated later this year, we can ramp up and deliver even greater growth.”

Other Q2 Highlights

Adjusted Net Income of $9.2 Million or $0.04 per Diluted Share
Q2 2015 Discretionary Cash Flow Totals $380.7 Million, a 53% Increase Over Q1 2015
Enhanced Completions Deliver 40% to 50% Production Increases Across Multiple Williston Basin Areas
Redtail Niobrara Field Production of 17,065 BOE/d in Q2 2015, Up 31% Over Q1 2015
$185 Million Additional Q2 2015 Non-Core Property Sales; $300 Million of Total Asset Sales in 1H 2015
2015 Capital Budget Revised to $2.15 Billion for 6.5% Production Gro

Whiting Petroleum Corp.'s Stock Crashed 35% in July with analysts speculating that the company's profitability is very correlated to the price of crude.

New Regulations For Bakken Housing

July 28, 2015 Elizabeth Alford

Williams County commissioners adopted new regulations that will significantly limit the availability of temporary housing that serves in North Dakota’s oil fields.

Temporary housing has peppered the landscape since 2008, providing a crucial way to house the droves of workers who have migrated to the Bakken oil fields. When the influx of workers outstripped available housing, new crew camps, RV/trailer parks and modular homes quickly sprang up to meet the need.

Last week the commission voted to adopt the new guidelines that put restrictions on new or renewed applications for temporary housing. Commissioners stopped short of a full ban fearing that might increase apartment and permanent housing costs.

“Mike Sizemore, director of Development Services said “This was an effort to try and put something together to work. It’s hard to come up with a policy that was cut and dry because none of these are the same.”

Recently, the SEC has frozen the assets of North Dakota Developments, LLC (“NDD”) and its principles, claiming they defrauded over 980 investors from 66 different countries to build Bakken housing projects that were never finished.

Bakken Man Camps Center of Ponzi-Type Scheme