Bakken

Intro and history

• Spans western North Dakota, eastern Montana in US and parts of Saskatchewan and Manitoba in Canada
• Named after Montana farmland owner Henry Bakken
• Recoverable estimates continue to increase as more about the play is understood
• First production in 1951, after which, formation began to be mapped
• In mid-90s, Elm Coulee field discovered with significant oil accumulation in the middle Bakken member
• In mid-2000s, EOG drilled the Nelson Farms 1-24H well; demonstrated H-wells with fracture stimulation could produce high IPs
• In 2009, Continental Resources found that the Bakken and Three Forks formations were separate reservoirs and could be produced independently

Well economics

• EURs highly dependent on location: range 200 to >1,000mboe, average 450-650mboe
• Wells average USD9.5m to drill and complete, but can vary depending on length of lateral and material usage
• 10,000ft laterals and 40 fracture stages becoming common
• Implementation of pad drilling is reducing costs

Infrastructure

• c.65% oil shipped via rail; enables access to higher Gulf Coast sales prices (Light Louisiana Sweet “LLS”)
• 2012 production: >700mbopd vs. 2007 production: c.200mbopd
• Transporting to Gulf Coast has been economically more attractive than to the oil congested WTI hub at Cushing, Oklahoma
• Explosive growth meant existing inter and intra-state pipelines quickly reached capacity
• Within play, crude transported by truck
• Outside play, rail and pipeline used
• Rail (USD15-20/bbl) is more expensive than pipeline (USD8-9/bbl), but allows access to LLS pricing

Outlook

• Cost reduction
• Expand longevity of play by testing lower Three Forks
• Down spacing
• Secondary and tertiary recovery