Whiting Petroleum Corp. reported some of industry's top initial production rates from both the Bakken and Three Forks formations in the Willison basin where the company controls 774,000 net acres and has identified more than 7,500 potential gross drill sites.
"We control the sweet spots in the central, eastern, and southern Williston basin where typical wells have cumulative production in the first 90 days of more than 50,000 boe," James J. Volker, Whiting chairman, president, and chief executive officer, said during a first-quarter earnings call.
The top IP rates come from Tarpon field in McKenzie County, ND. The Flatland Federal 11-4TFH well flowed 7,800 boe/d during a 24-hr test of the Three Forks. The Flatland Federal 11-4HR well flowed 7,100 boe/d during a 24-hr test of the Middle Bakken.
Whiting has reduced costs and enhanced productivity using new completion designs such as slickwater completions, he said, adding the company recorded internal rates of return of more than 50% despite low first-quarter oil prices.
Volker noted Whiting's $4.5 billion borrowing base demonstrates "the confidence our banking group has in the value of our producing assets and our long-term growth prospects. Our robust liquidity position provides us with excellent financial flexibility."
He expects that capital expenditures will decline sharply for the rest of the year because of service company price reductions, operational efficiencies, and new technology applications.
"The Bakken/Three Forks wells are being completed for approximately $6.5 million per well, down from $8.5 million in 2014," Volker said, adding he anticipates Bakken costs could drop to $6 million per well because he foresees "one more round of significant service company cost concessions" particularly pumping service.
Costs are dropping
He anticipates the cost will drop to about $6 million per well in the Bakken and Three Forks, "especially once we get into more of a bit of a manufacturing mode on some of the new areas that have come to us as a result of the Kodiak acquisition."
He noted Whiting visited with executives of its fracturing crew providers "early" in the downturn.
"They responded quickly and decisively to our requests for lower costs. As a result, we continue to use them. We continue to keep their crews as busy as we can at this price level concentrating…in our high rate-of-return areas."
Volker said Whiting has a decade's worth of drilling given current economics. Whiting plans to operate nine rigs in the Williston basin throughout 2015 although that could change, he said.
"I would say that if we were to see $70/bbl oil, which is basically $10 above where we are today, you'd probably see us put a couple of rigs back," Volker said. "Some of the rigs that we've released we can get back and pick up quickly as a result of the way in which our contracts were written."
Whiting profits at $50/bbl
"We posted another quarter of record production at 167,000 boe/d," Volker said. "Our objective this year is to rig and run the company to prosper at $50/bbl oil. Clearly, the first quarter shows we have some of the most productive oil assets in the industry."
He expects to maintain 160,000-162,000 boe/d production throughout the year by spending about $375 million each quarter. The Bakken and Three Forks formations represented 80% of Whiting's total first-quarter production.
Volker was upbeat about early results from Dunn field in Dunn County, ND, Polar field in Williams County, and Koala field in McKenzie County where 12 new wells, 4 in each field, had an average IP of 2,800 boe/d and an average 30-day rate of 1,200 boe/d.
Whiting implemented slickwater completions in the Pronghorn sand at Pronghorn field in Stark County starting in July 2014.
"We've completed a total of 15 slickwater wells," Volker said. "On average, the slickwater wells had 90-day rates 51% greater than the 42 offsetting wells completed with crosslink fluid."
Mark Williams, Whiting senior vice-president, exploration and development, said the area around Sanish and Parshall reaching down into Dunn County is believed to have the highest OOIP in the Williston basin.
"If you look at how we developed that area originally, it was on three wells per spacing unit and Middle Bakken. Most of the basin now, frankly, is being developed on more like anywhere between four and eight, and I would say an average of six in the quarter, a sweet spot to the basin."
Whiting is studying its infill program, and Williams said he sees the potential to go as high as two additional infills in the Sanish spacing units in the Middle Bakken.
"Separately from that, we've remapped the Three Forks here lately," Williams said. "We're going very good results along the southwest side of Sanish, and so we have continued infill opportunities in the Three Forks there, especially along the western half of Sanish field and Three Forks."