Brigham lists economic woes in Bakken
Economic factors drove Brigham Exploration to release both of its operated Williston basin rigs in mid-February, and the company is marketing 7,715 nonoperated net acres in Parshall, Austin, and Sanish fields.
By OGJ editors
HOUSTON, Mar. 12 -- Economic factors drove Brigham Exploration Co., Austin, to release both of its operated Williston basin rigs in mid-February, and the company is marketing 7,715 nonoperated net acres in Parshall, Austin, and Sanish fields.
Brigham is offering up to 50% of its working interest in part of its remaining 301,058 net acres in the basin and will remain operator. It also plans to close by the end of March the $6 million sale of Mountrail County mineral interests.
In reporting yearend 2008 results, the company described how it brought online its first Bakken wells east of the Nesson anticline in Mountrail County, ND, in early 2008, steadily acquired acreage, and rapidly advanced drilling and completion techniques.
Brigham moved its two operated rigs west of the anticline to further test its 105,590 net acres in Williams and McKenzie counties. Its engineers developed a plan to be the first company in the basin to complete a long lateral with 19 swell packers and 20 frac stages.
That well, Olson 10-15-1H, initially flowed 1,200 b/d of oil and 1.4 MMcfd of gas and has the highest cumulative production for any company well in the basin for a similar production period.
The "unprecedented economic upheaval" took place at the same time drilling day rates, steel costs, and pressure pumping rates were elevated from the high mid-2008 levels.
Bud Brigham, chairman, president, and chief executive officer, said the drop in commodity prices dramatically affected the company's efforts in the Bakken-Three Forks play.
"In that play, we invested the largest portion of our capital, 62% of our drilling capex, drilling in a $100/bbl of oil cost environment, and then subsequently booked the associated reserves at $44.60/bbl. The drilling cost and oil price mismatch element was compounded by the fact that we could only book proved undeveloped reserves to a level associated with the drilling and completion technology used in the original, directly offsetting well.
"As a consequence," Brigham said, "proved undeveloped locations offsetting older technology wells were booked at lower reserve volumes, or not at all, relative to the volumes associated with our more recent wells completed with a greater number of fracture stimulation stages."
Brigham plans to be free cash-flow positive for the rest of 2009 and will reduce 2009 cash general and administrative costs 10-15%. It paid no employee bonuses in the last half of 2008.