Summer Bakken DUC Possibilities

Operators in the Bakken are mixed on their commitment to focusing and investing into drilled but uncompleted wells (DUCs). With summer weather and a slow-to-stable oil price in their favor, many have talked about their plans.
By The Bakken Magazine Staff | July 22, 2016

Operators in the Bakken are mixed on their commitment to focusing and investing into drilled but uncompleted wells (DUCs). With summer weather and a slow-to-stable oil price in their favor, many have commented on their plans—or hopes—to begin completing DUCs.

Continental Resources has taken the clearest stance on Bakken DUCs. Earlier this year, the company indicated that when oil steadies (for an unspecified time period) at $50 per barrel, the company will add a Bakken frack crew to target its DUCs. Since that announcement, Continental has done just that and since June has been running a frack crew focused on DUCs in the Williston Basin. The company expects to exit the year with 195 DUCs.

EOG Resources believes that at $50/b, the some of the company’s Bakken wells can earn between 40 to 60 percent rates of return. This year, EOG is prioritizing drilling its premier locations and paying down debt before it focuses on DUC wells when oil is trading in the $50 to $60/b range. “We can respond quickly as supply and demand balance and oil prices firm,” said Bill Thomas, EOG CEO.

Although Halcon Resources is extremely focused on working down debt payment requirements, CEO Floyd Wilson said earlier this year the company has plans to spend up to $150 million for drilling and completion. Outside of the Bakken, the company will not be performing any other work. If the company does complete any DUCs, it will be where infrastructure is already in place.

WPX Energy is busy buying and selling assets in other basins. For the next few months, the exploration and production company will defer well completions in the Bakken. Currently, WPX has 15 DUCs but by year’s end that number could grow by 14 DUCs if oil prices do not improve.

Oasis Petroleum Corp. has its own internal frack crew. This summer the team will transition to its Wild Basin acreage. In Q1, the independent pure-play Bakken operator completed 15 wells. In May, the company had roughly 83 DUCs awaiting action.

Like Oasis, SM Energy can earn attractive returns in the $40 to $50/b range, but $50 to $60/b is much more appealing to ramping up operations again, according to SM Energy. “We want to increase our activity once we are in our cash flows and we are still outspending our cash flows,” said Jay Ottoson, president of SM Energy, earlier this year.

Whiting Petroleum expects to complete 44 wells this year. In March, the company announced it was halting completion activity and that by year’s end, it could have 30 DUCs. Earlier this year, Whiting agreed to accept $30.7 million from a private party group in return for the party’s participation in certain wells and working interests in 44 wells.

QEP Resources has roughly 17 wells yet to be completed after it completed 17 wells in the first quarter. The company recently purchased acreage in the Permian Basin for $600 million. Marathon Oil Corp. has spent $888 million for Oklahoma acres in the STACK play. The exploration and production company has not spoken about its Bakken DUC plans. But, the company has noted that this year’s production continues to benefit from enhanced completions it performed in late 2015.