ConocoPhillips adding 3 rigs to Bakken in November

By Luke Geiver | November 02, 2016

ConocoPhillips intends to add drilling rigs to the Bakken sooner than expected. Although the world’s large independent exploration and production company said earlier this year it planned to add rigs to its Bakken operations in 2017, the company unveiled plans this week to bring in three rigs before the end of the year. “We’ve already been able to secure drilling rigs and pressure pumping crews at attractive rates to maintain our low cost of supply, so we expect this incremental drilling work to start ramping in November,” said Al Hirshberg, executive vice president for drilling and projects.

The timing to add rigs and take advantage of today’s rates to get started a little earlier in 2016 is a shift, Hirshberg said. In addition to the three rigs in the Bakken, ConocoPhillips will also add two rigs into the Eagle Ford.

For a few of the rig contracts, ConocoPhillips has been able to lock in long-term contracts at fixed rates, but according to Hirshberg, his team wasn’t able to lock in long-term contracts at low prices with every rig provider. “If you wanted to lock for that period of time, they wanted a much higher price to start with,” he said. “So they were willing to lock, but it had to be at a much higher rate because of the perception that prices will be that much higher over that time frame.”

In the third quarter, ConocoPhillips’ Bakken production dipped by 3,000 barrels of oil per day for a total of 61,000 boepd. In the Permian, production rose by 8,000 bopd, for a total of 21,000. The production uptick came at a time when the company has no drilling rigs operating in the play. The timing of unconnected wells and gas-related infrastructure enabled the operator to increase production without drilling any new wells.

In 2017, the company believes it will be able to maintain or increase production without running as many drilling rigs as it had previously done two years ago. Hirshberg declined to comment on the reasons for the company’s optimism heading into 2017 until the team is able to share new information next week during its annual investor day. “We continue to get better recoveries and better production for longer from these wells,” he said. “So it’s all about well performance, and better IPs and slower decline rates that what we had put into our plans back when we set up the budget a year ago.”

Although ConocoPhillips intends to share its full 2017 plans next week, the company did say it was revamping its focus on the lower 48 unconventional assets it is currently operating.