Glancing at 2017 Bakken Activity Expectations
Operators plan increased activity
Enerplus plans a larger Bakken spend, including additional drilling rigs
Enerplus Corp. will increase its North Dakota oil production by 25 percent next year. Of the $400 million the exploration and production company intends to spend next year, 70 percent will be spent in North Dakota. By the end of January, Enerplus will add another drilling rig to its Fort Berthold operations. Enerplus has also secured a pressure pumping contract for the entire year. “Our efforts to improve the resiliency of our business and increase our margins have delivered meaningful results,” said Ian Dundas, president and CEO of Enerplus. “We remain on track to reinitiate profitable and sustainable growth in 2017.”
Marathon adds Bakken rig ahead of sequential growth plan
To achieve quarterly sequential growth in its North American resource plays during the latter half of 2017, Marathon will add a single drilling rig to its North Dakota operation at the end of 2016. “While our planning process is underway, our preliminary five-year view for resource play production supports a compound annual growth rate of 15 to 20 percent within cash flows at flat $55 WTI,” said Lee Tillman, president and CEO. According to Tillman, the macro environment for oil and gas production in 2016 is “transitional, volatile—but still with opportunities.”
Continental to focus on completing Bakken DUCs
The plan in early 2017 for Continental Resources is to work down drilled but uncompleted Bakken wells. Next year, the Oklahoma-based exploration and production company will complete at least 29 wells in the Bakken, in addition to 33 in the SCOOP play and another 32 in the STACK play of Oklahoma. The budget for 2017 should total roughly $1.1 billion. The push to complete DUC wells stems, in part, from the company’s new completion design, according to Harold Hamm, CEO. The designs rely on heavier sand loads and increased frack stages and have resulted in two wells that generated record 30-day initial rates for Continental-operated Bakken wells in 2016.
ExxonMobil sees new opportunities
ExxonMobil’s perspective on the oil and gas industry heading into 2017 is linked to the company’s view on the past. Despite an uncertain environment for both oil prices and global demand, CEO Rex Tillerson believes there will always be new opportunities for entities in the oil and gas business. “What most commentators on peak oil were unwilling to acknowledge was the record of this industry to develop and adopt new technologies that would change that future of diminishing supply,” he told a crowd at a London oil and money event. “Those of us who dismissed the peak oil theories weren’t any more prescient in our ability to forecast the future—we just held a different view shaped by our experience in this industry of innovators,” adding that, “for those of us who take a long term view—and for companies able to create value through the cycle—there will be new business opportunities.”
ConocoPhillips adding 3 drilling rigs ahead of schedule
ConocoPhillips has changed its plans for 2017 due to unforeseen production increases and recovery rates from its Bakken operations. Although the company intended to add drilling rigs to the Bakken in early 2017, the world’s largest independent exploration and production company has instead moved up its drilling rig ramp-up time line. In late 2016, ConocoPhillips added three rigs to the Bakken. “We continue to get better recoveries and better production for longer from these wells,” said Al Hirshberg, executive vice president for drilling and projects. “So it’s all about well performance, and better IPs and slower decline rates than what we had put into our plans back when we set up the budget a year ago.” The improved characteristics of its Bakken operations pushed the team to secure drilling rigs and pressure pumping crews earlier than its originally scheduled plans for 2017.
Hess optimistic but waiting to release 2017 plan
Despite production decreases in the Bakken during 2016, John Hess, CEO of Hess Corp., remains optimistic about the Bakken. Oil price improvements in late 2016 were enough to persuade the exploration and production firm to make initial preparations for increased drilling operations in the Williston Basin in 2017. Although Hess will not divulge the extent of its drilling rig plans for 2017 until well into Q1 of next year, the company did offer perspective on where the Bakken stands in relation to its overall plans. “Our Bakken team continues to offer excellent operating results and returns in the core of the play that are competitive with the Permian and Eagle Ford,” Hess said. “Our high-quality Bakken acreage, industry-leading drilling and completion costs, and advantaged infrastructure position set up our Bakken assets to be a major contributor to the company’s future production and cash flow growth.”
Drilling Rig Providers Experiencing Transformation
Nabors sees rig utilization increases
Nabors Industries, owner of the world’s largest land-based drilling fleet, is experiencing a transformation amongst its North American and international clients. “After a challenging downturn, we are experiencing significant utilization increases in our Lower 48 market,” said Anthony Petrello, president and CEO of Nabors. “Similarly, our international markets are showing signs of impending activity increases.” And, according to Petrello, regardless of how the recovery unfolds, Nabors expects its reduced cost structure, improved performance and various technology initiatives to significantly increase operating leverage across its global fleet.
Precision Drilling experiencing best customer sentiment in past two years
Precision Drilling Corp.’s President and CEO Kevin Neveu said North American customer sentiment has turned substantially compared to any other time in the past two years. “I believe that all of our customers are investigating adding rigs in 2017,” he said, adding, “this is the first time our customers are even talking about increasing activity and adding rigs, not how quickly they can lay rigs down.” Although investors and clients continue to ask about potential staffing issues, Neveu said finding drilling rig employees will not be and has not been difficult. In October, Precision added 1,000 rig workers and according to the company, keeps a list of roughly 1,200 possible hires in a database at all times. The majority of Precision rigs under contract today are the most advanced offered by the company. In many cases, clients are contracting for rigs that can drill super laterals—18,000 feet—even though they do not intend to drill to that lateral length. “Here we are right now just coming out of the trough of the worst cycle in a couple decades and we are talking about 18,000 foot horizontal sections, so even in this really tough environment, customers have a willingness to try things that could potentially increase capital efficiency.”