In Northern Oil and Gas’s fourth quarter earnings call on March 1, Chairman and Chief Executive Officer Michael Reger updated investors on the company’s joint venture with Slawson Exploration in Upper Bakken shale development in Richland County, Mont. Thanks to innovations by Slawson, the NW Big Sky prospect, he said, is now Northern’s area of highest internal rate of return.
“This is not a huge deal for us, but it will be among many of the drivers of production and value in 2013, similar to the movement of the rigs into the core over in North Dakota,” Reger said. “So it’s an exciting play for us with Slawson.”
Thus far in that venture, he said operator Slawson has drilled approximately 20 wells in the area of mutual interest, or AMI, which consists of approximately 20,000 acres on the southwestern edge of the Elm Coulee field. Slawson has a 76 percent working interest in the AMI; Northern has the remaining 24 percent.
“The program is slightly different than our typical Bakken and Three Forks development drilling,” Reger said. “We’re targeting the upper shale on that southwest edge of the Elm Coulee field where the middle member is no longer present. We are drilling short laterals in 640-acre spacing units.”
The laterals, he said, are approximately 5,000 feet in length, and “we’re using 20 stages sliding sleeves with white sand.”
The wells are coming in at under $5 million each, according to Reger, and have estimated ultimate recoveries, or EURs, in the range of 350,000 to 400,000 barrels of oil.
Dual-lateral recently completedSlawson recently completed a dual-lateral well in the NW Big Sky AMI at a cost of approximately $8 million, amounting to approximately $4 million per lateral, Reger said.
Slawson, he said, will complete one lateral, flow it back, shut it in and isolate it, then complete the other lateral in the same way. Once both laterals are complete Slawson will then comingle the production.
Slawson plans to drill approximately four wells per spacing unit.
“So Slawson continues to innovate, not just from a drilling and completion standpoint but they’re also innovating from a cost efficiency standpoint.”
Northern’s North Dakota interestsMost of Northern’s Bakken petroleum system acreage is in North Dakota and is concentrated in the Peninsula area in southern Mountrail County and in northern McKenzie County.
Reger said Slawson and EOG have recently moved into the Peninsula area, where, he said, “Northern has generated a lot of production growth over the last few years.”
In northern McKenzie County the company holds some 23,000 acres, where it shares interests with Whiting, ConocoPhillips and Continental.
He said Northern has a 17.4 percent working interest in Whiting’s Tarpon wells that have produced some of the highest oil initial production, or IP, rates in the Williston Basin (see related side brief on page 1).
In addition, Northern has just over a 7 percent working interest in ConocoPhillips’ Corral Creek field in Dunn County, where, Reger said, Northern has some of its highest EURs in its Bakken interests (see related story on top of page 1).
Northern Oil and Gas is a non-operating Bakken interest holder with approximately 180,000 net mineral acres in North Dakota and Montana