After announcing its acquisition of Kodiak Oil & Gas on July 13, Whiting Petroleum is eager to reap the benefits of the two companies’ offset acreage positions. With a joint 18 operated active rigs in the Williston Basin, the combined companies’ leading oil-weighted platform is expected to drive greater production and operational synergies. On a pro forma basis, Whiting’s drilling location count increases 158 percent with the acquisition.
“Kodiak has done a terrific job of establishing a tier-1 acreage footprint in the core of the Williston Basin, which, like Whiting’s acreage, sees some of the best economics anywhere in the play or, for that matter, anywhere in the U.S.,” said Whiting President and Chief Executive Officer Jim Volker. “When looking at both of our positions together, you can see just how complementary the two really are.”
Whiting becomes the top Bakken/Three Forks producer with the acquisition and in its 2014 second quarter conference call with analysts, Volker said the company has raised its production guidance for 2014 to a midpoint of 20 percent over 2013, up from a midpoint of 18 percent. Whiting’s pre-acquisition assets total nearly 675,000 net acres in the Williston Basin and production from the Bakken/Three Forks in the second quarter reached a record 80,195 barrels of oil equivalent per day, boepd, representing a 33 percent increase over the second quarter of 2013 and 73 percent of Whiting’s total second quarter production.
“Our double-play in the Bakken and Niobrara continued in the second quarter with record production and cash flow,” Volker said. “We believe we have plenty of running room in the Williston Basin, particularly in light of our new completion techniques and downspacing program.”
The proximity of Whiting and Kodiak’s positions in the central and eastern Williston Basin creates an advantage, Volker said, as the company uses its “cutting-edge geoscience” at its in-house core lab in conjunction with its “state-of-the-art completion techniques” (see slide).
Maximizing the number of entry points
Whiting has shifted almost exclusively to using a cemented liner plug-and-perf completion technique, augmenting it with coiled tubing fracks. The two allow maximizing the number of entry points, and the company hopes additional slickwater fracks it is currently testing will result in an incremental gain as well.
“Our new completion methods are generating strong results,” Volker said. “Based on our midyear reserve estimates, the EURs (estimated ultimate recoveries) associated with our well completions using cemented liners and plug-and-perf technology were approximately 23 percent higher than wells completed with uncemented liners and sliding sleeve technology.”
Other notable achievements from the quarter include a well completion in the second bench of the Three Forks. In its Tarpon area in the Twin Valley field of McKenzie County, a Skaar Federal well produced more than 6,000 boepd flowing on June 7. That well was completed in 30 stages with a cemented liner and plug-and-perf technology. An offsetting well in the upper Three Forks produced more than 6,600 boepd, and the company said there does not appear to be any communication between the two wells. Whiting has now recorded the highest initial production rate for both the first and second benches of the Three Forks, based on data from the North Dakota Department of Mineral Resources.
In May, Whiting also completed a well in the second bench of the Three Forks on the west side of Sanish field of Mountrail County that produced 1,124 boepd from a 29-stage frack. A slickwater fracked well in Whiting’s Missouri Breaks area in McKenzie County achieved a 44 percent greater 120-day average rate than the offsetting well in which an uncemented liner and sliding sleeve were used. In the Hidden Bench area, the company realized a 50 percent increase on 11 wells using cemented liners and plug-and-perf technology over its prior sliding sleeve technology. The company expects the cost of slickwater fracks to be comparable to plug-and-perf completions.
“Some operators in the basin are using 100 percent ceramic in their slickwater jobs with good success and some are using 100 percent white sand with very good success. Our game plan would be to use the same proppant that we’re using on our cemented liners,” said Senior Vice President of Operations Rick Ross. “I think we can do them for … the same costs as we’re currently doing on our state-of-the-art completion with cemented liners. Our costs in the Sanish area were just right around $7 million and the deeper part of the basin would be about $8.5 million.”
On a well completed in June in Sanish field, Whiting implemented a coiled tubing frack that consisted of a record 93-stage process. A key benefit to these types of fracks is the efficiency of cycle times in high well density areas, the company said.
“Without the need to drill out the plugs, we have been able to accelerate production by five to seven days per pad where we have tested it in the Williston Basin,” the company said in its second quarter results press release.
Testing the third bench
Whiting is drilling one Three Forks well for every Bakken well throughout the central part of the basin in its Cassandra, Tarpon and Hidden Bench areas and extending west to the Montana border. While the upper Three Forks drilling has brought “good production,” Volker said more exploration is needed to better define the lower benches.
“We … think that the second bench extends east to the Nesson. And we’ve actually tested the second bench over in Sanish as well successfully, as have other operators in that area. So I’d say that the periphery of the second bench is yet to be defined. And certainly, that’s the case with the third bench as well,” Volker said.
While the company is actively drilling the upper bench of the Three Forks, Whiting has conducted its first test of the third bench in its Tarpon area.
“We think that the third bench has the potential to work through our Tarpon area and beyond, but we’ll take it incrementally as we step out from Tarpon,” said Senior Vice President of Exploration and Development Mark Williams.
Activity in Colorado and Texas
In the Niobrara play in Colorado, the company spudded a well to test a 32-well spacing pattern. It also experienced its strongest pad to date in the area on its first eight-well pad which is producing 4,700 boepd, averaging 588 boepd per well. Another four are expected to be drilled on the pad by the end of January, Williams said. In the Niobrara, Whiting has explored the A and B benches and Volker said the reserves in C look to have good potential. A neighboring operator to the south has tested it successfully and Whiting will look to drill that bench within its Horsetail wells in Weld County.
“What we’re trying to do right now is decide whether or not this is going to be a full add to our current development pattern or an augmentation, essentially, to the A and B development pattern, “Volker said. “And so this will be our first chance to really determine that, which, if it is successful, it’s going to be huge additional number of wells for us and obviously increase the number of reserves as well.”
In Texas, the company has a new wildcat play in progress with results to come by the end of 2014. Volker said the success of Whiting in the Permian Basin will be based upon the company’s geoscience team and the latest technology.
“We’re looking for new oil resource plays in areas where acreage positions are available at reasonable prices. I’m talking about $100 per acre rather than thousands and thousands of dollars per acre,” Volker said. “I’m talking about generally better net revenue interest that would be available when compared to the so-called hot areas of the basin. So that’s the way we like to play Texas and it’s worked well for us in the past, and I think it’s going to continue to work well for us for a long period of time.”
Whiting reported a record 10 million boe for total production in the second quarter of which 88 percent was crude oil and natural gas liquids. The production total exceeded guidance with an average production rate of more than 109,000 boepd, rising 9.7 percent over the first quarter.
“We believe Whiting continues to be primed for growth and increasing production,” Volker said. “We’re a company on the move.”
