The Williston Basin in North Dakota and Montana continues as a core element of resource plays that give Calgary-based Enerplus the confidence its modest 5 percent annual targeted growth in production is well within reach. The independent now in its 27th year of business is aiming for 18,000 barrels of oil equivalent per day from the basin by year’s end, up 4,000 boe per day from a year earlier, with Fort Berthold listed as a “world class asset.”
Chief Executive Officer Ian Dundas told a Peters & Co. conference Sept. 10 that the second quarter year-over-year increase was ahead of “where we thought we’d be,” and allows Enerplus to safely stick with its overall 2013 guidance of an average 85,000 boe per day.
For the latest quarter, average output of 90,000 boe per day was up 10 percent from a year earlier, including 38,000 bpd of crude, 3,500 bpd of natural gas liquids and 290 million cubic feet per day of natural gas, with U.S. operations contributing 20,200 bpd of crude and gas liquids and 104 million cubic feet per day of gas.
However, Dundas cautioned that he expects the “pace of growth to moderate somewhat” over the balance of 2013.
The company is still counting on capital expenditures this year of C$685 million, of which C$550 million is earmarked to maintain production, with the spending averaging out at C$30,000-$35,000 per boe of production. Half of the budget is allocated to the Williston Basin.
Dundas said that since deciding to restructure its business Enerplus has “made real progress in changing the future outlook for the company” by posting solid gains in the economics of its drilling and completion programs.
Since 2005, Bakken operations have seen drilling times for Bakken wells drop to 16 days from 30 days, but he doubted there is any room left “for step changes on the drilling side.”
Dundas told an energy conference in July that recovery factors are where the industry should expect to see continued improvement and innovation within resource plays.
“There is lots of work going on there and it is very early in terms of where we can take these things. If we can get to a 20 to 30 percent recovery factor on some of the big resources it’s a technological advancement with the prize and economic implications being pretty significant,” he said.
Dundas also told a company investor day in June that Enerplus is counting on significant growth in the Bakken and Marcellus, while eying the “next wave of organic growth” in the Alberta Deep Basin from its 177,000 net acres of high working interests in the Montney, Wilrich and Duvernay formations.
He said the Duvernay and Montney plays have “clearly a large resource potential,” but are still in the appraisal phase.
At the Barclays conference, he said Fort Berthold accounts for 133 of 600 drilling locations in the company’s proved-plus-probable and contingent resource inventory, while the Bakken is estimated to hold 150 of 1,200 locations in unrisked inventory.
The Williston Basin is forecast to contribute C$100 million of cash flow, net of capital, in 2013 and is estimated to reach almost 30,000 boe per day by 2018 and nearly C$600 million of cash flow.
To date, the company’s presentation reported that 92 net locations have been drilled in the Fort Berthold play — 74 in the Bakken and 18 in Three Forks, with an average netback of C$50-$55 per barrel. Net land holdings, with an 88 percent working interest, are 70,000 acres, with proved plus probably reserves at 86/1 million boe at the end of 2012, up 53 percent from a year earlier.
