QEP Resources is evaluating increased well densities on its Williston Basin acreage.
The company plans to start drilling an infield pilot program in the near future to better understand the geology in its own leases.
“We’re monitoring the results from several pilot programs that are being conducted by nearby operators, and we have our own pilot program under way to evaluate applicability of increased density development on our own acreage,” said Chuck Stanley, QEP Resources chairman, president and CEO in a Feb. 26 conference call.
“The geology, even though at 40,000 feet it looks layer cake, there’s quite a bit of variability in both the middle Bakken and in the Three Forks; and while pilot programs run by other operators will give us a hint as to the applicability on our acreage, the only way we’ll know for sure will be through piloting on our own acreage,” Stanley said earlier in a Nov. 6 conference call.
Good buy
For good news, QEP need only turn to its South Antelope acreage in far eastern McKenzie County, which the Denver-based independent acquired in 2012.
QEP set a new annual production record producing 10.2 million barrels of oil, a 62 percent increase over 2013, due primarily to “successful development” of the 3,900 net South Antelope acres.
QEP reported total production for 2013 at 47.2 billion cubic feet of gas equivalent in the Williston Basin, which represents an increase of 133 percent over 2012 production. In January, QEP ranked 11th among North Dakota’s oil producers averaging 32,861 barrels of oil per day for operated, non-confidential wells.
“In spite of initial delays due to downstream and weather related issues, our current South Antelope oil production has grown to levels that are commensurate with the company’s expectations at the time of the acquisition,” Stanley said.
QEP logged a 30 percent increase in its fourth quarter Williston Basin production despite severe winter weather conditions that dropped North Dakota’s average daily oil production by more than 5 percent in December.
“Overall we remain very pleased with the technical results from the Williston Basin, and with the future potential of the play,” Stanley said.
Value almost doubles
QEP scooped up the South Antelope acreage in 2012 for $1.4 billion and saw the value of that asset almost double, Stanley said. “Including probable reserves and associated development costs, the year-end 2013 pre-tax PV-10 value of South Antelope was over $2.8 billion, nearly double the net capital investment today,” he said.
QEP is striving to lower well costs, with the latest group of QEP-operated wells coming in at approximately $10 million for gross drilled, completed and equipped costs.
“As we drive efficiencies in our drilling and completion operations through pad drilling, we’ve also made significant progress on completed well costs during the year, with a reduction amount in actual gross completed well costs of more than a million dollars from our initial assumptions at the time of the acquisition,” Stanley said, adding that “our wells costs today are approximately one-and-a-half million less than nearby, third party operated wells in which we have an interest.”
Frackingstein
QEP is experimenting with hydraulic fracturing methods and testing various proppants and proppant loads in its South Antelope wells, although thus far the company hasn’t seen any noticeable results.
Overall, QEP has increased the amount of proppant it uses in its wells, Stanley said.
“Generally, we’ve seen a pretty strong correlation between increased proppant density per stage and initial well performance,” Stanley said. “And if initial well performance indicates ultimate recovery, then we should see better recoveries over the life of the well.”
Stanley said QEP has “a good family of wells in the Three Forks” because the previous operator designed completions with cemented liner and plug-and-perf fracks in its Three Forks wells that can be used to compare proppant performance.
In contrast, QEP is using a sliding sleeve frack technique, averaging approximately 30 frack stages per well on its Three Forks wells. Those wells are near the Three Forks wells the former operator drilled and the fracks were of similar size. However, Stanley said thus far QEP has not seen any “material difference” in results from Three Forks wells fracked by the previous operator and QEP fracked wells.
The former operator used 100 percent ceramic proppant, while QEP has shifted to hybrid proppant consisting of primarily sand but with a “tail-in” of either ceramic proppant or resin-coated sand. In addition, QEP has increased proppant loads from between 2 million and 2.5 million pounds to as high as 5 million pounds to reveal the “point of diminishing returns.” But here too, QEP has not seen any notable performance difference.
“It’s been a great natural laboratory to compare early well performance and longer-term well performance, and frankly, we struggle to see any significant difference,” Stanley said. “Now, that doesn’t mean that in certain parts of the basin, where rock quality may not be as good, where geology is different, that there may be a material difference between sliding sleeve and plug-and-perf cemented liner completions. We just don’t see it in the area where we’re operating.”
Eight bits
In Q4 2013, QEP had eight drill rigs operating in the basin: six in the South Antelope area and two in Fort Berthold. In the third quarter QEP had five rigs in South Antelope and three in Fort Berthold.
QEP plans to keep its rigs busy with new spacing units, having filed applications seeking creation of two overlapping 2,560-acre spacing units with the North Dakota Industrial Commission for its hearings March 26 and 27.
In the Spotted Horn field of far eastern McKenzie County, QEP sought one overlapping 2,560-acre unit to drill up to 16 horizontal wells. In the neighboring Grail and/or Bear Den fields, QEP requested three separate overlapping 2,560s to drill one or more horizontal Bakken pool wells on each.
QEP completed 26 operated wells in the fourth quarter, up from 21 completions in the third quarter and nearly equal to the 27 seven wells completed in the first two quarters.
Of 26 wells completed in the fourth quarter, 17 in the South Antelope area had an average 24-hour initial production of 3,025 barrels of oil equivalent, while nine completed wells in the Fort Berthold clocked an average IP of 1,850 boe.
At the Fort Berthold Indian Reservation core area, QEP completed nine wells in the fourth quarter.
QEP’s overall fourth quarter Bakken production averaged approximately 27,700 barrels of oil equivalent per day, which was 96 percent liquids, a 30 percent jump over third quarter and 51 percent above production in fourth quarter 2012.
For 2014, Stanley said QEP has allocated 55 percent of its $1.65 billion to $1.75 billion capital budget to the Williston Basin.
