XTO Energy will maintain a steady pace in its Bakken exploration and production program, thanks to operating efficiencies, increased well production, proprietary technology and the financial strength and long-term outlook of its parent company.
In the Bakken over the last four years, XTO has seen well drilling time decline by more than 30 percent, parent company ExxonMobil said in a March 2015 analyst presentation.
Completion costs have fallen dramatically, coupled with a dramatic increase in initial well production.
In 2011, XTO was spending approximately $250,000 per fracture stage on its completions. In 2014, the company spent approximately $150,000 per stage, which has translated into lower well completion costs even as the number of stages per well has increased.
Completion savings are, in part, due to ExxonMobil’s proprietary completion technique known as XFrac, the company announced in 2014. That process eliminates the need for multiple plugs commonly used in hydraulic fracture stimulations.
As costs fell, seven day initial production rates on XTO’s Bakken wells doubled over four years, from approximately 600 barrels of oil equivalent in 2011 to approximately 1,200 boepd in 2014.
“In the Bakken, we increased net production by 38 percent last year, which reflects the addition of 144 new wells, increased well productivity, and accelerated pad development in our core acreage,” ExxonMobil Chairman and CEO Rex Tillerson told analysts. “We averaged 13 operating rigs in 2014, and we will likely average close to that level this year.”
ExxonMobil anticipates capital spending of about $34 billion in 2015 - down $4.5 billion from 2014 largely due to major projects coming online. Annual capital and exploration expenditures are expected to average less than $34 billion in 2016 and 2017.
“Compared with last year’s outlook, our capital spending plans are about 10 percent lower; I do want to emphasize that this does not reflect a change to our long-term investment approach,” Tillerson said. “We are capturing cost savings, and we expect further bottom-of-cycle efficiencies, particularly in rig rates,” he added.
“The wells we are drilling in the Bakken and the costs we are seeing in the Bakken are substantially different than they were back in 2010,” said Jack Williams, ExxonMobil senior vice president. “We are putting many more stages into the fracks, and our costs are down 20 percent, 25 percent.”
Williams said that the continuity in the company’s drilling program allows it to maximize savings in a falling service cost environment, while most of its wells still make sense today.
“The Bakken wells are much more productive wells than they were just three or four years ago,” Williams said. “We have run economics on every single well that we drill, and we are not going to go take any investment decisions on anything that doesn’t make sense at today’s prices.”
ExxonMobil established its presence in the Williston Basin when it acquired Fort Worth-based XTO Energy in 2010.
XTO operates in eight North Dakota counties, primarily McKenzie, Williams and Dunn. It also has wells in Golden Valley, Billings, Mountrail, and along the border of Divide and Burke counties.
The subsidiary operates in 16 states across the U.S., and has a division in Calgary. It owns interests in approximately 40,000 producing oil and natural gas wells in North America. Its western U.S. operations range from the San Juan and Raton basins, to the Piceance and Uinta basins, to the Bakken and into offshore Cook Inlet in Alaska, all overseen by XTO’s Denver office.
