Oasis Petroleum weathered a North Dakota winter in the first quarter to post a production increase over the fourth quarter 2013 as it closed on the sale of its non-operated Sanish assets and successfully tested new completion techniques, all while lowering well costs.
For the first quarter, the Bakken-focused independent’s output was up 5 percent over the fourth quarter 2013 to 42,856 barrels of oil equivalent per day, excluding the sale of its Sanish assets. That increase puts Oasis on track to grow its production to between 43,000 and 46,000 boepd which at the midpoint and adjusted for the sale of its non-operated Sanish assets would represent a quarter-over-quarter production growth of around 8 percent.
Contributing to that output are the successes the company has seen in new completion methods, most importantly a shift to slickwater fracturing in much of its West Williston core area where Chief Executive Officer Thomas Nusz says the company has seen “material uplift” in production resulting from that completion method. Oasis is looking to complete approximately 20 percent of its wells using slickwater in the second half of 2014.
While slickwater completions are generally more expensive than gel fracturing methods, Oasis finished the first quarter with an average well cost of $7.2 million, down from $7.5 million in the fourth quarter 2013, due in large part to its wholly owned completion subsidiary Oasis Well Services, OWS, coupled with the cost benefit of pad drilling. The company said OWS saved approximately $400,000 per net well in 2013. Oasis is putting on a second OWS fracturing spread that should have full capacity by summer.
Going forward, Oasis plans to continue its transition to full resource development, while at the same time continuing testing completion methods, as well as experimenting with downspacing and exploring into the lower benches of the Three Forks.
“With approximately 80 percent of our wells on pads of two or more wells, we were able to maintain our drilling and completion efficiencies during a tough winter operating condition,” Nusz said in a May 6 conference call with industry analysts. “As we look to the rest of the year,” he continued, “we will allocate approximately 55 percent of our drilling and completion capital to the deeper areas of the basin where we're moving towards full DSU (drill spacing unit) development. The remaining 45 percent of our capital will be spent on continuing to test alternative completion techniques, downspacing initiatives and holding recently acquired acreage.”
Shift to slickwater
In the Indian Hills area of its West Williston core area in central McKenzie County, Oasis has seen production increases in slickwater-completed wells in the 25 percent range over base wells through 90 days of production. Oasis President and Chief Operating Officer Taylor Reid said that uplift “is very impressive” considering the company’s average Indian Hills well already produces above the 750,000 boe type curve.
In two other regions of the West Williston core area, Oasis has seen output increases exceeding 30 percent over 12 months of production from slickwater-completed wells compared to base wells in those areas. And with those successes, Oasis is now planning to test slickwater completions in its East Nesson core area in western Mountrail County as well as in eastern Montana. “Based on the results in these areas,” Reid said, “we think that slickwater currently has application on over 100,000 acres of our land and we will be testing at new areas, as well, including South Cottonwood and Montana in the second half of the year.”
In addition, Reid said Oasis is going to conduct slickwater tests down as far as the third bench of the Three Forks on a partial DSU in its Indian Hills area. All together, the company is planning on 32 slickwater completions across its entire Bakken position in 2014.
Other experiments
While Oasis has seen positive results from its slickwater tests, slickwater isn’t the only alternative completion method the company has been experimenting with. “At the well level, we have done a lot of work, varying completion techniques to custom fit the completion style to our project areas,” Reid said. Those varying completion techniques include proppant concentration and mix, as well as completions using coil tubing and cement liners.
Reid believes coil tubing fracturing may allow for more in-zone fracturing in certain areas where the company’s wells have larger water cuts, thus cutting down on produced water.
Three Forks tests
Oasis has been testing wells in the second and third benches of the Three Forks, and brought four lower Three Forks wells on production in the quarter, boosting its total number of Three Forks wells to nine. “Results have been encouraging from these wells as they continue to expand our comfort to the lower benches throughout our position,” Reid said.
Five of those Three Forks wells have been on production in excess of 30 days, and four of those five are producing within or above the company’s type curve range. Two are second bench and two are third bench wells.
The company’s other four Three Forks wells have been on production less than 30 days. One completed in the second bench produced 780 boepd through the first seven days on production, and another completed in the third bench produced 530 boepd over its first seven days.
Oasis plans to complete approximately 30 second and third bench wells in 2014. “With this improved understanding of the Three Forks and our knowledge of infill spacing, we are moving to full DSU development on about 20 percent of our acreage,” Reid said.
