Bakken-focused Emerald Oil is adding a third drill rig to its fleet as its western McKenzie County middle Bakken wells continue to exceed type curves and its Three Forks wells show encouraging results. Now the Denver-based independent is planning to move that third rig south and begin developing its Pronghorn sand acreage in west-central Stark County this summer.
Since turning its attention from non-operated to operated production in 2013, Emerald added approximately 67,700 net Williston Basin acres in 2013 bringing its total acreage in the basin to 84,617 acres of which 63,237 are company-operated. The company estimates 320 potential operated drilling locations and an ultimate recovery of 550,000 barrels of oil equivalent per well.
Since March 2013, Emerald drilled 17 operated wells in its core Low Rider area, which includes the Boxcar Butte, Charbonneau and Foreman Butte fields in west-central McKenzie County. Those 17 wells, 15 middle Bakken and two Three Forks, had an average 24-hour initial production, IP, rate of 1,626 boepd and 15 of those wells have been on production more than 30 days with an average 30-day IP of 767 boepd.
In fact, Emerald says its middle Bakken wells have consistently exceeded the company’s 550,000 boe type curve for its Low Rider core area wells. “Our middle Bakken wells continue to exceed type curve expectations, and we are actively evaluating our stated Low Rider type curve along with increased downspacing assumptions across our 63,000 net acre position in McKenzie County,” said McAndrew Rudisill, Emerald president and chief executive officer in a fourth quarter 2013 conference call on March 13.
Three Forks evaluation
Emerald is also optimistic about the results from its first two Three Forks wells and is planning to drill more wells into the Three Forks formation. “Our second Three Forks well, the Caper 3, had a 24-hour IP of approximately 1,300 boe per day,” Rudisill said. “We are very encouraged with the results of our initial Three Forks wells and continue to permit and drill more as we move south.”
Emerald has historically assumed a total of four middle Bakken and three Three Forks wells per 1,280-acre drill spacing unit, DSU, in its Low Rider, Easy Rider and Richland areas. However, Rudisill now says the company is revisiting that assumption and is also looking at possibly adding more Three Forks wells to the mix.
“We are reevaluating the number of Three Forks wells that can be drilled in per drilling spacing unit,” Rudisill said. “And other operators in the Williston Basin have been talking about more Middle Bakken wells per DSU. I think until we finish this initial round of drilling; the increase in density will come from more Three Forks locations on our side.” He said he will have more to say on that mix in the first quarter 2014 conference call in May “after we drill a couple more Three Forks wells.”
Other core areas
The third rig Emerald is adding will begin drilling in the company’s Easy Rider core area in the Temple field in northeast Williams County by the end of March. That rig is expected to finish drilling in the Easy Rider area in the summer and then will move south into Stark County and begin drilling in the company’s Pronghorn sand area.
Rudisill said Emerald cored multiple operated units across the state line in Richland County, Mont., where there has been “recent middle Bakken and Three Forks well control,” adding that the company is “very encouraged by the strong results.” He said the geology in that area of Montana is similar to the geology in the company’s Low Rider area of west-central McKenzie County in North Dakota, and he believes the company’s Low Rider completion methods can be “replicated” on the Montana side.
Rudisill also said Emerald may potentially add a fourth drill rig later in 2014 to begin drilling in the Richland County area as well as in the company’s Lewis and Clark prospect in southern McKenzie County. Emerald is planning to drill a total of 18.2 net operated wells through 2014 at an average cost of $10 million per well.
Production growth
In the first two quarters of 2013 when Emerald was still a predominantly non-operating producer in North Dakota, its production averaged 1,229 boepd. After transitioning to operator status, the company’s third quarter output increased to 1,877 boepd and its fourth quarter production averaged 2,430 boepd. The company exited the year at 2,630 boepd.
In 2012, Emerald’s cumulative production totaled 341,755 boe, and in 2013 that total output was 616,065 boe, a year-over-year increase of 80 percent.
Emerald’s 2014 guidance estimates first quarter production of 2,750 boepd followed by steady production increases with fourth quarter output estimated at 4,150 boepd and a 2014 exit rate of 4,250 boepd.
However, Rudisill said Emerald did experience weather-related delays in completions in the first quarter, which may result in first quarter production shortfall, possibly up to 10 percent. But he expects the company will more than make up the difference should that shortfall occur. “Due to the large amount of production coming online during the back half of the first quarter and beyond, production in the second quarter will be higher than our previous guidance, and we plan to increase quarterly, annual and IP rate guidance on the first quarter earnings call.”
In January, Emerald ranked 33rd among the top 50 Bakken oil producers in North Dakota with an average production of 1,485 barrels of oil per day for operated, non-confidential wells according to North Dakota Department of Mineral Resources Oil and Gas Division production data.
—Mike Ellerd
