After lowering its drilling and completion costs nearly 10 percent from 2012 to 2013, Samson Resources is maintaining its focus on efficiency and cost reduction through multi-well pads, batch drilling and centralized facilities as the Tulsa-based independent continues development of its Divide County, N.D., acreage.
In a February investor presentation, the company indicated the average number of days from spud to total depth for its Bakken wells decreased from 20 to 12, and the average spud-to-depth cost for those Bakken wells went from $190 per foot in 2012 to $124 per foot in 2013. Those decreases mark efficiency gains of 40 and 35 percent. In 2013, Samson Resources spudded 35 operated wells in the Williston Basin.
For 2014, Samson Resources will continue with a one rig program focused on horizontal pad infill development of the Middle Bakken and Three Forks formations. The company has allocated $85 million or 12 percent of its drilling and completion capital budget to its Williston Basin operations where it plans to spud an additional 23 gross (11 net) operated wells through the year. Samson Resources also plans to pilot test a new completion design in 2014.
In the fourth quarter of 2013, the company reports producing 4,000 barrels of oil equivalent per day In December, Samson Resources ranked 25th among the top 50 oil producers in North Dakota with an average output of 6,503 barrels per day for operated, non-confidential wells according to North Dakota Department of Mineral Resources Oil and Gas Division data.
Most of the company’s wells are in the Ambrose field which lies along the Canadian border in north-central Divide County, but it also has a number of wells in the neighboring West Ambrose and Blooming Prairie fields. The company reported 30-day initial production rates of 451 and 463 barrels of oil per day for two of its recently completed Ambrose field wells. In late 2013, Samson filed an application for the creation of two overlapping 2,560-acre spacing units in the Ambrose field, also seeking permission to drill one well on or near the section line between the 640-acre and 1,280-acre units that comprise each of the requested 2,560-acre units.
Samson Resources holds approximately 180,000 gross acres in northwest North Dakota and northeast Montana, of which 77,000 are net, and of those net acres 75 percent is held by production and 55 percent is company operated.
Other operations
Companywide, Samson expects its 2014 rig count to be consistent with 2013 activity levels, it said, adding that it plans to spud 127 gross operated wells during 2014.
In addition to its Williston Basin business unit, Samson Resources’ other three business units in its western division are in the Powder River, Greater Green River and San Juan basins in Wyoming and Colorado. Its eastern division business units include the Midcontinent West, Midcontinent East and East Texas units in Oklahoma, Texas and Louisiana.
It operates 10 rigs and has a companywide acreage position of approximately 2 million net acres. Also planned for 2014 are non-core asset sales of $150 million to $200 million, the company said, adding that it would opportunistically spend on exploration as well.
Samson Resources said it relies on a diversified bank group to fund a $1.78 billion bank credit facility; there are 24 banks with no bank holding more than a 10 percent position.
The company is “committed to improving leverage” and is maintaining an adequate liquidity position based on a simple capital structure with no near term maturities.
Samson Resources said it will “access equity capital to de-lever with a growth focused acquisition or acceleration of organic development.”
The company said it maintains a hedge position to reduce price risk — over 70 percent hedged on a total hydrocarbons basis for 2014, with initial positions established for 2015.
Privately held
Samson Resources is a subsidiary of Samson Investment Co. In 2011, most of Samson Investment’s holdings, including its Williston Basin assets, were acquired by the private equity firm KKR and Co.
In December 2012, Samson closed a $650 million sale of 116,000 net acres of Bakken producing and undeveloped properties to Continental Resources Inc. The properties, primarily in Divide and Williams counties, had production of approximately 5,600 boepd.
