10 Incredible Numbers From the Bakken

It's hard to argue the fact that Bakken has become a game-changer for U.S. oil production. While it was discovered in the 1950s the play wasn't economically viable until more recently. Since producers began developing the play in earnest, it has produced some truly incredible numbers. Here are the 10 most incredible numbers from North Dakota's black gold mine.

1. 14,700 miles
The Bakken and the associated Three Forks covers 14,700 square miles, making it the largest continuous crude oil accumulation in the U.S. The play covers North Dakota and Montana as well as parts of Canada. Continental Resources (NYSE: CLR  ) is the largest leaseholder with more than 1 million net acres.

2. $9 million per well
It costs producers an average of $9 million to drill and complete the average well in the Bakken. Some producers enjoy below average well costs; Continental Resources' well costs are down to $8.3 million. Other producers, like the smaller Kodiak Oil & Gas (NYSE: KOG  ) , still have a way to go; its wells cost an average of $10 million.

Source: Newfield Exploration

3. 45 years
A typical Bakken well will continue to produce oil for the next 45 years. Over those years the well will likely switch hands as the steep initial decline rates could force producers to sell wells to an MLP such as LINN Energy (NASDAQ: LINE  ) . In 2011, the company acquired Concho Resources assets in the Bakken, which included non-operated oil wells and an interest in 400 potential future drilling locations. LINN, which typically acquires mature assets, is positioning itself to consolidate Bakken wells once producers, such as its partners in these wells, are ready to cash out.

4. 665,000 barrels of oil
Over those 45 years the average Bakken well will produce around 665,000 barrels of oil. The economics are exceptional even for a producer like Kodiak and its elevated $10 million well costs. For example, if oil drops to $75 a barrel then the company would still enjoy an internal rate of return of 35% and a payout of just 30 months.

5. $23 million in net profit
That same average well should yield around $23 million in profit to the producer over its life. That profit won't come at a steady pace, instead most of it will come up front, as the oil production from a Bakken well is initially high, and then production declines very rapidly. For example, some of Newfield Exploration's (NYSE: NFX  )  recent wells produced a company record 3,100 barrels of oil equivalent per day. That will produce a very fast payback, but the rate of production won't last very long.  

6. $4.3 million in taxes
The average Bakken well will generate over $4 million in taxes. This has created quite an interesting dilemma for the newly created North Dakota Legacy Trust Fund which has already accumulated over a billion dollars. That's 63% above the state's initial target for the fund at this point. While the state has no immediate plans for the fund, it's looking for the best way to make use of that money.

7. $2.1 million in wages
One of the reasons why North Dakota's unemployment rate is currently just 3.3% is because the wages paid by Bakken oil. Over the lifetime of each well it will dish out more than $2 million in salaries to those that kept its oil flowing.

8. 779,000 barrels of oil per day
This past February the Bakken produced 779,000 barrels of oil per day, which has made North Dakota the nation's second-best oil-producing state. Production grew 39% year over year and is expected to hit a million barrels of oil per day by next April and could top 1.5 million barrels of oil per day by the dawn of the next decade. Last quarter, top Bakken producer Continental Resources averaged 76,900 barrels of oil equivalent per day, while its gross production hit more than 100,000 barrels of oil equivalent per day.

9. 50,000 future wells
The industry has already drilled about 5,000 wells in the Bakken, which means that the play might only be 10% developed. This has oil-field services companies like Heckmann (NYSE: NES  ) envisioning a real long-term opportunity in the play. The company, which is an environmental solutions provider focusing on the water used in fracking, has a very large Bakken operation. While some will point to falling rig counts, the industry has become much more efficient in getting its well costs down, meaning its drilling more wells with fewer rigs. That could yield even more profitable wells in the future as long as oil prices stay elevated.

10. 7.4 billion barrels of oil
Five years ago the U.S. Geological Survey estimated that the Bakken might contain 3 billion-4.3 billion barrels of oil. Now, with the development of the Three Forks formation, it's nearly doubled the estimated amount of oil that could be pulled out of the region. Some in the industry, including Continental Resources, think that the estimates are still way too low, as the company believes those formations could hold 24 billion barrels of oil equivalent.

Foolish bottom line
The numbers don't lie: The Bakken is a phenomenal oil play that should produce for many years to come. As it does, those companies operating in the region will enjoy their share of profits.

One of those companies, Kodiak Oil & Gas, has become a dynamic growth story thanks to its focus on the Bakken. The company has great opportunities, but with those opportunities come great risks. As you dig into this exciting oil company, let us help you with your due diligence. To find out whether Kodiak is currently a buy or a sell, you're invited to check out The Motley Fool's premium research report on the company, which comes with a full year of updates and analysis as key news breaks. To get started simply click here now.


Read/Post Comments (7) | Recommend This Article (11)

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  • Report this Comment On May 16, 2013, at 4:29 PM, amvet wrote:

    The Bakken numbers are impressive. Many new wells are drilled and the total production increases, but look at the details.

    New wells with high production come on line. Older wells declling rapidly. How much does a new well add to total Bakken production?

    That added amount during the last eight months has rapidly declined....... 154 bpd, 148 bpd, then for two months an average of 61 bpd, then an average of negative 16 bpd, and finally 31 bpd.(Last data was for March 2013. The March production per well was 94 bpd.)

    What does this indicate? Statistical noise? A clear indication that the sweet spots have been already drilled. Or ???? Stay tuned.

  • Report this Comment On May 16, 2013, at 8:57 PM, TMFmd19 wrote:

    I'll make three points.

    First check out slide 15: http://media.corporate-ir.net/media_files/IROL/19/197380/CLR...

    It shows 3 forecasts of rising production through 2017. While it's likely not going to be as steady as the chart, all indications point to higher production.

    #2. see number 4 above where the average well will produce about 665,000 barrels in its lifetime. Sure, a lot of that production will come initially but..

    #3. which just happens to be the same # above where the average well will produce for 45 years. That's not counting new technologies extending production of enhancing the recovery.

    All that to say the current numbers, with currently available technology make for a very compelling future out of the Bakken. Technology, higher oil prices, etc could turn it into an every better play.

    Matt

  • Report this Comment On May 16, 2013, at 10:39 PM, MarkOfBeast wrote:

    The 665,000 barrels of oil equivalent recovery per well, was way OVER-ESTIMATED. That number is NOT supported by the actual Bakken well production data.

    OK, the March 2013 data of Bakken is out. Here are the numbers:

    In Oct 2012, there were 8025 producing wells produced at 884,500 BOE/day

    In Mar 2013, there were 8634 producing wells produced at 928,800 BOE/day

    There is a 151 days time gap and 609 wells added, at average 4.033 wells/day, and production increased a net of 44,300 BOE, or an average increase of 293 BOE/day each day.

    So each day, 4.033 new wells were added but the production was boosted by only 293 BOE/day. How did the numbers work? Let me explain.

    The average production rate during the period is 906,650 BOE/day. Each day, natural well decline reduces the production rate by -0.2%/day. That's a loss of 906,650 * 0.2% = -1813 BOE/day each day.

    But each new well%2

  • Report this Comment On May 17, 2013, at 8:11 AM, TMFmd19 wrote:

    MarkofBeast - I've seen estimated recoverable oil per well higher plus again you need to factor in that technology in the future could pull out more oil per well.

    Second item to consider is that in the timeframe you mentioned two things happened. First, it was a rough winter and that did have an impact on production numbers. Second, more drillers are moving to pad drilling. Instead of one well coming on at a time, sometimes you are seeing up to 8 wells coming online at once.

    Finally, the number you mentioned don't seem to line up with the data I've seen so your data might include legacy conventional wells which might sway the data.

    Either way, the decline rates are a well known issue and a lot can change with technology and time.

    Matt

  • Report this Comment On May 30, 2013, at 9:48 AM, QualityMat wrote:

    These are some remarkable numbers. If it's alright, we'd like to share them with our readers in our next infographic series. We're working on educating the public on the oil and gas industry, specifically the Bakken region, which you can see here (http://qmat.info/articles)

  • Report this Comment On July 03, 2013, at 9:11 PM, VangelVe wrote:

    Sorry but everything depends on the EURs being correct. The problem is that they aren't. Fracked Bakken horizontal wells do not last 40 years and do not produce more than 500,000 barrels over their lifetime. They deplete rather rapidly and are down to stripper status in about seven years, particularly outside of the core areas. The shale oil story is just another bubble being blown up by access to easy financing, just as the shale gas story was a bubble. Once you account for the royalty costs, overheads, drilling, infrastructure, and employee costs there is nothing left over for investors. That is why none of the primary shale producers are self-financing and why the balance sheets show exploding debt levels.

  • Report this Comment On July 15, 2013, at 5:06 PM, jakeoil wrote:

    Great resource for Bakken oil employment, search and post jobs: http://bit.ly/1cQN2bs

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