User Rating:  / 1

Oil production in a formation parallel to The Bakken shows indications of being much greater than anticipated, according to a recent report in the "Oil Patch Hotline."

Continental Resources of Enid, OK said there is more production from the Three Forks [Sanish] formation than originally anticipated, and estimated ultimate recoveries could double from 500,000 to over 1 million barrels per well, according to company president Jeff B. Hume.

At the same time, Continental said its capital spending for next year would top $1.75 billion, and the company plans to drill 250 wells.

What triggered the optimism was the success of a new McKenzie County ND well, which was drilled in the second bench of the Three Forks, 50 feet below a typical first bench horizontal Three Forks well.

"This successful test demonstrates that the Three Forks second bench has the potential to add incremental reserves to our estimated 24 billion barrels of technically recoverable oil and natural gas in the total Bakken," said Harold Hamm, chairman and CEO.
The company reported a $439.1 million net income, in a third quarter report. Hume and Hamm said drawing more out of the Three Forks would require a change in the frac design, including pumping more fluids and sand into the zones.

More wells will be drilled in the next year, to determine the extent of reserves in the lower benches of the Three Forks.

The capital spending for 2012 is less than the company plans to spend this year, which is already at $1.4 billion after nine months.

Continental is focusing more on improving infrastructure and speeding up drilling time. It has four dedicated frac crews and can use a fifth if necessary, and it has a fleet of 23 rigs.

The cost of drilling a Bakken well runs about $8 million. The rate of return ranges from 40 to 50 percent.

With drilling times averaging 30 to 31 days, company officials said they believe they can get that down to a 20-plus day range.

In the third quarter, the company saw a 27% increase in production from North Dakota and Montana well to 34,505 BOEPD. (Barrels Oil Equivalent per Day) It also saw a 4% growth to 14,954 BOEPD in its Red River unit wells in Montana, North Dakota and South Dakota.