Backing off the Bakken | Russell T. Rudy Energy LLC
The Bakken shale sparked the shale revolution, transformed the economy of North Dakota, and shook global oil markets with an additional 1 million barrels of oil per day of production. Small and intermediate operators in the play were bought for tens of billions of dollars. Companies such as Continental Resources and EOG Resources were catapulted into prominence.
In a recent article in “Oil Voice”, securities analyst, Keith Schaefer, elaborates on how dramatically things have changed in the Bakken. Continental and EOG still have large land positions and significant production, but are not investing their capital there. Rather, they are milking the play for cash flow, at least as long as prices remain at current levels.
Domestic oil and gas operators now have four horizontal oil plays that can generate acceptable rates of return on capital in the $45 a barrel world. The Midland Basin, Delaware Basin and Alpine High, all in the Permian Basin of West Texas and Southeast New Mexico, and the STACK play in Oklahoma, all are economically viable at current prices.
Continental has apparently stopped putting new Bakken wells on production. While it has drilled 165 wells since the price collapse, it is not fracking and completing them. Rather, it is waiting for higher prices before doing so. Alternatively, the company seems focused on Oklahoma’s STACK and gas-prone SCOOP plays. STACK wells can generate attractive returns even at $40, while similar projects in the Bakken barely break-even at this price.
EOG seems to be de-emphasizing the Bakken as well. Their CEO recently said that approximately 45% of their capital budget for 2017 will focus on the Eagle Ford Shale in South Texas, another 45% or so in the Delaware, and about 10% in the Rockies. The Bakken seems to be left out of the conversation, at least for the time being.
Apparently, any operator who has the option of investing in the other major shale plays is doing so and forsaking the Bakken. Rather, the Bakken is being treated as cash cow for production and cash flow which can be invested elsewhere.
To read the article in its entirety, please go to http://www.oilvoice.com/n/Where-are-the-Bakken-leaders-Spending-Money-Everywhere-Else/58aa1965bd35.aspx .
Russell T. Rudy Energy, LLC buys oil, gas and mineral interests nationwide. Please call (800-880-0940), or write (info@rudyenergy.com ) to let us know if you agree, disagree or would just like to comment on this, or any of our posts.
