Bakken's Breakeven | Russell T. Rudy Energy LLC
There has been much speculation as to the impact of recent price declines on future production and drilling activity. The answer appears to be “it depends”. In an opinion piece in “Rigzone”, author John Kemp makes his projections based on recent remarks by Lynn Helms, the Director of the North Dakota Department of Mineral Resources.
Helms contends that the state needs an average wellhead price of around $55 statewide to maintain production at its current level of 1.2 million barrels per day (bopd) and to keep the rig count at 140. Breakeven for new wells varies significantly by area. For example, for the four counties in the sweet spot of the Bakken shale, new wells could be justified down to $29-41 per barrel. (It should be noted that 90% of the state’s production is from these counties).
New drilling in counties on the periphery of the Bakken structure would require prices from $52-73 per barrel. Last week realized well head prices statewide were averaging around $40. The impact on drilling activity is already apparent; in October 191 rigs were running, but that has recently fallen to 165.
To read the article in its entirety, please go to www.rigzone.com/news/article.asp?hpf=1&a_id=136690&utm .
