Marathon Accelerates Activity in The Bakken and Other US Domestic Plays

March 26, 2014 Kirk Eggleston

Marathon's Bakken and Three Forks Acreage Map

Marathon is continuing to ramp up its presence in US domestic shale plays, with increased activity expected in the Bakken Shale through the end of 2014. In a company statement in late March 2014, officials revealed that Marathon hit its target of a 28-rig program across the Eagle Ford, Bakken and Oklahoma-Woodford Shale plays at the end of January.

“Marathon Oil’s CEO Lee Tillman said, “We continue to have high confidence in our ability to deliver on our North America long-term production growth targets underpinned by strong resource growth through downspacing and well optimization. In addition, we are progressing the evaluation and appraisal of co-development opportunities with the Eagle Ford’s Austin Chalk and the Bakken’s deeper Three Forks benches.”

Marathon Bakken Operations Update

According to Marathon, the company's Bakken acreage accounts for ~800 mmboe in proven and probable reserves and resource potential. As of March 2014, Marathon had a 6-rig drilling program, and anticipates 75 - 85 net wells across the play in 2014. The company also expects to complete 20 - 24 net wells by the end of the year. The Bakken budget for 2014 remains at approximately $1 billion and 29% of the company' 2014 capital budget.

Marathon Targeting Deeper Three Forks Benches in Myrmidon Area

The Three Forks First Bench accounts for ~23% of proven and probable reserves. 45 gross operated wells are planned for the Three Forks in 2014. Six wells are planned in the lower benches of the Three Forks between 2014 - 2015. The initial focus will be on the Myrmidon area.

Magnum Hunter Bakken 2014 Capital Budget - $52 Million

March 24, 2014 Kirk Eggleston

Magnum Hunter sold off its non-core Eagle Ford assets in 2013. In 2014, the company is focusing on its core Appalachia and Williston Basin areas. $52 million of the company's $400 million capital budget will be spent in the Williston Basin in 2013. 65% of the budget will be spent on the company's Appalachia assets.

“In a company statement, Magnum Hunter CEO Gary Evans said, “we made the decision to sell our Eagle Ford assets [] for a contracted price of $401 million and redeploy those proceeds to our two remaining core areas, Appalachia and the Williston Basin. Revenues were still up over 72% and EBITDAX increased 48%. We drilled 21 gross wells (12.5 net) in the Marcellus and Utica resource plays and drilled 72 gross (24.6 net) in the Bakken and Three Forks Sanish plays of the Williston Basin.”

Magnum Hunter Bakken & Three Forks Fourth Quarter Operations

In the fourth-quarter of 2013, Magnum Hunter drilled 15 gross (6.2. net) in the Bakken/Three Forks formations. In its operated areas, the company drilled 2 wells, and in non-operated areas, 13 gross (4.2 net) wells were drilled.

Initial production (IP) rates varied across the company's Williston Basin acreage. In the Middle Bakken Formation, six two-mile lateral wells completed, with an average 24-hour IP rate of 561 boe/d and a 30-day rate of 389 boe/d. Two one-mile laterals were also completed in the Middle Bakken. At the end of the year, one well had a 24-hour IP rate of 680 boe/d and a 30-day rate of 253 boe/d. In the Three Forks/Sanish Formation, seven two-mile lateral wells were completed, with an average 24-hour IP rate of 584 boe/d and a 30-day rate of 287 boe/d. One one-mile lateral was also completed in the Three Forks/Sanish. It had an a 24-hour IP rate of 760 boe/d and a 30-day rate of 282 boe/d.

Magnum Hunter 2013 Bakken & Three Forks Capital Spending

Upstream capital spending in the Williston Basin during the fourth-quarter was $19.7 million in 2013. For the full-year, the company spent $131.8 million. That was ~43% of the company's total upstream capex budget for the year.

Vermilion Energy Buys Bakken Assets in Saskatchewan - $345 Million

March 21, 2014 Kirk Eggleston

Vermilion Energy purchased $345 million in Saskatchewan acreage and other assets in mid-March 2014 from an undisclosed seller. With the acquisition, Vermilion establishes a long sought after core area in the Williston Basin. The assets include some Bakken and Three Forks properties.

“In a company statement, Vermilion officials stated, “we have been evaluating producing entry opportunities into this prolific area for an extended period of time, but had not previously been able to structure a transaction that met the stringent requirements of our dividend growth model.”

Vermilion Acquisition Details

Assets include approximately 57,000 net acres of land (approximately 80% undeveloped) covering the Midale, Frobisher, Bakken and Three Forks/Torquay formations. Production from the assets is projected to be approximately 3,750 boe/d (97% crude oil) during 2014. More than 90% of the current production base will be operated by Vermilion.

Vermilion Drilling and Development from Acquired Assets

The majority of production and development drilling opportunities from the acquisition will be from the Midale formation, with additional opportunities in the Frobisher, Bakken and Three Forks/Torquay formations. The company has identified 175 (152 net) potential drilling locations collectively targeting these formations. Total proved and proved plus probable reserves attributed to the Assets at the end of February 2014 were 10.3 mmboe (81% crude oil and natural gas liquids) and 16.5 mmboe (81% crude oil and natural gas liquids), respectively.

North Dakota Campaign Seeks to Grow Workforce for In-Demand Jobs

March 19, 2014 Kirk Eggleston

North Dakota officials announced a new workforce recruitment campaign aimed at attracting a permanent private-sector workforce to keep pace with the state's growing economy. The “Find the Good Life in North Dakota” campaign is targeting people in states with chronic unemployment, and people in industries that are high-demand in North Dakota, including: engineering, healthcare, energy, skilled trades, transportation and information technology.

The campaign is set to launch in May 2014.

Visit the BakkenShale jobs page

The Bakken Shale oil boom has been the primary reason for job growth in the state. Well-paying opportunities in the oil patch have been plentiful, attracting workers from across the country; however, the growth of the workforce has caused some issues over the past several years. Housing shortages, particularly near Williston, ND, which is considered to be the epicenter of the oil boom, have caused the price of rent to shoot through the roof. Crime and other factors affecting quality of life near the oil patch have also been cause for concern among locals and workers relocating to the area for well-paying opportunities.

Despite the growing pains caused by the boom, N0rth Dakota leads the nation in job growth, and the state's campaign hopes to continue that trend.

“In a statement released by the North Dakota Economic Foundation, Lt. Governor, Drew Wrigley, said, “To sustain [our] growth, we need to ensure that the jobs we are creating are filled with highly-skilled workers, and this campaign is a tremendous opportunity to expand our workforce and promote the quality of life that North Dakota has to offer.”

The campaign is also placing an emphasis on attracting veterans and active military transitioning to civilian life and employment.It is estimated that 250,000 service men and women will be exiting the armed forces in the coming years and the campaign will invite them to start their next career in North Dakota.

The State of North Dakota has provided $400,000 in matching funds to launch the project.

Emerald Oil Increases Bakken Production by 80% in 2013

March 14, 2014 Kirk Eggleston

Emerald's total production increased by 80% in 2013 over 2012 from ~935 boe/d to ~1690 boe/d. The production increase was attributable to the addition of 10.58 net operated Bakken and Three Forks wells in 2013.

Since the beginning of 2013, the company has acquired ~67,700 net acres. The most recent Bakken acreage acquisition took place in January, and cost Emerald $74.6 million.

Emerald's Bakken Fourth-Quarter Production and 2013 Reserves

Emerald had a strong fourth-quarter in the Bakken, with average daily production of 2,430 boe/d.

“McAndrew Rudisill, Emerald’s CEO, stated, “2013 was a transformational year for Emerald. We successfully drilled and completed multiple Middle Bakken and Three Forks wells, tripled our operated acreage position and monetized the majority of our non-operated assets.”

t the end of 2013, Emerald had total proved reserves of ~13.2 mmboe, all of which were located in the Williston Basin. Emerald's proved reserves increased approximately 147% during 2013 primarily as a result of our successful operated well program.

Emerald's Bakken 2014 Drilling and Production Strategy

In 2014, Emerald has plans to add another rig to it's drilling program. The company expects to achieve an exit rate of 4,250 boe/d, with an average production rate of 3,550 boe/d.

“In a company statement, Rudisill, said, “in 2014, our production will continue to grow as we add a third rig to our drilling program. The third rig is currently moving to location in our Easy Rider focus area and will soon begin drilling, earlier than originally anticipated. Due to the strong performance of our Low Rider Middle Bakken wells and positive indications from our Low Rider Three Forks wells, we are actively reviewing increased downspacing assumptions and raising our stated Low Rider type curve. We are very focused in 2014 on lowering operating expenses and driving greater drilling and completion cost efficiencies.”

Emerald plans to add an additional 18.2 net operated wells by the end of 2014.

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