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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Crude oil production from the Bakken Shale will double to 2 million barrels per day (BBL/d) by 2020, predicted Harold Hamm, chairman and chief executive at Continental Resources Incorporated (NYSE:CLR) (Oklahoma City, Oklahoma), at an oil industry conference last month. The Bakken's dramatic growth in production to about 1 million BBL/d today "is only the beginning," Hamm said, according to media reports. "And I still predict we ultimately will be producing 2 million BBL/d--that is not over the top for us."
"Over the top" is exactly what some producers and analysts said when Hamm told industry conferences several years back that the Bakken held more crude oil and natural gas than Alaska's Prudhoe Bay. But over time, Hamm's optimistic assessments of the Bakken's crude oil reserves and production have won converts.
North Dakota accounts for most of the crude-oil production from the Bakken, and that state's production is nearly 1 million BBL/d, roughly triple what it was at the start of 2010. In late 2011, Hamm estimated that the Bakken held about 24 billion barrels of oil equivalent. Since then, the U.S. Geological Service (USGS) has doubled its assessment of undiscovered but technically recoverable crude oil in the Bakken Shale and a formation that lay underneath the Bakken, called the Three Forks.
The updated USGS estimate, released last year, said the Bakken and Three Forks formations contained about 7.38 billion barrels of undiscovered but technically recoverable crude oil. That 2013 estimate is the first time the USGS estimated the potential reserves of the Three Forks formation. For more on Hamm's assessment of the Bakken, see October 26, 2011, article - Bakken Formation Has More Oil and Gas than Prudhoe Bay, CEO Claims.
Click the image at right to see a chart of North Dakota crude oil production.
Continental is the largest leaseholder and producer in the Bakken: It produces about 10% of all the crude oil extracted from that formation. Continental's stock price and earnings statements show how the company has benefitted from Hamm's deep dive into an area most of the industry had written off as mature. Hamm's company--he owns an estimated 70% of the common stock--produced about 97,000 BBL/d of oil equivalent from the Bakken in the first quarter of 2014, a 26% gain over first quarter 2013 production of about 77,000 BBL/d of oil equivalent, the company said in its first-quarter earnings release.
Hamm's company operates in other areas, including the South Central Oklahoma Oil Province (SCOOP), though the Bakken is its most important producing region. First-quarter revenue for the company rose to $972 million, a 38% gain over comparable year-earlier revenue of $703 million. Pre-tax operating income for the quarter was $359 million, up 61% from $223 million in first-quarter 2013. The stock is up about 71% over the last 12 months. Since going public in 2007 at $15 per share, the stock is up more than 800%, reflecting investors' rising interest oil producers using horizontal drilling and hydraulic fracturing.
Hamm is often quoted as saying that the good news is only beginning. He appears to be referring to his company's prospects, as well as the outlook for domestic energy self-reliance. Across the U.S., Continental's goal is to triple production and proved reserves over the five-year period from 2012 through 2017. Regarding production, the company said it is ahead of its goals. Regarding proved reserve additions, it said it is meeting its goals. Proved reserves hit 1.084 billion barrels of oil equivalent at year-end 2013, a 38% gain over year-end 2012 proved reserves. Most of those reserves are oil.
Click on the image at right to see a chart of Continental's growth in proved reserves from 2008 through 2013.
Commenting on the company's first-quarter results, Hamm said: "2014 is off to a solid start. We battled challenging weather in the quarter, and several pad locations experienced delays getting connected. However, we are very proud of the efforts of the team to stay focused on execution in order to achieve our target of 26% to 32% organic production growth in 2014.
"Within the next few quarters, new pipelines will be commissioned along with our new tank storage in the Bakken, which will serve us well by reducing transportation costs, improving differentials and adding significant optionality to our portfolio marketing strategy. These new assets and our proactive steps are the natural next phase in the evolution of our Company's marketing and infrastructure in the Bakken, as we move closer to full-field development."
Across the U.S., Continental plans to invest about $4.05 billion this year to develop and produce oil & gas. Roughly half of that will be spent in the Bakken and Three Forks formations. The $4.05 billion capital budget excludes potential acquisitions. Continental is leasing about 1.2 million acres in the Bakken. At the start of June, the company was operating about 189 drilling rigs in the Bakken and Three Forks, and 83% of its production there was oil.
While the Bakken still holds significant upside for Continental and other producers there, Continental also is leading the industry in exploring the Three Forks formation, which lies underneath the Bakken. The company said it is on schedule to confirm the amount of oil and gas contained in the Lower Three Forks formation. In its first-quarter earnings release, Continental said it completed 67 net wells in the Bakken during first-quarter 2014. North Dakota completions included 50 net wells in Middle Bakken ("MB") and Three Forks One ("TF1"), and six net wells in each of the Three Forks Two ("TF2") and Three Forks Three ("TF3"). Montana completions for first-quarter 2014 totaled 11 net wells, all in the Middle Bakken.
"Harold Hamm is a larger-than-life, once-in-a-generation oil & gas wildcatter that is changing the face of the business," said Jesus Davis, Industrial Info's vice president of research for Oil & Gas Production, Pipelines and Terminals. "In the Bakken, he has shown what advanced technology and entrepreneurial passion can accomplish. I wouldn't bet against him on the Three Forks."
In an email to Industrial Info Resources, Warren Henry, Continental's vice president for a research and policy, said, "We don't have an accurate, current estimate of (probable and possible) reserves (for the Three Forms formation) that we can share right now. Of our proved reserves of 1.08 billion barrels of oil equivalent at year-end 2013, 68% were in the Bakken, with the vast majority of those being Middle Bakken and Three Forks first bench. We're doing an extensive amount of density testing in various parts of the basin right now, and we expect these tests to give us a better picture of potential resource by year-end 2014. The density tests involve MB, and Three Forks benches 1, 2 and 3."
"There's only one Bakken, and it's getting bigger and better," Continental said in a June update to investors. The company said it had initiated the industry's first full-field development in the prolific Antelope area, which includes deposits in the Middle Bakken and Three Forks benches 1, 2 and 3.
Forbes magazine profiled Hamm's--and Continental's--success in a May 5, 2014, cover story. In that article, he said the U.S. energy boom is just beginning.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
"Over the top" is exactly what some producers and analysts said when Hamm told industry conferences several years back that the Bakken held more crude oil and natural gas than Alaska's Prudhoe Bay. But over time, Hamm's optimistic assessments of the Bakken's crude oil reserves and production have won converts.
North Dakota accounts for most of the crude-oil production from the Bakken, and that state's production is nearly 1 million BBL/d, roughly triple what it was at the start of 2010. In late 2011, Hamm estimated that the Bakken held about 24 billion barrels of oil equivalent. Since then, the U.S. Geological Service (USGS) has doubled its assessment of undiscovered but technically recoverable crude oil in the Bakken Shale and a formation that lay underneath the Bakken, called the Three Forks.
The updated USGS estimate, released last year, said the Bakken and Three Forks formations contained about 7.38 billion barrels of undiscovered but technically recoverable crude oil. That 2013 estimate is the first time the USGS estimated the potential reserves of the Three Forks formation. For more on Hamm's assessment of the Bakken, see October 26, 2011, article - Bakken Formation Has More Oil and Gas than Prudhoe Bay, CEO Claims.
Click the image at right to see a chart of North Dakota crude oil production.Continental is the largest leaseholder and producer in the Bakken: It produces about 10% of all the crude oil extracted from that formation. Continental's stock price and earnings statements show how the company has benefitted from Hamm's deep dive into an area most of the industry had written off as mature. Hamm's company--he owns an estimated 70% of the common stock--produced about 97,000 BBL/d of oil equivalent from the Bakken in the first quarter of 2014, a 26% gain over first quarter 2013 production of about 77,000 BBL/d of oil equivalent, the company said in its first-quarter earnings release.
Hamm's company operates in other areas, including the South Central Oklahoma Oil Province (SCOOP), though the Bakken is its most important producing region. First-quarter revenue for the company rose to $972 million, a 38% gain over comparable year-earlier revenue of $703 million. Pre-tax operating income for the quarter was $359 million, up 61% from $223 million in first-quarter 2013. The stock is up about 71% over the last 12 months. Since going public in 2007 at $15 per share, the stock is up more than 800%, reflecting investors' rising interest oil producers using horizontal drilling and hydraulic fracturing.
Hamm is often quoted as saying that the good news is only beginning. He appears to be referring to his company's prospects, as well as the outlook for domestic energy self-reliance. Across the U.S., Continental's goal is to triple production and proved reserves over the five-year period from 2012 through 2017. Regarding production, the company said it is ahead of its goals. Regarding proved reserve additions, it said it is meeting its goals. Proved reserves hit 1.084 billion barrels of oil equivalent at year-end 2013, a 38% gain over year-end 2012 proved reserves. Most of those reserves are oil.
Click on the image at right to see a chart of Continental's growth in proved reserves from 2008 through 2013.Commenting on the company's first-quarter results, Hamm said: "2014 is off to a solid start. We battled challenging weather in the quarter, and several pad locations experienced delays getting connected. However, we are very proud of the efforts of the team to stay focused on execution in order to achieve our target of 26% to 32% organic production growth in 2014.
"Within the next few quarters, new pipelines will be commissioned along with our new tank storage in the Bakken, which will serve us well by reducing transportation costs, improving differentials and adding significant optionality to our portfolio marketing strategy. These new assets and our proactive steps are the natural next phase in the evolution of our Company's marketing and infrastructure in the Bakken, as we move closer to full-field development."
Across the U.S., Continental plans to invest about $4.05 billion this year to develop and produce oil & gas. Roughly half of that will be spent in the Bakken and Three Forks formations. The $4.05 billion capital budget excludes potential acquisitions. Continental is leasing about 1.2 million acres in the Bakken. At the start of June, the company was operating about 189 drilling rigs in the Bakken and Three Forks, and 83% of its production there was oil.
While the Bakken still holds significant upside for Continental and other producers there, Continental also is leading the industry in exploring the Three Forks formation, which lies underneath the Bakken. The company said it is on schedule to confirm the amount of oil and gas contained in the Lower Three Forks formation. In its first-quarter earnings release, Continental said it completed 67 net wells in the Bakken during first-quarter 2014. North Dakota completions included 50 net wells in Middle Bakken ("MB") and Three Forks One ("TF1"), and six net wells in each of the Three Forks Two ("TF2") and Three Forks Three ("TF3"). Montana completions for first-quarter 2014 totaled 11 net wells, all in the Middle Bakken.
"Harold Hamm is a larger-than-life, once-in-a-generation oil & gas wildcatter that is changing the face of the business," said Jesus Davis, Industrial Info's vice president of research for Oil & Gas Production, Pipelines and Terminals. "In the Bakken, he has shown what advanced technology and entrepreneurial passion can accomplish. I wouldn't bet against him on the Three Forks."
In an email to Industrial Info Resources, Warren Henry, Continental's vice president for a research and policy, said, "We don't have an accurate, current estimate of (probable and possible) reserves (for the Three Forms formation) that we can share right now. Of our proved reserves of 1.08 billion barrels of oil equivalent at year-end 2013, 68% were in the Bakken, with the vast majority of those being Middle Bakken and Three Forks first bench. We're doing an extensive amount of density testing in various parts of the basin right now, and we expect these tests to give us a better picture of potential resource by year-end 2014. The density tests involve MB, and Three Forks benches 1, 2 and 3."
"There's only one Bakken, and it's getting bigger and better," Continental said in a June update to investors. The company said it had initiated the industry's first full-field development in the prolific Antelope area, which includes deposits in the Middle Bakken and Three Forks benches 1, 2 and 3.
Forbes magazine profiled Hamm's--and Continental's--success in a May 5, 2014, cover story. In that article, he said the U.S. energy boom is just beginning.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
