April Oil Production Decreases at Bakken Shale



Bakken crude oil production and rigs

On May 11, 2015, the U.S. Energy Information Administration (or EIA) released its Drilling Productivity Report (or DPR). It estimates that in April 2015, the Bakken shale produced 1.32 million barrels of crude oil per day. This is 1% less than March’s production and 29% higher than production a year ago.

The number of rigs in the Bakken decreased to 86 in April, from 101 in March. A year ago, there were 184 drilling rigs in the region. Most of these rigs are horizontal in trajectory, or type.

Article continues below advertisement

Oil production per rig

In April, the Bakken shale produced 590 barrels of crude oil per day (or bbl/d) per rig, a 39% gain in production per rig since April 2014.

Meanwhile, the high rate of production has led to a decline in oil prices. As oil prices remain suppressed, oil producers will have less incentive to increase production, and production may even fall.

Falling oil prices will hurt Bakken shale producers such as Denbury Resources, Inc. (DNR), Continental Resources (CLR), SM Energy (SM), Marathon Oil Corporation (MRO), and EOG Resources (EOG). SM Energy and Marathon Oil Corporation together account for 2.9% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

Williston Basin has highest tight oil reserves

The Williston Basin’s large size and number of wells have unlocked huge oil reserves in the region. The most productive formations for the horizontal drilling and hydraulic fracturing process are in Williston Basin’s Bakken and Three Forks formations.

According to the EIA, the Bakken–Three Forks play covering portions of North Dakota, Montana, and South Dakota has the largest tight oil proved reserves in the United States.

In the next part of this series, we’ll look at crude oil and gas production at the Niobrara shale.


More From Market Realist