"Are well performance gains real, and what does that mean for activity over the next 12 months?"
They are, and activity has already started growing. North Dakota production is up nearly 100 kb/d this year, and our North America Well Analysis Tool shows that 90-day production rates from Dunn County wells were at an all-time high in Q4 2016. New high-efficiency wells — using high concentrations of friction-reducing fluids and particulate diverters — are also more common.
Looking forward, private equity groups that made hefty returns selling Permian properties this year are now targeting the Bakken. Refracturing programmes are here for the foreseeable future, and Marathon in particular is known to have tested three different Bakken refracturing configurations.
SCOOP/STACK Anadarko Basin
"Are we seeing well performance issues away from Tier 1 acreage, and will PE-funded projects find willing buyers?"
Yes and yes. The largest risk of STACK step-out drilling is variability in oil cuts. Finding the right landing zone is also key, so seeing low averages and high skewness in appraisal well data sets is the norm. Another issue is high water production from the Mississippian intervals. Although Newfield claims minimal formation water in its core areas, we have witnessed water to oil ratios as high as 20:1 in Garfield County.
Private equity has been particularly interested in eastern SCOOP acreage around Garvin County, but most of the value in SCOOP/STACK projects resides in future drilling. Because tight oil projects in the Anadarko Basin tend to be scattered and require more transactions for an operator to establish scale, key value-proving appraisal and delineation wells for PE-funded operators should be intently watched.
Powder River Basin
"What does Wood Mackenzie think of this new play? Chesapeake and Devon are sending strong signals."
We like the potential of nine stacked reservoirs in the basin, and lower service costs and cheaper completions have pushed this basin to the top of our watch list. Both investors and geoscientists are interested in the 5,000 ft (1,500 m) of overpressured, oil-bearing strata where the Mowry and Niobrara zones are source rocks and all other Cretaceous sand zones act as reservoirs.
Peak, Wave and Ballard have drilled some particularly productive wells into the Turner sands, and one reportedly tested over 2,000 b/d. Wildcats are planned this year along the Montana border, as well.