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Linn Energy, LLC Message Board

  • sandonthebeach47 sandonthebeach47 Nov 21, 2012 3:02 PM Flag

    So, how about profitable is the Bakken?

    the 2012 Linn presentation slides show that the IRR averages for the Linn Bakken/Three forks wells are ~50% IRR....but there are many other examples to look at also.

    For Example Continental Resources has a 5 year plan (from October 2012) to tripple production:

    "Oklahoma-based Continental Resources Inc. (NYSE: CLR), a leading oil producer in the Bakken shale, yesterday unveiled its strategy for the next five years. Key information includes intent to increase both production and proven reserves threefold by the end of 2017."

    "Hess Doubles 3Q Profit on Bakken Shale, Libya Drilling"
    Nov, 2, 2012
    "Bakken shale production in North Dakota doubled to 62,000 barrels of oil equivalent a day and the company resumed operations in Libya"

    any more Bakken/Three forks examples?

    Sentiment: Strong Buy

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    • Profitable enough where everybody wants in on the Bakken.

    • You are the clown if you don't know what ND used for the base oil price. But like I said, I don't expect any logical answer from you anyway.

      • 2 Replies to rlp2451
      • 1,000,000 EURs Now who's joking? You actually think the average well in the Bakken that will produce that much? Funny man!

        No logic at all.

        Why stop at $30 millon? Why not $40 or 50...or even 60? The sky's the limit in your fantasy.

      • No one but you cares what "ND used for the base oil price" because it does not matter if you believe that they are capable to do the estimate and would use a reasonable number.

        You want to check their math...fine call them up ans ask all you want.

        You won't since that is not what you want to know anyway....right....clown.

        You just want to make it an issue of the price they used to distract from your posts claiming that they must somehow be incorrect and that Bakken wells are not as profitable as they actually are.

        Have fun trying.

        Since there seems to be interest in just how profitable the bakken wells actually are.

        It will be helpful to see some comments from others in the bakken also.

        This one was from the end of August, 2012
        [Rate of return for a Middle Bakken well reported at 106%...etc.]

        "The Bakken is not the only formation Apache is interested in drilling. Just like with the Anadarko Basin of the Texas Panhandle and western Oklahoma, where Apache has over a million net acres, this portion of the Williston Basin offers multiple stacked oil plays, the type of onshore unconventional drilling the company likes. Daniels County has produced conventional oil from the Ratcliff, Madison, Mission Canyon and McGowan formations in the past. However, the county also has potential to produce unconventional oil from the Mississippian aged Bakken, Lodge Pole, Madison Group as well as the deeper Devonian aged Three Forks and Nisku members.

        As far as economics goes, lower well costs are another advantage this area provides. Since the Bakken is at a shallower depth here, well costs are estimated to be around $7.5 million compared to about $10 million in the center of the bowl-shaped basin. Middle Bakken EURs are reported at 670 MBO compared to 377 MBO for a Three Forks well. Rate of return for a Middle Bakken well reported at 106% versus 37% ROR Three Forks well.

        It will be interesting to see this region develop. As time progresses I’ll check on other operators moving into Daniels County as well as production metrics for the Middle Bakken, Three Forks and other targeted formations."

        Sentiment: Strong Buy

    • A typical 2012 North Dakota Bakken well will produce for 45 yearsIf economic, enhanced oil recovery efforts canextend the life of the wellIn those 45 years the average Bakken well:
      Produces approximately 615,000 barrels of oil

      Generates about $20 million NET profit

      Pays approximately $4,325,000 in taxes$2,100,000 gross production taxes$1,800,000 extraction tax$425,000 sales tax
      Pays royalties of $7,300,000 to mineral owners
      Pays salaries and wages of $2,125,000
      Pays operating expenses of $2,300,000
      Cost $9,000,000 to drill and complete

      Sentiment: Strong Buy