The setting: Daniels County, Montana. Daniels lies in the northwest portion of the U.S. side of the Williston Basin. Apache is the first among the lucky few that will be able to develop this region of the Bakken Shale. According to John Bedingfield, VP for exploration and new ventures,” a few others will trickle in, but the leasing is done.” Apache acquired 300,000 net acres in a leasehold deal with Shale Exploration LLC, based out of Fort Worth, Texas. Being an early mover into this portion of the Williston allowed Apache to acquire leases at a low entry cost. Apache has over 1,900 play locations and a potential resource of 1 billion barrels of oil on this acreage.
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. Feel free to check out more Bakken activity in the Bakken DNA folder of Drillinginfo.