Bakken breakevens as low as $16/bl: ND

OREANDA-NEWS. August 16, 2016. WTI crude breakeven prices in the four most productive counties of the Bakken shale in North Dakota are \\$16-\\$38/bl, as drilling in the state still hovers near 1mn b/d despite a sharp drop in rig counts.

The breakeven prices — the price at which it no longer becomes profitable to drill and produce oil — are down on average by about \\$5/bl from May, the last time the state released the data. The drop reflects a drop in completed well costs and the increasing productivity of each well, state officials said.

In the most active county for drilling — McKenzie county — producers could breakeven with a WTI price of \\$24/bl, according to data released this month from the state's Department of Mineral Resources. Producers in that county have 15 active rigs.

The breakeven is \\$38/bl for Mountrail county with three active rigs. And Dunn county has the lowest WTI breakeven price in North Dakota at \\$16/bl. That county has 10 active rigs.

Williams county, with three active rigs, has a breakeven price of \\$23/bl.

WTI prices have dropped sharply from highs above \\$100/bl in mid-2014, hitting a low below \\$27/bl in February. Prices rallied in the second quarter and are hovering in a \\$40-\\$50/bl range. WTI prices averaged about \\$45/bl in July and about \\$42/bl so far in August.

The four North Dakota counties — McKenzie, Dunn, Williams and Mountrail — account for the bulk of the state's output as operators focus on what state officials call "the core of the core" or the most productive areas. Some wells in McKenzie and Dunn counties have output as high as 3,000 b/d, state officials said.

The majority of the state's drilled but uncompleted wells (DUCs) are in these productive areas, which means that output could pick up rapidly if they are put back on line.

North Dakota currently has 34 active drilling rigs, which is up by three from the end of July. The all-time high was 218 rigs in May 2012.

Drilling permits in the state increased to 86 in July, up by 21 from the previous month.

The increase in permits comes as operators begin to position themselves for higher oil prices in 2017, state officials said.

Despite the low breakevens in the four counties, North Dakota's output should drop below 1mn b/d by the end of this year, state officials said. That symbolic drop below 1mn b/d could happen as soon as this month.