Bakken crude breaks even as low as $22/bl

OREANDA-NEWS. May 27, 2016. WTI crude breakeven prices in the three most productive counties of the Bakken shale in North Dakota are \\$22-\\$41/bl, as drilling in the state remains near 1.1mn b/d despite a sharp drop in rig counts.

In the most active county for drilling — McKenzie county — producers could breakeven with a WTI price of \\$30/bl, according to data released this month from the state's Department of Mineral Resources. Producers in that county have 14 active rigs.

The data provides some insight into why US crude output has been resilient in spite of falling crude prices.

Almost all drilling in the Bakken is occurring in the three counties. Major Bakken producers include Whiting Petroleum, Continental, and Hess.

The breakeven is \\$41/bl for Mountrail county with three active rigs. And Dunn county has the lowest WTI breakeven price in North Dakota at \\$22/bl. That county has 5 active rigs.

The data examined breakeven prices in a dozen counties. Of those, eight were below \\$50/bl.

WTI prices have dropped sharply from highs above \\$100/bl in mid-2014, but have staged a modest recovery in recent weeks. The benchmark has settled above \\$40/bl since 11 April, rising from lows below \\$27/bl in February. WTI hit a six-month high today, settling at \\$47.72/bl.

The lower crude prices in the past two years curtailed drilling in North Dakota where active rigs have fallen to 27, the lowest since July 2005.

But drilling permits increased to 66 in April, up by 10 from March.

North Dakota's crude output fell in March compared to the previous month, sliding by less than 1pc, a smaller-than expected decline, according to the most recent state figures.

March crude production averaged about 1.1mn b/d, down by about 9,800 b/d from February.

Crude production should drop to 1mn b/d or lower by the end of the year, said Department of Mineral Resources director Lynn Helms.