WPX to step up Williston basin drilling

OREANDA-NEWS. June 29, 2015. US independent WPX Energy plans to step up drilling activity in the Williston basin of North Dakota by resuming completions and increasing rig count.

Lower operating costs and a technical analysis which led to higher estimated ultimate recoveries (EUR) is spurring the move. The company plans to increase its rig count from one to three by the end of the year.

The twin reasons give WPX "the opportunity to generate returns in excess of 30pc in today's commodity price environment," chief executive Rick Muncrief said. The company expects to grow crude output by 20pc in 2016.

WPX joins a small but growing group of companies like Pioneer Natural Resources and ConocoPhillips that plan to raise their production targets as the cost of rigs, crews and chemicals falls. Pioneer said it plans to double its rig count in south Texas' Eagle Ford shale this year. Occidental upped its expected production growth by 20,000 b/d and Devon increased its growth projections by up to 10pc.

WPX said that its estimated drilling and completion costs in the Williston are now about \\$8mn per well, down by 30pc from the average in 2014. The Williston includes the Bakken formation, one of the most prolific US shale developments.

The company will begin work in August on its 14 Williston wells awaiting completion, starting with a four-well pad.

WPX has one rig deployed on its Williston acreage and plans to add a second in August and a third in November.

WPX is planning to test larger hydraulic fracturing operations with more stages, more entry points, and a higher pump rate in the second half of 2015 on its Williston wells, using 100pc sand. The company previously used a combination of sand and ceramic proppant. Drilling and completion costs in the larger stimulation wells are estimated at \\$9mn per well.

WPX's crude output increased by 79pc in the first quarter from a year earlier, lifted by higher volumes in the Williston and the San Juan basin in New Mexico. Crude output increased to 34,600 b/d. Oil accounted for 20pc of WPX's overall first quarter production.