Wells Fargo Equity Research hosted a conference call July 2 with management from privately held Liberty Resources to discuss the slickwater completion technique it has used in the Bakken. In its follow-up research note, Wells Fargo’s E&P team summarized the call as follows:

“Liberty’s philosophy is ‘reservoir stimulation, not proppant disposal’. To enhance contact area and conductivity, Liberty generally uses plug’n perf, ceramic proppant, and slickwater in its completions.

“Management provided data showing this combination can improve cumulative oil production by 120-200% over 180 days compared to other techniques, while improving EURs nearly two-fold. Compared to the Bakken as a whole, Liberty’s 365 day cumulative oil number is 56% higher than the basin’s average.

“Investors on the call had questions whether slickwater only enhances economics in the lower-quality portions of the Bakken; management provided data showing the exact opposite; i.e., it sees more of an uplift in higher-quality areas. Further, Liberty’s service group works with 10-12 operators across the basin and said it has seen similar improvements across all areas of the Bakken.”

Liberty provided the following data regarding well results using various completion techniques.

Source: Liberty Resources

Source: Liberty Resources

The map area shown, provided by Liberty, is in Williams County, North Dakota. The bubbles indicate 180 day cumulative oil production from wells completed with various techniques. Red bubbles represent wells completed using Liberty’s plug’n perf, ceramic, slickwater technique, while the purple bubbles represent wells using sliding sleeves, sand or ceramic proppants, and cross-linked gel. The orange bubbles represent wells that were completed using a hybrid approach.

The size of the bubbles represents the 180 day cumulative oil production, comparing Liberty’s approach (red) to the other nearby wells, with 180d cumulative oil production greater than 80MBO versus ~20 MBO to 45 MBO for wells completed with cross-linked gel and ~40 MBO to 60 MBO for the hybrid wells.

“Liberty believes the data speaks for itself and that the enhanced economics of its completion technique are so strong that operators will eventually shift toward their direction. For operators already using ceramic proppant, moving to slickwater vs. cross-linked gel could add ~$1-2MM per well. However, Liberty believes these added costs are paid back in a few months due to the higher production rates,”

Wells Fargo said in its note, concluding, “It may become increasingly difficult to ignore the solid returns laid out by Liberty, and we would not be surprised to see other operators in the Bakken move toward sliding sleeves, slickwater, and larger frac’s over time.”

Slickwater Gaining Traction

E&Ps are always evaluating options to improve EURs, and the slickwater technique is being successfully utilized by other companies, including:

  • Oasis Petroleum (ticker: OAS). Oasis also operates in the Bakken and reported uplift of 25% to 30% in its Williston wells from the use of slickwater, according to its Q1’14 earnings call. As a result, the company plans on using the fracing technique to complete 20% of its wells (32 total) in Q2’14. A test on a Three Forks well is expected in the near future, and OAS management said, “There’s no reason why you shouldn’t get a similar uplift by doing that stimulation in the Three Forks versus the Bakken.”
  • Goodrich Petroleum (ticker: GDP) in the Tuscaloosa Marine Shale. GDP, one of the largest operators in the region, has been using hybrid frac jobs to complete its wells. As a result, eight of its last 10 wells have returned peak 24-hour rates greater than 900 BOEPD. Rob Turnham, President and Chief Operating Officer of GDP, told OAG360 that “the slick water provides some fracture complexity and the gel transports the proppant out into the formation.”
  • Synergy Resources (ticker: SYRG) in the Wattenberg. Slickwater is being used as part of SYRG’s downspacing program and the company is monitoring the results from its various completion methods. While the company is still testing different techniques and has not specifically revealed its method, recovery rates are on the rise. Its Phelps pad, as noted by SunTrust Robinson Humphrey on June 24, increased production by 50% at its midpoint for only an 8% cost increase compared to its previous pad.

[sam_ad id=”32″ codes=”true”]

Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.

Legal Notice