April 1, 2015 – In response to the drastically reduced price of oil, U.S. shale producers are “Coring up” said Tim Rezvan, Managing Director at Sterne Agee, speaking at the 2015 DUG Bakken and Niobrara conference today at the Colorado Convention Center. Tim Rezvan went on to explain that efforts to reduce costs was steering drillers to their most cost effective acreage in the core shale areas where yields were generally high and existing pipeline infrastructure was already in place to carry away oil. Gibson Scott, Director of Energy Research at ITG, also on the “Economics Lessons in The Rockies” panel, had data showing that 90% of the rigs in the Bakken were now running in core.
The common theme coming from all the speakers at the conference was a focus on lowering costs, understanding the dynamics of their play, and becoming more efficient in producing oil.
Jim Volker, Chairman and CEO of Whiting Petroleum said confidently during his talk that he was rigging the company to run profitably at $45 – $55 oil. Whiting Petroleum is active in both the Bakken and Niobrara plays. On their Niobrara Redtail program, Whiting is averaging 400 BOE/d in 120 days from the Niobrara C bench and the Fort Hays/Codell formations.
In a big picture view, Tom Petrie of Petrie Partners LLC. and author of the book “Following Oil” (read review from Oil and Gas Journal) who was speaking about oil and geopolitics, said that he did not think that Saudi Arabia’s ability to sustain low oil prices was unlimited, considering that they are now fighting a two front war with ISIL and Houthis rebels in Yemen. He was of the opinion that oil prices would rebound to the range of $70 to $85 bbl well before the end of the decade.
Jim Volker’s parting comment in his talk echoed a sentiment that was shared by many in the audience, “Keep your chins up, things are going to get better”