Oasis Petroleum Bakken Shale Frack Stages – Capital Budget Increase

by Kenneth E. DuBose on August 12, 2011

Oasis Petroleum announced second quarter results along with an increase in its capital budget and the number of frack stages deployed in the Bakken Shale. Operators have consistently utilized larger hydraulic fracturing completions in the Bakken Shale and the latest move has Oasis going from 28 to 36 stages per well.

Expect to see a lot of changes in the way wells are completed and brought to production over the coming months and years. We’re still early in the life of producing liquids from tight shale formations. As time passes, operators are gathering more data and will be able to make better decisions. That’s a win for mineral owners and operators.

One concern from the release is the amount of budget increase from cost escalations. That has been a message we’ve heard from almost all companies. If the economy continues to trend down and costs up, that makes for a very bad combination. We’ll need one side to give.

Changes in Oasis’ capital expenditure budget are approximately due to:

  • $22 million related to increasing the number of frac stages from 28 to 36; the Company now plans to complete 53 gross operated wells with 36 stages in 2011
  • $26 million due to the addition of rigs eight and nine in the fourth quarter of 2011
  • $19 million for well cost escalation
  • $19 million net  due to higher working interest in operated wells and lower working interest in non-operated wells
  • $14 million to the infrastructure budget to continue to expand the Company’s salt water disposal infrastructure, accelerating the pace of build (bringing 2012 projects into 2011)
  • $3 million reduction in Geologic and Geophysical
  • $24 million associated with equipment and materials for OWS
  • $6 million in non E&P capital for a field operations building in Williston, ND
  • $10 million in non E&P capital for other equipment, such as drill pipe

Read the full press release at OasisPetroleum.com

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