FORT WORTH, Texas - Chord Energy Corp. is striking deals and delivering solid results in the Bakken as the company reimagines its well spacing, three-mile laterals and returning cash from its Bakken operations.
On the deal front, the company announced in its first quarter earnings that it had sold off or is selling non-core assets located outside of the Williston Basin for proceeds of approximately $35 million.
Then, on May 22, Chord announced a $375 million acquisition of 62,000 acres from Exxon Mobil.
"It was a fun little base hit for us," Charles Ohlson, Chord’s senior vice president for production, said on May 24 during Hart Energy’s SUPER DUG event.
“We were able to block up some things and pick up some additional three-mile laterals.”
There is, he said, room for more consolidation to be done in that basin, he added.
Ohlson said the company has $590 million held in reserve for M&A.
But Chord is more excited with what it’s been able to do with what it already owns.
Chord since the merger
Chord, formed in July 2022 when Whiting Oil & Gas and Oasis Petroleum combined in a $6 billion merger, has focused on finetuning well spacing and improving longer lateral production, Ohlson said.
Back in 2015, the individual companies were drilling as many as 14 wells per drilling spacing unit (DSU) in certain locations, he said.
“It would appear that we were a little more optimistic than was warranted,” he said, noting the spacing was “consistent with what many operators were doing at the time.”
However, he said, through studies and observations, it was possible to zero in on better spacing intervals.
“Chord took a very deliberate approach to discovering what the optimum well density and spacing should be, both in a vertical sense and a horizontal sense,” Ohlson said.
A recent drilling spacing study that challenged assumptions, he said, revealed that improving completion designs combined with better understanding of reservoirs could develop reservoirs with half the wells previously thought required.
“This study is in the process of being broadly applied to all of our assets in Williston to reap those same economic benefits,” he said.
Further, he said, single-well performance with wider spacing — versus tighter spacing —reflected higher output.
“Chord’s wider spaced wells are outperforming the more closely spaced wells at the 300-day mark to a significant degree,” Ohlson said. “As we look at the population of more than 50 wells that Chord has brought online since July of 2022, we continue to see these wells perform at or above the tight curve with a significant period of flat production followed by a shallow decline.”
When Chord considered its inventory of wells with three-mile laterals, it found the final mile performed consistently.
“Chord certainly didn't invent three-mile laterals, although we were fast followers, dipping our toe into three mile laterals a few years ago,” he said. “We now feel confident that that third mile is indeed contributing and contributing in a meaningful way.”
He said the company confirmed improved output through technologies such as oil- and water-soluble tracers, as well as production observations and performance.
“At the 50-month mark, the three-mile wells are outperforming the two-mile wells by 43%,” Ohlson said. “Three-mile laterals are simply more efficient to drill on a per footage basis. The economic uplift gets pretty exciting.
“Spending only 20% more, achieving 40% to 50% more to recover recoverable reserves. That results in a 25% rate of return.”
For 2023, Ohlson said, three-mile laterals make up 50% of Chord’s development program, and that number will increase to as much as 60% of the company’s remaining inventory in the future.