New completion procedures
After noticing potential communication between wells during fracture stimulation procedures in the latter half of December, the company made the decision to modify its completion procedures.
CEO Lynn Peterson explained further:
Based upon our new observations, we decided to [shut down] all producing wells within the immediate vicinity of completion operation of new wells. With this approach we are seeing a positive response from the shutting wells once they are returned to production. Which leads us to believe that we are initiating new fractures into the old well bores and finding new reserves. While this procedure has resulted in a delay of some production, it is our view that this approach will help us prudently manage the reservoir and enhance our expected long-term results.
If there is significant communication between wells, it could have an impact on the quantity of oil the company can expect to ultimately recover, as well as implications for its estimate of proven reserves.
New pilot programs
To explore this issue further, the company will be implementing two pilot programs. The logic behind these programs is to evaluate the impact of closer well bore spacing over a larger acreage and get a better understanding of communication between intervals.
The two pilot programs will involve drilling six wells each in the Middle Bakken and Three Forks formations. Currently, Kodiak Oil & Gas Corp (USA) (KOG) has three rigs drilling in its Polar project area, and one rig up and running in its Smokey project area.
In the Polar project, the company expects to begin completion operations by the middle of the year, while in the Smokey area, it will be commencing completion operations throughout the year and has plans to fully develop the acreage.
The knowledge and experienced gleaned from these two pilot programs, which account for a third of Kodiak’s operated drilling program, will have a major influence on its future development strategy, the company said.
The article After Earnings Report, What’s Next for Kodiak? originally appeared on Fool.com and is written by Arjun Sreekumar.
Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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