ConocoPhillips (COP), Oasis Petroleum Inc. (OAS): Massive July Jump in Bakken Oil Production

Photo credit: ConocoPhillips (NYSE:COP)

Oil production in North Dakota exploded higher in July. This is according to new data from the state’s Industrial Commission’s Oil and Gas Division. Overall, production jumped by 55,000 barrels per day to a total just below 875,000. To put those numbers into perspective, total U.S. oil production in July was just 7.5 million, meaning North Dakota now represents almost 12% of that total.

The large monthly production jump is really related to two factors. First, weather has been holding back the completion of wells all year. Now that the weather has cleared, these wells are now finally just coming online. In addition to this, producers are getting better at finding the best formula to unlock more oil from the wells that are being drilled.

Behind July’s gusher
July’s jump shouldn’t come as a surprise. Oil producers from Oasis Petroleum Inc. (NYSE:OAS) to ConocoPhillips (NYSE:COP) all noted that terrible spring weather left several wells waiting to be completed. In Oasis Petroleum Inc. (NYSE:OAS)’ case, it thought it would complete nearly as many wells this current quarter as it had completed in the first half of the year. Meanwhile, ConocoPhillips (NYSE:COP) blamed the wet weather for its meager 3% quarter-over-quarter production jump. ConocoPhillips (NYSE:COP) certainly expects more out of the play given that it is projecting an 18% compound annual production growth rate from the play through 2017. Overall, wet weather left nearly 500 wells drilled, but not completed.

Now that the weather has cleared, frack crews were able to get wells completed. However, there are still 460 wells that are waiting to be completed. This is because more than 200 were drilled in July, which means there is still a lot of pent up production just waiting to be unleashed. This should also keep oil-field service companies very busy this summer, while providing booming production numbers for producers as the year goes on.

In addition to this, oil companies are now more focused on drilling the best spots in the play, while also using better completion techniques to unlock more oil. For example, Kodiak Oil & Gas Corp (USA) (NYSE:KOG) has been focusing its efforts on oil rich Dunn and Williams Counties, while also using ceramic proppants as the focus of its completion techniques. This is leading to excellent initial production rates, as evidenced by the fact that the company recently drilled three of the Bakken’s most recent top ten wells as measured by the initial production rate. As companies continue to discover what works in the play, it will keep production growth flowing.