Halliburton Company (HAL), Baker Hughes Incorporated (BHI), Chesapeake Energy Corporation (CHK): Oil and Gas Companies Hope for Padded Revenues

Finally, the move to multi-well pads has really improved returns for Bakken producers in particular. While rig counts are down 20% in the region from the peak, well starts are actually up 20%. This has really cushioned Continental Resources, Inc. (NYSE:CLR)‘ bottom line. The company has used multi-well pad drilling to shave $7.5 million and 73 days off the cost of drilling six wells, enabling it to grow its production faster and cheaper than before. In fact, this year it predicts that multi-well pads will shave another $300,000 off the costs of each well, which will get its completed well costs down to $8.2 million. When combined with its other cost savings, a million dollars will be knocked off its historical well costs. That improves the company’s rate of return from 50% to 60% with oil at $100 per barrel.

Final Foolish thoughts
Oil and gas producers really have embraced multi-well pad drilling, which isn’t a surprise given the big effect it has on returns. The move initially cut into rig counts and affected the growth of oil-field service companies like Baker Hughes Incorporated (NYSE:BHI) and Halliburton Company (NYSE:HAL), but both see opportunities ahead. That could mean that everyone wins.

The article Oil and Gas Companies Hope for Padded Revenues originally appeared on Fool.com.

Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Halliburton. The Motley Fool has the following options: long January 2014 $30 calls on Chesapeake Energy. 

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