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Testing the western edge of the Spyglass American Eagle puzzled by a Three Forks well on MT/ND border as other operators also begin operations within Divide County Maxine Herr For Petroleum News Bakken
An unusually high water cut and some chemical emulsion issues have brought fluctuating oil rates for American Eagle’s test well in Flat Lake East field along the North Dakota and Montana border in northwest Divide County.
The Haugen well, which targets the Three Forks formation, gained much of the attention in a May 14 first quarter conference call with analysts. The well has produced 60 to 192 barrels of oil estimated per day, boepd, so the company is still evaluating the well to determine the how much of a prospect the Three Forks really is along that western edge.
“There is nothing unusual about the proppant flowback,” said Tom Lantz, American Eagle’s chief operating officer. “So the only distinction out there is the water salinities are slightly higher, about 10 percent higher than other parts of the field. But we’re doing some further analysis on that and will find out how significant that is and how much that’s affecting oil fluctuations.”
American Eagle found the upper Three Forks to be slightly thicker than expected, but said it still looks very similar to what the company has seen on other wells, giving no indication of why it should be showing production fluctuations. Lantz said the company will review additional rock samples to see if there is a change in mineralogy that would explain the emulsion problem.
“If there is, we may find some compatibility issues and then we can adjust our frack fluids,” he said. “We’ll do more science work on the Haugen well and see if there’s anything we can determine from that to adjust anything on the completion side.”
The Haugen well produced an average of 91 boepd during the first 20 days of production with a water cut in excess of 90 percent.
Other wells produce better than expected Meanwhile, initial results from a well in the north central portion of the Spyglass acreage confirmed the expected quality that was established by two offset wells east and south of it. This Tangedal short-lateral well showed 30-day initial production at 363 boepd from the Three Forks, which put it above the type curve used in the company’s year-end reserve report. Another well on the western edge, the Taylor, produced 358 boepd from the Bakken, up 43 boepd from what was projected.
“Both wells have continued to perform with relatively flat production curves and give us confidence with our well developments schedule that focuses on developing wells with higher working interest in central Spyglass, while continuing to develop infill wells in eastern Spyglass, and moving development west with supportive well details,” President and Chief Executive Officer Brad Colby said.
American Eagle has two drilling rigs in the Spyglass area, has already spud two gross operated wells in the second quarter, and is completing four gross wells with plans to drill and complete two more. It expects to bring six gross operated wells into production each quarter.
The company plans to drill a mix of 16 net Three Forks and middle Bakken wells in 2014 for approximately $94 million. It will also participate in non-operated wells in its Spyglass area with total well development costs of $100 million.
“We are currently producing approximately 2,250 barrels of oil equivalent per day and are completing wells that should be additive to second quarter results,” Colby said. “The remainder of our 2014 development plan continues to focus on higher working interest wells in central and eastern Spyglass.”
American Eagle reported first quarter 2014 production of 148,048 boe, averaging 1,645 boepd. Production was up 69 percent from the same time last year, but down 12 percent from the last quarter due to extremely cold weather. “That negatively impacted our first quarter production, but our operations have been able to recover to 2,250 boepd now,” Colby said. “So we expect good growth and we have confidence we will exit 2014 with over 3,000 boe per day.”
Production volumes are expected to return to normal levels during the second quarter with higher working interests that now average 68 percent in the Spyglass area following the acquisitions completed in March. Colby said he is encouraged to see other operators beginning to acquire acreage in the Spyglass area. “We’ve known for years the low-cost wells and flat decline curves in the Spyglass make for great well economics,” Colby said. He cited an April press release from Crescent Point in which the company announced acquisitions within the Spyglass, touting a high rate of return wells at low capital cost. Colby said American Eagle may acquire another 5,000 to 7,000 acres in the heart of the Bakken.
Well costs were higher than projected, around $6 million, but Lantz said that price has tempered a bit as some wells are being drilled quickly. The company is interested to see the results of its long-lateral La Plata State well in which it used new sleeves in the initial completion resulting in a slightly higher cost.
American Eagle is a Denver-based exploration and production operator focused on acquiring acreage and developing wells in the Williston Basin. It ranked 26th among the top 50 Bakken oil producers in North Dakota in March for operated, non-confidential wells with an average daily output of 3,629 barrels.
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