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Continental Resources (CLR) estimates that the Bakken Shale formation could hold up to double its previous estimate, prompting a surge in planned activity there.
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Citing improvements in technology, the company now estimates that the Bakken play holds 30 billion to 40 billion barrels of recoverable oil, up from its 2011 estimate of 20 billion.
Continental Resources is ramping up in the Bakken this quarter and expects up to 70 wells to be completed by year’s end, vs. 42 completed in Q3.
As the company looks to pump more oil from the Bakken, it was also upbeat on the ability to transport.
Like the Permian Basin, the Bakken is suffering from takeaway capacity issues, which have produced localized oil gluts that force producers to sell oil at below-benchmark prices.
But Continental expects pipeline capacity to ramp up in 2019 and into 2020. Until then, the company can rely on trains with rail cars converted to meet new safety standards.
Shares of Continental Resources rose 1.5% to 51.09 on the stock market today, a day after reporting strong Q3 earnings, even as crude prices continued to sell off.
Outlook For Costs, Oil Prices
And while oilfield service companies have been raising prices recently, Continental Resources doesn’t expect its ramp-up plans in the Bakken to face higher service costs.
“These service companies are getting more healthy all the time,” CEO Harold Hamm said during the Q3 conference call. “Instead of forcing prices up continually, they are getting more efficient. And with more utilization, we think (prices) could stay about the same.”
With Iranian sanctions looming, Hamm expects the oil markets to “get pretty tight” and “oil prices are going to be strong.”
Hamm believes that the U.S. will account for 65% of new oil production growth if Iranian sanctions are implemented and an additional 800,000 barrels per day will come off the market.
Meanwhile, BP (BP) said its Q3 profit nearly doubled on higher oil prices, and the British oil major told Bloomberg that prices have firmed up in the last four months, with Brent futures expected to stay around $70 a barrel.
Bolstered by its outlook on prices, BP plans to use cash to pay for a $10.5 billion acquisition, scrapping plans to issue new equity to fund the transaction.
BP shares jumped 1.9% to 41.81.
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