Production from enhanced completions is outperforming offset wells by ~40%
Bonanza Creek Q3 production volumes averaged 15.8 MBoe per day
Bonanza Creek Energy, Inc. (ticker: BCEI) said that its enhanced completions and reduced cycle times are adding to top tier operational results in Q3, paving the way for development through 2018.
Seth Bullock, Interim CEO commented, “I am pleased to announce that initial results from our enhanced completion program are significantly out-pacing offset wells that used the previous completion design. These increased production results along with the significant structural cost reductions that have been identified and implemented this year are laying the ground work for a strong 2018.”
Production Results from Enhanced Completions
At the end of the second quarter, BCEI completed its first pad of four drilled uncompleted wells which utilized enhanced completion design. These 4,100-foot standard reach lateral (“SRL”) wells were completed using approximately 2,000 pounds of sand per lateral foot, approximately 100-foot stage spacing, and enhanced recovery flow back.
Initial results from these first four wells are very encouraging, with an approximate 40% increase in overall average production and an approximate 60% increase in average oil production through the first 120 days when compared to offsetting wells. The offsetting wells utilized the previous standard design of approximately 1,000 pounds of sand per lateral foot and stage spacing of approximately 225 feet.
Drilling and Completion Activity
During the third quarter BCEI s operated program drilled six gross and net wells (4 SRL and 2 XRL), and completed zero wells. Bonanza Creek’s non-operated program had one net completion during the third quarter.
Year-to-date, the Company’s operated drilling program has exceeded expectations with faster drill times. Spud-to-rig release times have decreased by approximately 20% when compared to the 2016 program, and are currently averaging less than six days for an SRL.
Wattenberg Gas Takeaway
Due to increased line pressures on the gathering system operated by the company’s primary gas processor, Bonanza Creek entered into a 15-year gas purchase agreement with Sterling Energy Investments, LLC, a nearby third-party gas processor, on September 1, 2017. The agreement will allow BCEI to deliver approximately 6.5 MMcf per day of wet gas, or approximately 20% of the Company’s third quarter 2017 Rocky Mountain gas production, into Sterling’s system. A new pipeline and interconnect, constructed by Sterling, will provide an additional gas processing outlet for gas production from the Company via its Rocky Mountain Infrastructure (RMI) gas gathering system. Gas will begin flowing to Sterling during the first half of November 2017. The Company is currently evaluating additional alternatives to minimize the potential of production headwinds from regional infrastructure constraints.
During the third quarter of 2017, BCEI reported average daily production of 15.8 MBoe per day, at the low end of the guidance range of 15.8 – 16.2 MBoe per day.
Production during the quarter was negatively affected by the increased line pressures on a third-party regional gas gathering and processing system in addition to extended downtime from offset completion operations. Third quarter production decreased by 25% when compared to the third quarter of 2016 due to minimal drilling and completion activity throughout 2016 and the first half of 2017.
Product mix for the third quarter of 2017 was 52% oil, 21% NGLs, and 27% natural gas.
Net revenue for the third quarter of 2017 was $45.2 million, compared to $49.3 million for the third quarter of 2016. Crude oil accounted for approximately 76% of total revenue.
