Brigham Exploration Company (BEXP) held a conference call on February 25, 2010, to discuss its fourth quarter of 2009 earnings release. The company disclosed extensive details on its reserves in the Bakken Shale, including new proved reserves totals and proved undeveloped locations booked for the year.
“The company added 9.4 million barrels of oil equivalent of reserves during 2009. We replaced 372% of our 2009 production when revisions are netted out of additions. If revisions are excluded, we replaced 524% of our 2009 production. Our additions were dominated by the Williston Basin, Bakken and Three Forks reserves. Our proved reserves in the Rocky Mountain increased 278% to 15.4 million barrels of oil equivalent at year end 2009.”
“Our EURs for our long laterals with multistage fracs are estimated to average between 500,000 and 700,000 barrels of oil equivalent.”
“Under 2008 SEC rules we booked no more then two PUD locations offsetting the producing well. As a result of the SEC monetization of its reserve rules Cawley, Gillespie took the position that up to four PUDs could be booked offsetting a producing well.”
“This does not imply that each producing well has 4 PUD locations booked. It only implies that 4 locations were booked where we had acreage offsetting the producing well and the productivity of the off setting producing wells justified a booked PUD.”
“57% of our proved reserve editions met the 2008 SEC requirements which allowed the booking of up to 2 PUD locations offsetting the producing well. The other 43% of our proved reserve editions of approximately 4 million barrels of oil equivalent were added as a result of the new SEC rules. These were the third and fourth PUD locations offsetting a producing well. Again, not in all instances did we book all four locations surrounding the producing well.”
“One final point regarding the assessment of reserve additions, Cawley, Gillespie used a 8% final decline rate when calculating our reserves. We believe there is additional upside to the final decline rate to potentially be as low as 5% or 6% if lower final decline rates hold through, we should have positive reserve revisions in front of us as we move forward.”
Source: Seeking Alpha