Continental Resources (CLR) CEO Harold Hamm said the shale producer is starting to frack wells in the Bakken Shale Formation again, as U.S. oil topped $50 per barrel this week.
Continental Resources has started fracking wells again since oil hit $50 a barrel (© Downunderphoto/stock.adobe.com)
Earlier this year, Continental said it had stopped fracking in the Bakken as oil prices hit recession-era lows, and said it wouldn’t wouldn’t resume drilling or completing drilled-but-uncompleted wells (DUCs) until oil hits $60. But Hamm told Bloomberg late Thursday that Continental has started completing DUCs.
Continental isn’t the only producer ramping up production. On Friday, Baker Hughes (BHI) said the U.S. oil rig count rose by 3 to 328 in the latest week, following the prior week’s increase of 9 rigs. This is the first time since August that rig counts have been up two weeks in a row.
And on Wednesday, the Energy Department said domestic output edged up to 8.745 million barrels per day last week from 8.735 million barrels a week earlier, the first uptick in 12 weeks.
U.S. crude dipped below $50 a barrel Friday, falling 3% to $49.29 a barrel. Brent dropped 2.7%, to $50.54 a barrel. Continental shares closed 5.45% lower in the stock market today.
Oil producers had held off on completing wells as a way to save money when prices plunged. Drilling accounts for 40% of a new well’s cost, while completion accounts for 60%, according to analysts at Platts.
Hamm also backed his earlier view that if U.S. oil tops $60 per barrel, rigs will start drilling new wells again. He also sees U.S. oil hitting $70 per barrel by the end of the year.
Despite Hamm’s bullishness, other shale producers have signaled more caution. EOG Resources (EOG) said earlier this year it wouldn’t be in a rush to boost production, even when oil hits $60.
According to Bloomberg, there were 4,290 DUCs at the end of 2015, and most of them were in the Bakken and Permian basins.
Last month, Dan Guffey, vice president of equity research at Stifel Nicolaus, said shale producers would likely start completions once oil hit hit $55 or $60.