Rosetta hits Bakken Oil

Rosetta hits Bakken Oil

Rosetta's Aug 8 financials caught my eye in mentions of the Alberta Bakken drilling.

http://ir.rosettaresources.com/releasedetail.cfm?ReleaseID=597464

Expanded Southern Alberta Basin horizontal drilling program — Rosetta initiated a three-well horizontal drilling program during the second quarter of 2011 that will continue to test the commerciality of the play. The first horizontal well was spud in the second quarter and drilling operations are now underway on the second and third wells. Rosetta plans to expand the horizontal program to include an additional four wells to be drilled by year end.

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SOUTHERN ALBERTA BASIN

During the first half of 2011, Rosetta completed eight vertical delineation wells on its approximately 300,000 net-acre position in northwest Montana. In total, eleven delineation wells have now been tested. All have encountered oil from multiple reservoirs that produced varying quantities of oil and gas. The vertical delineation wells span a wide area and test results have varied. Based on this variability, some areas of the play will have a higher chance of commerciality than others. While not all vertical testing is complete, production from testing only the Bakken reservoir resulted in an average seven-day rate from all well tests of 22 BOPD and associated gas from these single stage vertical completions.  

So in summary, Rosetta is adding 4 new wells by end of 2011 in the Alberta Bakken.  Note that they hit oil in all their drilling, and gave an average of 22 BOPD for the whole lot.  The Goombarh's interpretation is that Rosetta is being careful and conservative in their choice of words, as these are delineation wells in their own words, and also as test of Bakken reservoir, and single stage,  these are not meant for production, but merely to find areas that they will go horizontal and fracture to complete.  I am inferring that the variability that they refer to is in how thick the Bakken is at the well and also in terms of the depth and the pressure encountered.  Note the rumours of a high pressure sweet spot.

To my understanding, the Bakken is not a good reservoir, as the oil is tight, in other words, the shale has to be broken to allow the oil to slowly leak out from the heat and pressure.  The Bakken is not a reservoir at all, but is a source rock for oil, for which it is among the best in the world, with their Total Organic Content (TOC) of up to 60% by weight.  Contrast this with other source rocks that are good for oil with a 5 to 10% TOC.  The main driver here is that the Bakken oil here has not been released and have not migrated elsewhere, but they are contained in the source rock, the Alberta Basin Bakken. 

The thought, is that this is very good news, Bakken is hit everywhere, with the pressure being much higher in certain sections of this play.