Barons of the Bakken

John Wright and Greg Smith have forged the most powerful corporate entity now active in Saskatchewan’s hot Bakken play

by Dale Lunan
Oct 2009
Source: Oilweek Magazine

For most of the past two or three years, a mention of the name Petrobank Energy has brought to mind the company´s high-profile in situ bitumen recovery project in the Athabasca region. THAI (toe to heel air injection) has been talked about regularly, but little else has been said about Petrobank´s other assets. Until now.

In early August, the company dropped the bombshell of the summer by announcing that it had combined its Canadian Business Unit (which held Petrobank´s conventional oil and gas assets in western Canada) with TriStar Oil and Gas Ltd. to create PetroBakken Energy Ltd., the most dominating player in the one of Canada´s hottest oil plays in recent memory, the Bakken of southeast Saskatchewan.

The $580-million transaction brought together two of the three biggest Bakken players (Crescent Point Energy Trust, which recently acquired Talisman Energy´s Bakken assets, is the other) and created a dominant force that will, by the end of this year, be producing nearly 30,000 barrels of oil equivalent from the Bakken and flexing its muscles as it prepares to drill up to 130 bilateral horizontal wells a year for the next five years.

And that, says Petrobank president John Wright (who will serve as chairman of PetroBakken) is an investment vehicle the street can´t help but notice, especially in the current climate that favours oil first and natural gas last.

"It creates a pure play investment opportunity for exposure to high-netback light oil, particularly in the Bakken resource play," Wright told a conference call just a few days after the deal was done. "In the Bakken alone, the combined asset base of the two companies creates a dominant, operationally complementary land position and provides significant visible development growth through the drilling of more than 1,300 identified future locations."

Working apart, each of Petrobank and TriStar took the technologies needed to develop the Bakken´s tight sands to a new level, including Canada´s first-ever 20-stage frac of a horizontal well. There´s no telling how far the combination can go when working together, Wright says..

"Independently, each of TriStar and Petrobank have been industry leaders in applying new, leading-edge technologies to unlock the true potential of the Bakken," he told the conference call. "Bringing these two teams together in Petrobakken will create the preeminent Bakken resource team, utilizing best practices to continually enhance and ultimately maximize recovery factors."

Once some fringe Alberta assets cluttering the desks at Petrobank are sold off-about 9,700 barrels of oil equivalent, to be precise-PetroBakken will be focused almost exclusively on the Bakken play of southeast Saskatchewan, with opportunities to extend the fairway south into Montana. It will also have an extensive cache of drillable locations in the Horn River and Montney shale gas plays of northeastern Alberta, but it will await better times to pursue those opportunities.

"Taking some of that experience that we´ve gained by drilling and completing so many horizontal wells, the company will also have in its back pocket significant upside gas potential in the Horn River and Montney plays, with over 400 identified potential drilling locations, which will provide an additional long-term growth platform," Wright said.

PetroBakken will exit 2009 with production of more than 37,000 barrels of oil equivalent per day, 95 per cent of which is light oil, while Bakken production alone will exceed 27,000 barrels of oil equivalent per day. Proved-plus-probable reserves, again after the Alberta divestitures, will exceed 127 million barrels, giving PetroBakken an envious reserves life index of more than nine years.

And with more than a million acres of land-including more than 800,000 net acres in the Bakken proper-PetroBakken will be the largest landholder in southeast Saskatchewan, and among the largest in the province.