The Bakken Magazine May/June 2016

MAY/JUNE 2016

Positive Pull RockPile Energy Services’ Journey From Startup Through Low Oil Page 14

Plus

E&Ps Explain Bakken Entrance Page 26

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CONTENTS

MAY/JUNE 2016

VOLUME 4 ISSUE 3

Pg 26

EXPLORATION & PRODUCTION

New Resource

Capitalizing On The Bakken’s Set-up with cash and industry experience, Resource Energy LLC has entered the Bakken with a strategy for refracks.

BY LUKE GEIVER

DEPARTMENT

Pg 30

INNOVATORS

Achieving Custom Bakken Frack Solutions

To meet client demands, Nine Energy spent a year in the lab to verify a new take on a traditional Bakken well-completion strategy.

BY THE BAKKEN MAGAZINE STAFF

PHOTO: JASON HALLMARK

Pg 14

EXPLORATION & PRODUCTION

Standing Like A Rock

How RockPile Energy Services was built in the Bakken, has survived and could thrive.

BY PATRICK C. MILLER

4 Editor’s Note

Mixing New Technology With Experience

BY LUKE GEIVER

6 Bakken Backers

Why The Industry Needs You Involved

BY ROB LINDBERG

5 Events Calendar

ADVERTISER INDEX

ON THE COVER: A RockPile Energy Services worker prepares a workover rig on a Bakken well site in winter.

PHOTO: JASON HALLMARK

36 AE2S

29 KLJ

33 Bartlett & West

28 Matrix Service

19 Bluebeam Software, Inc.

32 New Prospect Company

2 CARBO

11 Newson Gale, Inc.

13 Convey-All USA

22 North Dakota Association of Counties

24 Golight Inc.

20 Protego USA, Inc.

5 Hotsy Water Blast Manufacturing LP 25 Industrial-Irrigation Services

12 TRC Services of Texas, Inc. 35 URTEC

10 ISCO Industries

THEBAKKEN.COM

3

EDITOR'S NOTE www.THEBAKKEN.com

Mixing New Technology With Experience Technology will lead the continued evolution of the Bakken. We

often hear that advancements created out of necessity during a time of low commodity prices—which is certainly right now—will improve individual wellproduction rates and positively impact field operations and the overall cost of doing business. But, who will be running or utilizing this new technology? And, who will Luke Geiver lead the Bakken into the post-commodity-price induced Editor The Bakken magazine slowdown? In the best case scenario, it would be experilgeiver@bbiinternational.com enced oilfield veterans who have successfully leveraged new technology for oilfield gain, been through other oil industry slowdowns, demonstrated the ability to implement new technologies and strategies, and understands basic oilfield metrics that have held steady over time.

Unbeknownst to each other at the time, when our team conducted feature interviews for this issue, we talked with several company leaders who fit that description. In his feature, “Standing Like A Rock,” Patrick Miller spoke extensively with Curt Dacar, founder of Rockpile Energy Services about the various strategies the company has deployed to stay successful at a time when all contracted work activity is slow. Dacar, before taking on his current duty as CEO for Rockpile, had survived and thrived in the oilfield services sector during challenging and unique times that spanned roughly 40 years. He has seen or experienced dramatic oilfield changes— from horizontal drilling to proppant distribution systems to safety protocols. He may not have a patent on the next greatest downhole tool or software option, but it’s safe to say that when he gets his hands on either one, he’ll know how to capture its value without disrupting current productivity.

Paul Favret and Kent Moore, mentioned in the article, “Capitalizing On The Bakken’s New Resource,” share similar attributes with Dacar. Each has survived and thrived. Each has seen low oil prices and flipped single-digit investments into triple-digit divestitures (Moore ran a drilling operation when oil was trading at $9 per barrel). Through their newly formed company, Resource Energy LLC, the Denver-based team is intensely focused on new technology and strategies. The company has acquired several producing assets in the Williston Basin and, Moore told us, they plan to refrack horizontal wells that were completed as recently as a year ago. Such goals ring true with the idea that technology and innovation will push the Bakken to new levels of productivity and efficiency. But, what does it matter how great a new technology is if there is no one capable of using it and blending the old with the new? As this current issue reveals, the Bakken’s future is bright. New technology and strategies are on the way, and no one is more excited about it than the people who already know how it could change things.

VOLUME 4 ISSUE 3 EDITORIAL Editor Luke Geiver lgeiver@bbiinternational.com Staff Writer Patrick C. Miller pmiller@bbiinternational.com Copy Editor Jan Tellmann jtellmann@bbiinternational.com

PUBLISHING & SALES Chairman Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com President Tom Bryan tbryan@bbiinternational.com Vice President of Operations Matthew Spoor mspoor@bbiinternational.com Vice President of Content Tim Portz tportz@bbiinternational.com Marketing & Sales Director John Nelson jnelson@bbiinternational.com Business Development Manager Bob Brown bbrown@bbiinternational.com Circulation Manager Jessica Beaudry jbeaudry@bbiinternational.com Marketing & Advertising Manager Marla DeFoe mdefoe@bbiinternational.com

ART Art Director Jaci Satterlund jsatterlund@bbiinternational.com Graphic Designer Lindsey Noble lnoble@bbiinternational.com

Subscriptions Subscriptions to The Bakken magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States. To subscribe, visit www.TheBakken.com or you can send your mailing address and payment (checks made out to BBI International) to: The Bakken magazine/ Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Reprints and Back Issues Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee.

For more information, contact us at 866-746-8385 or service@bbiinternational.com. Advertising The Bakken magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production.

To find out more about The Bakken magazine advertising opportunities, please contact us at 866746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. If you write us, please include your name, address and phone number. Letters may be edited for clarity and/ or space. Send to The Bakken magazine/Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or email to lgeiver@bbiinternational.com.

For the Latest Industry News:

www.TheBakken.com TM

4

COPYRIGHT © 2016

by BBI International

The BAKKEN MAGAZINE MAY/JUNE 2016

Please recycle this magazine and remove inserts or samples before recycling

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EVENTS CALENDAR

The Bakken magazine

will be distributed at the following events: Williston Basin Petroleum Conference May 24-26, 2016 Bismarck, North Dakota Issue: May/June 2016 The Bakken magazine

URTeC

August 1-3, 2016 San Antonio Texas Issue: July/August 2016 The Bakken magazine

North Dakota Petroleum Council Annual Meeting September 19-21, 2016 Minot, North Dakota Issue: September/October 2016 The Bakken magazine

OilComm

October 11, 2016 Houston, Texas Issue: September/October 2016 The Bakken magazine

NAPE Denver

October 12-13, 2016 Denver, Colorado Issue: September/October 2016 The Bakken magazine

NORTH DAKOTA PETROLEUM COUNCIL

THE MESSAGE

ENGAGE IN THE MATTER: Oil and gas professionals need to remain, or become, engaged with local, regional and statewide projects and decision making efforts to ensure the inudstry is properly represented. PHOTO: THE BAKKEN MAGAZINE

Why The Industry Needs You Involved Despite the fall of prices and employment, North Dakota's oil and gas industry continues to employ nearly 50,000 people within the state. That figure represents roughly five times as many workers than ten years ago in 2006 and, in turn, means that roughly one of every ten workers in the state works within the oil and gas business.

Yet, few would say that the presence of this employment 6

base has been fully integrated and understood by our communities, our media, our perceptions, or leadership.

I have never lived anywhere else, but I am continually surprised by the interconnectedness of our population. Sure, antagonists of the industry point to money and lobbyists, but this matters much less in a small state when the competition is the cousin or lifelong friend of

The BAKKEN MAGAZINE MAY/JUNE 2016

By Rob Lindberg

a leader when setting broad policies. But that affects the ability of our industry, filled with new residents from Texas, Oklahoma, Louisiana, Colorado and more, to integrate into our society and be effective. It makes it a slow process and that is largely a good thing. Our tightknit relationships are built on longstanding trust and working together, which are two things completed over time.

It also means that a seat at the

table is earned, not guaranteed, through the demonstration of a commitment to the community.

Often, the first efforts can be tough when trying to create new relationships with the fiercely independent, unyielding Scandinavians and Germans of the upper Great Plains.

However, it is our responsibility as members of the oil and gas industry to make the first effort. Our industry is impacted by not only headline-grabbing policies but small decisions made on local planning and zoning commissions, the school board, and more. No local decision maker or entity owes our industry any

NORTH DAKOTA PETROLEUM COUNCIL

'By being involved and knowledgeable in the happenings of our communities, the employees of the oil and gas industry will help make North Dakota a better place.' concern unless we stand up and take part in the process early, consistently and with genuine interest in the community.

To be sure, there are many from our industry who have done so, many that we recognize almost as legends for their service to the community. There are numerous efforts like Pick-Up -the-Patch and its sister Cleanup Williston Day that grew from our industry (and others). American Petroleum Institute chapters throughout North Dakota raise and give away tens of thousands of dollars in scholarships each and every year. Of course, many of us know people who give enormously and shy away from any acknowledgement.

However, in western North Dakota where the local mayor might also be the PTA treasurer, hospital board president, and secretary of a local service club, a new generation is taking the helm and will continue to do so more as time passes. As the prominent employer of the region, members of our industry and their families must be willing to carry that torch. Throughout the boom, leaders grappled with seemingly insurmountable challenges and through their tireless

dedication, they by-and-large made wise decisions that bettered their communities.

Where is our involvement needed? Practically everywhere.

Serve dinner at a church or homeless shelter. Talk about an aspect of the industry at a college class or student group. Become active on a sub-committee at your local Chamber of Commerce. Join the school PTA. Start a challenge at your company to collect coats and toys for the North Dakota Petroleum Council's annual coat and toy drives.

Run for office. Help someone run for office. Join a committee for your local government (they always need volunteers). Coach a sport. Become a Big Brother or Sister. The choice is yours.

But I challenge you to do something.

For many years, our industry worked at a breakneck speed.

Concern was levied at drilling the next well and getting product to market. Many were new to western North Dakota. Today, however, two variants allow the opportunity to enlarge our community presence. Obviously, the slowdown affords many people more time. The greater change, however, is the nature of the

positions in the industry. Sometime in 2014 or 2015, permanent production jobs grew to greater numbers than drilling and completions. This stable, more-localized work allows workers to call one community home and to become locally engaged and pursue leadership positions.

More need is coming. In 2022, new decennial census and redistricting efforts will take effect in their first election cycle and will send many districts westward towards the population growth of the Bakken, Bismarck, and Minot. It will greatly change the nature of politics in North Dakota. By becoming involved citizens today, those leaders can take that next step with the knowledge and experience they need to be effective because they will not only need to know about oil and gas, but also about the needs for public safety and of local systems for water, roads, schools, and much more. That information cannot be learned in a sudden and impassioned rookie run for office.

We must be vigilant voters as well. We must follow the candidates and the issues finitely.

Top-level issues can garner attention, but what will a candidate

really do once in that position of responsibility. Will they be a champion for jobs and energy development? Or will their daily decisions add new regulation and hamper production?

Involvement from the people of our industry is not about money and it is certainly not about control. It is more than voting, more than running for office, and more than battling individual issues. Getting involved in the community and political process allows our industry to be better represented by leaders who are better-informed regarding the issues that matter for efficient and proper oil and gas development. Most importantly, it is about being good citizens and creating opportunities for the next generation.

By being involved and knowledgeable in the happenings of our communities, the employees of the oil and gas industry will help make North Dakota a better place.

Author: Rob Lindberg Director Bakken Backers rl@backthebakken.org 701-989-5432

THEBAKKEN.COM

7

BAKKEN NEWS

BAKKEN NEWS & TRENDS

Forecasting New Bakken Well Costs A new study completed

by IHS Global Inc. for the U.S. Energy Information Administration shows how upstream-related costs in the Bakken have evolved since 2012. When compared to 2012 levels, upstream costs in the Bakken circa 2015 were roughly 30 percent lower. Upstream service prices peaked in 2012, the study says. By 2018, upstream related costs could decrease by a range of 7 to 22 percent per barrel of oil equivalent. Additional

efficiencies in drilling rates, lateral lengths, proppant use, multi-well pads and discrete fracture stages will be the main drivers in reducing upstream costs, the study also says.

“The adoption of best practices and the improvement of well designs have reduced drilling and completion times, decreased total well costs and increased well performance,” EIA’s study said. “Greater standardization of these drilling and comple-

tion practices and designs across the industry should continue to lower costs.”

Amongst the other shale plays studied—including the Eagle Ford, Marcellus, Midland Basin and Delaware Basin—the Bakken recorded the highest overall well costs due to the length of lateral and use of manufactured and resin-coated proppants. The Marcellus, in comparison, has the least costly wells due to shallower drilling

depths and the general use of less expensive natural sand.

On average, the Bakken does have the lowest drilling and completion costs of any basins included in the study. Drilling rig efficiency and pressure pumping crew capacity has helped to draw down the average price to drill and frack a Bakken well. In the future, greater standardization in drilling and completion practices could drive per-well upstream costs down even further.

PERCENTAGE BREAKDOWN

COST SHARES FOR U.S. ONSHORE OIL AND NATURAL GAS DRILLING AND COMPLETION

23% OTHER

12%

COMPLETION FLUIDS, FLOW BACK

14%

PROPPANT 8

The BAKKEN MAGAZINE MAY/JUNE 2016

15%

11% CASING AND CEMENT

RIG AND DRILLING FLUID

24%

FRAC PUMPS, EQUIPMENT

BAKKEN NEWS

DRILLING COST PER TOTAL DEPTH

COMPLETION COST PER LATERAL FOOT

$ per foot

$250 $200 $150 $100 $50 $2010

2012

2014

Eagle Ford

Bakken

Midland

Delaware

2016

$ per foot

2018

$1,000 $800 $600 $400 $200 $2010

Marcellus

2012

2014

Eagle Ford

Bakken

Midland

Delaware

2016

2018

Marcellus

NOTE: MIDLAND AND DELAWARE ARE TWO PLAYS WITHIN THE PERMIAN BASIN, LOCATED IN TEXAS AND NEW MEXICO SOURCE: IHS OIL AND GAS UPSTREAM COST STUDY COMMISSIONED BY EIA

WELL COSTS BY PLAY

BAKKEN

2014 $7.1 million 2015 $5.9 million

MARCELLUS 2014 $6.6 million 2015 $6.1 million

MIDLAND BASIN

2014 $7.7 million 2015 $7.2 million

DELAWARE BASIN 2014 $6.6 million 2015 $5.2 million

EAGLE FORD

2014 $7.6 million 2015 $6.5 million

THEBAKKEN.COM

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BAKKEN NEWS

Bakken Buyer/Seller Updates

PIPEPLUS

For buyers, the Bakken is an attractive market. For every Bakken-based distressed asset owner, overleveraged operator or entity experiencing the negative fiscal effects of low oil prices and are forced to sell, the Williston Basin always seems to attract a buyer.

When Emerald Oil Inc., a Bakken pure-play operator, voluntarily filed for Chapter 11 bankruptcy, the Denver-based company did so with a potential buyer already looming. Latium Enterprises Inc., an investments and acquisitions company with offices in the U.K. and New York City, has entered into an agreement to purchase the operator’s Williston Basin assets. Efforts made by Emerald during the past nine months to sell undeveloped

acreage and other assets were not enough to meet lender conditions.

Black Ridge Oil & Gas Inc., a non-operator based out of Minnesota, has also been acquired.

Chamber’s Energy Management LP, Black Ridge’s subordinated lender, has purchased the company and its assets to form a new entity—Black Ridge Holding Co. LLC. Ken DeCubellis, Black Ridge CEO, said that at year’s end the company’s total debt was just over $60 million but its assets were valued at just under $30 million. Through the terms of the buyout agreement, DeCubellis will continue to manage the oil and gas assets now owned by BRHC in exchange for a management fee. “The restructuring transaction provides a clean, clear path forward for us to focus on

our asset management business,” he said, “which we believe has the potential to produce equity returns far in excess of those that could have been derived from our previous asset base in the current commodity price environment.”

Based in Austin, Texas, Forestar Group Inc. has moved out of its Bakken and Three Forks oil and gas assets through a sale to a undisclosed buyer valued at roughly $60 million. The real estate development company will sell roughly 140 producing wells and 9,000 net acres of leaseholds.

Chuck Jehl, chief financial officer of Forestar, said that in combination with the company’s previous transaction to sell $21 million worth of oil and gas assets in Nebraska and Kansas, these Bakken moves will “complete our exit of non-core oil and gas assets.” Jehl added that the exit

transactions will also eliminate the company’s working interest exposure to fluctuations in the price of oil and gas.

Sanjel Corp., a global oilfield services business, also had no issue selling some of its Williston Basin assets due to low revenue generation linked to the price of oil. In April, Sanjel announced the sale of its U.S. fracturing, coiled tubing and cementing assets to Liberty Oilfield Services. The value of the transaction was not disclosed. Liberty operates in the Williston, DJ and Powder River basins. Sanjel has also filed for Chapter 15 of the U.S. Bankruptcy Code, an option created for entities operating within the U.S. that are not-based in the U.S.

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BAKKEN NEWS

SANJEL SELLING BAKKEN ASSETS: Liberty Oilfield Services has acquired Sanjel’s Bakken assets for an nondisclosed amount. Pictured here, a Sanjel pressure pumping operation is set up for a slickwater fracturing job. Slickwater frack jobs have become popular in the Bakken during the past three years.

PHOTO: SANJEL CORP.

BAKKEN NEWS

Produced water treatment facility opens in Montana Sionix Corp., a water treatment company based in Houston, first started testing its process to clean and recycle Bakken produced water in 2013. Three years later, Sionix has turned to a shuttered Montana oilseed crushing facility to bring its commercial vision for oilfield produced water recycling into reality.

The company recently announced the successful startup of its operations at the former oilseed crushing plant in Culbertson, Montana. The facility is home to Sionix’s proprietary patented dissolved air flotation technology. The system, which also includes chemical pretreatment, water clarification and water filtration, utilizes tiny bubbles to float contaminants to the surface of a wastewater holding tank. The Sionix concept works by taking in produced and

STARTUP TO OPERATIONAL: Sionix started testing Bakken produced water near Dickinson, North Dakota, in 2013. The company will now operate out of Culbertson, Montana, serving clients from North Dakota and those that move oilfield operations further west in the future.

PHOTO: SIONIX CORP.

flowback water—transported via truck to the facility—and sending the trucks back to a hydraulic fracture site with a brine solution suitable for fracking purposes. “We are logistically wellpositioned to serve customers in the Bakken fields of Montana and North Dakota and meet their quality requirements at a reduced all-in water cost,� said Rex Crick, general manager of Sionix Oilfield Solutions (SOS).

The newly formed entity, SOS, was created to build and operate the Culbertson facility through a licensing agreement with Sionix.

Steelworks Investments Ltd., a Sionix shareholder, will own 39 percent of SOS after investing roughly $1.365 million to fund the project.

Located on the junction of Montana State Highway and U.S. Highway 2, the facility also houses process equipment,

heated tank storage, lab buildings, on-site water wells and multiple truck loading/unloading stations.

In 2013, Clear Water Services, an independent water treating company observed Sionix’s operations near Dickinson and helped ensure the company’s efforts to provide samples to an independent lab were carried out appropriately.

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The BAKKEN MAGAZINE MAY/JUNE 2016

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BAKKEN NEWS

5 Questions: Energy firms explain expectations Energy firms based in the Tenth Federal District—Missouri, Kansas, Colorado, Nebraska, Oklahoma, Wyoming and New Mexico—believe oil prices need to be roughly $51 to turn a profit.

The Federal Reserve Bank of Kansas city, which serves the Tenth Federal District, recently completed a survey of energy firms within the district. Firms were asked several questions, including:

What oil price is needed in areas where you are currently active?

Participating firms said oil needed to trade between $40 and $70. Last fall, respondents said $60 per barrel was needed.

What will WTI trade at by year-end 2016 and 2017?

Year-end 2016 prices will equal $45/b. By the end of 2017, oil will trade at $56/b. Both projections were down from previous quarter survey answers.

Special Question - On average across the fields in which you are active, what price is currently needed for drilling to be profitable for oil, and what do you expect the WTI price to be at the end of 2016 and 2017?

100

$/Barrel

$/Barrel Q3-14

90 80

70 60

Q4-14

Q1-15

Q2-15

Q3-15

Q4-15

Q1-16

$79

100

90 80

$70 $62

$60 $51

50

70 $60

$58 $50

$56

60

50

$45

40

40

30

30

20

20

10

10

0

Profitable Price for Oil

How will 2016 oil production change, and, why?

While a small group of respondents said a slight production drop will occur, most pointed to an accelerated drop. The reason for the production drop varied.

Some believe a decline in the drill rig count and capital spending will

2016 Year-End Expected WTI Price

push production lower. Others believe high decline curves in unconventional wells combined with a lack of replacement wells being drilled will not make up for lost production.

How has your company’s debt level changed?

Slightly more firms said they decreased debt in 2016 rather

2017 Year-End Expected WTI Price

0

than increasing debt. Most firms plan to reduce debt in 2016.

How has financing changed in recent months?

Banks are requiring more collateral on both existing and new loans, survey respondents said. Alternative sources were more expensive.

THEBAKKEN.COM

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EXPLORATION & PRODUCTION

14

The BAKKEN MAGAZINE MAY/JUNE 2016

EXPLORATION & PRODUCTION

STANDING Like A Rock RockPile Energy Services CEO Curt Dacar knows what it takes to make it in the Bakken.

Story By Patrick C. Miller Photos By Jason Hallmark

Five years ago when Curt Dacar began hiring employees for the new company he now leads—RockPile Energy Services—he sought to recruit people who had grown up in the Northern Plains and had worked in either the oil and gas industry or the agriculture industry. He wanted employees with a good work ethic who understood what it was like to survive the harsh winter climate of western North Dakota.

In other words, to staff an oil services company working in the Bakken, Dacar—RockPile’s CEO—wanted people who were much like him. The tough, hardy plains folks RockPile hires is helping the company hold on through difficult times in the oil and gas industry, partly through a commitment to stay true to its roots and partly by exporting its North Dakota success with well completions to the Permian and Eagle Ford basins in Texas.

STICKING IT OUT: Although the low oil price environment has caused RockPile Energy Services to look elsewhere for work, the company plans to remain true to its roots and remain in the Bakken.

PHOTO: JASON HALLMARK

THEBAKKEN.COM

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EXPLORATION & PRODUCTION

“The footprint we established in North Dakota has moved to west Texas, and it is proving to be successful there as well,” Dacar says. “North Dakota was on the leading edge of developing longer horizontals and developing multi-sleeve and sliding-sleeve technology, as well as plug-and-perf technology.”

With more than 15,000 stages completed in North Dakota’s Williston Basin, Rockpile’s experience and reputation is catching on with producers in the Texas oil fields.

“We expanded operations to west Texas where a lot of the companies don’t have as much experience with horizontals,” Dacar notes. “When you transition from vertical to horizontal drilling, it’s another whole level of complexity. A good company with a good reputation for completing very complex wells is attractive to a lot of clients. There are a lot of completion companies that struggle with the more complex wells.”

After a 32-year career with Schlumberger, the world’s largest oil services company, Dacar knew what it took to operate a successful full-service well completions company. But he also knew what he wanted to do differently to make Rockpile a “best in class” service company for the oil and gas industry.

Leaving, And Returning, To North Dakota

CUSTOMER BASE: Besides completing wells for its parent company, Triangle Petroleum, RockPile has also worked for Continental Resources, Hess Corp., Enerplus Corp., Whiting Petroleum and WPX Energy.

PHOTO: JASON HALLMARK

16

The BAKKEN MAGAZINE MAY/JUNE 2016

Dacar grew up on a farm near Scranton, North Dakota.

After some time in and out of college, he went to work in the Williston Basin in 1979 hauling bulk cement. Within two years, he was supervising a cement crew.

EXPLORATION & PRODUCTION

NORTH DAKOTA COMMITMENT: RockPile CEO Curt Dacar grew up on a farm near Stanley, North Dakota, and began his career in the oil and gas industry driving a cement truck in the Williston Basin. After a 32-year career with Schlumberger, he started RockPile, a wholly owned subsidiary of Triangle Petroleum.

PHOTO: JASON HALLMARK

He was one of 250 people working for Dowell Schlumberger in Dickinson when the oil boom went bust in the mid-80s. He expected to receive a severance package, but instead became one of five people the company kept in North Dakota.

In 1987, opportunity knocked and Dacar took full advantage of it when Schlumberger selected him to attend an engineering program.

“They took people from the field who they thought had the skill set and talent to do the engineering part of the business,” he recalls. “They let us work on some course material, and if you could pass a test, they’d put you in the same program that col-

lege engineering graduates went through.”

Dacar was accepted to attend the field engineering program at Kellyville, Oklahoma, where he graduated with top-ofthe-class honors.

By the late ’80s, Schlumberger’s North Dakota operations had grown back to 30 employees. Dacar spent the next several years in Dickinson running the company’s Williston Basin office. He was transferred to Hattiesburg, Mississippi, and later to the Gulf Coast where he was responsible for Schlumberger’s on-shore pumping service operations.

“That was quite the change for my wife and me,” Dacar

notes. “We’d only been married a couple of years and had just had our first child with a second one on the way. It was quite a culture shock. It was the first time either one of us had lived outside of North Dakota, let alone traveled several thousand miles away.”

For more than 15 years, Dacar worked at different locations around the U.S. in various engineering, managerial and sales roles, spending much of that time in the Rocky Mountain region.

“I think the only basin in the U.S. I haven’t worked in is the Marcellus,” he says.

During that time, he continued to work while finishing his college education, earning a

degree in business administration from Regis University in Denver.

In 2005, Schlumberger again presented Dacar with an opportunity to advance his education and career. He was one of 16 international employees selected to attend a project management course at the prestigious Heriot-Watt University in Edinburgh, Scotland. Although Dacar didn’t have an engineering degree, he had more than 20 years of industry experience, which made him eligible for the program.

“It was a great experience to work with a bunch of colleagues from all over the world,” he remembers.

THEBAKKEN.COM

17

EXPLORATION & PRODUCTION

SERVING IT UP: RockPile provides hydraulic fracturing services, specialized pumping services, wireline cased-hole logging, perforating and mechanical services, acid services and workover rig services.

PHOTO: JASON HALLMARK

18

The BAKKEN MAGAZINE MAY/JUNE 2016

Dacar and his family spent a year in Scotland. He graduated from the university with a project management professional degree in petroleum engineering.

“Going back to school when I was in my late 40s wasn’t easy, but I was able to dedicate myself to study,” he says. “It was a great learning experience and a great cultural experience to spend a year in Scotland.”

After 32 years with Schlumberger, Dacar decided to leave the company in 2011 to start his own hydraulic fracturing consulting business in California where he and his wife were living. It enabled him to return to North Dakota to work for Occidental Petroleum as a consultant.

The Bakken boom was beginning again and producers such as Triangle Petroleum Corp. headquartered in Denver were having difficulty finding oil services companies to complete wells in a timely manner.

“Triangle didn’t want to spend $7 to $8 million to drill a well and then wait 10 to 12 months to get a crew to come frack the wells and produce them,” Dacar explains. “It’s not a very wise use of capital to invest and take the better part of a year to get your investment returning cash.”

Triangle recognized that the Bakken market needed additional fracking services. They believed there was not only an opportunity for a company to serve Triangle’s needs, but also the needs of other producers. That’s when Triangle approached Dacar about starting the company that became RockPile Energy Services, a wholly owned subsidiary.

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EXPLORATION & PRODUCTION

TAKING IT ON THE ROAD: Lack of work in the Bakken has caused Rockpile to move about 65 percent of its resources to the Permian Basin in Texas.

PHOTO: JASON HALLMARK

Staying on course for the oil turnaround Howard Rough, vice president of marketing and sales for Rockpile Energy Services, estimates that there were once more than 70 hydraulic fracturing fleets operating in North Dakota. Today, he believes that number is less than 12.

“We had four frack fleets, six workover rigs and eight wireline trucks operating in North Dakota.

We just couldn’t keep them busy because significant reduction in the quantity of work,” Rough explains.

The dramatic reduction in the need for well completion service brought about by low oil prices caused Rockpile to look at the Permian Basin in Texas. Many on Rockpile’s management team had previous experience in the Midland area when they worked for other service companies.

“We’ve really wanted to be core to North Dakota,” Rough says. “During the time when we could have 20

The BAKKEN MAGAZINE MAY/JUNE 2016

gone other places, we didn’t. The downturn in the Williston Basin was a catalyst for us to travel outside the region.”

Rough says that unlike some of the larger oil services companies, Rockpile doesn’t have the option of stacking equipment and moving people to locations where there’s more oil and gas activity. The company has moved approximately 65 percent of its resources to the Permian Basin where they’ve kept busy.

“There’s no money to be made in any domain,” Rough notes. “It’s more about trying to breakeven and keeping your people so when the turnaround comes, we’ll still have the skill set that we have today.”

Because it’s a small company, Rough says that Rockpile must operate at a high standard and innovate to drive its competitiveness. “We are always finding ways to move the needle past our peers,” he says.

EXPLORATION & PRODUCTION

MESSIN' WITH TEXAS: In North Dakota and Texas, RockPile has changed the way fracking materials are delivered to the wellsite, which reduces dust and noise, prevents spills, lowers energy use to reduce CO2 emissions and provide containment solutions for the entire well pad.

PHOTO: JASON HALLMARK

“I was a little reluctant to do it because I knew it would be a lot of work,” Dacar says. “The market was booming and all the big competitors were there. For a company to literally start from scratch with some capital and be able to compete was going to be a big challenge.”

As a consultant, Dacar had spent time in the field where he sometimes encountered poorly trained personnel who weren’t being properly developed for the jobs they were doing. This situation led to safety issues from equipment not being maintained properly.

“Overall, it was an experience that led me to think I could probably do a better job,” Dacar relates. “That’s what compelled me to take the role with Triangle and start RockPile Energy Services.”

Building The Foundation

With $29 million in capital, the goal was to have the company up and running within a year. Fortunately, Dacar was able to convince some highly experienced people he knew at Schlumberger to join his management team.

“They were all about the

same vintage as I was with 30plus years. None of them were really ready to retire, but all of them very entrepreneurial-type individuals. They were all very excited to come over and join me,” he says.

After assembling a team with more than 300 years of combined experience that included a veteran Williston Basin frack engineer, a procurement manager and a seasoned human resources recruiter—among others—RockPile was open for business in less than 8 months.

“I started late in the fall of 2011 and we had our first frack

fleet on the ground and pumping by July 2012,” he says. “The idea was to start with a 12-hour crew and cut our teeth with the Triangle work. From there, we grew the business with other third-party customers that needed 24-hour/365 services.”

Starting from the ground up, RockPile had the ability to determine what type of company it wanted to be, which Dacar said has been a key aspect of its success.

“As we sat down and started putting all these policies and procedures together—and getting input from a lot of the oth-

THEBAKKEN.COM

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EXPLORATION & PRODUCTION

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MAINTAINING QUALITY CONTROL: RockPile has its customers rate its performance for every job using a scorecard system. Providing that data to potential customers has helped open doors for the company with Texas producers.

PHOTO: JASON HALLMARK

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The BAKKEN MAGAZINE MAY/JUNE 2016

EXPLORATION & PRODUCTION

A CULTURE OF INNOVATION: As a small company, RockPile has stayed nimble and innovative to compete with larger oilfield services firms. For its fracking operations, RockPile introduced a self-suspending proppant--sand that comes precoated with guar and is blended with water on site.

PHOTO: JASON HALLMARK

er senior folks we hired from other companies—we developed a great program that focused on the best practices of all the service companies in our sector of the industry. That allowed us to deliver a higher level of quality than most of our competitors.”

Based on his consulting experience, Dacar emphasized health, safety, environment and quality control as part of Rockpile’s culture. Hiring the right people became a key aspect of the company’s success.

“Our strategy was to draw staff from the region. I knew from my own experience that North Dakota is a very difficult place to work in the winter months. The winter

is brutal and our crews spend a lot of time outside,” he explains. “Being a small company, we didn’t have that ability to draw from other U.S. locations like our bigger competitors that could keep pulling resources and pushing them into North Dakota.”

While some companies had attrition rates of 30 to 40 percent, RockPile kept its attrition rate to well under 20 percent, according to Dacar. Retaining employees for the long term has been one of RockPile’s objectives.

“We really strive to bring them on, train and develop them to RockPile culture standards and reassure them that we’re do-

ing this to build a career for them—just not a stop on their career path,” he says. “We spent a lot of energy-building our own employee housing in Dickinson. We spent a lot of time trying to attract the right people to our community.”

The years Dacar spent in Dickinson also taught him the importance of being active in and supporting the community, another part of RockPile’s culture that’s heavily encouraged. The annual Fireman’s Chili Cook-Off launched by RockPile has raised hundreds of thousands of dollars for the local rural fire departments vital to the oil and gas industry. The company’s employees

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EXPLORATION & PRODUCTION

are frequent participants in other charitable activities.

Competing With Giants

As a small company, RockPile can be nimble and innovative, which is also encouraged as part of the company’s culture. For example, the containerized Sandbox technology developed by RockPile and a partner company has led to much greater efficien-

cies in moving proppant and delivering it to the wellsite, evolving the way industry has transported and handled sand the past 60 years.

“We have done things quite differently than most of the industry,” Dacar says.

“That’s the luxury of being a small company. You can be very versatile and reactive with the ability to change quickly. We have patents pending on other technologies that

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we think the industry will find very applicable. We’re striving to bring some of that innovation to our industry.”

And although the industry is currently experiencing hard times, Dacar believes it will serve to spur more and greater efficiencies, reducing costs and significantly advancing the industry.

“Every time we come out of a downturn, the technology that comes out is just fascinating to me, and it’s happening again,” he says. “The last year has been very tough, but people have their noses to the grindstone. The amazing thing about this industry is that it bounces back every time. It always comes back stronger than the last.”

RockPile is maintaining its presence in the Bakken and plans to be there for the long haul when prices rise and activity picks up. Dacar thinks that could be another year to 18 months. For now, the expansion into Texas is helping to keep frack crews busy and RockPile’s business growing.

“I love North Dakota, and it’s my roots. To be able to go full circle—start there and come back 32 years later—start my own business and be part of that community again was important to me,” he says.

Some of the children of those Dacar recruited to work at RockPile—including his own son—are now beginning to work in the oil and gas industry in the Bakken.

“It’s like passing the torch off to the next generation,” he says. “I felt very good about seeing a lot of the second generation hitting the oil patch. Seeing them come from the community and starting to grow with the community has been very exciting and very satisfying.”

Author: Patrick C. Miller Staff Writer, The Bakken magazine 701-738-4923 pmiller@bbiinternational.com Photos by: Jason Hallmark Hallmark Photos www.hallmarkphotos.com 303-469-5220 info@hallmarkphotos.com

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EXPLORATION & PRODUCTION

Capitalizing On The Bakken’s New Resource Unafraid of oil prices, Resource Energy has entered the Bakken with an eye on refracks.

By Luke Geiver

WORLD-CLASS VIEW: While Resource Energy LLC is focused on acquiring assets in the Rockies and Texas, the team chose the Williston Basin as its first purchase.

PHOTO: THE BAKKEN MAGAZINE

The name of Paul Favret’s and Kent Moore’s oil- and gas-focused company is an indicator of things to come for Resource Energy Partners LLC’s recently acquired Williston Basin assets. It also tells of the team’s successful history in the oil and gas upstream and midstream sector. “We formed Resource Energy to pursue an acquisition strategy in resource plays in North America that could benefit from improved operations and what we call rejuvenations,” Favret says.

Favret has a classic oilfield pedigree. He’s spent time with Amoco, has a master’s in geology and an MBA, run an E&P firm and worked in private equity. He has overseen operations in Hungary, Peru, Poland and Germany in addition to drilling and completing 500 wells in Texas and Lousiana as President of Aspect Energy. In 2010, he helped lead Source Energy Partners LLC, a private oil and gas company focused on shale plays. With the help of Kent Moore, an oilfield veteran who has helped to lead drilling |continued on page 28|

STRONG PERSPECTIVE: Oil prices do not have Kent Moore worried. The industry veteran has worked through several commodity down cycles.

PHOTO: RESOURCE ENERGY LLC

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The BAKKEN MAGAZINE MAY/JUNE 2016

EXPLORATION & PRODUCTION

Building A Bakken Foundation

‘For frack jobs in the Bakken, jobs that were done two years ago are already obsolete’ Paul Favret, Founder, Resource Energy HISTORIC VISION: After 30 years leading oil companies and trailblazing new strategies, Paul Favret is now focused on refracking existing horizontal well bores in the Bakken and beyond.

In early 2016, Foundation Energy entered the Williston Basin through the acquisition of 100-plus operated and nonoperated oil and gas wells in North Dakota and Montana. “Oil and natural gas reserves are a real asset that typically require investment over the longterm and over multiple commodity cycles,” says Eddie Rhea, oil industry veteran and CEO of Foundation Energy.

Since acquiring the wells, Foundation Energy has moved an engineer to North Dakota to better assess the assets. The company doesn’t intend to spud any new wells this year, but Rhea says once the company gets into an area “we try to expand.” The Texas firm has operations in Wyoming and Colorado.

For Rhea, the plan in the Williston Basin is to grow.

“We have more capital to deploy. Our net production is relatively small, but over time, we hope to find more opportunities.” The company generally seeks acquisition opportunities in the $5 million to $100 million range that offer significant current production or potential further development.

PHOTO: RESOURCE ENERGY LLC

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EXPLORATION & PRODUCTION

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Acquire producing or distressed assets.

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Rejuvinate existing production through refracks and operational improvements.

|continued from page 26|

operations, cofounded American Midstream Partners and also worked for two large Denver mutual fund companies worked in private Favret formed and added an â&#x20AC;&#x153;Reâ&#x20AC;? to his business model to take advantage of existing unconventional assets ripe for optimization and well restimulations.

Backed by Apollo Global Management, an investment firm with $163 billion under management, the Resource team acquired 112 total wells with 2,300 barrels of operated oil equivalent per day production in Divide County, North Dakota. The teamâ&#x20AC;&#x2122;s future plans involve operations improvements, further acquisitions and refracks of existing horizontal well bores. â&#x20AC;&#x153;The Bakken is a resource play with substantial oil in place,â&#x20AC;? Favret says of the decision to enter the Williston Basin. â&#x20AC;&#x153;We are big believers in investing our time and money in technology. We did a very thorough nationwide analysis of existing horizontal well bores and the Bakken is very fortunate to have an abundance of well bores in need of additional work.â&#x20AC;?

The Bakken Opportunity

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As oil industry veterans, low oil prices have not deterred the Resource Energy team from investing into unconventional resource plays. When Moore started Caza Drilling in 1986 (sold to Ensign Resource Service in 1993), oil was trading at roughly $9/b. The advent of technology and new production strategies strengthens the teamâ&#x20AC;&#x2122;s resolve to pursue oil and gas assets at a time when Favret says roughly 90 percent of all unconventional assets are currently uneconomical due to low oil prices.

Moore is particularly focused on the role of technology in making current or new wells profitable. â&#x20AC;&#x153;I like to compare it to Intel computer chips,â&#x20AC;? he says. During the computer revolution, there was a time when new computers became obsolete soon after release as the chips used were being updated faster than the release of new computers. â&#x20AC;&#x153;For frack jobs in the Bakken,â&#x20AC;? he explains, â&#x20AC;&#x153;jobs that were done two years ago are already partially obsolete.â&#x20AC;?

Favret compares oil and gas assets in plays such as the Bakken or Eagle Ford to prime real estate. â&#x20AC;&#x153;Eventually, things will revert back to the mean of cost plus a reasonable profit,â&#x20AC;?

EXPLORATION & PRODUCTION

he says. Real estate offers a probable example for Favret. A house built for roughly $175 new build per square foot but purchased for $100 per square foot would create a profit eventually as the home’s value will again reflect the $175 price. The same theory can be applied to oil wells.

Armed with its rejuvenation experience—Favret has been involved in refracking hundreds of wells—and the industry know-how of Moore along with the financial backing of Apollo, the team believes the Bakken presents a unique opportunity. “People might need liquidity or they might need operational upgrades,” Moore says. “The menu of things that need to be done is much more unique and unprecedented than any time in the last years of this business.”

The Plan For Rejuvination

To validate the team’s penchant for refracks, Resource Energy has created a series of algorithms they call the refrack potential mapping technique. The system has been verified by a third party and both hypothetical applications and real-world refracks have proven to be economically positive. “We have a good way to predict refrack potential very effectively before conducting the operations,” Favret says, noting that some calculations have the company believing the recovery factor for some Bakken wells could be as high as 22 percent compared to 5 to 9 percent often seen in older Bakken wells fracked three years ago.

The recompletion strategy hinges proprietary techniques centered on pump schedules, pumping speeds, fluid variations and creating new well bore diversions to unfractured sections.

In 2016, the company is considering a few pilot tests of its rejuvenation strategies in its Williston Basin assets. The company is also focused on growing its asset base in the Williston Basin, all of the Rockies and Texas.

Before forming the new company, Favret and Moore say they presented a detailed financial model that showed how properly invested capital—protected by hedges—could provide attractive returns to investors when wells were rejuvenated.

Since taking over the assets of American Eagle Energy, the Denver-based company has transitioned all royalty landowner governance. Favret says the company is excited for its first investment into its new strategy, in part because of the location. Although the team has encountered the visible slowdown in operations and services within North Dakota, the company is confident in its choice to enter the Bakken.

“North Dakota is a great place to operate,” he says. “The people there are wonderful.”

Author: Luke Geiver Editor, The Bakken magazine 701-738-4944 lgeiver@bbiinternational.com

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THEBAKKEN.COM

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INNOVATORS

BAKKEN EXPERIENCE: To form Nine Energy, the company acquired several oilfield service entities, including a long-time, proven Bakken firm with a track record that started when Bakken operators were fracking wells with only 8 stages.

PHOTO: NINE ENERGY

Achieving Custom Bakken Frack Solutions

After a year in the lab, Nine Energy proved a nontraditional method can increase stage count, frack control and Bakken well production.

By Luke Geiver

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The BAKKEN MAGAZINE MAY/JUNE 2016

INNOVATORS

Developing The Divert-A-Frac

FIELD CHANGES: To meet the needs of its Bakken client, the Nine Energy team had to move away from its traditional 35 stage fracture job to a 50-stage job while still using a ball-drop system.

PHOTO: NINE ENERGY

Kendall Manning is happy to debate company with more than 500 employees and the various ways an unconventional oil operations in every major U.S. basin, Manning well should be hydraulically fractured. was involved in a unique hydraulic fracturing As an oil industry veteran, Manning has been involved with numerous projects and wellcompletion strategies from Texas to North Dakota. He’s seen firsthand which approaches yield the most desired results in his 20-plus year career working for the likes of Halliburton, Baker Hughes and others. As the Director of Sales for Nine Energy, an energy services

method that has reduced the number of days needed to complete a 50-stage Bakken well from 15 days to two.

We spoke with Manning about the research and results from Nine Energy’s new Divert-A-Frac system ahead of the soon-tobe-published Society for Petroleum Engineers paper detailing the multi-party effort.

According to Ricky Green, vice president for Nine’s Rocky Mountain region, a nondisclosed operator was looking for a single-point entry solution to increase stage count on a 10,000-foot lateral in a Bakken-targeted well.

The goal was to increase frack stage count from 35 stages to 50 without using limited entry cluster stimulation. Manning, who remembers when Bakken operators were fracking wells with only eight stages per well, says the effort and research required to make the leap from 35 to 50 stages was no easy task. “We had gotten to where our basic stuff in the Bakken was either a 30 or 35 stage system,” Manning says. “This [35 to 50] is a substantial jump.”

Over a period of one year, Nine Energy’s team researched, tested and designed a system to meet its client’s needs. The final system utilizes swell packers to isolate each desired zone spaced at roughly 250 feet. Each discrete fracture zone includes frack sleeves pressure tested with dissolvable metallic actuation balls.

Computational fluid dynamic modeling was used to demonstrate and verify that ball-onseat performance would not be affected by the planned proppant stimulation in the 50-sleeve system. “You can simulate millions of pounds of proppant going through that seat,” he says of the computational modeling. “The tolerances are so tight we have to make sure we aren’t going to erode the seat.”

Because the balls can only range in size from 3 inches to roughly 1.5 inches, the tolerances for the individual balls and sleeves are very tight, he says, and there is no room for error if the desired results of 50 isolated frack sections are to be achieved. The computational modeling showed the system would work, but in-field testing also provided assurance the tight tolerance of the ball-seat sleeve system would hold up to immense pressure and proppant flow. During the first live test, Nine’s team followed pressure signatures created during a frack job using the DAF system.

“You could see a pressure signature every time a ball was seated,” Manning says, proving that once dropped, the balls were holding and the isolated portions of the well were receiving the appropriate stimulation load.

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INNOVATORS

DAF In The Bakken

PRESSURE POINT: To verify the system in the real world, Nine’s field team follows pressure signatures that indicate the balls are holding under significant proppant loads.

PHOTO: NINE ENERGY

EXPERIENCE MAKES THE DIFFERENCE

During its use in the Williston Basin, the Nine team fracked a 50-stage well in roughly 50 hours. In comparison, a 50-stage cemented plug-and-perf system can take over two weeks, Manning says. The well was stimulated with 3.5 million pounds of proppant and roughly 2.1 million gallons of fluid. During the frack job, each stage took roughly one hour and there was zero non-productive time related to the DAF system.

The system is designed for high volumes of proppant and fluid. And, according to the Nine team, it works best on long horizontal wells in the 10,000-foot lateral length range.

Currently, Manning believes individual frack stages will be spaced at 250 feet because “you aren’t going to get much more increased drainage by fracking every 100 feet versus fracking every 200 feet.”

Until the SPE paper is published, Manning is not at liberty to discuss the productivity gains achieved by the stimulation approach,

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The BAKKEN MAGAZINE MAY/JUNE 2016

INNOVATORS

but the initial client that asked for the custom solution is now deploying the method in all new wells. The operator is also looking to add friction reducers to the fluid to increase the amount of pressure applied to the rock. In North Dakota, surface restrictions on pressure pumping applications limits the amount of pressure that can be applied downhole. “The more hydraulic force you apply, the more exposure that you get, which means more production,” Manning adds.

While Manning is working to expand the use of the system to other plays that feature longer laterals, the team is already back in the lab working on a new custom solution for its existing Bakken clients. “Everybody thinks we just use a bigger hammer but there is a lot of science involved in all of it,” Manning says.

So, only a few months after proving the DAF solution, the Nine team is working on its new request. “The operator wants to know how we can do more than 50.”

PRECISE WORK: To achieve 50 stages with its open hole ball-drop system, Nine’s team spaces its frack zones at 250 feet. The design allows a frack crew to complete on stage per-hour.

PHOTO: NINE ENERGY

THEBAKKEN.COM

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