United States: Frack 2.0: Refracing Could Enable A Second Wave Of Production Growth In The Bakken And Eagle Ford

Operators will likely refrac more oil and gas wells this year and further accelerate such activity in 2016. The reason is simple: substantial bang for CAPEX bucks. A recent study by engineers from SPE and Baker Hughes estimates that Bakken oil wells can be refraced for $1.8 million apiece – roughly Ľ of what it currently costs a top operator to drill and complete a new well. Yet the Bakken refracs in the study increased recoverable reserves by an estimated 69 percent and boosted production by 7.55 times relative to the pre-refrac level. Meanwhile, Eagle Ford wells can be refraced for $2.8 million apiece – about ˝ a top operator's average completed well cost. The Eagle Ford refracs reviewed in the study boosted production by an average factor of 7.26 relative to the pre-refrac production level and increased estimated recoverable oil reserves by 53 percent.

Equally profound, the study showed "no discernible correlation" between the amount of time a well has produced and the post-refrac performance metrics: In essence, even "young" wells may in fact be prime refrac candidates. Exhibit 1 shows the performance of refraced Bakken and Eagle Ford wells relative to well age. The performance metrics shown are the ratio of initial production ("IP") post-refrac to initial production after the initial fracturing job, and the increase in estimated ultimate recovery ("EUR").

Exhibit 1: Even "Young" Wells Can Make Excellent Refrac Candidates

Red marker=Bakken wells, Black marker=Eagle Ford wells

Source: SPE-173340-MS, Author's Analysis

Readers will notice a relatively narrow horizontal band in which the majority of results fall virtually regardless of the well's age when refraced: the average Eagle Ford well was 19 months old and the average Bakken well 42 months old. The fact that relatively new wells can still be economically viable refrac targets is important. Most analysts to date have viewed the Bakken and Eagle Ford as the primary locations for refrac potential because those plays are more mature – "older," if you will – than the Permian horizontal, Niobrara, South-Central Oklahoma Oil Province ("SCOOP"), and others that have come online more recently. Yet Eagle Ford wells that had been on production for as little as nine months still showed solid refrac performance – for instance, one well showed a recoverable reserves increase of 39 percent and production jump of 520 percent from pre-refrac levels. [6] This suggests that the pool of viable refrac candidates may be much larger, and span more basins, than previously thought. The study authors acknowledge that their work has some significant limitations – among them the fact that their search algorithm only captures success stories. Yet the trends amply reflected in the SPE study's data point to a much more positive outlook for the growth potential of refracing than the market consensus at present would suggest.

Oilfield services providers perceive this upside and are moving to embrace refracing. Schlumberger CEO Paal Kibsgaard noted on the company's 1Q2015 earnings call that "there are thousands of wells in North American land that are candidates for refracturing and this is both shale liquids and shale gas...this is quite a significant market opportunity."

Exhibit 2: Refracability of Newer Wells Suggests Significant Permian Basin Upside

Horizontal rig count, by selected basin

Source: Baker Hughes, Author's Analysis

Refracs Will Likely Become More Common as More Operators Perceive the Economic Benefits

To date, a number of key producers have expressed ambivalence about refracs. For instance, one large independent with strong positions in the Eagle Ford, the Bakken, and the Marcellus stated in its 1Q2015 earnings call that regarding refracs:

"We've looked at it and talked about it internally and we've not tried any refracs. Our outlook on that is that it really – technically, we believe that just drilling a new well and kind of starting fresh and making sure your lateral is in the very best target and making sure that you can redistribute the frac very evenly along the wellbore with the new well is probably the preferred way to go."[7]

Pioneer Natural Resources says it is conducting limited refracing in the Eagle Ford but that in its view there is presently "just not a lot of opportunity that we see that comes to mind where this is a no-brainer."[8] In essence, these operators appear to hesitate due to the potential opportunity cost of shifting capital and engineering focus from new well drilling and completions programs that have been very successful.

Nevertheless, the North American shale liquids production leaders may soon find their large inventories of potentially refracable wells an irresistible opportunity. CAPEX budgets have been slashed due to persistently low commodity prices, and further reductions could be coming if WTI crude prices do not recover to the $65 per barrel threshold. In addition, nontraditional incentives such as service company pilot programs, where the pressure pumper shares more risk with the producers and essentially gets paid out of the well's post-completion production – akin to a recovery-based contingent fee – may accelerate refracing activity.[9]

Gas Refrac Potential

Comstock Resources, a gas producer, announced in March that it plans to spend $23 million to refrac 14 wells in the Haynesville Shale.[10] Comstock reports that its first Haynesville refrac – the Pace #33 – cost $2 million and boosted the well's flowrate by a factor of eight and its flowing pressure by a factor of three. The company believes it can reduce costs of future refrac projects by 10 percent to 15 percent below the costs for the Pace #33 (i.e., $1.7 to $1.8 million per refrac). For comparison, drilling and fracing new wells in the Haynesville can cost from $6.3 million at the low end up to as much as $11 million for a well with a 10,000-foot lateral.[11]

Comstock estimates that with natural gas prices between $3.00 and $3.50 per thousand cubic feet, the refracs could yield internal rates of return as high as 40 percent to 69 percent. For reference, on May 11 natural gas traded for $2.85 per thousand cubic feet at the Henry Hub, the closest pricing location for Haynesville gas selling into the Gulf Coast market.[12] So even at today's prices, Comstock's Haynesville gas refracs are almost certainly robustly profitable.

Refracs Offer Substantial Medium-Term Oil and Gas Production Potential and May Also Increase M&A Valuations

There are four key takeaways from this analysis:

  1. Slowing the capital treadmill. Refracs offer shale drillers a way to slow down the "capital treadmill" on which they are currently running. Slowing the treadmill has been a priority for the industry as low commodity prices persist. A good refrac in the Bakken can bring a well's production back to 75 percent or more of the initial production rate while costing as little as 25 percent of the price of drilling and completing a new wellbore. As the dataset grows and operators learn more about how to identify the best refrac candidates, such potential return ratios will likely stimulate higher levels of refrac activity.
  2. Boost short-term cash flow. Refracs also offer companies a quick and lower-cost way of boosting short-term cash flows, which expands operators' ability to service debt and prepare for renewal of financing packages in today's lower-price environment. Once drilled, a well can be fraced and brought into production within two weeks once a decision is made to frac.[13] Refracs could likely be performed on a similarly short timetable.
  3. Boost enterprise value via larger recoverable reserve numbers. Greater refracing activity and operational improvements have the potential to significantly increase well-positioned shale producers' reserve bases. This would, all things held equal, boost stock prices and potential acquisition costs to majors seeking to buy their way into shale plays.
  4. Further decoupling of rig counts and oil and gas production numbers. Refracs can bring oil onto the market quickly, and the growth of refracing also stands to further decouple U.S. rig count and oil and gas production numbers.


[1] Yagna Deepika Oruganti, Rohit Mittal, Cameron J. McBurney, Alberto Rodriguez, "Re-Fracturing in Eagle Ford and Bakken to Increase Reserves and Generate Incremental NPV-Field Study," SPE-173340-MS, 2015. (18)

[2] Id. at 13.

[3] Id. at 11.

[4] Id. at 5.

[5] Id. at 1.

[6] Id. at 5.

[7] Company, 1Q2015 Earnings Call Transcript.

[8] Pioneer Natural Resources, 1Q2015 Earnings Call Transcript.

[9] Schlumberger, 1Q2015 Earnings Call Transcript.

[10] "COMSTOCK RESOURCES, INC. ANNOUNCES REDUCED 2015 CAPITAL BUDGET AND PROVIDES UPDATE ON HAYNESVILLE SHALE PROGRAM," 23 March 2015, http://phx.corporate-ir.net/phoenix.zhtml?c=101568&p=irol-newsArticle&ID=2027804.

[11] Naureen Malik, "Haynesville Shale Gas Cost Cuts Lure Drillers From Marcellus," Bloomberg, 11 March 2015,     http://www.bloomberg.com/news/articles/2015-03-11/haynesville-shale-gas-cost-cuts-lure-drillers-from-marcellus.

[12] Henry Hub Natural Gas Spot Price, Energy Information Administration, http://www.eia.gov/dnav/ng/hist/rngwhhdD.htm (accessed 13 May 2015).

[13] Telephone interview with experienced completions engineer, 3 April 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions