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 ¼ 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 ½ 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”).