How to use:

  1. Adjust model parameters (or use default settings)
  2. Click to choose a location in the Bakken (shaded map area)
  3. Click 'Run the model' button and wait to view simulation results

Please send questions and feedback to Justin Montgomery: jbm@mit.edu


1. Adjust model parameters:

Equity capital cost: 10.25%

Debt capital cost: 5.25%

Share of debt: 30%

WACC*: %

*Weighted average cost of capital

Royalty: 18%

Lease bonus: $3000/acre

Severance: 10%

Income tax: 35%

Completed well cost: $6MM

Lease operating expense: $10/Bbl

Price differential (wti - wellhead): $8/Bbl

Completed lateral length: 9200 ft

Proppant: 5.5 MMlb

Water: 5 MMgal

Formation:

2. Choose a location:

3.

Results:

Probability of breaking even (well NPV>=0) at different oil prices

About the Bakken Break-even Calculator

The Bakken Break-even Calculator is an interactive mapping tool that reports break-even oil prices for new wells across North Dakota's Bakken play. The tool is based on a novel spatially-resolved probabilistic model of well production rates with user-defined inputs and controls for a well's geological environment*. The machine learning model behind the production rate predictions is derived from the research presented in Montgomery and O'Sullivan, 2017 and incorporates engineering inputs, including the well horizontal section length, and volumes of water and proppant used for hydraulic fracturing. These can be varied under the "Model input variables " menu. Production predictions also take into account the uncertainty about how quickly production rates decline over the lifetime of a well. The economic model incorporates standard accounting and tax considerations for independent oil companies and can be customized to reflect different assumptions about development costs, tax rates, etc. under the 'model parameters' section. A median (P50) price is reported but the results are not deterministic and probability and cumulative distribution functions are plotted to depict the range of uncertainty.

*The colored contour map reflects the spatial pattern of productivity for over three thousand producing wells (shown as small x-marks). Sweet spots are red in the contour map and the least productive regions are blue.


Copyright: Justin Montgomery, 2017
Contributors: Justin Montgomery, Emre Gençer, Francis O'Sullivan, Jenn Schlick