Essential Facts:
| 1. | 2Q09 production in the Bakken was 12,391 Boepd, compared with 8,445 Boepd in the second quarter of 2008. These totals reflect reduced drilling activity in Montana and but increased activity in North Dakota since early 2008. |
| 2. | Bakken production in 2Q09 accounted for 33% of Continental’s production. |
| 3. | The Bakken accounted for 45.7 MMboe of proved reserves at year-end 2008, or 29% of the Company’s proved reserves. |
| 4. | As of August 2009, Continental was the largest leaseholder in the Bakken Shale play, with 605,000 net acres. |
Bakken Production History (Boepd)
| 2007 | 2008 | 2009 | ||||
| 1Q | 8,114 | 8,210 | 10,951 | |||
| 2Q | 8,814 | 8,445 | 12,391 | |||
| 3Q | 8,756 | 9,631 | 12.524 | |||
| 4Q | 8,626 | 10,811 |
Continental is the largest leaseholder in the Bakken Shale play of Montana and North Dakota, with 605,000 net acres as of June 30, 2009. Approximately 17% of the net acreage was producing and 83% was undeveloped at year-end 2008, with the largest undeveloped acreage being in North Dakota. As of year-end 2008, we had completed 308 gross (148.5 net) wells in the Bakken field.
In 2008, the Bakken Shale was one of the most actively drilled unconventional crude oil resource plays in the United States, with more than 100 rigs drilling in the play in the third quarter of 2008, prior to crude oil prices dropping through the end of the year. The United States Geologic Survey (“USGS”) in April 2008 estimated that the Bakken Shale contains up to 4.3 billion barrels of recoverable oil using today’s technology and classified the Bakken as the largest continuous oil accumulation ever assessed by the USGS.
The Bakken formation is a Devonian-age shale found within the Williston Basin. Generally the Bakken formation underlies portions of North Dakota and Montana and is found at vertical depths of 9,000 to 10,500 feet. It and contains three lithologic members -- the upper shale, middle member and lower shale, with a combined thickness of up to 130 feet. Wells are typically drilled horizontally on 320, 640 or 1,280-acre spacing with single, dual or triple-leg horizontal laterals extending 4,500 to 9,000 feet into the formation. These wells are fracture stimulated to maximize recovery and economic returns.
The upper and lower shales are highly organic, thermally mature and over-pressured, and they act as both a generating source and reservoir for the oil. The middle member, which varies in composition from a silty dolomite to shalely limestone or sand, also serves as a reservoir and is thought to be a critical component for commercial production.
Below the Lower Bakken Shale lies the Three Forks/Sanish formation, and the TFS has also proven to contain reservoir rock. We believe it adds incremental reserves to the play. The Three Forks/Sanish typically consists of interbedded dolomites and shale with local development of a discontinuous sandy member at the top, known as the Sanish sand.
All of these reservoir rocks have low porosity and permeability. They depend on natural fracturing and artificial fracture stimulation to produce economically. Horizontal drilling and multi-stage fracture stimulation technology has enabled commercial production from this reservoir, which has not generally been economic to drill and produce using conventional, vertical drilling and production technology. Fracture stimulation techniques vary, but most commonly utilize multi-stage mechanically diverted stimulations using un-cemented liners and packers.