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Page 40 of 51

Read online @ B A K K E N O I L B I Z . C O M / d i g i t a l - j o u r n a l 41 5 drilling rigs (0 on fee lands and 5 on trust lands) 177,553 barrels of oil per day (120,260 from trust lands & 57,293 from fee lands) 1,438 active wells (982 on trust lands & 456 on fee lands) 152 wells waiting on completion 549 approved drilling permits (368 on trust lands & 181 on fee lands) 1,802 additional potential future wells (1,286 on trust lands & 516 on fee lands) Seismic activity is unchanged. There are 4 surveys active,0 recording and 0 NDIC reclamation projects, 0 remediating, 3 suspended, and 1 permitted. North Dakota leasing activity is limited to renewals and top leases in the Bakken - Three Forks area. US natural gas storage is now 46.7% above the five-year average indicating low prices in the future. North Dakota shallow gas exploration could be economic at future gas prices, but is not at the current price. The operator of the exploration well (file 27235) in Emmons County has received Temporary Abandoned status on 8/31/15 and cancelled all other permits in the area. The well appears to contain 2 pay sections totaling about 80 feet thick with very good gas shows. The price of natural gas delivered to Northern Border at Watford City is up $0.11 to $1.57/MCF. This results in a current oil to gas price ratio of 21 to 1. The percentage of gas flared dropped below 10% to 9.7% (first month below 10% since December 2007). The Tioga gas plant operated at 80% of capacity. Even though the expansion of gas gathering from south of Lake Sakakawea was approved, the approval came too late for the 2015 construction season, resulting in a 1 year delay. The March Bakken capture percentage was 90% with the daily volume of gas flared from February to March down 24.3 MMCFD. The historical high flared percent was 36% in 09/2011. Activity on the Fort Berthold Reservation (FBIR) is as follows: March 2016 - 34,386,634 barrels = 1,109,246 barrels/day February 2016 - 32,453,679 barrels = 1,119,092 barrels/day The big news in the March 2016 report is the price of crude oil reaching $33 a barrel as well as four operators having significant production increases, which is the reason behind only having 10,000 barrels of crude oil a day decrease from February 2016. Operators remain committed to running the minimum number of rigs while oil prices remain below $60/barrel WTI. The number of well completions fell from 64 in February to 59 in March. Oil price weakness is the primary reason for the slow-down and is now anticipated to last into at least the third quarter of this year and perhaps into the second quarter of 2017. There were no significant precipita- tion events, 4 days with wind speeds in excess of 35 mph (too high for comple- tion work), and no days with tempera- tures below -10F. Over 98% of drilling now targets the Bakken and Three Forks formations. Estimated wells waiting on completion services2 is 920, up 13 from the end of February to the end of March. Estimated inactive well count3 is 1,523, up 84 from the end of February to the end of March. Crude oil take away capacity remains dependent on rail deliveries to coastal refineries to remain adequate. Low oil prices associated with lift- ing of sanc- tions on Iran and a weaker economy in China are ex- pected to lead to continued low drilling rig count. Utiliza- tion rate for rigs capable of 20,000+ feet is about 30% and for shallow well rigs (7,000 feet or less) about 20%. Drilling per- mit activ- ity declined February to March then fell further in April as opera- tors continue to position themselves for low 2016 price scenarios. Operators have a signif- icant permit inventory should a return to the drilling price point occur in the next 12 months. ■

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