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September 18, 2009

Evidence Three Forks formation is Separate from Bakken Which Would Mean a Lot more Oil

Testing done in the Bakken shale area found a "stacked play," meaning one oil formation is on top of another, which could allow more oil to be recovered at a lower cost in a smaller area with less environmental damage, said Continental Resources Hamm said the testing showed two distinct formations. He said the Three Forks well initially fetched 140 barrels daily. The Bakken well fetched about 1,200. State officials said in July that production results from 103 wells in the Three Forks-Sanish formation show some wells recovering more than 800 barrels a day, considered "as good or better" than some in the Bakken, where the record is thought to be more than 4,000 barrels a day.

State geologist Ed Murphy called Continental's findings interesting but said more wells are needed before researchers know for sure the characteristics and potential of the Three Forks formation.

The company's tests and other promising results from Three Forks wells have fueled speculation that the formation could add billions of barrels to government reserve estimates.

Continental, which is marking 20 years in North Dakota, also trademarked the process of drilling multiple wells from one pad, the area cleared for drilling machinery. It plans to drill two wells into the Bakken and another two into the Three Forks from one pad, which means the well site's footprint will be cut from 20 acres to six acres, Hamm said.

The company estimates its ECO-Pad process will cut drilling and well completion costs, which run as high as $7 million in the Bakken, by about 10 percent. The process could be in place by the end of the year.



The company also plans to use a single drill rig that can be moved to different sites on a pad, which will require only one road and fewer power lines, pipelines and other infrastructure, he said.

Seeking Alpha has the transcript of the August 2009 conference call for continental resources.

This test was very important to us and I believe we did (inaudible) is stacking two laterals and established not even with unrealistically tight spacing the Middle Bakken and Three Forks/Sanish reservoirs are separate and need be developed individually. Consequently in terms of testing we have seen what we effectively need to see. So given the extensive number of wells that we and others have completed across playing both zones, as I said earlier, Continental is now transitioning into the developmental mode with a staggered drilling pattern that we will use to harvest the two reservoirs.

The most effective way to drain these two tanks so to speak is to drill north south oriented Middle Bakken well and then step over to about 660 feet east or west and drill Three Forks/Sanish well in the same orientation and then step over another 660 feet and drill the next Middle Bakken well working your way out across play. We think this development plan dovetails very well with the ECO-pad concept that the NDIC approved this last week. Continental has developed an innovative new approach for drilling multiple wells around the same old drilling pad specifically the two Middle Bakken and two Three Forks/Sanish wells per ECO-pad.

The key advantages we think are very apparent. We drilled four wells from one ECO-pad minimizing the environmental impact. One ECO-pad will have about 70% less space as the surface footprint area than four conventional drilling pads. Instead of four pads, basically we use about 5 acres each up there for (inaudible) drilling platform and therefore we will be drilling four wells sequentially from a single 6-acre ECO-pad.

The NDIC granted ECO-pads an exemption from setback requirements on section [ph] property lines. We'll be drilling fence to fence from 1280 acreage spacing unit to the next, instead of leaving about 1100 feet or more untouched rock between these two 1200 acre space units. So we will be utilizing all the reservoirs within our space unit.




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