Continental Resources (NYSE:CLR) is evaluating a number of oil saturated zones at the bottom of the Three Forks formation present on its acreage in the Williston Basin. If these new zones prove to be commercial, the industry will see an increase in recoverable reserves in this formation.

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Three Forks
The Three Forks formation lies just under the better known and more developed Bakken formation in the Williston Basin. Although the Three Forks formation can be up to several hundred feet thick, Continental Resources has done most of its Three Forks development in the upper twenty to thirty feet of this play.

Continental Resources decided to investigate the hydrocarbon potential of the bottom layers of the Three Forks and obtained core samples from five wells that penetrated the entire Three Forks formation. These core samples were spread out across a hundred mile wide portion of Continental Resources leasehold. (Find out how to invest and protect your investments on this slippery slope. For more, see Peak Oil: What To Do When The Wells Run Dry.)

An analysis of the core samples by the company found that the Three Forks has four oil saturated layers of dolomite below the bottom of the Lower Bakken. These layers or benches are separate and run between 20 and 30 feet thick in the area that Continental Resources is testing.

Continental Resources is currently drilling the Charlotte 2-22H well in McKenzie County, North Dakota, to test out the commercial potential of the second bench of the Three Forks formation. Northern Oil and Gas (NYSE:NOG) is participating in this test well on a non operating basis and has a 1.68% working interest.

Continental Resources plans future tests of the third and fourth benches of the Three Forks, although the management noted during a recent conference call that these layers are not as "uniformly developed" as the upper two.

Other Exploration in the Area
Continental Resources and other operators have drilled a number of horizontals wells into the top or first bench of the Three Forks with mostly good results.

Brigham Exploration and Production (NYSE:BEXP) has drilled 79 wells in the Williston Basin in North Dakota since entering the play, with four of these wells targeting the Three Forks. The company reported initial production rates on these wells ranging from 1,100 to 2,400 barrels of oil equivalent per day.

Whiting Petroleum (NYSE:WLL) reported several Three Forks well results in August 2011, with one of the wells producing above 2,300 BOE per day, and the other producing only 193 BOE per day. The company blamed a weather related shut in during the initial flow back period for the poor results of the second well.

Although Three Forks development has been encouraging to date, this play is still more complex to develop than the Bakken. Oasis Petroleum (NYSE:OAS) plans to drill as many as six Three Forks wells in 2011 and said that the formation has more "variability in reservoir quality" than the Middle Bakken.

The Bottom Line
While Continental Resources is positive about the potential of deeper parts of the Three Forks play, this is still a very prospective area. Investors should be cautious about assigning too much value to future reserves here until the play can be proved up. (Drill into financial statements to tap into the right companies and let returns flow. For more, see Unearth Profits In Oil Exploration And Production.)

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