In order to get a clearer picture of the financial situation in Bakken, it is necessary to develop a financial model of the median Bakken well (attached).

With a discount rate of 15%, the median well has a profitability index of 1.02 (after federal income tax) if $66 per barrel is used.   (A profitability index of 1.0 indicates a break even situation at the discount rate that was used in the model).  This means that at $66 per barrel, half the wells are uneconomic.  If oil prices settle out at this price it can be expected that the number of wells drilled should be reduced by about half.

If the current oil price of $55 per barrel is used, the initial production rate has to be increased to 800 BPD in order to break even.  According to the J.D. Hughes data, 25% of the wells have an initial production rate of 1000 BPD or more.  Accordingly, if oil prices settle out at the current price, the number of wells drilled will be about a quarter of the present number.