Drills long oil wells into Bakken and Three Forks rock in North Dakota and Montana using techniques tuned to those specific formations.
Chord Energy drills long horizontal wells into the Bakken and Three Forks shale formations in the Williston Basin, using fracture designs tuned to the specific porosity and permeability of that rock to pull out as much oil as possible per well. Because each new well is drilled into geologically similar rock, the completion designs get reused across the whole leasehold, which gradually pushes down the cost per barrel produced — but only as long as there are productive locations left to drill. Every barrel recovered still has to leave North Dakota before it earns revenue, and nearly all of it travels through the DAPL pipeline; when that pipeline fills up during high-production periods, crude shifts onto BNSF rail cars at Casselton and New Town, which costs more per barrel and eats into the margins that make the expensive long-lateral wells worth drilling in the first place. The whole program is therefore built on geology that stays fixed in North Dakota but depends on a pipeline whose operating permits are subject to federal review — if DAPL were permanently restricted, every barrel would move by rail permanently, and the economics the drilling program is designed to deliver would no longer hold.
How does this company make money?
The company sells oil by the barrel at prices tied to Williston Basin differentials relative to the WTI benchmark price. It also sells natural gas by the thousand cubic feet at regional hub prices, and sells natural gas liquids based on Mont Belvieu pricing minus what it costs to transport them there. Money comes in as production is lifted from the wellhead and sold.
What makes this company hard to replace?
Crude oil purchase agreements are written specifically around Williston Basin delivery points, so switching to a different supplier means renegotiating those contracts. The gathering pipelines that connect wellheads to terminals are physical infrastructure — replacing them requires building new pipe, not just signing a new contract. Companies that want to operate in North Dakota also rely on established relationships with state regulators for permit processing, and new operators have to build those relationships from the ground up, which takes time.
What limits this company?
DAPL can only move so much crude at once. When production in the region pushes against that limit, extra barrels have to travel by BNSF rail through Casselton and New Town instead. Rail costs more per barrel than pipeline, so every barrel diverted to rail earns less money — and that shrinking margin is exactly what the company's long-well drilling program needs to stay worthwhile.
What does this company depend on?
The company cannot operate without DAPL pipeline takeaway capacity, BNSF rail terminal access at Casselton and New Town, hydraulic fracturing sand sourced from Wisconsin mines, specialized horizontal drilling rigs capable of extended-reach laterals, and drilling permits from the North Dakota Industrial Commission.
Who depends on this company?
Midwest refineries — including Marathon Petroleum's facilities — depend on this crude because Bakken oil has a specific API gravity and sulfur content their equipment is set up to process. Petrochemical plants use Bakken NGLs, particularly ethane, as a feedstock. Rail car lessors also depend on Williston Basin crude-by-rail volumes to keep their tank cars in use whenever the pipeline fills up.
How does this company scale?
The long-lateral drilling technique can be repeated well after well across similar Bakken geology, and each repetition brings the per-barrel cost down a little more. What does not scale is the acreage itself — the company can only drill within its existing leasehold, and the best drilling locations within that acreage get used up over time as development moves through the formation's most productive zones.
What external forces can significantly affect this company?
If Canadian crude pipelines expand, more Canadian oil reaches Midwest refineries, which pushes down the price advantage that Bakken crude currently enjoys in those markets. Federal permitting reviews of DAPL create ongoing uncertainty about whether the pipeline will remain available long-term. North Dakota's flaring regulations also require the company to build infrastructure to capture the natural gas that comes up alongside oil, adding capital costs that did not previously exist.
Where is this company structurally vulnerable?
If the federal government revoked or permanently blocked DAPL's operating permits, every barrel of oil would have to leave the basin by BNSF rail. That permanent shift to higher-cost transport would eat into the margin that makes drilling long, expensive wells economically sensible in the first place — and the entire business model would stop working.
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