When oil prices fall, operators don’t stop drilling overnight.
Instead, drilling programs unwind in stages — driven by economics, capital discipline, and inventory management. The recent decision by Continental Resources to pause drilling in North Dakota provides a clear, real-world example of how that process works and how drilling data often reveals the decision long before public statements are made.
Using well-level activity data from the last 12 months, we can see exactly how and when Continental adjusted its drilling strategy as oil prices weakened.
The Economics That Drive the Decision
Every drilling decision starts with one question:
Does a new well generate acceptable returns at today’s price?
In the Bakken, breakeven prices vary widely by location, but typically range from:
- $50–65 per barrel WTI
As oil prices slid toward the low $60s entering late 2025, margins for new Bakken wells narrowed quickly — especially compared to higher-return inventory in the Permian Basin.
At that point, operators face a choice:
- Continue drilling marginal wells
- Or preserve capital and wait for pricing to improve
Most choose the second option.
What the Data Shows: Continental Resources Wells Drilled
Looking at Continental Resources’ North Dakota wells drilled over the last 12 months and grouping activity by quarter reveals a textbook drilling slowdown.
Wells Drilled by Quarter (Activity Date)
| Quarter | Wells Drilled |
|---|---|
| 2025 Q1 | 34 |
| 2025 Q2 | 32 |
| 2025 Q3 | 21 |
| 2025 Q4 | 11 |
| 2026 Q1 (to date) | 2 |
This drilling history tells the story clearly.
Phase 1: Full Development Mode
Q1–Q2 2025
- ~33 wells drilled per quarter
- Represents a steady multi-rig development program
- Oil prices were still supporting full-cycle economics
- Capital budgets remained intact
At this stage, operators are focused on:
- Executing approved drilling schedules
- Holding acreage
- Maintaining production growth targets
Phase 2: The Decision to Reduce Drilling
Q3 2025
- Wells drilled dropped from 32 to 21
- A 34% quarter-over-quarter decline
This is the critical moment.
Operators rarely announce drilling cutbacks immediately, but internally this is when the decision is made:
- Updated price decks show weaker returns
- Internal hurdle rates are no longer met
- Capital efficiency becomes more important than volume growth
Rather than stopping entirely, companies begin:
- Dropping one rig
- Stretching pad timing
- Deferring marginal locations
This marks the shift from growth mode to preservation mode.
Phase 3: Capital Tightening Accelerates
Q4 2025
- Wells drilled fall again from 21 to 11
- Nearly a 50% reduction
By this point:
- Oil prices remain under pressure
- Global crude markets are oversupplied
- Service costs may be sticky
- Cash flow is prioritized over new drilling
Most operators at this stage are drilling only:
- Lease-hold obligations
- Top-tier locations
- Previously committed pads
Everything else is deferred.
Phase 4: Drilling Stops
Q1 2026
- Only 2 wells drilled
- Effectively a drilling pause
This aligns directly with Continental Resources’ public comments that it would temporarily operate zero rigs in North Dakota — the first time in 30 years.
Importantly:
- The company continues producing existing wells
- No large-scale shut-ins have occurred
- The pause applies only to new capital drilling
This distinction matters.
Why Operators Stop Drilling — But Keep Producing
Stopping drilling does not mean stopping production.
Once a well is drilled and completed:
- Operating costs are relatively low
- Cash margins often remain positive even at lower prices
New drilling, however, requires:
- High upfront capital
- Long payout periods
- Confidence in forward pricing
When prices weaken, operators often conclude:
“There’s no need to drill it when margins are basically gone.”
Preserving inventory becomes more valuable than adding volume.
What This Means for Production
In the short term:
- Production remains stable
- Existing wells continue flowing
Over time:
- Natural decline sets in
- Output gradually falls if drilling does not resume
This is why drilling activity — not production — is the earliest indicator of future supply changes.
The Bigger Picture
Continental Resources’ Bakken slowdown is not an isolated event.
It reflects a broader shale reality:
- Capital discipline now outweighs growth
- Operators respond to price signals faster than ever
- Higher-cost basins feel the impact first
- Drilling data reveals strategy months before headlines
In this case, the data shows:
- Drilling reduction decision: Summer 2025
- Rigs released: Fall 2025
- Drilling paused: Early 2026
The announcement simply confirmed what the wells already showed.
Final Thought
When oil prices fall, operators don’t react emotionally — they react mathematically.
Quarter by quarter, well by well, drilling programs are adjusted until economics justify activity again.
For analysts, service companies, and investors, the lesson is simple:
Watch the drilling data. It tells the story long before the press release does.
