Thursday, February 28, 2008
Wednesday, February 27, 2008
Hearing today, Feb 27,08 at the ND Oil and Gas ..the Murex Petroleum portion. You will all be interested in knowing that the Jacob Daniel, (Sec 36, 154-91) the last 45 days has averaged 785 bbl's of crude oil [per day]... the production chart per day (45 days)they presented is in a flat line.. this is without a frac job. They will do the frac later once the pressure drops some, but maybe not they said.
What is really interesting is that they could not drill the whole 2 mile leg, only about a 3/4 mile one, they just about lost the well, (blow out)so quit drilling and will go back and extend the leg when they feel it is safe to do so. [Ansbro had the same problem a couple years back, lost the rig in a blowout/rig fire and then couldn't finish the lateral with a different rig because of safety concerns: 7/11/07 post].
Tuesday, February 26, 2008
Line of the week goes to geologist Paul Jeffcoat-Sacco on the Risan well: "A drill bit is a great tool for destroying a seismic map."
And we have breaking news from a May 1919 edition of the Parshall Leader (thanks Jerry):
Be sure and check out Larry's comment about Whiting's activities in Mountrail Co.
Also, the "In The News" February 12th post has been updated with an article forwarded by Larry from MinnPost.com.
Monday, February 25, 2008
Sunday, February 24, 2008
North Dakota Oil Production Jumps 12.8% in 2007
Bakken Output Increases 329% Compared to 2006
North Dakota’s 2007 oil production recorded a healthy leap compared to a year earlier. For the year 2007, the state reported that total oil produced was 45,057,874 bo, up an impressive 5,114,464 bo as opposed to the 39,943,410 produced in 2006. These production totals makes 2007 the seventh largest year on record since the oil was first discovered within North Dakota in 1951.
Of course one of the major factors in this increase in production is the Bakken formation. According to state figures, in 2007, the Bakken is credited with producing 7,382,025 bo, up an incredible 329% compared to the 2,245,411 extracted from the same formation in 2006. This increase of over 5 million barrels bespeaks of the technological advances in horizontal drilling and more importantly, the record levels of the price of oil. The current hotspot for those operators that are chasing the Bakken are in Mountrail and Dunn Counties. Presently, of the 59 rigs that are making hole in the state, 36 of them are within these two counties looking for another Parshall field, the states largest Bakken oil pool. This field, which is in Mountrail County, is currently producing over 278 k bo per month from 21 wells and is currently under aggressive exploitation. It’s also noteworthy to point out that production within these two counties has greatly increased. In 2006, Mountrail and Dunn counties produced 415,434 bo and 984,863 bo respectively. A year later, Mountrail County reported production of 1,960,091 bo while Dunn County increased their output to 1,913,598 bo.
It should be pointed out that in 2006, the Bakken accounted for 5.6% of the states total oil output from 300 active wells. In 2007, the Bakken represented 16.6% of the states output from 457 wells. The only other formations that had a higher percentage of oil produced during 2007 was the Madison and Red River “B”. It’s anticipated that the results for 2008 will show even greater numbers for the Bakken.
Although a great deal has been written about the Bakken play within the state, it should be remembered that the Ordovician Red River “B” is still king. This formation produced 16,722,579 bo or 37.6% of the states production in 2007. In 2006, the Red River “B” cumulated 15,706,913 bo. The source of this production is coming from the Greater Cedar Creek Anticline, primary the Cedar Hills South Unit (CHSU) in Bowman County. In fact, for the month of December 2007, the latest production figures that are currently available, the CHSU produced 1,072,933 bo from 136 horizontal wells.
Of the 161 operators reporting production within the state for 2007, Burlington Resources (BR) was far and away industry’s leader. Retaining their #1 spot, BR reported production of 12,690,287 bo, up 425,475 bo compared to a year earlier. This production by BR is over twice that of the second largest producer in the state. The vast majority of BR’s production is due to the company’s aggressive horizontal Red River “B” drilling program occurring in Bowman County, however the company is getting increasingly active in the horizontal Bakken play, and has numerous prospects planned in Dunn County.
Another company who is major actor in the Red River “B” play is Continental Resources (CR). CR was second largest producer in the state, having extracted 5,146,714 bo for the year, up 1,237,361 bo compared to 2006. Aside from their activity in the Red River “B” play, CR is also a large player in the Bakken play with prospects planned or drilled in Divide, Billings, McKenzie, Mountrail and Williams County.
Hess Corporation (Hess) maintained it’s third place standing in 2007 with a yearly production of 4,189,870 bo. The majority of Hess’s production is coming from the Nesson Anticline in Williams and McKenzie counties. In 2006, Hess produced 3,528,876 bo. Hess is another company who is getting more aggressive chasing the Bakken and currently has five rigs working in Mountrail County evaluating their holdings.
Encore Operating, by virtue of their purchase of Kerr-McGee’s properties in the state, ranked number 4 with a yearly production total of 3,259,711 bo. A year earlier, the company reported that they had produced 529,439 bo.
The states fifth largest producer was Whiting O&G (Whiting). Whiting is credited with extracting 2,298,580 bo in 2007, up 105,112 bo compared to 2006. Look for Whiting’s production to increase in 2008 as the company continues their Bakken program in Mountrail County, primarily that area north of the Sanish Field area.
A quick look at drilling statistics for the state in 2007 show that a total of 407 wells were spud for the year with Dunn County leading with 70 spuds, followed by Williams County with 61. Mountrail County had 60 wells initiated and Bowman County had 56.
The following list ranks the top oil producers in the state of North Dakota for the year 2007. Please note that the company rankings for oil and gas do not include confidential wells, skimmed oil, drip gas or other liquids extracted during gas processing.
All content courtesy of the Rocky Mountain Oil Journal.
Monday, February 18, 2008
It is interesting to look at some of the players in the development of the field from the perspective of their size, history and financials. I have chosen four of them. In looking at the company size in terms of market capitulation, keep in mind that Exxon-Mobil (XOM) a Dow Jones Industrial Average component and largest integrated oil company, has a market capitalization of $289 billion. Market capitalization is the product of the shares outstanding times the current stock price. I will discuss each of the publicly traded players in descending market capitalization
EOG resources (stock symbol EOG)
Market cap about 21 billion or about 14% the size of XOM
EOG resources was once known as Enron Oil and gas, but was spun off by Enron in 1999 to senior executives in the group as a separately traded company. This was a couple years prior to when Enron collapsed. Jeff Skilling and Ken Lay, running Enron at the time, and both later convicted in trials, were interested in dumping what they saw as old economy parts of the company to finance their “new economy” ventures, and to them, the oil and gas drilling unit was as old economy as it gets. When Enron collapsed, the completely separated drilling unit was a valuable company, but no longer any part of Enron. As a company EOG seems to be run very conservatively, with executives going overboard to make sure the company is not seen as being anything like the old Enron. More details of company history can be found at: http://www.eogresources.com/about/company_history.html
Currently running 7 rigs in the area—supposed to have 8 shortly. EOG’s most important financial contributor to company profit by far is their very successful Barnett gas field in Texas, but the relative importance of the Bakken to the company bottom line is moving up. Its stock currently trades at 80-$95 a share. The stock was trading in the low-mid $60 range as late as last summer, but the trading range popped about $10 after the third quarter earnings report last October, TIP: The stock price tends to move on a daily basis with the crude oil price, which moves around a lot day to day. Watch the price of crude oil and try to make purchases of EOG on days when the crude price is off.
Whiting Oil and Gas (stock symbol WLL)
Market cap 2.1 Billion or about 10 % the size of EOG. Company Web Site http://www.whiting.com/
If you study the company Web site, you will see that they do much the same thing EOG does, except that they are a much smaller company. For now, the Sanish field in not as significant a contributor to the Whiting bottom line as the Parshall field is for EOG. They have 3 rigs in the Sanish field.
New Whiting wells in the Sanish are done with what I call “birdsfoot” laterals. 1280 acre spacing with laterals going out three ways. This is technologically more complex than the 640 acre spacing and single diagonal EOG has had success with. Whiting swears that given where they are their approach is better than if they were to simply apply EOG’s approach of a single SE-NW lateral on 640 acres. The most recent birdsfoot lateral completion came in at over 2200 initial bopd, so they may have a case. With the bigger spacing and smaller number of rigs, Whiting will be drilling far fewer wells than EOG, and as a consequence the Sanish field will appear to be developing less rapidly than the Parshall field has developed.
Stock price moved up from $35 about the same time the EOG share price moved and as I write this it is at $51. It came close to breaking $60 a few weeks ago. Again, if you are interested in this stock, look for buying opportunities on days when the crude price is off.
Brigham Exploration (Stock symbol BEXP)
Market capitalization 289 million, about 1/8th of the size of Whiting. Company Web site: http://www.bexp3d.com/
Brigham has recent news releases claiming success in the Bakken which you will find highlighted on their company Web site. For the most part, the wells they have significant interest do not appear to be doing quite as well as the EOG wells near them. They have had small working interest in some EOG wells, for example 1.3% in Risan #1. The wells Brigham has primary interest in are producers, but initial production appears to be in the 300-550 bopd range not 750-2000 bopd.
The stock has been trading in the $6 to $7.50 range, on much smaller volumes. Because of its small size, this company will have the major working interest in a very small number of wells relative to Whiting or EOG. Stock price trades in a range between $6 and $7.50 or so, obviously more speculative than EOG Or Whiting. Current share price is $6.32
Northern Oil and Gas (Stock symbol NOGS or perhaps NOGS.OB)
Market Cap ??? but small relative even to BEXP. Company Web site http://www.northernoil.com
Northern Oil and gas has a minority working interest in one of the Brigham wells recently completed. Their major asset is that they acquired a large number of yet undrilled leases in areas adjacent to but south of the Parshall and Sanish fields and to the NE of the main Parshall field. There have been very few wells drilled on these leases. As I read NOGS financials, they seem pretty shaky. It appears to me that the only way they can sink holes is to partner with someone that has more capital and wants leases. And how productive the leases are that they hold is highly speculative. The stock has been trading at around $6, expensive for a company with such shaky financials, but investors are speculating that all the leases they hold could prove to be very valuable.
Hunt Oil is privately held, not publicly traded, with some of the offspring of H. L. Hunt still being very actively involved. Hunt has been drilling and has had good success on a section just east of the EOG Parshall field—the so-called “Bowman” well in Shell Twp was drilled by Hunt not EOG. The oil industry has always attracted more than a fair share of colorful characters, and senior H.L. Hunt (who died in 1974) perhaps would be voted as the most colorful character in the industry ever.
Many of his traits had to have served as inspiration for the J.R. Ewing character on “Dallas.” The company Web site: http://www.huntoil.com/ There is a company history page http://www.huntoil.com/history.asp that hits some of the high points, and includes some fascinating photos, but carefully circles around some of the more “colorful” details about HL’s personal life and public persona. A quick H.L. Hunt biography is at http://en.wikipedia.org/wiki/H.L._Hunt
Tuesday, February 12, 2008
03/03 update: An article from the Grand Forks Herald about record high oil prices in ND.
02/27 update: An article from MinnPost.com: Booming Oil Patch Lights Up North Dakota Rangeland
02/25 update: In Barron's, Kopin Tan has article about the Bakken from an investment prospective (starts in the middle of p. 2). It contains one of the best passages in recent memory: Exploration stocks are risky prospects. Booms can turn into busts, and oil found may not be easily extracted. Wait too long for data and shares would have already run up. Jump in too early and you're one sunburn away from that crazy guy combing the beach with a metal detector.
02/13 update: Another one today in the Bismarck Tribune about a huge turnout in Killdeer for an informational meeting.
The Bismarck Tribune has reported on the the state lease sale in Mercer Co.
In addition,the Bismarck Tribune had a story on the uneven effects of development.
Then the Minot Daily News has another "boom" article. However, I have yet to see anyone show where there is currently more than a half billion barrels of potentially recoverable reserves in ND, now yet 400 billion, or what's going to happen to all the acreage in the dead zone consisting of most of Williams and McKenzie Counties (or how much, or little, is going to be recovered from that huge area).
Thursday, February 7, 2008
Only two tracks in Mountrail Co., both in sec. 19, 152N, 91W, and they both went for $3,650/acre and purchased by Rick Slagle.
Only one tract in McKenzie Co, sec 15, 151-96, went for $1,180/acre.
Six tracks in northern Dunn Co., in 146-93 to 148-95, went for about $600-800/acre.
A handful of tracts in McLean Co., all in 147-87, went for $1-6.
Mercer Co. had about 250 tracts with about half being in the $200-300 range and the rest in the under $100 range. The tracts went as far east as township 86W.
Monday, February 4, 2008
At month's end there were 19 drilling rigs on location in Mountrail County: EOG 7 rigs; Hess 4 rigs; Whiting 3 rigs; Fidelity 2 rigs; Brigham, Hunt, Murex 1 rig each.
During January there were 12 wells spudded: EOG 6; Hess 2; Whiting 2; Fidelity 2
During January NDIC issued 32 new permits to drill: EOG 15 permits in Model, Parshall, Wayzetta, and Austin Townships. Newcomer Behm Energy 7 permits in Osloe and Spring Coulee Townships. Whiting 3 permits in Crane Creek Township. Hess 3 permits in Banner, Idaho, and Ross Townships. Hunt 1 permit in Oakland; Murex 1 permit in Sikes; Fidelity 1 permit in Brookbank; and Brigham 1 permit in Manitou.