Thursday, February 28, 2008

The Bulls Catch EOG

EOG conference call today.

Its stock is up today almost $20 to about $125/share (almost 20%).

Presentation Slides from Rockies region

Discuss.

22 comments:

Anonymous said...

Whiting Petroleum also has a new corporate presentaion on its website.Talks about its Sanish Field and its relationship with EOG in the Parshall Field.

Anonymous said...

I bought 200 shares EOG at around 124, it had a strong run all day long. There seems to be more publicity on Bakken in the NY media. Oh yeah, I bought 600 shares of Whiting as well.

Larry said...

Here are some items of interest from the EOG Resources presentation:

1. EOG leases in North Dakota have increased from 175,000 net acres previously reported to 320,000 net acres. Most of EOG's leases are in Mountrail County.

2. The Austin 8-26H well had an IP of 3060 bpd.

3. EOG plugged and abandoned the McAlmond 5 well because of poor oil shows.

4. EOG made no indication they are increasing the number of drilling rigs from the 8 rigs currently in Mountrail County. With 320,000 acres under lease, EOG will need far more than 8 rigs to drill those lands prior to the expiration of the leases.

5. The surge in EOG's share price yesterday was due to announcing several new gas and oil fields and its added acreage in ND Bakken. EOG will be busy for many years.

Anonymous said...

If any person is interested, check out Brigham Exploration (bexp), they will have their conference call on March 4th.. the stock was up about 10% yesterday. Is still a good buy at that 7.00- 7.50 area because of the Bakken and other gas plays in the US. Disclaimer, I do own 700 shares of them, but for a small bakken player, its a cheap company stock to get into.

david said...

It was fun to watch the EOG stock price during the analyst presentation. I watched the stock price pop several dollars during the Parshall Bakken presentation

Some fun

Disclaimer:
I own EOG, BEXP, and NOGS
No Whiting yet but considering.
The funny part is that I thought I way overpaid for EOG when I pd $89 not too long ago.
My uncle picked up some last summer for $63, so I was comparing with what he paid.
moral of the story:
The stuff we discuss here about the wells isn't necessarily always already known generally in the market for these stocks and already priced in.
However, I do think $124 is pricey now, too rich for my blood :-)

David said...

Also, did you guys take note that in the EOG presentation on the Bakken there is a map of the Bakken showing the seismic data in yellow along with a bunch of future EOG well locations in the field that have not been permitted yet and therefore aren't known on any other map. The map is is not very clear but I can figure most of the new sections out that are scheduled but not permitted.

Anonymous said...

I am intrigued by Continental Resources (clr). They have over 300,000 acres leased in the Bakken and almost 30% of their total resources deployed there

David said...

EOG peaked at $130 but then yesterday dropped back to $118 and change.
Looking at these data as an investor I would say that $130 fully prices the good news into the stock price. At $118 there is a little more upside potential but not a lot.
For the stock to go above $130, the news has got to get ever more favorable and that is the difficult part at this point.

Right now I am more interested in the players who are somehow connected either to the EOG wells or to the leases in immediately adjacent areas including WLL, BEXP and NOGS, in large measure because I don't think the market fully understands the interconnections (nor do we here in some cases as a lot of the info is not public). But because of those still underappreciated interconnections there could be still more upside potential in these companies than in EOG itself. I'm still trying to figure out what is going on with NOGS as they claim to have a lot of leases south and east of the Parshall field, and yet I don't see much if any drilling activity on those leases. The tiny market cap of the company (189 million) means that putting out even a single 5 million $ well with a lateral would be a stretch w/o a financial sugar daddy partner such as EOG or WLL in the well. Its fortunate that EOG and WLL have the financial means to test out the boudaries of the field as well as try new ideas for upping the recovery rate, such as the third well crossing two 640 acre spacings EOG is drilling on 3 152-90. Smaller drillers couldn't afford to take the risk.

Anonymous said...

David, You will never see a well being drilled by NOGS. They are strictly a company that has put a lot of acreage together and will "farm out" the leases with participation agreements in the wells. They contribute with the value of the lease, as well as putting up a % of the drilling costs. This way they leverage their investment to the max, and are never spread very thin. For NOGS, they are in the drivers seat, they hold a lot of acreage, and are/will be courted by all of the other players in this Bakken play. It is a very good stock to load up on, not a fly by night outfit.

Anonymous said...

The following is from the Continental Resources conference call on their North Dakota Bakken work.

Next, we'll talk about our North Dakota project. And we are the largest single owner of acreage in the North Dakota Bakken play with approximately 325,000 net acres under lease and over 800 potential locations. We've been pleased with our drilling results in the central and northern portions of our acreage located along the Nesson Anticline, and in these areas we completed 27 Bakken shale wells during 2007, which have been assigned average estimated recoverable reserves of 335,000 gross barrels equivalent per well, exceeding our economic limit of 315,000 gross barrels equivalent per well. These wells include a mixture of 1280 and 640-acre dual-leg and single lateral wells that have been completed open hole and more recently completed using uncemented liners and mechanically-dewatered fracs. As most of you probably are aware, wells completed using these mechanically- dewatered fracs appear to be delivering better results. A good example is our McGinnity 1-15, which is 1280-a! cre well that was single lateral that was drilled recently here, and it was completed flowing at an average 7-day initial rate of 580 barrels of oil equivalent per day, which is the best completion we have had in the northern most portion of our acreage to date. We will be increasing the pace of our development of the northern and central areas in the first half of '08 by adding three to five rigs, bringing our rig count in North Dakota to nine and possibly 11 rigs by mid-year including three operated by ConocoPhillips under AMI.

We plan to continue to use mechanically-dewatered fractures on our operated wells and expect a majority of our non-operated wells will also be completed this way, given that most of the operators are embracing this technique.

In our southern most acreage position, we recently participated in the completion of the Basaraba 44X-27, which flowed at a 7-day average initial rate of 463 barrels of oil equivalent per day from an unstimulated 1280-acre tri-lateral well bore. This is best [ph] completion in our southern block to date and is very encouraging. Of significance, this well was selected based on [inaudible] analysis of 3D seismic, which with further confirmation may provide a method to select higher potential locations in this area. We are currently reprocessing and evaluating approximately 108 square miles of data in the immediate area and are contemplating additional 3D seismic acquisition during the year.

Of added significance for the entire North Dakota Bakken play is the emerging potential of the Three Forks-Sanish formation found immediately below the lower Bakken Shale. The thought is that the Three Forks-Sanish may prove to be a separate reservoir adding significant reserves to the North Dakota Bakken play. We’ve been encouraged by the recent Three Forks-Sanish completion [inaudible] find it interesting that the well with the highest cumulative production to date to Petro-Hunt USA, 2D, 3-1H, which has cumulative production of over 350,000 barrels with a Three Forks-Sanish completion on the Nesson Anticline. We plan to spud our first Three Forks-Sanish test in the next 30 days to begin our evaluation and we'll be participating in two non-operated Three Forks-Sanish tests schedule for late first quarter and second quarters

Larry said...

Does anyone know what oil price assumptions the drillers are using to determine the economic limit for a well?

CLR stated that 315,000 barrels EUR is their limit. Since 25% of the production goes to the leaseholders and the state in the form of royalty payments and taxes, that leaves the driller with 250,000 barrels. At $100 per barrel, the driller would receive $25 million over the life of the well. Therefore, the oil drillers must be using something like $40 barrel as the long term oil price in calculating the economic limit.

"which have been assigned average estimated recoverable reserves of 335,000 gross barrels equivalent per well, exceeding our economic limit of 315,000 gross barrels equivalent per well."

Anonymous said...

Murex, on the Jacob Daniel, Sec 36,154-91 at the NDIC hearing Wed. presented this data.. OIP 7,978,537bbls, Recoverable reserves 1,196,781 (15%)+ 612,752 Mcf gas, oil price $70.00, gas price $7.00 this is on a 1280 acres spacing. pay zone thickness 30', Oil API Gravity 43.3 Payout in 0.6 Years.

Larry said...

David,
Good eyes---
"did you guys take note that in the EOG presentation on the Bakken there is a map of the Bakken showing the seismic data in yellow along with a bunch of future EOG well locations"

Here are the locations by township-
Model 7
Fertile 1
Parshall 11
Van Hook 4
Shell 7
Wayzetta 20
Oakland 4
Austin 17
Burke 3

There are a total of 74 undrilled locations on that map. With 8 rigs operating this map pretty much lays out EOG's drilling plans for the next 12 months.

EOG is definitely in the "cat bird seat" knowing the next 74 wells drilled will likely produce more than 500 barrels a day.

EOG also has the luxury sitting back while the other drillers risk their money exploring the lands around EOG's other major holdings (such as in the Sidonia, Crowfoot, and Redmond Townships)in Mountrail County.

Anonymous said...

Does anyone know where the well Petro-Hunt USA, 2D, 3-1H that Continetal Resources is talking about is ?

Anonymous said...

USA 2D-3-1H IS LOCATED IN THE CHARLSON FIELD LEGAL DESCRIPTION 153-95-2

Teegue said...

I wrote about the Petro-Hunt well twice: on 3/21/07 and 11/13/07.

dkwilk said...

i recently read this article on Bakken well Stimulation and wonder how many producers in ND are using this.. the article is available @
www.dobmagazine.nickles.com/

Anonymous said...

BRIGHAM NEWS. http://biz.yahoo.com/prnews/080303/clm030a.html?.v=1

Anonymous said...

Actually a question from a novice. I own mineral rights in Mountrail County, North Dakota. I am receiving phone calls and offers to lease them from multiple landsmen for different companies. I do not know whether it matters who I lease to, or should I only be concerned about the actual terms?

Anonymous said...

This should help you.

https://www.dmr.nd.gov/oilgas/leasingconsiderations.pdf

Anonymous said...

I say hold on to them get a working interest or atleast ask what they ask in texas 1k per acre and 25%.

Steve said...

In evaluating Hess's activity in the Bakken, it would seem to me that a lot of their drilling is and will be on HBP (held by production) acreage. They have held this for decades and it likely that they have a very favorable royalty burden on the HBP acreage...say 12.5%...as compared to the new Bakken leases at 16.67 to 20 %...This may offset some of the fact that they don't seem to be in the more prolific areas of Mountrail Cnty....