Larry's May Scorecard for Mountrail County

It's a little early this month, but the remaining days will be added to the June summary.

At month end there were 24 drilling rigs on location in Mountrail County. EOG 8 rigs; Hess 3 rigs; Whiting 5 rigs; Fidelity 2 rigs; Brigham, Hunt, Murex, Sinclair, Slawson, and Windsor 1 rig each.

During May 17 wells were spudded. EOG 7; Hess 2; Whiting 3; Fidelity 1; Brigham 1; Hunt 1; Murex 0; Slawson 1; Sinclair 0; and Windsor 1.

During May NDIC issued 18 new permits to drill. EOG 8 permits in Parshall, Austin, Van Hook, Wayzetta, Oakland and Shell Townships. Whiting 4 permits in Knife River and Osborn Townships. Hess 1 permit in James Hill Township. Fidelity 2 permits in Powers Township. Slawson 1 permit in Van Hook Township. Hunt 0 permits. Murex 1 permit in Sikes. Brigham 0 permits. Sinclair 0 permits. St Mary 0 permits. Windsor 1 permit in Austin Township. Oasis 1 permit in Cottonwood Township.

XTO Finds Some Loose Change

XTO apparently had about $1.85 billion lying around (a little over half in cash) to acquire Headington's Bakken producing and non-producing properties. Whatever Headington received, they deserved it for having the foresight to be one of the original players in MT and also in ND.

The Details from XTO

Rig Count Keeps Rising

Larry put together a chart of changes so far this year in the rig count and noted that on January 8, 2008, there were 53 rigs operating in ND. As of last week, there were 70 operating in the state. (There are 72 this week).

Larry's spreadsheet shows the detail by company and by country, and he noted that from January through last week, Continental (CLR) has increased their fleet the most -- by 5 rigs. The biggest rig increases by county have been in Burke Co. -- 6 rigs; Mountrail -- 6 rigs; and McKenzie -- 5 rigs.

ND Drilling Rigs
BY COMPANY
	Jan 8 2008	May 20 2008	CHANGE
CONTINENTAL	6	11	5
EOG	8	8	0
HESS	7	7	0
MARATHON	6	6	0
WHITING	2	5	3
BURLINGTON	3	4	1
FIDELITY	1	3	2
ENCORE	1	2	1
HEADINGTON	2	2	0
MUREX	1	2	1
PETRO HUNT	1	2	1
SUMMIT	2	2	0
TRACKER	1	2	1
BRIGHAM	2	1	-1
CONDOR	0	1	1
CORNERSTONE	0	1	1
EAGLE	0	1	1
HELIS	0	1	1
HUNT	1	1	0
NEWFIELD	1	1	0
PEAK	0	1	1
PENN VA	0	1	1
PRIMA	1	1	0
SAMSON	1	1	0
SINCLAIR	0	1	1
SLAWSON	0	1	1
WINDSOR	0	1	1
CHIMNEY SWEEP	1	0	-1
PLAYA	1	0	-1
ST MARY	1	0	-1
TOP	1	0	-1
ZAVANNA	1	0	-1
ZENERGY	1	0	-1
	53	70	17
BY COUNTY
BILLINGS	2	3	1
BOWMAN	3	5	2
BURKE	1	7	6
DIVIDE	2	2	0
DUNN	13	15	2
MCKENZIE	6	11	5
MOUNTRAIL	17	23	6
RENVILLE	1	0	-1
STARK	2	0	-2
WILLIAMS	6	3	-3
WARD	0	1	1
	53	70	17

David has sent along a picture of Pioneer 57 which spud this weekend on EOG's Parshall 4-20H, sec. 20, T152, R90, in Mountrail Co. I think David may just have a little more than a photographic interest here, so let's all hope for a great result.

The End Of The (C.R.) Line In Mountrail?

Data from the EOG McAlmond 1-5H well, sec 5, T155, R89, Mountrail Co., indicates that area is east of the area of oil generation, or the Continuous Reservoir as described by the USGS. The company found virtually no oil shows either in the mid-Bakken or in the shales, indicating that the shales are too shallow to have initiated generation of hydrocarbons. Background gas was only around 30 units when it should be in the thousands. The upper shale is found in this area at a subsea depth of about -6600 ft. Some better shows were found near the bottom of the lower shale, which is about 70 ft below the top of the upper shale.

What makes this somewhat surprising is that this area is only about a half dozen miles northeast of active development in the Austin area of Parshall Field, where some of the most prolific producers have been found. Since the mid-Bakken in the McAlmond well was not saturated with oil, it is appears that oil migration from the area of generation may not be as widespread as hoped. While there may be some extensive horizontal fracture systems that are capable of charging the mid-Bakken with hydrocarbons in areas beyond the area of active generation, such a system apparently doesn't exist in the immediate area of the McAlmond well.

Continental Finds A Lot To Like About The Three Forks

Continental Res. announced today that its first foray into the Three Forks has been a success, and investors liked what they heard and boosted the CLR stock price up 23% today. The company's Bice 1-29H, sec 29, T147, R96, Dunn Co., flowed an average of about 700 bbl/day over a seven day period from about 50 ft. below the upper portion of the middle member of the Bakken where most laterals have targeted.

The well is the company's first attempt to test whether the TF is a separate reservoir that is not be drained by mid-Bakken wells. If the TF is indeed a discrete reservoir, a whole new chapter may need to be written on this play.

Marathon Attempting To Drain The Lake

In the last edition of The Rocky Mountain Oil Journal, it was noted that Marathon has moved one of its H&P rigs to the Big Lake in attempt to establish Bakken production thereunder. This Marathon activity is apparently unrelated to the breaking story on Fox News regarding the bonanza that awaits them.

Marathon Oil Drilling Under Lake Sakakawea-McKenzie County North Dakota

Marathon Oil has spud in their second horizontal Bakken test in McKenzie County North Dakota. The company has moved in Helmrich & Payne rig #256 and is making hole at the Myrmidon #1-2H ne-ne 2-151n-94w. Bottom hole location for this test will be the sw-sw 11-151n-94w. Of interest, this will be the first North Dakota horizontal Bakken test that will attempt to establish production beneath Lake Sakakawea, the third largest man-made lake in the United States, after Lake Mead and Lake Powell. This reservoir has a length of about 178 miles and contains roughly 1,320 miles of shoreline.

Originally the Myrmidon #1-2H prospect was generated by Black Rock Resources (BRR), a consortium of several companies including Savant Oil and Gas, Castle Rock Resources, Kirkwood Oil and Gas, and several individuals. The acreage that Marathon is drilling on is part of a 100,000 acre lease block that BRR sold to Marathon Oil for a reported $43 million. Prior to this sale, BRR had asked and received permission to create a 1,280 acre spacing drilling unit that included all of section 2 and 11 of 151n-94w. In supporting the request for the creation of this horizontal Bakken drilling unit before the Industrial Commission, the following reservoir and economic data was presented at the hearing:

Bakken Reservoir and Recovery Data

Reservoir Type Middle Bakken Silty Dolomite

Spacing 1280 acres

Stimulation Type Gelled Water/Sand Frac

Reservoir Thickness 38 ft

Porosity 9%

Water Saturation 25%

Oil Gravity 42 degrees API

GOR 800 scf/stb

Oil Formation Volume Factor 1.5 Res. BBL/STBO

OOIP 16,981,000 bbls

EUR 800,000 BBLS

Recovery Factor 5.5%

Well Economics

Capital Cost $6,000,000

Expected IP: 650 BOPD

Ultimate Recovery 800,000 BBLS Oil

960,000 Mcf Gas

Royalty Burden 20%

Operating Cost $6,000 per month

Prices $60/bbl Constant Oil Price

$6.50/MMbtu Constant Gas Price

Economic Projections

Future Net Revenue $4,590,000

Operating Costs $2,041,000

Production Taxes $5,048,000

Rate of Return >100%

Undiscounted Return on Investment 6.5

Bear in mind, that when BBR presented this data to the Industrial Commission, the company used a constant oil price of $60 per barrel. Current Williston Basin sweet is now selling for $112.75 per barrel.

Nearest Bakken penetration to the Myrmidon #1-2H is about a mile to the northwest at a field well within Antelope Field, a multi-pay oil pool. Originally drilled by Comdisco Operating and now controlled by Chesapeake Operating, the Gudbranson #1 nw-se 34-152n-34w was completed pumping 192 bopd and 96 mcfgpd from the vertical Sanish section 10,650’-10,660’. Since first being put on production in the latter part of 1990, this well has cumulated over 91,349 bo, 88.5 mcfg and 3,467 bw. Antelope Field itself is a southeast plunging anticline and was discovered in 1953. Producing from the Devonian, Madison, Red River, Sanish, Silurian and Winnipeg/Deadwood, this field has produced over 41.3 mmbo, 61.6 bcfg and 46.4 mmbw.

As mentioned, the Myrmidon #1-2H is the second Bakken test drilled by Marathon Oil in McKenzie County. The first sideways test drilled by the company scales about 36 miles southwest at the Dolezal #24-24H se-sw 24-146n-99w. Completed in November of 2006, this single lateral Bakken producer was given an IP of 82 bopd, 68 mcfgpd and 103 bwpd. Incorporated into Ranch Creek Field, the Dolezal #24-24H has produced over 29.3 k bo and 33 mmcfg. Ranch Creek Field is a Bakken oil pool discovered by PDC Corporation at the Carmona #31-1H ne-nw 1-146n-99w. Marathon Oil has now assumed operatorship of this discovery well.

Content courtesy of The Rocky Mountain Oil Journal

It's The Lake Stupid

Okay, this is just a bit scary that stuff like this makes it on TV. Who would have thought that the key to unlocking the Bakken had everything to do with being able to drill under the "biggest lake in ND." I don't think it was meant as a joke, but it gave me a chuckle.

Larry's April Scorecard for Mountrail County

Once again Larry has come through with his monthly summary:

At month end there were 24 drilling rigs on location in Mountrail County. EOG 8 rigs; Hess 5 rigs; Whiting 4 rigs; Fidelity 2 rigs; Brigham, Hunt, Murex, Sinclair, and Slawson 1 rig each.

During April 14 wells were spudded. EOG 7; Hess 1; Whiting 1; Fidelity 1; Behm 0; Brigham 1; Hunt 0; Murex 1; Slawson 1; and Sinclair 1.

During April NDIC issued 23 new permits to drill. EOG 6 permits in Fertile, Austin, and Shell Townships. Whiting 1 permit in 153-93 Township. Hess 2 permits in Idaho and Myrtle Townships. Fidelity 1 permit in Powers Township. Slawson 0 permits. Hunt 2 permits in Shell and Austin Townships. Murex 1 permit in Sikes. Brigham 0 permits. Sinclair 2 permits in Crane Creek and McAlmond Townships. St Mary 8 permits in Lostwood and Powers Townships.