EOG conference call today.
Its stock is up today almost $20 to about $125/share (almost 20%).
Presentation Slides from Rockies region
Discuss.
Thursday, February 28, 2008
Wednesday, February 27, 2008
Murex Finds Strong Producer, Sanish/Parshall Area
A reader left the following comment concerning the NDIC hearing held today to determine temporary spacing for the Murex well in sec. 36, 154N-91W, Mountrail Co. The well is about 3-4 miles northwest of activity in the "south" Parshall Field area and about the same distance southwest of activity in the "Austin" area.
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].
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
Some Parshall Completions, Mountrail Co.
Two EOG completions in the southern portion of Parshall Field are now available. On the west side of the field, the Risan 1-34H, sec. 34, 153N-90W, was completed at the end of Sept. for 817 bbls/day. Cumulative from Sept. to Dec. was about 67K bbls oil. About four miles to the SE, the Sampson 1-12H, sec. 12, 152N-90W, was completed at about the same time for 581 bbls/day. Cumulative from Aug. to Dec. was about 39K bbls oil.
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.
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
Barron's
The 02/12 "In The News" post has been updated with a Barron's article about the Bakken (thanks Nick).
Sunday, February 24, 2008
RMOJ's ND Activity Summary For 2007
The Rocky Mountain Oil Journal has graciously allowed it's article from last weeks edition to be reposted here. It provides an excellent, comprehensive summary of activity in ND during 2007:
North Dakota Oil Production Jumps 12.8% in 2007
Bakken Output Increases 329% Compared to 2006
All content courtesy of the Rocky Mountain Oil Journal.
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
Some Players in the Mountrail Parshall/Sanish/Austin Bakken and Adjacent Areas
David has forwarded this info he put together about some of the players:
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
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
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
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
In The News
It's a good thing that the newspapers are keeping things going when I'm to busy to write something.
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).
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
State Lease Sale Results For February
A lot of tracks this time on the fringe of the play in Mercer Co.
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.
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
January Scorecard For Mountrail Co.
Larry put some statistics together for last month:
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.
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.
Thursday, January 31, 2008
Whiting Hits It Big, Sanish Field, Mountrail Co.
Thanks to the reader for finding this Whiting press release. A surprising gas volume in that Liffrig well at 1.7 mmcfd.
BLM Sale Results
Thanks to Larry for digging this up for Mountrail Co. More detailed info later when I have more time.
Parcel 97711 is a 50% interest in 160 acres in Plaza Township: $520/acre, 80 net acres.
Parcel 97712 is a 50% interest in 320 acres in Osloe Township: $520/acre, 160 net acres.
Parcel 97713 is a 50% interest in 156 acres in Kickapoo Township: $387/acre,78 net acres
Parcel 97714 is a 50% interest in 160 acres in Redmond Township: $1,200/acre, 80 net acres.
Parcel 97716 is a 100% interest in 120 acres in Sikes Township: $3,225/acre, 120 net acres.
Parcel 97717 is a 50% interest in 149 acres in Osborn Township: $1,610/ acre, 74.5 net acres
Parcel 97711 is a 50% interest in 160 acres in Plaza Township: $520/acre, 80 net acres.
Parcel 97712 is a 50% interest in 320 acres in Osloe Township: $520/acre, 160 net acres.
Parcel 97713 is a 50% interest in 156 acres in Kickapoo Township: $387/acre,78 net acres
Parcel 97714 is a 50% interest in 160 acres in Redmond Township: $1,200/acre, 80 net acres.
Parcel 97716 is a 100% interest in 120 acres in Sikes Township: $3,225/acre, 120 net acres.
Parcel 97717 is a 50% interest in 149 acres in Osborn Township: $1,610/ acre, 74.5 net acres
Tuesday, January 29, 2008
Parshall Production And Maps
In December, Parshall Field produced about 156K bbls from 14 wells. Gas production for Nov. (Dec. is not in yet) was about 46 mmcfg. The highest gas production was in Aug. when 13 wells produced 70 mmcfg, which also had the highest oil production so far at 190K bbls.
David was kind enough to plot all the wells in the original Parshall Field area and the recent extended Austin area to the North so everyone could reference them.
David was kind enough to plot all the wells in the original Parshall Field area and the recent extended Austin area to the North so everyone could reference them.
Monday, January 28, 2008
It's The Fault's Fault
If you recall my discussion of the importance of faults in enhancing natural fracturing in the Murphy Creek area last May, it is theorized that faults serve as a conduit for fluids to migrate along the fault. Those fluids would then dissolve the salt deposits below the Bakken causing the overlying formations, including the Bakken to collapse, which obviously would greatly enhance the fractures.
I theorized (along with probably untold others) that such a collapse area existed in the Murphy Creek area in west central Dunn Co. due to the presence of the Heart River Fault in the area (one of the few major faults in the Basin), and also becau
se of the anomaly uncovered during the drilling of the Adobe Killdeer Federal wildcat well in 1981. That well almost blew out when it encountered what appeared to be a fracture in the lower Lodgepole.
This fracture system has apparently been confirmed by the first Marathon well to be drilled in the area, the Hecker 21-5H, sec. 5, 144N-96W in Dunn Co., which was drilled last year about a mile and a half west of the Adobe well. The Marathon well hit the same "fracture" in the lower Lodgepole at almost the same sub sea depth (6 ft.
difference) as was found in the Adobe well. The company ran logs to see what was up with the huge increase in gas and oil shows, but they didn't show any comparable reservoir prope
rties. It was then theorized that the shows were sourced from a "large fracture system below it." The Hecker well was completed for almost 400 bbls/day calculated as an average for seven days of production. Marathon has since drilled two other wells directly offsetting the Hecker well and has more planned.
Indications are that there may be some high volume producers in this area where the fracture system is more extensive or better developed. It's something worth watching to see how it all pans out.
I theorized (along with probably untold others) that such a collapse area existed in the Murphy Creek area in west central Dunn Co. due to the presence of the Heart River Fault in the area (one of the few major faults in the Basin), and also becau
se of the anomaly uncovered during the drilling of the Adobe Killdeer Federal wildcat well in 1981. That well almost blew out when it encountered what appeared to be a fracture in the lower Lodgepole.This fracture system has apparently been confirmed by the first Marathon well to be drilled in the area, the Hecker 21-5H, sec. 5, 144N-96W in Dunn Co., which was drilled last year about a mile and a half west of the Adobe well. The Marathon well hit the same "fracture" in the lower Lodgepole at almost the same sub sea depth (6 ft.
difference) as was found in the Adobe well. The company ran logs to see what was up with the huge increase in gas and oil shows, but they didn't show any comparable reservoir prope
rties. It was then theorized that the shows were sourced from a "large fracture system below it." The Hecker well was completed for almost 400 bbls/day calculated as an average for seven days of production. Marathon has since drilled two other wells directly offsetting the Hecker well and has more planned.Indications are that there may be some high volume producers in this area where the fracture system is more extensive or better developed. It's something worth watching to see how it all pans out.
Friday, January 18, 2008
Nightline Tonight
Apparently there will be a ND oil-related topic on ABC's Nightline show tonight. Thanks to the reader who heard about it for passing along the info. ABC usually has an abbreviated version of the news stories they televise on their website if you miss it.
In other news (which most certainly won't be on Nightline ha.), today's Rocky Mountain Oil Journal is reporting that EOG has apparently plugged its McAlmond well about a half-dozen miles NE of the company's Austin wells in Mountrail Co.
In other news (which most certainly won't be on Nightline ha.), today's Rocky Mountain Oil Journal is reporting that EOG has apparently plugged its McAlmond well about a half-dozen miles NE of the company's Austin wells in Mountrail Co.
Wednesday, January 16, 2008
Brigham Announces Three Discoveries, Mountrail Co.
Brigham announced three discoveries today, none of which appears to be a barnburner, but they certainly seem economically viable. In fact, they are more in line with an average well in Dunn Co.
Wednesday, January 2, 2008
NY Times Finds North Dakota
I guess it should be noted when the New York Times finds something of interest in the state, and particularly when it pertains to its oil patch.
Sunday, December 30, 2007
Marathon Buys PDC Acreage
Marathon has purchased from PDC about 72K undeveloped acres and most of the company's Bakken wells for almost $35 million effective 12/31. The transaction brings Marathon's net acreage up to 320K acres. Fox News
PDC and Marathon had a AMI in a large part of Bailey Field in Dunn Co., where each was developing their interests in a checkerboard pattern, but PDC hadn't been active in the area since last summer. Marathon is going to need a few more rigs besides the six it currently operates to hold a lot of its proven acreage, where the leases mostly expire in two years or less.
Speaking of Marathon, here are a few pictures of their operations in Bailey Field near Killdeer in Dunn Co.
It also appears that Billings, MT based Nance Pet. has sold most or all of their interest in ND to St. Marys Land & Exploration.
PDC and Marathon had a AMI in a large part of Bailey Field in Dunn Co., where each was developing their interests in a checkerboard pattern, but PDC hadn't been active in the area since last summer. Marathon is going to need a few more rigs besides the six it currently operates to hold a lot of its proven acreage, where the leases mostly expire in two years or less.
Speaking of Marathon, here are a few pictures of their operations in Bailey Field near Killdeer in Dunn Co.
It also appears that Billings, MT based Nance Pet. has sold most or all of their interest in ND to St. Marys Land & Exploration.
Some Reader Input
David expended some effort in writing some comments to a recent post that deserve some better exposure. He wrote:
EOG seems pretty confident that they can recover 750,000 bbls of oil from each section drilled in the Parshall/Bakken field almost irrespective of the initial bopd figure. According to Mark Papa in one of his responses during an analyst presentation, the Bartelson 1 well, one of the first completed which initially produced 1800 bopd, produced an average of 600 bopd over an entire year, but was at a little over 400 bopd rate 1 year out. The wells seem to pop off initially at quite variable rates, ranging from about 700 bopd to 2000+ bopd, but once the initial pressure is off, they all seem to move fairly quickly into a rate of 500-600 bopd, and then the rate of decline is much less rapid after that.
I've been trying to determine what assumption about well life EOG is using for the 750,000 barrels recovery from each 640 acre spacing--as near as I can tell that assumes a well life of about 5 years, possibly 6. EOG is experimenting right now drilling a third well on a 1280 acre spacing from the opposite corner across the Bartelson and Patten sections 1 and 2 of 152-90. If you listened to their request in Bismarck, they aren't really expecting this strategy to increase recovery on the two sections relative to what they are getting from the two existing wells(they think that the oil from the new well simply cuts production from the two older wells on the 640 acre spacing) However, this is an experiment (EOG's words) and there is a possibility that this will become a normal method to increase recovery rates, and a third well running crosswise of the laterals on two of the current 640 acre spacings may turn out to be the norm in the Parshall and Austin fields (those two fields will eventually be one).
The EOG economics are pretty simple: a very average well producing 500 bopd for 6 months generates over a million $ of oil a month at current prices and pretty much covers all their direct drilling costs of 5+ million $. As a capital budgeting project, this number is nothing short of fantastic, and EOG has been saying this over and over again in their reports to shareholders. What is pulled out after the 6 months is over less royalties and the cost of running and maintaining the pump goes straight to EOG's bottom line.
With oil around $90 a bbl, the economic incentive for EOG and others to experiment with new technologies to up the recovery rate on each section is huge. EOG seems pretty confident that there is 9 million bbl of oil under each section in the Parshall/Austin field, and that this first round of wells using the laterals, fracturing etc, is going to bring about 8 % of that to market. But if there is any way to pull more of the total 9 million bbls of oil out, the economic incentive to find that technology given what has already happened is huge. No doubt, 5 years from now EOG and others drilling the field will have further honed their techniques. EOG isn't going to walk away from a field that has been treating them this way from a purely capital budgeting standpoint. The only part of the puzzle I havent quite figured out is why the majors have not already landed. EOG is a big company, in the S&P 500, but small by the standards of a major oil company.
Does anyone have a number to toss out with respect to how much gas a typical well in the Parshall/Austin field might produce once the pipeline is in and the gas gets old rather than flared off? I have been guessing that the value of the gas might be 10-15% of the value of the crude oil produced each month, but this is only an uneducated hunch on my part.
I think the Feb-March date EOG is talking about corresponds to the date that the wells will be connected to the crude pipeline as well. At the moment the number of trucks needed just to haul off the oil from the 22 wells producing 500 bopd has been substantial--things should get a lot simpler with the pipeline in place.
How many barrels do each of those storage tanks hold? There are typically 8 or 9 set up on each well in the field. EOG is confident enough that the wells will come in that they set the tanks just as the wells are being started. [typically 400 bbls for the permanent tanks on location]
Here are some production histories from the Patten and Bartelson wells and projection for the infill well on the 1280.
And an earlier projection of production for the Warberg 1-25H well that indicates an EUR of about 400K bbls.
Another reader, Larry, sent along a graph plotting EOG's drilling permits and active rigs, indicating more rigs are likely to appear in the near future.
EOG seems pretty confident that they can recover 750,000 bbls of oil from each section drilled in the Parshall/Bakken field almost irrespective of the initial bopd figure. According to Mark Papa in one of his responses during an analyst presentation, the Bartelson 1 well, one of the first completed which initially produced 1800 bopd, produced an average of 600 bopd over an entire year, but was at a little over 400 bopd rate 1 year out. The wells seem to pop off initially at quite variable rates, ranging from about 700 bopd to 2000+ bopd, but once the initial pressure is off, they all seem to move fairly quickly into a rate of 500-600 bopd, and then the rate of decline is much less rapid after that.
I've been trying to determine what assumption about well life EOG is using for the 750,000 barrels recovery from each 640 acre spacing--as near as I can tell that assumes a well life of about 5 years, possibly 6. EOG is experimenting right now drilling a third well on a 1280 acre spacing from the opposite corner across the Bartelson and Patten sections 1 and 2 of 152-90. If you listened to their request in Bismarck, they aren't really expecting this strategy to increase recovery on the two sections relative to what they are getting from the two existing wells(they think that the oil from the new well simply cuts production from the two older wells on the 640 acre spacing) However, this is an experiment (EOG's words) and there is a possibility that this will become a normal method to increase recovery rates, and a third well running crosswise of the laterals on two of the current 640 acre spacings may turn out to be the norm in the Parshall and Austin fields (those two fields will eventually be one).
The EOG economics are pretty simple: a very average well producing 500 bopd for 6 months generates over a million $ of oil a month at current prices and pretty much covers all their direct drilling costs of 5+ million $. As a capital budgeting project, this number is nothing short of fantastic, and EOG has been saying this over and over again in their reports to shareholders. What is pulled out after the 6 months is over less royalties and the cost of running and maintaining the pump goes straight to EOG's bottom line.
With oil around $90 a bbl, the economic incentive for EOG and others to experiment with new technologies to up the recovery rate on each section is huge. EOG seems pretty confident that there is 9 million bbl of oil under each section in the Parshall/Austin field, and that this first round of wells using the laterals, fracturing etc, is going to bring about 8 % of that to market. But if there is any way to pull more of the total 9 million bbls of oil out, the economic incentive to find that technology given what has already happened is huge. No doubt, 5 years from now EOG and others drilling the field will have further honed their techniques. EOG isn't going to walk away from a field that has been treating them this way from a purely capital budgeting standpoint. The only part of the puzzle I havent quite figured out is why the majors have not already landed. EOG is a big company, in the S&P 500, but small by the standards of a major oil company.
Does anyone have a number to toss out with respect to how much gas a typical well in the Parshall/Austin field might produce once the pipeline is in and the gas gets old rather than flared off? I have been guessing that the value of the gas might be 10-15% of the value of the crude oil produced each month, but this is only an uneducated hunch on my part.
I think the Feb-March date EOG is talking about corresponds to the date that the wells will be connected to the crude pipeline as well. At the moment the number of trucks needed just to haul off the oil from the 22 wells producing 500 bopd has been substantial--things should get a lot simpler with the pipeline in place.
How many barrels do each of those storage tanks hold? There are typically 8 or 9 set up on each well in the field. EOG is confident enough that the wells will come in that they set the tanks just as the wells are being started. [typically 400 bbls for the permanent tanks on location]
Here are some production histories from the Patten and Bartelson wells and projection for the infill well on the 1280.
And an earlier projection of production for the Warberg 1-25H well that indicates an EUR of about 400K bbls.
Another reader, Larry, sent along a graph plotting EOG's drilling permits and active rigs, indicating more rigs are likely to appear in the near future.
Thursday, December 20, 2007
Some Austin Well Info, Mountrail Co.
Regarding temporary spacing for their Austin 1-02H well, sec. 2, 154N, 90W, Mountrail Co., EOG indicated that the well last month was averaging 800-some bopd, and that they have been fracing their wells before producing them and are utilizing a liner and swell packers in their completions. They are projecting an EUR (estimated ultimate recovery) of about 750K bbls over the life of the well, and estimated the mid-Bakken’s porosity to be about 7% (pretty good for the Bakken) and attributed about one-half percent porosity to fracturing. They said the reservoir properties are similar to those at the main area of development in Parshall field to the south. The company stated that they expected gas sales from the Parshall field area to begin around February or March of next year.
Speaking of EURs, from recent articles in the media it seems that some people are still claiming that billions of bbls are possibly going to be recovered from the Bakken. Those figures are derived from what seems to be a “let’s pull a number out of the hat” recovery percentage of the 400-some billion bbl estimate of oil in place from Price’s non-peer reviewed Bakken study. Specifically, they are indicating a recovery factor of 1-3 percent of the oil in place, which would result in 4-12 billion bbls of Bakken production.
There is nothing wrong with being optimistic, but is such an estimate realistic? Keep in mind that there will be no EUR from every section of land that is not going to be drilled, which at this point appears to be no small amount in a lot of the relevant counties, and which the estimates quoted in the media appear to totally ignore. Then too it is important to recognize that recovery of a billion bbls would require 2,000 wells that each have a EUR of 500K bbls. Consequently, 8,000 such wells would be needed to meet the lowest estimated EUR of four billion barrels. I invite anybody who is throwing out these estimates to forgo giving unsupportable broad brush estimates that lack specifics and explain where these 8K wells will be drilled, and whether an average EUR of 500K per well is realistic considering that many companies outside of the Parshall area are using EURs of around 300K per 1280 acre unit.
Speaking of EURs, from recent articles in the media it seems that some people are still claiming that billions of bbls are possibly going to be recovered from the Bakken. Those figures are derived from what seems to be a “let’s pull a number out of the hat” recovery percentage of the 400-some billion bbl estimate of oil in place from Price’s non-peer reviewed Bakken study. Specifically, they are indicating a recovery factor of 1-3 percent of the oil in place, which would result in 4-12 billion bbls of Bakken production.
There is nothing wrong with being optimistic, but is such an estimate realistic? Keep in mind that there will be no EUR from every section of land that is not going to be drilled, which at this point appears to be no small amount in a lot of the relevant counties, and which the estimates quoted in the media appear to totally ignore. Then too it is important to recognize that recovery of a billion bbls would require 2,000 wells that each have a EUR of 500K bbls. Consequently, 8,000 such wells would be needed to meet the lowest estimated EUR of four billion barrels. I invite anybody who is throwing out these estimates to forgo giving unsupportable broad brush estimates that lack specifics and explain where these 8K wells will be drilled, and whether an average EUR of 500K per well is realistic considering that many companies outside of the Parshall area are using EURs of around 300K per 1280 acre unit.
Saturday, December 8, 2007
In The News
The Minot Daily News has a fairly good article mainly about the recent BLM lease sale. The only issue I have is including a map of the entire area where the Bakken is present. The only relevant area of the Bakken, however, is where
the formation is deep enough so that heat and pressure caused hydrocarbon generation from the shales. Continental has a good map of that area, although pushing into Stark Co. quite so far is a little aggressive in my opinion.
Then the Missoulian has an article that mainly tracks the Wall Street Journal article a few years back about Richard Findley. One glaring error is it's statement that "[i]t was Findley's idea to drill a well sideways - a technique called 'horizontal drilling.'" While Findley may have initiated the use of horizontal drilling in the middle Bakken, the drilling technique was used elsewhere in the world before it was ever used in the Bakken, and in any event, it was utilized in the upper Bakken shale in the late 80s and early 90s in ND. They should have confirmed that with Canadian Hunter Expl., as its now defunk subsidiary, American Hunter, lost about $50 million in that little adventure.
the formation is deep enough so that heat and pressure caused hydrocarbon generation from the shales. Continental has a good map of that area, although pushing into Stark Co. quite so far is a little aggressive in my opinion.Then the Missoulian has an article that mainly tracks the Wall Street Journal article a few years back about Richard Findley. One glaring error is it's statement that "[i]t was Findley's idea to drill a well sideways - a technique called 'horizontal drilling.'" While Findley may have initiated the use of horizontal drilling in the middle Bakken, the drilling technique was used elsewhere in the world before it was ever used in the Bakken, and in any event, it was utilized in the upper Bakken shale in the late 80s and early 90s in ND. They should have confirmed that with Canadian Hunter Expl., as its now defunk subsidiary, American Hunter, lost about $50 million in that little adventure.
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