Wednesday, October 19, 2011

Let's Wait To See the IP Before Getting All Excited -- The Bakken, North Dakota, USA


August 17, 2012: 
  • 21002, 384, GMXR, Wock 21-2-1H, New Hradec, t10/11; cum 28K 6/12; a mediocre well;
Later: I was sent some additional information regarding the GMXR well a week or so ago; I'm finally getting around to posting it:
In regards to the GMXR "long" lateral in Stark county if you pull the atlas on it you will notice that it sits right on the county line between Stark and Dunn County. This makes the one section come in around 770 acres instead of 640... longer North to South...  making this well about 1400 acre spacing.

They did frac the Wock well and I did see a flare but no knowledge of the IP. The Frank well just down the road from the Wock Well has finished drilling but someone said they where moving that rig off and I remember they had 2 permits for one location so I don't think they are drilling the second well as of now. This is a few miles out of my area and I don't drive up that way so everything is just from what I hear in regards to these wells.

Original Post
Link here.

GMXR has a long lateral in Stark County, targeting the Three Forks. Planning a 41-stage frack.
How does a micro-cap company move from being a dry-gas producer in the Haynesville to having 65% to 75% of its production oil-related by the end of 2012?  One way is with a 10,281-foot lateral drilled into the Three Forks formation in North Dakota that will be tapped with a 41-stage hydraulic fracturing operation.

The lateral runs under two sections — 1,280 acres – in an odd-shaped, odd-sized spacing unit, Alan Van Horn, manager, investor relations, GMX Resources, told E&P On-Line. The Wock #21-1-1H well in Stark County runs almost as far horizontally as it does vertically.  Total measured depth of the well is 21,151 feet.
I have no idea what he means by "odd-shaped, odd-sized spacing unit." All spacing units in the Bakken are now routinely 1280-acres, and looking at the GIS map server, there is nothing odd-shaped about this rectangular spacing unit. With 41 stages, the company is paying a lot of money for this first well.

Eagle Ford South Texas Must Be Huge -- Travel Advisements

The Texas Railroad Commission-led Eagle Ford Task Force has adopted several advisements related to truck traffic and pipeline development in the region. The rapid increase in truck traffic on local roads in the Eagle Ford shale region has led to concerns regarding the deterioration of roads and hazards to public safety.
Pipeline infrastructure also was on the task force agenda. Several billion dollars worth of pipeline projects are under development in the region, and local communities have expressed concern with how the development of these massive projects will affect them.
If the Eagle Ford is that busy, a lot of folks working in the Bakken whose home is near Texas, may return to the south.

What is Chesapeake Up To South and Southeast of Dickinson -- The Bakken, North Dakota, USA


"Anonymous" in the Dickinson area tells me that the reason for the CHK rigs staying so long on site is because there is a shortage of workover rigs. Normally, the work that "anon 1" is describing (see comments) would be done with a workover rig. Due to the shortage of such rigs, CHK is doing the same work with the "big" rigs. Again, my readers have proved me wrong in my irrational exuberance.

Original Post

I don't recall seeing this on the GIS map server before.

Look at the GIS map south/southeast of Dickinson and check out files 21143 and 21139.  Chesapeake has two rigs-on-site south and southeast of Dickinson. The rigs are still on site despite the fact that the long horizontals are completed. The rigs have been there since August 27th according to others. Thirty days is max for most rigs, and certainly once you get the horizontals completed, the rigs are moved. But here on the GIS map server, the horizontals are obviously complete, and the rigs are still there. Something is up.

My hunch: CHK is going to drill another horizontal from the same pad. Of course, folks will tell me not possible if permit process not completed. We will see.

Others have told me that CHK is getting ready to move the southernmost rig about ten miles to the east. It may be nothing more than targeting the Three Forks, but on site for almost two months? Something is going on.

Well files:
21139: TD'ed at 10,180, in the Duperow. The well file shows the horizontal lateral in the Three Forks formation.

21143: the horizontal is in the Three Forks.

So, why are the rigs still there?

Six (6) New Permits -- 0/7 Wells Completed -- The Bakken, North Dakota, USA

Daily activity report, October 19, 2011 --

Operators: Hess (3), Zavanna, BEXP, BR

Fields: Ellsworth, Glass Bluff, Painted Woods, Ray, Haystack Butte.

Eight wells released from "tight hole" status --- and not one of them completed. 0/8 - one, though, was a cancelled permit, so I suppose it doesn't count. But still, 0/7 wells completed.

A producing well was completed, and it was a good one:

  • 20017, 2,502, Newfield, Hoffman 150-98-18-19-1H, Bakken

There are some new trends appearing:

  • Hess is definitely getting much, much more active -- look at the number of permits issued to Hess in past week or so
  • Companies are reporting better IPs; no question about it; no doubt due to increased number of frac stages
  • Newfield has been particularly noteworthy
  • The fracking backlog is not getting better; worse, if anything -- today, 7 wells released from "tight hole" status and not one of them completed. Not one.
  • For the past several days, NDIC has not reported wells coming off "confidential list." Instead, wells are being released from "tight status." I've never blogged about the difference between "confidential" and "tight hole" but for all practical purposes, they were the same; it is an administration technicality, for lack of better phrase right now
  • Williams and McKenzie counties, particularly Williams, are surprising some folks with their good wells; McKenzie, is going to be really, really hot next summer
I will be disappointed if analysts don't pursue the issue of fracking backlog on the conference calls. 

How Long Will The Bakken Last? -- The Bakken, North Dakota, USA

A lot of folks have been wondering "how long will the Bakken last?"

Finally, we have the definitive answer, brought to you by a company with its first permit in the Bakken.

This permit was issued yesterday:
  • 21735, conf, Christianson 15-12-163-101, Colgan Field
The name of the energy company that tells us in its name how long the Bakken will last: Eternal Energy Corporation.

Click here for its website. Best of luck to the company living up to its namesake!

How Big Is The Bakken -- Counting The Grains of Sand -- The Bakken, North Dakota, USA

This is an incredible photo-essay sent from Mike along the Minnesota/Wisconson border. It provides another glimpse into how far-reaching the Bakken has become.

From Mike:

I noticed these very large mounds of sand that are located somewhat close to where I reside in the Woodbury area of Minnesota.

Woodbury Minnesota is located between the river which is the border to Wisconsin to the east and St. Paul to the west.

These sand mounds have been growing bigger over time and there are many trucks hauling it away daily. I called the company operating the pit to inquire what the sand was for. They said that every grain of it is under contract for fracking in the Bakken.

Headlines and Homebuilding

Headline A: Home building jumps
Headline B: Building permits drop to five-month low

Link here.

Being an optimist, I was hoping: "Home Building Jumps 15 Percent in September."

These are the data points from the article:
  • Most of the gain was in volatile apartment construction (the snapshot is hardly a trend, in other words)
  • Single-family homes, representing 70 percent of construction, rose only slightly
  • But here was the bottom line, buried (and it could have been the headline, and it would have been under a different editor): building permits fell to a five-month low.

Dickinson't To Review Camper/RVs Parking-on-Street Rules -- -- Notes Doubling of Building Permits This Past Year -- The Bakken, North Dakota, USA

Link here.
Dickinson commissioners have received complaints about campers parked on streets. To alleviate the problem, they may revise the rules.

A housing crunch driven largely by an oil boom has brought more campers to Dickinson streets.

However, it’s also against rules to park a camper on the lawn, unless it’s on concrete or gravel, City Planner Ed Courton said, though rules are more lenient if it’s in a backyard.
Also, in Dickinson news: an increase in building permits:
Dickinson’s recent growth may already be challenging the city’s resources, but officials said Tuesday that building permit numbers have increased significantly and the city could see more growth before the end of the year.

“It really puts a lot of pressure on city staff to keep up with growth,” Dickinson Mayor Dennis Johnson said. “While we welcome the growth it is a challenge to manage it.”

Through September, the city has issued more than $97 million worth of building permits. During the same period last year, that value stood at nearly $44 million. Last month alone saw the issuance of more than $39.32 million in permits.

Existentialism -- Idle Ramblings -- Nothing To Do With The Bakken

Yesterday with eight hours or so non-stop in the truck hauling sugar beets, the driver and I had discussed a broad range of subjects. (The driver had started earlier in the day, and would put in a full 12 - 14 hours.)

Somehow we got unto Paul Tillach, a philosopher who I had read in college, but not since, and could not remember. But, of course that got me curious. A quick look at Paul Tillach/wikipedia brought me back to existentialism. Wiki:

The early 19th century philosopher Søren Kierkegaard is regarded as the father of existentialism. He maintained that the individual is solely responsible for giving his or her own life meaning and for living that life passionately and sincerely,in spite of many existential obstacles and distractions including despair, angst,absurdity, alienation, and boredom.
Subsequent existentialist philosophers retain the emphasis on the individual, but differ, in varying degrees, on how one achieves and what constitutes a fulfilling life, what obstacles must be overcome, and what external and internal factors are involved, including the potential consequences of the existence or non-existence of God.Existentialism became fashionable in the post-World War years as a way to reassert the importance of human individuality and freedom.
I think driving a truck for 14 hours would allow lots of time to reflect on those subjects. I really like that opening line: "...the individual is solely responsible for giving his or her own life meaning and for living life passionately and sincerely ..."

Wow, the things that come up in this part of the world. 

For Investors Only -- Seven Energy Companies With Great Upside Potential -- SeekingAlpha -- The Bakken, North Dakota, USA

Link here (sent to my be Don).

Nothing new on this list, except a shift to oil service companies, it appears, something I've been saying for quite some time.
The seven stocks are: Schlumberger Limited (SLB), ConocoPhillips (COP), Occidental Petroleum Corporation (OXY), Apache Corp. (APA), Halliburton Company (HAL), Baker Hughes Incorporated (BHI) and Hess Corporation (HES).
All of them, except Apache to the best of my knowledge, are in the Bakken.

For Investors Only -- Williams Cheap Takeover Target -- Bloomberg -- The Bakken, North Dakota, USA

Link here. (sent to me by Don)
Kinder Morgan Inc.’s takeover of El Paso Corp. at the highest premium for a U.S. pipeline operator in 15 years is turning Williams Cos. into the industry’s cheapest takeover target.

Williams, the Tulsa, Oklahoma-based pipeline owner pursuing a separation of its oil and natural-gas exploration unit, yesterday was valued at 7.5 times earnings before interest, taxes, depreciation and amortization, the lowest multiple of any U.S. pipeline company, according to data compiled by Bloomberg. That’s almost half the 14 times Ebitda Kinder Morgan said this week it’s paying for El Paso in a $38 billion purchase that will create the biggest U.S. pipeline operator. The 47 percent premium is the industry’s richest since 1996, the data show.

With 15,000 miles of pipelines delivering about 14 percent of natural gas consumed in the U.S., Williams may lure buyers after American factories, power plants and homeowners burned a record amount of gas last year and the company lost out on a bid for Southern Union Co.

Enterprise Products Partners LP (EPD), with a market value of $36 billion, may be big enough to take on $16 billion Williams, said T. Rowe Price Group Inc. TransCanada Corp.  or Enbridge Inc. may also feel pressure to add scale after the takeover of El Paso, said Frost Investment Advisors LLC.
Several of the companies mentioned in this article have been long-time favorites. I accumulate shares in some of the companies mentioned, but not Kinder Morgan -- never got around to them. I also don't have any holdings in TransCanada.

For Investors Only -- Oasis and Whiting The Best Deals In The Bakken -- Bloomberg -- The Bakken, North Dakota, USA

Link here -- sent to me by Gregg -- otherwise I would have missed the article.
Buyers looking to extract the best deals from Bakken shale oil may turn to Oasis Petroleum Inc. (OAS) and Whiting Petroleum Corp. (WLL) as the cost to find and produce a barrel of crude soars.

Among the biggest U.S. explorers in the 200,000 square-mile (518,000 square-kilometer) geological formation centered in North Dakota, Oasis and Whiting owned the most Bakken shale acreage versus their takeover value, according to data compiled by Bloomberg. On that basis, both control more land than Brigham Exploration Co. (BEXP), which sold itself to Statoil ASA (STL) this week for more than $12,000 per Bakken acre in the most expensive major acquisition in the region, said Pritchard Capital Partners LLC.

Oasis and Whiting, along with Continental Resources Inc., may now attract interest from Exxon Mobil Corp. (XOM), Royal Dutch Shell Plc (RDSA) and India’s Reliance Industries Ltd. (RIL) as the cost to extract Bakken shale oil falls, SunTrust Robinson Humphrey and RBC Capital Markets said.
Again, note the $12,000/acre purchase price.