Thursday, February 23, 2012

Oasis 4Q11 Earnings and Crude-By-Rail

Comment from Oasis earnings press release:
In February 2012, the quoted prices for oil coming out of the Williston Basin on pipeline (typically quoted at Clearbrook, Minnesota and Guernsey, Wyoming) ("Bakken Crude Oil") was substantially less than prices quoted for WTI due to refinery and transportation constraints. 

Transportation constraints were largely due to increased volumes produced in North Dakota in the second half of 2011.  In December 2011, oil production in North Dakota was approximately 535,000 barrels per day compared to approximately 386,000 barrels per day in June 2011. 

Oil from Canada also put pressure on the existing pipeline infrastructure that terminates in Mid-West refineries.

Although there was 300,000 barrels per day of railcar transportation capacity in place as of December 31, 2011, these railcar facilities are not running at nameplate capacity due to limited availability of railcars.  We believe the operators of these railcar facilities have railcars on order and expect utilization on these facilities to increase substantially during the first half of 2012. 

Additionally, during 2012 we expect to begin transporting a portion of our crude oil on gathering systems, originating at the wellhead, in the West Williston, which will eliminate the need to transport barrels by truck from the wellhead.  The gathering system is expected to provide us access to multiple pipelines and rail outlets where we can sell our crude oil.

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