Wednesday, February 8, 2012

Whiting Corporate Presentation -- February 7, 2012 -- The Bakken, North Dakota, USA

Raw notes taken while listening to the webcast. If I am alerted when the slides are available, this post could be updated. A reader has alerted me that the slides are now available for viewing at Whiting's home page.

Data points below not checked for accuracy; typed quickly while listening to the audiocast.  Don't use any of the data points as your sole source for research. Feel free to correct me/add "color"

Whiting audiocast: no slides available yet.

Big takeaways for me on this presentation:
  • Multiple pay zones
  • Pronghorn Sands part of the Bakken formation, not the Three Sands
  • WLL location numbers very, very conservative
  • Low-cost driller
  • Reason for differential at Clearbrook
  • 10-year inventory of drilling
  • Vertical wells in the Red River, no fracking, almost a sure thing, $3 million each
Data points:
  • Disclaimer: probable and possible reserves published unlike some other companies
  • De-risked: definition on the slide (which I don't have)
  • 86%, up from 83% last year; the percentage of oil will keep going up
  • Rocky Mountain (Bakken), Mid-Continental, Permian (EOR project -- 1 billion bbls)
  • Majority of production from the Bakken
  • Reserves: 305 boe to 345 boe/ 13% increase yoy
  • Per share value on reserves: $61
  • Debt: $10/share
  • Can get share value to $80/share
  • Completed their Belfield gas plant, late 2011; 10 million cfd
  • February 1: Lewis and Clark prospect, Pronghorn  -- via pipeline
  • $136 million budged for new acreage; could change significantly; that's where they are starting
  • Sanish is pretty much all booked; 70 locations not yet in proved 
  • > 1,000,000 gross acres; 680,000 net acres
  • Lewis & Clark: Three Forks; a bit of Pronghorn, but very limited in thickness
  • Pronghorn: much thicker Pronghhorn Sands
  • Pronghorn is definitely part of the Bakken formation, not the Three Forks
  • Sanish and Cassandra: B Zone of the middle Bakken; started leasing 6 years ago due to the
  • Tarpon, M: moved down one layer; down to the C Bench of the middle Bakken; looks more similar to conventional -- porosity and permeability; 
  • Hidden Bench: fully de-risked; numerous operators here; great area 
  • Tarpon: only one well -- 7,000 boepd, record; best well in the Bakken so far
  • Missouri Breaks: "de-risked" -- but Whiting had not drilled a well yet; very excited; similar to Hidden Bench and Missouri Breaks; in between Rough
  • Starbucks: JV this one; will perform well, EUR 350; just doesn't compete with our other prospects; if no JV, WLL will go it alone
  • Lewis & Clark, Pronghorn: middle Bakken doesn't exist; Three Forks and Pronghorn Sands (part of the Bakken formation)
  • Big Island: vertical Red River wells; scheduled to be drilled during the winter months; no fracking required; C Zone; $3 million cost; no hyperbolic decline; EUR 400K; the play is working because of 3-D seismic; drilled four; successful on three; first one was unsuccessful -- due to old seismic data  -- drill 49 locations; one rig
  • No inventory: WLL shows their de-risked locations -- 3+ years drilling in front of them
  • WLL gets lots of grief for no growth; "it's all Sanish";  WLL says look at wells for 1280 -- Hidden Bench WLL says 2 wells/1280 -- other operators say 4 - 8 wells/1280 -- if WLL went to 4 - 8 wells/1280 -- 10 year inventory for WLL; possibly 4 wells, but not 8 wells; WLL's location count is very, very conservative
  • Missouri Breaks/Starbucks: locations not listed yet; more growth
  • Sanish: 350 - 600 EUR boe
  • Sanish: 800 boe EUR
  • Most other prospects should be at the upper end; some prospects at 350 EUR (all boe)
  • 30-, 60-, 90- production: need to see the slides
  • This is the one he wants to talk about; a lot of grief about the Pronghorn; analysts say the Pronghorn not that good; WLL disagrees -- Pronghorn wells are very, very good; need to see the slides; Marsh well; Brunei well; they think they are getting great wells with the Pronghorn; they think it will compete with Sanish; most not yet producing for 30 days so no 60-day, 90-day production
  • Clearbrook capacity being increased to take ND Bakken
  • ND state November production:  >500,000 bopd
  • January and February: highest differentials at Clearbrook, -$13 from NYMEX; low demand this time of the year; refinery turnaround for this reason; west coast refineries turning around now; demand not there; differential will shrink in the spring
Q&A:
Q: WLL is low cost drill in the Bakken. How to improve?
A: WLL plans to just focus on production big time. Costs: multi-well pads in the Sanish; Pronghorn -- half their rigs at the Pronghorn; many on multi-well pads; $8.8 million/well on multi-well pads -- remember, these are long laterals; the $8.8 million includes completion, buildings, etc. He says actual drilling costs for a WLL well is $6.4 vs $7 million average for others. 17 days to drill a well  in Sanish; 23 days outside of Sanish; so they can get six more days off the Pronghorn wells, for example

Q: Opportunities for more acreage in the Bakken at good prices?
A: No.

From the slides: Pronghorn 4Q11 Completions, in BOEPD
  • Pronghorn Federal 34-11TFH, 1,645
  • Pronghorn Federal 21-14TFH, 1,849
  • Brueni 21-16TFH, 889
  • Mastel 41-18TFH, 3,218
  • Marsh 21-16TFH-R, 2,694
  • Obrigewitch 11-17TFH, 1,740
  • Pronghorn Federal 21-13TFH, 3,225
  • Pronghorn average: 2,184

    6 comments:

    1. Hello Bruce. Great update! Whats with the so called "analysts" jumping the gun on the Pronghorn? Not sure what they are expecting? Realistic?? Pronghorn Federal 21-13TFH, 3,225 IP is pretty darn good, also it had 14,239 oil run in the first 15 days of production from 12/17-12/31, as I believe it went online on the 17th. Even though the above Pronghorn wells are still confidential, they have had 10,000-20,000 oil runs each in last 3-4 months, of when a month had no downtime. The previous bad winter and wet spring/early summer really slowed infrastructure down in that Park-Bakken area. The great late 2011 summer/fall/winter finally allowed them to build the roads they need and get production going. I think they are going to have a booming 2012-2013 in the Pronghorn. (And yes, I did enjoy the Super Bowl from your last comment to me) Jeremy

      ReplyDelete
      Replies
      1. You are so correct.

        The analysts (and many others) have become "spoiled" with regard to the Bakken; I've blogged about that before.

        They seem not to remember that at one time we were happy with IPs of 600, which are still very common for some operators.

        The analysts appear not to understand the concept of "lease held by production," nor do they have any idea how many wells are going to be drilled in each spacing unit.

        This is going to play out very, very well. As you've noted, more and more infrastructure going in. Right now, with the glut of oil at Clearbrook and Cushing, there's no hurry to max out production.

        Delete
    2. Hello! Thought I'd share this. http://www.reuters.com/article/2012/02/22/idUS212414+22-Feb-2012+BW20120222

      ReplyDelete
      Replies
      1. I appreciate this; I'm way behind on blogging and my e-mail, so this saves me some time. I linked it "Earnings Central" but will have to read it later when I get caught up. Of the several companies in the Bakken, WLL is one of my favorite, perhaps my favorite.

        Delete
      2. My fav too! For obvious reasons! I did notice in their report they spoke highly of the Lewis & Clark/Pronghorn area, again, going against the so called analysts. Take care!!

        Delete
      3. You, too. Have a great weekend.

        Delete