Monday, March 5, 2012

Six (6) New Permits -- Daily Activity Report Seems To Be In Error -- The Williston Basin, North Dakota, USA

Daily activity report, March 5, 2012 --

Operators: OXY USA (3), Cornerstone (2), BEXP

Fields: Dimond, Carter, Alger

Something is very strange in today's daily activity report. Almost 100 -- yes, 100 -- wells were listed as released from "tight hole" status, but in fact, most, if not all, have been previously released.

I hope NDIC explains why all of a sudden they reported ~ 100 wells released from "tight hole" that had already been released.

Likewise, almost 30 wells were approved for "tight hole" status which is a much longer list than usual. I do not know if these are new or have been previously reported.

Twelve wells were listed as "plugged or producing."

Overall, I don't know what is new on today's report (except for the six new permits) or what has been reported previously.

Dore, North Dakota, Update -- The Bakken, North Dakota, USA

I'm not in the Bakken right now so I need to rely on others to help me visualize what's going on up there. This note from a contributor elsewhere gives a nice "picture" of Dore, North Dakota. I always enjoyed driving through Dore on our way to Sidney. One really doesn't know that a "Dore" is there -- I would't have know it was there except for the long line of brand new black rail oil tankers.

Dore has a crude-by-rail terminal (it was being built last autumn) and storage tanks.

There will be a new 500-bed man-camp in the immediate area, as well as a number of single family units. Apparently a number of wells have been staked along County Road 140 between Dore, ND, and Sioux Pass, MT.

Seeing how much activity there was in this area last autumn, I can only imagine how busy it has gotten since.

Murex To Sell 5,000 Net Bakken Pool Acres -- McKenzie County, North Dakota, USA

From ResearchViews, March 1, 2012:
Murex Petroleum Corporation, an oil and gas company, intends to sell certain oil and gas assets in Williston Basin in North Dakota and Montana.

The assets include interest in 5,174 net Bakken and Three Forks leasehold acres in Grace S.W. Prospect in McKenzie County. The assets are located along the North Dakota and Montana border in T150N – R104W.
One can get a vague idea of Murex' acreage in North Dakota at this site.

My hunch: CLR will buy.

According to the NDIC GIS map server this area is fairly inactive. There is one little section in the immediate area, a one-section oil field, Hay Creek. There are two producing wells, and one permitted location in this one section (actually two 1/2 sections of adjoining sections, sections 9 and 16:
  • 12262, Duperow/4; Madison/28; Duperow/30; Red River/817; Murex, B. Langwald 1, Hay Creek, s11/87; total cumulative for Red River: 283K; total cumulative for Duperow: 70K; total cumulative for Madison: 86K; total cumulative for all three formations: 487K for all formations; Madison and Duperow still producing
  • 12648, Duperow/83; Madison/50; Red River/Dry; CLR, Yellowstone 1, Hay Creek, s6/89; Duperow, t7/89; cum 147K; pump, 8/03; Madison, cum 68K; 1/12; total cumulative 215K for both formations
  • 22345, loc, Murex, Amber Elizabeth 9-4H, Bakken, Hay Creek; 
Another one-section field right on the North Dakota-Montana border, the Harding oil field, has four producing wells:
  • 13357, 70, Oasis, Karst 1-5X, Harding field, Madison, s5/92; t6/92; AL; cum 439K 1/12; still producing 600 bbls/month
  • 13509, 65, Citation Oil, Miller 23-6, Harding field, Madison, s4/93; t5/93; cum 129K 1/12; still producing 250 bbls/month
  • 13576, 33, Oasis, Andrew 1-5, Harding field, Madison, s9/93; t11/93; cum 122K 1/12; still producing but erratic, about 250 bbls/month
  • 15433, 17, Oasis, Karst 13-5, Harding field, Madison, s7/03; t10/03; cum 21K 1/12; producing 100 bbls per month
The above represents two sections in the township under consideration. Five thousand acres is about 8 sections.

Nothing Like a "Post From The Heart" -- Z-Man on NOG -- SeekingAlpha

One of the better reviews of a Bakken company at

I have always appreciated Z Man's analysis of oil companies. This one is perhaps one of his best -- a bit of personality, a bit of fire, a bit of humor.

And a lot of data.

From my perspective, the pure Bakken-play companies are still in growth mode, and quarterly earnings are not as important as a) cash flow; b) total acreage; c) production increase yoy; and, d) proved reserves.

With that in mind, some data points about acreage taken from the linked article and from the NOG press release:
  • NOG has 168,000 net acres at end of 2011
  • carries cost of those acres at $1,832/acre
  • NOG is trading at $9,413 per "straight" acre
  • KOG trades at ~ $20,000 per "straight" acre
  • NOG, on a 4Q production basis, trades at $5,000/acre
  • KOG, on a 4Q production basis, trades at $15,000/acre
The NOG press release can be found at the link for "4Q11 Earnings" at "Earnings Central," at the sidebar at the right.

With regard to proved reserves, NOG's nearly tripled, up 198% yoy. For my purposes: reserves tripled.

Assuming one can stay in business (cash flow), reserves may be the most important datapoint in the oil sector. Tripling one's reserves and keeping average cost/acre well below that of competitors is no mean feat.

I don't hold any NOG. I have in the past, and may in the future, but not anytime soon. This is not an investment site; see disclaimer.