Monday, October 29, 2012

Six (6) New Permits -- OXY With A Nice Well; Whiting With a Nice Pronghorn Well; BEXP With Two More Nice Wells, Including One Just North of Williston

On Tap for Tuesday

Mike Filloon: a Bakken update; the Red Queen is just a fairy tale.  The article is pretty much all about northeast McKenzie County, which I consider the very heart of the Bakken. I predicted last year that 2012 would be the year operators moved from Mountrail to McKenzie. It turns out northeast McKenzie County will be as big as (or bigger than) the Sanish/Parshall in Mountrail. From Mike's article:

  • 20589 is one of the best wells here, if not the best well in the Basin. It is notable that Whiting produced this result while using lower amounts of water and proppant. 
  • 20589, 4,815, Whiting, Tarpon Federal 21-4H, Twin Valley, t10/11; cum 251K 8/12;
RBN Energy: will the oil boom continue? Production, yes; prices, probably not.

Reporting earnings tomorrow: OKE, OKS, QEP, STR, VLO, WMB (all after market close?)

Coming off the confidential list on Tuesday:
  • 21112, 1,358, MRO, Aisenbrey 21-25H, Big Bend, t7/12; cum 29K 8/12;
  • 21686, 286, OXY USA, Kubik Trust 2-18-19H-143-95, Murphy Creek, t5/12; cum 41K 8/12;
  • 21874, 540, Zavanna, Tony 1-3H, Stony Creek, t8/12; cum 16K 8/12;
  • 22176, 1,261, Whiting, Marsh 34-9PH, Dutch Henry Butte, t5/12; cum 45K 8/12;
  • 22216, drl, WPX, George Evans 11-2HD, Van Hook,
Putting things into perspective: From the WSJ, putting a face on welfare spat.  From Teegue, the Pugh clause. 
Bakken Operations

Rigs: 182 (significant decrease; new post-high low)

Wells reporting IPs today (reported earlier; see sidebar at the right)

Six (6) new permits -- on track for 2,572 permits for calendar year 2012 (oil and gas wells; does not include salt water disposal wells)
  • Operators: Petro-Hunt (3), Zenergy (2), Enduro
    Fields: Eagle Nest (Dunn), Eightmile (Williams), Mouse River Park (Renville)
  • Comments: Another day with no Newfield or OXY USA permits; Enduro again, targeting the Madison, probably
Two producing wells completed:
  • 21955, 2,972, BEXP, Cvancara 20-16 3H, Alger, t9/12; cum --
  • 22081, 3,383, BEXP, Heen 26-35 2H, Todd, t9/12; cum --; just north of Williston;
Triangle US Petroleum assumes operator status for several older wells in McKenzie County.

Energy Jobs - Nothing To Do With the Bakken

Wow, talk about putting a lot of pieces together. Link to PR Newswire here.

Location: Lake Charles, Louisiana
Construction jobs: 1,500
Permanent jobs: 165
The scheme

Lake Charles Clean Energy, LLC, a subsidiary of Leucaida Energy, LLC, contracts with:
  • BP 
  • Air Products and Chemicals
  • Denbury Onshore
Project: cleanly manufacture industrial products from petroleum coke, the first of its kind in the US

Data points:
  • LCCE: to become one of the world's lowest-cost producers of methanol, hydrogen, argon
  • will capture, compress 90% of CO2
  • BP will purchase the methanol
  • Air Products will purchase the hydrogen and argon
  • Denbury will purchase the CO2 for EOR
  • $2.5 billion
  • up to 1,500 construction jobs during the 3 - 4 year construction period, beginning in 20131
  • multiple federal and state tax incentives, including a $128 million federal investment tax credit

Energy Impact on North Dakota:

Link to Minot Daily News. (A "thank you" to a reader for alerting me to the story.)

This is an interesting article, providing a bit of insight into how one can make sense of the Bakken.
Biberdorf said he classifies Bakken boom issues into three categories: road, water or land use issues. Under each of those issues, he said, there's definitely other issues, for example, under roads there's issues including dust and aggressive driving.
At first glance this is a "feel-good" / human interest story, but there's a fair amount of good information and some interesting trivia.

For example: record number of wells on one pad? 18.

This is an interesting observation. Most folks just want the truck reliever routes to get the trucks off the other roads, but truck routes bring additional dividends:
He said the truck routes for bypasses are important for a number of reasons but what he's observed is they allow cities to move forward.

With all the truck traffic in Williston, he said it was hard for development to occur because they were always looking at the traffic. As the bypasses open up, he said the development of the city has become a little more clear where it wants to go.
A very interesting article at the link.

Selected Data Points: KOG's Corporate Presentation

Production guidance: exit rate, 2012 (E) -- 27,000 boed

  • 2009: $27 million
  • 2010: $82 million
  • 2011: $261 million
  • 2012: $650 million (E)
  • Operating rigs: 8
  • Non-operating rigs: 1 - 2
Payout (months) - $10.5 million wells)
  • Bakken, long lateral, 650: at $75, 38 months
  • Bakken, long lateral, 750: at $75, 30 months
  • Bakken, long lateral, 850: at $75, 24 months
Net acreage unchanged: 155,000 net acres
Proved reserves: 70 million boe; 86% liquids; all hbp by end of 2013;
Full-time 24-hour dedicated frack crew; additional part-time crew as needed;
Six operating areas in the Bakken; all in North Dakota except unnamed area northeast MT; net well locations
  • Polar: sweet spot north of the river, 197; hbp by end of 2013;
  • Koala: sweet spot south of the river, 93, hbp by end of 2012;
  • Smokey: 88; hbp by end of 2012;
  • Dunn County: most net acres, 186, hbp by end of 2012;
  • Grizzly: Elm Tree extension into North Dakota, 148
  • Wildrose: fewest net acres; farthest north, 90
Total net well locations: 807 (includes 6 in Sheridan County, MT)
  • Generally based on four MB and three TF wells/spacing unit
  • 82 net locations drilled and completed through June 30, 2012
North Dakota takeaway:
  • Currently 975,000 b/d: 525/rail; 450/pipeline
  • 1,400,000 b/d by year-end 2013