Thursday, April 26, 2018

Salt Creek Acquisition -- NOG To Acquire 1,319 Net Acres In The Core Bakken; Nearly $40K/Acre -- April 26, 2018


Later, 4:12 p.m. CDT: think about this. NOG's market cap is $200 million. It just spent $50 million on 1,319 acres in the Bakken. 

Later, 3:49 p.m. CDT: I was looking for this data earlier. Couldn't find it easily. Forgot I had a "tag" for it. The "tag": boe/acre

Original Post

NOG, press release:
  • will acquire 1,319 net acres in the core Bakken
  • acquired from Salt Creek Oil and Gas, LLC; a subsidiary of Deutsche Rohstoff AG
  • 86 gross wells; 6.5 net wells (current operators: Hess, Whiting, COP, Statoil)
  • McKenzie County, southeast of Williston; right along the south side of the river
  • 100% held by production
  • acquiring 8.2 net future drilling locations; EURs of 1 million bbls
  • acquisition to yield almost $20 million of cash from operations for 2018 (this year)
  • $40 million + 6 million shrs NOG ($1.60/share)
  • $50 million / 1,319 acres = $38,000 / acre
  • the acreage is in some of the best acreage in the Bakken -- probably better than the Sanish, the Parshall, and as good as / better than the Grail (see graphic below) 
  • what do investors think of this news? in early morning trading, just after the announcement, NOG shares are up 2.5%
  • some idle calculations (mine, not from the NOG press release)
    • 1,319 acres = ~ 2 sections
    • 2 sections = 1280 acres
    • minimum: 12 wells on 1280-acre spacing
    • 12 wells x 1 million EURs = 12 million bbls
    • from an old post, 2014: 1,875 boe / acre - 2014; EURs of 500,00 bbls
    • 1,875 boe x 1280 acres = 2.4 million bbls
    • 12 million bbls crude oil / 1280 acres = 9,375 bbls oil / acre in the core Bakken 
    • 12 million bbls crude oil x $40/bbl = $480 million  
The graphic: note, the NOG press release did not have the text that I've put on this graphic. I could be way off, but I think this is fairly accurate:

Other News Affecting The Bakken

Active rigs:

Active Rigs63482684182

RBN Energy: costly logistical headaches for Permian crude E&Ps, part 4. I do not know, but I have not heard much about crude-by-rail yet in the Permian. While driving through a very, very small part of the Permian recently, I saw no CBR.
Large-scale and well-funded producers in the Permian have built dedicated gathering systems and signed up for pipeline-takeaway options to keep their barrels moving to markets at the Gulf Coast and Cushing.
For the most part, smaller producers don’t have the same options, for a variety of reasons. More and more, barrels from outside the core areas of the Permian are competing for the last bits of pipeline space and producers are being forced to rely more heavily on Permian trucking companies to help keep their crude flowing. Truckers are being asked to make less desirable, less economical and longer hauls, and are passing those costs back to the producer. With pipeline takeaway capacity maxed out, trucking capacity is being pushed to the limit too, with several potential upstream impacts. Today, we look at trucking options for smaller producers in second-tier production areas, the impact of boom-bust cycles on trucking companies and what tight trucking capacity means for the basin as a whole.

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