It's a quiet Sunday evening. Not much going, but the overseas markets are open and oil is trading a bit higher and is now back over $80.
When it's a slow day in the Bakken, one can rely on discussions of initial production (IP) numbers on other sites; I'm as guilty as any -- probably guiltier than most. (... if there is such a thing as more guilty or less guilty.)
There's such a discussion on the Bakken Shale Discussion Board about BEXP's IPs right now. I pretty much ignore those discussions any more. However, the comment that was made this evening is very interesting.
"Doc" notes that BEXP is often accused of bragging about their IPs. "Doc" talks about that, which is interesting in its own right, but even more interesting is "Doc's" concluding observation: it's not the IPs that excite him so much, it's the fact that BEXP has drilled only 19 locations in the Bakken, and the CEO says the company has 422 more sites yet to drill, all of which are in areas of development, not exploratory (or wildcat) locations.
Using yahoo key stats here.
ReplyDelete279.01m Debt
99m shares/95m float
How many new shares will they have to sell to finance 422 Wells at $3-5m per well?
I suppose quite a few shares if they were going to drill all those 422 wells this month and if they were going to hold 100% working interest in all of them. But I don't think that will happen. This is really a question of strategic planning and this is what makes BEXP exciting as an investment. Another word for exciting is volatile. Or risky. I think 2010 will be a watershed year that will answer a lot of these questions, if the price of oil holds at $80/barrel, or better.
ReplyDeleteImmediately after posting the above, BEXP released their annual statement; it's avaialable on line.
ReplyDeleteThis is not an investment board, but it is difficult not to talk about money when one is talking about the oil industry.
ReplyDeleteOne can learn a bit about money management looking back on GM and Ford.
GM took on increasingly more debt and ended up in bankruptcy.
Ford issued more shares, thereby diluting the value of the outstanding shares, but Ford survived without declaring bankruptcy.
A similar thing is seen among companies in the Bakken. I would point them out but I would be accused of promoting/dissing various companies so I will refrain.
But one can easily find that information on Yahoo!Financial key statistics site.
I am minimally interested in the investment side of the Bakken on this blog; much more interested in the drilling activity.
Ask and ye shall receive...
ReplyDelete"In October 2009, we raised an additional $168.3 million in net proceeds from an equity offering in order to pre-fund an increased level drilling activity in 2010. Our preliminary 2010 capital budget announced in October 2009, concurrent with the equity offering, was estimated to be $175.8 million and we estimated that we would drill 24 net wells in the Williston Basin and two net wells in our South Texas Vicksburg play.
In 2010, we estimate that we will have four rigs running in the Williston Basin and drill 39 gross (21.1 net) operated wells and 4.6 net non-operated wells. Overall, we currently estimate that we will spend approximately $199.3 million on drilling, land and seismic capital expenditures during 2010. We anticipate funding our 2010 capital expenditure budget through cash on our balance sheet, which was a result of our May and October 2009 equity offerings, cash flow from operations, availability under our Senior Credit Facility, which at year-end 2009 had a borrowing base of $110 million, and through potential divestiture transactions in our conventional asset portfolio. "
Risky, yes, but they look good if Oil prices stay above $70.