A Data Point in the Clear Water Field

I have never been impressed with the Clear Water oil field, first discovered by Fidelity (MDU) about two years ago. Fidelity eventually sold its rights in the Clear Water to Oasis, as far as I can tell.

This is the most recently reported Clear Water well, and reported by a very good company:

18337, 142, EOG, Clearwater 17-01H, Clear Water.

Oasis

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or think you read here. 

GENERAL INFORMATION

Website: Oasis Petroleum

NEWS

November 12, 2020: Court approves pre-packaging restructuring plan.

August 26, 2020: looking back on Oasis cutting back in the Bakken to focus on the Permian.

April 29, 2020: Oasis to stop operations in the Bakken. CLR announced that it would stop production in the Bakken about a week ago. 

February 21, 2018: update on Oasis Wild Basin NG processing plant near Watford City; largest to date;

May 19, 2017: announces interest in spinning off an MLP.

January 26, 2016: update; note Wild Basin Project; 

September 24, 2015: update on Oasis by Zeits.

August 9, 2015: 2Q15 conference call.

July 25, 2015: Oasis in the Grail -- 50 stage completions, 10 million lbs of sand.

July 18, 2015: Oasis changes its completions. 

June 23, 2015: update over at Seeking Alpha. 

September 18, 2014: Oasis to build new CBR terminal near Powers Lake?

September 6, 2014: August corporate presentation.

June 3, 2014: corporate presentation.

May 6, 2014: Transcript, 1Q14.

May 5, 2014: Bret Jensen on Oasis.

February 16, 2014: Oasis is one of five Bakken operators Filloon is bullish on. 

February 16, 2014: Motley Fool is bullish on Oasis. 

January 26, 2014: Oasis flaring in the Bakken compared to KOG flaring, November, 2013, data.

December 6, 2013: Oasis is on sale. 

October 17, 2013: for investors, Oasis has been on a tear over the past couple of weeks. Stories today:

• from Zacks -- can the Oasis rally continue? Yes, but cautious comments.
• from Investor's Business Daily -- yes:

Sanchez's stock strength is mirrored by Oasis Petroleum, also a domestic oil and gas firm. Analysts expect Oasis, which focuses on the Williston Basin in Montana and North Dakota, to report 92% profit growth. Shares have surged 74% this year.

Oasis recently acquired 161,000 additional acres in the basin, bringing its total acreage to 492,000 acres. That makes it the No. 7 biggest acreage holder in the Bakken Shale. It's also the target of takeover rumors.

September 25, 2013: Oasis raises $1 billion dollars; 6.875% notes due 2022.

On September 24, 2013, Oasis Petroleum Inc. completed its offering of $1.0 billion in aggregate principal amount of its 6.875% senior unsecured notes due 2022 , which are fully and unconditionally guaranteed on a senior unsecured basis by certain of the Company's subsidiaries: Oasis Petroleum LLC, Oasis Petroleum North America LLC, Oasis Petroleum Marketing LLC, Oasis Well Services LLC and Oasis Midstream Services LLC.

September 24, 2013: Oasis surges.

September 19, 2013: Oasis leads the energy sector on fundamentals -- IBD. 

September 16, 2013: the deal to acquire 161,000 net acres at a cost of $1.515 billion. 

February 26, 2013: Z-Man's year-end and 4Q12 review of Oasis.

February 1, 2013: Oasis posts 2012 update and 2013 outlook. The data has been updated in Snapshot.

October 15, 2012: random look at the status of Oasis wells in the Williston Basin;

October 1, 2012: random back-of-the envelope calculations concerning valuation of Oasis following the XOM-DNR deal.

April 15, 2012: Operations update.

February 23, 2012: corporate presentation, PDF; note slide 15 -- Banner oil pipeline system (Harold Hamm/CLR) and slide 16 -- Hiland gas pipeline system (Harold Hamm (CLR)

February 3, 2012: end-of-year production numbers; misses.

October 27, 2011: Oasis growing very, very fast; up to nine rigs from seven; raising another $300 million; too many wells waiting to be fracked

August 9, 2011: Oasis sets up new company, Oasis Wells Services, Inc (OWS) for pressure pumping fluids used in fracking completions. Huge. 

July 26, 2011: archived investing articles up to this date.

June 15, 2011: new presentation; 9-rig program by end of 2011

February 11, 2011: 22 years to drill out the Bakken with a 7-rig program; will add the 7th rig 1Q11

January 24, 2011: Operations update; raising $300 million in capital (issuing senior notes); tripled its reserves in 2010.

July 12, 2010: For those interested, an Oasis spreadsheet located here.

• 18437, 2,887, Oasis, Angell 5200 31-28H, Camp; 108,000 bbls in less than a year

Williston's Oasis "Headquarters"

August 15, 2010

Analysts Miss on June Jobs (Again)

Analysts estimated there would be an increase of 60,000 private sector jobs in June, 2010. The report has just been released .... drum roll ..... 13,000.

Census jobs end this month.

Stimulus money running out which will result in more jobs lost (mostly at state and local government level).

Federal government won't be seeing any huge increase in numbers.

It's gonna be a long, hot summer. The good news is that Congress will attach jobs bills to increased funding bills for Afghanistan.

Thank goodness we have a government that can respond.

MDU Completes Wind Farms in North Dakota, Montana -- Heart of the Bakken

MDU has completed two wind farms in North Dakota and Montana.

• The Rhame wind farm, Bowman County, southwestern North Dakota, 19.5 megawatts, 13 turbines
• The Diamond Willow wind farm, Baker, MT, 10.5 megawatts, see comments section below
• Can supply electricity needs for 10,000 homes

No cost provided

Rules of thumb

• 500 megawatts on-land wind farms: $500 million
• 500 megawatts off-shore wind farms: $1 billion
• 1 turbine on the northern plains: 1 megawatt
• 30 megawatts = 10,000 homes

UPDATES

Update -- July 22, 2010: after posting the above in which I asked how many turbines were supporting the Diamond Willow wind farm, I got the explanation, which is posted in the comment section below.

The Stimulus Money Is Almost Gone

The stimulus money is almost gone. I hope you all got yours. I can't remember. I may have gotten a $250 check.

Some of the money was for shovel ready jobs (which weren't) but most of the money simply extended the time states were able to maintain payrolls well beyond their means.

This is as good a summary as I can find anywhere:

California's $85-billion share of stimulus funding has repaired bridges and highways, built new barracks on military bases and renovated crumbling infrastructure. Disabled veteran Bill Vaughn says his biggest job this year was a stimulus project repairing a pipe at the VA Greater Los Angeles Healthcare System. Since that job ended in January, he hasn't found additional work for his firm, BCV Construction.

"My company's on the verge of closing," said Vaughn, who lives with his in-laws in Northridge.

In addition to infrastructure improvement, about $18 billion of California's share of stimulus funds has been spent on social programs such as Medicaid, unemployment insurance and food stamps. Billions more flowed to schools and job centers. But with those funds now gone, officials are preparing for another round of belt-tightening.

"It was unbelievable feast one year and famine the very next," said Blake Konczal, director of the Fresno Regional Workforce Investment Board, which used stimulus funds to help more than 2,000 unemployed people attend job retraining. The office's budget doubled thanks to $16.4 million in stimulus funds but will contract again in the new fiscal year, which begins July 1.

It would be interesting to know how many of those 2,000 folks have been hired at a time when firms are anxious about rising healthcare costs for new employees and California is boycotting trade with a neighboring state over in-state policy disputes. 

The sales tax -- the most regressive tax there is -- here in Los Angeles is 9.75%. In addition, Californians pay property taxes and state income taxes.

(Note: I am traveling. Right now I am in southern California, and thus some of the emphasis on California. Last month I was in Boston and I did a bit of reporting on the Wind Cape wind farm of Teddy Kennedy's (RIP) estate.)

Noble to Buy Frontier Drilling

A buyer's market. Something for investors to think about.

MIT: Natural Gas To Become More Important

MIT study: natural gas to become more important.

I've been saying the same thing for quite some time. It required no study.

KOG Releases Update on Operations

If the link is broken go to KOG's website.
The update:

• Both KOG rigs are now in North Dakota; one in Dunn County; one in McKenzie County
• Moccasin Creek 13-34-3H, 1,370, 24-hour flowback, short lateral, 11 stages
• Moccasin Creek 13-34-28-1H, to be completed in mid-July, long lateral
• Moccasin Creek 13-34-28-2H, offset from 28-1H; TBC in mid-August, long lateral
• Two Shields Butte 14-21-4H, the first of four wells of this TSB pad, short lateral
• Two Shields Butte 14-21-16-2H, the second of four wells on this TSB pad, long lateral

Venezuela Takes a Page Book From the US

Ahhhh.....the internet. Thank goodness for the internet.

I posted this information yesterday and now I see that it is at the top of the Drudge Report.

Venezuela takes a page book from the US.

Alice in Wonderland

This will be the last word on the subject except for updates.

Some folks are still under the illusion that the EPA and fracking can co-exist. The most recent comment I received took this paragraph from the EPA Website:

Based on the information collected and reviewed, EPA has concluded that the injection of hydraulic fracturing fluids into coalbed methane wells poses little or no threat to USDWs and does not justify additional study at this time. This decision is consistent with the process outlined in the April, 2001 Final Study Design, in which EPA indicated that it would determine whether further investigation was needed after analyzing the Phase I information. Specifically, EPA determined that it would not continue into Phase II of the study if the investigation found that no hazardous constituents were used in fracturing fluids, hydraulic fracturing did not increase the hydraulic connection between previously isolated formations, and reported incidents of water quality degradation were attributed to other, more plausible causes. 

I guess that's why the EPA is now studying the issue, has four meetings planned, and has "a plan" written and ready to go:

WASHINGTON, DC, June 21, 2010 (as in last week) -- The US Environmental Protection Agency has scheduled four public meetings on its proposed study of the relationship between hydraulic fracturing and its potential impacts on drinking water supplies.

The meetings will be held July 8 in Fort Worth; July 13 in Denver; July 22 in Canonsburg, Pennsylvania; and Aug. 12 in Binghampton, New York. EPA said it will accept comments on the proposed study at the meetings. Stakeholders planning to attend a meeting are asked to register at least 72 hr in advance.

The meetings will provide information about the proposed study’s scope and design, EPA said in a June 18 announcement. It said it sought guidance from its independent science advisory board to support initial planning and guide the plan’s development. 

All I can say is this: a) either the EPA is inconsistent; or, b) it is wasting taxpayer money studying a issue it says is a non-issue. I've long forgotten the difference between Phase I and Phase II, and exactly what phase the EPA is in. I know I'm out of phase with regard to the EPA. 

UPDATE: July 14, 2010: tangentially related to the EPA, is the Delaware River Basin Commission which is also trying to decide whether to maintain its moratorium on drilling/fracking. My hunch: if the state commission is seen as being lax by the EPA, the EPA will step in and take over. EPA rules and regulations likely to be national, not local. 

The Problem for Alternative Energy

No one wants transmission lines in their backyards.

Links to these stories are often broken and require passwords to access archives.

More Housing In Williston - Heart of the Bakken (USA)

New housing developer in Williston.

These links are often broken after a few days and require a password to access archives.

OT: Venezuela Likely to Nationalize H-P Rigs

Venezuela is likely to seize eleven (11) oil rigs owned by Tulsa-based Helmerich and Payne.

It's almost as tough being in the oil business in Venezuela as Louisiana now that the administration has nationalized the oil industry in the state of the Big Easy. Actually, it may be easier in Venezuela -- at least Venezuela is predictable.

Update, July 4, 2010: Yes, indeedy, Venezuela did nationalize these oil rigs. I just love the words governments and the media use to describe their actions. In this case, "nationalize" for "steal."

And it appears that the moratorium on drilling in the gulf will go on and on and on. The Obama administration canceled the next scheduled meeting to take another look at the moratorium. Venezuela steals rigs, calls it nationalization, and the US steals livelihoods, calling it a moratorium.  

The Rule of Nines

On a day like this,  I am reminded of something I suggested could come to pass in the not-too-distant future: a Dow of 9,000; oil at $90/barrel; and unemployment at 9%.  Or if one is not quite so negative: a down of 10,000; oil at $100/barrel; and unemployment at 10%. Of course, we are practically there for all practical reasons, so this is no great shake, but it has to be a nightmare for the administration if things continue to go in the direction they seem to be going.

Again, if one is an agile trader (I am not) one should be able to do very well in this very volatile market. On the other hand, long term investors holding shares in companies paying nice dividends should be happy with some of their returns, and another opportunity to accumulate shares that are on sale.

Watching this economy and the politicians flounder (or is it "founder"?) reminds me of many classic country/western songs and their great hooks. Maybe some more of that later.

There is an interesting op-ed piece at MarketWatch today. I am particularly buoyed by the third myth, that the US is sliding into socialism.

For a system allegedly being strangled in its bed, U.S. capitalism seems to be in astonishingly robust shape.

Numbers published by the Federal Reserve a few weeks ago show that corporate profit margins have just hit record levels. Indeed. Andrew Smithers, the well-regarded financial consultant and author of "Wall Street Revalued," calculates from the Fed's latest Flow of Funds report that corporate profit margins rocketed to 36% in the first quarter. Since records began in 1947 they have never been this high. The highest they got under Ronald Reagan was 30%.

And that's why I like to a) accumulate shares in good companies when I can; and, b) accumulate shares in companies that pay robust dividends. On a day that the market plummets, those companies are still going to be paying their dividends, and if one is able, can use the dividends to buy shares on sale.

There is more and more talk of deflation. I see suggestions of deflation in the fast food restaurants and not-so-fast restaurants as I travel around the country this summer. I honestly don't know how some of these restaurants continue to survive; the competition is severe.

MDU Touted as Great Diversification Play

Investopedia has a nice article: looking at MDU as a diversification play.

CenterPoint Explores Expanding Pipeline

A while back I opined that the "big boys" see opportunities in natural gas. Here's another story suggesting this could be true: CenterPoint exploring possibility of expanding Haynesville natural gas pipeline.

Gasland, The Movie, To Be on HBO

According to one of my readers, "Gasland," the movie will soon be showing on HBO.

For those interested in what the movie is about (the hazards of fracking), click here.

It was nice to see that "Gasland" did not win an Oscar.

It's just a matter of time.It's Just A Matter of Time, Brook Benton

The above has a few jumps, but if you goto the YouTube site, you can find other renditions with better recordings. 

Off-Topic: AAPL and T

Completely off-topic, I apologize. I'm traveling and I don't get to post much and when I get the chance to post, I take advantage of it.

I have held shares in ATT for decades; started with a gift from my father to our daughters. I really don't know how well I could have done elsewhere compared to ATT, but it really has been quite an incredible run. Not much appreciation over the years (at least lately) but the dividends keep rolling in. I see ATT is now paying 6.7%. Savings accounts in banks -- what are they paying -- 1%?

One has to be impressed with ATT committing itself to these high payouts. ATT is in a very competitive business. It has committed to heavy capital spending to improve its network and would probably like to use the dividend money for this capital expenditure; to continue with the high dividend, one has to give ATT some credit.

I do not hold shares in my favorite company, AAPL. I missed investing in AAPL years ago and took a different investing route (mostly energy and telecommunications). When I started investing, AAPL was not in telecommunications. I missed AAPL but not upset; there are always places to invest.  My daughters and I grew up with Apple computers. They were six years old and two years old when we got our first Apple computer in 1984/1985 time frame. They and I have never had anything other than Apple in our homes. I am not recommending AAPL one way or the other; just commenting/reminiscing on a great company/great memories. We got our first Apple computer while stationed overseas in Germany.

Getting back to T: I think traders can do very, very well in this market due to the volatility but one has to be a) nimble; and, b) courageous. I am neither. I am not a trader; just an investor, and tend to buy and accumulate, selling infrequently. I tend not to buy a stock if it doesn't pay a dividend. Over time, all of my dividend-paying companies have increased their dividend payouts and it really makes a difference. One doesn't get rich, but it helps.

This will all come to an end in the not-too-distant-future when tax rates go back up on dividends, but that's fine. The country voted to "spread the wealth" by "transferring money from successful corporations and investors to government programs." It could be worse: the federal government hasn't nationalized any companies except, depending on one's definition of nationalizing, General Motors and the big banks.

Another Analyst's Views of Investing in the Bakken

Another analyst's views of investing in the Bakken: gives a call-out to Whiting and KOG, two of my favorites.

If I don't hold shares in a company in the Bakken that I say I favor or like, it's because I am limited in number of companies I feel I can invest in or amount of money available at any time for investing. I am heavily invested in energy and some days I just don't have enough money to invest in all the companies I would like. WLL and KOG fall into that category. If I had the funds I would invest in WLL and KOG. As it is, of the companies heavily connected to the Bakken, I am accumulating shares in CLR, ENB, and NOG. I used to hold a fair amount of MDU (one of my larger holdings) but with broad downturn in economy, I sold MDU quite awhile ago. MDU is now one I would start accumulating if I had a bit more cash. I also take advantage of huge dividends some royalty trusts are paying, some in the Bakken.

For long-term investors, used to a bit of volatility, I think accumulating shares in companies in the Bakken, and for conservative investors, I think MDU should be considered.

BEXP Setting New Records With Number of Frac Stages

BEXP is setting a new record with number of frac stages: BEXP successfully ran 38 swell packers in the Wright 4-33 #1H and anticipate completing the well with 38 frac stages, which would represent a new company record in the Williston Basin.

In addition, BEXP is experimenting with other techniques such as micro-seismic technology. 

In the press release linked above, BEXP also talked about going into Montana's Roosevelt County, which they call their Pale Rider prospect. Previously, I did not know the name of this prospect; I just called it "eastern Montana."  I don't follow activity in Montana (just too much to cover with North Dakota) but this will help keep folks abreast of what BEXP is doing in the big picture.

BEXP With Three New Wells

Again, I apologize: I am not posting very often because I am traveling.

I see BEXP has announced three new wells. As usual they had a very good 24-hour flowback.

• Ross-Alger 6-7 #1H, 3,070, Ross-Alger
• Owan 29-32 #1H, 2,302, Rough Rider
• Abe 30-31 #1H, 1847, Rough Rider

For those interested in a more detailed look at the three BEXP prospects in the North Dakota Bakken, click here.

Energy Independence

At this rate, "we're" never going to get to there.

The first US off-shore wind energy project has been in the works for over ten (10) years now.  Just when it appeared to be ready to begin building, just when it appeared all environmental impact statements had been filed, just when all permits had been issued, "we" now have another lawsuit from the .... environmentalists. Teddy Kennedy (RIP) would be proud.

Even in the far west, some have had it with transmission lines.  This story is about landowners in Montana against transmission lines going south to Utah. It would go against their "no-growth" policy.

The Bakken continues to be one great play while the rest of the US dithers.  Of course, the issue of the EPA and fracking is the 800-pound gorilla in our backyard.

A Policy Problem, Not An Energy Problem

More confirmation that we have a policy problem, not an energy problem.

This one "district" in Wyoming has about half the entire coal reserves in the US.

The Powder River Basin coal mining district in Wyoming is regarded as the most prolific coal mining model in the industry to date. Some 14 active coal mines extract more than 400 million tons annually, and two railroads deliver that coal to some 37 states.

The district is said to have a capacity upwards of 500 million tons annually, which would amount to half the United States coal supply.

News Summary, June 24, 2010

I will be posting a bit less often for the next few days. I am traveling for the next few days.

I see the market had another tough day but oil held its own. I haven't checked share prices of any of the energy companies, but for long term investors this could not be a better time to accumulate shares. It's possible (and likely) the market will go down some more, and it could drop significantly. But I am not a market timer. I mostly dollar cost average, but when the market is down, I try to find cash to accumulate more shares for the long term.

I see Anschutz was granted two new permits today; the wells will be in two different fields in Dunn County: Fayette oil field and Manning oil field. They will sit on the same pad; one long horizontal going north into Fayette and one long horizontal going south into Manning.

I also noted that the number of active rigs has dropped from a high of 130 (it was there for just one day) back to 122 today. Not sure what that's all about, except I assume it's just normal rotation of rigs. However, one has to keep in mind: a) backlog of fracking crews; b) shortage of manpower; and, c) significant drop in oil price from $80+ with indications that global economy isn't going to turn around any time soon.

I see the Federal government lost the first round with regard to the executive order to shut down new drilling in the gulf. In fact, the Federal government has lost several recent high visibility cases in front of the Supreme Court, including one favoring Enron today.

I see aviation folks are unhappy (on both sides of the issue) regarding wind power and interference with radar. This was a major concern with the Cape Wind project off the Massachusetts coast, also. It certainly appears wind power is not the panacea some make it out to be.

I reported yesterday (or was it the day before) about Hess building a oil loading railroad facility. I see a major North Dakota newspaper picked up on that story and is reporting it today. This is a big, big deal: $48 million project; 120,000 barrels a day on two 100-unit trains daily. Other news in that article:

North Dakota's pipeline, rail and refining capacity is about 400,000 barrels a day and more than double the volume two years ago, said Justin Kringstad, director of the North Dakota Pipeline Authority.

North Dakota surpassed Louisiana last year as the fourth-largest oil-producing U.S. state, with nearly 80 million barrels of oil. Hess was the fifth-biggest oil producer in North Dakota last year with about 6.6 million barrels, industry records show.

Hess announced in April that it also plans a $325 million expansion to its natural gas plant in Tioga. The company said it wants to increase capacity at the plant from 100 million cubic feet of natural gas daily to 250 million cubic feet.

And that's about it for now. But again, I apologize for few postings for the next few days. Thank goodness for the internet and particularly the Drudge Report. There are breaking stories on both the internet in general and the Drudge Report in particular that are very significant and not yet being reported by the major newspapers, such as the New York Times or the Los Angeles Times. We could have an interesting summer. 

Just a BP Quickie

Until the BP spill, "everyone" spoke of volume of oil in barrels. During the first few days after the disaster, reported continued that trend, quantifying the spill interns of barrels of oil. But then, a few weeks later, the reporters began to write their stories using gallons instead of barrels to quantify the amount of oil spilled, collected, or burned.

That small change results in a number 42 times larger than how it is usually reported. Fair and balanced.

On another note, I don't possibly see how BP can survive as a company without declaring bankruptcy. This would not be setting a precedent. Texaco declared bankruptcy back in 1987 following a lawsuit with Pennzoil.

Update -- August 6, 2010:

• This became a non-story over time. The oil has disappeared. The media is upset there is no video. All they can do now is complain about the dispersants that were used, hoping that Congress bans them in the future, so better video of oil-tarred seagulls, pelicans, seals, polar bears can be filmed. What hypocrisy. 
• BP is probably wishing they hadn't acted so rashly selling all their assets for a debacle that became less-than-a-debacle.
  

Update -- July 20, 2010:

• The company has spent $3.95 billion so far with regard to the clean-up.
• The company is under pressure to set up an independent escrow account, just to get started, of $20 billion. 
• BP has committed itself to raising $10 billion this year (the year is half over) for the clean-up.
• BP's cash position is $7 billion. 
• BP has $32 billion in debt.
  BP's annual operating cash flow is $30 billion.
• Today BP announces plans to sell off assets worth $1.7 billion to start building that $10 billion. 
• BP's market cap is $108 billion.

Wyoming Wind Taxes Highest Among Neighbors

If planned taxes go into effect, Wyoming's taxes on wind would be highest among its neighbors.

The story lacks much financial information. For example, there is no comparison between taxes on fossil fuels and wind energy on an energy-producing basis.

In addition, there is no cost estimate of the biggest bottleneck: lack of transmission lines. Someone has to pay for those lines. Again, the reporting on wind energy is lacking. I have nothing against wind energy; I just want everything to be "transparent."  Voters can then decide how they want to spend their money.

Home Sales

I didn't realize this: existing home sales reported yesterday reflected the largest drop in anyone's memory, according to CNBC this morning. I did not know it was that bad; the opening paragraphs of this story did not say that, so I don't know how accurate CNBC's commentary is, but again, it "surprised" analysts.

With this kind of news, it's hard to believe that a) price of oil holds up as well as it does; and, b) the economy, as reflected in the stock market and Congressional spending, is doing as well as it is. It appears Congress has lots of money to spend.

With today's report that new home sales plummeted to worse level, either historically, or at least back to 1971, suggests two things: a) a reflection of the general economy (but everyone knew that); and, b) Congress has now introduced a wrinkle to home sales that was used in the car industry to devastating effect. [It's official: worse new home sales report since 1963 when records were first kept. Something tells me the administration will do anything to distract voter -- say, like fire a 3-star general officer?]

That wrinkle: rebates, tax credits, etc. At one time, the car industry did not offer rebates, but once they did, folks would hold off buying a new car until rebates or tax credits were offered. Years ago I read stories about the automobile industry realized they made a big mistake introducing the concept of rebates.

Now, Congress has done the same thing with the housing industry. Why buy a house now if you missed the opportunity this past year when Congress offered an $8000 credit? If you wait long enough, and I think it will be less than one year (with the election looming, it could be less than six months), Congress is likely to offer another credit. And there begins the housing cycle based on Congressional incentives.

By the way, 1,300 prison inmates received $9 million in new home-buying credits; 141 of those inmates were serving life sentences. In all, more than 14,600 taxpayers wrong received $27 million in credits. Other notes: one house was used by 67 folks to claim the tax credit. 

Peak Oil and BP Oil Spill Revisited

If other nations follow suit in slowing down or limiting off-shore drilling altogether, "peak oil" is probably nearer than most people think, according to a story in the Christian Science Monitor.

Two things I do not subscribe to: a) man-made global warming theory; and, b) peak oil theory, in their current renditions. I am not saying that either theory is completely inaccurate, but we are certainly not getting the whole story. When it comes to both theories, I follow a) the money; and, b) the politics.

With regard to peak oil theory, a) the US is swimming in natural gas; and, b) we have decades of coal available to convert to liquid hydrocarbon (althought there is an opposing view: a recent study that suggests this is not true).

Our energy problems are a policy problem, not a "peak oil" problem. Oil prices certainly do not reflect any near-term concern with peak oil. They are down again today (June 23, 2010).

The article linked above asks when "peak oil" arrives. Two sources in the article "believe" we are already there or passed it a few years ago (that's obviously incorrect to anyone with any common sense); a third source says 2025.

As stated before, "peak oil" theorists have not defined the concept well enough for me to understand (or more likely, I am the only one who misunderstands the concept and everyone else understands it perfectly):

Is peak oil when ACTUAL production falls off, or when POTENTIAL production is reached?

If today, someone discovered a cheaper, cleaner, safer alternative to oil that replaced all need for oil, the actual production would drop to zero, and thus yesterday would have been the day "we" saw peak oil production. However, if all of a sudden, the global economy takes off and oil consumption rises significantly, and price of oil rises to $300/barrel, I can guarantee you that oil production would take off.

Yes, someday the world will use less oil but it will be due more to economics than to actual last drop of oil being found.

Hess To Build a Rail Loading Facility in Tioga Area

I thought "takeaway" capacity for oil about matched / slightly exceeded production, but it turns out I may be wrong. Hess is planning to build an oil loading facility in the Tioga area.

These links don't often stick around for very long; I don't even know if they are always archived. Here's another link that is unlikely to disappear for a long time with the same story.

Census Numbers in the Bakken Don't Match Expectations

The census numbers in the Bakken don't match estimates. The spokesman said there were no theories or explanations for census numbers coming in significantly lower than expectations. Here are some of my thoughts:

1. The census tabulators only go after houses/homes/edifices with house numbers or addresses. There has been a housing crunch and a lot of folks are finding places to stay without fixed addresses. Something tells me the census tabulators aren't knocking on recreational vehicles at campsites.

2. Many of the workers are probably in the field and not responding to the census in the first place. Finding them will be very, very difficult.

3. Most of the new workers probably still call home their last place of residence and have not officially moved here in their minds. My hunch is that a large number of workers are itinerant, and probably coming from states with no income tax, like Texas (yes, I know, they would still pay out-of-state taxes on income earned in North Dakota).

Update on Wind Energy Costs in the Bakken

The wind energy story in Montana sounds a lot like the Cape Wind energy story here in Boston, Massachusetts.

Wind energy costs at least 30 percent more than conventional energy.

Wind energy promoter says his particular wind farm can only produce at 30 percent capacity: I suppose this means that the wind only blows at the right strength about 30 percent of the time. That would jive with what I saw while visiting Montana/North Dakota last summer; most of the turbines were not turning when I passed them (in the wonderful Amtrak trip from Los Angeles up to Portland, Orgeon, and then east to Williston (heart of the Bakken) and then on to Chicago, and finally south to San Antonio. What a fantastic trip!)

Incidentally, it has been my experience that most promoters of anything tend to exaggerate (including fishermen); if this promoter says his wind farm is producing at 30 percent capacity, I wonder what the true rate is.

The Public Service Commission (PSC) won't set rates for the wind farm (for a variety of reasons), suggesting that competitive bidding process be allowed to set rates.

The wind promoter is asking for $90 per megawatt-hour, significantly higher than the price currently being paid by the utility, $56. The average residential customer uses 9 megawatt-hours per year.

A Very Nice Questar Well

Someone reminded me a couple days ago about Questar. I had forgotten to mention Questar in one of my recent blogs and someone wanted to remind that Questar was doing some good things, also.

And Questar (STR) certainly is. Today, it reported a well with an IP of 1,742: file number 18322, MHA 1-06-31H-150-92. It is listed as a wildcat but it sits within feet of three good oil fields: the Van Hook, Heart Butte, and the Mandaree. There are about ten (10) sections sitting between Van Hook and Reunion Bay that are not yet part of either defined field. In these few sections there are two confidential wells (one with a rig on site; one that has reached TD and is waiting to be completed, and the aforementioned Questar well, which by the way, is a long lateral stretching under the lake.

Investopedia: Invest in OAS

Play the Bakken with Oasis.

Some Very Good Wells Coming Off the Confidential List

18050, 1,114, American (AEZ), Tong Trust 1-20H, Ray field
18322, 1,742, Questar, MHA 1-06-31H-150-92, Wildcat (near Van Hook)
18323, 2,654, Newfield, Sand Creek Federal 1-21H, Sand Creek
18176, 1,731, Whiting, TTT Ranch 43-4H, Sanish
18244, 3,014, Whiting, Ness 44-21H, Sanish
18347, 2,074, Whiting, Fladeland 44-9H, Sanish
18381, 1,134, XTO, Carol Federal 24X-6, Lost Bridge
18408, 1,945, Murex, Amber Renee 25-36H, Sanish

It really is incredible. These seven (7) wells were all released on the same day and there was no one, no one, blogging about how incredible these numbers were. Folks have really gotten bored with the Bakken. Or perhaps they put these piddly wells in comparison to what one "leaking" well in the gulf is doing.

See more great wells by clicking here and for complete list of new wells reporting, click here.

Energy Crisis Sooner Than We Think

Article from Seeking Alpha.com on impending energy crisis.

I don't agree with the article. I posted why I disagreed with the article in the comments section of the article.

EPA and Fracking

For those who think I'm "chicken Little" and the "sky is falling" with regard to the EPA and fracking, you may want to attend one of these four "already scheduled" meetings. Four meetings are scheduled to discuss "the plan" that is already being put together. The location of the meetings are very interesting.

I think most of us understand how far along a Federal plan has come when it starts the "public comment" period. Usually 60 - 90 days after the last meeting, the plan is put into place.

The governor has said horizontal drilling would cease for two to three years while the Federal rules were put in place. Maybe this would allow time for the infrastructure for the energy industry everyone wants in North Dakota. It would also provide time to figure out how to manage critical housing needs. (Of course, if drilling is stopped for two to three years, housing really won't be a problem, will it?)

The EPA is winning every battle it takes on under the current administration and it looks like it is going to take on the fracking battle.

Let's see ... if the casing that protects the water table blows out while drilling ....

NOTE: I am being very cynical and inappropriate in this posting. I would recommend that it (the posting, not the EPA) be ignored. I am just venting. Everything will work out just fine. I think even "Chicken Little" had a happy ending. The sky really didn't fall.

MDU Resources Increases Common Stock Dividend for 19th Straight Year

The MDU Resources Group (MDU) board of directors today increased the company’s quarterly common stock dividend to 15.75 cents per share, for an annualized dividend of 63 cents per share. The previous quarterly dividend was 15.5 cents per share.

“We are very proud of our company’s record of returning value to shareholders,” said Harry J. Pearce, chairman of the board. “This is the 19th consecutive year that we have increased the common stock dividend, and we have a 72-year unbroken record of consecutive dividend payments that stretches back to 1937.

And just yesterday, this blog suggested that investing in the Bakken might be one of the better things a young investor could do, and specifically mentioned MDU as an example of a company that rewards its shareholders with a nice dividend. MDU would not be raising its dividend if it anticipated significant cash flow problems going forward. 

Building Permits Up 40% at the Center of the Bakken

Building permits are up 40 percent at the center of the Bakken.

Off topic: this story is so heart-warming, I had to include it. This is true of sheep, also, by the way.

For young / new investors, this is a nice article on investing in dividend-paying companies. There are a number of utilities (like MDU) and any number of oil-related companies that pay nice dividends. (I have been a big fan of MDU ever since I started investing in 1984, but currently do not hold any shares in MDU. It's high on my list, however. For dividends, I have been very happy with EEP which I do hold.)

Second part of a two-part series on the Bakken's impact on local economy.

Bakken connector to Keystone Pipeline  wanted. 

A Houston company wants to ship North Dakota oil through a proposed pipeline that would carry Canadian crude to the Gulf of Mexico.


Quintana Capital Group Ltd. said it wants to build a $250 million, 300-mile-long pipeline system from western North Dakota to eastern Montana, where it would meet TransCanada Corp.'s proposed Keystone XL pipeline.

Terry Cunha, a TransCanada spokesman at the company's headquarters in Calgary, Alberta, said no agreement has been reached with Quintana or any other company wanting to ship domestic crude in its pipeline.

Investing in the Bakken

The Motley Fools have said exactly what I've been thinking for the past year or so:  amass your fortune in the Bakken. Years ago I started investing in energy because I enjoyed following the industry, and to a great extent, I felt it was fairly stable, if not exciting. But now I think a young investor could do well by picking a few companies in the North Dakota Bakken and investing regularly.

The more I follow the Bakken, the more I think one could dollar cost average with any number of Bakken players and do very well over the long term. I agree with the Motley Fools: consistently invest -- that means on a monthly basis. If nothing else, put a little away each month and don't get worried about the day-to-day volatility.

It appears companies in the Bakken are being valued based on their assets in the Middle Bakken, and to some extent, perhaps, their assets in the Three Forks Sanish.

Among the bigger players, I like the following companies in the order given: WLL, CLR, EOG, BEXP.

Among the smaller players, I like the following companies in the order given: NOG, KOG (two different business models), and now OAS.

Among pipelines: MDU and Enbridge.

There are many, many more ways to play the Bakken and many companies in the Bakken to invest in. My intent is not to step on anyone's toes, just to give readers a general idea of what I'm thinking at this point in time.

Of the Bakken companies, I am dollar-cost averaging in CLR and NOG, and ENB, but to a lesser extent. I take advantage of dividends offered by EEP. I think I missed opportunities in EOG, KOG, and WLL. But I can't complain about how things have gone in the big picture.

I am most intrigued by Slawson but it is not publicly traded. I think MDU is perhaps the best long-term, most conservative (safe) company out there. It's had a couple of tough years, but when (if) the economy turns, it should do very well. Right now it's trading not far above it's 52-week lows. It has never (?) missed a dividend payment and has increased dividends for the past five years. I do not own MDU yet but for a conservative investor with a long horizon, it might not be a bad choice. I certainly think it is one of the best utilities nationwide. Cap and trade won't hurt it (it has plenty of wind energy to offset carbon footprint).

Sagebrush

NEWS

January 15, 2011: Update on Sagebrush wells in Bottineau County. These are all Madison wells.

Original Posting

On the sidebar on the right, I have links to "producers" in the Bakken. I originally did not include Sagebrush for unknown reasons, probably an oversight.

But with the granting of five permits this past week on one or two abutting pads in the Renville oil field in Bottineau County, I thought it was about time to include a direct link to Sagebrush.

The five new wells will be on the same pad (or abutting pads) where there are already two wells (rig is on site). This appears to be two Eco-Pads side-by-side but I don't know; time will tell.

The pay zone in this area, is it the Madison? Yes, it is the Madison.

EPA More Emboldened With Each Win

As regular readers of my blog know, I have great anxiety about EPA taking control of rules and regulations of fracking nationwide. I think it's just a matter of time. Every "win" by the EPA emboldens the staff. Their latest win was in the Senate where the EPA prevailed in its authority to declare CO2 and water vapor hazardous substances. Water vapor contributes about 76% to greenhouse gases; a much smaller contribution is CO2 -- about 24%.

Be that as it may, here in Boston, the EPA is about to enforce rules on phosphorus discharge into the Charles River. I have no problem with the goal. What concerns me is that the dollar figures to do this are quite remarkable: it will cost anywhere from $6,000 to $120,000/acre to meet the EPA guidelines.  When the figures vary by that amount, it tells me that no one really knows how to do this, and what it will really cost. As a very astute Bostonian noted, there's "a big difference between $6,000 and $120,000."Even without an MBA, one could figure that out.

It would cost the city of Milford $50 million to retro-fit its streets and highways. The annual city budget is $77 million. (A jobs bill? Maybe the temporary census workers could get jobs re-routing drainage systems.)

The program proposed by the EPA has never been tried on a scale this huge. Detractors are worried this is an experiment with a very high cost that has not been proven to work. The EPA says to "trust them."

By the way, Rahm Emanuel, the White House chief of staff, is expected to leave his job later this year after growing tired of the "idealism" of the Barack Obama's inner circle. This speaks volumes how rabid the left is and the one industry they loathe is the oil industry.

There may be good reason for companies like BEXP to accelerate their drilling programs.

Chinese Oil Industry Asset Acquisition Has Been Intense

I have been watching the Chinese oil companies acquire oil assets this past year. I have some strong feelings about how I see the US president approach our energy needs and how the Chinese seem to approach their energy needs but because I am often accused of being too political in some of my comments, I won't say anything more.

This is an interesting, and objective, analysis of what the Chinese have done this past year.

Okay, I couldn't resist.

A New Denbury Presentation

For those interested, here's a webcast/iPodcast for Denbury which recently acquired Encore.

The presentation starts out with this note: Denbury is not "big" in the shale oil/natural gas business. It picked up a bit of shale oil in the Bakken with its acquisition of Encore, but its core competency is enhanced oil recovery (EOR).

It's a 30-minute presentation, but what I do is listen to this in the background while a) surfing the net; b) updating my blog; c) answering National Geographic questions that my six-year-old granddaughter asks; and, d) watching the US Open either on television or on the internet.

Another article on same topic, June 29, 2010:

CO2 enhanced oil recovery is a strategy that has already been used to stem Wyoming’s decades-long oil production slide and created hundreds of new jobs in the state. The largest such project is Anadarko Petroleum’s CO2 project at the historic Salt Creek field north of Casper.

George Peridas, a scientist at the Natural Resource Defense Council’s Climate Center, is an advocate because of the many environmental benefits: There’s a net gain in curbing CO2 emissions, and the industry doesn’t have to drill in new and sensitive areas offshore or onshore.

But convincing the oil industry to support climate change legislation for the benefit of enhanced oil recovery is a hard sell.

Spaceholder

BEXP With New Corporate Presentation: Accelerates Drilling Program

BEXP has a new corporate presentation.  (Note: the abbreviation on slide 3, "HBP," stands for "held by production." A lease is generally good for three-to-five years; if no wells are drilled, or if wells are dry, the leases expire at the end of the stated period. However, if there is production from a well affected by a certain lease, the terms of that lease last as long as the well is productive.)

I went through the slides pretty quickly and will look at them more closely later on.  However, two things jump out me, both on slide 9 (of 35 slides).

On slide 9, BEXP says it will accelerate its drilling program by doubling the number of rigs it has in the Bakken. BEXP said it added a rig in May, 2010, and would add another rig every four (4) months after that. The slide then shows how this will accelerate their drilling program.

The second thing that jumps out at you, again on the same slide: even with a doubling of rigs (up to eight rigs), BEXP will still be drilling wells in the Bakken through 2020 -- that's ten years from now! That jibes with the "Basic Analysis of the Bakken," in which the authors state it will take until 2030 to complete all the drilling. Slide 5 of the BEXP presentation says its wells have an economic lifespan of 35 to 39 years. 

It should be noted that this "analysis" was for the Bakken formation only, and did not include other formations.

I know I am way too optimistic about all this, but unless one thinks "we" will no longer be using oil in the near future, I feel more and more strongly that one could put together a very good portfolio to last a lifetime focusing on companies in the Bakken. "Legacy" wells keep producing -- for how long, we don't yet know; and, there is one-to-two decades of drilling yet.

Some wells drilled decades ago continue to produce, which I assume will also be true for some Bakken wells. A "monster well," the Dinsdale well was drilled in 1996 and is still producing as just one example.

MDU and the Nation's Electrical Transmission Grid

This month's issue (July, 2010) of National Geographic has a great overview of the nation's electricity grid. There is a fold-out of the North America (US and Canadian) grid which is very, very  interesting. Two things jump out at you from right away if you are from North Dakota:

• one of the very few conglomerations of power plants on the Great Plains is centered around Bismarck; and,
• there are only four long-distance DC lines in the US: two of them from Bismarck to Minnesota (one to Duluth; one to Minneapolis); and, two from out-of-state to California

According to the National Geographic, only 1.9% of all transmission lines in North America carry DC, and two of those transmission lines, as noted, begin in/near Bismarck.

The Oregon-southern California DC link is the largest single transmission line in the US.

The fourth DC line is from Utah to southern California.

DC is more expensive (apparently) to generate but it loses less power over long distances than AC.  DC is therefore used for long-distance (>400 miles) transmission.

I've been hard on MDU on this blog with regard to success of their oil exploration and production arm (Fidelity) in the Bakken, but I have to admit, the conglomeration of power plants around Bismarck tells another part of the MDU story. MDU is also invested with power plants in the upper northwest (Oregon/Washington), another area with a number of power plants.

I can't find a good link on the internet to show the grid highlighting the DC lines, etc., so if you can, check out this month's issue of National Geographic. The foldout will be easy to find.  [Well, that wasn't hard to find: here's one interactive link to America's power grid.]

When (and if) the economy ever recovers, MDU should do very, very well. For a long-term investor, this might be a good time to start

Optimized for 27" iMac

I don't have the 27-inch iMac so whenever I'm near an Apple store I pop in and do two things: 1) view my blog on a 27-inch iMac; and, b) put the blog bookmark in the toolbar for the next lucky customer. 

But it is incredible how impressive a website looks on the Apple 27-inch iMac. Absolutely incredible. 

I'm at the Boylston Street Apple store in Boston today.

OAS Cancels Two Permits, Gets a New One

I'm only posting this because OAS is in the news with its recent IPO.

In yesterday's (June 18, 2010) daily activity report, it was noted that OAS canceled two permits:

• 18914, Ellis 5602 42-8H, Williams County, SESW 8-156N-102W
• 18915, Somerset 5602 42-8H, Williams County, SESW 8-156N-102W

Based on the legal description, these two wells would have sat on the same pad. Often a cancellation doesn't mean anything. The operator still controls the acreage and may have plans to seek a new permit with new parameters (different pay zone, slightly different drilling location, etc). These wells would have been wildcats but they were just east of the Bull Butte field (according to the GIS map server) where BEXP has reported a good well. (The permits said they were in Bull Butte field.)

and was granted a new one:

• 19152, Mountrail County, wildcat, Hagen 5792 44-31H, SESE 31-157N-92W

This one is permitted as a wildcat but it sits in a section that is bordered by three fields: the Sorkness, the Cottonwood, and the Alger. I know nothing about the Sorkness (a small field with five producers and two confidential wells). The Cottonwood has not been all that impressive, though the south end (where this well sits) has been better than the north end; and the  Alger, which has had some good wells. If it produces oil, the Cottonwood field would probably be extended to include this section, as well as section 30, just north.

Samson With Another Permit

For all my Australian readers: Samson was granted another permit in the North Dakota (USA) Bakken: #19149, Hanson 17-20-163-98H, in the Blooming Prairie field. This is the fourth permit Samson has in this field. Although their first well in this field reported a lackluster 75 bopd as an initial production number, Samson must feel optimistic about this area to continue with permitting.

Outstanding Op-Ed by Editor, US News (& World Report)

I grew up with three news magazines: Time, Newsweek, and US News and World Report. The first was always the most liberal. I always felt Newsweek was most balanced, and US News too conservative, even by my standards. Over time, either they have changed, or I have changed. Time is still the most liberal, but I can't tell the difference between Time and Newsweek any more. Most interesting to me: US News is almost as liberal as the other two. Having said that, I've always enjoyed and trusted its editor, Mort Zuckerman, even though on television talk shows he is often too liberal for my tastes, especially when I catch him on "Morning Joe."

His three-page op-ed piece this week is superb, and I would hope everyone reads it.

My concern is that at some point some rogue nation will really test Obama if Mort's views are accurate. If Obama fails the test, the price of oil will skyrocket. But that won't be good news for any of us, even those of us who are heavily invested in oil.

OAS Had A Great Day! A Look At Current Operating Picture

A new high the first full day of trading, closing near its high for the day at $15.96, up $1.08, 7.26%.  I am impressed.

Here are the Oasis wells that are on confidential status (file numbers; not necessarily drilled or completed) (ROS = rig on site) (oil fields in bold):

• 16949, Schmitz Federal 44-34H-2, SESE 34-T153N-R102W, Eightmile
• 17636, Helling Trust 11-15H, NWNW 15-T154N-R94W, Alkali
• 17646, Peters 11-1H, Lot 4 1-T160N-R93W, Gros Ventre
• 17793, Nordby 5793-13-13H, NWNE 13-T157N-93W, Sorkness
• 17882, Colbenson 11-6H, Lot 4 6-T157N-R92W, Cottonwood
• 18357, Rebne 11-7H, Lot 1 7-T162N-R92W, Wildcat
• 18410, Barenthsen 6059 44-5H, SESE 5-T159N-R92W, Cottonwood
• 18418, Sandaker 5602 11-13H, NWNW 13-T156N-R102W, Cottonwood
• 18437, Angell 5200 31-28H, NWSW 28-T152N-R100W, Camp
• 18447, Enerson 5792 44-4H, SESE 4-T157N-R92W, Cottonwood
• 18466, Hynek 5693 42-35H, SESW 35-T156N-R93W, Alger
• 18567, Njos Federal 5602 11-13H, NWNW 13-T156N-R102W, Wildcat
• 18593, Edwards 6092 42-35H, SESW 35-T160N-R92W, Cottonwood
• 18623, Odin Jorgenson 5502 44-8H, SWSE 8-T155N-R102W, Squires
• 18657, Ernst 6092 42-31H, SESW 31-T160N-R92W, Cottonwood
• 18799, Stowers 5502 43-8H, SWSE 8-T155N-R102W, Squires
• 18801, Contreras 5502 42-7H, SESW 7-T155N-R102W, Squires,  ROS
• 18802, Vuki 5502 42-7H, SESW 7-T155N-R102W, Squires
• 18817, Kjos 5502 44-24H, SESE 24-T155N-R102W, Squires
• 18855, Meiers 5692 11-19H, NENW 19-T156N-R92W, Alger
• 18857, Berry 5493 11-6H, Lot 4 6-T154N-R93W, Robinson Lake
• 18914, Ellis 5602 42-8H, SESW 8-T156N-R102W, Bull Butte -- cancelled
• 18916, Missouri 52012 44-35H, SESE 35-T153N-R102W, Indian Hill, ROS
• 18940, Andre 5501 13-4H, NWNE 4-T155N-R101W, Missouri Ridge, ROS
• 18995, Manhattan 5792 11-2H, NWNW 2-T157N-R92W, Cottonwood, ROS
• 19030, Kjorstad 5300 24-22H, SENW 22-T153N-R100W, Wildcat
• 19036, Evans 5693 42-27H, SESW 27-T156N-R93W, Alger
• 19037, Banks 5892 44-34H, SESE 34-T158N-R92W, Cottonwood
• 19046, McFarland 5502 44-12H, SESE 12-T155N-R102W, Squires
• 19091, Horne 5603 44-9H, SESE 9-T156N-R103W, Bull Butte
• 19097, Merritt 5693 11-24H, NWNW 24-T156N-R93W, Alger
• 19131, Somerset 5602 12-17H, NENW 17-T156N-R102W, Bull Butte
• 19132, Ellis 5602 12-17H, NENW 17-T156N-R102W, Bull Butte
• 19152, Hagen 5792 44-31H, SESE 31-T157N-R92W, Wildcat

Comments:

• Bull Butte and Squires are in the Rough Rider area of BEXP, and have reported some good 24-flowback wells.
• I've not been impressed with Cottonwood wells
• Alger wells are generally good to very good

Slawson Reported Another Decent Well Today

Cougar Federal 1-30H in Big Bend, 1, 264.

For quick look at Slawson's wells in Big Bend/Van Hook, click here. Slawson is not a publicly traded company but it partners with companies that are. In addition, it gives one an idea what the Bakken potential is.

Peggy Noonan's Take on the "Speech"

As I've said before: I read the Wall Street Journal for its good writing, not for investment advice.

North Dakota Number One (#1) Again

North Dakota is number one (#1) in dry edible beans.

And I thought "we" were just number one (#1) in hard spring wheat, honey and ICBMs. And home of the largest continuous oil reservoir ever surveyed by the USGS.

Headline Writers

I was the editor for both my high school newspaper and my college newspaper, so I know a little bit about headline writing.

This is a great example. This is the headline from the AP today:  Unemployment Falls in 37 States.

Sounds like bullish news. But that is dispelled in the first paragraph:

A majority of states saw their unemployment rates drop in May. But the widespread declines were mainly because people gave up work searches and were no longer counted.

As I have noted in previous posts, if everyone would just quit looking for work, the unemployment numbers would plummet, to around 0%. 

The rest of the article:

The Labor Department says the unemployment rate fell in 37 states. Six states had increases and seven saw no change.

Forty-one states saw a net increase in jobs. But that reflected national data showing a huge gain because of government hiring of temporary census workers.

Nevada rose to the highest jobless rate in the country, marking the first time in more than four years that Michigan did not hold the top spot. Nevada's rate was 14 percent. Michigan fell to 13.6 percent.

The unemployment news above is just the tip of the iceberg. It is going to get very, very ugly by the end of the summer going into the autumn, off-cycle elections. By then, the effect of states cutting their payrolls to balance their budgets will start being felt, another AP story.

The layoff ax has hit public sector payrolls with force as states wrestle with massive budget shortfalls. Since August 2008, some 231,000 state and local government jobs have disappeared -- 22,000 last month alone, according to federal data.

The majority of the cuts are on the local level, which at 14.4 million workers is nearly three times the size of the state workforce. Plus, unlike at the federal level, most of these cuts come from the ranks of teachers, cops, firefighters and social service workers.

And more pain is coming down the pike. Some 19 states say they plan to implement layoffs to narrow budget gaps, according to a recent survey.

The cuts will be even deeper if Congress doesn't give $24 billion to the states to help cover Medicaid costs. This legislation, along with a $23 billion bill to fund teachers' salaries, is bogged down in political posturing on Capitol Hill.

It's hardly political posturing when the country is $19 trillion in debt, 90% of GDP, and growing daily.

Seeking Alpha on OAS

Prospectus at time of IPO.

This is how others see Oasis.

For newbies, comparison with BEXP is a bit more speculative than a comparison with other companies would have been:

BEXP champions 24-hour flowback for reporting their initial production numbers, and as a result, has the highest decline rate.

BEXP is one of the few operators in the North Dakota Bakken that has not increased the number of its rigs despite being one of the most vocally optimistic of these operators.

Other comments:

Acreage controlled by Oasis has been less than stellar in the past, and much of it was obtained from MDU/Fidelity which has had a very poor track record for oil in the North Dakota Bakken.

I do agree that the potential for any operator is huge, however, in the Bakken. Most analysts value the producers based on two pay zones (the Middle Bakken and the Three Fork Sanish group). In fact, there are about 20 pay zones in North Dakota, but not all are in the same location.

It is not uncommon for a company that "exhausts" one formation, to simply move the bore well up a 100 feet to the next pay zone.

In addition, there is more and more talk of huge natural gas deposits below the Bakken.

The fact that Oasis has no debt is very, very impressive in this highly-capitalized sector.

June 18, 2010: Oasis had a first good day. Offering was $14. Was up to $15.40 the full first day. Nice move. 

$7 gasoline?

That's what some are saying about Obama's knee-jerk reaction to shutting down the gulf. Not me, others are saying that. I'm just the messenger.

North Dakota Economy Highlights

Update on North Dakota economy from a different perspective.

Nice Article on ND Oil Industry in Minot Daily News.

Two-part article on oil industry on the reservation in the Minot Daily News.

The links to these articles are generally broken in a few days, and the articles are archived, requiring a subscription, free or paid. 

By the way, of the local newspapers on the internet, the Minot "paper" has consistently had the better reporting in my opinion. The Dickinson Press might come in second, competing closely with the Bismarck Tribune.

For newbies, just to give you an idea how big the Bakken is, for perspective: today it is announced nationally with a bit of fanfare that the electric car company Tesla will go pubic with an IPO to raise about $167 million.

In comparison, one of the smallest players in the Bakken, Oasis Petroleum, went public yesterday and its IPO raised just slightly less than $600 million. The current boom in the North Dakota Bakken is now about four years "old."

Warning: My Political Note for the Day

More from the right-wing LA Times on the President's speech. "There's a pipe spewing a gazillion gobs of oil into the gulf, so let's build more windmills."

By the way, has anyone done the carbon-spewing calculations on this fact: BP is flaring 30 million cubic feet of natural gas daily from the source of the leak, adding up to about 450 million cubic feet of natural gas since the containment effort started 15 days ago. That's enough gas to heat about 450,000 homes for four days.

Something tells me it would have taken a hundred years of Big Stone II to spew this much carbon. Oh, well. 

By the way, this story gets more interesting as the facts come out. The blow-out resulted from high methane gas pressure. It is the pressure of methane gas that pushes oil up a pipe. Oil companies put in blow-out protectors and valves to help prevent such blow-outs. Blow-outs were common in the early oil industry.  This particular gulf well contained about 40 percent methane, compared with about 5 percent found in typical oil deposits. This helps me understand much about the etiology of the problem. 

Idle Ramblings on IPOs

One of the reasons I enjoy investing is because it keeps me current in what is going on in the world, regardless of whether I actually invest all that much, or how well I do.

It also helps me put things in perspective.

I see today that Tesla (electric cars) will go public:

It plans to raise about $167 million.

I would not know what to make of that number had I not followed the Bakken so closely. The Bakken has taught me much more about investing than just about the oil industry in North Dakota. (The Bakken has also taught me geology, the reality of wind/solar energy, energy politics, and how to set up a blog. It also taught me how much time and energy is required to host a blog.)

Yesterday, as you all know, one of the smallest oil companies working in the Bakken, Oasis Petroleum, went public. Its IPO raised almost $600 million:

I did not invest in Oasis; I'm too heavily invested in oil to buy any more energy companies but I had watched this since the announcement in March when I was first alerted me to it. (Slawson, on the other hand, would be hard to resist.)

Anyway, idle chatter, but it is interesting to see Tesla go public and how much they value the company. Toyota will take a 5% stake.

Eleven (11) New Permits Today! On Track for 1300 Permits This Year

We're starting to see the type of daily activity reports I've been expecting for some time now that "we" have 130 active rigs in North Dakota. 

With eleven (11) new permits today, "we're" on track for 1,300 new permits this calendar year. That's huge.

This exceeds any past year in the current boom.

For comparison with other years, click here.

Sagebrush: Seven (7) Wells In Same Location

Sagebrush just got five (5) permits for five (5) wells, all in section 30, T162N-82W.

It turns out Sagebrush already has two wells in that section.

Here's what's going on. These seven wells all have the same location: SWSE 30-162-82

19027, Confidential, Erickson Et Al 1B, permit granted May 13, 2010.
19028, Confidential, Erickson Et Al 3B, rig on site, permit granted May 13, 2010.
19139, Confidential, Erickson Et Al 1A, permit granted June 17, 2010.
19140, Confidential, Erickson Et Al 4B, permit granted June 17, 2010.
19141, Confidential, Erickson Et Al 3A, permit granted June 17, 2010.
19142, Confidential, Erickson Et Al 4A, permit granted June 17, 2010.
19143, Confidential, Erickson Et Al 2B, permit granted June 17, 2010.

They already "hold" control of the location so there was no hurry to grab these permits, but the fact they are going to put seven wells in one section suggests they are trying something new, even for the Bakken. 

One more permit for "2A" and it looks like this could be two Eco-Pads next to each other, four wells on an Eco-Pad.

On the other hand, is it possible that 1, 2, 3, and 4 represent four different pay zones, and A and B represent horizontals running in opposite directions? Looking at the GIS map doesn't offer many hints.

Eleven (11) New Permits Today! Ho, ho, ho -- Sagebrush!

We're starting to see the type of daily activity reports I would have expected by now with 129 active rigs in North Dakota.

NDIC granted eleven (11) new permits, including five wells on one pad in Renville field in Bottineau County, for Sagebrush. Five seems to be an unusual number I haven't been particularly enamored with the Renville, but who knows. These should be fun to watch. 

Ho, ho, ho -- what have we here.....while typing the above, I searched a bit more. This could be very, very exciting.

The five new permits that Sagebrush just got in the Renville field are going to be place exactly where Sagebrush already has two other confidential wells.  Sagebrush must have struck something interesting. This is so interesting I will post a separate note for these seven wells/permits.

June 20, 2010: after posting the above, others noted the same thing. This thread may be interesting to follow over time. 

Update on the OAS IPO

Update on the OAS IPO. It looks like the company did well.

Update on Cottonwood Field Posted

A minor update on the Cottonwood Field has been posted. It might be of some interest to some folks since much of the acreage in this field may be controlled by Oasis which supposedly went public yesterday (June 16, 2010). I do not know for sure who controls the majority of the acreage in this field, but you see my thoughts at Cottonwood Field.

Marathon Just Reported a Nice Well

Marathon reported a nice well in Reunion Bay with an IP of 3,459.

Wynn Resorts Laid Off 260 People This Past Week

Yes, that is the data point the writer makes to show us where the job losses are coming from following another dismal jobless claims report.

Just this week, casino owner Wynn Resorts laid off more than 260 workers in its two Las Vegas casino hotels in a move expected to save nearly $8 million.

"...just this week..." --- wow.  "...just this week..."

The jobless report today was not good news.

The number of people filing new claims for jobless benefits jumped last week after three straight declines, another sign that the pace of layoffs has not slowed.

Initial claims for jobless benefits rose by 12,000 to a seasonally adjusted 472,000, the Labor Department said Thursday. It was the highest level in a month and overshadowed a report that consumer prices remain essentially flat.

Somehow the 260 Wynn Resorts employees hardly makes a dent in the 12,000. How many oil-related jobs in Louisiana have been lost in the past week? 

I read that article three times while completing this note. Not once does the article mention the number of laid off folks in the gulf due to the administration's six-month moratorium on deep-sea drilling and the on-going re-evaluation of rules and regulations governing shallow-water drilling.

Those jobless numbers in the gulf region are going to get worse.

Dickinson Won't Re-Open Swimming Pool

Due to costs for renovation, Dickinson won't re-open swimming pool.

One would think that with all the oil money in the state of North Dakota, money could be found for the swimming pool. Assuming folks want the pool; maybe they don't.

June 18, 2010: Comment -- the state will reduce employers' compensation premiums by $81 million. Couldn't they take just $1 million and put in a new swimming pool in Dickinson. In fact, for $8 million, they could put a new swimming pool in each of the eight largest cities in North Dakota. Oh, well. 

What Green Energy Costs: Temporary Rate Increase Granted to MDU

MDU's utility rates will go up almost 8% -- at least temporarily -- to pay for a) Big Stone II, a coal-fired power plant that Minnesota decided "not to accept"; and, b) MDU's wind farms.

It's a very complicated story but we're starting to see how much "green energy" will cost.

Expect higher costs if Congress passes "cap and trade."

Meanwhile, here in Boston, where I am, folks are still complaining about the cost of wind energy, and the turbines aren't even up yet. Cape Wind is the wind farm project off Teddy Kennedy's (RIP) coastline -- you know, the kind of wind project that "everyone" wants until they find out the cost. 

In today's Boston Globe, there are two stories, one on the front page below the fold and one on the front page of the business section.

Front page: Wal-Mart says Cape Wind will increase their utility costs. Fact: the starting price for Cape Wind electricity is more than double the current basic residential rate for conventional power.  The project is not expect to come on-line until 2013.

Business page: at a public hearing in local area, opponents and supporters of Cape Wind voiced their concern and/or support. Bottom line: rates will go up significantly, and their will be turbines off Teddy Kennedy's (RIP) coastline. Teddy was a true environmentalist. He would be proud.

The local utility company, National Grid, signed a contract for half the power generated from Cape Wind; the $3 billion was needed by the project to start construction. National Grid also signed a contract for the other half of the power generated by Cape Wind but will "assign" those rights to other buyers. Good luck.

National Grid could get stuck with the entire bill.

10 New Permits Issued Today

The only reason "Ten New Permits Issued Today" is noteworthy is the fact that this is the fourth year of the current North Dakota Bakken book and this is one of the biggest days for new permits. Generally, five to six new permits during this boom and when I see more than eight (8) it is quite noticeable.  Of note, Oasis was granted two permits on the day that it goes public (IPO tonight). Oasis is putting two wells on one pad in Bull Butte. EOG has yet another permit in the very prolific Wayzetta township in the Parshall oil field. This tells me "we haven't seen nothin' yet."

"We're" on track for 1,275 new permits this calendar year.

With ten (10) more permits granted today, North Dakota is on track to issue 1,275 new permits this calendar year (2010). This well exceeds any past year in the current boom.

For comparison with other years, click here.

Questar Approves Split

In all the "background noise" of the Bakken and this blog, I completely forgot about Questar. When I first came across this company some months ago while looking at the NDIC dockets, I was very impressed. Shortly thereafter, I saw that Questar was going to split off its regulated pipeline and distribution company from its E&P business which is operating in the Bakken.

At that time, I said that if I had the money, I would invest in Questar. As it is, I am pretty much maxed out in energy in the Bakken and did not want to add yet another holding, but "on the surface," (no pun intended) Questar post-split looks like another good bet in the Bakken.

Natural gas, by the way, is now over the $5.00 threshold and is trending up. If the "tea leaves" are correct, that the country is gradually adopting natural gas, then both the pipeline/distribution company and the E&P company look all that more attractive.  

That plan for the spin-off has been approved.

Oasis Petroleum IPO Tonight According to CNBC Television

Oasis Petroleum will go public tonight according to CNBC: 42 million shares in the $13 - $15 range, to raise about $400 million.  The press release was two days ago anticipating the IPO sometime this week. Here is the CNBC video. This is the original "Form S1" from March, 2010.

When I was first alerted to the pending IPO back on March 27, 2010, I posted my guess for fair value for Oasis based on NOG and KOG (two different business models): my fair value guess -- 30 million shares at $12/share.

Oasis currently has four (4) active rigs in North Dakota, one less than the highly visible BEXP. 

Regardless of what Oasis does, this is another opportunity for national awareness of the Bakken. I think it will help all Bakken stocks.

I am accumulating shares in three or four other Bakken companies and won't participate in the Oasis IPO, but I can't argue against it. I don't know history of Oasis very well, but I believe they partnered with MDU/Fidelity in the early days, and then during the drop in oil prices in 2008/2009, Oasis acquired all (or most) of MDU/Fidelity acreage in North Dakota. At the time, MDU had just successfully petitioned the NDIC for defining a new field, the Cottonwood field, which has been less than spectacular, although recently EOG has had some pretty good wells there.

It looks like a nice day for an energy IPO; oil has been trending higher ever since the administration shut down the gulf, and oil is having a good day today, also.

It also looks like a nice for a picnic in the Bakken; some areas will see highs in the low 80's; rain in some areas tomorrow.