- Slide 6: significant increase in daily production coming out of the Bakken; of course, this has to be looked at in light of increased number of shares outstanding when anticipating earnings/share
- Slide 10: XOM jumps out at you as a major oil company in the Bakken; this has to impress Wall Street investors who may not understand the significance of the Bakken; of course, that is due to XOM buying XTO
- Slide 15: the difference between short laterals and long laterals
Wednesday, September 15, 2010
New KOG Presentation
I had not looked at a KOG presentation in a long time, so I enjoyed a quick look at their presentation at the Rodman and Renshaw Annual Global Investment Council. I have not had a chance to take an-depth look at the presentation but three slides jumped out at me:
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on page 7, they say acreage has been de-risked both East & West of the Nesson Anticline.
ReplyDelete¿What does 'acreage de-risked' mean?
Someone else may be able to provide a specific definition, but to me, it means one of two things.
ReplyDeleteIn both cases, it means they have a producing well.
Either, 1) it means the "new" producing well is in an area where they had acreage, but because the acreage was in a designated field, it was not a wildcat by definition, but the "new" producing well means that area has economic potential "proved" by the well. That acreage is no longer an unknown, no longer a risk -- it has been "derisked."
Or, 2) less likely, it means that because the "new" well is producing, the lease in that area is now HBP (held by production) and they no longer have to worry about losing the lease. Ever. (Unless they abandon the well.)
Regardless of its specific definition, to me it means the acreage where the "new" producing well is, has gone from unproven reserves to proved reserves (and I think on their financial statements they can now carry that acreage at some of level of potential financial return.
Something tells me, if I'm wrong on this, someone will let me know. Smile.
I just did a Google search of "derisked," and I get the feeling that there is no formal definition. It almost appears that analysts and company spokesmen use "derisk" in any situation when the likelihood of economic production of oil is now pretty much a sure bet, at least to some extent.
ReplyDeleteYou will notice that there is never a follow-on question: "To what extent has the well "de-risked" your investment?"
I think it is similar to "you betcha" among the Norwegians when asked if there was a chance that the crops would be good the following year, as in, "Are the crops gonna be any good next year?" "Yup, you betcha."
Okay. Thank you for the explanations.
ReplyDeleteSeems reasonable, ya ubetcha.