Michael Reger and NOG

It appears I'm not the only irrationally exuberant fan of the Bakken. And this guy has made millions.

Michael Reger is the CEO of NOG.

From something called MinnPost.com, published May 19, 2010.

Data points from the article in case the link is broken (the exuberance is from the article; I did not embellish a thing):

• NOG's business strategy: participate in the "massive land grab" for leasing rights currently going on in the Williston Basin
• In 2006, Reger got wind of a successful drill site in Mountrail County, an area thought not to be that productive. He founded NOG and immediately began buying up strategically located leasing rights in the surrounding areas, giving him a proportional share of the oil being pumped in exchange for sharing in the upfront cost of drilling
• His first well, 12.5% interest, cost $600,000 up front, and production paid for that working interest in six (6) months "and they'll send us checks on that well for 50 years...That was the 'Eureka!' moment" when he knew the non-operating business model was the way to go
• Realizing he needed to raise more capital quickly to acquire leasing rights, he took the company public in 2007

"Mountrail thought not to be productive"? It has been noted that four townships in Mountrail county currently account for about 50% of North Dakota's annual oil production. 

And this answers another question I often get about the Bakken: how long will a Bakken well last? Michael Regel expects to get royalty checks from that well for 50 years.

Let's see, a stripper well, at 10 barrels/day at $50/bbl = $500/day; $15,000/month.  12.5% of $15,000 = $1,850. About as good as social security. Assuming social security is still around 50 years from now.  

Drilling Range to Extend East

North Dakota spokesman says the Three Forks Sanish extends well beyond the borders of the Bakken formation. He expects oil drilling to move east into Ward County and Minot, North Dakota.

(A reminder: some links remain only for a few days before they are lost to the archives where a subscription might be needed. Some of these subscriptions are free.)

Update, May 22, 2010: this short article about drilling moving toward Minot is being met with skepticism by some. It reminds me of the skepticism of some of the most knowledgeable Bakken geologists just prior to the boom. From another posting:

An interview with Julie Lefever just months before the Bakken boom in 2007 began. The date "March 7" is given but not the date, but it certainly sounds like 2006. Was the article written but not published by the Grand Forks Herald? Regardless, this is an important article for at least two reasons: a) provides a nice overview of what "we" knew about the Bakken just before the boom; and, b) the skepticism (if that's the right word) of perhaps the most knowledgeable person regarding the Bakken just before the boom.

In this article she refers to a new well in Mountrail County as generating a bit of interest in the Bakken. I wonder if this is the same well that propelled Michael Reger and NOG into the "big" leagues?

US Army Corps of Engineers to Put Kabosh on Fracking. UPDATE: Not!

UPDATE, May 22, 2010: The story below was posted May 21, 2010 (yesterday). Today it was announced that the US Army Corps of Engineers will NOT impose a moratorium on new water permits from Lake Sakakawea. Very, very good news.

ORIGINAL POST, May 21, 2010

Earlier this week, I posted a story that there was plenty of water in Lake Sakakawea for fracturing -- that all the water needed for the oil industry represented about two-tenths of one percent of the Missouri River flow.

But it turns out the US Army Corps of Engineers plans to put a hold on any more water coming out of the Missouri.

The corps is proposing a long-term water allocation study that could take at least three years and possibly seven years to complete. During that time, the corps has said, no new lake water intake permits will be issued and existing permits will not be changed for higher capacity.

Yup, anything to destroy the oil industry in this country.

Focus on Dore, North Dakota

NuStar has an oil-loading facility in Dore, North Dakota, shipping oil on the Burlington Northern Santa Fe (BNSF) to St James, Louisiana. 

When I first printed that story, I did not know where Dore was. I had never heard of Dore, North Dakota. This morning, with nothing better to do (with the price of oil in free fall) I decided to find Dore on Google maps.

Dore is located on the road between my home town, Williston, North Dakota, and Fairview, Montana. I have driven that road hundreds of times, often with my dad, sometimes by myself. I never recalled going through Dore. Thinking that Google might be "off" a bit, I checked Mapquest: same result.

Dore is just a few miles north of Fairview on state highway 58, about 30 miles southwest of Williston.

Both Google and Mapquest have satellite images of Dore. From what I can tell there are a few rural, as in farmyard, buildings but that's it. If there's a post office, grocery store, or bar, I would be surprised. Okay, I wouldn't be surprised if there's a bar there.

But the BNSF track does run parallel with the state highway 58 so an oil-loading facility there is entirely plausible.

When googling "Dore, North Dakota," one gets four hits.  Two of the hits are "maps" (Google and Mapquest).  The most interesting hit is:  "How can I sell my timeshare in Dore, North Dakota -- How to get rid..."

Who would have guessed? Time-shares in Dore.

Congress to Quadruple Taxes on Oil

Congress will quadruple taxes on oil to fund the Oil Spill Liability Trust Fund. Specifically, the bill will increase the 8-cent-a-barrel tax that oil companies pay toward the trust fund to 32 cents a barrel, raising $10.9 billion over the next decade.