139

I was heading for bed but wanted to update the blog one last time. I checked the "Current Active Drilling Rig List," saw "139" and moved on, thinking we had already crossed that threshold. But then I noted the "record" which was 138.

Incredible. 136 earlier today and now, at the end of the day (bless those roughnecks), "we're" up to 139, another record.

I just loaded highlights of Whiting's 2Q 2010 earnings. Someone should check my math, but year-over-year their production has increased almost 10,000 barrels/day. At $50/bbl, that works out to $500,00/day increase in cash flow since last year. I don't know about you, but for a small mid-cap company in North Dakota, $500,000/day increase seems like a lot. Again, I may have my calculations wrong; if so, someone will correct me.

Whiting's 2Q 2010 Results

2Q 2010, PowerPoint Presentation

Whiting's 2Q, 2010, Results -- their press release, Investopedia Recap

• Record Production
• Q2 2010 64,600 boe/d up 17% from 55,309 boe/d in Q2 2009
• Q2 2010 daily production up 8% over Q1 2010
• June 2010 65,690 boe/d Up 5% vs. 62,545 boe/d in March 2010
• Production from Sanish and Parshall Fields in North Dakota increases 17% to 27,380 boe/d in June 2010 from 23,365 boe/d in March 2010
• Production from our two EOR projects increases 3% to 17,250 boe/d in Q2 2010 from 16,800 boe/d in Q1 2010
• 2010 Production Guidance Raised to 15% to 17% over 2009
• Net income available to common shareholders of $119.9 million ($2.12 per Diluted Share)
• Adjusted net income of $72.2 Million ($1.31 per Diluted Share)
• Q2 2010 discretionary cash flow totals $228.2 million

The increase in 2010 from 2009 is about 10,000 boe/d. At $50/bbl, that's an increase of $500,000/day. Call me exuberant, but that seems like quite a change in cash flow.

*****

Operations Update: Sanish

• Completed 21 operated wells in Sanish field; bringing to 40 completed wells so far in 2010
• WLL now has 108 wells in the Sanish
• Of the 40 new wells: 36 were Bakken; 26 of these were infill; four were TFS

• Whiting completed two high-volume wells in the Sanish field just before the end of the quarter
• Fladeland 12-10H: 4,126; an in-fill well; 30 fracture stages
• The Fladeland 12-10H was the 3rd highest IP for WLL 
• Maki 11-27, 4,761, October 24, 2009
• Richardson Federal 11-9H, 4,570, October 22, 2008

• Hansen 12-20H, 3,863, 18 fracture stages

At end of quarter

• 11 operated wells were being completed or awaiting completion
• 9 operated wells were being drilled
• WLL intends to drill a total of 90 operated wells in 2010
• Participate in another 8 non-operated wells
• 52 net wells
• Of the 98: 88 Bakken, 10 TFS
• WLL estimates there are at least 57 Bakken wells and 128 TFS wells yet to be drilled in the Sanish field

Cost and Time
$5 million/well
Time to drill to depth (20,000 feet), including 10,000 foot laterals: average, 20 days
Two wells drilled in 15 days (from spud date to total depth)
With an average of 19 fewer days on site, WLL saves about $900,000/well in drilling costs

Takeaway
Saving $1 - $2/bbl shipping in Enbridge pipeline rather than by truck
Enbridge will add takeaway capacity in first quarter 2011

Operations Update: Lewis and Clark (Golden Valley, Billings, Stark Counties)
Adding to acreage: now potential for at least 500 wells that could target the TFS
Federal 32-4HBKCE, 1,970; 51,000 boe in first six months of production; TFS

Let Them Eat Cake

I can understand why many folks in this country feel the tax cuts on the "rich" need to expire.

In a country where single moms worry about the cost of routine health care for their babies, I have to agree that something is way out of proportion when a single wedding cake will cost $11,000.

I truly hope everyone enjoys their cake.

"Let them eat cake." Wow, does that sound familiar.

[This is not political: I would say the same thing regardless of whose wedding it was.]

The Bakken: It's Not Just In the Williston Basin -- Calgary Herald

This is just a reminder for newbies that "the Bakken" may exist beyond the Williston Basin.

Most folks, including me, generally think of the Bakken in the Williston Basin: North Dakota, eastern Montana, and Saskatchewan. But it turns out it may extend west in Canada to Alberta.

In the wake of swirling rumours about a new Bakken shale oil play in southern Albert -- possibly the driving force behind $48 million spent for five parcels north of Lethbridge in the last provincial drilling rights sale -- come a pair of analysts' research reports praising the formation.

We'll see.

 

TechTicker: Oil Prices Stabilize; EOG, APA, NOG Benefit

This is purely an investment press release from TechTicker. Take it for what it's worth.

Chris Edmonds, managing principal at FIG Partners Energy Research & Capital Group, says [oil] prices are likely range-bound for the time being. Current prices suggest healthy demand but he doesn’t expect prices to go much higher than $80 “until we get more clarity on the economy.”

Goldman Sachs says current prices are too cheap – telling clients this week prices are significantly lower than fundamentals warrant.

"Those who have resources to drill and exploit are those who will perform best over long periods of time," Edmonds tells Aaron in this interview.  Based on that he recommends investing in Apache, EOG Resources and Northern Oil and Gas.

Disclosure: Edmonds' firm has an investment banking relationship with Northern Oil & Gas.  He does not own shares of any of the stocks mentioned.

The article caught my eye for two reasons:

• There's a huge difference between EOG and NOG.
• I have shares of NOG but do not hold EOG or APA.

Had NOG not been mentioned, I may not have posted this particular story.

Coast Guard Out of Its Depth in Fighting Oil Rig Fires

Coast Guard admits it does not have expertise to fight oil rig fires and that its actions may have contributed to sinking of the rig in the gulf.

The Coast Guard also pressured BP into removing the "temporary seal" despite the fact that it worked and was working at the time Thad Allen wanted it removed. The Coast Guard lost that battle.

I can't make this stuff up.

The key paragraphs which will tie this thing up in court for years:

The question of what caused the platform to collapse into the Gulf two days later remains unanswered and could prove vital to ongoing legal proceedings and congressional investigations.

That is because the riser pipe from which the majority of BP’s oil spewed did not start leaking until after the rig sank. Experts and some lawsuits have openly tied the sinking of the drilling vessel to the severity of the leak. 

Yup.

ND Oil Patch Sets New Production Record

Bismarck Tribune:

North Dakota's oil patch is turning out about 300,000 barrels of crude per day, or double the state's production two years ago.

Lynn Helms, director of the state Department of Mineral Resources, said the state produced a record 9.2 million barrels in May, up from 8.5 million barrels in April, the latest figures available because oil production numbers typically lag at least two months.

Preliminary reports suggest production in July is about 310,000 barrels/day.

This link is likely to be broken in the near future, requiring a password, possibly paid, to access archives.

State On Pace for Active Rig Record

Williston Herald:

North Dakota Oil and Gas Division Director Lynn Helms said the level of oil activity is approaching full capacity for the infrastructure the state has to handle it. However, he expects the activity to continue to climb.

Helms states infrastructure can support about 150 active rigs. The highest number of rigs reported in the current boom has been 138, just a couple days ago. Today it is 136, but the number varies on a daily basis as rigs are moved or refurbished.

Helms states that it will take two to three years for infrastructure to catch up to be able to support 175 rigs.

The all-time record for active rigs in North Dakota was 146 in October, 1981. However, that is comparing apples to oranges. Those rigs were drilling vertical wells; it is said that some of the current horizontal wells are equal to eight of those 1980's vertical wells.

This link is likely to be broken in the near future, requiring a password, possibly paid, to access archives.

Hess To Buy American Oil and Gas

All stock transaction.

Premium for AEZ: 9%.

Comments should be entertaining.