This is interesting. No fanfare. No announcement. In today's daily activity report (October 19, 2010), file number 18544, CLR, Kennedy 2-31T, SWSE 31-151N-96W, McKenzie County, 1,925 feet, Dimmick Lake: a dry hole.
Rare as hen's teeth: dry holes in the current boom in western North Dakota. Non-economical, occasionally, but "never" a dry hole.
This was CLR's first Eco-Pad, I believe, and one can find numerous postings about this well on this blog, by using the search application to find the Kennedy 2-31T.
Looking at the GIS Map Server, the other three wells on this Eco-Pad are long laterals and producing. There is a new permit/file number right next to the failed Kennedy 2-31T: #18946, Kennedy 2X-31H. My hunch: a drilling problem with Kennedy 2-31T. Kennedy 2X-31H is the "replacement."
More to follow, I'm sure.
Tuesday, October 19, 2010
How Does Bakken Compare With Oklahoma?
Petro-Hunt is using the same technology in both the Bakken in North Dakota and in their shale holdings in Oklahoma: horizontal drilling and fracturing of shale for oil.
For newbies, Bakken wells produce about 500 - 1,000 barrels/day for the first few days, and then drop off significantly to plateau at about 200 to 300 bopd. It is common to see 30,000 to 75,000 barrels of oil in the first three months which equals 800 barrels per day for the first 90 days. (Many wells do much, much better, but there don't seem to be many wells below the 30,000 mark, or 300 bopd for the first 90 days. I assume I will get many comments for these numbers, and/or chuckling by those much smarter than I.)
Anyway, with that background, Petro-Hunt announced today that it has completed another well in the North Oklahoma Oil Project today.
For newbies, Bakken wells produce about 500 - 1,000 barrels/day for the first few days, and then drop off significantly to plateau at about 200 to 300 bopd. It is common to see 30,000 to 75,000 barrels of oil in the first three months which equals 800 barrels per day for the first 90 days. (Many wells do much, much better, but there don't seem to be many wells below the 30,000 mark, or 300 bopd for the first 90 days. I assume I will get many comments for these numbers, and/or chuckling by those much smarter than I.)
Anyway, with that background, Petro-Hunt announced today that it has completed another well in the North Oklahoma Oil Project today.
There are two pay zones, an upper zone and a lower zone. Based on the "oil shows" and "swab testing", the lower zone "will produce in excess of the No. 1 well which tested at 80 bopd under similar conditions. Engineers believe flow rates from the oil shale zone combined with the upper pay zone could ultimately result in over 200 bopd of production."Because I don't understand oil jargon completely and I certainly don't understand the Oklahoma shale oil, some of the above may be a bit off. But if there is any apple-to-apple comparison allowed between the Oklahoma shale and the Bakken shale, I find the Oklahoma production interesting.
Earl 1-13H, Samson Oil and Gas, Reaches Total Depth
Holy mackerel, as we used to say, there's a huge amount of news coming out of the Bakken today. I think this is my seventh posting so far today. Be sure to scroll down to catch all the stories.
This post from Rigzone:
This story in and of itself is not all that important in the big scheme of things. I post it for two reasons. First, it was published in Rigzone which tells me there is international interest in what is going on in the Bakken (duh); and, I have a soft spot in my heart for the guys (and gals) associated with this small company (market cap = $85 million). Each well must feel like a very personal success.
I certainly hope I don't have Samson Oil and Gas mixed up with Samson Resources, smile.
The Earl 1-13H is just east of Williston; the operator is Zavanna, LLC, and the rig is Nabors 587.
This post from Rigzone:
Samson Oil and Gas announced that the Earl 1-13H reached total depth of 17,342 feet early on October 18 (that would be yesterday). It is a short lateral, so a rather deep hole before they went horizontal.The well is being prepared for a four-inch liner to fracture stimulate 20 stages.
This story in and of itself is not all that important in the big scheme of things. I post it for two reasons. First, it was published in Rigzone which tells me there is international interest in what is going on in the Bakken (duh); and, I have a soft spot in my heart for the guys (and gals) associated with this small company (market cap = $85 million). Each well must feel like a very personal success.
I certainly hope I don't have Samson Oil and Gas mixed up with Samson Resources, smile.
The Earl 1-13H is just east of Williston; the operator is Zavanna, LLC, and the rig is Nabors 587.
NDIC Town Hall Meetings
In early October, the NDIC took their show on the road in the form of a series of "Town Hall Meetings" and the result was a series of nice presentations.
The link is at the top of the sidebar on the right, where it will remain for a month or so, and then will be moved permanently to the "Data Links" tab at the top of the blog.
The link is at the top of the sidebar on the right, where it will remain for a month or so, and then will be moved permanently to the "Data Links" tab at the top of the blog.
Thirteen (13) New Permits Issued Today (Bakken, ND, USA)
This has been an incredible day in the Bakken. I still have lots to do to catch up.
Maybe more on this later, but today there were thirteen (13) more permits issued in the North Dakota Bakken, representing ten different companies: Petro-Hunt (3); Zenergy (2); and, one each for Anschutz, Peak, Marathon, Burlington Resources, CLR, EOG, URSA, and KOG. With thirteen new permits today, we are on our way to 1,518 new permits by the end of this calendar year.
The new permits were in these fields: Reunion Bay, Heart Butte, Banks, Ray, Lake Ilo, North Tioga, East Tioga, Bailey, Elidah, Painted Woods, Grinnel, and South Fork. There was one wildcat.
In addition to these permits, IPs for five nice new wells were released (and reported earlier at this site).
Maybe more on this later, but today there were thirteen (13) more permits issued in the North Dakota Bakken, representing ten different companies: Petro-Hunt (3); Zenergy (2); and, one each for Anschutz, Peak, Marathon, Burlington Resources, CLR, EOG, URSA, and KOG. With thirteen new permits today, we are on our way to 1,518 new permits by the end of this calendar year.
The new permits were in these fields: Reunion Bay, Heart Butte, Banks, Ray, Lake Ilo, North Tioga, East Tioga, Bailey, Elidah, Painted Woods, Grinnel, and South Fork. There was one wildcat.
In addition to these permits, IPs for five nice new wells were released (and reported earlier at this site).
KOG Acquires Significantly More Acreage: EUR at $50/boe = $1.7 billion?
Here's the link. On first glance, this looks huge for KOG.
See also: SeekingAlpha (author misspells McKenzie County).
Some data points:
KOG's current spacing model for this area:
The new acreage adds nearly 60 net unrisked drilling locations
Including the acquisition, KOG will have over 200 net undrilled locations in the MB and TFS formations.
Rawhide, The Blues Brothers
EUR for each of these wells? a conservative 500,000 boe
Back-of-the-envelope calculations:
(please let me know if my math is wrong):
EUR calculations:
Or you can do the math a different way. KOG says this acquisition results in 60 unrisked drilling locations:
See also: SeekingAlpha (author misspells McKenzie County).
Some data points:
- Seller: unnamed private oil and gas company (any idea? here's a list of possible candidates)
- Cost: $99 million in cash and 2.75 million shares to the seller for $4.00/share
- There is no mention of issuance of new shares to help pay for this
- KOG will acquire 19,016 gross (11,742 net) acres in McKenzie County, midway between KOG's core Dunn County operating area and KOG's Koala Project area
- KOG will also acquire 4,117 gross (2,752 net) acres in northern Williams County and southern Divide County, located just north of BEXP's Rough Rider area
- Bottom line: the deal will expand KOG's acreage position in the Williston Basin to over 72,000 net acres
- Before this acquisition, 57,506 net acres. 14,494 net acres in this deal, represents 25% of KOG's pre-acquisition acreage. 25%. It's easier for a small company to double in size than a big company.
- The deal adds four wells currently producing 500 net boe per day
- The deal includes a pipeline that feeds into a regional natural gas pipeline
KOG's current spacing model for this area:
- 1,280-acre unit spacing
- Three (3) Bakken wells per unit; and,
- Three (3) Three Forks wells per unit.
- Total: six wells in each 1,280-acre spacing unit.
The new acreage adds nearly 60 net unrisked drilling locations
Including the acquisition, KOG will have over 200 net undrilled locations in the MB and TFS formations.
Rawhide, The Blues Brothers
EUR for each of these wells? a conservative 500,000 boe
- 500,000 x 6 = 3 million barrels per 1,280 acre spacing unit
Back-of-the-envelope calculations:
(please let me know if my math is wrong):
- $99 million + (2.75 million shares x $4.00) = $99 + $11 = $110 million
- Net acreage: 11,742 + 2,752 net = 14,494 net acres
- Price per net acre: $7,589/net acre
EUR calculations:
- Each 1,280-acre spacing unit with six wells
- 500,000 x 6 = 3 million boe per 1,280-acre spacing unit
- 14,494 net acres/1,280-acre spacing units = 11.3 spacing units
- 11.3 spacing units x 3 million boe = 33.9 million boe over the lifetime of this new acquisition
- At $50/boe x 33.9 million boe = $1.695 billion.
Or you can do the math a different way. KOG says this acquisition results in 60 unrisked drilling locations:
- 60 x 500,000 = 30,000,000 boe over the lifetime of the 60 wells
- $50/bbl x 30 million boe = $1.5 billion
- $1.5 billion almost identical to $1.7 billion
- And that's assuming the price of oil doesn't appreciate over the next 20 years.
Investopedia Highlights a "Bakken" Levered Fund -- for Investors Only
Investopedia's Eric Fox highlights an open-end fund that he says is "levered to the Bakken." My first look at the fund made me dubious, but closer analysis suggests a very interesting fund for those interested in the Bakken and energy in general. Shortly after posting the note below (literally within minutes), I was sent a link with more information regarding the fund's holdings.
The original post remains, but you may want to cut to the chase and just look at the fund's top 25 holdings which represent 65% of the fund's total assets. Very, very interesting.
One of the nice things about this fund is the fact that the more speculative plays are offset by some very, very good big cap companies.
I am not making any investment advice, but over coffee, I would certainly mention to my friends to take a look at the fund. Here's the link: http://www.integrityvikingfunds.com/PortalIntegrityFunds/DesktopModules/ViewDocument.aspx?DocumentID=59 or click here.
This is more for newbies than for seasoned investors. Do not take this as investment advice. I was just curious if I could find out more about a fund that was highlighted in Investopedia today.
Investopedia's Eric Fox highlights an open-end fund that he says is "levered to the Bakken."
The fund is the Integrity Williston Basin Mid-North America Stock Fund (ICPAX).
If you look at the Yahoo!Finance, you will see strange names associated with a fund that bills itself as a "Bakken fund." However, Yahoo!Finance has outdated information.
The following is outdated: According to Yahoo!Finance, the top ten (10) holdings which account for 47% of all assets (each of these are 4 - 6% of the total portfolio, each about 5% for round numbers) (this is outdated; these are no longer the top ten holdings of ICPAX, although still listed as such at Yahoo!Financial):
However, updated information shows something completely different: According to an on-line brokerage report, these are now ICPAX's top ten holdings (they account for 28% of ICPAX holdings). Each of these holdings represent about 2.75 to 3% of its total holdings (about 2.75% rounding off):
Hess, by the way, has bought AEZ.
According to the report, 27% of the portfolio is large cap (I can't think of many large cap stocks with significant exposure to the Bakken) and 7% with giant cap (possibly SLB, XOM, HAL, COP with exposure in the Bakken). Small cap and micro cap make up 38% of the portfolio and that's where the bulk of Bakken companies are, I suppose, with some mid-cap companies.
It will be interesting to see the prospectus to see what makes up the rest of the portfolio (70% of the portfolio). Since some of the best "Bakken" companies are already listed, I have trouble thinking of thirty to fifty other companies that would be "Bakken." But I may be wrong. I will be watching for the new prospectus.
Other information:
According to Yahoo!Finance this fund has an expense ratio of 1.5% (category average: 1.47%) which includes a maximum front end sales load of 5.00% I assume the maximum would be incurred for smaller investments, which means one's investment is automatically reduced by 5% on the day the investment is made. It appears there is no "deferred sales load."
The original post remains, but you may want to cut to the chase and just look at the fund's top 25 holdings which represent 65% of the fund's total assets. Very, very interesting.
One of the nice things about this fund is the fact that the more speculative plays are offset by some very, very good big cap companies.
I am not making any investment advice, but over coffee, I would certainly mention to my friends to take a look at the fund. Here's the link: http://www.integrityvikingfunds.com/PortalIntegrityFunds/DesktopModules/ViewDocument.aspx?DocumentID=59 or click here.
The Original Blog
This is more for newbies than for seasoned investors. Do not take this as investment advice. I was just curious if I could find out more about a fund that was highlighted in Investopedia today.
Investopedia's Eric Fox highlights an open-end fund that he says is "levered to the Bakken."
The fund is the Integrity Williston Basin Mid-North America Stock Fund (ICPAX).
If you look at the Yahoo!Finance, you will see strange names associated with a fund that bills itself as a "Bakken fund." However, Yahoo!Finance has outdated information.
The following is outdated: According to Yahoo!Finance, the top ten (10) holdings which account for 47% of all assets (each of these are 4 - 6% of the total portfolio, each about 5% for round numbers) (this is outdated; these are no longer the top ten holdings of ICPAX, although still listed as such at Yahoo!Financial):
- Shaw Communications (SJR): cable and digital communications; based in Calgary, Canada.
- Ormat Technologies (ORA): geothermal energy; based in Reno, Nevada.
- Teleflex Incorporated (TFX): medical devices; based in Limerick, Pennsylvania.
- ESCO Technologies (ESE): metering for utilities; based in St Louis, Missouri.
- Hess
- Sigma-Adrich Corporation (SIAL): medical chemicals; based in St Louis, Missouri.
- Agrium Incorporated (AGU): agricultural products; based in Calgary, Canada.
- Techne Corporation (TECH): biotechnology; based in Minneapolis, Minnesota.
- Thermo Fisher Scientific Incorporated (TMO): biomedical equipment; based in Waltham, Massachusetts.
- Stillwater Mining Company (SWC): palladium, platinum mining; based in Columbus, Montana.
However, updated information shows something completely different: According to an on-line brokerage report, these are now ICPAX's top ten holdings (they account for 28% of ICPAX holdings). Each of these holdings represent about 2.75 to 3% of its total holdings (about 2.75% rounding off):
- EOG (3.04%)
- CLR( 2.90%)
- BHI: an oil-service company that operates worldwide (2.84%)
- CRR (Carbo Ceramics, Inc): operates worldwide (2.81%)
- AEZ (2.80%)
- BEXP (2.80%)
- WLL (2.80%)
- ENB (2.73%)
- OAS (2.73%)
- LUFK: an oil-service company that operates worldwide (2.66%)
Hess, by the way, has bought AEZ.
According to the report, 27% of the portfolio is large cap (I can't think of many large cap stocks with significant exposure to the Bakken) and 7% with giant cap (possibly SLB, XOM, HAL, COP with exposure in the Bakken). Small cap and micro cap make up 38% of the portfolio and that's where the bulk of Bakken companies are, I suppose, with some mid-cap companies.
It will be interesting to see the prospectus to see what makes up the rest of the portfolio (70% of the portfolio). Since some of the best "Bakken" companies are already listed, I have trouble thinking of thirty to fifty other companies that would be "Bakken." But I may be wrong. I will be watching for the new prospectus.
Other information:
According to Yahoo!Finance this fund has an expense ratio of 1.5% (category average: 1.47%) which includes a maximum front end sales load of 5.00% I assume the maximum would be incurred for smaller investments, which means one's investment is automatically reduced by 5% on the day the investment is made. It appears there is no "deferred sales load."
Top MLPs Ooutperform: For Investors Only
About a year or so ago when I got serious about investing in the Bakken, and needed to raise some cash quickly, I looked into some high-dividend payers / high-distribution payers. I never expected share price to appreciate, so I have been pleasantly surprised.
Here is a nice link with an update on MLPs.
Here is a nice link with an update on MLPs.
Five Wells Reported Today: All With Nice IPs (Bakken, ND, US)
18791, 1,578, BEXP, Abe 30-31H, Painted Woods, just west of Williston
18731, 1,434, Tracker, Wing 1-1H, Little Knife,
17326, 3,199, WLL, Lacey 12-1H, Sanish, 43K in first three months; big decline rate
17872, 1,814, WLL, Littlefield 12-34H, Sanish, 90K in first three months, huge well
18536, 1,441, WLL, Olson 11-14TFH, Sanish, 35K in first 2.5 months, a Three Forks well
One of these was a Three Forks Sanish well, obviously.
Note the nice first three months for the Littlefield -- 90,000 barrels in the first three months. At $50/month, that's almost $5 million. This well should be paid for at the wellhead by the end of the first six months.
Perhaps one of the smaller working partners will shed light on how the wells were completed: stages or fracturing and type of fracturing.
For complete list of high initial production wells, click here.
18731, 1,434, Tracker, Wing 1-1H, Little Knife,
17326, 3,199, WLL, Lacey 12-1H, Sanish, 43K in first three months; big decline rate
17872, 1,814, WLL, Littlefield 12-34H, Sanish, 90K in first three months, huge well
18536, 1,441, WLL, Olson 11-14TFH, Sanish, 35K in first 2.5 months, a Three Forks well
One of these was a Three Forks Sanish well, obviously.
Note the nice first three months for the Littlefield -- 90,000 barrels in the first three months. At $50/month, that's almost $5 million. This well should be paid for at the wellhead by the end of the first six months.
Perhaps one of the smaller working partners will shed light on how the wells were completed: stages or fracturing and type of fracturing.
For complete list of high initial production wells, click here.
Short Video Recommendation for Hess, Marathon, others
I don't care for video news, too transient, but this is a quick overview of oil companies and oil service companies for investors with oil at $80. The analyst starts off with Hess as a turnaround story, and if pressed to name one company she would recommend for investors with one oil-related company to buy ... after ... being prompted to say COP ... the analyst clearly stated Marathon (MRO).
The common theme in this interview: oil shale, but did not mention the Bakken by name, but it was obvious it was the Bakken, the Niobrara, and the Eagle Ford
Another common theme: lots of cash is building in the economy, important for these high CAPEX industries.
The common theme in this interview: oil shale, but did not mention the Bakken by name, but it was obvious it was the Bakken, the Niobrara, and the Eagle Ford
Another common theme: lots of cash is building in the economy, important for these high CAPEX industries.
Williston Library Receives State-of-the-Art Flat Screen Computers
This is a very big story for me. I am a regular visitor to the Williston Public Library when I visit the Bakken.
I depend on the computers at the library to maintain the blog, and more importantly, I read the back issues of the Rocky Mountain Oil and Gas Journal. In the summer of 2008, I read two years of back issues, and that's when I got interested in the Bakken and started investing in the Bakken.
Generally speaking, the library had enough computers available that I did not have to wait to use one; with the addition of four more, it should be even nicer. The computers were part of a grant from the Bill and Melinda Gates Foundation. Awesome.
I'm impressed with the library; one of the better ones I've visited over the years. The staff is particularly helpful.
I depend on the computers at the library to maintain the blog, and more importantly, I read the back issues of the Rocky Mountain Oil and Gas Journal. In the summer of 2008, I read two years of back issues, and that's when I got interested in the Bakken and started investing in the Bakken.
Generally speaking, the library had enough computers available that I did not have to wait to use one; with the addition of four more, it should be even nicer. The computers were part of a grant from the Bill and Melinda Gates Foundation. Awesome.
I'm impressed with the library; one of the better ones I've visited over the years. The staff is particularly helpful.
Enerplus Completes Acquisition
Enerplus announcement to acquire 46,000 net acreage in Fort Berthold Indian Reservation was previously reported. [Update: "anonymous" wrote to tell me the seller was Simray; November 29, 2010.]
This acquisition has now been completed. ERF now has 70,000 net acres in the FBIR area.
ERF has 170,000 net acres in the Saskatchewan Bakken and 197,000 acres in the Marcellus (natural gas).
Production figures blow me away:
This is all part of ERF's plan to go corporate. I first got interested in ERF as a high distribution Canadian royalty trust. Due to changing Canadian tax laws, ERF changed its focus. My hunch: max cash return to their investors is in their blood. ERF's annual operating cash flow is reported to be $740 million.
This acquisition has now been completed. ERF now has 70,000 net acres in the FBIR area.
ERF has 170,000 net acres in the Saskatchewan Bakken and 197,000 acres in the Marcellus (natural gas).
Production figures blow me away:
Current production from this project is approximately 4,000 bbls/day. As drilling plans are executed over the next five years, production is expected to grow to over 20,000 boe/day.At $50/bbl, that's $200,000/day, more than a million/week now; one million dollars/day if price of oil doesn't appreciate over the next five years.
This is all part of ERF's plan to go corporate. I first got interested in ERF as a high distribution Canadian royalty trust. Due to changing Canadian tax laws, ERF changed its focus. My hunch: max cash return to their investors is in their blood. ERF's annual operating cash flow is reported to be $740 million.
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