Bakken Breakout, 2009

For newbies: this is a must-read article -- published back in 2009.  It's posted in the sidebar at the right, but I know a lot of folks don't go back and read all that is posted here, so thought this was worth it -- to post again.

Read this 5-page article in light of what is going on in the Bakken today. Back then, in 2009, CLR had 5 rigs operating in the North Dakota Bakken. Today, it has 20 rigs and is the biggest player in the Bakken.

Also, great look back at BEXP and especially GeoResources.

There is incredible activity that is going on in this part of the world. Enjoy.

For Investors Only: Bonds Vs Dividends (Not a Bakken Story)

Finally, someone with more credibility than I have is writing what I have been thinking about for a long time.

Bonds vs dividends.

A story about folks snapping up Wal-Mart bonds.

Take a look at the bond issue. Wal-Mart sold $750 million worth of three-year bonds paying 0.75% a year. It sold $1.25 billion of five-year bonds paying 1.5%, $1.75 billion of 10-year bonds paying 3.25% and $1.25 billion of 30-year bonds paying 5%.

Remember that those bond coupons are subject to two hidden costs.

First, bond interest is taxed as ordinary income. That means that if the bonds are held in a taxable account, they will be taxed up to 35% right now -- and as high as 39.6% next year if the Bush tax cuts expire as planned.

Second, bonds face a serious risk from inflation. Who wants a piece of paper paying 5% a year for 30 years if inflation jumps to 7%? Nobody. If that happens, the price of the bond would plummet.

Compare that to common shares of Wal-Mart and their dividend.

Not Sure Yet What to Make of This One: Slawson's Crusader 1-16H

18619, Slawson, Crusader 1-16H, 84.

More to follow, I'm sure. This one was in the very prolific Van Hook oil field, on the west side of the lake. Not sure what to make of it.

Thirteen (13) New Permits in the Bakken Today; First Multi-Well Pads for XTO? (Bakken, ND, USA)

New permits for: XTO (5), Whiting (2),  and one each for CLR, EOG, Sinclair, BEXP, Newfield, and Petro-Hunt.

I opined sometime ago that the takeover of XTO by XOM results in huge cash flow from the latter, and possibly will be translated into increased XTO activity in the Bakken, In addition, the "talking heads" on CNBC's Fast Money today suggested that XOM's earnings will be hurt by its exposure to natural gas. If that is true, then perhaps this burst of activity by XTO is directly related to XOM purchase. Obviously, whatever XTO does in the Bakken will be a very small piece -- a very small piece -- of all XOM does. But it was a surprise to see five permits for one operator, and to an operator not often seen on a daily basis.

The fields: Heart Butte (4 -- by all XTO), Gaylord (2), and one each in Upland, Van Hook, Midway, Parshall, Camp, Pembroke, and one Wildcat. Gaylord is in Stark County -- these are near South Heart, an area of recent new interest. Both Gaylord field wells are Whiting permits.

Four of the XTO wells: two pair of wells on two pads (or, two pads, with two wells on each pad):

• 19800, FBIR Beaks 24X-8
• 19801, FBIR Huntsmedicine 24X-8
• 19805, FBIR Stephen 31X-19
• 19806, FBIR Bird 31X-19

Are these the first multi-well pads for XTO? I don't know know, but I don't recall other multi-well pads for XTO.

Newfield had another good well: 1,797, Clear Creek Federal 1-25, McKenzie County.
BR had a nice well: 1,833, Amanda 21-14H, McKenzie County.

BEXP and Hess

A long time ago I raised this issue on this site. If you want to see previous posting on this subject, use the search application on this blog site and type in "lackluster."

Interesting to see this issue being voiced by others.

I am just including the link.

I am not passing judgment, nor going to make any comment.

Newfield's Current Presentation

Newfield's current presentation.  This is a PDF download.

Conference call, click and listen to the 3Q10 earnings conference call.

From the presentation:

• Switching emphasis from natural gas to oil


• Eagle Ford Shale in Texas: wow this is a huge area -- the center of activity that I was aware of was south and southeast of San Antonio, but Newfield's Eagle Ford prospects are on the southwestern border of Texas; this is truly a huge area; other players -- Shell, Chesapeake
• Acreage acquired in Eagle Ford: about $725/acre


• Huge area in Southern Alberta Bakken (Lodgepole, Bakken, and Three Forks Sanish); Browning, MT, at the center of activity

With regard to investing, I missed getting into Newfield some months ago. But it still looks very, very enticing: Williston Basin, Utah, and Southern Alberta Bakken. I currently do not hold any shares in Newfield and have no plans to acquire any in the near future.

Top-Five Tax Friendly States (Not a Bakken Story)

I have previously posted my sentiments regarding North Dakota's budget, the surplus, the fact that the state is taking in tax royalty at unprecedented rates, blah, blah, blah.

But with all that, North Dakota does not even make it to the top five tax-friendly states for retirees, according to Kiplinger. These are the top five tax-friendly states for retirees: Alaska, Wyoming, Michigan, Pennsylvania, and Colorado.

Look at the property taxes in Wyoming:

Retirees don't pony up much in taxes in the Cowboy State. Thanks to the abundant revenues that Wyoming collects from oil and mineral companies, residents shoulder the lowest tax burden of any state except Alaska, according to the Tax Foundation. Prescription drugs and groceries are exempt from state sales taxes. For most property, only 9.5% of market value is subject to tax, so a home worth $100,000 is taxed on $9,500 of assessed value.

Wyoming is high on my list. One of the best years of my life was an overnight stay in Rock Springs some years ago.




But what really surprised me was that Texas did not make it to the top five. It must be their property tax rates because Texas has no state income tax. Nor does South Dakota or Florida, to the best of my knowledge. With the fiscal problems that Pennsylvania has (Harrisburg is technically bankrupt), it is amazing that it makes the top five. Whatever.

Another link regarding this issue, click here. 

On a positive note, Schlumberger's earnings soar.