Monday, November 22, 2010

Ten (10) New Permits -- North Dakota, USA

Operators: American (3), Whiting (3), CLR, Tracker, North Plains, Oil for America.

Fields: Truax, Ray, Sanish, Gaylord, and five (5) wildcats.

Whiting has two in the Sanish, and one in Stark County. Two of American Oil's permits are wildcats, I assume in the same area as the rest of their wells, west of Ray. The third American Oil permit is in the Ray field.

Interestingly enough, the Oil for America permit is also a wildcat, in Stark County.

A Big Thank You To Someone (He/She Knows Who I'm Talking About)

In a few days, I will probably delete this particular post because it's a bit personal and a bit treacly, but I owe someone a huge thank you. 

This references my posting and the subsequent comments about a group of Sagebrush wells, one of which was in the news today.  Sagebrush reported the results of one of the wells, and based on what I read / misread, I assumed the well was a vertical well, and not a horizontal well.

Someone wrote a note to tell me it was a horizontal well. I was rushed, taking care of my grandchildren, and did not take enough time to do the research to prove that, in fact, that was true. I was argumentative, suggesting that I was correct, that it had to be a vertical well. But the individual hung in there, and explained to me that the wells are indeed shallow wells and yes, the well was a horizontal. I was wrong; he/she was right.


I went back and saw that the evidence was there, had I just taken the time to read it. 

I have re-written parts of the original posting to make sure anyone who reads it knows the Erickson / Madison well is indeed a horizontal well -- but the post and the comments might seem a bit confused.

So, I owe one of my readers a huge thank you for sticking with me. I learned a lot, as I do every day with this blog.

Thank you.

Hess Acquires TRZ LLC for Cash -- Bakken, North Dakota, USA

December 29, 2010; deal completed: Hess Wraps-Up $1.05 Billion Bakken Acreage Acquisition, December 29, 2010.

Link here. See comments below regarding who/what TRZ is. It should be the third comment down. [Following original post, more information came out; click here; at this site, scroll down to Hawkeye Spud.]

This is a Reuters story.

Subhead: "Follows $445 million acquisition in July same region; comes only a week after Williams Cos' $925 million deal there"

This, to me, is just another example of the "big boys" starting to get really interested in the Bakken, and more importantly for those bullish on oil, that they are feeling comfortable about where the price of oil is headed.

I started talking about this about two months ago that I expected to start seeing more mergers, acquisitions, acreage deals; very, very interesting to see it happening so soon.

The Hess deal:
  • Increasing "its already large bet on the oil-rich Bakken shale formation"
  • A $1.05 billion deal
  • Acquires 167,000 net acres from TRZ Energy LLC
  • The newly acquired acreage is near its existing acreage
  • New acquisition has current net production of 4,400 bbls/day
  • $1,005 million / 167,000 acres = $6,000 / acre
Hess recently announced its intention to buy American Oil and Gas (announced in July, 2010)

Hess' financials according to Yahoo!Financial:
  • Market cap: $23 billion
  • P/E: 9.4
  • Total cash: $2.35 billion
  • Total debt: $5.58 billion
  • Operating cash flow: $4.32 billion (trailing twelve months)
Williams Cos just bought its first North Dakota Bakken acreage this past week and ERF bought additional Bakken acreage just a few months earlier.

The $6,000 / acre (Hess/TRZ) is less than the $8,000 to $10,000 / acre paid by WMB and ERF in recent deals.

Reuters again stated: among the oil shales [around the world], "the Bakken has the highest crude oil content..."

Note: in the article, it was noted that "Marathon's chief executive said this month his company would focus more on Oklahoma's Woodford shale next year because it represented better value than the Bakken."

Investors Only -- EPD to Build Crude Oil Terminal In Houston -- Not a Bakken Story

Actually, I was hoping this would be a Bakken story. I was  hoping that EPD was building a crude oil terminal in Houston for Bakken oil, but not to be.

EPD is building a crude oil terminal in Houston for the growing production coming out of south Texas, Eagle Ford. By the way, some Bakken companies are involved in this new shale oil basin.
EPD has Eagle Ford crude delivery agreements in place with EOG Resources Inc., Pioneer Natural Resources USA Inc., Reliance Eagleford Upstream Holding LP, and Newpek LLC. 
EPD is one of the few companies outside the Bakken that I invest in and will post updates on this blog.

Sagebrush Madison Wells in Bottineau County -- North Dakota, USA

This is kind of interesting, and will be fun to follow. Sagebrush has a group of wells, in various stages of being spudded, completed, and planned, in Bottineau County targeting the Madison Pool, which, I believe, has produced the most oil in Williston Oil Basin since oil discovered in North Dakota in 1951.

Bottineau County is also where EOG is targeting the very shallow Spearfish formation with a group of wells, including many of the Scandia series.

The Sagebrush wells in the Renville field are a bit to the southwest of the EOG/Spearfish wells in the Souris field.

Here are the Sagebrush wells, all within a Brett Favre throwing distance of each other:
  • 19139, Erickson Et Al 1A
  • 19027, Erickson Et Al 1B, 111, reported out November 22, 2010
  • 19141, Erickon Et Al 3A
  • 19143, Erickson Et Al 2B
  • 19028, Erickson Et Al 3B
  • 19140, Erickson Et Al 4B
  • 19142, Erickson Et Al 4A
An original paragraph here, now deleted, anticipated that these were vertical wells. I have been told that they are horizontal wells; see comment below. If so, this is a most unusual grouping of wells.

*****

See comments below: to update folks -- I had originally thought 19027, Erickson Et Al 1B must have been a vertical well and my original post said that. I was wrong; someone wrote in to point out to me that the Madison wells are very shallow and the laterals are very short, see comments below. I owe someone a huge thank you.

Some Nice Wells Being Reported -- North Dakota, USA

Some nice wells being reported today:

19027, 111, Sagebrush, Erickson Et Al 1 B, Renville, Madison (not the Bakken), 7K in 3 mos

18927, 815, EOG, Mandaree 2-09H, Squaw Creek, Bakken

17997, 1,191, EOG, Liberty 6-25H, Van Hook, Bakken, 61K in first 3 months

18795, 1,074, CLR, Bonney 2-3M, Jim Creek, Bakken

For newbies, that IP of 111 reported by Sagebrush seems low, but this is in the Madison formation. I assume the Madison is still being targeted with vertical wells. I don't have enough feeling for Madison wells but based on limited data points, this looks like a nice well. For more on the Sagebrush Madison wells in Renville field, click here.