Wyoming Niobrara To Add 100 Wells Next Year -- Compare to Bakken

Wyoming Niobrara to add 100 wells next year.

The ND Bakken? 1,500 wells, is my estimate.

165 rigs x 10 wells/rig/year = 1,650 wells.

Number of new permits in North Dakota for 2010: on track for more than 1,600 permits.

Many of the Niobrara wells will be exploratory wells; most of the Bakken wells will be development wells. North Dakota has nearly a 100% success rate in the Bakken; success rate in Niobrara yet to be seen.

Turning Point: Switch from Coal to Natural Gas

Finally, mainstream media agrees: power plants switching from coal to natural gas; turning point reached. December, 5, 2010; New York Times.

Whiting's Current Presentation

Whiting's current presentation.

Without question, WLL presentations have some of the best photographs and the best Q&A.

But miserable slow to load due to corporate logo on each slide.

Market cap: $6.4 billion vs $9.6 billion for CLR
552,127 net acres * $5,000/acre = $2.8 billion
552,127 acres/640 acres x 2 wells/640 acres x 850,000 bbls/well (EUR) x $50 = $73 billion

WLL: #2 producer in North Dakota

552,127 net acres in the Bakken / TFS (includes Montana, with about 103,000)

Slide 23: average EUR -- 850,000 bbls/well (incredible); average cost per well: $5 million

Slide 34: lateral well configuration

Excellent Q&A, slides 65 - 68

Harold Hamm: Almost Twice as Much Oil in the Bakken/TFS As Prudhoe Bay, Alaska

Some comments on CLR's third quarter corporate presentation:

Slide 4: hedges in place to cover CAPEX program

• My back-of-the-envelope calculations: 22 rigs x 10 wells/year/rig x $6 million/well = $1.3 billion
• Hedges: 12.1 million bbls at 85.34, plus natural gas = $1.1 billion
• Yes, CLR has the cash flow to cover the CAPEX program

Slide 5: 15% growth in 2010; 30% growth in 2011

• 17% average growth between 2005 and 2009
• 15% over five years doubles the size of the company and now CLR is talking of 30% next year

Slide 6: growth in reserves in ND Bakken -- 43%

Slide 7: 24 billion barrels of recoverable oil

• Far outstrips USGS estimate of 3 billion
• NDIC estimate: 11 billion
• Be careful: ND-only Bakken vs entire Bakken in Williston Basin; need to compare "apples to apples"
• Prudhoe Bay, North Slope, Alaska: 14 billion barrels; much of it now depleted

Slide 8:

• 864,559 net acres
• My back-of-the envelope calculations: at $5,000/acre = $4.3 billion
• Current market cap = $9.6 billion
• 2 wells/640 acres x 864,559 acres x 500,000 bbls/well (EUR) x $50/bbl = $67.5 billion
• Note: WLL is putting in as many as three, maybe four, wells/640 acres in its best Bakken

Slide 8: 22 operated rigs; most of any producer in ND Bakken; 2 are in Montana

• Four rigs drilling Eco-Pads
• Two rigs on held-by-production units

Slide 10: note the formations shown -- includes the Lodgepole -- why would that formation be shown?

Slide 11: if I understand slide correctly, it takes 60 days to drill the four wells on an Eco-Pad

• Note: it takes about 30 days spud-to-spud non-Eco-Pad wells, based on my estimates; about 120 days for four non-Eco-Pad wells; are Eco-Pads cutting down number of completion days by half
• Also, frack teams in place for successive fracking

Slide 13: average number of frac stages now up to 24

• 90-day average boepd: from 122 in 1Q07 to 454 2Q10; more than 3x increase
• 30-day average boepd: from 150 in 1Q07 to 623 3Q10; more than 4x increase

Slide 14: lots of work to be done

• At 640-acre spacing: only 13% of wells drilled
• At 320-acre spacing: only 7% of wells drilled; 3,400 wells yet to be drilled

Slide 15: takeaway capacity continues to increase

• My hunch: still won't be enough pipeline; increasing rail shipping

Slide 16: Red River units in North Dakota and some in South Dakota, Montana

• Nice, steady cash flow

"The Rich Are Different Than You and Me"

The rich have more money.

A misquote from Fitzgerald, but it provides an opportunity to opine.

Recently Harold Hamm, CEO/Continental Resources, with 22 rigs in the Bakken and clearly the "face" of the North Dakota Bakken, recently spent some time at the University of North Dakota.

CEOs number one problem is time management. They no longer have the luxury of mismanaging time like the rest of us.

Harold Hamm visited Grand Forks for some very specific reasons, I would opine.

He met with some "heavy hitters" in the North Dakota oil industry, but he could have done that in Dickinson, closer to where he was hunting pheasants, or Bismarck, where the Heritage Center and the NDIC are located. Mr Hamm has made significant contributions to the Heritage Center, and he obviously has an important relationship with the NDIC.

But he chose to go to UND. Among many other reasons for going there, he is looking for young talent, mostly in the form of geologists to join his company. He implied that CLR is looking to hire 40 more geologists. With the most rigs in North Dakota, 22 at last count, he definitely needs them.

He also talked about his estimate of recoverable oil reserves in the Bakken:

Hamm is more bullish than most on North Dakota’s oil potential.

He said Friday his company has done it’s own “scoping” of the Williston Basin's Bakken Formation spread across western North Dakota, eastern Montana and parts of Canada and figures it holds up to 24 billion barrels of recoverable crude oil. That is five times the estimate the U.S. Geological Survey made in 2008 about the Bakken's recoverable oil.

And it would make the Bakken a bigger play than the Prudhoe Bay oil field on Alaska’s North Slope, usually considered North America’s largest oil field with about 14 billion barrels of recoverable crude; most of it has been pumped out.

Mr Hamm also noted that North Dakota has the has the highest taxes on oil production of any of the oil –producing states and hopes they can be lowered and simplified so oil firms can plan for the future.

Regarding economic impact of the oil industry in North Dakota: Each well has an economic impact of about $120 million.

There are 164 rigs drilling in the state as of Friday, according to the state Department of Mineral Resources, meaning the total economic impact of the oil development in a year would be nearly $20 billion.

Finally, what would be the impact of halting hydraulic fracking as New York state recently did?

If that idea spreads to North Dakota oil fields, it would be a disaster, Hamm said.
“If there is a moratorium on fracking, we’d be done,” he said.

Hopefully, common sense prevails. Unlike fracking for natural gas, hydraulic fracking for oil occurs two miles below the surface, well below any aquifer.

Global Warming Stopped For Past 15 Years: British Claim -- Not a Bakken Story

I'm just catching up on news, having been out and about all day.

Key paragraph in the article:

Read carefully with other official data, they conceal a truth that for some, to paraphrase former US VicePresident Al Gore, is really inconvenient: for the past 15 years, global warming has stopped.

One needs to read the entire article for slowly and very carefully, but here is another excerpt:

But little by little, the supposedly settled scientific ' consensus' that the temperature rise is unprecedented, that it is set to continue to disastrous levels, and that it is all the fault of human beings, is starting to fray.

Earlier this year, a paper by Michael Mann - for years a leading light in the IPCC, and the author of the infamous 'hockey stick graph' showing flat temperatures for 2,000 years until the recent dizzying increase - made an extraordinary admission: that, as his critics had always claimed, there had indeed been a ' medieval warm period' around 1000 AD, when the world may well have been hotter than it is now.

Other research is beginning to show that cyclical changes in water vapour - a much more powerful greenhouse gas than carbon dioxide - may account for much of the 20th Century warming. 

A medieval warm period around 1000 AD when the world may well have been hotter than it is now: if true, no doubt due to the diesel-burning engines on all those Viking ships. I always wondered how those Viking ships could move so fast and so far. Now we know.

By the way, water vapor is a much bigger "greenhouse gas" than CO2 -- which this article points out. If you don't believe it, just step into a greenhouse and what do you notice more: CO2 or water vapor. As texters text: LOL.

Even without this story, "cap and trade" is dead in the water in the USA.

Updates, December 7, 2010

• Cold record set in Ft Lauderdale, Florida; new low broke 169-year record
• Monster snowstorm to hit US; not even winter yet