For Investors Only: Corporate America With Huge Cash Assets -- Not A Bakken Story

A Seeking Alpha story stating exactly what I have been noticing for quite some time. Corporate America is building up huge amount of cash --- earning almost nothing on interest, with interest rates so low.

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

Producers: EOG (7), Slawson (2), and Newfield.

Fields: Spotted Horn, Saxon, Clear Water, Van Hook, Sandrocks, Painted Woods, Parshall, and three wildcats. No multi-well pads despite all the EOG permits.

Several good wells reported in today's daily activity report which will be reported elsewhere, but briefly, Oasis (1,481), BEXP (4,438), Oasis (1,999), and Encore (2,232).

Hydraulic Fracturing in Alaska -- Not A Bakken Story

I normally try not to stray too far from the Bakken, but this is an interesting story.

A newly formed Texas-based independent that recently acquired 537,000 acres of state of Alaska leases on the North Slope has plans to drill into source rocks below the region's prolific producing fields and produce oil by fracturing, a company official said Nov. 24.

"This is a new play for the North Slope but the rock types are right for this to be viable and the exploitation technology can be easily transferred from the Lower 48 states," where fracturing is now widely used to produce from tight shale rocks, said Ed Duncan, president of Great Bear Petroleum LLC.

"It could be a game-changer for the North Slope," Duncan said. 

The Rigzone article continues:

Oil and gas fields on the Slope now produce from conventional reservoirs but Great Bear's plan is to drill down and produce from the source rocks, the geologic formations in which the oil and gas originally formed.

Three layers of source rocks feed most of the existing fields on the Slope, and Great Bear has access to all three of them.

"Any one of them could be viable for us but we plan to initially target the Shublik.

Very, very interesting. Stay tuned.

For Investors Only: Comments Regarding EOG's Recent Drop in Share Price

Seeking Alpha commentary suggests recent drop in EOG's share price presents an opportunity; the analyst remains bullish on EOG, sticking with a $120 target.


Some time ago I opined I was ambivalent about EOG due to its heavy exposure to natural gas. I said that I would consider EOG if its share price dropped to $88 and would become very bullish on EOG if natural gas rose above $5.00. I said that when natural was significantly under $4.00. Natural gas is now above $4.50, and all indications are that it will be a very cold winter.

Just saying.

KOG To Issue More Shares -- North Dakota, USA

Back in August (2010) KOG issued about 30 million additional shares (the original offering was for 25 million shares but was oversubscribed, if I recall correctly).

Now, less than four months later, KOG announces it will offer an additional 20 million shares with an additional 3 million if oversubscribed.

The press release has a date-time stamp of 4:34 p.m., after the market close. Prior to the close, KOG had advanced; in after-hours trading, KOG retreated, but after-hours trades are generally unreliable indicators of the next day's trades.

I have mentioned often that Bakken companies are going to need a heck of a lot of cash to execute their 2011 drilling programs. This new KOG offering, coming as it does, just months after an earlier offering, speaks volumes.

It will be interesting to see the KOG price action tomorrow. (I do not accumulate or trade in KOG).

I have most recently opined that CLR will need incredible amounts of money to finance 22 rigs next year. CLR says it will be able to finance its CAPEX program through existing operations.

BEXP Has Another Typical BEXP Well -- Not Quite 4,500 BOPD IP -- Bakken, North Dakota, USA

I won't be posting for awhile tonight, due to all the family activities as we enter the Christmas / New Year festivities.

But to pique the excitement of newbies, you might want to take a look at this BEXP well:

• 18896, 4,438, Clifford Bakke 26-35H 1-H, Alger field, Bakken pool, 2nd highest reported BEXP IP (company reported the IP as 5,061 boepd, see April corporate presentation)

So, later, when I get some time, much more to post.

Energy Appears to Be The Number 1 Story on CNBC Today

As noted in the subject line.

Talking heads are stating the obvious: buy companies that are overweighted in oil, underweighted in natural gas.

It seems these folks are a bit late to the party.

One talking head just noted that Hess domestic mix is 96% oil; 4% natural gas. I don't accumulate shares in Hess, but it's a nice company for long term investors with conservative bent. Hess is down today; not sure why. It did not hike its dividend.

For newbies, a couple of points regarding natural gas: a) "they" wouldn't keep drilling if they couldn't make money on natural gas; b) "they" say they can make money on natural gas down to $2.50 or $3.00; and, c) some of the Bakken companies have hedged natural gas with contracts in excess of $6.00.

A couple of additional points: a) it's just a matter of time before federal government gets behind natural gas; and, b) more and more coal-fueled power plants are switching to natural gas, rather than retro-fit their coal-fueled plants to meet environmental regulations.

Cost of Going Green: Creditworthiness of Los Angeles Threatened -- Not a Bakken Story

This is truly incredible. Politicians, to be politically correct, were willing to put the creditworthiness of Los Angeles at risk for a problem that doesn't exist.

A dispute over rate hikes, sought last spring to help pay for new environmental initiatives, exploded into a highly public standoff that briefly threatened the city's overall financial standing.

Pet projects are lining the pockets of politically-connected folks on the backs of low-income and middle-income rate payers.

$90 Oil; 9% Unemployment. Heading toward $100 Oil, 10% Unemployment.

I see oil is nearly $90. In fact, I thought CNBC said it was over $91, but I must have misheard. 

I'm conflicted: I felt that the price of oil was ready to move higher, but I doubted (for no reason) that it really would. I thought it would move higher based on price of gold and China's requirements for oil, but too many talking heads said fundamentals did not support oil price greater than $40.

I think I may have opined on this on the blog earlier, but I forget.

This has to be an administration nightmare: $90 oil, 9% unemployment.  And heading toward $100 oil and 10% unemployment.

Outstanding Photograph of ND's New Landscape -- North Dakota, USA

For newbies: if you want to see how the oil industry is changing the North Dakota landscape, go to the BEXP home page, click on "corporate presentation" and scroll down to slide number 10. When the current corporate presentation is updated, it is likely that this photograph will be on a different slide (a different number), but something tells me this photograph will remain in BEXP's presentation for the foreseeable future.

Editor Calls For New USGS Survey

Grand Forks Herald editor supports call for USGS to conduct new study regarding Bakken reserves.

See CLR's current corporate presentation.