Double Counting Net Acreage

I try to keep the posting on the net acreage that various companies have in the Bakken current, but of course it is impossible, but for newbies, it provides a snapshot of the acreage controlled by some of the bigger players in the Bakken.

Several Bakken players, such as BEXP, Whiting and Continental Resources) provide very informative corporate presentations. This is a link to BEXP's current presentation (January, 2011).

It is interesting to note that BEXP breaks out their net acreage by formation: Bakken and Three Forks, but they do not "double count." That's very impressive. For example, in their Parshall/Ross prospect, BEXP reports they control 35,900 net acres targeting the Bakken and 35,900 net acres targeting the Three Forks formation. One would assume that these underlie the same "surface acres." To their credit, when totaling up their net Williston Basin net acreage, BEXP only counts the "35,000 net acres" once.

[The astute investor trying to put a value on a Bakken play might want to consider what is actually meant by "net acres" when valuing a company in the Bakken.]

I don't know how long BEXP has been differentiating the acres they control by formation, but it is interesting to note (for investors) that BEXP is not yet including the other formations that already are known to produce oil in these areas, and potential additional formations, such as the Red River, the Lodgepole, the Tyler, and maybe even the Birdbear and the Spearfish. A lot of it depends on price of oil going forward. One can be pretty well assured that if the price of oil gets high enough, folks will be going back in to target these other formations.