In today's daily activity report, it was noted that seventeen wells in Bottineau County changed operator. Corinthian Exploration (USA) Corporation has now acquired these seventeen wells, including the recent Bernstein wells. They used to be operated by Ritchie Exploration.
I assume Corinthian Exploration is related to Corinthian Energy headquartered in Calgary, Alberta, but do not know for sure. When you go to www.corinthianenergy.ca you end up at a website for Surge Energy. Corinthian Energy was bought by Surge Energy in 2010.
My hunch is that Surge Energy (SGY) is the name of the company in Canada, and its operating division in the US is Corinthian Energy.
The two Bernstein wells (#19384 and #19385) were drilled and completed in less than four days. I believe they were strictly fracked vertical wells, based on well file reports and the icons on the GIS map server. The IP was the same for both wells: (5) and cumulative oil appears to be extremely low (uneconomical?) but I don't have enough experience with Spearfish wells to know what the expectations are. A pump has been put on each of these wells.
Other posts earlier this evening linked the sources suggesting to me that Surge Energy will go back into these old vertical Spearfish wells and lay in horizontal laterals.
I have to thank one of my readers for alerting me to a couple of data points that piqued my interest in pursuing this. It's starting to come together. You might have to read several posts that were put up tonight to put together the whole story. It started out a bit disjointed but it's starting to come together.
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Later. Actually the more I think about this, the more excited I get. Investors might want to take a look at the SGY corporate presentation which can be found at the link above, and then look at Yahoo!Financial SGY.V.
Look at the economics of the Surge Spearfish wells just north of the border:
- Cost to complete a well: $1.2 million
- Typical production for a horizontal fracked Spearfish well: 2,400 bbls/month the first year; 28,800 bbls the first year; at $50/bbl = $1.4 million (note: $50/bbl; oil is now $105/bbl)
- Payout: 0.9 year
- EUR: 65K at $50 = $3.25 million (note, current price of oil is $105/bbl)
A EUR of 65K looks pretty paltry compared to Bakken wells, but Surge's core competency is tapping into multiple pay zones from the same well; once one has any production, that well holds the lease by production for all "eternity"
The surge spearfish economics are similar to what eog presented in it's waskada south spearfish initial plan. Eog estimated 75k eur but planned on 24 wells per section. Actual costs were in the 2M$ range and eur based on 6 mo production of the first two wells and lower than expected ips on the next 4 plus at least one dry hole to the south and eog stopped exoration. I am sure competition for resources from bakken and eagle ford projects in additition to the bad economic results were also factors. Legacy is still working to the east of eog and south of ritchie. My hunch is that eog will sell it's leases (or at least some) to one of the smaller companies. High priced crude is a factor obviously.
ReplyDeleteThanks. Great post; thank you for taking time to comment. It will be interesting to see if Surge can make it work. Their corporate presentation is very optimistic (like all corporate presentations).
ReplyDeleteI'm just glad to see some new activity. And, yes, costs of wells go up when price of oil goes up, so the $2 million price tag is not surprising.
The 2M$ cost (drill & complete) was a bit of a sticker shock as eog's Calgary subsidiary is very active in the spearfish just a few miles north and the eog bottineau wells were very similar in terms of vert depth although the lateral was slightly longer at around 2400 feet. In my view, that would not account for doubling of the cost so there were other factors in play.
ReplyDeleteAny idea what those other factors would be?
ReplyDeleteOne was insufficient electric power in the area (all rural so never had a lot of capacity ever and now almost all farmsteads are gone or unoccupied). Power company wanted eog to cost share or maybe carry the full cost of the upgrade since eog would be using almost all of new capacity. Area is so remote that a lot of copper would be needed just to get to a new substation to be placed somewhere in the field. There is at min a concept on paper for the electric upgrade but I do not know status I suspect it is on hold.
ReplyDeleteSwd was also needed . I assume this was known all along but eog was at a point where money needed to be committed in order to continue to bring more wells on line and deal with more swd.
These are all factors in every project but the remote sites increased the significance. My opinion.
I don't know that tax/regulatory env is all that different depending on which side of border you are operating.
I would have to assume eog Calgary at least considered picking up the eog leases from the folks in ego's Denver office but I have no info on this .
Excellent post; thank you for taking time to comment. I was completely unaware of the power issues. Wow, sounds like some solar panels would be the answer. I don't know power requirements and if solar panels would work but one wonders, and for small projects, solar seems to be the answer.
ReplyDeleteVery, very interesting. It will be interesting if Surge Energy can get it to work. (It's hard to believe Bottineau is any more remote/uninhabited than Canada along the border. -- but then what do I know?)
Again, great comment. Thanks.
When I txt remote, I mean from the perspective of a utility power planner
ReplyDeleteBtw, this field is 15 m nw of the greater metropolitan area of bottineau which is currently under about 2 feet of snow
I am sure I have infuriated 90% of botonoans by now
North Dakotans take these verbal hits all the time. Those living up in Bottineau are probably even more resistant to having their toes stepped on. They know they live in God's country.
ReplyDeleteI have the greatest respect for North Dakota farmers and their families doing all they do for our country; and based on the tone of your comments, I can tell you do, too. Thank you for taking time to comment.
Incredible winter with regard to snow this year.
is legacy oil and gas united with corinthian
ReplyDeleteCorinthian (bought by Surge), Surge, Legacy, and Baytex are all Canadian companies, with prospects in North Dakota.
ReplyDeleteIt's hard to keep them straight,and I do think there is cross-pollination (directors, members of management with history of personal relationship with more than one company), but Surge bought Corinthian, and Surge and Legacy are both separate companies, each publicly traded, with unique ticker symbols.
At least I think that's all correct; it is confusing.
At the sidebar at the right, under "Producers," I have a link to Legacy. In addition, you can use the web/blog search engine to look for posts on these companies.