2Q11 Bakken Company Earnings -- Bakken, North Dakota, USA

It will be interesting to see the earnings report for the second quarter for 2011. Oil prices have fallen significantly this week and could continue.

It will be interesting to see whether 1.5 months of production in one quarter when oil rose to $114 will be a better or worse quarter than a three-month period when we have three months worth of production (minus five days due to April 30 - May 1 blizzard) when oil fell back to $90. That was hard to write; maybe harder to understand.

Saying it another way:

• 1Q11: in the Bakken, we might have "lost" as much as 1.5 months of production due to winter weather; during that quarter, the price of oil rose to $114/bbl
• 2Q11: in the Bakken, barring any more blizzards, it appears we may have lost only a week of production due to winter weather; the price of oil is falling quickly; whether it falls back to $90/bbl is yet to be seen

My hunch: the 2nd quarter will be outstanding (remember, these companies have hedges, collars, and most of the oil has already been sold on contract.

And the 2nd half will be even more outstanding. Production will increase; infrastructure will improve; more takeaway capacity will come on line; and, workers will be more productive.

Speaking of oil field workers, by the way, it's my understanding that the drillers and oil service companies are not enamored with the man-camps. The work force is too undependable. The men live locally for two weeks, then return to Texas or their homes elsewhere for a couple of weeks. There is no guarantee they will return from their homes when their two weeks are up, and thus there is an on-going problem of fielding enough men for a scheduled job.

Companies are looking into developing their own housing projects, with 2- and 3-bedroom apartment complexes and/or single unit homes, and rent them back to their employees with the understanding that they bring their families to North Dakota, particularly the Williston area. There will be more than enough work for their spouses: the new Menard's coming into Williston will see to that.

By the way, as long as I'm rambling, how much work will there be in Williston?


Here is the data for new building permits in Williston, 2010 (2009):

• Williston: 770 permits; $106 million (257; $45 million)
• That's $106 million in permits for Williston in 2010
• It's my understanding that estimates for 2011 will be $150 million.