Highlights of the CLR Earnings Conference Call -- 1Q11 -- Bakken, North Dakota, USA

Data points [blogger comments]

Milestone: almost 1.5 years under their 5-year program to triple production from year-end 2009 to year-end 2014

• Right on track
• 1Q11 production stronger than expected
• 51,663 boepd for 1Q11, 34% increase over 1Q10; 8% increase over 4Q10
• 4Q10 was 27% higher than 4Q09
• [51,663 bopd -- at $70/bbl --> $3.6 million/day]
• Bakken production: 25,523 boepd in first quarter
• [25,523 -- at $70/bbl --> $1.8 million/day]
• This is amazing: CLR maintains production in the Red River units in southwest North Dakota; only one rig but producing 4,065 boepd from those units [4,065 --> $285,000/day (one rig)]
• Red River unit production up 17%
• Production grew 67% year-over-year

Notable well lists (in 1Q11)

• 25 gross wells; 12 wells that tested over 1,000 boepd
• The strongest: Bud 1-19H tested at almost 2,000 boepd
• Many CLR wells restricted to minimize flaring; without restrictions could have tested double or more
• 6 of their strongest 8 wells in Williston area (the "Williston" prospect)

The Williston Prospect

• Still considered exploratory
• 6 of CLR's strongest 8 wells in this prospect
• Aakron 1-27H tested at 1,407 boepd, 3,600 psi on a 16/64" choke; a very strong well

North Dakota vs Montana

• Less discussion separating the two
• Now: more about the "Bakken" cross both states

Fracking

• Experimenting with various methods
• For the first time in years, using sliding-sleeve systems along with perf-and-plug
• Stages: 24 is the norm, but anywhere from 18 to 30
• Pumped their first Schlumberger "HIWAY" frac -- pulses proppant into the frac zone

Future

• Still tens of thousands of wells to drill over next 2 to 3 decades
• Still feel that there is at least 24 billion boe recoverable
• USGS estimate of 4.3 billion boe recoverable based on 2007 data and reported in 2008
• Since then a technological revolution with more than 2,000 additional wells drilled
• The Bakken play is a conventional play with increasingly predictable well results
• The entire scope of the Bakken (15,000 square miles) is now considered (by the oil industry) to be viable for development -- the entire scope (makes me think of Chesapeake's recent announcements
• Will maintain

Cash Flow

• $269 million
• 53% higher than one year earlier
• 22% higher than previous quarter (and remember, the current quarter hard hit by weather)

Takeaway

• Some others in the Bakken constrained by takeaway capacity; not CLR
• CLR first in line when pipeline operators increase capacity
• Ship on all pipeline systems in the Bakken
• Ship by rail out of three separate facilities
• Can generally get around bottlenecks due to so many options
• Operations
• Maintain 22 rigs in the Bakken
• Substantial backlog, currently 63 wells drilling/awaiting completion in the Bakken
• Next 2 weeks: 13 new ND wells on-line
• Hiland: to bring on-line its 30 million cubic feet/day plant on May 15
• Because of Eco-Pads, production in next quarter could be lumpy
• Need to hire a lot of professionals to meet target of tripling production