For Investors: Another Bakken Metric -- Cash Margins on the Rise -- Bakken, North Dakota, USA

Link here.

Each month we update the Bakken Players piece for current events, repricing of the group versus cash flow estimates, and adding a few new graphs. In between we occasionally like to focus on sections of the larger piece. Last week we had brief comments on production growth per share and you can see that piece here. This week’s topic: unit costs and cash margins.

Note as usual that WLL and CLR are not pure Williston Basin plays but we include them since the Bakken and to a lessor the Three Forks are largely driving the fundamentals and the stories at present. As production rises the normal mode you want to see in your growthy E&P companies is rising absolute costs but flat or falling per unit costs with the passage of time. In unconventional resource plays we often experience this in two or three phases where you see rapid production growth lead to a decline in per unit production costs, followed by a bump up in per unit costs as firms bulk out their staff to handle the shift from delineation mode to development mode, followed by continued per unit cost declines. 

See also, an earlier Z-Man link (same as above).