Back of the Envelope Calculations While Sitting At the Williston Economart -- The Bakken, North Dakota, USA

Based on EURs of 500,000 bbls, $50/bbl for the next 30 years; and, two wells on each section, an acre in the good Bakken will generate $78,125 at the wellhead.

2 x 500,000 x 50 =  $50,000,000
$50,000,000 / 640 --> $78,125

Some data points and/or factoids:

• Others opine that the average EUR for the Bakken will be 603,000 bbls
• Raise your hand if you think the price of oil will average $50/bbl over the next 30 years
• The norm is now four wells on each section, not two as conservatively estimated above, and there are suggestions that in the very good Bakken, it will higher; see the November dockets; this has been going on now for the past six months or so
• Most opine that cost of wells in the Bakken are paid back in 1.5 to 3.0 years (open to discussion)
• There are "no" dry wells in the Bakken
• Some Bakken wells are "monster" wells; others are not economical
• These numbers are for the Bakken formation only; there are several other formations that have been and will be targeted, to include the Three Forks, Tyler, Madison, Red River, and Lodgepole

Statoil bought BEXP for $8,000/acre according to their presentation.

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