USEG Announces A Great Well and Another Partnership -- BEXP, Zavanna -- Bakken, North Dakota, USA

Remember USEG? The company that partnered with BEXP back in 2009? That deal is still playing out.

On Friday, January 28, 2011, just as the Egyptian revolution was making news, USEG announced its highest initial production rate Bakken well to date in the Williston Basin:

• The Lloyd 34-3 #1H, USEG's highest initial production rate Bakken well to date, produced approximately 3,240 barrels of oil and 4.74 mmcf of natural gas or 4,030 boed during an early 24-hour initial flow back period. The well was completed with swell packers and 31 fracture stimulation stages.
• In addition, USEG participated in the following wells, and reported them in the same press release:
• Brad Olson 9-16 3H, Kalil Farms 14-23 1H, and MacMaster 11-2 1H should be completed in February.
• The Hovde 33-4 1H well, the 15th and final initial well under the drilling participation agreement with BEXP, is drilling and should be completed in March. The Hovde is a direct offset to the Lloyd well.
• These are all in the Rough Rider prospect (a BEXP designation).

The company also announced a new participation agreement. This one with Zavanna LLC. USEG paid $11 million to acquire 6,200 net acres ($1,775/acre). Under this agreement, USEG will particpate in drilling 31 gross 1,280-acre spacing unit with the potential of 93 gross Bakken and 93 gross Three Forks wells, based on three wells per formation per unit.

Wells affected by the Zavanna-USEG agreement:

• Cheryl 14-23 1H, currently drilling
• Olson 8-5 1H, scheduled to drill after the Cheryl well
• Colfax 3-10 1H, following the Olson
• All three wells should be completed in the second quarter
• All long lateral
• Generally about 30 fracture stages

Zavanna and its partners (including USEG) are continuing efforts to acquire a full time drilling rig in the second quarter (2011) to drill 6 - 8 additional gross wells in 2011.

USEG's total in the Williston Basin: 22,400 net acres (includes Montana) with potential for 276 gross drilling locations (both the BEXP and the Zavanna partnership programs).

World Energy Consumption by Fuel

For all the stories about renewable energy these past few years (the "lost decade"), and then all the stories about coal-powered cars this past year, one would get the impression that ten years' worth of subsidies, grants, and tax breaks for the renewable energy business (wind and solar) has resulted in great strides.

For a look at the raw data compiled for the years 1965 - 2009, click on statistical review of world energy, 2010.

Near the top, on the left side is a downloadable Excel spreadsheet that breaks out energy consumption for those years by type of energy.

The amount of energy generated worldwide, including the US, was so low that it was either unmeasurable or it was a rounding error. The sources of energy measured were: oil, natural gas, coal, nuclear energy and hydroelectric power.

For the most recent year in which data is available, 2009, the amount of energy used, in million tonnes of oil equivalent, this is the breakdown (figures rounded):

• Oil: 843 (39 percent)
• Natural gas: 589 (27 percent)
• Coal: 498 (23 percent)
• Nuclear energy: 190 (9 percent)
• Hydroelectric: 62 (3 percent)
• Total: 2,182 million tonnes of oil equivalent

On other spreadsheets at that site, data on renewable energy is provided, but it is only a percentage of each country's contribution to worldwide use. For example, Germany has 44 percent of the world's installed wind capacity.

But 44 percent of zero is still zero.

Again, don't confuse facts with investing. Wall Street and individual investors can still make a lot of money by investing in renewable energy companies. It's just that it will be a very long time before renewable energy makes a statistical difference in energy consumption/production around the world.

[Note: that last paragraph is an opinion, not advice. I am not advising readers to invest or not invest in renewable energy.]

And, of course we've all seen how the "green energy" revolution helped Spain.