Voyager Provides Operations Update -- Record-Setting BEXP Well -- Bakken, North Dakota, USA

Link here.

NOTE: another company that estimates six (6) wells per 1280-acre spacing unit.

Datapoints:

• Bakken net acreage now up to 27,000 net acres (last report, 24, 000 net acres) -- ND and MT
• In 2011 (to date) Voyager has acquired 3,133 net mineral acres at an average price of $1,239 per acre in the Williston Basin targeting the Bakken and Three Forks formations
• Assuming six wells per 1,280-acre spacing unit, this acreage position will allow Voyager to participate in approximately 126 net wells

Highlight: VOG participated in a record-setting well (operator: BEXP)

Brigham Exploration, one of Voyager's operating partners, recently announced the results of the Johnson 30-19 #1H well in Richland County, Montana. The Johnson well was reported to produce 2,962 barrels of oil equivalent "BOE" during its early 24-hour peak flow back period. Voyager currently controls approximately 11,000 net acres within 10 miles of the Johnson well including 5 operable sections.

NOTE: in the data points below, it is noted that one of BEXP's new wells, the Johnson 30-19 1H, set a new Montana record of initial production. One can find the location of this Montana well by going to slide 35 of BEXP's April, 2011, corporate presentation. This is a very important well. It is located about 15 miles northeast of Elm Coulee field where the current Williston Basin Bakken boom began back in 2000. This confirms a new area sitting between Elm Coulee and Williston, North Dakota. On that slide, all the green dots in the lower left hand corner are in Elm Coulee.

In the Bakken:

• Voyager has spud 27 gross wells in 2011 bringing the total well count to 45 wells targeting the Bakken/Three Forks formations. 
• Currently, 1.72 net Bakken/Three Forks wells are drilling, completing or producing.
• Voyager expects to participate in 70 gross wells and 6.0 net wells in 2011 targeting the Bakken/Three Forks. 

SeekingAlpha: Eight Bakken Drillers Under $1 Billion Market Cap -- An Update

Link here.

Companies covered: CRED, SSN, GEOI, GMXR, USEG, TPLM, AXAS, and REN.

REN is new (at least to me) in the Bakken. REN controls about 33,000 net acres in Williams County (north of Williston) and McKenzie (south of Williston).

Motley Fool on KOG -- Bakken, North Dakota, USA

Link here. From the article:

Revenue growth in 2010 was up an impressive 175% over the previous year -- from $11.3 billion to $31.0 billion. The compounded annual revenue growth rate over the past five years is perhaps even more impressive, standing at 143%. However, in spite of its aggressive growth cycle, the company has not really managed to convert its revenues into net profit in these five years. While this is a matter of concern, I don't believe this trend will continue.

Looking into the future, because of substantial revisions in its reserves, Kodiak is bound to leave its dismal performance behind. In fact, Kodiak has actually managed to turn around its cash flow in 2010, recording a 20.1% margin in its EBITDA. Consensus estimates show that the company's EBITDA margin will grow even further, to over 70%, by the end of 2011. With no signs of abatement in global oil prices, I believe this level will be maintained for a couple of years more. And that, Fools, is what will begin to reward shareholders.

My hunch is that, in general, what is true for KOG, is true for many of the other Bakken operators. They have not been reporting net profit the past couple of years because they've been "planting their seed corn." 

Note also that the Motley Fool sees "no abatement in global oil prices."

Ohio Oil and Chesapeake Could Be "The Saviors of the Rust Belt" -- Incredibly Interesting Interview

Link here.

Some data points from an interview with an analyst in The Wall Street Journal:

• The analyst thinks the Fed is actually doing a pretty good job "balancing declines in M3 with adding to the monetary base to prop up the money supply."

• "Crude is trading as if the Fed will continue to debase the dollar, and I think that is the most likely scenario going forward."

• The analyst: "If you did nothing but sell master limited partnerships (MLPs) when the VIX is 15 or lower and buy MLPs when the VIX is 25 or higher, you'd make money over time. It's easier said than done, but if you think about it, that is essentially the Warren Buffett investment philosophy, which is very, very patient capital, look for your entry point and buy value." 

• The analyst: "The biggest long-term trend that we're seeing now is the retirement of coal fired power plants in the United States, for actually non-greenhouse gas reasons, although that could potentially be even more additive to that trend over the long term.the third trend is really the explosion of oil and liquids plays in the United States in some pretty weird areas. For example, the most interesting new play prospective - and we'll see - but Ohio could actually become a pretty big producer if acreage held by Chesapeake and EV Energy Partners turns out to be prospective. So we'll see, but I think that oil production in Ohio could be the savior of the rust belt."

Update on High Speed Rail -- Not a Bakken Story

A few days ago I posted a story about the fact that LAX had no rail access. The light rail system came within 2.5 miles, but for various reasons never quite made it to the airport.

For those interested in the administration's goal for high speed rail for the nation, here is an update. It's an op-ed article but it is filled with facts. I was not aware that the recent budget compromise between Congress and the President resulted in loss of all federal high speed rail funding.

Investors Only: SeekingAlpha on BEXP -- Bakken, North Dakota, USA

Link here.

Update on BEXP.

Decisions, Decisions, Decisions -- Not a Bakken Story

If you have nothing else to do right now, you should read the biography of John E. Anderson.

He was born in 1917, in Minneapolis, Minnesota, the son of a barber.

He attended UCLA from 1936 to 1940. He went on to earn his MBA from Harvard University; he was awarded his MBA after WWII broke out.

He served in the US Navy during WWII. After the war, he continued his education, earning a JD degree from Loyola Law School. He was offered a full-time teaching position at the law school; he taught there for 25 years, morning and evening classes and still worked full-time at his law firm.

On April 1, 1956, Anderson founded Ace Beverage Co. with exclusive rights to distribute Budweiser products in Los Angeles, California.

In 2006 he was ranked 189th among the Forbes 400 with a net worth of $1.9 billion.

UCLA’s John E. Anderson Graduate School of Management is named after him following gifts of $17 million over the years.

Today, it was announced that Mr Anderson will be giving the UCLA School of Management an additional $25 million.

Since last fall, the Anderson school has been at the center of a debate over Dean Judy Olian's proposal to end the school's reliance on dwindling state funds and gradually shift it to financial self-sufficiency through higher tuition and more private donations. The plan, which critics called a step toward privatizing the public university system, is still being reviewed by UC hierarchy.

Decisions, decisions, decisions. 

A private university? Hmmm. Would that be a good idea? Would that set a bad precedent? Oh, that's right. Boston's Harvard University is private, and last time I looked, doing just fine. 

Back to 176 Active Rigs -- Bakken, North Dakota, USA

We hit that record (176) a couple days ago. Then, yesterday dropped to 174 and now back up to 176.

Five (5) New Permits -- Bakken, North Dakota, USA

Operators: CLR (3), Denbury, and Hess.

Fields: Upland, Cedar Hills, Siverston, and Big Butte.

Two of CLR's permits are in the same section in Cedar Hills: 23-131N-107W.

There was absolutely nothing else on today's activity report. I assume that all the wells that came off the confidential list over the weekend and today will be seen on the activity report tomorrow.

The Cedar Hills field is very, very interesting.

Back in 2007, CLR had this to say about Cedar Hills:

The Cedar Hills North unit (CHNU) is located in Bowman and Slope Counties, North Dakota. We drilled the initial horizontal well in the CHNU, the Ponderosa 1-15, in April 1995. As of December 31, 2006, we had drilled 154 horizontal wells within this 49,700-acre unit, with 90 producing wellbores and the remainder serving as injection wellbores. We operate and own a 98% working interest in the CHNU.

These were CLR's Red River formation wells. Last year CLR was issued six permits in Cedar Hills, and these two permits today were the first to be issued for Cedar Hills this year. Two of the Cedar Hills wells from last year are off the confidential list and both were Red River or North Red River "B" wells, so I assume these new wells will also be Red River wells.

The Siverston field is pretty much owned by Newfield and Denbury. Denbury picked up these wells when they bought Encore.

I have not provided an update of Upland, but at 28 sections it is about the size of 36-section township. It is about 6 miles north-northeast of Wildrose, a bit north of the core Bakken. There are about a dozen wells there now (most confidential; about six producers; and one rig-on-site). The wells seem to be mediocre with IPs of about 650 - 750 and it appears the wells will take about three years to get to 100,000 bbls. But over time, these wells will do very nicely for CLR, especially if oil stays in the current price range (and trends higher). Today's Upland permit was the third one in Upland for CLR so far this year.

Carpe Diem: Administration May Force Boeing To Build New Plant in Washington State -- Not a Bakken Story

As noted before, one of my favorite blogs is Carpe Diem.

Today Carpe Diem has a story that is a nice bookend to the earlier story on this blog in which the EPA shut down Shell in the Arctic.

This time, the Carpe Diem story, the National Labor Relations Board may shut down Boeing.

For folks who think the EPA is no longer a threat to the oil industry in North Dakota, these two stories may be canaries in the coal mine.

Update: 7:00 p.m. EST, Monday, April 25, 2011 -- well, isn't this interesting. I posted this thinking it was just going to be a minor note for the day. It turns out that this is the lead story tonight on the Kudlow Report. I won't watch Kudlow when he has certain guests on and tonight one of those guests is on and I won't watch. I already know what side of the argument the folks will take and it will turn into a shouting match. But then, I've pretty much quit watching Kudlow completely now that I'm with my granddaughters.

Ice-Breaking Vessel in the Arctic Shelves Shell's Oil Drilling Plans Off Alaska: EPA Ruling. Footnote: the Polar Bear!

This should be the top story on CNBC and MSNBC but I doubt we will see it.

If anyone needs more evidence that the EPA is out of control, one does not need to read much more than this report. The EPA has stopped Shell Oil from drilling in the Arctic because of exhaust from an ice-breaking vessel.

Data points regarding Shell Oil's prospects:

• 27 billion barrels of oil (USGS, which is generally conservative in its estimates)
• This represents 2.5 times the total amount of oil that the Trans Alaska pipeline has carried in 30-year history
• The Trans Alaska pipeline will shut down if flow gets much lower
• Current Trans Alaska pipeline flow: 600,000 bopd; one-third of its capacity
• Production on the North Slope of Alaska is declining at a rate of 7 percent/year

Shell Oil's investment to date:

• Five years of exploration
• $4 billion invested
• Beaufort and Chukchi Seas
• Leases alone cost $2 billion

Reason for EPA's ruling:

• Air quality
• "The EPA's appeals board ruled that Shell had not taken into consideration emissions from an ice-breaking vessel when calculating overall greenhouse gas emissions from the project. What the modeling showed was in communities like Kaktovik [population: 245], Shell's drilling would increase air pollution levels close to air quality standards."

Close, not exceed.

Meanwhile, the President has established a task force to see why oil prices are so high. His attorney general is looking into fraud on the part of speculators and traders.

I can't make this stuff up.


What Shell needs to do is ask the EPA if they can put up some wind turbines outside Kaktovik to blow the exhaust from the ice-breaking vessel.

Oh, one more thing, and perhaps this was the tipping point in the environmentalists' argument: it's all about the polar bear.

But environmental groups were ecstatic [over the ruling], saying more study needs to be done before allowing drilling in polar bear habitat.

By the way, the Obama administration agrees with the Bush administration: the polar bear is not an endangered species and remains off the endangered species list.

Meanwhile, WTI oil hit $113/bbl earlier today, but has since backed off a bit. Gasoline is now solidly above $4.00/gallon across much of the US.

Ayn Rand, Atlas Shrugged

• This was all predicted in Ms Rand's book, published in 1957. Absolutely prescient. 

Three Nice Wells Coming Off Confidential List -- Bakken, North Dakota, USA

Three nice wells coming off the confidential list today:

• 19539, 3,240, BEXP, Lloyd 34-3 1-H, Sandrocks, Bakken, t1/11; 133K 6/12;
• 19490, 900, Petro-Hunt, George Tank 151-96-10C-3-3H, Clear Creek, t3/11; cum 144K 6/12;
• 19448, 1,049, American Oil and Gas, Dahl 15-22H, Dollar Joe, t2/11; cum 42K 6/12; 

And one well, a Burlington Resources well, that reached total depth (20,000/long lateral) and then shut it in; did not say DRY; perhaps more to follow: 

• 19487, 2,108, BR, Cleetwood 11-27H, Elidah, t6/11; cum 124K 6/12;