No Record But Back To Record 178 Active Drilling Rigs

We're back to 178 active drilling rigs. My hunch we will soon move to new record.

I apologize for so few postings today. I will eventually get caught up. I don't expect to do much for next couple of days.

Week 18: April 30 -- May 6, 2011

Williston Taxable Sales: New Record, 2010 -- $1.35 Billion; Second Only to Fargo

ERF With Eight (8) Wells on Two Pads in Adjoining Quadrants

BEXP --> 12 Rigs By Summer; Up From Five (5) Last Year

NDIC Director: First Phase of Bakken Drilling -- 28,000 Wells

Bakken Driller Using Schlumberger's New Fracking Process; CLR Mentions It

Results of North Dakota's May Land Lease Auction

Chesapeake and the Bakken

Chesapeake: 190,000 Acres In The Bakken

BEXP's Infill Wells Very Successful

BEXP Doubles Production Year-Over-Year

Magnum Hunter Resources/NuLoch Acquire Additional 5,000 Acres After Buyout

New Record For Active Drilling Rigs in North Dakota: 178

Flashback: CLR's First Economically Successful Well -- Robert Heuer 1-17R

Update on Drillers With Dedicated Frack Teams

Exactly What Will The EIA Be Doing in the Future?

Increased Margins Required When Buying WTI Oil Futures

Takes effect after market closes today.

This is the new requirement:

The benchmark West Texas Intermediate light, sweet crude oil futures contract maintenance margins will increase from $5,000/contract to $6,250/contract effective at the close of business Tuesday, May 10, Chris Grams at CME Group told Dow Jones in an email. The move was CME's third increase in 2011.

Not exactly earth-shattering. It will effect small players only. Anything the government does to eliminate background noise regarding oil futures is welcome. Yes, I did say that, and it is counter-intuitive. 

The headline for the linked story above: "Crude Tumbles As CME Margin Hike Spooks Investors."

Oil futures tumbled all the way to $101.

NOG says their production expenses for first quarter 2011 were $5.24 per BOE on an accrued basis, compared to $3.15 per BOE on an accrued basis for the first quarter of 2010 and $3.69 per BOE on an accrued basis for the fourth quarter of 2010.

Oil futures likely to remain volatile:

Other analysts expect oil prices to continue gaining due to renewed strength in stock markets, continued strong Chinese demand and OPEC output restraint. Ritterbusch and Associates said dramatic oil price swings are likely to continue this month, pegging it at a low of $92 and fresh high above $115 a barrel.

US Scientists: No Evidence "Global Warming" Cause for April's Extreme Weather

Link here.

"Global warming" is now "climate change" -- a politically corrected statement. And, of course, we always have climate change.

U.S. scientists also looked for the fingerprints of global warming and La Nina on last month's deadly tornadoes, but couldn't find evidence to blame those oft-cited weather phenomena.

And then this:

NOAA research meteorologist Martin Hoerling tracked three major factors that go into tornadoes — air instability, wind shear and water vapor — and found no long-term trends that point to either climate change or La Nina. That doesn't mean those factors aren't to blame, but Hoerling couldn't show it, he said.

Climate models say that because of changes in instability and water vapor, severe thunderstorms and maybe tornadoes should increase in the future. But it may take another 30 years for the predicted slow increase to be statistically noticeable, said NOAA research meteorologist and tornado expert Harold Brooks.

Meanwhile for the next 30 years politicians will continue to talk as if there is man-made climate change.

Oil Industry Looks to Recruit Military Vets

Link here. From PennEnergy:

All branches of the US military are very highly sought for positions with today’s leading energy companies. Oil and gas firms, in particular are aggressively recruiting, hiring and cross-training retired military servicemen and women, as well as reservists.

Ever-increasing demand for oil and gas globally puts the industry in a labor predicament. Companies must act now to fill vacancies, retain knowledge and skills from a graying workforce, as well as position the industry to continue pushing technological boundaries.

Despite grim economic and jobs news in the media, the petroleum industry is hiring – and military personnel are a hot commodity.

In fact, GI Jobs magazine recently published its annual list of 100 military-friendly employers, and energy firms ranked high among other business sectors. More than 20 percent of the companies were energy firms, including major energy corporations, oil and gas operators, oilfield services and technology firms, and offshore rig contractors.

Williams Partners Now Owns 50% of Gulfstream Pipeline System

Link here.

Williams Partners now owns a 49-percent interest in the Gulfstream system, while Williams directly holds a 1-percent interest. Spectra Energy Corporation and its subsidiaries own the additional 50-percent interest.

GMXR Misses by 11 Cents; Misses On Revenues -- Small Play in Bakken, North Dakota, USA

Link here.

Recently entered the Bakken; small play; predominantly a natural gas company.

These capital market transactions allowed us to purchase significant positions in the top oil play in the U.S.(the Bakken) and in a top emerging oil play in the U.S. (the Niobrara), realign our balance sheet and move 80% of our debt past the maturity date of our bank revolver. We believe we have enough liquidity in place to fund our capital expenditures for the next two years, and we expect to be cash flow positive in early 2013. Transformation to more oil production is the key in our ability to accomplish that goal. We are focused on accelerating our operational start up in North Dakota organizing four GMXR-operated 1280 acre units in the Lewis and Clark play with a total of sixteen well locations. We have about a 50% average working interest in these units and expect to be drilling in late June or early July.

"Significant" is in the eye of the beholder. 

NOG Misses By 9 Cents; Misses on Revenue -- Bakken, North Dakota, USA

Link here.

NOG announced record first quarter oil and gas sales of approximately $27.0 million.  Excluding the effect of unrealized, mark-to-market of oil hedges, Northern Oil had net income of $5.9 million, representing $0.09 per fully diluted share.  Including the effect of unrealized mark-to-market of oil hedges, Northern Oil had a first quarter net loss of $7.1 million, representing a $0.11 loss per share.

NOG is one of several Bakken companies to report an unrealized loss in mark-to-market oi hedges.

Oil and gas sales for the first quarter of 2011 were $27.0 million compared to $8.4 million for the first quarter of 2010, representing a 223% increase.  These results represent a 13% increase in oil and gas sales during the first quarter of 2011 compared to the fourth quarter of 2010.

Production volumes for the first quarter of 2011 were a quarterly record of 356,622 barrels of oil equivalent ("BOE"), representing a 185% increase compared to the first quarter of 2010 and a 5% increase compared to the fourth quarter of 2010.  The first quarter production volumes represent Northern Oil's thirteenth consecutive quarterly increase in production.

For newbies: I would not read too much into the 5% increase over sequential quarters. Drillers in North Dakota lost as much as 30 days production in the first quarter of 2011 due to weather conditions. We should see a much better 2Q11 compared to the first.

This was an interesting comment in light of recent bear raid:

Depletion expense for first quarter 2011 was $6.9 million, or $19.25 per BOE.  As such, Northern Oil's first quarter 2011 depletion expense was consistent with its peer group in the Bakken and Three Forks play.   

And finally:

Production expenses for first quarter 2011 were $5.24 per BOE on an accrued basis, compared to $3.15 per BOE on an accrued basis for the first quarter of 2010 and $3.69 per BOE on an accrued basis for the fourth quarter of 2010. The increase in production expense is primarily due to the continued addition of producing oil and gas properties, exposure to new operators and new development areas, an increase in working interests, mature wells utilizing artificial lift and the general aging of our production.  

The North Dakota Bakken (North Dakota side of the border, not Montana) is only about four years old, so I find that last comment (in bold) interesting.

NOG also announced a $150 million stock repurchase program; no time frame was announced.