Dates for Earning Releases Posted

The dates for earning releases for second quarter, 2011, have been posted.

Permitorium Costing US At Least 190,000 "New" Jobs -- Not a Bakken Story

Link here.

190,000 "new" jobs. Compared to a gain of 18,000 "new" jobs last month. Oh, well. Not gonna happen.

Four (4) New Permits -- Bakken, North Dakota, USA

Daily activity report, July 15, 2011 --

Operators: Marathon, Fidelity, Hess, and Hunt.

Fields: Sanish, Ellsworth, Lake Ilo and one wildcat.

Fidelity has the Sanish permit; MRO has the wildcat in Williams County.

Other than that, quiet.

Why The Debt Ceiling Debate is Meaningless -- Not a Bakken Story

Link here.

When the writer adds these to the list of things that will be hurt by the US defaulting, all credibility is lost, and my anxiety goes away:

Art lovers, beachgoers, and public TV viewers. A long list of "discretionary" federal programs has been targeted for cuts or elimination, and those could end up getting whacked right away.

According to the article, a default would have huge national and global impact: most likely a US recession; social security recipients would not get their checks; government workers furloughed; maybe military would not be paid; and then the writer says that art lovers, beachgoers, and public TV viewers would be hurt. Give me a break. Those last three categories are the least of my worries.

As a reminder, in 2006, every -- repeat, every -- Democratic Senator, including then-Senator Obama, voted against raising the debt limit. 

So, Three Reasons Why BHP Was Able and Willing To Buy Petrohawk at a 65% Premium -- SeekingAlpha: Smart Move By BHP

Update

July 20, 2011: What it means to Bakken investors that BHP bought Petrohawk (Part I of an article at SeekingAlpha.com).

July 19, 2011: More on what it means to Bakken investors that BHP bought Petrohawk (Part II of an article at SeekingAlpha.com).

Original Post

1. Weak American dollar -- American assets are on sale (BHP is an Australian company). [Michael Filloon agrees: see his SeekingAlpha story, July 18, 2011.]

2. Aussies, Chinese, Koreans see value in American energy assets.

3. Too many American investors must have fallen for the New York Times article on the natural gas scam being perpetrated on the American public. 

BHP Billiton Petroleum will acquire Petrohawk Energy Corp., Houston, for $12.1 billion, [a 65% premium] giving the Australian firm operated positions in the US Eagle Ford and Haynesville shale resource plays and the Permian basin. 

Petrohawk sounds like a natural gas play to me:

Petrohawk has a nonproved resource base of 32 tcf equivalent for a total risked resource base of 35 tcfe. It had 3.4 tcfe of proved reserves at the end of 2010.

Petrohawk’s assets span 1 million net acres in Texas and Louisiana. Estimated 2011 net production is 950 MMcfd of gas equivalent or 158,000 b/d of oil equivalent. [Conversion factor = 6,012.] The company reported $8.2 billion in assets at Mar. 31, 2011, and a $390 million profit before tax for the last calendar year.

BHP Billiton reported production in the 9 months ended Mar. 31, 2011, of 260,000 b/d of oil, condensate, and natural gas liquids and about 1 bcfd of natural gas. In the fiscal year ended June 30, 2009, it had 332 million bbl of liquids reserves and 2.3 tcf of gas reserves.

By the way, SeekingAlpha.com contributor thinks it was a smart move by BHP to buy Petrohawk and even references the New York Times shoddy reporting.

Michael Filloon -- Seeking Alpha -- With Great Overview of All the Smaller Producers in the Bakken, North Dakota, USA

Michael Filloon has a great overview of the smaller producers in the Bakken.

Mentioned: GMXR, SSN, Triangle, Abraxas, US Energy, Voyager, Sundance, Credo, Arsenal Earthstone, and Stetson Oil.

It is THE list. I hadn't seen Stetson mentioned anywhere in the longest time. See a October 25, 2009, posting, where I mentioned Stetson:

18212: Dry. MHA 1-11H-148-90; Reported 10/16/09. One of the very few dry wells in current boom. [Operational update, Feb 18, 2010: a pump was put on this well; they are sure they are in the Bakken; 1,470 bbls of oil to date, as well as 34,000 bbls of water. Remember it takes trucks, personnel and money to transport water away from a well. It appears this well is not economic. (1,470 * $60 = $88,000 after four months for a well that cost $6 million to drill.)] On March 5, 2010, reported 50 bopd after workover -- still not all that great. No production since June, 2010; probably shut in.

Filloon references this $3 million well that was drilled in the reservation near some of the best Bakken sites, and it came  up very, very wet. Water.

Highlights of Recent Bakken Investors Conference, Minot -- Bakken, North Dakota, USA

There are no shortage of opportunities to find out answers to your questions regarding the Bakken.

The most recent venue was the Bakken Investors Conference held this past week in Minot (regional links break early).

Among those presenters was Art Vivar of Rangeland Energy, who took the podium after Enbridge Pipelines to talk about the new oilfield rail-loading facility Rangeland is building near Epping, known as the COLT Hub.

"Following Enbridge, I'm sorry, we're a very small company, so I hope I won't disappoint many of you with our little story," Vivar said as the audience chuckled. "But we have a place and a role to play as well."

Vivar said Rangeland's focus is to make it easier within the region for the producers' oil to get to market.

Oil will be brought into the COLT facility either via pipe or rail, he said, and leave either into a larger pipeline or via rail transport.

In addition, speakers for the Western Area Water Supply (WAWS) authority also spoke.

It's Acreage, Acreage, Acreage (Location, Location, Location) in the Bakken -- North Dakota, USA

About a year ago I realized that the most important metric in the Bakken was total acreage held, and started writing about this about six months ago. I forget exactly when.

As recently as July 10, 2011, I posted a note to that effect, linking a SeekingAlpha.com article.

Now today, I see we have a Reuters story that says exactly that: it's all about net acreage in the Bakken. 

Energy exploration companies like Range Resources, Whiting Petroleum Corp, and Cabot Oil and Gas Inc., have something that bigger oil companies desperately want: extensive acreage in U.S. shale basins.

Those companies and a long list of others are considered by Wall Street analysts to be takeover targets as a perfect storm for deal-making brews.

Sustained low natural gas prices have left some of the smaller companies vulnerable after they spent heavily to amass large areas to drill, while big companies are awash in cash. Crude prices around $100 per barrel have also piqued interest in companies that own acres in oil-rich basins like the Eagle Ford and Permian in Texas.

This is one of the better articles linked today. Read it to get ideas on which companies might be takeover targets. Reuters has missed a fair number of possibilities. 

For Investors: Nice Motley Fool Story on Dividends -- XOM, COP, CVX

Link here.

Wharton professor Jeremy Siegel made a wonderful discovery in his book The Future for Investors. The greatest long-term returns typically don't come from the most innovative companies, or even companies with the highest earnings growth. They come from companies that happen to crank out dividends year after year. Simply put, since the 1950s, "the portfolios with higher dividend yields offered investors higher returns."

The key word is "typically."  

In Light of BHP Buying Petrohawk, One Analyst Says KOG and BEXP Could Be Next -- Bakken, North Dakota, USA

Link here.

The "headline" is the whole story.

At a 65% premium, BHP got Petrohawk for $12 billion.

At a 30% premium, BEXP < $5 billion.

At a 30% premium, KOG ~ $1.5 billion.

Pocket change for a big company.

Tesoro Replacing Declining Alaska Crude Oil at Washington Refinery With Bakken Oil -- Railcar Oil -- Another Huge Story For The Bakken -- North Dakota, USA

Link here.

Tesoro Corp said Friday it plans to expand crude supply to its refinery in Anacortes, Washington, from the Bakken shale prospect in North Dakota, helping to divert some of the glut of crude oil at Cushing, Oklahoma.

Data points:

• Tesoro will increase light sweet crude oil shipped via railcar to 30,000 bpd, vs current 2,000 bpd
• Bakken crude will replace declining Alaska North Slope production
• Anacortes refinery: 120,000 bpd refinery
• Tesoro will build loading and unloading facilities for daily shipments
• Cost: $50 million
• Time line: 9 - 12 month; once company gets permits
• Tesoro with long-term agreement to use Rangeland Energy's crude oil loading facility in Williams Co.
• This oil loading facility has a direct connection with Rangeland's High Plains crude oil gathering system
• Will decompress oversupply issues at Cushing

Key financial data point that might explain share price appreciation today:

Tesoro's latest move will help it expand supply to its refinery with a cheaper feedstock because of its advantageous logistical position in the Bakken, according to Greg Goff, the company's chief executive officer.

In addition, Tesoro has recently announced a $35 million plan to expand the capacity of its 58,000-bpd Mandan/Bismarck, North Dakota, refinery.

Most interesting comment in the story: the writer uses the number "3.6 billion barrels of technically recoverable oil resources" in the Bakken prospect. Oilmen in the Bakken estimate the number much larger, and based on prices paid/mineral acre, my hunch is that the number far exceeds 3.6 billion barrels of recoverable oil.

Despite Flooding / Moisture Problems, North Dakota Likely To Be #1 In Oil This Year -- Canola Oil

Link here (regional links break early).

Despite fewer acres, officials are saying canola should be strong enough for good returns and keep North Dakota as the number one canola producer in the U.S.

In 2010, North Dakota produced 89 percent of the nation’s canola crop, according to the U.S. Department of Agriculture National Agriculture Statistics Service. North Dakota saw a 27 percent decrease in the number of acres planted compared to last year.

I am always impressed how fast farmers can respond to changes in the market.

[North Dakota State University Research Agronomist Eric] Eriksmoen said that area farmers may have chosen to replace other crops because of crop rotations or because of the attractive prices when planning what crops to plant earlier this year.

One has to love the agronomist's Scandinavian name. 

Nice Discussion of "Re-Entering" Old Wells in North Dakota

Link here.

Again, for newbies, the entry by Teegue at that link is key.

This is an issue I do not understand -- re-entering "old" wells, but I will probably learn as I go along.

Some data points:

1. The general consensus is that drillers do not find it cost effective to go into "old wells."

2. It was my understanding that in North Dakota, an abandoned well / plugged well was the end of the story. An operator could not drill into that plugged well again. The whole process had to begin anew and the new well would be in the same location but not through the plugged well. I may be incorrect on this.

3. Regardless of whether one is allowed to drill through a cement-plugged abandoned well, most old wells are situated in the wrong location within the section for most new horizontal wells. The drillers want to site the well as close to the section line as possible to drain as much of the section as possible; old wells were farther from the section line.

4. Having said all that, unless I misunderstand the definition of "re-entry" or I am mis-reading some file reports, there are examples of wells that have been re-entered. One such example has turned out to be a very good well. Note: this well was DRY in the Red River formation, totally abandoned the Birdbear formation, and then hit a very nice payzone in the Bakken.

Again, this issue is confusing to me, but more to come, I'm sure.

Tipping Point for Ending the Minnesota State Shutdown: Beer -- Not a Bakken Story

Greg from "Freedom to Act" blog writes:

There was an imminent cut-off of Miller and Coors beer because the company waited until just before the shutdown to renew all of their 3-year permits (total cost $1300). Obviously the imminent beer cutoff was the crisis needed to get a tentative deal!

Greg normally posts at http://FourFiftyGas.com.

As crazy as it sounds, this can be backed up at CNN Money, not "fair and balanced," but in this case, probably accurate:

The MillerCoors brewing company will soon be forced to pull 39 brands of beers from every restaurant, bar and liquor store in the state of Minnesota.

It's all because the company wasn't able to renew their brand label registration far enough in advance before the state's government shut down.

"What that means is they're not able to either distribute or sell their product in this state," said Doug Neville, spokesperson for the Minnesota Department of Public Safety.

Neville said the bare-bones staff of the state Alcohol and Gambling Enforcement department have reached out to MillerCoors for a removal plan, so he said it will likely be a day or two before the company begins pulling the product.

If only essential personnel from the state are working, how would anyone from the state know if MillerCoors even pulled their beer, and if they didn't, was there anybody on the state payroll still working with the authority to enforce the ruling. Just asking.

Read more at his blog regarding the details of the deal to close the budget impasse in Minnesota.

Even By Bakken Standards, This Is a Huge Story -- New 720-Acre Industrial Park -- Major Truck Stop -- Larger Than A Section -- Bakken, North Dakota, USA

Link here (regional links break early).

Granite Peak Development, Casper, Wyoming, has broken ground on a new industrial park north of Williston, on US 2.

The 720-acre park will be between 56th and 57th street, about five miles north of Williston (at the Epping turn-off). My original posting regarding the site was incorrect. See comment below. A big "thank you" for "anonymous" for pointing out my mistake.

From the operations manager:

"We plan to announce a major truck stop, restaurants and hotels to anchor the property, along with a significant number of oilfield and construction-related businesses locating in this industrial park," [Terry] Metzler said. 

Many years ago the only truck stop in Williston closed down, and there is currently no "real" truck stop, although the Conoco station on US 2 just south of this new industrial park site has been a de facto truck stop. 

The old truck stop west of Williston closed after trucks put on larger fuel tanks and were able to travel between Fargo, North Dakota, and points in Montana without having to stop in Williston.

Even by the Bakken standards, this new 720-acre industrial park with "major truck stop" is a huge story.

For those doubting the Bakken story, ....

By the way, here is the website for Granite Peak Development in Casper.

President Obama Seeks to Streamline Permitting Process in Alaska

Link here. 

President Barack Obama on Tuesday called on federal agencies to better coordinate oil and gas permitting and other regulatory oversight as the industry looks to expand operations in the Arctic and as environmentalists ramp up their opposition.

The White House said a federal working group, which will be overseen by Deputy Interior Secretary David Hayes, will simplify oil and gas decision-making in Alaska by bringing together federal agencies to collaborate as they evaluate permits and environmental reviews.

The working group's formation comes partly in response to criticism about delays in federal air quality and construction permits both onshore and offshore in the Arctic.

"Time will tell if this working group helps streamline and expedite the process, as I hope it will, or if it adds another level of bureaucracy and red tape," said Rep. Don Young, R-Alaska. "In the meantime, I commend the president for taking a positive step in the right direction."

To quote "anonymous," "anyone can make a speech."

EPA: Fracking Safe

This seems to be a repeat of articles I've seen before, but it may be interesting to newbies.

This paragraph, of course, is my favorite:

However, thus far fracking's dangers are mostly theoretical. Earlier this year EPA Administrator Lisa Jackson - certainly no friend to the hydrocarbon energy industry - told Congress that there had been "no proven cases where the fracking process itself has affected water."

'Nuf said. 

EIA Provides Update on US Dependence on Foreign Oil

Link here.

The U.S. imported about 49 percent of the crude oil and refined petroleum products that were consumed during 2010, the U.S. Energy Information Administration (EIA) noted in a recent brief on the issue.

About half of these imports came from the Western Hemisphere, EIA said, adding that U.S. dependence on foreign petroleum has declined since peaking in 2005.

Canada is the United States' leading crude oil supplier.

And if we had the TransCanada XL on-line, even less would be coming from the Mideast. Ditto for offshore drilling. Ditto for faster permitting on BLM land in the west. Ditto for so much. 

NOG Analysis -- Bakken, North Dakota, USA

Lots of data here, SeekingAlpha.com, but it supports what I've blogged earlier about NOG.

Amtrak Back On Track -- Yes, It's a Bakken Story

Amtrak will resume operations on Empire Builder, Chicago to Seattle / Portland (Oregon).

Officials say track repairs have been made by BNSF Railway, which owns the track on which the Amtrak passenger trains run.

This means that oil shipments by rail should be back on track also.