The Million Dollar Way (The Bakken Oil Blog): 07/18/11

This is old news but combines news from two companies well-known in the Bakken: Slawson and Voyager Oil and Gas.

From Oil and Gas Financial Journal, July 1, 2010 (last year):

Voyager Oil & Gas Inc. is getting in on the Niobrara play, signing a $7.5 million exploration and development agreement with No. 40-ranked Slawson Exploration Co. Inc. to develop Slawson's 48,000 net acres in the Denver-Julesberg Basin Niobrara formation in Weld County, Colorado.

Wichita, KS-based Slawson will begin a drilling program in early July with an initial series of three test wells expected to be completed by October 2010. Depending on the results of these wells, the company expects to target 57 additional locations in the area throughout 2011.

Voyager purchased a 50% working interest in the approximately 48,000 acre block and will participate on a heads-up basis on all wells drilled, as well as participate for its proportionate working interest in all additional acreage acquired in an Area of Mutual Interest consisting of all of Weld and Laramie Counties.

Voyager will fund the purchase price and initial drilling commitments out of cash on hand and cash flows from current production. Voyager remains fully funded through 2010 with no debt and approximately $12.5 million of cash on hand.

Updates

January 22, 2016: Kaiser-Francis picks up 115 wells from Fidelity (MDU).

Original Post

This past week I noticed a "new" name on the NDIC daily activity report. At least it was new to me: Kaiser-Francis.

Tonight while taking a tour of the NDIC GIS map server, I noticed a constellation of five wells with fairly old permit numbers in a field quite a ways north of Williston. The wells intrigued me. The permit numbers: 10927, 15425, 15492, 15687, and 16078. They all target the Duperow formation, and with low IPs and relatively low production, they did not excite me.

But then I saw that the current operator of the these five old wells was a company called Kaiser-Francis Oil Company, the same one that I noticed recently on the daily activity report, and which I thought was a new operator.

It turns out that Kaiser-Francis is quite a story. The full story can be read at the Energy Bulletin.net in a story that was originally published in The Wall Street Journal, July 22, 2004.

It's a liquid natural gas story that is one of the more fascinating stories I've come across in the past few days.

It turns out that the "Kaiser" in Kaiser-Francis is a "publicity-shy businessman with a fortune built on oil and banks." Kaiser bought El Paso's new technology to liquify natural gas with plans to import natural gas into the US because of a perceived shortage of natural gas back in 2004. That was before hydraulic fracturing opened vast natural gas reserves in the US, and the US does not have a shortage of natural gas. I assume that the technology can be used to export US natural gas.

The Wall Street Journal suggested that Kaiser's liquified natural gas company could become one of the top 10 providers of natural gas in the U.S., just behind ConocoPhillips. Kaiser was 61 years old in 2004.

I don't know how that is working out, but at the time of the story, Kaiser was on Forbes' list of richest Americans.

Forbes magazine estimates Mr. Kaiser's wealth at $3 billion, placing him at No. 56 on its list of richest Americans. Much of his fortune came from high-risk bets in the banking and venture-capital areas, as well as the energy business. When bad loans to the oil industry left the Oklahoma energy and banking industries in tatters in the 1980s, he snapped up the Bank of Oklahoma from the Federal Deposit Insurance Corp. for $95 million.

Mr. Kaiser now owns a 70 percent stake, valued at $1.9 billion, in BOK Financial Corp., a publicly traded company that owns banks in Oklahoma, Texas, Colorado, Arkansas and New Mexico. Mr. Kaiser is so intense about his work that he once outfitted the back of a delivery van with a makeshift desk so that he could spread out his papers and work during the two-hour trips between Tulsa and Oklahoma City to visit banking clients.

With regard to his wealth:

With his wealth, Mr. Kaiser has endowed two foundations that have combined assets of more than $800 million. The foundations have given generously to nonprofit groups such as Oklahoma chapters of pro-choice groups and legal services for the poor. A major benefactor to the Jewish community in Oklahoma, which numbers about 5,000 people, Mr. Kaiser has told associates he plans to leave the bulk of his estate to charity. For every $1,000 he has given to Republican politicians, he has given $10,000 to Democrats, according to campaign contribution records.

And Kaiser-Francis:

Kaiser-Francis Oil Co. was created in the 1940s by Mr. Kaiser's uncle and parents, Jewish refugees from Nazi Germany who settled in Oklahoma. Mr. Kaiser graduated from Harvard and took over the family company in 1969. At the time, it had fewer than 10 employees and operations in a single state, Kansas. He expanded the business and his fortune dramatically, in part by buying up properties during the oil industry's inevitable busts. Today, Kaiser-Francis fills a five-story headquarters building in Tulsa, and is producing oil and natural gas in at least eight states. Production is up about 100-fold from 1969.

And now, in 2011, we have Kaiser-Francis with two new permits in Colgan oil field, north of Williston.

21163, 27, Kaiser-Francis, Spyglass 17-1 (vertical), Colgan oil field, Duperow; t12/11; cum 5K 11/12;
21164, 38, Kaiser-Francis Oil, Spyglass 8-4, Colgan, Duperow, s9/11; t12/11; cum 6K 11/12;

Other data points:
In 2009, Kaiser-Francis was ranked #20 among private oil and gas producers in the US (ranked by boe). Samson Resources (a name well-known in the Bakken) was #5 on that list; Slawson did not make the 2009 list.

From the Oil and Gas Financial Journal, February 1, 2009:

In one of two deals, Argonaut Private Equity, a private equity firm controlled by Kaiser, announced it is buying assets from Chesapeake Energy for $412 million in a transaction financed by Goldman Sachs. In the second transaction, Kaiser purchased $50 million of shares in another gas producer, Sand-Ridge Energy, from that company’s chairman and CEO, Tom Ward, formerly president and COO of Chesapeake before he cashed out and formed his own company in 2005. Both Chesapeake and Sand-Ridge are based in Oklahoma City.

Kaiser’s role in this is viewed by industry observers as important because of his reputation as a savvy investor who built Kaiser-Francis into one of the country’s largest private oil and gas producers in part by buying up assets during market downturns.

The Million Dollar Way (The Bakken Oil Blog)

Pages

Monday, July 18, 2011

No More Posts Today Until Late Tonight

KOG To Offer 20 Million New Shares -- Bakken, North Dakota, USA

Old News For Those Following Slawson, VOG, and the Niobrara -- Housekeeping -- Connecting Dots -- Nothing To Do With The Bakken

New Operator in the Bakken? in North Dakota? Hardly -- But Still Surprising -- Bakken, North Dakota, USA -- Kaiser-Francis

A Horizontal Re-Entry Into the Madison Formation -- North Dakota, USA