Some Interesting Tidbits From Whiting's 2Q11 Conference Call -- Bakken, North Dakota, USA

Whiting thinks their Lewis and Clark prospect in southwestern North Dakota could be equal to two or three "Sanishes."

Their Lewis and Clark prospect has up to 250 1280-acre units. 

WLL still has 2.5 years of drilling inventory in the Sanish. WLL's Lewis and Clark prospect is about three times larger than the Sanish. Take a look at the NDIC GIS map server, click on "Find Well" on the left side menu, and type in "Sanish." Take a look at how WLL has developed that field, imagine 2.5 years of more drilling (WLL has seven rigs in the Sanish), and then imagine that same activity in the much larger Lewis and Clark.

"It's all about the rock" -- whether one uses sliding sleeves (SS) or plug and perf (PP) doesn't matter with regard to outcome. But one method is much quicker and much less expensive.

WLL thinks it can get the cost of its well in its Lewis and Clark prospect down to $5.5 million by using DWOP process (drawing wells on paper).

With the new technology WLL is reaching total depth in less than fifteen (15) days --

At one point, the CEO was very, very emphatic (the audio is much, much better than the transcript here):

To try to summarize for you, in terms of what we think on average across the play, I'm going to give you a range, 300,000 to 500,000 BOEs per well and about a $6 million well cost. So roughly somewhere between $18 million and $24 million of future net for a $6 million well cost. I think that will be the range across the play. And by God, I think that's one of the best plays going on in the United States today.

Payout: a typical Three Forks well at 400,000 BOEs , with about a 92% IRR, a 1.2 year payout, about 3.2:1 on investment at $90 WTI.

More from the CEO:

But Lewis & Clark, we believe, is a home run and maybe 3 home runs, i.e., 3 times as big as Sanish. So we're highly optimistic about it, because the economics are great. The only thing I can say is maybe it'll average more like 3, 3.5:1, than the 4 or 5:1s that we were getting on our money early on in the little Bakken development at Sanish, but those are great results. In fact, the oil prices are going up and helping us. We also still, in our opinion, going to pay out in somewhere between just under 1 year and 2 years across that 300,000 to 500,000 BOE EUR range. So I'm telling you, it's the best play I've seen in my now almost 40 years in this business.

It's a very long post, but lots of information, and much of it near the end of the post. If it interests you, listen to the conference call (I believe conference calls only stay up for a limited amount of time) or read the transcript when/if it comes out.

Yup, we're still in the early innings.

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For folks interested in reading about Whiting's "discovery well" in their Lewis and Clark prospect, click here. 

On November 25, 2009, the Federal 32-4HBKCE flowed 1,835 barrels of oil and 811 thousand cubic feet (Mcf) of gas per day or 1,970 barrels of oil equivalent (BOE) per day during a 24-hour test of the Three Forks formation at a vertical depth of 10,530 feet. The initial 24-hour production rate was gauged on a 28/64-inch choke with a flowing casing pressure of 700 pounds per square inch (psi). The well was fracture stimulated in 15 stages, all using sliding sleeve technology. Whiting holds a working interest of 84% and a net revenue interest of 71% in the Federal well.

The Federal 32-4HBKCE was a re-entry well (to the best of my knowledge); it is the oldest permit in my database; #15412, to granted to Equity Oil on March 28, 2003. To date (through May, 2011), that well has produced 54,000 bbls of oil from the Birdbear, and 125,000 bbls from the Bakken pool. It continues to produce at 4,500 bbls/month and the decline curve has leveled off significantly.

Samson Oil and Gas Closes on 20,000 Acres Of Williston Bakken in Montana

Link here.

Samson O&G has closed its purchase of 20,028 acres of oil and gas leases in the Fort Peck Indian Reservation in, Roosevelt County, Montana, from the Fort Peck Energy Company (FPEC).

When It Rains, It Pours -- Global Warming Curiouser and Curiouser -- Not a Bakken Story

The first article, the "polar bear" story:

Just five years ago, Charles Monnett was one of the scientists whose observation that several polar bears had drowned in the Arctic Ocean helped galvanize the global warming movement.

Now, the wildlife biologist is on administrative leave and facing accusations of scientific misconduct.

The federal agency where he works told him he was on leave pending the results of an investigation into "integrity issues." A watchdog group believes it has to do with the 2006 journal article about the bear, but a source familiar with the investigation said late Thursday that placing Monnett on leave had nothing to with scientific integrity or the article.

The second article, NASA blows hole in global warming alarmism:

NASA satellite data from the years 2000 through 2011 show the Earth's atmosphere is allowing far more heat to be released into space than alarmist computer models have predicted, reports a new study in the peer-reviewed science journal Remote Sensing.  

The study indicates far less future global warming will occur than United Nations computer models have predicted, and supports prior studies indicating increases in atmospheric carbon dioxide trap far less heat than alarmists have claimed.

The third story, the Viking's coal-powered ships caused global warming during their millenium:

 This review of changes in nature and culture during the past 1,000 years was published in the April 11 issue of the Journal of Energy and Environment. It puts subjective observations of climate change on a much firmer objective foundation. For example, tree-ring data show that temperatures were warmer than now in many far northern regions from 950 to 1100 A.D.  

Fourth story, EPA's ozone restrictions cost more than benefits derived.

Inconvenient, but other than that, no comment.

Six (6) New Permits -- Bakken, North Dakota, USA

Daily activity report, July 28, 2011 --

Operators: CLR, Enerplus, Arsenal, Denbury, Dakota-3, and Whiting

Fields: Jim Creek, Mandaree, Stanley, Sanish, and a wildcat.

I haven't heard "Mandaree" mentioned lately and there were two in Mandaree today -- a permit there for Enerplus, and a permit there for Dakota-3.

Whiting was issued another permit in its cash cow, the Sanish.

Abraxas permit #19331 expired; Zavanna canceled its #18070 permit.

Baytex seems to be getting more active but maybe just a recent spike. Of the six wells that were granted "tight hole" for well files, two of them were for Baytex; three for EOG, and one for WLL.

Holy Guacamole, Batman: Little Tioga Reels in $8 Million -- State Authorizes Millions To Cities Out West for Oil Impact -- Bakken, North Dakota, USA

Data points (regional links break early):

$54 million authorized in grants

• Watford City: $12.3 million
• Williston: $12 million
• Tioga: $7.7 million -- almost twice that of Minot
• Dickinson: $5 million
• Stanley: $4.1 million (received full request)
• Minot: $4 million
• Parshall: $2.4 million
• Killdeer: $2.1 million
• Plaza: $1.1 million (received full request)
• New Town: $869,000
• Crosby: $811,000
• Belfield: $200,000
• Wildrose, $100,000
• Grenora, $100,000
• Arnegard, $100,000
• Beach: $100, 000 
• Columbus: $75,000
• Kenmare: $50,000
• Berthold: $50,000
• Lignite: $50,000
• Mohall: $50,000
• Ross, $50,000
• Ray, $50,000

Most of the projects were for street projects, or water and sewer improvement projects.

Some numbers rounded. Some data was obtained from the Mountrail County Promoter, August 4, 2011. 

This give folks an idea where the activity is. Tioga receives almost twice that of Minot, and Watford City ekes out slightly more than Williston. I recently drove through the town of Parshall. The only evidence of Parshall was the highway sign saying you were in Parshall. There might have been two residential structures at that location.

A Top Ten story!

Williams County Denies Man-Camp Request -- Bakken, North Dakota, USA

Link here (regional links break early). From the Williston Herald:

Lodging Solutions representative Pat Ellingson outlined the proposal. Ellingson said the camp would consist of six 36-bed dormitory-style units, or 216 total beds.

It would be located north of Williston on the acreage where the Target Logistics Williston North Lodge sits.

Ellingson said the camp would be fully enclosed with kitchen and dining facilities, recreation and laundry rooms and have a 40,000-gallon waste water storage tank.

Commissioner Tate Cymbaluk noted that he was still opposed to additional temporary housing in the area north of 26th Street and south of Williams County Road 6 until more safety improvements are made along U.S. Highway 2.

That request was denied by the Williams County Planning and Zoning Commission; another request was forwarded without recommendation to the Williams County Commission. 

Fifteen Minutes of Paradise -- Get Your Mind Off The Debt Ceiling Debate -- Enjoy The Bear Den in North Dakota -- Hauling Oil -- Bakken, North Dakota, USA

Huge, huge thanks to trucker for posting fifteen minutes of paradise -- driving his Kenworth W900 oil tanker into the Bear Den in western North Dakota. The Bear Den is not the roughest part of North Dakota, but this video will counter all arguments that North Dakota is one big huge flat state.

Again, thanks for posting!

Hauling oil in the Bakken, North Dakota, USA 

Wow, this is cool. Be sure to watch to the end.

If you go to the YouTube site where this video is, you can check out at least seven more of his videos including this one of Santa's reindeer:


The deer don't want to get back into that deep snow, that's the problem. To his credit, the truck driver was driving about a slow as one could reasonably expect (20 mph?). The deer were able to find a spot to get off the road.

Eleven (11) New Permits -- Bakken, North Dakota, USA

Daily activity report, July 27, 2011 --

Operators: EOG (3), Zavanna (2), Samson (2), Dakota-3, (2), Helis, KOG

Fields: Squaw Creek, Paulson, Kittleson Slough, South Fork, Parshall, Stony Creek, and two wildcats

Dakota-3 has the two wildcats, and they will be on the same pad in Dunn County.

EOG has two wells going on the same pad in Mountrail County (Kittleson Slough).

Zavanna's two new wells will both be in Stony Creek, but on different pads.



Some nice wells reported today:

• 19329, 1,261, BTA, 20711 Bibler 67 1H, Williams
• 19395, 778, Hess, Haug 14-19H, Williams
• 19576, 1,223, BTA, 20711 Erickson 3130 1H, Williams

Whiting's Second Quarter 2011 Financial and Operating Results -- Bakken, North Dakota, USA

As you go through all the data below, pay particular attention to the results of two wildcats in McKenzie County (Arnegard 21-26H and Rovelstad 21-13H).

Also, when you look at the new production records and the increased cash flow and income/share, remember, this was one of the toughest quarters experienced in the Bakken to date with floods, shut in wells due to muddy roads, truck traffic shut down in Williams County due to road conditions. With that in mind, this report practically shouts: HUGE QUARTER.

Zachritz at Seeking Alpha weighs in on report.

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Data points and comments from the WLL second quarter 2011 financial and operating results. 

Interesting tidbits at end of this post, as well as here. 

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For investors: remember, WLL split their shares 2-1 back in late February, 2011

Production records in 2Q11

• WLL's Bakken production: new production record -- 58,105 boepd gross (31,161 boepd net) on July 19, 2011
• WLL in the Sanish field: reached 44,102 boepd (22,817 boepd net) on July 19, 2011

Rigs in the Williston Basin

• 17 rigs
• Typical inventory of 20 - 25 wells waiting to be completed (fracked)
  

Fracking

• 2.5 dedicated frack crews
• 18 - 20 wells / month through the rest of the year (2011)
• Expect to reduce current 44-well inventory of operated wells waiting for completion to below 25 by November 30, 2011
• Commentary on fracking backlog here

Shut-In Wells

In several recent daily activity reports, I have noted some wells were shut in (not only WLL but also other producers). This quote explains what is going on in many cases:

We have 11 service units running in the Sanish field and are making good progress in placing back into production wells that were shut-in during the inclement weather due to muddy roads. As of July 15, 2011, we had 27 wells waiting for a service unit. We expect this inventory to be eliminated by September 30, 2011.

Financial Results (some numbers rounded)

• Discretionary cash flow in 2Q11 increased 37% to $313 million (mostly due to higher price of oil)
• Net income increased 17%, to $1.73/share vs $1.18/share comparable quarters

Net Acreage in the Bakken

• CEO: >680,000 net acres in the Bakken/Three Forks system
• Prior: 678,000

CAPEX Increased To $1.6 billion from $1.35 billion

• 18 additional wells in Hidden Bench (Watford City area)
• 6 additional wells in Cassandra
• 5 additional wells in Starbuck

Recent Notable Wells

The CEO presented several recent notable well results. All of these are 2010 permits except the Nesheim well (2011 permit). The two Hidden Bench wells are wildcats. The Hidden Bench prospect is in the Watford City, North Dakota, area. The Sanish prospect is WLL's cash cow.

• 19684, 3,092,WLL, Arnegard 21-26H, Hidden Bench, Bakken, wildcat
• 20014, 2,450, WLL, Rovelstad 21-13H, Hidden Bench, Bakken, wildcat
• 20451, 3,752, WLL, Nesheim 11-24XH, Sanish, Bakken
• 19475, 2,835, WLL, Brookbank State 41-16XH, Sanish, Bakken
• 19972, 2,294, WLL, Oppeboen 14-5WH, Sanish, Bakken
• 19860, 1,338, WLL, Vangen 11-3TFH, Sanish, Bakken
• 19687, 2,108, WLL, Clemens 34-9TFH, Lewis and Clark, Bakken
• 19923, 1,028, WLL, Richard 21-15TFH, Lewis and Clark, Bakken,
• 19917, 282, WLL, Maus 23-22, Big Island, Red River,

Regarding those wildcat wells, here's more from the report:

Hidden Bench Prospect. Whiting completed the Arnegard 21-26H discovery well at its Hidden Bench prospect flowing 2,423 barrels of oil and 4,012 thousand cubic feet (Mcf) of gas or 3,092 BOE per day from an 8,913-foot lateral in the Bakken formation on June 23, 2011. The flow rate was gauged on a 48/64-inch choke with a flowing casing pressure of 900 psi. The well, which was drilled to a vertical depth of approximately 11,490 feet, was fracture stimulated in a total of 30 stages, all using sliding sleeves. Whiting owns 59,170 gross (30,905 net) acres in the Hidden Bench prospect, located in McKenzie County, North Dakota. The Company plans to drill a total of 11 operated wells in the prospect in 2011.

Also at Hidden Bench, Whiting completed the Rovelstad 21-13H flowing 1,880 barrels of oil and 3,419 Mcf of gas (2,450 BOE) per day on June 15, 2011. The well was tested on a 48/64-inch choke with a flowing casing pressure of 700 psi and was fracture stimulated in a total of 30 stages, all using sliding sleeves. The Rovelstad well is located approximately two miles northeast of the Arnegard well.

Look at the Red River well:

Big Island Prospect. At our Big Island prospect in Golden Valley County, North Dakota, we completed the Maus 23-22 pumping 282 barrels of oil per day from the Red River formation at a depth of approximately 12,450 feet. This is a conventional vertical well that we believe sets up four more tests of adjacent Red River prospects. We estimate EURs in this area at 400,000 BOE for a completed well cost of only approximately $3.8 million. 

Comment: conventional vertical well vs horizontal, fracked well

• A EUR of 400,000 BOE is at the lower end of the lower-production Bakken wells. Bakken wells cost upwards of $8 million to complete. 

CONFERENCE CALL

Listening to the conference call, these are soundbites that caught my attention:

• Whiting wells generally pay out in one year or less (remember these wells are expected to produce for 30 -- 35 years)
• Hidden Bench and Cassandra Prospects in North Dakota gaining more attention
• Increased acreage in the Bakken by over 76,000 net acres; >680,000 net acres
• Across the Bakken, WLL paid an average $419 per net acre -- core Bakken acreage is now going for $8,000/acre
• Lewis & Clark prospect at 254,000 net acres is 3.5 times larger than WLL's phenomenally prolific Sanish prospect
• In the Lewis & Clark, WLL controls 164 1280-acre units with an average 64% working interest
• Lewis & Clark: decline rates more shallow than in the Sanish
• Lewis & Clark: EURs will average 300 to 500,000 boe
• In the Sanish, 261 sites left to drill; represents 2.5 years of drilling activity
• Pipeline from Sanish field to the Enbridge field at Stanley has been completed, saving $2/bbl in transportation costs

Over and over, WLL mentioned the phrase "sliding sleeves"

• 30-stage, all using sliding sleeves, frac for the very productive Arnegard well
• 30-stage, all using sliding sleeves, frac for the very productive Rolvestad well
• They compared SS with PP in harder rock area and found no difference in production results between the two methods; SS is much faster (days instead of weeks); and much less expensive
• Can do SS in one day, rather than 7-9 days for PP; and at much less cost; and production is not different; "it's all about the rock"
• Combining PP/SS -- Sanish -- microseismic to see what they are doing -- 60-stage completion being tested -- BHI and HAL equipment both being used

Lewis and Clark: "one of the best" plays in the United States today

• 300 - 500 boe/well
• Cost: $6 million/well; production: $18 - $24 million of future net over the life of the well 
• "There may be two or three Sanishes in the Lewis and Clark

Wow, wow, wow! Cost of wells will be coming under $5 million; being drilled in 14 days.

Fracking in the Bakken -- How Long To Frac? How Bad Is the Backlog? -- WLL 2Q11 Results Shed Light

From Whiting's 2Q11 financial and operating results:

[Whiting] currently [has] two full-time dedicated frac crews and one half-time frac crew working in the Williston Basin and believe they are capable of fracing approximately 18 to 20 wells per month between now and year-end 2011. Therefore, [WLL expects] to reduce [their] current 44-well inventory of operated wells waiting on completion to below 25 by November 30, 2011. Based on [their] current drilling rig count of 17 rigs working in the Williston Basin, 20 to 25 wells being prepared for completion represents a typical inventory [for Whiting].

2.5 crews --> 20 wells/month --> about 8 completions/frac team/month
17 rigs result in inventory of 25 wells/month waiting to be fracked

I interpret that to mean if there are no disruptions to the schedule (particularly weather), WLL's dedicated frac crews can keep with completed wells. Drilling one well/month, 17 rigs results in about 17 rigs/month, and the 2.5 teams can frac up to 20 wells/month.

By the end of the year, WLL expects to be back on track after a horrendous winter and spring earlier this year.