Elsewhere someone asked about the Elizabeth and Cecilia Stroh wells; both permits were canceled effective August 4, 2011.
I have followed the Stroh wells for a very long time; they are located in a very nice Bakken area: the Fayette and Cabernet oil fields.
For an update on the Elizabeth and Cecilia Stroh wells, click here.
At that post, one can link to the other Stroh wells. This is a particularly interesting Stroh link ("Gun Fight at OK Corral") which I updated this evening.
In addition, there is a label/tag for "Stroh" at the bottom of the blog where tags are.
Saturday, August 13, 2011
Connecting the Dots in Southwest North Dakota -- Bakken, North Dakota, USA
The dots:
[I calculate 89,500 net acres, as does their July 31, 2011, presentation. From a "PR" point of view, this acquisition, according to KOG, was important:
CHK's cryptic remarks about their prospect in southwestern North Dakota and CLR's very clear comments about the Three Forks formation in southwestern North Dakota are interesting to say the least. The amount of activity that WLL has laid down in the Bell field is very interesting. And now we have KOG entering the same area
Back of the envelope calculations:
For the $85 million: the 22,000 net acres, current production (200 boepd), and a new rig.
Somewhere I read that the production was from two wells, but I could be wrong on that. But let's say it was two wells (cost to drill: $14 million); a new rig ($12 million on eBay); leaves $60 million/22,000 net acres --> $2,700/acre. If the wells are worth more, the rig more, the $$ per acre goes down. If the rig is less, the wells less, the $$ per acre goes down, of course, but at least the $$/acre seems to be in the ballpark.
- The Chesapeake 2Q11 earnings conference call suggests something interesting in southwest North Dakota.
- Whiting (WLL) has two major operations in North Dakota: a) North Bakken Ops (centered around the Sanish); and, b) South Bakken Ops (centered around Bell). Reminder: Whiting is also testing the Red River formation, click on Maus.Whiting had the highest producing TFS well in the Williston Basin in this area.
- CLR has suggested something very, very interesting about the Three Forks in southwestern North Dakota
- KOG has 22,000 net acres in its SW BKN-TF Trend as noted on slides 9 and 10 of that presentation
Included in the transaction are approximately 25,000 net mineral acres and production of approximately 200 net barrels of oil equivalent per day (BOE/d). The total purchase price for the leasehold interests and associated assets is $85.5 million and is comprised of $71.5 million in cash and the issuance to the Seller of 2.5 million shares of Kodiak common stock. Kodiak funded the transaction through cash balances and borrowings under credit facilities including its reserve-based revolving line of credit. As part of the transaction, Kodiak entered into a contract for a new build drilling rig that was previously contracted to the Seller. The new build drilling rig is scheduled for completion in September 2011.It looks like they valued the 2.5 million shares at $5.60/share.
[I calculate 89,500 net acres, as does their July 31, 2011, presentation. From a "PR" point of view, this acquisition, according to KOG, was important:
Including today's acquisition, Kodiak's acreage position in the Williston Basin now approximates 100,000 net acres.]But I digress.
CHK's cryptic remarks about their prospect in southwestern North Dakota and CLR's very clear comments about the Three Forks formation in southwestern North Dakota are interesting to say the least. The amount of activity that WLL has laid down in the Bell field is very interesting. And now we have KOG entering the same area
***************
Everything below this is for my use only. Back of the envelope calculations:
For the $85 million: the 22,000 net acres, current production (200 boepd), and a new rig.
Somewhere I read that the production was from two wells, but I could be wrong on that. But let's say it was two wells (cost to drill: $14 million); a new rig ($12 million on eBay); leaves $60 million/22,000 net acres --> $2,700/acre. If the wells are worth more, the rig more, the $$ per acre goes down. If the rig is less, the wells less, the $$ per acre goes down, of course, but at least the $$/acre seems to be in the ballpark.
***************
It's hard to tell, but it looks like the newly acquired KOG acreage in the "SW BKN - TF Trend" is in the area of the Bicentennial, Squaw Gap, Mondak, and Poker Jim oil fields.
KOG Net Acreage -- July 31, 2011, Presentation -- Bakken, North Dakota, USA
It appears that KOG's new acreage, acquired on/about June 30, 2011, was the East Grizzly Prospect, far east Elm Coulee, in North Dakota, but I could be wrong, but that's how it looks to me. Also look at the map in the KOG presentation, slide 9.
Acreage for Bakken companies at this link.
Breakdown of slide 10 from KOG July 31, 2011, presentation:
Kodiak (KOG)
Acreage for Bakken companies at this link.
Breakdown of slide 10 from KOG July 31, 2011, presentation:
Kodiak (KOG)
- Total Bakken net acres: 93,500 net acres (ND: 85,000 ; MT: 4,500 acres)
- Prior to the June 30, 2011, acquisition: Total Bakken net acres: 70,000 net acres (Dunn County: 35K; McKenzie County: 35K)
- Elm Coulee Field
Grizzly Prospect: far southeast end of Elm Coulee on ND side (3,000 net acres)
- Western Trend
- North Flank Trend
- SW Bakken - TF Trend
- Eastern Trend
- (Other Williston Basin: Montana, northwest of Williston)
- Analyst's number: 72,000 net acres (December 31, 2010)
- Koala Prospect: southeast of Williston, south of river, Williams Count (10,000 net acres)
- Smokey Prospect: McKenzie County, 11,742 net acres; between their acreage on the reservation and the newer Koala Prospect area and just to the west of the southern tip of the Nesson Anticline (16,000 net acres)
Polar Prospect: northern and southern Divide, 2,752 net acres; just north of BEXP's Rough Rider(4,000 acres)
June 30, 2011 Acquisition -- East Grizzly Prospect: far southeast end of Elm Coulee on ND side (22,000 net acres)
Dunn County Core area: northeast Dunn County, south of river (west of river), FBIR (34,000 net acres)
Between First and Second Phase of Drilling Out the Bakken -- Kathy Neset -- 15,000 Workers in Crew Camps Across the Bakken -- Man Camps -- Bakken Rocks CookFest -- Bakken, North Dakota, USA
Update
Kathy Neset spoke at the Denver Bakken conference this past week, reiterating that fracking was safe. This is additional data point for Kathy Neset:
Kathy Neset has good reason to be excited about the Bakken. The geologist moved to North Dakota in 1979 and rode the boom cycle of the 1980s, building a geology and engineering company in Tioga called Neset Consulting Service. But her timing in moving here from New Jersey also meant she was part of the bust that followed.
But her company survived and now thrives - with one hundred employees and business all over the region. Her mission at the Bakken Summit was to tell these industry leaders that the fracking process used in the Bakken is completely safe for water quality in the region. It's a message she says is critical to deliver right now because of charges in the northeastern US that fracking has contaminated water supplies. She points out that the key difference is how deep the Bakken oil is - some ten thousand feet - more than five times the depth of any aquifers, meaning the facking process happens well below the water supply. Neset says the fracking process is indicative of the takeover of technology in the oil business right now.
Original Post
The story included a wonderful photograph of Kathy Neset, geologist and owner of Neset Consulting.
I have never met her, but I first blogged about her quite some time ago, at least back as far as the November 8, 2010. If you go to that site, I can't guarantee links from there are still intact; regional links tend to break quickly.
Recently Ms Neset spoke to attendees of the annual Bakken Rocks CookFest.
Kathy Neset, geologist and owner of Neset Consulting, has identified four phases to drilling and oil recovery. Right now, Kathy states, we are between phase one and phase two.Ron Ness, president of the North Dakota Petroleum Council brought in representatives from across the region to speak on safety, infrastructure, technology.
Kathy also states that two years ago, with the technology present then, researchers projected that the Bakken had four billion barrels of recoverable oil. Today, with drilling technology improving and with new formations being identified, oil industry experts predict there is even more oil that can be recovered than was initially estimated.
Ness also touched on housing, and stressed the importance of the ‘crew camps,’ stating that 15,000 workers are currently housed in crew camps all over the Bakken.
A Huge "Thank You" to Representative Glen Froseth, Kenmare, North Dakota -- Bakken, North Dakota, USA
A reader recently sent me the reply he had received from Representative Glen Froseth with regard to a question on activity in the most recent North Dakota legislative session.
For the moment, I won't post it, for various reasons, but mostly because I'm not sure it was meant for wider distribution. There was nothing in that correspondence that couldn't be found in official documents publicly available, except perhaps for some personal opinions, which are neither here nor there, in my mind, for the purpose of this posting.
Are you still with me?
The point of this rambling is to send out a huge "thank you" to Representative Glen Froseth for a most informative note, answering a constituent's question with the clarity I seldom see coming out of government. I was quite impressed.
I have not seen such a well-written letter since 30 years ago or so when I received a letter from the Democratic presidential nominee, US Congressman and Senator, Henry Jackson. He responded to my letter and said he would do what he could to make my military stipend (educational) tax-free. And sure enough, some time later, the stipend was increased to take into account taxes. I ended up with the same amount of money for education, but paid back some of it in taxes, if I remember correctly. Maybe it was not increased, but tax-free. I forget. I just remember the nice letter from Scoop Jackson. RIP.
I had written to all six or seven Democratic presidential nominees. All but one responded. All responses were boiler plate replies except one. Only Scoop Jackson came back with a personal reply. He did not know me; I did not know him. I was a resident of North Dakota, not Washington state.
Yes, folks enjoy clear, honest letters from their representatives.
(Note: I have no idea what party Mr Froseth belongs to and until now had not heard of him.)
For the moment, I won't post it, for various reasons, but mostly because I'm not sure it was meant for wider distribution. There was nothing in that correspondence that couldn't be found in official documents publicly available, except perhaps for some personal opinions, which are neither here nor there, in my mind, for the purpose of this posting.
Are you still with me?
The point of this rambling is to send out a huge "thank you" to Representative Glen Froseth for a most informative note, answering a constituent's question with the clarity I seldom see coming out of government. I was quite impressed.
I have not seen such a well-written letter since 30 years ago or so when I received a letter from the Democratic presidential nominee, US Congressman and Senator, Henry Jackson. He responded to my letter and said he would do what he could to make my military stipend (educational) tax-free. And sure enough, some time later, the stipend was increased to take into account taxes. I ended up with the same amount of money for education, but paid back some of it in taxes, if I remember correctly. Maybe it was not increased, but tax-free. I forget. I just remember the nice letter from Scoop Jackson. RIP.
I had written to all six or seven Democratic presidential nominees. All but one responded. All responses were boiler plate replies except one. Only Scoop Jackson came back with a personal reply. He did not know me; I did not know him. I was a resident of North Dakota, not Washington state.
Yes, folks enjoy clear, honest letters from their representatives.
(Note: I have no idea what party Mr Froseth belongs to and until now had not heard of him.)
Enercom Conference -- Agenda Highlights -- Part II
Part II
Part III
Part V
I recommend removing this post and going directly to Part IV linked above.
What To Watch For in The Enercom Conference This Week -- Part I -- Bakken, North Dakota, USA
Part I
Part III
Part V
If I remember correctly, the Enercom Conference is, without question, the conference for those interested in the Bakken. It is being held this week in Denver, Colorado.
For those who cannot attend, the presenters will place their presentations on the web following their oral presentation. (Man, that's an awful sentence.)
It is so important, so relevant, so interesting that I have moved the link for this conference to the top of the sidebar at the right for easy reference.
This is what I will be looking for in the presentations of the oil exploration and production companies:
- How much the Bakken represents vs the company's total worldwide acreage?
- Whether the oil company has increased its Bakken acreage? Bakken acreage is expensive, so if they've increased Eagle Ford acreage, that might be a trade-off. The Niobrara, in 2011, is not a trade-off for the Bakken in 2011. Companies not increasing Bakken acreage concern me.
- Whether the company has made any new strategic decisions? Example: Oasis starting a new company, Oasis Wells Services. Are companies thinking outside the box?
- Ratio of rigs to dedicated frack teams.
- Ratio of rigs to acreage.
- Comments on infrastructure initiatives. If only bringing oil to surface and not getting it to pipeline or CBR facility, that's a problem in my mind
- Whether the company highlights any new technology? Fracking changes, particularly, combined with monitoring of microseismic arrays (which I don't fully understand)
- Uniqueness of business models. I've talked about this before. The CLR business model is substantially different than the business model of WLL, for example. BEXP is different than both of those. NOG and VOG are certainly different.
I won't follow the nitty-gritty of the financial slides, for reasons I've posted numerous time.
I might try to sort out finding and production costs. Red flags will be trends going the wrong way within a company, but comparing costs between companies is fraught with difficulty. They may count things the same way (SEC rules) but they can present them differently and rely on footnotes to further explain them.
Bondholders Vs Pensioners -- Not a Bakken Story
I find this particular story very interesting, concerning the promises to bondholders and retired policemen, firemen, and teachers in a city that has declared bankruptcy. I find it interesting in light of the General Motors bailout / government takeover, and the recent recall elections in Wisconsin over teachers' health care benefits.
Although there are hints of some bias in the story, it seems to be quite balanced, and like The Times in general, very well written.
I remember years ago when I first served overseas with the military, the Department of Defense teachers obtained their medical care through the US military. They were charged a nominal fee for this benefit. At least in my mind it was nominal, considering the options on the economy, especially in such places as Turkey. Most teachers were young, healthy, and were able to receive routine medical care back in the states during summer recesses. The union leaders, for some unknown reason, suggested that the teachers would get a better deal going with a private insurer instead of with the military health care system. In so doing, their salaries would be raised (slightly in my mind), by the amount that was being taken out to pay for military health care. Obviously many of the younger, healthy teachers went without coverage altogether.
I remember some years later, the teachers union arguing with the federal government that overseas DOD teachers should be able to access military health care facilities for emergency and urgent health care needs. I don't recall how it all ended but I do believe the DOD agreed to cover emergency care; the problem, of course, then became defining emergency care.
This, of course, takes me back to the story linked above when the writers note that the city unions made a conscious decision decades ago to have pensions backed by the local government rather than by the federal government (social security).
There are no easy answers, and my hunch is it will not get any easier going forward.
Although there are hints of some bias in the story, it seems to be quite balanced, and like The Times in general, very well written.
I remember years ago when I first served overseas with the military, the Department of Defense teachers obtained their medical care through the US military. They were charged a nominal fee for this benefit. At least in my mind it was nominal, considering the options on the economy, especially in such places as Turkey. Most teachers were young, healthy, and were able to receive routine medical care back in the states during summer recesses. The union leaders, for some unknown reason, suggested that the teachers would get a better deal going with a private insurer instead of with the military health care system. In so doing, their salaries would be raised (slightly in my mind), by the amount that was being taken out to pay for military health care. Obviously many of the younger, healthy teachers went without coverage altogether.
I remember some years later, the teachers union arguing with the federal government that overseas DOD teachers should be able to access military health care facilities for emergency and urgent health care needs. I don't recall how it all ended but I do believe the DOD agreed to cover emergency care; the problem, of course, then became defining emergency care.
This, of course, takes me back to the story linked above when the writers note that the city unions made a conscious decision decades ago to have pensions backed by the local government rather than by the federal government (social security).
There are no easy answers, and my hunch is it will not get any easier going forward.
For Investors: Big Cap Recommendations Following Recent Stock Market Volatility
XOM.
Oil service companies.
Both from SeekingAlpha.com.
I posted a lot of stand-alone posts yesterday; it's possible some may have been missed. This is probably the most important post I put up yesterday, also with a link to SeekingAlpha.com.
Yes, it's a slow morning, but I felt I needed to post something new for those enjoying their first cup of coffee on the west coast and checking out the Bakken.
Oil service companies.
Both from SeekingAlpha.com.
I posted a lot of stand-alone posts yesterday; it's possible some may have been missed. This is probably the most important post I put up yesterday, also with a link to SeekingAlpha.com.
Yes, it's a slow morning, but I felt I needed to post something new for those enjoying their first cup of coffee on the west coast and checking out the Bakken.
Grain Farmers Need to Have Commercial Drivers Licence (CDL) and Soccer Moms Taxi Medalions
Regulators run amok.
The link takes you to the story. I have to thank "Carpe Diem" for spotting it.
The US Department of Transportation argues that grain farmers need commercial drivers licenses. In addition to the fee for the license, the holder would require annual physical exams; and, the holder would need to log all trips, including short trips from the yard to the field.
US DOT says they have jurisdiction because most grain leaves the state and, thus, the grain farmers are involved in interstate commerce.
From another site, same story:
The same regulators note that many six-year-old children eventually go on to college or join the military, and in preparation for those jobs, these six-year-old children attend elementary school. Soccer moms transporting their children, or the children of friends, are engaged in interstate commerce and will also require CDLs. For those moms who verify that they will only transport children who have no future, the state will only require a taxi medallion. Taxi medallions in New York City now average $650,000. Rules will no doubt be formulated by the newly created Whited House Soccer Moms Council.
I cannot make this stuff up.
I have not yet found the link for the soccer moms but I'm sure it's out there.
The link takes you to the story. I have to thank "Carpe Diem" for spotting it.
The US Department of Transportation argues that grain farmers need commercial drivers licenses. In addition to the fee for the license, the holder would require annual physical exams; and, the holder would need to log all trips, including short trips from the yard to the field.
US DOT says they have jurisdiction because most grain leaves the state and, thus, the grain farmers are involved in interstate commerce.
From another site, same story:
(It is also important to note here that DOT Secretary Ray LaHood holds a seat on the newly created White House Rural Council. A powerful group whose members have ties to George Soros and The Center For American Progress.)This is truly scary, the part about President Obama establishing the "Rural Council" which comes up with rules like these. No wonder the Tea Party is gaining traction.
The move by the DOT appears to be “legislation through regulation.” By reclassifying all farm vehicles and implements as Commercial Vehicles, the federal government will now be able to claim regulatory control over the estimated 800,000 farm workers in America, at the same time, overriding the rights of the states.
The same regulators note that many six-year-old children eventually go on to college or join the military, and in preparation for those jobs, these six-year-old children attend elementary school. Soccer moms transporting their children, or the children of friends, are engaged in interstate commerce and will also require CDLs. For those moms who verify that they will only transport children who have no future, the state will only require a taxi medallion. Taxi medallions in New York City now average $650,000. Rules will no doubt be formulated by the newly created Whited House Soccer Moms Council.
I cannot make this stuff up.
I have not yet found the link for the soccer moms but I'm sure it's out there.