Updates
February 5, 2012: Teegue provides his thoughts on this issue at this thread.
Original Post
Link to Bismarck Tribune. [Chesapeake] says it's taking a time-out to analyze results from six confidential wells.
The company has the attention of people living in the New England, Regent and Mott areas, who are waiting to see if it will drill another 12 wells that have been permitted, including a new one just last week in Hettinger County.
CHK has leased at least 100,000 mineral acres in Hettinger County alone, Resner estimated.
[A company spokesman] denies talk that the company is pulling out of its southwestern North Dakota probe.Link here to Dickinson Press.
I can only assume they are opening the champagne bottles in the Dickinson Press newsrooms:
Chesapeake Energy, a major oil company with work sites south of Dickinson, is uprooting two rigs and could possibly move out of North Dakota, said Kelsey Campbell, coordinator of corporate development and government relations for the company.I was alerted to this in a comment/e-mail (I now forget) about two months ago, but chose not to post until confirmatory reporting. I may have posted one of the notes; I forget. The writer said that Chesapeake had pulled its landmen out of Hettinger County. In fact, that might have been a news story. I've forgotten.
“We’re moving our rigs out of the area for the time being and not drilling anymore wells until we have a better idea of where we want to continue our exploration in the future,” Campbell said Thursday."
The company is not sure when the rigs will be moved. Campbell said “there hasn’t been as much activity in the southern area as there has been up north near Williston” and they are looking to collect core samples in other areas.
Regardless, not a big deal in the big scheme of things. This will take some pressure off the Dickinson folks for which they seem to want.
But Chesapeake has huge opportunities elsewhere and it can be a nuisance to manage two outlying rigs if not a lot is happening.
As I have noted since late last fall, the center of activity will most likely be around Watford City in 2012.
Probably an indication that the wells they have drilled and were on the confidential list were not successfull? Thoughts?
ReplyDeleteI remember to this day, the response I got from my 8-year-old granddaughter when I came to a similar conclusion regarding an unrelated subject. I can't repeat the comment here, but she did refer to me as "Sherlock."
DeleteThe Bismarck Trib interviewed a different employee with Chesapeake.
ReplyDeletehttp://bismarcktribune.com/news/state-and-regional/chesapeake-analyzing-well-results-at-far-edge-of-bakken/article_4f78bc4a-4e00-11e1-9e68-001871e3ce6c.html
I'm not exactly sure how accurate the NDIC's active drilling rig next location list is but one of the CHK-Nomak rigs is slated to move to the next township West.
Thank you; I was a bit delayed getting the Bismarck Tribune story linked; I was behind a day in blogging.
DeleteCHK's two rigs won't make a huge dent in overall rig count. If OXY USA decreases rigs from 16 to 6, that would be significant. Remember, each rig generates about $10 million/month.
actually it is not surprising at all that Chesapeake is leaving.. they did in Dickinson what they did in other areas using Blanaca Peak Energy are a front for them to gather up leases and now terminated that relationship with them..
ReplyDeletethey got as many acres leased up on long term leases 5 years plus option for three more.. my reasioning for the two rigs that were drilling were used as a ploy to get theremainder of folks holding out on leasing to sign, typical for Chesapeake.. they are very investor friendly, but not at all mineral or land owner friendly...be a nice package of leased acres to sell to another company..as far as oxy pulling their rigs, im sure it has to do with load restrictions coming on soon and not taking a chance of getting stuck here in cas fracing becomes an issue
Folks have been commenting for quite some time about which company would sell its acreage; you could be correct.
DeleteJust talked to a friend up in North Dakota, and they said that a few of the Chesapeake confidential wells are actually producing (or at least there is a well there at the moment) Will be interesting to see what the production is when they come off the list.
ReplyDeleteOh, I"m sure they are producing, but to what degree, as you suggest is the issue. And, there are many, many other issues.
DeleteProduction is an issue, what other issues are there? I am kind of new to following the bakken, so am just gathering information.
ReplyDeleteThe cost of drilling; the availability of personnel; infrastructure (how much pipeline is laid in the area).
DeleteCheck out well file #21143. It is listed as confidential but you can read the geologists report. In my uneducated opinion I thought it looked pretty positive.
ReplyDelete100,000 acres in this remote location is not much, about 156 square miles. From Dickenson to Mott that would be a swath about 5 miles wide.
Future value of mineral acres will be lower if there is a local consensus that says they tried and failed so lets take what we can get.
What can you tell me about file #21135 Decker well? Where can you read geologists reports? That is another Chesapeake well my family has an interest in.
DeleteThanks
The geologist's report is at the NDIC site. To access it only requires a $50 annual fee -- well worth it if one has significant minerals in the Bakken or more than a passing interest in the Bakken.
DeleteI am not a geologist and so cannot accurately interpret what was summarized, but suffice it to say, they did targeted the Three Forks, there is oil there (and it seems to be an optimistic tone to the summary) but the geologist only says the well is waiting to be completed.
The well is on confidential status.
When I was working in Stark of September 2010, Chesapeake was buying up EVERYTHING in the south for four times what everybody else was paying. The same happened in 2011 further west where I was working. It was very frustrating have them come in and pay multiple times what seemed reasonable. It is sort of satisfying that their plan may have failed. I'd rather see oil discoveries, but I'll focus on the silver lining.
ReplyDeleteMy hunch is CHK will do one of two things.
ReplyDeleteIf CHK needs the cash, and there are indications it does, they will re-package their holdings and sell. This would be an opportune time for CLR to go over the million-acre mark in North Dakota. There could end up being a bidding war among CLR, WLL, and a third major player (COP, XOM, WPX). If CHK sells, I think they will want to sell it as one package. They will do very, very well on some of the less attractive acreage, and do okay on the attractive acreage.
On the other hand, if CHK does not need the cash, they could wait for fracking costs to come down and more infrastructure (housing, takeaway capacity) in place before coming back.
Private communication suggests they will sell, but just to make it interesting, I will be contrarian and suggest they won't sell in 2012. This would be the 2nd time they have left North Dakota. That's a hard pill to swallow.
This is what I find most interesting: if you go to "Headlines" for CHK at Yahoo!Financial, I find no headlines regarding CHK leaving the Bakken (I could have missed it). And yet, only a few months ago there was a Reuters article of CHK having amassed 320,000 acres in the Bakken, with an eye on 400,000 total. When one does a google search, the same holds true. Other than regional newspapers (and this blog) there were no links, at least in the first three or four pages to any story about CHK leaving ND. In the big scheme of things, this suggests a) it's a big deal for the folks in North Dakota that CHK might be leaving, but it's not a big deal for CHK as a whole; b) analysts are still analyzing; and/or, c) like most things, the East Coast media is not tuned in to "fly-over country" and they have yet to hear the news. I assume some of the East Coast journalists are still asking, "What's a bakken?"
Someone else can do the math, but $4000/acre x 320,000 acres looks like $1.28 billion.
Actually when one looks at their debt, they need to sell.
No one wants to buy bad acreage, they doomed their prospect by drilling dry holes.
DeleteThis was a business decision, not an "oil man's" decision, to do what CHK is now doing.
DeleteWhile talking to a local about Chesapeake today, was told that the Decker well had tanks on site and was a self pumping well. I did not know what self pumping meant. Apparently not all wells in North Dakota have the pumps which I associate with all wells and they now only have pumps on them if they are needed. Didn't know this fact. Also this local had heard Chesapeake pulled out because of a bigger play in Texas with natural gas, which they have more interest in. Everyone is just speculating at this point. Hopefully Chesapeake will just come out with what is going on.
ReplyDeleteThe more I read, the more it sounds like a near-term business decision for both CHK and OXY with regards to the Bakken. To me it does not appear to lessen the importance or the story of the Bakken. Although this site has a lot of discussion centering around individual wells, owners, etc., and a lot of investment discussions, the original intent of the site was to educate folks about the Bakken and brag about North Dakota.
DeleteAgain, remember, CHK's market cap is $14 billion and it has $12 billion in debt; and is primarily a company mining a commodity that is in freefall. A company in that situation has to make big changes fast to survive.
My bet is chesapeake is moving there rigs to the Utica
ReplyDeleteThe next Bakken and there going to hit big
What do think Bruce ?
Nothing will ever be the "next" Bakken in my mind. The Bakken is a very unique event on so many levels. Read the Leigh Price paper again (which I have been reviewing and posting).
DeleteThe best part about blogging the Bakken, I now know what to look for, and it's going to be very, very interesting to watch CHK going forward. I expect a very interesting Q&A at their 4Q11 earnings call. Don't miss it.
Chesapeake permit 3/22/2012 on 17-137n-98w, I thought that Chesapeake was moving out of ND anyone know what is going on????
ReplyDeleteLooks like a classic head fake to me.
DeleteWord on the street is the prolific Proghorn sand just below the lower Bakken. This sand is very thick on CHK's acreage. They are playing games for now and getting their money ready. They are planning a strong surge for development in the entire area for this sand and other formations that contain a lot of oil and gas.
Deleteall is good here.....paid good lease....permitted location on site....another permitted site 3 miles away...east side of hwy 22 and south of dickyville
DeleteGod's country.
DeleteDickyville? I wonder if the truckers refer to it as "D-ville"?
I wonder if the truckers from the south know how to speak French (Belle Fourche)?