Wow, have I been getting depressing comments from folks after the Chesapeake announcement!
There really isn't any reason to post this note, but I decided to post it to try to cheer folks back up about the Bakken. I don't think the Bakken is going to go away any time soon.
But this should cheer you up.
Look at slide 12 (of 26 slides) of the most recent Abraxas presentation: 32 long laterals in 5,120 acres (four adjoining 1280-acre spacing units). Thirty-two long laterals, each with a EUR of 500K boe. On top of that, these wells are in or near the bull's eye of the Bakken, and I think the 500K boe is very, very conservative. The Bakken laterals probably have EURs closer to a million and the TF laterals perhaps 500K boe.
Regardless of the EURs, that's 32 wells in an area where two years ago most were thinking maybe four wells at most. And we're still only five years into twenty years or so of drilling in the Bakken. The basic analysis of the Bakken suggested that active drilling would continue until 2030 and production would continue through 2100. Whiting says they have ten years of drilling inventory, as just one example, based on conservative spacing and de-risked locations.
A while back Abraxas was spread thin and lacked cash. Since then a lot has gone right.
ReplyDeleteTheir ND land is mostly HBP from old marginal wells. They can drill when and how they choose. They choose pads. More efficient. They wanted a rig. Too expensive. For the same money they are building their own rig. Hiring their own crew. With their own housing. In three years they will have a rig paid for. If they do the job right they should have great economics.
They plan to sell some stuff to impress the market which thinks they are spread to thin.
They may end up with a few nice plays with plenty of cash and no rush.
Might be cheap. Might be a good buy.
San Antonio based.
anon 1
Great summary, thank you. This is not an investment site, but it's impossible not to discuss investing when trying to understand the oil patch.
DeleteI have really had a lot of fun watching some very small companies come out of nowhere to do very well. Likewise it's been fun to see companies spread very thin, somehow get out of a tight spot. I remember BEXP when it seemed on the ropes (I was discouraged from buying shares in BEXP when someone told me that) and then BEXP tied up with USEG to get through a cash flow problem, and we all know the rest of the story.
I know your thoughts on GMXR, but even so, it's been interesting to watch GMXR.
GeoResources is another one. And although I don't follow Triangle very closely, I think one can say similar things about Triangle.
I saw AXAS was going to get a rig; I did not know they were building it themselves. I am very, very impressed. Wow, the Bakken has to be exciting. I miss it.
A lot of smart, dedicated, hard-working folks up there. I'm glad they've had a better winter than last year. They all deserve a break.
BEXP was speculative. Land but no cash for a while.
ReplyDeleteTriangle seems too full of themselves.
Geo may be sound if I am thinking of the right company.
GMXR very speculative and scrappy. Even if the company makes it stock may be diluted. Fun to watch from the sideline. Their leases south of Dickinson may not seem to be so good this week. Even more speculative. But, always interesting presentations.
BTW, STATOIL is solid, and those exploration wells in the North Sea and Arctic are expensive, but worth it I guess. Remember their video?
anon 1
Now, I remember (hadn't thought of them until you mentioned it).
DeletePerhaps a video on the Statoil note would be appropriate again.