The "Lost 66,000 DNR Acres" -- The Bakken, North Dakota, USA

This is one of my favorite pages, the page on this blog with a "snapshot" of the players in the North Dakota Bakken. For example, this is a snapshot of Denbury. Quickly skim through the snapshot, and get to the narrative farther down.

Denbury = EOR

• ~ 200,000 (February corporate presentation)
• Back to 266,000 net acres (Enercom Conference, August 16, 2011); note -- previously planned to add 7th rig by January, 2012; now by end of 2011 (not much difference, but moved up) -- nope, back to six (6) rigs through 2012;
• 275,000 net acres in the Bakken (January, 2011; agrees with corporate presentation)
• 266,000 net acres (April, 2011; IPAA conference presentation)
• Fields, SW of the river: Camp, Cherry, Lone Butte, Bear Creek, Charlson, and Murphy Creek
• Field: NE Foothills in Burke (+/- value)
• Field: Almond in Ward County (76,000 acres; almost no proven value yet)
• Analyst's number: 300,000 net acres (December 31, 2010)
• 5 rigs (1H11); increase to 7 by January, 2012
• Production (from the Bakken): 9,976 (3Q11); 11,892 (4Q11); target: 14,750  in 2012
• Production (from the Bakken): 8,826 boed (2Q11); target: 8,400 

The narrative:

In the snapshot above, note that as of last summer, 2011, Denbury had 266,000 net acres in the Williston Basin, but in their most recent presentation, just a few days ago, February, 2012, the CEO clearly stated (and the slides confirmed) the company had ~200,000 net acres.

I was curious where the "66,000" acres went but did not bring it up (for various reasons).

Now, thanks to a reader, we have the answer. Here's what happened to the 66,000 acres -- sent to me in a comment which I re-post here because it is an incredibly important note, with a great analysis. Here's the comment:

An interesting item in Denbury's presentation is what is not there. Denbury has dropped its "Almond" prospect when listing their various Bakken prospect areas. This reduced their Bakken net acres from about 260,000 to 200,000. Their Almond prospect, essentially located in Ward County, ND, was acreage Encore had blocked up back in 2007 and 2008. Subsequent drilling seems to show this is beyond the northeast edge of Bakken production.

This might be the first of many cases like this. At some point several of the other companies should clean their books and acknowledge not all their leased acres in North Dakota & eastern Montana are Bakken prospects. Continental Resources and Hess also have similar blocks of acres which appear to be too far east and likely out of producing areas. You can review the maps on their presentations and see which companies have these large blocks of outlying acreage.

I'm guessing none of the companies will want to admit that some of their net acres are out of the play. Yet Denbury bit the bullet to provide an accurate assessment of their Bakken prospects, they deserve credit for doing so.  

The Parshall oil field caught everyone's attention when the Bakken boom began back in 2007 in North Dakota, but a curious thing happened. It appeared that the western half of the field was "good," but the eastern half of the field was not living up to Bakken expectations.

For newbies, it turns out that DNR's Almond Prospect, located in Ward County, North Dakota, is even farther east. [Interestingly, I mentioned the Almond Prospect in a December 10, 2010, posting linking an Eric Fox article.]

There are rumors that there will be a play this far east in the Williston Basin at some point, but there is no guarantee and it isn't going to happen any time soon. Regardless, the important point to be made is that we now know where the ""lost DNR acreage" was. Of course, we don't know who acquired it and for what price.

But most importantly, a reader sent this information in to be shared with all. A huge "thank you."

And yes, I agree: we should see lots of acreage change hands in 2012 as companies start to sort out what they have at the five-year mark of the boom.