Will Be Awhile Before I Catch Up With All The Earnings Reports, Comments -- Traveling

I will post as fast as I can but I am traveling so it won't be as fast or as well organized as usual.

Lots of earning reports coming out: CLR, WLL, OAS, CHK, NFX, DNR, others. Be sure to check ou "Earnings Central" where I post the links.

DNR just reported record quarterly earnings. 

Also, Mike Filloon is also starting to go through these reports: derivative losses hurt the Bakken companies.

• After Newfield's poor third quarter, many investors saw value. This was a mistake as Newfield continues to have trouble controlling costs. More worrisome is Newfield's natural gas exposure. It has done a fantastic job of increasing liquids production from 30% of total production in 2010, to approximately 40% last year. Even if Newfield hits its liquids goal of 48% in 2012, it will still have significant issues with natural gas at $2.60. Earnings estimates averaged $1.01/share, but Newfield missed by six cents. After derivatives losses, Newfield's EPS shrank to 51 cents/share.
• Oasis also noted Bakken oil pricing has been difficult. Increased oil production in the Williston Basin and Canada has strained pipeline capacity. There was supposed to be large increase in railroad transports, but rail cars are in short supply so it is not running at full capacity. Oasis' average sales price per barrel of oil was $86.20, for the quarter. All said, the biggest problem was a derivatives loss of $65.5 million that pushed EPS down significantly.
• More of the same derivative issues dogged Continental in the fourth quarter.
• In the Bakken, Continental purchased 23,161 net acres from Newfield. Continental will operate 89% of this play and most of this is held by production.
• Whiting had a very good quarter.  [compare well costs of WLL and EOG to others.]

CHK, transcript here.

• On slide 10, mentions its gas and oil plays; does not mention North Dakota.
• Notably, our reserve additions in just that 1 year of 2011 exceeded the total proved reserves of all but just a handful of our competitors, many of which have been in operation for more than 20 years. As an operator, we drove a total of 1,680 gross wells and connected more than 1,400 wells, or about 1 every 6 hours, and substantially all of these were horizontal wells. This is an unprecedented level of activity, a performance the industry has never seen before. We also participated in another 1,250 wells drilled by others, and those operators turned 1,050 wells online during the year.
• Well, it's enough to handle a full divestiture of the Permian, if that's your question. It's about 5% of our current production,
• on the DJ Basin, like with other companies, our results have been spotty. And today, I don't think we're drilling anything in the DJ Basin in the Niobrara. On the other hand, our Powder River Basin play is working quite well.
• I might also mention that it's in both of those areas, it's not just the Niobrara. We're investigating lots of different other formations as other operators are as well. So I think for the DJ, I wouldn't say all is lost as you're outside of Greater Wattenberg, but there's going to be some other ideas. But we have certainly shifted our focus on the Niobrara play to the Powder River Basin.
• Great note on cost of wells in the Utica; depth; time to TD, etc
• The Bakken: yes, we drilled a couple of wells up there and not crazy about what we found to date, so kind of recalibrating there. We have just under 0.5 million acres kind of south of Dickinson and really to the Three Forks idea for us. And I suspect the western part of our acreage, which is kind of abuts where Whiting is operating, will probably work out fine. We drilled our initial wells more towards the south than the east. So disappointed to date in what we've seen in the Bakken, but have a huge acreage position there. We didn't spend a whole lot of money on it, so not too worried about that. And really, just moving our rigs over to the western side of the play and kind of cozy up a little bit more to what Whiting is doing there. 

From WLL press release:

• 2011 was a year of discoveries for Whiting Petroleum. We de-risked a substantial portion of our acreage at Lewis & Clark/Pronghorn and generated excellent initial drilling results at Hidden Bench/Tarpon. Our 2011 drilling program sets the table for what we believe will be a strong year for production and reserves growth in 2012. Based on independent engineering at December 31, 2011, we had 2,264 gross locations from our 3P reserves. Based on internal estimates at year-end 2011, we had an additional 3,741 gross locations estimated from our resource potential.
• In 2012, we will focus on bringing a number of our prospects into development mode. These prospects include Hidden Bench/Tarpon and Missouri Breaks. We also plan further development of our resource play at Lewis & Clark/Pronghorn. With these key projects, we are optimistic about Whiting’s operational results in 2012. 
• Our average lease cost in the Williston Basin, where we hold 681,504 net acres in the Bakken/Three Forks Hydrocarbon System, is $432 per net acre.
• In 2012, we plan to invest $851 million for the drilling and completion of 218 gross (124 net) wells in the Williston Basin. This represents 69% of our total planned exploration and development expenditures of $1,236 million. We have initiated pad drilling at our Sanish field and our Lewis & Clark/Pronghorn prospects. We expect to drill two or three wells off of each pad at Sanish and, for the most part, two wells off of each pad at Lewis & Clark/Pronghorn. We currently estimate that we can save approximately $500,000 per well in mobilization costs and efficiencies utilizing pad drilling.
• We currently have 21 drilling rigs operating in the Williston Basin. We have 33 service rigs running in the Basin, which is up from 20 at September 22, 2011, and three full-time dedicated frac crews. As of February 1, 2012, there were 292 Whiting-operated wells producing, 46 operated wells being completed or awaiting completion, 16 wells were being drilled and 31 wells were shut-in awaiting workover operations.

NFX transcript:

• At year end 2011, our proved and probable reserves totaled 6.5 trillion cubic feet equivalent, a 5% increase over 2010. [This alone, caught my eye and helped explain share price action yesterday.]
• The largest transaction was the $276 million sale of about 23,000 net acres in the Williston Basin, located West of the Nesson Anticline and our Catwalk area. We sold current net production of about 300 barrels of oil equivalent per day and 8 drilled and uncompleted wells. This sale allows us to focus our development drilling efforts on high-graded areas in the basin. I'll talk more about our increased Williston Basin activity levels in just a moment. [Comment: CLR bought about 22,000 net acres about this same time; the numbers are very coincidental/similar.]
• We will invest about $200 million in the Williston Basin in 2012. You'll recall that our activities in the basin slowed in late 2011 to ensure that we limited our budget overexpenditures. We deferred the completion of about 17 wells and dropped 3 rigs. Since then, we sold a package of the assets, which included 8 of the uncompleted wells. Our crews have completed 3 wells since January 1 with an average 24 hour IP of 2,900 barrels of oil equivalent per day. Plans are to have the remaining 6 wells completed before mid-year, and we expect to run 2 to 4 rigs in the Williston Basin during the course of the year. Our current production is about 7,500 barrels of oil equivalent per day, and expected to grow about 35% in 2012 compared to 2011 levels.
• In 2012, we expect to drill about 25 new wells in the Williston Basin. Our drilling is focused on identified locations in the Middle Bakken and Sanish/Three Forks across our acreage. We have about 60,000 net acres in core development regions along and southwest of the Nesson Anticline and an additional 40,000-acre position, all held by production in the Elm Coulee. We have more than 250 identified development drilling locations today and plan to increase our activity levels in the Williston Basin going into 2013.
• I would say we have no additional plans to divest Williston Basin assets. We've described those as bridge assets. We've got a strong development inventory and we're looking to ramp up activity there. So I'd say that's not on the short-term target list.
• [Cost of Bakken drilling:] I can tell you that our view of it is, right now, we're looking at somewhere in a kind of a low $10 million well cost for a 1,280-acre well. That's maybe upwards of about $1 million lower than what we previously had talked about. There's are a couple of things. I think just improved execution is going to drive a most of that versus service cost changes and in 640-acre wells, looking at somewhere around $7 million well or so, in that vicinity.