Overheard At the Economart -- The Bakken, North Dakota, USA

Folks sometime read more into my posts than I mean to imply.

I try to keep the discussion on this blog at the level I would expect to hear while having lunch at the Economart in Williston, North Dakota, heart of the Bakken.

I'm not in the Bakken right now, but if I was/were there, I could imagine hearing this conversation:

One has to be in a good mood to see a day like this: the market in general is "melting up" as they say, moving up slightly despite all the headwinds. Despite Bernanke. Despite oil going back up.

Oil seems to have corrected (all of $3 off $110) and has bottomed (in short term) at $107 and now turning up, at least a bit.

KOG did not suffer significantly; I thought it would be much worse, but I guess analysts thought like Motley Fool: KOG has huge production increase; forget about missing estimates, "damn the torpedoes, full speed ahead."

I see oil just went over $108.

NOG also missed making a profit due to derivative losses; that seems to be a common theme. Same thing there; forget the quarterly earnings losses due to derivatives; five years from now, these little companies are going to have huge production -- these Bakken wells keep producing for 20 - 40 years based on history of Madison wells. These wells are going to be paid for in 3 - 5 years (closer to 3 years in many cases) and then keep producing for "peanuts" for 20-30 years longer.

Some say oil could "crash" to $80.  Wouldn't it be interesting if much of the Bakken drilling occurred during high price of oil, and then when drilling tapered off (10 years from now) and steady production for little cost, oil dropped back to $80 (in 2012 dollars).  The margin for each bbl sold is high now, and will stay high in the out years even if price of oil drops.

Just some Economart chatter.