Production expenses were $6.5 million in the first quarter of 2012 compared to $2.0 million in the first quarter of 2011. Northern Oil experiences increases in aggregate operating expenses as it adds new wells and maintains production from existing properties. On a per unit basis, production expenses per Boe increased from $5.65 per barrel sold in the first quarter of 2011 to $8.40 in the first quarter of 2012. This increase was primarily due to increased costs associated with higher amounts of water hauling and disposal costs and workover expenses as wells are placed on to pumping units.This seems to be a recurring theme. I first noted it in the CLR presentation in which the company said they were working hard to bring down these costs by adding more pipeline to takeaway water.
Monday, May 7, 2012
Another Bakken Company Cites High Water Hauling Costs -- NOG
From NOG's 1Q12 earnings press release:
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In their conference call, management said they model $7.50 boe as production expense. Also, as production matures the higher production expense will become, but that is an issue for the much longer term.
ReplyDeleteMuch more money was left on the table with differentials than water hauling costs.
~JJ Butler
Yes, the "differentials" are a challenge.
DeleteI've always said the "business" of the business is the key. Even oil and gas companies can lose money despite the high price of oil.