Thursday, May 3, 2012

Transcript -- SeekingAlpha -- CLR -- 1Q12 -- CLR Will Update EURs in 2Q12 Conference Call

For newbies: there is a lot of incredibly interesting information in this conference call. There are things in this conference call that tell me we are still in the first innings of this boom.

Link here.

Data points:
  • strong cash flow was key first quarter highlight -- this is the opening statement
  • comments regarding pricing -- see this link also
  • nearly 90% of natural gas is captured; not flared; much better than what NDIC is reporting statewide
  • fracking water is trucked in but about 30% of flow-back is piped away
  • upgrading older rigs --> newer rigs 
  • increasing oil / natural gas ratio; changing drilling rig locations to reflect this
  • long discussion regarding additional payzones in the Three Forks (separate stand-alone post)
  • 320-acre development project called Midnight Run project (separate stand-alone post, later)


Cafe Music by Schoenfield, Lincoln Trio

Q&A
  • CLR is increasing their non-operated well activity, because more rigs coming into the Bakken
  • analyst suggests wells are costing $10.8 million; CLR suggests the number is closer to $8 million
  • again, discussion regarding price differentials
  • 90% of acreage likely amenable to Eco-Pad drilling
  • the $550 million in crease in CAPEX excited the analysts; ALL OF IT WILL GO TO THE BAKKEN
  • 2nd bench TFS: EURs of 650,000
  • increased production estimates for the Bakken: due to better EURs or simply more wells? both
  • switched from 24- to 30-stage fracks this past year; sprinkling in some 40-stage fracks
  • budget originally built on EURs of 603,000 bbls; telegraphs that EURs are going up; CLR WLL UPDATE THE 603,000 EUR in 2Q12
  • CLR telegraphs that CLR could acquire more Bakken acreage; always parcels available

HUMOR:
"Well, we have some risk in there, and that's mainly weather-related risk that we have in there. For the next 3 or 4 months, we have the rainy season up there, so have some risk on that." Comment: rainy season in North Dakota! LOL. Speaker talks as if monsoon season about to start. Rain will have minimal impact on oil operations in North Dakota based on what I remember growing up in North Dakota! [May 10, 2012: Dickinson Press complaining not enough rain; getting too dry. This is the North Dakota I remember.]


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6 comments:

  1. AnonymousMay 4, 2012 at 10:34 AM

    Remember last spring? Rain played a huge part in daily operations last spring, things didn't dry up until July. I know the rain definitely slowed down frac operations with muddy roads and locations. Operators couldn't haul sand or water into locations let alone move the frac equipment because it was so wet and muddy. If you could haul sand/water they were light loads because of the road restrictions in place which in turn slowed everything down. I know we had a lot of snow last winter (which didn't help with the situations above) but there was also a lot of rain last spring which just made matters worse.

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    1. Bruce OksolMay 4, 2012 at 10:34 AM

      You are correct, and I apologize for taking it so lightly. I was not there, so I don't have the visceral memory.

      Having said that, I do believe the spring rains last year were somewhat of an anomaly. And, as you noted, the spring rains were on top of an already soil-soaked / rivers-full setting. Based on what I know this year, the rivers and creeks should be able to handle the rain.

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    2. AnonymousMay 4, 2012 at 10:36 AM

      Bruce, remember reading in the Bible when it rained for forty days and nights. Killdeer got 20 hundreds that time.

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    3. Bruce OksolMay 4, 2012 at 10:51 AM

      20/100ths? For newbies that would be a fifth of an inch. [After this dry winter, I think "we" are all hoping for a wet spring regardless of the oil industry.]

      I remember 8th grade North Dakota "history" or whatever it was called; included more than history. I was taught then how dry North Dakota was. I never really thought about it until that class. I never thought about trees until that class either. And how North Dakota doesn't have very many except those planted by Johnny Appleseed.

      For newbies, North Dakota is one of the driest states in the country, and western North Dakota is the driest part of the state.

      http://www.wrcc.dri.edu/pcpn/nd.gif

      Now that I digress and ramble, I do think had it not been for the winter run-off, the rain last year would have been notable, but not out of the ordinary. It was the snowpack from the Rocky Mountains and Canada that caused the problem. How soon we forget:

      http://www.weather.com/outlook/weather-news/news/articles/floods-minot-missouri-river-why_2011-06-24

      I will be surprised if rain has any appreciable effect on oil production this year. In this boom (2007 - present), last spring was the only time rain was ever mentioned as a problem.

      For the Dickinson folks, a lot of rain will keep the dust down.

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    4. AnonymousMay 4, 2012 at 11:34 AM

      I do agree with you that rain shouldn't be a huge issue this spring and that last year was abnormally wet but you have to plan for the worse and hope for the best.

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    5. Bruce OksolMay 4, 2012 at 11:36 AM

      That's how I am approaching the November elections: planning for the worse but hoping for the best. Forward, with hope and change. To infinity and beyond.

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