Bullets From Oasis 2Q12 Earnings

1. Most important bullet as far as I'm concerned:

Oasis increased its acreage in the Bakken by about 13,000 acres; now up to about 320,000 acres.  Analysts should be able to estimate almost everything about publicly traded companies in the Bakken (now) except announcements like these.

2. "We are increasing our full year 2012 production guidance to 20,500 to 22,500 boepd from 18,000 to 22,000 boepd."

The "22,000 boepd" exit estimate for 2012 is about the same as noted in their February 3, 2012, presentation. 

3. Cost of a completed well:  Average well cost is now $9.8 million. At  the end of 2011, the average well cost should be $8.8 million. In 2013, when more develpoment drillling costs could drop, one might see another 5 -10 % decrease from that ($8.8 million).

I don't remember the exact figures, but I believe short laterals were costing $3 to $5 million when the Bakken was first being developed (or at least when folks started really getting excited about the Bakken). Those were short laterals. So, a long lateral going to $9 million is interesting. Also, the siting of wells on the spacing units is improving. They are being set closer to the section line. Larger spacing units are minimizing "lost" acres.

4. Follow-up on the Cottonwood field. This was the first field that I really followed as it was being developed. Fidelity (MDU) sold it to Oasis; my world view is that the Cottonwood was THE field that propelled Oasis to where it is today. After Oasis took possession of the Cottonwood, the field didn't seem all that good -- I guess, compared to the Parshall and the Sanish. But it appears Oasis has done well: they are doing 36-stage fractures there and estimating 500,000 EURs for Cottonwood wells. Pretty nice. 

5. Another example of infrastructure gradually catching up: 85% of Oasis' natural gas is put into pipelines; only 15% is flared. As the Bakken matures, the flared numbers will only improve. But don't hold your breath: it is estimated that "we" have 15 to 18 more years of this high-intensity drilling ahead of us.

6.  More to follow perhaps. A big "thank you" to Don for sending me most of these bullets.