Idle Ramblings On A Saturday Night and Into Sunday Morning

Another catalyst for the Bakken -- Motley Fool: infrastructure

The main driver to the increased Williston oil price has been the development of three types of infrastructure in the Williston region. First off, more rail lines and hubs have become active this summer, vastly increasing the number of barrels that can be hauled out of the region to refiners. Secondly, Tesoro, added 10,000 barrels of capacity at its Mandan facility. Finally, some small connector pipelines have come on line as well.

I suppose one could argue that it's a stretch to include the additional 10,000 bbls of capacity at a Mandan refinery as a significant contributor when production is over 670,000 bopd. The small connector pipelines may be a bigger contributor in helping oil move along.

Three types of infrastructure: pipelines, refineries (local and distant), and rail.

I think they can add a fourth: fertilizer factory (at Jamestown). Similar to the additional capacity at the refinery, I suppose.

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EnerVest and The Season of Deals (?)

First, this story: Chesapeake sells some Permian acreage to Shell, Chevron, and EnerVest. Until that story, I had not heard of EnerVest, and now I see EnerVest is in the news again.

EnerVest Ltd., the biggest energy producer in Ohio, is selling a big chunk of its oil and gas holdings in the state's Utica Shale, a prize its executives predict will fetch more than $6 billion. 

Privately held EnerVest, with its publicly traded arm EV Energy Partners LP, plans to shed 539,000 acres above the Utica, a dense layer of rock that many believe holds great petroleum wealth. The firm is pursuing a sale by the end of the year that would be the largest in the company's 20-year history and mean a big payday for its institutional investors. 

EnerVest wound up with this would-be bounty almost by happenstance. The Houston-based company had been acquiring drilling rights to the Utica in Ohio since 2003 but had no intention of tapping it or any notion of its potential. Instead, it was targeting deposits at different depths than the Utica that were known to contain oil and gas, pursuing its usual strategy of buying drilling rights to traditional energy fields and coaxing greater output from them.

"EnerVest wound up with this would-be bounty almost by happenstance."

"We're not very smart," said John Walker, EnerVest's founder and chief executive, acknowledging that he hadn't foreseen the Utica's promise. "But good things happen when you have a lot of acreage."

Maybe I'm just showing my usual irrational exuberance about the Bakken, but it seems we are seeing a season of deal-making.  And it looks like folks are going to where the oil is (as opposed to natural gas) and where the business climate is favorable (as in Texas and North Dakota). So, we'll see.

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Wide Moats

DNR

This appears to be a throw-away article by Motley Fool -- mentioning "wide moats" almost in passing, and then moving into marketing/imitation. The "wide moat" references DNR which caught my attention. With the recent chatter regarding XOM and DNR, there's a third observation that could be added, certainly when it comes to the oil and gas industry: the number and kinds of tools in one's toolkits. 

If it is becoming more and more difficult to find large new fields, returning to old fields with enhanced oil recovery expertise is another option. 

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How Big IS The Bakken

It can be interesting to go back and read some "old" SeekingAlpha.com articles on the Bakken. I recently posted this subject: "How Big IS the Bakken?" I see SeekingAlpha.com had the same question back in May, 2012.

As is true for many articles, the comments are often the best, and, in this case, even better, given 20-20 hindsight. As an example, someone noted that earnings estimates for one company were decreasing, probably because of a) increasing CAPEX; and, b) decreasing price of oil.

But my favorite comment came from "oilwizard":

Big oil fields get bigger...just the way it is. And after working the Bakken for over 20yrs (yep, drilled the first horizontal test in 1989); it [the Bakken] is a marvel of tech and tenacity. And it ain't done folks.  

It ain't done by a long shot.

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