What They Will Be Talking About Friday Morning; TRANSCRIPT -- KOG at Barclay's; TPLM Earnings Transcript

As usual, Peggy Noonan has it exactly right: soft extremism at the convention.

********************* For those who missed it the first time around, the "quote of the day" from the other day:
Quote of the day:

"If you look at just buying one gallon of gas, it really doesn't hurt us at all, but the problem is a lot of US consumers are buying multiple gallons of gas every single day." -- analyst, August 30, 2012.

I assume this analyst does not own a car, but buys gasoline in one-gallon plastic containers for his Briggs and Stratton lawn mower.

******************

Story of the day (well, at least for the moment): why flaring will not "stop" in the Bakken -- RBN Energy.

******************

From the WSJ today: the shale revolution -- what could go wrong? -- lots of quotes from the "hofmeister." The whole article may be there; or  you may need a subscription (sometimes these links seem to change on me.)

******************

Active drilling rigs: 193 (up).

Wells coming off confidential list, Friday:

• 20126, 379, EOG, Kandiyohi 19-2932H, Clear Water, t3/12;  cum 37K 7/12; 
• 20220, 1,427, EOG, Lostwood 10-2227H, Kittleson Slough, t3/12; cum 64K 7/12; 
• 21430, 382, EOG, Kandiyohi 26-3328H, Clear Water, t3/12; cum 32K 7/12; 
• 21967, 806, Petro-Hunt, Brenna 152-96-23C-14-5H, Clear Creek, t7/12; cum 26K 7/12; 
• 22057, drl, BEXP, Wagenman 29-32 1H, Todd,
• 22296, drl, Triangle, Larsen 157-101-28-33-1H, Otter,
• 22340, 366,  Slawson, Revolver 2-35H, Van Hook, t5/12; cum 26K 7/12; 

Eleven (11) new permits were issued Thursday:

• Operators: Fidelity (2), KOG (2), Whiting, Citation, G3 Operating, North Plains Energy, CLR, XTO, Cornerstone
• Fields: Climax (Williams), Smoky Butte (Divide), Truax (Williams), Zenith (Stark), Haram (Bottineau), Dutch Henry Butte (Stark), Sanish (Mountrail), Last Chance (Williams), Stoneview (Divide), Woburn (Burke)

The Whiting permit is for another Pronghorn Sand(s) well.

Wells released from confidential status today were reported earlier.

In addition, one producing well was completed:

• 20874, 732, KOG, Oppegaard 9-9H,  Truax, t1/12; cum 36K 71/2; 

******************************* I assume the pullback in the price of oil today was due to the inevitable Euro-zone recession, coming sooner than later. I haven't watched CNBC since early August so I don't know what the talking heads were saying about the volatility in oil price today. 

******************************* ATTENTION
Transcript: KOG presentation at Barclays.

Transcript: TPLM earnings conference call.

Although XOM settled below its all-time high, it did set a new all-time high; CVX came close.

Bullish on CVX -- SeekingAlpha. Talk of CHK or Hess as possible acquisitions by CVX.

**************************

Data points from the KOG presentation at Barclays.

• after acquisitions last year, it took some time to get "out of the gates"; now hitting on all cylinders
• one full-time completion (fracking) crew now; will have a second crew in next month or so
• completing four to five net wells every month
• pad drilling coming to completion stage
• trying hard to bring lease operating costs down; now down to $5, $6/bbl range
• deepest wells in the basin; costs down to $10.5 million
• moving from mid-30s to low 20s (days) to reach total depth
• infrastructure / oil service support much better; back-up available in hours, not days now
• 8 rigs for next 3 months; considering laying down one rig after that
• will try a six-well pad
• 155,000 net acres; "25 of that is probably a tier two type property. The balance is pretty solid acreage and we are going to see EURs 650,000 up to 1 million bbls"
• Dunn County: gas-to-oil ratio -- 600 to 800
• West side of the Bakken: gas-to-oil ratio -- double that of Dunn
• KOG thinks acreage in terms of a) east of the Nesson; b) west of the Nesson
• the Three Forks is "a much larger interval"; KOG mostly drilling the upper bench (TF1)
• number of drilling locations increasing, not going down
• drilling locations: 4 middle Bakken; 3 TF1 -- seven total per drilling unit
• KOG has taken wells from 1,300-1,400 feet apart down to about 1,000 -- (I've suggested this narrowing for quite some time -- and I think it will get down even lower)
• three in the Three Forks; will that increase? most likely; looking at TF2
• 10 to 12 year inventory of drilling
• East side, Dunn County: EURs of 800,000 to 1 million bbls; expect middle Bakken to better than TF, but surprised with some of the TF wells; 3 rigs in this area; working with XOM -- 2 rigs on KOG acreage;
• West side, McKenzie County: IPs might be a bit better but that's because of more gas; the Koala wells are really good wells; 3-well pads right now; able to sell nearly 100% of our gas produced and oil is moving by pipeline
• West side, Williams County: "believers" in ceramic in the steeper part of the basin; all of our wells we've talked about are completed with 100% ceramics; 28 stages; 325 feet/stage; the Williams County wells are very similar to what they've seen in Koala; some gathering work to do; all wells hooked up to gas pipelines; working with ONEOK to put additional pipe in; looking to improve the flaring issue;
• flaring more gas in Williams than other areas; EURs similar to Koala, 750 to 1 million bbl;
• Grizzly prospect, McKenzie: a bit of a mixed bag; the IPs not as big, but neither are the declines; EURs 400 to 600 on the western side; 600 to 750 on the eastern side

More at the link above.