MDU With A New Corporate Presentation

A PDF file: http://files.shareholder.com/downloads/MDU/1408063649x0x559719/52989124-3e4d-470c-8d67-a53fa4272ccf/IPAA%20Presentation%20UPDATED%20FINAL.pdf

Four divisions:

• E&P (Fidelity, headquartered in Denver)
• Construction
• Electric and Natural Gas Utilities
• Pipeline & Energy Services

E&P

• Predominantly natural gas (34% oil)
• 4Q11 production: 30,000 boepd (compare with Whiting: 70,000 boepd)
• Presentation says 3 rigs in the Bakken, but I thought we saw 4 recently (?)>
• Key operating areas in Montana and North Dakota: Bakken (124,000 net acres); Heath Shale (90,000 acres -- Montana); and, Cedar Creek Anticline ("net profits interest" -- Montana)

Mountrail County: Bakken

• 16,000 net acres
• production sets new record: >5,000 net bopd operated and non-operated
• EURs of 250 - 500,000 (compare with Whiting approaching 1 million bbls EUR)

Stark County: Three Forks

• 51,000 net acres
• EURs of 250 - 400,000 bbls

Richland County (Montana): Bakken

• 57,000 net acre block adjacent to prolific Elm Coulee field
• EURs of 250 - 400,000 bbls

Heath Shale play in Montana

• 90,000 net acres
• EURs of 165 - 220,000 bbls

Materials and Services

• "unprecedented NDDOT budget at $1.73 billion for 2011 - 2013, $800,000 more than last biennium"
• Ports of Southern California
• Long Beach: $25 million contract for Phase I
• Los Angeles: 1.2 million tons of aggregate; contract through 2012

Miscellaneous

• ND diesel consumption increased 51% in past three years; Bakken area consumption -- 50,000 bpd; ND's sole refinery produces 17,000 bpd
• Will lay 13 miles of pipeline from ONEOK's Stateline I and Stateline II to Northern Border Ppeline
• Completed construction of 12 miles of pipeline from Bear Paw Energy's Garden Creek facility (ONEOK) to Northern Border Pipeline in December, 2011

With all that:

• Continuing operations in 2010: $243 million; in 2011: $225 million

Update Regarding Newfield and the Bakken, North Dakota, USA

I've made a number of comments about Newfield which seems to be missing in action (very little being heard from Newfield). A reader provided an update, which is greatly appreciated:

• According to a recent conference call, Newfield is transferring their Bakken operations from Denver to Houston. The Denver office will handle their Utah wells
• Newfield recently drilled four wells in the west half of sections 2-11 150-99, apparently testing future well spacing plans. They also are staking infill wells in the Watford area
• Newfield sold their holdings northeast of Williston to Continental Resources so will be centering their efforts in the Watford, Westberg and Lost Bridge areas
• They have a fairly large 2012 budget for the Bakken
• They also have begun testing a new micro-seismic array in 150-98-99. This should be of additional help with infill wells and fracking plans 

150-99 is in Tobacco Garden oil field, about 5 miles northwest of Watford City, near the bull's eye of the Bakken. 

If you click on the Westberg link above, you will see why Newfield is excited about this area.

Update Of A Small Electric Utility Serving a Small Area Near The Bakken -- Williston Basin, North Dakota, USA

From Verendrye Electric Cooperative website:

Verendrye has grown to serve over 12,300 meters in the six counties surrounding Minot, a 4,000 square mile area requiring 60,000 poles and 4,300 miles of line to do the job. We have 55 employees dedicated to serve our member/owners.

Update regarding this cooperative in the Minot Daily News (data points):

• hooking up new customers at an accelerated pace
• pace not expected to slow for some time
• the coop added about 1,000 customer accounts last year (2011) (not counting FEMA hookups; following flood)
• expects another additional 1,000 customer hookups this year
• one large customer: Enbridge
• Verendrye plans to double the size of its substation at Berthold where Enbridge's CBR facility is
• also serves Great Plains Energy Park in Minot
• new home construction
• five new hotels in Verendrye's territory under construction
• will be taking over operation of electrical distribution system at Minot AFB; DOD privatized the operation this past year; Verendrye got the 50-year contract, beginning June, 2011
• first time in Verendrye's history that they put cable in the ground in January
• Central Power Cooperative is building a $7 million substation outside of Minot to supply Verendry with additional bulk delivery transmission
• Central Power also putting in 17 miles of new transmission lines; $3 million price tag

 Most amazing data point:

Verendrye, based in Velva, North Dakota, is doing all this with 59 full-term employees. I wonder how many federal employees were assigned to electrical distribution system at MAFB before it was privatized, and how many Verendrye will assign against that conract?

Actually this may be the more amazing data point:

Minot is not exactly in the center of the Bakken activity, and yet, one little utility is seeing all this activity, most of it due to Bakken oil activity, at least as far as I can tell.

Whiting's New Corporate Presentation -- April, 2012

Link here to WLL website to access the corporate presentation. It loads as a PDF on a non-mobile PC, but comes up so much nice on a mobile device like the iPad.

Things that caught my eye as I "rushed" through the presentation with NASCAR on in the background:

Some numbers rounded.

4Q11 production: 70,000 boepd

Production in Michigan exceeds production along the Gulf Coast (for WLL):

• Michigan: 3,000 boepd
• Gulf Coast: 2,000 boepd
• Rocky Mountains: 45 boedp

Prospects

• Prospects in the Bakken remain the same (dual targets = middle Bakken and Pronghorn Sand/Upper Three Forks
• Starbuck (MT) (dual targets)
• Missouri Breaks (MT) (dual targets)
  
• Big Island (SW ND) (outside the Bakken) (multiple objectives)
• Lewis & Clark (SW ND) (single target: Pronghorn Sand/Upper Three Forks)
• Pronghorn (SW ND) (single target)
• Hidden Bench (ND) (dual targets)
• Tarpon (ND) (dual targets)
• Cassandra (ND) (dual targets)
• Sanish and Parshall (ND) (dual target)
• Go to the presentation to see the relative thickness of the various plays

"Typical" wells: EURs, payout; CAPEX (I may be misreading this slide; if interested, look at it)

Sanish Field, "typical" Bakken well

• wells with 950,000 bbls EUR: CAPEX $6 million; payout in 0.5 to 0.6 years
• wells with 450,000 bbls EUR: CAPEX $6 million; payout in 0.9 to 1.4 years

Sanish Field, "typical" Three Forks well

• wells with 400,000 bbls EUR; CAPEX $6 million; payout in 1.1 to 1.8 years

Typical Non-Sanish Field Bakken or Pronghorn/Three Forks well

• wells with 600,000 EUR: CAPEX $7 million; payout in 0.8 to 0.9 year
• wells with 350,000 EUR: CAPEX $7 million: payout in 1.9 to 2.3 years

Slide 18: Whiting leads all other Bakken operators in 6-month average production/well; selected examples:

• Whiting: 91 mboe 10 (avg first six months)
• BEXP: 85
• ERF: 80
• Slawson: 75
• KOG: 67
• CLR: 61
• OAS: 57

Slide 26: Margins (again, numbers rounded)

• 2005: $45
• 2006: $50
• 2007: $55
• 2008: $70
• 2009: $45
• 2010: $60
• 2011: $75 (actual: $73.88)
  

From all of the above, what gets my attention?

• Whiting leads ALL operators in 6-month production per well (average)
• 2011 margins at record levels (>$70/bbl)
• EURs approaching 1million bbls (when I first started blogging about the Bakken, EURs were around 400,000 bbls, if I recall correctly); other operators (I believe KOG) also report EURs of 1 million

Of those three, what gets my attention?

• 2011 margins at record levels despite takeaway obstacles reducing profit/bbl

Disclaimer: I may have misread or misinterpreted some of the slides but that's what I saw when I went through the presentation pretty quickly; if something doesn't look right, go to the linked presentation; typos may be present; numbers rounded.