Whiting Posts 2Q12 Results vs Others

2Q12 production up 26% yoy; $1.27/share; ups 2012 production guidance; ups 2012 CAPEX budget;

Compare to others reporting today (or earlier):

• COP:   tough report for COP;  $1.80/share vs $2.41/share yoy; 
• NFX: tough report; $1.00/share vs $1.62/share yoy; July corporate presentation; raises production forecast, doesn't mention the Bakken; earnings call at SeekingAlpha.com;
• STR: 22 cents vs 22 cents yoy; misses on revenue;
• WFT: ugly;  

I am overwhelmed during "earnings season" and can't possibly find all the stories, much less read them, and comment on them, so I will depend on others to help.

Comments from readers

On Newfield's conference call: The reason they don't like the Williston Basin and prefer to talk about their other plays (Unita and Monument Basin) is cost. Newfield spends at least twice as much, and usually more, per well in the Bakken than the plays in Utah. But one thing they make perfectly clear: the EUR's haven't been compared and the Bakken, in my opinion, will surely prove to be the greater of the two. [Comment: I am biased, but I agree. Thank you for taking time to write.]

When the Going Gets Tough, The Tough Get Going -- Something Is Happening, and You Don't Know What It Is

When I pulled up today's NDIC daily activity report and I saw twelve new permits with BEXP and KOG at the top of the list, the first thought that flashed across my mind: "when the going gets tough, the tough get going."

There's been a lot of hand-wringing lately over price of oil (now below $90) and the cost of completing a Bakken well. And then we see another day with double-digit new permits led by Bakken stalwarts. (And, giving credit where credit is due), we saw similar examples with WPX, CLR, QEP,  in the last week or so.)

And then I think: something is happening, and I don't know what it is ...

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The Ballad of the Thin Man, Bob Dylan I don't know what it is about Bob Dylan. There are times when I really don't appreciate him, but then, every once in awhile, I hear another Dylan song that reminds me what a great poet he really is/was.  I never paid much attention to "The Ballad of A Thin Man" until I heard the cover by Ben Weaver on a Mojo tribute that I picked up a long, long time ago.

Bakken Production Forecasts Significantly Under-Estimated? -- Top Story of the Year?

Updates

July 26, 2012: some data points that were not mentioned below in the original post, or the first update, from the Dickinson Press --

• the cited Bentek Energy study was commissioned by the NDIC
• in the past, the 30-second sound bite: $3 - $4 billion to develop the Bakken natural gas program; now, that number has been raised to as much as $15 billion (huge new data point)
• the study looked at only the Bakken and Three Forks wells in North Dakota and eastern Montana
• currently: the area studied -- 736 million cubic feet/day; projection -- 3.1 billion cubic feet/day (so, for round numbers, from 3/4 billion to 3 billion)
• unlike oil, natural gas can only be transported by pipeline
• huge potential for value-added industries: fertilizer, petrochemical and natural gas-fired electrical generation
• reminder: natural gas liquids higher economic value than dry natural gas now, but now as valuable as oil

Later, 7:00 p.m.:  a reader sent in a link to a StarTribune story on the Bentek Energy study suggesting a natural gas boom in North Dakota. If the following is accurate, this is a huge data point:

Justin Kringstad, director of the pipeline authority, said the study — the first to assess the long-range potential for natural gas in the state — shows that gas will represent an increasingly larger share of the output of wells, which are being drilled primarily for oil.

“It shows that the ratio of natural gas to oil will continue to increase as the wells age,” he said.  

I would be curious to see if others agree: that as the Bakken wells age, the ratio of natural gas to oil will increase.

The writer makes a point (and there is a photograph to send the point home in case anyone missed it) that natural gas is being flared (see below) in the Williston Basin. Yes, natural gas is being flared, but the issue is a McGuffin. See below. The data point that should be followed is not how much natural gas is being flared but how long it takes to get an average well hooked up to a natural gas pipeline as the Bakken boom matures.

Obviously if only one well was drilled/month across the entire state of North Dakota, not much natural gas would be flared. But with 200 new wells/month, yes, a "lot" of natural gas will be flared. It's my impression, and I could be wrong, that the companies are getting their wells on pipelines more quickly that two years ago.

I do have to chuckle. Investors are looking at a new natural gas boom in North Dakota; faux environmentalists are looking at a McGuffin.

A huge "thank you" to the reader for sending the StarTribune link: if that is accurate -- that a natural gas boom is pending in North Dakota -- that's huge.

Original Post

The Bismarck Tribune is reporting that Bentek Energy has released a study that suggests oil production from the Bakken could jump threefold by 2025, to 2.0 million barrels of oil per day. The Tribune does not link the original story, and a quick google search was unproductive.

Bentek Energy, LLC, website.

For newbies, the Bakken is currently producing about 640,000 barrels of oil per day plus natural gas. It is an oil field, and natural gas is, for the most part, a by-product of producing oil. Folks consider the Bakken an unconventional oil field, not a natural gas field.

On slide 13 of  the NDIC presentation dated May 25, 2012, the NDIC provides three data points: proven, probable, and possible. In 2025:

• proven: 600,000 bopd
• probable: 800,000 bopd
• possible: 1,100,000 bopd

A new forecast suggesting 2,000,000 bopd is not trivial. My feeling is that the potential of the Bakken has been under-reported for quite some time, and that numbers like these justify the huge development we continue to see in the Williston area.

The writer provides a throw-away link in the linked article above regarding "wasting" natural gas. As I've noted many, many times, the flaring of natural gas in the Bakken is not unanticipated, and reporting it as an issue to be resolved is a McGuffin. The regulators are doing the right thing by saying they are working on it, but in fact, the free market system / oil and gas industry will resolve this non-issue.

Wednesday Morning Links -- Hess Reports Doubled Production From Bakken YOY

Independent Stock Analyis, including this link:

Slowly but surely the anti-fracking fear-mongering zealots (and, I might add, faux-environmentalists) are being put to bed by reputable mainstream publications, Newsday in this case

and,

Iraq's oil exports to fall for third month in July, MEES

RBN Energy: a very timely discussion on ethanol mandates when corn crop is in rough shape

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Hess beats by $0.20, beats on revs: Reports Q2 (Jun) earnings of $1.61 per share, $0.20 better than the Capital IQ Consensus Estimate of $1.41; revenues fell 5.1% year/year to $9.31 bln vs the $8.82 bln consensus. Oil and gas production increased to 429,000 barrels of oil equivalent per day, up from 372,000 in Q2 of 2011. Oil and gas production from the Bakken increased to 55,000 barrels of oil equivalent per day, up from 25,000 in Q2 of 2011; transcript:

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Flashback! "The Emptied Prairie," National Geographic, January, 2008. The story/link sent in by a reader overnight; thank you.

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Apple took it on the chin last night. Fascinating story.

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For folks interested in monitoring frack sites wireless, visit "Top Ten: Fracking Companies" and scroll down through the comments. 

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From CNBC (on-line CNBC stories -- I generally just read the headlines):

Why oil is just a headline away from $100.
Ben keeps talking ("ready to intervene, sooner than later"), but no one's listening
New US home sales decline ... drum roll ....  almost 10%; inventories rise; prices drop

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From Drudge Report, the world economic system looks bleaker than ever:

Japan posts record first-half trade deficit

Japan posted its biggest first-half trade deficit on record, according to government figures released Wednesday, highlighting the economic consequences for this nuclear-averse country of importing fossil fuels to meet its energy needs.

... reflected not only Japan’s surging need for oil and liquefied natural gas (LNG), but also weakened exports to slumping markets such as Europe and China. 

An opportunity for energy-rich US but like most things in this administration, it will be an opportunity missed.

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Greece will run out of money by August 20. No, they won't.  The French will send them cash.

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France is scrapping all but the most necessary of projects! Reality bites. Something tells me green projects (wind and solar) are dead. Even funding for more high-speed rail may be derailed.

"A stimulus plan focused on infrastructure projects that only makes the deficit worse bears medium-term risks that outweigh the weak boost to growth in the short-term," said economist Denis Ferrand at think-tank Coe-Rexecode.

Yup.

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UK experiencing longest double-dip recession in 50 years; surprised by most recent contraction. Soon we will be reading about the costs associated with the Olympics which have not yet begun.

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US Secretary of the Treasury: "Hey, things are tough all over." (para-phrased) "Congress has the authority...." but then doesn't spell out the specifics because the specifics are at odds with his boss. Something about a fiscal cliff.

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This speaks volumes about how worried the president is about the election: he sounds like a Republican with regard to gun control.

"I believe the majority of gun owners would agree that we should do everything possible to prevent criminals and fugitives from purchasing weapons; that we should check someone's criminal record before they can check out a gun seller; that a mentally unbalanced individual should not be able to get his hands on a gun so easily," he said. "These steps shouldn't be controversial. They should be common sense."

But Obama also offered a nod to the difficult politics of gun control, portraying himself as a believer in the individual right to bear arms ...

The laws are already on the books about felons and gun control; the suspect in Colorado theater killings had absolutely no criminal record. What's the president even talking about? I don't think I've seen a liberal Dem be this weak on gun control. Wow.

Twelve (12) New Permits -- Daily Activity Report -- July 25, 2012 -- XTO With a Nice Well

New permits: 12

• Operators: BEXP (4), XTO (3), KOG (2), Fidelity, Oasis, MRO
• Fields: Banks (McKenzie), Stockyard Creek (Williams), Murphy Creek (Dunn), Gros Ventre (Burke), Heart Butte (Dunn), Dutch Henry Butte (Stark)

Wells coming off confidential list:

• 8774 - Red River B, no data, Encore/Total Petroleum, Mud Buttes Federal 2-12, Horse Creek, Bowman County, horizontal re-entry into the Red River "B"; horizontal about 4,700 feet long; it looks like both formations have continued to produce; the Red River since 1982; the Red River "B" since 1995; from the Red River, a cumulative 307K 5/12; from the Red River "B", a cumulative of 5,621 bbls, 5/12;
• 8774 - Red River, 56, Encore/Total Petroleum, Mud Buttes Federal 2-12, Horse Creek, Bowman, see 8774 - Red River B above (July 25, 2012)
• 20098, 2,315, XTO, John 33X-8, Grinnell, Williams County, t3/12; cum 29K 5/12;
• 21959, drl, MRO, Elizabeth Strommen 24-12H, Killdeer, Dunn County; s1/12

Producing wells completed: pending

Two permits cancelled:

• 22171, PNC, Murex, Evy June 18-19H, McKenzie County
• 22345, PNC, Murex, Amber Elizabeth 9-4H, McKenzie County

Twelve (12) New Permits -- The Williston Basin, North Dakota, USA

Daily activity report, July 24, 2012 -

New permits

• Operators: Petro-Hunt (6), Hess (2), Oasis (2), OXY USA, and KOG
• Fields: Truax (Williams), Big Butte (Mountrail), Camp (McKenzie), McGregory Buttes (Dunn), St Anthony (Dunn)

Petro-Hunt has permits for six wells in sections 36-148-94 and 1-147-94.

The wells that came off the confidential list over the weekend and Monday have been updated elsewhere.

If You Have a Business, You Didn't Built It. Someone Else Did. -- Absolutely Nothing About the Bakken.

Absolutely nothing about the Bakken -- purely political. If you came here for the Bakken, scroll up or down. 

I was not going to re-post this video so quickly, but when I am being told that his comments were taken out of context, I can't ignore it. Here is one of many postings at YouTube. If you want to see whether it was taken out of context or not, google YouTube for the entire speech.

Now, back to more blogging about the Bakken, including the daily activity report which I would have already posted had I not passed the YahooNews about these comments taken out of context.