Thursday, August 23, 2012

QEP To Acquire 27,600 Net Acres in Core/Central Bakken; Price Tag: $1.38 Billion

Helis link here.
Black Hills Corp link here.
Huge "thank you" to Chris.

There's much more in the deal than just de-risked acres, but $1.38 billion/27,600 acres --> $50,000/acre.

More to follow.

But you can read all about it at the links.

Note: Acquired assets and acreage from Helis. I've been blogging about Helis and their outstanding wells in Grail and Croff oil fields.  Also, some acreage from Black Hills Corporation.

This was my "snapshot" of QEP before this deal was announced:
  • 4Q11 (Filloon): 90,000 net acres: most of it inside the reservation
  • Three rigs; will add a fourth in 2012 (1Q12 report)
  • 4Q11: 5,019 boepd 
  • 4Q11 (Filloon): Most interesting: it's proposed 10-well pad; first test of 5 MB and 5 TF from one pad
  • Still natural gas heavy
Note that last bullet and that was taken from late 2011, less than a year ago. 

For Newbies: A Quiz


September 1, 2012: time is up. Essays should have been handed in by now. The answer is posted here.

Original Post

Some random data points, and then a one-question quiz.
  • Lately it has been reported that the wells in the Bakken are getting very expensive to drill/complete. Some have even said the high costs of a Bakken well are "ruining" the Bakken.
  • It used to take, on average 45 to 60 days to drill a well to total depth. Now, Lynn Helms says operators are getting to total depth in 20 days. I posted one well today that got to total depth in 13 days.
  • It is also generally agreed that fracking takes much less time now than it used to. (That data is a bit harder to come by.)
  • I can't say for sure, but it appears that the IPs are consistently better than a year ago. 
So, the question is this:  if it is taking less time to drill and complete a well, why are well costs going up?

This question is for newbies only. I am looking for two specific reasons, which are both very unrelated to each other.

I will not consider "inflation" as an acceptable answer.

Pennsylvania Says Oil Company Can Go Back to Work on Dimock Area Wells

Link here.
Pennsylvania’s Department of Environmental Protection gave Cabot Oil & Gas Corp. permission to resume activities at seven Dimock area wells it has drilled. The Aug. 21 action came after the Houston independent demonstrated that the wells fully complied with state laws, their mechanical integrity was sound, and the wells are not contributing to previously discovered methane migration, a DEP spokesman said.

The agency has not cleared Cabot to resume drilling new wells in the area, he added. If data indicate that the methane’s source has been eliminated or that methane in the aquifer has been returned to background levels, DEP’s consent order and agreement provides that Cabot could do so, the spokesman told OGJ by e-mail on Aug. 22.
I'm not exactly sure what to make of the second paragraph, but Cabot seems happy with new ruling. See link for Cabot's reaction. 

Tag: much ado about nothing.

Request For Minerals For Sale Or Lease

Corey sent me the following note:

If you have mineral rights for sale or lease in ND, we would sure welcome a few more postings in our North Dakota region.

Schlumberger Frack Crews Moving from Colorado Gas Fields to The Bakken

Link here (these links break early and break often).

Data points:
  • Bill Barrett Corp suspended drilling operations in Piceance Basin due to low natural gas prices
  • 70 workers from Schlumberger's Grand Junction (CO) office to North Dakota
  • About 60 workers remain at the Grand Junction office
  • Garfield County affected
  • Garfield County once led Colorado in drilling but is now ranked a distant second to Weld County, where oil drilling is main focus
Several story lines: the most important story line -- the faster the US gets its natural gas export program up and running, the better.  It's a win-win for everyone -- even east coast senators, but it will be interesting to see if east coast senators can see their way to support this.

Interesting Observation -- Will Follow


March 24, 2013: both the 19454 and 19452 are shown as EXPIRED by the NDIC. 

Original Post

Elsewhere Andrew says Hess permits #19454 and #19452 are expired but the NDIC site, today, says status of both permits are "LOC." Nothing about being expired or canceled, according to "Get Well Scout Ticket Data." The GIS map server does show those two permits, as well as a third, as expired. My hunch is that the paperwork is in the mail. I've seen this before, but maybe the permits have expired.

On the 5-well pad, #19456, RS-Ball-157-90-2227H-1 was just completed 6/12; with an IP of 197 (typical for Clear Water oil field).  #19457, RS-Johnson-157-90-1510H-1, on that same 5-well pad was also completed 6/12 with an IP of 149.

I can't explain it yet, but it's a great opportunity to learn a bit more about a process in the Bakken.

Will follow-up monthly for awhile. 

Upcoming Conference: 2nd Annual Bakken Crude Oil Logistics Conference

Announcing the 2nd Annual Bakken Crude Oil Logistics Conference!

Being held at the JW Marriott in Houston on March 7 & 8, 2013.

Visit to learn more & register.

From the link:
This conference is response to the sudden challenge being faced by U.S. petroleum companies who are pumping crude out of the Bakken shale in North Dakota and Montana. The sudden increase in volume has resulted in the problem that the companies are having problems shipping the crude to the refineries. Truck and rail are being used and the volume has put an enormous strain on the supply of tank cars and available tank trucks. This conference is a follow up to our highly successful 2012 Bakken Crude Oil Logistics Conference, where we had over 135 attendees, numerous sponsors, and a great lineup of speakers. This event is organized to help bring together the crude producers, the rail companies, truckers, barges, and those who provide technology solutions to help develop a more efficient supply chain.

MegaLoads -- Idaho, Montana -- Update

Long-time readers know the background to this story. For others, you may want to check this link first.

Now, an update:
Massive coke drums must be shipped overland from inland ports, and while the so-called "megaloads," which can weigh as much as 600,000 pounds and span two highway lanes in width, have been effectively halted on Idaho's scenic Highway 12, the new route takes them from the Port of Pasco, across the Idaho Panhandle--either from Spokane on I-90 or from Lewiston to Moscow and Coeur d'Alene on U.S. 95--and through northwest Montana to the Canadian border.

While push-back on the Highway 12 route pulled major media attention, the new alignment hasn't yet stirred much controversy. That's something Helen Yost, of Moscow-based direct action group Wild Idaho Rising Tide, would like to change.
File under: Don Quixote.

Whiting Has Another Great Well in the Sanish; Long Lateral Drilled in 13 Days! OXY USA Reports a Well; Baytex Has a Nice Well

Link here to wells coming off confidential list today.

Check out the OXY USA wells here.

I mentioned yesterday that some days it seems like the "same ol', same ol'" groundhog day in the Bakken, but generally the Bakken never fails to surprise me.

Look at this aforementioned Whiting well:
20840, 3,376, Whiting, Maki 41-33XH, Sanish, t2/12; cum 113K 6/12; middle Bakken; 30 stages; 2.6 million pounds; all sand; spudded November 28, vertical total depth on December 4 (6 days); total depth for the lateral reached December 12 (8 days later): 13 days from spud! Gas shows were reported as being very high at times. 
For newbies: when I first started blogging, it was not unusual to see it take 45 days to reach total depth, and with problems one often saw 60-day wells. I remember clearly one operator setting a new record when the well was drilled in 26 days. I do not recall a long horizontal being drilled in less than 24 days. Under 20 is incredible. Under 15? My hunch is the roughnecks wanted to get home for Christmas.

There are four wells in this section, 33-154-91:
  • 18298, 3,422, Whiting, Kannianen 44-33H, t1/10; cum 415K 6/12;
  • 19174, 2,090, Whiting, Kannianen 43-33H, t10/10; cum 184K 6/12;
  • 20437, 134, Whiting, White 43-33TFH, t12/11; cum 35K 6/12;
  • 20840, as above

Jobless Claims Rise; Long-Term Jobless Trend Worsens; Reuters/Yahoo See Silver Lining

Remember: the magic number is 400,000

Yahoo!Finance headline for Reuters story: Jobless Claims Rise as Labor Market Heals Slowly
The Reuters headline for the same story: Weakness in labor, factory data sends dour data
The number of Americans filing new claims for jobless benefits unexpectedly rose last week while U.S. manufacturing improved only slightly in August, worrisome signs for an economy struggling to create enough jobs.

Initial claims for state unemployment benefits rose 4,000 to a seasonally adjusted 372,000, the Labor Department said on Thursday.
Okay, now the spin:
Despite the increase in new claims filed last week, the data on layoffs did have a silver lining. [this I have to see]

The data covers the same week looked at by the government for its monthly measure of employment, and showed a slight drop in layoffs from the survey week last month, which is a mildly positive signal for hiring in August. ["mildly positive"? who are they trying to kid?]

The four-week moving average for new claims, a measure of labor market trends, was 368,000 last week. That was a slight increase from the prior week, but still 2.1 percent lower than in the second week of July. [not even the trend helped this time. wow!]
So, here we go again. Jobless claims rise and the headline suggests the labor market is healing, albeit slowly. Not only that, the jobless claims, which unexpectedly rose, had a silver lining.


An interesting bit of trivia: every week when jobless claims rose this past year, Yahoo/Reuters said that the long-term trend was improving. This is the first week in many, many weeks that the long-term trend actually worsened.

And the headline writers saw a silver lining. I have read that "silver lining paragraph" half a dozen times and I don't see the silver lining.

Anyway, enough of this for now; need to load the new IPs for the day.

Random Update on Heart Butte Pad Drilling (XTO, QEP) in Heart Butte

This post is really for newbies to give them an idea of pad drilling. (This post has been updated to include two new pads that were not completed at the time of the original post. To see how some Native Americans feel about the oil and gas industry on their reservation, click here. Multiply the oil production in bbls, multiply by about $65/bbl, and assume the Native Americans are getting about 20% of that, including the original leases.)

A reader sent me production numbers for another incredibly good well, this time in Heart Butte oil field. It had a slow first week (to keep the pressure up) and ultimately produced 25,000 bbls in the first 31 days. According to the NDIC website the well is still confidential so I can't provide more data at this time, but it gave me the opportunity to look again at Heart Butte oil field. I've blogged about it several times. It is a huge field ("huge" in terms of excitement).

Earlier I blogged about mega pads in Heart Butte.

So, here is a bit of activity review in two sections of Heart Butte: section 10-149-92 and 3-149-92.

There are four pads in this immediate area: two pads in the south half of section 3 and one pad in the north half of section 10, putting them all about 0.2 miles from the extreme north well to the extreme south well.

These are the file numbers and the pads:

Northernmost pad with rig on site:
  • 23331, 2,282, QEP,  MHA 1-03-34H-150-92, Heart Butte, t3/13; cum 93K 10/13;
  • 23332, 2,348, QEP,  MHA 3-03-34H-150-92, Heart Butte, t3/13; cum 99K 10/13;
  • 23333, 2,310, QEP,  MHA 1-03-35H-150-92, Heart Butte, t3/13; cum 89K 10/13;
  • 23334, 1,949, QEP,  MHA 3-03-35H-150-92, Heart Butte, t3/13; cum 72K 10/13;
  • 23335, 1,791, QEP,  MHA 2-03-35H-150-92, Heart Butte, t3/13; cum 60K10/13;
Middle pad, near that pad:
  • 23336, drl, QEP,  MHA 4-03-35H-150-92, Heart Butte,
  • 23337, drl, QEP,  MHA 1-03-02H-149-92, Heart Butte,
  • 23338, drl, QEP,  MHA 3-03-02H-149-92, Heart Butte,
  • 23339, drl, QEP,  MHA 2-03-02H-149-92, Heart Butte,
  • 23340, drl, QEP,  MHA 4-03-02H-149-92, Heart Butte,
Farther south; pad with rig on site (these are sited in section 10, just to the south of the wells noted above):
  • 23401, 1,325, XTO, FBIR Smith 11X-10E, Heart Butte, t1/13; cum 77K 10/13;
  • 20036, 2,331, XTO, FBIR Smith 11X-10, Heart Butte, t10/11; cum 190K 10/13;
  • 23402, 1,045, XTO, FBIR Smith 11X-10F, Heart Butte, t1/13; cum 70K 10/13;
  • 23403, 2,148,  XTO, FBIR Smith 11X-10A, Heart Butte, t1/13; cum 115K 10/13;
Western pad with wells straddling 4/9 section line:
  • 24206, 2,342, QEP, MHA 8-04-33H-150-92, t5/13; cum 64K 10/13;
  • 24207, 2,641, QEP, MHA 6-04-33H-150-92, t5/13; cum 62K 10/13;
  • 24208, 2,573, QEP, MHA 7-04-33H-150-92, t51/13; cum 78K 10/13;
  • 24209, 2,854, QEP, MHA 5-04-33H-150-92, t5/13; cum 66K 10/13;
Southwestern pad, in section 9:
  • 24401, 2,384, QEP, MHA 4-04-33H-150-92, t7/13; cum 60K 10/13;
  • 24400, 2,844, QEP, MHA 2-04-33H-150-92, t7/13; cum 71K 10/13;
  • 24399, 2,381, QEP, MHA 3-04-33H-150-92, t7/13; cum 66K 10/13;
  • 24398, 2,909, QEP, MHA 1-04-33H-150-92, t7/13; cum 63K 10/13;
This is an interesting area. I started blogging about Arrow Midstream providing pipeline support for XTO back on April 18, 2010. An incredible story.  Look at the IP and the cumulative production of the first well to report. Phenomenal.

A graphic of the area, taken November 30, 2013: