Idle Rambling; Oasis Cost Per Well: $8.4 Million/Well Excluding Another $0.3 Million Through Oasis Midstream Services

The other day I linked a story from the Minneapolis StarTribune about the international excitement following the USGS 2013 survey of the Bakken.

The StarTrib noted that investors from New York's Wall Street to Connecticut to Singapore were visiting the Bakken looking for opportunities.

My hunch, I can't remember if I posted it, was that these investors/venture capitalists would talk a good game while out here, but would not come back.

After posting that story, I got a nice note from an in-state developer who said the same thing. I'm sure it was an original thought with both of us, but when I post so much so often, I lose track of who said what, when. (We had different reasons why we felt these investors would not return. We are probably both right to varying degrees.)

Abbott and Costello

The reader mentioned that the investors/venture capitalists come out here, looking for investment opportunities, but have trouble "modeling" the Bakken. They have not seen something like this before and it's hard to figure out an "exit strategy." He said they are looking at building something, developing something, with a return in five years or so, and then exiting. They would build a business, and then in five years time, once the building has matured, turn around and sell the company or the operation which would then continue under new owners.

But the Wall Street money, the Connecticut investors, the Singapore folks can't figure it out and they won't come back.

In the near term, the new ideas, the new "companies," the new developments are going to come from within.

In their earnings report today, Oasis provided another example. Within the last quarter, Oasis:

Formed Oasis Midstream Services ("OMS"), a wholly-owned subsidiary of Oasis, which provides midstream services to the Company through the Company's salt water disposal ("SWD") and other midstream assets held by OMS.

According to the CEO:

"The momentum of our operational success continued into the first quarter, as we again exceeded our production guidance and drove down our average capital cost per well by 5% to $8.4 million, excluding the impact of Oasis Well Services," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer.  "OWS remains a key value driver for Oasis on numerous fronts, including driving down well costs and increasing the efficiency and quality of our fracs.  OWS reduced overall capital expenditures for the Company by $8.1 million in the first quarter of 2013, which equates to $0.3 million per net operated well completed in the first quarter."