Highlights From The KOG Presentation At Barclay's CEO Energy Conference

At SeekingAlpha.

The good news: KOG is a one-basin play.

The bad news: KOG is a one-basin play.

About 200,000 net acres.

7 rigs.

Name dropping: area of mutual interest with XOM

• KOG participates with XOM with at least one or two rigs
• 50% interest

Production guidance: 30K to 34K boepd this year; currently about 38K boepd

Continue to work on downspacing (they should just ask the folks over at the TR&E site; they know what the best spacing unit size is -- 10 acres)

Inventory: 12 to 15 years (by the way, this is almost identical to EOG's inventory in the Bakken. It also mirrors exactly what UND said about two or three years ago. Active drilling will continue through 2030, and then maintenance through 2100).

KOG says they were the first operator to drill off a pad (I would be interested in hearing Harold Hamm's comment on this).

KOG: pretty much drilling four-well pads everywhere; will try some 8-well pads but with two rigs to shorten time between first spud and first sale.

 Dunn County: best acreage; 800,000 to one-million-bbl EURs.

Slightly less quality: Polar and Koala, north and south of the Missouri River; 700,000 to 900,000 bbl EURs.

KOG does not yet distinguish among the various benches of the Three Forks on their graphics.

Currently: 140 million bbls of oil; expect that to rise (dramatically?) as KOG "ramps up"

Cost: $9.5 million; down from $10.5 to $11 million back in 2012

CAPEX: about $1 billion this year

Two other areas: Wildrose (north); Grizzly (southwest); only 7% of CAPEX

Drilling time: 18 days vs 30 days a year ago; goal -- 15 days.

Fracking: two fulltime 24-hour frack crews but then says they only use the 2nd crew "off and on" and that the second crew has been "down" for the past three weeks. So, I guess when they are working, they work around the clock, but that does not necessarily mean they are running year-round

With regard to spacing, formations, communication, etc:

So, we’ll get into our down spacing program, and I know there is kind of the buzz at the whole Williston right now. We have done a couple projects. I’m going to talk primarily about the one we call our Polar Block, just north of the river, east of Williston.  

We chose to put six wells in the middle Bakken member. We put these wells about 800 feet apart. We went down into Three Forks, and we also drilled three wells there, but we alternated between what we referred to as the upper member and the middle member, also known as one and two.

Our attitude on the Three Forks, we believe this is actually one reservoir. We don’t believe there is a separation between the two, that it’s a seal. We believe we fracked a well in the middle member. We get communication up into the upper member and vice versa. So, we laid them out just alternating across again about 800 feet apart. I guess it would be about 400 feet of the middle Bakken wells. So, we did this in two different places. Again, we’ll talk about the one on the north, we call our Polar Block I.

Then:

We didn’t see a lot of communication when we were fracking these wells. We were looking for pressure in offsetting wells, we didn’t see a lot of that. As we’ve gone through first 30 or 60 days of production, we continued to shut wells in here and there to see if we see an impact on an offsetting well. To date again, we have not seen anything that makes us very nervous at this point. 

Spacing: KOG thinks they may be going beyond 7 and 8 wells per drilling spacing unit (wow).

I know the folks over at the TR&E were concerned about wells being spaced too closely together, though, in the same breath, they wanted 10-acre spacing, but now we have at least three operators -- EOG, CLR, KOG -- who are not seeing risks in drilling wells with 800-foot spacing.