NOG Presentation Transcript

Two things I learned from this presentation:

• another operator that says they have 22 years of drilling inventory
• operators don't hedge simply to get best price; they hedge to protect liquidity

At SeekingAlpha.

Some data points:

• production: 11,000 bopd
• completing another 218 wells; 17 net wells (that's a lot of information they are privy to)
• cherry-picked 100 acres at a time since 2006; started at $35/acre in Mountrail County
• now: 182,400 acres; 121 net wells
• 1,000 remaining sites at a paltry 4 mB/3TF wells per spacing unit; doesn't include ower units;
• held by production: 70% in North Dakota
• 25,000 units held with Slawson in Richland County, MT
• recently acquired 2,000 acres at $2,500/acre; but equates to $125 million CAPEX to drill it
• at least 22 years of drilling inventory
• EOG, CLR, Slawson: 50% of their total net wells drilled to date

Definition of a "buy down":

an operator had about 75% working interest in six drilling spacing unit in one particular area. And they ask us to buy them down to 50% interest in unit because they wanted three net wells with exposure as they drilled those six units, so they could hold those units by production.

The buzz of the conference:

the new completion design by EOG where they are tripling, in some cases quadrupling, the amount of sand they are putting into these wells, which really is improving the EURs that we are seeing.

Information in real time:

We have working interest in the Continental Charlotte unit. That was their first big lower bench test where they drilled off three, all three of the lower benches of the Three Forks which was very exciting for us to participate in. We got to see that real time.

Hedging:

And again, we are basically hedged out pretty well through 2015 at about $90 a barrel, because we don’t believe that we are hedging to get the best price, we believing we are hedging to protect our liquidity position as we continue to develop this field.