Another factor influencing Bakken producers is debt. Excluding Statoil, long-term debt levels and interest expense at the end of the third quarter were:Disclaimer: this is not an investment site. Do not make any investment, financial, or relationship decisions based on what you read here. Financial data for operators is included to help me learn about the Bakken. Whenever my granddaughters do not understand something, I tell them to:
These are not particularly high levels for EOG, Hess or Continental, which have market caps of $56.4 billion, $50.4 billion and $22.3 billion, respectively. The much smaller Whiting, with a market cap of $4 billion, may be pushing the envelope.
- EOG: $5.9 billion in long-term debt; interest expense of $49.7 million
- Hess: $5.9 billion debt; $75 million interest expense
- Continental: $4.7 billion debt; $73.9 million interest expense
- Whiting: $2.75 billion debt; $39.6 million interest expense
- follow the money
- ask "why now?"
- google it
Crude oil from the Bakken (Williston Basin Sweet) is priced at a discount to benchmark oil that is roughly equal to the cost of transporting the oil to its destination. For example, Bakken light sweet crude headed to the east coast of the United States by rail last Friday brought a price to the producer of around $40 a barrel, based on a $59 per barrel price for Brent crude and a total transportation cost for the Bakken crude of $19 a barrel.
Another example: Shipping Bakken crude by pipeline to the Gulf coast cost $11 a barrel, and the price of benchmark Louisiana Light Sweet Crude last Friday was $57 a barrel. That translates to a netback to the producer of $46 a barrelWhiting:
Whiting Petroleum Co. completed its acquisition of Kodiak Oil & Gas early in December, and as a result it is expected to become the Bakken’s largest producer at more than 107,000 barrels of oil a day from a total of 885,000 net acres in the Bakken play.
In the third quarter of 2014, the company produced 8.5 million barrels of oil, with all but about 1.6 million of those barrels coming from the Bakken shale play. Whiting reported that its average sales price per barrel fell from $97.69 in 2013 to $86.78 this year and that the average price per barrel of WTI on the NYMEX exchange fell from $105.82 a barrel a year ago to $97.21 in 2014.
Whiting’s costs totaled $48.06 a barrel in the third quarter, down from $51.59 in the third quarter of 2013. The company’s margin per barrel works out to $38.72 in the third quarter of this year, compared with $46.10 per barrel a year ago. Neither amount includes transportation costs.