One Man's Thoughts On The Bakken -- March 14, 2015

Disclaimer: this is not an investment site. The following is posted to provide an assessment of the Bakken by a single individual or company or board of directors. It is not posted for purposes of determining whether an investment in this company or any company is warranted. This is not an investment site. Do not make any investment, financial, or relationship decisions based on this post or based on any post at this blog or based on anything you think you might have read or inferred (that is our granddaughter's favorite new word) from this site. I provide this information only for my own use, but for the time being it is open to anyone who wants to read it. If this information is important to you, go to the source.

This is a portion of the comments posted over at Seeking Alpha from the CEO of a real estate investment trust located, I believe in Minot, North Dakota:

You are obviously curious to what affect this drop in oil prices has had on IRET and I would like Diane to update you on some of specifics later in the call, but I wanted to remind you that we did not pivot the portfolio on Boomtown USA, better known as Williston, North Dakota. But we have strategic joint ventures to maximize our returns in real estate.

Of the wealth of information about the Bakken field, I will encourage you to search out the Bakken Magazine to get a true perspective of the activities in real estate. That being said, I want to call your attention to this map of North Dakota.

As you can see, the statistics provided by the North Dakota Department of Mineral Resources and the latest issue of the Bakken Magazine gives you an indication of the breakeven price point at which new drilling would cease.

McKenzie County in the heart of the Bakken would need prices to drop to $30 per barrel to cease new drilling. And although, I think, that is an interesting statistic, what I find even more interesting is the ballpoint (sic) which states the price at which production from existing wells would be shut-in: $15 per barrel.

According to a report published by the North Dakota State Industrial Commission, dated December of 2014, there are approximate 12,000 wells in production. Since I have been told that can take upwards of three people to maintain production, I believe the need for housing will continue. Most of the production workers are target tenants. Those are committed for longer-term and seek amenities that our complexes provide.

We will continue to monitor energy impact on IRET and adjust our decisions accordingly. But as Diane will point out later in the call, the impact to IRET has not as drastic as has been suggested by some of the national attention we have received. 

Remember we have five projects, three multifamily and two medical facilities underway on a Minneapolis market despite our risks throughout the upper Midwest.

There were a number of typographical errors in the original transcript (which is not a big deal; I am impressed how fast these transcripts can be posted). I tried to catch the typos and correct them but obviously missed some.