Derailment -- May 6, 2015; Earnings -- Oasis Beats By 2 Cents

Derailment, explosion, fire in central North Dakota town near Heimdal.

**************************

Other Spills
 Updates

May 8, 2015: Bakken.com is reporting --

Crude oil aboard a BNSF train that derailed in North Dakota on Wednesday caught fire even though it was less flammable than required by a state law that took effect last month.

Test results sent to federal investigators and seen by Reuters show the state’s new rule may not be stringent enough to significantly reduce the risks of fireballs after derailments of trains carrying crude. In this crash, the crude on board contained about 20 percent fewer volatile gases than regulations mandate.

The oil, transported in tank cars owned by Hess Corp , had a vapor pressure of 10.83 psi, according to test results. This pressure is less than the new threshold of 13.7 psi.

Original Post

Bakken.com is reporting a spill near Powers Lake, North Dakota:

A state Department of Health official says about 63,000 gallons of saltwater have leaked from a pipeline in northwest North Dakota and that some has reached a lake via a tributary.
Water Quality Director Karl Rockeman said Wednesday that it’s unclear how much of the saltwater has entered Smishek Lake near the town of Powers Lake, which is about 75 miles northeast of Williston. He says the lake does not supply area drinking water.
Saltwater, or brine, is an unwanted byproduct of oil production and is considered an environmental hazard by the state. It is many times saltier than sea water and can easily kill vegetation.
Rockeman says he considers the 1,500-barrel leak “significant.”
Oasis Petroleum owns and operates the pipeline. The state learned of the spill on Monday.  

Bakken.com is also reporting the biggest spill to date in the Bakken:

A North Dakota health official says a 70,000-barrel brine spill near Williston that has affected two creeks is the largest since the state’s oil boom began.

Operator Summit Midstream has begun the cleanup process and inspectors have been monitoring the affected area.

Brine is an unwanted byproduct of oil production and is considered an environmental hazard. It’s saltier than sea water.

The saltwater was released from a pipe Jan. 7 about 15 miles north of Williston and reached nearby waters in Blacktail Creek and Little Muddy Creek.

A contractor has pumped out from Blacktail Creek about 64,000 barrels of a mix of water and brine.  

***********************

Oasis 1Q15 Earnings

Oasis Petroleum beats by $0.02, misses on revs: Reports Q1 (Mar) earnings of $0.28 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of $0.26; revenues fell 44.0% year/year to $180.4 mln vs the $253.77 mln consensus.

Press release:

• Exceeded production guidance range and increased average daily production to 50,446 barrels of oil equivalent per day ("Boepd"), an 18% increase over the first quarter of 2014 and a 1% sequential quarter increase.
• Invested capital expenditures ("CapEx") of $271.1 million in the first quarter of 2015, compared to a CapEx budget of $271.1 million.
• Completed and placed on production 23 gross (19.2 net) operated wells in the first quarter of 2015.
• Decreased lease operating expenses ("LOE") per barrel of oil equivalent ("Boe") to $8.62, a 17% decrease from the first quarter of 2014 and an 11% sequential quarter decrease.
• Reported Adjusted EBITDA of $208.9 million in the first quarter of 2015. For a definition of Adjusted EBITDA and a reconciliation of net income and net cash provided by operating activities to Adjusted EBITDA, see "Non-GAAP Financial Measures" below.
• Completed a public offering of 36.8 million shares, raising $463.1 million of net proceeds for the Company on March 9, 2015.

"Oasis exceeded production guidance of 47,000 to 49,000 Boepd in the first quarter of 2015, as new wells brought on during the first quarter exceeded production expectations with over 60% of the wells completed with high intensity stimulation," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer.

"Based on our first quarter performance, we expect to produce between 47,000 and 49,000 Boepd in the second quarter of 2015 and to produce between 46,000 and 49,000 Boepd for the full year 2015. Additionally, CapEx tracked in line with our budget, with drilling and completion capital coming in at $216.6 million, or $8.3 million below our budget. There were some timing differences on a few non-drilling and completion items, and we remain on track to spend our $705 million CapEx budget for 2015. Well costs are trending below our original 2015 estimates, as the team has driven down the cost for high intensity completions to approximately $9.0 million per well."

Mr. Nusz added, "The White Unit in Wild Basin, our first multi-slickwater test, continues to outperform the high-end of our type curve. The test included seven wells in a portion of a single DSU, all completed with slickwater completions. The Middle Bakken well has produced approximately 256,000 Boe through 216 days and the wells in the first bench of the Three Forks have produced on average 167,000 Boe through 192 days.  Additionally, we completed our first high volume proppant test in Alger, which is the 17,000 net acre southern subsection of South Cottonwood where we have 18 DSUs included in our core inventory. 

The Helling Trust has two new Middle Bakken wells that have produced on average 139,000 Boe through 88 days and a well completed in the first bench of the Three Forks wells that has produced 104,000 Boe through 87 days.  

All of the Middle Bakken and Three Forks wells in both the White Unit and the Helling Trust have early time production that is trending over double our corresponding production data for our 750,000 Boe Middle Bakken type curve and our 600,000 Boe Three Forks type curve, respectively. The continued outperformance of both of these high intensity completion tests continues to provide us with confidence in our plans to target our core area with high intensity completions."

Taylor Reid, Oasis' President and Chief Operating Officer added, "We have driven LOE down to $8.62 per Boe, the lowest level we have delivered since our acquisition during 2013 and 15% below 2014 levels. We have been successful at lowering operating costs as we focus completions in areas with existing salt water pipeline and disposal infrastructure as well as improving run time on our producing wells. We increased connectivity to our OMS infrastructure in the first quarter of 2015 and now have 58% of our wells connected. We are updating our LOE guidance for the year to $9.00 to $10.00, based on confidence around recent performance."

"We also continue to increase our financial flexibility completing a $463 million equity offering in early March as well as amending our credit facility to increase the term to five years and to increase the committed level to $1.525 billion.  We have over $1.3 billion of liquidity even as we drill within cash flow for the remainder of the year," said Mr. Reid.