Wednesday -- Back To The Bakken With Some Great Stories, May 27, 2015

Active rigs:

	5/27/2015	05/27/2014	05/27/2013	05/27/2012	05/27/2011
Active Rigs	84	190	187	214	172

RBN Energy: nice update on Bakken operators. If that link is unavailable, here is another link, which will only be available a limited period of time.

Oil-Weighted exploration and production companies (E&Ps) are slashing capital spending in 2015, as they need to regain control of their costs in today’s lower oil price environment. With robust oil prices over the past three years, these companies only posted middling profitability as capital and operating costs ate up much of their incremental revenue.

The Large Oil Weighted E&Ps are cutting back less than the Small/Mid-Sized Oil Weighted E&Ps as they are more financially secure and have more ability to spend through the price cycle.

The Small/Mid-Sized Oil Weighted E&Ps are focused on getting their spending in line with cash flows and to get to a point where they are self-funding their capital investment. Today we explore how each of the companies in the two oil-weighted peer groups is trying to resolve these issues.

At Seeking Alpha, COP expanding in more ways than one:

Summary:

• ConocoPhillips' Bakken/Three-Forks operations will continue to pump out production growth through 2017 and beyond.
• Downspacing projects may boost Conoco's drilling inventory and resource potential.
• The Middle Three-Forks remains the emerging play to watch going forward.
• Expect an update on ConocoPhillips' completion optimization tests by year-end.

North Dakota, Montana, and South Dakota house the Bakken and Three-Forks formations, one of the symbolic oil-weighted plays of the North American energy revolution. Several shale developers have built up sizeable positions in the area to create lengthy production growth runways for themselves.

ConocoPhillips has made developing its unconventional resource base, which includes shale plays, its top priority going forward as its Surmont 2 and APLNG facilities are brought online this year. After building up a 620,000 net acre position in the Bakken/Three-Forks region that is primarily located in McKenzie and Dunn counties [two of the most prolific counties in the area], ConocoPhillips plans on putting its acreage to good use.

Filloon update on the Bakken, at Seeking Alpha:

Summary:

• Core areas of the top U.S. plays produce excellent economics at $60/bbl realized oil prices.
• Production per foot continues to improve, and at a faster pace than investors realize.
• Oil service costs have decreased in 2015, and should continue to head lower through year-end.
• We believe the Permian is the best area in the United States, and FANG has excellent acreage in Midland County.

Many have become bearish the oil markets; oil and gas have been removed from portfolios. However, we believe the pullback has created an opportunity. Buying unfavorable sectors is a common practice as markets recover. When dollars exit, value is found. Selling a down industry is a common mistake, as the initial pain of the pullback is realized and dollars are removed before the industry recovers.

The greatest fear of investors is the economic validity of unconventional production. This stems from a lack of understanding. Fracking has been around for decades, but its use in horizontal production has not. We believe current oil prices support the profitability of shale, and current well data supports this. Many of the newer plays have become uneconomic, as have marginal areas of the Big Three. The Bakken, Eagle Ford, and Permian still have significant inventories of core wells to complete.