Idle Rambling On Vantage And The "Helis Grail" -- December 14, 2018

Updates

Later, 5:53 p.m. CT: see first comment -- the Vantage purchase of QEP's Williston assets is scheduled to close on March 14th.

Original Post

 

Wow, this was out of the blue. I had forgotten all about it. I thought this happened a year or so ago. Time contracts / expands in the Bakken ... depending on the subject.

I really had forgotten all about this: Vantage Energy Acquisition buying out QEP's position in the Bakken, the "Helis Grail." That was announced only a month or so ago, November 7, 2018. It feels much longer ago than that. Like one or two years.

Bakken operators are tracked at this post, but it is not always updated in a timely manner.

The Vantage Energy's website is pretty much "empty."

Vantage is still trading on the NASDAQ under the "VEAC" ticker symbol. My understanding is that it would eventually trade under the VEI ticker symbol.

According to the NDIC web site, Vantage is not yet listed as an operator in the Bakken. My hunch is that Vantage will not be an operator. If not, they could contract with any number of the better operators in the Bakken. I can't imagine a "major" like MRO or XTO getting involved, but I could see Harold Hamm being interested. Slawson could possibly be interested, I suppose. Both CLR and Slawson seem to like to try new things, think outside the box, as they say.

Also, it appears that not one QEP well has yet been "officially" transferred to Vantage, at least according to the scout tickets. Perhaps by June, 2019, we will see that transfer. If so, it will be a list of 203 wells, I suppose.

See this post for a case study of the "Helis Grail."

VEAC's original press release:

• $1.65 billion + 5.8 million shares of VEAC
• VEAC is trading at about $10/share -- that adds another $6 million to the acquisition price
• about $1.656 billion
• 100,000 net acres
• about $16,000 / net acre
• producing about 46,000 boepd

The case study link above suggests that the Helis Grail is producing:

• 1,000,000 boe per month
• about 35,000 boepd
  at $30/boe = about $1 million / day or $365 million / year
• $1.7 billion / $365 million = less than five years
• imagine buying a $1.7 billion house, paying if off in five years, and then flipping it

A reader asked whether I thought Vantage would begin drilling any time soon.

So, just for the fun of it, this timeline:

• Vantage (or the operator working for Vantage) will have first mention on the NDIC dockets not sooner than June, 2019
• Vantage (or the operator working for Vantage) will have first new "Helis Grail" not sooner than December, 2019

So, we'll see.

On the other hand: QEP embarked on a major re-frack program in the "Helis Grail" about the time the announcement was made. Wouldn't it be interesting if we didn't see any new drilling for awhile, but simply an aggressive re-frack program. Since that data is not easily tracked (not shown on the daily activity report), one needs to watch the monthly production data, and re-check the scout tickets periodically. This could be quite entertaining to watch. Just think if Vantage were to keep the Red Queen from falling off the treadmill by not drilling any new wells. Wow.  I think it's going to be absolutely fascinating. Doesn't cost a lot to simply re-frack an existing well. $4 million/well? That certainly changes the "break-even costs."

I'm sure the reader asking about Vantage would be thrilled to hear from other readers their thoughts regarding Vantage.

It is incredibly fortuitous that we have the "peculiarities" of the "Helis Grail" to watch.