The Bakken Is Back -- Barron's -- July 18, 2020

Re-posting.

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Barron's: The Bakken Is Back

This is behind a paywall, but if you are able to access it, it's worth it. The link: https://www.barrons.com/articles/u-s-oil-companies-are-drilling-again-heres-whos-ramping-up-51595014332. You might be able to find using typical Google tricks.

Oil companies are starting to increase their drilling again, after months where they shut off wells or postponed projects. Their decisions in the months ahead, along with the path of Covid-19 could determine the longer-term trajectory of oil stocks.

After a volatile spring, oil prices have been trading around $40 a barrel for the past few weeks. Analysts don’t expect them to rise above $50 a barrel until there are more signs demand is returning -- a question mark as Covid-19 surges in the U.S.

Other countries are starting to pump more oil, too. OPEC said this week that it planned to gradually increase production.

Regarding the Bakken:

In June, the number of permits to drill wells in the U.S. rose by 15% on a month-over-month basis off a “brutal” May bottom, noted Evercore ISI analyst James West in a note. In total, federal authorities approved 1,238 permits — 126 more oil permits and 40 more gas permits than the prior month.

Small and midsize oil companies have had trouble getting financing to drill, but larger explorers and producers have fared better. Exxon Mobil and Chevron both raised billions of dollars in the credit markets after Covid-19 began to spread.

The majors, which include Exxon, Chevron, and European oil companies likeRoyal Dutch Shell account for a large share of the increased drilling permits.

Of the independent explorers and producers, Devon Energy andDiamondback Energy are expanding their presence in the Permian basin—the most productive oil basin in the U.S.—applying for drilling permits for 31 and 12 wells, respectively.

There is also more activity in the Bakken formation, which is in North Dakota and Montana. The companies adding the most wells there include ConocoPhillips and Marathon Oil, up 21 and 15 wells respectively.

It should be noted that XOM is also in the Bakken (XTO) and picking up a bit of activity.