Samson Oil and Gas To Sell Some Wyoming Assets

Link here.

Samson Oil and Gas will sell gas assets in Green River Basin, Wyoming, for $6.3 million.

According to the release:

The sale of these gas assets is consistent with the business strategy Samson announced in October 2010, allowing Samson to focus on developing its two oil plays, the Bakken Formation in North Dakota and the Niobrara Formation in Wyoming. That strategy also calls for the Company to become debt-free in May 2011 when its debt facility with Macquarie Bank, bearing a current balance of $9.7 million, matures.

Samson Oil and Gas has its own "page" linked on the sidebar at the right. 

Surge/Corinthian Acquires Ritchie's Bottineau Spearfish Wells

This was tucked into an earlier post and many folks may have missed it. It's too important to be missed.

In today's daily activity report, it was noted that seventeen wells in Bottineau County changed operator. Corinthian Exploration (USA) Corporation has now acquired these seventeen wells, including the recent Bernstein wells. They used to be operated by Ritchie Exploration.

I assume Corinthian Exploration is related to Corinthian Energy headquartered in Calgary, Alberta, but do not know for sure.   When you go to www.corinthianenergy.ca you end up at a website for Surge Energy. Corinthian Energy was bought by Surge Energy in 2010.


My hunch is that Surge Energy (SGY) is the name of the company in Canada, and its operating division in the US is Corinthian Energy. 

The two Bernstein wells (#19384 and #19385) were drilled and completed in less than four days. I believe they were strictly fracked vertical wells, based on well file reports and the icons on the GIS map server.  The IP was the same for both wells: (5) and cumulative oil appears to be extremely low (uneconomical?) but I don't have enough experience with Spearfish wells to know what the expectations are. A pump has been put on each of these wells.

Other posts earlier this evening linked the sources suggesting to me that Surge Energy will go back into these old vertical Spearfish wells and lay in horizontal laterals.

I have to thank one of my readers for alerting me to a couple of data points that piqued my interest in pursuing this. It's starting to come together. You might have to read several posts that were put up tonight to put together the whole story. It started out a bit disjointed but it's starting to come together.

******

Later. Actually the more I think about this, the more excited I get. Investors might want to take a look at the SGY corporate presentation which can be found at the link above, and then look at Yahoo!Financial SGY.V.

Look at the economics of the Surge Spearfish wells just north of the border:

• Cost to complete a well: $1.2 million
• Typical production for a horizontal fracked Spearfish well: 2,400 bbls/month the first year; 28,800 bbls the first year; at $50/bbl = $1.4 million (note: $50/bbl; oil is now $105/bbl)
• Payout: 0.9 year
• EUR: 65K at $50 = $3.25 million (note, current price of oil is $105/bbl)

Very, very favorable tax treatment in Canada; I don't know tax treatment in US

A EUR of 65K looks pretty paltry compared to Bakken wells, but Surge's core competency is tapping into multiple pay zones from the same well; once one has any production, that well holds the lease by production for all "eternity"

Spearfish Oil: Sweet or Sour -- Still Confusing -- Bottineau County, North Dakota, USA

Lynn Helms, Director, NDIC, says North Dakota Spearfish oil is sour, yet a leading Canadian producer of Spearfish oil says Canadian Spearfish oil is "sweet." When you get to the latter link, click on the corporate presentation. The presentation will change over time, but the March 8, 2011, presentation, slide 14, clearly stated that Canadian Spearfish is sweet.

It's minimally important in the big scheme of things, I suppose, but one of the rationales for trucking Spearfish oil to Canada rather than putting it in Enbridge pipeline system is because Enbridge says it only wants to ship light, sweet oil.

My interest is piqued by all this due to Canada's Surge Energy/Corinthian Energy acquiring the Ritchie Spearfish wells in Bottineau.

For newbies: the lighter the oil, the better. Bakken oil is so light it can almost be used without refining.  Canadian sands oil is heavy. Sweet oil is preferred over sour oil. Sour oil contains sulfur which refiners must remove.  Bakken oil is sweet, and light. 

Short Vs Long Lateral Fracks in Canadian Bakken Just North of North Dakota Bakken -- Implication for Spearfish Wells in Bottineau County, North Dakota -- Surge/Corinthian Acquires Ritchie's Bottineau Spearfish Wells

Updates

July 29, 2012: from a reader:

It does appear that Surge believes Madison/Mission Canyon may be a second target from the Spearfish. Even though NDIC names the Spearfish to be Spearfish Madison, the drilling lands in the Spearfish on the 15 or so wells that EOG, Corinthian and Legacy have drilled since horiz drilling started in 2009 in Bottineau County. Most of the older wells in this area of ND targeted the Madison using vert drilling. These are now stripper or abandoned. It will be interesting to find out more about the Mission Canyon hearings as these are right in the middle of what has been for the last 3 years an attempt to establish a Spearfish play. If the objective is Mission Canyon, then these two wells will be slightly deeper as the Spearfish overlays the Madison in this area. It will also will be interesting to find out if horiz Madison is the objective. Sure seems as tho Surge saw something on the seismic in mc and want a closer look.

Original Post

I'm not sure how important this is, and I'm not quite sure if it has any relevance in the Bottineau Spearfish wells, but until it is sorted out, I don't want to lose the link.

This is a PDF of a study comparing fracking long and short laterals in the Canadian Bakken just north of North Dakota.

I'm attaching a Spearfish label even though this has to do with the Bakken.

My interest in this is piqued by the recent acquisition of the Ritchie Bottineau Spearfish wells by Surge Energy/Corinthian Energy. According to Surge Energy's March 8, 2011, corporate presentation, slide 7, Surge Energy has drilled approximately 100 horizontal wells in the Canadian Spearfish between January, 2008, and April, 2010.

On slide 15 of that presentation, it is noted that Surge has drilled five (5) horizontal Spearfish wells just on the other side of the North Dakota border. It is costing them $1.2 million to drill a well, compared to $6 - 8 million for a typical North Dakota Bakken well.

Based on the well file reports and the GIS map server it appears the two Bernstein Spearfish wells were simply fracked vertical wells. Surge's core competency is horizontal fracturing of the Spearfish and it's very likely that Surge will go back into the Bottineau Spearfish wells and put in horizontal laterals.

Oil Hits Highest Price Since Recession; Oil Consumption Will Continue to Rise

Link here.

We went into the weekend with oil solidly above $105 and this price appears sustainable. In fact, there are few indications that the price won't continue to rise over the next few weeks:

• Mideast heating up; Bahrain/Saudi story may be more troublesome than some think
• Libya's oil industry is off-line for the foreseeable future
• US driving season just about to begin
• Japan switching to fossil fuels
• Japan's rebuilding yet to start
• US domestic drilling program in decline; glimmers of hope in the Gulf but deep water drilling rigs have moved to off-shore Africa
• China will re-assess role of fossil fuels vis a vis nuclear energy
• Canadian pipeline to US stalled for another year

Comments from the linked article:

Oil prices hit another post-recession high this week as economists said the world will keep consuming more petroleum even with this month's destruction in Japan and the wave of uprisings in North Africa and the Middle East.

China's oil demand has jumped 15 percent this year. Analyst Sudakshina Unnikrishnan has raised her forecast for the average price of benchmark oil to $106 per barrel this year from $91.

Meanwhile, major oil producers like Saudi Arabia already have cranked up production to make up for lost Libyan oil. While this increases the flow of oil right now, it also cuts off spare production that could have been tapped later this year to meet increasing world demand. Spare production capacity, which was thought to be around 5 million barrels per day earlier this year, has since dropped to about 3 million barrels, Unnikrishnan said.