Legacy, Surge, and an Update on the Bottineau Spearfish Wells -- North Dakota, USA

I still don't have the complete story, but here a few more dots to connect.

First, a story from the Calgary Herald just a couple of days ago, May 30, 2011:

Formation watchers have drawn a bead on the Manitoba Spearfish light oil formation, with a report from FirstEnergy Capital suggesting it may have twice the amount of original oil in place per acre as the storied Saskatchewan Bakken.

"Drilling activity levels and play-wide production volumes have grown exponentially since the winter of 2008-09, with latest public data (current to January 2011) showing Spearfish production approaching the 15,000 barrel of oil equivalent per day range, and likely capable of much more today if it were not for an anomalously wet spring break-up this year," says the report.

"In terms of resource potential, the regional extent of the Spearfish is still being delineated, however, in areas already shown to be prospective, reservoir parameters can suggest potential OOIP to be in the realm of 9.0 to 15.0 million barrels per section, which could represent 2-3 times what the southeastern Saskatchewan Bakken offers on average."

The Spearfish attracted super-looking oilpatch newcomer Legacy Oil + Gas to invest $185 million to buy assets from Molopo Energy Canada Ltd. in February, paying $93 million in cash and issuing 6.18 million Legacy common shares.

EOG Resources and Penn West Exploration are considered the leaders in the play but for maximum exposure, FirstEnergy likes Legacy or Surge Energy, who both have concentrated, low risk, development inventories.

Then this comment sent in to me, and posted at this site:

Looks like Surge energy may have purchased EOG's leases in Bottineau County Spearfish. Appears that Surge now claims a 329 low risk drilling inventory.
http://surgeenergy.mediaroom.com/index.php?s=10448&item=39018
Also check out their May 20 investor presentation and look at the spearfish land map page 14. The land position looks very similar to what EOG had shown in some of its reports. However I haven't seen any public record of sale by EOG? 

The press release at that link says Surge's deal to acquire Spearfish assets in North Dakota has closed:

CALGARY, May 16 /CNW/ - Surge Energy Inc. (SGY) is pleased to provide the results of its third horizontal multi-frac well at Valhalla South and to announce the closing of its previously announced light oil asset acquisition in North Dakota. Surge is also pleased to announce that it has syndicated its bank facility and increased its bank line from $90 million to $120 million.

The press release goes on: 

Surge is pleased to announce that it has closed its second light oil asset acquisition in North Dakota.  As previously disclosed, the first light oil asset acquisition in North Dakota closed on March 31, 2011. The assets from both acquisitions were acquired by Surge Energy USA Inc., a wholly owned subsidiary of Surge Energy Inc. 

Through the two acquisitions, Surge acquired 100 bbl/d (2010 exit rate) of high quality, high netback, light oil production, 6,000 net acres of highly prospective land in the Spearfish light oil resource play and greater than 100,000 acres of high working interest, undeveloped land for total consideration of $21.5 million in cash. The acquisitions added an internally estimated 205 gross (120 net) horizontal Spearfish drilling locations and approximately 126 mmbbls gross DPIIP (discovered petroleum initially in place; similar to US companies "OOIP" -- original oil in place). 

Surge now has approximately 329 gross (231 net) horizontal Spearfish drilling locations in southwest Manitoba and North Dakota and greater than 460 gross (350 net) oil drilling locations in the Company.

For those who have forgotten what/who Legacy is:

Legacy Oil + Gas Inc., an oil and natural gas company (from the BusinessWeek.com site) engages in the acquisition, development, exploration, and exploitation of oil and natural gas properties in Canada. It principally holds interests in various properties located in an area ranging from approximately 130 to 290 kilometers southeast of the city of Regina, Saskatchewan; the Turner Valley property situated in southern Alberta; and the Maxhamish property located in northern British Columbia. The company also owns interests in approximately 44,684 net acres of undeveloped land in Bottineau County, North Dakota; and a 50% working interest in 16,640 net acres of undeveloped land in southern Alberta. In addition, it invests in petroleum and natural gas gathering, processing, and transportation assets. The company was formerly known as Glamis Resources Ltd. and changed its name to Legacy Oil + Gas Inc. in November 2009. Legacy Oil + Gas Inc. was incorporated in 2005 and is headquartered in Calgary, Canada.

So, bottom line: it looks like Surge, Legacy, and EOG have assets in Bottineau's Spearfish formation, but whether EOG sold most/all of its assets to Legacy and/or Surge is still an issue.

Halliburton's Housing -- Photographs

Back on April 14, 2010, I posted a story about Halliburton moving some portable housing that was used at the Vancouver 2010 Winter Olympics down to their industrial park east of Williston.

I was finally able to take some photographs of the complex.

From the press release:

"...the complex will be placed at an industrial park in Williston, on about six acres of land that the company bought from the city for about $160,000.

The company said in a statement that the 158-bedroom camp would include kitchen, dining, recreation and office areas.

"The camp was used at this year's Winter Olympics in Vancouver, Canada, and will be demobilized and transported to Williston,'' the company's statement said."

If you click on the top picture and zoom in on the sign you will see that the name of this "lodge" is the Halliburton Muddy River Lodge.

If you zoom in on the bottom picture, you will see that these are "container modules" used to transport cargo on dry goods container ships, which can be transferred directly to tractor-trailers and hauled cross-country.

To put this in perspective, this lodge is apparently 158-beds, according to the press release.

In a story published yesterday, a developer will bring in 2,500 beds for a man-camp near Tioga. The project will be accomplished in four phases, each phase with 67 buildings. Each building will hold about 10 beds, if I did the math right. (4 x 67 = 268 buildings; 2,500/268 --> 9 beds, to be exact).

Samson Oil and Gas Pays Off Credit Facility -- Carries No Debt on Balance Sheet -- Update on Two Bakken Wells -- North Dakota, USA

Link here.

Samson O&G has fully repaid its debt facility. After this final repayment of the facility, which once stood at US $21 million, Samson no longer has any debt on its balance sheet, and its current cash balance is approximately US $61.2 million.

The link also provides update on two Samson oil wells east of Williston, North Dakota. 

The Heart of the Bakken Is Shut Down -- Bakken, North Dakota, USA

Williams County commissioners ordered all truck traffic, with farm equipment exceptions, to cease operations on county and township roads, effective today, June 2, 2011, at noon.

Truck traffic is to cease at noon today on all county and township roads in Williams County, as lowered weight restrictions go into effect.

The new road weight limit is set at 25,000 pounds.

A driver can be given a $100 citation for driving on a road in an overweight vehicle. North Dakota Century Code Chapter 39-12-17 outlines what the fines are per 1,000 pounds over the weight limit a vehicle is found to be.

It was passed unanimously by the Williams County Commission during a special meeting Wednesday morning.

"The best we can do is stand by so we can repair them," Commission Chairman Dan Kalil said. Farm equipment, city, county and state vehicles will be the only exceptions to these new weight restrictions.

There is simply too much mud.

Divide County north of Williams County passed similar order earlier. I am not aware that Mountrail or Dunn counties have passed similar restrictions.

Bismarck Tribune: Obama Backtracks on Wilderness Initiative

Link here (regional links break early and break often).

Even out here in the west where this is an important story, it was buried deep in the paper edition. And, of course, on the electronic site, no one would find it unless looking for it.

Under pressure from Congress, the Obama administration is backing away from a plan to make millions of acres of undeveloped land in the West eligible for federal wilderness protection.

Interior Secretary Ken Salazar said in a memo Wednesday that his agency will not designate any of those public lands as ``wild lands.'' Instead Salazar said officials will work with members of Congress to develop recommendations for managing millions of acres of undeveloped land in the West.

``The protection of America's wilderness for hunting, fishing and backcountry recreation should be a unifying issue that mobilizes us to a common purpose,'' Salazar said. ``We will focus our effort on building consensus around locally supported initiatives.''

Salazar's decision reverses an order issued in December to restore eligibility for wilderness protection to millions of acres of public lands. That policy overturned a Bush-era approach that opened some Western lands to commercial development.

Despite all the oil activity in North Dakota, the wildlife seems as robust as ever. Indeed, the harsh winter was much more devastating than anything the oil industry might have down with regard to wildlife.

Elsewhere, despite the oil spill in the Gulf, the number of endangered turtles has never been higher (at least in the past three years).

And so it goes.