New Director's Cut -- July 21, 2011 -- Bakken, North Dakota, USA

Link here.

Production hits all-time high in North Dakota:

• April, 2011, oil: 351,183 bopd
• May, 2011, oil: 361,407 bopd (all-time high) 
• April producing wells: 5,536 
• May producing wells: 5,570 (all-time high)

Permitting

• April, 2011: 125 (all time high: 245, 2 Nov 10)
• May, 2011: 154

Pricing

• April, 2011: sweet crude, $103.91
• May, 2011: sweet crude, $94.69
• Back of envelope calculations: April, 351,183 x 103.91 = $36.491 million; May 361,407 x 94.69 =$34.221344 million.

Director's comments:

The summer surge has begun.  There continues to be surplus crude take away capacity with pipeline, rail and truck all included. Leasing remains focused on renewals and top leases in the Bakken - Three Forks, but there is significant activity south of Dickinson to the South Dakota border. Flaring hit a new record, 29%. Significant new natural gas plant and gathering pipeline expansions have been announced but have to wait for drier weather.

Rigs

• 20,000-foot capable rigs: over 90% utilization rates
• 7,000 or less-capable rigs: less than 50% utilization rates

Seven (7) New Permits -- Oasis Reports Two Nice Wells; Denbury Reports One Nice Well -- Bakken, North Dakota, USA

Daily activity report, July 22, 2011 --

Operators: Denbury Onshore (2), North Plains (2), Slawson (2), CLR

Fields: Glass Bluff, Big Gulch, Big Bend, and two wildcats

Both Denbury Onshore permits, both Slawson permits, and both North Plains permits are for wells to be drilled on the same pad

The two North Plains permits are wildcats in Williams County.

Some nice wells were reported:

• 19152, 1,685, Oasis, Hagen 5792 44-31H, Mountrail
• 19308, 1,235, Oasis, Glover 5601 12-1H, Williams
• 19630, 916, QEP, MHA 2-29-30H-150-90, McLean
• 19889, 1,678, Denbury Onshore, Sand creek 21-10SH, McKenzie (previously reported)
• 19461, 1,477, Baytex Energy, Hansen 18-19-162-99H, Divide (previously reported) My mistake: IP oil was only 28. I'm not sure how I missed that; that would have been a huge well for Baytex. Sorry for the error. A big thank you to Craig for catching that, see first comment below.

For Investors Only -- US Energy (USEG) Ready to Breakout -- Bakken, North Dakota, USA

Link here.

The one Bakken stock that has failed to trade at a premium is U.S. Energy (USEG). While all other Bakken stocks trade at a 3 to 10 times premium of invested Bakken capital, U.S. Energy actually trades at a discount to invested Bakken capital. That could be poised to change over the next few months.

For starters, U.S. Energy participated in 5 successful Bakken wells in the second quarter. Four wells were with Brigham Exploration (BEXP) and one well was with Murex Energy. U.S. Energy is scheduled to complete 4 Bakken wells over the next 4 months with Zavanna LLC. U.S. Energy is participating in a drilling program with Zavanna that plans to drill one well per month over the next 12 months. U.S. Energy has 5,500 net acres held by production with Brigham Exploration and 6,200 net acres with Zavanna.

Additionally, U.S. Energy has over 13,000 net Bakken acres in North Eastern Montana that do not have proven production. Overall, U.S. Energy has 25,200 net Bakken acres under lease.

U.S. Energy has other oil and gas assets besides its Bakken production and acreage. The most significant asset is 3,550 net acres in the Eagle Ford Shale oil window in a joint venture with Crimson Exploration (CXPO).

NO MORE POSTS TODAY -- TRAVELING -- POSTS TO START AGAIN TOMORROW ...

.... unless I find time, free wi-fi, a long extension cord ....

Permitorium Continues -- Not a Bakken Story

Every time I use the word "permitorium" I get at least one comment saying the "permitorium" does not exist.

I do not print those comments unless factual information is provided or a mistake of mine is pointed out, such as a typographical error.

Link here.

Swift action to reduce the growing deepwater exploration plan backlog in the Gulf of Mexico and the approval pace for those plans and associated drilling permits would increase employment in almost every US state; boost tax and royalty revenue for federal, state, and local governments; and improve US energy security, a new study by IHS-CERA and IHS Global Insight concluded.

The permitorium affects "almost every state." Incredible, considering almost every state is facing a budget crisis.