Timing Is Everything: Otter Tail To Go Red

Updates

August 23, 2012: from an August 8 story -- headline: Wind power company announces closures day after Reid's clean energy summit. 

The day after the Senate Majority Leader Harry Reid’s held his annual Clean Energy Summit in Las Vegas, wind power manufacturer DMI Industries said it will close two of its wind tower factories by the end of the year, laying off a combined 384 workers in Oklahoma and North Dakota.

I wonder if DMI was the keynote speaker for the conference?

No matter how they spin the story, wind energy cannot succeed without huge help from the government.

Original Post

Link here.

Otter Tail Corp. is negotiating to sell its North Dakota-based wind tower manufacturing company for $20 million, leaving the future of nearly 400 workers uncertain.

Minnesota-based Otter Tail has not identified the potential buyer for the DMI Industries Inc. plants, property and equipment in West Fargo, ND [216 employees], and Tulsa, OK [167 employees].

[A company spokesman said] there has been a reduced demand for wind towers in part because of uncertainty surrounding the future of a federal tax break for wind energy.

DMI Industries was founded in 1978. 

Wow.

Active Rigs Falls Below 200 --> At 198

Active rigs in North Dakota: 198. Down from the boom's high of 218.

"We" were last at this number (198) last year, August 26, 2011.

Bullets From Oasis 2Q12 Earnings

1. Most important bullet as far as I'm concerned:

Oasis increased its acreage in the Bakken by about 13,000 acres; now up to about 320,000 acres.  Analysts should be able to estimate almost everything about publicly traded companies in the Bakken (now) except announcements like these.

2. "We are increasing our full year 2012 production guidance to 20,500 to 22,500 boepd from 18,000 to 22,000 boepd."

The "22,000 boepd" exit estimate for 2012 is about the same as noted in their February 3, 2012, presentation. 

3. Cost of a completed well:  Average well cost is now $9.8 million. At  the end of 2011, the average well cost should be $8.8 million. In 2013, when more develpoment drillling costs could drop, one might see another 5 -10 % decrease from that ($8.8 million).

I don't remember the exact figures, but I believe short laterals were costing $3 to $5 million when the Bakken was first being developed (or at least when folks started really getting excited about the Bakken). Those were short laterals. So, a long lateral going to $9 million is interesting. Also, the siting of wells on the spacing units is improving. They are being set closer to the section line. Larger spacing units are minimizing "lost" acres.

4. Follow-up on the Cottonwood field. This was the first field that I really followed as it was being developed. Fidelity (MDU) sold it to Oasis; my world view is that the Cottonwood was THE field that propelled Oasis to where it is today. After Oasis took possession of the Cottonwood, the field didn't seem all that good -- I guess, compared to the Parshall and the Sanish. But it appears Oasis has done well: they are doing 36-stage fractures there and estimating 500,000 EURs for Cottonwood wells. Pretty nice. 

5. Another example of infrastructure gradually catching up: 85% of Oasis' natural gas is put into pipelines; only 15% is flared. As the Bakken matures, the flared numbers will only improve. But don't hold your breath: it is estimated that "we" have 15 to 18 more years of this high-intensity drilling ahead of us.

6.  More to follow perhaps. A big "thank you" to Don for sending me most of these bullets.

Five (5) New Permits; EOG Reports a Nice Well; Tuesday Links

Five (5) new permits:

• Operators: Oasis (2), American Eagle (2), Triangle
• Fields: Camp (Mckenzie), Antelope Creek (McKenzie), Colgan (Divide)

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Energy links from Independent Stock Analysis.
RBN Energy: Eagle Ford crude, currently about 500,000 bopd; should reach 1,200,000 bopd over the next five years

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The following wells come off the confidential list:

• 18555, 510, EOG, Sidonia 15-1102H, Clear Water, t2/12; cum 22K 6/12;
• 18821, 924, XTO, Roust 34X-7, Hofflund, t412; cum 13K 6/12;
• 20888, 3,415, EOG, Clarks Creek 14-1819H, Clarks Creek, t4/12; cum 24K 6/12; 21 stages; 4.1 million lbs; all sand; 4-section spacing (2560-acre);
• 20900, drl, BEXP, Herman Johnson 32-5 1H, Briar Creek,
• 20917, 490, ERF, Likes Eagle 2-31H, Eagle Nest, t4/12; cum 26K 6/12;
• 21072, 232, EOG, Lostwood 24-1510H, Kittleson Slough, t3/12; cum 40K 6/12;
• 21503, 1,628, MRO, Jahnke USA 24-31H, Reunion Bay, t5/12; cum 52K 6/12; 

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NOG at SeekingAlpha.com.

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For investors only:

CVX is flirting with a new 52-week high.
XOM reached a new 52-week high.
MHR: an interesting Bakken play: 132,000 acres in the Bakken/Tableland; 24,000 acres in Eagle Ford.

Disclaimer: this is not an investment site; this is for informational and educational purposes only.

Random Look At Bakken Operators With IPs > 1,000

The following data was sent to me by a reader; I'm posting it "anonymously." The reader has done a fair amount of work.

He took all of the IP data that was provided for the second quarter, 2012. He placed them in a spreadsheet, and then computed percentage of all wells with IPs > 1,000 bbls. This is what he got. All wells were counted, even if they were on DRL status. 

For the 2^nd qtr 2012,   top 25% (  i.e. 12 companies out of total 48 reporting)

                              total                                   

                              Wells                                   Wells IP over 1,000

CLR                       45           9.83%                                 3

Hess                      36           7.86%                                  1

Whiting                35           7.64%                                  15

BEXP                     34           7.42%                                17

Oasis                    31           6.77%                                  14

EOG                      27           5.90%                                  2

Petro Hunt          20              4.37%                                  6

OXY                       19           4.15%                                1

XTO                       17           3.71%                                 5

MRO                     16           3.49%                                  10

Denbury               14           3.06%                                   7

KOG                      14           3.06%                                 5            

 

All other:            150          32.74%            

Honorable mention  BR:  9 wells completed – 6 with IP over 1,000

 

Total:                     458        100.00%

I went back to the 2nd quarter and updated any of the DRL wells that were now completed and had an IP reported. About 63 wells on DRL status now had an IP.  

For CLR,  one additional DRL well reporting, not > 1,000

For Hess, 17 DRL wells reporting; 3 more wells with IPs > 1,000

For Whiting, I did not see any more DRL wells coming off DRL status

For BEXP, six DRL wells reporting; all with IPs > 1,000

For Oasis, four more DRL wells reporting, one with an IP > 1,000

For EOG, I did not see any more DRL wells

For Petro-Hunt, two more DRL wells reporting; one with an IP > 1,000

For OXY, one more DRL well reporting; but the IP was not > 1,000

For XTO; two more DRL wells reporting; one with an IP > 1,000

For KOG, four more DRL wells reporting; three with an IP> 1,000

Comments:

1) IPs are simply one data point. Analyzing data points is difficult, but comparing them between operators is very difficult; within an operator, IPs might be more meaningful

2) CLR drills the most, but few wells with an IP>1,000

3) Whiting, BEXP, and Oasis stand out. 

4) BEXP might be an outlier, and one may want to remove BEXP from the list. That leaves Whiting and Oasis as the stand outs. But others are doing pretty well also, for example: MRO and Denbury.  

5) A lot wells came close to 1,000, but by the rules, even a well with an IP of 999 was not counted as a well > 1,000.