Wells Coming Off The Confidential List Tuesday; BR Has A Nice Well In Haystack Butte; 2/5 Wells To DRL Status

Active rigs: 189

Wells coming off confidential list Tuesday:

• 22719, 632, Petro-Hunt, Syverson 156-99-30A-31-1H, East Fork, t3/13; cum 35K 3/13;
• 23721, 2,880, BR, Inga 14-21H, Haystack Butte, 2-section spacing; t2/13; cum 27K 4/13;
• 23767, 1,405, XTO, Mendenhall 12X-18C, Grinnell, t5/13; cum 4K 4/13;
• 23881, drl, XTO, FBIR Bird 31X-19G, Heart Butte, no data,
• 23982, drl, Statoil, Samson 29-32 2TFH, Banks, no data,

********************************

22719, see above, Petro-Hunt, Syverson 156-99-30A-31-1H, East Fork:

Date	Oil Runs	MCF Sold
4-2013	10548	0
3-2013	14418	0
2-2013	10024	0

23721, see above, BR, Inga 14-21H, Haystack Butte:

Date	Oil Runs	MCF Sold
4-2013	20779	16158
3-2013	2946	0
2-2013	3361	0

Eight (8) New Permits -- The Williston Basin, North Dakota, USA; Several Nice QEP Wells; Great Graphic For Newbies

Locator: 30010B.

Active rigs: 189 (trending up; nice)

Eight (8) new permits --

• Operators: Whiting (6), Fidelity, Triangle 
• Fields: Sanish (Mountrail), Dickinson (Stark), Timber Creek (McKenzie)
• Comments: Coincidental -- the one Triangle permit is in Timber Creek, the same field where Whiting has 3 permits in today's report

Wells coming off the confidential list were posted earlier; see sidebar at the right.

Six (6) producing wells completed:

• 25046, 338, Oasis, Sequoia 6093 42-34H, Gros Ventre, t5/13; cum 163K 8/23;
• 21561, 1,731, QEP, MHA 1-31-25H-150-92; Heart Butte, t5/13; cum 304K 8/23;
• 21557, 2,140, QEP, MHA 1-31-36H-150-92, Heart Butte, t5/13; cum 277K 8/23;
• 21558, 2,359, QEP, MHA 3-31-36H-150-92, Heart Butte, t5/13; cum 356K 8/23;
• 21559, 2,032, QEP, MHA 5-31-25H-150-92, Heart Butte, t5/13; cum 280K 8/23; off line;
• 21560, 673, QEP, MHA 7-31-25H-150-92, Heart Butte, t5/13; cum 352K 8/23; off line;

This is how those QEP wells look, under the Missouri River. All wells are on 4-section (2560-acre) spacing. These roughnecks and engineers can lay a horizontal almost anywhere the boss wants it:

Zooming in on the ten wells on the two 5-well pads in the southeast corner of the above four-section spacing unit:

For newbies:

• solid black dots: actively producing wells
• green circles: "DRL" status; have been drilled; waiting to be fracked, tested, and reported

Timing Is Everything: Great Britain Lifts 18-Month Moratorium on Fracking, Determines Fracking Is Safe (And Maybe Even Necessary)

It has been reported that Great Britain came within six (6) hours of running out of natural gas this past winter. It appears the country may have significant natural gas reserves if they choose to go after it.

So this is good news, being reported by Bloomberg:

The government lifted an 18-month moratorium on hydraulic fracturing, or fracking, used to exploit shale deposits in December after the completion of an investigation into two small earthquakes near Blackpool caused by Cuadrilla’s drilling. The company has delayed exploratory testing until next year to carry out environmental assessments. 

Timing is everything.

But confusion still appears to exist: "two small earthquakes near Blackpool caused by Cuadrilla’s drilling."

KOG Pays >$10,000/Acre In The Better Bakken

Updates

Later, 3:37 pm: SeekingAlpha on the KOG-LR deal:

The transaction appears to be reasonably valued, although by no means a "steal" taking into account the quality of acreage being acquired. I attribute approximately $250-$325 million M&A value to existing production and wells-in-progress included in the transaction (based on the very limited operating data disclosed and using certain decline curve assumptions). That implies approximately $335-$410 million paid for the undeveloped acreage and translates to valuation of ~$10,000-$12,500 per undeveloped acre, assuming that 80% of the acreage being acquired is undeveloped.

Conclusion of this particular writer:

Strategic rationale of the acquisition raises some concern, albeit not a major one. Given that Kodiak already has a decade plus-long inventory of drilling locations (which may prove to be even greater as Deeper Three Forks potential is unlocked), the acquisition effectively consumes the liquidity that could be used to accelerate the development of existing high-quality drilling inventory.

Some of the acquired acreage, if of inferior quality, may not be called upon for many years and would represent a "negative carry."

While the company's desire to grow its footprint is understandable, it is hard to expect that many "bargains" can be found in the Bakken's highly competitive and increasingly transparent M&A market. Having said that, it is important to note that Kodiak's management has done a formidable job in building out the company's asset base in what later proved to be the core of the play through acreage acquisition and delivering strong operating results. In the long run, this transaction may prove no different.

Overall, the transaction has neutral implications for the stock value. Some financing-related headwinds would not be a surprise.

Original Post

KOG buys Liberty Resources. Not mentioned in today's presentation at the RBC Capital Markets Conference (a pdf file).

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you read here.

First, KOG, from Yahoo!Finance which often lags.

• operating cash flow (annual): $320 million.
• total cash: $6 million
• total debt: $1.2 billion; getting close to $2 billion?
• market cap: $2.3 billion

The KOG-Liberty Resources deal:

• $660 million cash / 42,000 net acres = $15,000/acre
• 6,000 boepd production x $50 = $110 million. $660 million - $110 million = $550 million
• $550 million / 42,000 net acres = $13,000/acre
• plus a drilling rig

I've blogged numerous times: one of the problems KOG has -- a Bakken only company. The story continues.

NOTE: This was posted earlier as part of another post. To better follow this story, it was moved here as a stand-alone post.

Who Wudda Guessed? Breaking News From The Supreme Court ....

The Supreme Court held that police can take DNA samples from criminal suspects without probable cause.

One word: wow.