Folks Have Been Requesting Graphics Of 320- And 160-Acre Density Drilling In The Bakken -- Here They Are

This comes from the October 2, 2013, CLR presentation which can be found at the company's website.

I am really, really thrilled to see this (again). Long before anyone else outside the industry said anything about increased density, the MDW opined that fracking results suggested that we would be seeing 500-foot lateral spacing someday in the Bakken.

That "someday" is here.

Ramblings: The Center Of Gravity Has Shifted From The Mideast To The Midwest

I started blogging on the Bakken simply as a way to help me understand what the Bakken was all about. See "welcome/disclaimer." I owned no mineral rights, and although I enjoyed investing, the blog was never intended to have anything to do with investing.

After a few months of tracking the Bakken, it became obvious that one would not truly understand the Bakken without following the business side, which included following financial news, of the Bakken.

At the time I truly had no idea where the Bakken was headed. Within a year or two it was obvious that "the Bakken" was more than a geographical location. In addition to being a laboratory for testing new ideas in unconventional oil exploration and production, "the Bakken" has now come to mean, for me at least, anything that has to do with horizontal drilling and completion (generally fracking) in unconventional shale and oil deposits.

Some time ago, it became obvious to some of us, including CarpeDiem, that the center of gravity for energy had shifted from the Mideast to the Midwest.

If I had the time, I could ramble at length on this issue, but I will let this article from CNBC/Yahoo!News do it for me:

Developing a comprehensive plan to achieve U.S. energy independence is the "single biggest" way to boost the economy, FedEx Chairman and CEO Fred Smith told CNBC on Wednesday.

"Oil is at the center of everything we do," Smith said in a "Squawk Box" interview. "If we produce more in the U.S. and use less and develop alternatives ... you allow the United States within our economy a half a trillion dollars more in GDP."

Smith opened the OPEC Oil Embargo 40 summit, sponsored by Securing America's Future Energy, in Washington on Wednesday. He's the co-chair of the advocacy group's Energy Security Leadership Council of retired generals, admirals and CEOs of oil-using companies. 

The US will never develop a comprehensive energy independence plan. In fact, I don't even want the federal government involved at all in developing any plan.  It looks like we will become energy independent on the backs of the likes of Pioneer Natural Resources and Continental Resources.

Maybe we were lucky that the current administration did not know how much oil and natural gas the US had. The administration knew how much coal we had and we all know how that worked out.

There are many, many story lines here. The most important story line is that the energy revolution in the United States is just beginning.

I think I was among most folks who agreed that when the Bakken was discovered it would be the last "big" oil story.

Then, they discovered the Eagle Ford.

Then, they re-discovered the Permian.

This is not an investment site. The easy money has been made in the Bakken. But my advice to anyone investing: be diversified and follow the oil and gas industry very, very closely. It's never too late.

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Just after posting the story above, I get this story:  German Power-Price Swings Threaten Growth Engine: Energy Markets --

The lack of clarity on Germany’s energy policy is creating the most volatile power prices in seven months, boosting costs for industry in Europe’s largest economy.

The 30-day historical volatility in the price of power for 2014 more than doubled in the past six weeks to the highest since March 4, data compiled by Bloomberg show. Prices are being whipsawed because Chancellor Angela Merkel, re-elected almost a month ago, has yet to give details on her pledge to amend the nation’s $750 billion solar and wind power program.

Price swings in Europe’s biggest power market, exacerbated by plunging fuel and carbon costs, are making it harder for industrial users to plan purchases. The volatility is boosting total costs and hindering investment in the $3.4 trillion economy.

Homesick Majors Returning To The US; Wall Street Finally Finds Oasis; Halcon Update

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

EPD announces a slight increase in its dividend/distribution.

Oasis is building Bakken oil acreage as Wall Street gushes. -- Investors.com, Investors Business Daily. But the story they report is an old, old story. It sure takes a long time for some folks to see these things.

From The Motley Fool:

ConocoPhillips plans on investing $3 billion over the next five years in the Permian Basin. It has 1 million net acres with 800 million barrels of recoverable oil equivalent in the area.

Conoco plans on boosting production in the play by 40,000 boe/d through 2017 to help offset the decline of its older assets. Permian production growth won't be enough though, which is why it also set its sights up north.

In the Bakken play, Conoco plans on investing $4 billion over the next five years to explore its 626,000 net acre position in the area. The company sees 600 million barrels of recoverable oil equivalent in the area and estimates production will rise 45,000 boe/d by 2017.

Even that won't be enough to offset declining base output, so Conoco decided to pull out the big guns.

In the Eagle Ford, Conoco is betting big with $8 billion being spent to push up production over the next five years. It has 227,000 net acres in the play with 1.8 billion barrels of recoverable oil equivalent. All of that oil has given Conoco over 1,800 locations to drill and as such forecasts an increase of 130,000 boe/d in production by 2017.

At SeekingAlpha:

Halcon Resources has seen its shares remain strong and not retreat as we anticipated. There has not been any news out but with the shares so beaten up and underperforming recently it's fair to reason that shorts may be covering or the winnings from other trades in the sector are finding their way into Halcon. Either way up is up, and as shareholders we have to be pleased, although we would have preferred to have seen the shares retreat back into our buying area so we could make another purchase. The company will report November 5th, so we have a while for another pullback but we do think that with all of the events in the Utica that this name might very well rally into its conference call as investors search for names offering value heading into earnings season. 

Around The Horn -- The 16th Day Of The Government Shutdown

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

30-second sound bite: oil continues to slide toward the $100 support. Bakken operators are significantly outperforming the majors. Sweet. In early trading, the market surges despite the impending government default. We all know the fix is in. [In the bracket, after market close. Oil recovered; up $1.04 for the day; I guess even oil traders were happy to see government getting back on track.]

KOG trading at a new high, up over 2%. I used to consider KOG the bellwether stock to track the Bakken. About a month ago (sometime in September, 2013), I began re-thinking this. I now consider HK the bellwether stock to track the Bakken. [Closes up 2.1%; new high, $13.10.]

HK is up about 3%; about $5.27. [Closes up over 4%.]

Oasis remains on a tear, up over 2.2%; up another dollar. [Closes up 3.2%; new high.]

WLL is up 2.35%; reaching a new 52-week high. [Closes up 2.58%; new high.]

CLR is up over 2%; trading at a new high. [Closes up over 3%; new high.]

CVX, COP, XOM: CVX is up 1%; COP is up 1.2% and trading at a new high; XOM is up but not quite as much. Both CVX and XOM are well off their highs.

EOG is up less than a percent; well off its 52-week high. [Closes up almost 1.3%; new high.]

CHK is up almost 2%; back near its 52-week high. [Closes up almost 4%; new high.

SD is up another 1.4%; breaking out of a trading range, but below its 52-week high. [Closes up 2.8%.]

AMZG is fourteen cents over a nice entry point of $2.00. [Some profit taking? Back down to $2.09.]

TPLM is up almost 3%; near its 52-week high. [On a tear; up 5%; new high.]

UNP is in its trading range well below its 52-week high. But, along with the rest of the market, is up today.

I don't follow BNSF (BRK) much any more; BRK follows the market in general.

ENB, EEP are both in a trading range, well below their highs.

SRE seems to have broken out of its slump -- up 1.5% today; about $2 below its high.

TransCanada is up slightly; well off its high.

The Midland, Texas, Folks Are Preparing For Another Boom

For newbies: active drilling will be necessary through 2030 to drill 48,000 wells to exhaust the Bakken (with today's technology and today's estimates). Production from the Bakken will continue through 2100.

The Permian is estimated to be several times bigger than the Bakken (although some will disagree with the "several times").

The Permian is just beginning. Production is enormous.

The oil and gas industry is well known to go through boom and bust cycles.

North Dakota reports a new record yesterday: > 900,000 bbls of crude oil being produced daily.

Read the following story, in that context, and note the byline (Midland, Texas), being reported by The Dickinson Press:

MIDLAND, Texas — In a faded West Texas town dotted with vacant buildings and potholed streets is a sparkling storefront window and a curious display: rows of diamond-studded Rolex watches, awaiting buyers whose pockets are packed with oil money.

The surge in oil drilling has drawn money and men like a magnet to run-down communities that haven’t seen a boom since the 1980s.

But leaders and residents here are increasingly mindful that the runaway riches tapped by hydraulic fracturing will eventually run out. And they are determined to live by a fondly remembered bumper sticker from the last bust: Please, God, give me another oil boom and I promise not to blow it. So some towns are taking steps to ensure they land softly rather than crash into economic ruin.

The Permian (Midland, Texas) is getting ready for another boom.

The US is now #1 in the world -- repeat, #1 in the world -- for producing oil and gas.

I believe the US is now out-producing Saudi Arabia, and will soon out-produce Russia in oil, making the US the #1 crude oil producer in the world.

With that in mind, recall our first nominee for the 2013 Geico Rock Award. The graph at this link might help put things into perspective.