EOG Reports Another Huge Bear Den Well; Eleven New Permits -- Williston Basin, North Dakota, USA

Active rigs:

	2/11/2014	02/11/2013	02/11/2012	02/11/2011	02/11/2010
Active Rigs	195	183	203	165	91

Eleven (11) new permits --

1. Operators: Whiting (3), XTO (3), CLR (2), Petro-Hunt (2), Enduro
2. Fields: Dollar Joe (Whiting), Grinnell (Williams), Ellisville (Williams), North Tioga (Burke), Tree Top (Billings)
3. Comments:

Wells coming off confidential list were posted; see sidebar at the right (not worth looking at today's list -- only two came off the confidential list and both went to DRL status).

Wells coming off confidential list Wednesday:

• 23062, 455, EOG, Bear Den 101-2019H, Spotted Horn, t8/13; cum 84K 12/13;
• 23456, drl, Hess, BB-Budahn-150-95-0506H-2, Blue Buttes, no production data,
• 25159, drl, CLR, Columbus Federal 2-16H, Baker, no production data,
• 25734, 1,253, Whiting, Moen 41-26-2H, Timber Creek, t8/13; cum 46K 12/13;
• 25814, drl, CLR, Salers 1-27H, Antelope,
• 25907, drl, BR, CCU Columbian 43-1TFH, Corral Creek, no production data,

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

23062, see above, EOG, Bear Den 101-2019H, Spotted Horn:

Date	Oil Runs	MCF Sold
12-2013	10974	12370
11-2013	31164	18087
10-2013	13168	9944
9-2013	15312	3
8-2013	13273	309

Update On Natural Gas Pricing, Supplies

CNBC is reporting:

A brutally cold winter has made natural gas the new black, firing up demand and sending prices to a four-year high last week at $5.74. The sharp rally has upended assumptions that a surplus of supplies would provide inexpensive energy for decades to come, and that the U.S. could even afford to ship some of it abroad.

For years, the market has grown accustomed to the idea that natural gas—a product of the U.S. shale revolution—is both abundant and inexpensive. The breakneck pace of U.S. natgas production, which the Energy Information Administration recently predicted would jump by 56 percent from 2012 to 2040, had helped depress prices.

At least for the moment, analysts expect the current price spike to be temporary: Goldman Sachs recently raised its natgas forecast for 2014 in response to the rally, but expects prices to top out at $4.50. Elsewhere, Bank of America-Merrill Lynch expects prices to fall back below $4 within the next two months.

Still, others say the natural gas spike could last longer than expected, because a prolonged cold spell has delayed the replenishment of depleted inventories. The latest report from the EIA showed natural gas stockpiles fell by 262 billion cubic feet (bcf), having shed 40 percent since November alone as the weather turned frigid.

Data points:

• prolonged winter will prolong the shortage; less time to replenish the tanks over the summer
• the situation will exacerbate if there is a hot summer
• farmers in autumn (2014) will be first to notice
• March natural gas futures might trade at a premium to April contracts
• relatively inexpensive in US ($4); Europe ($10+); Asia ($15+)
• at the time the article was written, DOE had approved three new LNG export facilities in 2013
• DOE just approved a fourth, Sempra, approved yesterday
• DOE weighing 21 more requests

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

Summer Wine, The Corrs and Bono

Sempra Energy Receives DOE LNG Export License For Louisiana Liquefaction Facility -- One Word: Wow; Marcellus NG -- $4/MCF Yields 60% Rates Of Return

Sempra Energy subsidiary receives Department of Energy LNG export license for Louisiana liquefaction facility:

The U.S. Department of Energy (DOE) today issued a conditional authorization that allows Sempra Energy subsidiary Cameron LNG to export domestically produced liquefied natural gas (LNG) from its proposed liquefaction facilities in Hackberry, LA, to countries that do not have a free trade agreement (FTA) with the U.S. Subject to environmental review and final regulatory approval, the authorization conditionally approves Cameron LNG to export up to 12 million tonnes per annum (Mtpa), or approximately 1.7 billion cubic feet per day, of natural gas for 20 years commencing on the date of first export.

This reinforces the fact that there is not a "natural gas" shortage in New England; there is a "pipeline" shortage, or "distribution issue." See RBN Energy earlier today.

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

Hitting new highs include BHI, EPD, MDU, WMB.

Others trading near new highs include SRE.

Not a good day for WPX:  WPX  late Monday said its fourth-quarter and full-year earnings will be impacted by up to $1.4 billion in pre-tax charge stemming from a drop in forward market natural gas prices. WPX shares slumped 10%, the biggest loser in the S&P 500.

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

The Marcellus: A Monster

Yahoo!Finance / AccessWire is reporting that Canada has a problem. Losing East Canada as a customer means west Canada needs Asia for a natural gas customer.

When will Marcellus production peak? That is Big Question #1. There are thousands of undrilled well locations remaining in the play and Marcellus economics work at very low gas prices.

At just $4/mcf, rates of return from drilling wells in the Marcellus reach as high as 60%. These stellar economics will keep Marcellus production growing in all but the most pessimistic of natural gas price scenarios.

Expectations for the Marcellus are for production to increase by another 3 bcf/day in just 2014 alone. The Marcellus is the monster shale gas play and is already turning the North American natural gas game upside down—just recently it forced the partial reversal of the $4 billion REX pipeline, which was built only a few years ago to get Rockies gas east to the lucrative New England market. Now Marcellus gas will flow west.

Wow, What An Incredible Day For The Bakken, For The Market, For Oil ...

... nothing but blue skies, I see, today. Nothing but blue skies from now on.....thank you, Janet Yellen.

Blue Skies, Willie Nelson

I'll be off the net for awhile.

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

Don sent me this link, another SeekingAlpha story on KOG. I wasn't going to open it. KOG is the darling of Wall Street.  It's easy to find another good news story on KOG. But for some reason (boredom?) I went to the link. I was pleasantly surprised; the contributor is one I appreciate and trust: Bret Jensen. Remember the days when KOG was losing a penny/share or maybe earning a penny/share every quarter? Look at this from Bret:

In addition to Kodiak's substantial production increases, earnings are increasing at a nice clip. The company earned 47 cents a share in FY2012 and should have earned ~65 cents a share for FY2013 when it reports its last quarterly earnings of the fiscal year at the end of this month. Analysts have over 90 cents a share in profit pegged for FY2014 in the current earnings consensus.

Given these significant increases in earnings & revenues, the stock is too cheap at just over 12x this year's expected earnings; a ~20% discount to the overall market multiple. The shares also have one of the lowest five year projected PEGs (.30) of the E&P stocks I cover. Finally I continue to believe the company would make a logical acquisition target if M&A activity in the sector picks up. 

Regular readers are very, very aware that operators have been putting in "seed corn" since 2007, at almost $2 billion/month in the Bakken. At some point that seed corn would be producing a crop ripe for harvest.

KOG has outstanding Bakken acreage, just not very much.

Otter Tail Surges 8% On Strong Report

Press release here.

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

For the year: Consolidated net income from continuing operations increased to $50.2 million, or $1.37 per diluted share, from $39.0 million, or $1.05 per diluted share, in 2012.

For the quarter:

• Fourth quarter diluted EPS from continuing operations were $0.35 compared with $0.47 for the fourth quarter of 2012.
• Fourth quarter diluted EPS from continuing operations were $0.52 on a non-GAAP basis compared with $0.47 for the fourth quarter of 2012. Non-GAAP results for the fourth quarter of 2013 exclude the effect of early debt retirement costs of $6.2 million.
• On February 3, 2014 the corporation's Board of Directors increased the quarterly common stock dividend to $0.3025 per share, an indicated annual dividend rate of $1.21 per share or $0.02 per share increase over the 2013 rate. The dividend is payable on March 10, 2014.