IPs for Recent Whiting Wells Reported In May, 2011, Corporation Presentation -- Bakken, North Dakota, USA

This is the Whiting's corporate presentation (CP), May, 2011:

• CP, 1,182, WLL, Barlow 14-6H
• CP, 920, WLL, Deal 43-28TFH
• CP, 1,416, WLL, Arndt 14-5XH
• CP, 1,087, WLL, Scott Meiers 12-17TFH
• CP, 1,529, WLL, Ness 42-31WH
• CP, 715, WLL, Warden 43-9TFH
• CP, 2,212, WLL, Hoover 14-1X
• CP, 1,254, WLL, Guinn Trust 1-13TFH
• CP, 2,028, WLL, Smith 14-29XH
• CP, 1,232, WLL, Hollinger 21-14TFH
• CP, 596, WLL, Hollinger 11-14TFH
• CP, 440, WLL, Robert Patten 44-3TFH
• CP, 2,247, WLL, State 12-32H

If I remember, I will replace the "CP" with the file number, and add the field where the wells are located.

The graph in that presentation doesn't explicitly state it, but it appears that Whiting's short laterals average EUR is 450,000 bbls of oil equivalent; long laterals average EUR is 950,000 bbls of oil equivalent.

Whitings budgets a CAPEX of $6.5 million for a long lateral; $5.5 million for a short lateral.

Slide 31/32 is very, very interesting: WLL's graph says this is their "typical" Sanish well profile. At the end of the first year, the long lateral Sanish well is producing 250 bbls/day x 365 days x $75 --> $6.8 million (remember, CAPEX is $6.5 million). But the average production during that first year appears closer to 450 bbls/day x 365 days x $75 --> $12 million. And these wells will produce 25 - 30 years; BEXP says as long as 39 years. 

At $75/bbl, an EUR of 950,000 bbls --> a whopping $70 million.

$70 million / 1280 acres --> $55,000/acre.

Back-of-the-envelope calculations: at one time one could buy a Sanish township net mineral acre for $3,000. One hundred acres --> $300,000, about the price of a very nice home in Bismarck. With a EUR of 950,000 for a long lateral, one hundred net acres in a 1280-acre spacing unit would gross more $5.5 million (at $75/bbl) over the lifetime of the well.

I believe the state gets about 12 percent in extraction/production taxes.

At ten years, long lateral Bakken wells are predicted to still be producing 80 boepd on average; short laterals, about 25 boepd. When looking at these figures, one may want to review the definition and benefits of a stripper well.

I'm sure folks will correct me if my math is wrong.

Observations on Building in The Bakken -- North Dakota, USA

I thought I had written this post last night but I can't find it, so if I am repeating myself, I apologize.

Driving around Williston something interesting stands out:

• the local field offices for the various E&P companies are rather ho-hum or even unsightly
• on the other hand, the offices for the oil service companies are generally very, very nice
• and the new homes in Williston keep getting nicer, bigger, and more expensive

With regard to the second point, Schlumberger is putting in a huge new complex just west of Williston. I don't know what will be there, but my hunch is it's going to be the finest building in Williston when it's complete, based on its exposure to the passing public. 

Now, about that first point. It's my contention that the E&P companies will eventually put in some very nice regional headquarters or field offices in the Bakken.

But it appears the E&P companies are starting to do exactly that. Going through the May, 2011, corporate presentation by Whiting Petroleum Corporation tonight provides evidence that this new building is starting.

Slide 24/25 is a photo of Whiting's new Robinson Lake Field office. It seems I've seen this picture before so it may not be all that new, but it still brings out the point. It's a gorgeous building and I think we will see more of this in the future. Both Oasis and SM Energy in Williston have very small office footprints, and I think it's just a matter of time before they upgrade.

Whiting's corporate presentations can be found at its website.

Global Oil Demand To Hit Record This Year (Poll) -- 89 Million Bbls/Day

Link here.

Global oil demand is growing faster than analysts expected just six months ago, according to a new Reuters poll...

The poll of 10 top oil analysts showed oil demand will grow by 1.5 million barrels per day (bpd) this year to hit a record 89 million bpd. At that level, global use will have risen by 5 percent since the depths of the recession in 2009.

The forecast for demand this year is 300,000 bpd higher than it was in the last Reuters poll in December, based on strong emerging market growth. And early indications for 2012 suggest growth will quicken further.

So, we'll see.

The last barrel is most expensive. And sets the price for the first 88,999,999 bbls. 

Update on Investment Opportunity -- Investors Only

I don't know if folks recall and I don't know if I can easily find the original link, but some time ago, I received a note from a developer looking for investors interested in a motel/hotel project in "the Bakken."

I had no previous connection with the developer and have never met him. We have corresponded only a couple times since then, only in regards to the development project.

The whole thing had sort of slipped my mind until someone wrote me today asking me to forward his name/e-mail address to the developer, which I did.

The developer wrote back and said that his group had actually broken ground on the new project -- I believe they actually broke ground today. They hope to have it completed by "late winter."

On his way through Williston, the developer heard that twenty (20) people are moving into Williston daily, and that there is only one house on the market for sale in Williston which he agreed might be hyperbole. (I replied that I am aware of two houses, both on the same street, but it's possible that one  sale is in escrow. Smile. )

He said that their investment group still has "room for about $500,000" for their project(s). I can't remember but I believe the group prefers a minimum of about $100,000 per investor. (I'm wrong: looking at the fact sheet, they require $250,000/investor.) The total project is budgeted at $13.4 million and the group is looking for $4 million equity.

If anyone remains interested, let me know, and I will send you a copy of the fact sheet that was sent to me.

I Don't Think Most People Would Get This Answer Correct: Globally, Which "Company" is the Largest Oil and Gas Company?

The answer is buried near the end of this long article on the game-changing transformation Saudi Aramco plans to undertake.

In a speech in Washington, D.C. in mid May, Saudi Aramco's President and Chief Executive Officer, Khalid A. Al-Falih, outlined for the first time in public, the company's new Accelerated Transformation Program (ATP) that will transition Aramco from "an oil and gas company to a fully integrated global energy enterprise."

... Aramco is pressing ahead with the massive expansion of its global refining capacity and continuing with refining and chemicals integration and expansion in the U.S., Korea and China.

The statement buried in the Q-and-A that we found most interesting was that "the foundations of Saudi Aramco's future will remain in those reservoirs [the current prolific producing fields of Saudi Arabia], but the Kingdom and the company will have a future that is larger and more diverse." The timing of the disclosure of the ATP initiative is curious. It comes at the same time the media discovered that the Kingdom has begun a foreign relations effort aimed at creating an alliance of Muslim countries to provide a counter-balance to a militant Islamist Iran.

The answer to the question is in the article. I did not want to take it out of context and place it here.