Wells Coming Off Confidential List; Legacy With a Nice Spearfish Well; EOG With Two Nice Wells; Compare Three Murphy Creek Wells; Zenergy With A Nice Well; Hess With a Huge Well; Whiting With a Nice Red River Well

RBN Energy: Isobutane -- Part I in a series on pricing, production of isobutane

Montana oil production tax: Random update of the oil activity in eastern Montana and debate over raising oil production tax, The Missoulian. 

Wells coming off the confidential list over the weekend and Monday:

Monday, March 11, 2013

• 22133, 388, OXY USA, Mongoose 1-13-24H-142-95, Murphy Creek, t9/12; cum 15K 1/13;
• 22364, 138, Legacy, Legacy Etal Bernstein 5-17H, Red Rock, t10/12; cum 13K 1/13;
• 22962, 860, EOG, West Clark 5-2425H, Clarks Creek, t12/12; cum 37K 1/13;
• 22963, 1,908, EOG, West Clark 102-2413H, Clarks Creek, t10/12; cum 34K 1/13;
• 23107, 1,213, MRO, T D Steffan 21-27H, Murphy Creek, t11/12; cum 26K 1/13; compare with the OXY USA well above,
• 23400, drl, Crescent Point, CPEUSC Suitor 13-24-158N-101W, Little Muddy, minimal production to date

Sunday, March 10, 2013

• 23210, 923, Zenergy, Cayko 22-27H, Dore, t1/13; cum 16K 1/13; 
• 23273, 492, Whiting, Froehlich 24-9PH, Bell, on a gas line; t9/12; cum 21K 1/13;
• 23300, 941, Hess, SC-TR Slette 153-98-1819H-3, Truax, t12/12; cum 46K 1/13;
• 23433, 301, MRO, Ivan Hoff 31-28H, Strandahl, t11/12; cum 3K 1/13;
• 23525, drl, SM Energy, Ceynar 4X-18H, Poe, no production data;

Saturday, March 9, 2013

• 22884, drl, Hess, LK-Wing 146-97-2215H-2, Little Knife, no production data;
• 22889, drl, Hess, LK-Wing 146-97-2215H-7, Little Knife, no production data;
• 22915, drl, BEXP, Roger Sorenson 8-5 2TFH, Alger, no production data;
• 23291, drl, CLR, Topeka 3-12H, Brooklyn, no production yet;
• 23330, 195, Whiting, Samuelson 23-32, wildcat (Beach oil field); a Red River well; t12/12; cum 10K 1/13;
• 23425, drl, BEXP Roger Sorenson 8-5 6TFH, Alger, no production data;
• 23520, 585, CLR, Jack 3-9H, Murphy Creek, t1/13; cum 7K 1/13;
• 23526, drl, SM Energy, Ceynar 4-18HB, Poe,

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

22962, see above, EOG, West Clark 5-2425H, Clarks Creek, already on a gas line:

Date	Oil Runs	MCF Sold
1-2013	9352	6935
12-2012	27192	16142
11-2012	404	251
10-2012	26	101

22963, see above, EOG, West Clark 102-2413H, Clarks Creek, already on a gas line:

Date	Oil Runs	MCF Sold
1-2013	6529	12238
12-2012	12044	20782
11-2012	15063	25131

23210, see above, Zenergy, Cayko 22-27H, Dore, on a gas line:

Date	Oil Runs	MCF Sold
1-2013	13728	5877
12-2012	1944	0

23300, see above, Hess, SC-TR Slette 153-98-1819H-3, Truax, on a gas line:

Date	Oil Runs	MCF Sold
1-2013	17096	13340
12-2012	28888	6091

Received As A Comment To An Earlier Post

The following was a comment to an earlier post ("array" fracking). One cannot easily search comments, so I wanted to bring the comment forward where it could be more easily found.

I like your comparisons of the forward looking PE's. I too don't understand why the market values these Bakken growth companies similar to XOM from an earnings perspective. The only logical explanation that I can up with is the perceived risk that the market must see in these Bakken companies.

Going with that assumption, I don't see risk in the reserve estimates, in fact I see significant upside for all the reasons that you state. "Array" fracking only adds the potential for upside. Early data points from these companies, both what they have stated publicly along with the data that one can see from the NDIC site are certainly positive indicators that we'll see an increase in EUR's as knowledge around the correct spacing evolves.

And then you look at the Lynn Helms discussion around the "gusher" NW of Watford City. Whether that turns out to be a step function in EUR's or not, it illustrates to me that there is the very real potential that a step function could occur in the near future. Certainly a huge financial incentive for the oil companies as well as the service companies to innovate.

There certainly is the risk around regulatory interference in fracking, which should be considered. And there are the macro economic risks that the price of oil could collapse. Hedging helps in the near term, but if prices stay low for too long the hedging won't provide indefinite protection.

I've also read some analyst who worry that the 'break even' point for Bakken oil is quite high. In my view, those analysts have it wrong. They are looking at current returns against current expenditures and concluding that the cost to produce oil is very high. The companies IRR numbers are very strong. If I could get 50%-80% IRR on every dollar I invest, I think I'd be extremely happy.

And then consider cost improvements, differential improvements and additional efficiency gains,and you start to really drive the bottom line figures which only drive the PE down or the share price up.

Up until this past year (or so), some of the Bakken-centric companies (particularly KOG) had outlandish P/Es, but now they seem to have swung to the other end of the continuum.

We may be seeing low P/E's for three reasons:

• most agree the Bakken-centric companies are priced to "perfection." Any glitch (regulatory, global economy, falling oil price, etc) and share prices will fall precipitously (based on history);
• everyone agrees one needs deep pockets to pay for these very expensive Bakken wells; pad drilling makes each well less expensive, but each pad becomes much more expensive; and, 
• relatively unknown to mutual fund managers and retail investors.

Two other thoughts:

• for growth, there are much better opportunities; many feel the "easy" money has been made in the Bakken; considering that one could have bought KOG for 60 cents/share several years ago, and that was before share dilution when additional shares were issued; and, 
• for value, there has been a noticeable turn to dividend-paying companies, which does not include many Bakken-centric operators. 

At least that's my 2 cents worth.

Disclaimer: this is not an investment site; do not make any investment decisions based on what you read here. 

Another Pipeline Reversal? Northeastern United States, Canada's St Lawrence Seaway

This post will be up for a few minutes and then taken down, and placed in draft status.

I do that for the time-stamp, and then re-post if the information becomes relevant sometime in the future.

Read this story and then look at the map. 

In case the linked story is taken off the net, a quick summary: the last leg of the Canadian-US pipeline system necessary to move Canadian oil and/or Bakken oil to the east coast:

• pipeline from Sarnia, Ontario (60 miles NE of Detroit), to Montreal, Quebec (ENB Line 9)
• pipeline from Montreal, Quebec, to Portland, Maine (the Portland-Montreal Pipeline)
• the Portland, Maine, terminal

Once oil gets to the Port of Montreal, there may be some options for the Canadian oil shippers. Two options: a) pipeline through a corner of Vermont and New Hampshire to Portland, Maine, terminal (one of the largest oil import terminals in the US); b) oil tankers to the Atlantic via the St Lawrence Seaway.

US faux environmentalists/activists will do what they can to stop the reversal of the PMPL (pronounced "pimple"), and forcing decision to use the St Lawrence seaway.

One indication of how this goes will be watching for news stories of oil activity at the Portland, Maine, terminal.

Overnight Lodging Options in The Big Apple

Hitchhiking, taking the bus, or traveling by Amtrak, I sometimes find myself in an expensive city (such as Chicago) with no (affordable) place to stay. The last time that happened I was traveling by Amtrak and had a scheduled layover in Chicago. I stayed overnight in a wonderful (and affordable) youth hostel.

It turns out there is a similar option when visiting New York City, an option I had not considered. I would assume that could be true in other cities as well. What a great country.

In NYC, just don't try to sneak a 20-oz drink into a homeless shelter. 

Week 10: March 3, 2013 -- March 9, 2013

Bakken operations
20% recovery in the Bakken -- "Array" fracking
EOG's completion design is a game changer -- Filloon
KOG comments on a new completion method
Whiting: 15 wells in one spacing unit
Wall Street Cheat Sheet highlights Whiting's huge prospects in North Dakota
Hess: pure E&P; to sell its retail operations
Drilling costs coming down in the Bakken -- CarpeDiem
CLR's experience in the Bakken -- reader's comment
Overlapping spacing units in the Bakken
Large BEXP pad northwest side of Williston
Active rigs: 187

Pipeline
Enbridge announces completion of its Bakken Expansion Program; increased oil from Berthold to Saskatchewan; new pipeline from Saskatchewan to Manitoba; from there to Chicago
IHS story on pipeline takeaway in the Bakken; Enbridge won't mix Bakken oil with Canadian heavy oil

Railroad
RBN: part III of crude-by-rail terminals in North Dakota

Technology
New technology saves drilling time; the jury is still out (of course)

Economic development
BNSF to use natural gas as a trial

Miscellaneous
Satellite view of the Bakken at night; very little of it was flaring