NOG Operational Update

Northern Oil & Gas announces 4Q2013 production is expected to average ~ 13,900 barrels of oil equivalent (Boe) per day, up 28% y/y: Co is providing a production and operations update for the quarter ended December 31, 2013.

Production and operations update
Northern's Q4 2013 production is expected to average ~13,900 barrels of oil equivalent (Boe) per day. This represents an increase of 28% compared to Q4 of 2012, and a sequential increase of 6.5% compared to the third quarter of 2013. Total production for 2013 was ~4.47 million barrels of oil equivalent, an increase of ~ 19% compared to 2012.

During Q4 of 2013, Northern added 173 gross (12.6 net) wells to production, with an additional 245 gross (15.2 net) wells that were drilling or awaiting completion as of Dec 31, 2013. During 2013, Northern added 531 gross (40.0 net) wells to production. As of Dec 31, 2013, Northern's total producing well count was 1,758 gross (146.2 net) wells.

Northern expects its Q4 2013 realized price per barrel of oil equivalent, including the effect of settled derivatives (hedges), to be in a range of $74.50 - $75.00. The expected realized price per Boe reflects an approximate crude oil differential to WTI of $15.00 per barrel and an ~$3.00 per barrel loss on settled crude oil derivatives during the quarter.

Northern expects its fourth quarter 2013 lease operating expense (LOE) per barrel of oil equivalent to be in a range of $8.75 - $9.00, a reduction of ~7% compared to Q3 of 2013.

This Story Came Out Before The News That Someone Paid $34,000/Acre In The Bakken

A contributor over at SeekingAlpha looks at Surge Energy, KOG, and Halcon.

Disclaimer: This is not an investment site, but some days I wish it were. Having said that, do not make any investment decisions based on what you read here or what you think you may have read here.

For those who come here for investment advice, President Obama is hoping to initiate the plan that President Bush II proposed but instead of common stock, President Obama will ensure the full faith and credit of his administration, guaranteeing a fair return, let's say 2% on one's money. The Fed's inflation target is 2% so this will work out just about right. Again, this is not an investment site, and I do not know the particulars of the president's plan which he has cleverly called "myRA." 

It's better than nothing (some say). I did not say that. This is not an investment site. By the way, the maximum balance of $15,000 looks ridiculously small, but it appears once one gets to $15,000, it is expected that one would roll that over into a private sector IRA. This sounds like President Bush II's plan -- done a bit differently, but essentially the same idea.

Halcon presentations can be found here. A big thank you to a reader. 

$34,000 / Acre In The Bakken; January's BLM Minerals Lease Sale -- January 29, 2014

KXNET is reporting:

The Bureau of Land Management says its most recent sale of oil and gas leases in North Dakota totaled more than $17.5 million.

BLM says 40 federal leases were sold Wednesday.

The agency says Williston-based Diamond Resources Co. submitted a record high bid of $34,000 for each acre in a 53-acre parcel in Mountrail County.

Diamond Resources also purchased the highest single-parcel bid at more than $5 million for a 152-acre parcel in Mountrail County.

Let's do the math: $5,000,000 / 152 acres = $32,895/acre (rounded). 

At least three story lines come from this:

a) now we know why holding leases by production is so important;
b) if the acreage is worth this much, the Bakken operators are going to show some spectacular profits down the road -- no one paid this much for so little
c) this helps investors understand the value of the shares they hold in Bakken operators

Diamond Resources is probably buying the minerals for CLR.

According to my FAQ page, question 11:

The late summer QEP/Helis deal may have priced "core" Bakken at $30,000/acre (or more). -- August 29, 2012.

I know two people who, when they read this, will be sneezing coffee out their respective nostrils.

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The worst case scenario for the sweet spots in the Bakken:

• 8 wells on 1280-acre spacing (four middle Bakken wells, four Three Forks wells)
• EURs of 300,000
• $50/bbl oil 
• The arithmetic:
• 8 wells x 300,000 bbls (EURs) = 2,400,000 bbls
• 2,400,000 x $50/bbl= $120,000,000
• $120,000,000 / 1280 acres = $93,750 / acre
• Even with each of the 8 wells costing $10 million, one still comes out to $31,250/acre

However, a couple things to consider:

• in the best Bakken, EOG, CLR, and KOG are planning on many more than 8 wells/1280-acre unit (see pilot density projects)
• no one thinks 300,000 bbls for average EURs is even close; across the Bakken, the average is closer to 600,000 (according to CLR) and Mike Filloon says that in the best Bakken, expect to see EURs of 1 million bbls
• I doubt anyone thinks oil will average $50/bbl over the next 30 years
• wells are coming down in cost, from $10 million to $8 million

See what $/acre one gets with the following assumptions?

• 12 wells (still way below the current anticipated well density)
• EURs of 450K (still way below the average of 600K)
• $75/bbl (perhaps reasonable)
• same cost per well

Fourteen (14) New Permits -- The Williston Basin, North Dakota, USA; KOG Will Report A Nice Well Thursday

Active rigs:

	1/29/2014	01/29/2013	01/29/2012	01/29/2011	01/29/2010
Active Rigs	190	187	204	163	90

Fourteen (14) new permits --

• Operators: Hess (4), Statoil (3), BR (3), Fidelity (2), MRO (2)
• Fields: Alkali Creek (Mountrail), Alger (Mountrail), Hawkeye (McKenzie), Green River (Stark), Chimney Butte (Dunn)
• Comments:

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

Triangle USA Petroleum renewed eight (8) permits, six Larsen wells and two Kittleson wells.

One producing well was completed:

• 23278, 2,143, QEP, Paul 1-26/35H, Grail, t1/13; cum --

Wells coming off confidential list Thursday:

• 23019, 754, CLR, Sacrament 3-10H, Brooklyn, no production data,
• 24160, 863, Whiting, Pronghorn Federal 34-10PH, Park, Three Forks, 21,478 feet; t7/13; cum 23K 11/13;
• 24161, 716, Whiting, Pronghorn Federal 41-15PH, Park, Three Forks, 21,030 feet; t8/13; 24K 11/13;
• 24162, 1,327, Whiting, Pronghorn Federal 44-10PH, Park, Three Forks, 21,811 feet; t7/13; cum 30K 11/13;
• 24848, drl, QEP, MHA 5-06-07H-147-92, Heart Butte, no production data,
• 25009, 1,614, WPX, Olson 12-1HX, Van Hook, t12/13; cum 3K 11/13;
• 25033, 507, Hess, LK-Thomas-145-97-3625H-4, Little Knife, no production data,
• 25213, 1,415, Statoil, Alger State 16-21 6TFH, Alger, no production data, 
• 25287, 2,109, KOG, Charging Eagle 1-14-11-2H, Twin Buttes, t12/13; cum 20K 12/13;
• 25760, 1,757, MRO, Williams Kukla 24-34H, Murphy Creek, no production data;

MRO - Re-Fracking

Reminder: I follow this story here. (Actually, I follow the story when I remember.)

At this post I list the MRO wells that might be candidates for re-fracking.