Brigham Exploration (BEXP) reports solid Bakken well

Brigham Exploration announced today that its Carkuff 22 #1H Bakken well in its Ross Area has an early production rate of 1,110 barrels of oil per day, which brings its Bakken area production to about 1,500 barrels of oil per day. Also, the company is close to a significant test in Three Forks test that may ultimately yield more Bakken production.

The company also reported Q2 earnings of $0.17 per share, excluding unrealized mark-to-market hedging losses, $0.02 better than the First Call consensus of $0.15; revenues rose 3.6% year/year to $35.5 mln vs the $32.8 mln consensus. BEXP expects Q308 production volumes to average between 30 MMcfe per day and 34 MMcfe per day. Expects Q408 production volumes to average between 35 MMcfe per day and 44 MMcfe per day. If Brigham can get its hedge book in order which has been a drag on its bottom line, it is poised for great growth in the next year. Below is a 3 month chart of BEXP



Continental Resources in the CLR

UPDATE: Although the numbers were solid, CLR sold off today and is down to around $55 a share which is less than expected 10x 2009 earnings. Beware as when BEXP and EOG report in the next day that even a good report may result in a selloff.

Continental Resources beat expectations by reporting a second-quarter profit of $127.3 million, or 75 cents a share this morning as revenue more than doubled to $303.4 million from $145.3 million. Production rose 11% to 31,623 barrels of oil a day with June topping 33000 barrels of oil a day which indicates acceleration in growth. Continental indicates it will deploy more drilling rigs in the second half. During the second quarter, Continental continued to expand its undeveloped acreage positions in the Bakken, Anadarko Woodford, Atoka, Rhinestreet, Marcellus, Huron and Haynesville shale plays. The Company has added approximately 325,000 net acres to its lease holdings since the beginning of 2008, increasing its acreage position to almost one million acres in U.S. shale resource plays.

In terms of Bakken production, average seven-day initial production rates continued to improve in the second quarter of 2008, with wells averaging 513 boepd, an increase of 13 percent over initial daily production for wells completed in the first quarter this year. Recent data in the North Dakota Bakken are shown below with average seven-day initial gross production rates with the Dodge and Mathistad wells performing quite nicely.

— Mathistad 1-35H (40% WI) in McKenzie Co. — 1,260 boepd;
— Dodge 1-17H (20% WI) McKenzie Co. — 989 boepd;
— Whitman 11-34H (32% WI) in Dunn Co. — 765 boepd;
— Bice 1-29H (44% WI) in Dunn Co. — 693 boepd;
— Cleo 1-12H (26% WI) McKenzie Co. — 654 boepd;
— Carson Peak 44-2H (33% WI) in Dunn Co. — 601 boepd;
— Kermit 1-32H (45% WI) McKenzie Co. — 596 boepd;
— Bridger 44-14H (45% WI) in Dunn Co. — 383 boepd;
— Bonneville 31-23H (45% WI) in Dunn Co. — 362 boepd;
— Mountain Gap 31-10H (44% WI) in Dunn Co. — 331 boepd.

The release indicates that CLR is on track for stellar growth for the next 12-18 months fueled by its Bakken plays. If oil stays above $120 per barrel, CLR is on track to post earnings over $4 in 2009 which would give the stock a forward PE of less than 16 at current prices. CLR may give back a little today amidst choppy trading, but long term the story is intact and this is a good entry point for a high powered growth stock.

Trying to form an uptrend

Today is the first day in the last 2 weeks that our bakken plays have gained significantly even as oil stays steady around $124 per barrel. WLL and CLR lead the pack with 3-6% gains and others are close behind. The notable loser here is NOG as Barron’s wrote a negative piece on the company over the weekend but I believe NOG will bounce back as it continues it’s bakken development. NOG is still only a sub $300 million dollar company with low operating costs and a good business model which allows other companies to take on a good portion of the capital risk associated with drilling and exploration. It only takes 10 producing wells (avg 500-700 bbl per day) to justify the current market cap of $285 million so there is plenty of room for growth.

Stock Quotes:

bakken Edit
Symbol Last Trade Change Volume Avg Vol (3m)
WLL 11:27AM ET 90.87 Up 2.96 Up 3.37% 158,597 1,123,770
MDU 11:22AM ET 31.21 Down 0.09 Down 0.29% 236,761 1,093,810
SM 11:27AM ET 45.66 Up 1.27 Up 2.86% 423,301 1,377,520
CLR 11:27AM ET 66.45 Up 3.85 Up 6.15% 447,042 1,759,480
EOG 11:27AM ET 106.71 Up 2.66 Up 2.56% 1,129,932 3,544,840
NOG 11:22AM ET 9.10 Down 0.72 Down 7.33% 374,036 599,233
KOG 11:22AM ET 3.27 Up 0.03 Up 0.93% 258,591 1,469,600
KDKN.OB 11:27AM ET 2.06 Down 0.01 Down 0.48% 13,040 242,083
BSIC.OB 10:37AM ET 1.72 Down 0.03 Down 1.71% 2,900 88,196.9
XTO 11:27AM ET 49.44 Up 0.77 Up 1.58% 4,192,825 9,304,030

July 26, 2008 – Active Drilling Rig List

The number of active drilling rigs has stayed fairly static since our last post on the subject in June.    Continental Resources is still the leader with 13 active rigs in the area.   EOG has 8 rigs,   Marathon Oil (MRO) has 7 and Whiting Petroleum (WLL) has 5 rigs.   With some of the recent finds in the area, we expect the number of rigs to top 85 by September and Continental Resources will most likely continue to report positive news on their drilling efforts as they did with Mathistad 1-35H a few weeks ago as outlined in a recent Continental Resources press release on Mathistad 1-35H below:

“The Mathistad 1-35H commenced production on July 4, 2008 and has flowed at an average rate of 1,095 barrels of crude oil equivalent per day, with 90 percent of production being crude oil and 10 percent natural gas,” said Harold Hamm, Chairman and Chief Executive Officer for Continental Resources. “This is a second positive data point in our effort to determine whether the Three Forks/Sanish formation is a separate oil-producing reservoir not drained by a horizontal well completion in the Middle Bakken zone above it. If the Three Forks/Sanish proves to be a separate reservoir, it would add significant incremental reserves to the Bakken play.”

Rig

Operator

Start Date

RED HAWK 351 BALLANTYNE OIL 7/17/2008
NABORS 49 BRIGHAM OIL & GAS LP 6/26/2008
NABORS 688 BURLINGTON RES O&G CO 6/26/2008
NABORS 59 BURLINGTON RES O&G CO * MIRU
NABORS 177 BURLINGTON RES O&G CO * MIRU
NABORS 52 BURLINGTON RES O&G CO 7/23/2008
CYCLONE 27 CONTINENTAL RESOURCES 7/16/2008
CYCLONE 26 CONTINENTAL RESOURCES 7/16/2008
CYCLONE 22 CONTINENTAL RESOURCES 7/23/2008
CYCLONE 9 CONTINENTAL RESOURCES 6/25/2008
CYCLONE 18 CONTINENTAL RESOURCES 6/27/2008
CYCLONE 2 CONTINENTAL RESOURCES 6/20/2008
CYCLONE 21 CONTINENTAL RESOURCES 6/22/2008
PATTERSON 154 CONTINENTAL RESOURCES 7/1/2008
CYCLONE 19 CONTINENTAL RESOURCES 6/12/2008
CYCLONE 10 CONTINENTAL RESOURCES 6/28/2008
PATTERSON 82 CONTINENTAL RESOURCES * MIRU
CYCLONE 23 CONTINENTAL RESOURCES 6/17/2008
PATTERSON 180 CONTINENTAL RESOURCES 7/22/2008
PATTERSON 136 CONTINENTAL RESOURCES 6/1/2008
RED HAWK 358 EAGLE OPERATING INC * MIRU
CYCLONE 25 ENCORE OPERATING LP 6/24/2008
NABORS 277 ENCORE OPERATING LP 7/5/2008
PIONEER 57 EOG RESOURCES INC 6/27/2008
NABORS 337 EOG RESOURCES INC 7/12/2008
ENSIGN 88 EOG RESOURCES INC * MIRU
PIONEER 56 EOG RESOURCES INC 7/11/2008
NABORS 148 EOG RESOURCES INC 7/7/2008
NABORS 149 EOG RESOURCES INC 7/15/2008
NABORS 161 EOG RESOURCES INC 6/28/2008
ENSIGN 67 EOG RESOURCES INC 7/2/2008
NABORS 358 FIDELITY EXPL & PROD CO 6/23/2008
NABORS 417 FIDELITY EXPL & PROD CO 7/23/2008
NABORS 455 FIDELITY EXPL & PROD CO 6/29/2008
RED HAWK 354 GOLDEN EYE RESOURCES, LLC 7/22/2008
ENSIGN 46 HEADINGTON OIL CO LLC 5/16/2008
ENSIGN 24 HEADINGTON OIL CO LLC 7/21/2008
NABORS 560 HEADINGTON OIL CO LLC 7/12/2008
NABORS 558 HELIS OIL & GAS CO. LLC 7/11/2008
NABORS 165 HESS CORPORATION 6/9/2008
NABORS 742 HESS CORPORATION 7/22/2008
NABR WELL 556 HESS CORPORATION 6/28/2008
H & P 179 HESS CORPORATION 6/23/2008
H & P 241 HESS CORPORATION 7/14/2008
NABORS 272 HESS CORPORATION 7/3/2008
NABORS 557 HESS CORPORATION 7/20/2008
NABORS 140 HUNT OIL COMPANY 7/10/2008
NABORS 684 LUFF EXPLORATION CO 7/13/2008
NABORS 44 MARATHON OIL CO 7/8/2008
H & P 258 MARATHON OIL CO 7/7/2008
PATTERSON 183 MARATHON OIL CO 7/16/2008
H & P 255 MARATHON OIL CO 7/15/2008
H & P 259 MARATHON OIL CO 7/15/2008
H & P 257 MARATHON OIL CO 7/5/2008
H & P 256 MARATHON OIL CO * MIRU
CYCLONE 20 MUREX PETROLEUM CORP 7/4/2008
ENSIGN 71 MUREX PETROLEUM CORP 7/10/2008
WANNER 5 OASIS PETRO NO AMER 6/30/2008
PATTERSON 490 PEAK NO DAK LLC 6/12/2008
ENSIGN 93 PETRO HUNT LLC 5/6/2008
PATTERSON 462 PRIMA EXPLORATION INC 7/18/2008
NABR WELL 164 SAGEBRUSH RESOURCES LLC 7/10/2008
NABORS 152 SAMSON RESOURCES CO 7/9/2008
PIONEER 44 SLAWSON EXPLORATION 6/25/2008
NABORS 592 ST MARY LAND & EXPLORATION CO 7/6/2008
KEY 233 ST MARY LAND & EXPLORATION CO 7/19/2008
NABORS 267 TRACKER RES DEVMNT 5/14/2008
NABORS 182 TRACKER RES DEVMNT 6/23/2008
GREY WOLF 520 WHITING OIL AND GAS CORP 5/31/2008
NABORS 527 WHITING OIL AND GAS CORP 6/30/2008
KEY 257 WHITING OIL AND GAS CORP 7/18/2008
NABORS 686 WHITING OIL AND GAS CORP 7/16/2008
NABORS 354 WHITING OIL AND GAS CORP * MIRU
H & P 180 WINDSOR ENERGY GROUP LLC 7/24/2008
ENSIGN 43 ZENERGY INC 7/20/2008

Glass half full?

The pain continues today for many oil stocks as there is still fear that oil prices will continue to drop from its current level of $125 per barrel. If we can sustain 1 or 2 weeks of stable oil prices, then I believe the controlled “panic selling” will subside and Bakken stocks can start trading independently of other oil sector stocks. At this point, standard option strategies like selling out of the money (OOTM) puts are not advisable as we don’t know where the bottom is of this oil vacuum. We are hunkering down for the next leg here and hoping for stabilization in the next week when some of the Bakken plays report earnings. There were a few bright spots today with WLL, BSIC.OB and XTO in the green. Good Luck to all.

bakken Edit
Symbol Last Trade Change Volume Avg Vol (3m)
WLL 4:03PM ET 84.95 Up 1.31 Up 1.57% 1,194,647 1,115,910
MDU 4:03PM ET 31.14 Down 1.21 Down 3.74% 1,288,924 1,086,270
SM 4:01PM ET 43.23 Down 0.39 Down 0.89% 2,176,189 1,369,390
CLR 4:04PM ET 62.08 Down 0.19 Down 0.31% 2,377,113 1,737,110
EOG 4:00PM ET 101.18 Down 1.84 Down 1.79% 5,746,200 3,521,540
NOG 4:00PM ET 10.10 Down 0.51 Down 4.81% 410,358 594,478
KOG 4:00PM ET 3.00 Down 0.27 Down 8.26% 1,848,770 1,461,550
KDKN.OB 3:59PM ET 2.03 Down 0.03 Down 1.46% 108,734 243,183
BSIC.OB 3:50PM ET 1.82 Up 0.17 Up 10.30% 8,501 94,520.3
XTO 4:02PM ET 48.78 Up 0.54 Up 1.12% 55,620,781 9,122,790

Back on track

Update: More pressure this morning due to dissipation of tropical disturbance Dolly in the Gulf causing oil to ease once again. I am looking for oil to form a base in the $120-$125 range which will hopefully cause this sporadic selling to cease

After an absolutely horrid week last week, our Bakken plays finally had a strong positive showing today with numerous stocks up 5% or more on the day. WLL, KOG and CLR looked particularly strong although the volume was a little lighter than I would have liked. Buoying the sector was a slight rebound in oil prices as well as some positive news from Northern Oil & Gas (NOG). NOG announced it was involved in the successful completion of three wells in the Three Forks/Sanish area of Bakken which brought it to a total of 11 producing wells in the area. Also, NOG has fourteen wells that are in the drilling or completion stages and is included in nearly 70 permitted or docketed-for-permit drilling locations that are expected to drill between now and early 2009. If Northern Oil & Gas can maintain even a conservative general success rate for these 70 wells, we can expect very good things in terms of pps for 2008.
Symbol Last Trade Change Volume Avg Vol (3m)
WLL 4:01PM ET 96.12 Up 8.02 Up 9.10% 1,591,956 1,091,650
MDU 4:01PM ET 32.31 Up 0.44 Up 1.38% 685,511 1,044,810
SM 4:02PM ET 48.92 Up 1.65 Up 3.49% 1,299,516 1,325,890
CLR 4:04PM ET 72.90 Up 3.50 Up 5.04% 1,174,091 1,697,610
EOG 4:02PM ET 109.03 Up 2.64 Up 2.48% 3,333,166 3,395,010
NOG 4:01PM ET 11.87 Up 0.76 Up 6.84% 846,686 578,919
KOG 4:00PM ET 3.85 Up 0.46 Up 13.57% 875,948 1,484,960
KDKN.OB 3:58PM ET 2.15 Up 0.11 Up 5.39% 372,199 243,183
BSIC.OB 3:20PM ET 1.87 Up 0.07 Up 3.89% 22,980 94,520.3
XTO 4:05PM ET 57.98 Up 1.77 Up 3.15% 9,192,680 7,794,160

A tiny Bakken play that could be a 10 bagger (or a 0 bagger) in 3 years

I came across a tiny Bakken play Western Standard Energy Corp (WSEG.OB) that has a $27 million dollar market cap. This is truly the smallest publicly traded Bakken play that I have come across thus far. Western Standard has an effective 80% Working Interest and 64% Net Revenue Interest (after land owner payouts) in seven Lodgepole Reef Prospects (see map below) within the Williston Basin. In this area approximately 4 million barrels of oil has been estimated with represents almost $2 billion in reserves at $110 per barrel. The company also announced on July 14th that they acquired additional acreage in Stark County with 100% working interest with payouts due to landowner downstream. The company plans to drill a well in the 11000 feet range at a cost of $4.5 – $5 million dollars. If they are able to tap even 3-5 decent wells in the area with a rate of 600 barrels per day that could lead to a revenue stream of $100 million per year and a market cap of $300 million which equates to a share price around $3 (hence the potential 10 bagger). Please be aware that the opposite could also occur with this company not having success, not being able to get access to financing and becoming a sub penny stock (hence the 0 bagger). We are just setting aside a few thousand shares and checking this again in a year. Good Luck to all!

Western Standard Energy Bakken Prospect Map

Below is a 3 month chart of WSEG



Daily Contest – Guess BEXP opening price on Fri 7/18/2008

The Rules: Guess the opening price on Nasdaq of Brigham Exploration (BEXP) for FRIDAY’s (7/18) Opening Bell. You must guess the opening price to the second decimal place (ie 16.08). Just put your answer in the COMMENT section (bottom right hand corner of this post) and you are done…. although use a valid email address or i won’t be able to contact you to send you your prize! All entries must be in by 7/17 11:59PM Eastern Time.

Prize: $25 Nordstrom Gift Card (Hopefully there is a Nordstrom near you)

Below is a recent chart of BEXP….Happy guessing!



Bakken stocks you’ve probably never heard of

Below is a rundown of Bakken stocks that are not widely publicized or covered. By no means am I suggesting that any of these are good investments, I’m just posting these for informative purposes. Many of these don’t even trade on US stock markets, but in this day and age, many of the major brokers such as ETrade allow you to trade on foreign markets:

SUNDANCE ENERGY

Company: Sundance Energy

Stock Symbol: TSEA

Market: Australian Stock Exchange (ASX)

Most recent Stock Price: 0.46 (Australian dollars)

Highlights: Sundance owns an interest in oil and gas rights under 82,000 gross acres and 21,000 net acres adjacent to the prolific Elm Coulee Bakken shale oil field in North Dakota and approximately 98,000 gross acres and 47,500 net acres in the Indiana portion of the Illinois Basin. For 2008, Sundance expects to be drilling as many as 21 wells in the United States. This is a fairly small entity with $2.7 million (Australian Dollar) in revenue in 2007.
_________________________________________________________________________

Company:American Oil & Gas

Stock Symbol: AEZ

Market: American Stock Exchange (AMEX)

Most recent Stock Price: $3.21 (US dollars)

Highlights: American Oil & Gas is a small cap oil company with a market cap around $150 million. AEZ ‘s Goliath project is located primarily in Williams and Dunn Counties, North Dakota around the Williston Basin. The Goliath project area currently encompasses approximately 88,000 gross acres and AEZ owns a 50% working interest in approximately 67,000 lease net acres.



_________________________________________________________________________

http://www.ccnmatthews.com/logos/20071206-painted%20pony%20big.png

Company: Painted Pony Petroleum

Stock Symbol: PPY

Market: Toronto Stock Exchange (TSX)

Most recent Stock Price: $6.89 (Canadian dollars)

Highlights: Painted Pony Petroleum is a small cap oil company with approx $200 (Canadian) million market cap that trades on the TSX. Painted Pony is a relatively new public company, its class A and Class B shares began trading on the TSX venture exchange May 23rd, 2007. Painted pony to date, has identified 100 Bakken drilling targets, and plans to drill 40 wells in 2008. A recent press released yielded the following highlights.

  • Drilled 11 gross (3.74 net) horizontal operated wells targeting the Bakken formation in Saskatchewan at a 100% success rate and one (1.0 net) step-out stratigraphic exploration well in a new area. To date, Painted Pony has drilled a total of 19 (7.35 net) horizontal operated wells targeting the Bakken formation,
  • Acquired access to additional potential Bakken-bearing lands with two farm-in agreements,
  • Enjoyed field netbacks of $69.60 per bbl,

———————————————————————————–
We’ll continue to search for more “lesser known” bakken plays in the future. Let us know if you come across any.

Morning Roundup – Fighting back

After a rough week for the Dow last week,  Oil has temporarily stabilized in the 140’s again which is propping up our Bakken plays.  In addition,  the 15%+ gain induced by the positive wells details issued by Continental Resources is holding up nicely increasing optimism for the sector.   It is encouraging that CLR isn’t attempting to fill the gap down to $70 and is attempting to form a base at $80.    Speculative play Northern Oil & Gas looks quite attractive to us here around $13.

ymbol Last Trade Change Volume Avg Vol (3m)
WLL 10:34AM ET 105.41 Up 1.48 Up 1.42% 127,626 1,070,060
MDU 10:32AM ET 34.11 Up 0.09 Up 0.26% 175,670 1,036,060
SM 10:33AM ET 58.89 Up 1.46 Up 2.54% 168,132 1,244,460
CLR 10:33AM ET 82.52 Up 2.50 Up 3.12% 279,830 1,726,880
EOG 10:33AM ET 120.17 Up 1.61 Up 1.36% 487,726 3,215,470
NOG 10:33AM ET 13.08 Up 0.08 Up 0.59% 52,427 599,400
KOG 10:34AM ET 4.02 Up 0.01 Up 0.25% 184,995 1,569,670
KDKN.OB 10:33AM ET 2.06 0.00 0.00% 17,744 244,559
BSIC.OB 9:56AM ET 1.95 Down 0.07 Down 3.47% 7,600 95,853.1
XTO 10:33AM ET 61.49 Up 1.24 Up 2.06% 938,319 7,393,360