Support solidifying

Yesterday oil futures spiked more than 10% on the potential impact and devaluation of the dollar on a $700 billion bailout of the financial sector. Today there was some profit taking but oil still closed above $105 which allowed our bakken plays to keep most of their gains. As the market has endured turbulence, the bakken related companies have gone about their business continuing to build up production capacity and expanding in the bakken region. Notable highlights over the last 2 weeks:

  • Northern Oil & Gas (NOG) announced 8 new Bakken discoveries with anywhere from 1%-12.5% working interest.  These wells average 768 BOPD.
  • Northern Oil & Gas (NOG) announced that with recent leasehold acquisitions, Northern’s acreage position in the North Dakota Bakken and Three Forks/Sanish plays has grown to approximately 65,000 net acres.
  • MDU Resources (MDU) estimates that it holds approximately 950 Bcfe of probable and possible reserves, a 19 percent increase from its previous estimate released in July 2007. The increase is largely driven by the companys exploration plays in the Bakken and Paradox Basin areas and the recent East Texas acquisition.
  • Kodiak Oil & Gas (KOG) released info that it now owns an approximate 38,000 net acres under 54,000 gross leasehold acres on the Fort Berthold Indian Reservation (FBIR) in Dunn County, N.D. The Company has three approved drilling permits and recently completed construction of a drilling pad on one of these permits.
  • UBS upgraded EOG Resources from hold to buy which helped send the stock up $15 this week.

We have not seen any hint of slowing of exploration for our bakken plays which is a positive sign.  If oil can continue to stay over $100,  the rest of the year could be quite promising as we head into earnings season.

Signs of life

The downturn in financial markets had sparked renewed fears of a global slowdown amid the credit crunch.  For the better part of the last 2 weeks, this took its toll on the price of oil which caused our bakken plays to drop 10-20% during the period.   There has been such a mistrust of the financial system that now oilinvesting is being viewed as a flight to quality which may provide a short term base while the capital market issues attempt to resolve themselves.   On a positive note,  it does look like oil has major support around $90 and if we can get a prolonged hold of that level, then big dollar oil investors may enter the fray.

bakken Edit
Symbol Last Trade Change Volume Avg Vol (3m)
NOG 11:23AM ET 7.04 Up 0.12 Up 1.73% 170,642 508,603
WLL 11:24AM ET 70.59 Up 0.49 Up 0.70% 404,045 1,190,530
SM 11:23AM ET 34.86 Up 0.06 Up 0.17% 531,390 1,456,460
MDU 11:24AM ET 26.65 Down 0.15 Down 0.56% 511,302 1,106,240
GEOI 11:23AM ET 11.11 Up 1.16 Up 11.66% 89,040 214,415
BSIC.OB 11:11AM ET 1.30 Down 0.10 Down 7.14% 18,795 43,792.3
WSEG.OB 11:20AM ET 0.1250 Down 0.0400 Down 24.24% 257,534 789,254
CLR 11:23AM ET 36.39 Up 1.90 Up 5.51% 1,304,581 2,017,570
BEXP 11:23AM ET 12.74 Up 0.65 Up 5.38% 478,931 1,304,140
KDKN.OB 11:23AM ET 0.86 Down 0.26 Down 23.21% 105,260 95,510.8
KOG 11:23AM ET 1.3800 Up 0.1800 Up 15.00% 1,128,631 1,350,410
EOG 11:24AM ET 90.33 Up 1.52 Up 1.71% 2,018,772 4,224,690

Still waiting and hoping

Our Bakken bucket of stocks continues to languish under the pressure of falling oil prices.   We have had a cautious stance on the sector since late June when oil started its descent.   For those who are long,  we hope that OPEC can vigorously defend the $100 a mark.   Defense of this psychological marker will allow for stabilization of our bakken plays in the long term.    For now we must wait and endure the pain.

bakken Edit
Symbol Last Trade Change Volume Avg Vol (3m)
NOG 10:48AM ET 5.71 Down 0.40 Down 6.56% 72,433 533,884
WLL 10:49AM ET 75.82 Down 7.59 Down 9.10% 592,988 1,092,670
SM 10:48AM ET 36.39 Down 2.33 Down 6.02% 578,570 1,436,810
MDU 10:49AM ET 29.11 Down 1.34 Down 4.40% 558,302 1,060,430
GEOI 10:48AM ET 11.90 Down 1.52 Down 11.33% 52,552 241,614
BSIC.OB 2:51PM ET 1.57 0.00 0.00% 0 51,378.1
WSEG.OB 10:44AM ET 0.18 0.00 0.00% 29,660 814,181
CLR 10:48AM ET 35.98 Down 4.75 Down 11.66% 1,120,640 1,891,030
BEXP 10:49AM ET 10.94 Down 1.06 Down 8.83% 572,406 1,284,620
KDKN.OB 10:32AM ET 1.51 0.00 0.00% 10,600 126,373
KOG 10:48AM ET 2.16 Down 0.33 Down 13.26% 385,008 1,297,400
EOG 10:49AM ET 86.38 Down 5.91 Down 6.40% 1,698,077 3,901,030