What Bakken O&G companies can learn from the BP debacle

It’s been months since a drop of oil has leaked into the Gulf but the remnants still reside from this PR disaster.  BP is still running radio and TV ads in all major markets to slowly reclaim it’s brand equity and based on the Exxon Valdez disaster it will take upwards of 15-20 years for the subject to fade into wikipedia.  

In the last few weeks in a number of papers a similar theme is circulating that should catch the attention of all the Bakken O&G companies that exist.   Elements of the media have started reported that  “Fracking” is a dirty word.   On Yahoo today the term hit #1 in the “Trending Now” section. In the Christian Science Monitor,  a prominent article ran with the subject

Fracking debate prompts EPA hearing in New York on gas drilling

If the title didn’t get your attention then surely the tagline would – “Fracking opponents carried signs saying “Kids can’t drink gas” and “Protect our water. “. In the Bakken region hydraulic fracking is a core component, perhaps the core component in drilling and recovering oil from the layers of rock within the Williston Basin. The long term effects of hydraulic fracturing are not entirely clear as the data around this technique is limited.

Opponents make claims that fracking destroys the environment, sickens children and sets water ablaze. There are a couple of congressional inquiries on the matter related to the practice in Pennsylvania and New York within the lucrative Marcellus Shale beds. For Bakken related companies, the inquisition has not started, but these protests against fracking may be the beginning. Any North Dakota state commission or board has not raised a vocal ruckus over this issue as yet, after all, this is the very practice that catapulted ND into the national spotlight as one of the only bright economic growth stories in recent years. The state took in more than $400 million in oil revenue last year and handcuffing drillers would hamper growth.

If Bakken O&G companies are smart, they will get out in front of this issue, form an independent commission, and do some real unbiased research on the potential impact of this type of drilling and develop a detailed industry standard incident response plan as well as disaster prevention strategies in case this issue surfaces on any real scale in North Dakota. Sure there has been a few small incidents including a recent spill near Killdeer, but these were passing glances in terms of media coverage. One of the only things that can derail the growth in the Bakken is some sort of human casualty (or near casualty) as a direct (or even indirect result) of the environmental impact of fracking.

Just as O&G companies de-risk their acreage, bigger players such and Continental Resources (CLR: 32.68 -1.39%), Brigham Exploration (BEXP: N/A N/A) and Whiting Petroleum (WLL: 4.40 -5.58%) need to step up and de-risk the environmental impact of drilling before lawmakers step in and try to do it for them. Even a temporary moratorium on hydraulic drilling could lead to a 30-40% haircut across all Bakken related stocks and that is the last thing a loyal Bakken investor needs.

Active Drilling Rigs – September 9th 2010

Our last report 3 months ago yielded 121 active drilling rigs. The capex constrains seem to be lifting across the sector as the number of rigs is up a whopping 18% to 143 total rigs.  We have seen steady increases across the board of all the major Bakken players such as Continental Resources (CLR: 32.68 -1.39%) and Whiting Petroleum (WLL: 4.40 -5.58%) which both increased their presence by 2 rigs.   American Oil & Gas (AEZ: N/A N/A) a small cap player increased from 2 to 4 rigs.   AEZ in the process of being acquired by Hess (HES: 39.29 -3.46%) which already has a formidable 9 rigs in the region.  With the acquisition,  Hess will be thrown in with the top players in the region.   Brigham Exploration has had a stable 4-6 rigs in the region throughout 2010.   Brigham’s followers however know that its not the number of rigs that matter, but the quality of the well.   Brigham has made a name for itself squeezing every ounce of production from its wells.  After hours today,  they released some more promising news on some recent exploits:

Brigham Exploration Company  announced the completion of four Bakken wells in its Ross and Rough Rider project areas. To date, Brigham has completed 32 long lateral high frac stage wells in North Dakota with an average early 24-hour peak flow back rate of 2,643 barrels of oil equivalent.  In the Ross project area in Mountrail County, North Dakota, Brigham announced the completion of the Wright 4-33 #1H, which was completed with 38 fracture stimulation stages, at an early 24-hour peak flow back rate of 3,660 barrels of oil equivalent (3,097 barrels of oil and 3.38 MMcf).

We’ll have more about Brigham in an upcoming article.  Until next time,  we’ll keep drillin’ for more bakken news.

Active Drilling Rigs - September 2010
Active Drilling Rigs - September 2010
Operator Well Name and Number Current Location Start Date
ABRAXAS PETROLM CORP. RAVIN 26-35-1H NENE 26-150N-97W 7/25/10
AMERICAN OIL & GAS INC OLSON 15-36H SWSE 36-157N-98W 8/12/10
AMERICAN OIL & GAS INC BERGSTROM 2-27H NWNE 27-156N-98W 8/15/10
AMERICAN OIL & GAS INC HODENFIELD 15-23H SWSE 23-157N-98W 8/20/10
AMERICAN OIL & GAS INC REID 3-3H LOT3 3-157N-97W * MIRU
ANSCHUTZ EXPL CORP JAEGER STATE 1-34-27H-144-97 SWSE 34-144N-97W 8/10/10
ANSCHUTZ EXPL CORP DENNIS KADRMAS 1-9-4H-143-96 SWSE 9-143N-96W 7/30/10
ANSCHUTZ EXPL CORP EVELYN KARY 1-15-22H-144-97 NWNE 15-144N-97W 8/14/10
ANSCHUTZ EXPL CORP STATE 1-36H-156-98 NWNE 36-156N-98W 7/24/10
BAYTEX ENERGY USA LTD LARSON 3-162-99H SESE 3-162N-99W 9/6/10
BAYTEX ENERGY USA LTD HAUGLAND 4-162-99H SESE 4-162N-99W 8/15/10
BRIGHAM OIL & GAS LP BROWN 30-19 1-H SWSE 30-156N-93W 9/6/10
BRIGHAM OIL & GAS LP ROGER SORENSON 8-5 1H SWSE 8-155N-92W 9/5/10
BRIGHAM OIL & GAS LP BRAKKEN 30-31 1-H SENE 30-154N-100W 8/1/10
BRIGHAM OIL & GAS LP BRAD OLSON 9-16 3H NENW 9-154N-102W 8/16/10
BRIGHAM OIL & GAS LP M. MACKLIN 15-22 1H NENW 15-155N-101W 8/30/10
BRIGHAM OIL & GAS LP STATE 36-1 2H NWNE 36-155N-100W 8/1/10
BTA OIL PRODUCERS LLC 20711 BIBLER 67 1-H NENW 6-154N-99W 9/7/10
BURLINGTON RES O&G CO CONCORD 24-10H SESW 10-147N-97W 8/8/10
BURLINGTON RES O&G CO KEENE 14-35H SWSW 35-147N-97W 8/22/10
BURLINGTON RES O&G CO TILTON 34-7H SWSE 7-147N-97W 7/31/10
BURLINGTON RES O&G CO PHANTOM SHIP 24-22H SWSW 22-152N-97W 8/28/10
CIRQUE RESOURCES LC PICK AXE 19-4H NWNW 19-160N-90W 9/6/10
CONTINENTAL RESOURCES RIVERS BEND 21-16SH NENW 16-130N-106W 9/1/10
CONTINENTAL RESOURCES TANBERG 1-4H LOT 3 4-161N-95W 9/8/10
CONTINENTAL RESOURCES RAYMO 2-30H SESE 19-161N-95W 8/23/10
CONTINENTAL RESOURCES TANGSRUD 2-1H NWNW 1-160N-96W 8/13/10
CONTINENTAL RESOURCES FARVER 1-29H NENW 29-160N-96W 8/17/10
CONTINENTAL RESOURCES DALIN 1-4H NWNE 4-160N-96W 8/3/10
CONTINENTAL RESOURCES KELLING 2-4H SESW 4-145N-96W 7/3/10
CONTINENTAL RESOURCES BONNEVILLE 2-23H NWNW 23-146N-96W 8/28/10
CONTINENTAL RESOURCES MEADOWLARK 2-6H SWSE 31-146N-95W 8/30/10
CONTINENTAL RESOURCES NADIA 1-30H SESW 30-146N-96W 8/31/10
CONTINENTAL RESOURCES BOXCAR BUTTE SOUTH FEDERAL 1-26H SWSW 26-148N-102W * MIRU
CONTINENTAL RESOURCES ROLFSRUD 1-11H SWSE 11-151N-97W 7/19/10
CONTINENTAL RESOURCES ORF 1-17H NENW 17-146N-98W 8/1/10
CONTINENTAL RESOURCES HENDRICKSON 2-36H SWSW 36-153N-94W 8/16/10
CONTINENTAL RESOURCES SANDIE 1-28H NWNE 28-151N-97W 9/1/10
CONTINENTAL RESOURCES HOROB 1-14H SWSE 14-155N-104W 8/2/10
CONTINENTAL RESOURCES GRONFUR 1-28H NWNE 28-155N-98W 9/3/10
CONTINENTAL RESOURCES MYRTLE 4-7H SWSW 7-159N-95W 9/5/10
CONTINENTAL RESOURCES NADEAU 1-35H SENE 35-155N-104W 9/5/10
CORNERSTONE NAT RES LLC LINDA HINDS 8-7H SESE 7-161N-90W 8/24/10
ENCORE OPERATING LP FRANCHUK 34-19NWH SWSE 19-145N-95W 8/29/10
ENCORE OPERATING LP FETTIG 24-22H SESW 22-149N-94W 8/18/10
ENCORE OPERATING LP JOSEPH 11-1H LOT4 1-152N-102W 8/3/10
ENERGY EQUITY CO DVORAK-SEIDL 1-27-3C SESE 27-145N-97W 8/25/10
ENERPLUS RES USA CORP ETHAN HALL 6B-31-30-1H NENW 6-147N-93W 8/29/10
EOG RESOURCES INC MANDAREE 5-16H NWNW 16-149N-94W 8/25/10
EOG RESOURCES INC RIVERVIEW 01-32H NWNW 32-152N-94W 8/6/10
EOG RESOURCES INC RUUD 1-18H LOT 1 18-152N-89W 9/2/10
EOG RESOURCES INC JAMES HILL 5-24H SESE 24-157N-91W 8/22/10
EOG RESOURCES INC LIBERTY 10-36H NWNW 36-151N-91W 8/27/10
EOG RESOURCES INC WAYZETTA 103-06H SESE 6-153N-90W 9/1/10
EOG RESOURCES INC SIDONIA 36-2722H SESW 27-158N-90W 8/20/10
EOG RESOURCES INC LIBERTY 3-14H SESE 14-151N-91W 8/21/10
EOG RESOURCES INC WAYZETTA 143-31H SWSE 31-153N-90W 8/31/10
EOG RESOURCES INC CLEARWATER 102-0506H SENE 5-157N-90W 9/4/10
EOG RESOURCES INC SIDONIA 23-2017H SESE 20-158N-90W 9/8/10
EOG RESOURCES INC LEBRON 1-01H SESE 1-155N-104W 8/21/10
FIDELITY EXPL & PROD CO LYNN 19-20-29H NWNE 19-154N-92W 8/28/10
HELIS OIL & GAS CO. LLC HENDERSON FEDERAL 4-26/35H NWNW 26-150N-95W 9/3/10
HESS CORPORATION AV-SCHWARTZ-163-93- 0211H-1 Lot 1 2-163N-93W 9/4/10
HESS CORPORATION AN-PROSSER-152-95- 0211H-1 LOT3 2-152N-95W 7/25/10
HESS CORPORATION AN-BRENNA-153-94- 3130H-1 SESW 31-153N-94W 8/30/10
HESS CORPORATION RS-NELSON FARMS A-156-90- 2829H-2 NWSW 27-156N-90W 7/26/10
HESS CORPORATION EN-WILL TRUST A-157-94- 2734H-3 NENW 27-157N-94W 8/20/10
HESS CORPORATION EN-DOLAN-157-94- 2833H-1 SWSE 21-157N-94W 8/4/10
HESS CORPORATION EN-ABRAHAMSON-155-93- 3019H-3 SWSE 30-155N-93W * MIRU
HESS CORPORATION EN-HEINLE-156-94- 2536H-2 NENE 25-156N-94W 9/3/10
HESS CORPORATION RS-NELSON A-156-90- 2120H-1 NESE 21-156N-90W 8/3/10
HUNT OIL COMPANY HALLIDAY 1-11-2H 1 SWSW 11-146N-93W 8/25/10
HUNT OIL COMPANY PALERMO 1-5-34H SWSW 5-156N-90W 8/12/10
KODIAK OIL & GAS (USA) INC TWO SHIELDS BUTTE 14-21-33-15H SESW 21-149N-92W 8/4/10
KODIAK OIL & GAS (USA) INC KOALA 9-5-6-5H NESE 5-151N-99W 9/6/10
LUFF EXPLORATION CO JETT B-28H NWNE 28-129N-101W 9/4/10
MARATHON OIL CO T KUPPER USA 34-11H SWSE 11-146N-95W 8/27/10
MARATHON OIL CO EDWARD DARWIN 14-35H SWSW 35-145N-96W 8/30/10
MARATHON OIL CO DARCY DIRKACH 14-12H SWSW 12-144N-95W 8/24/10
MARATHON OIL CO TAT USA 34-22H SESW 22-151N-94W 8/26/10
MARATHON OIL CO QUALE USA 31-20H NWNE 20-152N-93W 8/26/10
MARATHON OIL CO LUTHER USA 11-16H NESW 9-150N-93W 8/13/10
MUREX PETROLEUM CORP JOANN MARIE 13-24H NWNW 13-156N-96W 8/6/10
MUREX PETROLEUM CORP VENTURA 11-2H SWSW 11-156N-96W 8/12/10
NEWFIELD PROD CO URSUS 1-20H NENW 20-148N-97W 7/21/10
NEWFIELD PROD CO CHARLOTTE 150-98-17-20-1H NENE 17-150N-98W 7/18/10
NEWFIELD PROD CO JOHNSRUD 150-98-6-7-1H NENW 6-150N-98W 7/29/10
NEWFIELD PROD CO CALIENTE 1-9H NWNE 9-156N-99W 8/28/10
NORTH PLAINS ENERGY LLC AARESTAD 4-34H NWNW 34-160N-97W 9/2/10
OASIS PETRO NO AMER MERRITT 5693 11-24H NWNW 24-156N-93W 8/13/10
OASIS PETRO NO AMER ODIN JORGENSON 5502 44-8H SWSE 8-155N-102W 8/22/10
OASIS PETRO NO AMER KJORSTAD 5300 24-22H SENE 22-153N-100W 8/1/10
OASIS PETRO NO AMER ELLIS 5602 12-17H NENW 17-156N-102W 8/14/10
OIL FOR AMERICA WOLF 29-1 SWSE 29-139N-95W 9/6/10
PEAK NO DAK LLC BIRON 20-24H SWSE 20-149N-92W * MIRU
PETRO HUNT LLC TANDE 159-94-29C-20-3H SWSW 29-159N-94W 8/14/10
PETRO HUNT LLC FREDRICKSON 160-94-33C-28-1H SESW 33-160N-94W 8/20/10
PETRO HUNT LLC FORT BERTHOLD 148-94-35D-26-1H SWSE 35-148N-94W 6/24/10
PETRO HUNT LLC FORT BERTHOLD 152-94-22D-15-1H SESE 22-152N-94W 8/4/10
PETRO HUNT LLC SORENSON 152-96-24C-13-2H SWSW 24-152N-96W 8/27/10
PRIMA EXPLORATION INC GUNNISON 11-31H NWNW 31-161N-90W 9/2/10
QEP ENERGY CO MHA 1-29-30H-150-90 NENE 32-150N-90W 8/20/10
SALTWATER DISPOSAL OF ND SDND 1 NENE 26-156N-92W 9/2/10
SAMSON RESOURCES CO ALMOS FARMS 1-12-162-99HOR CNE 1-162N-99W 9/6/20
SAMSON RESOURCES CO HANSON 17-20-163-98H CNW 17-163N-98W 8/5/10
SAMSON RESOURCES CO IMPALA 23-14-163-98H NWNE 26-163N-98W 9/4/10
SINCLAIR OIL & GAS CO BIGHORN 1-6H SESW 31-147N-97W 7/10/10
SINCLAIR OIL & GAS CO MARTENS 1-5H LOT 4 5-154N-92W 8/29/10
SLAWSON EXPLORATION MAVERICK FEDERAL 1-14 SESE 14-147N-105W 7/29/10
SLAWSON EXPLORATION WATER MOCCASIN 1-34H SESE 27-151N-92W * MIRU
SLAWSON EXPLORATION JAGUAR 1-32H NWNE 32-151N-92W 8/30/10
SLAWSON EXPLORATION MUSKRAT FEDERAL 1-28-33H NENW 28-151N-92W 9/7/10
SLAWSON EXPLORATION SUBMARINER FEDERAL 1-23-24H NWNW 23-151N-92W 9/6/10
SM ENERGY CO JORGENSON 1X-30H NENE 30-149N-95W 8/25/10
SM ENERGY CO FOSSUM 15-35H SWSE 35-153N-101W 8/30/10
TRACKER RES DEVMNT BICE 6-31-1TH LOT7 6-147N-96W 7/31/10
TRACKER RES DEVMNT GUDMUNSEN 27-1H NENE 27-149N-100W 8/13/10
TRACKER RES DEVMNT SCANLAN 17-1TH NWNW 17-153N-98W 8/10/10
WESCO OPERATING INC FEDERAL 12-20 SWNW 20-145N-103W * MIRU
WHITING OIL AND GAS CORP TEDDY 44-13TFH SESE 13-142N-101W 7/25/10
WHITING OIL AND GAS CORP TEDDY 44-30TFH SESE 30-142N-100W 7/22/10
WHITING OIL AND GAS CORP MOSSER 11-27TFH NWNW 27-145N-104W 8/20/10
WHITING OIL AND GAS CORP ROGGENBUCK 14-25H SWSW 25-153N-93W 8/18/10
WHITING OIL AND GAS CORP CVANCARA 11-14H NWNW 14-155N-93W 8/28/10
WHITING OIL AND GAS CORP LACEY 12-10H SWNW 10-152N-92W 7/21/10
WHITING OIL AND GAS CORP CURREN 12-14H SWNW 14-153N-93W 9/6/10
WHITING OIL AND GAS CORP ANDERSON 21-7H NENW 7-154N-92W 8/23/10
WHITING OIL AND GAS CORP BREHM 12-27H SWNW 27-153N-92W 8/17/10
WHITING OIL AND GAS CORP MALLARD STATE 44-16TFH SESE 16-154N-91W 8/24/10
WHITING OIL AND GAS CORP STROBECK 12-1H SWNW 1-154N-92W 8/27/10
WHITING OIL AND GAS CORP NESS 43-21H NESE 21-154N-91W 8/29/10
WHITING OIL AND GAS CORP JONES 12-8H SWNW 8-154N-91W 8/20/10
WHITING OIL AND GAS CORP MANN 21-18TFH NENW 18-140N-98W 8/28/10
XTO ENERGY INC DAKOTA FEDERAL 41X-16 NENE 16-148N-97W 8/24/10
XTO ENERGY INC WHITE FEDERAL 34X-34 SWSE 34-154N-96W 9/3/10
XTO ENERGY INC ROEDESKE FEDERAL 12X-21 SWNW 21-148N-104W 7/29/10
XTO ENERGY INC SUNDHAGEN 31X-3 LOT2 3-157N-96W 8/27/10
XTO ENERGY INC CARTER 14X-12 SWSW 12-154N-96W 8/25/10
ZAVANNA LLC MARLIN 27-34 1H NWNW 27-154N-99W 8/21/10
ZENERGY INC Rella 18-19H NENW 18-153N-103W 8/22/10
ZENERGY OPERATING CO LLC DAKOTA-3 SKUNK CREEK 1-12H LOT3 1-148N-93W * MIRU
ZENERGY OPERATING CO LLC DAKOTA-3 KYW 27-34H NWNW 27-150N-94W 8/7/10
ZENERGY OPERATING CO LLC DAKOTA-3 FBIR 13-24H NENW 13-150N-92W 7/24/10
Active Drilling Rigs - September 2010

I’ve been gone for a while

It seems like a few days have gone by but its been almost 2 3 months since my last post…. I have some interesting articles on the way and a little about an interesting project I’m working on, stay tuned!