Weekly Roundup – USGS reevaluating Bakken formation estimates

It has been a busy week with oil volatility settling down, but clear direction is still evading us.   WTI crude is approaching $100 again after almost hitting $95 earlier in the week.    OPEC is making headlines lately with reports indicating that Iranian President Mahmoud Ahmadinejad, now the temporary overseer of the Iranian oil ministry, will join and chair the next OPEC meeting,  in Vienna, Austria.   If this does occur, then the impact of Ahmadinejad’s influence may churn oil markets and reignite the volatility of previous weeks.    In the Bakken region,  we saw the following events transpire in the last week.

  • The US Geological Survey will update its 2008 assessment of undiscovered, technically recoverable oil and gas in the US portion of the Bakken formation in North Dakota and Montana, Interior Sec. Ken Salazar announced. The update will begin in October and take 2 years to complete, depending on funding.  There is speculation that updated geological information may lead to an estimate above 8 billion bbl of technically recoverable oil which  almost a 100% increase on the previous estimate.
  • American Eagle Energy Inc. (OTCBB: AMZG)  announced on 5/19  that it has spud its first horizontal Bakken development well in the Hardy Field (Bakken Formation) of Southeast Saskatchewan.  Proposed merger partner Eternal Energy Corp., as well as Passport Energy Ltd., are working interest partners in the well.  The Hardy S 1A4-16-4B4-9-04-21W2 is the initial earning well for the farm-out agreement among the companies.
  • Samson Oil & Gas Limited (SSN: 0.50 -5.30%)  reported its Everett #1-15H well has landed in the middle member of the Mississippian Bakken Formation at a total vertical depth of 11,147 feet. While drilling into the middle member, significant levels of oil and gas shows were recorded. Production casing will now be run in the hole and cemented in preparation to drill the 5,500 foot horizontal lateral.
  • The need for rail in the Bakken region is heating up.  By the end of 2011, over  1,500 new wells — each requiring 23 carloads of rail-delivered materials during construction — are projected to join the thousands already operating in the Bakken. Production is currently 325,000 barrels per day, outstripping available transportation capacity.     Oil companies are expediting plans to build or expand terminals that can load or transload 100+ car unit trains, which can transport up to 70,000 barrels per trip.

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Active Drilling Rigs – May 2011

The number of active drilling rigs has remaining relatively steady around 172 rigs for the last 3 months.   Similarly (as shown below), the number of Rigs for the major Bakken players has also remained static with Continental Resources leading the way with 21 drilling rigs.    The notable exception was with OXY USA (a subsidiary of Occidental Petroleum (OXY: 59.57 -0.10%) ) which saw the number of rigs increase from 2 to 10.  Of course,  this was due to the acquisition of Anshutz and their rig assets,  but this has pushed OXY to one of the leading drillers in the region.  This combined with the 200,000 acres they have amassed in the region makes them a formidable producer on the Bakken horizon.  In other drilling news:

  • Brigham Exploration (BEXP: N/A N/A) held the 4 highest initial rate wells in the region.  Brigham is expecting an eighth operated rig is to be in place by the end of May, a 9th  in June, a 10th in early July, and another 2 in the first quarter of 2012. The pace is a few months ahead of its previously announced schedule.
  • Voyager Oil & Gas (VOG: N/A N/A)  has participated in approximately 40 gross wells in 2011, bringing the total well count to 58 wells targeting the Bakken/Three Forks formations. Currently, Voyager has approximately 1.80 net Bakken/Three Forks wells drilling, completing or producing. Voyager expects to participate in 70 gross wells and 6.0 net wells in 2011.  Voyager expects to average 700 barrels of oil equivalent “BOE” per day by the end of 2011.
  • GeoResources Inc (GEOI: N/A N/A) is currently drilling their 4th well, the Muller #1-21-16H with an 18% working interest (WI). They have three wells on production in the area with their recently completed well, the Anderson #1-24-13H (35% WI), (completed in early April 2011) having an initial 24-hour production rate of 905 bopd.


Operator Well Name and Number Current Location
AMERICAN OIL & GAS INC BLAKE 2-6H LOT3 6-156N-97W
BAYTEX ENERGY USA LTD GERALYN MARIE 34-163-99H 1DQ NWNW 34-163N-99W
BAYTEX ENERGY USA LTD COLBY 23-14-160-99H 1PB SWSE 23-160N-99W
BRIGHAM OIL & GAS LP ENDERUD 9-4 2H SESW 9-152N-98W
BRIGHAM OIL & GAS LP CHARLIE SORENSON 17-8 1-H NWNE 20-155N-93W
BRIGHAM OIL & GAS LP ALGER STATE 16-21 1-H SESW 9-155N-92W
BRIGHAM OIL & GAS LP STANLEY LARSON 8-5 1-H SWSE 8-155N-103W
BRIGHAM OIL & GAS LP LUCY HANSON 15-22 1-H NWNE 15-154N-100W
BRIGHAM OIL & GAS LP DELORME 12-1 1-H SESW 12-154N-103W
BRIGHAM OIL & GAS LP IRGENS 27-34 2H NENW 27-156N-100W
BTA OIL PRODUCERS LLC 20711 SWANSON 3328 1-H LOT3 4-154N-99W
BURLINGTON RES O&G CO RIFLE FALLS 31-25H NWNE 25-144N-95W
BURLINGTON RES O&G CO INTERVALE 31-35H NWNE 35-144N-96W
BURLINGTON RES O&G CO MIDNIGHT RUN 21-1TFH LOT 3 1-152N-96W
BURLINGTON RES O&G CO SUN NOTCH 43-32H NESE 32-153N-96W
BURLINGTON RES O&G CO SAMUEL 34-21H SWSE 21-148N-98W
CONTINENTAL RESOURCES ERIC 11-24SH NWNW 24-130N-106W
CONTINENTAL RESOURCES GLASOE 4-18H NWNW 18-161N-95W
CONTINENTAL RESOURCES FREDDY 1-8H SWSE 8-161N-95W
CONTINENTAL RESOURCES AGNES 1-22H SESW 22-161N-96W
CONTINENTAL RESOURCES SALO 2-35H SESE 35-160N-96W
CONTINENTAL RESOURCES ROCKET 1 SWD SENE 23-146N-96W
CONTINENTAL RESOURCES PLETAN 2-18H NWNW 18-146N-95W
CONTINENTAL RESOURCES TANEY 1-14H NENE 14-145N-97W
CONTINENTAL RESOURCES WAHPETON 1-16H NENW 16-152N-99W
CONTINENTAL RESOURCES STEELE 1-24H SESW 24-152N-99W
CONTINENTAL RESOURCES BAILEY 3-24H NWNE 25-150N-97W
CONTINENTAL RESOURCES NYLA 1-17H NWNE 17-148N-98W
CONTINENTAL RESOURCES CALHOUN 1-3H NWNE 3-149N-98W
CONTINENTAL RESOURCES MONTPELIER 1-14H NENE 14-153N-101W
CONTINENTAL RESOURCES KUHN 1-12H SESE 12-152N-100W
CONTINENTAL RESOURCES VACHAL 2-27H NWNW 27-154N-94W
CONTINENTAL RESOURCES DEBRECEN 1-3H LOT 3 3-140N-99W
CONTINENTAL RESOURCES MILLOY 1-15H SESE 15-155N-104W
CONTINENTAL RESOURCES ROLF 1-20H SESW 20-155N-98W
CONTINENTAL RESOURCES STANGELAND 1-18H SESW 18-153N-99W
CONTINENTAL RESOURCES RENNERFELDT 1-30H NWNE 30-155N-98W
CONTINENTAL RESOURCES CHARLESTON 1-22H SWSW 22-155N-98W
CORNERSTONE NAT RES LLC JACOBSON 8-33H SESE 33-161N-90W
DAKOTA-3 E&P CO DAKOTA-3 PACKINEAU 15-32H SWSE 32-149N-92W
DAKOTA-3 E&P CO DAKOTA-3 WOLF 27-34H NENW 27-149N-94W
DAKOTA-3 E&P CO DAKOTA-3 ADAM GOOD BEAR 15-22H NWNW 15-150N-92W
DENBURY ONSHORE GILBERTSON 34-26NEH SW-SE 26-153N-95W
DENBURY ONSHORE LEE 34-31NWH SWSE 31-150N-98W
DENBURY ONSHORE JOHNSON 11-5SEH LOT4 5-149N-97W
DENBURY ONSHORE LUNDIN 11-15SEH NW-NW 15-150N-98W
DENBURY ONSHORE LOOMER 34-4NWH SWSE 4-151N-99W
ENERGY EQUITY CO OBRIEN SWD 1 SWSW 33-140N-99W
EOG RESOURCES INC KANDIYOHI 5-3031H LOT1 30-159N-90W
EOG RESOURCES INC HORSE CAMP 101-11H NWNW 11-149N-93W
EOG RESOURCES INC VAN HOOK 17-23H NWNW 23-152N-91W
EOG RESOURCES INC LIBERTY LR 21-36H SESW 36-151N-91W
EOG RESOURCES INC SIDONIA 28-2722H SESE 27-158N-90W
EOG RESOURCES INC REDMOND 21-1807H SESW 18-157N-89W
EOG RESOURCES INC SIDONIA 44-2821H SESE 28-158N-90W
EOG RESOURCES INC ROUND PRAIRIE 7-1522H NWNW 15-154N-103W
EOG RESOURCES INC MONT 4-3502H LOT2 35-155N-102W
EOG RESOURCES INC ROUND PRAIRIE 3-0706H SESE 7-154N-103W
FIDELITY EXPL & PROD CO TTT RANCH 33-28H SESE 33-155N-91W
FIDELITY EXPL & PROD CO HILL 31-30H SESW 31-155N-91W
G3 OPERATING LLC MULLER 1-21-16H SWSW 21-158N-103W
GADECO, LLC GOLDEN 25-36H NENW 25-155N-99W
HELIS OIL & GAS CO. LLC KIRKLAND 13-23/14H SWSW 23-149N-95W
HELIS OIL & GAS CO. LLC GABBERT 4-2/11H LOT 4 2-149N-95W
HESS CORPORATION BONNIE DIVIDE 16-1H NENE 16-146N-97W
HESS CORPORATION WALLACE 7-1H SWSE 7-143N-94W
HESS CORPORATION ARNEGARD STATE 36-1H SESW 36-151N-100W
HESS CORPORATION AN-BOHMBACH-153-94- 2734H-1 NWNE 27-153N-94W
HESS CORPORATION EN-VACHAL-155-93- 0532H-2 SWSE 5-155N-93W
HESS CORPORATION EN-WEYRAUCH-154-93- 1918H-3 SWSE 19-154N-93W
HESS CORPORATION EN-CHARLES WOOD-157-94 1720H-1 SESW 8-157N-94W
HESS CORPORATION EN-CVANCARA A-155-93- 3231H-1 SENE 32-155N-93W
HESS CORPORATION EN-RULAND A-155-94- 1201H-3 NWNE 13-155N-94W
HESS CORPORATION EN-PERSON OBSERVATION- 11-33 NWSE 11-156N-94W
HESS CORPORATION EN-PERSON OBSERVATION- 2-32 SWNE 2-156N-94W
HESS CORPORATION EN-URAN B-154-93- 2932H-1 SESW 20-154N-93W
HESS CORPORATION EN-WANDER-156-94- 0904H-1 SWSW 9-156N-94W
HESS CORPORATION NORMAN 31-1H SWSE 31-154N-98W
HESS CORPORATION JOHNSON 15-22H SESW 22-157N-97W
HESS CORPORATION GO-SOINE A-156-97- 3229H-1 SESW 32-156N-97W
HESS CORPORATION GO-ASLAKSON-156-97- 3427H-1 SWSE 34-156N-97W
HESS CORPORATION GO-SOINE-156-97 3130H-1 SWSE 31-156N-97W
HUNT OIL COMPANY HALLIDAY 1-19-18H 1 SWSE 19-146N-92W
HUNT OIL COMPANY SHELL 1-15-10H 1 SESW 15-153N-89W
HUNT OIL COMPANY NIELSEN 2-8H 2 NENE 8-156N-90W
KODIAK OIL & GAS (USA) INC SKUNK CREEK 2-24-25-16H NWNE 24-149N-93W
KODIAK OIL & GAS (USA) INC KOALA 3-2-11-13H LOT 3 2-151N-100W
MARATHON OIL CO KOVALOFF 14-9H SWSW 9-144N-95W
MARATHON OIL CO VERLYN STROMMEN 34-8H SWSE 8-145N-94W
MARATHON OIL CO GOOD BEAR USA 21-14H NENW 14-147N-93W
MARATHON OIL CO ONE FEATHER USA 11-17H SWSW 8-150N-90W
MARATHON OIL CO FISHER USA 41-5H SESE 32-151N-93W
MARATHON OIL CO ELLA USA 11-16H SWSW 9-151N-93W
MUREX PETROLEUM CORP DARON WILLIAM 28-33H NWNE 28-151N-103W
MUREX PETROLEUM CORP MARGARET ELIZABETH 4-33H SWSE 4-158N-95W
NEWFIELD PROD CO SOLHEIM 160-102-28-33-1HA SESW 21-160N-102W
NEWFIELD PROD CO OBENOUR 150-99-28-33-1H SWSW 21-150N-99W
NEWFIELD PROD CO DROVDAL 150-99-8-5-1H SESW 8-150N-99W
NEWFIELD PROD CO LAWLAR 151-98-31-30-1H SESW 31-151N-98W
NEWFIELD PROD CO STAAL 150-99-23-14-1H SWSE 23-150N-99W
NORTH PLAINS ENERGY LLC FLATLAND 9-9H NESE 9-153N-97W
NORTH PLAINS ENERGY LLC EVITT 16-12H SESE 12-154N-98W
OASIS PETRO NO AMER BAY CREEK FEDERAL 4703 11-5H LOT 4 5-147N-103W
OASIS PETRO NO AMER KLINE FEDERAL 5300 11-18H LOT1 18-153N-100W
OASIS PETRO NO AMER SPRATLEY 5494 34-13H NESE 13-154N-94W
OASIS PETRO NO AMER DAVIS 5300 42-12H SESW 12-153N-100W
OASIS PETRO NO AMER LYNN 5502 11-10H NWNW 10-155N-102W
OASIS PETRO NO AMER ROSS 5603 42-10H SESW 10-156N-103W
OXY USA INC SWENSON 160-91-4-P-1H SESE 4-160N-91W
OXY USA INC ERICKSON 160-91-8-D-1H NWNW 8-160N-91W
OXY USA INC EVELYN STROH 1-17-20H-143-96 SWSE 8-143N-96W
OXY USA INC REUBEN SCHNEIDER 1-27-34H-143-96 NENW 27-143N-96W
OXY USA INC SCHNEIDER 1-33-28H-143-96 SESW 33-143N-96W
OXY USA INC LAMEY 1-30-31H-143-96 NENW 30-143N-96W
OXY USA INC NOVASIO STATE 1-16-21H-142-95 NWNE 16-142N-95W
OXY USA INC WANNEMACHER 1-4-9H-142-95 SWSE 33-143N-95W
OXY USA INC STATE JAEGER 1-21-16H-142-94 SWSW 21-142N-94W
OXY USA INC KUDRNA 1-17 SWSE 17-141N-97W
PEAK NO DAK LLC BAKER 29-31H SWSE 20-149N-92W
PEAK NO DAK LLC DANKS 20-41H SESE 17-151N-94W
PETRO HUNT LLC WOLD 159-94-5C-32-2H SWSW 5-159N-94W
PETRO HUNT LLC VAN HISE TRUST 153-95-28C-21-1H SESW 28-153N-95W
PETRO HUNT LLC KLEVMOEN TRUST 17D-4-3H SESE 17-153N-95W
PETRO HUNT LLC SKEDSVOLD 150-101-4B-9-1H LOT 3 4-150N-101W
PETRO HUNT LLC FORT BERTHOLD 152-94-22D-15-2H SESE 22-152N-94W
PETRO HUNT LLC BORRUD 156-101-11D-2-1H SESE 11-156N-101W
PETRO HUNT LLC STATE 157-100-21C-16-1H SWSW 21-157N-100W
PRIDE ENERGY OK GEN BEAVER CREEK STATE 1-36H SESW 36-143N-103W
QEP ENERGY CO MHA 1-01-02H-149-91 SWSE 6-149N-90W
QEP ENERGY CO ERICKSON 1-26-25H-155-102 NWSW 26-155N-102W
SAMSON RESOURCES CO MUSTANG 7-6-163-98H NWNE 18-163N-98W
SAMSON RESOURCES CO BLUE JAY 32-29-163-95H LOT3 5-162N-95W
SAMSON RESOURCES CO LE MANS 11-2-163-99H NWNE 14-163N-99W
SEQUEL ENERGY LLC RIDER 4-13 NWSE 13-140N-103W
SEQUEL ENERGY LLC BULL MOOSE 22Y-32 SWNE 22-147N-101W
SINCLAIR OIL & GAS CO MARTENS 2-5H LOT2 5-154N-92W
SLAWSON EXPLORATION DAGGER 1-10H NENW 10-144N-97W
SLAWSON EXPLORATION ORCA FEDERAL 1-23-26H SWSE 14-152N-92W
SLAWSON EXPLORATION HUNTER 2-8-17H SWSE 5-151N-92W
SLAWSON EXPLORATION WIZARD 2-35H NENE 35-152N-93W
SLAWSON EXPLORATION MUSKRAT FEDERAL 2-28-33H NENE 28-151N-92W
SLAWSON EXPLORATION JAGUAR 2-32H NWNW 32-151N-92W
SM ENERGY CO BAGLEY 4-30H LOT1 30-163N-100W
SM ENERGY CO BARNES 2-2H LOT2 2-152N-102W
TRUE OIL LLC HAGEN 23-13H NESW 13-148N-101W
WARD-WILLISTON CO NWMU A-10H SESE 36-164N-80W
WHITING OIL AND GAS CORP CLEMENS 34-9TFH SWSE 9-143N-102W
WHITING OIL AND GAS CORP MAUS 23-22 NESW 22-141N-104W
WHITING OIL AND GAS CORP KUMMER 34-31H SWSE 31-149N-99W
WHITING OIL AND GAS CORP REGINA ANNALA 12-33TFH SWNW 33-153N-91W
WHITING OIL AND GAS CORP LINDSETH 11-1TFH LOT4 1-154N-92W
WHITING OIL AND GAS CORP MERILYN SMITH 12-7TFH LOT 2 7-153N-91W
WHITING OIL AND GAS CORP SNYDER 21-11H NENW 11-153N-91W
WHITING OIL AND GAS CORP PETERSON 34-35TFH SWSE 35-153N-92W
WHITING OIL AND GAS CORP FLADELAND 14-18WH SWSW 18-153N-91W
WHITING OIL AND GAS CORP LAUKALA 34-22TFH SWSE 22-154N-91W
WHITING OIL AND GAS CORP NESHEIM 11-24XH NWNW 24-153N-91W
WHITING OIL AND GAS CORP LACEY 12-1TFH SWNW 1-152N-92W
WHITING OIL AND GAS CORP DIETZ 21-18TFH NENW 18-139N-99W
WHITING OIL AND GAS CORP TALKINGTON 21-30TFH NENW 30-140N-99W
WHITING OIL AND GAS CORP BINSTOCK 21-30TFH NENW 30-139N-99W
XTO ENERGY INC FBIR BIRD 31X-19 NWNE 19-149N-91W
XTO ENERGY INC TEDDY FEDERAL 12X-5 SWNW 5-148N-97W
XTO ENERGY INC WILLIAM 41X-6 LOT1 6-148N-96W
XTO ENERGY INC NELSEN STATE 24X-33 SESW 33-153N-101W
XTO ENERGY INC ALBERTINE 21X-2 LOT 3 2-157N-96W
XTO ENERGY INC LEACH STATE 12X-16 SWNW 16-155N-95W
ZAVANNA LLC GUST 2-11 1H LOT 4 2-153N-99W
ZAVANNA LLC EVERETT 1-15H SESE 15-154N-99W
ZENERGY INC LAWLAR 23-14H NWNE 26-151N-99W
ZENERGY INC ROLFSON 20-17H NWNE 29-151N-98W
ZENERGY INC LINK 12-1H SESW 12-150N-102W

Brigham Exploration and Continental Resources looking attractive here

It’s been a tough 2 weeks for oil with a flurry of news causing massive volatility and ultimately sending Bakken stocks down about 5-10% since the beginning of May.      A number of factors including supply/demand concerns, margin requirements and rumors of Gaddafi being wounded (and possibly ousted)  leading to the net decline.   In looking at 2 major players in the Bakken region,  Brigham Exploration (BEXP: N/A N/A) and Continental Resources (CLR: 30.55 -0.78%) ,  there are some strong technical indicators that we will see a bounce.    Continental is down about 15% from its 52 week high earlier this year and Brigham is down almost 28% from its 52 week high.   Both companies have met earnings expectations, although one could argue that Brigham didn’t beat expectations as much as expected to match their lofty growth expectations on the street.

In taking a closer look at both charts below,   both CLR and BEXP should see major support very close to current PPS  ($27 for BEXP,  $60 for CLR)  and both are at the lower Bollinger Band which can also be interpreted as a level of support  (Bollinger Bands is an indicator of  relative price performance against a stocks short term historical performance).   Fundamentals are still intact for both companies with Brigham getting a reiterated Buy rating and a price target of $41 from Jefferies last week.   We agree with this sentiment and expect a short term bounce of at least 5% for both CLR and BEXP  in the next month.