Back to Basics – Picking up BSIC.OB here

Posted by bakkenexpert

Ok, so I’ve been watching this one but haven’t decided to pull the trigger until now. Today Basic Earth Science Systems (BSIC.OB) issued an updated on their Bakken Well. The Paulson 14-9H well had its best day near the end of May when it produced 687 barrels of oil. During May, the well produced approximately 5,400 barrels of oil over 14 days for an average of 387 barrels of oil per day. Currently BSIC is working on stabilizing the flow and at that point the production rates can be better estimated. Basic only has a 1.2469% working interest (0.9975% net revenue interest) in the well which is operated by Marathon Oil Company (MRO) so the revenue impact is not expected to be substantial in my mind.    The  Paulson 14-9H well was a nice friday tidbit but nothing to put on the refrigerator.   The next paragraph is what got my attention:

“In related events, the success of offset wells near our Banks Prospect, a 13,000 acre horizontal Bakken project, has dramatically enhanced the viability of our acreage. As a result, the Company and its partners have been approached by several companies wishing to acquire a portion of Basic’s acreage. While some offers are enticing, at this point, no agreements have been made. If we were to enter into an agreement, in addition to being fairly compensated for our investment and maintaining as much of our interest as possible, our objective would be to increase the effectiveness of the original joint venture agreement so that development could not be stalled by a handful of non-consenting owners.”

I think this is a VERY positive development for BSIC. Typically for a company as small as BSIC, it is difficult to scale operations and fund exploration and production. It appears they are open to divesting some of their prime Bakken acreage for NRI in return as well as compensation for the land. For a company with a tiny 40 million dollar market cap, this could be huge in terms of revenue and profit. A single lucrative deal could propel the company to a low single digit PE.

Disclosure: We own shares of BSIC.OB as of June 27, 2008. View our Disclaimer here

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Morning roundup – After the storm

Posted by bakkenexpert

The Dow had a disaster of a day yesterday dropping more than 350 points. Oil hit a new record above $140 but the negative vacuum pulled down most of our Bakken plays. All in all however, there was buying amidst the panic selling and the sector was able to avoid an unabated selloff. The last 2-3 sessions where there was panic oil selling, buyers seemed to gravitate towards the sector throughout the course of the day to mitigate any further losses. Today we are mixed with a bias towards the upside on light Friday volume. Our earlier stock picks WLL & EOG are still holding up quite well. NOG has eased a bit, but we are still bullish on the stock.

Symbol	Last Trade		Change		Volume	Avg Vol (3m)
CLR	10:20AM ET	67.08	0.20	0.30%	150,609	1,491,270
EOG	10:20AM ET	129.33	3.14	2.49%	260,185	2,970,220
NOG	10:20AM ET	13.72	0.63	4.39%	151,218	552,992
KOG	10:20AM ET	4.15	0.02	0.48%	286,727	1,403,040
KDKN.OB	10:02AM ET	2.57	0.03	1.15%	16,268	257,676
BSIC.OB	10:16AM ET	2.60	0.15	6.12%	14,150	83,284.9
XTO	10:21AM ET	68.42	1.28	1.91%	1,346,774	6,614,890
MDU	10:20AM ET	32.58	0.05	0.14%	91,840	959,455
WLL	10:20AM ET	103.80	1.99	1.95%	79,602	890,035

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