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

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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.

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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

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

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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.”

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Glass half full?

bakken

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

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