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Oasis: Finally Out From Brigham’s Shadow
Posted by MichaelFilloon
The average Bakken investor is well versed on Brigham (STO). Brigham Exploration routinely outperformed the competition. It was well positioned in Alger Field, which is possibly the best middle Bakken play in the Williston Basin. When Brigham announced it was being purchased by Statoil, Bakken investors flocked to Kodiak Oil and Gas (KOG: 8.82 +4.63%) as it purchased a very large number of acres in southeast Williams and northeast McKenzie counties. These two companies gained attention through very good initial production rates. Brigham’s best were in Alger Field, while Kodiak produced very good wells in the middle Bakken and upper Three Forks.
These two companies have gotten most of the attention as pure Bakken plays. Oasis (OAS) has been in the shadow of Brigham and Kodiak, but this could change very soon. Oasis has over 303000 net acres in the Williston Basin. This breaks into three areas:
1. West Williston: 191716 net acres in southwest Williams, northwest McKenzie, and eastern Richland and Roosevelt counties.
2. East Nesson: 102786 net acres in western Mountrail and west Burke counties
3. Sanish: 8729 net acres in the Sanish field area
Oasis has 9 rigs running with 7 in West Williston and 2 in East Nesson. It has quietly increased production significantly since the second quarter of this year, when it produced 7893 Boe/d. Oasis estimates it will produce between 11000 and 12500 Boe/d on average for the full year of 2011.
Oasis’ Sanish acreage is probably its best outside of its Indian Hills acreage. The Sanish is non-operated, and currently can support four middle Bakken and three upper Three Forks locations per 1280 acre spacing. Oasis’ Cottonwood play is northwest of its Sanish play. It consists of Mountrail County and into southern Burke County. The Cottonwood play has much better production at its most southern acreage. As the play heads north and into Burke, the wells are less expensive. Its most northern acreage in Burke County is Oasis’ St. Croix. Oasis has one result (Rebne 11-7H)here, which had and IP rate of 175 Bo/d. For comparison sake, its Berry 11-6H is west of the Sanish and had an IP rate of 2023 Bo/d.
Its West Williston leasehold is broken down into four parts:
1. Indian Hills- Northwest of Kodiak’s Koala prospect
2. Red Bank-Northwest of Brigham’s Roughrider
3. Mondak
4. Hebron
Indian Hills is has great potential. The acreage is probably not as promising as Koala, but has significant upside. The southeast point of Red Bank is also quite good. That said, Oasis has an abundance of good acreage that will allow them to execute their operational strategy. Overall, the acreage Oasis currently owns is not as good as Brigham’s but should only sell at a minor discount to it’s Bakken competitor.
Oasis’ management has done a great job ramping up production, especially when we take into consideration the Bakken winter which slowed oil and gas production to a stand still. The flooding made things worse as trucks could not get in and out of the well sites. Oasis has met earnings estimates for three straight quarters after a bad miss in December of 2010. This company has stated rising costs of oil service has placed a strain on its business. Because of this, Oasis has started up its own well service business, which helps to take the fear of fracking costs continuing to rise.
In summary, Oasis has a very good acreage in the Williston Basin. It has kept costs in check, and has seen its initial production rates increase significantly in a short period of time. It has expanded it infrastructure and is better prepared for winters going forward. Keep an eye on this company, as it is no longer in Brigham’s shadow.
This article was written by new BakkenStocks contributor, Michael Filloon. Michael is well versed on companies operating in the Bakken region and we look forward to more articles from Michael in the coming year.
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