Jun
27
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
Related posts
Jun
18
Posted by bakkenexpert
If you would have looked at all the negative commentary on CNBC today regarding oil, financials and plunging through 12000 , you would assumed all your stocks did quite poorly today. Even oil was stagnant throughout the day with XLE only ending up 0.38%. But today is not like other days… today’s magic word of the day: divergence . One more time: di-ver-gence. Why is divergence important? Because it means that to some degree investors have disassociated broader market trends (including big oil) with bakken related plays. This bodes well for bakken for the remainder of 2008 as I suspect there will be extreme volatility in the market with housing, oil, inflation, geopolitical forces and election hoopla all exerting various levels of pressure.
Lets take a snapshot at what bakken plays did today while the dow was testing 3 month lows. CLR, EOG, WLL and XTO up 1-2% (good), NOG up 12% (great), KOG up 30% (priceless). However, with great gains comes great responsibility and we’ll see if our Bakken plays can sustain the momentum over the next few days and whether they can resist the urge to gap down.
| Symbol |
Last Trade |
Change |
Volume |
Intraday |
| ^DJI |
4:04PM ET |
12,029.06 |
 131.24 |
1.08% |
212,900,502 |
 |
| ^IXIC |
5:16PM ET |
2,429.71 |
28.02 |
1.14% |
0 |
 |
| CLR |
4:01PM ET |
73.85 |
 0.55 |
0.75% |
1,169,616 |
 |
| EOG |
4:02PM ET |
133.03 |
1.02 |
0.77% |
2,636,795 |
 |
| NOG |
4:00PM ET |
15.84 |
1.70 |
12.02% |
1,806,783 |
 |
| KOG |
4:00PM ET |
5.05 |
1.21 |
31.51% |
9,681,693 |
 |
| KDKN.OB |
3:58PM ET |
2.77 |
0.03 |
1.09% |
119,827 |
 |
| BSIC.OB |
3:58PM ET |
2.56 |
0.10 |
4.07% |
73,244 |
 |
| XTO |
4:05PM ET |
71.61 |
1.63 |
2.33% |
9,231,836 |
 |
| WLL |
4:03PM ET |
106.15 |
1.86 |
1.78% |
872,862 |
 |
|
|
Related posts
Jun
10
Posted by bakken
Basic Earth Science Systems, Inc. (BSIC) is an independent oil and gas exploration company. Basic is involved in the exploration, acquisition, development, operation, production and sale of crude oil and natural gas. The Company’s activities are focused in the North Dakota, Montana portions of the Williston basin, the Denver-Julesburg basin of Colorado, the southern portions of Texas, and along the onshore portions of the Gulf Coast.
The Williston basin continues to be the Basic’s primary area of focus. From a drilling perspective, Basic has three areas within the Williston basin. The Company has acquired a 20% interest in 13,000 acres in its Banks prospect in McKenzie County, North Dakota. It has acquired leases on approximately 4,200 gross acres in northern Sheridan County near the Flat Lake Field. Basic has acquired a 1.075% working interest in the TR Madison Unit.
In the latest quarter, Basic Earth Sciences, (BSIC) reported net income of $562,000, nearly three and a half cents ($0.033) per share, on oil and gas sales revenue of $2,080,000 for the third quarter ended December 31, 2007. Most of their revenue comes from their other wells in Colorado at their Antenna
Federal Property as evident by a recent press release that outlined flow data below which shows the initial production rate reported to the Colorado Oil & Gas Conservation Commission for these five new wells:
Well Name Bbls. Oil/Day MCF/Day NRI
USA 2-36 51 350 0.52500
USA 21-36 0 638 0.16375
USA 24-36 22 109 0.16375
USA 25-36 73 348 0.16375
USA 41-36 67 358 0.02000
Recently, BSIC has acquired 2000 net acres in the Bakken region and have a small NRI (<10%) in some drilling efforts in the region. Basic has a 1.2469% working interest (0.9975% net revenue interest) in the well which is operated by Marathon Oil Company. In addition, the horizontal well drilling required in the Bakken region is quite expensive potentially running into the millions of dollars per well to bring it online. We are watching on the sidelines to see how BSIC does over the next few months as it is approaching 52 week highs and volume may dry up if oil pulls back after July 4th as is expected. Our price target for BSIC is $2.50 but that does not include any Bakken related revenue as that is marginal at this point. The positive thing this company has going is that it is conservative and well managed so the Bakken portion of their portfolio will probably grow, just not at the rate that short term investors would like.
Related posts
