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Jun
07

Week in Review: OPEC behaving badly?

Posted by bakken

In the last week oil prices have languished as the broader market has declined about 3%.    European debt fears continue to be a drag on the market and the poor job growth numbers recently released have not helped sentiment.        An important OPEC meeting looms on potential production increases.    Certain OPEC members (predominantly the Saudis)  have pushed for a production increase in the belief that demand will rise in the next few months due to US demand.  Other members such as Iran have a much less favorable policy towards the U.S. are more apt to push keep production curbed and to maximize margins (and profit) as the summer driving season in the U.S. begins and demand will likely rise regardless of moderate price increases.     Our Bakken plays have been hit 3-4% on average but are showing signs of consolidation at these levels.  As usual, the Bakken region continues to be a flurry of activity and we highlight some of the happenings below

▲▼ Company name▲▼ Price▲▼ Change▲▼ Chg %▲▼ Mkt Cap▲▼
BEXP Brigham Exploration Co. 27.58 +0.32 1.17% 3.23B
NOG Northern Oil & Gas, Inc. 17.46 +0.43 2.52% 1.10B
CLR Continental Resources,… 60.15 -0.30 -0.50% 10.86B
WLL Whiting Petroleum Corp. 61.30 -0.59 -0.95% 7.19B
OAS Oasis Petroleum Inc. 26.59 +1.05 4.11% 2.46B

 

  • Oil & Gas companies are improving drilling technology in the Bakken region with Brigham Exploration leading the way.   Companies typically drill 2 miles underground and rely on hydraulic fracs with as many as 40 stages using a ball-and-sliding-sleeve system.   In 2010, North Dakota pumped 113 million bbl of oil from the wellhead, almost three times the state’s total in 2006, with most coming from the Bakken region.
  • Northern Oil & Gas (NOG: 25.25 +1.20%) participated in the Mustang #1-22H, a successful Bakken test well operated by Slawson Exploration in Mountrail County, North Dakota.  Northern Oil controls a 39.56% working interest in the well, which had an initial production rate of 1,829 barrels of oil per day (“BOPD”).  As of June 6, 2011, Northern Oil currently holds working interests in a total of 413 gross (35.96 net) producing wells and is participating in 139 gross (13.23 net) Bakken or Three Forks wells drilling, awaiting completion or completing.
  • Aux Sable, partly owned by Enbridge Inc , said one of its affiliates has agreed to buy some key assets in the Bakken area of North Dakota from U.S. oil and gas company EOG Resources for $185 million.   Aux Sable and Sable NGL are owned by Veresen Inc , Williams Partners and Enbridge, whose pipelines carry the bulk of Canada’s crude exports to the United States.
  • VAALCO Energy, Inc. (“VAALCO”) (EGY: 6.45 +4.37%) today announced the purchase from a privately held company of a 70% working interest in 5,214 acres in Sheridan County, Montana.  The acreage directly adjoins the Flat Lake Field which successfully produces from the Middle Bakken formation.

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May
20

Weekly Roundup – USGS reevaluating Bakken formation estimates

Posted by bakken

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: 2.21 +0.96%)  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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