Nov
13
Posted by bakken
In the January of 2011 we put out a number of predictions related to the Bakken region, let’s see how we are tracking thus far.
PREDICTION #1 – Brigham Exploration (BEXP: 0.00 N/A) gets acquired by a large O&G in the region such as EOG.
>> RIGHT – As most everyone who follows the region knows, Statoil ASA acquired Brigham last month for $36.50 per share. We weren’t at all surprised that BEXP got acquired, but were expecting more of a bidding war for this jewel in the Bakken region.
PREDICTION #2 – PetroBakken goes up 50% in 2011 .
>> WRONG – This prediction has been a huge disappointment for PetroBakken shareholders. Instead of being up 50% the stock is down about 50% since the beginning of the year. They have failed to execute on their growth plan and missed a few earnings estimates and Wall Street has responded negatively. On paper many investors (such as this one) believe it still has some potential.
PREDICTION #3 – Continental Resources (CLR: 79.28 -0.11%) tops $75 per share in 2011 .
>> TBD Continental Resources (CLR: 79.28 -0.11%) came within striking distance of $75 in July hitting $73.48. The market experienced a pullback shortly thereafter and CLR followed suit. It has bounced back in recent days to $67 and there is an outside chance it will hit $75 in the next 2 months… but don’t hold your breath.
PREDICTION #4 – Bakken drilling continues to surpass estimates and will yield record production in 2011
>> RIGHT – By the end of 2010 oil production rates had reached 458,000 barrels per day in the Bakken region. The numbers are obviously not yet complete for 2011, but right now the numbers are tracking to easily beat 2010 numbers. From the North Dakota Industrial Commission (NDIC) Oil & Gas some positive numbers on 2011 development are below:
Aug Oil 13,829,114 barrels = 446,122 barrels/day
Sep Oil 13,923,650 barrels = 464,122 barrels/day (preliminary) (all time high)
Aug Gas 14,349,802 MCF = 462,897 MCF/day
Sep Gas 14,552,239 MCF = 485,075 MCF/day (preliminary) (all time high)
Aug Producing Wells = 5,951
Sep Producing Wells = 6,071 (all time high)
Look for our 2012 Predictions next month!
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Jan
02
Posted by bakken
It has been a banner year for companies operating in the Bakken region. Brigham Exploration (BEXP: 0.00 N/A) , Northern Gas & Oil (NOG: 25.25 +1.20%) saw gains over 100% and American Oil & Gas was acquired by Hess corporation (HES: 60.38 +4.45%). Bigger players such as Continental Resources (CLR: 79.28 -0.11%) and Whiting Oil (WLL: 49.50 +1.29%)] also rebounded in a big way and are within striking distance of all time highs in 2011.
| Symbol |
Trade |
Market Cap |
P/E |
PEG Ratio |
Pct from Yr Low |
| NOG |
27.21 |
1.37B |
132.09 |
3.16 |
 159.89% |
| HES |
76.54 |
25.14B |
10.33 |
0.71 |
57.17% |
| CLR |
58.85 |
10.01B |
37.99 |
1.38 |
62.26% |
| WLL |
117.19 |
6.86B |
30.64 |
1.68 |
87.03% |
| BEXP |
27.24 |
3.18B |
92.34 |
1.29 |
116.53% |
| EOG |
91.41 |
23.22B |
45.80 |
5.93 |
7.01% |
| SM |
58.93 |
3.72B |
23.51 |
-28.62 |
91.95% |
| GEOI |
22.21 |
438.05M |
21.19 |
N/A |
96.72%
|
So what will 2011 bring for the Bakken region? Of course, specific predictions are rarely accurate but in the spirit of the new year we will give it our best shot. Underlying assumptions in our predictions are that oil prices will sustain over $90 per barrel over the majority of 2011 and that the overall domestic and global economies will continue a recovery albeit slow and sometimes painful.
PREDICTION #1 - Brigham Exploration (BEXP: 0.00 N/A) gets acquired by a large O&G in the region such as EOG.
It is no secret that Brigham Exploration is one of the best executing pure plays in the Bakken Region. Their expertise in multi-stage fracking is a boon for a larger player with untapped acreage. They may look expensive on paper to some with a forward PE around 30, but an acquisition would be focused around operational synergy with Brigham’s drilling prowess, not necessarily looking at their current revenue numbers.
PREDICTION #2 - PetroBakken goes up 50% in 2011 .
Although, most US based Bakken players did well in 2010, PetroBakken (PBN on TSX), just across the border did not fare as well. Declining production and sub-par execution related to a number of factors such as bad weather caused many big investors to shun this stock for most of 2010. PetroBakken has no shortage of opportunity with 210,000 net undeveloped acres with 1,000+ locations in the Bakken region “North of the Border”. The company will put upwards of 20 rigs into action in 2011 and has a focus on Bilateral well drilling under their “Bakken 3.0″ strategy which should increase Bakken boepd significantly over the next 12 months. More about their strategy can be found on their latest presentation posted in Dec 2010
PREDICTION #3 - Continental Resources (CLR: 79.28 -0.11%) tops $75 per share in 2011 .
Continental has banked a lot on their ECO-pad strategy in the latter half of 2010 and that strategy is already paying dividends. Continental Resources has nearly doubled its production from the North Dakota Bakken during 2010, growing from an average of 8,384 (BOE) per day during the 4th quarter of 2009 to 15,000+ BOE per day in Q3 2010. We expect production to top 21,000 BOE per day by the end of 2011. With seemingly few factors that can stop a 30% sustained growth rate for CLR, a move above $75 seems quite probable in 2011.
PREDICTION #4 - Bakken drilling continues to surpass estimates and will yield record production in 2011
The growth train that is the Bakken was derailed slightly in 2008 amidst the economic crisis but came back with bang in 2010. North Dakota is currently is pumping about 350,000 barrels of crude per day and was on pace to produce about 110 million barrels in 2010, up from about 80 million in 2009. In 2011, we expect the following
- Record production in excess of 140 million BOE in 2011
- Well completion time averaging 23 days in 2011 (was over 60 days 2 years ago)
- USGS revision that outlines more than 11 billion barrels of recoverable oil in the Bakken region
- 1900 new wells in North Dakota (200% growth from 2010)
We’ll check back in a few months to see how our predictions have fared, but based on the solid growth in 2010, we are not worried about what we’ll find. Have a great start to 2011! Look for more insight in the coming days on new plays in the region
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