November 18, 2012 Window … · 2012. 11. 16. · MERGERS & ACQUISITIONS LAND & LEASING GEOLOGY...
24
● MERGERS & ACQUISITIONS ● LAND & LEASING ● GEOLOGY Vol. 1, No. 15 • www.PetroleumNewsBakken.com A semi-monthly newspaper for industry and government November 18, 2012 BAKKEN page 12 Kodiak production in Williston Basin up 281 percent from a year ago A semi-annual supplement AKKE B N OIL & GAS DIRECTORY Vol. 1, No.1, Released November 2012 Petroleum News Bakken’s first oil and gas directory, a full color magazine, accompanies this issue of the newspaper. The first of its kind, the directory will appear twice a year, with the next being released in May. It is a work in progress so the publisher welcomes additions, deletions and corrections, asking they be sent to pub- [email protected]. Bakken Oil & Gas Directory inside Window closing Hamm: most government land tied up; fewer takeover opportunities in Bakken By RAY TYSON Petroleum News Bakken W illiston Basin superstar Continental Resources Inc. said following disclosure of its latest Bakken acquisition that opportunities for such mega deals in the region may be coming to an end. “We expect to see those opportuni- ties diminish, and so this is especially one that fits us real well,” Harold Hamm, Continental’s chairman and chief executive officer, said of the com- pany’s recent $650 million deal in a Nov. 8 conference call with analysts and investors. Others have tied up most of the available state and federal acreage, Hamm said, while takeover candidates in the way of smaller exploration and production companies are vanishing. “In my estimation, we’ll see a few of them going forward,” he added. “There’ll still be a few, but perhaps that window is closing.” Deal includes 120,000 acres Continental, in its latest deal, entered into an agreement with an undisclosed seller or sellers to acquire Bakken producing and undeveloped Others have tied up most of the avail- able state and fed- eral acreage, while takeover candidates in the way of small- er exploration and production compa- nies are vanishing, said Continental’s Chairman and CEO Harold Hamm. see MEGA DEALS page 23 Redefining the Sanish ND geological survey considers sands to be Pronghorn unit of Bakken formation By MIKE ELLERD For Petroleum News Bakken F or years people had been seeing a lime- stone/lime mudstone unit between the lower Bakken Shale and the upper Three Forks formation in parts of Stark, Dunn, McKenzie, Billings and Golden Valley counties in western North Dakota, but that limestone/mudstone unit had never been well defined or well described. That was until three years ago when Anschutz Petroleum cut a long core in a well it drilled in far southern Dunn County that fully transcended what for years had been commonly known as the Sanish sand, a unit that has been considered part of the Three Forks formation in the larger Bakken petroleum system. With the information gained from the Anschutz core, the North Dakota Geological Survey now formally considers this lime- stone/mudstone unit to be part of the Bakken formation within the same petrole- um system, and have redefined it as the Pronghorn member. A little history In 1954, NDGS described an “unconfor- mity sand” lying between the lower Bakken shale and the Three Forks formation, and referred to it as the Sanish sand, and included it as part of the Bakken for- JULIE LEFEVER see UNIT DEFINITION page 20 ND sale draws robust bids Trust Lands auction price per acre averaged $1,997 on 9,421 acres; 4th highest By MIKE ELLERD For Petroleum News Bakken T he North Dakota Department of Trust Lands Minerals Management Division brought in just over $18.9 mil- lion in its November oil and gas lease auction, selling leases on 9,421 acres in 100 separate parcels in nine western North Dakota counties, for an average of approximately $1,998 per acre. The sale prices at the November auction ranged from a low of $25 per acre to a high of $15,300 per acre. Slightly over half of the acreage sold was in McKenzie County. The average price of $1,998 per acre was the fourth highest auction average going back to 1970. The highest average price per acre was $3,526 set at the November 2011 auction, followed by $2,968 in May 2010, and $2,090 in February 2011. In August, the Minerals Management Division sold a total of 16,665 acres at an average price per acre of $701 per acre. In May it sold 10,447 acres at an average price per acre of $1,000, and in February the total acreage sold was 69,942 with an average price per acre of $1,219. “We were pleased with the sale,” Minerals Management Division Director Dew Combs told see LEASE AUCTION page 23 DREW COMBS Alberta opens door on huge resources; formations on parallel with Bakken, say agencies Alberta’s emerging shale and/or siltstone formations could ultimately yield 423.6 billion barrels of oil, 58.6 billion barrels of liquids and 3.3 trillion cubic feet of natural gas, says a long-awaited report by the Alberta Energy Resources Conservation Board and the Alberta Geological Survey. The report is designed to provide baseline data, informa- tion and understanding of the geology, distribution, reservoir characteristics and hydrocarbon resource potential of Alberta shales. The calculations for the formations, including the Duvernay, Montney and Muskwa, put the deposits in the same league as some of the major U.S. shale plays as part of Apache pleased with oil shows in logs from first Bakken well Apache Corp.’s top executive is pleased with what he’s seen from the first well drilled in the company’s newly acquired acreage in Daniels County, Mont., on the northwestern fringe of the Bakken petroleum system. “As we continue to build and execute our global pipeline of exploration activity we’re testing two wells (in two new plays for Apache) — one in the Williston Basin and one in the Mississippi Lime,” G. Steven Farris, company chairman and chief executive officer, said in early November in Apache’s third quarter earnings con- see ALBERTA RESOURCES page 21 see APACHE WELL page 19 G. STEVEN FARRIS
Transcript of November 18, 2012 Window … · 2012. 11. 16. · MERGERS & ACQUISITIONS LAND & LEASING GEOLOGY...
� M E R G E R S & A C Q U I S I T I O N S
� L A N D & L E A S I N G
� G E O L O G Y
Vol. 1, No. 15 • www.PetroleumNewsBakken.com A semi-monthly newspaper for industry and government November 18, 2012
B A K K E Npage12
Kodiak production in Williston Basin up 281 percent from a year ago
A semi-annual supplement
AKKEB NOIL & GAS DIRECTORYVol. 1, No.1, Released November 2012
Petroleum News Bakken’s first oil and gas directory, a full colormagazine, accompanies this issue of the newspaper. The first of itskind, the directory will appear twice a year, with the next beingreleased in May. It is a work in progress so the publisher welcomesadditions, deletions and corrections, asking they be sent to [email protected].
Bakken Oil & Gas Directory inside
Window closingHamm: most government land tied up; fewer takeover opportunities in Bakken
By RAY TYSONPetroleum News Bakken
Williston Basin superstarContinental Resources Inc. said
following disclosure of its latestBakken acquisition that opportunitiesfor such mega deals in the region maybe coming to an end.
“We expect to see those opportuni-ties diminish, and so this is especiallyone that fits us real well,” HaroldHamm, Continental’s chairman andchief executive officer, said of the com-pany’s recent $650 million deal in aNov. 8 conference call with analystsand investors.
Others have tied up most of theavailable state and federal acreage,Hamm said, while takeover candidatesin the way of smaller exploration andproduction companies are vanishing.
“In my estimation, we’ll see a fewof them going forward,” he added.“There’ll still be a few, but perhaps thatwindow is closing.”
Deal includes 120,000 acresContinental, in its latest deal,
entered into an agreement with anundisclosed seller or sellers to acquireBakken producing and undeveloped
Others have tied upmost of the avail-able state and fed-eral acreage, whiletakeover candidatesin the way of small-er exploration andproduction compa-nies are vanishing,said Continental’sChairman and CEOHarold Hamm.see MEGA DEALS page 23
Redefining the Sanish ND geological survey considers sands to be Pronghorn unit of Bakken formation
By MIKE ELLERDFor Petroleum News Bakken
For years people had been seeing a lime-stone/lime mudstone unit between the
lower Bakken Shale and the upper ThreeForks formation in parts of Stark, Dunn,McKenzie, Billings and Golden Valleycounties in western North Dakota, but thatlimestone/mudstone unit had never beenwell defined or well described. That wasuntil three years ago when Anschutz Petroleum cut along core in a well it drilled in far southern DunnCounty that fully transcended what for years had beencommonly known as the Sanish sand, a unit that hasbeen considered part of the Three Forks formation in
the larger Bakken petroleum system. Withthe information gained from the Anschutzcore, the North Dakota Geological Surveynow formally considers this lime-stone/mudstone unit to be part of theBakken formation within the same petrole-um system, and have redefined it as thePronghorn member.
A little historyIn 1954, NDGS described an “unconfor-
mity sand” lying between the lower Bakken shale andthe Three Forks formation, and referred to it as theSanish sand, and included it as part of the Bakken for-
JULIE LEFEVER
see UNIT DEFINITION page 20
ND sale draws robust bidsTrust Lands auction price per acre averaged $1,997 on 9,421 acres; 4th highest
By MIKE ELLERDFor Petroleum News Bakken
The North Dakota Department ofTrust Lands Minerals Management
Division brought in just over $18.9 mil-lion in its November oil and gas leaseauction, selling leases on 9,421 acres in100 separate parcels in nine westernNorth Dakota counties, for an average ofapproximately $1,998 per acre. The saleprices at the November auction ranged from a lowof $25 per acre to a high of $15,300 per acre.Slightly over half of the acreage sold was inMcKenzie County.
The average price of $1,998 per acre was the
fourth highest auction average goingback to 1970. The highest average priceper acre was $3,526 set at the November2011 auction, followed by $2,968 in May2010, and $2,090 in February 2011.
In August, the Minerals ManagementDivision sold a total of 16,665 acres at anaverage price per acre of $701 per acre.In May it sold 10,447 acres at an averageprice per acre of $1,000, and in Februarythe total acreage sold was 69,942 with an
average price per acre of $1,219.“We were pleased with the sale,” Minerals
Management Division Director Dew Combs told
see LEASE AUCTION page 23
DREW COMBS
Alberta opens door on hugeresources; formations on parallelwith Bakken, say agencies
Alberta’s emerging shale and/or siltstone formationscould ultimately yield 423.6 billion barrels of oil, 58.6 billionbarrels of liquids and 3.3 trillion cubic feet of natural gas,says a long-awaited report by the Alberta Energy ResourcesConservation Board and the Alberta Geological Survey.
The report is designed to provide baseline data, informa-tion and understanding of the geology, distribution, reservoircharacteristics and hydrocarbon resource potential of Albertashales.
The calculations for the formations, including theDuvernay, Montney and Muskwa, put the deposits in thesame league as some of the major U.S. shale plays as part of
Apache pleased with oil showsin logs from first Bakken well
Apache Corp.’s top executive ispleased with what he’s seen from the firstwell drilled in the company’s newlyacquired acreage in Daniels County,Mont., on the northwestern fringe of theBakken petroleum system.
“As we continue to build and executeour global pipeline of exploration activitywe’re testing two wells (in two new playsfor Apache) — one in the Williston Basinand one in the Mississippi Lime,” G.Steven Farris, company chairman and chief executive officer,said in early November in Apache’s third quarter earnings con-
see ALBERTA RESOURCES page 21
see APACHE WELL page 19
G. STEVEN FARRIS
2 PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012
Petroleum News Bakkencontents
PRODUCTION & RECOVERY
DRILLING & COMPLETION
COMPANY UPDATE
4 Hess 3Q Bakken output up, costs below average
6 Legacy upbeat over Spearfish, Bakken
7 Montana weekly oil activity reports
FINANCE & ECONOMY
MERGERS & ACQUISITIONS
MOVING HYDROCARBONS
IN OTHER NEWS
3 Fidelity testing Upper Bakken shale
MDU E&P arms sees huge Q3 output increase, mostlyfrom Bakken, despite tardiness with oil wells; sees Utah play as game changer
5 EOG sees good Bakken output
With focus on two Bakken/Three Forks core areas where recent tests show promising IPs, companycontinues to test downspacing
6 Magnolia buys in MT, partner drills in ND
Statoil drilling two new Jake wells in Williams County,four more planned; Magnolia acquires 6,700 acres in Montana
9 Inergy new ND transport player
Company acquires Rangeland’s COLT facility at Epping,ND, for $425 million; a perfect fit for Inergy
8 PetroBakken set to take off
Fledgling Bakken, Cardium company earmarks C$975Mof capital spending for 2013, pulling some spending forward to achieve ’12 rate
12 Extraordinary production growth
Kodiak Oil & Gas boosts 2012 capital spending 28%;increases staff 73% and production 281% since same period last year
16 Crescent Point reaches out
Bakken player scoops up Utah assets to apply drilling,fracturing technologies; W. Canadian productionaverages almost 100,000 boe
15 Chart: North Dakota Bakken oil production by company
18 Rail will ‘be here for a while’
11 Fate of Keystone XL still uncertain
13 Enerplus backs off Fort Berthold
17 SM Energy reports strong 3Q production
16 Tight oil sideswipes oil sands
18 Rail buildout ahead to handle 1M bpd
18 Time for natural gas to replace diesel as locomotive fuel?
18 OPEC first to feel squeeze from US, Russia crude output?
14 Chart: Top 50 North Dakota Bakken Oil Producers
14 Forecasting a Bakken bubble
14 North Dakota posts record annual oil output — again
Alberta opens door on huge resources;formations on parallel with Bakken, say agencies
Apache pleased with oil shows in logs from first Bakken well
ON THE COVERWindow closing
Hamm: most government land tied up; fewer takeover opportunities in Bakken
Redefining the Sanish
ND geological survey considers sands to be Pronghorn unit of Bakken formation
ND sale draws robust bids
Trust Lands auction price per acre averaged $1,997 on 9,421 acres; 4th highest
Net Production
Operational Highlights
5.6
8.510.3 10.4 11.0
0
2
4
6
8
10
12
3Q11 4Q11 1Q12 2Q12 3Q12
MB
OE
/d
PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012 3
One of thousands of projects using Polyguard RD-6 non-shielding coating. Our first was in 1988.
By RAY TYSONFor Petroleum News Bakken
MDU Resources Group’s explo-ration and production arm,
Fidelity E&P, saw a double-digit surge inoil production during the third quarter,largely on the strength of North Dakota’sBakken-Three Forks play. But the num-bers could have been much higher hadFidelity not been so late in bringing newwells on stream.
Production during the three-monthperiod ending Sept. 30 averaged 12,200barrels per day, a substantial 19 percentincrease over last year’s third quarter of10,260 barrels per day.
“However, we did have some delays inour drilling and completion activity, andwe did not bring online all the wells wehad planned,” Terry Hildestad, MDU’spresident and chief executive officer, dis-closed in a Nov. 1 conference call.
But he said “a number of good wells”were brought on stream in late Septemberand October, resulting in a weekly pro-duction record in October of 13,500 bar-rels per day, a hefty 32 percent increaseover the 2011 third quarter and an 11 per-cent increase over the 2012 third quarter.
“This is primarily a timing issue,”Hildestad explained. “We still expect tomeet our full year oil production projec-tion increase of 25 percent to 30 percent.”
The company’s planned Bakken capi-tal budget for 2012 was $265 million, upfrom $165 million compared to last year(see adjacent chart).
Continues to curtail gas outputFidelity said it continued to curtail nat-
ural gas output during the recent quarterbecause of prolonged price weakness.Production tumbled nearly 37 percentfrom the year-ago quarter.
“The curtailment focused on dry gaswells that were providing minimum mar-gin in lower natural gas price environ-ments,” Hildestad said. “We plan to bringthese wells back on production ratherquickly when natural gas prices recover toan economic level.”
Fidelity’s realized natural gas priceswere down 20 percent during the thirdquarter, while realized oil prices weredown 5 percent. A higher Bakken oilprice differential, which includes trans-portation charges, averaged about $12 to$13 per barrel throughout the third quar-ter and also affected Fidelity’s oil pricerealization.
“Forecasts indicate a significantimprovement in these pricing spreads forthe fourth quarter,” Hildestad told ana-lysts.
Mountrail well had IP of 1,353 bpd of oil
Fidelity said it is operating five rigs inthe Bakken, the company’s primarygrowth area. Oil production there was upa substantial 46 percent over last year, set-ting a new production record of more than7,000 net barrels per day, and is achievingthat at a consistent level.
In Mountrail County, N.D., Fidelityhas seen continued strong wells in thisdevelopment phase acreage. TheAmundson 23-14H well had a 24-hourinitial production rate of 1,353 barrels ofoil.
“We have identified approximately 40
remaining Middle Bakken wells in thearea and we’re evaluating our Three Forkspotential following the lead of other oper-ators, which would be incremental tothese numbers,” Hildestad said.
Identifies sweet spot in StarkIn Stark County, N.D., the company
said it continues to see encouragingresults, and gross production recently seta record of about 2,000 barrels a day. Thecompany has 51,000 net acres here and,through its appraisal program and begin-ning stages of development, said it hasidentified a sweet spot area its believeswill be highly productive.
The company said it recently complet-ed a couple of strong wells in Stark. ThePavlish 19-20H came on line at 1,097 bar-rels of oil. The Kudrna 5-8H had a 24-hour IP rate of 1,151 barrels. And about40 future drilling sites have been identi-fied in the area.
Stay tuned for Upper Bakken resultsIn Richland County, Montana, Fidelity
is initially targeting the Three Forks.However, data is pointing to significantupside potential in the Upper Bakkenshale on this acreage, the company said.
“While initial rates are not as high assome of our other Middle Bakken andThree Forks wells, it appears that thedecline rates are shallower and can pro-vide good economic returns,” Hildestadexplained. “We still have a couple morewells planned for the Richland Countythis year, so stay tuned for further resultsas we continue to focus on cracking thecode there.”
Finishes Heath appraisal programIn Montana, Fidelity also has conclud-
ed its appraisal program this year for theHeath Shale play where the company has90,000 net acres.
“We’ve drilled five wells, saw encour-aging results in four of the five wells, butproduction issues are clouding the deci-sion to move forward with additionaldrilling,” Hildestad said. “These wells arebeing worked on by our productionteam.”
Views Utah’s Paradox as game changerParadox Basin in Utah is a potential
game changer for Fidelity, the companysaid, noting that it kicked things off in thisplay with a strong well that was a CaneCreek unit number 26-2H well. It hasbeen consistently producing roughly1,500 barrels of oil a day over the pastthree weeks. It has a flowing pressureabove 2,800 psi. And the company hasidentified 50 to 75 future locations withgross recovery rates estimated up to 1million barrels per well and perhapsmore.
In addition Utah’s Paradox Basin andthe Bakken-Three Forks play in NorthDakota and Montana, MDU’s Fidelityholds E&P interests in Colorado,Wyoming, Nebraska, Louisiana,Oklahoma, New Mexico, Texas, and off-shore Gulf of Mexico.
Oil growth partly offset by lower pricesFidelity’s overall 19 percent increase
in oil production partially offset lowercommodity prices during the recent quar-
� C O M P A N Y U P D A T E
Fidelity testing Upper Bakken shaleMDU E&P arms sees huge Q3 output increase, mostly from Bakken, despite tardiness with oil wells; sees Utah play as game changer
• $265 million in spending planned in 2012An expansion of $165 million compared to last year
More operated wellsHigher working interest
• Bakken – Approx. 127,000 net acresMountrail County, approx. 16,000
Currently our largest oil producing propertyStark County, approx. 51,000Richland County, approx. 60,000
• Produced approx. 5.7 million net barrels in 5 years
E & P Building A Strong America ®
Bakken Acreage
MM DD UUM D U
Exploration & Production
Production
Record 7,000net BOE/day
Production
Record 7,000net BOE/day
see FIDELITY E&P page 4
4 PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012
Kay Cashman PUBLISHER & EXECUTIVE EDITOR
Ray Tyson EDITOR
Gary Park CONTRIBUTING WRITER (CANADA)
Eric Lidji CONTRIBUTING COLUMNIST
Alan Bailey STAFF WRITER
Rose Ragsdale CONTRIBUTING COLUMNIST
Allen Baker CONTRIBUTING WRITER
Mike Ellerd CONTRIBUTING WRITER
Darryl Flowers CONTRIBUTING WRITER
Mary Mack CHIEF FINANCIAL OFFICER
Clint Lasley GM & CIRCULATION DIRECTOR
Susan Crane ADVERTISING DIRECTOR
Bonnie Yonker AK / NATL ADVERTISING SPECIALIST
Steven Merritt PRODUCTION DIRECTOR
Marti Reeve SPECIAL PUBLICATIONS DIRECTOR
Tom Kearney ADVERTISING DESIGN MANAGER
Heather Yates BOOKKEEPER
John Lasley DRILLING CONSULTANT
Amy Spittler MARKETING CONSULTANT
Renee Garbutt ADVERTISING ASSISTANT
Shane Lasley IT CHIEF
Julie Bembry CIRCULATION SALES EXECUTIVE
Dee Cashman CIRCULATION REPRESENTATIVE
Joshua Borough ASSISTANT TO THE PUBLISHER
ADDRESS
P.O. Box 231647
Anchorage, AK 99523-1647
NEWS
RAY TYSON • 605.343.4031
CIRCULATION
907.522.9469
ADVERTISING
Susan Crane • 907.770.5592
Bonnie Yonker • [email protected]
FAX NUMBERS
SOUTH DAKOTA • 713.658.0125
ALASKA • 907.522.9583
PETROLEUM NEWS BAKKEN is currently a semi-monthly supplement ofPetroleum News, a weekly newspaper that covers Alaska and northern andwestern Canada. In March 2013 Petroleum News Bakken is scheduled to
go weekly. To subscribe to Petroleum News Bakken [email protected]; or call Clint Lasley at 907.522.9469; or sign up online at
www.petroleumnewsbakken.com. A subscriber to Petroleum News also receives Petroleum News Bakken, and vice versa.
Print and/or online subscriptions are available.
www.PetroleumNewsBakken.com
B A K K E N
Several of the individualslisted above are
independent contractors
Petroleum News Bakken looking for writersPrefer experienced reporters, but oil industry knowledge also valued.Contact Kay Cashman at publisher@petroleumnews or 907.561.7517
WHERE PROGRESS MEETS PRESERVATION
Providing Cultural Resource Inventories and GIS services throughoutthe Great Plains, our services include:
• NEPA & NHPA compliance assistance
• Archaeological inventories
• Native American consultation
• Architectural history
• Preservation compliance
• Interpretive planning
• Interdisciplinary GIS mapping
and geoprocessing analysis
Have a project? Contact us.
301 1st St NE, Suite 201
Mandan, ND 58554
701-663-5521 | [email protected]
ter. But earnings from MDU’s E&P oper-ation fell to $13.1 million in the thirdquarter of 2012 from $22.5 million in thethird quarter of 2011.
Fortunately, MDU had help from someof its other business segments, particular-ly from construction materials and servic-es, which had combined earnings of$51.8 million, an increase of $13.6 mil-lion over last year. Contributing to thegrowth were improved volumes and mar-gins in most material product lines, aswell as higher equipment sales and rentalmargins and the company’s lower coststructure. Revenues improved 6 percentand earnings 36 percent. This group alsohas a backlog that is $55 million highercompared to a year earlier.
Utility benefits from Bakken boomMDU’s electric utility earnings grew
by 32 percent over the prior-year thirdquarter to $11 million, in large partbecause of a 5 percent increase in electricsales and lower operating expenses. Theutility continues to benefit from contin-ued economic growth in northwesternNorth Dakota’s Bakken oil fields wherethe company saw an 8 percent increase inits electric customer count compared to ayear ago.
Natural gas transport biz reports lossMDU’s natural gas transportation busi-
ness reported a normal seasonal loss,which was an approximate 20 percentimprovement compared to the third quar-ter of 2011, related to decreased operatingexpenses.
In September, the company filed an
application with the Montana PublicService Commission for a natural gas rateincrease of $3.5 million annually, or5.9 percent, to cover costs associated withinvestments in facilities.
Overall, MDU had consolidated third-quarter earnings of $71.1 million, exclud-ing a non-cash write-down primarilyrelated to the lower natural gas prices.That compared to $63.8 million in earn-ings in last year’s third quarter. Includingthe non-cash write-down, the companyposted a consolidated loss of $29.8 mil-lion for this year’s third quarter.
Diesel topping plant underconsideration
Meanwhile, MDU, along withCalumet Refining, LLC, continues toexplore the feasibility of building andoperating a 20,000-barrel per day dieseltopping plant in southwestern NorthDakota.
The facility would process Bakkencrude and market the diesel within theBakken region. Options to purchase landfor the plant site were recently exercised.
Total project costs are estimated to beabout $280 million to $300 million with aprojected in-service date in 2014.
In May, the company purchased a 50percent undivided interest in Whiting Oiland Gas Corp.’s Pronghorn natural gasand oil midstream assets near Belfield,N.D., in the Bakken area.
The company expects to invest rough-ly $100 million in 2012 including the pur-chase price.
The Belfield natural gas processingplant has an inlet processing capacity of35 million cubic feet per day. �
continued from page 3
FIDELITY E&P
Contact Ray Tyson at [email protected]
� C O M P A N Y U P D A T E
Hess 3Q Bakkenoutput up, costsbelow average
By MIKE ELLERDFor Petroleum News Bakken
In Hess Corp.’s third quarter 2012 earn-ings conference call on Nov. 2,
Chairman and CEO John Hess said thecompany’s net Bakken production averaged62,000 barrels of oil equivalent per day inthe third quarter, up from the 32,000 boeper day in the third quarter of 2011, anincrease of 94 percent.
The company shipped approximately37,000 barrels of oil per day from its Tiogarail facility to “higher value markets,improving our price realizations,” Hesssaid, noting the company is currently eval-uating the feasibility of building a railunloading facility at its Port Reading, N.J.,complex to market Bakken crude oil on theEast Coast.
Hess currently has 16 drill rigs operat-ing in the Bakken, 15 of which are in paddrilling mode, per Gregory Hill, Hess’executive vice president and president ofworldwide exploration and production. “Aswe focus on capital efficiency, we maymoderate the pace slightly. But it won’t bea major downward reduction in pace in theBakken,” he said.
CFO John Rielly said the company hasreduced its drilling costs in 2012 from an
average of $13.4 million in the first quarterto $9.5 million in the third quarter. Hess hasbeen getting more and more efficient quar-ter by quarter in the Bakken, and presentlyits Bakken costs are “slightly below ourportfolio average.” He said Hess plans tospend approximately $750 million this yearon Bakken infrastructure.
In a statement, Hess said it “will sub-stantially complete its ‘held by production’drilling in the Bakken in the fourth quarterof 2012 and is transitioning to pad drilling(development drilling), which involvessequentially drilling a number of wells on apad followed by sequential fracturing of thewells. This pad drilling process is expectedto lead to a temporary flattening of theBakken production profile until mid-2013,at which point steady-state operations willallow an upward growth trajectory.”
Worldwide, John Hess said the compa-ny’s crude and natural gas production was402,000 boe per day in the third quarter of2012, which is a 17 percent increase overthe 344,000 boe the company produced inthird quarter 2011. The growth was prima-rily the result of higher output from NorthDakota’s Bakken and Libya.�
Contact Mike Ellerdat [email protected]
By MIKE ELLERDFor Petroleum News Bakken
EOG announced on Nov. 5 that it saw a45 percent increase in North
American crude oil production in the thirdquarter and 51 percent increase through thefirst nine months of 2012 compared to thesame periods in 2011. Total NorthAmerican liquids (crude oil, condensateand natural gas liquids) productionincreased 42 percent for the third quarterand 48 percent for the first three quartersof 2012 over the same periods a year ago.
In a Nov. 6 conference call, EOGChairman and Chief Executive OfficerMark Papa said the company’s two largestproduction areas are its South Texas EagleFord play and the Bakken/Three Forks playin North Dakota. In that call, EOGPresident William Thomas, said EOG will“continue to be particularly upbeat aboutthe Bakken and Three Forks potential onour acreage in the Williston Basin.”
Most shipped by railPapa said most of EOG’s Bakken crude
oil is being shipped via rail to the compa-ny’s terminal at St. James, La., where thecrude is priced off of the Louisiana LightCrude index, which he said provides anadvantage over West Texas Intermediatepricing.
In the Nov. 6 conference call, Thomassaid the company’s 320-acre downspacingin its Bakken Core area has proven to besuccessful, and this was further confirmed,he said, by results from two recently com-pleted wells. One of the wells, the Fertile46-1608H, tested with an initial productionof 1,732 barrels of oil per day, with 90 bar-rels per day of NGLs and 363,000 cubicfeet per day of natural gas. The other well,the Fertile 47-0712H, tested with an IP of1,258 barrels of oil per day, 83 barrels perday of NGLs and 332,000 cubic feet ofgas. EOG has 92 percent and 78 percentworking interest in these wells, respective-ly. Both wells are in Mountrail County.
In the Antelope Extension area, Thomassaid the company is applying improvedfracking technology to its current well
completions. “We recently completed anoutstanding Antelope Three Forks well, theHawkeye 100-2501H, for 3,196 barrels ofoil per day with 5.5 million cubic feet perday of rich natural gas.” EOG has a 73 per-cent working interest of this well, which islocated in McKenzie County.
Spending in focus areasThomas said EOG plans to spend most
of its North Dakota capital in these sametwo focus areas from 2013 to 2015, prima-rily downspacing in the Bakken Core, andthat the company will be testing 160-acredownspacing in its Core area late this year.In the Antelope Extension area, he said,EOG will be further developing bothBakken and Three Forks targets.
EOG also is also active in Leonard andWolfcamp Shales in the Permian Basin,the Fort Worth Barnett Shale Combo, andit has natural gas assets in the Marcellus,Haynesville, Barnett and the Uinta Basin.Internationally, EOG is active in Canada,Trinidad, China, the United Kingdom andArgentina. Worldwide the company saw a42 percent increase in crude oil and con-densate production along with a 40 percent
increase in total liquids production overthe third quarter of 2011.
“With especially strong, consistentindividual well results, EOG’s best playshave become even better,” Papa said in aNov. 5 company statement. “Therefore,based on nine months of robust crude oilproduction, we are setting the bar higherfor the third time this year. EOG hasincreased its 2012 crude oil productiongrowth target to 40 percent from 37 per-cent. Because our outstanding oil resultsalso impact total liquids production, we arealso raising our total liquids productiongrowth target to 38 percent from 35 per-cent and increasing our total company pro-duction target to 10.6 percent from 9 per-cent.” �
PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012 5
OILFIELD COMMUNICATIONS
Telecom Engineering
Project Management
Two-way Radio Systems
Microwave & Satellite Systems
Fiber Optics & Network Cabling
FCC Licensing
Tower Construction & Inspection
NSTI800-490-4693 www.nstinorthdakota.com
� C O M P A N Y U P D A T E
EOG sees good Bakken outputWith focus on two Bakken/Three Forks core areas where recent tests show promising IPs, company continues to test downspacing
EOG_1112 v2-19
Current 5-Rig Development Program - Plan 63 Net Wells
Success with 320-Acre Downspacing in 90,000 Net Acre Core Area - Fertile Wells (2) – IPs 1,732 and 1,258 Bopd + Rich Gas - Test 160-Acre Downspacing Late 2012
Continued Success in Antelope Extension with 320-Acre Spacing- Both Bakken and Three Forks Potential- Hawkeye Well – IP 3,196 Bopd + 5.5 MMcfd Rich Gas
Innovative Crude-by-Rail System- Securing LLS Pricing at St. James with EOG Owned
Offloading Facility
Using EOG Self-Sourced Sand
Expect Secondary Recovery Pilot Results Early 2013
Gas 2%
NGLs6%
Gas 6%
NGLs7%
Stateline WellCore Well
Oil92%
Oil87%
Canada
20 Miles
Bakken Subcrop
EOG Acreage – Bakken/Three ForksBakken Oil Saturated
Core Area
Liberty and Fertile Wells
One of Top Bakken Oil Producers in North Dakota- 56.4 MBoed Gross Production at YE 2011- 7-to-10 Year Drilling Inventory
Note: 162 MMBoe proved reserves in Bakken/Three Forks booked at December 31, 2011.
2012 Areas of Activity
Antelope Extension
WaterInjection
Pilots
Stateline/Diamond
Point Area
Stanley, ND
Antelope WellNGLs11%Gas
11%
Oil78%
In the Antelope Extension area,Thomas said the company isapplying improved fracking
technology to its current wellcompletions: “We recently
completed an outstanding AntelopeThree Forks well, the Hawkeye100-2501H, for 3,196 barrels ofoil per day with 5.5 million cubicfeet per day of rich natural gas.”
Contact Mike Ellerdat [email protected]
6 PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012
By MIKE ELLERDFor Petroleum News Bakken
Magnolia Petroleum said in earlyNovember that drilling is underway
on two Statoil-operated horizontal Bakkenwells, with four additional Statoil wells slat-ed for drilling in early 2013, all from a sin-gle pad in southern Williams County.
The six Statoil wells are known as the“Jake” wells, and of the two currently beingdrilled, the Jake 2-11 1H is targeting theBakken formation, and the other, the Jake 2-11 TFH, is targeting what has been known asthe Three Forks Sanish formation (now tech-nically redefined as the Pronghorn memberof the Bakken petroleum system, see relatedstory on page 1).
Total drilling costs for the two wells areestimated at $10.215 million each. Magnoliahas a net revenue interest of just under 1.5percent.
“Statoil has reported some of the best ini-tial production rates in this region,”Magnolia’s chief operations officer, RitaWhittington, said in a company statement.“With this in mind, we are delighted that thetwo Jake wells have commenced drilling andthat four additional wells in WilliamsCounty, also operated by Statoil, are due tobe drilled in early 2013.”
Norwegian-state owned integrated inter-national giant Statoil moved into the
Williston Basin in October 2011 through itsacquisition of Brigham Exploration, whichat the time held over 375,000 net acres in thebasin.
New Montana acreageMagnolia also said in early November
that is has agreed to pay $4 million toacquire 6,700 net mineral acres on theMontana side of the Bakken, most of whichis in Daniels county, on the Canadian borderin far northeast Montana.
The new Montana acreage is surroundedby 320,000 leased acres that Apache Corp.acquired earlier this year and is alreadydrilling, testing the fringes of the Bakkenpetroleum system, which includes othermembers, such as Three Forks.
In a Nov. 2 statement, Magnolia said the6,700 acres “represent an opportunity for thecompany to build a position in an area wherethe directors believe there is strong prospec-tivity and increasing interest. The acreagelies amongst and is surrounded by Apache’sleases. They are located in Daniels Countyand three surrounding counties in Montana.”
“We believe that this acreage in DanielsCounty, Montana, has the potential tobecome a significant extension for produc-tion from the Bakken/Three Forks Sanishformations,” COO Rita Wittingham said.“Today’s acquisition matches our investment
criteria, namely early, affordable access toliquids rich onshore U.S. formations, wherethe application of modern techniques suchas horizontal drilling may dramaticallyimprove recovery rates and, in the process,substantially increase net production andreserves. The directors believe that withlower drilling costs and multiple pay zones,the economics of drilling to theBakken/Three Forks Sanish formations inMontana are very attractive.”
Apache acquired its 300,000 acres inDaniels County, Mont. in June in a deal withFort-Worth-based Shale Exploration LLC.As reported by Petroleum News Bakken inSeptember, Apache is actively drilling inDaniels County and is targeting both theMiddle Bakken and the Upper Three Forksformations (see Sept. 23 edition ofPetroleum News Bakken).
Also in its Nov. 2 statement, Magnoliasaid “the level of investment being made byApache in the area reflects their recognitionof the scale of the opportunity to generatesubstantial value for shareholders. Apachebelieves their 320,000 net acres holds over1,900 potential drilling locations and that oneach of these up to 16 horizontal wells maybe required to recover reserves, estimated byApache at 1 billion barrels of oil.”
According to both Apache and Magnolia,at 7,000 to 7,400 feet, the Bakken formationis shallower in Daniels County than in North
Dakota, resulting in a lower estimateddrilling cost of $7.5 million per well, asopposed to $10 million in North Dakota.
According to its website, “MagnoliaPetroleum plc is an AIM listed oil and gasproduction company focused on the acqui-sition, exploitation and development of oiland gas properties primarily locatedonshore in the United States. Lead by ahighly skilled management team with over100 years combined experience in the onshore oil and gas industry, the companyalready has interests in over 60 producingproperties and significant acreage in twomajor project areas, the potentially game-changing and highly productive Bakkenshale in North Dakota and the provenWoodford and Hunton formations inOklahoma. The company is also currentlytargeting the Mississippi Formation inOklahoma, a known play with proven andsubstantial reservoirs.”
Magnolia’s “country of incorporation” isGreat Britain, specifically England andWales; again per its websitehttp://www.magnoliapetroleum.com/
As of September 2012, the NorthDakota Department of Minerals showedno production from any North Dakotawells operated by Magnolia. �
� C O M P A N Y U P D A T E
Magnolia buys in MT, partner drills in NDStatoil drilling two new Jake wells in Williams County, four more planned; Magnolia acquires 6,700 acres in Montana
Contact Mike Ellerdat [email protected]
� C O M P A N Y U P D A T E
Legacy upbeat over Spearfish, BakkenBy GARY PARK
For Petroleum News Bakken
Calgary-based Legacy Oil + Gas is continuing tomake gains in the Spearfish petroleum system of
Manitoba and Bottineau County, N.D., claiming “excel-lent production results” in the third quarter.
It estimates that initial productive capability of a num-ber of its wells at Pierson, Manitoba, will range from 120to 280 barrels of oil equivalent per day, while the firstfour wells of the recent program in Bottineau Countyhave come onstream at an average 150 boe per day,despite constrained production to maximize ultimaterecovery.
In its third-quarter report, Legacy said it believesresults at Pierson will lead to superior long-term per-formance, higher per-well reserve booking and the book-ing of additional locations.
Legacy said vertical wells drilled in Pierson over the
first nine months of 2012 have drill, complete, equip andtie-in costs of less than C$1.5 million, while wells drilledin the latest quarter have all-in capital costs of C$1.2 mil-lion-C$1.3 million.
In North Dakota, no new operated wells were broughton production in the quarter, but the company anticipateshaving six additional gross wells onstream in the currentquarter.
Total Spearfish play development drilling inventory isnow estimated at 440 net potential locations (88 percentunbooked), based on eight wells per section.
Using other operators’ results in the play, Legacy saidits location count could increase by 50 percent throughdownspacing.
The company said it is also evaluating the waterfloodpotential of the play and anticipates recovery factors of upto 14 percent, based on analogous pools.
At its Bakken play in southeastern Saskatchewan,Legacy said it has applied leading fracture stimulation
design developed in Heward.Since the start of the third quarter, 11 gross Bakken
wells have been brought on production at average 30-dayinitial rates of 200 boe per day.
The company believes its Bakken play boundarieshave expanded, allowing it to increase its drilling locationinventory to more than 50 net wells in Star Valley.
At Taylorton in Saskatchewan, Legacy has observedimproved waterflood response in the original pilot area,with the production rate increase from one well reachingnearly 50 bpd, while drilling and completion costs havebeen 15 percent lower than historical levels.
At Heward, a pilot waterflood project initiated almosta year ago shows well production rates are up 50 percentto 500 percent from before the initiation of waterfloodand plans are being developed to expand the pilot projectlater this year. �
Contact Gary Park through [email protected]
COMPILED By DARRYL L. FLOWERSFor Petroleum News Bakken
With one exception, the Heath,Petroleum News Bakken’s
Montana weekly oil activity report focus-es on the horizontal well activity in theeastern, northeastern and northwesternpart of the state, where the geologic targetsare repeatable plays that are either part ofthe Bakken petroleum system or somehowrelated to it.
The counties included in this coverageare Glacier, Toole, Pondera and Tetoncounties in northwest Montana, andDaniels, Dawson, Fallon, Garfield,McCone, Prairie, Richland, Roosevelt,Sheridan, Valley and Wibaux counties inthe east and northeast part of the state.Although Petroleum News Bakken hasbegun to report on fledgling industryactivities in the Heath shale of centralMontana, that area is not included in thisreport.
Week of 10/26 to 11/1New locations — horizontal wells
All the new horizontal activity for theperiod is centered in Richland County,with a total of eight wells permitted, alltargeting the Bakken formation.
Five of the wells will fly theContinental Resources Inc. banner: TheJoseph 1-22H, with a SHL at NW NE 22-23N-54E (225 FNL/1980 FEL) and aPBHL of 14,120 feet at SW SE 22-23N-54E (660 FSL/1980 FEL); the Reimann 3-23H, with an SHL at NW NE 23-23N-55E(305 FNL/2540 FEL) and a PBHL of19,978 feet at SW SE 26-23N-55E (200FSL/2640 FEL); the Thomas 3-27H, withan SHL at SE SW 27-23N-56E (225FSL/2000 FWL) and a PBHL of 19,924feet at NE NW 22-23N-56E (660FNL/2000 FWL); the English Federal 1-5H, with an SHL at SW SE 5-26N-53E(299 FSL/1701 FEL) and a PBHL of18,662 feet at NW NE 32-27N-53E (200FNL/1980 FEL) and the Baird 1-34H,with an SHL at NW NE 34-27N-53E (305FNL/2300 FEL) and a PBHL of 18,740feet at SW SE 3-26N-53E (200 FSL/1980FEL).
Slawson Exploration Co. Inc. wasgreen lighted for two Bakken wells inRichland County: the Hobo 1-16H, withan SHL at NW NW 16-24N-52E (250FNL/735 FWL) and a PBHL of 13,544feet at SW SW 16-24N-52E (250 FSL/735FWL) and the Knave 1-9-4H, with an SHLat NW NW 16-24N-52E (250 FNL/760FWL) and a PBHL of 16,008 feet at W2W2 4-24N-52E (250 FNL/760 FWL)
Wrapping up the Bakken wells inRichland County is the Pine 12-1 1H,operated by Kraken Operating LLC. Thewell has an SHL at SE SE 12-24N-51E(280 FSL/740 FEL) and a PBHL of14,598 feet at W2 E2 1-24N-51E (660FNL/1760 FEL).
Re-issued locationsAll three Re-Issued Locations for the
reporting period are in Richland County.Slawson Exploration Co. Inc. wasapproved for two wells: the Dirk Federal1-22-21H, with an SHL at NW NW 23-21N-59E (587 FNL/286 FWL) and aPBHL of 20,667 at NW NW 21-21N-59E(750 FNL/250 FWL) and the Boomerang1-4H, with an SHL at SE SE 36-21N-59E(200 FSL/760 FEL) and a PBHL of15,436 at SW SW 4-20N-60E (700FSL/773 FWL).
Oasis Petroleum North America LLCwon approval for the Stilt Federal 2658 42-
22H, with an SHL at SE SW 22-26N-58E(200 FSL/1670 FWL) and a PBHL of20,916 feet at SW SW 34-26N-58E (200FSL/550 FWL).
All the Re-Issued Locations will aimfor the Bakken Formation.
CompletionsIn Richland County, Continental
Resources Inc. reported the completion ofthe Abercrombie 1-10H. The Bakken for-mation well has an SHL at SE SW 10-27N-53E (305 FSL/2450 FWL) and aBHL of 18,682 feet at NE NW 3-27N-53E(257 FNL/1977 FWL). The well turned inan IP of 451 BOPD; 483 MCFPD and 515BWPD.
Week of 11/2 to 11/8New locations
In Musselshell County, North RangeExploration LLC has been approved forthe Barile 2-7, a Heath formation wellwith a SHL at NE SW 7-10N-28E (3014FNL/2056 FWL). The well has a proposeddepth of 4,100 feet.
New locations — horizontal wellsThere were three new horizontal loca-
tions approved during the reporting period,all in Richland County and targeting theBakken formation.
Whiting Oil and Gas Corp. was greenlighted for the Sundheim 44-8-3H, with anSHL at NW NE 17-25N-58E (345FNL/1925 FEL) and a PBHL of 21,045feet at NW NE 5-25N-58E (240FNL/1980 FEL).
Slawson Exploration Co. Inc. wonapproval of two wells: the Curmudgeon 2-20H, with an SHL at SE SE 20-24N-52E(600 FSL/280 FEL) and a PBHL of13,908 feet at SW SW 20-24N-52E (250FSL/735 FWL) and the Scavenger 2-28H,with an SHL at NE NE 28-24N-52E (350FNL/280 FEL) and a PBHL of 13,992 feet
at NW NW 28-24N-52E (750 FNL/250FWL).
Re-issued locationsIn Rosebud County, Fidelity
Exploration & Production Co. wonapproval for the Sun Coulee 24-14H. Thewell is heading for the Heath formationwith an SHL at SE SW 14-9N-34E (330FSL/2310 FWL) and a PBHL of 9,580feet at NW NW 14-9N-34E (380 FNL/380FWL).
Permit modifications/correctionsIn Richland County, Oasis Petroleum
North America LLC was granted PermitModifications / Corrections for twoBakken formation wells: the Stilt Federal2658 42-22H, with an SHL at SE SW 22-26N-58E (200 FSL/1670 FWL) and aPBHL of 20,795 feet at SW SW 34-26N-58E (248 FSL/1506 FWL) and the DianneFederal 2658 42-22H, with an SHL at SESW 22-26N-58E (200 FSL/1770 FWL)and a PBHL of 20,332 feet at NE NW 15-26N-58E (200 FNL/1770 FWL).
CompletionsSlawson Exploration Co. Inc. reported
the completion of the Dart (Federal) 1-30H, a Richland County well with anSHL at NW NW 30-21N-59E (290FNL/1250 FWL) and a BHL of 14,643feet at SW SW 30-21N-59E (252FSL/882 FWL). The well taps into theBakken formation. �
� D R I L L I N G & C O M P L E T I O N
Montana weekly oil activity reportsAbbreviations & parameters
With a few exceptions, the
Montana weekly oil activity report
includes Bakken petroleum system
horizontal well activity in the eastern,
northeastern and northwestern part
of the state.
Following are the abbreviations used
in the report and what they mean.
BHL: bottomhole location
BOPD: barrels of oil per day
BWPD: barrels of water per day
IP: initial production
MCFPD: thousand cubic feet per day
PBHL: probable bottomhole location
SHL: surface hole location
Darryl L. Flowers, a contributor to Petro-leum News Bakken, is the publisher of the SunTimes in Fairfield, Mont., www.fairfieldsun-times.com, and can be reached [email protected].
PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012 7
There were three new horizontallocations approved during the
reporting period, all in RichlandCounty and targeting the Bakkenformation. Whiting Oil and GasCorp. was green lighted for the
Sundheim 44-8-3H, with an SHLat NW NE 17-25N-58E (345
FNL/1925 FEL) and a PBHL of21,045 feet at NW NE 5-25N-58E
(240 FNL/1980 FEL).
By GARY PARKFor Petroleum News Bakken
PetroBakken, which is gearing up tofly solo when released by its parent
company Petrobank Energy andResources on Dec. 31, is setting ambi-tious goals for 2013, including a C$975million capital budget to drill new wellsand hike tight oil production from itsBakken and Cardium acreages.
“We are cautiously excited,” ChiefExecutive Officer John Wright told ana-lysts, while injecting a note of reality bysuggesting the rewards from some of theassets in Saskatchewan and Alberta “aregoing to come over the next number ofyears, not the next number of quarters.”
But he announced that some of thecapital program planned for the firstquarter of 2013 is being accelerated intothe current quarter.
“This increase is due to an active land
acquisition strategy in a potential newresource play in Western Canada wherewe have acquired 218 net sections (almost140,000 acres) and to reduce mobiliza-tion expenses during the winter.”
Wright did not locate the new play,although PetroBakken said it made C$25million in unplanned spending at govern-ment land sales and through other deals toacquire the property, adding about 50 per-cent to its emerging play portfolio oflands prospective for the Nordegg,Montney, Beaverhill Lake and Duvernayformations.
Drive for productionIt’s all part of the company’s drive to
achieve an exit production rate for 2012of 52,000-56,000 barrels of oil equiva-lent per day, compared with an average38,503 boe per day in the third quarterand early November output of 45,000 boeper day.
Wright said next year’s budget willalso be spent on drilling and well com-pletions, facility construction and opti-mization efforts “which we expect willpositively impact production levels inearly 2013.”
He said there is a special emphasis onaccelerating facility construction insoutheast Saskatchewan to reduce down-time during the spring melt in 2013.
PetroBakken holds 450 net sections(288,000 acres) in the Bakken play inSaskatchewan and 350 net sections(224,000 acres) in Alberta’s Cardium.
The company has earmarked C$30million in additional capital to buildinfrastructure and C$30 million to drill15 Cardium wells in the place of 10Bakken wells.
“We currently have 17 drilling rigs,six frack spreads and 13 completionservice rigs working in the field,” saidRene LaPrade, senior vice president ofoperations. “From now until the end ofthe year we plan to drill 42 more wellsand bring 74 wells into production.”
He said a new production facility inthe Cardium business unit at Brazzeau inSaskatchewan is also expected to becompleted by the end of November, set-ting the stage for incremental output of2,500 boe per day.
Disagreement among analystsAnalysts have been dubious about
PetroBakken’s chances of achieving itsexit rate production, although JeremyKaliel of CIBC World Markets said thegoal is within reach.
“Contrary to popular belief, webelieve PetroBakken will comfortablymeet its 2012 exit guidance,” he wrote,adding the “grey lining to the quarter’ssilver cloud” is the extra capital spend-ing.
The Bakken unit averaged 15,676 boeper day in the third quarter, up 6 percentover the second quarter, as the majorityof production shut-in during the springbreakup was restored. Drilling in the playincreased through the latest quarter to 40net wells, with 31 net wells brought onproduction. Currently, the company hasseven drilling rigs operating in the unitand has drilled 17 wells since quarter-end, with 15 net wells waiting to be com-pleted and brought online.
In the Alberta Cardium output aver-aged 14,721 boe per day, down 7 percentfrom the second quarter, due to a delayedstart in the second quarter capital pro-gram and restricted production anddowntime from routine maintenance ofindividual wells and facilities.
System near completionA battery and gathering system
expansion in the Brazzeau area of WestPembina is expected to be completed byNovember 30 and will significantlyreduce current well restrictions, reducingtrucking expenses and add more than2,500 boe per day of production.
During the third quarter, PetroBakkendrilled 32 net wells and brought 15 netwells on production in the Cardium, mostof which were in the latter half of thequarter and had only minimal impact onproduction.
The company currently has eightdrilling rigs operating in the Cardiumand has drilled 16 net wells since the endof September, with 29 net wells in inven-tory waiting to be completed or broughton production.
In the Alberta-British Columbia unit,PetroBakken has 2,578 boe per day ofproduction and has compiled an invento-ry of more than 294 net sections(188,160 acres) of land prospective fornew oil resource plays in one or more ofthe Nordegg, Montney, Duvernay andSwan Hills zones. It plans to drill sixwells in the current quarter targetingSwan Hills or Montney zones. �
� C O M P A N Y U P D A T E
PetroBakken set to take offFledgling Bakken, Cardium company earmarks C$975M of capital spending for 2013, pulling some spending forward to achieve ’12 rate
8 PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012
Advertising has its benefits with Petroleum News Bakken
B A K K E N
Introducing Petroleum News BakkenYou’ve heard that newspaper advertising creates awareness, telling the marketplace you’re a player.
But creating awareness isn’t all Petroleum News Bakken does for you.
Whether you’re seeking attention from the investment community, looking for new customers, or affirming your leadership, we go “beyond advertising” to market your business.
For example, Petroleum News Bakken’s contracted advertisers are included in each issue in a Bakken Players company list alongside Oil Patch Bits, which features three or four advertisers each issue, announcing everything from new hires to expansions and awards.
There’s more.
Your firm will be included in our monthly Bakken Oil & Gas Directory that companies inNorth Dakota, Montana, Saskatchewan, Alberta and Manitoba turn to purchase goods or services—or make an investment. The directory, which debuts in September, will give you the chance to promote your business through articles, briefs, standalone photos, and listings that describe what you have to offer.
To find out more information on advertising, please contact:Susan Crane at [email protected] or 907.770.5592Bonnie Yonker at [email protected] or 425.483.9705 Julie Bembry at [email protected] or 907.522.9469
itittstising has itsss benesrevAd
BawemeumtrotPith uw u BassweeNtroleum NeePefits with
nekk
K KB A
NEK
affirming youWhether you’
But creating
you’re a playou’ve heardY
roductIn
ur leadership, we go “beyond advertisi’re seeking attention from the investme
awareness isn’t all Petroleum News B
.ryed that newspaper advertising creates a
ws Baeoleum NrtePcing
ng” to market your business., looking for new customyent communit
akken does for you.
awareness, telling the marketplacenekak
mers, or
chance to prservices—orNorth Dakotaour firm wilY
s more’There
each issue, aBakken PlayeFor example,
omote your business through articles, wyr make an investment. The director
a, Montana, Saskatchewan, Alberta anl be included in our monthly Bakken O
e.
announcing everything from new hires ers company list alongside Oil Patch B
s contracted’ Petroleum News Bakken
briefs standalone photos and listings, will give yorwhich debuts in Septembe
d Manitoba turn to purchase goods oril & Gas Directory that companies in
to expansions and awards.its, which features three or four advertadvertisers are included in each issue
s thatu the
tisers e in a
Julie Bembry
onkYBonnieSusan Craneo find out mT
describe whachance to pr
y at [email protected] or
ker at [email protected] e at [email protected] or more information on advertising, plea
.rat you have to offeomote your business through articles,
r 907.522.9469
or 425.483.9705907.770.5592
ase contact:
briefs, standalone photos, and listings
s that
The Bakken unit averaged 15,676boe per day in the third quarter,
up 6 percent over the secondquarter, as the majority of
production shut-in during thespring breakup was restored.
Contact Gary Park through [email protected]
By MIKE ELLERDFor Petroleum News Bakken
Rangeland Energy LLC, the SugarLand, Texas-based company that
recently built the large, open access crudeoil loading terminal at Epping inWilliams County, N.D., known as COLT,announced earlier in November that it isselling the facility to Kansas City-basedInergy Midstream for $425 million. Thedeal, which is expected to close inDecember, marks Inergy’s first ventureinto the Williston Basin and its first ven-ture into crude oil transport.
The COLT facili-ty, which went intoservice in May,includes 120,000barrels per day railloading capacity onBurlington NorthernSanta Fe unit trains,eight truck unload-ing bays with a totalcapacity of 64,000barrels per day, and 600,000 barrels ofdedicated customer storage capacity. TheCOLT facility is currently connected tothe Banner Highland Partners gatheringsystem, and an agreement is in place toconnect the facility to the Bear Trackergathering system.
With two 8,700-foot rail loops, thefacility can load a 120-car unit train inless than 10 hours, according to Inergy.The rail-loading facility is covered, whichavoids slowdowns in harsh to winterweather. The first loaded BNSF unit trainleft the COLT facility on June 5.
In addition to the COLT facility, theRangeland deal includes the COLTConnector, a 21-mile, bi-directional 10-inch pipeline that extends to the east andconnects the COLT facility with the DryFork Terminal located at the BeaverLodge/Ramberg pipeline hub junctionsouth of Tioga. There, the COLTConnector pipeline connects withEnbridge and Tesoro pipelines, andaccording to Inergy, has potential forfuture connection to such existing andproposed pipelines operated by Oneok,Hess and TransCanada at Dry Fork. TheDry Fork terminal has a working storagecapacity of 120,000 barrels.
Expansion potentialAccording to Bill Gautreaux, president
of Inergy’s NGL supply logistics businessInergy Services, the COLT facility coversapproximately 318 acres, whichGautreaux says provides Inergy with sig-nificant expansion capacity, includingopportunity for a second rail loop. A sec-ond rail loop could provide an additional40,000 to 80,000 barrels of unit trainloading capacity, although Gautreaux saidan additional 40,000 barrels capacity “is amuch easier grab than perhaps the 60,000or 80,000.”
There is also room for additional stor-age according to Gautreaux. There arecurrently five 120,000 barrel storagetanks and he believes the facility is capa-ble of holding up to 15 to 20 such tanks.
About InergyInergy is a publicly traded master lim-
ited partnership historically focused onnatural gas and natural gas liquids withoperations in California, Texas, New Yorkand Pennsylvania. Inergy Midstream is
engaged in the development and opera-tion of natural gas and NGL transporta-tion, storage and serving refiners in thenortheast and California.
In August, Inergy sold its retailpropane operations to New Jersey-basedSuburban Propane Partners for $1.8 bil-lion. At the time, Inergy was the thirdlargest propane retailer in the countrywith retail outlets in 33 states. With thedivestiture of the propane operations,Inergy had repositioned the partnership“as a pure-play midstream business with astrong financial position,” according toInergy Chairman and CEO JohnSherman.
The company started as a propaneretailer, but diversified into midstreamnatural gas and NGLs. Gautreaux toldPetroleum News Bakken that over theyears the retail propane business changedwith increasing prices and conservationefforts, and his company saw slightalthough consistent declines in demandyear over year. As the midstream compo-nent grew, the company became abouthalf midstream and half retail propaneand a decision was made to divest thepropane retail component and focus onmidstream opportunities. At that point thecompany became 100 percent midstream,Gautreaux said, and it began looking into
midstream acquisitions, which led it toRangeland and the Bakken COLT facility.
“When you look at our criteria, whatassets do we have, what is our focus andwhat are we best at, the Bakken deal hiton a couple of areas, one being that it getsus into the crude business, which wedecided already makes a lot of sense to bein. It was just a question of where. And itis very compatible with our NGL busi-ness because we’re already serving thoserefiners on the east coast and the westcoast in PADD I and PADD V,” Gautreauxtold Petroleum News Bakken.
He said the operations at the COLTfacility are similar to what Inergy does inits midstream operations. For example,when you look at trucking crude in, put-ting it in into storage, putting it back outthrough a terminal or a pipeline or intorail cars, and serving producers with take-away on the one hand but also creatingdeliverability for refiners, the COLT proj-ect, Gautreaux said, “fits us like a glove.”
With the Rangeland acquisition,Inergy now moves into the crude trans-portation business in the Williston Basin,and plans to provide Bakken crude torefiners in the northeast (PetroleumAdministration for Defense District orPADD I) and California (PADD V).
A portion of the funding for the acqui-sition will come from an agreementInergy has to sell institutional investors$225 million in discounted InergyMidstream common stock. In addition,Inergy expects to access long-term debtcapital markets prior to closing the deal,but the company has obtained $225 mil-lion in committed unsecured bridgefinancing to ensure sufficient availablecapital when the deal closes. Throughthese funding mechanisms, Inergy willhave fully equity financed the transaction.
Executive perspectives“This is an exciting day for both com-
panies. It’s also a great day for the crudeoil industry in the Bakken, which will bewell served by Inergy’s dynamic new
� M O V I N G H Y D R O C A R B O N S
Inergy new ND transport playerKansas City midstream company acquires Rangeland’s COLT facility at Epping, ND, for $425 million; a perfect fit for Inergy
PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012 9
see INERGY page 10
BILL GAUTREAUX
RA
NG
ELA
ND
EN
ERG
Y
presence in the play,” said RangelandCEO Chris Keene in a Nov. 5 pressrelease. “Inergy’s CEO, John Sherman,and the rest of his very seasoned leader-ship team have the experience and desireto serve our current customers with dis-tinction and aggressively grow the busi-ness we’ve developed at COLT. We start-ed with a piece of paper and a vision andnow, just three years later, COLT is wellpositioned to be the premier crude oil ter-minal in the Bakken. I’m very proud ofwhat the Rangeland team has accom-plished in North Dakota in a very shortperiod of time. The scope, quality andefficiency of the storage, rail and pipelinefacilities we’ve put in place are unparal-leled in the market,” Keene said.
In a Nov. 5 conference call discussingthe transaction, Inergy Chief Operating
Officer John Sherman said that “the loca-tion, the scale, and capabilities of this com-plex are outstanding. We inherited a solidcustomer base that we expect to grow, andthis asset was designed for cost-effectiveexpansion that we believe will result inhigh-return bolt-on projects for ourinvestors.”
“The COLT Hub is an attractive assetthat provides refiners with crucial access toBakken-sourced crude oil and offers pro-ducers reliable takeaway capacity to premi-um demand markets,” Inergy’s Gautreauxsaid in a Nov. 5 press release. “We areexcited to acquire and grow this business.”
In a Nov. 5 conference call, InergyPresident Brooks Sherman said, “crudeand NGL logistics are highly compatible,and it’s a good platform for us for growth.This is a newly constructed crude termi-nalling system, an integrated network ofrailcar loading, pipeline and storage assets,creating a source of liquidity and access tocrude oil import-dependent PADD I and
PADD V markets. So today, this asset issupplying PADDs I and V that are other-wise import-dependent.” Sherman alsosaid the COLT hub is the largest rail termi-nal in the Bakken with the largest rail ter-minal storage capacity, and provides accessto multiple downstream markets. “It’s real-ly a first-mover advantage in building aregional crude hub,” Sherman said.
Inergy Vice President for CorporateDevelopment Will Moore said BNSF isrunning two to three unit trains out of theBakken each day, and the railroad has saidpublically that it can run up to 14 if neces-sary. And Moore is very impressed withthe round trip times to California. “We’veactually been seeing trip times of five daysround trip between this facility and PADDV, and we think that’s phenomenal,” Mooresaid.
90% contractedAccording to Sherman, 90 percent of
the capacity of the facility is either cur-
rently contracted or committed underlong-term take-or-pay contracts, and overthe course of the next 11 months, newcontracts coming online will lead to thefull utilization of 120,000 barrels per dayof rail capacity.
Inergy’s Gautreaux said the company’sBakersfield, Calif., NGL plant manage-ment will oversee operations at the COLTfacility, but Inergy is retaining all of theexisting operating employee relationshipsat COLT. “All of the employees at COLTwho actually operate the facility will bestaying with us,” Gautreaux told PNB.
Inergy’s John Sherman said the compa-ny is looking forward to “welcomingRangeland’s customers and the highly tal-ented employees at COLT into the Inergyfamily. The COLT assets provide Inergywith a solid position in this prolific regionand are a great complement to our existingmidstream operations.”
Prior to acquiring the COLT facility,Gautreaux told Petroleum News Bakkenthat Inergy was approached by customerson the West Coast who hold Bakkenacreage about building a crude receiptfacility at Bakersfield because ofBakersfield’s proximity to Californiarefineries and crude pipelines. That,Gautreaux said, is an option that Inergywill evaluate.
What’s next for Rangeland?In the transaction, Inergy will acquire
Rangeland Energy LLC assets, which con-sist of the COLT facility and Connectorpipeline, but the Rangeland managementteam is retaining the company name, andaccording to a press release, Rangeland“will continue to pursue midstream devel-opment opportunities across NorthAmerica.” Rangeland’s Keene recentlytold the Houston Chronicle thatRangeland has looked at the Utica, EagleFord and the Permian Basin plays, but asyet has made no decisions about futureventures.
Rangeland was founded in 2009 withfinancial backing in private equity com-mitments from San Antonio-based EnCapFlatrock Midstream. �
10 PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012
CO
URT
ESY
RA
NG
ELA
ND
EN
ERG
Y
Exterior view of the rail loading canopy at COLT taken in April before completion.
continued from page 9
INERGY
Contact Mike Ellerdat [email protected]
By GARY PARKFor Petroleum News Bakken
The Canadian and Alberta govern-ments have made it clear they will
not live on hope, nor will they get boggeddown by doubt when it comes to thefuture of TransCanada’s Keystone XLpipeline under a re-elected PresidentBarack Obama.
Prime Minister Stephen Harper, on theheels of two trips to China this year, wasin India during the US election makinghis case for foreign investment in theAlberta oil sands in return for access toCanadian energy supplies.
Alberta International andIntergovernmental Relations Minister CalDallas followed the election by heading tothe Middle East for two weeks in an effortto drum up C$120 billion of energyinvestment and to sell some of the world’soil giants on Alberta oil and gas technol-ogy.
Both trips were scheduled long beforethe outcome of the election was knownand would have occurred regardless ofwhether Obama or Mitt Romney claimedthe White House.
They are all closely linked to the driveby both governments to diversify andexpand Canada’s energy sales outsideNorth America.
And they mirror the unease withingovernment and industry circles over thechances of Obama approving the C$7.6billion Keystone XL to deliver oil sandscrude to Gulf Coast refineries in Texas.
Continued advocatingCanada’s Natural Resources Minister
Joe Oliver said his government will con-tinue advocating for the pipeline andexpressed confidence that it will getapproved.
“It is clearly in the U.S. national inter-est in terms of national security, jobs andeconomic growth,”he said.
Alberta EnergyMinister KenHughes said his gov-ernment will “con-tinue to advanceAlberta’s interests inany way that we pos-sibly can. Watch us.We will be executinga game plan over time.”
A spokesman for TransCanada arguedKeystone XL “fits very well” withObama’s energy strategy of moving theU.S. away from its dependence on foreignoil, including 500,000 barrels per day ofheavy crude from Venezuela and Mexico.
He said the company is also preparingto rebuff “misinformation” about thepipeline by explaining “the facts of theproject as we see them and its benefits.”
Al Monaco, chief executive officer ofrival crude exporter Enbridge, said it is“in everybody’s interest to get new infra-structure built and I think that has beenthe Obama’s administration’s view to thispoint. I think we will see (that position)going forward.”
One issue Romney was never accusedof wavering on during the U.S. campaignwas a pledge to authorize the pipeline onDay One of his administration — a com-mitment he made again only two daysbefore the vote.
Obama noncommittal Obama has been noncommittal since
rejecting TransCanada’s application inJanuary, arguing there had not beenenough time to complete an environmen-tal analysis — a move seen as appeasinghis supporters in the powerful environ-mental movement.
The U.S. State Department and depart-ments in the Nebraska government arereviewing a new application, which is
designed to reroute a portion of the lineaway from sensitive areas in Nebraska,including the Ogallala Aquifer.
Obama’s victory has inspired environ-mental leaders who have turned KeystoneXL into their own benchmark fightagainst the oil sands.
“The new Obama administrationshould be an opportunity for Canadiansand Americans to work together to fightclimate change,” said Danielle Droitsch,Canada program director for the NaturalResources Defense Council.
“Now is the time to be at odds overdirty energy sources such as tar sands. Itis the time for North American leadershipin tackling one of the world’s most press-ing threats.”
Uncertainty The uncertainty has spread deep into
political and industry ranks, with DavidWilkins, the former U.S. ambassador to
Canada and now a partner in a SouthCaroline-based law firm that advisesCanadian energy companies, said he isunsure about Keystone XL.
His best advice to Canada was to keep-ing pushing for approval and be vocalabout its position.
The current ambassador, DavidJacobson — selected by Obama —agreed that speedy approval of thepipeline under Obama is uncertain.
“This thing has got to move in anorderly fashion,” he said, emphasizingthat Keystone XL would not be a hugepart of the world’s largest two-way energyrelationship.
Andrew Finn, program associate at theCanada Institute of the Woodrow WilsonInternational Center for Scholars inWashington, D.C., urged Canada to makethe case that the oil sands will be pro-
� M O V I N G H Y D R O C A R B O N S
Fate of Keystone XL still uncertainObama’s win revives controversial pipeline as hot energy issue; no clear message from re-elected president where he stands
PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012 11
BARACK OBAMA
JOE OLIVER
STEPHEN HARPER
see KEYSTONE XL FATE page 12
SHA
NE
LASL
EY
By RAY TYSONFor Petroleum News Bakken
Saying that Kodiak Oil & Gas Corp. ison a mission from above may be under-
stating the company’s resolve to increaseBakken-Three Forks production in the U.S.Williston Basin, its sole producing region(see map adjacent to this article).
The Denver-based E&P independent, ona steep climb for a relatively short period oftime, is now looking to exit 2012 producinga net 27,000 barrels or more of oil equiva-lent per day.
This compares toaverage productionof 17,190 boe per dayfor this year’s thirdquarter, 13,998 boeper day for the priorquarter, and just4,509 boe per day inthe year-ago thirdquarter.
Put another way,Kodiak’s productionincreased 24 percent just from the secondto third quarter of 2012, and rocketed 281percent when compared to the year-agothird quarter.
Output could be extraordinaryObviously, Kodiak’s output would again
have to increase at a good clip throughoutthis year’s fourth quarter to reach a year-end exit of 27,000 boe per day. But, if thisprojected rate remains steady or continues
to grow over the course of next year’s firstquarter, as it should, the results would beextraordinary.
“With a large number of wells sched-uled to be completed in the fourth quarter,we should see that same upward trajectorycontinue over the coming quarters,” LynnA. Peterson, Kodiak’s chairman and chief
executive officer, said in a Nov. 2 confer-ence call with analysts and investors.
However, this kind of spirited produc-tion growth does not come cheap, asKodiak’s own capital expenditure projec-tions show.
Capex reaches $750 millionSince the beginning of the year,
Kodiak’s capex budget has been increased28 percent from $585 million to $750 mil-lion, with much of the additional invest-ment allocated to its non-operated proper-ties, where the company has experienced amuch larger number of wells drilled thisyear than anticipated.
Kodiak budgeted $45 million for thesenon-operated interests, but invested morethan $100 million through Sept. 30, andanticipates an additional $40 million innon-operated capital investment by year-end.
“These non-operated interests are adja-cent to our core acreage blocks, and webelieve it is important to elect to participatein the drilling of the wells in order to retainour economic interests in the lands anddevelop our Williston Basin asset base,”Peterson said. “The increased investment inboth operated and non-operated propertiesshould result in an acceleration of our pro-duction as we exit the year and continueinto 2013.”
Kodiak increases barrowingKodiak said it intends to pay for the
spending increase through a combinationof barrowing and cash flow from opera-tions. Kodiak’s lenders recently agreed to
increase the company’s borrowing base to$450 million from the previous $375 mil-lion.
Over the past year Kodiak also hasincreased the number of its employees 73percent from 60 to 104, giving the compa-ny added strength in the field but causingthe company’s general and administrativeexpenses to more than double to $9.1 mil-lion from $4.5 million.
But the company also has taken majorsteps to decrease operational costs throughefficiency moves, which includes thereduction of drilling days from spud to rigrelease. On average drilling time has beencurtailed from 25 to 20 days, with certainrigs released in less than 20 days. Last yeardrilling times averaged nearly 35 days.
“As a result we feel that we will drillmore wells with our current seven rig countin 2013 than we did with eight in 2012,”Peterson said, noting that the company hasemployed a second well completion crewsince min-October. “The two crews areworking efficiently at this time and thenumber of days to complete wells contin-ues to improve. As we move to the fourthquarter, our goal is to complete approxi-mately 23 net operated wells.”
Wells increase to 55For the entire year, the estimated num-
ber of net wells scheduled for completionhas been increased from 46 to about 55. Asa result of the additional wells, the compa-ny has increased capital spending on itsoperated properties by nearly $90 million.
12 PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012
Exceptional Accommodations,
SOLSTENHOTEL
Meals and Amenities
Reserve your rooms now!www.SolstenHotel.com
Solsten Hotel is a division of SolstenXP Lodging, LLC,
a member of the SolstenXP group of companies
Visit our website or call for more information:701-774-7580
Have a need for another location? SolstenXP has other facilities available, to build on your site or area. Contact: [email protected] or call (701) 774-7583.
145th Ave. NW
Hw
y. 2
Hwy. 2
Hw
y. 1804
85Sloulin Field International
AirportWilliston
Trenton
85
Located between Williston and Trenton
duced, “it’s just a matter of where it’sgoing. We can’t get off fossil fuels tomor-row.”
But Adams Brooks, an advisor toPPHD Limited Partnership, a small ener-gy investment firm, told a Calgary audi-ence there is no chance that Keystone XLwill be built under an Obama administra-tion, which he said will have an “anti-fos-
sil fuel orientation. “They believe that government knows
best about how we should live and con-sume energy,” he said.
“So be prepared for (rejection ofKeystone XL). That’s going to put somepressure on Canada to figure out how toget your oil and gas out of the country,”Brooks said. �
continued from page 11
KEYSTONE XL FATE
Contact Gary Park through [email protected]
� C O M P A N Y U P D A T E
Extraordinary production growthKodiak Oil & Gas boosts 2012 capital spending 28%; increases staff 73% and production 281% since same period last year
LYNN A. PETERSON
see KODIAK GROWTH page 19
PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012 13
� C O M P A N Y U P D A T E
Enerplus backs off Fort Berthold PETROLEUM NEWS BAKKEN
Calgary-based Enerplus posted a 10 percent gain to12,800 barrels of oil equivalent per day from its
third-quarter production at the Bakken tight oil play inthe Fort Berthold Indian Reservation in North Dakota,but expects to trim spending in that play in 2013.
“Economics in Fort Berthold are still attractive.However, the combination of lower oil prices and‘sticky’ costs has eroded significant margins with rateof returns under strip pricing for our Bakken wells inthe 30 percent to 40 percent range,” Ian Dundas, thecompany’s executive vice president and chief operatingofficer, told a third-quarter earnings call.
“We’re not prepared to adjust our spending plansbeyond our current two-rig program until we see sus-tained improvements in cost performance,” he said.
Underscoring its measured strategy, Enerplus said itexpects to set a 2013 company-wide capital budget ofC$680 million, 20 percent below this year’s projectedspending, after booking a C$63 million net loss for thelatest quarter due mainly to non-cash charges involvingasset write-downs. The cuts will be made across all thecompany’s properties, including its Marcellus andCanadian assets, Dundas said in a Q&A session thatfollowed the call.
“Our tight oil project at Fort Berthold, North Dakotacontinues to attract the lion’s share of our capital with$80 million invested there during the quarter. Year-to-date, we spent approximately $370 million in NorthDakota,” he said.
The company’s efforts in 2012 are “focused ongrowing production, improving our cost structures,managing lease expiries and advancing our understand-ing” of the Three Forks formation in the Bakken petro-leum system.
Enerplus drilled 24 wells year-to-date on its FortBerthold acreage, 80 percent of which were long hori-zontals with 24 net wells brought on-stream.
Going back to 28-29 frack stages“We’ve tested a number of different completion
designs this year to understand if we can enhance welleconomics with smaller fracks. While we’ve seen costreductions, these wells have not met our performanceexpectations and we believe we are sacrificing return,”Dundas said.
As a result, the company is “moving back closer” toits original design; its recent completions for a 9,800foot lateral have 28 to 29 stages, with approximately9,000 pounds of ceramic proppant per stage and highergel weighting, he said.
Although the increased stages put “cost pressure” onEnerplus’ frack jobs, Dundas said the company was“starting to see cost release in other line items, suchproppants, which are down about 20 percent per poundfrom the beginning of the year.
Drilling performance has also improved “signifi-cantly” since January, “in part related to eliminatingour two least efficient rigs. Drilling days from rig up toTD are averaging about 30 days for a single well drilledon a pad,” Dundas said, giving Enerplus a per welldrilling cost of $5 million and a total drilling and com-pletion cost, before facilities and tie-in, of less than $12million.
“This is net,” he said, noting “we’ve drilled moresingle wells than multiple wells on pads. We have one
four-well pad that we drilled earlier this year and wesaw the average drilling days drop to under 25 days.”
Once the company starts development drilling in2013, moving to more high-density pads, it should seea further reduction in cost, which Dundas estimatedwould be a half million dollars per well.
Three Forks model 70% as productive as BakkenEnerplus tested seven Three Forks wells in 2012, and
although it has seen some “variability,” Dundas said“we’ve been quite encouraged by the results,” notingthe company is modeling its Three Forks wells to be“approximately 70 percent as productive” as a Bakkenformation well.
“Our best Three Forks well with any significant run-time is a 4,500 foot short lateral with about 10 monthsof production history. This well will produce more than100,000 barrels in its first year,” he said.
Next year Enerplus plans to drill “another half dozenwells in Three Forks.”
Price differentials volatileEnerplus is shipping 70 percent of its Bakken crude
by pipeline on the Enbridge and Duke systems with theremaining 30 percent going by rail to the Gulf Coast.Differentials continue to be very volatile, Dundas said.
“We’ve seen Fort Berthold field differentials tightenfrom a $15 barrel discount to WTI in the first half ofthe year to less than $10 in September. And in October,we saw differentials in the $2 per barrel range,” he said.
“While differentials remain tight in November, wecontinue to expect volatility in the region and are con-tinuing to forecast wider differentials in 2013. Our railcapacity has been providing some pricing productionwith approximately 15 percent of our total Bakken pro-duction being priced off of Gulf Coast markets whichhave been more closely linked to Brent pricing,”Dundas said. �
Enerplus tested seven Three Forks wells in2012, and although it has seen some
“variability,” Dundas said “we’ve been quiteencouraged by the results,” noting the company
is modeling its Three Forks wells to be“approximately 70 percent as productive” as a
Bakken formation well.
By JAMES MACPHERSON The Associated Press
North Dakota already has set an oil pro-duction record for the fifth consecu-
tive year and the state is on pace to best theprevious mark by more than 50 million bar-rels.
The state Department of MineralResources said Nov. 13 that crude produc-tion through September totaled more than173.9 million barrels, up from the record152.9 million barrels set last year. (See relat-ed charts on pages 14 and 15 of this issue,including the adjacent Top 50 North Dakotaproducers.)
North Dakota produced 21.8 million bar-rels in September, up from 21.7 million bar-rels in August, agency spokesman AlisonRitter said.
Oil production numbers typically lag at
least two months. Ritter said its “pretty fea-sible” that the state will end the year at morethan 200 million barrels, once October,November and December production resultsare factored.
Trails only TexasSteve Grape, the domestic reserves proj-
ect manager for the U.S. Department ofEnergy’s information administration, saidNorth Dakota accounts for nearly 12 percentof total U.S. crude production, up from 1percent less than five years ago.
North Dakota trails only Texas in oil out-put. North Dakota has risen from the ninthbiggest oil state just six years ago withimproved horizontal drilling techniques inthe rich Bakken petroleum system, whichincludes the Bakken and Three Forks forma-tions, in the western part of the state.
“No way has North Dakota’s oil produc-tion been a straight line,” Grape said. “Thegrowth has been amazing.”
Ron Ness, president of the North DakotaPetroleum Council, said oil companies havebenefited this year from more efficient drillrigs and favorable weather.
“It’s remarkable,” said Ness, whosegroup represents several hundred companiesworking in the state’s oil patch. “Bakken oilis going to refiners all across the countrynow.”
Three billion barrel mark — soonJustin Kringstad, director of the North
Dakota Pipeline Authority, said the state hasforecast oil production over the next decade.
The ability to move crude to market iskeeping pace with North Dakota’s oil pro-duction, Kringstad said. Nearly half ofNorth Dakota’s crude is being shipped byrail due to the lack of pipeline capacity, hesaid.
Increased pipeline infrastructure thatcould increase so-called takeaway capacityby 195,000 barrels daily is expected to comeon line early next year, Kringstad said.
North Dakota began producing oil in1951. Ritter, of the state Department ofMineral Resources, said the state has talliedmore than 2 billion barrels of oil sincethen, mostly in the last few years.
“We’ve done some number crunching,and if we average 20 million barrels amonth, we could hit our 3 billionth barrelin less than three years,” she said. �
14 PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012
Company BDP*
1 Continental Resources, Inc. 62,264.4
2 Whiting Oil and Gas Corporation 59,092
3 Hess Corporation 54,953.9
4 EOG Resources, Inc. 44,365.4
5 Brigham Oil & Gas, LP (Statoil) 40,035.6
6 Marathon Oil Company 28,450.3
7 Burlington (ConocoPhillips) 21,530.3
8 Slawson Exploration Company, Inc. 21,296
9 Petro-Hunt, LLC 18,669.8
10 XTO Energy Inc. 17,877
11 Kodiak Oil & Gas (USA), Inc. 17,746.7
12 Oasis Petroleum North America LLC 17,698
13 SM Energy Company 12,860
14 Denbury (XTO & ExxonMobil) 12,617.1
15 WPX Energy Williston, LLC 12,390
16 Oxy USA, Inc. 11,629
17 Zavanna, LLC 10,296
18 Enerplus Resources USA Corporation 9,689.4
19 Hunt Oil Company 9,105.5
20 Newfield Production Company 8,923.5
21 QEP Energy Company 8,028.6
22 Helis Oil & Gas Company, LLC 7,395.2
23 Zenergy, Inc. 7,386.9
24 Fidelity Exploration & Production 6,514.1
25 Murex Petroleum Corporation 6,255.1
26 Samson Resources Company 5,754
27 Baytex Energy USA Ltd 3,058.0
28 Crescent Point Energy US Corp. 2,522.9
29 G3 Operating, LLC 2,492.2
30 Sinclair Oil and Gas Company 1,977
31 Liberty Resources, LLC 1,189.7
32 Cornerstone Natural Resources, LLC 1,124.7
33 Arsenal Energy USA, Inc. 1,124.5
34 Triangle USA Petroleum Corporation 739.0
35 American Eagle Energy Corporation 668.0
36 GMX Resources, Inc. 412.0
37 Windsor Energy Group, LLC 244
38 Prima Exploration, Inc. 235.9
39 Resource Drilling, LLC 217.1
40 Abraxas Petroleum Corp 204.4
41 Sequel Energy, LLC 203
42 Gadeco, LLC 186.4
43 True Oil, LLC 149.2
44 Legacy Reserves Operating LP 127.7
45 Resolute Natural Resources Company, LLC 57.5
46 BTA Oil Producers, LLC 54.6
47 Texakota, Inc. 55
48 Petro Havester Operating Company, LLC 38
49 Tri-C Resources, LLC 27.4
50 Sundance Energy, Inc. 19
*Barrels of oil per day
Numbers derived from the September 2012 Oil & GasProduction Report published by the North Dakota StateIndustrial Commission, Department of Minerals, Oil &Gas Division. Note this is the oil produced by wells operated by these companies; it does not identify thepercentage of Bakken petroleum system oil (includingThree Forks) that is owned by the company or its partners, so it may differ from what the company reports.
September 2012 Top 50 North Dakota Bakken Oil Producers
PRODUCTION & RECOVERYForecasting a Bakken bubble
Plains All American Pipeline expects the economics of Eagle Ford and Permianproduction could prick the growing Bakken bubble, Plains Chief Executive OfficerGreg Armstrong told a third-quarter conference call.
He said higher costs and the distance to market make the Bakken less attractivethan the Texas plays, indicating that the NorthDakota/Montana formation is “probably theone that is on the economic bubble.”
Armstrong forecast that price differentialscould make Bakken crude less attractive in thenear term and will likely widen as the marketis saturated with light sweet crudes.
As a result there could be “some slow-down” in the Bakken, he said, without settinga timeline, suggesting that producers with lim-ited access to capital will likely allocate theirresources to the Permian and Eagle Ford.
Armstrong predicted that Eagle Ford vol-umes would grow to 1.6 million barrels per day in 2018, up 600,000 bpd from Plains’earlier estimate.
Faced with changing price differentials, he suggested producers will be reluctant tomake long-term pipeline shipping commitments, making rail out of the shale the pre-ferred transportation mode to handle excess Bakken volumes.
He estimated that although pipeline transportation from the Bakken to the GulfCoast costs about $10 per barrel, while rail runs to $13-$15, producers are hesitantwhen it comes to signing 10-year contracts to support pipeline projects.
Armstrong said Plains now has about 6,000 rail cars, which are evenly dividedbetween natural gas liquids and crude, but, outside the Bakken, he said the companyis sticking with pipelines, viewing them as the “most efficient way to move crudes.”
—GARY PARK
� P R O D U C T I O N & R E C O V E R Y
North Dakota postsrecord annual oiloutput — again
Steve Grape, the domestic reservesproject manager for the U.S.
Department of Energy’sinformation administration, said
North Dakota accounts for nearly12 percent of total U.S. crude
production, up from 1 percent lessthan five years ago.
The ability to move crude tomarket is keeping pace with NorthDakota’s oil production, Kringstad
said. Nearly half of NorthDakota’s crude is being shipped by
rail due to the lack of pipelinecapacity, he said.
Armstrong said higher costsand the distance to market
make the Bakken lessattractive than the Texasplays, indicating that theNorth Dakota/Montana
formation is “probably theone that is on the economic
bubble.”
PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012 15
Abraxas Petroleum CorpDemores — Bakken – Billings 374North Fork — Bakken – McKenzie 5,431Roosevelt — Bakken – Billings 530
Daily Average — 204.4
American Eagle Energy CorporationColgan — Bakken – Divide — 20,708
Daily Average — 668.0
Arsenal Energy USA, Inc.Stanley — Bakken – Mountrail — 34,860
Daily Average — 1,124.5
Baytex Energy USA LtdAmbrose — Bakken – Divide — 39,792Burg — Bakken — DIV/WIL — 2,588Garnet — Bakken – Divide — 2,818Lone Tree — Bakken – Williams — 4,962Lone Tree Lake — Bakken – Williams — 3,014Musta — Bakken – Divide — 4,871Plumer — Bakken – Divide — 599Skabo — Bakken – Divide — 1,507Smoky Butte — Bakken – Divide — 4,794West Ambrose — Bakken – Divide — 21,751Whiteaker — Bakken — Divide — 5,036Wildcat — Bakken – Williams — 3,066
Daily Average — 3,058.0
Brigham Oil & Gas, LP (Statoil)Alexander — Bakken – McKenzie — 11,760Alger — Bakken – Mountrail — 383,715Avoca — Bakken – Williams — 10,339Banks — Bakken – McKenzie — 109,018Briar Creek — Bakken – McKenzie — 24,929Buford — Bakken – Williams — 4,541Bull Butte — Bakken – Williams — 35,953Camp — Bakken – McKenzie — 74,555Catwalk — Bakken — Williams — 11,738Cow Creek — Bakken – Williams — 28,617East Fork — Bakken – Williams — 42,898Elk — Bakken – McKenzie — 12,058Foreman Butte — Bakken – McKenzie — 6,352Glass Bluff — Bakken – McKenzie — 2,106Kittleson Slough — Bakken – Mountrail — 11,607Lake Trenton — Bakken – Williams — 4,785Last Chance — Bakken – Williams — 43,771Nameless — Bakken – McKenzie — 9,973Painted Woods — Bakken — Williams — 71,177Parshall — Bakken – Mountrail — 393Poe — Bakken – McKenzie — 28,922Ragged Butte — Bakken – McKenzie — 24,012Rosebud — Bakken – Williams — 9,459Ross — Bakken – Mountrail — 259Sakakawea — Bakken – McKenzie — 4,176Sandrocks — Bakken – McKenzie — 16,958Spring Creek — Bakken – McKenzie — 7,801Squires — Bakken – Williams — 41,412Stony Creek — Bakken – Williams — 28,794Sugar Beet — Bakken – Williams — 12,788Todd — Bakken – Williams — 120,435Wildcat — Bakken — MCK/WIL — 15,068Williston — Bakken – Williams — 30,736
Daily Average — 40,035.6
BTA Oil Producers, LLCBicentennial — Bakken — Golden Valley — 273Elkhorn Ranch — Bakken – Billings — 54North Tioga — Bakken – Burke — 138Pierre Creek — Bakken – McKenzie — 196Stoneview — Bakken — Divide — 1,032
Daily Average — 54.6
Burlington Resources Oil & Gas Company, LP (ConocoPhillips)Bailey — Bakken – Dunn — 24,486Bennett Creek — Bakken — McKenzie — 3,676Blue Buttes — Bakken – McKenzie — 53,392Bully — Bakken – McKenzie — 6,207Cabernet — Bakken – Dunn — 17,996Camel Butte — Bakken – McKenzie — 5,641Charlson — Bakken – McKenzie — 51,757Clear Creek — Bakken – McKenzie — 33,819Corral Creek — Bakken – Dunn — 16,405Croff — Bakken – McKenzie — 10,320Crooked Creek — Bakken – Dunn — 4,750Dimmick Lake — Bakken — McKenzie — 5,131Elidah — Bakken – McKenzie — 56,541
Fayette — Bakken – Dunn — 6,832Hawkeye — Bakken – McKenzie — 16,190Haystack Butte — Bakken – McKenzie — 52,618Jim Creek — Bakken – Dunn — 3,656Johnson Corner — Bakken – McKenzie — 7,519Keene — Bakken/Three Forks – McKenzie — 86,313Killdeer — Bakken – Dunn — 8,212Little Knife — Bakken – Dunn — 11,894Lone Butte — Bakken – Dunn — 5,173Mondak — Bakken – McKenzie — 135Morgan Draw — Bakken — Golden Valley — 1,197Murphy Creek — Bakken – Dunn — 42,321North Fork — Bakken – McKenzie — 12,021Pershing — Bakken – McKenzie — 7,020Pierre Creek — Bakken – McKenzie — 703Sand Creek — Bakken – McKenzie — 24,883Twin Buttes — Bakken – Dunn — 4,837Union Center — Bakken – McKenzie — 48,033Westberg — Bakken – McKenzie — 33,217Wildcat — Bakken – McKenzie — 493Willmen — Bakken — Dunn — 4,052
Daily Average — 21,530.3
Carl H. NordstrandPierre Creek — Bakken – McKenzie — 159
Daily Average — 5.1
Charger Resources, LLCBuckhorn — Bakken – McKenzie — 39Johnson Corner — Bakken – McKenzie — 182Morgan Draw — Bakken — Golden Valley — 179Pierre Creek — Bakken – McKenzie — 0
Daily Average — 12.9
Chesapeake Operating, Inc.Wildcat — Bakken/Three Forks – Stark — 77Wildcat — Bakken/Three Forks – Golden Valley
Daily Average — 2.5
Citation Oil & Gas CorporationSadler — Bakken – Divide — 114
Daily Average — 3.7
Condor Petroleum, Inc.Big Bend — Bakken – Mountrail — 0Hayland — Bakken – Divide — 104Stoneview — Bakken — Divide — 113
Daily Average — 7.0
Continental Resources, Inc.Alkali Creek — Bakken – Mountrail — 13,981Banks — Bakken – McKenzie — 132,226Barta — Bakken – Billings — 3,464Battleview — Bakken – Williams — 4,157Bear Creek — Bakken – Dunn — 9,438Beaver Creek — Bakken — Golden Valley — 4,524Beaver Creek Bay — Bakken – Mercer — 0Beaver Lodge — Bakken – Williams — 293Bell — Bakken – Stark — 4,570Bicentennial — Bakken – McKenzie — 619Big Gulch — Bakken – Dunn — 10,480Border — Bakken — BRK/DIV — 4,505Brooklyn — Bakken – Williams — 86,714Bully — Bakken – McKenzie — 8,360Cabernet — Bakken – Dunn — 9,495Camel Butte — Bakken – McKenzie — 1,522Camp — Bakken – McKenzie — 50,234Cedar Coulee — Bakken – Dunn — 6,696Charlie Bob — Bakken – McKenzie — 226Charlson — Bakken – McKenzie — 18Chimney Butte — Bakken – Dunn — 72,175Corinth — Bakken – Williams — 9,220Corral Creek — Bakken – Dunn — 6,338Crazy Man Creek — Bakken – Williams — 16,377Demores — Bakken – Billings — 1,079Dimmick Lake — Bakken — McKenzie — 10,927Dollar Joe — Bakken – Williams — 24,986Dolphin — Bakken – Divide — 26,712Dutch Henry Butte — Bakken — Stark — 132East Fork — Bakken – Williams — 66,106Edge — Bakken – McKenzie — 4,176Elidah — Bakken – McKenzie — 21,931Elk — Bakken – McKenzie — 3,710Elkhorn Ranch — Bakken – Billings — 11,406Elm Tree — Bakken – McKenzie — 113,369Epping — Bakken – Williams — 32,572Glade — Bakken – Billings — 253Hamlet — Bakken – Divide — 37,829
Hanson — Bakken – Williams — 15,162Haystack Butte — Bakken — MCK/DUN — 24,013Hebron — Bakken – Williams — 17,977Indian Hill — Bakken – McKenzie — 25,338Jim Creek — Bakken – Dunn — 94,914Last Chance — Bakken – Williams — 23,156Lindahl — Bakken – Williams — 18,253Little Knife — Bakken – Williams — 28,973Lone Tree Lake — Bakken – Williams — 12,307Long Creek — Bakken – Williams — 10,595Mary — Bakken – McKenzie — 1,268Mondak — Bakken – McKenzie — 2,561Murphy Creek — Bakken – Dunn — 71,691North Fork — Bakken – McKenzie — 1,292North Tioga — Bakken — WIL/BRK — 65,416North Tobacco Garden — Bakken – McKenzie — 22,240Northwest McGregor — Bakken – Williams — 24,160Oakdale — Bakken – Dunn — 118,539Oliver — Bakken – Williams — 64,737Patent Gate — Bakken – McKenzie — 23,522Pembroke — Bakken – McKenzie — 9,524Pershing — Bakken – McKenzie — 16,282Pleasant Valley — Bakken — Williams — 10,951Poe — Bakken – McKenzie — 8,607Rainbow — Bakken – Williams — 12,524Ranch Coulee — Bakken – McKenzie — 3,430Ranch Creek — Bakken – McKenzie — 1,297Rattlesnake Point — Bakken – Dunn — 30,042Ross — Bakken – Mountrail — 89Sadler — Bakken – Divide — 17,885Sauk — Bakken — DIV/WiL — 9,595Siverston — Bakken – McKenzie — 3,580South Boxcar — Bakken – McKenzie — 401Squires — Bakken – Williams — 6,464St. Demetrius — Bakken – Billings — 44,621Stoneview — Bakken — DIV/WIL/BRK — 109,099Temple — Bakken – Williams — 6,538Todd — Bakken – Williams — 5,873Upland — Bakken – Divide — 39,823Viking — Bakken – Burke — 24,139West Capa — Bakken – Williams — 5,550Westberg — Bakken – McKenzie — 15,525Wildcat — Bakken — WIL/BIL/MCK — 25,946Wildrose — Bakken – Divide — 31,261Willow Creek — Bakken – Williams — 14,215
Daily Average — 62,264.4
Cornerstone Natural Resources, LLCBailey — Bakken – Dunn — 1,397Carter — Bakken – Burke — 9,397Clear Water — Bakken – Burke — 2,008Coteau — Bakken – Dunn — 783Customs — Bakken – Burke — 2,063Flaxton — Bakken – Burke — 6,895Lostwood — Bakken – Burke — 369Northeast Foothills — Bakken – Burke — 1,324South Coteau — Bakken – Burke — 2,229Wildcat — Bakken – Burke — 508Woburn — Bakken – Burke — 7,892
Daily Average — 1,124.7
Crescent Point Energy US Corp.Colgan — Bakken – Divide — 4,273Dublin — Bakken – Williams — 6,908Ellisville — Bakken – Williams — 18,311Gooseneck — Bakken – Divide — 10,065Little Muddy — Bakken – Williams — 4,446New Home — Bakken – Williams — 478West Ambrose — Bakken – Divide — 4,806Wheelock — Bakken – Williams — 747Wildcat — Bakken — DIV/WIL — 28,176
Daily Average — 2,522.9
Denbury Onshore, LLC (XTO & ExxonMobil)Arnegard — Bakken – McKenzie — 6,012Bear Creek — Bakken – Dunn — 14,832Bicentennial — Bakken — Golden Valley — 395Buckhorn — Bakken – Billings — 400Camp — Bakken – McKenzie — 2,400Cedar Coulee — Bakken – Dunn — 1,555Charlson — Bakken – McKenzie — 59,494Corral Creek — Bakken – Dunn — 1,139Devils Pass — Bakken — MCK/BIL — 51Elidah — Bakken – McKenzie — 645Elk — Bakken – McKenzie — 7,465Elkhorn Ranch — Bakken – Billings — 22Garden — Bakken – McKenzie — 15,183Glass Bluff — Bakken – McKenzie — 11,495Hofflund — Bakken – Williams — 1,731Indian Hill — Bakken – McKenzie — 2,229
September 2012 North Dakota Bakken oil production by company
Derived from the September 2012 Oil & Gas Production Report published by the North Dakota State Industrial Commission, Department of Minerals, Oil & Gas Division. Note this is the oil produced by wells operated by these companies; it does not identify the percentage of Bakken petroleum system oil (including Three Forks) that is owned bythe company or its partners, so it may differ from what the company reports. Also, the daily average was derived from dividing the total production by the number of days in September, versus the number of days the well was actually producing. There are a few wells that did not produce for the entire month.
Legend:CompanyField — Pool — County — Barrels of oilDaily average barrels
To view this chart in its entirety, please visit: http://bit.ly/Waf9tQ
By GARY PARKFor Petroleum News Bakken
C rescent Point Energy, which hasbeen on the leading edge of technol-
ogy that has cracked the CanadianBakken formation, has extended its C$2.5billion 2012 shopping spree to a light oilresource play in Utah’s Uinta Basin.
In an C$861 million deal, including acash consideration of C$784 million, ithas acquired privately held oil and gasproducer Ute Energy Upstream Holdings.
“This resource play is a new core areafor Crescent Point and is consistent withour strategy of acquiring high-quality,
large oil-in-place pools with long-termupside potential,” Crescent Point ChiefExecutive Officer Scott Saxberg said in arelease Nov. 1.
He said his company believes it canapply extraction expertise developed inWestern Canada and North Dakota to theUinta, using vertical and horizontal infilldrilling and multi-stage fracture stimula-tion.
Fourth deal this yearThe deal, expected to close by the end
of November, is Crescent Point’s fourththis year, raising its production to 99,500barrels of oil equivalent per day, with an
exit rate for the year targeted at 109,000boe per day.
Ute Energy has proved plus probablereserves of 55.1 million boe, produces7,800 boe per day, 88 percent weighted tooil and liquids, controls a net 173,000acres in Uinta and has 8,800 gross poten-tial drilling locations.
Crescent Point expects closure of thedeal will increase its 2012 capital spend-ing by C$150 million to C$1.4 billion.
Exploration and development agree-ments with the Ute Indian Tribe governmore than 96,000 net acres of the proper-ty.
Based on meetings with the tribe,
Crescent Point said it is confident thatprovisions to extend the majority ofagreements will give it up to 15 years todevelop the inventory.
In a statement, Irene Cuch, chair-woman of the Ute Tribe BusinessCommittee, welcomed “a quality operatorof Crescent Point’s capabilities and finan-cial strength operating on our lands.”
New production recordFor the third quarter, Crescent Point set
a new average production record of99,631 boe per day, up 38 percent fromthe previous quarter and more than 27,000boe per day from a year earlier, with15,500 barrels per day coming from theBakken formation.
Expansion of the company’s Stoughtonrail facility, due for completion beforeyear’s end, will raise shipping capacity outof the area to 40,000 bpd.
For its properties in southeastSaskatchewan and Manitoba, the compa-ny logged 66 gross wells and claimed a100 percent success rate. Of that total, 44gross wells were drilled horizontally in theBakken play and 22 were horizontal wellsin conventional zones.
Crescent Point also converted six addi-tional Viewfield Bakken producing wellsto water injection wells, ending the quar-ter with a total of 41 producing waterinjection wells.
It said production from those wellscontinues to surpass its expectations andhas demonstrated the field-wide applica-bility of waterflood to the play, withpotential partners and the Saskatchewangovernment involved in discussing thatprospect.
Crescent Point said it continues to pur-sue multiple applications of new technolo-gies to maximize recoveries and improveefficiencies, including re-entering existingwells in the Saskatchewan Bakken that
16 PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012
� F I N A N C E & E C O N O M Y
Tight oil sideswipes oil sandsBy GARY PARK
For Petroleum News Bakken
O il sands giant Suncor Energy is dis-playing more jitters than ever before
as it faces the wave of new tight oil pro-duction in North America.
The ramping up of volumes from for-mations such as the Bakken is forcing thecompany to revise its original schedule formaking investment decisions on threeprojects carrying a combined price tag ofabout C$40 billion.
Chief Executive Officer SteveWilliams said the company’s Voyageurproject to upgrade oil sands bitumen intosynthetic crude is “struggling” to meet itseconomic threshold and the Fort Hills oilsands mine — both joint ventures with theCanadian unit of France’s Total — willprobably be delayed at least a year to2017.
The new volumes of tight oil enteringthe North American market are effectivelyincreasing the amount of light sweetcrude.
“An upgrader just takes advantage of
the margin between light crudes andheavy crudes and so it squeezes the mar-gin on an upgrader,” he said.
“We are in the process of fully assess-ing the mid- and long-term consequencesof that change in the market and our beliefthat Voyageur economics are under morepressure than when we initially conceivedthe project.”
Revision of timetableWhile decisions on sanctioning had
been targeted to occur around mid-2013,reviews are expected to force a revision ofthat timetable.
With spending delayed, Suncor haschopped 11 percent or C$850 million offits 2012 capital budget and expects the2013 budget will be stripped of up toC$1.5 billion that Williams now expectswill be around C$7.5 billion, down froman earlier target of C$8 billion-C$9 billion.
“At the start of the year, we said thatcost and quality metrics would be Suncor’spriorities when executing growth proj-ects,” he said. “We’re delivering on thesegoals by spending capital efficiently and
maintaining a disciplined approach to pre-sanction spending on our operated growthprojects.”
Shrinking this year’s program toC$6.65 billion was achieved by eliminat-ing C$200 million from unidentified smallprojects, saving C$200 million on Stage 4of the Firebag in-situ project and imposingtight controls on three joint-venture proj-ects.
Voyageur ‘stressed’The toughest challenge involves the
Voyageur project to process 200,000 bar-rels per day of bitumen, with Suncor hold-ing 51 percent and Total 49 percent. Thelast cost estimate was C$23 billion.
Voyageur is “stressed” because of“impressive” volumes of tight oil enteringthe market and Suncor and Total are“working very aggressively” to improvethe economics, he said.
However, the two mining projects —Fort Hills and Joslyn — are “looking veryattractive — we are pleased with progressbeing made on scope and costs,” althoughSuncor is not ready to disclose cost thresh-
olds, Williams said. Fort Hills, with Suncor as 40.8 percent
operator, Total holding 29.2 percent andTeck Resources 20 percent, targets160,000 bpd of bitumen production at anoriginal cost of C$9.6 billion.
Total with 38.25 percent is operator ofJoslyn, designed to produce 100,000 bpd,with Suncor holding 26.75 percent,Occidental Petroleum 15 percent andJapan’s Inpex 10 percent and carries a costestimate of C$6 billion.
Williams said Enbridge’s plannedreversal of Line 9 to displace importedcrude for Quebec and Ontario refinerieswith production from the Alberta oil sandsand Bakken play is presenting severaloptions for Suncor’s Montreal refinery.
He said the prospect of using “inland”crude for the facility allows Suncor to con-sider alternatives, including the use of railto deliver crudes from Western Canadaand the United States, adding there will besome action on the project in 2013. �
Contact Gary Park through [email protected]
� M E R G E R S & A C Q U I S I T I O N S
Crescent Point reaches outBakken player scoops up Utah assets to apply drilling, fracturing technologies; W. Canadian production averages almost 100,000 boe
see CRESCENT POINT page 17
By MIKE ELLERDFor Petroleum News Bakken
SM Energy reported quarterly produc-tion of 9.5 million barrels of oil
equivalent, a production increase of 13percent over the previous quarter. Whilemost of this production was driven by thecompany’s Eagle Ford rich gas play, pro-duction in its Bakken and Three Forksassets was 11,000 barrels of oil equiva-lent per day, an increase of 6 percent overthe second quarter 2012 and a 96 percentincrease over the third quarter 2011.
SM Energy operated four drilling rigsin the Williston Basin during the thirdquarter, and it plans to continue to operatethose four rigs through the fourth quarter.Three of these rigs are focused on theBakken and Three Forks in its Raven andBear Den prospects in McKenzie andWilliams counties, and the fourth rig istargeting the Three Forks formation in itsGooseneck prospect in Divide County.
Multi-well, infill drillingThe company transitioned most of its
drilling and completion activity in thebasin to multi-well pad infill drilling inthe first two quarters of the year. Duringthe third quarter, SM Energy completednine operated wells in its Bakken andThree Forks pools.
“During the third quarter, we operatedfour drilling rigs, with one rig in theGooseneck area and the other three in ourRaven and Borden prospect areas,” saidSM Energy President and ChiefOperating Officer Javan Ottoson in a Nov.1 conference call. “This program contin-ues to deliver strong production growthand reported a 6 percent increase insequential production growth from priorquarter up to 11,000 barrels of oil equiv-alent per day and nearly double quarterly
production volumes from the third quar-ter of 2011,” Ottoson said.
Focus Bakken, Three ForksWhile SM Energy has approximately
196,000 net acres in the Williston Basin, theprimary focus of its activities in the basin ison the oil-producing Bakken and ThreeForks formations in the Raven, Bear Denand Gooseneck areas where it has approxi-mately 87,000 net acres. In the Nov. 1 con-ference call, Ottoson also said that essen-tially all of this acreage is currently held byproduction.
In other operations, SM Energy reportedan 18 percent increase in its rich gas EagleFord play, and that oil production in its non-operated Eagle Ford assets also increasedfrom the previous quarter. In the Permian
Basin, the company operated four drill rigsin the quarter and added 10,300 net acresbringing the total Permian Basin acreage to125,600 net acres. SM Energy also operat-
ed three rigs in its Granite Wash programand one rig in the Powder River Basin. �
were originally completed with 8-stageand 16-stage cemented liners and increas-ing them to 25-stage and 30-stage com-pletions. Another 90 wells have been iden-tified as candidates for this process.
In addition, the company said it drilledthree two-mile horizontal wells in the FlatLake Bakken play and achieved 100 per-cent success.
Shaunavon injectionIn southwestern Saskatchewan, it
drilled 20 gross wells at a 100 percentsuccess rate, 11 of them drilled in theShaunavon area.
Crescent Point is now injecting waterinto seven horizontal wells in the LowerShaunavon and has been “encouraged”by results to date.
Through acquisitions completed thisyear, it has add 17 injection wells in theUpper Shaunavon formation and expectsto have as many as 30 water injectionswells in the play by year-end.
In the latest quarter, the company
completed preparation of its rail-loadingfacility in the Dollard area and deliveredits first loads in October. Current capac-ity is 4,000 bpd and expansion isplanned for 2013.
In North Dakota, Crescent Point par-ticipated in drilling 30 oil wells, 14 ofthem targeted in the Three Forks forma-tion. The success rate was reported at100 percent.
It aims to drill up to 16 net wells inthe Bakken and Three Forks zones thisyear and is working with serviceproviders to reduce capital costs thathave seen upward pressure due to highindustry activity levels in North Dakota.
According to the state’s Departmentof Minerals, Oil and Gas Division,Crescent Point’s U.S. subsidiary operat-ed wells that produced 2,694 bpd inAugust.
Calculations by Petroleum NewsBakken rate the company as the 28thlargest oil producer in the Bakken sys-tem of North Dakota, including theThree Forks formation. �
PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012 17
Watford Ranch provides comfortable, secure housing and a warm,
Our commitment to full-service amenities and top-quality service is unmatched in the industry.
Situated on 75 prime acres, just 6 miles south of Watford City.
Now taking reservations for November 2012 occupancy.
701-339-5411 www.watfordranch.com
WATFORD RANCH FULL-SERVICE WORKFORCE HOUSING
CUSTOMIZED FOR MAXIMUM COMFORT, SECURITY & CONVENIENCE
Contact Gary Park through [email protected]
continued from page 16
CRESCENT POINT
� C O M P A N Y U P D A T E
SM Energy reports strong 3Q productionThird quarter Bakken/TF production up 96 percent over third quarter 2011; operated four rigs and completed nine wells
BAKKEN/THREE FORKS
� 3Q12 average daily production increased 6% over 2Q12 and 96% over 3Q11
� SM Energy operated 4 drilling rigs in the program through out the quarter
� 3Q12 drilling program continues shift toward infill drilling program, utilizing multi-well pad drilling
Net Production
Operational Highlights
� Total Bakken/TFS Net Acreage � ~196,000
RAVEN~37,000 acres
BEAR DEN~14,000 acres
GOOSENECK~35,000 acres
� Focus area total net acreage:
~87,000
Canada
MT ND
5.6
8.510.3 10.4 11.0
0
2
4
6
8
10
12
3Q11 4Q11 1Q12 2Q12 3Q12
MB
OE
/d
12
The company transitioned most ofits drilling and completion activityin the basin to multi-well pad infilldrilling in the first two quarters of
the year.
Contact Mike Ellerdat [email protected]
18 PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012
WATCH FOR IT IN MAY
For more information on this new annual magazine, which will feature those oil companies exploring vertically or laterally in the Bakken petroleum system, email Kay Cashman, publisher and executive editor, at [email protected].
The Bakken Explorersfrom Petroleum News Bakken
A special publication from Petroleum News Bakken
COMPILED By STEVEN MERRITTFor Petroleum News Bakken
Despite its phenomenal growth inrecent years, especially in the north-
ern Plains, rail transport for crude oil willnot replace the need for more pipelines,Continental Resources chief financialofficer told an investor conference earlierin November.
According to a recent Platts report,Continental CFO John Hart said the pro-duction forecast for the Williston Basinalone “will require a full platform ofinfrastructure buildout.”
“There will definitely be a need forpipelines,” Hart said. “The productiongrowth forecast is in excess of 1.5 mil-lion barrels per day, and could reach 2
million to 2.5 million bpd.” According to Platts, Hart said that
regional rail infrastructure to handlemore than 1 million barrels per day is inthe works, which will create a “hugeshift” in markets in the coming years aswell as affect the price differentialbetween West Texas Intermediate andGulf Coast crudes.
Currently, Continental is shipping 65percent of its Bakken crude by rail.
Platts cited Hart’s mention of twopipeline projects — the reversed Seawaypipeline and TransCanada’s Gulf CoastProject — as vital to bringing Plainscrude south. The Seaway pipeline begandelivering Cushing, Okla., crude ship-
ments to the Gulf Coast last June, and,according to the Platts report, couldreach a capacity of 400,000 bpd in early2013. Plans also are in the works to dou-ble capacity by mid-2014.
TransCanada’s Gulf Coast line, origi-nally part of its Keystone XL design, isslated for a mid-to-late 2013 startup withan initial 700,000 bpd capacity that willdeliver crude from Cushing toNederland, Texas, according to Platts.
� Read more here:http://bit.ly/Sqs7C4
Time for natural gas to replace diesel as locomotive fuel?
THE BOOMING PRODUCTION ofnatural gas from resource plays coupledwith prices that are forecast to remainlow and stable in the coming years haverailroad executives revisiting a decades-old question for the industry: is it timefor natural gas to replace diesel as ameans for fueling locomotives?
According to a recent article in theHouston Chronicle, although rail firmshave been publicly quiet about the poten-tial of natural gas-powered locomotives— citing unproven technology and a lackof real-world examples of gas-poweredtrains — they are giving the idea seriousconsideration.
“It has to be something that the wholeindustry is going to be moving on to, butour projection is that, yes, it will beeventually moving on to (gas),”Normand Pellerin, assistant vice presi-dent for environment and sustainabilityfor Canadian National Railways, told theChronicle. “That’s because we don’t seehow diesel prices will come down overthe years. It’s all about pricing.”
Canadian National currently runs anatural gas-powered test train in Alberta.
According to the Chronicle, risingdiesel prices pushed Union PacificRailroad’s fuel and utilities costs to $3.6billion in 2011, which accounted for 26percent of its overall expenses. Thatongoing expense has prompted railroadsto invest in engine and softwareupgrades in an effort to trim total fuelusage, which can top 1 billion gallonsannually for industry mainstays likeUnion Pacific and BNSF, according tothe Chronicle. Currently, natural gas
sells for $1 to $2 per gallon less than anequivalent amount of diesel.
But getting from concept to realitywill involve myriad factors.
A switch to natural gas would involvemodifying diesel-electric locomotives ata cost of $600,000 to $1 million each,which would be expected to fall withincreased application and interest fromcompanies, according to the Houstonnewspaper.
Also, the challenge of storing andmoving liquefied natural gas for refuel-ing trains will involve new regulations,infrastructure and logistics. According tothe Houston Chronicle article, the ideaof bringing back the tender car hasemerged. Instead of wood or coal, therailcar directly behind the locomotivewould be filled with LNG.
� Read more here:http://bit.ly/RV7qkU
OPEC first to feelsqueeze from US, Russiacrude production?
FOR YEARS, CHALLENGERS andincumbents for national office in theU.S. have emphasized a “do more withless oil” from the Organization of thePetroleum Exporting Countries. Andaccording to a recent Wall Street Journalpiece, the U.S. boom, coupled with arobust production effort in Russia couldhave OPEC feeling the market pinch.
According to The Journal, imports areexpected to account for less than 40 per-cent of U.S. oil consumption next yearfor the first time since 1991.
“This flood of U.S. crude is likely toput oil prices and OPEC output underdownward pressure next year,” TheJournal quoted Leo Drollas, chief econo-mist of the U.K.-based Centre for GlobalEnergy Studies. The article also cited anEnergy Information Agency report thatsees a small drop of 490,000 barrels aday in OPEC supply next year, as it cutsoutput to support prices.
Meanwhile, the Centre for GlobalEnergy Studies reported that the outputboost will reduce global demand forOPEC’s crude in 2013 by about 670,000barrels a day — about 2 percent of itscurrent crude production of about 31
� I N O T H E R N E W S
Rail buildout ahead to handle 1M bpdTime for natural gas to replace diesel as locomotive fuel? OPEC first to feel the squeeze from US, Russian crude production?
MOVING HYDROCARBONSRail will ‘be here for a while’
Crude transportation by rail will remain an “essential market link” for manyyears as Midcontinent production outpaces the introduction of new pipelines,Mike Jennings, chief executive officer of independent refiner HollyFrontier, tolda third-quarter earnings conference call.
He said rail shipments will “be here for a while,” meaning it will likely bemany years before U.S. crude price differentials relative to Brent reflect only thecost of pipeline transportation.
The Association of American Railroads captured the rapid acceleration in theuse of rail to deliver from inland production fields to Gulf Coast refineries, report-ing that for the week ended Sept. 18, rail transportation of petroleum productsrose 64.2 percent over a year earlier.
Jennings said rising Midcontinent volumes will likely continue for years to out-strip pipeline capacity, with domestic crude price differentials to Brent continuingto reflect the cost of both pipeline and rail transportation.
Costs wideningHe said the cost of getting inland-produced crude to coastal refining regions
has widened those differentials against waterborne crudes in recent years becauserail costs especially are more expensive than pipes.
Jennings said HollyFrontier’s forward view of oil price differentials reflects theconsensus position that pipe transport will “ultimately” set prices for many dif-ferentials.
He said pipeline tariffs are not currently setting crude differentials, a situationthat is likely to continue as output rises in such fields as the Bakken in NorthDakota and Montana, the Permian Basin in West Texas and the Mississippi Limein Oklahoma/Kansas.
Jennings noted that Magellan’s conversion of the former Longhorn pipeline,which the midstream company is reversing to carry 135,000 barrels per day fromCrane, Texas, to the Houston area by mid-2013, “will drain a significant volumeof crude out of the Permian, but Permian production is growing by 150,000 bpd,”so the line fills less than a single year’s output.
—GARY PARK
In Other News
see IN OTHER NEWS page 19
ference call.“The good news is we’ve had good oil
shows from the logs in the formations thatwe were targeting,” he said.
The horizontal wells in the WillistonBasin would be targeting the middleBakken and upper Three Forks members,Apache previously said.
“We’re currently in the completion phaseof our initial wells in each of these plays andwe’ll be experimenting with our frackdesigns to give us optional results,” Farrissaid.
For the horizontal well in DanielsCounty, where Apache acquired about300,000 net acres in the first half of 2012,Farris said the company was in the processof hydraulic fracturing its first well anddrilling its second well, which he put at2,700 feet as of Nov. 1.
Although Apache had expected to drillas many as five wells by the end of the year,Farris since it would have “two wells down”by that time.
When asked if Apache was still pickingup acreage in the area, Farris essentiallyrepeated what company vice president forexploration and new ventures, JohnBedingfield, said in mid-June when theHouston-based company announced itsentry into the Williston Basin and its300,000-acre acquisition.
The leasing is done, Bedingfield said. “Some will trickle in, but the big leasing
is done.”Farris also noted that “there have been
some other operators … not right next door… that have announced pretty good results.I mean, the play is moving that way (north-west), so hopefully, it moves all our way.We’re going to find out here pretty quick.”
Bedingfield said in June that if 2012drilling was successful Apache would ramp
up drilling in the area in 2013.In response to a request for an update on
Apache’s first two wells in Daniels County,a company spokesman said, “we'll havemore to say next year after the data are ana-lyzed, and we're in a better position to com-ment on their impact.”
Daniels County is known for producingconventional oil from the Ratcliff, Madison,Mission Canyon and McGowan formations.
Although Apache is initially focusing onthe middle Bakken and the upper ThreeForks, from which almost all Bakken petro-leum system crude is currently being pro-duced, Bedingfield said “there are a numberof other plays” throughout Apache’sDaniels County acreage: “The Madisonsection above us, Lodgepole and others. …And below in the Devonian, there’s otherDevonian plays, the Birdbear, for example,which also has oil pay.”
During third quarter Farris said Apache“accelerated our drilling momentum acrossour portfolio and we’ve got excellentresults. In the U.S. we continue to step offour play activity and now run 63 rigs (near-ly 100 worldwide) — 50 percent more thanwe had at the beginning of the year.”
The buying spree Apache started twoand a half years ago has since slowed downbecause the company now has identifiedthousands of drilling locations worldwide,including 1,900 potential locations inDaniels County.
Farris said the company had a $10 bil-lion exploration and development budget in2012, and planned to expand drilling in2013 throughout its portfolio,
Apache’s oil production as of Nov. 1 was800,000 barrels a day, Farris said.
Worldwide, Apache received an aver-age of $102.62 per barrel of oil in the thirdquarter, a slight increase from $101.71 perbarrel in the prior-year period.
—KAY CASHMAN
PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012 19
million barrels a day.Besides the U.S. juggernaut of pro-
duction, The Journal cites an intensiveRussian drilling program that is send-ing production (10.46 million barrels aday in October) to levels not seensince the 1980s.
And while Russia has promisedcloser ties with OPEC, observers say
it would be unlikely to coordinate pro-duction cuts with the cartel to bolsterprices.
“For us to join in production cuts,OPEC would have to offer us some-thing very attractive that would com-pensate all the risks. I haven’t seenany such offers,” Igor Sechin, chiefexecutive of OAO Rosneft, told TheJournal.
� Read more here:http://on.wsj.com/UEQJgs
continued from page 18
IN OTHER NEWS
continued from page 1
APACHE WELL“The increase (in wells) is directly relat-
ed to our improvement in drilling timecaused largely by more pad drilling andefficiency gains,” Peterson said.
He said that through efficiencies, theaverage cost of drilling a well is now about$10.5 million, down from nearly $12 mil-lion earlier this year.
Peterson noted that Kodiak would be inthe final stages of fracture stimulation workover the next couple of weeks. “This activ-ity level demonstrates our completion workprogress and a road map for our productiongrowth,” he added.
For the third quarter of 2012, Kodiakreported $112.1 million in revenue, com-pared to revenue of $28.5 million in thethird quarter of 2011. Third-quarter netincome ($3.5 million) includes an unreal-ized loss of $36.7 million related to deriva-tive instruments used for commodity hedg-ing and $4 million in deferred income taxbenefits.
Per its website, Kodiak “owns and con-trols approximately 155,000 net acres” inWestern North Dakota and Eastern
Montana in the Williston Basin, where itsprimary target is the Bakken petroleumsystem’s middle Bakken and Three Forksformations. The company has more than800 net locations prospective for Bakkenproduction. �
Editor’s note: Kodiak’s secondaryleasehold area is the Green River Basin inthe Vermillion Basin, where the companybelieves there is natural gas trapped invarious sands, coals and shales at depthsranging from 2,000 feet to nearly 15,000feet. The primary target of its currentefforts in this area is the over-pressuredBaxter Shale at depths to approximately13,000 feet. Per its website, Kodiak will“continue to monitor and evaluate thisprospect before allocating further capitalto this area. As of Dec. 31, 2011, weowned a non-operated interest in approxi-mately 35,000 gross (12,000 net) acres inthis geologic basin that is prospective formultiple gas bearing reservoirs includingthe Almond Sandstone and the BaxterShale.”
continued from page 12
KODIAK GROWTH
Contact Ray Tyson at [email protected]
mation. The section was called the Sanishsand based on Stanolind Oil Co.’s #1Woodrow Starr well, which produced fromthat member. NDGS considered the Sanishto be part of the Bakken formation.
The unit was later described by C.A.Sandberg and C.R. Hammond as a fine-grained sandstone and coarse siltstone rang-ing from five to 15 feet in thickness.Sandberg and Hammond considered the unitas part of the Three Forks formation.
Over the years the unit appeared and dis-appeared in texts as an understanding of theBakken and Three Forks formations evolvedfrom the 1950s to 2009, but where it was ref-erenced, the unit was commonly referred toas the Sanish sand unit and was generallyconsidered to be part of the Three Forks for-mation.
Then in 2009, Anschutz drilled its No.24-14H Sadowsky well in far southern DunnCounty and cut a core 88 feet in length fromthe eight feet above the bottom of theLodgepole down to nine feet into the top ofthe Three Forks formation. From that core,NDGS Core Library Director Julie LeFever,along with Richard LeFever of theUniversity of North Dakota and StephanNordeng of NDGS, was able to finally anddefinitively describe the Pronghorn member.
The Pronghorn identified in that core was43 feet thick, extended from 10,491.5 to10,534.5 feet, and unconformably overliesthe Three Forks and is unconformably over-
lain by the lower Bakken, they said.In a paper published by the Rocky
Mountain Association of Geologists in 2011,LeFever and her colleagues formally arguedfor redefining the Sanish unit as thePronghorn member, and to also formallyinclude the Pronghorn as a member of the
Bakken formation. In that paper, LeFever and her colleagues
said, “We consider the Pronghorn member tobe part of the Bakken formation for two rea-sons. First, where present, the member liesabove a recognizable unconformity, whichprobably has regional extent. Second, thesuccession from the Pronghorn memberupward to the lower Bakken shale stronglyresembles the succession from the middlemember to the upper Bakken shale,” fromwhich a large majority of Bakken oil is pro-duced.
In an interview with Petroleum NewsBakken, LeFever reiterated the similarity ofthe Pronghorn with the middle Bakken, andthat the argument for including it in theBakken formation is the fact that it sits on amajor unconformity between the ThreeForks and the Bakken.
“It’s that placement of that unconformityat the top of the Three Forks that I think real-ly pushes it into the Bakken,” LeFever said.
LeFever also said that where thePronghorn is producing, the lower Bakkenshales are gone and the Pronghorn is over-lain by the upper shales in most areas. Sowhere one generally sees the Pronghorn, shesaid, the lower shale is gone.
According to LeFever, the Pronghornmember is predominant in Stark, southernDunn, southern McKenzie, and northernBillings counties, as well as touching a smallpart of the east side of Golden ValleyCounty.
Why is term ‘Sanish’ a problem?According to LeFever and her col-
leagues, the term Sanish, while “wellembedded in the literature,” as describing asandstone bed at the base of the Bakken for-mation, has since been adopted as a regula-tory pool name, and is also the name of afield that produces from both the ThreeForks and the Bakken formations.Therefore, LeFever and her colleagues rec-ognized the need for a formal clarificationand nomenclature change.
A definite pay zone for WhitingRegardless of what it is called, the
Pronghorn unit has proven to be very pro-ductive.
For example, in announcing its thirdquarter 2012 financial and operating results,Whiting Petroleum said net production fromits Lewis & Clark/Pronghorn prospects thatfocus on the Pronghorn unit, averaged12,190 barrels of equivalent per day in thethird quarter of 2012, an increase of 19 per-cent over the 10,275 barrels of equivalentper day in the second quarter of 2012.
Whiting said a typical Pronghorn well isits Solberg 14-11PH in Stark County, whichflowed at an initial rate of 1,825 barrels ofequivalent per day from the Pronghorn Sandon Sept. 17, 2012.
Whiting also cited results of two otherwells completed in the Pronghorn unit andtested in late September; its Buckman 34-9PH well flowed at an initial rate of 1,964barrels of equivalent per day, and itsBuckman 44-9PH was completed flowing1,545 barrels of equivalent per day.
Will the name stick?Whether or not the new nomenclature
will be universally adopted is yet to beseen.
LeFever told Petroleum News Bakkena speaker at a recent conference arguedfor continued use of the term Sanish.
“We proposed this,” LeFever said, “andnow it’s open to discussion,” but went onto say that generally she believes it hasbeen accepted.
LeFever said she is currently mappingthe Pronghorn unit. Completion of theproject, she said, depended on the avail-ability of adequate well data. �
20 PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012
continued from page 1
UNIT DEFINITION
All models are made to withstand the most extreme arctic weather environments.
3 Models Available to Fit Your Needs:
• Tundra RT 350• Tundra RT 750• Tundra RT 1400
350,000 BTU - 1,400,000 BTU
1750 - 5000 Cubic Feet/Minute
• High Heat Output• • Flameless Heat
Rotational Energy has your Tundra RT Series Heater In-Stock
Winter is coming!
arcticr weaw ther environr mentstt .
Precision EquipmentEmail: [email protected]: 800-237-5161Web: www.rotational-energy.comWeb: www.precisionequipmfg.com
LeFever said she is currentlymapping the Pronghorn unit.Completion of the project, she
said, depended on the availabilityof adequate well data.
Contact Mike Ellerdat [email protected]
According to LeFever and hercolleagues, the term Sanish, while“well embedded in the literature,”as describing a sandstone bed at
the base of the Bakken formation,has since been adopted as a
regulatory pool name, and is alsothe name of a field that produces
from both the Three Forks and theBakken formations.
the radical industry shift from conven-tional operations to horizontal drillingand hydraulic fracturing.
Andrew Beaton, one of the report’sauthors, said the numbers fall roughlyinto line with the Eagle Ford andMarcellus shales and approximate num-bers reported so far by companies explor-ing the shale prospects in Alberta.
Potential beyond oil sandsThe findings bolster the view that
Alberta has immense hydrocarbon poten-tial beyond its oil sands, rated as the world’sthird-largest deposit at 170 billion barrelsof proven reserves and an ultimate potentialof 1.7 trillion barrels.
The Duvernay and Montney havealready attracted strong investments fromEncana, Chevron and Talisman Energy,with ExxonMobil joining the scramble inOctober by negotiating a C$2.6 billiontakeover of Celtic Exploration, while a hostof mostly state-owned Asian companieshave stakes out minority positions.
The study says the Duvernay formation,which cuts across much of north-centralAlberta, contains 61.7 billion barrels of oil,11.3 billion barrels of liquids and 443 tcf ofgas, while the Muskwa in northwesternAlberta has 115.1 billion barrels of oil, 14.8billion barrels of liquids and 419 tcf of gas.
Western Alberta’s Montney — whichalso extends into a major exploration areain northeastern British Columbia — hasestimated resources of 136.3 billion barrelsof oil, 28.9 billion barrels of liquids and2,211 tcf of gas.
However, the Montney is not strictlyrated as a shale target because it is domi-nated by siltstone and has been includedbecause it is a target for unconventionalresources.
The findings also cover a preliminaryassessment of the Colorado, Wilrich andRierdon units as well as a summary of theBantry shale unit.
Technical snapshot of Exshaw findingsThe basal Banff/Exshaw resource
assessment was limited to southern Alberta“due to data availability and current indus-try focus”, the report said.
In addition to sourcing conventionalreservoirs the Exshaw shale is recognizedas a major source rock for heavy oil andbitumen deposits in northern Alberta. Thecombined interval of the Exshaw formationand the basal shale of the Banff formationis stratigraphically equivalent to theBakken formation in the Williston Basin,the study said.
Extending into northern and northwest-ern Montana, the play is often referred to asthe southern Alberta Bakken or the south-ern Alberta Bakken basin by industry
“For this project,” the findings noted,“the terms lower shale, middle unit, andupper shale correspond to the Exshaw shale(lower Bakken), the upper Exshaw (middleBakken), and the lower Banff basal blackshale (upper Bakken), respectively.”
The basal Banff/Exshaw has a largevariation in primary lithologies. The upperand lower shales are dominated by darkgrey to black, fissile, hard-to-soft, calcare-ous to noncalcareous, organic-rich shale.
The middle unit consists of variouslithologies, including calcareous sandstone,argillaceous sandstone, dolomitic siltstone,calcareous siltstone, silty lime-mudstone,limestone, and dolostone.
The variation in primary lithologies, thereport said, “may indicate that the Exshawand basal Banff merit a more detailed strati-graphic study to determine erosionalboundaries and confirm stratigraphicequivalence to the Bakken.”
In the study area, depth to the top thebasal Banff/Exshaw ranges from 500meters (1,640 feet) near the subcrop ero-sional edge to about 4000 meters (13,123feet) along the deformed belt.
The upper and lower shales are boththin. The thickness of the lower shaleranges from 4 to 13 meters, or 13 to 43 feet.
The upper shale is more difficult to corre-late and has a smaller aerial extent than thelower shale. The upper shale ranges from<1 to 2.3 meters, or <3 to 7.6 feet, thick.
The gross isopach of the middle unit insoutheastern Alberta ranges from zero to 40meters, or zero to 131 feet, along a roughlynortheast-to-southwest trend.
Four wells were selected for a cross-sec-tion that displays the stratigraphic relation-ship of the three units and the correlation tothe Bakken.
A porosity-thickness, or Phi-h, map ofthe basal Banff/Exshaw was constructedfor the study, using density-porosity logscalibrated to a grain density of 2.74 g/cm3with no porosity cutoff and a >75 APIgamma-ray–log cutoff.
The gamma-ray cutoff excluded anylithology, such as sandstone or limestonethat was relatively free of argillaceousmaterial.
The map shows high porosity-thicknessvalues in the northeast near the erosionaledge. Current hydrocarbon exploration isconcentrated in the southwest corner of thestudy area.
The grain density used to determineporosity accounted for the presence of totalorganic carbon by converting TOC to kero-gen and counting it as a mineral compo-nent. The methodology used works well,the findings said, when the TOC contentrange spans only a few weight per cent.
“The TOC content of the upper andlower shale, however, is quite variablewhich may cause significant error in thecalculation of the porous volume of shale inour methodology,” the report said. “For thepresent resource estimation, we chose notto include the porous volume of the shale.A well-by-well evaluation of the data isnecessary to achieve a reliable estimate ofshale porosity. However, because the upperand lower shales are quite thin, the resourceestimate may not change dramatically bythis exclusion.”
The resource estimate for the basalBanff/Exshaw “is based on the adsorbedgas content of the upper and lower shales,as well as the porous volume of the middleunit, which is the primary production unit
PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012 21
January 31st-February 1st 2013 | The Woodlands Waterway Marriott Hotel & Convention Center, Houston, TX, USA
*Please note that in order to book as a VIP delegate your company must be qualified as an end-user. WTG reserves the right to reject any registrations that do not fulfill this strict criterion. This offer is not available to existing Pipe Tech Americas Summit 2013 attending delegates, consultants or suppliers. *A 10% service fee will apply to bookings.
SAVE $200!*USD Register for only $1,295*USD before November 30, 2012.
Visit www.pipetechamericas.com/pnb Email [email protected] Call 416 214 1144
THE PREMIER EVENT FOR SENIOR EXECUTIVES WITHIN THE OIL PIPELINE AND GAS TRANSMISSION INDUSTRYFEATURED SPEAKERS:
Pipeline Research Council International (PRCI)
Cliff Johnson | President
Access Midstream Partners
Bob Purgason | Chief Operating Officer
Pipeline Hazardous Materials Safety Administration (PHMSA)
John Jacobi | Community Assistance/Technical Services (CATS) Manager Southwest Region
TransCanada
Tom Hamilton | Manager, Quality and Compliance, Keystone Oil Pipeline
Researched and Produced by:
FOR SALE
Arrow Truck Sales• Largest pre-owned dealer• All makes and models• Standard 90 day warranty• Trucks are inspected, serviced, reconditioned, and ready to work!• Financing available• Ability to transfer units anywhere in the country
2,500 Heavy Duty Trucks!
ANDY HAUSER [email protected]
Arctic Catering, Inc.Serving the Oilfield and Construction Industries since 1974
The Difference Is Our People!
Contact us at:701-842-2862
continued from page 1
ALBERTA RESOURCES
see ALBERTA RESOURCES page 22
The combined interval of theExshaw formation and the basalshale of the Banff formation is
stratigraphically equivalent to theBakken formation in the WillistonBasin. … “For this project,” thefindings noted, “the terms lower
shale, middle unit, and upper shalecorrespond to the Exshaw shale
(lower Bakken), the upper Exshaw(middle Bakken), and the lowerBanff basal black shale (upper
Bakken), respectively.”
22 PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012
ADVERTISER PAGE AD APPEARS
Companies involved in the Bakken, Three Forks and related plays
B A K K E N
Oil Patch Bits
Alaska Textiles
Allstate Peterbilt Group...................................................................................24
Anvil Corporation .............................................................................................23
Arctic Catering..................................................................................................21
Arrow Truck Sales .............................................................................................21
Atigun Inc.
Beaver Creek Archaeology.................................................................................4
Carlile Transportation
City of Grand Forks, ND .....................................................................................7
ClearSpan Fabric Structures.............................................................................19
Cruz Energy Services LLC (A CIRI Co.) .............................................................13
DAWA Solutions Group
Four Seasons Equipment..................................................................................16
Haws Integrated
Larson Electronics LLC
Lister Industries ................................................................................................20
Lynden...............................................................................................................11
MT Housing.........................................................................................................6
MT Rigmat LLC....................................................................................................9
North Dakota Petroleum Council
North Slope Telecom (NSTI) ...............................................................................5
Northern Oilfield Services, Inc. ..........................................................................5
OFS Energy Fund ..............................................................................................23
Petroleum News Bakken
Polyguard Products.............................................................................................3
Precision Equipment.........................................................................................20
Solsten Electric & Telecom
Solsten Hotel ....................................................................................................12
Umiaq
UNICO Inc..........................................................................................................10
Universal Steel
Wanzek Construction
Watford Ranch..................................................................................................17
Western Industrial Resources Corp.
Larson Electronics introduces portable work lightLarson Electronics LLC said Nov. 13 that it has announced the addition of the 6000
watt CM-4X15M-25-480V-3P for operators looking for portable 480 volt work site light-ing. Equipped with four 1500 watt adjustable metal halide light heads, this Magnalightwork site lighting system can beused from the ground or elevatedvia crane for work site area illumi-nation.
Larson has begun shipping theCM-4X15M-25-480V-3P 6000 wattportable work site lighting system.Equipped with four 1500 wattmetal halide lights that can inde-pendently be positioned in anydirection, this industrial lightingsystem can be powered with 480volts, Larson said. Constructed ofheavy duty aluminum tubing, thiswork area floodlight system is builtfor durability and demanding con-ditions. The design of the lightenables the operator to pick thelight system with a crane as easilyas using it from the ground, sincethe light heads can be pointed directly up or down.
“Our new CM-4X15M-25-480V-3P work site illumination system is designed to bepositioned within, above or below the work area for optimal coverage,” said Larson’sRob Bresnahan. “The 480 volt ballasts don’t require any kind of transformer or powerdistribution. Instead operators can tie off directly to their 480V panel and get the light-ing they require.”
For more information visit www.magnalight.com.
Call a circulation representative today at 907-522-9469 or email “Gift Sub Offer” withyour name and phone number to [email protected] and
a representative will contact you.
Offer only available for new 1yr subscriptions.
SUBSCRIBETODAYBuy yourself a New One Year print subscription and give one as a gift to afriend, family or colleague for ONLY $1!
B A K K E N
petroleumnewsbakken.com
in the Bakken play in the Williston Basin.”The TOC content ranges from 0.1 to
16.9 weight percent in the findings, basedon 75 samples from 13 wells. The
TOC content of the middle unit is gen-erally <1.0 wt. % in the southern area.
“There is some indication that the north-ern area may contain a higher content ofTOC,” the report said. “The thermal matu-rity of the basal Banff/Exshaw sourcerocks, based on vitrinite reflectance data,exhibits increased maturity to the south-west, corresponding to an increased depthbelow the surface.”
Using Dean Stark analysis and heliumpycnometry on select samples, the labora-tory calculated water saturation.
“The distribution of values for the basalBanff and Exshaw formations in the south-ern area shows dominance in the range ofabout 10 percent to 50 percent, which weused as P90 and P10 constraints in ourresource evaluation,” the report said.
Constraints not consideredThe report cautioned that the numbers
represent “endowment of hydrocarbons”and that geological and engineering con-straints along with economic, social andenvironmental considerations will eventu-ally determine the volumes that can berecovered.
Co-author Dean Rokosh said the opera-tors will be in the best position to say whichplays are economic.
“It’s still a learning stage in every one ofthese formations,” he said.
Data and information produced by thestudy may help in the evaluation, explo-ration and development of the resourcesand can be used by industry to help identi-fy shale gas prospects, plan effective
drilling and completions strategies andguide land acquisition decisions.
In Alberta, 15 formations have thepotential for shale and/or siltstone-hostedhydrocarbons, which may represent a valu-able resource for the province, the reportsays.
Estimates for the total amount of gas inAlberta shale vary from 80 tcf to 100 tcf,pointing to the “great potential size of theresource, which can contribute to econom-ic benefits and energy security for Alberta.”
The Energy Resources ConservationBoard launched its study of shale- and silt-stone-hosted hydrocarbons in 2006, initial-ly focusing on shale gas in the formationswhich had attracted industry interest, suchas the Colorado shales and theBanff/Exshaw.
As the study moved ahead, the ERCBfound that many of the formations it wasanalyzing also contained significant quan-tities of natural gas liquids and oil, prompt-ing it to expand the assessment.
In total, 3,385 samples were analyzed,including duplicates and standards forquality control.
Samples were collected from 65 out-crops and core samples were taken from316 wells. Of the total samples collected,2,746 were from core, 440 were from out-crops and 199 were standards and dupli-cates. Some of the data generated by theERCB’s resource appraisal group will bepresented in future digital databases.
Read the full report athttp://www.ags.gov.ab.ca/publications/OFR/PDF/OFR_2012_06.pdf
—GARY PARK
Editor’s note: The text under the sub-head “Technical snapshot of Exshawfindings” was compiled by KayCashman.
continued from page 21
ALBERTA RESOURCES
Contact Gary Park through [email protected]
properties for $650 million. The propertyincludes leasehold of roughly 120,000 netacres, primarily in Divide and Williamscounties, N.D., and production of about6,500 barrels of oil equivalent per day.
Continental is currently the largestleaseholder in the Bakken, with 984,040net acres as of Sept. 30. If completed, theproposed acquisition will increase thistotal to 1.1 million net acres. TheOklahoma-based company operates alarge portion of the acreage that it’sacquiring, and more than half of it is heldby production.
In addition, Continental said it hasentered into an agreement to sell its pro-ducing crude oil and natural gas proper-ties and supporting assets in its EastRegion for $125 million in cash, using theproceeds to help pay for the Bakkenacquisition. The East Region primarilyincludes properties east of the MississippiRiver, including the Illinois Basin and thestate of Michigan, among other areas.Production from the properties includedin the sale agreement averaged about1,100 boe per day during this year’s thirdquarter.
“We are divesting non-core, conven-tional assets and re-investing the proceedsin an attractive acquisition that furtherbuilds our strategic, core position in theBakken,” Hamm noted.
Transaction closes at year-endIf the Bakken acreage acquisition is
completed as planned, the company said itexpects additional 2013 drilling capitalexpenditures will be largely offset byincremental cash flow from the acquiredproperties. Both transactions are expectedto close prior to year-end 2012.
Continental reported strong productionon average for the third quarter of 2012,setting an overall record of 102,964 boeper day, 55 percent above third quarter2011 output and 9 percent above this
year’s second quarter. September produc-tion was 105,874 boe per day, the compa-ny reported.
Bakken-Three Forks production,which represents just over 60 percent ofContinental’s total output, was 62,453 boeper day for the third quarter, a whopping81 percent increase over the 2011 thirdquarter and 17 percent higher than thisyear’s second quarter, the company said.
In terms of operated wells, Continentalcompleted 46 gross (34 net) wells in theBakken in the third quarter of 2012, with41 gross (29 net) wells in North Dakotaand five gross (five net) wells inMontana.
Wells averaged 1,076 boepdCompany-operated wells completed
during the third quarter averaged 1,076boe per day for North Dakota Bakkenwells and 886 boe per day for Montanawells in their initial one-day test-periods.Twenty-two of Continental’s 41 grossoperated wells in North Dakota had initialproduction test rates of more than 1,000boe per day, while two of its five operatedMontana wells surpassed that level in thethird quarter of 2012.
Bakken well performance continues tomeet the company’s expectations,Continental said.
A notable project completed during therecent quarter was the Antelope-Bohmbach ECO-Pad in McKenzieCounty, consisting of the Antelope 3-23Hand 4-23H and the Bohmbach 3-35H and4-35H wells. The four wells tested at anaggregate initial rate of 6,240 boe per dayin total, for an average of 1,560 boe perday per well, with average flowing tubingpressure of 3,800 psi. Continental has an85 percent working interest in the wells.
In October the company announced anew five-year plan to triple productionand proved reserves by year-end 2017.
“2013 is shaping up as another year ofproduction growth with efficiency gains,”Hamm said. “We expect 30-to 35 percentproduction growth next year, the first yearin our new five-year plan. …”
Big plans for SCOOPContinental also has big expansion
plans for the so-called SCOOP play ofsouthern Oklahoma, in helping to attainits triple growth strategy. Production thereduring the third quarter was 5,183 boe perday, a 327 percent increase over last year’sthird quarter and 64 percent above thisyear’s second quarter output.
Meanwhile, efforts by Continental todevelop new opportunities to marketBakken oil to refineries and other marketson the East, West and Gulf coasts, arepaying off in big ways.
“Additional pipe and rail infrastructurehas broken the logjam of Bakken oil, andwe are marketing our barrels directly torefineries on all three coasts, as well as inCanada,” Hamm said. “This has resultedin reduced oil price differentials … in thethird quarter.”
Winston Frederick Bott, Continental’spresident and chief financial officer, saidseveral third-quarter operating trendsshould help the company increase produc-tion more cost efficiently in 2013, andcontinue to build cash flow.
More equipment available“Firstly, we are starting to see
increased availability of drilling and com-pletion equipment and crews in theBakken,” he said. “The supply of servicesand equipment is starting to come in linewith demand.”
Moreover, he said 45 percent of thecompany’s operated drilling fleet is situat-ed on multi-well pads, versus 10 percentin the first quarter, allowing the drilling ofsecond and third production wells in a sin-gle spacing unit. Because pad drillingminimizes rig moves, he added, the aver-age cost per rig move has been reduced 17
percent this year.“Pad drilling helps reduce drilling
cycle times,” Bott said, noting that cur-rently, the company is saving 10 percentper well on its ECO-Pad projects.
And though day rates for newerupgraded rigs are higher, “we’re offsettingthe higher cost with faster cycle times,” headded.
Wells per rig increasedFor example, he said the average num-
ber of wells drilled per rig increased 33percent to 1.2 wells per rig month in thethird quarter compared to the first quarter.Average days in the lateral, the most criti-cal part of the hole, dropped 18 percentthrough a combination of greater efficien-cy, improved execution and accuracy.
Continental recently demonstrated itsexecution capabilities with the NorthDakota-Lewisville well, which set aWilliston Basin depth record, drilling to atotal depth of just over five miles in 26days.
“So I think the headline is if you takeour drilling cycle spud-to-spud, well costsare 25 percent lower in the third quartercompared to the first quarter of the year,in large part because of these drilling effi-ciencies,” Bott said. “This is on top of the12 percent improvement in spud-to-spudwell costs that we had last year.”
On the financial side, Continental’sthird-quarter earnings before interest,income taxes, depreciation, depletion,amortization and accretion, propertyimpairments and exploration expenses,EBITDAX, were 492.3 million, a 46 per-cent increase compared to the 2011 thirdquarter. �
PETROLEUM NEWS BAKKEN • WEEK OF NOVEMBER 18, 2012 23
Serving the Oil & Gas Industry since 1971
100% ESOP-Owned
Upstream | Midstream | DownstreamSafety � Quality � Experience � Leadership � Resources
Value to every client on every project ANCHORAGE, AK
509 W. 3RD AVE BELLINGHAM, WA 1675 W. Bakerview
BILLINGS, MT 1015 Broadwater
CONCORD, CA 5600 Imhoff Dr.
Petroleum News Bakken. Combs said the acreage avail-able for the lease auctions in what he referred to as the“proven area” is decreasing, and that, he said, might bereflected in the higher prices.
Top price by Diamond ResourcesThe top price of $15,300 per acre in the November
2012 auction was paid by Diamond Resources ofWilliston for a 5.03 acre parcel in McKenzie County.Diamond Resources was also the high acreage buyer,successfully bidding on a total of 3,783 acres in Billings(77), Burke (1,083), Dunn (eight) and McKenzie (2,615)counties. The average price per acre paid by DiamondResources was $1,050 in Billings County, $237 in BurkeCounty, $1,100 in Dunn County, and $5,968 inMcKenzie County.
Denver-based QEP Energy purchased two parcelstotaling 214 acres in McKenzie County for $8,000 peracre. Black Ridge Oil and Gas of Minnetonka, Minn.,
paid $1,800 per acre for 80 acres in Mountrail County,and also purchased a total 160 acres in MountrailCounty at $1,800 per acre, and 160 acres in BurkeCounty with an average of $206 per acre.
Other successful bidders at the November auction:Houston-based Hess Corp. (20 acres in McKenzieCounty at $4,100 per acre); American Land ServicesLLC of Bismarck (six acres in McKenzie County at$1,300 per acre); LSM Energy Inc. of Mandan (eightacres in Billings County with an average of $1,250 peracre); Empire Oil Co. Williston (971 acres in BillingsCounty with an average of $509 per acre); NorthernEnergy Corp. of Bismarck (480 acres in Burke Countyat $25 per acre, 160 acres in Dunn County with an aver-age of $157 per acre, 80 acres in Mountrail County at$500 per acre, and 160 acres in Stark County at $125 peracre); Gary Warnke dba Warco Oil Co. (120 acres inBowman County with an average of $475 per acre);White Butte Resources of Bismarck (1,919 acres inMcKenzie County with an average of $82 per acre);Great Northern Energy LLC of Bismarck (780 acres inBowman County with an average of $49 per acre); and
H. Kermit Anderson and/or Rebecca Ann HiltonAnderson of Ronan, Mont. (80 acres in Bowman Countywith an average of $55 per acre, 160 acres in RenvilleCounty at $36 per acre, and 80 acres in Ward County at$26 per acre).
Next auction in FebruaryThe Minerals Management Division is currently
accepting nominations for the next lease auction, whichis tentatively scheduled for Feb. 5. The nominationsdeadline is Dec. 14. The location for the February auc-tion has not yet been determined.
Combs told Petroleum News Bakken that he has afew holdover parcels from the November auction thatwill be available at the February auction, but otherwisehe doesn’t know what to expect in terms of nominationsfor the February sale. However, he said he typicallydoesn’t see many nominations this far in advance of anauction, and most nominations are received in the lasttwo days of the nomination period. �
continued from page 1
LEASE AUCTION
continued from page 1
MEGA DEALS
Contact Ray Tyson at [email protected]
Contact Mike Ellerd at [email protected]
