Kinder Morgan Acquires Hiland

$3 Million Deal Moves Company into Bakken
Hamm sells Hiland

Contenental Resources CEO, Harold Hamm

Kinder Morgan announced last week that it finalized the acquisition of Hiland Partners, a midstream firm founded by Harold Hamm, CEO of Continental Resources. The deal, reported at $3 billion, includes assuming almost $1 billion in debt.

Hiland primarily serves production from the Bakken Formation in North Dakota and Montana and by operating crude oil gathering/transportation pipelines and gas gathering/processing systems including roughly 1,225 miles of pipeline. Company officials anticipate retaining nearly all of Hiland’s approximately 430 employees.

“We are delighted to establish a substantial midstream footprint in one of the most prolific oil producing basins in the United States,” said KMI Chairman and CEO Richard D. Kinder. “Hiland’s systems serve some of the Bakken’s largest and most successful producers, including Continental. We look forward to continuing to provide high quality midstream services to these producers and pursuing incremental growth opportunities in the basin.”

Harold Hamm began contemplating the sale due to financial worries stemming from plummeting oil prices and a very public, and expensive divorce. Hamm reportedly sold the interest in order to gain the necessary cash for a $1 billion divorce settlement, one of the largest divorce tabs ever recorded. This acquisition is on the heels of a personal loan in December at the same time the company slashed its 2015 capex for the second time.

Related: More Budget Cuts for Continental Resources

For more visit kindermorgan.com


More Budget Cuts for Continental Resources

Hamm Is Confident as Company Slashes Capex by 48%
Hamm slashes budget

Continental Resources CEO, Harold Hamm

For the second time in as many months, Continental Resources announces huge adjustments to its 2015 budget in response to plummeting oil prices.

More about Bakken operators slashing budgets for 2015

In a press release before Christmas, the energy giant announced the details including plans to slash their 2015 capital expenditures to $2.7 billion. Additional cuts will come as they decrease the number of operated rigs, which they predict to drop from 50 to approximately 31 operated rigs by the end of 2015.

In an interview with Forbes, CEO Harold Hamm explained that the company is taking the necessary precautions to weather this storm and protect bondholders. Seemingly unfazed in his comments, Hamm credits his confidence to his past experience with these types of scenarios.

Harold Hamm tells Forbes that “It’s all part of our plan. If prices go down, we are going to cut back to save our wealth — which is oil in the ground.” Hamm goes on to say that, “I’ve seen this six or seven times. We have ample liquidity, our total revolver available, no near-term debt, a lean organization with just 1,100 people, production of 200,000 barrels per day, and a low-cost, high-margin operation. We’re going to navigate right through it.”

Read more at Forbes.com

photo credit: david_shankbone cc


Bakken Operators Slash Budgets for 2015

Falling oil prices cause reconsideration of 2015 growth plans
Bakken Producers Slash 2015 Budgets

Bakken Operators Slash 2015 Budgets

As the free-fall in crude prices continues, major Bakken operators are expressing their caution by slashing their budgets for 2015.

Marathon Oil is the latest giant to announce that its projected budget will curb exploration spending by a whopping 20% for 2015. Though the company still forecasts spending in upwards of $4.4 billion, the decrease is another sign that the spiraling oil prices are casting a dark shadow over the incredible growth that is taking place in the shale regions.

“We remain confident in our investment opportunities in the three U.S. resource plays,” Marathon Oil President and Chief Executive Officer Lee Tillman said in a statement. “Our 2015 capital program is not opportunity constrained but will reflect sound discipline in managing cash flows in the current price environment.”

Related: Eagle Ford and Bakken Drilling Permits Fall 30%

This news comes as oil plunged Thursday to an incredible $54.11, prices not seen since 2009. And Marathon is not the only E&P company to back off on growth plans. ConocoPhillips is also shaving 20% off for 2015, by deferring investment in unconventional plays. The company, however, is continuing to affirm its commitment to Bakken region, which continues to be a major source of growth for the company. Bakken’s largest operator, Continental Resources, also seems to be getting skittish as it announced Wednesday it will reduce spending in 2015 by $600 million and delay new rig starts while they wait out the current situation.

For more on 2015 budgets visit Reuters.com


How the Keystone XL Pipeline Would Impact the Bakken

Senate Votes Today On Bill to Approve Controversial Pipeline
Pipeline Photo

Pipeline Construction | Click to Enlarge

The Senate will vote today on a bill to approve the Keystone XL Pipeline, after the House voted to approve it last Friday. The controversial pipeline would carry heavy oil sands crude from Canada and lighter Bakken crude to the Gulf Coast refining market.

In 2013, the Congressional Research Service released a report that stated 12% of the Keystone XL Pipeline’s 830,000 b/d ultimate capacity has been set aside for the transport of Bakken Crude. The report further said the Keystone XL pipeline project would include a lateral pipeline, called the Bakken Marketlink, to carry oil from Baker, MT, to the hub in Cushing, OK.

Although the Keystone XL Pipeline would play a role in the Bakken, its significance in the region has diminished slightly over time. Despite a still lacking midstream infrastructure in the Bakken, several pipeline projects have advanced as the political thunderstorm has ensued surrounding the Keystone XL Pipeline.

In September of 2013, Harold Hamm, CEO of Continental Resources, the Bakken’s second largest producer, said the Keystone XL pipeline was no longer critical in an interview with Amy Harder from the National Journal. For full disclosure, at the time of the interview, Hamm’s Hiland Partners was pushing its Double H Pipeline, a 460-mile pipeline project from Dore, ND, to Guernsey, WY., which is slated to be online by January of 2015.

Read more: No Need for Keystone XL – Continental’s CEO Harold Hamm

Political Sway for the Keystone XL Pipeline

Senator John Hoeven (R-ND) is the Senate bill’s chief sponsor. Hoeven has pushed for the pipeline for several years, and touts its benefits (i.e. an increase in jobs, energy security and a decrease in crude by rail transport).

“The Keystone XL pipeline is about energy, jobs, helping to grow our economy and increasing national security by increasing energy security,” Hoeven said in a prepared statement.

Keystone Pipeline Could Alleviate Rail Congestion from Bakken Crude

Currently, just under 70% of all the oil produced in North Dakota, where much of the Bakken’s development is concentrated, is transported out of the state by rail, ultimately making its way for now to refining markets, primarily on the East and West Coasts. The Keystone XL Pipeline could alleviate some of the rail congestion being caused by the transport of oil, which would free up the rail service in North Dakota and across the midwest for the transport of other goods, primarily agricultural.


Continental Resource’s Harold Hamm on Falling Oil Prices – Videos

Hamm: OPEC Causing Price Drop with Rhetoric

Continental Resources, the Bakken’s second largest producer, will not change its course on new drilling immediately due to falling oil prices, according to its CEO Harold Hamm. In a Platt’s Energy Week interview on Sunday, Hamm said prices would have to fall another 20% before Continental would significantly cut back its operations.

Hamm has been making the rounds on TV, also appearing on CNBC, talking about what he believes are some of the reasons behind the drop in oil prices. Hamm points the finger sharply at OPEC, accusing the Saudi’s of using rhetoric to dictate price.

Since June of this year, oil prices have been falling, and the reasons why have to do with supply v. demand. The shale oil boom, for instance, has increased the supply of oil worldwide, and demand has gone down in China, the world’s second largest oil consumer. But the main reason oil prices have dropped can be traced back to OPEC, which has for all intents and purposes allowed the price of oil to drop, by actively engaging in talks of opposing cuts to production to curb supply.

Hamm doesn’t believe the Saudi’s have the power to set oil prices, but the fact remains OPEC controls 81% of the world’s crude oil reserves. According to the Wall Street Journal (WSJ), which cited sources familiar with the matter, OPEC will oppose any cuts to it’s oil production ceiling., in its late November meeting in Vienna.

See  Harold Hamm interview:

Platt’s Energy Week Interview – 10/26/14


Continental Resources Appoints New President

Stock Drops Slightly Following Announcement of High Bakken Well Costs
Continental President & COO Jack Stark

Continental President & COO Jack Stark

Continental Resources appointed a new president and COO this week, following the reportedly unexpected resignation of Rick Bott last week.

Read more: Major Bakken Producer’s President Quits – Continental Resources 

The company provided few details when Bott left his position, other than he was leaving “to pursue other opportunities.” Bott’s replacement is Jack Stark, 59. Stark has been with Continental since 1992, and was formerly the company’s Senior VP of Exploration.

Continental Stock Dips Slightly

In the midst of its leadership change, Continental also announced that it plans to increase its’ portfolio-wide capital expenditures budget for 2014 to $4.55-billion ($2.85-billion in the Bakken). The reason for the increase has to do with Bakken well costs, which the company revealed this week are $10-million per well. That’s more than $2-million per well, compared to the same time last year. This comes at at time when most operators in the area are reducing the well costs. According to Forbes, as a result of the higher than expected well costs, the company’s stock dropped ~8% (about $5 per share) on Sept. 18th.

Continental is the largest oil producer in the Rockies,  Bakken Shale play and the SCOOP play combined. It is the second largest producer in the Bakken, behind Whiting Petroleum, which just recently acquired Kodiak Oil & Gas.

Read more at contres.com


Major Bakken Producer’s President Quits – Continental Resources

Botts Departure Leaves Leadership Gap

The Bakken’s second largest producer, Continental Resources, Inc., announced this week that President and COO W.F. “Rick” Bott, 54, has resigned to “pursue other opportunities.”

According to company officials, his duties will be absorbed by senior management. Bott joined Continental in 2012, and worked previously at Cairn India Ltd and in Devon Energy Corp’s international division.

Continental CEO Harold G. Hamm said, “we are grateful for his professional contributions and wish Rick the very best.”

During the second quarter of 2014, Continental Resources completed 224 gross (93 net) wells in the Bakken, and finished the reporting period with an inventory of approximately 84 gross operated (66 net) Bakken wells drilled, but not completed. Continental’s Bakken production totaled 108,573 boe/d (North Dakota: 94,702 boe/d, Montana: 13,871 boe/d) for the second quarter, which was an increase of 11% quarter-on-quarter and 23% year-over-year.

Read more: Continental Resources Bakken Production Up 

Continental says it is ahead of its five year plan to triple production and proved reserves from 2012 to 2017 and maintains its leadership position as the largest oil producer in the Rockies,  Bakken Shale play and the SCOOP play combined.

Continental currently holds ~1.14-million net acres in the Bakken.

Read more at contres.com


Continental Resources Bakken Production Up 11% in Q2 2014

Company Uses Modified Completion Techniques in Q2 2014 and Reports Positive Inter-Well Spacing Tests
Continental 2014 Production

Continental Production | Click to Enlarge

Continental’s Bakken production totaled 108,573 boe/d (North Dakota: 94,702 boe/d, Montana: 13,871 boe/d) in the second quarter of 2014. That’s an increase of 11% quarter-on-quarter and 23% year-over-year.

During the quarter, the company completed 224 gross (93 net) wells in the Bakken, and finished the reporting period with an inventory of approximately 84 gross operated (66 net) Bakken wells drilled, but not completed. The second quarter drilling inventory numbers are down from 100 gross operated wells drilled, but not completed at the end of the first quarter of 2014.  Continental expects to complete approximately 870 gross (287 net) wells in the Bakken in full-year 2014, including both operated and non-operated wells.

Read moreContinental’s Proved Reserves in Bakken Valued at $14.5 Billion – 2013

Continental Bakken New Completion Techniques Employed

The company continues to modify completion techniques. During the quarter, Continental conducted three slick water completions in an unspecified geological area of the play, which company officials say resulted in an average early cumulative production increase of 35% higher than the production trend for the company’s 603,000 BOE estimated ultimate recovery (EUR) model for North Dakota. Additionally, in the same geological area, early production was also stronger for three wells completed with increased proppant volumes, which averaged between 200,000 to 300,000 pounds of proppant per stage.

COO Rick Bott, said, “we’re pleased with several of the new completion methods we are testing and early results show significant improvements in well performance. We are studying the broader implications of applying enhanced completions across the play.”

Continental Bakken Well Tests Update

In 2013, Continental began testing different areas across the Bakken field to determine the optimum well density and pattern for maximizing recovery and returns.  So far, the company has initiated seven density pilot projects, all designed to include the Middle Bakken (“MB”) and Three Forks One, Two and Three across the company’s approximately 1.2 million net acres of leasehold.

Three of these projects are testing 1,320-foot inter-well spacing and four are testing 660-foot inter-well spacing. Four of the projects have already been completed. Company officials indicate positive results from the first completed 660-foot inter-well spacing test:

  • Wahpeton (660 ft test); Initial Production (IP) rate for 12 wells in unit – 1,015 boe/d; IP rate for three MB wells in unit only – 1,730 boe/d

Three more projects testing the 660-foot inter-well spacing are in various stages of drilling or completion. The new wells are expected to be completed in the second half of 2014.

Read more at contres.com


Whiting Petroleum Acquires Kodiak Oil & Gas – $3.8 Billion

Transaction Creates Largest Bakken Producer
Whiting Bakken Acreage Map

Whiting Bakken Acreage Map | Click to Enlarge

Whiting Petroleum announced on July 13, 2014, that it would acquire Kodiak Oil & Gas, in an all stock transaction, for $3.8 billion. The deal makes the combined company the largest Bakken/Three Forks producer, unseating Harold Hamm’s Continental Resources from the top spot.

Next to the Eagle Ford Shale in South Texas, the Bakken Shale is the most prolific shale play in the world, with daily oil production exceeding 1-million b/d. With Whiting’s acquisition of Kodiak, the company is positioning itself to be an even more formidable force in the Bakken.

In the first-quarter of 2014, Whiting and Kodiak had combined production of 107,000 boe/d, and officials indicate total 2014 production will be 152,000 boe/d. The combined company has 855,000 net acres and an inventory of 3,460 net drilling locations.

“The addition of Kodiak’s complementary acreage position (approx. 173,000 net acres) and substantial inventory of high return drilling locations will provide the opportunity to drive significant value growth for both Whiting and Kodiak shareholders through an acceleration in drilling and increase in operational efficiencies,” said Whiting CEO James Voulkner.
Kodiak Bakken Acreage Map

Kodiak Bakken Acreage Map | Click to Enlarge

Whiting officials said the deal is valued at $6 billion when Kodiak’s net debt of $2.2 billion is absorbed.

Kodiak shareholders will receive 0.177 share of Whiting stock in exchange for each of Kodiak common stock they hold, representing a value of $13.90 per share based on the closing price of Whiting shares on July 11, 2014.

The transaction is expected to close in the fourth quarter of 2014.

 

Read more at whiting.com


Continental Resources: Bakken Hits 1-Billion Barrel Mark

Two-thirds of Total Oil Produced in the Last Three Years
Continental 2013 Production

Continental Production | Click to Enlarge

Citing IHS data, Continental Resources revealed the Bakken field of North Dakota and Montana reached the milestone of 1 billion bbls of cumulative light, sweet crude oil produced during first quarter of 2014.

Two-thirds of the total was produced in the last three years according to Continental.

 

 

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