Abraxas Buys 210 Bakken Acres

May 4, 2015 Elizabeth Alford

In a show of optimism, Abraxas Petroleum announced that it has purchased additional land in the Bakken region and plans to increase drilling by later in 2015.

The San Antonio-based company recently bought an interest in 210 acres of property in the Bakken Shale in North Dakota and will be seeking regulatory approval from the NDIC to control the acreage. This will pave the way for the Abraxas to add another 15 Bakken and Three Forks wells to the company’s inventory. Abraxas’ activity in the Williston Basin includes the Jore 5H, Jore 6H, Jore 7H and Jore 8H wells in McKenzie County, where the company hopes to begin fracturing in late May.

“Bob Watson, President and CEO of Abraxas, commented“The acquisition of additional Bakken interests directly plays into our strategy of acquiring interests at a reasonable cost that will provide future development in our core areas. Each operated unit we are able to successfully acquire adds approximately two years of inventory for our Company owned drilling rig and substantial potential reserves. We will continue to search for similar opportunities that will allow us to further consolidate our interests in our core regions in the currently distressed environment.”

Abraxas released 2015 first quarter production numbers showing an average of approximately 6,590 boepd (4,475 barrels of oil per day, 8,871 mcf of natural gas per day, 637 barrels of NGLs per day). The company reports that gas processing constraints in the Bakken negatively impacted production volumes.

Crude prices increased to $67 a barrel today, reaching a 2015 high after prices plummetted in the fall.

Occidental Petroleum Reduced 2015 Capex by 33%

February 10, 2015 Elizabeth Alford

Occidental Petroleum Corporation reported during its earnings call in late January that the company sustained a fourth quarter loss of $3.4 billion.

In response to low oil prices, Occidental announced it will scale back its 2015 capital spending by 33 percent to $5.8 billion from $8.7 billion spent in 2014. In addition to the cuts, the company will also be reducing its activity in the Bakken.

This confirms the news we reported in October that the company was in the process of restructuring, and looking to sell off its Williston Basin assets. Read more here.

“Stephen Chazen, President and Chief Executive Officer confirmed that the company “minimized our development activities in the Williston Basin, domestic gas properties, Bahrain, and the Joslyn oil sands project, as these have subpar returns in this current product price environment. These efforts should result in a reduction in the cost of executing our capital program, as well as reducing our operating expenses”

Occidental may be moving out of the Bakken sooner than later. The Dickinson Press reported this week that the company had one rig finishing up in Dunn County and plans to move the equipment offsite within a week.

Other company highlights include a year-end 2014 cash balance of $7.8 billion, which exceeds their total debt of $6.8 billion. Additionally, the company projects that oil and gas production will grow 6 to 10 percent in 2015.

Learn more about Occidental's Bakken operation

How the Keystone XL Pipeline Would Impact the Bakken

November 18, 2014 Kirk Eggleston

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.

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.

Is the Bakken America's Last Oil Boom?

May 30, 2014 Kirk Eggleston

At the Thirtieth Annual Sanford C. Bernstein Conference on May 29, 2014, EOG Resources CEO Bill Thomas indicated the company doesn't see another shale play of the same magnitude as the Bakken or Eagle Ford on the horizon.

According to Thomas, the Bakken and the Eagle Ford currently produce 75% of all horizontal oil production in the U.S., but he notes the two plays are beginning to mature, and their growth rates are beginning to slow.

“Thomas said, “we don’t see another play out there that’s like an Eagle Ford or Bakken that will maintain this tremendous growth that we have had going forward. So production we believe is beginning to slow. In 2012, [production] was about 1-million b/d per year and then last year was a little over 800,000 b/d per year. We are looking at maybe this year 750, maybe in 2016 650,000 b/d per year and really over a fairly short period of time we really believe that the U.S. will be in kind of a very low growth mode. So oil is not going to just go on forever because there is not really another Eagle Ford or Bakken out there.”

Thomas' postulation about the Bakken and Eagle Ford, which is likely an accurate depiction, doesn't diminish the impact these plays have already had, or will continue to have on the oil and gas industry, and the U.S. economy. According to the EIA, production in the Bakken Shale has now exceeded the 1-million b/d mark. Recently, Continental Resources, the Bakken Shale's largest producer, released data showing 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.

Emerald Acquires Bakken Acreage in the Wiliston Basin for $74.6 Million

January 29, 2014 Kirk Eggleston

Emerald Oil acquired 20,800 net acres in the Williston Basin for $74.6 million in two separate deals in early January.

The company now controls 85,000 net acres in the area.

With the closing of this deal, Emerald is now the operator for 75% of its acreage. The company's purchase includes Bakken and Three Forks producing properties and an undeveloped leasehold in McKenzie and Williams counties in North Dakota. Without valuing production of 350 boe/d, the company paid a little more than $3,500/acre.

“McAndrew Rudisill, CEO, said, “This additional acreage expands Emerald’s presence in our Low Rider and Lewis & Clark focus areas of McKenzie County, ND where we have seen strong production growth as a result of our successful operated well program.”

Roughly 19,500 of the net acres are adjacent to the company's Low Rider operating area, with 17 of the 19 drilling spacing units acquired being in this area.

Approximately 62% of the acreage acquired is already held by production, with ~350 boe/d of current net production.

Emerald Bakken Acquisition Highlights:

Emerald acquired 20,800 net acres for $74.6 million in the Williston Basin
62% of acquired acreage is held by production at 350 boe/d
Emerald's assets now include 85,000 net acres in the basin

Hot Area for Acquisitions

Emerald is not the only company expanding it's acreage in the Bakken. In August of last year, Whiting Petroleum announced the acquisition of 39,310 gross (17,282 net) acres targeting the Bakken in North Dakota and Montana for $260 million.

Whiting's acreage is located in McKenzie and Williams counties in North Dakota, and Roosevelt and Richland counties in Montana.

In total, Whiting has 714,541 net acres in the region at a cost of $643 million or less than $900/acre.