Northern Oil Q4 Production Up by 28% with Total 2013 Production of 4.47 mmboe

February 3, 2014 Kirk Eggleston

Northern Oil saw production numbers increase in Q4 of 2013 by 28%, bringing estimated boe/d to ~13,900. Total production for the entire year was 4.47 mmboe.

The company estimates their realized price for a barrel of oil equivalent (boe) will be between $74.00 - $75.00.

Northern Bakken Production Growing and Costs Decreasing

Northern Oil continues to experience a growing trend in the Bakken, with its Q4 LOE (lease operating expense) down by ~7% from ~8.40 per boe in Q3.

The company's growth pattern is leveling off slightly in the Bakken from its excpetional rate in 2012, when the company grew production by 95%.

“We experienced solid sequential production growth driven by strong activity levels during the fourth quarter,” said Northern’s CEO Michael Reger.”

n 2013, Northern Oil added 531 gross (40 net) wells to production. At the end of the year, the total well count for the company stood at 1,758 gross (146.2 net) wells.

Growth Concurrent with Strategic Company Decisions

Growth in 2013 was also concurrent with major strategic decisions for Northern Oil. In Q3 of 2013, the company re-purchased more than two million shares of its common stock.

Weather Slowing Production at Beginning of 2014

Inclimate weather in the Bakken at the beginning of this year has had an impact on production, but Northern claims it's drilling operations are robust, with 190 active drilling rigs in North Dakota.

“CEO Micheal Reger said, “completion activity has been slower given significant cold weather during the month.”

Northern also saw slows in production in 2013 due to poor weather conditions in the first quarter of 2013.

Northern Highlights for 2013

Q4 2013 Bakken production up 28% to ~13,900 boe/d
Total production was 4.47 mmboe
531 gross (40 net) wells added to production
Company total well count at 1,758 gross (146.2 net) by end of year
Q4 LOE (lease operating expense) down by ~7% from ~8.40 per boe in Q3
Q4 2013 realized price of boe estimated at ~74.00 - ~75.0

WBI Energy's Bakken Natural Gas Pipeline Enters Open Season - Dakota Pipeline

January 31, 2014 Kirk Eggleston

The open season to secure commitments for WBI Energy's natural gas "Dakota Pipeline" began on January 30th.

WBI Energy, a subsidiary of MDU Resources, announced plans to build a 400 mile natural gas pipeline at an estimated cost between $650 - 700 million dollars in June 2013. Costs for the project will remain at $650 million, but only cover 375 miles, shaving off 25 miles of pipeline.

Natural Gas Pipelines will Alleviate Bakken Flaring

It may not come as a surprise to readers on this site, but according to the North Dakota Industrial Commission (NDIC), ~30% of natural gas produced in the state is flared.

Without effective infrastructure in-place, no other economically viable choice exists for companies targeting the oil rich Bakken Shale.

“The Dakota Pipeline offers another avenue to move Bakken-produced natural gas out of the area and complements our other ongoing activities to build connections to several natural gas processing facilities,” said David Goodin, CEO of MDU Resources. “The increase in natural gas pipeline capacity out of the region will provide additional transportation opportunities for new production as it comes on line, as well as more capacity for natural gas captured through industry’s efforts to reduce the flaring of this valuable resource.”

WBI Expects Positive Response to Dakota Pipeline Open Season

WBI CEO, Steven Bietz, is optimistic about the "Dakota Pipeline", and indicated in a statement released by the company that there is viable interest in the marketplace.

“This project provides access to markets in the Mid-Continent and Great Lakes regions... Through the open season process, we intend to secure capacity commitments for the Dakota Pipeline and begin the process for obtaining the necessary permits and regulatory approvals.”

Pipeline Route and Construction

The proposed route for the natural gas pipeline will provide access to interconnections with other pipelines operated by Great Lakes Gas Transmission Limited Partnership, Viking Gas Transmission Company and possibly TransCanada Pipelines Limited. Interconnection points would be in Northwestern Minnesota.

According to the company, construction on the new pipeline could begin in 2016, with completion expected in 2017.

ConocoPhillips' Bakken Shale Production Up 80% in Q4 2013 to 43,000 boe/d

January 30, 2014 Kirk Eggleston

ConocoPhillips Bakken Shale production was 43,000 boe/d in the fourth-quarter of 2013, surpassing fourth quarter 2012 production of the formation by ~ 80%.

In the Lower 48 and Latin America, that accounted for about ~12% of the company's total production.

ConocoPhillips Production Growing Rapidly in the Bakken

In the fourth quarter of 2012, Conoco's Bakken production averaged 24,000 boe/d.

At the beginning of 2013, production was only expected to grow by 10%, but with the ~80% increase to 43,000 boe/d, Conoco is well within its 2013 target goal to produce an average of 40,000 boe/d over the next 4 - 5 years.

ConocoPhillips Capital Budget in Unconventional Drilling

In 2014, Conoco will spend ~$9 billion on its North American operations. Approximately $4.3 billion will be focused on the Bakken, Eagle Ford and Niobrara Shale. In 2013, Conoco's production in the Bakken, Eagle Ford and Permian grew 31% from ~167,000 boe/d in the fourth-quarter of 2012 to ~218,000 boe/d in 2013.

Bakken Contribution to Conoco's Reserves

The growth in unconventional drilling has contributed greatly to Conoco's reserves.

“CEO Ryan Lance, said, “2013 was a significant year for the company and we achieved several important, strategic milestones... [the company] achieved conventional and unconventional exploration success... [and] our capital program yielded strong organic reserve replacement.”

In 2013, Conoco added 470 million boe in Lower 48, primarily in liquids-rich shale plays, including the Bakken and Eagle Ford.

ConocoPhillips Production in 2013 and Plans Moving Forward at a Glance

ConocoPhillips Bakken Shale Q4 production up ~80% from 2012 to 43,000 boe/d
~ 12% of ConocoPhillips Lower 48 Production is in Bakken
$4.3 billion will be focused on the Bakken, Eagle Ford and Niobrara Shale in 2014
470 million boe in Lower 48 reserves added in 2013, primarily in liquids-rich shale plays, including the Bakken and Eagle Ford
31% production growth in Bakken, Eagle Ford and Permian to ~218,000 boe/d in Q4 2013

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.

Hess Capital Budget for 2014 Flat in Bakken at $2.2 Billion

January 28, 2014 Kirk Eggleston

Hess plans on committing nearly half of its $5.8 billion capital budget to unconventional shale resources in 2014, with $2.2 billion slated for development of the Bakken. That's the same figure Hess earmarked for development spending in the formation for 2013, but the company's strategic focus is slightly different this year as shale costs shrink.

Although overall investments in infrastructure are down slightly, Hess still plans on allotting $350 million for completing the expansion of the Tioga Gas Plant and associated pipeline and compression projects.

Also read:Alliance Pipeline's Tioga Lateral Is Online & Moving Gas Onto Its Mainline System

“Greg Hill, President and COO, said, “as a result of lower well costs and decreased investments in infrastructure projects we plan to operate 17 rigs versus 14 last year and to bring 225 new operated wells online in 2014 compared to 168 in 2013.”

The other nearly 10% of Hess's capital budget for unconventional shale resources will be in the Utica Shale in Ohio, with $550 million for drilling approximately 35 wells targeting the wet gas window. That's up $95 million from the company's investment in the area last year, but that does not necessarily mean that the company's focus is shifting away from the Bakken. It does indicate however that Hess is diversifying its interests in unconventional shale resources.

Read the full release at hess.com