Tuesday, June 5, 2012

Get In The Oil Business: Making Money From A Distance With The Bakken

I've been following Michael Filloon for a couple of years and he provides some very good, and I think accurate information.  I think that if you want to learn about the oil and gas business it helps to have "some skin in the game".......in other words, invest in the stock of some of these companies.  You WILL follow their ups and downs, and you will read the news, and pay more attention to political issues. 

Then if you're smart and get lucky, you might make some money.  For example, Brigham turned a nice profit when it was bought out by Statoil, and likewise when Petrohawk was acquired by BHP Billiton (?).

This is all a learning experience, for almost everyone.  I appreciate Mr. Filloon's analysis and commentary.

To read all of the following article, go here: http://seekingalpha.com/article/632641-bakken-update-continental-resources-well-results-are-getting-better?goback=%2Egde_156898_member_121215590

Michael Filloon picture
About the author: Michael Filloon

I have done a series of articles covering recent well results by Bakken operators. Information garnered from this shows improvements in 90-day IP rates. The main reasons are stimulation improvements from increase stages and proppant, but these companies are doing a better job in all phases of production. It wasn't long ago we were seeing 10 stage short laterals, and now long laterals with 30+ stages are common place. In my opinion, the two best operators are Kodiak (KOG) and Brigham (STO). It should be noted both have very good acreage positions as well. Kodiak's Polar and Koala prospects are its best, while Brigham's Alger Field acreage is thought by some to be the best in the Bakken. Whiting (WLL) has had some very good completions in Sanish Field, and has been the first to work the Pronghorn. Oasis (OAS) is getting much better, with significant upside in the Camp Field area.
Continental (CLR) may be the best way to follow the Bakken. It has a large acreage that covers a significant area in North Dakota and Montana. Because of this, it has well results in virtually every area of the Williston Basin. Here are its 4Q 2011 and 1Q 2012 well results.

Oil And Gas, The Kind Of Hope And Change America Needs Now

Jobs being created, money being earned, taxes being paid instead of tax dollars being spent, royalties and taxes filling state coffers, the entire emotional mood of the country becoming positive.......yes, all of those things are happening.  I believe American creativity (combining horizontal drilling and hydraulic fracturing of petroleum-bearing rocks), combined with industriousness and ambition, are proving America and its economy will not stay down.  That's who we are, what we are: fighters, survivors, competitors.

Ok, enough cheer leading, but what is happening in the oil and gas industry excites and pleases me.  The following articles just refer to the Marcellus Shale Play in the Appalachian Basin in the northeastern U.S.  There are many other such plays, some being developed, some not thought of yet.  I think things are looking up.  Let's keep it going.

June 4, 2012 | PERMALINK | @MarcellusGas

What They’re Saying: American Natural Gas
“Offers Hope in Hard Times”

Pittsburgh, Pa. – There is no question that the U.S., and global, economy continue to face historic challenges. In spite of the many ongoing economic recovery and job creation hurdles impacting countless families and businesses across the nation, the responsible development of clean-burning American natural gas remains a silver lining. Indeed, American natural gas is offering “hope in hard times” and is Building a Stronger, More Secure America. Here’s what they’re saying:

·         Fmr. Pa. Gov., Phila. Mayor and DNC Chairman Ed Rendell: This influx of jobs and investment spurred an unprecedented economic boom for our state and, thanks to a resource found right here in Pennsylvania, this economic revitalization continues. Cheap, clean, and abundant energy is available to heat our homes, fuel our cars and trucks, and power our state’s economy. It’s not a campaign slogan, it’s reality. … While improved air quality and savings at the pump are key advantages of natural-gas vehicles (NGVs), the most critical benefit is our increased economic, energy, and national security. America’s dependence on foreign oil puts our citizens and our economy in jeopardy. Year after year, as OPEC continues to raise the price of oil, we cannot afford to continue relying on unstable, undemocratic regimes to provide our energy. Natural gas offers a solution, an American solution, produced right here in Pennsylvania. … Despite these overwhelming benefits, there is a misunderstanding that residents must make a choice between protecting the environment and ensuring the dependable production of sufficient energy for power generation and transportation. This is a false choice. Pennsylvania can have both. … Natural gas can foster an economic, environmental, and security revitalization for our country and our state. (Philadelphia Inquirer op-ed, 6/3/12)

·         Pa. DEP Secretary Michael Krancer: Our ability to unlock the huge clean burning energy source contained in unconventional shale formations has transformed Pennsylvania into an energy exporter and will ultimately move our nation toward energy self-sufficiency. In addition, we are looking at an economic and energy transformation. We have already seen tens of thousands of new jobs here in Pennsylvania from the industry itself as well as from new industries spawned to support it. These are good paying career jobs in many fields. And that is just the start. There will be hundreds of thousands more good paying skilled and unskilled jobs in a variety of sectors. (Congressional testimony, 5/31/12)

·         “America’s Shale-Gas Revolution Offers Hope in Hard Times”: The story of America’s shale-gas revolution offers hope in hard times. … America’s shale-gas industry has since drilled 20,000 wells, created hundreds of thousands of jobs, directly and indirectly, and provided lots of cheap gas. This is a huge advantage to American industry and a relief to those who fret about American energy security. … America’s emissions have fallen by 450m tonnes in the past five years, more than any other country’s. (The Economist, 6/2/12)

·         “Shale Gas Boom Could Bring Manufacturing Jobs Back to U.S., Economists Say”: The shale gas boom hitting Ohio, Pennsylvania and several other states could provide a major advantage to manufacturers in the United States -- cheap energy that could significantly cut the costs to produce goods here, a group of economists said Thursday. "By 2025, the manufacturing sector alone could save $11.5 billion in energy costs," Robert McCutcheon, an economist with consulting group PwC, said at a manufacturing summit hosted by the Federal Reserve Bank of Cleveland. McCutcheon's company, formerly called PriceWaterhouseCoopers, released a study late last year predicting that as many as 1 million new U.S. manufacturing jobs could come from lower-cost energy. (Cleveland Plain Dealer, 6/1/12)

·         American Natural Gas Has Had an “Astonishing” Economic Impact, “Continues to Amaze”: America’s “unconventional” gas boom continues to amaze. … America’s gas boom confers a huge economic advantage. It has created hundreds of thousands of jobs, directly and indirectly. And it has rejuvenated several industries, including petrochemicals, where ethane produced from natural gas is a feedstock. … This is astonishing. Barely five years ago America was expected to be a big gas importer. Between 2000 and 2010 it built infrastructure to regasify over 100 billion cubic metres (bcm) of imported liquefied natural gas (LNG). Yet in 2011 American LNG imports were less than 20 bcm. … So long as well-shafts are properly sealed, there is hardly any risk that fracking will poison groundwater. (The Economist, 6/2/12)

·         Marcellus Shale Creating Blue-Collar Union Jobs in Western Pa.: Two skilled laborers toil around an automated pipe-cutting machine at Chapman Corp.’s new $6.6 million pipe fabrication shop, using laser precision technology that cuts the man-hours for a job from a full day to a half-hour. Nearby a custom-built “shake and bake” paint room allows the company to reduce the time it takes to paint pipelines for the Marcellus Shale natural gas industry from two days to eight hours or less, said Ron Delsandro, shop coordinator. “We can get that order out a day sooner,” Delsandro said Friday when the Washington-based company held an open house for the new shop, which is as long as two football fields. That’s how much of a demand there to meet the pipeline needs of the gas and oil industry, which is booming across Washington and Greene counties. (Washington Observer-Reporter, 6/1/12)

·         Clean-Burning Natural Gas Boosts Family Farmers: The oil and gas boom in western Pennsylvania has provided a much-needed infusion of capital to farmers in that area, members of the Tuscarawas County Farm Bureau learned during a trip to the Keystone State on Tuesday. “It’s had mostly a good impact,” said Steve Quillin, local Farm Bureau president. “Just driving around, we saw farmers making improvements and updates to their properties.” Money from oil and gas leases has allowed agriculture to expand, added Jerry Lahmers, chairman of the policy development committee for the organization. … The boom has benefited others beside farmers. Quillin said the owner of the restaurant where they ate lunch has seen his business triple in the past year.The oil and gas boom in western Pennsylvania has provided a much-needed infusion of capital to farmers in that area, members of the Tuscarawas County Farm Bureau learned during a trip to the Keystone State on Tuesday.“It’s had mostly a good impact,” said Steve Quillin, local Farm Bureau president. “Just driving around, we saw farmers making improvements and updates to their properties.” (New Philadelphia Times Reporter, 6/2/12)

·         American Natural Gas Creating Local Jobs: Low-cost natural gas also produces cheap fertilizer for farmers, thus lowering food prices, and feedstock for chemical plants, for cheaper plastics and other basic materials. Industries can now return to the United States and provide jobs locally. (Washington Times op-ed, 5/29/12)

·         “Phila. Gas Works Lowers Prices To Natural Gas Customers”: Good news for PGW natural gas customers: your monthly bill is going down. The Philadelphia Gas Works is lowering the price of natural gas by 2½ percent, and that should save the average customer more than $34 per year, according to spokesman Barry O’Sullivan. “Supply right now is abundant.” … O’Sullivan says this is the fifth quarter in a row without a rate increase, and compared to this time last year the average customer is paying $181 less for natural gas. (CBS Philly, 6/1/12)

·         More Natural Gas Jobs En Route to the Rust Belt: A natural-gas processing hub being developed in a partnership between Chesapeake Midstream Development, M3 Midstream and EV Energy Partners will be located on state Route 151 northwest of Scio, a North Township trustee has told Harrison County commissioners. ... The hub will receive and process natural-gas liquids, such as propane and butane, that are being extracted from Ohio’s Utica Shale. The facility is expected to be one of the largest of its kind in eastern Ohio and will create 50 to 125 jobs. (New Philadelphia Times Reporter, 6/1/12)

·         Building a Strong Local Workforce: Gas companies and the people who want to work for them packed the Wyoming County Fairgrounds Friday for the inaugural Business, Job and Gas Expo. The Wyoming County Chamber of Commerce has held annual job fairs for more than a decade and three years ago began hosting a yearly natural gas expo to connect local businesses and the emerging drilling industry, but this year’s fair was the first to unite the two concepts. … “When we’re looking for employees we are finding folks who are locals who have the skills,” said Helen Humphreys of gas-infrastructure company Williams. “As I look forward from two years ago there’s been a tremendous amount of collaboration between education and the industry.” (Times Leader, 6/2/12)

NOTE: Follow the Marcellus Shale Coalition (MSC) on Twitter (@MarcellusGas) and like us on Facebook for news about job-creating American natural gas development.