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My Recent Posts · 01/01/08

Quote:
Estimates have ranged wildly, said Julie LeFever, a geologist with the North Dakota Geological Survey, but many scientists suspect that the Bakken may contain 200 billion barrels of oil significantly more, for instance, than the much debated field in the Arctic National Wildlife Refuge. Still more in doubt, though, is how much trapped oil can be recovered./

200 billion barrels of oil? The investment community is all gaga over Brazil's offshore Tupi field and its tiny 8 billion barrels. I don't read about excitement over the Bakken Shale.

Pat

www.nytimes.com/2008/01/01/us/01dakota.html?ei=5087&em=&en=e6697c76d34c39c4&ex=1199336400&pagewanted=all

Oil in North Dakota Brings Job Boom and Burdens

I hope the place wont change, but it probably will, said John Warberg.

By MONICA DAVEY
Published: January 1, 2008

STANLEY, N.D. At dawn, people from faraway states huddle outside the Mountrail County courthouse here, the coldest ones leaving briefcases and books to secure their spots for the moment it opens.

John Warberg, a farmer who receives royalties for a new oil well. Mr. Warberg near an oil well on his family's land.

Seeking oil near Stanley, N.D.

Land records at the Mountrail County courthouse.

It is a peculiar sight in Stanley, population roughly 1,200, one in a constellation of isolated and, in some cases, shrinking farm towns along North Dakotas wide open western edge where few residents recall a traffic jam.

The early morning line hints at the sudden fortune that has arrived: Oil companies, saying that they located what may prove to be one of the largest recent oil finds in the United States, have begun drilling all through these parts. Fifty-two drilling rigs were at work in the state at the end of December; a count taken in October showed that 198 new wells had been drilled in a year, state officials said.

At the courthouse, the crush of people, known as landmen in the world of oil, spend their days scouring enormous old binders of deeds, each trying to sort out who owns the mineral rights to land that once seemed valuable mainly for growing durum wheat or peas.

It seems like God flew over this country, and a dart landed on Granddads homestead, said John Warberg, who is being paid royalties for the new oil well on the land where his grandfathers crumbling, nearly century-old homestead shack stands.

People here say the oil boom could be the answer to fears that Stanley might one day disappear, like so many ghost towns in North Dakota, where the population peaked in 1930. In Stanley and towns like Killdeer, Parshall and Tioga, oil crews have filled roadside motels. And schools are growing or, at least, not shrinking anymore.

But new strains have flowed along with the oil. Roads and water systems are being used at levels unseen here. The number of workers switching to oil jobs the oil industry in the state expects to need 12,000 new workers by 2010 has left some restaurants shortening their hours, county and town officials leaving positions unfilled, and at least one desperate fast food place offering signing bonuses.

A year ago, the North Dakota Department of Commerce began recruiting prospective workers at job fairs in Chicago, Denver and St. Paul. Marketed mainly to people who had once lived in North Dakota, the fairs even provided home-state food buffalo meat, a dessert known as kuchen and chocolate-covered potato chips to lure people back.

Were going to get nothing out of this except a headache and a heartache, Ken G. Halvorson, the county sheriff here who has been elected eight times (and also serves as coroner), said of the oil boom.

For the moment, North Dakota, where oil was first found in 1951, is only a tiny piece about 2 percent in the nations domestic oil production, well behind Alaska, Louisiana, Oklahoma, Texas and others. About 129,000 barrels daily come from North Dakota, said Ron Ness, the president of the North Dakota Petroleum Council, but the numbers are growing.

The oil is being drawn from a formation beneath the land here and parts of eastern Montana and Canada. Named the Bakken, after the owner of the land where oil was first found, it was identified more than 50 years ago, but no one figured out how to tap into it successfully until recently.

In 2001, new exploration into the Montana side of the Bakken an Oreo cookie-like structure of shale, a layer of tan sandstone and siltstone, then shale again began netting crude oil, thanks in part to new extraction technology. By about 2004, with rising oil prices, companies began sending a few landmen to western North Dakota; in the area around Stanley, the boom took off in 2007.

Lately, landmen some are women fill the county recorders office, the courthouse hallways, the community room upstairs and even the jury deliberations room, save the rare day when a jury trial comes to quiet Mountrail County.

In a single month this fall, the county recorder, Joanne Stanley, was handed 1,200 documents for recording most of them legal agreements for drilling rights on the land of local farmers, and more than twice what had been a normal workload.

The size of the target is whats got everybody excited, said Lynn Helms, the director of the North Dakota Industrial Commissions oil and gas division, which regulates drilling in the state.

No one is certain how much oil the Bakken will produce. However, Steven G. Grape, of the federal Energy Information Administration, said calculations from the Montana side already suggested that, aside from five fields in Texas and California, it was producing more crude oil than other onshore fields in the lower 48 states.

Estimates have ranged wildly, said Julie LeFever, a geologist with the North Dakota Geological Survey, but many scientists suspect that the Bakken may contain 200 billion barrels of oil significantly more, for instance, than the much debated field in the Arctic National Wildlife Refuge. Still more in doubt, though, is how much trapped oil can be recovered.

But Mr. Helms can also list worries that the oil boom has created. Much of the natural gas that has also been found in the drilling here is being burned off while workers race to build new natural gas plants in the region. The area needs more pipeline to make use of the oil it is finding. It also needs more electricity for its new gas plants, more fresh water for all this drilling, more housing and more workers.

Some here also wonder how long the oil boom will last. In places like Williston, a city of more than 12,000 about 70 miles west of Stanley, people have been through such a boom before and suffered through the bust that followed.

When oil showed promise in the early 1980s, some thought Willistons population would grow to 40,000. City officials took on more than $20 million in debt to build streets and sewers for subdivisions that never arrived after the price of oil collapsed in the mid-1980s.

No one has forgotten.

Some people are conservative about this now, and some people are just bitter, said Cyndy Aafedt, an owner of El Rancho Motor Hotel in Williston, its 92 rooms nearly always full these days.

Ms. Aafedt has struggled so much to fill 10 job openings that she sometimes cleans rooms herself. I think people just say they dont think this will last, though, she said. They dont want to get caught with their pants down, admitting that they actually do believe.

Mr. Warberg, the owner of a farm where an oil well was drilled a year ago, would not say how much he was earning from EOG Resources Inc., the company that sunk the well. Such talk, he said, would hardly suit a North Dakotan.

What Ive gotten this far, Mr. Warberg said, some people would consider it wealth and some people would blow it on one shopping trip.

Mr. Warberg said he hoped to use his money on travel, bills, farm equipment and new door hinges on his blue 1983 Chevrolet pickup. He said he also planned to continue planting durum wheat and wearing his old work boots.

Mr. Warberg, 55, said that he sometimes missed the solitude and silence he grew up with here, but he proudly pointed out the well that carried his family name on its sign. Standing on a rise beside the well on a recent evening, the distant sound of drilling echoed. The glow of flares natural gas burning off warmed the air and dotted the landscape. Oil trucks kicked up dust along the gravel roads.

I hope the place wont change, but it probably will, he said. I have thought about this a lot. I guess what I hope is that I dont change.

My Recent Posts · 01/02/08

I have a few friends working in the region. The Bakken play really started a few short years ago and they have been working non-stop since 2002 as I recall. Now as western oil is about $35/bbl it should continue to be booming. I have considered looking into working the region myself but Wyoming oil and gas has been hot as well.

- Black Blade

The meek shall inherit the Earth, but not the mineral rights!

My Recent Posts · 01/22/08

The Bakken Trend: Lost Dutchmen Mine of the Oil Patch?
SEEKING ALPHA
STEPHEN WARD

The Bakken Trend: Lost Dutchmen Mine of the Oil Patch?
posted on: January 22, 2008 | about stocks: CPGCF.PK / ENY / EPG / ERF / KOG / MRO / PENFF.PK Where to drill? The ultimate factor in any oil company's success or failure.

Stories abound about great oil riches in faraway places yet undiscovered; the foot of the Himalayas, the Spratley Islands, the Atlantic Rockall volcanic peak. These stories have become legend with ever increasing speculation on the estimates of recoverable reserves. Fact or fiction - or partly both?

Such a legend exists in the continental U.S. and Canada. The Bakken Trend, located in the giant Williston basin that covers a part of South Dakota, most of North Dakota, at least a third of Montana, a smidgeon of Manitoba and the Southeast corner of Saskatchewan. The Bakken is truly huge.

Oil companies, including the majors, have known for some time that oil exists in the Bakken, but the problem was getting it out. The few wells that were drilled in the years prior to 1996 produced some oil but soon Gave up the Ghost, so to speak. The majors, such as Shell (RDS.A), left and put their money into the Gulf of Mexico. Geologists had come to believe that the Bakken oil had migrated elsewhere and where was anyones guess.

Then the stuff of legends came, along with one geochemist by the name of L. C. Price. Mr. Price, working for the US Geological Survey [USGS] performed extensive chemical analysis of abandoned oil wells, primarily in North Dakota and came away with an astonishing conclusionThe Bakken trend contains up to 200 billion to 500 billion, yes that is with a B, of original oil in place.

Here is where the story starts to take on the likeness of the Lost Dutchman Mine of the Superstition Mountains.

Price turned in his report to the USGS in 1999 and the USGS started its own review of Prices work. Price died in 2002 with the USGS still holding onto his report and refusing to release the findings of Price and the USGS Review.

Like the German immigrant miner, Jacob Walz, who claimed he had found the legendary gold of the Supersticion Mountains, Price died without vindication of his fantastic claim, like the Lost Dutchmen mine itself, the Bakken oil remained elusive and to some illusory, the stuff that makes a good story around bars filled with oil men.

To add to the legend, the USGS, 9 years later, still has refused to release Prices report and their review of Prices work citing, Prices unorthodox approach. Even Federal Senator Byron Dorgan of North Dakota couldnt pry the USGS loose with a demand for release of the two reports.

But then comes along oil geologist Richard Findley. Now the seeds of legend grow stronger. Findley, a highly competent geologist with a strong penchant for independent work, suffered for years scrimping by financially unable to interest anyone with money to invest in his ideas. Financial matters were so bad for Findley that Findley came close to leaving the oil business entirely.

True to the stuff of legends, he didnt.

Findley reviewed old drilling logs and old seismic data from abandoned wells and fields in the Bakken. Findley, in a moment of true inspirational genius came to the conclusion that all other attempts at the Bakken had missed the oil source entirely and had drilled right through it bypassing the oil that lies between two shale layers. Findley got Lycos Energy of Houston interested in the theory and Lycos brought in Halliburton to try at that time new techniques of horizontal drilling and fracturing.

What Findley, Lycos and Halliburton discovered is the Elm Coulee Field in eastern Montana. Elm Coulee now pumps 45,000 to 50,000 barrels a day of light sweet crude, real Texas T, at a 40 to 42 degree API.

Further research reveals that other analysis by geochemists and geologists not associated with the USGS confirm that Price was in essence correct. The estimates range from a low of 10 billion barrels to confirmation of Prices 200 to 500 billion barrel estimate. After Findley and companys 1997 discovery of the Elm Coulee one would think the rush would be on, but It wasnt and didnt in the U.S. But Canada was a little different story.

In Manitoba, Canadian oil companies drilled in the Daley/Bakken field and came up a winner with small but commercially viable oil production. In Saskatchewan, Canadian companies came up with the same only larger pools of oil. For the last several years Southeast Saskatchewan has been the only growth business for oil rig and drilling companies in Canada. The drilling activity is hot and will get hotter with infill and step out drilling alone as well as exploration drilling.

But finally, it now appears that the Bakken Rush is finally on in the U.S. as well as in Canada.

In Canada, there have been new entrants such as Petrobank (PBEGF.PK), Pennant Petroleum (PENFF.PK) and heavy consolidation with larger companies such as Crescent Point Energy Trust (CPGCF.PK) buying up the smaller players such as Inova.

In the U.S., the buying spree has spread as well. Canadian Energy Trust, Enerplus (ERF), purchased 9,000 plus barrels a day of production and large unexplored land areas in the Bakken. Canadian firms such as Paramount Resources and micro companies such as Primary Petroleum have now entered the fray with land purchases and scheduled exploratory drilling.

Where are the Americans? They finally arrived in the last 2 to 3 years. EOG Resources (EOG) is now producing from the Bakken and Bakken production has boosted the bottom line handsomely. Marathon Oil (MRO) is the only American integrated company in the trend and has set up an office in North Dakota solely to exploit the Bakken. Small juniors such as Kodiak (KOG) are recent arrivals there as well.

For the investor, a pure Bakken play is tough. My research indicates there arent any pure plays yet. All the companies mentioned have only a portion of their total production coming from the Bakken and the rest have just arrived and are scheduling exploration.

My suggestion to the investor is to use a barbell investment approach. Purchase the larger companies currently achieving production from the Bakken as one end of the barbell. These companies will have the financial power to explore, exploit and acquire fields and other companies working in the Bakken as is their current strategy.

The other side of the investment barbell is the junior and micro companies engaged in the exploration process. This will give the investor the potential of large maybe huge upside gains.

At this juncture I am advocating to the investor the Bakken play itself and not any particular company or companies. There are plenty of companies to choose from and in all sizes. Clearly my emphasis is the entire Bakken Trend. I believe large amounts of pools of oil in place will be found. If a standard 10 percent is used to measure the extractable reserves then the prize is in the billions of barrels. Do your homework, pick a big operator in the Bakken and pick up a couple of small ones.

Still doubting? Again, like the Lost Dutchman Mine that had several people clearly re-discover the treasure only to keep it secret and die with that secret, the Bakken also has its new discoverers. Only this time its not a secret.

As recently as 2006, geologists J.Flannery and J. Kraus presented a paper using even more sophisticated computer modeling and extensive data input from The North Dakota Geological Survey and Oil and Gas Division. The model and data estimated initial barrels in place at 200 billion and prior to the papers release in 2006 estimates were refined upwards to 300 billion barrels of oil in place in North Dakota and Montana alone.

And there is more.

Petroleum geologist Julie Lefever, who originally assisted L.C. Price in his initial report, has published a paper estimating that in North Dakota additional barrels of oil maybe found in other strata of the Bakken other than Findleys absolute middle layer zone with a larger oil bearing zone in North Dakota than the one in Montana.

The rush for The Bakken is finally on; investors should catch it if they can.

My Recent Posts · 02/25/08

The Bakken Trend Increasing in Value

posted on: February 25, 2008 | about stocks: BEXP / CPGCF.PK / MRO / NOGS.OB / NOIGF.PK / PBEGF.PK / TOGSF.PK

Email In an eye popping purchase, a new Canadian oil and gas trust paid a record price for producing and non-producing Bakken lands.

Canadian insurer Manufacturers Life, in a 50 percent interest in a partnership with NAL Oil and Gas Trust (NOIGF.PK) on February 11, 2008, set a record in purchasing Bakken Lands in Southeast Saskatchewan.

The MLI/NAL partnership acquired two private companies, Tiberius Exploration and Spear Exploration, for a total of $115 million. The new partnership receives 3,336 acres of land, 2.1 million barrels of P+P reserves and a current 925 barrels of daily production.

The key metric in this purchase for investors to be aware of is the 120,000 dollar per flowing barrel cost the partnership paid in this transaction. This rise in purchase price for Bakken land, based on the flowing barrel metric, is right at the current estimated flowing barrel costs for oil sands start up and development operations; considered the highest flowing barrel costs in the world.

If the investor looks at Crescent Point Energy Trusts (CPGCF.PK) January 16, 2008 purchase of Pilot Energy, you see that CPT in a very comparable deal paid 73,000 dollars per flowing barrel or 66 percent of what NAL/MLI did for their Bakken purchases several weeks later.

CPT received 24 percent more acreage with 22 identified low risk drill locations in addition to a full 1,000 BOE a day of production for 76 million dollars as compared to NAL and MLIs $115 million purchase.

If the investor looks at Petrobanks (PBEGF.PK) recent January 28, 2008 purchase of Peerless Energy, Petrobank only paid 60,000 dollars per flowing barrel for Bakken lands and 3400 bopd production, half as much as the NAL/MLI partnership paid.

All of these purchases were adjacent to existing acreage owned by the purchaser. However, it is the willingness of NAL/MLI Partnership to significantly pay up from Crescent Points and Petrobanks acquisitions in only a matter of weeks to much higher price levels. It is also significant that MLI chose the Bakken to make its first foray into direct ownership of oil and gas.

Tristar Oil and Gas (TOGSF.PK) has done three acquisitions in and around the Bakken Saskatchewan in the last two months, taking out private and public companies for a total consideration of $510 million with TOG estimating an 8 to 1 recycle ratio on some of the lands.

The Canadian side of the Bakken is clearly consolidating and apparently with ever higher priced acquisitions.

The American side of the Bakken is purchasing land and conducting exploratory drilling and farm outs. Evident of this is Northern Oil and Gas (NOGS.OB) holding 70,000 gross (22,000 net) acres in the Bakken on the North Dakota side with two recent additions of 3,000 and 6,000 acres this month alone. NOGS has farm in agreements with Brigham Exploration (BEXP) and Marathon Oil (MRO) with 25 permitted Bakken wells at the time of writing.

The American side has yet to see the consolidation like the Canadian side due to a much larger land area that offers plenty of running room for explorcos. Inevitably, it is a matter of time before drilling success is achieved in the Dakotas and Montana with increasing 3-D seismic delineation and improved technology to extract the oil source. With that will come consolidation, but not for awhile.

This gives the investor the opportunity to take a chance and get in rather early.

Again, I recommend the investor use a barbell approach to the Bakken, splitting the investment dollar between one or two larger and producing companies and 2 or 3 of the smaller explorcos. Again, do your homework on these companies. There are plenty of companies out there to choose from in both Canada and the U.S.

The future price of oil, reserve additions and the longevity of their new lands will determine whether MLI and NAL paid too much. But with OPEC considering a production cut, Chevron (CVX) going back to drill on the North Slope in spite of a doubling of the Alaskan Petroleum Tax and Nigeria wanting a bigger cut from her offshore operations, dont bet on it.

seekingalpha.com/article/65909-the-bakken-trend-increasing-in-value

My Recent Posts · 02/25/08

Massive Oil Deposit Could Increase US reserves by 10x

America is sitting on top of a super massive 200 billion barrel Oil Field that could potentially make America Energy Independent and until now has largely gone unnoticed. Thanks to new technology the Bakken Formation in North Dakota could boost Americas Oil reserves by an incredible 10 times, giving western economies the trump card against OPECs short squeeze on oil supply and making Iranian and Venezuelan threats of disrupted supply irrelevant.

In the next 30 days the USGS (U.S. Geological Survey) will release a new report giving an accurate resource assessment of the Bakken Oil Formation that covers North Dakota and portions of South Dakota and Montana. With new horizontal drilling technology it is believed that from 175 to 500 billion barrels of recoverable oil are held in this 200,000 square mile reserve that was initially discovered in 1951. The USGS did an initial study back in 1999 that estimated 400 billion recoverable barrels were present but with prices bottoming out at $10 a barrel back then the report was dismissed because of the higher cost of horizontal drilling techniques that would be needed, estimated at $20-$40 a barrel.

It was not until 2007, when EOG Resources of Texas started a frenzy when they drilled a single well in Parshal N.D. that is expected to yield 700,000 barrels of oil that real excitement and money started to flow in North Dakota. Marathon Oil is investing $1.5 billion and drilling 300 new wells in what is expected to be one of the greatest booms in Oil discovery since Oil was discovered in Saudi Arabia in 1938.

The US imported about 14 million barrels of Oil per day in 2007 , which means US consumers sent about $340 Billion Dollars over seas building palaces in Dubai and propping up unfriendly regimes around the World, if 200 billion barrels of oil at $90 a barrel are recovered in the high plains the added wealth to the US economy would be $18 Trillion Dollars which would go a long way in stabilizing the US trade deficit and could cut the cost of oil in half in the long run.

www.nextenergynews.com/news1/next-energy-news2.13s.html

My Recent Posts · 02/25/08

Quote:
America is sitting on top of a super massive 200 billion barrel Oil Field that could potentially make America Energy Independent and until now has largely gone unnoticed. Thanks to new technology the Bakken Formation in North Dakota could boost Americas Oil reserves by an incredible 10 times, giving western economies the trump card against OPECs short squeeze on oil supply and making Iranian and Venezuelan threats of disrupted supply irrelevant.

Black Blade: Quite impressive considering the financial media and petroleum analysts were creaming their jeans over a tiny presumed 8 billion bbl find off the coast of Brazil (Tupi) and another tiny find in the GOM (Jack-2).

The meek shall inherit the Earth, but not the mineral rights!

My Recent Posts · 02/27/08

U.S. Oil Driller Specializes In Going For The Hard-To-Get Stuff
Tuesday February 26, 6:17 pm ET
Kevin Harlin

American's thirst for oil keeps the tankers coming from foreign wells. But Continental Resources says there are still hydrocarbons to be found in the U.S.
It has the growing reserves to prove it.

Earlier this month, Continental (NYSE:CLR - News) said its proven gas and oil reserves -- the deposits it is reasonably certain it can economically extract -- grew 14% from a year ago, to the energy equivalent of 134.6 million barrels of oil.

And Tuesday, it said production climbed to the energy equivalent of 30,369 barrels of crude per day in the fourth quarter. That was up almost 15% from a year ago.

Much of that new reserve and production comes from deep under North Dakota, in the Bakken Shale formation. Those once-marginal oil fields are now one of the hottest areas for oil exploration and production in the U.S.

New Finds

The Enid, Okla., company is one of the top firms in the area now.

Continental has about 311,000 acres to explore in the Bakken Shale. If oil prices remain strong, the company says it may increase drilling there.

It's also boosting reserves thanks to new confirmed finds in Oklahoma, where it has 45,000 acres above the Woodford Shale formation.

"I expect those two areas to produce significant proved reserve additions in 2008 as well," the company's chairman and chief executive, Harold Hamm, said in a statement.

Company officials declined to comment for this story.

Hamm founded Continental in 1967 to look for and develop oil and gas in Oklahoma. By 1993, it had expanded into the Rockies and the Gulf Coast. The stock debuted in May. Hamm, family members and management own 82%.

Strictly speaking, those new reserves aren't all new finds.

Geologists have known since the 1950s that the Bakken formation -- which stretches across much of North Dakota and into Montana and Saskatchewan, Canada -- was rich in oil. Companies have been pumping it out ever since. But it's thousands of feet deep, encased in thick rock. It has never been cheap to get at.

When oil prices fell in the late 1990s, production there slowed and exploration stopped.

In the last three years, though, new drilling methods and high oil prices have made those reserves more accessible and very profitable.

Some geologists now think there may be more oil beneath the North Dakota ranch land than under all of Alaska. But only a tiny percentage of it might ever be accessible.

"In many cases, we already know that there's vast amounts of what we call probable reserves, but it's a matter of putting a well in the ground and proving that it's there and that they can get to it," says Raymond James analyst John Freeman.

Continental specializes in getting oil and natural gas out of difficult spots. In the Bakken Shale, for instance, it uses horizontal drilling, in which it pushes thousands of feet down, then turns 90 degrees and digs sideways into the shale.

It also uses fracture stimulation -- pumping in sand or fluids under pressure to break open channels in the rock, allowing better flows.

Ron Ness, president of the North Dakota Petroleum Council, says there's a learning curve in the Bakken. Not every company has found the right spots or figured out the right methods.

"Some companies are getting high flow rates from their test wells. Others are seeing moderate or low returns," Ness said. "Some are struggling to get oil economically."

But Continental says it's getting high flow from its test wells; it expects high margins.

Meanwhile, it's expanding production from fields already developed. It's Red River area, straddling North Dakota and Montana, accounts for almost half of Continental's production.

The company has been increasing overall oil and gas production by more than 20% a year. Late last year, the company said it could deliver 17% growth in 2008. At the time, analysts thought it was being conservative.

But it only slightly beat that goal, posting a nearly 18% gain in 2007.

On Tuesday, Continental posted earnings per share of $1.47 for 2007, excluding one-time items, according to Thomson Financial. That was a penny below the analyst estimate of $1.48, but up from $1.04 the year before.

It reported EPS of 44 cents for the fourth quarter, in line with estimates. That was up from 29 cents a year ago.

Continental is unique among U.S. exploration and production companies in that 80% of its reserves are oil. Most U.S. companies are heavily weighted toward natural gas.

The No. 2 driller in the Bakken formation, EOG Resources (NYSE:EOG - News), gets almost three-quarters of its revenue from natural gas.

Freeman said Continental is "the oiliest company we cover. Oil fundamentals are fantastic right now."

Margins are far less attractive in natural gas.

Continental also has one of the cleanest balance sheets, with a low debt-to-capital ratio of about 17%. Freeman says he expects that to improve to about 10% by the end of this year.

But Continental uses its drills, rather than its checkbook, to grow.

From 2001 to the end of 2006, its test wells uncovered the equivalent of 96.2 million barrels of oil in land that it already owned or controlled. During that same period, it bought just 5.1 million barrels of already-proven reserves.

New Leases

It's still adding to its explorable lands, particularly in North Dakota. In 2007, it signed leases for almost 90,000 new acres of land above the Bakken formation. It's drilling test wells in some spots and thinks those acres show potential.

Oil and gas exploration companies come with risks. Environmental concerns could derail drilling plans. The most promising test wells could come up dry.

And like other exploration and production companies, Continental would be hurt by a sudden fall in oil prices.

Freeman says Continental's Bakken play makes sense even if oil falls off by $20 a barrel -- not that he expects that to happen.

Raymond James expects oil to average $100 a barrel in 2009. Other analysts argue that prices may fall.

"They've got a lot of running room and a lot of upside," Freeman said. "And in a $90-a-barrel environment, they're generating a lot of favorable return rates."

biz.yahoo.com/ibd/080226/newamer.html?.v=1

My Recent Posts · 04/05/08

Jun 2007 [Oil & Gas Inquirer]

.............................................
One of the hot spots in the province is the southeastern corner. "The mood is very upbeat. There is a lot of enthusiasm going forward with development. Everyone is going great guns," Cline says. Driving some of the activity is exploration and new technology to get the oil out of the ground. The Bakken play is generating a lot of activity and excitement in southeast Saskatchewan.

Petrobank Energy and Resources Ltd. has recently had success in unlocking the Bakken light oil play, with wells that produce 200 to 250 bbl/d. "It's a technology play," says John Wright, Petrobank's president. Little step changes in how drilling and fracing are done can net big results. "It's not over. I think a lot of people will find tricks [to unlocking the play." "We are spending a lot more time horizontal drilling and controlling where the well goes and the completions-fracing and stimulating…We're avoiding break through," Wright says. "We are able to stay in the Bakken zone and not frac out of zone," explains Greg Smith, VP, Petrobank's Canadian business unit. The result is more oil and less water.

"[Companies] couldn't have pursued this play five years ago. We've just elevated the game. Someone else will elevate the game again." He, of course, can't give away how Petrobank is achieving the results it is, but draws an analogy to explain the fracing. "We're using a much smaller hammer. We tap it…with a smaller hammer." Petrobank is sticking to single lateral horizontal wells while others are trying other strategies such as more exotic configurations and three shorter horizontals without stimulation. Industry has known that the oil was there for a long time but hasn't been able to unlock the geology. "What makes it difficult is that it's in a very tight rock that doesn't respond well to conventional drilling," Wright adds.

It's not cheap for Petrobank to drill and complete these wells at $1.7 million. A provincial royalty holiday on 37,500 barrels per well is making the play more economic. Petrobank plans to drill 60 wells in the Bakken play in 2007, and ramp up to four rigs from two in the second half. Starting in 2008, it plans to continue with four rigs and drill 80 wells a year. "That will be our pace for the next while," adds Wright. The company has 550 drilling locations and expects that number to grow. Petrobank has recently become a major player in the Bakken. It now has 116,163 net acres. The company spent $59.5 million to acquire 47,285 acres in Saskatchewan's April 2007 land sales. It is also gaining an additional 4,813 net earned interest acres as a result of an additional acquisition and a farm-in transaction. The company has the potential to earn a further 9,400 net acres on the Bakken play through drilling. "We got every piece we wanted. We don't get to do that often in our business," Wright says. Why become such a big player in the play? "It's one of the last big remaining resource play opportunities in the Western Canadian Sedimentary Basin," explains Wright. There's not a lot of [light conventional] oil out there." Smith adds that it is estimated the play has 4.5 MMbbl of oil per section in place. He notes that Petrobank at first took a wait-and-watch attitude to the play. It wanted to see the technology develop. Starpoint drilled the first Bakken horizontal well in Canada in July 2004, on a farm-in on Petrobank lands. "We liked what we were seeing," says Smith, "…and came up with our own plan for drilling and completing the wells."

Just on the edge of Saskatchewan and into Manitoba is the Torquay play that is both promising and challenging. "It has a tremendous amount of oil in place but it's not the best reservoir," says Smith, adding that Petrobank has had interesting and encouraging results. "It has another level of complexity [from the Bakken play]," he adds, explaining that it has other complexities in terms of its reservoir and fluids. The play is deeper than the Bakken and very tight. "We think we can solve it technically," Smith says. "The technology has to catch up with the play," he adds. Petrobank has drilled 10 wells in the Torquay, with seven being producers. The company plans to drill more later this year or in 2008. The Torquay has been a significant play in Manitoba. Tundra Oil & Gas Ltd. has done well developing it,

Drilling overall in southeastern Saskatchewan is booming. A local oilfield business that is prospering is United Centrifuge Ltd. Wayne Ebel started United Centrifuge with Tim Bowers and Ed Lantz in 2002, after working for more than 12 years in the solids control business. United Centrifuge provides solids control and dewatering equipment for drilling operations. The company also rents a wide range of tanks: cone, polymer injection, dewatering, and premix, as well as pumping units, shale bins, and rig matting.

United Centrifuge, which originally started with two employees, has grown to the present number of 12, with over 80 pieces of equipment. "We're anticipating a good year," Ebel says.

"Pretty much all of the company's equipment is pre-booked," he said in April. He added: "We also hired a new field technician last week."

Ebel explains that, in addition to high oil prices, wells are generally cheaper to drill in Saskatchewan due to lower drilling and service costs, plus with the focus drawn away from natural gas, the level of oil well drilling has increased.

"All predictions are that it will be good to Christmas [at least]. I hope they are right." Ebel, born and raised in Weyburn, lived and worked at two separate times in Alberta. He returned to the area he grew up to try his luck as an entrepreneur. So far it's worked out very well.

My Recent Posts · 04/08/08

Gettin' back'n the Bakken

By Tim Wood
07 Apr 2008 at 06:36 PM

This is not new news per se, but I'm seeing a lot more general media interest in the Bakken Trend, so it's worth a roundup. More to the point, this Thursday, the U.S. Geological Survey will release a long awaited "official" estimate of the oil reserves in the shale formation that stretches across 25,000 square miles of North Dakota, Montana, Saskatchewan and Manitoba.

It is believed that recoverable reserves could amount to 200 billion barrels of high quality light sweet crude with API gravities of 40-45.

Back in the 90s, a USGS geologist investigated previous workings in the Bakken Trend, which are part of the Williston Basin. He concluded that there could be as much as half a billion barrels of oil on tap. Dr Leigh Price died, and his work remains officially unproven because his methodology was "controversial". But along came one those great maverick geologists, Richard Findley, who theorized that previous exploration had drilled right through the deposits. He sold the idea to Lycos Energy of Houston. Lycos in turn brought in Halliburton because it had new technology to apply. That turned into the worthwhile Elm Coulee Field in eastern Montana. Theory, meet reality.

Subsequent exploration and analysis is suggestive of the Bakken holding Price's original estimate of at least 200BBbls. It is understood that the USGS may release Price's original 1999 paper, entitled: "Origins and characteristics of the basin-centered continuous-reservoir unconventional oil-resource base of the Bakken Source System, Williston Basin". There is something disconcerting about a government agency withholding research conducted by an employee of the taxpayer, controversial or not.

The Canadians are already very active in these formations on their side of the border, and they're leading the way in the U.S. And don't expect North Dakotans to get all squishy about producing oil in their state; they'll do it and laugh all the way to the bank. Indeed, North Dakota's politicians are fully invested in the effort to develop oil extraction in their state.

There's a lot of useful detail available from North Dakota's Department of Mineral Resources Geological Survey, specifically this press release.

http://www.resourceinvestor.com/pebble.asp?relid=41728

My Recent Posts · 04/09/08

More good news for Bakken oil people. The USGS releases a report on the shale tomorrow. I now understand there is another probable pay zone some oil company is looking to test out.

OCD

http://www.argusleader.com/apps/pbcs.dll/article?AID=/20080408/UPDATES/80408031/-1/isdapps

Some predict more oil exploration in South Dakota

Associated Press

RAPID CITY - Oil exploration in South Dakota has been mostly in northwest Harding County, but county Auditor Kathy Glines says she thinks it will move east. Glines, who also is the planning and zoning coordinator for the county, said she issued 334 well permits in 2007. Already in 2008, she has issued 32 permits, mostly for new wells, the Rapid City Journal reported Tuesday. "Here it is the first of April, and I think this is only the tip of the iceberg," Glines said. "I anticipate quite a bit more to come. The oil work is spreading more to the east. Its staying on the northern end of the county right now. But as the fields progress, Im going to see them a little more south than what we typically see." Glines keeps track of the permits that are required to dig new wells or change existing ones to accommodate new technology.

In 2007, South Dakota had 153 wells that produced 1,664,889 barrels of oil - the most since 1988. Industry watchers wonder if a bigger boom is coming. The largely untapped energy potential in the Bakken Oil Formation, considered by some to be a potential solution to national energy problems, has attracted national attention. It's within the Williston Basin, which covers much of North Dakota, southeast Montana, and parts of Saskatchewan, Manitoba and northwest South Dakota. Some think the formation has oil reserves even larger than those in the Middle East.

My Recent Posts · 04/09/08

S'more Bakken today. Should be Bakken into the Bakken.

OCD

http://www.streetinsider.com/Corporate+News/Northern+Oil+and+Gas+(NOG)+Completes+Fifth+Successful+Bakken+Discovery/3528364.html

Northern Oil and Gas (NOG) Completes Fifth Successful Bakken Discovery

April 8, 2008 10:15 AM EDT

Northern Oil and Gas, Inc. (Amex: NOG) today announced the successful completion of its fifth horizontal Bakken discovery in the growing North Dakota oil play. The company participated in the successful completion of the Kent Carlson 24-26H as a horizontal Bakken producer in Dunn County. The well was operated by Marathon Oil and Northern participated with a 6.25% working interest.

In addition, the Rick Clair 25-36H discovery was recently completed on Northern acreage by Murex Petroleum in Mountrail County. Northern controls a 6.25% interest in the Murex drilling unit. Previously announced were 2 successful Mountrail County Bakken discoveries (6.25% & 8.5% WI) and a Montana Red River discovery (37% WI) operated by Brigham Exploration (Nasdaq: BEXP).

The discoveries bring Northern's net production to approximately 200 barrels per day with development of less than 1% of the Company's acreage position.

Northern is currently participating in 3 additional Bakken wells and its acreage has been included in approximately 30 additional wells permitted to be drilled in 2008. Northern expects to spend an additional $5 million on acreage acquisitions in 2008.

Northern Oil and Gas, Inc. engages in the exploration and production of oil and gas properties in Montana and North Dakota. [BCS]

My Recent Posts · 04/09/08

Tomorrow, always tomorrow. I bet you that USGS geologists are buying stocks today ahead of the report.

OCD

http://biz.yahoo.com/ap/080407/bakken_study.html?.v=2

AP Newsbreak: Study on Oil Potential of Bakken Shale Formation Due Out This Week

BISMARCK, N.D. (AP) -- A long-awaited federal report on oil that could be recovered in parts of North Dakota, Montana and two Canadian provinces is to be released this week. The Bakken shale formation encompasses some 25,000 square miles in North Dakota, Montana, Saskatchewan and Manitoba. About two-thirds of the acreage is in western North Dakota, where the oil is trapped in a thin layer of dense rock nearly two miles beneath the surface.

Ron Ness, president of the North Dakota Petroleum Council, said the number of wells in the Bakken increased from about 300 in 2006 to 457 at the end of last year. Bismarck-based MDU Resources Group Inc. announced its first venture into the Bakken this week. The study being released Thursday by the U.S. Geological Survey was done at the request of Sen. Byron Dorgan, D-N.D., over the past 18 months. "Technology continues to advance," Dorgan said Monday. "This is not going to be a red light or green light about oil development in the Bakken -- clearly there already is a big green light there. But I think the question is pretty clear: How much of that oil is recoverable using today's technology?"

In 1995, the Geological Survey estimated that using technology available at that time, 151 million barrels of oil could be recovered in the Bakken, said Brenda Pierce, a geologist and program coordinator for the agency's energy resources program. Pierce said she would not disclose the study's findings until Thursday. Asked whether the estimate would be an increase from the 1995 figure, she said, "There is industry in there and having success. There's your answer." The oil is trapped in microscopic pores of rock, and to capture it, most companies "fracture stimulate" horizontal wells by forcing pressurized fluid and sand to break pores in the rock and prop them open to recover oil. "It's not something you would see in most oil formations," LeFever said. With technology, she said, "the success rates are going up, but we're not all the way there yet."