And of course it's rare for a casing to fail. But after the BP Gulf fiasco, people aren't willing to give O&G companies the benefit of the doubt.
And of course it's rare for a casing to fail. But after the BP Gulf fiasco, people aren't willing to give O&G companies the benefit of the doubt.
My point is just that the O&G PR Industry needs to do a better job. And we as an industry need to be less hostile to the Environmental lobby. Otherwise, we have these situations like in New York, and people calling for more regulation.
Both extremes are wrong.
It was very interesting watching all the urban drilling shit go on in the Ft. Worth area over the past 6, 7 years. Of course its pretty quiet right now.
DVN is drilling in the Cline Shale and in the process of completing a few wells. I am going to say this play does not work out. Just a hunch. Hope I'm wrong.
I/the other person can't do that type of personal work in the Barnett because we've worked it for a client for so long.
So looking at other areas. Maybe Eagleford, maybe more remote. This has been on my mind for a whole day now so I have no grand plan developed yet. And I'm still employed here in lovely Granbury for now. But its down to months, most likely.
I know you do that sort of thing. I'd like to talk sometime. No emergency, but where are you located?
The New York fracking thread...........geez. We want to educate the masses, we try to talk to the public. Its a tough road (row) to hough.
Here is a tidbit from local newspaper QRI
Wednesday, Nov. 28, 2012
Exploration continues to fuel expectations for Cline Shale oil boom
By ASHLEY EADY
Two years ago, no one had ever heard of the potential of the Cline Shale oil play.
Now, the 140-mile-long and 70-mile-wide oil shale is anticipated to be one of the largest oil plays in American history.
Projections for the Cline Shale contribute to the expectation for the U.S. to become the world leader in oil production by 2017.
As the result of exploration by oil companies Devon Energy and Chesapeake Energy, the Cline Shale is quickly emerging as the richest oil play known. Other development companies with interests include Firewheel Energy, Laredo Petroleum, Exco, and Callon Petroleum, among others.
Devon Energy President John Richels gave a â€śtype curveâ€ť for a Cline Shale well â€” a guess at how much a well would produce over time.
He said he expects a total production of 570,000 barrels of oil equivalent, and 85 percent of that would be oil and liquid gas rich.
â€śWe are very excited about the Cline,â€ť said Andy Coolidge, Devon Energy's vice president for the Permian Basin. â€śWe expect to deliver highly economic and robust production growth.â€ť
Snyder is in the the Cline pocket, which includes parts of Scurry, Borden, Mitchell, Fisher, Nolan, Sterling and Glass**** counties
â€śItâ€™s like Christmas morning. We are all waiting to see how this unfolds,â€ť said Bill Lavers, CEO of Develop Snyder.
Test wells on the Cline show the shale contains 3.6 million barrels of recoverable oil per square mile, about 30 billion barrels of recoverable oil for the entire shale.
Until recently, the Eagle Ford Shale was considered to be the richest shale play in Texas. The Eagle Ford Shale covers Webb, Dimmit, Lavaca, McMullen, Karnes, DeWitt and Gonzales counties in the southern portion of the state.
Recent advances in horizontal drilling have opened up the possibility of drilling in areas like the Cline.
The Clineâ€™s depth is equivalent to 10 Eagle Ford Shales stacked on top of each other.
Pete Stark, an independent analyst from Englewood, Co., and regarded by the industry as an expert on global oil and gas resources, said, â€śWe havenâ€™t seen billion-barrel numbers onshore since Prudhoe Bay, Alaska, in the â€™70s.â€ť
While the buzz surrounding the Cline Shale brings excitement and economic hope, it also presents some challenges to the communities located there.
For weeks, local officials have held public meetings to discuss the effects of the increasing drilling activity.
The shortage of housing in the Cline Shale area continues to be a main concern, according to Lavers.
â€śEverybody in the entire area is working together more than they ever have. There are no guarantees that anything is going to happen, but when you look at all the growth that has already occurred, it is obvious that something big is going on here,â€ť he said.
Abel Deloera, Snyder councilman and owner of Deloera Realty, said he is busier than he has ever been.
â€śNovember and December are usually really slow months in real estate,â€ť said Deloera, â€śThis is the busiest I have been in six years.â€ť
Deloera, who gets 10 to 15 phone calls every day from people looking for housing, said he started trying to address the Snyder housing shortage in October 2008.
â€śI saw this coming, but no one would listen,â€ť said Deloera, â€śnow we are a good 18 months to two years behind.â€ť
Snyder lacks between 400 and 500 housing units, according to Deloera, and there has been a major increase in land value as a result of recent activity.
â€śI have people literally calling in tears saying they need a place for their families to live,â€ť he said, â€śand I canâ€™t help them. From here to Midland, in the entire area, there is virtually nothing available.â€ť
According to Lavers, 35 housing lots were developed for sale and sold within 20 days of completion to a single developer.
Another project expected to close in March, according to Deloera, will develop about 100 single-family housing units.
Deloera said that development is moving too slowly, a fact he attributes to the risk involved. â€śDevelopers will have to risk millions of dollars in anticipation of what is about to happen; people are hesitant because of the risk.â€ť
To comment on this story:
Spotlight intensifies on emerging Cline Shale
Posted: Wednesday, December 12, 2012 8:45 pm
The spotlight has been intensifying on the Cline Shale, an emerging unconventional resource play on the eastern flank of the Midland Basin.
Lying approximately 9,250 feet below the surface, the Cline runs roughly 140 miles north-south and 70 miles wide through portions of Glass****, Howard, Reagan and Sterling counties, according to Matt Menchaca with DrillingInfo. Some say the Cline could be the largest oil play in the nation's history, citing Devon Energy's figures that the shale contains 3.6 million barrels of recoverable oil per square mile.
"That is an unrisked estimate of reserves, about as preliminary as it gets," stressed Chip Minty, Devon's media relations manager. "It is essentially what is possible and by no means probable."
Still, Devon is confident enough to steadily ramp up drilling activity, adding a fourth rig last month. Its second horizontal well, the Virginia City Cole C1H in Sterling County, had a 30-day initial potential rate of 450 barrels of oil equivalent per day, a third Cline well was just starting to flow back and five additional wells are in various stages of completion, including one targeting the Mississippian formation.
In September, Devon closed a $1.4 billion joint venture agreement with Japan's Sumitomo Corporation that covers 650,000 net acres in the Cline and Midland-Wolfcamp shales. Sumitomo is investing $1.4 billion in exchange for 30 percent of Devon's interest in these projects. Of that $1.4 billion, $980 million will be invested in a drilling carry that will fund 70 percent of Devon's capital requirements. Of that 650,000 net acres, Minty said 500,000 acres will be in the Cline Shale.
"We're in the exploration phase, drilling to determine what initial production might be," he said. "We're drilling initial wells to explore the area and learn more about the formation and the best areas."
The company is also quite active in the Midland-Wolfcamp Shale, Minty noted.
Apache Corp. is also active in the Cline and recently acquired acreage in the North Midland Basin and South Midland Basin. "We're testing the entire play," said John Polasek, new ventures manager with Apache and advanced drilling systems technical advisor to Baker Hughes. He said Apache's dominant Cline position is 100,000 acres in Glass**** County called Deadwood. Six science wells have been drilled and turned to production, he reported. "We've drilled through it to the Fusselman and Ellenburger."
"I think in the Cline, we're getting better, the wells are better and we understand the reservoirs better. We feel comfortable, enough to get several rigs going in each area. We have hundreds, if not thousands, of potential locations," Polasek said while discussing the play with the Permian Basin chapter, American Association of Drilling Engineers recently.
He attributed Apache's growing activity to success gained through experience. For example, he said, it has been learned that where the laterals extend can make a difference. The company, he said, plans to focus on horizontal drilling activity into next year.
Estimates are the Cline could hold more than 30 billion barrels of recoverable oil, exceeding both the Bakken fields in North Dakota and Eagle Ford in South Texas by nearly 50 percent. With the Cline projected to be 200 to 550 feet deep, that would be the equivalent of 10 Eagle Ford shales stacked on top of each other. The shale contains 85 percent oil and liquids-rich gas.
It's important, Minty said, to stay grounded about the Cline's potential, stressing that much work needs to be done to explore the formation and determine just how much recoverable production it holds.
"We're optimistic and hopeful about the Cline and what it might bring," he said. "With new applications of technology, it offers new opportunities for us to pursue. But before that, we need to drill."
Devon's unrisked estimate, he explained, "tells our investors we're excited about the play, there's a lot of work to be done but it's why we justify spending $900 million on 500,000 acres."
Read more: Spotlight intensifies on emerging Cline Shale - Mywesttexas.com: Oil http://www.mywesttexas.com/business/...#ixzz2GyU564oc
Under Creative Commons License: Attribution
Laredo Petroleum in the Permian Basin
Oil and liquids-rich natural gas
Extensive vertical program enhanced by horizontal drilling
The Permian Basin, located in west Texas and southeastern New Mexico, is one of the most prolific onshore oil and natural gas producing regions in the United States. It is characterized by an extensive production history, mature infrastructure, long reserve life and hydrocarbon potential in multiple intervals. Our Permian activities are centered on the eastern side of the basin approximately 35 miles east of Midland, Texas in Glass****, Howard, Reagan and Sterling Counties.
The overall Wolfberry interval, the principal focus of our drilling activities, is an oil play that also includes a liquids-rich natural gas component. Our production/exploration fairway extends approximately 20 miles wide and 80 miles long. While exploration and drilling efforts in the southern half of our acreage block have been centered on the shallower portion of the Wolfberry (Spraberry, Dean and Wolfcamp formations) the emphasis in the northern half has been on the deeper intervals, including the Wolfcamp, Cline Shale, Strawn and Atoka formations. Considering the geology and the reservoir extent of each contributing formation, we now have identified significant potential throughout our total acreage block for the entire Wolfberry interval from the shallow zones to the deepest.
The success of our vertical drilling program, coupled with industry activity, has substantially reduced risks associated with our future drilling programs in the Wolfberry interval.
We have expanded our drilling program to include a horizontal component targeting the Cline and Wolfcamp Shales. The drilling of the Cline Shale, located in the lower Wolfberry, was initiated after our extensive technical review that included coring and testing the Cline separately in multiple vertical wells. We believe the Cline Shale exhibits similar petrophysical attributes and favorable economics compared to other liquids-rich shale plays operated by other companies, such as in the Eagle Ford and Bakken Shale formations. We have acquired 3D seismic data to assist in fracture analysis and the definition of the structural component within the Cline Shale.
Also, for the ethics police, I won't be doing any of this until/if I get cut from this job. That looks fairly likely, but maybe not for a couple of months. Anyway, I'm not going to be doing my own work on client time......
and thanks guys.
I read a very interesting and detailed blog post on domestic onshore drilling on Friday. It went through an unusual combination of production increases accompanied by rig count decreases as producers move more production to oily fields and they became much more efficient in getting oil out of the ground. Although this is not good news for some of the oil service firms that face a declining number of their rigs being deployed, it is great news for E&P outfits that are benefitting from this migration to higher oil production and declining costs as they deploy more efficient technologies.
This should be a nice tailwind to earnings & margins in the coming quarters and years. In addition, pipeline projects in heavy producing shale regions like the Bakken in coming years should also help improve margins. Here are two fast growing oil producers in the Bakken that should also benefit on the margin from improving technology and infrastructure.
Continental Resources (CLR) produces crude oil and natural gas. It is the biggest producer of energy from the fast rising Bakken reserve.
4 reasons CLR is a good growth play at $77 a share:
The stock was initiated as a "Buy" at Deustche Bank this week. The 24 analysts that cover the Continental have a $92 price target on the shares.
Consensus earnings estimates for FY2012 and FY2013 have risen nicely over the past three months, FY2013's earnings estimates have increased more than 30 cents a share in the last ninety days.
Revenues are expected to grow over 35% in FY2013 after increasing at a 45% clip in FY2012. The stock sports a five year projected PEG of under 1 (.84).
The vast majority of its production is oil and the stock sells for just over 16.5x forward earnings, a deep discount to its five year average (27.7).
Kodiak Oil & Gas Corp (KOG) produces oil & gas from its properties which are primarily concentrated in the Williston Basin of North Dakota and Montana, and the Green River Basin of Wyoming and Colorado.
4 reasons to KOG is a solid growth pick at $9 a share:
Almost all of the company's production is oil and it is already applying new technology and its increasing expertise getting oil from shale to new projects. It has approximately 800 net drilling locations left to put on existing acreage. It has lowered its cost to $10.5mm per well from $12mm recently.
The company achieved over 250% revenue growth in FY2012 and analysts expect almost 100% sales increases in FY2013. KOG has a minuscule five year projected PEG (.40).
Earnings per share more than quadrupled from FY2011. Earnings are project to rise another 75% in FY2013 by analysts. The stock is priced at less than 13x forward earnings, a discount to its five year average (16.7).
The 18 analysts that cover the stock has a median price target of $12 a share on KOG. Credit Suisse has an "outperform" rating on the shares.
Fracking is hell on the environment.
Guys, I wouldn't waste the typing energy on Palmbeach. He's a flame throwing troll. He trolls by the Hello Win Column thread once every blue moon to say something stupid and try to stir shit up.
Just a tip......
In rumor news, some message board chatter of CLR possibly buying Kodiak. Could happen, but I'd like to see Kodiak prove up more three forks and raise the enterprise value before being taken out......
CLR now up a little over $2. Most all energy is down.......maybe something really is "up"......
I noticed something was up yesterday.
My gut feeling is that Hamm and CLR would know the value of KOG more than anyone else!
It would have been preferable to have seen KOG prove more on its balance sheets but as an owner of both stocks hopefully this would be a win - win deal if it comes to fruition.
Determining A Reasonable Takeover Price For Kodiak Oil And Gas
On Monday shares of Bakken oil producer Kodiak Oil and Gas (KOG) surged late in the day on some unusually heavy volume.
The reason for the surge apparently is that the company cancelled an appearance from an upcoming conference suggesting that it may be taken out before the conference date.
With shares at $9.40 I thought I'd have a look at what investors may be able to expect for a takeover price. The best comparable metric is the takeover of Bakken pure-player Brigham Exploration which occurred just over a year ago when it was acquired by Statoil (STO).
So let's compare.
Statoil paid $36.50 per share for Brigham Exploration. That equates to an enterprise value of $4.7 billion.
Kodiak has an enterprise value as follows:
Shares outstanding -- 263 million
â€˘ Most recent closing stock price -- $9.40
â€˘ Market Capitalization -- $2.472 billion
Total debt outstanding -- $915 million
â€˘ Enterprise Value -- $3.387 billion
Price Per Flowing Barrel
â€˘ Brigham Exploration was producing 21,000 boe/day. With a $4.7 billion enterprise valuation that equates to $223,000 per flowing barrel.
â€˘ Kodiak's exit rate production figure is expected to be 27,000 boe/day. If Kodiak gets taken out at the same price per flowing barrel as Brigham that would be a share price of:
â€˘ Calculate total price paid - $223,000 x 27,000 = $6 billion
â€˘ Less Debt Outstanding - $915 million
â€˘ Equals Proceeds For Shareholders - Roughly $5 billion
â€˘ Divided By The Number of Shares Outstanding - 263 million
â€˘ Price Per Share - $19.01
Multiple of EBITA
For the six months ended June 30, 2011 prior to its acquisition Brigham had an EBITA of $137 million. On an annual basis that would be roughly $280 million. That would be an EBITA multiple of $4.7 billion / $280 million = 16.79 times
For the nine months ending Sep 30, 2012 Kodiak had EBITA of $220 million which annualized would be about $300 million. At Brigham's 16.79 takeover multiple Kodiak would be taken out at roughly $5 billion ($300 million x 16.79), which again is $19.01 per share.
Multiple of Proved Reserves
Brigham (as of the December 2010 reserve report) has 67 million barrels of proved reserves. A $4.7 billion valuation suggests Statoil is paying $4.7 billion / 67 million = $70 per barrel of proved reserves
Kodiak (as of the June 2012 reserve report) has 70 million barrels of proved reserves. At Brigham's $70 per barrel multiple of proved reserves Kodiak would be taken out atâ€¦.you guessed it roughly $5 billion ($70 per barrel x 70 million barrels.
Again, this is $19 per share.
The Brigham deal multiples clearly point to about $19 per share for Kodiak. There are of course other considerations such as the amount of acreage each company has, the quality of that acreage, and ability to finance future development.
Because of that I don't think Kodiak would go for the same multiples as Brigham, but I think the mid-point between the current share price ($9.40) and the Brigham price ($19.00) might be realistic. That would be $13 to $14 per share which is still a good premium to the current share price.
Now I guess we just wait and see if the takeover chatter amounts to something.
^^^^ I just read that. I'd go for that too.....ha ha, like my opinion matters.
KOG trading volume is heavy....
COLUMN-Dreaming of Bakken, Kansas welcomes oil drillers:
Tue Jan 8, 2013 11:06am EST
By John Kemp
LONDON Jan 8 (Reuters) - While other states struggle with how best to regulate horizontal drilling and hydraulic fracturing, or wonder whether to permit the practice at all, Kansas is actively courting fracking firms in the hope of repeating North Dakota's oil boom.
Interest centres on the Mississippian Lime Play (MLP), a porous limestone formation found under parts of southern and western Kansas as well as across the boundary in northern Oklahoma.
The Mississippian Lime has already produced more than 1 billion barrels of oil in the state since 1915 from conventional wells but was considered largely tapped out.
Now horizontal drilling and hydraulic fracturing have kindled hopes of a new oil rush as drillers unlock oil and gas previously trapped in impermeable parts of the rock formation.
"The potential economic benefits to Kansas could be significant, resulting in hundreds of wells drilled, billions of dollars in investment, thousands of jobs and industry activity in the MLP for the next 20 to 30 years," the Kansas Department of Commerce enthuses on a special website created to promote the play.
The Kansas Corporation Commission (KCC), which regulates oil and gas, has already organised tours of both North Dakota and Oklahoma to understand the transformative impact of the oil boom and its impact on local residents.
And in November, state leaders, including Governor Sam Brownback, hosted a high-level conference to hear an update on drilling and discuss how Kansas businesses could benefit from oil and gas activity.
In the first 10 months of last year, 143 horizontal wells were drilled in the state, up from 50 in the whole of 2011 and 10 in 2010. Just over 30 rigs were drilling at the end of October, of which 18 were working on horizontal wells. Half were contracted to Sandridge, which holds by far the largest position in Mississippian acreage in the state.
Production from the Mississippian remains tiny compared with the state's conventional oil output let alone more mature unconventional plays such as the Bakken and Eagle Ford. Kansas has more than 46,000 active oil wells (mostly stripper wells producing less than 10 barrels per day) and another 24,000 producing gas.
Unconventional oil and gas production amounted to only 10,000 barrels of oil-equivalent at the end of October, 3.8 percent of the state total. Nevertheless, there is evident excitement at the potential for hydraulic-fracturing to bring a Bakken-like boost to the state economy.
The Brownback administration is unashamedly pro-business, and keen to encourage economic development.
The state is solidly Republican. All state-wide officeholders, both U.S. senators and all four U.S. representatives are from the party, which also controls both chambers of the state legislature by lop-sided majorities (32-8 in the state senate and 92-33 in the lower house).
State agencies are also sympathetic to fracking. In a basically favourable "public information circular" published in May 2012, the Kansas Geological Survey (KGS) explained that of 244,000 conventional vertical wells drilled in the state since 1947, some 57,000 wells have already been hydraulically fractured, without ill-effect.
In contrast to other states, which have agonised over the potential for fracking to lead to contamination of other rock formations and drinking water resources, KGS argued "strong economic incentives compel operators to avoid propagating fractures beyond the target formation and into adjacent areas."
"Kansas has not encountered the problems some other states have, and no documented cases of ground-water contamination by hydraulic fracturing have been reported in the state."
"Kansas' favorable geologic setting, its regulatory process, and its successful history of hydraulic fracturing and fluid management make it one of the safer regions of the country to employ the practice."
In case anyone doubted the state's enthusiasm, the Kansas Corporation Commission has published a note by the KGS and the University of Kansas which states bluntly:
"Induced seismicity (earthquakes) has not been related to hydraulic fracturing. The U.S. Geological Survey has stated that there is no evidence to suggest that hydraulic fracturing itself is the cause of the increased rate of earthquakes in the midcontinent".
Wastewater injection can trigger seismic activity but the KCC and KGS downplay the risk. "It is important to remember that those (waste) fluids are the result of any oil and gas production, and independent of the practice of hydraulic fracturing."
"Earthquakes would someday have occurred anyway as a result of slowly accumulating forces in the earth ... injection just speeds up the process."
SCOPING THE PLAY
Most drilling has so far occurred in parts of the Mississippian in Oklahoma, where more than twice as many rigs are operating and holes have been drilled.
In Kansas, exploration companies are still trying to scope out the play and identify sweet spots. Most wells have been drilled in just three counties along the Oklahoma border (Harper, Barber and Comanche) though wildcats have been sunk in another nine and the play underlies parts of 34 counties in total ().
Early exploration was directed towards natural gas, but with gas prices stuck at just $3-4 per million British thermal units (mmBtu), the focus has switched to finding fairways with more condensate and crude.
"The Lime is a reasonably low-cost play where hydrocarbons have been found before, with lots of (conventional) wells drilled in the past," the Oil and Gas Financial Journal wrote in August 2012 ("Horizontal drilling boosts production in Mississippi Lime" Aug 1).
"The nice thing about this trend versus shale is that it requires low-horsepower equipment, and smaller players can be competitive."
"The limestone's porosity and natural fractures also can mean less expense on the drilling and hydraulic fracturing parts of the project. Expenses can total half and even a fourth of typical unconventional well efforts."
By far the largest operator across the Mississippian is Sandridge, with larger companies like Chesapeake, Range Resources, Shell and Devon playing a much smaller role in the area.
The Mississippian Lime is just one layer in the vast Anadarko sedimentary basin. In other parts of the Anadarko, Continental Resources is targeting production from the Woodford shale.
For the time being, the Mississippian Lime remains a highly speculative play. "No one knows for sure" how much drilling there may eventually be, the Kansas Corporation Commission admits. "The activity in the Oklahoma region of the MLP has been encouraging, but it could be another 12-18 months before the state has a more realistic estimate of the economic impact."
But if significant quantities of oil can be produced from the Mississippian, drillers and frackers will find no state more welcoming.
I like that 2nd to last paragraph!
The KOG sizzle is starting to fizzle.
Of course, its 1 day.
The U.S. Energy Department increased crude-oil price projections for 2013 and forecast that global consumption will climb to a record.
West Texas Intermediate oil will average $89.54 a barrel this year, up 1.3 percent from the December projection of $88.38, the department said today in its monthly Short-Term Energy Outlook. The U.S. benchmark grade averaged $94.12 in 2012, less than the December estimate of $94.26.
Brent, the benchmark grade for more than half the world's crude, will average $105.17 a barrel in 2013, up 1.4 percent from last month's forecast. The average cost of domestic and imported grades used by U.S. refiners will be $94.27 a barrel in 2013, up 1.2 percent from the December projection of $93.11.
WTI will climb to an average $91 a barrel next year, while Brent will slip to $99.25 according to the report. This is the first edition of the outlook to have 2014 forecasts.
The spread between Brent and WTI, which will average $15.63 a barrel this year, will narrow to $8.25 in 2014. The Brent premium will shrink because increasing pipeline capacity will lower the cost of shipping oil from the central U.S. to refineries on the Gulf Coast, according to the report.
The department increased its forecast for global oil consumption this year to 90.11 million barrels a day from 90 million estimated last month. Demand will be 1.1 percent higher than last year's average of 89.17 million. Global consumption will climb to 91.46 million in 2014.
Apparently Shell made an offer to buy the entire CHK position in the EagleFord formation. No links, just inside information being bantered about. I wonder if Shell or Chevron have it in them to purchase CHK outright.
Question: I own an ORRI and was wondering if the operator of the properties would give me estimated remaining reserve numbers? Is this something that operators share with orri owners or not? Im thinking of selling mine and could sell on a cash flow multiple but would really like to know remaining reserves if possible.Thanks.
If anyone has minerals or production for sale. Send me a message. My company is looking to expand.
We are also interested in investing is larger plays.
Kinda what I thought on getting reserve numbers. Anyone know how many years cash flow an orri goes for? Production is very consistent and in the largest unit in Oklahoma.
check your pmKinda what I thought on getting reserve numbers. Anyone know how many years cash flow an orri goes for? Production is very consistent and in the largest unit in Oklahoma.