Bowood Energy Inc V.BWD

Montana Oil: The Next Bakken Rush

[fredski]

Montana Oil: The Next Bakken Rush
Source: Keith Kohl, Energy & Capital 08/02/2010
Sometimes a story just doesn't unfold the way you expect it to.

ForMontana's oil industry, the carpet was pulled out from underneath themwhen the media's attention was snatched away by the state's neighbor tothe east. . .

It must have been painful for them to watch NorthDakota's oil industry explode, even in spite of a massive globalrecession. But the last laugh hasn't been heard.

And that'sbecause Montana is preparing to re-take the spotlight—and for investorssearching for the next phase of the Bakken oil boom, it's time to giveMontana its due.

Sympathy for Montana

If you've looked into the Bakken formation, there's a good chance you've come across the Elm Coulee oil field.

Locatedin Richland county, on the eastern side of Montana, the Elm Couleefield was discovered in 2000. Like most Bakken wells, companies haveutilized horizontal drilling and multi-stage fracturing techniques toincrease production.

By 2006, the field was pumping out 56,000barrels per day from approximately 350 wells, with an estimated ultimaterecovery of 270 million barrels. A year later, the Elm Coulee field hadbecome the highest-producing onshore field in the lower 48 states.

Toput that into perspective, Montana's oil production in 2003 averaged53,000 barrels per day. In 2006, the Elm Coulee field was responsiblefor almost 60% of the state's production that year.

You've got to have some sympathy for Montana. . .

ThoughMontana shares a portion of the now-famous Bakken, the Treasure State'soil production has struggled while a good old-fashioned oil boom hasbeen taking place right next door in North Dakota.

Over the lastfive years, oil and gas producers across the U.S. have had shale fever.But sadly for Montana, North Dakota has taken center stage.

After an impressive start into the shale fever gripping the country's oil producers, Montana's oil production lost momentum.

Thestate's production (pictured below)—which reached averaged 99,000barrels per day in 2006—fell to 76,000 barrels per day in 2009.





Montana became the forgotten stepchild in the U.S. oil industry.

But don't feel too sorry for them, because things are about to change. . .

Time to Cash in on the Bakken Fame

As you know, North Dakota has been a hotbed of activity for oil and gas drillers.

Accordingthe Baker Hughes rig count, there are 128 active drilling rigs. Youonly need one guess to figure out where those rigs are drilling. ..Approximately 95% of those rigs are drilling in the Bakken and ThreeForks formations. The Three Forks formation is located beneath theBakken.

That means the number of active rigs has jumped 333% since oil prices collapsed to $33 per barrel in December 2008.

NorthDakota's drilling boom is paying off, too. Last week, North Dakotaovertook Oklahoma's position as the country's third-most active drillingstate. Remember, North Dakota surpassed Oklahoma in 2009 to become thefourth-largest oil producer in the U.S.

And North Dakota's success is good news for Montana.

Drillerslooking to expand their Bakken exposure are starting to revisitMontana. As companies continue to improve upon drilling and completiontechniques, those Montana leases are looking more attractive.

How can we be sure?

Digginga little further, you'll discover that the Montana Board of Oil and Gasis being flooded with drilling permit applications. According to oneadministrator, Tom Richmond, oil and gas there could be more than 300permits this year.

Taking another look at the latest rig count by Baker Hughes, there are only five rigs currently drilling in Montana. All five are drilling the Williston Basin in Richland County.

2011 is shaping up to be a strong year for Montana.

Thelatest scramble to pick up leases in northeastern Montana isreminiscent of the land rush that occurred in North Dakota in 2008. Ifyou remember, the catalyst for North Dakota's oil boom was when the USGSupdated their Bakken assessment in April 2008.

Of course, the Bakken has been extremely generous to investors. In fact it's helped my readers close winner after winner—including more than 400% on one of our favorite Bakken stocks.

You can bet they won't miss out on Montana's good fortune.

Until next time,

Keith KohlEditor, Energy and Capital

[Dire_Wolf]

Well Boys and Girls,I'm back.  I see things have been rather quiet on the board for a while now. I believe the next leg up may just come this month!Dire Wolf

[Majorwood]

Wolf why do you believe the next leg up comes this month? Thats rather vague don't you think . Could you enlighten us on any information or are you just pumping. 

[Dire_Wolf]

Just pumping! Later in the month.

[Majorwood]

So you have nothing to back up what you say and you're just a pumper is that correct?

[Dire_Wolf]

Hint: 2 words, First Blood.Trying to get an old friend out of the woodwork.

[Majorwood]

Sorry wolf your hint first blood means nothing. What are you saying, anyone can post a stock will go up. You don''t seem to be able to back it up. As for old friends what does that have to do with this stock?

[Dire_Wolf]

ok, third word: Nations. That is all I can say. You have any shares?

[Majorwood]

Yes Wolf I have some shares. What is up with the Nations, I think I understand who you are talking about now.