The Bakken Oil Boom
The Bakken Oil Boom
by dj on
North America’s Hottest Oil Play Just Got Bigger
The Bakken oil play is already one of the largest onshore oil discoveries in North America in decades.
But producers in both Canada and the US are still pushing out the“generally accepted” boundaries of the play – mostly to the west, intoAlberta and into Montana from North Dakota – even as far as westernMontana.
Rosetta Resources (ROSE-NASDAQ), Newfield (NFX-NYSE) and Quicksilver (KWK-NYSE)have all pushed the boundaries of what is known to be productive Bakkenland – theirs is in northwestern Montana, right up against the Albertaborder, in what is known as the Alberta Basin Bakken play.
Not only is their far west of all the development activity in NorthDakota, it is also outside the six assessment units that the U.S.Geological Survey (USGS) designated when it conducted the assessment ofthe Bakken Formation, Williston Basin Province as late as 2008.(1)
These producers have established big land positions in the Alberta Bakken play of 100,000 – 300,000 acres each in Montana.
And a land position that size in this very young play has the abilityto make a tangible difference in production and potentially stock pricefor three large US producers – Rosetta Resources (ROSE-NASDAQ–286,000net acres), Newfield Exploration (NFX-NYSE–224,000 net acres) andQuicksilver Resources (KWK-NYSE–130,000 net acres).
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Bakken Oil has created fortunes for investors in the last six years.Yet this party’s far from over. You see, while mainstream financialgurus claim the biggest Bakken profits are well behind us, there’s oneplay nearly everyone has overlooked…
One small cap company holds a huge, underdeveloped land position.Its oil production is climbing quickly. Moreover, this outfit boasts animpressive balance sheet… and is sitting on one whopper of a naturalgas play. I think it could be the next take-over play in the Bakken,and I’m willing to tell you all about it – for free.CLICK HERE TO ACCESS YOUR FREE OIL & GAS INVESTMENTS BULLETIN STOCK REPORT!
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A fourth NYSE-listed producer, Murphy Oil Corporation (MUR-NYSE) also recently announced a large, 200 section (130,000 acre) land position in the area.
There are few juniors in the play. Canada’s Primary Petroleum (PIE-TSXv) is the leading junior with 127,000 acres, but Bowood Energy (BWD-TSXv), Mountainview Energy (MVW-TSXv) and Covenant Resources (CVA-TSXv) are also there, with smaller land positions.
None of the big three producers in the play talk much about theAlberta Bakken, as the play is called (even in Montana) in their websiteor literature, as they are continually acquiring more land, but theyare drilling. The lead company, Rosetta, didn’t even include a singlemention of it in their current investor presentation.
Both Rosetta and Newfield have each started a minimum eight wellprogram on their lands to prove up this potential new discovery of theAlberta Basin Bakken. And they are finding oil. While none of thecompanies has yet issued an IP rate, Rosetta management has estimatedthere is between 12.5 million and 15.3 million barrels of oil equivalentin place (this means oil and gas) per square mile.
The companies are now drilling lower cost vertical wells, trying todetermine where the sweet spots are in the various formations in theAlberta Bakken, where they would drill a more expensive horizontalwell. The market won’t likely see an IP rate until they have drilledseveral horizontals, and have 30 days production behind them.
An IP rate from any of the producers would be a major catalyst for the entire play.
And the analysts are watching. Global Hunter Securities said thatinvestors in Rosetta, even with a $1 billion market cap, “should getrewarded,” with success at the Alberta Bakken Basin. Clarus Securitieshave added Primary to their “Energy Watch List”.
The Alberta Bakken could also be a multi-zone play, which wouldincrease economics. Rosetta is targeting the Bakken, Three Forks,Lodgepole and Nisku formations.
The play also stretches up into Alberta. The most recent land sale onSeptember 01, 2010 in the Del Bonita area along the Alberta Montanaborder brought in roughly $40 million for the sale of 50,000 acres, withthe highest price of over $4200 per hectare or $1700/ac for leasesalong the border and inside the Bakken fairway.
*Primary Petroleum is an OGIB portfolio stock at 16 cents. Keith Schaefer owns Primary Petroleum.