Quick Reference of a Mature Non Op to Petroshale Petroshale has a long way to go but with Slawson/Chernoff as the major shareholders, Air Tight share structure and ready for growth!
Northern’s small acquisitions adding up
If you nibble at a pie long enough, eventually you’ll consume a big piece. With its small acquisitions averaging only 100 acres at a time, Northern Oil and Gas has gobbled up a lot of the pie in the Williston Basin since 2006. Chief Executive Officer Mike Reger says his company is the largest non-operator in the area with an average 8 percent working interest in its wells — many operated by some of the industry’s biggest players. Today, the Minnesota-based company has a portfolio of more than 2,000 gross Bakken and Three Forks wells and some 187,000 net mineral acres. Last year, its wells averaged a net 12,000 barrels of oil per day and exited 2013 at 14,000 bpd. The company also acquired more than 20,000 acres in 2013, and even surprised itself at the end of March with an all-time record of 24.4 net wells. Earlier, in January, it had projected only 18.8 net wells by the end of the first quarter 2014.
“Northern really stands alone as the only non-operator of any scale in the Williston Basin,” Reger told investors on April 8. “So that franchise we built is very powerful.”
He said the company’s position as a non-operator allows it to pick away at the field and acquire strategic drilling opportunities, and its exposure to some of the best operators in the industry has led to significant growth.
“We are the direct beneficiary of really a staggering amount of capex and innovation we’re seeing in the field,” Reger said.
Control over capex
Though Williston Basin development may seem to be driven by operators, Reger argues that Northern maintains more control over its capital expenditures than its partners. “We have 20 employees and we make decisions in one office … we don’t have to consult multiple offices; we have no infrastructure or long-term contracts … so every day so we can literally put our pencils down and pare back our capex as needed,” he said.
Northern recently added a $50 million borrowing base on its credit facility creating a healthy $425 million account for expenses.
“It really gives us a lot of dry powder to keep drilling and keep acquiring the acreage and continue to meet all our drilling obligations,” Reger said.
Northern’s partnered operators plan to drill 44 wells in 2014 even though it is closer to 55 wells based on first quarter spud results. Reger is proud of the relationships the company has built with operators in the Williston Basin, and highlighted a recent project with Continental Resources. Northern teamed with the exploration leader on its pilot project at the Charlotte well in Banks field of McKenzie County in which it drilled into the lower benches of the Three Forks.
“We’ve drilled every lower bench, and it really is an exciting development to see unfold,” Reger said. “It’s really going to add a significant inventory over time.”
—Maxine Herr
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