QEP - Helis Bakken Deal Agreed for 27,600 Acres for $1.3 Billion

QEP Bakken Acquisition Aug 2012

QEP Resources added Bakken acreage for $1.3 billion. The company acquired 27,600 net acres that have production of 10,500 boe/d. Net proved and probable reserves add up to more than 125 million barrels of oil equivalent.

Reserves are 81% oil, 9% NGLs, and 10% natural gas. The company's average net revenue interest is 80% and the company will operate approximately 90% of the acreage acquired.

Most of the assets being acquired were owned by Black Hills E&P and Helis Oil & Gas.

QEP disclosed the following:

• The properties are prospective for both the Bakken and Three Forks
• There 72 gross (29 net) developed locations and 301 gross (146 net) undeveloped locations
• Future developed capital is estimated at $1.59 billion
• QEP Resources now has 118,000 net Bakken acres.

"The Acquisition will add a new contiguous block of QEP-operated acreage in a localized 'sweet spot' for both the Bakken and Three Forks formations, as evidenced by above average well performance and EURs from wells drilled to-date in both reservoirs," said Chuck Stanley, Chairman, President and CEO of QEP. "To drive operational efficiency, we have historically targeted the best rock in contiguous operated acreage blocks in the basins in which we operate. The Acquisition meets our criteria perfectly. Further, the Acquisition gives us a greater degree of operational flexibility in allocating rigs and personnel on our various assets in North Dakota. The Acquisition will allow our talented team of drilling and completion specialists to achieve the scale necessary to improve capital and operating efficiencies and drive down costs. We expect the growth potential of these assets to have a significant impact on our overall production, and more specifically on our crude oil production," Stanley added.

North Dakota Oil Production Could Jump to 2 Million Barrels Per Day

ND Oil Pump Jack

North Dakota oil production could surpass a whopping 2 Million barrels of oil per day by 2025. North Dakota is now the number two oil producing state in the country trailing Texas. That's the potential pegged in a recent Bentek study.

For those that were around back in 2000, production in all of ND was less than 90,000 b/d of oil and the average well produced just 27 b/d. Even in 2005, production in still less than 100,000 b/d. Oh, what a few years can change. Today, the same area is producing more than 600,000 b/d and the average well is producing more than double what it was in 2000 (>65 b/d). Total production has increased more than six-fold in a twelve year period and many expect it will double again. The Bentek example is likely a high case, but possible nonetheless. I wouldn't say anything is impossible based on what we've learn over the last decade.

Read more about the Bentek prediction at fuelfix.com

North Dakota's Rig Count is Expected to be Choppy Going Forward

North Dakota's rig count will likely bounce up and down as oil prices oscilate around $80-90/bbl. Oil prices have recovered from below $80/bbl, but operated rig counts are showing a decline in activity in North Dakota.

"The largest drillers in the Bakken are all reducing their rig counts this month, although no one acknowledge a change in drilling plans," Sen said, citing a sharp drop in oil prices during June. That oil price drop cast doubts about the viability of shale production at prices below $80/bbl.

You can read more at ogj.com

Canadian Pacific - Smart Sand Partner to Supply Bakken Frack Sand

Canadian Pacific and Smart Sand are partnering to supply Northern White frac sand in the Bakken, Eagle Ford, Marcellus, and Utica shale plays. The first course of action being a transload facility in Makoti, ND, that will be in service early in 2013.

Smart Sand's primary facility, which opened in late June 2012 and is located on the CP rail line in Oakdale, Wisconsin, will supply premium Northern White frac sand in a broad range of mesh sizes to the new transload facility. Based on Smart Sand's initial processing capacity of more than one million tons per year, plus the company's extensive proven reserves, the facility will be able to quickly fulfill long- and short-term orders while providing direct rail access for unit trains.

Rangeland Energy's Bakken Shale COLT Rail Facility Open - June 11, 2012

Crude Oil Rail Car

The COLT (Crude Oil Loading Terminal) facility in North Dakota opened on June 11, 2012. COLT is operated by Rangeland Energy, LLC, and is the largest open access crude oil marketing terminal in the state. The facility provides marketing through unit trains and a 21-mile, 10-inch connector pipeline that ties into mulitple pipelines at Rangelands Dry Fork Terminal near Tioga. The pipeline provides direct access to both the Tesoro and Enbridge pipeline systems.

COLT's rail car loading facility is serviced by BNSF Railway. Storage and working capacity include:

• 720,000 barrels of working storage
• 120,000 barrels of tank storage
• Access to 120,000 barrels of tank storage at the Dry Fork Terminal
• Rail export capacity of 120,000 b/d
• Pipeline capacity to move 75,000 b/d

Rangeland has service agreements with both U.S. Oil Trading LLC (subsidiary of Astra Oil Trading N.V.) and Flint Hills Resources.

Read more about the company at rgldenergy.com