Bakken Oil Revenue Could Push North Dakota's Legacy Fund to $3 Billion

Bag of Cash
Bag of Cash

North Dakota first proposed the Legacy Fund in 2008 and legislators approved its creation in 2010. The legislature expected deposits might reach $600 million dollars by the summer of 2013. Instead, the fund is sitting on $1.3 billion and could very well surpass $3 billion by the time lawmakers determine the best use of the funds.

30% of annual oil extraction and production taxes are directed to the fund and spending is restricted through 2017. Even then, spending has to be approved by a two-thirds vote and no more than 15% of the fund can be spent in any two year budget cycle.

“It is growing very fast. It’s going to become much bigger.”
— Republican Gov. Jack Dalrymple

Add the $583 million rainy day fund and the $342 million property tax relief fund and it becomes very clear the North Dakota oil boom is setting the state up for a long and prosperous future.

Read the full article at thefiscaltimes.com

Whiting Petroleum Acquires Bakken Acreage In MT & ND - $260 Million

Whiting Petroleum Bakken Acquisition Acreage Map - August 2013
Whiting Petroleum Bakken Acquisition Acreage Map - August 2013

Whiting Petroleum announced the acquisition of 39,310 gross (17,282 net) acres targeting the Bakken in North Dakota and Montana for $260 million. The acreage is located in McKenzie and Williams counties in North Dakota, and Roosevelt and Richland counties in Montana.

The properties had produced 2,420 boe/d through the month of August and Whiting estimates proved reserves at 17.1 million boe (85% oil and only 24% proved and producing). The deal includes 13 operated wells on 1,280 acre units, with an average working interest of 58% (48% NRI). 92% of the acreage is held by production.

“This acreage expands our presence in our Western Williston Basin area where we have seen recent strong production growth primarily as a result of positive drilling results at our Hidden Bench, Tarpon and Missouri Breaks prospects.”
— James J. Volker, Whiting`s CEO
Whiting Petroleum Bakken Acreage Breakout - August 2013
Whiting Petroleum Bakken Acreage Breakout - August 2013

Whiting has now assembled a 714,541 net acreage position in the region at a cost of $643 million or less than $900/acre.

In the second quarter of 2013, Whiting produced 93,380 boe/d company-wide. Williston Basin production was broken out as follows:

  • Western Williston Basin - 8,385 boe/d
  • Southern Williston Basin - 13,325 boe/d
  • Sanish Field Area - 36,315 boe/d

Read more at Whiting.com

EOG Resources' Secrets To Success In The Bakken & Other Shale Plays

Oil Rail Car Image
Oil Rail Car Image

EOG Resources opened North Dakota to the modern oil industry when the company discovered the Parshall Field in 2006. The company led the shift to horizontal drilling and hydraulic fracturing in oil plays like the Bakken and Eagle Ford. Forbes published an interesting article on the company in July.

EOG invested in areas that weren't common for oil companies just a few years ago.

  • EOG spent $100 million on a rail terminal in 2008
  • EOG invested $200 million in three sand mines and two processing facilities in Wisconsin

EOG increased the value of oil the company was producing by bypassing pipeline choke points.

Sand mines in Wisconsin save the company an average of $500,000 per well. Self-sourced sand saves the company as much as $300 million per year!

In addition, EOG is using microseismic sensors to understand the reach and effectiveness of the company's well completions. As a result, the company has shifted from focusing on reach in completions to utilizing shorter, but more energy intensive fracks. Shorter frack lengths allow the company to drill wells at closer acreage spacing.

Read the full article at forbes.com

Bakken On Auto-Pilot With 180 Rigs Running

Rigs working in the Bakken have gotten much more efficient. The 180-190 rigs running in the region can drill as many wells as 200 plus in previous years. Better yet, there are enough completion crews to keep up. Development of the play is finally hitting its stride in what should be a normal level of development.

During a call discussing record production in June, Helms stated "The current condition of our Bakken plays is that we`ve reached our cruising altitude, so it is safe to get up and walk around."

Bakken production from North Dakota surpassed 750,000 b/d for the first time in June. Wells continue to improve and the deeper zones of the Three Forks look promising.

Oil prices falling substantially is one risk to development at this point, but there aren't many concerns at $100 per barrel. At the time this article was written, oil in the region was trading at a ~$5/bbl discount to WTI.

Read more about ND's record production month in the article Bakken Oil Production Sets New Record.