Whiting to Reduce Bakken Rig Count

March 3, 2015 Elizabeth Alford

In its fourth quarter earning report, Whiting Petroleum announced a record 2014 and revealed a 2015 spending plan that includes reducing Bakken rig count.

In spite of low crude prices, Whiting ended the year with a Q4 profit of $58 million with cash flows totalling $419 million. Oil production was at record numbers for both the quarter (up 13%) and the entire year, which averaged 41.8 MMBOE and was up 22% over 2013.

In July of 2014, Whiting Petroleum announced plans to acquire Kodiak Oil & Gas for $3.8 billion. The deal made the combined company the largest Bakken/Three Forks producer, unseating Harold Hamm’s Continental Resources from the top spot.

“James J. Volker, Whiting’s Chairman, President and CEO, commented, “2014 was a strong year for Whiting. We set records in production, proved reserves and discretionary cash flow. In the wake of our acquisition of Kodiak Oil & Gas, we became the largest Bakken/Three Forks producer in the Williston Basin.Our 2015 capital budget of $2.0 billion reflects a disciplined approach to maintaining our financial strength while preserving our long-term growth plans.”

2015 Spending Plan

Looking to the new year, Whiting plans for the following:

Reduce its capital budget to $2 billion
$1.8 billion of the 2015 capital budget will go towards exploration and development activity
$59 million is allocated for land and $123 million for facilities
Production forecast of 59.0 MMBOE, an increase of 42% over 2014
Reducing Bakken rig count from 16 to 10
Completed well cost in the Bakken will average $7 million, down from $8.5 million in 2014

Read the full report at whiting.com

Governor Dalrymple Commits to Infrastructure

February 26, 2015 Elizabeth Alford

Governor Dalrymple of North Dakota signed legislation that grants massive emergency funding to counties and cities statewide in order to bolster the lagging infrastructure.

On Monday, the ND Senate unanimously approved SB 2103 for roads and other critical infrastructure throughout the state with the bulk of the resources allocated to its oil producing counties. The $1.1 billion is in addition to a $2.3 billion infrastructure spending package that is already in place.

The bulk of the money is targeted to fix roadways and bridges that have not been able to keep up with the increased traffic of heavy oil field equipment that the shale boom has brought to the Bakken area. Many of the region’s oil-producing counties still use hundreds of miles of gravel roads as main transportation routes often seeing as many as 1,000 vehicles a day, compared to fewer than 50 before the boom. Lawmakers hope this legislation will improve the infrastructure for what is hopefully another 20- to 25-year production in the play.

“Speaking with the Dickenson Press, Watford City Mayor Brent Sanford said, “The traffic flow will be better. It will be safer. So this is really a great investment for public safety.”

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Senate bill 2103 allocates the nearly $1.1 billion as follows:

$450 million for the Department of Transportation
300 million for the state’s top 10 oil-producing counties
$140 million for cities within the top 10 oil producing counties
$8,750,000 to school districts in oil-producing counties
$215 million for hub cities: Williston, Dickinson, Minot and Watford City.
$112 million for non-oil-producing counties.
$16 million for townships in non-oil-producing counties.

Read the entire bill at legi.nd.gov

Obama Issues Keystone Pipeline Veto

February 25, 2015 Elizabeth Alford

The White House issued a press release this week to announce that President Obama has carried out his promise to veto the Keystone XL Pipeline Approval Act. This action allows a final decision to be put on hold until further environmental reviews are complete.

The Keystone pipeline veto is the latest round in a highly political debate that has been raging since 2008, when the TransCanada Corporation first applied for a permit to construct the pipeline. At issue is a proposed 1,179-mile section of the pipeline that would run through the heart of the Bakken Formation in order to deliver 800,000 barrels of petroleum to the refineries on the Gulf Coast.

Since the first of the year, President Obama has hinted at his intentions to veto anything the Republican majority might try to push through. Instead he has urged lawmakers to “pass a bipartisan infrastructure plan that could create more than 30 times as many jobs per year, and make this country stronger for decades to come.” Read more here.

“In the official news release, President Obama stated “The Presidential power to veto legislation is one I take seriously. But I also take seriously my responsibility to the American people. And because this act of Congress conflicts with established executive branch procedures and cuts short thorough consideration of issues that could bear on our national interest — including our security, safety, and environment — it has earned my veto.”

A backlash to the Keystone pipeline veto began almost immediately and accusations towards the President have accelerated, with some decrying his ties to environmental groups. The future of the legislation is unclear, but republican lawmakers are certain to try and override the veto very soon.

EOG Reduces 2015 Capex 40 Percent

February 23, 2015 Elizabeth Alford

EOG announced a strong fourth quarter for 2014 and revealed a disciplined 2015 spending plan that leverages their position to get them through the current difficult market. The company gives much of the credit for its success to the outstanding performance from its interests in the Bakken formation in North Dakota.

EOG reported its Q4 net income at $445 million, which stands in sharp contrast to many companies who saw losses as crude prices plummeted through the fall. Overall, 2014 brought a net income of $2,915 million for the company, compared to $2,197 million for 2013.

Related: Energy Giants Announce Layoffs

2015 Capital Plan

As EOG looks to the new year, they expect their capital expenditures to range from $4.9 to $5.1 billion. This number includes projects for production facilities and midstream expenditures and will primarily be directed to EOG's highest rate-of-return oil assets including the Bakken play. This is a 40 percent reduction compared to 2014 spending and Capital will be allocated

“Chairman and CEO, William R. “Bill” Thomas, commented that “EOG delivered both high returns and strong growth in 2014, a unique accomplishment in the energy sector. Our returns-focused capital discipline has been at the core of EOG’s culture since the very beginning. We are confident we will continue to earn healthy returns on our capital program during this commodity down cycle and, more importantly, emerge stronger and poised for significant long-term growth.”

The biggest news for 2015 is that additional development in the Bakken will be put on hold. The company's plans to utilize existing rigs and complete approximately 45 percent fewer wells in 2015 (25) versus 2014 (59). This tactic will prepares the company to resume strong growth when prices recover.

Marathon Oil Reduces 2015 Spending by Half

February 19, 2015 Elizabeth Alford

Marathon Oil announced further cuts to its 2015 capital spending plan, reducing numbers another 20 percent from their initial December forecast. This represents a total capex that is less than half of last year’s budget. The company will continue to focus spending on its shale resources and will reduce exploration spending by more than half.

Bakken Highlights

Marathon reports that its Bakken production increased 38% from 2013. This number includes 17 gross operated Bakken wells to sales, with 15 piloted enhanced completions. 18 pilot completion wells averaging greater than 30% uplift in cumulative production over the first 60 days. For 2015, Marathon’s operations in the Bakken will receive a $760 million piece of the pie, which represents 22% of the company’s total budget and includes approximately $550 million for drilling, completions and recompletions.

“President and CEO Lee Tillman noted that “Nearly 70 percent of our 2015 capital spending will be directed toward our three core U.S. resource plays, which continue to be among our highest-return investment opportunities. This budget reflects an emphasis on investment selectivity, balance sheet flexibility and positioning for price recovery.” He added, “Though our U.S. resource plays generate competitive returns at current pricing, we’re taking action to materially reduce our 2015 capital program relative to 2014 to protect our financial flexibility.”

Marathon in the Bakken Formation

The North Dakota Bakken Shale oil play is top investment priority for Marathon Oil, where they have approximately 370,000 acres across North Dakota and Montana.

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