Continental Resources: Excellent Q2

August 11, 2015 Elizabeth Alford

EOG Releases 2015 Q1 Report — Continental Resources: 2015 Q2

The second quarter of 2015 delivered “excellent results” for Continental Resources, especially in light of the prevailing low crude prices.

Continental reported a Q2 net income of $0.4 million and anet production of 20.6 million Boe, or 226,547 Boe per day, a sequential increase of 10% from first quarter 2015 and 35% higher than second quarter 2014. This included 149,897 barrels of oil per day (66% of production) and 459.9 million cubic feet (MMcf) of natural gas per day (34% of production).

“Jack H. Stark, COntinental’s President & Chief Operating Officer said, “Looking to the second half of 2015, we expect production will decline slightly in the third quarter and level off in the fourth quarter, reflecting a lower level spend that we have planned. Our year-end 2015 exit rate is projected to be 210,000 barrels to 215,000 barrels of oil per day and there may be some upside to this number as efficiencies continued to build.”

Bakken Q2 Highlights Continental’s Bakken drilling program is focused on core leasehold in Williams, McKenzie, Mountrail and Dunn counties, targeting an average estimated ultimate recovery (EUR) of approximately 800,000 Boe per well. Other highlights include:

Production averaged 140,988 Boe per day an increase of 4% compared with first quarter 2015 and an increase of 30% compared with second quarter 2014.
Completed 56 net (159 gross) Middle Bakken and Three Forks wells
Operated an average of 10 rigs and three completion crews in the Bakken
The company estimates it has at least 10 years of drilling inventory, with wells averaging 775,000 Boe per well in EUR, in the core of the Bakken.
95 gross operated Bakken wells drilled and waiting on first production, compared to 115 at the end of first quarter 2015

Whiting Plans to Drop Bakken Rigs

August 4, 2015 Elizabeth Alford

Whiting petroleum announced second quarter earnings this week that highlighted record production and plans to complete 40 to 50 wells in the Bakken.

Whiting posted a record quarter with total production at 170,000 BOEs per day. Company operations in the Bakken/Three Forks region represented 80% of total production at 136,000 BOEs a day.

“CEO James J. Volker said, “With the recent decline in commodity prices, we have elected to drop an additional three rigs in the second half of the year and run an eight-rig program. In 2016, at a $50 NYMEX oil price, our capital budget and cash flow should be equal, with a relatively flat production profile when compared to Q4 2015. Our budget is flexible. If oil prices are higher than anticipated later this year, we can ramp up and deliver even greater growth.”

Other Q2 Highlights

Adjusted Net Income of $9.2 Million or $0.04 per Diluted Share
Q2 2015 Discretionary Cash Flow Totals $380.7 Million, a 53% Increase Over Q1 2015
Enhanced Completions Deliver 40% to 50% Production Increases Across Multiple Williston Basin Areas
Redtail Niobrara Field Production of 17,065 BOE/d in Q2 2015, Up 31% Over Q1 2015
$185 Million Additional Q2 2015 Non-Core Property Sales; $300 Million of Total Asset Sales in 1H 2015
2015 Capital Budget Revised to $2.15 Billion for 6.5% Production Gro

Whiting Petroleum Corp.'s Stock Crashed 35% in July with analysts speculating that the company's profitability is very correlated to the price of crude.

New Regulations For Bakken Housing

July 28, 2015 Elizabeth Alford

Williams County commissioners adopted new regulations that will significantly limit the availability of temporary housing that serves in North Dakota’s oil fields.

Temporary housing has peppered the landscape since 2008, providing a crucial way to house the droves of workers who have migrated to the Bakken oil fields. When the influx of workers outstripped available housing, new crew camps, RV/trailer parks and modular homes quickly sprang up to meet the need.

Last week the commission voted to adopt the new guidelines that put restrictions on new or renewed applications for temporary housing. Commissioners stopped short of a full ban fearing that might increase apartment and permanent housing costs.

“Mike Sizemore, director of Development Services said “This was an effort to try and put something together to work. It’s hard to come up with a policy that was cut and dry because none of these are the same.”

Recently, the SEC has frozen the assets of North Dakota Developments, LLC (“NDD”) and its principles, claiming they defrauded over 980 investors from 66 different countries to build Bakken housing projects that were never finished.

Bakken Man Camps Center of Ponzi-Type Scheme

Bakken Train Derailment

July 21, 2015 Elizabeth Alford

Another Bakken train derailment leaves a mess in rural northeastern Montana

Related: Bakken Oil Train Derails

Last Friday, 22 train cars from a Burlington Northern Santa Fe Railway (BNSF) train derailed causing an evacuation of residents in nearby homes and in a Bakken man camp. Officials said the train was headed to Anacortes, Washington and derailed about 5 miles east of the small town of Culbertson, near the North Dakota border.

35,000 gallons of crude oil leaked from four of the derailed cars, but officials there was no immediate evidence that any crude reached a waterway.

The Department of Transportation issued an emergency order in May that requires certain crude by rail trains to slow down in high threat areas. But speed doesn’t seem to be a factor in the latest crash. After investigating Thursday’s crash, the U.S. Federal Railroad Administration revealed that the train was only traveling at 44 mph.

This was the sixth such train accident in the Bakken since the beginning of he year. Other crashes include:

2/17/15: WV derailment carries Bakken crude

2/14/15 Train carrying crude oil derails in Canada

3/6/15: Oil train carrying Bakken crude explodes in Illinois

3/7/15 Train carrying crude oil derails in Canada

3/8/15: Train carrying crude oil derails in northern Ontario

5/6/15: Train carrying Bakken crude derails near Heimdal, North Dakota

Savage Services Cuts Jobs in Bakken

July 14, 2015 Elizabeth Alford

Savage Services Corp, a North Dakota railcar and logistics facility, laid off 10% of its full time employees this week. Savage is one of the largest facilities of its kind in the region and employed 118 people before this layoff.

Company sources blame the layoffs on decreased demand for railcars to transport Bakken crude oil, saying that as pipeline construction has increased, the demand for railcars is the lowest it has been in three years. This is contrary to other data about the prevalence of transporting crude oil by rail. In May, the Energy Information Administration (EIA) released its latest data for crude by rail across the country that shows a 1700% increase over the last five years.

Related: Crude by Rail Up 1700%

It has been almost two years since Savage announced the expansion of the Bakken Petroleum Services Hub in Trenton, ND as a result of its acquisition of Ft. Worth Pipe. The new terminal added oil country tubular goods (OCTG) storage, transloading, trucking, threading, inspection and clean and drift services for oil and gas producers in the Williston Basin.

Since crude prices plunged last year, oil company executives are working to cut costs wherever they can, but tightening the belt doesn’t necessarily mean more layoffs. Over the next two years, the majority of the oil and gas executives (76%) expect to see their organizations’ ranks to increase or stay the same over the next two years. Read more here.