Bakken Producers Creating Exciting Upside For Investors

Posted by Turn Key Oil on August 30, 2011 · 1 Comment

Jim Cramer keeps raving about the Bakken Shale and the many companies operating there. The Bakken has become quite popular and has numerous companies generating some great income. Michael Filloon suggests some more Bakken companies beyond Cramer’s picks.

Whiting (WLL) was the second largest oil producer in North Dakota at the end of 2010. It has 680,137 net acres in the Bakken hydrocarbon system. It has 65056 net acres in the Sanish area. This has been a great performer. In 2011, Whiting has drilled 21 wells in the Sanish with an average IP rate of 2020 Boe/d. These wells have a 90 day IP rate of 545 Boe/d. Whiting has an aggressive 2011 Bakken drilling program:

Sanish/Parshall-95 wells

Lewis & Clark-48 wells

Hidden Bench/Tarpon-26 wells

Starbuck-7 wells

Missouri Breaks-1 well

Cassandra-8 wells

Big Island-3 wells

SM Energy (SM) has 204,000 net acres with Bakken/Three Forks exposure. It has three rigs running in the area. Of its $1.55 billion 2011 cap ex program, SM will spend $190 million on the Bakken. SM Energy is more levered to the Eagle Ford than the Bakken, but it had a very goodsecond quarter. I believe this trend will continue. SM plans to spend an additional $185 to $205 million on the Bakken in 2012. This is a very good company with a conservative balance sheet and has been beating estimates.

Brigham (BEXP) may be the best way to play the Bakken. It is a pure play on the Williston Basin. It has 375800 net acres in the Bakken. Brigham has completed 79 North Dakota Bakken/Three Forks long laterals with an average IP rate of 2803 Boe/d. Its Montana Bakken wells have an average IP rate of 1576 Boe/d. By the first quarter of next year it will be running 12 rigs which will produce a 132 gross well annual run rate. Brigham consistently outperforms it competitors. In the first quarter of 2011, it had an average IP rate of 2681 Boe/d. This was 69% better than the average of all companies in the Bakken that completed a first quarter well. Brigham has drilled 6 of the top 10 highest IP rates in the Bakken. In summary, Brigham is my favorite play on the Bakken. It is a pure Bakken player with years of inventory to complete. It consistently outperforms competitors, while keeping costs down and using new technologies to improve well outcomes.

Kodiak (KOG) is also a pure Bakken player. It has 93,500 net acres. Kodiak has four operated rigs in the play and plans a fifth in the fourth quarter of this year. It also has two non-operated rigs. Kodiak has a $230 million 2011 capital program. This will fund 26 net wells with 21 net wells operated. Kodiak projects its long lateral Bakken wells will have EURs of 650 MBoe to 850 MBoe. These estimates are higher than competitors, but its two recent wells could be to the high end of its projections. Kodiak may be the best value of this group based on growth estimates. There could be a very large move to this stock if it continues to get very good IP rates.

Triangle Petroleum (TPLM) has become interesting as its stock dropped by more than 50% since its 52 week high of $9.73. Triangle has accumulated substantial acreage in the Bakken. It has72,050 net Bakken acres and 413,000 net acres in Nova Scotia. 44% of Triangle’s Bakken acres are operated. Of its 30000 core net acres, 22,000 are in Dunn, Divide, McKenzie, and Williams Counties. Triangle’s 42,050 operated acres are in Roosevelt County in Montana. Its first operated rig will arrive in September. It plans to drill 12 net wells by the end of next year. Triangle has $110 million in cash and zero debt. For more in depth information on Triangle go here.

Samson (SSN) has pulled back from its 52 week high of $4.75 to $2.36. This pullback has made Samson a value. It still has its acreage in the Niobrara, plus right to first refusal to participate in wells with Chesapeake (CHK). Samson has 1,200 net acres in the North Dakota Bakken. This project has had very good production from its 6 by 640 acre Bakken producers. Samson has 3 additional on 320 acre spacing. Samson recently announced the purchase of 20,000 net acres of leases in Roosevelt County, Montana. Fort Peck Energy has the option to buy back 33.334% of the 20000 net acres plus the same percentage of the two first horizontal wells by reimbursing Samson. Samson has the option to purchase an additional 20000 net acres, bringing the total to 40,000 total net acres. If all goes well, Samson will then purchase an additional 50,000 net acres with Fort Peck Energy. Continental and Brigham have both had good well results near Samson’s newly acquired leasehold. The most recent is Brigham’s Johnson 30-19 which had an IP rate of 2962 Boe/d. If well results continue to impress it could mean there is significant upside to both Samson and Triangle.

There are many different ways to play the Bakken, and there are many successful ways to do this. Filloon believes these companies are better positioned that Cramer’s picks. What do you think? Do you like these better?

Quotes taken from report by Michael Filloon, Read the entire article here.

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