St. Mary Land & Exploration
Further information on St. Mary Land & Exploration’s North Dakota Divestiture. SM received at closing $120.0 million; previously SM received an earnest money of $7 million. SM management still has not stated how many acres it retains in North Dakota.
American Oil & Gas
In 15 March American Oil & Gas (AEZ) has clarified that it will receive $44 in cash on or before March 31, 2010 from the sale of its Wyoming properties. This is good news as AEZ need to cash to drill on it North Dakota, 76,000 net acre, Bakken / Three Forks Goliath project. American Says they plan to drill seven to nine gross (five to seven net) wells at Goliath during 2010.
Recommendation: American Oil & Gas (AEZ) remains a highly speculative investment. I am not buying at the current price of $6.11.
Continental Resources
On 16 March 2010, Continental Resources (CLR) announced 7 North Dakota Bakken horizon wells, whose one-day-test production averaged 1262 BOEPD (barrel of oil equivalent per day).
Obert 1-13H (41% WI = working interest or ownership) a Three Forks horizon well in Williams County tested at 896 BOEPD. The Obert is the first test of the Three Forks in this area; the well is clearly economic but weak.
The Obert test is slightly negative news for Brigham Exploration (BEXP), which owns its large Rough Rider acreage block just to the east of the Obert
well. BEXP will drill Three Forks tests in Rough Rider this summer.
Lodgepole Formation Discovery: Continental announced its second Lodgepole formation discovery in Stark County, ND, the Gruman 18-3 (33% WI), which flowed at 474 BOPD from 11 feet of perforations. The well was a vertical test, and a relatively inexpensive well to drill.
This is a followup well to the Laurine Engel #1 (33% WI), which was completed in September 2009, flowing at 463 Bopd, and has produced 76,200 barrels of oil to date.
Analysis: These two Lodgepole wells are very good wells that payout in less than a year and have a slow decline rates. Continental did not disclose how much acreage it has in this area. The Lodgepole is a formation that lies just above the Bakken.
Michigan's Trenton/Black River play: In Hillsdale County, Continental completed was the Abraham 1-6 (83% WI), which flow-tested at the state allowable of 200 barrels of oil per day through a 12/64ths (small) choke.
A second well, the Gordon 1-36 HD (83% WI), which flow-tested 50 barrels of oil per day through a 7/64ths (very small). This well is producing from an unstimulated 1,360-foot horizontal well bore drilled in the Van Wert zone within the Black River formation. Continental plans to stimulate the well in May 2010.
Continental’s three Trenton/Black River play discovery wells in late 2007 and early 2008 continue to flow at the state allowable 200 Bopd. These Continental's wells in the field have been assigned gross proved EUR (Estimated Ultimately Recoverable) reserves of 1,469,000 Boe. These vertical wells cost less than $1 million to drill and complete.
Continental has leased 51,000 net acres in the play. So far, CLR has identified 23 additional potential well sites will drill six of these in 2010.
Anadarko Woodford: Continental reported promising preliminary test results from the Ballard 1-17H (99% WI) in Grady County, Oklahoma, in the Southeast Cana area of the Anadarko Woodford. It appears to be a condensate well, one that produces liquid petroleum as well as gas.
Recommendation on Continental Resources: Continental continues to prove that it can find oil, perhaps better than any other company. I own the stock, and will buy more on significant market weakness. In general, I’m waiting for a major downturn in the Dow Jones Industrial Average and/or oil prices.
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