News Briefs: Bakken, Three Forks, American Oil & Gas, Continental Resources

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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NW Montana’s Southern Alberta-Basin Oil Play: Bakken, Three Forks, Banff (Lodgepole) new play. Updated 17 March 2010

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Location: Northwest Montana: from Cut Bank to the Canadian border and west to Glacier Park.

Major Players:
Rosetta Resources (ROSE) 254,000 net acres, and still leasing
Newfield Exploration (NFX) 221,000 net acres, and still leasing
Quicksilver Resources (KWK) 130,000 net acres (+more in a JV with Mt Power)

We don’t know much, as only three 2010 vertical wells have been drilled (all by Rosetta), and Rosetta tried to complete only one with a horizontal. Rosetta said that three producing zones (Bakken, Three Forks and Banff) taken together are equal to the Williston Basin’s Bakken. That’s a concern as Rosetta’s first attempt to frac all three through one horizontal failed.

This play will likely be slow in developing. Rosetta will only say that it intends to drill at least one well this year and Newfield says they will move a rig in April.

Quicksilver (KWK) looked at the Bakken four years ago with vertical wells on its 130,000 acres, which is held by production. With 2006 technology, Quicksilver found the Bakken to be uneconomic. However with technology’s great leap in 2008 and 2009, its says it will try again. The geology looks good, it only a question of whether 2010 technology fits the local Bakken horizon.

Quicksilver will probably complete or recompleted two horizontal wells in the Bakken in 2010. Quicksilver’s acreage is east of the other operators. The Bakken is only 3,000 to 4,000 feet deep.

Eventually, the Southern Alberta-Basin Oil Play will get developed as technology advances and oil prices increase. Whether it means a major bonanza for any of these, I cannot say.

Assuming all the acreage has equal value, Rosetta is the purer play as its mktcap (market capitalization) is only $1.4 billion. Next is Quicksilver, (mktcap = $2.3 B). And then comes Newfield (mktcap = $7.3 B). Quicksilver the most expertise in horizontal drilling and Newfield is second.

Not of these firms is tightly focused or a pure play. All are natural gas heavy and oil poor.

Recommendation: I’m not hot any of these stocks, especially at current prices. If one has a major decline, I might buy. But, if there is a major pullpack, then other petroleum exploration and production stocks might be even a better buy.
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Brigham Exploration (BEXP) News, Bakken Horizon; Petrohawk (HK) Sells Reserves

News from Brigham Exploration (BEXP) per their Press Release Yesterday afternoon,

Acreage Acquisition: Brigham purchased over 10,000 net acres in the northeastern portion of its Rough Rider project area; the purchase will close on April 10th, 2010. Assuming 3 wells per 1280-acre spacing-units, this will yield 23 wells in the Bakken horizon, and more speculatively another 23 in the Three Forks horizon. Unless, BEXP brought something to the table other than money, they likely paid full value for this acreage.

New Ross Area Well: Brigham’s Jerome Anderson 15-10 #1H Bakken had an early 24-hour peak-rate of 2,678 BOPD (barrels of oil per day) and 2.62 MMCF/D of natural gas. Brigham has a 50% working interest in this well, which was completed with 30 frac stages. The Ross Area is east of the Nesson Anticline in Mountrail County, North Dakota, this well helps delineate the northeastern porton of BEXP’s Ross acreage.

Two New Rough Rider Area Wells: Rough Rider is BEXP’s largest project and is to the west of the Nesson Anticline.

The Papineau Trust 17-20 #1H was completed with 29 frac stages and tested at 2,616 BOPD and 2.55 MMCF/D (early 24-hour peak-rate). This well is in the southern portion of Rough Rider, only two miles west of BEXP’s Mrachek well.

Kalil 25-36 #1H was completed with 30 frac stages and tested at 1,334 BOPD and 1.51 MMCF/D during its early 24-hour peak flow-back period. The Kalil well is in the center of BEXP’s large, solid block on its acreage in NW Rough Rider. When adjusted for the number of stages, this well is consistent with BEXP’s wells in this area.

BEXP Recommendation: All this news is good news, but not unexpectedly good news. These wells show progress from previous wells, confirming the steady progress of completion technology.

Petrohawk Sells Terryville Field for $320 Million:
$500 Million Raised So Far

15 March 2010: Petrohawk Energy Corporation (HK) today announced it has sold its interest in Terryville Field, located in Lincoln and Claiborne Parishes, Louisiana, to a private company for $320 million. The sale is the second of four asset packages expected to be sold by the Company during 2010.

Petrohawk has raised $500 million from the sale of older proven assets this year. It's intent is to use the cash for drilling higher return wells in the Haynesville/Bossier Shales and the Eagle Ford Shale. The stock is a little weak due to poor natural gas prices (now $7.90 MYMEX).

Recommendation: Petrohawk is a natural gas stock, not an oil stock. I'm looking to buy a some below $21.00, with the intent of picking up more in the event of a major drop in HK stock price.
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American Oil & Gas (AEZ): Goliath's Last Stand in the Williston Basin’s Bakken & Three Forks

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American Oil & Gas (AEZ) is now a pure play in the Bakken and Three Forks horizons in North Dakota. Since AEZ sold its Wyoming interests for $44 million (terms very unclear), it has become an interesting bet.

History: Like many tiny publicly-owned independents, American Oil & Gas has fled from play to play, like a polar bear abandoning one melting iceberg after another. AEZ bet the farm on the Powder River Basin and its notoriously difficult Niobrara formation, which should be called the Graveyard formation. AEZ leased 68,500 net acres of very marginal North Dakota Williston Basin “moose pasture,” while the prices were cheap.

AEZ’s Goliath Project: American calls its 68,500 net acres, the “Goliath Project,” and Goliath’s far SW corner is six miles northeast from Brigham Exploration’s largely derisked Rough Rider Project. For the two wells closest to Goliath, Brigham claims 24-hour peak initial production rates averaging 3,500 BOEPD (barrels of oil equivalent per day).

In December 2009, a desperate AEZ traded 7,500 net acres to Halliburton Energy Services for the cost of drilling one well plus $1 million in cash. This acreage cost Halliburton only about $700/acre; a real steal, even considering the traded acreage is on the east side of AEZ’s block (furthest from Brigham).

The well Halliburton agreed to drill is the Tong Trust 1-20H, a Bakken horizon test, located 21 miles from Brigham’s State 36-1 well, a 3,800-BOEPD IP discovery. Halliburton has finished drilling that well, and completion operations should commence any day now (weather permitting).

AEZ is also drilling the Ron Viall 1-25H, which is 14 miles from Brigham’s State 36-1. (AEZ’s closest property to Brigham’s well is 8 miles.) Ron Viall is also a Bakken test.

A third well of interest is Newfield Exploration’s currently-drilling Heidi well (8 miles to the WNW of the Ron Viall. Heidi will test the Three Forks horizon, which is a few hundred feet below the Bakken.

Tong Trust, Ron Viall, and Heidi will determine if American Oil & Gas is boom or bust. If those wells are strong, Goliath easily could be worth $1 billion, making AEZ stock worth $16 per share within a couple years. (AEZ has only 62 million diluted shares.) If those wells fail, AEZ sock will sink to $2, or perhaps as low as 50¢.

AEZ Champion versus BEXP Mrachek: American Oil & Gas likes to point out that its Champion well, like BEXP’s Mrachek well, was initially poor. AEZ blames the initial stimulation treatments that used obsolete single-stage technology.

Mrachek was only 70 BOEPD using single stage, but when BEXP recompleted it with a 7-stage frac, Mrachek jumped to 700 BOEPD. One could then guesstimate that if Mrachek had been completed with today’s 28 to 32-stage technology that Mrachek would have had an initial production rate of 2300 BOEPD to 3500 BOEPD.

Therefore, we are supposed to assume that AEZ’s Champion well (initial rate was only 170 BOEPD) would have also been a great well with a multi-stage completion. I buy the argument. At least, I’ll say that there is a 75% chance that the parallel is correct. American Oil & Gas’ Goliath property is a hot prospect, but only a prospect.

AEZ Management Quality: I rate American Oil & Gas’s top management down there with Kodiak Oil & Gas’ top management and Arena Resources’ top management. The very top men appear to be promoters who know very little about being successful oilmen. But even a broken clock is right twice a day. {I feel sorry for the actual operating management who work for these guys.}

But in the short run, AEZ doesn’t need good top management. All it needs to do is copy Brigham Exploration’s drilling and completion methods. Halliburton is a real expert in completing these wells, and AEZ has Halliburton Energy Services as a partner.

Recommendation: AEZ is a crap shoot, but one where the odds are in your favor. Buy on weakness; then hold until you make a good profit or until about three days after the results of two of the three wildcats are known. Don’t blame me if you lose most of your money; this is a high risk bet.
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Continental Resources (CLR) sizzling hot in the Bakken, Three Forks, and Woodford Shale

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Caption: The yellow shows CLR’s acreage in the Woodford Shale of the Anadarko basin. The gray band is the Woodford Shale. In the far NW corner, the yellow near the word Dewey shows the Northwest Cana Field just discovered by CLR. Toward the SE, near the word Grady, is where CLR is trying to prove is acreage with the Ballard wildcat.


Main Article:Continental Resources (CLR) sizzling hot in the Bakken, Three Forks, and Woodford Shale
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Continental Resources (CLR) is a $6.8 billion independent exploration and production firm highly focused on the Williston Basin, and, to a lesser extent, the Woodford Shale in Oklahoma. 67% of Continental Resources reserves are oil, and it is almost exclusively focused on horizontal (unconventional) drilling.

Billionaire CEO Jack Hamm built Continental Resources from scratch. He is highly entrepreneurial and understands all the details of CLR’s activities. Yet he has developed a large capable staff. In short, Jack Ham is a real oilman.

Williston Basin (North Dakota & Montana)

CLR’s Williston Basin Rig Count: Continental Resources rig count in the Williston Basin will rise from the current 12 to 16 at midyear (15 in North Dakota and one in Montana). About half of the Williston Basin wells will be in the Bakken and about half in the Three Forks (which CLR considers a separate horizon).

These rigs will drill 218 gross wells, which is only 80.5 net wells to CLR. This means that CLR has only an average 37% WI (working interest or ownership) in these wells. Sometimes independent E&P (exploration and production) companies drill lower WI wells to conserve their own cash. CLR will only have to pay 37% of the drilling and completion costs. CLR did state that the number of rigs that they are running in North Dakota is constrained by cash flow.

Multi-well Pad & Simul-frac Technologies: Continental Resources is bringing in “walking rigs” from SW Wyoming for use on “ECO-Pads(TM),” where up to four wells will be drilled on one location. These are more commonly known as multi-well pads. The drilling rig drills one well, then the rig “walks” a few feet and drills another.

Continental estimates that the multi-well pad method will save 10% on each of the four wells. At $5.4 million per well each multi-well pad saves CLR $2.16 million ($5.4 million x 0.10 x 4). Six of the 16 rigs will be on multi-well pads; these are development wells. The other ten rigs will mostly be delineating Bakken and Three Forks acreage. Two drilling rigs are already drilling on multi-well pads. Two more will be added within 45 days, and the final two by midyear.

Multi-well pads also offers the possibility of saving money through simul-fracs, a method where the same set of high pressure pumping trucks facture two wells at the same time. This has only been done a few times in North Dakota.

Multi-Stage Technology: Continental started 18-stage completions in September 2009, and now considers them standard. They are experimenting with 20-stage and 24-stage completions. This puts them in the pack, because the frac-stage technology leaders are already in the 28-32 stage range. CLR has increased their sand to 100,000 pounds per stage.

Hawkinson Three Forks Well: Continental Resources announced an important discovery in the relatively new Three Forks Formation, which is below the Bakken. CLR’s Hawkinson 1-22H (48% Working Interest) in Dunn County, North Dakota produced 1,667 BOEPD in its initial seven-day test period from the Three Forks horizon. The Hawkinson's strongest single-day production total was 2,338 BOE. It is currently producing 1200 BOEPD at 3200 PSI FTP (flowing tubing pressure) through a 14/64-inch choke. According to CEO Jack Ham, it is highly restricted “to capture the entire gas volume.”

Obert Well: This Three Forks test was just fraced. CLR will know the results within a few weeks. It is important to both CLR and Brigham Exploration (BEXP), whose large Rough Rider project is just to the east of the Obert test. The Three Forks horizon has not been tested in this area.

CLR’s Williston Basin Net Acreage: Net acreage refers to the actual acreage that Continental owns and excludes any acres in CLR operated wells that is owned by other oil companies.

Continental owns 652,000 acres in the Williston Basin, of which 489,000 acres are in North Dakota. About 70,000 North Dakota acres are now of questionable value, because the Traxel wildcat was a dry hole (uneconomic).

Only 7% of Continental’s undeveloped acreage in North Dakota expires in 2010, and they will either drill on it before expiration or pay renewal fees.

Well-Spacing Density: Continental Resources is planning on drilling four wells per each 1280-acre unit in each horizon (320-acre spacing).

CLR’s Montana Williston Basin Activities: Continental will use one drilling rig in Montana this year. It will alterative between (1) infill wells in Elm Coolee Field, and (2) steps-out wells and Wildcats to the north.

CLR completed the Rognas 2-22H, which is just a minor stepout from the prolific Elm Coulee Field. Continental used with a 14-stage frac with a high proppant (frac sand) load. The Rognas 2-22H averaged 841 BOEPD during its initial seven-day test period, but its best single-day production rate was 1,014 BOE.

Some operators like Brigham Exploration (BEXP) report only the “best single-day” IP (initial production rate), which is always much higher. One has to be careful to compare apples to apples. In the future, CLR plans to release only the “best single-day” rate.

The Rognas well gives us no information on the value the acreages further to the north, controlled by BEXP, EOG, and CLR.

Woodford Shale: Arkoma Basin and Anadarko Basin

CLR’s Woodford Shale in the Arkoma Basin: This is the older Woodford natural gas pay and is less important to CLR’s future. CLR has 47,500 net acres in the Arkoma Woodford; 47% is HBP (held by production). CLR will use one drilling rig here in 2010.

CLR’s Woodford Shale in the Anadarko Basin: This Woodford Shale play is new, larger, and to the west of the one in the preceding paragraph.

Continental Resources has added 51,500 net acres to its Anadarko Woodford leasehold, increasing its total position to 200,000 net acres; it is still leasing, especially in the “Northwest Cana” extension to Cana Field. CLR is already a major leaseholder in this area.

CEO Jack Ham said, "We think the Anadarko Woodford Shale play will be capable of competing with the economics of any shale play in the United States." This is important because of intense competition between with natural gas plays in shales. The plays that can produce gas the cheapest will make the most profit.

Keep in mind that CLR could use its cash to drill in the Williston Basin. CLR says Cana wells will produce a 30% return on gas prices below the current gas price.

CLR’s new discovery well in Northwest Cana is the Brown 1-2H (100% WI), which is Dewey County, Oklahoma, 40 miles to the northwest of what usually is called the Cana Field. It produced 4.2 MMCFD (million cubic feet) of natural gas and 102 BOPD in its initial seven-day test period. Anadarko Woodford Shale wells have a somewhat better (slower) decline rate than most gas wells. This well could easily still be producing 2 MMCFD at the end of one year.

Continental is currently drilling a step-out confirmation well, the Doris well, five miles south of the Brown 1-2H. The Doris will help “derisk” Northwest Cana Field.

35 miles to the southeast of Cana Field, Continental is trying to prove its 76,000 net acres in that area. Its McCalla well was a mechanical failure but showed strong promise of making a natural gas will with considerable natural gas liquids. Continental is now completing its second test well, the Ballard 1-17H (99% WI), also in Grady County.

During 2010, Continental will have three drilling rigs (up from one currently) in the Anadarko Woodford. Woodford wells cost about $5.4 million each.

Other CLR activity: CLR continues to spend insignificant sums on its Red River waterfloods and its Michigan oil wells. Both are economic but unimportant to CLR. It also holds 26,000 acres in the Haynesville Shale play.

Miscellaneous CLR Information

CLR’s Bakken rig time is now 26 days from spud to release.
Simulation time (fracing) = three hours per stage.
Total company-wide rig count is now 15 rigs, going to 24 at mid year.

Recommendation: Continental Resources is as close to perfect as an oil company can be. It is large enough to do anything that the big guys can, yet has the focus and agility of smaller firms. It is still entrepreneurially driven. It is oil focused. Is 100% U.S. onshore.

At $40.26 per share, it is a good buy. Today, I’ll be looking to buy CLR, and hopefully at a below $40.26. Then if it falls, I’ll buy more. I’ve had a buy order in for some time at $37.13, but, perhaps, that is being too optimistic. The target range for these great firms goes up with time.

Of course, if you expect a major market pullback, and if you are buying for the long term you should wait. I couldn’t find a published beta for CLR, but it must be 2 or higher.
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Brigham Exploration 25 Feb 2010 Earnings Conference Call, Bakken, Three Forks, Rogney

My Notes:

BEXP is currently running four drilling rigs, which will yield them 25.7 net wells for the full year 2010. In Rough Rider and Ross areas combined, they have 422 derisked locations yet to drill. Therefore, at the current rate of 25.7 wells/year, it would take BEXP 17 years to drill the 422 locations. Obviously, they plan to do it much faster; this just illustrates how much proven potential Brigham has.

Updated acreages by area:
Rough Rider 105,000 acres
Ross/Parshall 99,000 acres
Ghost Rider (Eastern Montana) 84,000 acres

Brigham Exploration has started to lease again, and have put $15.6 million in their 2010 capital expenditure (CapEx) budget for leasing.

Brigham management is optimistic about both the Three Forks Formation wildcat in the Rough-Rider area and the Bakken Formation wildcat in the Ghost Rider area. BEXP believes both targets have good porosity (8%-10%).

Rogney Wildcat: BEXP’s Eastern Montana wildcat will be the Rogney well, which is in the middle of their 84,000-acre Ghost Rider prospect. A couple of wells to southeast were economic completions, even though they used archaic single-stage frac jobs. One had an Initial production (IP) of 500 barrels of oil per day (BOPD). In my opinion, unless that operator got real lucky on his single stage frac, that well could have easily IP’ed at 3,000-4,000 BOPD using a multi-stage frac stimulation. Ghost Rider is a red hot prospect!

BEXP will be able to glean some information from two wells currently being drilled to the east and south east, because Brigham owns a small percentage of both wells. BEXP will spud the Rogney well in mid-March, but BEXP is unlikely to give us any information on initial production until mid to late June. Much of the delay will be due to coring the Bakken and Three Forks and the 30-day delay in getting those cores examined.

Lance Langford commented on Geosteering, which he said gives them the ability to keep the drill bit within ten feet of where they want it. This keeps them drilling in the highest quality rock. [That is truly amazing].

Each time that Brigham Exploration completes one net well, the value of BEXP goes up $9.5 million, assuming a present-value discount rate of 10% (PV10) on future oil. In other words, if you take the PV10 value of the complete well and if you subtract all the drilling and completion costs, you net out $9.5 million. ‘‘Net well” is a term needed because, if BEXP drills a well in which they own only 60%, they have only drilled 60% of a net well because their partners own the other 40%.

Non-Williston Basin Properties Updates: Brigham Exploration is currently drilling a Vicksburg gas well. This is down on the Gulf Coast where BEXP has some good leases that they would like to sell. In response to a question, Ben Brigham said they have no plans to drill a Mowry shale well (Wyoming, Powder River Basin), and, instead, are watching nearby drilling. They have been looking at some other oil plays in the Rockies, but haven’t budgeted any money to acquire leases there.

No Lease Expiration Proplems: One man asked BEXP what percentage of BEXP’s North Dakota leases are “held by production.” Oil leases have an expiration date. If BEXP hasn’t drilled and found production by a certain date, the leases expire, or sometimes BEXP must pay a large renewal fee. “Held by production” means that BEXP already has a producing well on the lease, and so the lease cannot expire.

The value of Brigham is not their existing oil wells but their leases on which they can drill more oil wells. Obviously, expiring leases and renewal fees are to be avoided. So BEXP drills first on the leases that will expire first. Bud Brigham’s answer was all important leases that would have expired in 2010 are either help by production or being drilled now. Currently, Brigham is drilling mostly 2011 leases.

The AFE cost to drill and complete a Williston Basin well is $6.825 million.

BEXP defines Initial Production (IP) as the peak oil 24-hour early flow rate. [This is a liberal definition, and BEXP is sometimes accused of overstating their IPs.]
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Brigham Exploration, BEXP, Pure Williston Basin Play, Main Fact Sheet

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Brigham Exploration Company (BEXP) is a pure oil play in the Bakken Shale and Three Forks Sanish Formation in the Williston Basin of North Dakota and Montana.

Brigham Exploration was formed in 1997 by CEO Ben M. “Bud” Brigham, an entrepreneurial geophysicist. BEXP is a one-man company with Bud involved in the details of geophysics, exploration, leasing, drilling, completion, finance, regulations, production, and marketing. This works very well as Brigham is almost exclusively focused in the Williston Basin oil boom in Western North Dakota and Eastern Montana.

Brigham stock price has had four major up spikes: 1997-98, 2005, 2008, 2009-2010. Both in 1999 and again in 2009, BEXP stock was down to about $1.10 per share suggesting that the firm was on the edge of collapse. Unless oil prices fall below $50 per barrel and remain there for several years, BEXP will not collapse.

BEXP was natural gas-focused until 2006, when it began acquiring Bakken Shale acreage in the Williston Basin. By May 2009, BEXP was focused almost entirely on oil in North Dakota where it holds 190,000 acres which is enough to drill over 700 wells. Currently BEXP has about 20 completed wells in North Dakota.

Ross Prospect, 26,400 acres: Just under the Bakken Shale is the Three Forks (sometimes called Sanish) formation. BEXP has made enough Bakken and enough Three Forks discovers in its Ross prospect, to suggest that Ross has been “derisked” for both. Derisked means the oil is there; and it only a matter of drilling wells to produce it.

Rough Rider Prospect, 105,000 acres: During 2009 BEXP drilled and completed enough Bakken wells in Rough Rider to essentially derisked most of that acreage for Bakken production. BEXP will drill its first Three Forks test in Rough Rider in about May 2010. The only surprise will be if the Three Forks is not commercial under most of Rough Rider.

BEXP’s Ross and Rough Rider properties in North Dakota are reasonably profitable (returns of 30%) at a NYMEX oil price of $50 per barrel and are extremely profitable (returns of 70% - 100%) at a NYMEX oil price of $70 per barrel. BEXP has about 430 derisked undrilled oil well locations in Ross and Roughrider.

Ghost Rider, Eastern Montana, 86,300 acres: The value of BEXP’s acreage in Montana is essentially unknown. BEXP’s first wildcat well will be drilled soon, with results known by early summer 2010.

BEXP has four operated drilling rigs in North Dakota, and may add a fifth soon. [BEXP does not own the rigs but contracts for their services. “Operated” means that BEXP is the oil firm in charge of the drilling if the well is partnered with other oil firms.]

It takes about one month to drill a Bakken or Three Forks well. Then the drilling rig moves out, and the fracking crew moves in. However in winter, fracking is often delayed do to extreme cold.

BEXP is trying to sell (monetize) almost all of its non-Williston Basin properties, some of which are valuable natural gas properties.

BEXP heavily hedges its oil and gas, as much as two years out.

BEXP has been the brightest star in the oil patch for the last couple years.

Williston Basin, Bakken and Three Forks in North Dakota and Montana

Reserved for Work in Progress