Publisher Joins Petroleum Geologists To Learn How To Hunt For Hydrocarbons

By Darryl L. Flowers

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Sun Times photo by Darryl L. Flowers

Pinning down the early history of oil exploration in Montana can be tricky. The first mention of the substance dates back to 1865, when thick oil coming to the surface at a seep near a river was used to lubricate the wheels on horse-drawn wagons.

The Daily Interlake, Kalispell, in December of last year reported that the first oil well was drilled by the Butte Oil Company in 1901 near Kintla Lake, in what is now Glacier National Park. The location was chosen because Indians as well as fur trappers had long known about oil seeping to the surface.

A few years later, while digging for copper near the community of Altyn, in what was then part of Teton County, a miner struck oil. Just as in the Kintla Lake attempt, no oil was ever produced in any commercial quantity. Altyn now sits at the bottom of Lake Sherburne in Glacier Park.

What those first attempts at producing oil have in common is that the black gold was observed or found by accident.

But how does an oil exploration company go about finding oil when, to the layman’s eye, there is no sign of the stuff?

In the history of Petroleum County, it is recorded that “scant attention was paid to the four strangers who checked into the hotel in Winnett on October 9, 1919.” They were geologists, following up on a USGS report from 1915 that claimed the east slopes of the Judith Mountains indicated favorable conditions for the presence of coal. In 1918, a follow-up report noted that the formations in the Cat Creek, Flatwillow and Devil’s Basin “anticlines” might favor the accumulations of oil.

So, what are the characteristics that the trained eye seeks in the search for hydrocarbons? Before the high tech seismic crews come on the scene, before the satellite images are examined, what is it that tells the trained eye there are liquid riches beneath?

As it turns out, Montana – and specifically areas of Cascade, Teton and Lewis and Clark Counties, is among the best locations on the planet to examine the geologic structures that are common in oil producing locations.

For the rest of the story, please go to:

http://www.fairfieldsuntimes.com/articles/2012/07/31/news/doc5018196cde72b354876530.txt

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Whiting Petroleum Corporation Announces Second Quarter 2012 Financial and Operating Results

• Q2 2012 Production Up 26% from Q2 2011

• Q2 2012 Net Income Available to Common Shareholders of $150.6 Million or $1.27 per Diluted Share and Adjusted Net Income of $86.8 Million or $0.73 per Diluted Share

• Q2 2012 Discretionary Cash Flow Totals $310.5 Million

•Increasing 2012 Production Guidance to 20% – 23% over 2011 and Capital Budget to $1.9 Billion from $1.8 Billion

Whiting Petroleum Corporation’s (NYSE: WLL) production in the second quarter of 2012 totaled 7.34 million barrels of oil equivalent (MMBOE), of which 86% were crude oil/natural gas liquids (NGLs). This second quarter 2012 production total equates to a daily average production rate of 80,700 barrels of oil equivalent (BOE), representing a 26% increase over the second quarter 2011 average daily rate of 64,120 BOE per day. During the second quarter, Whiting replaced the approximate 4,500 BOE per day of production that was conveyed from Whiting Petroleum Corporation to Whiting USA Trust II effective March 28, 2012, through new drilling. Production would have increased 33% without the Trust II conveyance.

“We added more than 10,500 net acres to our Williston Basin acreage position in the second quarter and now hold over 712,000 net acres in the Basin. With further drilling in our new development areas and our established core properties, we expect a strong second half in 2012.”

Based on continued good results across our properties, we are increasing our 2012 production growth guidance to 20% – 23% from 17% – 22% and revising upward our capital budget to $1.9 billion from $1.8 billion.

James J. Volker, Whiting’s Chairman and CEO, commented, “Our objectives for 2012 remain intact:

We continue to execute on our active drilling program and have increased our guidance for the third time this year to a range of 20% to 23% production growth; Our plan to drill 257 gross (160 net) wells throughout our prospect areas remains unchanged. By high-grading our drilling rig fleet and using pad drilling and sliding sleeve completions, we believe we can efficiently reach our 2012 drilling goals; At current oil prices, our discretionary cash flow, recent WHZ Trust unit sale and Belfield Plant sale will substantially fund our 2012 capital budget of $1.9 billion; We continue to experience success in emerging development areas such as Big Tex and build solid acreage positions in new exploration areas at attractive prices and attractive net revenue interests.

We continue to monitor oil prices and have flexibility in our rig contracts. Of our 29 contracted rigs 13 have contracts that can be terminated without penalty by December 31, 2012 and another seven have contracts that can be terminated without penalty by December 31, 2013. Currently our plans call for the release of three rigs. One in Sanish in early September, one in Hidden Bench in late August and one in Pronghorn in late August. These are generally less efficient rigs when compared to others we have under contract. Due to the efficiency of the rigs we will retain under contract, we anticipate no reduction in the number of wells we intend to drill in 2012.

Mr. Volker continued, “We added more than 10,500 net acres to our Williston Basin acreage position in the second quarter and now hold over 712,000 net acres in the Basin. With further drilling in our new development areas and our established core properties, we expect a strong second half in 2012.”

Operations Update

Core Development Areas

Bakken and Three

Forks Development

Sanish Field. Whiting’s net production from the Sanish Field averaged 31,530 BOE per day in the second quarter of 2012, an increase of 10% from 28,790 in the first quarter of 2012.

Highlighting recent results in the Sanish field were the completions of our first two wells using pad-style completions. Both wells were drilled on the western side of the Sanish field. The S-Bar 14-7XH, a cross-unit well, was completed in the Middle Bakken flowing 1,568 BOE per day on May 21, 2012. The well’s 9,658-foot lateral was fracture stimulated in a total of 30 stages.

The adjacent 10,121-foot lateral at the S-Bar 14-7TFX was fraced in 25 stages soon after the S-Bar 14-7XH. This cross-unit well was completed in the Three Forks formation flowing 955 BOE per day on May 27, 2012.

Combined with our DWOP (Drill Wells on Paper) training, white sand and sliding sleeve completions, pad drilling is providing efficiencies for drilling and fracture stimulation that lead to an estimated savings of $2 million per well. These factors enable us to drill and complete our Williston Basin wells for approximately $7 million. Each rig now drills approximately 12 wells per year rather than 10 and allows wells to be efficiently fraced and placed on production sequentially thereby minimizing equipment moves and truck traffic. Currently 25% of our rig fleet in the Williston Basin is pad capable. We anticipate that over 50% will be pad capable by year-end 2012.

Also of note at the Sanish field was the July 5, 2012 completion of our highest-rate wing well to date. The Smith 41-12H flowed 2,974 BOE per day from the Middle Bakken. The well’s 6,996-foot lateral was fracture stimulated in a total of 22 stages.

Lewis & Clark/Pronghorn Prospects. Whiting’s net production from the Lewis & Clark/Pronghorn prospects averaged 10,275 BOE per day in the second quarter of 2012. We own 381,403 gross (261,445 net) acres in the Lewis & Clark/Pronghorn prospects.

We completed our first two wells off a pad at the Pronghorn prospect. The 3J Trust 34-8TFH was completed in the Pronghorn Sand formation flowing 2,254 BOE per day. The well’s 10,568-foot lateral was fraced in 30 stages. Whiting owns an 88% working interest and a 71% net revenue interest in the 3J Trust 34-8TFH well. The 3J Trust 24-8PH flowed 2,157 BOE per day on completion in the Pronghorn Sand. The well’s 10,001-foot lateral was fraced in 30 stages. The Company holds an 89% working interest and a 71% net revenue interest in the 3J Trust 24-8PH well. Both 3J Trust wells were tested on June 22, 2012.

Hidden Bench/Tarpon Prospects. Whiting’s net production from the Hidden Bench/Tarpon prospects averaged 2,190 BOE per day in the second quarter of 2012. We currently hold 58,124 gross (36,301 net) acres in the Hidden Bench/Tarpon prospects, which are located in McKenzie County, North Dakota. Of note at Hidden Bench is the recent completion of the Johnson 34-33H. This well was completed in the Middle Bakken formation on May 25, 2012 flowing 2,213 BOE per day. We hold a 94% working interest and a 75% net revenue interest in the well.

Missouri Breaks Prospect. In the second quarter, we acquired an additional 4,000 net undeveloped acres and now hold 89,580 gross (61,794 net) acres in the Missouri Breaks prospect, located in Richland County, Montana. To date, we have drilled and completed three wells on the western portion of our Missouri Breaks prospect. Going forward, we estimate ultimate recoveries in the 300,000 – 400,000 BOE range in this area.

Big Island Red River Play. We have identified more than 50 vertical Red River prospects at our Big Island play in Golden Valley County, North Dakota, using 3-D seismic interpretations as well as porosity anomalies. All five vertical Red River wells drilled to date at Big Island have been completed as successful oil producers. Estimated ultimate recoveries for these wells range from 200,000 BOE to 300,000 BOE. The wells have an estimated completed well cost of approximately $3.5 million.

Samson Updates WY Operations

Hawk Springs Project, Goshen County, Wyoming

Defender US33 #2-29H, (SSN 37.5% working interest)

The work-over rig has successfully completed the clean out of the Defender well. There was evidence of an obstruction close to the heel of the well and a significant volume of frac sand was recovered from the well bore by circulating a completion brine, of which around 1000 barrels have not yet been recovered from the reservoir.

A completion string was set, including a rod pump, and the well will be returned to production this week once all the electrical facilities have installed.

Spirit of America US34 #2-29, (SSN 100% WI)

The work-over rig has returned to the SOA2 well site and has begun efforts to recover a 2,200 foot fish, consisting of tubing and the packer/bridge plug, which remains in the well bore.

Once the recovery of the fish is complete, the remaining two Stages of the SOA #2-29 frac program will be pumped.

CHMR Unveils Extraction Method to Replace Hydraulic Fracturing

Chimera Energy Corp announced this week that they have licensed Non-Hydraulic Extraction, which is a shale oil extraction technology that is designed to safely replace hydraulic fracturing (AKA fracking and fracing) without negative environmental impacts.

Originally developed for shale oil extraction in geographic areas that were far too cold to use water due to freezing, Non-Hydraulic Extraction has recently emerged to be asserted as a cheaper and more effective extraction method that does not affect groundwater at all.

Do you wonder what the experts look for on the landscape in the search for oil and gas?

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Come along with the Sun Times as we spend a couple of days among the rocks with some of the planet’s leading Petroleum Geologists to learn the signs of hidden hydrocarbons, and find out why each year other geologists from around the world come to Teton, Cascade and Lewis & Clark Counties to learn the finer points of hyrdocarbon hunting… ONLY in the Sun Times! (www.fairfieldsuntimes.com)

Sun Times photo by Darryl L. Flowers

Primary Petroleum Well In Operation: Weekly Oil Report

On Sunday, a recently installed pumpjack was in operation at one of the Spring Hill wells on Halverson Road near Bynum. The well was drilled earlier this year by Primary Petroleum. Sun Times photo by Darryl L. Flowers

Compiled by Darryl L. Flowers

New Locations

Petro-Hunt, LLC took a permit for the Borntrager 2C-2-1 (NW SW 2-19N-54E). The well has a Proposed Depth of 11,270 feet and will tap into the Red River C Formation.

New Locations – Horizontal Wells

Apache Corporation was greenlighted for two wells in Daniels County; the Lindley 19-9H-B (NE SE 24-36N-46E), with a Probable Bottom Hole Location (PBHL) at 12,082 feet, and the Lindley 24-10H-T (NE SE 24-36N-46E), with a PBHL of 11,876. The wells will target the Bakken and Three Forks Formations, respectively.

In Richland County, Fidelity Exploration and Production Co. received permits for two wells; the Lisa 22-23H (NW SW 22-22N-57E), with a PBHL 19,999 feet, and the Klette 24-13H (SW SE 24-22N-56E), with a PBHL of 20,049 feet. Both wells are targeting the Bakken Formation. Slawson Exploration Company Inc. received a permit for the Highwayman 1-30H (SE SE 30-24N-52E), with a PBHL of 13,105 feet. The well will tap into the Bakken Formation.

Re-Issued Locations

In Fallon County, Fidelity Exploration & Production Co. took out eight permits for Re-Issued Locations.  All eight permits are in the Cedar Creek field and will hit the Eagle Formation at a depth of 2,000 feet.

The wells are: the Fee-BR 2813 (NE SE 25-5N-60E), the Fee-BR 2814 (SE SW 25-5N-60E), the Fee-BR 2839 (NW NE 27-5N-61E), the Fee-BR 2840 (NE SW 27-5N-61E), the Fee 2815 (NW NW 30-5N-61E), the Fee 2851 (SW NW 30-5N-61E), the Fee-BR 2852 (NE NW 31-5N-61E) and the Fee-BR 2853 (NW SE 31-5N-61E).

In Richland County, Continental Resources Inc. received a permit for the Egan 1-14H (NE NW 14-26N-53E), a Bakken Formation well with a PBHL of 19,291 feet.

Permit Modifications / Corrections

In Carbon County, a Permit Modification was issued to Energy Corporation of America for the ECA Foothills 2-H (NW SW 13-6S-17E). The well has a PBHL at 6,000 feet, aiming for the Greybull Formation.

In Richland County, Slawson Exploration received two Permit Modifications, for the Dart (Federal) 1-30H (NW NW 30-21N-59E), with a PBHL of 14,233 feet, and the Dragonfly 1-36H (NE NE 36-23N-54E), with a PBHL at 14,586 feet. Both are Bakken Formation wells.

Completions

In the Clark’s Fork, North Field in Carbon County, Baldwin Lynch Energy Corp. finished the State 1-16 (NW SE NE 16-9S-22E). The Lakota Formation well has a Total Depth of 8,829 feet.

In Richland County, two wells were reported as completed. Continental Resources Inc. wrapped up the Jane 1-4H (NW NE 4-25N-55E). The well had an Initial Production (IP) of 273 Barrels of Oil Per Day (BOPD), 234 Thousand Cubic Feet of Gas Per day (MCFPD) and 170 Barrels of Water Per Day (BWPD). The well has a Total Depth of 19,828 feet, draining the Bakken Layer. Fidelity Exploration & Production Co. completed the Bouchard 34-21H (SW SE 21-22N-57E. With a Total Depth of 14,667 feet, the well hits the Three Forks Formation. The well reported an IP of 57 BOPD and 273 BWPD.

In Sheridan County, TAQA North USA, Inc. reported the completion of Westgaard 5-5H (NW 5-37N-58E). The Bakken well has a Bottom Hole Location of 11,713 feet. Initial Production was reported as 162 Barrels of Oil Per Day (BOPD) and 275 Barrels of Water Per Day (BWPD).

In Toole County, Somont Oil Company, Inc. wrapped up the Breaupre 2 (SW NW 8-35N-2W). The well, located in the Kevin-Sunburst Field, has a Total Depth of 537 feet.

In Yellowstone County, Antelope Resources, Inc. brought in three wells, all three in the Mosser Dome Field, and all tapping into the Mosser Sand Formation. The wells are: the CH Mosser 18 (NW SW NE 26-3S-24E); the JC Mosser 19 (NW SW NE 26-3S-24E), and the Kelly 7 (NE SE NW 26-3S-24E). The wells have Total Depths of 996, 997, 999 feet, respectively.

Expired Permits

In Fallon County, the permit for the State 3017 (NE NE 16-8N-59E) expired. The well, in the Cedar Creek Field, was owned by Williston Basin Interstate Pipeline Company.

Darryl L. Flowers is the Publisher of the Sun Times in Fairfield, Montana, www.fairfieldsuntimes.com. Darryl can be reached at publisher@fairfieldsuntimes.com

Apache Enters Bakken With Big Acquisition Across Daniels County, MT

By Kay Cashman
Petroleum News Bakken

Apache Corp., which has a reputation for entering new oil provinces in a big way, has recently acquired a 300,000 net acre position in Montana’s Daniels County, which has a total of 912,700 acres and is on the fringe of the Williston basin’s known Bakken petroleum system.

The big independent, which made the announcement at an investor’s conference in mid-June, acquired the leasehold in a deal with Shale Exploration LLC, a PR savvy firm based in Fort Worth, Texas, with three other U.S. offices, including Scobey, Mont., the county seat of Daniels.

Houston-based Apache says the acreage, dubbed the Jayhawk prospect by Shale, has “more than 1,900 potential” drilling locations with a “potential resource of 1 billion barrels of oil.”

Apache, never a company to dally when there’s drilling to be done and money to be made, plans to drill “up to five wells” this year, beginning in July.

“That program will run through the end of the year, and assuming success, we’ll continue on into 2013,” company vice president for exploration and new ventures, John Bedingfield, said June 15 at Apache’s 2012 Investor Day.

Daniels County is known for producing conventional oil from the Ratcliff, Madison, Mission Canyon and McGowan formations, and is considered to have potential for producing from the unconventional oil-prone Bakken formation, and the underlying Three Forks and Nisku members.

The mid-June announcement of its entry into the Williston basin is the first time Apache officials talked about it publicly, giving the company what Bedingfield refers to as a “first-mover” advantage.

“What can I say? It’s good to be there first. We got low entry costs.”

And the leasing is done, he said.

“Some will trickle in, but the big leasing is done and we’re surrounded by some of the traditional Bakken players you should recognize,” he said, likely referring to well-known Bakken and Three Forks players such as Continental Resources, XTO Energy (part of Exxon), Whiting Petroleum and others drilling in nearby counties such as Sheridan and Roosevelt, with the direction of drilling moving west and north from the heart of the Bakken system’s development.

“Interestingly, our biggest competitor up there on the west side … is Exxon,” Steve Farris, Apache’s well-known chairman and CEO, told the audience.

Shale Exploration’s story

According to its website (http://shaleexp.com), an interesting story in itself, Shale Exploration and its joint venture partners, such as such as Greehey Co., “began a quest to assemble a strategic position” in Montana’s Williston basin in 2011.

After more than 12 months of “leasing and multiple large acquisitions, from numerous companies, Shale is strategically positioned to begin development of our Bakken-Three Forks Jayhawk prospect,” the company says on its website, noting it and its partners “hold more fee leaseholds and state of Montana leaseholds in Daniels County than any other company.”

Shale’s “leasehold position in Daniels County is substantially superior to all other companies in the area, as evidenced by four drilling permits filed with the state of Montana,” the company says.

Shale has “obtained over 400,000 acres within Daniels, Sheridan and Roosevelt counties for the purposes of drilling for oil and gas and has secured an operator, Apache Corp. If you would like to include your minerals in the impending development, please lease to Shale Exploration,” its website says.

“We are good neighbors, partners, and friends as proven through our actions, which are not just empty promises,” Shale says.

A March news article and advertisement on Shale’s website says the company recently paid more than $30 million to Daniels County mineral rights owners, undoubtedly making for some happy citizens.

Community publication and press release headlines also testify to the company’s community spirit: “Shale doing its part in community safety” (a $45,000 check to the Daniels County Rural Fire Department); “Community champion presented by Shale Exploration,” “Sam Tallis makes donation to Montana Rescue Mission Women’s and Family Shelter on Sunday,” and the list goes on.

The company’s two top executives, both principals in the limited liability corporation, are Sid J. Greehey, CEO, and F. Sam Tallis, president.

Tallis’ favorite quote: “Always do right. It will gratify some and astonish the rest.”

Apache has area ‘locked up’

PNB sources say Apache and Shale first started talking in February.

And while the larger company, now operator of Jayhawk, might not have been astonished by Shale’s prospect, there are things it very much likes, including the geology and lower well costs.

Pointing to the Elm Coulee field on the Williston basin oil map, Bedingfield told investors, Elm Coulee’s “got a billion barrels of oil from the Bakken. … There’s no Three Forks at that location. The red dots … represent where industry is currently drilling, and what you can see is that industry is moving in this direction and certainly … has been quite active in Canada, as well.”

But “what really brought us to this point was … we recognized an area that had not been viewed as attractive by industry. It’s thermally mature. We’ve got great reservoir and we’ve got about 35 wells on or near our acreage, all of which are oil saturated. So this is an area where moving quickly can make a real difference.”

Per Bedingfield, Apache has the area, which he previously identified as Daniels County, “pretty well locked up.”

Cheaper wells, stacked plays

And, he says, the wells will be less expensive — $7.5 million versus about $10 million — because the Bakken formation is at a shallower depth in Daniels County than farther east.

Although Apache is initially focusing on the middle Bakken and the upper Three Forks zones, Bedingfield said “there are a number of other plays throughout. … The Madison section above us, Lodge Pole and others. … And below in the Devonian, there’s other Devonian plays, the Birdbear, for example, which also has oil pay.”

One drilling pad, he says, should be able to access four square miles with 16 wells — “eight Bakken and eight Three Forks wells, at basically 10,000 foot laterals.”

In a third slide that looks at a cross section of Apache acreage, the reservoirs are “fully matured and definitely in the oil window,” with the lighter colors representing higher oil saturation. The two grey bands or the grey band at the top and the one sort of in the upper middle represents the two Bakken shales. They are mature in this area. We put a lot of time and effort into (determining) that. … We have great saturations in our reservoirs. And the reservoirs here, they’re a little bit siltier. It actually has slightly better porosities than we’ve seen elsewhere and the facies are, I think quite amenable to very good production rates,” Bedingfield said.

“So we do think this is a great location. It’s very similar to the Rough Rider field, I believe, on the eastern side, and also a little bit to Elm Coulee to the south, although our pay … in this part of play is significantly larger than an Elm Coulee.”

And what does Farris have to say about Jayhawk?

“We’re really very confident about what we’re doing in the Bakken,” he told investors.

It’s “a good time to be back in the United States.”

© Petroleum News. Reprinted with permission. www.petroleumnews.com