“We’ve Got Hydrocarbons”

The moon breaks through the clouds late Saturday night as the drilling continues at the Milford Colony well in Lewis & Clark County. Sun Times photos by Darryl L. Flowers

By Darryl L. Flowers

Published: Monday, September 23, 2013 5:46 PM CDT

The first phase of drilling the Milford Colony  13-11 well in Lewis and Clark County ended Monday afternoon when the drillbit reached “TD,” or total depth. “I feel good about the well. It feels good to have something drilled.” said Glen Landry, a geologist and the President and CEO of Norstra Energy.

The drilling rig reached 850 feet, believed to be in the Two Medicine Formation. Landry examined the cuttings under a stereoscope and recorded the characteristics of the rock. Next to the stereoscope was a light box, used to check for fluorescence, a sign of oil. Landry, with a grin, reported “We’ve got hyrdocarbons.”

In a conversation with Joe Large, President of RPM Geologic, Landry explained that the driller had found several “oil shows.” “We had shows of oil at 309 to 367 feet, 428 feet and at 521 feet we found a red shale layer that produced blooming cut when put into a chemical.” Landry explained to the Sun Times that these oil shows are not an indicator of commercial quantities, “But the oil has to come from somewhere.” Landry thinks the oil may have migrated from the Cone Formation or the Bakken Formation. Both are found throughout the region.

The oil found in the cuttings was a heavy oil, degraded from a light crude over time by exposure to water.

The drilling got underway early Friday afternoon when Faith Drilling Rig #5, a small “single section” rig began boring a wide, shallow hole a few feet from the actual well location. The hole is known as a “rathole,” and is used to store the drillbit as drillpipe sections are being added or removed from the well. As the drillbit bores through the rock, going lower and lower, sections of steel pipe have to be added. The pipe is hollow, allowing drilling “mud” to circulate down the pipe and through holes on the drillbit. The mud cools and lubricates the bit. As the water is pushed down the pipe by powerful pumps, the cuttings-laden fluid exits out the hole by flowing up the outside of the pipe.

After the rathole was completed, the crew from Faith Drilling swapped to a small bit to drill a pilot hole. The pilot hole would serve as a guide for a huge 17 inch bit that drilled the conductor pipe, a large steel pipe that would guide the bit as it first bites into the rock.

Late Friday night Glen Landry sat in his truck watching the drill rig. He was impatient, but excited. The bit could not go fast enough, but he was glad to see a start to the South Sun River Project.

With cement trucks at the ready, the bit was pulled out and Faith Drilling owner Doug Bruner supervised the crew as the long conductor pipe was positioned to be driven into the hole. Landry was nervous.

“I hope the hole doesn’t collapse.” At the top of the well site, just like most of the area, there is a lot of glacial debris, rocks that were worn smooth form being ground under the enormous weight of the glaciers that carved though the region. If the rocks fall into the hole, the drill crew will have to run the bit back down, “reaming” the hole for another try.

The conductor pipe is hoisted above the rig floor and lowered smoothly into position. Now the trucks begin mixing the cement to seal the pipe. Once in place, the cement will cure overnight.

By Saturday afternoon, the drilling process has settled into a routine. A slow routine. The pipe sinks slowly into the Rocky Mountain Front, tiny bits of rock coming out of the shaker, a device that removes the cuttings from the drilling mud.

The crew preps a pipe section for insertion into the drill string. It’s going to be a while before the pipe is needed. The crew, though, stays busy. They check the mix of the drilling mud, making sure it has the right consistency. They check the many humming diesels that drive the rig, the pumps, the generators. There is always something to do.

Finally, as the last streams of sunset find cracks in the clouds, the drill has gone as deep as it can. It’s time to add another section. Rig hands head to the drilling floor and begin the process to lengthen the drillstring. There is a change in the sounds of the diesel engines as the bit slows down and comes to a stop.

A Kelly rig is old school drilling. A Kelly bushing, on the rig floor, turns the Kelly, a square pipe that connects to the pipe and the bit. Newer rigs, especially the larger ones, use a “top drive.”

“For drilling the surface casing, I like the Kelly rig,” says Landry. “They seem to drill a straighter hole.

Landry must be right. While in the “doghouse,” or rig office, a small building located a few steps form the drill floor, I watch as Doug Bruner’s crew uses a device to measure just how straight the hole is. The device is lowered into the hole and punches two tiny holes in a circle of paper smaller than a quarter. One hole is punched, then the device turns slightly. A second hole is punched. Bruner shows the paper through a special viewer. It’s easy to make out a center dot, then several concentric circles. The first circle has two barely noticeable punch holes. “You want to see both of those holes at an equal distance from the center point,” explains Bruner. “That means both the readings are equal, so you have an accurate measurement of the deviation of the hole.”

The two holes are on the innermost of the circles. When the measuring device hit the bottom it registered that there was 1 degree of deviation from a straight-down hole. “That’s just a little more than one foot variation from a perfect vertical,” says Joe Large.

The Milford well is located on property belonging to the Milford Hutterite Colony. Milford was the first colony in the state of Montana. Each day, there was a steady stream of Hutterites walking to the drill site, which was across Highway 287 form the colony.

“Do you think they will find oil?” the Hutterites ask when they see me on the site. On Saturday evening it seems that most of the colony has come out to check the well’s progress. The men gather in a group, the women in another. Teenagers and younger kids congregate in another area.

Two of the Hutterite men walk over as I shoot photos of the rig hand “tripping the bit.” As the men talk about the rig, some youngsters gather around, pointing to the rig and discussing the situation in German.

As I move closer to the rig to get some close-up photos of the rig hands, the Hutterite women walk over and talk about working on an oil rig. “Those are some hard workers,” one of the young ladies comments, nodding toward the raised floor where the crew are working. “It looks like a tough job.”

One of the Hutterite women asks, “Have you ever worked on an oil rig.”

“No,” I reply. “But it is tempting.”

Teton County: First in State To Produce Oil, Natural Gas

Cable tool drilling rig on display at the Oil Field Museum in Cut Bank. Sun Times photo by Darryl L. Flowers

Region is now in Glacier County

By Darryl L. Flowers

Published: Monday, August 5, 2013 10:31 PM CDT

Last year, as news of oil companies and their landmen scouring the area for minerals was making the headlines, several attempts to report the history of early oil exploration in Montana appeared.

As the public hubbub has subsided and most of the work in the region has fallen below the radar, the Sun Times has continued to dig into the fascinating hydrocarbon history of the Treasure State.

Early this year we came across one of the best papers on the subject, written by  geologist William Boberg. It is still the best work for those who want to focus only on the Flathead / Alberta and British Columbia regions. Boberg’s work was published in the 1984 Montana Geological Society Northwestern Field Conference.

The Sun Times research showed that the earliest mention of oil in Montana dated to the 1860s, when oil was found at a “seep” near a river and was used by wagon trains to lubricate the axles.

But we were not able to pin down the details, so rather than publish an  incomplete history, we held the story.

But we kept digging, searching.

In late July, we were looking for details reported when the Krone, Steinbach and J.B. Long wells were being drilled in Lewis and Clark County, as well as the famous Morning Gun Well that was drilled in Glacier County. The search led us to the Oil Field Museum, part of the Glacier County Museum in Cut Bank.

While the Oil Field Museum certainly has the best display of old drilling tools… including a real “Cable Tool” drilling rig, for instance… it also has an impressive collection of old oil industry journals and company records.

While looking through old issues of the Montana Oil Journal, we came across the crown jewel of Montana’s early oil history.

The in depth report was published in the July 20, 1963 edition of the Montana Oil Journal, which was based in Great Falls at the time.

The article was titled “Outline History of the Development of Oil and Gas in Montana,” and was written by well respected United States Geological Survey geologist Dr. C.E. Erdmann.

According to an Editor’s Note preceding the report, the work was done at the request of Senator Lee Metcalf, Montana Democrat. The note reads, in part, “Included in this report was an authoritative and entertaining report on the history of oil and gas development in the state, by Dr. Charles E. Erdmann of the U.S.G.S., whose headquarters are in Great Falls. Of particular interest to many will be his account near the start of the article, covering the fruitless effort in the state, from 1889 to 1910, to develop production near oil-gas seeps.”

The report is detailed, a little too detailed for the non-geologist. The Sun Times has edited Dr. Erdmann’s report, removing some of the technical details, such as the geological ages of the formations. We have also added some clarifications of the terms Dr. Erdmann used. Otherwise, the report is original.

Outline History Of Oil And Gas Development in Montana

By Charles E. Erdmann, PhD

Introduction

The classical pattern of petroleum exploration in virgin territory is for the first tests to be made in the vicinity of natural surface indications (seeps) of oil and gas, if any have been found. Unusual combinations of geologic conditions are required for the development of these surface features, and their occurrence is transient and infrequent. Their value, however, is that they provide tangible evidence of the local presence of hydrocarbons, thereby raising hopes that commercial accumulations may be found underground. The analogy with surface discovery of inorganic minerals is obvious: both require bold and enterprising spirits if the usually costly and difficult adventure of development is to be undertaken. Because they are few in number, they are soon exploited, and this first stage of exploration is of short duration; but the often amateurish effort frequently clothes it with many colorful and dramatic incidents. If no significant discoveries result, and they seldom do, drilling on easily recognized geologic features such as anticlines and domes may follow with more or less delay. If drilling depths are shallow, as they are in some of the older fields in Montana, this second stage may mark the heyday of the small independent operator.

By the time the obvious surface structures have been recognized and evaluated, a more mature third stage has appeared in which the search for subsurface structures and porous beds and stratigraphic traps is carried on by the sophisticated techniques of geophysical prospecting and study of formation samples or subsurface stratigraphy. Other later stages may involve deeper drilling, secondary recovery techniques and, finally, abandonment. Initially, each stage may appear in order. No firm line between them exists, however, for if the petroleum industry is to prosper, new discoveries must succeed abandonments. Review of the history of oil and gas development in Montana indicates close adherence to this pattern, which will be the outline for this chapter.

Explorations On Surface Indications, 1889-1910

The exact number of oil and gas seepages in Montana is not known with certainty, but probably there are not more than 15 or 20, and some of them have become inactive since they were discovered. Several of them have been known for many years, and were responsible for the pioneer oil excitement. The first of record was noticed August 10, 1864, by members of an immigrant train crossing the northeast flank of the Pryor Mountains on the Bozeman Trail, as a scum of heavy oil on a stagnant pool of water. In this instance the immediate practical application was for axle grease for the wagons. No drilling development followed, and even the report was not made for many years. Furthermore, no rediscovery seems to have been reported. The exact location, therefore, is not known, other than it was northwest of Beauvais Creek toward the East Fork of Pryor Creek Divide. A likely possibility, however, is that it was on some intermittent upper tributary of Woody Creek in T. 4 S., R. 28 E., Big Horn County, near where that drainage was crossed by the Bozeman Trail.

Roscoe seep. The first oil seep to be drilled in Montana was the occurrence of heavy black oil or asphalt near the southeast corner NE1/4SE1/4 sec. 32, T. 6 S., R. 18 E., Carbon County, about 5.5 miles south of the old Roscoe post office. Date of discovery and name of the original locator are not known. In the late 1880’s, however, the area was acquired by Thomas Cruse, who had found the famous Drumlummon lode near Marysville in 1876. The location of the first test, Thomas Cruse well No. 1, was about 650 feet northwest of the seep, and was completed and abandoned in 1889 as a dry hole in the Judith River formation at a, total depth of 1,100 feet. Insofar as known, this was the first organized attempt to discover oil by drilling in Montana. Undeterred by failure, Cruse continued operations in the vicinity of the seep during 1890 and drilled eight more dry holes that ranged in depth from 600 to 800 feet before giving up; and even then he retained ownership of the tract. Others continued to be intrigued by the possibilities, and additional tests were made in 1909, 1931, and even as late as 1947, but without success.

Kintla Lake area. Impressive amounts of pale-yellow, high-gravity (44° API) oil issue from surface deposits at the Sage Creek seeps in southeastern British Columbia, about 8 miles north of the international boundary at the northwest corner of Glacier National Park. The controlling structural feature appears to be a normal fault of great magnitude that can be projected into Montana where it is called the Roosevelt Fault. In 1892 active seepages of oil and gas were discovered in Montana near the northeast end of Lower Kintla Lake, not far east of where the lake crosses the trace of the fault. An organization called the Butte Oil Co. posted a location notice on August 10, 1900. Drilling began late in October 1901, the well location being NW1/4NW1/4NW1/4 sec. 18, T. 37 N., R. 20 W., Flathead County. Late in 1902 work was suspended temporarily, with the hole at a depth of 1,450 feet in very hard “black limestone and iron.” A significant incident was the discovery of gas at a depth of 720 feet, which is said to have burned with a 4-foot flame. As will appear later however this was not the first discovery of gas in Montana by drilling.

In late June 1902 the Kintla Lake Oil Co. of Kalispell commenced operations at their No. 1 well, approximately in the center of NE1/4 sec. 12, T. 36 N., R. 22 W.; and in 1903 a second test is said to have been located toward the center of the section. Both are situated on Tertiary “lake beds” on the left bank of the North Fork of Flathead River. The No. 1 well was drilled to 1,290 feet at least, and the No. 2 to about 1,000 feet. Traces of oil and gas were reported from each, but both were abandoned as dry holes. The circumstances that led to these tests are not known, but they may have been drilled on seeps in the “lake beds” that emerged along faults.

Another old venture, for which there is good authority but no log or operational information, is the Southwest Kootenai Land Oil Co. test on Kintla Creek about 3 miles above Upper Kintla Lake. This locality is approximately in the north center of sec. 8, T. 37 N., R. 19 W., Flathead County, in a deep glaciated valley about 1.5 miles west of the Continental Divide. Drilling is reported to have commenced March 8, 1906, and continued to a depth of at least 600 feet.  In all probability the location was made on the basis of seeps or iridescent films of oil whose origin is more or less identical with those on Cameron Brook at Oil City, Alberta, a short distance northeast across the divide, where petroleum exploration had been going on since 1901.

Swiftcurrent Creek. Sustained efforts to develop oil by drilling on or near obscure surface indications of petroleum and natural gas in Swiftcurrent Creek Valley throughout the nine year period before the district became incorporated into Glacier National Park in 1910 resulted in seven tests that give it the nominal distinction of being the first oil and gas field in Montana and the only locality in the State where drilling on seepages proved successful. Credit for the recognition of these showings appears to be divided between two men: Frank M. Stevenson identified certain exposures of Upper Cretaceous marine shale as “oil shale” in the summer of 1901; and Samuel D. Somes prospecting near where Sherburne Dam is located, observed small pools of oil in irregularities on freshly broken shale and limestone on the floor of his adit in late February or early March 1902.

Within a short time, 52 oil claims were located under the placer mining law. Companies were organized and consolidated as claims were exchanged for shares, the ultimate operator being the Swift Current Oil, Land & Power Co. The first derrick was erected in November 1902, approximately at the center of SW1/4 NE1/4 sec. 4, T. 36 N., R. 15 W., unsurveyed, on the Lakeside placer claim which had been located by Stevenson. Drilling began in 1903, when the hole was taken to a depth of 430 feet, with a showing of oil; but was abandoned because of inability to shut off water. The rig was then skidded 30 feet west, and work begun on location 1-A, which was completed as an oil well at a total depth of about 550 feet during the summer of 1905. Oil from this well was displayed at the State fair at Helena in the fall of 1905, where the company was awarded a diploma for “the first producing oil well in the State of Montana.” Operations were terminated through lack of finances in 1907, and the properties turned over to Stevenson. In the meantime, however, one other oil well, with an initial capacity of about 20 barrels per day, by bailing, and 2 dry holes had been completed.

M. D. Cassidy, locator of a neighboring claim to the east, became aroused by this activity and organized the Cassidy-Swiftcurrent Oil Co., date of incorporation being July 15, 1905. Approximate location of the first test by this company, which may have been near a gas seep recognized by Cassidy, was in the extreme northeast corner of NW1/4 NW1/4 NE1/4 sec. 3, T. 35 N., R. 15 W., unsurveyed, near the center of St. Louis Placer No. 1. Drilling began in 1907, and continued at intervals into 1909 to a total depth of about 2,800 feet, where the tools were lost. Natural gas was reported from depths of 430, 1,900, and 2,800 feet, the initial shut-in pressure being about 250 p.s.i.

No measurement of volume seems to have been taken, but, upon being ignited, the gas flow from a I-inch pipe is said to have burned to a height between 15 and 20 feet. Cassidy piped the gas into his house, where it was used for heating and lighting until 1914 when the flow ceased, due to caving in the hole. The Cassidy-Swiftcurrent well No. 1, therefore, has the distinction of being the first producing gas well in Montana, even though it had only one customer.

Boulder Creek. Following Somes’ discovery of oil in his adit on Swiftcurrent Creek in 1902, other prospects in the Marias River formation were examined for traces of oil. Favorable indications were reported in an abandoned working on Boulder Creek, probably somewhere near the center NW1/4 sec. 27, T. 35 N., R. 15 W., unsurveyed, Glacier (formerly Teton) County. Recognition of this seep may have contributed to the organization of the Swift Current-Boulder Oil Co., which soon acquired substantial acreage south of Swiftcurrent Creek. Drilling commenced in July 1904, the approximate site being south of the center SE1/4 SE1/4, sec. 11, T. 35 N., R. 15 W., on the left bank of Boulder Creek. A show of gas was reported in shale at a depth of about 1,750 feet, and a show of oil “of a superior quality” was found in the top of a sandstone at a depth of 2,010 feet on July 8, 1905. Operations were abandoned at this depth in the spring of 1906.

This persistent run of failure naturally resulted in loss of interest, and by the close of 1907 such random drilling had come to an end. The Congress passed the act establishing Glacier National Park on May 11, 1910, thereby precluding new ventures. In the meantime, the Lakeside and New Era placer claims in the Swiftcurrent District had been patented, and the patent for the St. Louis No. 1 was pending but held in abeyance as Sherburne Lake project of the Bureau of Reclamation approached realization. More or less ineffectual efforts to recondition the two small oil wells and the gas well persisted for several years, but terminated in the summer of 1919 when the locations were flooded by water rising behind the Sherburne Lake Dam.

No other drilling on surface indications (seeps) has been recorded in Montana.

Exploration Of Surface Structures, 1890-1950

Many anticlines and domes are expressed in rocks at the surface on the Montana Plains. The precise number is unknown, but more than 475 areas, fields, and structures have been named. Approximately 185 fields and structures have been named on the latest edition of the “Structure Contour Map of the Montana Plains” (U.S. Geological Survey, 1955); but only about 100 areas have been proved to contain oil or gas in commercial quantities, and not all are anticlines. The producing fields are shown on figure 7, and their names are keyed by number to the list (available at http://www.mbmg.mtech.edu/sp28/table1.htm).  This chart, it should be noted, is not a complete list of Montana oilfields, nor does it include the major gas fields.

The surface structures exhibit wide variation in size, shape, and amount of structural relief. Bowdoin dome in Phillips and Valley Counties, and Kevin-Sunburst dome in northern Toole County occupy hundreds of square miles, and are so broad And have such comparatively low relief that the domical structures cannot be visualized on the ground. The Cedar Creek anticline in the southeastern part of the State is more than 100 miles in length, but the narrow Pierre shale inlier along the crest is only a few miles in width. Flat Coulee dome north of the Sweet Grass Hills, on the other hand, is contained within a single square mile. Elk Basin anticline, which straddles the Montana-Wyoming boundary, or Milk River anticline in the Disturbed Belt on the Blackfeet Indian Reservation, are nearly perfect folds in which both flanks can be observed from a single viewpoint.

Not too many years had elapsed since the pronouncement of the anticlinal theory of oil and gas accumulation and, in the absence of an oil seep, a sharp or closely folded anticline seemed the next best feature on which to drill. Recognition of a completely exposed fold in rock requires so little imagination or interpretative skill that when they were observed they were reported, often by sheepherders, and the more evident small folds were described as “sheepherder structures.” Insofar us known, the first test in Montana to be located on an anticline, presumably in accordance with the anticlinal or structural theory, was the R. O. Morse well No. 1, NE1/4 sec. 4, T. 6 S., R. 18 E., Carbon County, on the northeast flank of Roscoe dome, a “sheepherder structure” toward the west end of the Nye-Bowler lineament. It may be, however, that Morse had been attracted to the area by Cruse’s exploration around the Roscoe seep a few miles south, which was then in progress. Drilling equipment in 1890 was very inadequate for a complete test of the structure and the operation was abandoned as a dry hole in the upper part of the Colorado Group at a total depth of 1,100 feet. Subsequent drilling has proved the structure to be dry into the upper part of the Cambrian series at a total depth of 5,928 feet. Chance plays an important part in exploration for oil and gas, and the first discovery of natural gas by drilling on the Montana Plains came unexpectedly in 1893 a few miles southwest of Havre at Fort Assiniboine in a water well in the upper sandstone unit of the Eagle sandstone. Although not of commercial volume, the find directed attention to the possibility of gas development out on the plains, but this did not follow for nearly 20 years.

The first commercial show of natural gas in eastern Montana was found in Gas City dome at the north end of the Cedar Creek anticline in 1913. Drilling was initiated by the Mid-West Oil Co., in November 1912, at their No. 1 well, W 1/2 NE 1/4 NE 1/4 sec. 20, T. 14 N., R. 55 E., Dawson County; but with change of ownership the hole was completed by the Eastern Montana Oil & Gas Co., which developed the field. Drilling continued to a total depth of 2,710 feet, which was reached in April 1914. In the meantime a flow of 500,000 cubic feet of gas per day with a shut-in pressure of 220 pounds per square inch, and some water had been found between depths of 730 and 745 feet in a sand assigned arbitrarily to the Judith River formation. Beginning in 1915 gas for domestic use was supplied to the city of Glendive 10 miles north on Yellowstone River. Peak of production was reached in the fall of 1917, when the combined flow of eight wells amounted to about 10,600,000 cubic feet of gas per month. The field was abandoned in 1925; but other gas production followed along the anticline to the south.

The year 1915 also was notable for the discovery of oil in the Elk Basin anticline in Carbon County, Montana, and Park County, Wyoming, a structure which had first been noticed some 10 years previously by the U.S. Geological Survey. The discovery well, which produced from the Torchlight sand in the Frontier formation at depths of 1,335 to 1,402 feet, was in Wyoming; and about 87 percent of the productive acreage fell in that State. The remaining northern portion of about 120 acres became Montana’s first producing oilfield. The beginning, therefore, was rather small. Four oil wells were drilled in 1915, but were not brought into production until shipping facilities became available the following summer. Two more oil wells and one dry hole were drilled in 1916, and production for the last 6 months of the year totaled 44,917 barrels, with a value of $44,019.

Excellent examples of the possible rewards of deeper drilling are furnished by the development of the Elk Basin field. Natural gas was found in the Cloverly formation, about 1,150 feet below the Torchlight, in 1922, but is now largely exhausted. The major discovery, however, did not come until December 1943 when oil was found in the Tensleep sandstone at a depth of about 4,500 feet. This reservoir proved to have about 215 feet of saturation, the thickest producing section of any field in the State. About 1,375 acres, or 27.5 percent, of this Tensleep pool are in Montana. Finally, in 1946 oil was found in the underlying Madison limestone of Mississippian age.

The immediate effect of the original Elk Basin discovery was to direct attention to the Montana extension of the Bighorn Basin and the country to the north where interest still centered on sharp-dip structures; but prospecting resulted only in dry holes. One of the more prophetic of these efforts was the first test on the large, Woman’s Pocket anticline, which was spudded May 6, 1916, by the Foster Oil Co., in C SW1/4 NE1/4 sec. 15, T. 8 N., R. 20 E., Golden Valley County, and completed in June 1918 by the Tri City Oil Co., at a total depth of 2,215 feet. The trace of oil from 1,550 to 1,565 feet, and two other minor shows at greater depth, were the first evidence in Montana of the occurrence of petroleum in the Kootenai formation, and provided the incentive for further exploration of that unit. Although still far short of commercial production, more tangible encouragement soon came from the Devil’s Basin anticline to the northeast where the Van Duzen Oil Co. well No. 1 spudded in the Kootenai formation in NE1/4 SW1/4 NW1/4 sec. 24, T. 11 N., R. 24 E., Musselshell County, on August 10, 1919. Drilling continued to a total depth of 2,031 feet on November 6, 1919. In the meantime, 10 or 12 barrels of oil had been found in a 6-foot limestone at a depth of 1,167 feet in what was then called the Quadrant formation later it was shown the producing horizon was the Heath Formation. The trend of exploration continued toward the northeast, and the next structure to be drilled was Mosby dome on the elongate Cat Creek anticline. Here the Franz Oil Corp. well No. 1 (now Continental Oil Co., Charles 1-A) was started December 18, 1919, and was completed at a total depth of 1,014 feet as a 30-barrel oil well on February 20, 1920. Production was obtained from the second Cat Creek sand of the Kootenai formation between the depths of 998 to 1,014 feet. This famous discovery well, which in itself never produced more than 700 barrels of oil, resulted in the development of the Cat Creek field, the first important field in the State and, for its size, still one of the most productive and most profitable that has been found. Exploitation was rapid. A peak production of 2,080,826 barrels per year was reached at the close of 1923; and cumulative production to the close of 1961 has amounted to nearly 20 million barrels of oil.

The discovery of the Cat Creek field definitely carried the struggling Montana petroleum industry beyond the nascent stage; but national significance was not achieved until the oil discovery on the Kevin-Sunburst dome in Toole County 2 years later. Actually, there were two oil discoveries; and the short interval between them compounded the excitement they raised. Oil was found first on April 14, 1922, when the Gordon Campbell, Kevin Syndicate-A. Goeddertz well No. 1, NE1/4 NE1/4 NE1/4 sec. 16, T. 35 N., R. 3 W., was completed as a 20-barrel producer between depths of 1,770 to 1,790 feet in the basal sandstone unit of the Sawtooth formation and the eroded, weathered upper surface of the Mission Canyon formation of the Madison group. In the second, oil was found June 5, 1922, when the Ohio-Sunburst Oil Company’s R. Davey well No. 1, SE1/4 SE1/4 SW1/4 sec. 24, T. 36 N., R. 2 W., was completed as a 150-barrel producer between depths of 1,535 to 1,564 feet in a sand at the base of the Kootenai formation, which later was named the Sunburst sand. These discoveries, together with the great size of the dome, first production from rocks of Paleozoic age in the Rocky Mountain region, shallow drilling, and demonstrated production from a low-dip structure, attracted immediate attention from major oil companies and numerous small operators. The result was remarkable and, by the close of 1922, out of a total of 42 completed tests the field could show 22 producing oil wells, 4 wells producing both oil and gas, 3 Sunburst sand gas wells, 3 dry holes with shows of oil and gas, and 8 dry holes, with 11 tests drilling. Peak oil production of 6,457,217 barrels of oil was reached rapidly in 1926, since when it has been declining; and cumulative production to the close of 1961 has amounted to 66,189,439 barrels, which is not far from its estimated ultimate production of 70 million barrels of oil. Peak production of natural gas of 4,950 million cubic feet was reached in 1928, with cumulative production of about 78 billion cubic feet through 1961. With the development of the Kevin-Sunburst field the petroleum industry became firmly established.

Norstra Stock Suspended By SEC; Plans Continue For Well Near Augusta

One of several oil analysis reports conducted on the J.B. Long well near Haystack Butte. From the Board of Oil and Gas Conservation database

By Darryl L. Flowers

On June 20, Norstra Energy’s Glen Landry sat down with the Sun Times to answer questions about the company’s South Sun River Prospect, a speculative oil play south of Augusta.

In the midst of putting together the story, the Securities and Exchange Commission put a 10 day suspension on the trade of Norstra shares. A press release issued by the SEC reads, in part, “The Commission temporarily suspended trading in Norstra because of questions regarding the adequacy and accuracy of information about Norstra, including, among other things, its business operations. Norstra’s ticker symbol is NORX.

The Commission cautions brokers, dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by Norstra.”

Contacted by the Sun Times as a follow-up to these developments, Glen Landry said he was aware of the SEC action and was in touch with his attorney on the matter. “My first reaction was to call the SEC and try to get more details, but the attorney advised against that.”

After the SEC action, the Sun Times received an e-mail from Yolanda Holtzee, a semi-retired Seattle “mining industry type” who invests in large cap mining stocks. Holtzee expressed concerns about Norstra’s claims. Asked if she would be willing to speak on the record, Holtzee called the Sun Times.

According to Holtzee, the problem can arise when “seed” investors try to orchestrate a “pump and dump” with a stock. An investor will find a penny stock and pick up millions of shares. The seed stockholder will then promote the stock, often making questionable claims about the company. As the stock prices climb on false hopes, these investors dump the stock and walk away with a healthy profit.

“We see this all the time with these penny stocks,” said Holtzee. “Where Norstra may have hurt itself was in not reacting immediately to those false claims and issuing press releases distancing themselves from these promotions.”

Holtzee sent samples of these promotional flyers pushing Norstra stock to the Sun Times.

To the trained eye, these flyers are pure junk mail. But to the casual observer, they might represent easy money. However, in reading the fine print at the bottom of the promotional pieces, it seems that the flyers may not have originated with Glen Landry or Norstra. “I don’t see anything, so far, that would convince me that Mr. Landry was directly responsible for the materials.”

An area oil and gas investor brought a similar flyer by the Sun Times’ offices. The 20 page slick magazine style promotional piece is titled “The Luckiest Place on Earth” and is filled with graphics of cash…. dollars flowing from water faucets and $100 bills rolled up like round hay bales in a field. But the devil is in the details, and buried in the pages is the small print that begins, “DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND IN THIS REPORT.”

Just before wrapping up the story, we received a package in the mail postmarked with a California zip code. The package included a multi-page printout. The source of the information could not be determined. Although the report laid out an interesting history of Norstra, there were no reports of run-ins with regulators, other that the recent SEC action. The origin of the report could not be determined.

Norstra is incorporated in Nevada and has a space in an office complex in Texas. “We have an accountant working in the office, but that’s all for now,” said Landry. Asked why there was no landline phone in the office, he said there was no need at this time to spend the money for a phone, “When I need to speak with the accountant, I just use the cell phone.” Regarding Norstra choosing Nevada as the state of incorporation, Landry explained it was a tax matter. “It makes sense to incorporate in Nevada for tax purposes, just as many corporations choose Delaware, which has no corporate income taxes.”

According to Landry, he recently had another encounter with the SEC. The regulatory agency asked him for the records in his possession related to UnionTown Energy, a Calgary based oil “junior” that was drilling at New Miami Colony.

“I complied with the SEC requests, but I had no stock position with UnionTown, it was a straight-up deal where I was paid to be the operator.” Asked to define operator, Landry explained that he was responsible for the drilling and completion. “Me, my family and my employees… none of us were compensated with any stock by UnionTown.

There are 15 wells currently listed on the Montana Board of Oil and Gas Conservation database operated by Landry’s Longshot Oil, LLC. Of those wells, one is currently in production. The New Miami 21-20 produced 556 barrels in April. Longshot also has a well in Texas, according to Landry.

Longshot Oil was holding mineral leases in Teton County, near Power, the Sun Times discovered last year. Asked if he was still holding those leases, Landry replied that he had sold those, known as the “Muddy Creek” play, to Hillcrest.

The leases in the South Sun River Prospect are a combination of private minerals and state minerals.

When visiting with the Sun Times, Landry addressed the perceived difficulty of drilling on state school land leases. “At Milford Colony, there are several state parcels mixed in with the private minerals. The general opinion is that it is all but impossible to drill on those lands.” Landry continued, “I want to change that perception. The stipulations put on those lands can be addressed and still enable drilling on those lands.” Landry said he had recently met with the state office that administers oil leases on state school lands. “They are eager to work with the oil exploration firms to make these leases profitable for the state as well as the oil companies.”

Landry is also pursuing a “reef” play in North Dakota, near Dickinson. The Longshot 10-23 1, operated by Landry’s Core 54 Oil & Gas, LLC, was approved as a “tight hole” in November 2010. A tight hole designation is common in areas experiencing new exploration. Information on a tight hole is withheld from the public for a period of time, allowing a firm to secure a position in a new play before other companies can review the well data.

While Landry was coy about answering questions about the status of the Stark County well, the Sun Times used mapping software designed for the oil and gas industry to map the location and view a satellite image that showed a pit and what appears to be equipment trailers on the location. Landry did confirm that the well would tap into the Lodgepole Formation. In the same section are wells operated by Denbury Onshore. The Denbury wells are reported to be in production.

Several times the Sun Times has contacted Landry with questions regarding company press releases. One Norstra press release had some questionable numbers that appeared to be typos. In a press release dated June 10, this sentence had an obvious error: “Norstra also has the right to purchase this land position for 10,000,000 million common shares from treasury.” The Sun Times sent an email to Landry and Tyler Troup asking for clarification of the number. Troup, based in Windsor, Ontario, is Managing Director of Circadian Group, which describes itself as an “ultra-full-service boutique Investor Relations, Public Relations, and Capital Formation Firm, specifically focused on two industries: Natural Resources and Clean-Tech.”

Troup and Landry responded with the corrected numbers. However, according to Landry, Norstra should have handled the error differently. “We sent out a corrected release. We should have sent out a new release immediately taking responsibility for the mistake, not just an updated release.” Indeed, the release with the confusing numbers stayed on internet financial sites, such as Yahoo, until the next press release cycle which occurred late in the afternoon. Many who just gave the new press release a cursory look would have not noticed the change.

Geology

The location of Norstra’s first proposed well is in an area of interest to geologists. Two wells were drilled close to the proposed site. In 1937, the Durnin & Procktor 1 well was drilled. According to the one page drilling record, the well was drilled to 3,300 feet, into the Two Medicine Formation.

In 1955, the Milford Colony 1 was drilled, reaching the Sun River Dolomite at a depth of 6,788 feet. The well was drilled by Crescent Oil of LaCrosse, Wisconsin. Working the well was respected Great Falls geologist Virgil Chamberlin.

Both wells were recorded as dry holes. But there may be shallow gas deposits in the area. A member of the Milford Colony described a water well drilled on the property. “The driller went to 500 feet and something went wrong, so the well could not be completed. But you can go to the spot where the hole was and drop a match and the gas will ignite.”

Surrounding the Norstra well location are three newer wells that were drilled to map the formations in the area… and all three wells are of keen interest to petroleum geologists.

The Krone 31-32, drilled in 1962 by Shell Oil Company, encountered the Bakken Formation at 6,910 feet. The well continued to 7,240 feet, passing through another formation and ending at the Nisku Formation. It is interesting to note that this well, like many other deep wells drilled during the 70s and 80s, goes beyond the Bakken. At the time, according to an experienced petroleum geologist contacted by the Sun Times, the Bakken was considered useless. Before hydraulic fracturing and horizontal wells, the Bakken was just another layer of tight rock that refused to give up its oil and gas.

In 1984, Atlantic Richfield drilled the Steinbach 1. The Steinbach “readings”: porosity, TOC (total organic content) and vitrinite reflectance are odd, to say the least, for an area that many like to claim has no oil. In fact, if the numbers are correct, the well taps into a spot that is comparable to Williston area wells. But, at the time the Steinbach was drilled, the readings coming out of the test well would have discouraged Atlantic Richfield. With modern oilfield techniques, though, the well may have potential.

The third well, drilled in 1982 by Sun Exploration and Production Company, is the J.B. Long, located near Haystack Butte. Drilled to a depth of 12,100 feet, the well finds the middle member of the Bakken, the Sappington, at 10,894 feet. The J.B. Long was a bugger to drill. Located on a spot that has the classic overthrust profile, the drill bit encountered a fault and had to be withdrawn from over 5,000 feet down back up to a depth of about 2,000 feet. From this point the drillbit was “sidetracked” to avoid the fault.

While the public record of the well records the J.B. Long as a dry hole, at least three samples of crude oil from the well were sent to a lab for analysis. Sun went so far as to order distillation tests on the samples.

The Eastern Slope has a long history of study by geologists sent by Washington to find the region’s potential. One of the most respected geologists… and mapmakers, was Mel Mudge, with the US Geological Survey. In 1978, Mudge developed a report titled “Mineral Resources of the Bob Marshall Wilderness and Study Area, Lewis and Clark, Teton, Pondera, Flathead, Lake, Missoula and Powell Counties, Montana.” The US Bureau of Mines contributed to the detailed report.

In a map contained in the study, Mudge indicated the potential for various minerals in the area of study.  According to the map, the Eastern Slope, from the southern tip of Glacier Park south showed an “area of high hydrocarbon potential.” The region to the west was an area of “moderate hydrocarbon potential.” Of particular interest to Mudge was the “Saypo” area, west of Choteau.

Farther to the north, still in the Thrust Belt zone, is another area of interest to scientists.

In June, 2011, the newsletter of the American Association of Petroleum Geologists (AAPG), featured a profile of Doug Strickland. Strickland had died in May at age 58. According to the story, Stickland was working on developing some wells in NW Montana, tapping the Bakken Shale. Even though the Bakken is thinner in this region than in the Williston Basin, the wells would be cheaper to drill because the layer is not as deep.

But, the report reads, the Bakken was not what had Strickland excited. “I’ve been working in this part of Montana for 25 years. One of the largest prospects I believe I’ve ever mapped is in the western portion of the Blackfeet Reservation, ” he said.

He described a trend that started in Canada and extended south into the Glacier mountain front.

“Across the border, there are three major fields within six miles of the United States, ” he said. “There’s a swath in there that looks very prospective.”

Glen Landry is encouraged by what he sees to our north, too. While Anschutz, Rosetta and Newfield seem to have either left the area, or at least scaled down their exploration, the Canadians are punching holes just over the border.

One of the most aggressive drillers is DeeThree. The company appears to have broken the code, getting  respectable production out of the Bakken. The secret to DeeThree’s success seems to be a technique just now being adopted in eastern Montana – drilling into the Upper Bakken.

The upper layer of the Bakken, thought by some to be the source rock of Bakken oil, is a soft carbon rich shale. The challenge for drillers was to drill laterally through the layer without the soft rock collapsing onto the bit. One upper Bakken well was recently completed on the edge of the Williston Basin successfully. The well, being on the basin edge, is at a point where the typical target, the Middle Bakken, is “pinched out,” or disappears.

Landry hired Dr. David Lopez, a Petroleum Geologist, to prepare a report on the reserves in the South Sun River Prospect. Lopez received his PhD from the Colorado School of Mines and spent 16 years as a senior research geologist at the Montana Bureau of Mines and Geology. Lopez also spent almost 8 years with the USGS conducting geologic field research in east-central Idaho, southwest Montana and in south central New Mexico.

According to Dr. Lopez, the Steinbach well, used as a reference, showed a reservoir of over 9,000,000 barrels of Original Oil In Place (OOIP) per section. The actual report, available on the SEC website, does contain an obvious error. The column with the number of barrels in reserve has the header “OOIP (MMBO) per Section,” but the numbers in the column appear to be the actual numbers, not in “Millions of Barrels.” MMBO is shorthand for “Millions of Barrels;” MBO would represent “Thousands of Barrels.”

Not revealed in Dr. Lopez’ report is the estimate of how much of the oil is recoverable. That amount depends on many factors, but oilfield geologists have told the Sun Times that a 25 percent recovery would be the norm. Currently there are three methods of recovery used to produce oil. The first is overpressure, where the pressure pushing the oil out of the formation exceeds the static pressure in the atmosphere. Bakken wells in Eastern Montana and North Dakota can have thousands of pounds of pressure pushing the oil to the wellhead.

Installation of the familiar pumpjack is the second method of recovery. The pump draws the oil out of the hole as it seeps from the formation.

The third recovery method is injection, where carbon dioxide (CO2), or water is injected into the formation around a wellbore. The pressure of the injection forces the oil toward the wellbore where it is pumped out.

Research on a fourth method of recovery is reportedly underway in the Elm Coulee field in Eastern Montana.

How much oil?

Getting back to the SEC trading halt on Norstra stock, there have been allegations that Norstra claimed it was sitting on “8.5 billion barrels of oil.” While the Sun Times has not been able to find that claim in company presentations, it was contained in one of the “pump and dump” mailers.

Norstra’s official reports of oil reserves may seem on the high side, but they appearto be in agreement a US Geological Survey Report.

The report, by Dr. Leigh Price, was obtained by the Sun Times in late 2011. The 300 page report was written in 1999/2000 by the USGS geophysicist. After Dr. Price completed the report, he passed away. The USGS claimed that since Dr. Price died before the paper could be peer reviewed, the agency could not make the report public.

But David Bardin, a former attorney with the Federal Energy Regulatory Commission (FERC) provided a copy of the report to the University of North Dakota Energy and Environmental Research Center. Shortly after obtaining the report, the Sun Times spoke to Bardin to confirm the report’s authenticity. Asked why he had make the report available, Bardin told the Sun Times, “The taxpayers paid for this research and have the right to know the extent of the resources available to this nation.”

According to Bardin, Price was sent to North Dakota to find out what was going on with “this Bakken thing.” Price chose North Dakota for his research because the state had a better database of well information than Montana. Price researched the Bakken for four years, even developing a program for a successful Bakken well.

But it was Price’s estimates of Bakken Reserves that stand out. In his paper Price lays out the math behind his calculations. In his example, Price assumes a Bakken thickness of 52 feet. Based on this, and other assumptions that may not apply to our area of Montana, Price estimates there are 1.55 billion barrels of oil per township, or 36 sections. And that is, according to Price, a “conservative” estimate.

Augusta

Still, in Augusta, you can find men that worked the rigs when the area was a hotbed of oil drilling. Pat Troy, who has done “wildcatting” from oil to Uranium, was a driller on the J.B. Long well. “We pulled a strand of core that was just oozzzin’ greasy crude,” said Troy. Troy, who can tell some good stories from the Eastern Slope oil patch, is hoping to see the rigs return.

At the Buckhorn Bar, local naturalist and wildlife photographer Gus Wolfe holds court with a cold beer in hand. “I use oil, just like everyone else… in plastic, fuel… everyday things, even though I consider myself a low consumer of oil. I want to see our area protected, but these people have a job to do and I respect them for putting their money where their mouth is to find the oil.”

Asked, as a naturalist, his thoughts on environmentalists who try to block oil development, Wolfe replies, “Let me tell you, when they were drilling up here I would go out to where the rigs were drilling to check on the wild birds I was watching. I had a nesting pair near a rig. I would be close to the rig with my binoculars, checking on the pair and the rig’s tool pusher came over and asked what I was looking at.”

Wolfe said he wouldn’t tell the oilman about the birds at first, but as he got to know the tool pusher, Bill Froman, he eventually pointed out the nest.

“After that, every time I would see Froman or his hands, they would tell me what the young eagles were up to… ‘the young bird was stretching its wings’,” Wolfe quoted Froman as saying in one of the reports.

“That’s a real environmentalist,” said Wolfe. “I knew that crew had a job to do, but I went out there and got to know them. I showed them the beauty of the nature surrounding them and made environmentalists out of them. Real environmentalists.”

Plastered on the frosty glass door of the beer cooler across the bar from Wolfe is the decades-old evidence of the Augusta oil boom from the 80’s, stickers from Halliburton, Froman Drilling, Pioneer Drilling, WASCO Rathole Drilling… most of the stickers covering the two glass doors seem to be from oilmen, or from the armed services.

Anne Gannon, of Sun River, told the Sun Times her family supports oil and gas development in the area. “We should support our own industries, taking care of our country. We should end our dependence on others for our energy supplies.” Gannon added, “People who don’t understand the science… they just say ‘no,’ when they should really take the time to become educated and informed about the issues before jumping on the naysayer bandwagon.”

At the wellsite, which is across the road from the Milford Colony, colony resident Peter Wipf, greets us as Landry is explaining the layout of the drilling pad. Wipf asks when Landry will start drilling. “As soon as we get the permits we hope to get the surface casing set.” Landry talks about the well pad construction with Wipf. The pad will be located on a flat piece of ground a stone’s throw from Highway 287. According to Wipf, the colony is fully behind the project and is anxious to get things underway.

Before heading back to Fairfield, I ask Landry what the formations under the site look like. “What’s the lay of the land a few thousand feet below us?”

Using  his finger to write in the dust on his black truck, Landry draws a pattern… like an ocean wave with two crests. “Here is the Krone well,” he saws as he makes a vertical mark on the left apex. “And here we are.” He makes a similar mark on the right apex.

“Is that an anticline?”

“We don’t know,” Landry answers. “We can’t see how far this structure goes.”

But Landry is sure that he has found an intact area of the Bakken. “The records show a lot of thrusting in the area, but from the seismic data what we seem to have here is a resource play.”

Norstra Closing in on First Drill Location

A comparison of the Krone Well, located near the proposed Norstra drill site south of Augusta, and a well located in Elm Coulee in eastern Montana.

Published: Monday, May 20, 2013 2:02 PM CDT

SOUTHLAKE, Texas — Norstra Energy today announced that the company is finalizing the evaluation of technical data this week for the first drill location on its South Sun River Prospect. “We received the first seismic interpretation from our geophysical team in Denver and are reviewing the proposed first drill location internally. Once we have evaluated and cross-referenced the proposed location with the actual surface conditions for the drilling operations we will send our surveying team out to stake the location and design the drilling pad,” stated Glen Landry, the CEO & President of Norstra. He further said: “We are also very excited about the quality of the seismic lines.”

Central to the viability of Norstra’s South Sun River Prospect are the subsurface well logs in the area. Norstra is fortunate to have acreage that is near wells that show the likelihood of commercial oil in the Bakken Oil Formation.

There are three key wells in the immediate vicinity of the first potential Norstra drill site.

• Krone #3132 drilled by Shell Oil Company. This well demonstrates those essential parameters for a commercial well in the Bakken Oil Formation. There are 24 feet of Bakken middle member present. The middle member of the Bakken Oil Formation produces most of the oil today. The reservoir rock displays a resistivity of 200 ohms suggesting oil and gas is present. The well is less than 2.5 miles away from the first proposed Norstra drill site.

• Steinbach #1 drilled by Arco. The Steinbach # 1 well is around 3,000 feet deeper than the Krone well.  The same reservoir is present, but with deeper buried shales that are heated at a higher temperature resulting in higher resistivities from the generations of oil and gas.  The resistivity here is over 2,000 ohms.  The well is less than 5 miles south of the first proposed drill site.

• Soap Creek Cattle Co. #1331 drilled by Flying J Oil and Gas.  The well is not studied much because it did not penetrate the Bakken Oil Formation. It still has some very significant information for our project. The well stopped in the middle member of the Blackleaf Oil Formation at a depth of 5,480 feet. The Bakken is perhaps 3,000 feet deeper. What is of interest is that in one of the many faults present, there is oil described by the geologist, M.K. Jones. The oil is described from 4,928 to 4,994 feet.  It is in a fractured member of the Taft Hill and the oil has been biodegraded to a heavy crude due to the presence of the water in the fractures. This oil has migrated up the thrust from deeper formations. The source for the oil could be the Bakken Oil Formation. This well is less than 0.75 miles from the proposed first drillsite away. Just the fact that oil is present so close to the Company’s proposed well site is extremely significant.

We anticipate that the Bakken Oil Formation on the Norstra drill site may be very similar to the Krone well or Steinbach well. A comparison has been made by the Company’s technical consultants between the Krone well and the Balcron 44-24 Vaira well located in the Elm Coulee field of Eastern Montana. Elm Coulee (2007) was the highest producing onshore oil field in the United States, and it is Bakken Oil. This field is expected to exceed 270 million barrels of production from the Bakken Oil Formation at depths of 8,500-10,000 feet. This is exactly the depth range around the proposed Norstra drill location and in the Krone and Steinbach.

The comparisons do not stop there. (See photo accompanying story)

The Vaira 44-24 well has produced over 159,000 barrels of oil and was completed in 1989 when new fracking and drilling technologies were in their infancy. A series of upgrades have been applied to this well but in today’s world one would expect this well to exceed these figures. The Company plans to employ all of the latest completion technologies to drill the Norstra #1 well. Production is anyone’s estimate but just based upon the increased thickness of the Bakken Oil Formation at the proposed Norstra location, the recoverable reserves may compare favorably to those found in nearby wells.

Geological Society Has Presentation On Southern Alberta Bakken

Geophysicist Eric Johnson Sun Times photo by Darryl L. Flowers

By Darryl L. Flowers

Last Wednesday Billings Geophysicist Eric Johnson spoke to a full house at the Petroleum Club in Billings regarding oil exploration along the Eastern Slope of the Rockies.

The occasion was a regular monthly presentation of the Montana Geological Society.

According to the MGS’ Jay Gunderson, the monthly gatherings typically bring in 25-35 people. 48 showed up for Johnson’s lecture.

Johnson told the crowd that the oil in the Cut Bank oil field in Glacier County has been determined to have originated in the Bakken System. The Cut Bank oil was found at a much shallower depth than the Bakken since the formation has fractured in a zone along the Rockies known as the overthrust belt.

“There’s no reason not to expect Bakken oil in NW Montana,” said Johnson. “Landslide Butte has more shale than Elm Coulee.” Landslide Butte is located in Glacier County, to the northeast of Browning. Elm Coulee is the legendary Bakken oil field in eastern Montana, the area of some of the most prolific wells in the state.

Addressing the issue of why exploration firms drilling in NW Montana have had difficulty finding the sweet spot while Canadian firms such as Shell Canada, DeeThree and Crescent Point enjoy success on the north side of the border, Johnson commented, “There is something going on as you cross the [Canadian] border, and I don’t think it’s the geology that has changed.”

Limited production start-up at In Amenas

Photo: Kjetil Alsvik / Statoil

Algerian facility was target of terrorism…

Published: Saturday, February 23, 2013 9:55 AM CST

On Friday, the In Aménas gas facilities in Algeria operated by the Joint Venture partners Sonatrach, BP and Statoil, initiated a limited production start-up. The news came in a press release issued by Statoil.

Production from the plant’s train 1 was started-up following a detailed review of technical integrity, security, and other conditions, and after the partners had concluded that the criteria required to ensure a safe restart of train 1 had been met. The remaining two production trains were damaged during the terror attack, and will not be put on stream until it is safe to do so.

The physical inspection of train 1 was conducted by Sonatrach on behalf of the Joint Venture, and the documentation has been fully reviewed by both Statoil and BP.

“The Joint Venture has initiated a limited production start-up at In Amenas. We thank Sonatrach for the work they have done and continue to do on behalf of the Joint Venture, during this difficult time for everyone involved”, says Lars Christian Bacher, executive vice president for Development and Production International in Statoil.

During the production start-up phase, the facilities will be operated by Sonatrach on behalf of the Joint Venture. Statoil and BP staff will not yet be redeployed but technical specialists will provide support when needed, in line with strict security procedures established for short-term visits.

Statoil is currently in a close dialogue with Algerian authorities, Sonatrach and BP about the necessary conditions for full production and a redeployment of staff.

“The safety and security of our people is our utmost priority. We will take whatever time needed to conduct all required assessments and reviews and take all necessary precautions before we consider a re-entry of Statoil personnel,” says Bacher.

Coinciding with production start-up, Sonatrach will hold a commemoration ceremony at the In Amenas facilities Sunday 24 February in connection with the Algerian Day of Nationalisation of Hydrocarbons. A memorial monument with the names of the victims of the terror attack will also be unveiled.

LINN Energy and LinnCo to acquire Berry Petroleum Company for $4.3 billion

Published: Saturday, February 23, 2013 9:53 AM CST

LINN Energy, LLC, LinnCo, LLC and Berry Petroleum Company on Friday announced in a company press release the signing of a definitive merger agreement pursuant to which LINN and LinnCo will acquire all of Berry’s outstanding shares for total consideration of $4.3 billion, including the assumption of debt. The transaction, which is structured as a stock-for-stock merger of Berry with LinnCo followed by the acquisition of the Berry assets by LINN, is expected to be tax-free to Berry shareholders. This transaction represents the first ever acquisition of a public C-Corp by an upstream LLC or MLP.

Operational Highlights

• Berry’s long-life, low-decline, mature assets are an excellent fit for an MLP/LLC;
• Meaningful growth to LINN’s portfolio with increased geographic presence in California, the Permian Basin, East Texas, and the Rockies, as well as the addition of an attractive new core area in the Uinta Basin;
• Production of approximately 240 MMcfe/d, increasing LINN’s current production by 30 percent;
• Berry’s reserves are approximately 75 percent oil, which results in a meaningful increase in liquids exposure to 54 percent from 46 percent of proved reserves, pro forma as of December 31, 2012;
• Proved reserves of approximately 1.65 Tcfe, increasing LINN’s estimated proved reserves by 34 percent;
• LINN has identified additional probable and possible reserves at Berry of approximately 3.8 Tcfe;
• Approximately 3,200 producing wells and more than 200,000 net acres; and
• Potential for production optimization and cost savings.

Financial Highlights

• The transaction is expected to be highly accretive to distributable cash flow per unit. In the first full year following closing, accretion is expected to be in excess of $0.40 per unit.
• LINN plans to recommend to its board of directors an increase in the current quarterly distribution of 6.2 percent. LINN’s current quarterly distribution of $0.725 per unit, or $2.90 per year, would increase to $0.77 per unit, or $3.08 per year. The recommended increase is anticipated to take effect in the quarter immediately following the closing of the transaction, which is estimated to occur on or before June 30, 2013.
• LinnCo’s current estimated annual dividend of $2.84 per share includes a reduction of $0.06 per share for taxes, which LinnCo now estimates to be zero for 2013. Therefore, management estimates that the LinnCo dividend per share for the quarter ended March 31, 2013 will increase 2 percent from $0.71 to $0.725 per quarter, or $2.90 per share on an annual basis.
• LinnCo’s management intends to recommend to its board an increase in LinnCo’s dividend by 8.5 percent following the closing of the transaction to $3.08 per share on an annualized basis, which includes the $0.18 per share increase in LINN distributions.
• Due to the significant accretion expected from this transaction, LINN’s coverage ratio for the second half of 2013, assuming the transaction closes on or before June 30, 2013, is expected to be approximately 1.20x including the anticipated distribution and dividend increases.
• All stock consideration and greatly increased size are expected to result in significantly improved debt metrics.
• As part of the transaction, Berry will be converted into a limited liability company and then it will be contributed to LINN in exchange for LINN units. This arrangement allows LINN to own Berry’s assets in a pass-through entity without any immediate payment of tax.

“This transaction creates tremendous value for LINN Energy, LinnCo and Berry equityholders. We are pleased to have been able to achieve such a mutually beneficial outcome,” said Mark E. Ellis, Chairman, President and Chief Executive Officer, LINN Energy. “Berry’s assets are an excellent fit for LINN, and we believe this transaction generates significant accretion to our distributable cash flow per unit.”

“We have great respect for what the Berry management team has accomplished and consider the Berry employees to be an important part of this transaction,” added Ellis. “We welcome them to LINN and believe that together, we will be positioned for great success in the future.”

Robert Heinemann, President and Chief Executive Officer, Berry Petroleum Company, said, “Today’s merger announcement with LINN Energy marks the beginning of a new, important chapter in our company’s history. Berry and LINN have demonstrated the ability to prudently grow their businesses while delivering value and returns to their respective shareholders and unitholders. Berry’s portfolio fits well with LINN’s structure and asset base, and the combination of the two companies will create one of the largest independent E&P companies in North America. This transaction consideration delivers substantial value to Berry shareholders with the opportunity to participate in the upside potential of the combined, growing company.”

Transaction Terms & Structure

Under the terms of the agreement, which was unanimously approved by the boards of directors of LINN Energy, LinnCo and Berry, LinnCo has agreed to issue 1.25 common shares for each common share of Berry outstanding prior to the merger. The consideration to be received by Berry shareholders is valued at $46.2375 per Berry share based on LinnCo’s closing price as of February 20, 2013. This represents a premium of 19.8 percent to the Berry closing price on February 20, 2013, and a premium of 23.1 percent to its one month average price at that date.

The acquisition, which is expected to be tax-free to Berry’s shareholders, is structured as a stock-for-stock merger. In connection with the merger Berry will be converted into an LLC. Upon completion of the merger, LinnCo will contribute the Berry assets to LINN in exchange for LINN units.

In connection with approval of the contribution from LinnCo to LINN Energy, the boards of directors of each company formed a conflicts committee to evaluate any potential conflicts that may arise between LINN and LinnCo. To ensure the independence of each of the conflicts committees, two directors resigned from the LinnCo board of directors to serve on the LINN conflicts committee and two directors resigned from the LINN board of directors to serve on LinnCo’s conflicts committee. In addition, in connection with the transaction, one representative of the board of directors of Berry will be appointed to the board of either LINN or LinnCo.

The transaction is subject to the approval of the shareholders of Berry and LinnCo and the unitholders of LINN Energy, as well as customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The transaction is expected to close by June 30, 2013. The combined company will be headquartered in Houston, Texas.

2013 Estimated Cash Distributions (Subject to Board Approval)

LINN ENERGY
	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Quarterly	$0.725	$0.725	$0.77	$0.77
Annualized	$2.90	$2.90	$3.08	$3.08

LINNCO
	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Quarterly	$0.725	$0.725	$0.77	$0.77
Annualized	$2.90	$2.90	$3.08	$3.08

LinnCo Estimated Taxes

In order to avoid immediate tax on LINN’s acquisition of the Berry assets, LinnCo incurred a deferred tax liability. Because of the incremental costs for LinnCo resulting from this deferred tax liability, LINN has agreed to pay LinnCo $6 million per year for three years (2013, 2014 and 2015) or roughly $0.06 per LinnCo share. Due to the significant estimated shield provided by LINN to LinnCo, LinnCo’s cash tax liability is estimated to be zero for the last two quarters of 2013. In future periods, assuming current estimates for taxable income and capital spending, management estimates that LinnCo’s tax liability will be in the range of 2 percent – 5 percent of dividends paid, which is the same as the estimates provided in the prospectus for the LinnCo IPO. Therefore, this transaction is not estimated to give rise to any additional tax liability for LinnCo over and above the guidance that was previously provided. LINN’s management and board have also agreed to evaluate the need for any additional payments from LINN Energy to LinnCo should taxes be higher than expected.

Senior Notes

LINN expects that the completion of this transaction will trigger change of control provisions in the indentures governing Berry’s existing senior notes. These change of control provisions entitle holders of the notes to receive 101 percent of par for the notes plus accrued and unpaid interest from a change of control offer related to each series of notes. LINN expects any of Berry’s notes not tendered pursuant to the change of control offers to remain outstanding following the transaction, subject to any opportunistic refinancing of such notes it may pursue in the future based on market conditions.

Advisors

Citigroup Global Market Inc. acted as exclusive financial advisor to LinnCo, and provided a fairness opinion to the LinnCo board of directors; Latham & Watkins LLP acted as legal advisor to LINN Energy and LinnCo. Greenhill & Co., LLC provided a fairness opinion to the conflicts committee of the LINN Energy board of directors; Akin Gump Strauss Hauer & Feld LLP acted as legal advisor to the conflicts committee of the LINN Energy board of directors. Evercore Partners provided a fairness opinion to the conflicts committee of the LinnCo board of directors; Locke Lord LLP acted as legal advisor to the conflicts committee of the LinnCo board of directors. Credit Suisse Securities (USA) LLC acted as exclusive financial advisor to Berry Petroleum Company and provided a fairness opinion to the Berry Petroleum Company board of directors. Wachtell, Lipton, Rosen & Katz acted as legal advisor to Berry Petroleum Company.

A Rig is Down

Sun Times file photo by Darryl L. Flowers

By Rachel E. Kelley

Published: Tuesday, February 12, 2013 2:41 PM CST

A shrill ring invades the quiet of our bedroom. Just barely on the edge of sleep, I hear one side of a mumbled conversation, and then my husband says to me, “A rig is down.” A fairly common phrase from him, I know what it means. An oil rig engine needs a part. Rigs can’t run without engines, and just one hour down costs tens of thousands of dollars.  Despite the seduction of sleep, he’ll go save the day like an oilfield superhero. I think of him like that at times like these.

I see oil rigs every day. Similar to the Eiffel Tower, they are a massive construction of steel beams, cables, and our country’s flag fluttering at the top as if they represent something inherently American. Perhaps they do. After all, the oil rig has a reputation. The rig, whipping boy of environmentalists everywhere, has become something more than just a means to get oil; it embodies many things: greed, abuse, capitalism, rape of the earth, pillaging of natural resources, money, power, inequality, pollution.

But to some of us saving a rig is a big deal. Like saving Freddie-Mac. Or Lehman Brothers before its crash in ‘08. Or the auto industry. Like saving the California Grey Whales in Barrow, Alaska in 1988. How ironic.

I’m no stranger to irony. When I drive by an oil rig at night, and the thing is lit up like some kind of heavenly beacon of hope, I inevitably measure the angles of my reasoning and find them incongruent. The uninvited feeling of pride I get when seeing a rig still hangs decidedly under ‘need to reconcile’ in the orderly convictions of my mind.

Many times I’ve examined the conflicted feelings whose origins belong to the oil rig. Aside from its sheer size, the oil rig is not so amazing in-and-of itself. However, the bright lights and heavenly luminescence only make the feeling that much stronger like dramatic music does for movies. Oil rigs are dirty and dangerous up-close.

I often wonder if I’m the only one that sees a rig this way, but I realize the irony has nothing to do with how others see a rig. The paradox lies with me, the avid proponent of clean energy and technology, who admonishes her children to never neglect the sanctity of life, even if such life resides in a caterpillar or housefly. “We respect the earth. We respect all God’s creations,” I tell them. My son stepped mercilessly on a beetle once, and I nearly lost it. How do I remain in awe of the oil rig yet stand so avidly on the side of my earthly home?

I suppose, in my mind, hope trumps the realities of oil. The hope inspired by a rig is bigger than anything the rig may mechanically do. The rig saved us: my husband, my children, and me. Even that wouldn’t be enough for me to revere the rig this way, but it didn’t just save us. The rig saved that dirt and grease-clad man in front of me at the post office whose hands bear the evidence of manual drudgery. He’s mailing his son a Transformer toy for his birthday because he can’t be there. He’s here, in North American Siberia to save his family.

The rig saved the guy and his daughter who slept in the church parking lot under some bushes while they looked for jobs to save the rest of their family back in Washington. It saved the man lugging his meager belongings in a backpack down the side of the road on his way to find the well-springs of hope promised by the rig. His rolled-up sleeping bag slaps the back of his legs as he walks, urging him onward toward his goal.

The artist from Arizona, who custom designed welded architecture, came here too. The housing bubble devoured his dream and his livelihood as if they never were. But the rig saved him and his family.

The rig saved the guy who lost his job—there are so many of those guys. Hundreds of thousands the rig has saved. Perhaps millions. The rig has the power to save every person that comes here.

So when a rig is down, we have to fix it. The rig has lives to save.

Rachel E. Kelley “blogs” under the name “Zealous Mom” at http://zealousmom.areavoices.com/. Kelley lives in Williston, ND which she describes as “… the happiest place on earth (Sorry Disney World) where everyone has a job and makes plenty of money thanks to that fantastic industry you all depend on to run your cars.  Seriously, this place is like Mecca and I love it.” The post was sent to the Sun Times by Montana Petroleum Association.

Can America Really be the Planet’s Top Energy Producer?

Chris Faulkner Photo courtesy Breitling Oil & Gas

CEO of Breitling Oil & Gas asks…

By Chris Faulkner

Published: Tuesday, February 12, 2013 2:41 PM CST

For decades, Americans have lamented their dependence on foreign energy, especially Middle East oil. Now, however, the tables are turning. Growing numbers of analysts are concluding that within a decade, America could become the world’s top energy producer.

That would certainly be desirable. Substantial expansion of domestic energy would generate tens of thousands of jobs, lower everyday energy expenses, and eliminate our dependence on unstable Middle East governments.

But that future is far from guaranteed. We have the entrepreneurship and technological innovation we need. The question is whether we’ll have the smart public policies that allow them to flourish. While America’s energy prospects have never been brighter, regulators have never been more vehement in their push for restrictive controls on development of new projects.

Of course, we must protect the environment and ensure worker safety. But lawmakers have gone well beyond that, and they need to scale back the needless and costly rules if we are to have any hope of reaching our full potential.

There are three obvious places to start with reform.

First, regulators need to ease restrictions on hydraulic fracturing.

“Fracking” uses water pressure to extract oil and natural gas from shale formations buried deep under the earth’s crust. This technique is already in widespread use in the Bakken Shale in North Dakota. The energy boom in that state has led to astonishing economic growth and three percent unemployment.

The massive shale deposits in America could, if fully developed, profoundly change our energy landscape. But so far, oppressive state and federal rules have prevented firms realizing this potential.

Most of the environmental concerns over fracking, which turn on possible groundwater contamination, are based on misinformation or a misunderstanding of the process. This technique has been around since the 1940s. Over 1.2 million wells have been successfully fracked. The shale formations disrupted by the process are separated from water aquifers by up to two miles of rock, limestone, sand and earth. And over 99 percent of the standard fracking liquid mixture is simply water.

In other words, fracking presents very little environmental risk — and massive potential for economic gains. By some estimates, natural gas development in the Marcellus alone would create over 100,000 new jobs.

The second major way federal regulators can promote American energy is to open up off-shore energy reserves for drilling. After the tragic Deepwater Horizon spill, the Interior Department instituted a rigid drilling moratorium that effectively halted offshore development. Eventually, the courts forced regulators to ease the ban, but there is still a great deal of uncertainty and delay surrounding the offshore permit process.

Since the moratorium was announced, eleven major ocean drilling operations have closed shop, destroying an estimated 91,000 jobs.

The Deepwater disaster certainly justifies targeted safety standards for offshore drilling. But the status quo is overkill — imagine if federal aviation officials grounded all flights forever after a single crash.

Finally, the Obama administration needs to grant full approval for the construction of Keystone XL — a planned $7 billion, 2,000-mile pipeline that would carry oil from Canadian shales to refineries in Texas.

Extensive environmental analysis by the State Department and others shows Keystone will have minimal adverse effects on surrounding areas. The Constructing and maintaining the pipeline will create 130,000 new jobs.

It is indeed possible for the United States to become the world’s premier energy producer by 2020. But reaching that goal requires policymakers to identify and eliminate regulatory barriers that are now keeping America from achieving its astounding energy potential.

Chris Faulkner is the CEO of Breitling Oil & Gas.

Bill Barrett Corp. Adds Two In Toole: Weekly Oil Report

Bill Barrett Corp. was approved for two more Toole County locations. Sun Times photo by Darryl L. Flowers

Published: Tuesday, February 5, 2013 1:02 PM CST

Compiled by Darryl L. Flowers

This weekend I travelled to Toole County to see what’s happening on the ground, visiting a Bill Barrett Corporation well and checking in with some of the people that work in the Oil Patch in that border area.

I ran into a fellow that works as a “Pumper” in the oil fields at the Derrick Bar and Café in Kevin, Montana.

I told him who I was and the reason for my trip to the area. After a couple of minutes he asked if I had a card. The Pumper told me I didn’t talk like a “newspaperman.”

So I handed him my card, and even grabbed a copy of the Sun Times from two weeks ago out of the truck and gave it to him.

I asked him, “If I don’t sound like a newspaper reporter, what do I sound like?”

“An oilman,” he replied.

I told him that was the nicest thing anyone had said to me in years.

New Locations

In the Pine Oil Field in Wibaux County, Denbury Onshore, LLC has won approval for the Unit 44X-09A. The well has a Surface Hole Location of SE SE 9-11N-57E (560 FSL/1130 FEL) and a Proposed Depth of 9,900 feet, aiming for the Winnipeg Formation.

The Pine Oil Field, according to the Montana Geological Society, recently celebrated 61 years of production, being discovered on January 28, 1952. The “Discovery Well” was the #1 Pine Unit, drilled by Shell Western E & P Inc. The discovery at Pine, part of the Cedar Creek Structure, resulted in Cedar Creek getting recognition as one of the most prolific oil structures in the Northern Rockies. By 2004, according to the Board of Oil and Gas Conservation, the Pine Field had produced 120,000,000 barrels of oil.

New Locations – Horizontal Wells

All five horizontal wells approved for the period are in Richland County.

Continental Resources Inc. received three of the permits: the Barlow Federal 1-12H, with an SHL at SW SE 12-26N-55E (610 FSL/2255 FEL) and a Probable Bottom Hole Location (PBHL) of 19,549 feet at NW NE 1-26N-55E (200 FNL/1980 FEL); the Wood Federal 1-11H, with an SHL at SE SW 11-26N-55E (460 FSL/2345 FWL) and a PBHL of 19,728 feet at NE NW 2-26N-55E (200 FNL/1980 FWL) and the Lepel 1-34H, with an SHL at SE SW 34-23N-53E (340 FSL/1825 FWL) and a PBHL of 14,137 feet at NE NW 34-23N-53E (200 FNL/1980 FWL).

Whiting Oil and Gas Corporation was greenlighted for two wells in Richland County: the Mullin 21-24-1H has an SHL at NE NW 24-24N-59E (785 FNL/1795 FWL) and a PBHL of 20,039 feet at SW SW 25-24N-59E (240 FSL/660 FWL); the Weber 24-30-1H has an SHL at SE SW 30-24N-60E (440 FSL/1680 FWL) and a PBHL of 20,185 feet at NW NW 19-24N-60E (240 FNL/660 FWL).

All of the new horizontal wells will tap into the Bakken Formation.

Re-Issued Locations

In Phillips County’s Bowdoin Field, Fidelity Exploration & Production Co. has been approved for two wells. The Federal 1531 has an SHL at NE NE 11-31N-33E (904 FNL/1279 FEL) while the Federal 1527 has an SHL at SW NW 28-31N-34E (1389 FNL/1298 FWL). Both wells will draw from the Mowry Shale at a depth of 1,800 feet.

According to a U.S. Geological Survey publication from 1917, the Bowdoin Dome is “a broadly arched portion of the earth’s crust from which the strata dip away on all sides, its structure being a type known to be favorable for the accumulation of oil or gas in many fields.”

The USGS noted that a water well drilled in the region “several years ago has been yielding a small flow of gas, sufficient… for domestic use in one family ever since.” In 1915, a large gas well was drilled at Havre in the field. The discovery well was the Martin #1, completed in 1913.

The USGS report commented on the Field Work they conducted at the time: “During the summer of 1916 the writer, assisted by H.R. Bennett and Edwin T. Conant, made an extensive reconnaissance in northeastern Montana. The field work consisted of hastily riding over a large area, noting the outcrops of the formations, collecting fossils…”

In Richland County, two Bakken Formation wells were approved. Continental Resources, Inc. was given the go-ahead for the Ruben 1-9H, with an SHL at SW SE 9-26N-55E (180 FSL/1660 FEL) and a PBHL of 19,979 feet at NW NE 4-26N-55E (200 FNL/1980 FEL). Slawson Exploration Company Inc. was OK’d for the Scabbard 1-34H, with an SHL at SW SW 34-22N-58E (300 FSL/1145 FWL) and a PBHL of 14,759 feet at NW NW 34-22N-58E (250 FNL/750 FWL).

In Toole County, Bill Barrett Corporation was greenlighted for two wells, both targeting the Exshaw Shale. The Simmes Ranch 21-13-36-3WH has an SHL at NE NW 13-36N-3W (200 FNL/2230 FWL) and a PBHL of 7,596 feet at SE SW 13-36N-3W (400 FSL/2230 FWL); the Simmes Ranch 31-14-36-3WH, has an SHL at NW NE 14-36N-3W (400 FNL/1980 FEL) and a PBHL of 7,448 feet at SW SE 14-36N-3W (400 FSL/1980 FEL).

In the Valley County portion of the Bowdoin Field, Fidelity Exploration & Production Co. has been approved for ten wells, all tapping into the Mowry Shale. The wells are: the Federal 1543, with an SHL at NW SE 15-31N-34E (2024 FSL/2263 FEL); the Federal 1525, with an SHL at NW NE 25-31N-34E (1250 FNL/2290 FEL); the Federal 1512, with an SHL at NE NW 14-31N-35E (867 FNL/1905 FWL); the Federal 1516, with an SHL at SW SW 15-31N-35E (1102 FSL/1054 FWL); the Federal 1545, with an SHL at NE SE 19-31N-35E (1523 FSL/753 FEL); the Federal 1523, with an SHL at SE SE 20-31N-35E (1243 FSL/1226 FEL); the Federal 1518, with an SHL at SE NE 21-31N-35E (2421 FNL/775 FEL); the Federal 1517, with an SHL at NW SE 23-31N-35E (1666 FSL/1355 FEL); the Federal 1522, with an SHL at SW NE 23-31N-35E (1589 FNL/2399 FEL) and the Federal 1520, with its SHL at NE NW 29-31N-35E (202 FNL/2317 FWL).

Permit Modifications / Corrections

In Powder River County’s Bell Creek Field, Denbury Onshore, LLC was approved for a modification or correction regarding the Unit 3116R. The well is located at SE SE 31-8S-54E (765 FSL/541 FEL) and has a depth of 4,772 feet, penetrating the Skull Creek Formation.

Completions

In Hill County, G/S Producing, Inc. reported they have brought in the Weil 1, located at NW SE 28-34N-9E (2053 FSL/1954 FEL). The gas well, which was drilled into the Red River Formation at a depth of 5,380 feet, reported an Initial Potential (IP) of 2,480 Thousand Cubic Feet of Gas Per Day (MCFPD).

In Musselshell County, True Oil, LLC reported the completion of the Tranel 22-22H. The Heath Formation well has an SHL at SE NW 22-11N-24E (2278 FNL/2534 FWL) and a BHL of 4,824 feet at SE SE 22-11N-24E (797 FSL/357 FEL). The well turned in an IP of 420 Barrels of Water Per Day (BWPD).

In Richland County, XTO Energy Inc. reported the completion of the Peterson 42X-18, with an SHL at SE NE 18-23N-59E (2250 FNL/250 FEL) and a BHL of 19,905 feet at SW NW 13-23N-58E (2029 FNL/750 FWL). The reported IP was 172 BOPD, 18 MCFPD and 323 BWPD. XTO also reported the completion of the Hanson 44X-26B in Richland County. The well has an SHL at SE SE 26-23N-59E (873 FSL/432 FEL) and a BHL of 20,120 feet at NW SW 27-23N-59E (2000 FSL/267 FWL). The well turned in an IP of 304 BOPD, 17 MCFPD and 2,270 BWPD. Both of the XTO wells produce from the Bakken Formation.

Two wells were completed in Roosevelt County. EOG Resources, Inc. completed the Stateline 8-3328H. The well has an SHL at SE SE 33-28N-59E (300 FSL/1000 FEL) and a BHL of 19,497 feet at NW NE 28-28N-59E (712 FNL/1344 FEL). The Bakken Formation well reported an IP of 840 BOPD, 500 MCFPD and 540 BWPD.  Landtech Enterprises, LLC completed the Romo 2 SWD, which has an SHL at NW SW 26-28N-58E (2102 FSL/305 FWL). The Romo taps into the Swift Formation at a depth of 5,631 feet.

In Sheridan County, TAQA North USA, Inc. reported the completion of the Flat Lake 11-13H. The well has an SHL at SW SW 11-37N-57E (480 FSL/280 FWL) and a BHL of 11,791 feet. Producing from the Bakken Formation, the Flat Lake reported an IP of 33 BOPD and 525 BWPD.

Denbury Onshore, LLC reported the completion of two wells in the Pine Oil Field in Wibaux County. The Unit 24X-15A, with an SHL at SE SW 15-11N-57E (428 FSL/1544 FWL) and a BHL of 8,752 feet at SE SW 15-11N-57E (175 FSL/1400 FWL) reported an IP of 379 BOPD; 88 MCFPD and 144 BWPD, tapping the Red River Formation. The South Pine Unit 23X-22A, which has an SHL at NE SW 22-11N-57E (2345 FSL/2640 FWL) with a depth of 9,700 feet turned in an IP of 38 BOPD; 5 MCFPD and 44 BWPD. The well taps the Winnipeg Formation (Siluro-Ordovician).

In Yellowstone County, Vecta Oil & Gas, Ltd. reported the completion of the #1 Heberle 33-28. The well, which has an SHL at NW SE 28-7N-32E (1667 FSL/2045 FEL) reported an IP of 90 BOPD and 276 BWPD. The Heberle taps the Amsden Formation at a depth of 6,140 feet.

Abandoned Wells

In Hill County, Devon Energy Production Co., LP was approved to abandon two wells: the Rocky Boy 18-4, with an SHL at NW NW 18-29N-15E (689 FNL/961 FWL) and the Rocky Boy 35-10, with an SHL at NW SE 35-30N-15E (2079 FSL/2181 FEL).

In Toole County, Mountain Pacific General Inc. was approved to abandon the Ostrem 2-33, with its SHL at SE NW 33-32N-3E (1980 FNL/1980 FWL).

Converted to Injection

Three wells, belonging to Denbury Onshore, LLC, were approved for conversion to injection.

In Fallon County’s Lookout Butte Field, the Unit 13X-33, with an SHL at NW SW 33-7N-60E (2000 FSL/780 FWL); and in Powder River County’s Bell Creek Field the Unit 3313, located at SW SW 33-8S-54E (660 FSL/660 FWL) and the Federal 805, located at C SW NW 8-9S-54E (1980 FNL/660 FWL) will be converted to injection wells.