The Liberty acquisition included "approximately 42,000 net leasehold acres and net production of approximately 5,600 barrels of oil equivalent per day (average net production for June 2013) located in McKenzie and Williams Counties, N.D." Without this transaction (5.6 k boepd), the 2nd quarter production would have been less than 1st quarter. Upon reading and rereading this I sold my KOG, but just had to come back for a final look after earnings.. Good luck to all, moved to CREE a week or so ago - wow! Might buy KOG December options in a month or so. Again, good health and good luck to all....
It is a very good question because I have brought up the depletion rate dozens of times KOG themselves took down there one year data on their wells which were warning signs to me late last year. Essentially KOG averages usually about a 15 to 20 percent increase per quarter and this quarter you would assume the focus and move to the Polar project and KOG had a few doggie wells last quarter some numbers I have never seen before. You would have to include if they are doing any shut in as well, I think this is a very fair question to ask and hope it is asked tomorrow. Overall, it came inline to what my figures where about a month ago and LP needs to deliver a winning presentation tomorrow not the same ole dog and pony show stuff, you can see the numbers in the back #$%$. Overall though the price of oil is a very huge factor right now and if it breaks that 9,83 and 9.93 area and runs through 10 it may finally be ready for a new range but believe it or not it is still in control of the shorts until 9.91 area and 10.25 but not have as bad as 9.63 and below like the 9.33, 9.16 and 9.03 range. I do believe depletion is a very important conversation for all of the Bakken.
The short answer is a great deal of KOG's driling activity was tied up in the 24 wells making up the two pilot projects that, like a number of other wells being drilled, only came on line at the very end of the quarter. Thus the average production rate only went up to around 23,700 (I forget the exact number), but production was up over 34,000 a day only a few weeks into this quarter with those same wells on line (July 23 operational update). Bakken wells have 60% first year depletion, so depletion greatly impacts production and makes it hard to grow production without a large number of wells coming on line. KOG had the wells coming on line, but they were all bunched up at the end of the Q so the production average for the full 90 days was not higher.
NOW WATCH: Because KOGs second quarter new wells came on so late, and we are nearly wrapped up with the pilot project wells, the third quarter average production will likely be around 36,000 per day or more and all the 2Q naysayers will be satisfied.... Lex
and the fact that the second quarter is the spring when the ground is wet so load limits for trucks are reduced. as a result, it takes a LOT more trips to get the water and frac proppant to the site. KOG was doing a lot of drilling and limited completions.
ANd KOG was focused ong etting the infrastructure built so that when the wells were completed they could be hooked up and go directly to sales rather than trucking oil and/or flaring gas.
Read a little and you will see where they talked about this multiple times and about how many wells they will be completing in the third and fourth quarters with their now 3 full time completion crews working to catch up now that the ground has dried up enough to support fully loaded trucks.
I see where you said you might short because of this low growth. Be careful, they are now drilling in different zones with results that appear to be much different and hopefully much better. Time will tell on this but it could easily be a game changer for KOG.