Bakken Stocks in Clear Downtrend, Likely to Stay That Way
Despite projections of a massive pool of oil beneath the Great Plains of Montana, North and South Dakota, most of the small independent companies drilling for the resources there have shown little in the way of profits or in their stock prices.
Kodiak Oil and Gas (KOG), Mangum Hunter (MHR), Triangle Petroleum (TPLM), Northern Oil & Gas (NOG), once the darling of stock pickers not long ago, have seen their price drop preciptiously, and in the case of NOG by over 50%. That trend does not appear to be reversing any time soon.
High well costs, even higher decline rates, overwhelming debt, and rapidly dropping oil prices may be the death knell for some of these companies unless the price of oil recovers soon.
Only the strong survive
Larger companies such a EOG Resources, Continental Resources (CLR) and Whiting Petroleum (WLL) have also seen recent price weakness. They will be better able to weather the rough waters ahead, but investors should steer clear of even these companies due to the lower oil prices created by the oversupply they are causing
drilling prices are coming down in the Bakken so that will help. But ya the weakening of global growth behind oil weakness is going to negatively impact if it continues. But JP morgan this week forecast Brent to rise back above 100 this summer to 110-115. I am not confident that stocks like TPML are going to continue to fall otherwise I would short them, although my main position there is OTM puts. And TPLM has revenue streams beyond production coming on line, that should buffer them, as should their hedges. Are you short any of the bakken names? I thought you were long pbkef?
It sounds like there might a move to Texas & North Dakota OIL areas if the trend continues.
"Utica Shale oil outlook fades, gas still prospective: analysts"
Houston (Platts)--19Apr2013/440 pm EDT/2040 GMT
"While acreage sales in Ohio's Utica Shale seem to indicate a less optimistic outlook for oil production in the region, the play still has plenty of natural gas and liquids to offer, analysts said.
Chesapeake Energy, the largest producer in the play, recently announced an increased natural gas net production target for the end of this year at 330,000 Mcf equivalent/d, a 340% increase from current levels.
But the company is also selling about 94,205 acres in the play, according to Meagher Advisors, an acquisition and divestitures firm involved in the potential transaction. The acreage is in Portage and Stark counties, which is part of the oily window, according to Meagher's website.
Chesapeake Energy spokesman Jim Gipson declined to comment. A handful of other companies, such as Devon Energy, have also recently put Utica acreage up for sale, providing a mixed message of how fruitful production has been.
"We are seeing the same thing we saw in Eagle Ford; there are areas where lots of oil is in place but there is not enough reservoir energy to produce high rates that bring oil to the surface," a regional analyst said. "The wet gas window is what is working, there is plenty of condensate being produced but we are not seeing wells that are 75% oil."
The Utica could turn out to be more of a gassy play with natural gas liquids rather than the oily play that Chesapeake might have billed it as a couple years ago, the analyst said.
"But I have a little bit of hesitation; I do not think it is entirely written off [for oil]," the analyst said.
Another analyst said most of the acreage being sold is in the western portion of the play, which has proved to be less productive than the east. However, there has not exactly been a mass exodus to get out of..."