2013 November 15

The Master Resource Report 2013-11-15

North Dakota

The North Dakota Department of Mineral Resources released data today reflecting activity thru September. As expected the state’s oil production hit a new all-time record of 931,940 barrels per day in September continuing its climb towards 1 million. This was up 20,754 over the August level but was 16,518 less than the additions seen in August and 33,121 below the July additions (based on updated data released this week which does not match the numbers given in the Director Cut today.).

The report emphasized that 93% of the production came from the Bakken and Three Forks even though that only represents 61% of the producing wells in the state.

The number of wells waiting on completion increased by 90 to about 520 according to the report. Drilling crews were drilling 1.5 wells for every well completed in September which is a major shift from August when completions far outstripped new drilling.

One item of interest is the price for sweet crude produced in North Dakota. It has now fallen by over $22/barrel since August according to the report. The current price of $71.25/barrel has North Dakota crude at about a $22/barrel discount to WTI and a $37/barrel discount to Brent. It will be interesting to watch how far the price can slip before capital expenditures are adjusted.

August: Sweet Crude Price = $93.97/barrel

September: Sweet Crude Price = $92.96/barrel

October: Sweet Crude Price = $85.16/barrel

Current November: Sweet Crude Price = $71.25/barrel

(all-time high was $136.29 7/3/2008)

It is also interesting to note that the average daily production reported for August in the new data was revised down from last month’s report. This further emphasizes why short-term trends need to viewed with caution.

A thought for the day: What would that oil priced at only $71.25/barrel today be worth in say five or six years? Are they selling a valuable asset too cheaply in the rush for cash flow???

Next week’s MRR will have a more complete review of the North Dakota data.