BakkenExplorersThe

Extending the Bakken: It just keeps getting better

� M O V I N G H Y D R O C A R B O N S

� M O V I N G H Y D R O C A R B O N S

� C O M P A N Y U P D A T E

Vol. 2, No. 20 • www.PetroleumNewsBakken.com A weekly newspaper for industry and government Week of September 1, 2013 • $2.50

page13

The Bakken Explorers magazine to come out twice a year in 2014

In the heart of the BadlandsV

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PHY New XL roadblock

Watchdog examines possible conflict of interest; southern leg up in 2013

By GARY PARKFor Petroleum News Bakken

Procrastination over an Obama administrationfinal decision on TransCanada’s Keystone

XL shows no signs of abating.In the latest delay, the U.S. State Department’s

Office of Inspector General, OIG, said it willprobe whether contracts tied to the pipelinereview process were improperly awarded and reg-ulatory safeguards were fully adopted.

The pipeline that was originally supposed tohave started moving 830,000 barrels per day ofAlberta oil sands crude and Bakken light crude tothe U.S. Gulf Coast by 2012 and, most recently,was counting on a decision from President Barack

Obama in 2012, now faces waiting for a verdict in2014.

The OIG, under pressure from environmentalgroups, will try to determine whether it wasappropriate for the government to hireEnvironmental Resources Management, a privatecontractor selected to prepare a draft environmen-tal impact statement.

Environmental organizations accuse ERM ofnot disclosing it had previously done consultingwork for TransCanada.

A spokesman for TransCanada said the compa-ny was not clear how the investigation mightaffect the timing of the State Department’sKeystone XL review.

see XL ROADBLOCK page 16

UBS dual-laterals OK’dSlawson gets green light from NDIC to drill multiple upper Bakken shale wells

By MIKE ELLERDFor Petroleum News Bakken

Between July 26 and Aug. 23, the North DakotaIndustrial Commission issued orders author-

izing Slawson Exploration to drill multiple dual-lateral wells on existing spacing units in the SquawAntelope-Sanish pools in McKenzie County and inthe Van Hook-Bakken pool in Mountrail County.

Slawson submitted applications for the dual-lat-eral wells in May. Hearings on the applicationswere held on May 30.

Most of the oil production from the WillistonBasin’s Bakken petroleum system comes from theprolific middle Bakken, non-shale reservoir.Slawson was the first company to economicallyproduce from actual upper Bakken shale, the

source of the crude in the middle Bakken and ThreeForks reservoirs.

Slawson will drill five dual-lateral wells into theupper Bakken shale on existing 1,280-acre spacingunits and five dual-laterals on existing 640-acrespacing units in the Squaw Gap-Bakken pool insouthwest McKenzie County.

Slawson will drill five dual-lateral wellsinto the upper Bakken shale on existing1,280-acre spacing units and five dual-laterals on existing 640-acre spacing

units in the Squaw Gap-Bakken pool insouthwest McKenzie County.

see DUAL-LATERALS page 12

Hopes raised, hopes dashedGroup looks at MM&A; railway doubts it will move oil; CP told to resume

By GARY PARKFor Petroleum News Bakken

North Dakota oil producers are riding theirown rollercoaster as they look for ways to re-

establish shipments from the Bakken to Canada’slargest refinery.

But for every glimmer of hope there is anaccompanying setback.

The best bet comes from the immense Irvingbusiness empire, which seems to have a hand ineverything that makes Atlantic Canada functionand never acts on a whim.

Which is why there is intense interest in hintsthat the J.D. Irving branch of the privately heldconglomerate might be a contender to buy what is

left of Montreal, Maine & Atlantic Railway, thecompany at the center of the Quebec rail disaster.

Not that J.D. Irving is a novice in the rail field.It owns NB&M Railways, which has two rail oper-ations in Maine and one in New Brunswick cover-ing a combined 450 miles of track, including about270 miles acquired from MM&A since 2011.

NB&M is the final link from MM&A to IrvingOil’s 300,000 barrels per day refinery in SaintJohn, New Brunswick — a facility that relies heav-ily on crude from the North Dakota Bakken asfeedstock and offers a crucial outlet for the crude.

Discussions acknowledgedJ.D. Irving has confirmed it is in discussions

see RAIL ROLLERCOASTER page 15

This photo was taken at sunset in July 2012, about 10 miles southof Medora, N.D. The Little Missouri River flows north and eastfrom here, through Medora, Theodore Roosevelt National Park,and into Lake Sakakawea. Population an unconfirmed 242 lastyear, Medora is the seat of Billings County. According towww.ghostsofnorthdakota.com Medora is the leading touristattraction in the state and the biggest, most diverse little townyou’ll ever visit, with hotel rooms outnumbering bedrooms andthe streets chock full of antique stores, gift shops, saloons andlots of Badlands history. Check it out at www.medora.com

N.D. Water Commission offeringMcKenzie Co. lease tract online

The North Dakota Water Commission is offering a five-year oil and gas lease on a 40.09 net mineral acre tract in farnorthwest McKenzie County in an online auction conductedby EnergyNet.

Online bidding opens at 3 p.m. Central Daylight TimeSept. 11 and remains open until 3 p.m. Sept. 18. The tract ispart of an existing 2,560-acre spacing unit defined asSections 4, 9, 16 and 21, Township 153 North, Range 101West.

Whiting picks up 17,282 acres,2,420 boe a day in Williston Basin

Whiting Petroleum Corp. has signeda $260 million agreement to buy oil andgas wells and about 17,282 net (39,310gross) acres of mineral rights from anundisclosed party in the Williston Basinof North Dakota and Montana, the com-pany said in an Aug. 27 press release.(See map identifying new acreage athttp://bit.ly/17lQZ8t)

The assets are in North Dakota’sWilliams and McKenzie counties andMontana’s Richland county, in and around Whiting’s acreage

GMX bankruptcy sale pulls $338MGMX Resources Inc. says it has sold “substantially all” of

its assets to an undisclosed party in a bankruptcy auctionworth $338 million.

The bankruptcy court is scheduled to consider approval ofthe sale during a Sept. 10 hearing.

The auction, held Aug. 28, was almost five months afterthe Oklahoma City-based oil and gas company filed forChapter 11 bankruptcy protection.

In its April 1 bankruptcy filing GMX listed assets of$281.1 million and debt of $458.5 million as of Dec. 1.

The $338 million figure was the baseline offer for theassets at auction, which company officials hoped would gar-ner competing, and potentially higher and better offers.

see ONLINE AUCTION page 14

see WHITING MOVES page 13

see GMX BANKRUPTCY page 13

JAMES VOLKER

2 PETROLEUM NEWS BAKKEN • WEEK OF SEPTEMBER 1, 2013

Petroleum News Bakkencontents

BAKKEN STATS

ANNOUNCEMENT

PEOPLE TALK

GOVERNMENT

9 Montana well permits and completions, Aug. 16-22

9 Bakken producers’ stock prices

9 Bakken producers’ stock prices

3 Another production boost for Abraxas

8 Renegade appoints interim VP exploration

8 Peregrine continues Bakken work

7 American Eagle expanding Spyglass

13 Bakken Explorers to publish twice a year

9 North Dakota well operator transfers, Aug. 10-23

10 IPs for ND Bakken wells, Aug. 20-26

11 North Dakota oil permit activity, Aug. 20-26

COMPANY UPDATE

4 Norstra waiting on Directional Drilling

Deadline near on deal with JV partner in project targetingSouthern Alberta Bakken in Montana

5 Hydraulic fracturing debate continues

Industry groups provide comments on BLM’s revised frackrule, calling BLM’s economic analysis ‘woefully deficient’

N.D. Water Commission offering McKenzie Co. lease tract online

Whiting picks up 17,282 acres, 2,420 boe a day in Williston Basin

GMX bankruptcy sale pulls $338M

ON THE COVERNew XL roadblock

Watchdog examines possible conflict of interest; southern leg up in 2013

UBS dual-laterals OK’d

Slawson gets green light from NDIC to drill multiple upper Bakken shale wells

Hopes raised, hopes dashed

Group looks at MM&A; railway doubts it will move oil; CP told to resume

SIDEBAR, Page 10: Top 10 Bakken wells by IP rate

SIDEBAR, Page 4: Eco-Trade’s South Bakken prospect

SIDEBAR, Page 6: 1.2 million comments and counting

SIDEBAR, Page 5: Opponents contend rule insufficient

A semi-annual supplement

AKKEB NOIL & GAS DIRECTORYVol. 2, No. 1 Released May 2013

ADVERTISE.GET LISTED.GET NOTICED.Don’t be left out.Is your company doing business in the Bakken/Three Forks play?

Then get listed in the Bakken Oil & Gas Directory.

Petroleum News Bakken is getting ready to publish its third Bakken Oil & Gas Directory for companies doing business in the Bakken and related plays of the Williston Basin. Contact us for details on how your company can qualify for inclusion in this full color, glossy magazine that will be available in both print and electronic formats.

Contact for details:

Susan Crane at (907) 770-5592,

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Renee Garbutt at (907) 522-9469,

or rgarbutt@petroleumnews.com

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SIDEBAR, Page 15: Rail safety needs ‘swift’ action

SIDEBAR, Page 16: Quebec targets more for cleanup

PETROLEUM NEWS BAKKEN • WEEK OF SEPTEMBER 1, 2013 3

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With Halcón Resources soaring into the

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By RAY TYSONPetroleum News Bakken

E&P independent Abraxas Petroleum Corp. plans touse some of the cash from the latest sale of non-

operated assets to accelerate growth in its core areas,including the Williston Basin.

The company already was looking for a “step change”in production in the second half of the year due to new,high-performance wells in North Dakota’s Bakken playand Texas’ Eagle Ford.

“We did a lot of preparatory work during the first halfof the year, and we’re very happy to say that we’re nowseeing the results of all that work,” said Robert Watson,Abraxas’ president and chief executive officer.

However, total production actually slipped in the sec-ond quarter of 2013, due primarily to bad weather andthe loss of oil and gas volumes associated with assetsales during the first half of the year.

Exiting 2013 at 5,300 boepdOn average Abraxas produced 4,109 barrels of oil

equivalent per day during the second quarter of 2013,compared to 4,272 boe per day for the second quarter of2012. The company expects to average 4,600-4,800 boeper day in 2013 and exit the year producing 5,300 boeper day.

To help reach this goal, Abraxas intends to dedicate aportion of the $38.3 million in proceeds it received fromthe recent sale of non-operated Williston Basin proper-ties to finance additional work in its core developmentareas. The sale to Natural Resources Partners consistedof about 13,000 net acres and 120 producing wells, inaddition to interests in 22 wells that were in variousstages of development.

In the Williston Basin, Abraxas will skip the Bakkenthis time and turn to “low risk development targets of aconventional nature,” planning to drill a vertical replace-

ment well in Roosevelt County, Mont., during the fourthquarter. The initial well had to be abandoned formechanical reasons, the company said, noting that pro-ducing zones included the Red River, Gunton andWinnepegosis. The new well will be completed for anestimated $2.5 million.

Similarly, Abraxas plans to drill another 100 percentworking interest twin well to develop reserves in theRatcliff zone. The original well produced from the deep-er Red River zone, and also was abandoned for mechan-ical reasons.

“The shallower Ratcliff at a depth of about 8,000 feethad an excellent oil show,” the company said, addingthat the Christiansen 12-2 will also be spud in the fourthquarter, at an estimated completed well cost of $1.5 mil-lion.

Lillibridge 4H remediation a successDuring the second quarter, Abraxas said it successful-

ly remediated the sand plug on the Lillibridge 4H inMcKenzie County, N.D. The well, producing from theThree Forks, is currently producing 1,436 boe per day.Combined, the four wells on the company’s LillibridgeEast pad are producing 5,503 boe per day, the companysaid. Abraxas owns a 34 percent interest in the pad.

In the Eagle Ford, Abraxas holds a 100 percent work-ing interest in the roughly 4,400 net acres in AtascosaCounty, Texas, in the Jourdanton prospect. This wellaveraged just 103 barrels of oil equivalent per day overits first 30 days of production, but the relatively flatdecline rate had yielded cumulative production of 40,000boe. Since the completion of the initial well, the compa-ny said, it acquired a new 3-D seismic survey and inter-pretation indicates that the Grass Farm 1H was only inthe target zone about 10 percent of its lateral length.

Also, recent completions by area operators at similardepths of 8,000-8,200 feet have shown “markedimprovement” in initial rates, Abraxas said, adding thatit now plans to drill a 100 percent working interest EagleFord horizontal in late September at an estimated com-pletion well cost of $6 million.

Also in the Eagle Ford, Abraxas recently secured anew 410 net acre prospect in northern McMullenCounty. The lease will accommodate up to four EagleFord laterals with anticipated lengths of 7,000-9,000feet. The company plans to spud an initial well in thefourth quarter with a 100 percent interest.

Stimulating Spires Ranch wellIn the Permian Basin, Abraxas said it drilled four hor-

izontal wells over the last several years on its SpiresRanch prospect targeting the Strawn formation. Thecompany recently drilled the Spires Ranch 129 No. 2Hin a similar environment to the 89 No. 1H targeting theStrawn formation. Given the company’s past success instimulating analogous rock in the Edwards formationwhich greatly enhanced well productivity, Abraxas saidit plans to stimulate this well with a small, multistagefrack completion, rather than the open hole design ofprevious wells. Abraxas holds a 100 percent interest inthe Spires 129 No. 2H and anticipates a completed well

� C O M P A N Y U P D A T E

Another production boost for AbraxasTo use sale proceeds from non-operated assets to accelerate growth in core areas, but skipping Bakken in Williston Basin

In the Williston Basin, Abraxas will skip theBakken this time and turn to “low risk

development targets of a conventional nature,”planning to drill a vertical replacement well in

Roosevelt County, Mont., during the fourthquarter. … the company said, noting thatproducing zones included the Red River,

Gunton and Winnepegosis. The new well willbe completed for an estimated $2.5 million.

see ABRAXAS OUTPUT page 4

By MIKE ELLERDFor Petroleum News Bakken

Norstra Energy Inc., the Texas-basedexploration company with plans to

drill into the Southern Alberta Bakken innorthern Lewis and Clark County, Mont.,recently announced that it received noticefrom Directional Drilling LLC, a potentialjoint venture investment partner inNorstra’s South Sun River Project, that thelatter is nearly done with its due diligenceand is satisfied with the documents andother materials that Norstra provided.

Norstra said the progress on the due dili-gence is in anticipation of DirectionalDrilling’s decision to proceed.

Directional Drilling has until Aug. 30 tomake a decision.

In the meantime, Norstra has temporari-ly put a on hold the delivery of a drill rigfrom Gasco Drilling to the site of the pro-ject’s first well, on the basis of “judiciousdecision making affecting time andfinances.” Norstra said that if the contractwith Directional Drilling is completed, asingle rig would be used not only to com-plete the casing work but also to completethe 8,800-foot vertical portion of the well.But, Gasco is not able to perform both oper-ations. Based on seismic data, Norstra said

the Bakken formation in the area appears tobe at about 8,800 feet.

“We can appreciate our Shareholdershave been quite patient, and we are thankfulfor this, but we need to explore, on a pru-dent basis, the most Shareholder friendlyroute,” said Glen Landry, Norstra’s chiefexecutive officer in an Aug. 21 pressrelease. “For example, if we can savemoney by doing the work with one rig, thenthat’s a no brainer. We also feel that timecan be saved taking this route.”

Previously, Norstra announced thatSummit West, Norstra’s operator on theproject, confirmed that all permits, bondsand surveys had been approved by the

Montana Board of Oil and GasConservation. Norstra also previouslyannounced that all of the preparatory dirtwork at the drill site is complete.

SEC trade suspension and follow-upAs Petroleum News Bakken reported in

July, the U.S. Securities and ExchangeCommission temporarily suspended tradingof Norstra’s securities from June 26 to July10 due to what the SEC described as a lackof current and accurate information con-cerning Norstra’s securities.

During the suspension, Norstra issued astatement indicating that it had come to thecompany’s attention that “recently certainparties unrelated to the Company have beenpromoting our company’s Stock.” Thestatement went on to say that Norstra wasseeking to clarify that it had not engaged inany such activity and had no connections to,

or relationships with, anyone who would beengaging in the promotion of its stock.

“As an exploration stage enterprise, ourfocus must remain on developing our prop-erty interests to establish a commerciallyviable hydrocarbon resource,” Norstra con-tinued. “This is where our attention andfunds will remain focused and we have not,and do not currently intend to, expend fundson stock promotional activity.”

The company added that it stronglyurged any prospective investors to obtainadvice from qualified investment profes-sionals prior to making any investments inthe company.

Norstra and its management said theyhave been complying with SEC informa-tion requests and addressing SEC ques-tions.

SEC continues looking into the matter. �

Note: The southern Alberta Bakken isreferred to as the Exshaw over the border inAlberta. It is not part of the Williston Basin.

� C O M P A N Y U P D A T E

Norstra waiting on Directional Drilling Deadline near on deal with JV partner in project targeting Southern Alberta Bakken in Montana’s northern Lewis and Clark County

4 PETROLEUM NEWS BAKKEN • WEEK OF SEPTEMBER 1, 2013

Kay Cashman PUBLISHER & EXECUTIVE EDITOR

Ray Tyson EDITOR

Gary Park CONTRIBUTING WRITER (CANADA)

Eric Lidji CONTRIBUTING WRITER

Rose Ragsdale CONTRIBUTING WRITER

Mike Ellerd CONTRIBUTING WRITER

Steve Sutherlin CONTRIBUTING WRITER

Darryl Flowers CONTRIBUTING WRITER

Mary Mack CHIEF FINANCIAL OFFICER

Clint Lasley GM & CIRCULATION DIRECTOR

Raylene Combs BAKKEN ADVERTISING EXECUTIVE

Ashley Lindly RESEARCH ASSOCIATE

Mark Cashman RESEARCH ASSOCIATE

Susan Crane ADVERTISING DIRECTOR

Bonnie Yonker AK / NATL ADVERTISING SPECIALIST

Steven Merritt PRODUCTION DIRECTOR

Marti Reeve SPECIAL PUBLICATIONS DIRECTOR

Tom Kearney ADVERTISING DESIGN MANAGER

Heather Yates BOOKKEEPER

Amy Spittler MARKETING CONSULTANT

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cost of $2.3 million.Over the past year, before sale of its

non-operated Williston propertiesannounced in June, Abraxas sold severalnon-core Permian Basin leases in MartinCounty and its remaining Oklahomaproperties.

“After a considerable divestiture cam-paign over the last eleven months,Abraxas now finds itself with a morefocused asset base and right sized balancesheet,” Watson said.

Looking for bolt-on acquisitionsConsequently, he said Abraxas is not

interested in “picking up big blocks ofacreage,” but rather developing incre-mental production through smaller bolt

on acquisitions that don’t require “hugecapital expenditures upfront.”

“We feel like we’re better off focusingon smaller blocks that we can get on rightaway and fully develop … and we havehad some success in doing that,” Watsonexplained.

“Our goal is to build out our inventory,but not for the sake of building inventory,but for building it in areas that we knowvery well, that we’ve now determined (tobe) sweet spots and are thus very eco-nomic for our development.”

Meanwhile, Abraxas posted netincome of $7.9 million revenue of $21.5for the second quarter of 2013, comparedto net income of $10.9 million on revenueof $15.9 million for the second quarter of2012. �

continued from page 3

ABRAXAS OUTPUT

Eco-Trade’s South Bakken prospectIn early May, Petroleum News Bakken reported that a Washington, D.C.-based

independent, Eco-Trade Corp., had signed a letter of intent with a European syn-dicate for financing the development of a well in that company’s South BakkenProspect, also in Northern Lewis and Clark County, a prospect totaling more than5,800 acres, per Eco-Trade.

Since then, however, Eco-Trade has not issued any updates on activity in theMontana prospect on its website, and the company did not respond to a requestfor information from Petroleum News Bakken.

The southern Alberta Bakken is referred to as the Exshaw over the border inAlberta. It is not part of the Williston Basin.

—MIKE ELLERD

“We can appreciate ourShareholders have been quite

patient, and we are thankful forthis, but we need to explore, on a

prudent basis, the mostShareholder friendly route.”

—Norstra CEO Glen Landry

By MIKE ELLERDFor Petroleum News Bakken

As the extended comment perioddrew to a close on Aug. 23, both

proponents and opponents of hydraulicfracturing scrambled to submit commentsto the U.S. Bureau of Land Managementon the agency’s revised hydraulic fractur-ing rule. Among the fracking proponentswere the Independent PetroleumAssociation of America, IPAA, and theWestern Energy Alliance.

Representing numerous industry con-tractor organizations as well as some 40state oil and gas associations, includingthe North Dakota Petroleum Council andthe Montana Petroleum Association,IPAA and the Western Energy Alliancerequested in their 66-page letter that BLM“rescind or significantly amend the pro-posed rule to eliminate requirementswithout a sound technical foundation,reduce overlap with state and tribalrequirements, and better balance costsand benefits.”

While IPAA and the Alliance identi-fied numerous policy and technical con-cerns with the revised rule, they firstquestioned the need for any such federalregulation in light of the fact major oiland gas producing states in the U.S. haveexisting fracking regulations that providesafeguards necessary to protect the envi-ronment, in particular usable watersources.

In the revised rule, BLM stated that it“acknowledges that many States do haveregulations in place; however, not all ofthe States that contain Federal landsunder the BLM’s jurisdiction havehydraulic fracturing regulations.”According to IPAA and the Alliance, thatis not a basis for the federal fracking rule.IPAA and the Alliance cite statistics indi-cating that in fiscal year 2012, BLMapproved 4,256 applications to drill,APDs, on federal land in 17 states.However, 98 percent of those APDs werein seven western states that have or are inthe process of revising their own frackingregulations to address public concerns:California, Colorado, Montana, NorthDakota, New Mexico Utah andWyoming.

Of the 10 states that accounted for theremaining 2 percent of APDs, nearly allhave amended their regulations to addresspublic concerns: “In short, there is no gapin the regulation of hydraulic fracturingjustifying BLM’s proposed rule,” theIPAA and Alliance letter concluded.

State variancesAnother main concern IPAA and the

Alliance had with the revised rule waswith specific language addressing vari-ances to the rule.

They noted that the preamble to therule indicated BLM would allow opera-tors to request case-by-case variancesfrom the rule, and that BLM would workwith states and Indian tribes to issuebasin-wide or field-wide variances.Language in the proposed rule, they said,was vague in regard to the process bywhich states would substitute their regu-lations for BLM regulations.

In addition, the proposed rule statedthat “BLM must determine that the vari-ance would meet or exceed the effective-ness of the revised proposed rule.” IPAAand the Alliance found that language

“problematic” because the proposed rulehad requirements that were more strin-gent than current industry and state stan-dards, and the “meet or exceed” require-ment would allow BLM to deny a state’srequest for primacy unless the stateincluded additional “unnecessary”requirements to match BLM require-ments.

IPAA and the Alliance also expressedconcern that adoption of state proceduresin the proposed rule was limited to “oper-ational activities,” including monitoringand testing technologies, but doesn’tapply to the actual “approval process” anddoesn’t provide criteria for determiningwhether a regulated activity was “opera-tional” or fell into the “approval process.”

A final concern IPAA and the Alliancehad with the variance language was that itgave BLM “unfettered discretion” torevoke or modify a variance based on achange in policy as well for “other rea-sons.”

No environmental justificationBLM has repeatedly stated that a pri-

mary concern with hydraulic fracturingwas whether the practice could result incontamination of underground sources ofwater. Industry has repeatedly stated thatthere was no evidence indicatinghydraulic fracturing had ever resulted incontaminated groundwater, and IPAA andthe Alliance stressed this in their Aug. 22letter to BLM.

The letter pointed to numerous studiesfinding that hydraulic fracturing of deep-er oil and gas producing formations hadnot penetrated drinking water aquifers,and that the vast majority of wells that arefracked are completed in formations thatare thousands of feet below drinkingwater supplies. In shallower natural gasreservoirs, they said, improvement infracking technologies has provided a sim-ilar safety record.

In addition, the letter pointed out thatin deeper formations, petrophysical prin-ciples “dictate” that the energy propagat-

� G O V E R N M E N T

Hydraulic fracturing debate continuesIndustry groups provide in-depth comments on BLM’s revised frack rule, calling BLM’s economic analysis ‘woefully deficient’

PETROLEUM NEWS BAKKEN • WEEK OF SEPTEMBER 1, 2013 5

Opponents contend rule insufficientAfter the U.S. Bureau of Land Management’s revised hydraulic fracturing rule

was released on May 16 it drew fire from fracking opponents who felt the ruledidn’t go far enough to protect the environment, and those opponents have beenformally voicing their views in comments to BLM.

One such opponent is the Environmental Working Group, EWG, aWashington, D.C.-based non-profit environmental health research and advocacyorganization, which identified numerous “shortcomings” in the proposed rule, oneof which was the proposed rule does not apply to acidizing and other techniques“that pose numerous risks to the environment and public health.”

In addition, EWG said provisions for disclosing hydraulic fracturing fluidsfailed to ensure meaningful public disclosure of dangerous chemicals.

The group also said the requirements for evaluating wellbore integrity failed toadequately protect groundwater resources, and that the rule failed to ensure thetoxic wastewater associated with hydraulic fracturing would be stored safely andresponsibly.

In its letter to BLM, EWG “urges BLM to stand up to the oil and gas industryand significantly strengthen its proposed rule.”

EDF’s commentsIn an Aug. 23 letter to BLM, the Environmental Defense Fund, EDF, com-

mended the agency for the effort it put into the revised proposed rule, but EDFalso said the rule still fell short in the area of well integrity. That issue was thefocus of EDF’s 52-page letter to the federal agency.

EDF said that while well intended, it felt BLM’s cement logging requirementswere not up to date with modern technologies.

EDF said cement evaluation tools were important, and as an example said itbelieved radial cement evaluation tools should be mandatory for production cas-ing: “But generally speaking, instead of merely requiring operators to use acement evaluation tool, the BLM would more effectively regulate cement jobs byinstead requiring operators to show isolation of zones that require protection, aim-ing at the end rather than the means.”

The EDF letter went on to say, “Rather than relying on cement evaluation toolsas the primary evaluation technique, the key to properly evaluating the quality ofcement jobs is to require pressure testing and formation integrity testing for eachcasing string before the next is drilled, to call for cement evaluation logging underparticular circumstances, and to require reporting and remediation of cementintegrity failure.”

While EDF’s focus was on well integrity, it also briefly addressed the issue ofvariances where state fracking regulations would apply rather than the BLM rule.

EDF believes the issue was not clearly documented and should be: “There isone issue we will not thoroughly address in these comments that neverthelessdeserves serious consideration by the BLM: how BLM’s rules and regulations onoil and gas development interact with those of the states in which the developmentoccurs, and how the federal government and the states should coordinate,” EDFsaid in its Aug. 23 letter. “Both the current BLM system — Memoranda ofUnderstanding, variances, etc. — and the proposed BLM variance process are adhoc, uneven and opaque. Working with the states, the BLM should develop more

see BLM RULING page 6see FRACTURING DEBATE page 6

ed into a fractured interval preferentiallydispersed horizontally rather than verti-cally.

Citing several recent studies, IPAA andthe Alliance indicated that the “layered”nature of subsurface formations made ver-tical migration of fractures difficult, andthat widespread and rapid upward migra-tion of fracking fluids through bedrockwas “not physically plausible.”

In light of these studies, IPAA and theAlliance argued that existing state regula-tions had provided the necessary safe-guards to protect drinking water sources.

“There is, in sum, no evidence in therecord that regulation through existingstate regimes has been inadequate to pro-tect groundwater, the goal BLM expresslyseeks here.”

IPAA and the Alliance said BLM musttake those facts into account in its rule-making process to “avoid an unlawfullyarbitrary rule.”

Financial impactsBLM admitted that the various require-

ments in the revised rule, including andperhaps most importantly cement logging,would increase well costs, and said itanticipated the additional cost per well atbetween $3,138 and $5,011 for an estimat-ed total additional annual cost to industryof between $12 million and $20 million.

IPAA and the Alliance commissionedthe economic research firm John Dunhamand Associates to examine the financialimpact the revised rule would have onindustry. That study found in the best casescenario where BLM approved 100 per-cent of all existing applications, and therule was applied to all 3,566 projects cur-rently under development in western

states, the rule would result in additionalcosts to industry of approximately $346million, or roughly $97,000 per well.

IPAA and the Alliance said BLM’s eco-nomic analysis was “woefully deficient”and that without significant revisions, the

economic analysis “renders the proposedrule arbitrary and capricious.”

Increased permit timeIPAA and the Alliance also expressed

concern with the impact the rule wouldhave on federal permitting. In their Aug.22 letter, they cited BLM statistics indicat-ing the following “inordinate delays”

between receipt of an APD and the ulti-mate approval in various BLM offices inwestern states: Farmington, N.M., 162days; Dickinson, N.D., 181 days; CanonCity, Colo., 211 days; Price, Utah, 215days; Meeker, Colo., 226 days; Lander,Wyo., 233 days; Rawlings, Wyo., 271days; Kemmerer, Wyo., 518 days; Moab,Utah, 635 days; and Buffalo, Wyo., 952days.

“The effect of delays in leasing andpermitting have resulted in declining pro-duction from federal leases,” IPAA and theAlliance said and concluded the proposedrule “will only result in driving even moreoil and gas investment off of publiclands.”

Where from here? As it did with the initial proposed rule

in 2012, BLM will go through all the pub-lic comments to identify unique and sub-stantive comments and will review andtake under consideration those commentsin determining how it will proceed withthe proposed revised rule.

Exactly what BLM will decide to doand when it will make a decision remainsto be seen.

BLM spokeswoman Bev Winston toldPetroleum News Bakken on Aug. 26 it isentirely possible the rule will be revisedbased on the latest round of comments.

“We entered the comment period inthat spirit,” Winston said. “We’re not justasking for comments on a pro forma basis,we entered it with the idea that therewould be debate.”

However, whether a revised rule willbe released for additional comments orsimply finalized based on the existingcomments is not known. �

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formal, transparent, environmentally pro-tective, and rational procedures for deter-mining which regulations should governin the event of a conflict.”

EDF came under fire from other envi-ronmental organizations earlier this yearwhen it joined with industry, as well asphilanthropic and other environmentalgroups in forming the Center forSustainable Shale Development, CSSD,an organization with a charter to developrigorous performance standards for safeand environmentally responsible shaledevelopment. The criticism maintainedthat EDF was siding with oil and gascompanies in oil and gas development.

Other organizations forming theCSSD included Chevron, Shell, CleanAir Task Force, PennsylvaniaEnvironmental Council and HeinzEndowments.

BLM’s viewIn an official statement regarding the

revised proposed rule, BLM said, “Theupdated draft hydraulic fracturing ruleprovides additional flexibility whileestablishing minimum baseline standardsfor safety and environmental protectionacross all federal and Indian lands. Thedraft rule minimizes duplication andunnecessary burden by incorporating awide range of best practices currently inplace in a number of states and allowingoperators to continue following state ortribal regulations that meet or exceedthese minimum baseline standards.”

—MIKE ELLERD

1.3 million comments and countingAfter issuing its initial proposed rule on hydraulic fracturing in May 2012, the

U.S. Bureau of Land Management received a total of approximately 177,000comments over a 120-day public comment period.

However, that number paled in comparison to the 698,866 comments receivedon the revised proposed frack rule that BLM had processed by the close of the 90-day public comment period at 11:59 pm on Aug. 23.

That number, however, reflects only the comments that had been processed asof the closing of the comment period. More comments were received before clos-ing that BLM continues to process and at close of business on Aug. 28 the num-ber of comments processed had risen to an amazing 1,339,885.

BLM will continue processing the comments that it received prior to the dead-line, which could conceivably take weeks and that number is expected to rise evenfurther.

When all the processing is complete, BLM will identify those comments thatare unique and substantive because a vast majority are duplications resulting frommass mailings.

For example, of the approximately 177,000 comments BLM received on theinitial proposed rule in 2012, only 7,673 were considered unique and substantiveby BLM. And by Aug. 26, BLM had identified 5,689 unique and substantive com-ments. Those are posted on the federal government’s website atwww.regulations.gov/#!docketDetail;D=BLM-2013-0002.

However, even though many of the comments are duplicates, BLM spokes-woman Bev Winston told Petroleum News Bakken that every person who issueda comment or signed a petition will be counted, although not all signatures will beposted online. For example, Winston says one bulk comment had some 25,000signatories and the agency won’t post all of those online, but will indicate onlinethat the letter was signed by 25,000 individuals.

The substantive issues presented in the comments will be addressed in the finalrule when it is written and released. At the present time, BLM is not speculatingon how long it will take to process and analyze the comments and then revise therule.

It’s a “ground-sourcing” process, Winston said. “What arguments are peoplemaking? What are they bringing to the fore? What information are they provid-ing?”

—MIKE ELLERD

continued from page 5

FRACTURING DEBATE

continued from page 5

BLM RULING

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By MIKE ELLERDFor Petroleum News Bakken

A merican Eagle Energy is expandingits net acreage in the company’s

Spyglass project area along the Canadianborder in northwest Divide County, N.D.,and is entering into carry and farm-outagreements with a joint venture partneramid very healthy increases in its Spyglassproduction.

On Aug. 19, the Denver-based inde-pendent, which entered the Williston Basinin North Dakota in 2012, announced that itis acquiring 9,300 net acres from the JVpartner with an option to acquire an addi-tional 9,300 net acres that remains openthrough March 2014. American Eagle cur-rently holds approximately 15,900 net acresin the Spyglass project, and the first acqui-sition boosts that acreage to over 25,000 netacres. If the company opts to proceed withthe second acquisition, it would hold over34,000 acres in the project. Both deals arepriced at $47 million.

American Eagle recently closed on asenior credit facility with Morgan StanleyCapital Group for a maximum potentialcommitment of $200 million, $40 millionof which will go toward the Spyglass acqui-sition.

The company has operating control of39 spacing units in its 15,900 net Spyglassacres, 14 of which are contiguous in aproved area of the project where it has anaverage working interest of 40 percent.American Eagle’s second quarter produc-tion averaged 1,288 barrels of oil equivalent

per day, and it estimates that with the first9,300-acre acquisition its second quarterpro forma production will be approximate-ly 1,900 boepd.

Should the company exercise its optionon the second 9,300 acres, it estimates itspro forma second quarter production will beabout 2,500 boepd.

American Eagle will have a workinginterest of approximately 52 percent in thefirst acquired acreage and 63 percent in thesecond.

Brad Colby, American Eagle’s presidentand chief executive officer, said in an Aug.19 press release that the acquisition willincrease the company’s overall working

interest and will immediately add to its pro-duction, cash flow and proved reserves.

“The transactions will give us a largerstake in developing future operated wells inwhich 14 contiguous DSUs are alreadyproven with production from our 20 operat-ed wells,” he said.

� C O M P A N Y U P D A T E

American Eagle expanding SpyglassBakken-focused Denver independent continues to grow in northwest Divide County, N.D. with carry and farm-out agreements

AM

ERIC

AN

EA

GLE

EN

ERG

Y

see AMERICAN EAGLE page 8

By KAY CASHMANPetroleum News Bakken

Peregrine Petroleum LLC said Aug. 21that it is continuing its oil and gas

exploration and development activities inthe Bakken petroleum system in NorthDakota’s Williston Basin, following lastyear’s acquisition of 3,210 acres of produc-ing leases from Ranch Oil Co.

Peregrine, which has offices in Dallasand Houston, said it recently filed drillingspacing unit applications in the Pierre Creekfield in McKenzie County, N.D. Theacreage is part of its Ranch Oil acquisition.

In May, State of North Dakota recordsshowed Peregrine as the 58th largest oil pro-ducer from wells it operates with an averagedaily oil output of 18.2 barrels. The threefields in which it operates a total of fivewells, again per state records, are Buckhornin Billings County and Covered Bridge andFlat Top Butte in McKenzie County.

The horizontal Connell 24-27H well inBuckhorn County was originally drilled into

the Bakken by Shell Western E&P, its initialproduction, or IP, test date Nov. 8, 1990,yielding 1,503 barrels of oil in its first 24hours.

The horizontal Stensrud 1 well inMcKenzie County’s Covered Bridge fieldwas drilled by Conoco Inc. Its test date wasMarch 16, 1993, showing an IP of 183 bar-rels of oil from the Bakken.

The “Flat Top Butte Fed. Com. 100% 2”well, drilled by Conoco, is one of three FlatTop Butte Bakken horizontal wells inMcKenzie County currently operated byPeregrine. Its test date was June 1, 1992,showing an IP of 512 barrels of oil.

The Trotter 1, also drilled by Conoco,tested Jan. 18, 1992, at 660 barrels of oil inits first 24 hours of production.

The third Flat Top Butte well, the MOIFlat Top Butte 44-35H, was drilled byMeridian Oil Inc., yielding 107 barrels of oilon its first day of production, March 4,1991.

Peregrine also has a non-operatedWilliston Basin position with operator

Kodiak Oil and Gas Corp. in the FortBerthold Indian Reservation in DunnCounty, N.D.

Kodiak completed its first horizontalwell with Peregrine in the Bakken petrole-um system in early 2009 and, perPeregrine’s Aug. 21 press release, “contin-ues to drill and complete successful wells inDunn County.”

“Our work with Kodiak has beenextremely successful since we began work-ing together,” said Michael B. WisenbakerJr., president of Peregrine. “Kodiak hasdone a tremendous job as operator, and welook forward to continued success in theBakken and Three Forks.”

Wisenbaker told Petroleum NewsBakken in an email that the company’s

drilling is “in the upper Three Forks andmiddle Bakken reservoirs.”

Founded in 2008 by a group of energyindustry veterans from Hunt PetroleumCorp., Peregrine’s “continuing growth ini-tiatives are focused on internal and externaloil and gas exploration and development,joint ventures and acquisitions in thePermian Basin, Williston Basin, East Texas,Gulf Coast and Middle America regions,”Peregrine said in its release.

The company operates as PeregrinePetroleum Partners LTD on the leases itacquired from Ranch Oil in NorthDakota. �

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Carry and farm-out agreementsIn another deal with the same JV partner,

American Eagle has entered into carry andfarm-out agreements where its partner willfund the drilling and completion of up to 11new middle Bakken and Three Forks wellsin the Spyglass project.

In the carry agreement, the partner willpay 100 percent of American Eagle’s work-ing interest share of well development costsfor five middle Bakken wells in an area ofproved upper Three Forks wells that will bedeveloped and operated by AmericanEagle. The company will receive 50 percentof its net revenue interest for two years oruntil its partner has recouped 112 percent ofits development cost, after which 100 per-cent of the well bore interest will revertback to American Eagle.

In the farm-out agreement, the JV part-ner will pay 100 percent of AmericanEagle’s working interest share of welldevelopment costs for a total of six middleBakken and Three Forks wells in an area ofunproved development. Those wells will bedeveloped and operated by AmericanEagle.

The partner will receive all of AmericanEagle’s net revenue interest until it hasrecouped 112 percent of development costs,after which 30 percent of American Eagle’swell bore interest will revert back to thecompany.

Colby said the agreements provide boththe opportunity to accelerate developmentas well as de-risk its acreage.

Second quarter productionIn a separate Aug. 19 press release,

American Eagle said that as of June 30 ithad 19 gross (six net) operated wells pro-

ducing from both the Bakken and ThreeForks formations in the Spyglass project.Daily oil production in the second quarteraveraged 1,286 barrels per day, a 32 percentincrease over the 972 bpd production in thefirst quarter and a 420 percent increase overthe 247 bpd the company produced in thesecond quarter of 2012.

The company also produced and sold anaverage of 10,769 cubic feet of natural gasand other liquids per day in the secondquarter, which equates to 1.8 barrels of oilequivalent using a conversion factor of6,000 cubic feet of gas per boe. ThusAmerican Eagle’s second quarter produc-tion was virtually 100 percent oil.

The company currently has 20 grossoperated wells producing in the Spyglassproject and an additional five gross operat-ed wells that are awaiting completion andscheduled to be completed over the nextfew weeks. The 20 gross operated wells areproducing approximately 3,500 barrels ofoil per day with approximately 1,400 to1,500 bpd net going to American Eagle onits operated and non-operated wells in theSpyglass project.

Oil and Gas Division records indicatethat the company has 18 wells on active sta-tus and another 19 on confidential status inNorth Dakota, all in the Colgon field. The18 active wells went on production in a 13-month period from May 2012 to May 2013with 24-hour initial production rates rang-ing from 103 to 864 bpd with an average of481 bpd. Those 18 wells have produced atotal of 745,700 barrels over 3,176 days ofpumping for an overall daily average of 235bpd. The average daily production of the 18active wells ranges from 291 bpd for a wellpumped a total of 227 days to 72 bpd for awell pumped 57 days. �

continued from page 7

AMERICAN EAGLE

PEOPLE TALKRenegade appoints interim VP exploration

Renegade Petroleum Ltd. Aug. 23 reported the departure of Brad Wakefield, thecompany’s vice president, exploitation, and the appointment of Russell Walz as inter-im vice president, exploration.

Renegade said Wakefield resigned his position, effective immediately, to pursueother personal and professional opportunities. The board of directors and managementof the company wished him well in his future endeavors.

Walz has been an integral part of the Renegade team since February 2010 andbrings extensive operational and geological experience to the company. A profession-al geologist, Walz is a graduate of the University of Regina with a bachelor’s degreein geology. He has held various exploration and development positions with TalismanEnergy and, most recently, held the role of manager of geoscience at Renegade sinceNovember 2011.

Renegade is a light oil-focused independent with assets in North Dakota,Saskatchewan, Alberta and Manitoba.

—ROSE RAGSDALE

� C O M P A N Y U P D A T E

Peregrine continues Bakken work

COMPILED By DARRYL L. FLOWERSFor Petroleum News Bakken

Re-issued locationsIn Daniels County, Apache Corp. was

approved for two wells.The Wescoe 35-8H-T has an SHL at

SE NE 34-36N-47E (2330 FNL/210 FEL)and a PBHL of 12,163 feet at SE NE 35-36N-47E (2291 FNL/200 FEL). TheWescoe will target the Bakken formation.The Strong 4-1 has an SHL at C NW 4-34N-46E (1322 FNL/1320 FWL) and aPBHL of 9,123 feet at SE NE 4-34N-46E(1322 FNL/660 FEL), targeting theRatcliffe formation.

In Fallon County’s Pennel Field,Denbury Onshore LLC has been issued apermit for the Unit 14-8B at SW SW 8-7N-60E (260 FSL/900 FWL). The RedRiver formation is the target at a depth of9,300 feet.

In Rosebud County, FidelityExploration & Production Co. wasapproved for the Nefsy 44-2H. The Heathformation well has an SHL at SE SE 2-11N-33E (328 FSL/568 FEL) and aPBHL of 10,473 feet at NW NE 2-11N-33E (380 FNL/2310 FEL).

CompletionsIn Richland County, Slawson

Exploration Company Inc. reported thecompletion of the Scavenger 1-28H. TheScavenger has an SHL at NE NE 28-24N-52E (280 FNL/350 FEL) and three later-als with BHLs of 13,750 feet at SE SE 28-24N-52E (253 FSL/772 FEL); 10,592 feetat NW NE 28-24N-52E (812 FNL/2054FEL); and 13,609 feet at NW NW 28-24N-52E (774 FNL/255 FWL). TheBakken formation well reported an IP of291 BOPD, 349 MCFPD and 556 BWPD.

In Roosevelt County, ContinentalResources Inc. filed a completion reportfor the Langdon 1-19H, which has anSHL at SE SW 19-29N-58E (230FSL/1550 FWL) and a BHL of 20,180feet at NE NW 18-29N-58E (236FNL/1992 FWL). The Bakken formationwell reported an IP of 215 BOPD, 276MCFPD and 447 BWPD. �

PETROLEUM NEWS BAKKEN • WEEK OF SEPTEMBER 1, 2013 9

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North Dakota welloperator transfers

August 10—23, 2013

LEGENDDate of well operator transferWell(s) transferred fromWell(s) transferred toNDIC well file number — well name — welltype — geological target — field — IP (initial production) test date — IP oil ratein barrels — location — county

Company Exchange Symbol Closing price Previous Wed.

Abraxas Petroleum Corp. NASDAQ AXAS $2.62 $2.67

American Eagle Energy Corp. AMZG OTC $2.03 $1.76

Arsenal Energy USA, Inc. TSE AEI $5.10 $5.40

Baytex Energy Corp. NYSE BTE $39.72 $40.59

Burlington Resources Co. (ConocoPhillips) NYSE COP $66.77 $67.16

Continental Resources, Inc. NYSE CLR $94.58 $91.76

Crescent Point Energy Corp. TSE CPG $38.57 $39.02

Enerplus Resources USA Corp. NYSE ERF $16.81 $17.16

EOG Resources, Inc. NYSE EOG $159.46 $156.40

Fidelity Exploration and Production (MDU) NYSE MDU $27.43 $28.72

HRC Operating (Halcon Resources Corp.) NYSE HK $4.82 $5.30

GMX Resources, Inc. PINK GMXRQ $0.25 $0.29

Hess Corp. NYSE HES $76.48 $75.47

Kodiak Oil and Gas (USA), Inc. NYSE KOG $10.07 $9.41

Legacy Reserves Operating LP NASDAQ LGCY $27.14 $27.02

Marathon Oil Co. NYSE MRO $34.60 $34.60

Newfield Production Co. NYSE NFX $23.98 $23.54

Oasis Petroleum, Inc. NYSE OAS $39.57 $39.11

Oxy USA (Occidental Petroleum Corp.) NYSE OXY $88.17 $87.68

QEP Energy Co. NYSE QEP $27.70 $29.10

Resolute (Resolute Energy Corp.) NYSE REN $8.18 $8.53

Samson Resources Co. (KKR & Co.) NYSE KKR $19.21 $20.25

SM Energy Co. NYSE SM $69.52 $67.64

Statoil Oil and Gas LP NYSE STO $22.65 $21.91

Sundance Energy, Inc. SEA ASX $1.07 $1.03

Triangle USA Petroleum Corp. NYSE TPLM $6.70 $6.70

Whiting Oil and Gas Corp. NYSE WLL $51.75 $49.75

WPX Energy, Inc. NYSE WPX $18.89 $18.42

XTO Energy, Inc. (ExxonMobil) NYSE XOM $88.84 $88.42

Bakken producers’ stock pricesClosing prices as of Aug. 28, along with those from previous Wednesday

BAKKENStats

GET THELATEST BAKKEN NEWS.SUBSCRIBE TODAY! PETROLEUMNEWSBAKKEN.COM

Montana well permitsand completions

Aug. 16—22, 2013

Abbreviations & parametersWith a few exceptions, the Montana weekly

oil activity report includes horizontal well activi-ty in the Bakken petroleum system in the east-ern/northeastern part of the state within theWilliston Basin. It also includes the Heath playand what is referred to as the South AlbertaBakken fairway in northwestern/west-centralMontana, which is at least 175 miles long (north-south) and 50 miles wide (east-west), extendingfrom southern Alberta, where the formation isgenerally referred to as the Exshaw, southwardsthrough Montana’s Glacier, Toole, Pondera,Teton and Lewis & Clark counties. The SouthernAlberta Bakken, under evaluation by several oilcompanies, is not part of the Williston Basin.

Following are the abbreviations used in thereport and what they mean.

BHL: bottomhole location | BOPD: barrels ofoil per day | BWPD: barrels of water per day

IP: initial production | MCFPD: thousand cubicfeet per day | PBHL: probable bottomhole loca-

tionPD: proposed depth | SHL: surface hole loca-

tion | TD: total depth

And public land survey system abbreviations:FNL = from north line | FEL = from east line |FSL = from south line | FWL = from west line

Editor’s note: Darryl L. Flowers, a contributorto Petroleum News Bakken, is the publisher of the

Fairfield Sun Times in Fairfield, Mont., www.fairfieldsuntimes.com, and can be reached at publisher@fairfieldsuntimes.com. The informationis derived from the online records of the MontanaBoard of Oil & Gas Conservation Commission.

see TRANSFERS page 10

10 PETROLEUM NEWS BAKKEN • WEEK OF SEPTEMBER 1, 2013

IPs for completed North Dakota wells

Abraxas Petroleum23624; Lillibridge 20-17-3H; Pershing; SWSE 20-150N-96W; 2SEC;McKenzie; Bakken; horizontal; 20,308; 7/24/2013; 1,235 bbl23625; Lillibridge 20-17-4H; Pershing; SWSE 20-150N-96W; 2SEC;McKenzie; Bakken; horizontal; 18,472; 8/11/2013; 1,275 bbl

Burlington Resources Oil and Gas (ConocoPhillips)24482; CCU Meriwether 24-19MBH; Corral Creek; NWNE 30-147N-95W;U; Dunn; Bakken; horizontal; 21,737; 7/27/2013; 2,963 bbl24481; CCU Meriwether 24-19TFH; Corral Creek; NENW 30-147N-95W; U;Dunn; Bakken; horizontal; 22,068; 7/24/2013; 1,824 bbl

Continental Resources24005; Columbia 4-5H; Dollar Joe; LOT1 5-155N-97W; 2SEC; Williams;Bakken; horizontal; 20,778; 8/5/2013; 634 bbl23281; Krehlik 1-11H; Barta; SWSE 11-141N-98W; 2SEC; Billings; Bakken;horizontal; 20,560; 7/17/2013; 411 bbl

Hess24505; BB-State 151-96-3625H-4; Blue Buttes; SESE 36-151N-96W; 2SEC;McKenzie; Bakken; horizontal; 20,440; 8/4/2013; 659 bbl24506; BB-State 151-96-3625H-5; Blue Buttes; SESE 36-151N-96W; 2SEC;McKenzie; Bakken; horizontal; 20,374; 7/22/2013; 1,065 bbl22802; LK-Dukart 145-97-0310H-3; Little Knife; SWSE 34-146N-97W;2SEC; Dunn; Bakken; horizontal; 21,210; 7/26/2013; 412 bbl24357; EN-Hermanson 154-93-0235H-3; Robinson Lake; SESE 2-154N-93W; 2SEC; Mountrail; Bakken; horizontal; 19,219; 7/27/2013; 724 bbl24370; EN-Weyraugh A-154-93- 1720H-5; Robinson Lake; NENE 17-154N-93W; 2SEC; Mountrail; Bakken; horizontal; 20,435; 8/1/2013; 770 bbl22803; LK-Obrigewitch 146-97-3427H-4; Little Knife; SWSE 34-149N-97W;2SEC; Dunn; Bakken; horizontal; 20,520; 7/24/2013; 746 bbl

Kodiak Oil and Gas24606; P Wood 154-98-4-27-34-13HA; Truax; NWNW 27-154N-98W; 2SEC;Williams; Bakken; horizontal; 20,924; 7/27/2013; 2,118 bbl24607; P Wood 154-98-4-27-34-14H3; Truax; NWNW 27-154N-98W; 2SEC;Williams; Bakken; horizontal; 21,192; 7/26/2013; 1,622 bbl

Liberty Resources25255; Cavalli State 156-100-9-4-11TFH; East Fork; SWSE 9-156N-100W;2SEC; Williams; Bakken; horizontal; 21,094; 7/22/2013; 1,926 bbl

Sinclair Oil and Gas22662; Harris Federal 1-29H; Lone Butte; NENE 30-147N-97W; 2SEC;Dunn; Bakken; horizontal; 21,400; 6/29/2013; 1,369 bbl

Statoil Oil and Gas23888; Gyda 31-6 1H; Briar Creek; LOT4 30-152N-104W; 2SEC; McKenzie;Bakken; horizontal; 20,747; 7/20/2013; 2,984 bbl

True Oil24525; Hagen Federal 23-25-30-29H; Red Wing Creek; NESW 25-148N-101W; ICO; McKenzie; Bakken; horizontal; 20,487; 7/22/2013; 483 bbl24762; True Federal 21-3 3-10H; Bowline; LOT3 3-147N-101W; 2SEC;McKenzie; Bakken; horizontal; 19,936; 8/8/2013; 567 bbl

IPs for ND wells released from confidential status

American Eagle Energy24969; Karen 3-2N-163-101; Colgan; LOT3 2-163N-101W; 2SEC; Divide;Bakken; horizontal; 14,519; 5/28/2013; 103 bbl

Arsenal Energy23760; Ronald Carter 11-2H-155-91; Stanley; SESW 11-155N-91W; 2SEC;Mountrail; Bakken; horizontal; 18,736; 7/16/2013; 930 bbl

Burlington Resources Oil and Gas (ConocoPhillips)24245; CCU Prairie Rose 11-30TFH; Corral Creek; LOT1 30-147N-95W; U;Dunn; Bakken; horizontal; 20,477; 4/15/2013; 2,445 bbl24483; CCU Prairie Rose 21-30MBH; Corral Creek; NWNE 30-147N-95W;U; Dunn; Bakken; horizontal; 19,565; 7/29/2013; 2,840 bbl

Continental Resources24005; Columbia 4-5H; Dollar Joe; LOT1 5-155N-97W; 2SEC; Williams;Bakken; horizontal; 20,778; 8/5/2013; 634 bbl24006; Columbia 5-5H; Dollar Joe; LOT1 5-155N-97W; 2SEC; Williams;Bakken; horizontal; 20,977; 8/2/2013; 451 bbl24223; Hawkinson 4-22H2; Oakdale; NWNW 22-147N-96W; N/A; Dunn;Bakken; horizontal; N/A; N/A; N/A24224; Hawkinson 5-22H; Oakdale; NWNW 22-147N-96W; N/A; Dunn;Bakken; horizontal; N/A;N/A; N/A23281; Krehlik 1-11H; Barta; SWSE 11-141N-98W; 2SEC; Billings; Bakken;horizontal; 20,560; 7/17/2013; 411 bbl

EOG Resources24281; Parshall 32-0225H; Parshall; LOT4 2-152N-90W; ICO; Mountrail;Bakken; horizontal; 19,574; 3/22/2013; 1,833 bbl

Hess24715; EN-Hein S 156-94-1201H-3; Big Butte; NENW 13-156N-94W; 2SEC’Mountrail; Bakken; horizontal; 16,818; 6/25/2013; 533 bbl24445; EN-State B 155-93-1609H-2; Alger; SESE 16-155N-93W; N/A;Mountrail; Bakken; N/A; N/A;N/A; N/A

Kodiak Oil and Gas24196; P Evans 154-99-2-4-9-15H3; Stockyard Creek; LOT2 4-154N-99W;N/A; Williams; Bakken; horizontal; N/A; N/A; N/A24611; P Wod 154-98-2-27-34-16H3A; Truax; NWNE 27-154N-98W; 2SEC;Williams; Bakken; horizontal; 20,958; 7/19/2013; 1,806 bbl

Liberty Resources23651; Helling 150-101-7-6-1H; Pronghorn; SWSE 7-150N-101W; 2SEC;McKenzie; Bakken; horizontal; 21,002; 3/7/2013; 820 bbl

Oasis Petroleum24079; Anansen 5393 14-3B; Sanish; LOT1 3-153N-93W; 2SEC; Mountrail;Bakken; horizontal; 20,400; 3/13/2013; 3,581 bbl24080; Flavin 5393 14-3T; Sanish; LOT1 3-153N-93W; 2SEC; Mountrail;Bakken; horizontal; 20,800; 3/16/2013; 2,627 bbl

Oxy USA (Occidental Petroleum)23353; Frank Anders 1-27-34H-142-95; Murphy Creek; NENW 27-142N-95W; 2SEC; Dunn; Bakken; horizontal; 20,358; 2/25/2013; 302 bbl23384; Joseph Carter 1-13-12H-141-96; St. Anthony; SESW 13-141N-96W;2SEC; Dunn; Bakken; horizontal; 18,806; 2/22/2013; 270 bbl

QEP Energy24367; MHA 2-04-03H-149-91; Heart Butte; NWSW 4-149N-91W; ICO;Dunn; Bakken; horizontal; 20,034; 7/12/2013; 1,003 bbl

Slawson Exploration24897; Jeriyote 5-32-5TFH; Big Bend; SWSE 29-152N-92W; N/A; Mountrail;Bakken; horizontal; N/A; N/A; N/A

SM Energy24656; Hartel 1-26HB; Siverston; NENE 26-150N-98W; N/A; McKenzie;Bakken; horizontal; N/A; N/A; N/A24190; Jorgenson Federal 14-19H; Bear Den; SWSE 19-149N-95W; 2SEC;McKenzie; Bakken; horizontal; 21,248; 7/18/2013; 1,028 bbl24191; Jorgenson Federal 14X-19H; Bear Den; SWSE 19-149N-95W; 2SEC;McKenzie; Bakken; horizontal; 21,330; 7/10/2013; 946 bbl

Statoil Oil and Gas24833; Houston 11-2 1H; Buford; SESW 11-152N-104W; 2SEC; Williams;

Bakken; horizontal; 21,400; 7/10/2013; 3,084 bbl24469; Viking 16-15 2TFH; Poe; NWNW 16-151N-100W; N/A; McKenzie;Bakken; horizontal; N/A; N/A; N/A24470; Viking 16-15 3H; Poe; NWNW 16-151N-100W; N/A; McKenzie;Bakken; horizontal; N/A; N/A; N/A

Whiting Oil and Gas24558; Langwald 31-17-1H; Estes; SWSE 8-150N-104W; 2SEC; McKenzie;Bakken; horizontal; 20,702; 3/12/2013; 834 bbl24128; Miller 34-8-1H; Harding; SWSE 8-150N-104W; 2SEC; McKenzie;Bakken; horizontal; 19,023; 3/12/2013; 1,304 bbl21548; Taylor 34-7H; Sioux; SWSE 7-151N-101W; 2SEC; McKenzie; Bakken;horizontal; 20,430; 2/20/2013; 1,437 bbl

WPX Energy23318; Adam Good Bear 15-22HX; Van Hook; NWNW 15-150N-92W; N/A;Mountrail; Bakken; horizontal; N/A; N/A; N/A

XTO Energy (ExxonMobil)24037; Fbir Darcie 34X-14H; Heart Butte; SWSE 14-148N-92W; 2SEC;Dunn; Bakken; horizontal; 19,997; 6/20/2013; 1,868 bbl23412; Hegg 21-29SEH; Siverston; NENW 29-150N-98W; 2SEC; McKenzie;Bakken; horizontal; 20,270; 7/23/2013; 2,074 bbl

—Compiled by Ashley Lindly

This chart contains initial production rates, or IPs, for active wells that were filed as completed with the state of North Dakota from Aug. 20 to Aug. 26,2013 in the Bakken petroleum system, which includes formations such as the Bakken and Three Forks. The completed wells that did not have an availableIP rate (N/A) likely haven’t been tested or were awarded confidential (tight-hole) status by the North Dakota Industrial Commission’s Department ofMinerals. This chart also contains a section with active wells that were released from confidential status during the same period, Aug. 20 to Aug. 26. Again,some IP rates were not available (N/A). The information was assembled by Petroleum News Bakken from NDIC daily activity reports and other sources. Thename of the well operator is as it appears in state records, with the loss of an occasional Inc., LLC or Corporation because of space limitations. Some of thecompanies, or their Bakken petroleum system assets, have been acquired by others. In some of those cases, the current owner’s name is in parenthesisbehind the owner of record, such as ExxonMobil in parenthesis behind XTO Energy. If the chart is missing current owners’ names, please contact AshleyLindly at alindly@petroleumnewsbakken.com.

LEGENDThe well operator’s name is on the upper line, followed by individual wells withdata in this order: NDIC file number; well name; field; location; spacing; county;geologic target; wellbore type; total depth; IP test date; IP oil flow rate. (IPstands for initial production; in this chart it’s the first 24 hours of oil production.)

IPs for ND Bakken wells August 20—26, 2013

Top 10 Bakken wells by IP rate

Oasis Petroleum24079; Anansen 5393 14-3B; Sanish; Mountrail; 3,581 bbl

Statoil Oil and Gas24833; Houston 11-2 1H; Buford; Williams; 3,084 bbl23888; Gyda 31-6 1H; Briar Creek; McKenzie; 2,984 bbl

Burlington Resources Oil and Gas (ConocoPhillips)24482; CCU Meriwether 24-19MBH; Corral Creek; Dunn; 2,963 bbl24483; CCU Prairie Rose 21-30MBH; Corral Creek; Dunn; 2,840 bbl

Oasis Petroleum24080; Flavin 5393 14-3T; Sanish; Mountrail; 2,627 bbl

Burlington Resources Oil and Gas (ConocoPhillips)24245; CCU Prairie Rose 11-30TFH; Corral Creek; Dunn; 2,445 bbl

Kodiak Oil and Gas24606: P Wood 154-98-4-27-34-13HA; Truax; Williams; 2,118 bbl

XTO Energy (ExxonMobil)23412; Hegg 21-29SEH; Siverston; McKenzie; 2,074 bbl

Liberty Resources25255; Cavalli State 156-100-9-4-11TFH; East Fork; Williams; 1,926 bbl

Note: This chart contains initial production rates, or IPs, from the adjacent IP chart foractive wells that were filed as completed with the state of North Dakota from August 20to Aug. 26, 2013 in the Bakken petroleum system, as well as active wells that werereleased from tight-hole (confidential) status during the same period. The well operator’sname is on the upper line, followed by individual wells; the NDIC file number; wellname; field; county; IP oil flow rate in barrels of oil.

August 22, 2013From Hess Corporation To: Armstrong Operating, Inc.

#17168 - Allan 17-1H; horizontal; Bakken; Hans Creek; N/A; N/A; NENW17-145N-91W; Dunn Co.

From: Samson Resources Company To: Bakken Hunter, LLC

#21356 - Monterey 18-19-163-97H; on confidential status; N/A*;Fillmore; N/A; N/A; NENW 18-163N-97W; Divide Co.#21357 - Coronado 7-6-163-97H; on confidential status; N/A*; Fillmore;N/A; N/A; NWNE 18-163N-97W; Divide Co.#21366 - Goose 12-1-163-96H; on confidential status; N/A*; BountySchool; N/A; N/A; SWSE 12-163N-96W; Divide Co.#21367 - Egret 13-24-163-96H; on confidential status; N/A*; Bounty

School; N/A; N/A; SWSE 12-163N-96W; Divide Co.#21611 - Mountaineer 12-1-163-97H; on confidential status; N/A*;Paulson; N/A; N/A; SESW 12-163N-97W; Divide Co.#21649 - Flamingo 34-27-163-96H; on confidential status; N/A*; BountySchool; N/A; N/A; SESW 34-163N-96W; Divide Co.#21808 - Crow 32-29-163-96H; horizontal; Bakken; Bounty School; N/A;N/A; SWSE 32-163N-96W; Divide Co.#21835 - Raven 8-5-163-96H; horizontal; Bakken; Bounty School; N/A;N/A; SWSE 8-163N-96W; Divide Co.#21836 - Defender 9-4-163-97H; horizontal; Bakken; Fillmore; N/A; N/A;SWSE 9-163N-97W; Divide Co.#21843 - Teal 3-10-163-96H; horizontal; Bakken; Bounty School; N/A;N/A; LOT3 3-163N-96W; Divide Co.#22140 - Plover 17-20-163-96H; on confidential status; N/A*; BountySchool; N/A; N/A; SWSE 8-163N-96W; Divide Co.#22191 - Carrera 17-20-163-97H; horizontal; Bakken; Fillmore; N/A; N/A;SWSE 8-163N-97W; Divide Co.#22192 -Cayman 8-5-163-97H; horizontal; Bakken; Fillmore; N/A; N/A;SWSE 8-163N-97W; Divide Co.#22253 - Heron 22-15-163-96H; on confidential status; N/A*; BountySchool; N/A; N/A; SESW 22-163N-96W; Divide Co.

August 23, 2013From: Charger Resources, LLC To: Whiting Oil and Gas Corporation

#09917 - Zenith-Newton Unit 2; vertical; Heath; Zenith-Newton;2/15/1983; 35 bbl; SESW 3-139N-99W; Stark Co.

From: Enerplus Resources USA corporationTo: Continental Resources, INC.

#16174 - Titan F-WP 32-14-H; horizontal; Bakken; Mondak; 6/15/2007;135 bbl; SESW 32-148N-103W; McKenzie Co.

* Note: The geologic target for these wells was not listed in its well filebecause they are a tight (confidential) hole, but the Bounty School andFillmore fields produce from the Bakken pool.

— Compiled by Ashley Lindly

continued from page 9

TRANSFERS

PETROLEUM NEWS BAKKEN • WEEK OF SEPTEMBER 1, 2013 11

North Dakota oil permit activityAugust 20—26, 2013

Billings Co.Permits issuedWhiting Oil and GasMcDonald Family Trust Federal 31-3PH; LOT2 3-142N-102W; 360’FNLand 1,395’FEL; Roosevelt; Bakken; horizontal; 2,455’ ground; 26269; 33-007-01802; 8/26/2013

Bottineau Co.Permits issuedLegacy Oil and GasLegacy ET AL Bernstein 12-7 2H; LOT3 7-163N-76W; 1,901’FSL and262’FWL; Red Rock***; N/A; on confidential status; 1,730’ ground; 26255;33-009-02336; 8/22/2013

Burke Co.Permits issuedContinental ResourcesBildt 1-25H1; NWNE 25-161N-94W; 360’FNL and 1,880’FEL; LeafMountain; N/A*; on confidential status; 2,421’ ground; 26246; 33-013-01731; 8/21/2013Ellison 1-21H1; SESW 21-161N-94W; 529’FSL and 2,069’FWL; Stoneview;N/A*; on confidential status; 2,397’ ground; 26257; 33-013-01732;8/22/2013Oneil 1-28H1; SESW21-161N-94W; 620’FSL and 1,890’FWL; Stoneview;N/A*; on confidential status; 2,398’ ground; 26258; 33-013-01733;8/22/2013

Petro-HuntTande 159-94-29D-20-5H; SESE 29-159N-94W; 300’FSL and 625’FEL;North Tioga; N/A*; on confidential status; 2,313’ ground; 26233; 33-013-01730; 8/20/2013

Dunn Co.Permits issuedHRC Operating (Halcon Resources)Fort Berthold 147-94-1B-12-4H; SESW 36-148N-94W; 431’FSL and2,081’FWL; McGregory Buttes; N/A*; on confidential status; 2,195’ground; 26280; 33-025-02244; 8/26/2013Fort Berthold 147-94-1B-12-5H; SESW 36-148N-94W; 521’FSL and2,201’FWL; McGregory Buttes; N/A*; on confidential status; 2,200’ground; 26282; 33-025-02246; 8/26/2013Fort Berthold 148-94-36C-25-4H; SESW 36-148N-94W; 386’FSL and2,021’FWL; McGregory Buttes; N/A*; on confidential status; 2,195’ground; 26279; 33-025-02243; 8/26/2013Fort Berthold 148-94-36C-25-5H; SESW 36-148N-94W; 476’FSL and2,141’FWL; McGregory Buttes; N/A*; on confidential status; 2,197’ground; 26281; 33-025-02245; 8/26/2013

QEP EnergyMHA 2-26-35H-148-92; SESE 23-148N-92W; 696’FSL and 1,119’FEL;Heart Butte; N/A*; on confidential status; 2,018’ ground; 26285; 33-025-02249; 8/26/2013MHA 4-26-35H-148-92; SESE 23-148N-92W; 705’FSL and 1,146’FEL;Heart Butte; N/A*; on confidential status; 2,020’ ground; 26286; 33-025-02250; 8/26/2013MHA 6-26-35H-148-92; SESE 23-148N-92W; 679’FSL and 1,066’FEL;Heart Butte; N/A*; on confidential status; 2,014’ ground; 26283; 33-025-02247; 8/26/2013MHA 8-26-35H-148-92; SESE 23-148N-92W; 688’FSL and 1,093’FEL;Heart Butte; N/A*; on confidential status; 2,016’ ground; 26284; 33-025-02248; 8/26/2013

Whiting Oil and GasFaiman 24-33PH; SWSE 33-141N-97W; 290’FSL and 1,980’FEL; St.Anthony; Bakken; horizontal; 2,571’ ground; 26242; 33-025-02242;8/21/2013Faiman 44-33PH; SWSE 33-141N-97W; 290’FSL and 1,935’FEL; St.Anthony; Bakken; horizontal; 2,572’ ground; 26241; 33-025-02241;8/21/2013

Divide Co.Permits issuedHunt OilAlexandria 161-100-24-13H-1; SESW 24-161N-100W; 225’FSL and1,980’FWL; Alexandria; N/A*; on confidential status; 2,220’ ground;26256; 33-023-01097; 8/22/2013Alexandria 161-100-23-14H-1; NENW 26-161N-100W; 279’FNL and1,875’FWL; Alexandria; N/A*; on confidential status; 2,214’ ground;26259; 33-023-01098; 8/23/2013Burg 161-99-19-18H-1; SWSE 19-161N-99W; 305’FSL and 1,320’FEL;Musta; N/A*; on confidential status; 2,211’ ground; 26260; 33-023-01099;8/23/2013

SM EnergyOrlynne 2-3H; LOT2 3-162N-100W; 250’FNL and 1,575’FEL; WestAmbrose; N/A*; on confidential status; 2,254’ ground; 26247; 33-023-

01096; 8/22/2013Peter 4-2H; NWNW 2-162N-100W; 300’FNL and 1,250’FWL; WestAmbrose; N/A*; on confidential status; 2,286’ ground; 26229; 33-023-01095; 8/20/2013

Permits renewedBakken HunterCoronado 7-6-163-97H; NWNE 18-163N-97W; 245’FNL and 2,115’FWL;Fillmore; N/A**; on confidential status; 1,933’ ground; 21357; 33-023-00754; 8/22/2013Monterey 18-19-163-97H; NENW 18-167N-97W; 295’FNL and2,115’FWL; Fillmore; N/A**; on confidential status; 1,934’ ground; 21356;33-023-00753; 8/22/2013

McKenzie Co.Permits issuedEmerald OilCaper 2-15-22H; SESW 10-149N-102W; 250’FNL and 1,500’FWL; BoxcarButte; Bakken; horizontal; 2,244’ ground; 26261; 33-053-05232; 8/23/2013Caper 3-15-22H; SESW 10-149N-102W; 250’FSL and 1,550’FWL; BoxcarButte; Bakken; horizontal; 2,244’ ground; 26262; 33-053-05233; 8/23/2013Caper 4-15-22H; SESW 10-149N-102W; 250’FSL and 1,600’FWL; BoxcarButte; Bakken; horizontal; 2,245’ ground; 26263; 33-053-05234; 8/23/2013Pirate 5-2-11H; LOT1 2-149N-102W; 250’FNL and 1,000’FEL; ForemanButte; Bakken; horizontal; 2,289’ ground; 26270; 33-053-05238; 8/26/2013Pirate 6-2-11H; LOT1 2-149N-102W; 250’FNL and 950’FEL; ForemanButte; Bakken; horizontal; 2,287’ ground; 26271; 33-053-05239; 8/26/2013

Kodiak Oil and GasKoala 16-32-29-1H; SESE 32-152N-99W; 494’FSL and 964’FEL; Poe;N/A*; on confidential status; 2,318’ ground; 26244; 33-053-05223;8/21/2013Koala 16-32-29-2H3; SESE 32-152N-99W; 494’FSl and 994’FEL; Poe;N/A*; on confidential status; 2,318’ ground; 26243; 33-053-05222;8/21/2013

Newfield ProductionEide 150-99-7-6-2H; LOT1 18-150N-99W; 350’FNL and 300’FWL; TobaccoGarden; N/A*; on confidential status; 2,250’ ground; 26252; 33-053-05229; 8/22/2013 Eide 150-99-7-6-3H; LOT1 18-150N-99W; 350’FNL and 345’FWL; TobaccoGarden; N/A*; on confidential status; 2,249’ ground; 26251; 33-053-05228; 8/22/2013Eide 150-99-7-6-4H; LOT1 18-150N-99W; 350’FNL and 390’FWL; TobaccoGarden; N/A*; on confidential status; 2,249’ ground; 26248; 33-053-05225; 8/22/2013

Petro-HuntVan Hise Trust 153-95-28D-21-4H; SESE 28-153N-95W; 360’FSL and745’FEL; Charlson; N/A*; on confidential status; 2,267’ ground; 26265; 33-053-05235; 8/23/2013Van Hise Trust 153-95-28D-21-5H; SESE 28-153N-95W; 360’FSl and670’FEL; Charlson; N/A*; on confidential status; 2,265’ ground; 26266; 33-053-05236; 8/23/2013Van Hise Trust 153-95-28D-21-6H; SESE 28-153N-95W; 360’FSL and595’FEL; Charlson; N/A*; on confidential status; 2,265’ ground; 26267; 33-053-05237; 8/23/2013

QEP EnergyMoberg 2-18TH; SESW 18-149N-95W; 403’FSL and 1,581’FWL; Grail;Bakken; horizontal; 2,425’ ground; 26234; 33-053-05220; 8/20/2013Moberg 3-18BH; SESW 18-149N-95W; 413’FSL and 1,555FWL; Grail;Bakken; horizontal; 2,424’ ground; 26235; 33-053-05221; 8/20/2013

SM EnergyOakland Federal 1-1H; LOT1 1-150N-104W; 318’FNL and 882’FEL;Cartwright; N/A*; on confidential status; 1,985’ ground; 26254; 33-053-05231; 8/22/2013

Triangle USA PetroleumDwyer 150-101-35-26-2H; LOT3 2-149N-101W; 275’FNL and 1,450’FWL;Rawson; Bakken; horizontal; 1,450’ ground; 26230; 33-053-05217;8/20/2013Dwyer 150-101-35-26-3H; LOT3 2-149N-101W; 275’FNL and 1,400’FWL;Rawson; Bakken; horizontal; 2,321’ ground; 26231; 33-053-05218;8/20/2013Dwyer 150-101-35-26-4H; LOT3 2-149N-101W; 275’FNL and 1,350’FWL;Rawson; Bakken; horizontal; 2,320’ ground; 26232; 33-053-05219;8/20/2013

True OilTurnquist Federal 11-22 22-23H; NWNW 22-148N-101W; 470’FNL and630’FWL; Red Wing Creek; Madison; horizontal; 2,236’ ground; 26245; 33-053-05224; 8/21/2013

Whiting Oil and GasKarst 21-17-1H; NENW 17-150N-104W; 315’FNL and 1,595’FWL; Estes;Bakken; horizontal; 1,889’ ground; 26249; 33-053-05226; 8/22/2013Schlothauer 24-8-1H; NENW 17-150N-104W; 255’FNL and 1,595’FWL;Harding; Bakken; horizontal; 1,889’ ground; 26253; 33-053-05230;8/22/2013Schlothauer 24-8-2H; NENW 17-150N-104W; 285’FNL and 1,595’FWL;Harding; Bakken; horizontal; 1,889’ ground; 26250; 33-053-05227;8/22/2013

Permits renewedContinental ResourcesPasadena 2-2H; NWSW 2-152N-99W; 2,515’FSL and 1,037’FWL; Banks;N/A*; on confidential status; 1,942’ ground; 23790; 33-053-04389;8/22/2013Pasadena 3-2H; NWSW2-152N-99W; 2,515’FSL and 1,082’FWL; Banks;N/A*; on confidential status; 1,938’ ground; 23791; 33-053-04390;

8/22/2013Rochester 5-24H; SWSE 24-151N-99W; 340’FSL and 1,946’FEL; NorthTobacco Garden; N/A*; on confidential status; 2,104’ ground; 23749; 33-053-04378; 8/22/2013Monroe Federal 2-2H; NWSW 2-152N-99W; 2,515’FSL and 1,172’FWL;Banks; N/A*; on confidential status; 1,935’ ground; 23792; 33-053-04391;8/22/2013Monroe Federal 3-2H; NWSW 2-152N-99W; 2,515’FSL and 1,127’FWL;Banks; N/A*; on confidential status; 1,936’ ground; 23793; 33-053-04392;8/22/2013

Location resurveyedHessBW-Thelma 150-99-3031H-2; NWNE 30-150N-99W; 700’FNL and2,254’FEL; South Tobacco Garden; N/A*; on confidential status; 2,263’ground; 26054; 33-053-05154; 8/22/2013BW-Thelma 150-99-3031H-3; NWNE 30-150N-99W; 700’FNL and2,204’FEL; South Tobacco Garden; N/A*; on confidential status; 2,259’ground; 26055; 33-053-05155; 8/22/2013

Mountrail Co.Permits issuedContinental ResourcesRehak Federal 6-25H1; NENE 25-155N-94W; 335’FNL and 705’FEL;Alkali Creek; N/A*; on confidential status; 2,332’ ground; 26273; 33-061-02677; 8/26/2013Rehak Federal 7-25H; NENE 25-155N-94W; 335’FNL and 750’FEL; AlkaliCreek; N/A*; on confidential status; 2,333’ ground; 26272; 33-061-02676;8/26/2013

Fidelity Exploration (MDU)Carissa 27-34H; SESW 22-155N-91W; 448’FSL and 1,746’FWL; Stanley;Bakken; horizontal; 2,274’ ground; 26275; 33-061-02679; 8/26/2013CJ 27-34H; SESW 22-155N-91W; 437’FSL and 1,794’FWL; Stanley;Bakken; horizontal; 2,274’ ground; 26276; 33-061-02680; 8/26/2013Dylan 22-15H; SESW 22-155N-91W; 461’FSL and 1,697’FWL; Stanley;Bakken; horizontal; 2,274’ ground; 26274; 33-061-02678; 8/26/2013

Slawson ExplorationWalleye {Federal} 4-12-11TFH; LOT7 7-152N-92W; 2,225’FSL and250’FWL; Sanish; N/A*; on confidential status; 2,021’ ground; 26268; 33-061-02675; 8/26/2013

Permits cancelledSlawson ExplorationWalleye Federal 2-12-11H; LOT11 7-152N-92W; 630’FSL and 535’FWL;Sanish; N/A*; on confidential status; 1,949’ ground; 25501; 33-061-02546;8/23/2013

Renville Co.Permits issuedBallantyne OilTolley WSW 1; NWSW 9-161N-86W; 1,604’FSL and 839’FWL; Tolley;Dakota; vertical; 1,828’ ground; 90297; 33-075-90297; 8/22/2013

Williams Co.Permits issuedContinental ResourcesMadison 6-28H1; SENE 28-155N-97W; 2,476’FNL and 971’FEL; DollarJoe; N/A*; on confidential status; 2,265’ ground; 26237; 33-105-03175;8/20/2013Madison 7-28H; SENE 28-155N-97W; 2,478’FNL and 926’FEL; Dollar Joe;N/A*; on confidential status; 2,267’ ground; 26236; 33-105-03174;8/20/2013Pierre Federal 6-21H1; SENE 28-155N-97W; 2,472’FNL and 1,061’FEL;Dollar Joe; N/A*; on confidential status; 2,264’ ground; 26239; 33-105-03177; 8/20/2013Pierre Federal 7-21H; SENE 28-155N-97W; 2,474’FNL and 1,016’FEL;Dollar Joe; N/A*; on confidential status; 2,264’ ground; 26238; 33-105-03176; 8/20/2013

Oasis PetroleumEdwin 5601 44-24T; SESE 24-156N-101W; 240’FSL and 550’FEL; Tyrone;Bakken; horizontal; 1,932’ ground; 26277; 33-105-03179; 8/26/2013Johnson 5601 41-24T; SWSW 24-156N-101W; 200’FSL and 600’FWL;Tyrone; Bakken; horizontal; 2,056’ ground; 26278; 33-105-03180;8/26/2013Lydia 5601 43-24T; SWSE 24-156N-101W; 240’FSL and 2,210’FEL;Tyrone; Bakken; horizontal; 2,000’ ground; 26264; 33-105-03178;8/26/2013

* Note: The geologic target for these wells was not listed in its well filebecause they are a tight (confidential) hole, but the following fields pro-duce from the Bakken pool; Alexandria, Alkali Creek, Banks, Cartwright,Charlson, Dollar Joe, Heart Butte, Leaf Mountain, McGregory Buttes,Musta, North Tioga, North Tobacco Garden, Poe, Sanish, South TobaccoGarden, Stoneview, Tobacco Garden, and West Ambrose.

** Note: The geologic target for these wells was not listed in its well filebecause they are a tight (confidential) hole, but Fillmore field producesfrom the Duperow pool.

*** Note: The geologic target for this well was not listed in its well filebecause it is a tight (confidential) hole, but Red Rock field produces fromthe Spearfish pool.

— Compiled by Ashley Lindly

LEGENDThe county name is on the upper line, the type of permitissued is on the second line, and company names are next, fol-lowed by individual wells with data in this order: well name;location; footages; field; geological target; well bore type;elevation; NDIC file number; API number; date permit showson NDIC website.

AbbreviationsFollowing are the abbreviations used in the report and what theymean:FNL = From North Line | FEL = From East LineFSL = From South Line | FWL = From West Line

The first lateral of each well inSlawson’s dual well drilling procedure isdrilled conventionally into the upper shale.A liner with external isolation packers isinstalled and hung in the production casingand a whipstock is then installed above thefirst lateral within the Lodgepole forma-tion just above the upper shale and a win-dow is cut in the casing through which thesecond upper shale lateral is drilled andlined.

The second lateral is fractured by run-ning a stimulation tie-back string into thesecond lateral liner, which is then allowedto produce for approximately 30 days. Thetie-back string is pulled, the well is killedand the whipstock pulled, and then the firstlateral is fracked. The first lateral isallowed to produce for approximately 30days after which its fracture stimulationtie-back string is pulled and both lateralsare allowed to produce and comingle.

Van Hook and Antelope field wellsAcross the county in the Antelope-

Sanish pool Slawson will drill three dual-lateral wells in an existing 320-acrestandup spacing unit. Three of the dual-lat-erals will target the middle Bakken forma-tion while the other two target the first andsecond benches of the Three Forks forma-tion.

However, unlike the Squaw Gap wells,the Antelope dual-lateral wells will bestacked, dual-target wells with the upperlateral targeting the middle Bakken and thelower lateral targeting the second ThreeForks bench.

Slawson will drill these dual-lateralsusing the same methods as the Squaw Gapwells. In the Antelope wells, the ThreeForks lateral will be drilled and frackedfirst, followed by the second lateral thatwill be drilled into the middle Bakken. Aswith the Squaw Gap wells, the second lat-eral will be fracked and allowed to pro-duce for approximately 30 days, then thefirst lateral will be fracked.

In the Van Hook field in southeast

Mountrail County, Slawson got the goahead to re-enter and cut a window in anexisting single lateral middle Bakken welland drill a second lateral which will alsotarget the first bench of the Three Forksformation. Drilling and completion proce-dures are the same as with the other dual-lateral wells.

Well economicsSlawson’s well economics for the

Squaw Gap dual-lateral wells indicate esti-mated ultimate recoveries, EURs, of400,000 barrels of oil. For the dual-lateralsin the Antelope-Sanish pool, Slawson putthe EUR at 650,000 barrels and an EUR of225,000 barrels for the Van Hook ThreeForks re-entry well.

Slawson said dual-lateral wells are lessexpensive to drill. For example, Slawsonsaid a single lateral on a 640-acre unitcosts approximately $5 million, or approx-imately $10 million for two laterals, whilea dual lateral on a 640-acre unit comes inat approximately $7.5 million for a savingsof approximately $2.5 million. Dual-later-als on 1,280-acre units result in similar ifnot greater savings according to Slawson.

Other Slawson dual-lateral applicationsOrders have yet been issued on other

dual-lateral well applications that Slawsonfiled in May. In those applications,Slawson is seeking authority to drill addi-tional re-entry dual-lateral wells in the ElmTree field in McKenzie County and in theBig Bend and Ross fields in MountrailCounty.

In the Ross field, the second lateral willtarget the middle Bakken. In the Elm Treefield the second lateral will target the sec-ond bench of the Three Forks formation,while in the Big Bend field the second lat-eral will target first bench. Slawson reportsan EUR for the first bench in the Big Bendfield of 225,000 barrels, and 400,000 bar-rels for the middle Bakken in the Rossfield as well as the second bench in theElm Tree field. �

12 PETROLEUM NEWS BAKKEN • WEEK OF SEPTEMBER 1, 2013

2013 North Dakota Petroleum Council Annual MeetingMembers Only Showcase and Community Day

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continued from page 1

DUAL-LATERALS

in the Missouri Breaks and Hidden Benchprospects.

Whiting said it thinks the properties,which produced an average of 2,420 bar-rels of oil equivalent a day in August,contain proved reserves of 17.1 millionbarrels of oil equivalent, about 85 percentof which is oil. It estimates 24 percent ofthe reserves are “proved developed pro-ducing” and 76 percent are “proved unde-veloped.”

The acquired assets include 13 operat-ed 1,280-acre Bakken/Three Forksdrilling spacing units with an averageworking interest of 58 percent and netrevenue interest of 48 percent. Ninety-two percent of the acreage is held by pro-duction.

“This acreage expands our presence inour Western Williston Basin area wherewe have seen recent strong productiongrowth primarily as a result of positivedrilling results at our Hidden Bench,Tarpon and Missouri Breaks prospects,”James J. Volker, Whiting’s chairman andCEO, was quoted as saying in the pressrelease.

Denver-based Whiting, which plans tofinance the acquisition with borrowingsunder its existing bank credit facility,expects the acquisition to close by Sept.30, and carry an effective date of Aug. 1.

The $260 million price tag is “subjectto customary adjustments,” Whiting said.

Whiting is an independent oil and gascompany that explores for, develops,acquires and produces crude oil, naturalgas and natural gas liquids primarily in

the Rocky Mountain, Permian Basin,Mid-Continent, Michigan and Gulf Coastregions of the United States.

The company said its largest projectsare in North Dakota’s Bakken and ThreeForks plays, which are part of the Bakkenpetroleum system, and its enhanced oilrecovery field in Texas.

—KAY CASHMAN

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WHITING MOVES

In June, GMX reported losses for eightconsecutive quarters.

According to court documents, thecompany’s cash resources had declinedsignificantly, dropping from $107 millionin the fourth quarter of 2011 down to $18million in the third quarter of 2012.

Low oil prices citedGMX cited low gas prices as a primary

cause of its financial problems.In 2010, the company made a strategic

decision to expand from East Texas intobasins with oil potential. In the first halfof 2011, the company acquired positions

in more than 75,000 undeveloped netacres in the Williston Basin of NorthDakota and Montana, targeting theBakken and Three Forks formations, andin the Denver Julesburg Basin ofWyoming, targeting the emergingNiobrara play.

Though managing to boost its produc-tion to about 5,400 barrels of oil equiva-lent per day, this accounted for only about11 percent of the company’s total net out-put as of last year’s third quarter, the lasttime GMX submitted a required quarterlyfinancial statement to the SEC.

—KAY CASHMAN

continued from page 1

GMX BANKRUPTCY

ANNOUNCEMENTBakken Explorers to publish twice a year

Petroleum News Bakken said Aug. 28 that the publishing schedule for The BakkenExplorers magazine will be changed from annual to semi-annual in 2014 and beyond.

“We’re changing the schedule because the firstmagazine was very well received — and becausethings change so quickly in the Bakken,” publisherand editor Kay Cashman said.

The first 2014 edition will be released in April andthe second in September, Cashman said.

E&P companies must first operate wells in theWilliston Basin’s Bakken petroleum system to be fea-tured in the magazine, but they also have to qualify inone of the following three ways to show they are help-ing extend the Bakken’s recoverable reserves:

1. Exploring laterally by testing the fringes of theknown Bakken petroleum system;

2. Exploring vertically by evaluating relativelyunproduced zones within the system, such as theupper Bakken shale and the lower benches of the Three Forks; or

3. Developing and utilizing new exploration and production technology and tech-niques.

—PETROLEUM NEWS BAKKEN

BakkenExplorersThe

Extending the Bakken: It just keeps getting better

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from Petroleum News Bakken

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14 PETROLEUM NEWS BAKKEN • WEEK OF SEPTEMBER 1, 2013

Business Spotlight

ADVERTISER PAGE AD APPEARS ADVERTISER PAGE AD APPEARS ADVERTISER PAGE AD APPEARS

Bakken PlayersAbrasives .................................................................14Alaska TextilesAlliance PipelineAllstate Peterbilt Group............................................7American Association of Railroads (AAR)Anvil CorporationArctic CateringArrow Truck SalesBakken Solids Control ServicesBeaver Creek ArchaeologyBTL LinersCancade Company LimitedCESI ChemicalCity of Grand Forks, ND............................................9ClearSpan Fabric StructuresCruz Energy Services LLC (A CIRI Co.)CST StorageDakota Landing.........................................................8DAWA Solutions GroupDeep Casing ToolsE3 Energy and Environmental Experts ..................13Ebeltoft Sickler........................................................14

Elite TankFour Seasons EquipmentFutarisGray Wireline...........................................................16Guard-AllHalcon Resources ......................................................3HMG Automation, Inc. ..............................................6Investors First CapitalIseman HomesKilo Technologies Ltd.Larson Electronics LLCLister IndustriesLT EnvironmentalLyndenM SPACE.....................................................................4Midwest Industrial SupplyMiller Insulation Co.MT Rigmat LLC ..........................................................4Muth Pump LLCNetzsch Pumps North AmericaNorth Dakota Petroleum Council...........................12North Slope Telecom (NSTI)

Northern Oilfield Services, Inc..................................5OFS Energy FundPetroleum News Bakken...........................................2Pierce LeasingPlainsman Mfg. Inc.Polyguard ProductsPremier Community Homes Ltd.Quality MatReef Oil & Gas.........................................................15Rigid Global BuildingsRitchie Bros. AuctioneersShelterLogic.............................................................15Spartan EngineeringTenCateTremcar Inc.Trinity Health Occupational MedicineUmiaqUnconventional Resources TechnologyUNICO Inc.Unit Drilling CompanyWanzek Construction ................................................3

Ebeltoft . Sickler . LawyersEbeltoft . Sickler . Lawyers consists of nine

lawyers serving Bakken-based businesses in NorthDakota and Montana. Practice groups provide legalexpertise for: corporate due-diligence, merger, acqui-sition and business sale negotiation and completion,and leasing, purchase or sale of real estate anddeveloper contracts, appearances for planning andzoning and litigation relating to governmental deci-sions, and environmental claims litigation.

Bekki Grant, Associate Lawyer

Lawyer Bekki Grant spent her first two years inprivate practice in Missoula, Mont., where her workconsisted of criminal defense work, workers’ com-pensation matters and plaintiff’s litigation. At Ebeltoft. Sickler . Lawyers, Grant concentrates her practice within the organizational consultants,real estate and mineral and environmental, and personal planning practice areas and man-ages the firm’s criminal prosecution contracts.

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Our Bakken-Business Team has you covered!Corporate Due-Diligence • Mergers, Acquisitions & Business Sales

Real Estate Development, Leasing & Sales • Planning & ZoningInternal Practices Audits

Nathan Bouray Jennifer Grosz Randall Sickler

David Laschkewitsch of the WaterCommission told Petroleum NewsBakken that the commission acquired theproperty along with the mineral rights in1939. The commission transferred theproperty to the Rural RehabilitationCorp. in 1943, but kept a 50 percent

interest in the mineral rights.Laschkewitsch said the commission wasnot aware of the tract until it was con-tacted by representatives of an oil com-pany.

The Water Commission tract is adja-cent to 19.94-acres that the MineralManagement Division of North DakotaDepartment of Trust Lands included inits quarterly lease auction in May, whichbrought a record price of $24,500 per

acre. Diamond Resources of Willistonwas the successful bidder on that lease.

The division has assisted the WaterCommission in getting the tract ready forthe upcoming online auction.

Detailed information on the tract and theauction is available on EnergyNet’s websiteat www.energynet.com/govt_listing.pl.Scroll down to the tract identified as “TractNDSWC-0001” and click on “Track Info.”

Trust Lands entered into a contract

with EnergyNet in June 2012 to provideonline auction services to the state on anas-needed basis.

EnergyNet also provides online miner-al lease auction services for Colorado andUtah.

—MIKE ELLERD

continued from page 1

ONLINE AUCTION

with government authorities about thepossible acquisition of MM&A

Company Vice President Mary Keithtold Petroleum News Bakken that NB&Mis exploring its options because connec-tions to MM&A are “vital to our opera-tions,” although J.D. Irving has not madea formal offer.

But she said that only Irving Oil,which did not answer requests for com-ment, was able to outline efforts to re-establish shipments of crude from theNorth Dakota to the Saint John refinery.

Before the derailment and explosionsthat claimed 47 lives at Lac-Megantic,Quebec, on July 6, MM&A was deliver-ing up to 500,000 barrels a month to theIrving refinery.

No process in place for saleMeantime, MM&A Chairman Ed

Burkhardt told Petroleum News Bakkenthere is no current process in place to sellthe MM&A assets.

He said that will have wait for theappointment of a bankruptcy trustee in theUnited States and “for the situation to sta-bilize.

“We welcome any interest from theIrvings, but anticipate there will be anumber of other interested parties aswell,” he said.

Burkhardt said a “major factor” will bewhether MM&A’s severed rail link inLac-Megantic can be re-established.

The prospect of building a new sectionof track to bypass Lac-Megantic is “agood idea, but will take considerableplanning and commitment of funds, pre-sumably from (the Quebec government),and then take quite a while to get built,”Burkhardt said, conceding emotions inthe town are still “running high” againstMM&A.

Partly for that reason, he doubtedcrude shipments on the line would resume“at any time in the future.”

“There are a number of alternatives forshipping crude to Saint John and, with thevirtual elimination of the Brent premiumto WTI, the economic rationale has goneaway,” while the progress on Energy Eastcould further reduce the importance ofrail, Burkhardt suggested.

“As to MM&A, handling crude hasindeed proven to be more trouble than it isworth,” he said.

Worth more as going concern“Ultimately (MM&A) will be sold for

the benefit of the creditors and it is worthconsiderably more as a ‘going concern’than if it were to be shut down,”Burkhardt said.

He said that although MM&A in itscurrent form is unlikely to emerge fromrestructuring, the railroad could sell itsassets to a “new interest, free from huge(legal) obligations to Quebec.”

In its bankruptcy filings, MM&A’sCanadian subsidiary said it had C$25 mil-lion in insurance coverage, while estimat-ing the cleanup costs in Lac-Meganticwill exceed C$200 million.

Both the U.S. and Canadian units ofthe railway also said they had debts tomore than 200 creditors following the dis-aster.

Tanker delivery to resumeIn a surprise move to some, the

Canadian Transportation Agency orderedCanadian Pacific Railway to resumedelivery of crude oil tankers and other railcars to MM&A, overriding CP’s concernsabout the “serious and alarming risks” ofdoing business with the embattled rail-way.

Hunter Harrison, chief executive offi-cer of CP, said in a statement his compa-ny would take “immediate steps” to com-ply with the regulator’s order.

But it was not clear what serviceswould be restored given that MM&A’sline from Montreal to Maine and NewBrunswick is severed in Lac-Megantic.

CP said it is concerned about the fit-ness of MM&A to “safely handle haz-ardous substances, including the crude oilcurrently under investigation in the Lac-Megantic derailment.”

“The CTA dismissed CP’s argumentsand ordered CP to lift the embargo” thatwas imposed Aug. 13 and stopped theinterchange of all traffic to and fromMM&A.

CP was the original carrier from NorthDakota, handing over the train inMontreal to MM&A which was scheduledto do a further interchange with NB&MRailway for final delivery to the IrvingOil refinery in Saint John, NewBrunswick.

Sufficient insuranceHaving satisfied itself that MM&A had

sufficient third-party insurance coverage,the CTA reversed its Aug. 13 embargo,allowing MM&A to continue operationsuntil Oct. 1.

In a letter to CP, the CTA said it foundthat “on balance MM&A will sufferirreparable harm as a result of CP’sembargo.”

CP said in a letter to CTA there were“serious and alarming risks associatedwith MM&A’s ongoing operations”because of its aging rail infrastructure.

“The issue before the agency is not onethat is rooted in contractual or commer-cial law, but is instead one that is hearted

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RAIL ROLLERCOASTER Rail safety needs ‘swift’ actionCanada’s municipalities and a committee of the Canadian Senate are lending

their weight to pressure on the federal government to overhaul its rail safety stan-dards.

The annual conference of the Federation of Canadian Municipalities called for“swift, concrete action” on three priorities: Equipping and supporting municipalfirst responders to accidents, ensuring federal and industry policies and regula-tions address safety concerns and ensuring local taxpayers don’t shoulder thesafety and emergency costs.

“We agree that it’s important for our economy ... 70 percent of our exports gothrough the rail system,” said FCM President Claude Dauphin. “At the same timewe need to make sure the rail system is safe.”

Pauline Quinlan, mayor of the Quebec town of Bromont, said federal lawshould “guarantee companies have sufficient coverage to cover all costs associ-ated with rail emergencies.”

Review urgedA day earlier, a committee of the Canadian Senate urged the government to

start an independent review of Canada’s railway regulations to better ensure thesafe transportation of dangerous goods.

The study said the measures should include the phasing out of 40-year-oldtanker cars, even if that means slowing the shipment of oil when pipelines arefull.

In a study focused on the movement of bulk hydrocarbons by pipelines,tankers and rail, the Senate Committee on Energy, Environment and NaturalResources said the government should move immediately to implement recom-mendations made two years ago covering the safety of rail shipments.

The committee started its latest review nine months ago, but noted the Lac-Megantic derailment had overtaken its work.

“It will take some time before all the facts of this tragedy are covered,” thecommittee said.

“However, there can be no doubt that the accident underscored concerns ...about the risk to the public and the environment, particularly as North Americais expanding its oil and natural gas production,” and Canada is stepping up itsefforts to export crude bitumen and LNG to foreign markets.

Retirement of DOT-111 cars urgedThe committee urged the government to accelerate the retirement of the DOT-

111 rail cars (also referred to as CT-111A in Canada and DOT-111A in the UnitedStates) used to transport crude and which safety boards in Canada and the U.S.have said are prone to puncturing in a derailment.

It also called for federal inspections in Canada to be prioritized according tothe highest risk cargoes.

The study said the Quebec accident should have the same impact on the railindustry as the 1989 Exxon Valdez oil spill in Alaska had on the marine trans-portation industry: That spill resulted in an overhaul by Canada of its “spill pre-paredness and response programs.”

However, the committee said both pipeline and rail remain safe means oftransporting crude and other hazardous goods. For pipelines, 99.9996 percent ofoil reaches its destination without a spill, while for rail, the success rate is 99.9percent, the committee reported.

Sen. Richard Neufeld, chair of the committee, said in a news release that “theshocking Lac-Megantic disaster has only intensified” the work on hydrocarbontransportation, reinforcing the committee’s view that an arm’s-length review ofthe rail safety regime is necessary.

—GARY PARK

see RAIL ROLLERCOASTER page 16

C O M P A N Y U P D A T E

A S S O C I A T I O N S

L A N D & L E A S I N G

Vol. 1, No. 21 • www.PetroleumNewsBakken.com A semi-monthly newspaper for industry and government February 17, 2013

Crude on rails in for long haul

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Plains All American’s Manitou crude oil and NGL rail facility nearRoss, west of Stanley in Mountrail County, North Dakota. Phototaken this winter by Vern Whitten. See rail story below.

WLL gets bum rapJames. T. Brown: Whiting Petroleum is not running out of drilling inventory

By RAY TYSONPetroleum News Bakken

Denver-based E&P independentWhiting Petroleum Corp. is finding

it difficult convincing investors that thecompany is not running out of suitableplaces to drill.

“The knock against Whiting is that youguys don’t have any inventory and in threeyears you’re going to be done,” James T.Brown, Whiting’s president and chief operating offi-cer, told industry analysts Feb. 6 at the Credit Suisse2013 Energy Summit in Vail, Colo.

The lack-of-inventory perception seems to be par-

ticularly acute when it comes to findingnew targets in Whiting’s flagship Sanishfield in North Dakota’s Williston Basin,which accounts for around 30,000 barrelsper day, or nearly 40 percent of the compa-ny’s roughly 80,000 barrels per day of pro-duction.

By the end of 2012, a total of about 300production wells had been drilled in theSanish field, with at least another 200 to bedrilled and completed.

“It seems that when we get to the end of everyyear, we have two-and-half to three years of drilling

Riverbed draws top bidsQEP Energy high bidder on 22 Missouri River leases; shore zone included

By MIKE ELLERDFor Petroleum News Bakken

A total of 27,370 acreswere leased in 306 tracts

in nine western North Dakotacounties in the Feb. 5 NorthDakota Department of TrustLands oil and gas lease auctionbringing in a total of$24,609,206 at an averageprice of $899 per acre. The auction was dominated bytracts between the former high water marks on thetwo banks of the Missouri River under LakeSakakawea in Dunn County.

Of the 27,370 acres leased, slightly less than one-

third or 9,900 acres were in106 Missouri riverbed tracts inDunn County and those tractsbrought in a total $21,227,455,a sum that accounted for morethan 86 percent of the grossauction proceeds.

The Dunn County leaseactivity was, in turn, dominat-ed by 22 Missouri riverbedtracts totaling 1,465 acres that

fetched a total of $16,536,197 at an average price of$11,291 per acre, all purchased by Denver-basedQEP Energy Co.

Galt: MPA ever vigilantMontana Petroleum Association chief keeps tabs on several bills during session

see WHITING INVENTORY page 18

LANCE GAEBE DREW COMBS

see ND LEASE AUCTION page 21

By MIKE ELLERDFor Petroleum News Bakken

Numerous oil and gas-related billshave been introduced thus far in the

63rd session of the Montana legislaturecurrently in session in Helena, and whileMontana Petroleum Association ExecutiveDirector Dave Galt follows all of themclosely, he recently spoke with PetroleumNews Bakken and discussed those that hethinks are most important to his membership.

The key bills Galt identified fall into a variety ofcategories. Some deal with compensation forlandowner surface damage, eminent domain andforced pooling, all of which Galt lumps together intowhat he considers to be “property rights” legislation.Other bills that Galt considers key deal with taxation,

temporary leasing of water rights, financialrelief to oil and gas-impacted communities,and carbon sequestration and enhanced oilrecovery using carbon dioxide.

Property rights: surface damage compensation

House Bill 431, introduced by Rep.Austin Knudsen of Culbertson, is a surfacedamage compensation bill that would addto the existing oil and gas surface damage

and disruption compensation statue the definition of“lost land value” as “the value of the highest and bestreasonably available use, including the proposed use.”The bill would also require that the surface owner andthe oil and gas developer or operator attempt “in good

DAVE GALT

see ENERGY LEGISLATION page 22

Rail will survive pipeline additionsThe need for rail to move crude from

Midcontinent fields will likely persist,even if plans for expanding pipelinelinks from the Bakken to the Gulf Coastgo ahead, EOG Resources ChiefExecutive Officer Mark Papa told aColorado conference.

He said rail will still be used fiveyears from now to deliver Bakken crudeto all three Lower 48 coasts — the Gulf,East and West — but expects the cur-rent advantage of Louisiana Light Sweet, LLS, crude pricesin the Houston market will probably change within 18

Bakken threatens Alberta upgraderThe Bakken might be about to register a friendly-fire vic-

tim — a C$11.6 billion Suncor Energy upgrader to convert oilsands bitumen into synthetic crude for refining into fuels.

Suncor, with France’s Total as a 49 percent partner, expectsto decide no later than March 31 on the immediate fate of itsVoyageur project, which has been in a holding pattern for thelast four years, putting an end to its original startup date of2016.

Since taking control of the oil sands giant nine monthsago, Suncor Chief Executive Officer Steve Williams hasincreasingly hinted that economic challenges could be theundoing of Voyageur.

His explanation has been delivered in clear-cut terms.

Helms slams U.S. Fish & Wildlife Two new slides have appeared in

Lynn Helms’ presentation packet —slides with information that he thinksindicate an attempt bythe U.S. Fish & WildlifeService to take over oiland gas permitting inNorth Dakota.

One is a map backing up his agency’srecent analysis that shows 83 percent ofNorth Dakota’s oil and gas spacing unitshave some federal land ownership, surface and/or minerals.

Helms, director of the North Dakota IndustrialCommission’s Department of Minerals, Oil and Gas Division,told North Dakota lawmakers in January, “It was really sur-prising to me when we did this analysis to find out that 83

see RAIL SURVIVAL page 24

MARK PAPA

see ALBERTA UPGRADER page 24

see PERMITTING page 10

JAMES T. BROWN

LYNN HELMS

page6

Senate majority leader weighs in onNorth Dakota oil, gas legislation GET THE

LATEST BAKKEN NEWS.SUBSCRIBE TODAY!907-522-9469PETROLEUMNEWSBAKKEN.COM

Kevin Brook, an analyst withClearView Energy partners, said there is“no reason to believe the approvalprocess will be predicated upon the con-clusions of the investigation.”

But even the hint of a fur-ther delay spreads uneasethrough the Canadian govern-ment and Canadian oil produc-ers, who are forced to seekother transportation options,including rail.

The State Department said itwill “cooperate fully” with theOIG, adding it is “committedto a rigorous, transparent andefficient federal review of theKeystone XL application,” butdid not say whether the auditwill affect the timing of itsfinal decision.

Southern leg 90% completeMeanwhile, TransCanada

said the southern leg ofKeystone XL is 90 percentcomplete and should be inservice by the end of 2013.

The company said testingand commissioning activities are underway for the Gulf Coast pipeline project,connecting Cushing, Okla., withNederland, Texas.

On another issue, TransCanada, inanswer to comments from the U.S.Department of Interior, said it has amplydemonstrated how it will mitigateimpacts of Keystone XL on wildlife andsensitive ecosystems.

The department’s comments werereceived in April but only posted in mid-August.

It accused the State Department ofdownplaying potential negative harmfrom the pipeline and asked for “someassessment of how the cumulativeimpacts, including climate change, mayaffect fish, wildlife and plat resources,”insisting there will be “several types ofpermanent impacts to wildlife that willresult from this project.”

The report also urged the StateDepartment to further analyze theimpact of Keystone XL’s light and noiseon nearby national parks as well aswildlife.

Pipeline says issues addressedTransCanada insisted many of the con-

cerns were addressed in the application fora presidential permit and outlined “detailedsteps we have taken to mitigate impacts onthe environment, sensitive areas, wildlifeand communities.”

“There are already more than 12,000pages of technical review thathave been published onKeystone XL and they have stat-ed that there will be minimalimpact on environmentalresources along the entireroute,” said TransCanada in abarely disguised sign of itsgrowing frustration.

The Natural ResourcesDefense Council has weighedin, accusing the Canadian gov-ernment of Prime MinisterStephen Harper of refusing tocut greenhouse gas emissions inexchange for approval ofKeystone XL.

“Canada’s climate policiesare significantly weak and haveno chance of improving underthe current” Harper government,said Danielle Droitsch, Canada’sproject director for the NRDC.

In 2009, Canada pledged toreduce emissions by 17 percent from a2005 baseline by 2020, but is now expect-ed to miss that objective by a wide margindue to a 62 percent increase since 2005 inoil sands production.

New study finds little impactHowever, a new IHS CERA study said

the pipeline would have “no materialimpact” on GHGs in the U.S., partlybecause a failure to ship that production tothe Gulf Coast would be replaced byimports of Venezuelan heavy crude whichhave the same carbon footprint as the oilsands.

The study affirmed a State Departmentdraft supplemental environmental impactstatement for Keystone XL by arguing thateven if XL is turned down, productionfrom the northern Alberta resource willcontinue unabated.

Study authors Jackie Forrest and AaronBrady said that if oil sands producersinvested in improved rail efficiencies, thecost of transporting oil sands crude bythose means would be within $6 per barrelcompared with the pipeline.

The study also noted that the Gulf Coastrefinery region, which represents abouthalf of total U.S. refining capacity, now hasa large capacity to process heavy crude,meaning crude of similar GHG intensity tothat from the oil sands would continue tobe refined.

“Venezuelan heavy oil — andVenezuela — would be the number onebeneficiary of a negative decision onKeystone,” it said. �

in the protection of the safety and well-being of all Canadians,” CP said.

The letter said CP was “overwhelm-ingly concerned” about the dangers oftransporting crude while Canadian gov-ernment investigators were still tryingto determine why the crude “createdsuch a fierce fire” after the Lac-Megantic derailment.

Despite the CTA order, MM&A saidit has no plans to move crude from theNorth Dakota when it resumes service.

Burkhardt said he has “no idea whyCP acted as it did” in refusing to connectwith MM&A trains and “shut off accessto (Canadian National Railway) as wellas to themselves. There was never anyconversation or notice from CP and theynever returned our calls.” �

16 PETROLEUM NEWS BAKKEN • WEEK OF SEPTEMBER 1, 2013

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The pipeline thatwas originally sup-posed to have start-ed moving 830,000barrels per day ofAlberta oil sandscrude and Bakkenlight crude to theU.S. Gulf Coast by2012 and, mostrecently, was count-ing on a decisionfrom PresidentBarack Obama in2012, now faceswaiting for a verdictin 2014.

continued from page 1

XL ROADBLOCK

Quebec targets more for cleanupThe Quebec government is casting its net far and wide to recover cleanup costs

from the Lac-Megantic tragedy, which some observers calculate will easily sur-pass C$500 million.

In its latest round-up, the government has added the names of Canadian PacificRailway and World Fuel Services Inc. to the list of those it deems liable.

The government said it holds Canada’s second largest railroad partly responsi-ble for the costs so far estimated at C$7.8 million, saying CP was the main con-tractor responsible for the shipment of 50,000 barrels of crude involved in theaccident.

CP was quick to state its position. “As a matter of fact, and law, CP is notresponsible for this clean up,” company spokesman Ed Greenberg said. “CP willbe appealing.”

CP initially hauled the 72-car train from North Dakota’s Bakken area toMontreal, where it handed off to Montreal, Maine & Atlantic Railway, whichoperated the train that left the tracks in Lac-Megantic July 6.

In addition, the government said Aug. 14 that Miami-based World FuelServices Inc., which it lists as owner of the 50,000 barrels, is now included in thelegal demand for payment.

An original July 29 legal notice targeted MM&A, Western Petroleum Co. andWestern Fuel Services Corp.

Quebec Environment Minister Yves-Francois Blanchet said in a statement theprovince’s “duty is to do everything we can to ensure that companies responsiblefor this accident might shoulder the costs related to the cleanup and decontami-nation.”

Since the July 29 legal notice was filed, MM&A and its Canadian subsidiaryhave filed for bankruptcy protection in Canada and the U.S. after claiming theycould not pay the rising cleanup costs and multiple lawsuits.

World Fuel did not respond, although it said in a statement in July that it didnot expect to be named in any government legal action.

Blanchet’s department also published an analysis of water and air samplestaken after the accident, which showed a “downward trend” for petroleum hydro-carbons in the town of Lac-Megantic and the nearby Chaudiere River.

The government statistics show the concentrations have returned to the samelevels they were at before July 6. Blanchet’s department estimated Aug. 4 that 7.2million liters (42,000 barrels) of light crude had spilled into the environment.

A non-government organization called SVP that worked in collaborationGreenpeace released a report Aug. 13 claiming the presence of carcinogenic poly-cyclic aromatic hydrocarbons on the surface of the Chaudiere River was 394,000times greater than what the Quebec government considers safe.

—GARY PARK

continued from page 15

RAIL ROLLERCOASTER

C O M P A N Y U P D A T E

A S S O C I A T I O N S

L A N D & L E A S I N G

Vol. 1, No. 21 • www.PetroleumNewsBakken.com A semi-monthly newspaper for industry and government February 17, 2013

Crude on rails in for long haul

VERN

WH

ITTE

N P

HO

TOG

RAPH

Y

Plains All American’s Manitou crude oil and NGL rail facility nearRoss, west of Stanley in Mountrail County, North Dakota. Phototaken this winter by Vern Whitten. See rail story below.

WLL gets bum rapJames. T. Brown: Whiting Petroleum is not running out of drilling inventory

By RAY TYSONPetroleum News Bakken

Denver-based E&P independentWhiting Petroleum Corp. is finding

it difficult convincing investors that thecompany is not running out of suitableplaces to drill.

“The knock against Whiting is that youguys don’t have any inventory and in threeyears you’re going to be done,” James T.Brown, Whiting’s president and chief operating offi-cer, told industry analysts Feb. 6 at the Credit Suisse2013 Energy Summit in Vail, Colo.

The lack-of-inventory perception seems to be par-

ticularly acute when it comes to findingnew targets in Whiting’s flagship Sanishfield in North Dakota’s Williston Basin,which accounts for around 30,000 barrelsper day, or nearly 40 percent of the compa-ny’s roughly 80,000 barrels per day of pro-duction.

By the end of 2012, a total of about 300production wells had been drilled in theSanish field, with at least another 200 to bedrilled and completed.

“It seems that when we get to the end of everyyear, we have two-and-half to three years of drilling

Riverbed draws top bidsQEP Energy high bidder on 22 Missouri River leases; shore zone included

By MIKE ELLERDFor Petroleum News Bakken

A total of 27,370 acreswere leased in 306 tracts

in nine western North Dakotacounties in the Feb. 5 NorthDakota Department of TrustLands oil and gas lease auctionbringing in a total of$24,609,206 at an averageprice of $899 per acre. The auction was dominated bytracts between the former high water marks on thetwo banks of the Missouri River under LakeSakakawea in Dunn County.

Of the 27,370 acres leased, slightly less than one-

third or 9,900 acres were in106 Missouri riverbed tracts inDunn County and those tractsbrought in a total $21,227,455,a sum that accounted for morethan 86 percent of the grossauction proceeds.

The Dunn County leaseactivity was, in turn, dominat-ed by 22 Missouri riverbedtracts totaling 1,465 acres that

fetched a total of $16,536,197 at an average price of$11,291 per acre, all purchased by Denver-basedQEP Energy Co.

Galt: MPA ever vigilantMontana Petroleum Association chief keeps tabs on several bills during session

see WHITING INVENTORY page 18

LANCE GAEBE DREW COMBS

see ND LEASE AUCTION page 21

By MIKE ELLERDFor Petroleum News Bakken

Numerous oil and gas-related billshave been introduced thus far in the

63rd session of the Montana legislaturecurrently in session in Helena, and whileMontana Petroleum Association ExecutiveDirector Dave Galt follows all of themclosely, he recently spoke with PetroleumNews Bakken and discussed those that hethinks are most important to his membership.

The key bills Galt identified fall into a variety ofcategories. Some deal with compensation forlandowner surface damage, eminent domain andforced pooling, all of which Galt lumps together intowhat he considers to be “property rights” legislation.Other bills that Galt considers key deal with taxation,

temporary leasing of water rights, financialrelief to oil and gas-impacted communities,and carbon sequestration and enhanced oilrecovery using carbon dioxide.

Property rights: surface damage compensation

House Bill 431, introduced by Rep.Austin Knudsen of Culbertson, is a surfacedamage compensation bill that would addto the existing oil and gas surface damage

and disruption compensation statue the definition of“lost land value” as “the value of the highest and bestreasonably available use, including the proposed use.”The bill would also require that the surface owner andthe oil and gas developer or operator attempt “in good

DAVE GALT

see ENERGY LEGISLATION page 22

Rail will survive pipeline additionsThe need for rail to move crude from

Midcontinent fields will likely persist,even if plans for expanding pipelinelinks from the Bakken to the Gulf Coastgo ahead, EOG Resources ChiefExecutive Officer Mark Papa told aColorado conference.

He said rail will still be used fiveyears from now to deliver Bakken crudeto all three Lower 48 coasts — the Gulf,East and West — but expects the cur-rent advantage of Louisiana Light Sweet, LLS, crude pricesin the Houston market will probably change within 18

Bakken threatens Alberta upgraderThe Bakken might be about to register a friendly-fire vic-

tim — a C$11.6 billion Suncor Energy upgrader to convert oilsands bitumen into synthetic crude for refining into fuels.

Suncor, with France’s Total as a 49 percent partner, expectsto decide no later than March 31 on the immediate fate of itsVoyageur project, which has been in a holding pattern for thelast four years, putting an end to its original startup date of2016.

Since taking control of the oil sands giant nine monthsago, Suncor Chief Executive Officer Steve Williams hasincreasingly hinted that economic challenges could be theundoing of Voyageur.

His explanation has been delivered in clear-cut terms.

Helms slams U.S. Fish & Wildlife Two new slides have appeared in

Lynn Helms’ presentation packet —slides with information that he thinksindicate an attempt bythe U.S. Fish & WildlifeService to take over oiland gas permitting inNorth Dakota.

One is a map backing up his agency’srecent analysis that shows 83 percent ofNorth Dakota’s oil and gas spacing unitshave some federal land ownership, surface and/or minerals.

Helms, director of the North Dakota IndustrialCommission’s Department of Minerals, Oil and Gas Division,told North Dakota lawmakers in January, “It was really sur-prising to me when we did this analysis to find out that 83

see RAIL SURVIVAL page 24

MARK PAPA

see ALBERTA UPGRADER page 24

see PERMITTING page 10

JAMES T. BROWN

LYNN HELMS

page6

Senate majority leader weighs in onNorth Dakota oil, gas legislationGET

THELATESTBAKKENNEWSSUBSCRIBE TODAY!907-522-9469PETROLEUMNEWSBAKKEN.COM