The hottest oil strike in the U.S. is the Bakken Shale Formation of North Dakota. As a result, North Dakota is now the second largest oil producing state (after Texas). The oil companies are flocking to Bakken. Most of the Bakken Oil Companies drilling there were rewarded, early-on, by significant increases in the value of their stock. In 2008, however, the stocks crashed as the overall stock market panicked. Now, 5 years later, most of the Bakken stocks have fully recovered and are rapidly increasing in value. Bakken oil company stocks have certainly been an excellent investment!
Geologically, The Bakken Shale Formation consists of two parallel shale layers at about two miles depth. Sandwiched between the shale layers is a layer of dense dolomite which, so far, has contained the bulk of the oil produced.
Horizontal Drilling. Advances in horizontal oil well drilling techniques allowed the Bakken shale oil to be extracted economically. Vertical drilling is used to reach the shale-dolomite-shale layers which has been described as having a "oreo" appearance. Once drilling reaches the oreo layers which are about two miles below the surface, horizontal drilling is used to pierce the center dolomite layer and drill in it for a distance of two miles or so.
Fracking A fracturing (fracking) technique is then used to fracture and open up the dolomite to permit oil flow. Proppants are inserted to hold the fractures open. The high-quality oil then flows out easily.
The above procedures may sound simple but it took significant advances in drilling techniques to make it so.
These new drilling techniques are example of American ingenuity at its best. We will need more of the same if we are to survive the energy crisis that is descending on us.
Oil experts are still arguing about the amount of recoverable oil contained in the Bakken Formation. The estimates begin at about 2 billion barrels and range all the way up to 500 billion barrels. Obviously, the future price of oil will play a major role in determining how much oil will be recovered.
A $50 per barrel price for oil has been quoted as the minimum price necessary to allow development of the Bakken Shale Formation. The present price of crude oil is hovering at about $100 per barrel. so rapid development of Bakken should continue.
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It should be noted that the same general technology being used to develop Bakken is also being used to produce massive amounts of natural gas from the Haynesville Shale Formation of Louisiana and other shale formations of the United States. American innovation at its best!
In my opinion, the development of oil and natural gas reserves in shale formations could end the "energy crisis" for our time.nbsp;
A description of some of the oil and natural gas companies operating in the Bakken Formation follows: Note: Lease figures are provided for some oil companies but these figures are constantly changing.
EOG is generally regarded as being ahead of most of the other Bakken Oil Companies in developing and producing oil from the Bakken Shale Formation. EOG has over 600,000 acres under lease. EOG has said that Bakken is giving them the highest return of any of their company ventures.
EOG has a market cap of $59 billion, revenue of $16 billion, and a net income of $2.4 billion. The EOG stock price was up about 30% during the past year.
EOG has the dubious honor of being a former subsidiary of the disgraced Enron Corporation. But don't let that association bother you! EOG is a well-thought-of company with no hint of scandal. Their work at Bakken has been super!
EGO's activities are not limited to the Bakken Formation. They are extremely strong in the Eagle Ford Shale Formation (600,000 acres) and have good positions in the Haynesville Shale, the Permian Basin, and other oil and natural gas plays.
Statoil (STO), the large Norwegian oil company with huge interests in the North Sea, has jumped into the Bakken oil strike with both feet. In 2011, Statoil acquired Brigham Exploration (BEXP), a very successful oil company and a pioneer of the Bakken play
The BEXP acquisition was just one of several major accomplishments by Statoil recently Statoil has suddenly become one of the most aggressive of the larger oil companies. With a trailing PE of only 9, STO stock appears to be one of the most underpriced large oil companies!
The STO stock price was up about 25% during the past year.
Marathon's market cap is $27. billion, revenue is $14 billion, and net income is $ 2.0 billion. The stock was up about 30% over the past year.
Northern is another small, hot oil company working the Bakken Formation. It has over 150,000 acres under lease and a heavy drilling program in progress.
Even though, this is only their ninth year as a publicly traded company, the company has enthusiastic management and appears to be a successful participant in the Bakken oil strike.
Market cap is $1 billion and revenue is $424 million. The company operated at $21 million net income over the past year . The stock price was up about 30 % during the past year.
Northern Oil & Gas is truly a small oil company with only 20 employees.
Whiting is another fairly small oil company (but rapidly growing!) whose name always comes up in discussions of who's doing what in the Bakken Formation. The wells they have drilled in Bakken are flowing well and, for future work, they have identified many new locations in Bakken for future drilling.
Market cap is $11 billion and revenue is $3 billion. Net income is $401 million. The stock was up about 30% during the past year.
Whiting is merging with Kodiak (KOG), another small Bakken company, and the new company will be the largest oil producer in the Bakken.
Continental is believed to be the largest (over 1,100,000 acres) lease holder at Bakken (and sister formation of Three-Forks).
Market cap is $30 billion, revenue was $4.1 billion during the past year and operated at a net income of $630 million. Continental stock was up about 60% during the past year.
Continental Resources is optimistic about the company's future. It should also be noted that CLR is very active in the Woodford shale of Oklahoma and the Niobrara shale of Colorado and Wyoming.
Because of their huge leased acreage, CLR is consided a prime target for acquisition by some oil giant.
St Mary's is by no means a pure Bakken play since they have varied oil & gas interests around the country.
Market cap is $6 billion, revenue is $2.5 billion and SM earned about $203 million during the past year
SM stock is up about 1/3 during the past year. In addition to Bakken, SM is strong in the Eagle Ford field in Texas.
This small company stock is often recommended for purchase in Bakken blog discussions and the company has 150,000 acres at Bakken under lease.
Market cap is $2.3 billion, revenue is $500 million and income is $150 million. Kodiak
Other small oil companies operating in the Bakken Formation include Oasis Petroleum Inc (OAS-300,000 acres, Georesources,Inc.(GEOI-50,000 acres), Abraxas Petroleum Corporation (AXAS-50,000 acres)
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The Bakken Shale Formation oil strike in North Dakota is only a few years old but, many oil companies have plunged in and most appeared to be doing very well until the great recession of 2008. At that time, many of the stock prices dropped appreciably in step with the rest of the stock market, but are now in the process of recovering.
The new drilling technologies implemented at the Bakken Shale Formation by the oil companies, conceivably, could mark the beginning of a turnaround in the oil industry's fight against the energy crisis.
This web site, titled Bakken Oil Companies Stocks & Investments and the information included herein, is intended to provide information only and should not be construed as investment advice. The information provided is meant to broaden your knowledge and enable you to make better investment decisions within your portfolio.
I am not registered as an Investment Adviser nor am I a certified financial adviser. Sometimes I give an opinion on the quality of an investment. This information is based solely on my own investment goals and investment needs and might not reflect your goals and needs and might not be an appropriate investment for your portfolio.
Please consult with your financial manager/consultant/accountant before actually purchasing any of the investments discussed herein.
Last Updated: 11/09/14