Nov 27, 2008 - 04:06:19 CST
A Minot company has launched the first-ever investment portfolio aimed at companies doing business in the Bakken and other Williston Basin oil plays.Integrity Funds Distributor Inc. launched the Williston Basin/Mid-North America Stock Fund earlier this month, based on the premise that individuals are looking for some way into the Bakken boom.
Laura Anderson is the company's mutual fund division manager.
"People keep saying, 'I don't own land or minerals, so how do I get in on this?' and that's a common refrain, not only in the area, but nationally," she said.
She said the fund has assets of $1 million now, with about $300,000 held in cash while the company looks for publicly traded companies whose stocks are trading below their true value.
All 18 companies in the portfolio are in resource development, and seven are directly involved in the Williston Basin, she said.
Eventually, the company hopes to have as many as 25 to 35 companies in the portfolio, with household names like Hess, EOG and Halliburton that are drilling now in the Bakken, she said.
The key is investing in those companies when their stock price is low enough to allow long-term appreciation, she said.
"It may take some time to get the recognizable companies in there, but we're looking for good buying opportunities. We don't want to buy overvalued companies," Anderson said.
The fund requires a $1,000 minimum investment; less for an Individual Retirement Account, she said.
North Dakota's oil production recently surpassed Oklahoma to make it the fifth highest oil-producing state in the country, at 188,000 barrels a day.
The quoted price of oil has fallen off all-time highs of more than $148 a barrel this summer down to $54 Wednesday.
The state Department of Mineral Resource's director Lynn Helms says most oil development can be sustained at that price and some parts of the Bakken, where wells are extraordinarily productive, can be sustained at $30-a-barrel oil.
Bakken back-off
However, there is some indication that falling prices are affecting companies' plans.
Jeff Hume, chief operating officer for Continental Resources, a company with 450,000 leased acres in the Bakken, said the company changed its 2009 drilling plan based on forecasts that oil will stick at $55 next year.
Starting in December, the company will reduce its Bakken rigs from 10 to eight next year, when it had originally planned to ramp up to 14 to 15 rigs. However, the company will still have more "rig days" in 2009 than it has this year. It expects to complete 62 new wells, compared to the 45 in 2008 and will spend $257 million on Bakken development, compared to $191 million for the current year.
Hume said plans could change up or down, depending on the price of oil.
"We can't overreact. We'll wait and see how it opens up," he said. "If there's continued deterioration, we would be forced to cut activity."
He said the company anticipates that a national decline in oil exploration could make it less expensive to drill wells.
It costs Continental about $5.8 million to drill and fracture the deep, horizontal Bakken wells, but Hume said less demand for equipment and services could get that price down to $5 million.
In a move that bodes well for future Bakken recovery, Continental is among companies that will test the effects of carbon dioxide injection in a Bakken field on the older Montana side of the play.
Injecting CO2 in a developed oil field is one way to increase overall oil production as production ages and slows down.
"Preliminary testing in the lab works beautifully," Hume said.
The companies plan to experiment by injecting CO2 into a well sometime in December and then bring the well back into production and measure any increased production.
A spokeswoman for Marathon Oil, another high profile company on the Bakken, said the company is only now developing its 2009 budget.
(Reach reporter Lauren Donovan at 888-303-5511 or lauren@westriv.com.)
hmm wrote on Nov 27, 2008 3:00 PM:
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