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Introduction

The Bakken formation mania which gripped investors in early 2010 has subsided, but the symptoms of a new mania are showing up on many companies with land holdings in Montana. Land prices have risen significantly from under $100/acre whereas the industry spent millions of dollars grabbing land during 2010-2011 and is now ramping up to spend millions more as multi-well programs are planned for 2013. Truth is that some good wells have been discovered in Montana like the Brigham-operated #1-H Gobbs 17-8 A well in Roosevelt County with an IP-24h of 1,817 boepd and the XTO Energy-operated #11X-12 Thiel well in Richland County with an IP-24h of 1,201 boepd, but the area needs more such results to climb on the top of the oil-producing States.

After the first four parts, this is the last part from this series dedicated exclusively on Montana and the players of that highly prospective area.

The companies

Although Enerplus Corporation (NYSE:ERF) has a concentrated core land position in North Dakota (Dunn and McKenzie Counties), it also holds significant contiguous acreage (90% WI) at Sleeping Giant, a mature Bakken field in Richland County of Montana with a low decline rate (14%) producing 7,300 boepd currently.

There is a strong upside potential from that acreage as the company has not implemented any waterflood program yet and the recovery rate is still very low (8%). Enerplus plans to spend 85% of its capex for 2013 on oil and liquids rich plays so I expect its production and its 2P Reserves in Montana to rise significantly.

To me, Enerplus has the best acreage in Montana and it has also made the most progress on it among all the other producers there.

Montana plays a big role for MDU Resources (NYSE:MDU) which has activities in different sectors from utilities, pipeline and energy services to construction and E&P exploration. The company's balanced portfolio targets primarily the North Dakota and Montana region. It is estimated that the Bakken region will have a 52% population increase over the next 20 years and MDU invests heavily in that area holding currently the most extensive natural gas transportation system there.

Regarding its E&P activities, MDU owns 57,000 net acres in Richland County, Montana adjacent to the Elm Coulee field targeting the Bakken and the Three Forks formations. The estimated EUR rates per well there are 250,000 to 400,000 Bbls.

The first results from that acreage are not exciting, but they have 24-hour IP rates between 70 and 250 boepd. My take on MDU is that this company is primarily for the income investors as it has a history of 75 consecutive years of quarterly dividend payments with 22 consecutive years of increases. Other than that, it is fairly priced in comparison to its peers from the Utilities and the Pipelines sectors.

Conclusion

Through this series of articles, I believe I have concentrated all the ongoing exploration and production activity in Montana giving also the readers a very good overview about Montana's oil potential. It is clear that Montana's acreage has not proved yet that it deserves a premium pricing. This is why I remain cautious about establishing a position in a company which is heavily Montana-weighted. To me, Enerplus Corporation has the best acreage there and it has also made the most progress de-risking its acreage. The other players have either failed to find commercially viable oil or they are in a "sit and wait" mode or their first results are well below expectations.

This being said, if I had to pick one player with properties in Montana, I would go for Enerplus Corporation, which has a well diversified asset base in conjunction with a good dividend and a strong balance sheet.

Source: For The Montana Bakken Players: Is Montana's Bakken A Dud ? (Part V)