Seeking Alpha
View as an RSS Feed

Michael Filloon  

View Michael Filloon's Comments BY TICKER:
Latest comments  |  Highest rated
  • Bakken Update: 2015 May Be A Difficult Year For This Bakken Non-Operator [View article]

    NOG is fairly well hedged when compared to the majority of operators. Most are only 50% hedged in 1H15, with the number decreasing to 25% to 30% in 2H15. NOG is approximately 67% hedged at $90/bbl in 2015. The real pain for NOG would occur as operators of its leases cancel permits. Lets say CLR cancels a permit to drill in central McKenzie County for which NOG has a non-operated interest. That production doesn't occur. CLR is able to recoup by drilling on a better section of its leasehold, but more than likely NOG wont have interest in the new permit and thus lose a100% of its estimated production.
    Nov 20, 2014. 01:18 AM | 6 Likes Like |Link to Comment
  • Bakken Update: Emerald Payback Times Point To A Long Winter In The Bakken [View article]
    Thanks for commenting. Im happy to see that you have been following the company, and as most companies have been doing you are right, Emerald is switching to natural gas powered equipment. These variables you have stated are already factored into company estimates for costs. But one needs to understand they are developing an area with minimal infrastructure, and this wont be rectified quickly. When one compares Emerald to other Bakken players, it isn't well placed for a pullback in the price of oil. Other operators will just move rigs and cancel fringe pad projects, cut Emerald will not have this luxury. As for oil prices, there is no way to know for sure where commodity prices are headed. We have been lucky on this trade and there is no doubt that inventories will draw down over time and prices will head higher, but like I said its difficult to know for sure.

    Since you brought it up, I would be real interested to see you model the payback on these wells and see if there is something I have missed. I would be real interested to see how or if those numbers are different so we could all discuss them here in the forum. Its fine if you think insults will get your point across, but as a general rule most people would rather someone provided at least a little proof.

    Just for your info: We do not own, nor are we shorting any EOX. The accounts we manage are included in this, but some of our investors do manage a portion of their own moneys through their accounts. As for those I couldn't really say, but that money isn't managed by us directly. I know there are a large number of investors that are pretty high on this name, especially after this type of sell off. But the selloff is more due to 8 downgrades/price target reductions since 10-8-14.
    Nov 12, 2014. 09:20 PM | 6 Likes Like |Link to Comment
  • Oklahoma seeing surge in earthquakes near fracking sites [View news story]
    These earthquakes are probably due to salt water disposal wells that are near/around fault lines. If there are earthquakes in a specific area, the state would just need to close down the disposal well or wells to rectify the situation.
    Apr 10, 2014. 12:29 PM | 6 Likes Like |Link to Comment
  • Bakken Update: Frac Sand Pricing Could Go Parabolic As EOG Resources' Well Design Revolutionizes Unconventional Oil Production [View article]

    I think MRO has done a well in the Eagle Ford, and there are a few wells I have seen in the Permian but I haven't looked through all of those well files. I would guess we will see a large number of operators making announcements about experimenting with this design early next year.
    Oct 21, 2013. 12:05 AM | 6 Likes Like |Link to Comment
  • Bakken Update: Frac Sand Pricing Could Go Parabolic As EOG Resources' Well Design Revolutionizes Unconventional Oil Production [View article]

    Excellent point, and I would guess that it would happen. The only problem is how soon. Most of the frac sand producers are already seeing operators wanting more than what they are contracted for. These additional allotments sell at spot prices. What I see happening is a near term spike in pricing that will probably be an issue in the latter point of next year. This could be an issue for a year or two until supply can meet demand. It can take quite a long time to get all the permitting to add new capacity, so it could take some time..
    Oct 20, 2013. 11:59 PM | 6 Likes Like |Link to Comment
  • Bakken Update: Frac Sand Pricing Could Go Parabolic As EOG Resources' Well Design Revolutionizes Unconventional Oil Production [View article]

    Frac sand sells for about $60 per ton while ceramic proppant sells for about 32 or so cents per pound. Keep in mind these are approximate numbers, so they could be off some. Plus there are a lot of different types of ceramic proppant depending on what type and where it is made.
    Oct 20, 2013. 11:31 PM | 6 Likes Like |Link to Comment
  • Bakken Update: 2013 Top Bakken Stock Picks [View article]

    Always great hearing from you. I appreciate all the time you spend reading my articles.
    Jan 13, 2013. 07:29 PM | 6 Likes Like |Link to Comment
  • Bakken Update: EOG Wells Model EURs Over 2 Million Barrels Of Oil [View article]
    Thanks for the comments Mark. All of the data used in this article is correct, hope you enjoyed it.
    Jan 9, 2013. 02:53 AM | 6 Likes Like |Link to Comment
  • Bakken Update: Continental Continues To Seek Better Differentials [View article]

    Your theory has some serious holes in it. You look at all production over a period of years without accounting for improvements in drilling and completions. The number of stages, amount of water and proppant, type of proppant are just a few variables that can affect the depletion curve. The biggest flaw is lateral length. If one of EOG's initial Parshall Field wells was 4500 feet in length how can you compare that to a 14000 foot lateral? If both EOG and CLR drill 400 wells (just a generic number) but EOG averages a lateral length of 5000 feet while CLR averages 10000 feet how is a comparison made. I know you want to provide an easy to use calculation to help investors calculate EURs, but you are probably just confusing the subject by offering something with little to know value.
    Dec 6, 2012. 08:52 PM | 6 Likes Like |Link to Comment
  • Bakken Update: Is Whiting For Sale? Part I [View article]
    Thanks for your input, here is what Whiting said at its last quarterly earnings call transcript.

    We have also initiated pad drilling and completions at Sanish. Combined with our DWOP program, which stands for drill wells on paper, white sand and sliding sleeve completions, pad drilling is providing efficiencies for drilling and fracture stimulation that lead to an estimated savings of $2 million per well. These factors enable us to drill and complete our Williston Basin wells for approximately $7 million.

    Here is their estimates on Pronghorn wells:

    Will Green - Stephens Inc., Research Division
    I wonder if we could touch on the Pronghorn, the first Pronghorn pad you guys drilled. Could you guys maybe give me an idea of where that pad came in cost wise?

    Michael J. Stevens - Chief Financial Officer and Vice President
    Yes, we drilled -- drilling the first 2 wells, we drilled the 2 wells for $8.8 million. That's both wells. So that's $4.4 million per well. And so our -- what we're thinking is we should be able to get the fracs and everything, the facilities, everything done for about $2 million a copy. So we're thinking those wells are going to be in the range of $6.5 million, plus or minus, somewhere in there.

    I don't remember exactly where, but its Sanish wells are in the $6.5 million range. I think about a half million less than its average in other areas.

    The point that is generally missed when quoting well prices are what is being used. Well costs can be higher and still drive better IRRs. Most do not look out past the 90 day IP rate to figure production numbers, but this causes a lot of confusion because EURs can vary significantly. Whiting uses half as much proppant and it is pretty much all sand where a company like Kodiak that uses all the best stuff and plenty of it (4 million pounds and uses a mix of white sand and ceramic proppant). Kodiak also uses about twice the water. Kodiak's 24 hour IP rates may not be that much higher than a Whiting well, but that has more to do with Kodiak's generally using tighter chokes. When you get out to the 90 day IP rates, Kodiaks are double that of Whitings. Each company operates by a different set of principals, as where Kodiak wants to spend more now and get paid more later, where Whiting does all it can to keep costs down, but longer term its wells are not as good as Kodiak's. Although well costs have risen, water and proppant prices have decreased some. Trucking costs use to be $4/barrel and $150/hour, and we have seen some big time undercutting, which is helping as well. I am guessing we could see completion costs also pull back some. Each well is different in one way or another, so generalizing is difficult. Have a great night.
    Sep 26, 2012. 10:48 PM | 6 Likes Like |Link to Comment
  • Bakken Update: Brigham's Completion Design Is One Of Best In The Williston Basin [View article]

    I made a recent shift in my investments as a company I work with is setting up a couple of water depots to sell to the oil companies. I am helping to finance this, so I needed to liquidate some assets.

    If it wasnt for this I would still own stock in KOG, TPLM, OAS, NOG, CLR. Those should all work well going forward. Given their hedges I think they will all be ok, but I would also exercise caution as we could see some very heavy volatility in the price of oil. We got great news from China today (or at least better than expected), but I hope their numbers are correct. Europe could be a mess for a while as well, so I would operate with tight stops in place if investing in smaller companies. Long term all are very good, and the Bakken differentials should see a big improvement by the end of the year.
    Jul 13, 2012. 07:18 PM | 6 Likes Like |Link to Comment
  • Bakken And Western Canadian Select Differentials Will Improve [View article]
    There are several plays that are interesting right now and the favorites seem to be the Anadarko Woodford, Niobrara (only in some areas), Mississippi Lime, Granite Wash, Utica, Barnett Combo, but I like the Wolfcamp. Low well costs with quite a few shallow payzones and high liquids content.
    Jul 3, 2012. 12:09 AM | 6 Likes Like |Link to Comment
  • Investing in the Bakken (Part II): 7 Companies With a Market Cap Above $1B [View article]
    Fracking is used by every company drilling the Bakken/Three Forks. The shale is fractured so the oil will run from the shale to the tubing that is perforated and then pressure pulls it out of the well. It seems that there is quite a bit of talk about ground water contamination, and people getting sick, but what they aren't talking about is the well casing, if done properly, protects the ground water from any of the fluids running down or up the well. Thats not to say that it has or hasnt happened, but I think there will be some regulation coming up I would guess. Take a look at this link, it talks about fracking a little and companies that are producing biodegradable fracking fluids. Have a great day.
    Mar 6, 2011. 01:35 PM | 6 Likes Like |Link to Comment
  • Bakken Update: Whiting's Extensive Refrac Inventory May Provide Significant Upside [View article]

    Thanks for the kind words, I really appreciate it. I didn't think you were being negative as I appreciate the input. I hope my comment wasn't disrespectful in anyway, we really crunch the numbers a lot on shale and when we kick this data around try to tie in how numbers could be affected no matter the circumstance. It is just so hard to cover every angle in these quick papers. You make very good points, as WTI has to come up especially for areas like the Bakken that have wider differentials. The fraclog is a little scarey as there are a large number of holes in the ground and anytime that pricing recovers we will probably see it head lower quickly. It is so easy for these operators to improve production in the short term, especially with inventories in the best areas. This is why we are seeing the wide swings in production each week from the EIA and why the API seems to miss so wildly on those same estimates a day earlier. This is going to be a problem for quite a while I would agree, and it will be more of a traders game than a long term investor.
    Apr 8, 2015. 10:55 PM | 5 Likes Like |Link to Comment
  • Bakken Update: Recent Kodiak Completions Model 1000+ MBoe [View article]

    Thanks, and I will keep writing but now I am bound by new industry rules so there will probably be some changes. The recompletion question is a good one and I would guess the answer is yes. The timing of recompletions is a complex one and is a better answer for Craig, but I believe that operators would be hesitent to recomplete until the initial fracture production is done and matrix production begins. The reason I say this is it would give a better idea of how well the shale will produce from new fractures as opposed to calculating production from both the first and second frac in concert.
    Apr 4, 2014. 01:21 PM | 5 Likes Like |Link to Comment