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You Should Be Bullish in the Bakken

Now is the Time to Buy

Written by Keith Kohl
Posted May 15, 2012

“It's the perfect storm here for drillers, Keith. Not a dry hole in sight.”

That's how I was greeted by an old friend as I stepped onto the rig last week.

I've heard these same words time and again since my first visit to the Bakken. And I can't blame my friend for his rosy outlook...

The rig he runs happens to be in one of the hottest oil fields in the United States.

ND rig count 5-15

Two Reasons to Remain Bullish

As well as things are going for my buddy up in the Bakken, things are about to get even bigger there.

Growth is coming — and all we have to do is look to the United States Geological Survey for affirmation.

Last May, Secretary of the Interior Ken Salazar announced the USGS will be updating their 2008 Bakken assessment.

Just how important is this update and these new oil fields?

Remember that not every well is a gusher.

In fact, the opposite is true more often than not when it comes to our domestic production...

These "non-gusher" wells are known as stripper wells — and most people don't realize how much we count on them.


small stripperclick chart to enlarge

Simply put, a stripper well is an oil well that produces fewer than 10 bbls/day — or a natural gas well that produces fewer than 60 Mcf/d.

Together, they account for nearly 15% of our oil supply and 8% of our gas production.

As you can see above, approximately 80% of our producing wells in the United States are classified as stripper wells, giving new meaning to the phrase "scraping the bottom of the barrel."

Good thing there's one sure way we can stay ahead of the game...

Mass Migration

The exodus to these shale plays has already begun, and North Dakota is just one example to follow.

That much should be evident from the mass of people heading to the state in droves — tens of thousands making their way there, each one looking to cash in.

There's a reason unemployment is under 1% in the heart of the formation...

According to the Bureau of Economic Analysis, per capita personal incomes in Billings County, North Dakota, jumped by 46.8% between 2009 and 2010.

Billings 5-15

But you don't need to pitch a tent in North Dakota to grab your own piece of the Bakken pie...

20 Billion Reasons to Invest in the Bakken

There's something for everyone in the Bakken.

Over the last few weeks, we've seen infrastructure investments that are building the pipes and railways that will carry the high-quality crude to market, some of which are offering the safest annual dividends available.

And no matter how bullish we are on these long-term plays, there's one group in particular that will always have a place in our portfolio...

Those companies that are driving the unconventional oil boom taking place today. They're responsible for running the 2,000 drilling rigs across North America, increasing production every quarter.

When the USGS announced they're going back to Bakken to reassess the amount of undiscovered, technically-recoverable oil and gas available, the opportunity was clear...

Remember, their 2008 survey propelled the shale play into the national spotlight.

Just imagine the profits the next round of USGS projections will bring.

Back in 2008, the USGS was calling for 4.3 billion barrels in the area — but some oilmen have projected that number to be closer to 20 billion.

Five years ago, I told my readers the Bakken play was just beginning.

After we banked our first triple-digit winners a year later, many newer investors felt as if they'd missed the boat...

To that, I say prepare for Act Two.

Until next time,

Keith Kohl Signature

Keith Kohl

follow basic@KeithKohl1 on Twitter

A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.

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