Investors Can Find It All in the Bakken

Keith Kohl

Written By Keith Kohl

Posted January 12, 2012

“Sorry to tell you we don’t have much time today.”

He’d agreed to give me a quick early-morning tour of the rig earlier this week.

I took one look around and immediately understood why this man didn’t have much time…

With a 5,500-foot vertical well to be drilled, the last thing he wanted to be was behind schedule.

After all, it was his crew, his rig, and his time.

When news that North Dakota’s oil production topped 510,000 barrels per day, this didn’t come as a surprise for us. The entire state is busy drilling at a feverish pace, driving more and more investors there every day.

Thanks to the Bakken formation, just three counties produce nearly half of the state’s entire oil production.

small countyclick to enlarge image

Williams County — where I found myself that day — has been pumping more than 83,000 barrels per day as of late, comprising 16% of the state’s total.

True to his word, the tour was brief… but well worth the time.

As we walked through the site, the scent of petroleum was overwhelming. Of course, this wasn’t this first time I’d smelled the pungent odor.

“This kind of reminds me of my trip up to see a few oil sands operations,” I told him.

His mood suddenly soured, and I was sure I’d offended him.

“Bah, I got a younger brother who went to Fort Mac for work — as if we didn’t have enough here. The kid’s making $125,000 a year up there,” he told me.

I didn’t want to delve into the obvious rivalry that had developed between the two men, but he continued after a slight pause, “Sure, they’ve got a bit of oil up there, but everybody knows that now… Of course, he gets mad every time he comes back for Christmas and I remind him that the tar they’re pumping out doesn’t come close to our stuff.”

Quality or Quantity?

My guide had made a good point.

You see, the quality of oil is determined by its weight — also known as its API gravity — which is compared with water. Typically, if the measurement is greater than 10, it’s lighter and floats on water; anything less than 10 is heavier and sinks.

Good old-fashioned WTI comes out around 39.6o, and Brent — the current global benchmark being used — has a gravity of about 38o.

The bitumen up north in Fort McMurray is of the extra heavy variety. Production from the oil sands has an API gravity around 8o.

It then has to be upgraded into what’s known as synthetic crude, which carries a weight of around 33o.

Needless to say, the heavier the oil, the most expensive it is to refine.

On the other side of the spectrum, the light, sweet crude from the Bakken has a gravity of about 42— making it easy to see how attractive crude from the Bakken is to producers.

Something for Everyone

After a few hours, we were walking away from the rig when the guy started to shake his head.

“I’ve been drilling this county every day for the last few years, and I gotta tell ya, Keith… I rarely see a loser here,” he said with a grin.

He wasn’t going to hear me disagree with him there, that’s for sure.

I happen to know one clear-cut winner in the Bakken: everyday investors like us.

Whether it’s a little more risk to pay out big, or the safe high-dividend paying companies that are the bread and butter for investors over the long run…

We can find it all in the Bakken.

And I’ll show you both right now…

In March 2009, Brigham Exploration was trading below $2 when a few of my readers decided to join the Bakken fray. Not two years into their investment, Brigham was bought out by Statoil to the tune of $36.50 a share. A $1,000 investment in 2009 delivered profits of nearly $19,000.

This is an ongoing profit cycle that’s been gaining steam since 2007.

Truth is, some of the best small-cap oil stocks in North America are nestled in the various counties of North Dakota.

It’s where I found three little oil and gas gems just waiting to be plucked, each one holding the potential to double our money before year-end…

Or if having security is more to your liking, there’s plenty of it waiting in the Bakken. (And let’s be honest, a bit of security in this kind of market volatility is too good to pass up.)

Companies like Enerplus (NYSE: ERF) are not only expecting to increase production by as much as 15% over the next 24 months, but they’re also paying out a hefty 8.4% yearly dividend.

I’ll give you one guess as to where they hold more than 200,000 acres of undeveloped land…

Saskatchewan also happens to be the area where another high-yielding producer is securing investor profits.

When Nick Hodge mentioned the potential of PetroBakken Energy yesterday, it wasn’t on a whim. At this level, PetroBakken Energy is buy pumping out 50,000 barrels per day and offering a solid annual dividend of 7.3%.

Make no mistake; the opportunity here is endless — and promising.

Especially in light of the fact that North Dakota is set to become our nation’s second-largest oil producing state this year — a reality that will most likely play out in the next few months.

How profitable will 2012 be for you?

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Until next time,

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Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

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