Global Hunter Provides Color on Exploration & Production Sector

Global Hunter Securities provided color on the Exploration & Production sector. In a research report published today, Global Hunter commented on the current land grab in the northwest United States. The report states, "Land grab fever has hit a peak. If we had to succinctly describe the Bakken progression over the past five years we would characterize it as a massive “land grab." Operators were quick to leverage balance sheets and issue equity to fund acquisitions, and investors were more than willing to support the frenzy through a seemingly limitless supply of capital." The companies had to pay the highest price in the Mountrail County. The report states, "During the May lease sale, Mountrail County received the highest bonus at $8,300 per acre and had the highest average price per acre at approximately $6,000. Not a surprise given sound results uncovered in the Sanish and Parshall fields, as well as on the reservation in the southern portion of the county." The highest number of rigs was found in the McKenzie County, however. The report states, "During the May lease sale, McKenzie County received average bids of approximately $4,000 per acre and had a high bid of $8,200 per acre in the Grizzly Prospect (Kodiak operated) on the Williams County border. The rig count leads all counties with 44, primarily Continental (CLR) and Denbury (DNR) with four each." In the Dunn County, the northern portions of the land obtained a higher price as drilling activity in the southern portion remains limited. The report states, "During the May lease sale, Dunn County received average bids of approximately $3,500 per acre and had a high bid of $5,900 per acre. The average price continues to decline as the packages put up for bid are increasingly from the southern portion of the county where drilling activity has been relatively limited." Williams County not only managed to obtained the lowest price per acre, but the number of acres purchased was small as well. The report states, "During the May lease sale, Williams County received average bids of approximately $2,500 per acre and had a high bid of $3,500 per acre. While these bonus levels are significantly lower than the previous four lease sales, the number of acres in this latest round was marginally insignificant."