Bakken Formation Reserve Estimates
Julie LeFever and Lynn Helms
Executive Summary
Nature of the Controversy

All researchers agree that the Bakken Formation is a tremendous source rock. The controversy
lies with how much oil has been generated, what other formations it may have sourced, and how
much is ultimately recoverable. Early research on the Bakken started with a 1974 landmark paper
by Wallace Dow, a UND Geology graduate, that addressed the oil generation capacity of the
Bakken shale. Since that time, several additional papers have re-evaluated the Bakken, each
bringing its own controversy over how much oil the Bakken is capable of generating and more
importantly, how much of that oil can be economically produced.
The current controversy involves a paper by the late Dr. Leigh Price formerly of the United States
Geological Survey in Denver, Colorado. He was an innovative thinker that challenged many of
the traditional viewpoints of petroleum geochemistry. After an extensive oil sampling program
by the North Dakota Geological Survey showed oil from the Bakken is compositionally distinct,
further work, additional analyses, and many discussions with Dr. Price resulted in the
controversial paper under review.
The methods used by Price to determine the amount of hydrocarbons generated by the Bakken
and the idea that the oil has not migrated out of the Bakken are under dispute.

History of Bakken Oil Generation Estimates
A landmark paper by Dow and a companion paper by Williams (1974) recognized the Bakken as
a tremendous source for the oil produced in the Williston Basin. These papers suggested that the
Bakken was capable of generating 10 billion barrels of oil (BBbls). Webster (1982, 1984) as part
of a Master’s Thesis at the University of North Dakota further sampled and analyzed the Bakken
and calculated hydrocarbon generation capacities to be about 92 BBbls. This data was updated
by Schmoker and Hester (1983) who estimated that the Bakken was capable of generating 132
BBbls of oil in North Dakota and Montana. Price (unpublished) used a more complete database
and estimated that the Bakken was capable of generating between 271 and 503 BBbls of oil with
an average of 413 BBbls. New estimates of the amount of hydrocarbons generated by the Bakken
were presented by Meissner and Banks (2000) and by Flannery and Kraus (2006). The first of
these papers tested a newly developed computer model with existing Bakken data to estimate
generated oil of 32 BBbls. The second paper used a more sophisticated computer program with
extensive data input supplied by the ND Geological Survey and Oil and Gas Division. Early
numbers generated from this information placed the value at 200 BBbls later revised to 300
BBbls when the paper was presented in 2006.

North Dakota Geological Survey Input
Dr. Price was impressed by the data available from the State of North Dakota and the extensive
oil sampling program conducted by the North Dakota Geological Survey which determined oil
from the Bakken is compositionally distinct from oil generated in the Mission Canyon Formation
(Madison). The results of this study were published by Price and LeFever in 1994 and showed
that the Bakken is “truly dysfunctional” with no evidence in the analysis that Bakken-generated
oil had migrated into the overlying Madison beds, as previously thought. Therefore, the oil
generated by the Bakken remains within the Bakken. Considerable input was given to the Price
paper by North Dakota Geological Survey geologists concerning the overall geology of the
Williston Basin and specifically the Bakken Formation. Price used samples collected for analysis
from the ND Geological Survey Core and Sample Library and the well files from the Oil and Gas
Division extensively.

North Dakota Geological Survey Evaluation
The geochemistry methods used by Dr. Price are beyond the expertise of the Geological Survey
to review; however his methods appear to be supported by the data and are adequately explained.
The geological model as presented by Price in his paper appears solid. Use of North Dakota
Geological survey and Oil and Gas division data along with considerable input from staff
geologists adds to the credibility of the geological portion of the model.

Conclusions and Recommendations
The Bakken Formation is a large unconventional resource that underlies most of the western
portion of the state of North Dakota.
Shales that comprise the upper and lower members of the Bakken are world class source rocks.
An extensive oil sampling program by the North Dakota Geological Survey shows that the
Bakken generated oil remains in the Bakken.
The geological model presented by Price in his paper appears solid and is built upon considerable
input by North Dakota Geological Survey geologists, samples from the ND Core and Sample
Library, and the well files from the Oil and Gas Division.
A sophisticated computer program with extensive data input supplied by the ND Geological
Survey and Oil and Gas Division places the Bakken generated value at 200 – 300 BBbls.
How much of the generated oil is recoverable remains to be determined. Estimates of 50%, 18%,
and 3 to 10% have been published.
The Bakken play on the North Dakota side of the basin is still early in the learning curve.
Technology and the price of oil will dictate what is potentially recoverable from this formation.
The unpublished manuscript by Dr. Leigh Price entitled “Origins and characteristics of the basin centered
continuous-reservoir unconventional oil-resource base of the Bakken Source System,
Williston Basin” contains valuable information and should be published with a disclaimer or
perhaps a discussion. The data in the paper is valuable and potentially of great benefit to the
state. It should be left to the geological community to determine whether or not they will accept
interpretations presented within the report.

DiscussionThe Bakken Formation is a large unconventional resource that underlies the western
portion of the state of North Dakota. It has been an exploration target several times since
oil was discovered in the state. Recent drilling success in the Bakken Formation of
Montana (Wall Street Journal, April 5, 2006) has once again focused interest on this
resource. Since the start of the play in Montana in 2001, activity has also increased on
the North Dakota side of the Williston Basin where the majority of the formation exists.
This activity translates into record lease sales of mineral rights and increased drilling.
Information becomes a valuable component of this activity. Drilling results with the
increase in oil prices have attracted new companies into the Williston Basin. Existing
and new companies commonly have staff with limited or no knowledge of the play.
These companies rely on information from the current literature and the state government
to quickly answer their questions. The availability of that data is important, part of which
is the focus of this paper.

In addition to being an exploration target, the Bakken Formation has also been a
focus of research since the early days of exploration. The Williston Basin is the ultimate
geologic laboratory, especially the North Dakota portion of the basin. Since the
discovery of oil in the state occurred late compared to other states, key legislation was
already in place. The state is foremost in data acquisition and storage. The availability of
well information, cores and samples makes the state an ideal laboratory. Early research
on the Bakken started when a landmark paper was written by Wallace Dow, a graduate
from the Geology Department of the University of North Dakota, in 1974 that addressed
the oil generation capacity of the Bakken shale. Since that time, several additional papers
have added to and further refined the information and re-evaluated the Bakken. Each
additional paper brings its own controversy into the discussion of how much oil the
Bakken is capable of generating and, more importantly, how much of that generated oil
can be economically produced. The following discussion is an in-house review of one of
these papers.

As previously stated, the Bakken has been and continues to be a focus of research.
The shales that comprise the upper and lower members of the Bakken are world class
source rocks. Additionally information that is learned in this basin may be applied to
other similar rocks in North America. The fact that the Williston Basin is located in the
middle of a continent and is relatively undisturbed structurally makes it more attractive
for study. It is a simple, more geologically controlled environment for applied research.
All researchers agree that the Bakken Formation is a tremendous source rock. The
controversy lies with how much oil has been generated, what it has sourced, and how
much is ultimately recoverable. The landmark paper by Dow and a companion paper by
Williams (1974) recognized the Bakken as a tremendous source for the oil produced in
the Williston. Based on the limited dataset of the time, these papers suggested that the
Bakken was capable of generating 10 billion barrels of oil (BBbls). They also suggested
that the only 3 BBbls would be recoverable in existing pools. The remainder would be
found in some undiscovered pools with a large portion left in the Bakken unable to
escape. Webster (1982, 1984) as part of a Master’s Thesis at the University of North
Dakota further sampled and analyzed the Bakken and calculated hydrocarbon generation
capacities to be about 92 BBbls. Once again this data was updated by Schmoker and
Hester (1983) who estimated that the Bakken was capable of generating 132 BBbls of oil
in North Dakota and Montana. It is easy to see that as new data become available the
values shift significantly.

The current controversy involves a paper by Dr. Leigh Price formerly of the
United States Geological Survey in Denver, Colorado. Price was a well respected
organic geochemist whose primary research interest was the Bakken Formation. He was
impressed by the data available from the State of North Dakota citing it in many of his
publications, for instance in the current publication under review, he states: “The North
Dakota portion of the Williston Basin, which has the larger of the two Bakken HC
kitchens in the basin, has the best rock and oil sample base and well-history file for any
basin, worldwide.” He was an innovative thinker that challenged many of the traditional
viewpoints of petroleum geochemistry. An early paper by Price and others (1984) once
again looked at the oil resources of the Bakken in the U.S. side of the Williston Basin.
They concluded that this was a significant resource and followed the traditional line of
thought that most of the generated oil had been expelled from the formation. Price
changed his opinion about the conclusion to this paper. He felt that the data was solid but
that they had made some erroneous assumptions in the interpretation of that data. This
change occurred when an extensive oil sampling program was done by the North Dakota
Geological Survey. Oil from the Bakken is compositionally distinct from oil generated in
the Mission Canyon Formation (Madison). The intent of this study was to determine
whether oil had migrated from the Bakken into the overlying and very productive
Madison beds. The results of this study were published by Price and LeFever in 1994
and showed that the Bakken was “truly dysfunctional”. There was no evidence in the
analyses of the oil that Bakken-generated oil had migrated into the overlying Madison
beds, as previously thought. Therefore, the oil generated by the Bakken was still within
the Bakken. Further work, additional analyses and many discussions later with the
author, resulted in the paper under review.

The methods used by Price to determine the amount of hydrocarbons generated by
the Bakken are different from the traditional petroleum geochemical practices and are
under dispute. Previous estimates were determined directly from available data and did
not take into account the changes that had already occurred within the rock. These
estimates are calculated from the area (measured) times the thickness (measured) times
the total organic content (TOC, measured by RockEval pyrolysis in the laboratory) times
the percent of organic carbon that has been converted (measured by RockEval). Price
used a more complete database and re-calculated the data based on what he considered
more realistic input parameters. The reasons for these adjustments are beyond the scope
of this review; however his methods appear to be supported by the data and adequately
explained. He estimated that the Bakken was capable of generating between 271 and 503
BBbls of oil with an average of 413 BBbls. Price also re-calculated the data previously
presented by Schmoker and Hester (1983) and Webster (1984); the re-calculated values
also fall within the range stated above. These values combined with the idea that the oil
has not migrated from the Bakken is what is under dispute. Price also states that 50% of
this oil is recoverable (on average, 200 billion barrels of oil).
The model as presented by Price in this paper appears solid. Considerable input
was given to this paper by North Dakota Geological Survey geologists concerning the
geology of the overall geology of the Williston Basin and specifically the Bakken
Formation. In addition to samples collected for analysis from the ND Geological Survey
Core and Sample Library, Price used the well files from the Oil and Gas Division
extensively. This data and the considerable input from staff geologists adds to the
credibility of the geological portion of the model.

New estimates of the amount of hydrocarbons generated by the Bakken were
presented by Meissner and Banks (2000) and by Flannery and Kraus (2006). The first of
these papers tested a newly developed computer model with existing Bakken data. Data
used was not as extensive as some of the other studies mentioned in this discussion
therefore estimates of generated oil presented were 32 BBbls. The second paper by
Flannery and Kraus used a more sophisticated computer program with extensive data
input supplied by the ND Geological Survey and Oil and Gas Division. Early numbers
generated from this information placed the value at 200 BBbls (pers. comm. Jack
Flannery, 2005). Estimates had been revised to 300 BBbls when the paper was presented
in 2006. Even if the lower value of 32 BBbls is correct, the amount that may be
potentially recovered from the Bakken is significant.
How much of the oil that has been generated is technically recoverable is still to
be determined. Price places the value as high as 50% recoverable reserves. A primary
recovery factor of 18% was recently presented by Headington Oil Company for their
Richland County, Montana wells. Values presented in ND Industrial Commission Oil
and Gas Hearings have ranged from 3 to 10%. The Bakken play in the North Dakota side
of the basin is still in the learning curve. North Dakota wells are still undergoing
adjustments and modifications to the drilling and completion practices used for this
formation. It is apparent that technology and the price of oil will dictate what is
potentially recoverable from this formation.

The paper under discussion is an unpublished manuscript by Dr. Leigh Price
entitled “Origins and characteristics of the basin-centered continuous-reservoir
unconventional oil-resource base of the Bakken Source System, Williston Basin.” The
manuscript had been sent out for peer review prior to his death as U.S.G.S. protocol
states. It was my understanding that many of the reviews had been returned with
comments and a “publish” statement. It is unknown whether or not those corrections or
comments were addressed by Dr. Price. There has been an outside request for the
U.S.G.S. to publish this manuscript. They have responded that it has not completed the
peer review process and therefore should not be published. The information is valuable
and should be published with a disclaimer or perhaps a discussion. The data is valuable
and of great benefit to the state. It should also be left to the geological community to
determine whether or not they would accept interpretations presented within the report.

References Cited
Dow, W.G., 1974, Application of oil-correlation and source rock data to exploration in
Williston basin: American Association of Petroleum Geologists Bulletin, v. 58, p.
1253-1262.
Flannery J. and Kraus, J, 2006, Integrated analysis of the Bakken petroleum system, U.S.
Williston basin: American Association of Petroleum Geologists Search and
Discovery Article #10105
Meissner, F.F. and Banks, R.B., 2000, Computer simulation of hydrocarbon generation,
migration, and accumulation under hydrodynamic conditions – examples from the
Williston and San Juan Basins, USA: American Association of Petroleum
Geologists Search and Discovery Article #40179
Price, L.C. and LeFever, J.A., 1994, Dysfunctionalism in the Williston basin: The mid-
Madison/Bakken petroleum system: Bulletin of Canadian Petroleum Geology, v.
42, no. 2, p. 187-218.
Price, L.C., Ging, T., Daws, T., Love, A., Pawlewicz, M., and Anders, D., 1984, Organic
metamorphism in the Mississippian-Devonian Bakken shale, North Dakota
portion of the Williston basin, in Woodward, J., Meissner, F.F. and Clayton, J.L.,
eds., Hydrocarbon source rocks of the Greater Rocky Mountain Region: Rocky
Mountain Association of Geologists, Denver, CO, p. 83-134.
Schmoker, J.W. and Hester, T.C., 1983, Organic carbon in the Bakken Formation, United
States portion of Williston basin: American Association of Petroleum Geologists
Bulletin, v. 67, no. 12, p. 2165-2174.
Webster, R.L., 1983, Analysis of petroleum source rocks of the Bakken Formation
(Devonian and Mississippian) in North Dakota: unpubl. Master’s Thesis,
University of North Dakota, 150p.
Webster, R.L., 1984, Petroleum source rocks and stratigraphy of the Bakken Formation
in North Dakota, in Woodward, J., Meissner, F.F. and Clayton, J.L., eds.,
Hydrocarbon source rocks of the Greater Rocky Mountain Region: Rocky
Mountain Association of Geologists, Denver, CO, p. 57-81.
Williams, J.A., 1974, Characterization of oil types in Williston basin: American
Association of Petroleum Geologists Bulletin, v. 58, p. 1243-1252.

Dennis W. Stutes, CEO
Oil & Gas Technologies & Discoveries, Inc.
New Hi-Tech Oil & Gas Discoveries, LLC, Manager

Tar Water Oil & Gas, LLC, TOG, Operator
408 975 0800 Cell: 805 701 7761
16 East 16th. Street
Ste. 401
Tulsa, Oklahoma 74119
www.oilandgasinvesting.com

I still like being ‘long the product’ per oil & gas investing. Oil investments pay if oil is found by reputable Operators with ‘controlling ownership interest’; and who are working in areas like the Bakken Shale Basin…and production revenue is paid-out over time, and as long as oil & gas wells produce.

Technology is still the king in the oil patch today! Frankly, it’s what keeps our economy going in thousands of ways. Smart investors will invest some of their money in oil & gas…it’s not going away anytime soon.

Most sophisticated investors know there are investments where cash flow can be better than what can be received in conventional banking deposits, bonds, and most hybrid investments. I’m referring to those involving; the betting on markets, stocks, or financial instruments where investors count on something expected to be going up or down, or staying the same. The point is you want to be ‘in the money’ when writing calls or puts as in options trading, or trying to hedge in a variety of ways with options, commodities trading, or arbitrage…and let’s face it, if you have the inside track, and work with the not so transparent ‘shadow trading instruments’, and are an insider, you aren’t reading my updates.

Check-in, or call for some specifics on oil & gas investing with the majors, and learn how to be a part of an investment where you can be ‘piggy backing’ with the big guys.

04/20/2012
Denbury Resources Reports On 18 Bakken Wells

Denbury Resources (DNR) reported an update on recent wells drilled and completed into the Bakken play on its properties in North Dakota. The well names, prospect area and 24 hour initial production rate in barrels of oil equivalent (BOE) are in the table below:

Well Name
Area
Initial Production (IP Rate)
Charlson 34-12
Charlson
1,441
Rolfson 21-16 SEH
herry
2,340
Loomer 24-34 SEH
Cherry
1,850
Rolfson 11-16 NEH
Cherry
2,694
Loomer 21-4 SWH
Cherry
1,689
Sorenson 31-28 SWH
Cherry
1,614
Bergem 44-28 NWH
Cherry
1,170
Loomer 24-34 NEH
Cherry
1,689
Serrahn 41-6 SWH
Cherry
2,035
tepanek 31-17 SWH
Camp
835
Jore 34-22 NWH
Cherry
2,060
Satter 24-35 NEH
Cherry
1,393
Satter 24-35 SEH
Cherry
2,015
Roen 24-23 NEH
Camp
1,039
Erickson 41-25 NWH
Camp
1,153
Erickson 41-25 SWH
Camp
1,170
Nelson 24-11 NEH
Cherry
2,178
Johnson 24-31 NEH
Cherry
2,091

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XTO Energy Reports Bakken Shale Well Completion
Brigham Exploration Company Reports Completion Of Sorenson …
Posted at 05:29 AM in 24 Hour Production Rate, Camp, Charlson, Cherry, Cherry Camp/Indian Hills, Denbury Resources, Initial Production, North Dakota, Operated Wells, Operational Update, Production, Well Results | Permalink

Technorati Tags: Bakken Shale, condensate, crude oil, Denbury Resources, energy, energy stocks, exploration and production, extraction, fractionation, horizontal drilling, hydraulic fracturing, natural gas, natural gas liquids, North Dakota Oil and Gas, oil, oil and gas investing, oil and natural gas stocks, petroleum, pipelines, shale gas, shale plays, tight gas, Williston Basin

January 11, 2011| Filed Under » Business, Commodities, Energy, Fundamental Analysis, Investment, Stock Analysis, Stocks

Tickers in this Article » WLL, ROSE, NFX, MUR

The Bakken formation will draw capital away from other areas in North America in 2011 as this oil play continues to attract operators looking for the higher returns that oil and liquids development provides. IN PICTURES: 10 Options Strategies To Know

The Facts
The Bakken is an upper-Devonian and lower-Mississippian formation present in several basins in North Dakota and Montana and extending across the border into Manitoba and Saskatchewan. The Bakken consists of an upper shale, middle sandstone and a lower shale, with the majority of the Bakken wells producing from the Middle sandstone zone.

A U.S. Geological Survey report released in 2008 reported that the Bakken formation contains an estimated 3 to 4.3 billion barrels of undiscovered, technically recoverable oil. This report covered only the part of the Bakken that lies in the Williston Basin in Montana and North Dakota.

The discovery of the Bakken has led to a resurgence in oil development in North Dakota over the last two years. The North Dakota Industrial Commissionreported that oil production in the state reached an average of 342,000 barrels per day in October 2010. In October 2008, average oil production was only 204,000 barrels per day. There were 166 active rigs in North Dakota as of Dec 15, 2010, up from 143 active rigs in September 2010.

The Players
Many exploration and production companies are assembling acreage and developing properties that are prospective for the Bakken formation.

Whiting Petroleum (NYSE:WLL) has approximately 552,000 net acres under lease in several project areas across North Dakota and Montana. The company drilled 62 net wells into the Bakken in 2010.

Most of the development today is in the Williston Basin, but the industry is moving into the Alberta Basin as well, where several operators are building position and starting operations.

Rosetta Resources (Nasdaq:ROSE) has 300,000 net acres under lease in the southern part of the Alberta Basin. The company drilled four exploratory wells here in 2010 and has allocated additional capital in 2011.

Murphy Oil Corporation (NYSE:MUR) also has a position in the Alberta Basin Bakken. The company leased approximately 129,000 acres from the Blood Tribe First Nation and is obligated to drill a minimum of 16 wells over the five-year term of the lease. Newfield Exploration (NYSE:NFX) has a 260,000 net acre position in the Alberta Basin and drilled eight wells in 2010 on its properties.

The Bottom Line
Many exploration and production companies were active in developing the Bakken formation in North Dakota and Montana in 2010, and this development will increase in 2011 as the area provides higher returns than other basins in North America. (To learn more, see our Oil & Gas Industry Primer.) Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

by
Eric Fox

Eric J. Fox, CFA, is a freelance financial writer and has previous experience working in the asset management industry as an equity analyst and portfolio manager on the buy side. His favorite area to write on is the energy sector and he keeps current on the industry by reading Haynesville Shale, Permian Oil and Gas and various other blogs.

Read more: http://www.investopedia.com/stock-analysis/2011/The-Bakken-Will-Still-Rule-In-2011-WLL-ROSE-NFX-MUR0111.aspx?partner=YahooSA#ixzz1sbc5QGCT

Tickers in this Article » CLR, WLL, BEXP, EOG

A recent test well by Continental Resources (NYSE:CLR), an operator with vast acreage in the Bakken Shale in North Dakota, may hint at a much higher recoverable reserve number for this oil bearing shale formation that is being rapidly developed by the exploration and production industry. (For a primer on the oil industry, refer to our Oil and Gas Industry Primer.)

IN PICTURES: Eight Ways To Survive A Market Downturn

There is a debate in the exploration and production industry regarding the stratigraphy of the Bakken Shale. The Bakken Shale is currently composed of three zones, an upper, middle and lower zone. Just below the Lower Bakken is a zone called the Sanish/Three Forks. The conventional wisdom is that the Sanish/Three Forks is not a separate producing formation, and that operators that have drilled here have “drained” oil from the Bakken Shale above.

Continental Resources just released data on a well, designed to prove that the zones are separate producing formations. The company drilled the Mathistad 2-35H into the Middle Bakken Shale, just 50 feet above and parallel horizontally to the Mathistad 1-35H, which was drilled in 2008 into the Sanish/Three Forks.

Continental Resources shut in the Mathistad 1-35H, which was producing at 187 barrels oil equivalent (BOE) per day, before drilling the second well. After the new well was completed, it produced at a seven-day average rate of 995 Boe per day, four times the production of the first well. This convinced the company that a new reservoir had been stimulated.

If other operators confirm this, it may increase the recoverable reserves of the Bakken Shale significantly as it will increase the number of drilling locations that are possible. The U.S. Geological Survey recently estimated the amount of recoverable oil in the Bakken Shale in a range from 3.0-4.3 billion barrels of oil.

Whiting Petroleum (NYSE:WLL) is a large producer in the Bakken Shale, and its total net production averaged 15,448 BOE per day in June 2009. The company’s latest wells in the Bakken Shale came in at initial production rates of 2,528 and 2,376 BOE per day.

A small cap company in the Bakken Shale is Brigham Exploration Company (Nasdaq:BEXP), which just restarted its development program in the area after suffering funding problems during the first half of 2009. The company has two wells being completed and one more set to drill shortly.

Producing oil has some benefits over natural gas from the point of view of the operator. First, if the area is capacity constrained, that is to say that there are not enough pipelines available, oil can actually be put in a truck and driven to where pipeline is available. This is not the ideal and most cost efficient method, but it can be done in a crunch. Natural Gas producers don’t have this option.

EOG Resources (NYSE:EOG) did just that in the first quarter of 2009, and had to ship some of its oil out of the Bakken Shale area by truck to get it to market. The company decided to restrict production from its wells here, as the cost to ship was estimated at $22 per barrel. The company said that it would be back to full production in the Bakken Shale by July 2009.

The Bakken Shale continues to reveal its secrets during quarterly earnings, as an operator produces evidence that reserves here may be much higher than generally accepted. This prolific oil bearing shale may yet help the U.S. get rid of some of its dependence on foreign oil. (For related reading, take a look at A Guide To Investing In Oil Markets.)

by
Eric Fox

Eric J. Fox, CFA, is a freelance financial writer and has previous experience working in the asset management industry as an equity analyst and portfolio manager on the buy side. His favorite area to write on is the energy sector and he keeps current on the industry by reading Haynesville Shale, Permian Oil and Gas and various other blogs.

I see no problems with the S.E.C., or the Feds relative to the interpretation, and enforcement of S.E.C. legislation, and passage of laws since this is their responsibility. But I have seen problems with various ‘overly aggressive state regulator claims of misrepresentations, or making false, or untrue statements, or not disclosing all material facts in an offering by promoters using private placement memorandums. Some state regulators routinely claim misconduct or fraud as part of their ‘boiler plate language’ used when accusing private companies, or their funding agents, issuers, and sponsor’s, etc. In other words, in my opinion, state regulators take little time to decide if a promoter, or oil & gas salesman is truly a bad apple, but only look at a legally prepared contract, or PPM which may have improper language, or has technical or other errors of ommission.

In fact, I would doubt local state securities lawyers care or could even make a determination of whether a ‘proposed oil field action’ or oil field decisions, and other practices are appropriate, nor do the state regulators know or care anything about the oil industry. This is particularly onerous when a state makes a decision contrary to what a court with appropriate jurisdiction decides, as in a case in 2002, when a certain Hawaii case was dismissed in Oklahoma by a district judge there. However, the Hawaii authorities still fined the saleman, and issued the cease & desist, which is nearly impossible to remove after a negative story was, and is published by Google.

What’s even more outlandish, in the Hawaii case, is the regulator published a terribly incorrect account of the charges against a promoter, and made untrue statements that were picked-up by the local Hawaii newspapers. The news story account reported among other untrue statements that; the promoter re-entered old capped wells to attempt to find oil. In fact, the promoter drilled new wells as offsets to the new 10,000′ ‘Gloria well’ in Oklahoma; which came-in with I.P’s of over 700 bopd, and nearly 3 million cubic feet of gas…for example. This well was drilled to the Morrow Basin, and Granite Wash, which is often a prolific zone found in Oklahoma. Investors traveled to Okahoma from Hawaii to meet with the Operator, and Ward engineers, and the promoter management to verify their investment’s were actually made in the oil wells. The ‘Gloria’ was one of several successful wells drilled on acreage purchased from ExxonMobil in 2000-2002 by Ward Petroleum. The promoter joint ventured with Ward Petroleum, and a company that has been around since 1957. Bottomline, the ‘uncaring regulator’ got it wrong, as the new Gloria well paid-out in about 2-3 months.

If a state is going to file a cease & desist, they should also state their decision was made without discovery or a legal proceeding involving a hearing, or a ruling by an appropriate state judge with jurisdiction for cases involving securities, or alleged securities violations. In other words, the regulator should tell the truth, the whole truth, and nothing but the truth which they expect American citizens to do!

Subject: Comments made to the SEC re: the JOBS Act

http://www.sec.gov/comments/jobs-title-ii/jobstitleii-3.htm

You can purchase stock, and this is the best way for many investors to take advantage of the success being experienced by many public oil companies trading on the N.Y.S.E, or Nasdaq, and even the OTC Bulletin Board. This may be the best way to go for those investors who must have instant liquidity.

Investors who want generous tax write-offs kept by public companies, and those investors who want cash flow will want to consider limited partnerships. This can make it possible for investors to be able to participate in flush or peak production from new wells, while enjoying the possibility of other profits investors can get for example when acreage values increase after oil production is established and proved.

In these aforementioned situations an investor might consider a private placement offering in drilling programs, or make direct investments in oil & gas leases, and participate directly in new wells being drilled.

Call for more information. Dennis

805 701 7761

THIS ASTOUNDING NEW LEGISLATION MAKES SOME ONEROUS LAWS OBSOLETE AND ‘ITS ABOUT TIME’, OR IT MAKES SOME ‘PREVIOUS PRACTICES NOW LEGAL’ BY PROMOTERS ENGAGED IN OFFERING PRIVATE PLACEMENT OFFERINGS AND PERMITS ADVERTISING & MARKETING OR GENERAL SOLICIATION LEGAL AMONG OTHER KEY SECURITIES LAWS. READ CAREFULLY, AS IT’S WRITTEN BY LAWYERS BUT WAS PASSED BY BOTH HOUSES IN CONGRESS, AND WAS JUST SIGNED BY THE PRESIDENT. THE S.E.C. MUST STILL REVIEW THE NEW LAW AND HAS 90 DAYS TO DO SO. THE S.E.C. WILL DECIDE HOW THEY WILL OVERSEE AND INTERPRET THIS NEW LEGISLATION.