Northern O&G provided an operations update related to drilling and completion activity in the Williston Basin Bakken and Three Forks play. In connection with this operations update, Northern Oil also provided information regarding its preliminary financial results for first quarter 2010.
2010 DRILLING ACTIVITY
Since January 1, 2010, Northern Oil has spud 5.15 net wells. Of those wells, 1.76 net wells are currently drilling but have not reached total depth and 2.05 net wells have been drilled to total depth and are awaiting fracture stimulation to commence production. This high number of wells awaiting completion was caused by longer time delays from completion of drilling to commencement of oil sales, primarily due to the seasonal backlog of fracture stimulations that typically occurs in early spring as a result of reduced completion activities during the coldest months in North Dakota.
Northern Oil now expects to spud up to 18 net wells in 2010, which represents an increase from previous guidance of 15 net wells. We believe the increase in expected wells is based upon the increasing rig count, which is now at an all-time high of 108 drillings rigs in the North Dakota Bakken play. Northern Oil's Chief Executive Officer, Michael Reger, commented, "The pace of drilling in the Bakken and Three Forks plays continues to increase. Given recent announcements by key operators in the plays, we expect 2010 drilling to increase by up to 20% to a total of 18 net Bakken and Three Forks wells."
FIRST QUARTER 2010 PRODUCTION AND PRELIMINARY FINANCIAL RESULTS
Northern Oil's first quarter 2010 production increased approximately 10% and oil and gas sales increased approximately 20% compared to fourth quarter 2009. First quarter 2010 production approximated 125,000 barrels of oil equivalent ("BOE"), an increase from 114,000 BOE in fourth quarter 2009. First quarter 2010 oil and gas sales were approximately $8.4 million, an increase of approximately 20% from fourth quarter 2009 oil and gas sales of $6,965,622. First quarter 2010 net earnings are expected to be approximately $0.03 per outstanding share.
Northern Oil has experienced significant delays in fracture stimulation appointments for wells across all operators with whom we participate. We believe this trend has been driven primarily by seasonal issues and increased costs of completing during the coldest winter months. Additionally, Northern Oil believes there has been some constraint in moving fracture stimulation supplies, such as frac sand, into the field due to seasonal conditions. Northern Oil expects that for the next quarter delay between fracture stimulation and completion may average as much as six weeks. This is not affecting the pace of drilling and we continue to see wells drilled to total depth at an accelerated pace. However, delays in fracture stimulation have the effect of delaying production additions.
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