Welcome Welcome Mineral Owners November 13, 2009
Nov 17, 2014
Welcome
Welcome Mineral Owners November 13, 2009
Oil and Gas in NDWhat it means to ND Mineral Owners
1. North Dakota Oil and Gas Overview; Bakken and Three Forks
2. Economic Impact; developments trends
3. Challenges: Oil and Gas Tax Policy
4. Changes to tax policy
Bakken and Three Forks
Bakken-Three Forks Play Moved ND from 9th to 4th in U.S.
149 Billion Barrels1-2%
Recoverable2.1 billion recoverable
Three Forks 50% size of the Bakken
North Dakota Oil Production and Price
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,0001970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
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2045
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Bar
rels
per
Day
$0
$50
$100
$150
$200
$250
$300
$350
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ND
Sw
eet
Pri
ce $
/bar
rel
History Bakken Maximum Bakken Most Likely Bakken Minimum
$/Barrel History & DOE-EIA Projected $/Barrel Most Likely $/Barrel Maximum
Drilling follows economics
0%
50%
100%
150%
200%
250%
300%
350%
Change in Oil Price (WTI) Change in Drilling Activity Change in Production
Peak Drilling:98 Rigs (Nov 2008)
Peak Oil Price$145/Bbl
Low Oil Price: $31/Bbl
54 Rigs
$69/Bbl
299 KBD
The Bakken/Three Forks:
• 1,057 Bakken and Three Forks wells
• 3,422 drilling and spacing units approved
• 335 of 381 wells past 12 months
• 10,000 drilling and spacing units possible
Recently in North Dakota
08/08 1/09
NYMEX Price per Barrel $147 $31ND Price Per Barrel $125 $24 Difference is Distribution, not quality
Production (BOPD) 215,000 187,000Rigs 98 31120 Jobs for Each Rig
Current Status:
NYMEX $77ND prices $68Production 230,000Rigs 62
Eco-pads: 10% cost saving
4 wells @ pad; less trucks
North Dakota’s EconomyNDSU Study$8 Billion Gross
Business Volume
$400 Million Royalties
46,000 Jobs
Contributions to North Dakota Oil and Gas Production Taxes
2007-2009 $794,000,000
General Fund $71 M
School Trust Fund $37.7 M
Foundation/Stabilization Fund $37.7 M
Permanent Oil Tax Trust Fund $475 M
(POTTF)
Water Resources Trust Fund $75.4 M *
*(05-07: $25.82M; 07-09 projected: $41M)
ND Oil Trust Fund$794 Million 2007-2009• $6.5 million Veterans
Home• $350,00 Peace Garden• $23 million Higher Ed• $115 Million Property Tax
• 2007-2008
• $300 Million Property Tax• 2009
• 1. Market Forces • Price/Economics/Costs• Infrastructure (price discounts)• Housing/labor/roads
• 2. Public Policy/ND/US• US Tax Policy
• ND Tax Policy
• 1. Market Forces • Price/Economics/Costs• Infrastructure (price discounts)• Housing/labor/roads
• 2. Public Policy/ND/US• US Tax Policy
• ND Tax Policy
Challenges
EOG Rail Facility at Stanley ND
Images provided by EOG
ND Oil TaxesThird Highest in the US5% Gross
Production
6.5% Extraction
11.5 % 0ff Gross Revenue
11.5% Tax Impact to Mineral Owners
11.5% paid by mineral owner too
Impedes Mineral Development
Hor/Vert
Horizontal & Vertical Production By Month1986 Through September 2006
Slide Text
Robert Harms 701-471-0959
www.northernproducers.com
North Dakota Tax Policy?
Desired change: 9% “off ramp” -from extraction tax- in lieu of price triggers
-retain gross production rate
-increase investment in ND
-increase tax revenues (more production)
-Bakken more economic; not “millionaire” oil wells
North Dakota Tax Policy cont.
Makes ND more competitive (MT-0%-9%)Improves Revenue ForecastingMoves toward flat, more simplified tax systemImproves business climate-for long range planning
North Dakota Legislation
House Bill 1235
11.5% 7% New Drilling Incentive$4.5 million; 75,000 barrels; 18 months Expires in 36 months Not applicable above $70
Robert Harms 701-471-0959
www.northernproducers.com