Welcome Welcome Mineral Owners  November 13, 2009
Oil and Gas in ND What it means to ND Mineral Owners <ul><li>North Dakota Oil and Gas Overview;  Bakken and Three Forks </...
Bakken and Three Forks
Bakken-Three Forks Play   Moved ND from 9 th  to 4 th  in  U.S. 149 Billion Barrels 1-2% Recoverable 2.1 billion recoverab...
 
 
Drilling follows economics 0% 50% 100% 150% 200% 250% 300% 350% Change in Oil Price (WTI) Change in Drilling Activity Chan...
The Bakken/Three Forks: <ul><li>1,057 Bakken and Three Forks wells </li></ul><ul><li>3,422 drilling and spacing units appr...
Recently in North Dakota    08/08 1/09 NYMEX Price per Barrel  $147   $31 ND Price Per Barrel    $125   $24 Difference is ...
Current Status: NYMEX $77 ND prices $68 Production 230,000 Rigs 62 Eco-pads: 10% cost saving 4 wells @ pad; less trucks
North Dakota’s Economy NDSU Study $8  B illion  Gross  Business Volume $400  M illion 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 ...
ND Oil Trust Fund $794 Million 2007-2009 <ul><li>$6.5 million Veterans Home </li></ul><ul><li>$350,00 Peace Garden </li></...
<ul><li>1. Market Forces  </li></ul><ul><ul><ul><ul><li>Price/Economics/Costs </li></ul></ul></ul></ul><ul><ul><ul><ul><li...
EOG Rail Facility at Stanley ND Images provided by EOG
ND Oil Taxes Third Highest in the US 5%    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 Month 1986 Through September 2006   Slide Text
Robert Harms  701-471-0959 www.northernproducers.com North Dakota Tax Policy? Desired change:  9% “off ramp”  -from extrac...
North Dakota Tax Policy cont. Makes ND more competitive (MT-0%-9%) Improves Revenue Forecasting Moves toward flat, more si...
North Dakota Legislation  House Bill 1235 11.5%  7% New Drilling Incentive $4.5 million; 75,000 barrels; 18 months Expires...
Robert Harms  701-471-0959 www.northernproducers.com
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NAIP Mineral Owners Presentation 11/09

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NAIP Mineral Owners Presentation 11/09

  1. 1. Welcome Welcome Mineral Owners November 13, 2009
  2. 2. Oil and Gas in ND What it means to ND Mineral Owners <ul><li>North Dakota Oil and Gas Overview; Bakken and Three Forks </li></ul><ul><li>Economic Impact; developments trends </li></ul><ul><li>Challenges: Oil and Gas Tax Policy </li></ul><ul><li>4. Changes to tax policy </li></ul>
  3. 3. Bakken and Three Forks
  4. 4. Bakken-Three Forks Play Moved ND from 9 th to 4 th in U.S. 149 Billion Barrels 1-2% Recoverable 2.1 billion recoverable Three Forks 50% size of the Bakken
  5. 7. Drilling follows economics 0% 50% 100% 150% 200% 250% 300% 350% Change in Oil Price (WTI) Change in Drilling Activity Change in Production Peak D rilling: 98 Rigs (Nov 2008) Peak Oil Price $145/Bbl Low Oil Price: $31/Bbl 54 Rigs $69/Bbl 299 KBD
  6. 8. The Bakken/Three Forks: <ul><li>1,057 Bakken and Three Forks wells </li></ul><ul><li>3,422 drilling and spacing units approved </li></ul><ul><li>335 of 381 wells past 12 months </li></ul><ul><li>10,000 drilling and spacing units possible </li></ul>
  7. 9. Recently in North Dakota 08/08 1/09 NYMEX Price per Barrel $147 $31 ND Price Per Barrel $125 $24 Difference is Distribution, not quality Production ( BOPD) 215,000 187,000 Rigs 98 31 120 Jobs for Each Rig
  8. 10. Current Status: NYMEX $77 ND prices $68 Production 230,000 Rigs 62 Eco-pads: 10% cost saving 4 wells @ pad; less trucks
  9. 11. North Dakota’s Economy NDSU Study $8 B illion Gross Business Volume $400 M illion Royalties 46,000 Jobs
  10. 12. 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)
  11. 13. ND Oil Trust Fund $794 Million 2007-2009 <ul><li>$6.5 million Veterans Home </li></ul><ul><li>$350,00 Peace Garden </li></ul><ul><li>$23 million Higher Ed </li></ul><ul><li>$115 Million Property Tax </li></ul><ul><ul><li>2007-2008 </li></ul></ul><ul><li>$300 Million Property Tax </li></ul><ul><ul><li>2009 </li></ul></ul>
  12. 14. <ul><li>1. Market Forces </li></ul><ul><ul><ul><ul><li>Price/Economics/Costs </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Infrastructure (price discounts) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Housing/labor/roads </li></ul></ul></ul></ul><ul><li>2. Public Policy/ND/US </li></ul><ul><ul><ul><ul><li>US Tax Policy </li></ul></ul></ul></ul><ul><ul><ul><ul><li>ND Tax Policy </li></ul></ul></ul></ul><ul><li>1. Market Forces </li></ul><ul><ul><ul><ul><li>Price/Economics/Costs </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Infrastructure (price discounts) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Housing/labor/roads </li></ul></ul></ul></ul><ul><li>2. Public Policy/ND/US </li></ul><ul><ul><ul><ul><li>US Tax Policy </li></ul></ul></ul></ul><ul><ul><ul><ul><li>ND Tax Policy </li></ul></ul></ul></ul>Challenges
  13. 15. EOG Rail Facility at Stanley ND Images provided by EOG
  14. 16. ND Oil Taxes Third Highest in the US 5% Gross Production 6.5% Extraction 11.5 % 0ff Gross Revenue
  15. 17. 11.5% Tax Impact to Mineral Owners 11.5% paid by mineral owner too Impedes Mineral Development
  16. 18. Hor/Vert Horizontal & Vertical Production By Month 1986 Through September 2006 Slide Text
  17. 19. 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
  18. 20. North Dakota Tax Policy cont. Makes ND more competitive (MT-0%-9%) Improves Revenue Forecasting Moves toward flat, more simplified tax system Improves business climate-for long range planning
  19. 21. 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
  20. 22. Robert Harms 701-471-0959 www.northernproducers.com

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