Many exploration and production (E&P) companies raised 2012 capital budgets during first quarter of the 2012 earnings season. These operators are finding success in the many onshore crude oil and liquids basins in the United States.
Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.
Continental Resources (NYSE:CLR) is active in the Bakken play in North Dakota and Montana and reported one of the largest increases in its capital budget. The company now expects to spend $2.3 billion in 2012, up from the previous level of $1.75 billion.
It said that the increased budget and accelerated drilling schedule was due to faster cycle times and will cover 300 net wells in 2012. The previous budget covered the drilling of 249 net wells.
SEE: Oil And Gas Industry Primer
Denbury Resources (NYSE:DNR) is also heavily involved in the Bakken play and increased the company's total capital budget by 11% to $1.5 billion. The extra $150 million will be split between the Bakken, which will receive an extra $80 million, and the company's tertiary oil operations, which is set to receive $70 million.
The company has made other investments in its tertiary oil operations, which involves the injection of carbon dioxide into older wells to stimulate oil production. It recently announced the purchase of the Thompson oil field for $360 million, and plans to initiate tertiary recovery at this field at a later date.
Magnum Hunter Resources (NYSE:MHR) announced a large increase in its 2012 capital budget and will now spend $325 million, up from the preliminary budget of $150 million. The company will apply the additional funds to its operations in the Eagle Ford Shale in Texas.
SEE: What Determines Oil Prices?
It plans to issue equity to fund the extra capital spending as well as the purchase of additional acreage prospective for crude oil and liquids. The company expects the extra spending to raise production sharply with an estimated exit rate for the company of 18,000 barrels of oil equivalent per day at the end of 2012.
Whiting Petroleum (NYSE:WLL) added $200 million to its capital budget, and will spend $1.8 billion in 2012. The company will use $36 million of the extra funds for drilling into the Niobrara at the Redtail Prospect in the Denver Julesburg Basin, and $37 million for increased development in the Permian Basin. The balance of the funds will be used for leasehold acquisitions and the company's share of non-operated drilling costs.
Northern Oil and Gas (NYSE:NOG) is planning to spend an extra $35 million in the Bakken in 2012, bringing its total capital budget for the year to $360 million. The company participates on a non-operated basis, and reported that its operated partners are conducting more pad drilling and using longer laterals when developing properties.
SEE: A Guide To Investing In Oil Markets
The Bottom Line
The Bakken and Eagle Ford Shale are the premier crude oil and liquid plays in the onshore United States and both are attracting large amounts of capital from the exploration and production industry. Operators active here plan to spend even more than previously expected in these areas in 2012.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.
Mutual Funds & ETFsGet information about some of the most popular and best-performing mutual funds that are focused on commodity-related investments.
Chart AdvisorAgriculture stocks have experienced strong moves higher over recent weeks, but chart patterns on sugar, corn and wheat are suggesting the moves could be short lived.
Mutual Funds & ETFsLearn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
Investing NewsWill Ferrari's shares move fast off the line only to sputter later?
Investing NewsShares of Glencore International, a leading multinational commodities and mining company, jumped by around 15% on London Stock Exchange, after the shares had gained about 71% earlier on the Hong ...
InvestingCommodity prices have been heading lower for more than four years, being the worst performing asset class of 2015 with more losses in cyclical commodities.
Stock AnalysisHere are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
InvestingThe further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
InvestingWest Texas Intermediate oil futures have recently made pronounced movements. What do they bode for the world market?
InvestingGrowing global demand for quinoa has impacted Bolivian farmers' way of life. Should the American consumer be wary of buying this product?
When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>