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
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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
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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
10. Current Status: NYMEX $77 ND prices $68 Production 230,000 Rigs 62 Eco-pads: 10% cost saving 4 wells @ pad; less trucks
11. North Dakota’s Economy NDSU Study $8 B illion Gross Business Volume $400 M illion Royalties 46,000 Jobs
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)
16. ND Oil Taxes Third Highest in the US 5% Gross Production 6.5% Extraction 11.5 % 0ff Gross Revenue
17. 11.5% Tax Impact to Mineral Owners 11.5% paid by mineral owner too Impedes Mineral Development
18. Hor/Vert Horizontal & Vertical Production By Month 1986 Through September 2006 Slide Text
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
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
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
22. Robert Harms 701-471-0959 www.northernproducers.com
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