By: Wealth Daily
October 27, 2011 at 10:28 AM EDT
The Bakken Black Gold Rush
Analyst Ian Cooper takes a look at one part of the country where economic growth isn't a real worry.
With oil running on futures backwardation, slight signs of growth, and falling supplies...
I decided to take a trip to the one spot taking center stage: North Dakota's Bakken region.
Little did I know how hard it'd be to book a hotel room.
Most area lodging is at 100% occupancy for months to come as strippers flock to this part of the country... and need a place to call home for a few nights.
Things are so good in this American hot spot that strippers from as far away as New Jersey are relocating here to do business. After all, the thousands of men coming to Williston, North Dakota, need something to throw their new $125,000 paychecks at.
One of the women tells CNN she makes about the same "amount she would have made in an entire week in Vegas." Another was quoted as saying, “We make more than doctors.”
But who am I to complain about a sudden massive increase in the adult entertainment industry?
When was the last time you heard someone complain about sustainable growth?
It's a typical Saturday night at the local pizza joint in Williston. Tables groan under the weight of wings, pizza, and pitchers of beer. Children run around between chairs and hide under tables with new friends.
A high-strung waiter, flapping his gums faster than my jet-lagged brain can handle, tells me it's been like this every night for months.
"I've never made so much money," he admits with a grin as he sets my beer down on the table in front of me.
There's a new way of life for the people of Williston. People are flocking to the town from all over the country, escaping recession-hit towns and salaries that pale in comparison to those the citizens of North Dakota currently boast.
“See that girl over there?” the waiter asks me, tilting his head toward a woman across the restaurant.
“She's a stripper from Atlantic City. Moved here about two months ago, making something like $3,000 a night.”
“That woman over there,” the waiter continues, “is a truck driver out of New York. She moved here last year with three kids under five and that lazy husband of hers. She tells me she just about doubled the income she was making in New York."
“That guy over there?" he gestures with an elbow. "He just moved here from Florida with a wife and two kids. He tripled his salary. He works six days a week, but he tells me it's better than before.”
I nod along. “How do you know so much about these people?” I ask.
“I live with them," he shrugs as he delivers my pizza.
Turns out my chatty waiter and about 20 other families camp out every night in their cars, either in a local parking lot or nearby camp grounds.
“It's all because of the big oil boom around here. There are jobs, jobs, and more jobs to be had. There's no recession here... There just aren't enough homes to house us all right now. I've been sleeping at the campgrounds since I moved here."
Black Gold Rush
There's no fear of a recession in this area. The pay is outrageous. Housing can't keep up with demand.
Unemployment is the lowest in the country; companies are hiring non-stop.
And while the rest of the country struggles to keep the recession at bay, North Dakota has a $1 billion budget surplus as other states face $4 trillion of debt.
The growth is astonishing.
So long as new drilling technology allows for more oil finds in this part of the country, North Dakota's "behemoth" Bakken will continue to boom...
The state has already gone from producing 113,000 barrels of oil a day in 2010 to more than 425,000 today... and it could reach 700,000 barrels a day by 2015:
In fact, Keith Kohl of The $20 Trillion Report has been pounding the table over the Bakken for years. He was one of the first to recommend companies like Brigham Exploration (NASDAQ: BEXP) around $3 — and a few years later, sell it at $36.
Statoil (NYSE: STO) announced it would buy BEXP for $4.4 billion — or $36 per share — giving STO one of the strongest, most solid positions in the Bakken region. This buyout wasn't news to us...
Yet there are companies whose properties are being valued at less than half of what Brigham's property was bought for as they await a buyout.
“I just found one stock that could easily double to $12 — even $15 — from $6 on any buyout news,” Keith tells me.
The Saudi Arabia of America
A few years ago, the U.S. Geological Survey said the Bakken held between four and five billion barrels of oil.
But according to Harold Hamm, founder and CEO of Continental Resources (NYSE: CLR), that's not possible.
“We estimate that the entire field, fully developed, in Bakken is 24 billion barrels,” Hamm told the Wall Street Journal. That alone would easily double our proven oil reserves.
Hess CEO John Hess believes North Dakota's Bakken Shale could triple by 2015 as the company continues to drill. Current output of 39,000 barrels of oil could reach 60,000 by 2012 — and 120,000 barrels by 2015, as it rushes to tap the oil and gas that lay underneath the United States.
And this growth will continue for quite some time...
But what's really exciting about North Dakota is that it's about to overtake California — and maybe even Alaska — to become one of the United States' biggest oil producers.
If it does, the money that could be made by average investors is staggering.
Why wouldn't you invest in the Bakken?
We've been doing it for years, pulling down massive profits for readers. Keith's latest play could easily do the same.
And right now, he's putting the finishing touches on a new report that tells you all about it.
Stay ahead of the herd,
Ian L. Cooper
The Bakken Black Gold Rush originally appeared in Wealth Daily. Wealth Daily is a free daily newsletter featuring contrarian investment insights and commentary.
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