“In addition, we are excited about the recently announced significant appraisal well results in the Paradox Basin where we own 75,000 net leasehold acres,” Hildestad said. “The potential of this play appears substantial. The Cane Creek Unit No. 26-2H well was tested at a stabilized rate of 647 barrels of oil per day and 561 thousand cubic feet of natural gas per day following two weeks of production. These results are based on a significantly restricted flow allowing our team to properly manage production operations, gather performance data and minimize natural gas flaring.”
Natural gas prices are at a 10-year low and the company's dry natural gas properties are held by production. The company believes it has been prudent in curtailing natural gas production in an over-supplied market and instead focusing on its substantial liquids-based opportunities.
Natural gas prices also had an effect on the pipeline and energy services business, which experienced decreased storage and gathering volumes. Total transportation volumes increased, principally related to completion of a new pipeline to move natural gas from a third-party processing plant that began operating in December. In addition to a proposed diesel topping facility, the pipeline business continues to explore opportunities in other liquid-based midstream projects.
Significantly warmer weather affected sales at the utility business segment. Natural gas sales volumes declined 12 percent, with temperatures nearly 31 percent warmer than the prior year in the Plains states service territory and 11 percent warmer in Idaho. The North Dakota Public Service Commission recently approved a request for advance determination of prudence for an 88-MW, approximate $85 million natural gas generation facility that the company plans to build in North Dakota, part of the utility's approximate $915 million five-year capital growth program.The construction business continued to see signs of stabilization in the construction market. Earnings at the construction services business increased to $11.4 million compared to $4.6 million a year ago, driven by higher construction revenue and margins and higher equipment sales and rental. Although the construction materials segment experienced a normal seasonal loss, we are optimistic about the prospects for earnings from prior green fielded operations in Cheyenne and the Bakken region.
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