Friday, February 23, 2018

Off The Net Until Later This Evening -- Family Commitments -- February 23, 2018

6:11 p.m. Central Time. Good luck to all.

Four New Permits; One DUC Reported As Completed -- February 23, 2018

Active rigs:

$63.552/23/201802/23/201702/23/201602/23/201502/23/2014
Active Rigs574139126187

Four new permits:
  • Operators: Hess (3); Oasis
  • Fields: Alkali Creek (Mountrail); Painted Woods (Williams)
    Comments:
Nine permits renewed:
  • QEP (4): four Moberg permits in McKenzie County
  • Enerplus (2): a Carp permit and a Beans permits, both in Dunn County
  • CLR (2): two Syverson permits in Williams County
  • Whiting: a Bartleson permit in Mountrail County
A dry hole:
31603, dry, CLR, Anderson 5-4H,
One producing well (a DUC) reported as completed:
32498, 866, Hess, EN-Rehak-LE-155-93-0718H-1,

NDIC Hearing Dockets For March, And, April, 2018, Posted

Link here.

Dockets are tracked here

The usual disclaimer applies.

Highlights completed; I will come back and complete the entire dockets later. 

Wednesday, April 4, 2018

26494, XTO, petitions for an order for the unitized management of the Hofflund-Bakken Unit Area, consisting of lands within the Alkali Creek field, Capa field, Charlson field, Grinnell Field, Hofflund field, and West Capa field in Williams and McKenzie counties
26495, XTO, application for an order determining that the plan of unitization for the Hofflune-Bakken Unit Area (as described in case #26494) has been signed, ratified or approved by owners of interest owning that percentage of the working interest and royalty interest within said unit, Williams and McKenzie counties
Thursday, March 22, 2018 

26464, Resonance Exploration, Sergis-Madison, establish a 640-acre unit; establish a 560-acre unit; a multi-lateral horizontal well of each spacing unit; Bottineau County
26465, Resonance Exploration, Russell-Spearfish/Madison, establish a 640-acre unit; drill a multi-lateral horizontal well; Bottineau
26479, XTO, Hofflund-Bakken; eleven (11) wells on an existing 1280-acre unit; Williams County

Wednesday, March 21, 2018 

26438, Lime Rock, Dimond-Bakken; establish six 2560-acre units; 3 wells each; Burke County
26439, Lime Rock, Dimond and/or Vanville-Bakken; establish two 1280-acre units; ten (10) wells each; Burke County
26441, Whiting, Big Stone-Bakken; establish a 160-acre unit; a vertical well; Williams County
26443, Foundation Energy, temporary spacing for a pool discovered with Lardy well (#29562); Golden Valley County
26445, Oasis, Camp and/or Willow Creek-Bakken; establish two laydown 1760-acre spacing units, with 11 wells one one; and, seven wells on the other; Mckenzie, Williams
26449, Lime Rock, Dimond-Bakken, authorize ten wells on each of eight 1280-acre units; a total of 80 wells; Burke County
26450, Whiting, Alger-Bakken; on an existing 1280-acre unit; 11 wells; Mountrail County
26456, MRO, Reunion Bay-Bakken; nine wells on each of two 1280-acre units; Mountrail County;
26460, BR, Croff-Bakken; authorize 14 wells on a 1280-acre unit; McKenzie

EIA Updates Their US Energy Mapping System -- February 23, 2018

Link here.

This is a lot of fun when you get used to using the interactive map.

For example. I don't know how accurate this is or how current it is, but this is the EIA data base for
  • natural gas processing plants in North Dakota (and a bit of eastern Montana); and,
  • CBR (rail) terminals

WTI Heading For A "64-Handle" -- February 23, 2018; Turkey Becoming Unhinged; Enerplus Crushes Earnings Forecast

Wow, I almost missed this -- I'm not sure what "suggested" I check the oil market at this moment, but there it is, WTI about $63.63. Remember: most operators in the Bakken, according to their 4Q17 earnings presentations are "cash-neutral" at $45 - $50. I don't think I saw any operator said they were "cash-neutral" at WTI greater than $50. The number to watch: $63.63.

From oilprice.com, all in 24 hours:

Note: I did not look at many or listen to many presentations but the few I did ...

Enerplus: quarterly profit beats expectations.  27 Canadian cents/share vs 17 Canadian cents/share. ERF shares up 7% today.

*******************************
Other News

Canadian Kinder Morgan's TransMountain: British Columbia backing down? It appears Alberta oil may, in fact, reach the west coast despite objections of "British Columbia."

Turkey becoming unhinged: Turkey's navy threatens to sink Eni drilling ship offshore Cyprus. Go ahead, do it. And kiss your aspirations to be a full member in the EU goodbye. Wow, what idiots. (Yes, I know there's a bit more to this. But not much.)

Wow, Mexico to emulate Venezuela? The front runner in the Mexican presidential election?
A "leftist" candidate who plans to "scrupulously review" his countries oil sector policies. Wants to discontinue crude oil exports to the US. Wow.  From wiki:
As in the 2006 and 2012 elections, the 2018 campaign has featured numerous accusations and attack ads directed at the leftist frontrunner candidate Andrés Manuel López Obrador (AMLO), who will be contesting the elections with the support of his party MORENA ("Movimiento de Regeneración Nacional", "National Regeneration Movement"). 
A Red Scare-like campaign has been used by the PRI and PAN candidates to convince voters that an AMLO victory would turn Mexico into "another Venezuela". In a speech, PRI president Ochoa Reza stated that "if the people from MORENA like Venezuela so much, they should just go and live in there".
The wall: come 2021, even the Californians will want that wall. See previous note above.

Oil imports from Mexico:

Market Action For Selected Bakken Operators Over The Past Six Months -- February 23, 2018

Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on what you read here or what you think you may have read here.

Dislcaimer: this was done quickly and there will be typographical and factual errors. Opinions are interspersed with "factual data." If this is important for you, go to the source.

Disclaimer: The exact share prices were picked out quickly and may be off by a few pennies but, in general, they are close enough for purposes of the blog.

*************************************

This is kind of interesting. This blog is not an investment site and I really don't care about investments in the Bakken or the oil industry all that much in the big scheme of things with regard to the blog. I've talked about that many times and I think I talk about it on the welcome/disclaimer. It's hard to follow or understand the Bakken if one doesn't follow the (stock) market; US politics; and, global geopolitics. This post concerns the stock market.

Almost exactly six months ago, a "Karl Francis, long only" had a fairly long contribution to SeekingAlpha last August 23, 2017.
IP30 Data in the Bakken: from a SeekingAlpha article last August 23, 2017.
Karl Francis describes himself as "long only."

I thought the article was fairly balanced overall but I did not read it closely. One observation the writer made:
Average IP30 has been relatively flat from the second half of 2014 to the first half of 2016, but made a significant jump in the 2nd half of 2016, lifting the 2016 average to 690 bopd. There are two main reasons for this. The first is the extraordinary IP30 performance jump of a few companies, notably WLL and OAS. The second is the strongly falling contribution of under-performing XTO wells (from 83 new wells with IP30 in the first half to 20 in the second half of the year).
Disclaimer/note: as an aside, I don't know if the writer defined "IP30" nor do I know if he took into account the phenomenon of "constrained production" in the Bakken. I would like to see the IP30 in the Bakken defined as the max IP30. The first six months of unconstrained production in the Bakken is probably the best parameter (UP6M), followed by the "EUR type curve" once we have the UP6M.

Note: I find it interesting that the industry continues to use parameters suited for vertical, conventional wells instead of migrating to parameters better suited for horizontal, fracked, unconventional wells. 

Note: as another aside, I don't believe the writer took into account short laterals vs long laterals. In this case, it probably does not matter because my hunch is that 99.9% of all wells in his sample were long laterals, but if not, the small number of wells sampled (as the writer acknowledged) would have a huge affect if even a few short laterals were included in the data pool. 

Finally, done with disclaimers and notes: Although I thought it was a fairly balanced article (again, I didn't read it closely) I was surprised by how negative most of the comments were.

I assume the majority of folks that come to SeekingAlpha follow the market and probably invest in the market. Of those who invest in the market, I would not be surprised if a large percentage are short term traders ( horizons less than six months). 

It seems most folks commenting were looking at the Bakken as a whole from an investment point of view. I think they would have done better had they used the data to separate the wheat from the chaff, separate out the better companies from the others. (Defining "better" is in the eye of the beholder; it's very, very difficult, and the definition would vary among folks based on their knowledge of the oil industry).

Interestingly, in this case, it would not have mattered a whole lot, trying to separate out the better companies. With minor exceptions, for short term investors, the appreciation at the "high water" mark was exceptional (I doubt it got the attention of CNBC). At six months the appreciation is still remarkable (again with some exceptions). Whiting, up 60% at six months, as perhaps the best example, and, oh, by the way, the writer singled out Whiting as one of two Bakken operators with the "best wells." Another open book test.

As an aside, the biggest exception at six months was Newfield. The other poor performer was XOM (XTO is a subsidiary). I can't speak to Newfield, but I've long considered XOM to trade like a utility company, not an oil company. [Actually the biggest exception was HRC, but that's another story for another day.]

So, without further ado, a look at the share prices of the companies mentioned in the linked article below, at three months and six months after the article was posted.



Aug 25, 2017
High During The Six-Month Period
Percent Change At The High
Feb 22, 2018
Percent Change Over Six Months
Hess
38.36
54.72
43%
47.08
23%
Whiting
17.68
31.38
77%
28.26
60%
CLR
33.42
58.33
75%
48.44
45%
XTO (XOM)
76.33
89.07
17%
75.86
-1%
Oasis
7.27
11.09
53%
8.37
15%
COP/BR
43.30
60.49
40%
54.91
27%
QEP
7.50
11.05
47%
8.63
15%
Statoil
18.62
24.22
30%
22.59
21%
EOG
84.62
118.47
40%
107.09
27%
MRO
10.99
19.28
75%
15.18
38%
SM Energy
13.54
26.84
98%
19.31
43%
Newfield
25.09
34.75
39%
23.46
-6%
WPX 
9.91
15.76
59%
14.34
45%
Enerplus
8.76
11.65
33%
10.47
20%
Zavanna





Petro Hunt





HRC





Friday, February 23, 2018

Peak oil? What peak oil? During the past two years there have been numerous articles on lack of investment in offshore projects which some suggest are desperately needed to forestall a shortage of oil in the out year (think, "Peak Oil"). Today, from a GlobalData press release: investment of $97 billion on top ten offshore oil projects will add 1.6 million bopd by 2025. This appears to be an update of their January 26, 2018, press release when they said the top ten fields would add 1.1 million bopd, and the investment amount has increased from $85 billion to almost $100 billion. Now, an additional 1.6 million and $97 billion in spending. From the earlier press release:
  • 10 projects selected from 126 onshore project globally
  • about $85 billion in CAPEX will be spent over the lifetime of these top 10 onshore projects
  • these top 10 projects will produce almost 10 billion bbls of crude oil
  • [for comparison, the Bakken, a reservoir of at least 500 billion bbls, at 20% primary production, will produce 100 billion bbls; so far the Bakken has produced about 1 x 365 x 8  = 3 billion bbls of crude oil]
  • the average development breakeven = $55/bbl [for comparison, the breakeven across North Dakota is $21/bbl]
  • projects in Russia have the greatest break-even at $92/bbl
  • to bring the 10 projects online: $85 billion
  • by 2025: CAPEX forecast at $50 billion
  • conventional oil Kuyumbinskoye development in Russia leads capital investment with $13 billion over its development lifetime
  • second, in CAPEX: Canada's Telephone Lake (Cenovus Energy), a $10 billion CAPEX development cost
****************************************  
Back to the Bakken

IP30 Data in the Bakken: from a SeekingAlpha article last August 23, 2017 -- I will come back to this one later today. 

Active rigs:

$62.742/23/201802/23/201702/23/201602/23/201502/23/2014
Active Rigs564139126187

RBN Energy: a downside for many midstreamers in new tax law.
While the recently enacted federal tax cuts have been widely viewed as a boon to corporate America, including businesses in the energy sector, a new report by our friends at East Daley Capital finds a major drawback in the law for midstream companies. By slashing the corporate tax rate from 35% to 21% — and by allowing partnerships and “pass-through” entities to take a 20% deduction on their income pre-tax — the new law will increase the return on equity that midstreamers earn on their crude oil, NGL and natural gas pipelines.
That may well lead the Federal Energy Regulatory Commission (FERC) to re-set its formula rates for at least some gas pipelines, and also is likely to heighten regulatory scrutiny of the rates charged by the owners of oil and NGL pipelines. Today, we continue our review of East Daley’s new “Dirty Little Secrets” report with a look at the tax law, the higher pipeline ROEs resulting from the tax cuts, and the midstream companies that may be affected most.

Thursday, February 22, 2018

Interesting Slide From Recent Denbury Presentation -- February 22, 2018

Link here.

The Cedar Creek Anticline (CCA) is located in Montana, just across the state line from the very southwest corner of North Dakota. (It extends a bit into southwestern North Dakota.)

According to slide 10 of 23 of the company's presentation, Denbury has 600,000 acres in several plays across the United States, including in North Dakota, Montana, Wyoming, Mississippi. Among those plays, their Mission Canyon-Pennel play in the CCA (southeast Montana) is the most promising (highest probability of success among its many plays; high productivity potential).

Slide 11 of 23 is most interesting. In the CCA, Denbury reports a successful Mission Canyon, de-risking a multi-well follow-on program.

Their successful well was a short later (4,800 feet) that required no fracking (typical for Mission Canyon wells in North Dakota, but usually vertical wells). The well had a 30-day IP rate of 1,050 bopd; a preliminary EUR of 400,000 bbls oil but will be updated when sufficient production history is established. The graph:


The follow on wells appear to be in Montana but some folks in southwestern North Dakota might be able to see the rigs and/or from their back porches.

**************************************
The Art Page

Mom, dad, Sophia and her two sisters (Sophia is in the middle):

Wow, WTI Jumps -- Up Almost 2% -- Flirting With $63 -- Also Exxon On The Move -- February 22, 2018

Note: initially unable to access NOG press release reporting guidance, but it looks like it may be good news. Shares up 8% before the close; down 2% after hours.  Here's the press release (link here):
  • Northern raises 2018 annual production guidance and now expects a 16 - 20% increase over 2017
  • year-end 2017 proved reserve volumes increased 40% year over year from 54.1 million barrels of oil equivalent (“boe”) in 2016 to 75.8 million Boe
  • the SEC PV-10 value of year-end proved reserves increased 100% year over year
  • fourth quarter production increased 22% year over year and 9.3% sequentially to 1,540,237 boe. Production averaged 16,742 boe per day in the fourth quarter
  • fourth quarter oil differential was $3.51 per barrel, an improvement of $2.71 per barrel compared to the third quarter
  • Northern added 16.9 net wells to production during 2017 and ended the year with an additional 18.3 net wells in process
  • adjusted EBITDA for the fourth quarter was $48.5 million. Northern’s adjusted net income for the fourth quarter was $6.6 million, or $0.10 per diluted share. GAAP net loss for the quarter was $23.8 million, or a loss of $0.37 per diluted share, primarily due to a non-cash mark-to-market loss on its hedge portfolio. [I don't know, yet, what analysts forcast NOG's earnings to be for 4Q17.]
 ******************************************

First, Exxon: could make Beaumont the largest refinery in the US -- being reported by oilprice.com. Data points:
  • Beaumont Refinery currently processes 365,00 bpd; produces 2.8 billion gallons of gasoline annually
  • Exxon could expand the capacity for the Beaumont Refinery to between 700,000 bpd and 850,000 bpd
  • this capacity would be higher than the current largest refinery in the US, Motiva's Port Arthur refinery, at 600,000 bpd; North America's biggest refinery
Much more at the link.

Now, back to WTI: $62.73 near the close of the normal trading day in the US. Tomorrow, for those turning into CNBC you could hear the phrase, "63-handle for WTI."

***********************************
Back To The Bakken

Active rigs:

$62.732/22/201802/22/201702/22/201602/22/201502/22/2014
Active Rigs564339127187

Two new permits
  • Operator: WPX
  • Field: Squaw Creek (McKenzie)
  • Comments:
One permit canceled:
  • WPX: one Hackberry permit in McKenzie County
No permits renewed.

No producing wells (DUCs) reported as completed.

Wow, This Happened Quickly -- EQT To Spin Off Midstream Business -- February 22, 2018

Updates

Later, 7:05 p.m. CT: speaking of "Rover" -- this just in -- moments ago from ArgusMedia -- 
Energy Transfer Partners (ETP) said its Rover natural gas pipeline will not reach completion until the second quarter, up to three months later than its earlier estimate. Delay due to a regulatory issue which has since been resolved.
Later, 6:44 p.m. CT: see first comment --
Regarding EQT ...
The acquisition of Rice will not only enable much longer laterals (there are NO geometric, pre-set drilling units in Eastern states.
Contiguous acreage is invaluable for efficiency), Rice's recognized drill skills will be a huge boost for the new company.

The article mentioned the 1.9 Bcfd Mountain Valley pipe coming online this year - one of 2 opening up the south.mid Atlantic to vast gas supplies (the other being the Atlantic Coast pipeline).

Another massive pipe - Mountaineer Xpress - is under construction and - at 2.7 Bcfd - is almost as big as the well recognized Rover.

This time next year, Appalachian Basin output will soar.
Original Post 

Story at ArgusMedia, EQT:
  • largest natural gas producer in the US when it acquired Rice Energy last year
  • acquisition resulted in proven reserves of 21.4 Tcf of natural gas equivalent
  • sold 3.2 Bcfe/d by end of 4Q17
  • the acquisition hastened the spin-off
  • EQT Midstream Partners will merge with Rice Midstream Partners
  • result: will become the third largest gathering footprint in the US
See link for more numbers.

Another investing opportunity while waiting for the Saudi Aramco IPO.

Disclaimer: this is not an investment site. Do not make investment or financial decisions based on what you read here or think you may have read here. If this is important to you, go to the source.

******************************
@Tesla Charts

These charts are coming out of nowhere, several every few hours; not sure how one can do so many of these charts so fast. Oh, that's right. This is Tesla.