Sunday, December 4, 2016

Update On The Bridger Wells In Rattlesnake Point Oil Field -- December 4, 2016 -- IN PROGRESS

In a long note like this, there will be typographical and factual errors. The NDIC map server was a bit tough to sort out but I think I have it correct; but there could be errors. If this information is important to you go to the source.

In a long commentary, facts and opinions will be interspersed. It is often difficult to separate facts from opinions.

If something appears wrong, it probably is.

Finally, I did not proofread this page in its entirety. I consider the page to be a PAGE IN PROGRESS FOR AT LEAST A WEEK giving readers a chance to weigh in on the post.

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To bring yourself up to speed regarding with the Bridger wells, check out this post first, where I track the Bridger/Bonneville wells.

There appear to be eleven (11) CLR Bridger wells. The Bridger wells are on Bridger pads as well as Bridger-Bonneville pads, all in Rattlesnake Point oil field.

The Bridger wells run from the south to the north; the Bonneville wells rum from the north to the south.

The eleven (11) Bridge wells are broken down as such:

Five "H" wells, MB: middle Bakken wells. Four of the five "H" wells have been completed and are producing.

Three "H1" wells, TF1: Three Forks, first bench. Only one H1 well has been completed.

Three "H2" wells, TF2: Three Forks, second bench. Only one H2 well has been completed.

Here are the Bridger wells. It's a busy slide. I've tried to line up the "H" wells across the top; the "H1" wells in the second line; and, the "H2" wells along a third line. The "t" date is the month/year the well was tested; generally a well is tested within two months after the well is completed. FracFocus will report exactly when wells are fracked.

SI/NC (DUCs): these wells have been drilled to total depth; they were not fracked at the time they were completed. It is possible they have been fracked; if so, their production reports will soon be available.



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Observations

#17089, middle Bakken well, was completed 4/08. The production profile is quite unusual. Notice the production profile from 7/14 to 4/16.

By 7/14 this well had plateaued at 350 bbls / month. Then taken off line, and production jumped to 3,000 bbls of oil per month. Some suggest this could be simply due to built up pressure while the well was taken off line but that pressure should have "exhausted" itself after a couple of months. Note that the increased production has lasted for many months. It's hard not to think that this increased prodution was due to two "neighboring wells" fracked at this time (8/15).

The problem is that the middle Bakken well that was fracked 8/15 is 1,320 feet away; and, the other "neighboinrg" well that was fracked was from a different formation, the TF1.

But, it's been talked about before the geologic relationship between TF1 and the middle Bakken.

Here's the production profile for #17089:

BAKKEN6-2016302106222060225321592373
BAKKEN5-201631231922316772778342744
BAKKEN4-2016302141202160525422472295
BAKKEN3-201631207620366672494162478
BAKKEN2-201626208522019352472342438
BAKKEN1-2016312849292210903370373333
BAKKEN12-201527260226781158306503065
BAKKEN11-20153321227823820382
BAKKEN10-201531219820141407261002610
BAKKEN9-201530210122272428251302513
BAKKEN8-20152112199112978136401364
BAKKEN7-201500990000
BAKKEN6-20150000000
BAKKEN5-20150000000
BAKKEN4-20150000000
BAKKEN3-20151003000
BAKKEN2-20150000000
BAKKEN1-20152833542911219214745
BAKKEN12-2014314824371533393318
BAKKEN11-201430533687158392252140
BAKKEN10-201422407222345461110351
BAKKEN9-20143044367018343836672
BAKKEN8-201431474448150378243135
BAKKEN7-20143150645214336427985


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Now, take a look at two middle Bakken wells that were fracked back in 2/10. What was the production profile at the time the middle Bakekn well that was fracked 8/15?

First, #19013:

BAKKEN1-201631303633062380364023811259
BAKKEN12-201531564957895098637244171955
BAKKEN11-20152235373205402028542043811
BAKKEN10-201523742977717373873656263110
BAKKEN9-20153013506130791406216404635110053
BAKKEN8-2015261330613330161611574197835958
BAKKEN7-201592312252224434430
BAKKEN6-2015301276133346019251817108
BAKKEN5-2015311390133546817861631155
BAKKEN4-2015301395133652718921569323
BAKKEN3-201531163917955852142209052

It's hard to believe that taking a well off-line for less than a month resulted in a build-up in pressure to the extent that production went from 1300 bbls/month to 13,000 bbls/month.

Now, #19011:

BAKKEN1-2016126881319214879287592
BAKKEN12-2015311787144993019176741243
BAKKEN11-201512109030771764
BAKKEN10-20156140050889089
BAKKEN9-20152110011307269103358975
BAKKEN8-201526296928401012290317301173
BAKKEN7-2015126476702196216210
BAKKEN6-2015302471268760832432921322
BAKKEN5-2015312504224267529562270686
BAKKEN4-2015302569272770728712192679
BAKKEN3-2015312874293171231862981205

I can't make any sense out of #19011. This well's production profile has been very erratic over varying periods. One can see the difficulty of figuring this well out when it was only on line for only 6 days in October, 2015, (producing a trivial 140 bbls) and on line for only 12 days in November, 2015, (producing a trivial 109 bbls).

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What I Will Be Watching For

With regard to the halo effect, the next data point to watch will be the production profile of #17089 when #31846 is fracked.

With regard to the halo effect, the next data point to watch will be the production profile of #29552 when #31847 is fracked.

With regard to the halo effect, the next data point to watch will be the production profile of #29554 when #31845 is fracked.

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Discussion to continue.

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Because this was a particularly long note, I had my assistant check the numbers:

Two XTO Wells Coming Off Confidential List Monday; Will Be DUCs -- December 4, 2016

Monday, December 5, 2016
None.
Sunday, December 4, 2016
32366, conf, XTO, Werre Trust Federal 21X-3B-N, Bear Creek, no production,
Saturday, December 3, 2016
32367, conf, XTO, Werre Trust Federal 21X-3F2-N, Bear Creek, no production,

Army Hands Victory To Protesters -- Won't Issue Easement -- December 4, 2016

Link here.

From Twitter: 
Joe McMonigle:  On very political DAPL permit denial: Courts will overturn and approve if not done before by Trump.
When a president in his last full month of presidency shuts down a $4 billion pipeline which is 99% complete and was approved by a gazillion government agencies as the necessary and as the best route option, it puts to rest all that media anxiety about an incoming president's conflicts of interest. Something tells me I have less to worry about the incoming president's "conflicts of interests" compared to the decisions made by a fathomless ignorant incumbent.


A huge "thank you" to a reader for providing the graphic.

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John Kemp On Twitter

 We don't need a new law. We need a new president.

The Bakken: How Things Stand Near The End Of The Year, 2016 -- December 4, 2016 -- IN PROGRESS

Sometime in 2014, I started losing interest in reviewing the quarterly presentations of the operators in the Bakken. Perhaps I wasn't losing interest. Better said, it was simply overwhelming. And quarter-to-quarter, and covering a dozen operators in the Bakken, the changes were staggering, but at the same time incremental, if that makes sense.

Yesterday, after a long hiatus I went back and looked at the most recent presentations by Whiting and Oasis. I will look at CLR later today and then update this post.

Observations.

EURS. Staggering. See next "story" below the break, from Wood Mackenzie.

Both Whiting and Oasis consider 900,000 boe EURs the new norm, and are on track to go significantly higher, to 1.5 million boe EURs.

For newbies, this is a screen shot from an SM Energy presentation, five years ago. The Bear Den, in the Watford City area, is one of the best spots in the Bakken. At the end of 2011, EURs were 550,000 in the middle Bakken and 450,000 in the Three Forks (not otherwise specified; all assumed to be first bench). In five years, we've gone from 500,000 boe EURs to 1.5 million boe EURs:


Drilling times:
  • two huge changes since the beginning of the boom
    • the first change, of course, is the huge decrease in time it takes to drill a two-mile horizontal; at the beginning of the boom, 45 - 65 days. 
    • the second change: the way some operators are measuring drilling times. Whiting tracks the time from spud-to-spud: the clock starts ticking when the first well is spud, and continues to tick, until the rig is moved to the next well, and the next well is spud. Whiting has that spud-to-spud time down to 14 days or so in the Bakken; in the Niobrara, Whiting has it down to 7 days. In the old days it could take a week or so just to "tear down" rig once a well had been completed, load it on a truck, move it to the next location, and then set it up again. During the muddy season -- spring thaw -- roads were closed and rigs did not move. Now, even in the spring thaw, rigs can continue pad drilling if the pad is dry; fracking can wait
Cost per completed well:
  • costs have come way, way down, but there is a twist
    • some operators are "advertising" the costs to complete a DUC, in effect not providing the sunk costs in drilling the well to TD; costs to complete a DUC are in the range of $3.8 million; total costs are in the range of $6.8 million
  • I remember at the beginning of the boom, talking about $10 million wells -- and some of those were short laterals
Bragging rights, net acreage in the Williston Basin:
  • CLR: 860,000 net acres
  • Oasis: 540 net acres (once the SM Energy deal [55,000 acres] closes (scheduled to close December 1, 2016)
  • XTO: 494,000 net acres (website, December, 2016); 531,000 net acres  (June, 2015)
  • Whiting: 433,125 net acres
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"You Can Enter The Bakken A Lot Cheaper Than You Can Enter The Permian -- Wood Mackenzie

From The Bakken, October 12, 2016, before the OPEC meeting:
Jonathan Garrett, the Bakken expert for Houston-based Wood Mackenzie, has a message for those who think the Permian Basin in Texas is the place to be. 
"The Permian has a lot of upside and the economics to support the interest, but for investors looking from a full-cycle basis, you can enter the Bakken a lot cheaper than you can enter the Permian," he said. "Some of the best parts of the Bakken rival some of the best parts of the Permian. That should at least pique the interest of folks looking outside of west Texas. Developing a portfolio in some of those core areas of the Bakken might make a lot of sense."
And then this (I like it when I see the words "humongous" and "Bakken" in the same paragraph).
Although the number of well completions in the Bakken have been steadily declining, the types of wells being drilled and completed has prevented production from dropping sharply. 
"We track completions in North Dakota closely and while the completion count has been anemic, the wells that are getting completed are absolutely humongous," Garrett noted. "Operators are completing wells that will produce upwards of a million-plus barrels from an EUR standpoint. A few years back, wells were being completed that produced half that."
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COP Adding Rigs Sooner Than Expected In The Bakken

From The Bakken, November 2, 2016, before the OPEC meeting:
ConocoPhillips intends to add drilling rigs to the Bakken sooner than expected. Although the world’s large independent exploration and production company said earlier this year it planned to add rigs to its Bakken operations in 2017, the company unveiled plans this week to bring in three rigs before the end of the year. “We’ve already been able to secure drilling rigs and pressure pumping crews at attractive rates to maintain our low cost of supply, so we expect this incremental drilling work to start ramping in November,” said Al Hirshberg, executive vice president for drilling and projects.
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The Red Queen

I can't wait to check the North Dakota crude oil production numbers next July, which we won't know until September, 2017, about ten months from now. In October, 2016, Lynn Helms suggested that North Dakota's crude oil production will bottom out at 900,000 bopd in June or July next year.

That statement was made before OPEC announced plans to cut/freeze oil production. On the day the October, 2016, Director's Cut, was released, it was reported that there were 33 active rigs in North Dakota. Today there are 39:


12/4/201612/04/201512/04/201412/04/201312/04/2012
Active Rigs3964191192181

(39 - 33) / 33 = an 18% increase in the number of active rigs. (In July, 2016, there were 31 active rigs, and recently the number of active rigs has occasionally hit 40: (40 - 31) / 31 =  a 29% increase in active rigs.

If operators continue to add rigs -- perhaps another 10 by next summer, and if the DAPL is completed, my hunch is that North Dakota will be back above 1 million bopd by next summer. 

EV Sales For November, 2016 -- Another Good News Story For The Coal Industry -- December 4, 2016

Link here. If I recall correctly, someone said there were two additional sales days in November, 2016, compared with last November, 2015. I don't know.

Regardless.

EVs sold in the US in 2016: 13,337
EV's sold in the US in 2015: 10,070

For November, 2016, top sales:
  • Chevrolet Volt: 2,531
  • Ford Fusion Energi: 1,817
  • Nissan Leaf: 1,457
  • Tesla Model S: 1,400
  • Tesla Model X: 900
  • Toyota Prius Prime: 781 (arrived November, 2016)
  • Ford C-Max Energi: 721
  • BMW i3: 629
  • BMW X5 xDrive40e: 437
Arriving next month: BMW 7403
  • Chevrolet Bolt EV
  • Kia Optima PHV
  • Chrysler Pacifica Hybrid
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Good News for Coal Industry
EVs Sales To Surge By 2035 -- Wood Mackenzie

Link here

Saturday, December 3, 2016

Chain Of Command -- December 3, 2016

This may be of interest in early 2017:

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Tick, Tick, Tick

From the AP: Venezuala to issue larger bills; currency continues to melt. Data points:
  • Venezuela bordering on economic collapse
  • triple-digit inflation
  • largest note currently worth about 2 US cents on the black market
  • Venezuela currency lost 67% of its value on the black market last month -- the steepest monthly plunge ever

Oasis Petroleum -- November, 2016 Presentation

This is a very, very impressive presentation. My recommendation: skip my post and go directly to the presentation.

Oasis: only "play"is the Williston Basin
  • 485,000 net acres
  • pending: another 55,000 net acres; to close December 1, 2016 (see deals at sidebar at the right or go direct to this post
  • with acquisition, I believe Oasis is now the #2 operator in the Bakken based on net acreage, surpassing Whiting by just a bit; CLR remains out front by a large margin
  • 91% held by production
  • 97% operated
Inventory
  • 395 drilling units
  • ~ 25 years of drilling activity
  • more than 1,300 locations are economic at $40
EURs -- look at this: Whiting says the same thing --
  • 1.55 million boe EUR in area around Watford City (Wild Basin area)
  • the pending acquisition includes a fair amount of acreage in the Wild Basin rarea
  • this is even more amazing: the 1.55 million boe EUR is new; but the previous EUR was 1.2 million boe; these are incredible EURs
Costs
  • LOE down to $7.00/boe; was over $10/boe as recently as 2014
  • bringing well costs down to $5.2 million; Slickwater wells
Acquisition
  • 55,000 acres; a bolt-on acquisition
  • bolt-on means that the new acreage abuts producing acreage
  • will ad 34 operated drilling units
  • will result in a 25% increase in OAS core inventory position
Average spud to rig release
  • 2014: 22 days
  • 2016: 13 days
DUCs
  • about 80 DUCs right now
  • "highly economic" at current strip (~ $3.5 million completion cost)
  • ~ 80% of DUCs in core  
EUR Curves



These curves are simply staggering.

Gathering system: pipeline and CBR:



Expanding takeaway capacity out of the Williston Basin:

  • Note: pay particular attention to the "Guernsey." Previously discussed in light of the DAPL.

Finally, We're Done -- Jill Stein Throws In The Towel In Pennsylvania -- December 3, 2016

Jill Stein calls off recount attempt in Pennsylvania. It does not matter what happens in Wisconsin and / or Michigan. [Update: actually, there's a bit more to this but hopefully we're near the end. I track the "recount" here.]

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The Trump Style

A reader sent me a link to an interesting look at Trump's "management" (for lack of a better word) style. From the article the reader noted this:
The Trump Organization, which began in the early 1970s but has grown rapidly since 1980, includes his patient younger brother, who terms himself the "plow horse" of the team; a shrewd and cautious negotiator whose previous employer was wildly successful before its fortunes plunged; and two former city commissioners with valuable contacts in government and law.
It includes his wife, Ivana, who is president of the Plaza Hotel, and three other very strong-willed women, among them one of the few female construction supervisors in the industry. "I have found in many cases {women} are more effective than a man would be," Trump said. "They're very dedicated to showing me that they can do it."
Something tells me world leaders are scouring the "literature" to  learn more about Trump. My advice: watch the first few seasons of "The Apprentice."

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Teaching Her Best Friend To Read

Sophia is 2.5 years old. One of her favorite activities is being read to. She also has her favorite books.

Her favorite friend is a huge, stuffed monkey, which goes by the name, "Little Georgie," after her great-uncle with the same name who passed away some years ago.

When she comes home from TutorTime, she runs into the house, runs past her mom, runs past her sisters, and heads directly to "Little Georgie" to give him a huge hug.  And then read to him.


Most remarkable: the book is being held correct-side up.

Little Georgie is not making as much progress as we had all hoped.

From Whiting's November, 2016, Presentation; Targeting 1.5 Million BOE EURs -- December 3, 2016

The usual disclaimer

Whiting is projecting 1.5 million boe EUR wells in the Bakken. Currently, the standard is 900,00 boe EURs. 

For newbies: search "EURS" at the blog. I have long forgotten but early on in the boom, EURs of 400,000 were the norm, but by 2014, we were talking some remarkably higher estimates. See this post: EURs in excess of 2 million boe?

Highlights:
  • 3Q16 LOE below low end guidance at $7.98 / boe ("below" is good)
  • Williston Basin 5+ million pound completions: tracking 900,000 boe-type curves
  • Williston Basin 10+ million pound completions: tracking1.5 million boe-type curves
  • thirteen (13) new McKenzie County test at average rate of 3,727 boe/day 
  • Whiting is focused on the Bakken and the Niobrara
    • positioning the company to be the operator in those two basins
    • Williston Basin: 106,000 boe/day
    • Niobrara (Redtail): 11,000 boe/day
  • Bakken acreage
    • 738,479 gross acres
    • 443,125 net acres 
    • 99% held by production
    • completed well cost: $6.8 million
  • Bakken development plan
    1280-acre units
    • 5,471 potential gross drilling locations
    • targeting 900,000 boe EUR wells in 2016
    • approximately 22 DUCs at end of CY2016
  • correction from original post (see first comment): Whiting's most recent presentation does not mention southwest North Dakota but a reader says that 6% of Whiting's locations are still in Stark County
  • most of Whiting's interests are around Williston, Watford City, Parshall
  • EUR s have jumped from 700,000 boe to 900,000 boe using "enhanced completion")
  • but look at this:

Record-setting production: According to their data, Whiting is the top producer in the Bakken based on initial 90-day production rate for wells completed between August, 2015, and July, 2016. Peer group includes Newfield, QEP, Oasis, XTO, Hess, EOG, BR, CLR, and SM Energy.

Drilling times -- Bakken -- Niobrara:
  • 1Q12: 40 days Bakken; 16 days Niobrara
  • 1Q13: 30 days Bakken; 18 days Niobrara
  • 1Q14: 30 days Bakken; 12 days Niobrara
  • 1Q15: 24 days Bakken; 15 days Niobrara
  • 1Q16: 14 days Bakken; 7 days Niobrara
Note: the drilling times are "spud to spud" -- this is really quite amazing -- the time it takes a rig to drill a well and then move to thenext location adn begin drilling the next well. When the Bakken boom began, it could take weeks to get a rig torn down, moved to a new location, and then set back up before beginning drilling again.
Cash flow:
According to their data, Whiting is the top operator based on cash flow vs CAPEX. WLL cash flow/CAPEX ratio is 200%. The peer group ranges from 175% to a very, very low 25%. [100%: Cash flow = CAPEX; 200%: cash flow is twice CAPEX]. Peer group includes Noble Energy, Denbury Resources, CLR, Cimarex Exploration, EOG, SM Energy, Pioneer Natural Resources, Murphy OIl, Concho Resources, Oasis Petroleum, and Range Resources.
Very liquid balance sheet.

Hedges:
  • 2016: $44 - $74
  • 2017: $53 - $70
There is so much to write about / consider when discussing hedges that the actual prices are only a single data point, but I don't want to go down that road right now.

Trump And The Generals; Nothing About The Bakken -- December 3, 2016

I'm not sure if President-elect is predictably unpredictable or unpredictably unpredictable.

This screenshot is from the Drudge Report a few minutes ago. This has been at the Drudge Report for several days now:


One of the links takes you to The New York Times with this story, again, another screenshot:


Now, moments ago, this is the top story over at Google Finance
Zenefits CEO David Sacks is stepping down amid speculation that he has been tapped by billionaire technology investor Peter Thiel to assist president-elect Donald Trump.
In a memo to Zenefits staff, Sacks said late Friday he would become chairman of Zenefits and lead a search for a new CEO.
The Wall Street Journal reported late Friday that people familiar with the matter said Sacks would help Thiel, one of Trump's few Silicon Valley supporters, with the transition. 
So, again, we have the trope: "one of Trump's few Silicon Valley supporters" but then Trump starts naming folks from Silicon Valley to his team. Running circles around the media.

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Trump and The Generals

"Trump and the Generals" has brought back some great memories of my USAF career. But enough about me.

Walk, Don't Run.

By the Ventures.

17-y/o drummer had a lot to do with the original arrangement.

Unfortunately, the 17-year-old was (legally) too young to go on tour so the Ventures hired another drummer.

Meanwhile, the 17-year-old drummer went on to college, get his degree, joined the USAF, subsequently rising to 4-star general, the top rank in peacetime military.

His name: George Babbitt.

From his resume:
10. August 1980 - September 1981, commander, 36th Aircraft Generation Squadron, Bitburg Air Base, West Germany
11. September 1981 - July 1985, assistant deputy commander for maintenance and later, deputy commander for maintenance, 36th Tactical Fighter Wing, Bitburg Air Base, West Germany 
My first assignment to Bitburg Air Base was from 1983 to 1986. Then-lieutenant-colonel Babbitt was responsible for the F-15s. No doubt he was responsible for the maintenance support for all the "bare-base" operations to which we were deployed, the most notable being Sidi Slimane, Morocco. 

Walk, Don't Run, 1998 -- Ventures With George Babbitt


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A Small World, A Wonderful World

Some things never cease to amaze me. Today it's Amazon (again) and global commerce. I was looking for a better price on a rather expensive book with limited availability. Of course, it was available through Amazon. I ordered it about ten days ago. Ah, there it is: packing slip says it was ordered November 22, 2016 -- about twelve days ago.

Today it arrived. Return shipping address:
Glynn's Collection
Lydican, Claregalway
County Galway H91 X7E2
Ireland