Friday, January 27, 2012

For Investors Only: Marathon OIl Increases Dividend

Link here.

Marathon Oil Corporation ... has approved a 13 percent increase in the quarterly dividend ... resulting in a new quarterly dividend rate of 17 cents per share.

Legislative Presentations -- The Williston Basin, North Dakota, USA

Anonymous sent me this link to legislative presentations. Enjoy.

Eight (8) New Permits -- Wildcat Targeting the Tyler -- Southwest North Dakota -- 35 Miles Southwest of Dickinson

In today's daily activity report:
  • 18216, DRL, Williston Exploration, Vanvig 1, Wildcat, Tyler, Billings County; Williston Exploration, LLC,'s first well; 28-138-102; 35 miles southwest of Dickinson, right where you would expect a wildcat Tyler to be drilled.
Here are the permits:

Operators: CLR (2), BEXP, Crescent Point Energy, Oasis, XTO, Whiting, and Denbury

Fields: Banks, Cottonwood, Capa, Bell, St Demetrius, Poe, Oliver

Crescent Point Energy has another wildcat in Williams; Crescent had a couple other wildcats in Williams County yesterday.

Four wells came off the confidential list and only one was completed/fracked and it was not particularly noteworthy.

However, another twelve (12) wells were said to be plugged or producing.

Eight (8) wells on DRL status reported an IP, including:
  • 19422, 1,536, OXY USA< Beatrice Kubischta 1-15-22H-143-96, Dunn County
  • 20051, 1,169, MRO, Red Feather USA 21-17H, Mountrail County
Whiting canceled a permit:
  • 20309: Mikes Creek Federal 12-28TFH, Billings County

Another CRYO Natural Gas Processing Plant -- Follows On The Heels of The ONEOK Plants -- Plains All American Ross Gas Plant -- The Williston Basin, North Dakota, USA

Ross Gas Plant to be built by Plains All American Pipeline data points
  • a cryogenic gas processing plant
  • "deep cut ethane plus recoveries and specification product fractionation"
  • purity ethane, specification propane, butane plus raw-make NGL stream
  • 50 - 75 million cfd (compare to 100 million cfd at each of three ONEOK plants)
  • to be on-line by 2Q13
  • will deliver pipeline quality residue gas into Williston Basin Interstate Pipeline Company's transmission system
  • the facility will include rail-loaindg and storage facilities
  • first phase: capacity to trans-load 8,500 bbls/day of NGLs and 20,000 bbls/day crude oil
  • second phase: 4Q12; unit train loading of up to 65,000 bbls/day, to be served by a new 16-mile, 10" crude oil pipeline from PAA's Robinson Lake pipeline near Stanley, ND
The press release did not state a dollar amount for the project.

A big thank you to MD for sending me this link.

Triangle Petroleum Schematic for Multi-Pad Drilling in the Bakken, North Dakota, USA

  • Two 1280-acre units side-by-side
  • One 4-well pad in each 1280-acre unit
  • Four long laterals running north from each pad (a total of 8 long laterals)
  • Alternating "middle Bakken" with "Three Forks" long lateral
  • Terminal separation: 1,230 feet between laterals in same formation
  • Source: Triangle Petroleum, corporate presentation, January, 2012
Corresponds with what others are doing

Confirms that fracking is effective about 500 feet radially; 1,000 feet diameter

Triangle states: it has a lack of near-term lease expirations

Zipper frac

Multi-pad drilling: saves about $25,000/rig move (~ $225,000/8 wells)

Random Comment Regarding Fracking Spreads in the Bakken -- Backlog Continues To Worsen -- The Williston Basin, North Dakota, USA

According to Triangle Petroleum, corporate presentation, January, 2012
  • Operators with 4 rigs or less make up approximately 40% of the market and are grossly underserved by incumbent services companies struggling to maintain pace with demand from larger customers
  • Current idle well inventory waiting on fracturing services is estimated at +400 wells with an estimated market of +$4 billion and growing
  • Estimated backlog of 350-400 wells Waiting on Completion (WOC) 
This blog noted some time ago that smaller operators were last in the queue to get fracking scheduled; this seems to confirm that observation

The industry said in 2Q11 that it would catch up with fracking by 3Q/4Q11. In fact, the backlog appears to be worsening.

I am aware that Oasis, Triangle, and Chesapeake have their own fracking spreads; in addition, some operators have contracted out to dedicated fracking spreads if they don't have wholly-owned subsidiaries.

GeoResources -- One of the Stronger Shale Oil Companies -- Seeking Alpha

Link here.
One of the top takeover candidates in North American shale plays is GeoResources, which boasts leaseholds in the Bakken Shale and the Eagle Ford, has a market capitalization of only $760 million. The company owns 46,000 net acres in the Bakken, of which it operates 33,200 acres. GeoResources has drilled and completed eight wells in a 25,000-acre block near the border between North Dakota and Montana. In 2012 the firm plans to drill between 23 and 26 gross wells in which it will have a 25 to 30 percent working interest.
Personal note: it's been my observation that GEOI is getting more active in the Bakken through its wholly-owned subsidiary, G3 Operating.

Warren To Ship Western Coal to West Coast --> China

Warms the cockles of my heart. I have been following this story for some time.

All I can think of is all those dads and moms who will finally find work.

Work defines folks. Period. Dot. I can't think of many things more sad (sadder?) than folks who desperately want to work and can't find jobs. Somehow "occupiers" living off the largesse of their families or trust funds in the urban cities on the East Coast with the intent of denying others work is the height of hypocrisy. Carrying the banner of "environmentalism" doesn't do it for me.

The Spanish conquistadors, in their quest for gold, were preceded by priests carrying the banner of Catholicism. Not much as changed. Just the word on the banner.

In case the link is broken, this is what the story is all about:
Despite opposition from environmentalists and downtown Rainier, Wash., business owners, port commissioners Wednesday approved lease options for two coal terminals that would ship Powder River Basin coal from Wyoming and Montana mines to customers in Asia.

The five-member Port of St. Helens commission unanimously approved a lease option from Pacific Transloading LLC, a subsidiary of Australian coal company Ambre Energy, to operate a barge unloading dock at Port Westward, north of town.

Commissioners also voted 4-1 to approve a lease option from Houston-based energy giant Kinder Morgan to build potentially the largest coal terminal on the U.S. West Coast.

The Sky Is Falling! The Sky Is Falling! CVX Posts Its Largest Earnings Decline in Two Years

.... from $2.64/share to $2.58/share.

Never mind.

I've told this story many, many times. I bought my first position in Texaco -- before it was CVX -- when it declared bankruptcy. And have never looked back.

It pays 3% and has a p/e of 7.7.

I remember when I first started investing thirty years ago: I was told to look for $6 stocks paying 6 percent with a p/e of 6. No joke. I guess that's why I missed AAPL when it was selling for $20, had no p/e, and was paying no dividend.

Everything's relative.

CVX paying 3 percent. What's your favorite money market account paying?

Be advised of disclaimer at the sidebar on the right. This is not an investment site. This is a friendly discussion among friends.

By the way, the state's Legacy Fund -- oil money -- will not be invested in the stock market, and will earn less than one percent.

BNSF Opens Rail Yard East of Minot -- First New Facility in BNSF System In Quite Some Time -- $30 Million -- Bakken Impact

Link here.

Data points:
  • Gavin Yard, east of Minot
  • in Minot, not Williston
  • first new BNSF facility in quite some time
  • $30 million project
  • has now opened
  • new car shop and two (2) 9,200-foot inspection tracks
"This is the first new facility we've built on our entire system in a long time. It just goes to show how much activity and how much potential there is in this part of the world," said Roger Nober, BNSF executive vice president from Fort Worth, Texas, where BNSF has its headquarters.

Nober said BNSF expects activity in this area will ramp up even more than it is now.
Another indication that the Bakken boom is having effect/impact outside of Williston.

Food Shortage in Williston - County Commissioner -- The Heart of the Bakken


January 29, 2012: the mayor sees things quite a bit differently -- "a growing Williston will be a better Williston."Great op-ed article. Good for him. And the editor of the Williston Herald supports him. Good for both of them.

Same day, later: I've seen this story before; it appears it is a "cut and paste" job from the Dickinson Press and picked up by Bloomberg. Back in 2008/2009 I received a comment from "anonymous" that predicted all of this. I did not post that comment, not wanting to be inflammatory, and wanting to give the state leaders and county commissioners the benefit of the doubt. If armchair amateurs could see it coming why couldn't others closer to the action see it coming? There was no strategic vision, no planning, and this is where it has gotten us. As noted below, for every story of whining I see, I would like to see five stories in which there is some strategic planning going on.

Same day, later: I'm sure if there was a food shortage in Williston, the Dickinson Press would have reported it. 

Same day, later: this is a current ad from Economart; prices are better than what I am paying here in Boston. I see there is plenty of fruit and vegetables: avocados, grapes, apples. Thank you to a reader for sending me the link (and, no, it was not from an employee of Economart, although  that would have been refreshing).

Original Post

I was in the Bakken most of August, all of September, October, and November, departing on December 1, 2011, so I don't know how things have changed between then and now, in less than two months.

I do not recall any problem with a grocery shortage in Williston. The Economart was well stocked; Wal-Mart was well stocked. I did not visit the huge Albertson's store. But I don't know. Maybe Williston is short of groceries now as the county commissioners say:
Williams County Commissioner Dan Kalil received applause from the audience after his testimony about the toll the boom has taken on Williston. The area is short on patience, jail space, groceries and fuel; and long on sewage, garbage, anger and frustration, he said. 
I do know that there is a problem with diesel fuel on a daily basis, but there should be a diesel refinery up and running in the heart of the Bakken in a short time if folks work together to expedite the process. The diesel refinery would have been up and running by now had there not been the usual bureaucratic delays. Thank goodness, we don't have the Minnesota bureaucracy where it takes five years for a permit vs one year here in North Dakota.

But as far as gasoline for automobiles, again, I did not see any shortage back in September, October, and November. In WWII, "they" laid a fuel pipeline from England to Germany as the war effort moved east; that was across a channel during the biggest war in recorded history. The late Virgil Syverson, a tank driver for General Patton and long-term Williston resident, could have probably told us about that.

[The pipeline: PLUTO -- pipeline under the ocean -- from England to France to Germany.]

There's a refinery in Bismarck; if folks were serious about solutions, they should be able to find them.  We can't put in a diesel pipeline from that refinery to the Bakken? Greed? Lack of strategic vision? Faux-environmentalists? The boom started back in 2007; this is 2012. The impact was being talked about back in 2008. They can't lay a diesel pipeline from Bismark to Williston in five years?

From what I see, it's two things: a) bureaucratic delays; b) lack of strategic vision; and, c) greed. Okay, three things.

The greed prevents a lot from getting done.

I do agree with this:
“This level of activity has only led to unwarranted greed and unbelievable pressure on everyone,” he said.
The oil companies tried to get the lowest lease rates possible, but local folks held for as much as they could get [and it's getting worse]. Well, duh. I suppose some would call that greed.

My first question: do the county commissioners  have any oil income? My hunch is that the folks who have their wells, say "slow down." The folks who don't have their oil wells yet, say "hurry up." (By the way, wells that used to be named with names of folks and families we used to know -- not happening so much any more. Folks are asking their family names not be tied to the wells. No comment.)

It was not the outsiders that raised the rates on rooms at motels and hotels. Local folks did that. It was not the outsiders that raised the rent; that was the local folks. It was not outsiders that (in)famously evicted seniors from their long-term residences to increase the rent in Williston; that was the local owner. It was not outsiders that evicted a dance studio operator; that was the daughter/son of a long-term Williston resident, if I remember correctly. It is not the outsiders that have raised prices; outsiders are doing what they can to keep prices down. It's the local folks that have raised prices.

Not enough money coming back to the community to deal with roads, buildings, etc? That's a local problem, as in "local" at the state level, Bismarck. The outsiders don't vote; they don't control where the tax dollars go.

Lack of affordable housing? It was not the outsiders that banned man-camps.

But as I've always said, now we know how the native Americans felt when the white man invaded, bringing with them unwarranted greed and unbelievable pressure on everyone -- forcing the native Americans to reservations on some of the worse land in the state.

I'm not saying there aren't problems, huge problems. But I have great faith in what men and women can do. Certainly our grandparents, and now, in some cases, our great-grandparents suffered much greater challenges -- Giants of the Earth comes to mind.

For every Dickinson Press story I see about how tough things are, I would like to see five stories of state and federal government "fast-tracking" applications for infrastructure projects. Is WAWS on track, or is it mired in court? Why is there such a problem with getting new roads in; maintaining current roads? "They" fast-tracked the highway widening project between Williston and Watford City; I think that was done in six months, from announcement to completion. Construction crews from outside the area came in and did a bang-up job.

The Keystone XL project was killed, by faux-environmentalists; that pipeline would have taken thousands of trucks off the road on a daily basis, and maybe even less railroad terminals needed.

Anyway, I'm rambling. I know for some the Bakken boom is not fun; it is highly challenging for all. But maybe I'm seeing it from the eyes of the soldiers who took on a mission in Iraq and got it done. By the way, the Williston Herald reported fewer traffic accidents in December, 2011. Things can't be all bad.

And by the way, if groceries are in short supply in Williston, we need to ask the new Bakken millionaires to start ordering their steak, potatoes, desserts, and side dishes from Omaha Steak, to take the pressure off the local grocery stores, for the rest of the poor folks. My daughter sends me a gift pack every Christmas; it lasts for weeks. Those, whose wells have not yet come in, can order their groceries from The post office, as we all know, desperately needs the business. [Although the Williston post office does not.]

It appears the one thing the Bakken is not short on is alcohol. At least that wasn't mentioned in the article above. It's funny how some things always seem to get "there." Years ago, I was deployed to a Muslim country; we were told we could not bring alcohol into the country, and that it was against the law to sell or buy alcohol there. I was naive; I believed the senior leaders. I was one of the later ones to arrive. When I arrived, I learned that the NCOs had found the discotheques and bars in the nearby city within 24 hours of their earlier arrival. I, too, enjoyed the night life.

Oh, one last story. We were in that foreign Muslim country for a full month. We were operating out of a bare-base operation, training their fighter pilots. We had an outstanding mess facility -- I do believe it was an Air Force operation, but it was so good, it makes me think it was Army-run, but I could be wrong. Be that as it may. We had great meals throughout the mission. But just standard meat and potato fare.

In these bare-base missions, it takes several days to fly every one out when being re-deployed. The fighters go first;  and then there is a hierarchy of who goes next. The security forces (to protect assets) go last, and the medics, of which I was one, go second to last (to be there to aid the security forces to the end). The mess hall folks go near the end, also, until there are so few, that the last can do with meals-ready-to-eat (MRE's), the modern answer to C-rations.

The commander and the pilots were the first to leave. As soon as the fighter jets were past the halfway point between the bare base where we were and the home base to which they were returning, the dining hall chef announced over the PA system that dinner that night would be steak and lobster. I kid you not. We were in Africa. There is no lobster in Africa. But as soon as the commander and his pilots were too far to turn back, the chief cook cracked open the really good stuff.

Well, this turned into a rambling note that went nowhere.

Good luck to all.

And again, please, will all you Bakken millionaires start ordering your groceries on-line so that the food shortage in Williston can be ameliorated.

Update on Williston Story About Luxury Suites -- The Williston Basin, North Dakota, USA

Link here back to one of my original posts on this story.

Anonymous sent me an update from the Williston Herald, but since some folks may not read comments, here is what was sent to me:
Hmmm...maybe this Winterton Suites is the Elks bldg after all. This was in today's paper, and I am copying and pasting from the article.
Approved: a "Renaissance Zone" application from Williston Building, LLC, to make a $500,000 improvement to the Elks Building in downtown Williston. The building, which is no longer owned by the Elks, will become a a "boutique" hotel with restaurant and bar.

I'm not sure $500,000 would be enough to renovate the bldg into 25 luxury suites, but maybe this is just the amount they are asking for in relation for the Renaissance zone part of the deal? 
The Elks' building is pretty huge and cool. I can see it a quaint luxury hotel.
For newbies, the Elks building isn't exactly downtown -- it is, but it's not on main street -- it's a block or two east of Main Street in a very nice residential area. Yes it would be an interesting building for luxury suites. 

For Investors Only: CVX to Announce Before Market Open

At least I think so.

For Investors Only: Seven (7) Stocks Cheering the Keystone Pipeline's Demise -- The Street

Link here.

The seven: CLR, Whiting, Berkshire Hathaway, El Paso Pipelines, TC Pipelines, Enbridge Energy Management, XOM, Heckmann.

This is a very long article, eight pages, so it's a nice place to spend your time if you run out of things to read.

But that's not the reason I linked this article. The reason I linked this article was the headline: Demise of the Keystone Pipeline.

I remember some time ago I was taken to task for saying the Keystone was "dead." I was one of the first to say that anywhere. Well, it looks like "mainstream media" is finally using the adjective to describe the keystone XL.

Keystone XL 1.0 was taken off the table by TransCanada after folks in Nebraska suggested it be stopper.

Keystone XL 2.0 was recently rejected by the president.

TransCanada is working on Keystone XL 2.1 and 3.0.

For Investors Only: WLL, HES to Benefit From Killing of Keystone -- Seeking Alpha -- The Williston Basin, North Dakota, USA

Link here.