Wednesday, March 28, 2012

Bill O'Reilly -- Fox Cable

President Obama inaugurated: price of gasoline -- $1.84
  • Moratorium, permitorium in the Gulf
  • No off-shore drilling
  • Arab Spring, the Libyan Ruckus
  • Kills the Keystone XL
  • Sanctions on Iran
  • Tripled the money supply
Today, price of gasoline -- $3.91

Just saying.

(Data for price of gasoline and "tripled the money supply" comment from Bill O'Reilly show this evening. This is the first time I've tuned into Bill O'Reilly in months; the last time was last autumn, but no "Criminal Minds" on tonight. Surfing the channels. Now back to "Seinfeld: The Switch" episode.)

BEXP Has Another Great Well -- The Bakken, North Dakoa, USA

21282, 3,219, BEXP, Margaret 5-8 1H, Wildcat, Bakken. The well is about 2 miles northeast of Rawson, between Alexander and Watford City, North Dakota.

I actually know a person who was raised in Rawson. I believe the population of Rawson is about 11. 

Again, No Evidence That Saudi Is Going to Make Up the Iranian Shortfall

Saudi says there is no shortfall; excess oil already sloshing around
This is different than what was said during the Libyan ruckus


May 20, 2012: Saudi production --
From a March, 2012 article: 
Saudi Arabia increased production to 10.047 million barrels a day in November, the highest in at least three decades. The kingdom, the world’s biggest crude exporter, has the capacity to produce 12.5 million barrels a day and will pump about 9.9 million barrels a day this month and in April, al-Naimi told reporters at the Ritz Carlton hotel in the Qatari capital. [In this article, Saudi says it can increase production 25% if necessary.]
From a May 20, 2012, article
Saudi Arabia, OPEC’s largest producer, increased daily output to 9.923 million barrels in March, up 0.7 percent to the second-highest level since at least 1980, according to the initiative.
Moments later: moments after posting the story below, I saw this op-ed by Saudi Arabia's oil minister Ali al-Naimi. The Saudi Minister says here is plenty of oil sloshing around. So why the high price? I don't know, and I don't think anyone else does either. I think part of it has to do with "just-in-time" delivery. Plenty of oil can be sloshing around, but countries are bidding for it as their supplies from Iran are shut off. For all I know Saudi is holding oil in tankers off-shore waiting for a higher bid. Elsewhere I've read there is an excess of ocean-going tankers and it's actually fairly inexpensive to "store" oil offshore. Again, I have no idea. But if there is plenty of oil sloshing around offshore and yet the price of oil is "ridiculously high" there has to be a reason. 

The price of WTI dropped a couple of bucks today on rumors that the western nations were getting ready to release emergency supplies. The $2 drop was similar to the drop that we saw the day it was first reported that Great Britain and the US had agreed to release emergency oil supplies. When the report was realized to be "premature," the price went back up. A $2 drop in the price of WTI from $107 to $105 is not going to lower the price of gasoline very much at the pump. The risk here for politicians is that if the release of emergency supplies fails to do much at the pump, there is no Plan B.

Original Post
Link to Yahoo News
Saudi Arabian Oil Minister Ali al-Naimi mounted his most direct rhetorical attack against high oil prices on Wednesday, but showed no sign of moving to increase supplies even as France joined the United States and Britain in talks for a release of strategic reserves. [Interesting, huh?]

Two weeks after Reuters initially reported that Britain and the United States were set to agree on tapping emergency stockpiles, French Energy Minister Eric Besson said the European nation was also in talks with Washington. Le Monde reported that the move could come in a matter of weeks. [Trial balloon: be prepared for release of oil from SPR. It's interesting that there is not a shortage of oil.]

At the same time, the Financial Times published a rare opinion piece by the head of the world's largest crude oil exporter, who said a feared shortage of oil supplies was a "myth" but reiterated that Saudi Arabia was ready, able and willing to meet any gap in supplies.

The moves emphasized the growing concern from both sides of the market -- producers and consumers -- about the economic and political impact of the 15 percent jump in oil prices this year. But it also highlighted the different responses they are taking. 
As I've said many, many times before, I have yet to see evidence that Saudi has the will power and/or ability to increase oil production to affect oil prices in the short term.

Seven (7) New Permits -- The Williston Basin, North Dakota, USA

Daily activity report, March 28, 2012 --

Operators: Hess (2), Whiting (2), MRO, Denbury, G3

Fields: Bailey, Magpie, Sanish, Manitou

G3 Operating has a permit for a wildcat in Williams County.

Four wells released from "tight hole" status; only one completed, and as usual:
  • 21282, 3,219, BEXP, Margaret 5-8 1H, McKenzie

Folks Focused on Personal Gasoline Costs -- But The Bigger Story?

Our focus on the cost of gasoline and how it affects households may be "costing us" in our investment decisions. suggests again:
The U.S. now enjoys an incredible energy price advantage that not only is transforming industries (for example, it shouldn't be too long before we start seeing cars that run on LNG), but that should be an important source of growth for the entire economy. This could be the best reason to be bullish." 

North Dakota Income Pace Leads Nation

Link over at
North Dakota led the country with the highest gain in state income for 2011 (8.1%), the largest increase in per-capita state income (6.7%), and the highest gain in personal income during the last quarter of 2011 (1.5%).
Note: net worth is different than net income. I wonder how much per-capita net worth grew in North Dakota in 2011? It doesn't take many new millionaires to affect a state with a low population like North Dakota.

Enbridge CEO on CNBC's Kudlow Tonight

Follow existing pipeline corridors.

6,400 jobs on each. 12,800 total.

WTI-Brent spread will narrow.

Nothing new; nothing concerning.

Kudlow asked the same question: will Enbridge get its new pipeline on-line before Keystone XL 2.0S? Enbridge CEO could speak only to his company's project, not others.

Majority of Americans Own At Least One Apple Product; AAPL Shoots Through Previous High

Previous high: somewhere around $617; shot as high as $621 today
Close: Up a couple of bucks to about $618
And...oh, one more thing ... the market was generally down today.....

NBC poll: 51% of all American households own at least one Apple product. The Apple-environment will drive households to increase the number of Apple products. Although one can use an iPad without a laptop or desktop computer, there are reasons to have laptop/desktop when using an iPad.

Slow-Rolling the Oil and Gas Industry -- 5-Year Moratorium -- Explore But Don't Drill; Smoke But Don't Inhale

President Obama has learned a lot from President Clinton.

Link here to Yahoo News.
The Obama administration today endorsed new oil and gas exploration along the Atlantic Coast, setting the stage for possible future drilling lease sales.

The announcement by the Interior Department sets into motion what will be at least a five year environmental survey to determine whether and where oil production might occur.

It also comes as President Obama faces mounting pressure over high gas prices and criticism from Republicans that he has opposed more drilling for oil.
"Making decisions based on sound science, public input and the best information available is a critical component to this administration's all-of-the-above energy strategy," said Interior Secretary Ken Salazar.
At least a five-year environmental survey to determine w/w oil production MIGHT occur.

A five-year study: a permitorium or a moratorium? Fair and balanced. You decide.

So Much For Fast-Tracking Keystone XL 2.0S -- Unmarked Indian Graves "Lying All Over" Will Be Disturbed

Link here to the Rapid City Journal.
As President Barack Obama pushes to fast-track an oil pipeline from Oklahoma south to the Gulf Coast, an American Indian tribe that calls the oil hub home worries the route might disrupt sacred sites holding the unmarked graves of their ancestors.

Sac and Fox Nation Chief George Thurman plans to voice his concerns this week in Washington. He said he fears workers placing the 485-mile Keystone XL pipeline that would run from Cushing to refineries on Texas' Gulf Coast could disturb holy ground without consideration of the tribe. He and another tribe member say the pipeline's route travels through areas where unmarked graves are likely buried.

"We've been here 171 years," said Sandra Massey, the Sac and Fox Nation's historic preservation officer.

"We've been living and dying here. We are all over."
And so it goes. 

Marathon Announces Twelve (12) Recent Completions

Marathon announces twelve (12) recent completions; IPs in boepd except where indicated in bopd. BOPD IPS will be lower than BOEPD.
  • 21590, 2,045, MRO, Ostlund 11-14H, Reunion Bay,
  • 21211, 1,026 bopd, MRO, Goodbird USA 44-7H, Deepwater Creek Bay, 
  • 20454, 1,005 bopd, MRO, Goodbird USA 34-7H, Deepwater Creek Bay, 
  • 21243, 1,950, MRO, Everett Fisher USA 31-6H, Reunion Bay, 
  • 20824, 1,229 bopd, MRO, Bears Ghost USA 31-4H, McGregory Butte, 
  • 20685, 1,431, MRO, Ben Reckard 41-27H, Bailey, 
  • 21823, 1,575, MRO, Ben Reckard 44-22H, Bailey, 
  • 21285, 1,000, MRO, Person 24-35H, Murphy Creek, 
  • 21119, 817, MRO, Sheralee Dolezal USA 14-10H, Bailey
  • 20402, 1,367, MRO, Eckelberg 14-23H, Bailey, 
  • 21603, 797, MRO, Paulson 34-9H, Bailey, 
  • 21286, 261, MRO, Vorwerk USA 14-34H, Deepwater Creek Bay, 

If You Visit the Drudge Report ...

... you may want to consider

If you do, be sure to click on the various categories (US politics, global news, entertainment, sports, media): there are different stories under each category.

Twitchy has different links than Drudge; not a lot of overlap. The "entertainment" module alerts readers to items they might otherwise miss on a very timely basis. It also appears new items pop up more frequently than at the Drudge Report.

Best "twitch" of the day (it was also there yesterday): CNN's morning ratings have plunged.

For Investors Only: Triangle, VOG, and USEG -- Emerging Bakken Plays To Consider link here for Triangle.

The contributor mentions he may initiate a position in USEG in the next 72 hours; he/she must be kicking himself. USEG announces two record IPs and stock shoots up 7 percent in early trading today.

Last week, the same contributor highlighted USEG. At that time, he said the same thing -- that he/she might initiate a long position in USEG in the next 72 hours. I suppose it's possible, he/she is talking about two "separate" long positions. If he/she did initiate a long position in USEG last week, the comment today should have been "I am long USEG, and am considering adding to it in the next 72 hours." But I may be misreading things; I go through some of these articles pretty quickly.

If he/she is a trader, a missed opportunity. If an investor, it doesn't really matter in the long run.

Just my 2 cents worth. This is not an investment site. I am not making any recommendations, simply passing on information and opinion. See disclaimer.

USGS To Reassess The Bakken

Link here: USGS to reassess the Bakken; results to be known by late 2013.
In 2008, the U.S. Geological Survey estimated the Bakken formation could have up to 4.3 billion barrels of recoverable oil. But they've sent a team of geologists and geochemists back to the Bakken to study rock samples from previous drillings. They normally reassess oil formations after about 10 years, but the Bakken isn't a typical oil formation.

"It's very rare that we reassess this quickly," said Brenda Pierce, the manger of the USGS Energy Resources Program. "The Bakken is such an unusual reservoir and what is technically recoverable really has changed in a short period of time."

Pierce also said their scientists are learning new concepts from studying the Bakken.
"I mean I think it's kind of breaking the way for other potential unconventional oil reserves (and) resources," Pierce said. "I mean it really is world class."

The USGS is using the same methods to survey the Bakken so the results can be more accurately compared to previous assessments. They plan to complete the study by late 2013. 
I've always said that; it's not the production, it's the lessons learned and ground-breaking technology being tested, studied, and used in the Bakken. 

Two Successive Record IPs for Zavanna/USEG Announced -- The Bakken, North Dakota, USA

At Yahoo!In-Play -- item will disappear later today

8:32AM U.S. Energy announces successive record initial production rates from two zavanna wells in the williston basin: Co reported The Wang 10-3 #1H well was fracture stimulated with 35 stages and had an early 24-hour flow back rate of 2,208 BOE/D on a 36/64" restricted choke during drillout of the plugs. The initial production rate consisted of approximately 1,942 barrels of oil and 1.6 MMCF of natural gas. The Company has an approximate 18% WI and 14% NRI in this well. The Wang well began production on March 15, 2012.

Yahoo!Finance link here, the press release:
USEG today reported the initial production rate on the Wang 10-3 #1H well and the Crescent Farms 7-6 #1H well under its drilling program with Zavanna, LLC.
Williston Basin, North Dakota - Yellowstone Program:
  • 20094, The Wang 10-3 #1H well was fracture stimulated with 35 stages and had an early 24-hour flow back rate of 2,208 BOE/D on a 36/64" restricted choke during drillout of the plugs. The initial production rate consisted of approximately 1,942 barrels of oil and 1.6 MMCF of natural gas. The Company has an approximate 18% WI and 14% NRI in this well. The Wang well began production on March 15, 2012.
  • 20105, The Crescent Farms 7-6 #1H has also been fracture stimulated with 35 stages and had an early 24-hour flow back rate of 2,437 BOE/D on a 36/64" restricted choke during drillout of the plugs. The initial production rate consisted of approximately 2,178 barrels of oil and 1.5 MMCF of natural gas. The Company has an approximate 27% WI and 21% NRI in this well. The Crescent Farms well began production on March 22, 2012 and represents the highest reported IP rate for a Zavanna drilling program well to date.
The next two wells which have drilled to depth in this program and are scheduled to be fracture stimulated in April 2012 are;
  • 20093, The Skorpil 11-2 #1H well, in which the Company has an approximate 23% WI and 18% NRI.
  • 20000, The CDK 15-22 #1H well, in which the Company has an approximate 32% WI and 25% NRI.
"We are pleased to announce the successive record IP results of the Wang and Crescent Farms wells with Zavanna. These two higher interest wells coupled with the two additional scheduled for the month of April should add meaningfully to our production for the second quarter of 2012," stated Keith Larsen, CEO of U.S. Energy Corp.
  • The Wang well is located south of the river, southeast of Williston, in Glass Bluff oil field. 
  • The Crescent Farm well is located it the same township. about three miles directly west of the Wang well.The Skorpil well is about one mile due east of the Wang well.
  • The CDK well is just a few hundred feet south of the Wang well, on the south side of the section line. The Wang well runs due north; I assume the CDK will run directly south.
Zenergy has a fairly nice horizontal Madison well one mile to the west of the Wang/CDK wells:
15695, 80, Zenergy, Lassey 1-15H, s9/05; t11/05; cum 32K 1/12; short lateral, running northwest to southeast

National Average for Gasoline: $3.90

Top story at Yahoo!Finance.
The price of an average gallon of regular gas surpassed the $3.90 mark Wednesday, moving to within a dime of the $4 threshold. [Comment: I'm glad Yahoo provided this arithmetic calculation; the math can get complicated as one approaches $5 gasoline.]

The average price rose 1.3 cents to $3.911 in the latest daily survey conducted for the motorist group AAA. The price has risen for 19 consecutive days. [And for Noah, it rained 40 days and 40 nights. Consecutively.]

The current price compares to just below $3.70 a month ago, and just below $3.59 a year ago. [For all the chatter, this is about a dime's difference and we survived last year just fine.]
Earlier: my thoughts on average price of gasoline across the nation, and the price that the average American is paying.

Perfect storm:
  • Chinese and Indian imports rising significantly year-over-year
  • Keystone XL killed
  • Iranian sanctions take 2.5 million bopd off the global market
  • analysts unsure Saudi can make up the Iranian shortfall
  • administration continues to slow-roll the domestic oil and gas industry
  • two, maybe three, refineries close in northeast (US), near Philadelphia; accounts for 50% of regional gasoline
  • winter-to-spring transition at refineries (different stories; some say it's already underway; others say bulk of changeover occurs in April)
  • glut at Cushing won't be relieved for months, maybe one to two years
  • Japan shuts down 53 of 54 nuclear reactors; the 53rd shut-down was for maintenance; Japan increased oil imports

CLR To Purchase 37,900 Net Acres in the Bakken -->953,763 Net Acres in the Bakken for CLR

From In-Play -- will disappear later today.

7: 02AM Continental Resources to Purchase 37,900 Net Acres in the Bakken Play With 2.5 MBoe Average Daily Production for $340 mln:The purchase price of $340 mln is anticipated to result in the issuance of between 3.90 mln and 4.25 mln shares of Continental Resources' common stock, subject to customary purchase price adjustments. The number of shares will be determined based on a 20 day average of the daily sale prices prior to closing of the transaction. The average daily price determination will be subject to a floor of $80.00 per share and a ceiling of $87.18 per share. Wheatland's assets include 37,900 net acres in the North Dakota and Montana Bakken play and interests in more than 1,000 gross wells, with net proved reserves of 17 MMBoe (mln barrels of oil equivalent) as of year-end 2011 and production of 2.5 MBoepd (thousand barrels of oil equivalent per day) in December 2011.

Reuters link here
The assets include 37,900 net acres in the North Dakota and Montana Bakken play and interests in more than 1,000 gross wells. The assets produced 2.5 thousand barrels of oil equivalent per day as of December 2011.

Continental said it expects to issue between 3.90 million and 4.25 million shares to fund the purchase price.
Net acreage approaching 1 million acres in the ND and MT Bakken. 

Back-of-the-envelope data points:
  • $9,000/acre without the 1,000 gross wells.
  • Based on reserves: $340 million/million bbls --> $20/bbl based on reserves
  • 2,500 boepd * $50/bbl --> $125,000/day on current production (production declines; price of oil varies); one year --> $46 million
According to Elwood, elsewhere:
'Wheatland is owned 75% by the Revocable Inter Vivos Trust of Harold G. Hamm, of which Harold Hamm is sole trustee and beneficiary, and 25% by Jeff Hume. Mr. Hamm is Chairman of the Board, Chief Executive Officer and the majority shareholder of Continental Resources. Mr.  Hume is President and Chief Operating Officer of Continental Resources.' 
Elwood opines (at the link): CLR could be "positioning" for acquisition.

The question is raised: would Harold Hamm have to put in blind trust/divest of CLR if he takes cabinet position in new administration?