Thursday, May 3, 2012

Midnight Run Wells and Midnight Run Project -- The Bakken Pool, The Williston Basin, North Dakota, USA

Updates

July 5, 2018: the wells are updated with graphic at this post --

Running north from the south --
  • 31317, 157, BR, Midnight Run 2-8-12MTFH, Union Center, t3/18; cum 39K after 41 days;
  • 31318, 133, BR, Midnight Run 3-8-12MBH, Union Center, t3/18; cum 37K after 40 days;
  • 31319, 448, BR, Midnight Run 4-8-12MTFH, Union Center, t3/18; cum --
Running south from the north --
  • 24537, 2,842, BR, Midnight Norse 11-1MBH-ULW, Union Center, t5/13; cum 313K 5/18; nice jump in production;
  • 22675, 2,640, BR, Midnight Run 11-1TFH, Union Center, t10/12; cum 272K 5/18; nice jump in production;
  • 20323, 3,325, BR, Midnight Run 11-1MBH, Union Center, t12/11; cum 345K 5/18; huge jump in production;
  • 20324, 1,963, BR, Midnight Run 12-1TFH, Union Center, t12/11; cum 211K 5/18; huge jump in production;
  • 20325, 2,846, BR, Midnight Run 21-1MBH, Union Center, t12/11; cum 287K 5/18; off-line since 12/17;
  • 20326, 2,083, BR, Midnight Run 13-1TFH, Union Center, t12/11; cum 302K 5/18; nice jump in production;
  • 17421, 544, BR, Midnight Run 41-1H, Union Center, t11/08; cum 421K 5/18; 
  • 20327, 2,443, BR, Midnight Run 41-1TFH, Union Center, t12/11; cum 292K 5/18;
June 20, 2012: the folks over at the Bakken Shale Discussion Group have also noted the relationship between CLR and BR with regard to the Midnight Run wells.

Original Post
From the CLR transcript:

We also have a 320-acre development project underway for the Middle Bakken and first bench of the Three Forks. The Midnight Run project, as it is called, consists of 3 Middle Bakken producers and 3 Three Forks producers within one 1,280-acre unit. The wells in each horizon are spaced 1,320 feet apart, with the Middle Bakken wells offset 660 feet from centerlines of the Three Forks. These wells began producing in the first quarter with average IPs of 1,300 barrels of oil equivalent per day per well. Interference testing is underway, and results will help guide future drilling density for the play.

But the Midnight Run wells are all BR (Burlington Resources) wells in Union Center oil field, and they are just as CLR described; a mix of MB and TF, all in 1-152-96:
  • 17421, 544, BR, Midnight Run 41-1H, Union Center, Bakken, 7/08; t11/08; cum 351K 9/13; 9-stage fracture; still producing 12,000 bbls/month; on a pump; 3/13: it looks like it is choked way back.
  • 20323, 3,325, BR, Midnight Run 11-1MBH, Union Center, Bakken, t12/11; cum 216K 9/13;
  • 20324, 1,963, BR, Midnight Run 21-1TFH, Union Center, Bakken, t12/11; F; cum 108K 9/13;
  • 20325, 2,846, BR, Midnight Run 21-1MBH, Union Center, Bkken, t12/11; F; cum 170K 9/13; 14K/month
  • 20326, 2,083, BR, Midnight Run 31-1TFH, Union Center, t11/11; F; cum 156K 9/13; 
  • 20327, 2,443, BR, Midnight Run 41-1TFH, Union Center, t12/11; F; cum 121K 9/13;
  • 22675, 2,640, BR, Midnight Run 11-1TFH, Union Center, t10/12; cum 111K 9/13;
  • 24537, 2,842, BR, Midnight Horse 11-1MBH-ULW, Union Center, announced November 30, 2012; will be squeezed in between #22675 and the west line; 30 stages; 3.3 million lbs;
All seven eight of these wells are in the same section, running west-to-east across the north end of the section.
In the transcript, CLR talks about increasing their involvement in non-operated wells (the NOG model). They don't mention that the Midnight Run wells are BR wells.

I find it hard to believe that BR and CLR both have Midnight Run wells/a Midnight Run projects.

Perhaps more to follow. 

Additional Payzones in the Three Forks -- The Williston Basin, North Dakota, USA

Link here to SeekingAlpha conference call transcript with CLR.
We are very pleased with the performance of our first two second-bench Three Forks producers, the Charlotte 2-22H and the Sunline 11-1. The Charlotte has produced 64,000 barrels of oil equivalent in 5.5 months and the Sunline has produced 48,000 barrels of oil equivalent in 2.8 months, and both wells continue to produce in line with the typical first-bench Three Forks producers.

By year end, we plan to drill 8 additional wells to test not only the second bench of the Three Forks, but also the third bench as well. Our first third-bench well will be drilled in the 1,280-acre Charlotte unit. This well will be located 0.5 mile east of the Charlotte 2-22 second-bench producer and 660 feet east of the Charlotte 1-22 Middle Bakken producer. In addition to this third-bench test, we also plan to drill a first-bench Three Forks well between the 1-22 Middle Bakken well and the 2-22 second Three Forks well. When finished, this will be the first 1,280-acre unit in the play with wells completed in 4 different members of the Bakken petroleum system
Folks might remember that it was CLR that first talked about middle Bakken and Three Forks not communicating.

Transcript -- SeekingAlpha -- CLR -- 1Q12 -- CLR Will Update EURs in 2Q12 Conference Call

For newbies: there is a lot of incredibly interesting information in this conference call. There are things in this conference call that tell me we are still in the first innings of this boom.

Link here.

Data points:
  • strong cash flow was key first quarter highlight -- this is the opening statement
  • comments regarding pricing -- see this link also
  • nearly 90% of natural gas is captured; not flared; much better than what NDIC is reporting statewide
  • fracking water is trucked in but about 30% of flow-back is piped away
  • upgrading older rigs --> newer rigs 
  • increasing oil / natural gas ratio; changing drilling rig locations to reflect this
  • long discussion regarding additional payzones in the Three Forks (separate stand-alone post)
  • 320-acre development project called Midnight Run project (separate stand-alone post, later)


Cafe Music by Schoenfield, Lincoln Trio

Q&A
  • CLR is increasing their non-operated well activity, because more rigs coming into the Bakken
  • analyst suggests wells are costing $10.8 million; CLR suggests the number is closer to $8 million
  • again, discussion regarding price differentials
  • 90% of acreage likely amenable to Eco-Pad drilling
  • the $550 million in crease in CAPEX excited the analysts; ALL OF IT WILL GO TO THE BAKKEN
  • 2nd bench TFS: EURs of 650,000
  • increased production estimates for the Bakken: due to better EURs or simply more wells? both
  • switched from 24- to 30-stage fracks this past year; sprinkling in some 40-stage fracks
  • budget originally built on EURs of 603,000 bbls; telegraphs that EURs are going up; CLR WLL UPDATE THE 603,000 EUR in 2Q12
  • CLR telegraphs that CLR could acquire more Bakken acreage; always parcels available

HUMOR:
"Well, we have some risk in there, and that's mainly weather-related risk that we have in there. For the next 3 or 4 months, we have the rainy season up there, so have some risk on that." Comment: rainy season in North Dakota! LOL. Speaker talks as if monsoon season about to start. Rain will have minimal impact on oil operations in North Dakota based on what I remember growing up in North Dakota! [May 10, 2012: Dickinson Press complaining not enough rain; getting too dry. This is the North Dakota I remember.]


Oil Prices -- Bakken Spot HIGHER Than The WTI Spot Price You See On Your Television Crawler

I think you can find just about any price point for North America crude oil if you look long enough, but here are the two sites I think are most important.

First, this is the nicest site because at one glance one can compare a number of spot prices.

Go down that list, and notice that there is a Bakken oil spot price missing.

At least I don't see it. Do you know which one?

It's Bakken delivered to Clearbrook, Minnesota.

Now, go back to the first link. Spot price of --
  • North Dakota sweet: $80.57
  • WTI: $97.17
Nice spread, huh? Now, the second link --
  • Clearbrook, MN, Bakken: $103.54
A huge thank you to Tom for sending me this little nugget. But unless he and I are misreading this data, Bakken oil delivered to Clearbrook, Minnesota, has a nice premium to the WTI price you see on your television crawler. 

These data links, and dozens more, can be found at my "Data Links" page, linked at the top of the page. 

Thoughts, anyone?


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

Interestingly enough, the folks at CLR addressed the pricing differential in their 1Q12 conferent call:
There has been a lot of interest in the last several months about differentials on pipe barrels delivered to Clearbrook Minnesota, and Guernsey, Wyoming, markets and how this market volatility is affecting our net wellhead price realizations.

All of our Red River Unit oil is gathered at the wellhead and piped to Guernsey, Wyoming, where it is marketed. Roughly half of our Bakken oil is currently being railed to markets where it is priced against waterborne barrels, mainly Brent or Louisiana Light Sweet, which has been $17 to $23 higher than WTI during the first quarter of 2012.

Obviously, the rail transportation cost is much higher than pipe. It's been running about $20 to $22 per barrel all-in from the wellhead to the ultimate end market. But even though the rail transportation cost is higher than pipeline, delivery to the coastal markets has provided superior net pricing lately due to the recent high differentials experienced at Clearbrook and Guernsey, especially during March and April.

With the pipelines currently at full capacity, we anticipate our incremental growth over the next 18 to 24 months will be shipped by rail. And we're having no issues getting railcars and capacity. 

We reported last night an average oil differential for the first quarter of 2012 of $12.27 per barrel below WTI, which is considerably above our guidance range of $7 to $9 for a year as a whole. Due to the spikes in oil differentials in early 2012 and continued supply-demand volatility at Clearbrook and Guernsey, we now expect average differentials for the year to be in the range of $9 to $11 per barrel. That's the long-haul transportation picture.

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

Feds Ready to Post New Fracking Rules

Updates

May 5, 2012: Dickinson Press -- new rules redundant, ridiculous; won't slow down Bakken boom;

Original Post

The WSJ is reporting that the Feds are ready to post new fracking rules on federal land. I'm too busy to link the article, but once the rules are posted, I will link and post the important points.

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

Daily activity report, May 3, 2012 --

Operators: Helis (2), Whiting (2), Oxy USA, MRO, Petro-Hunt

Fields: Murphy Creek (Dunn), McGregory Buttes (Dunn), Grail (McKenzie), Murphy Creek (Dunn), Alger (Mountrail)

Helis has permits for two wells in Grail oil field where they have had some spectacular wells based on IPs and early production. One of the Helis permits is for a well about 100 feet east of an existing well, with the "HR" designation.

One well was released from "tight status":
  • 20562, 1,128, BR, Gorhman 14-31TFH; Bailey, t2/12; cum 16K 3/12;

KOG: 1Q12 Earnings

Link here.
For the quarter-ended March 31, 2012, the Company reported oil and gas sales of $79.9 million, as compared to $13.3 million during the same period in 2011, a 499% increase and a company record.  Kodiak reported an overall 474% increase in quarter-over-quarter equivalent sales volumes of 963 thousand barrels of oil equivalent, or an average of 10,578 BOE per day during the first quarter 2012, as compared to 168 thousand boe or an average of 1,864 boepd in the same period in 2011, not including flared gas.  Crude oil revenue accounted for approximately 96% of oil and gas sales in the first quarter 2012.
See disclaimer. 

Absolutely Nothing To Do With the Bakken: Solar-Powered iPad Keyboard -- Fully Charged -- Will "Last" Two Full Years

Link here.

Maybe I'm missing something, but this is incredible if it lives up to expectations:
Similar to Logitech’s solar keyboards for Mac and PC, the Logitech Solar Keyboard Folio includes onboard solar cells that charge the built-in Bluetooth keyboard in any light, whether indoors or outdoors. When fully charged, the battery lasts for up to two years, even in complete darkness (based on a average use of two hours per day).
Note: this is just the keyboard that will "last" two full years on a single full charge.

Two comments:
1) for me, this is a huge breakthrough: I hate replacing batteries -- seems like such a waste, especially for my desktop Blue Tooth keyboard
2) this demonstrates how little energy a keyboard actually uses -- a full charge will last two full years based on average use of two hours per day

***************
A Note To My Granddaughters

I don't know how well solar-powered gizmos will work today in Boston/Cambridge: it's very overcast; earlier, rain, which has pretty much dissipated, but it still has the look of Yorkshire, England.

I've completed Arrian's history of Alexander's campaigns and am now reading the various appendices.

This is an example of just good this book is, a bit from the appendix on Alexander's army and his military leadership:
Perhaps the only thing all scholars of Alexander are agreed on is the brilliance of his generalship and the devastating effectiveness of his army. In his thirteen years as king and commander, he led this army to victories over forces many times its size, overcame a huge range of strategic challenges and perils, marched at astounding rates through rough or unfamiliar terrain, and almost never ran short of supplies (until he met with a set of logistical failures on his last great march). These phenomenal achievements were only in part the result of Alexander's own prodigious talents, however. The groundwork for them was laid by his father and predecessor, Philip, who, with a series of profound innovations in the 350s BCE, changed the face of organized land warfare forever. Alexander's brilliance is beyond dispute, but his success was in large part determined by the remarkable inheritance he received from Philip.

Before Philip's time the Macedonians had always been strong in cavalry, the corps dominated by the horse-owning nobility, but had lacked an effective infantry. On coming to power in 360, Philip quickly built up his infantry by recruiting strong, vigorous youths from the lower classes and equipping them with a new kind of spear, the sarisa, sixteen or more feet in length. 
And it continues for several pages.

Enbridge Will Reverse Flow Of Yet Another Pipeline

Link here.

I blogged about this yesterday.

Today the WSJ has an even bigger story, page C4, same subject, this time talking about two companies: Enbridge and TransCanada. Yesterday's note just mentioned TransCanada.

I thought it was a huge story yesterday; it appears the folks over at the WSJ think it's a big story also, based on the amount of space and the huge graphic they devoted to the story.
With more oil than customers, Canada's landlocked West has sought to carve out new markets in the U.S. Gulf Coast and Asia. The next frontier is east.

Pipeline companies Enbridge Inc. and TransCanada Corp. are exploring ways to ship crude to both U.S. and Canadian refineries on the East Coast, the latest projects aimed at reconfiguring energy infrastructure to accommodate North America's oil-output boom.

Enbridge plans to reverse the flow of oil on an existing pipeline by the first quarter of next year, and TransCanada is looking at converting a natural-gas pipeline to oil.
About the reversal:
Even though Canada is the biggest exporter to the U.S., it has to import 650,000 barrels of light crude from Africa and the Middle East because of the lack of pipeline connections from the West to the East. The prices of the imports are well above prices for U.S. and Canadian crude.

Enbridge and TransCanada have presented two preliminary proposals. Enbridge wants to reverse the flow of a pipeline [Enbridge Line 9] that currently takes foreign crude from Canada's eastern ports to Ontario. The pipeline initially would have a capacity of 50,000 barrels a day and later ramp up to 200,000 barrels a day, said Enbridge Chief Executive Pat Daniel. TransCanada is mulling a separate plan that would modify part of its existing, 1,500-mile natural gas pipeline from Alberta to Montreal to transport oil instead.
The article concludes with this positive note: both plans likely to hit strong headwinds of the faux environmentalists who don't like heavy oil (among much else).

Also: note that last sentence in the cut and paste above: 
TransCanada is mulling a separate plan that would modify part of its existing, 1,500-mile natural gas pipeline from Alberta to Montreal to transport oil instead.
This is exactly the subject of the two most recent RBN Energy articles posted yesterday and today. 

Initial Jobless Claims -- Larger Drop Than Expected -- Biggest Weekly Drop Since Early May One Year Ago

Remember: the magic number is 400,000 (less is good)


Updates

Later, 10:30 a.m.: yesterday with the ADP unemployment numbers, I opined about the "R" word.  It appears the mainstream media's attempt to put a positive spin on today's numbers did not fool the market. The market did not respond positively to this "good news" jobs story, and oil is now down another $1.50, suggesting to me that folks are talking about the "R" word behind closed doors. Remember: a) half of the 17 EU countries are in recession; b) the most recent GDP numbers for the US came in less than expected; c) housing debacle is not expected to turn around for years, maybe decades; d) unemployment numbers are grim, despite the spin today ("initial jobless claims fell more than expected"). The mainstream media does not want to start talking about the "R" word in an election year when "hope and change" could very well be a possibility this November.

Half of the EU countries are in recession, and France is about to elect a socialist.

Later, 10:20 a.m.: a reader reminds us of the unemployed we don't hear about -- 86 million. These are the folks who have dropped out of the labor pool, for various reasons.

Original Post

Link here.
The number of Americans filing new claims for jobless aid fell more than expected last week, easing fears the labor market recovery was stalling.

Initial claims for state unemployment benefits dropped 27,000 to a seasonally adjusted 365,000, the Labor Department said on Thursday.

The biggest weekly drop in claims since early May last year helped to lift some of the dark cloud cast over the labor market by a report on Wednesday from payrolls processor ADP showing private employers in April created the fewest jobs in seven months.
We're on our way. Happy days are here again. (Sarcasm emoticon placed here.)

This Speaks Volumes About Global Oil Supply and Demand

So much for global sanctions on Iran. India continues to flip-flop. First said it would ignore sanctions; then said it would abide by them; now insuring the Iranian tankers when others won't.
The Indian government has offered to insure as much as $50 million for any "Indian flag carriers" traveling to Iran. This amount falls well short of the actual liability incurred by oil tankers on any given trip, but it comes to more than six times as much as the Japanese government has offered its companies, illustrating India's interest in continuing the flow of Iranian oil.

For Investors Only: NOG -- The Bargain of the Bakken -- SeekingAlpha

Link here.

Note disclaimer: this is not an investment site.

The contributor does a nice job comparing OAS with NOG:
OAS has twice the current production and 1.8 times the acreage of NOG, has a lower growth rate yet has 2.66 times the enterprise value of NOG. NOG is a non-operator while most of OAS's acreage is operated and held by production so perhaps NOG deserves a small discount on an apples to apples basis, but I would argue that NOG's higher growth rate, ability to operate "leaner" and be much more diversified as a non-operator and proportionally more room to grow (with a higher % of acreage awaiting development) more than compensates for the non-operator discount, especially since NOG has interests in many of the same wells that OAS operates.
My hunch is that five years from now folks will be absolutely amazed how the Bakken has changed.

Filloon Looks Back on the Bakken -- North Dakota, USA

Link here.

He starts with Triangle Petroleum.

Coincidentally, I just posted a Triangle Petroleum update last night.

Note disclaimer.

For Investors Only: Denbury, SandRidge, Sempra To Report Today

DNR: beats estimates by 4 cents;
Beats by $0.04, beats on revs: Reports Q1 (Mar) earnings of $0.41 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus Estimate of $0.37; revenues rose 25.5% year/year to $645.1 mln vs the $634.4 mln consensus.
SRE: link at MarketWatch:
First-quarter profit fell to $236 million, or 97 cents a share, from $254 million, or $1.05 a share, in the year-ago period. The power company's revenue dipped to $2.38 billion from $2.43 billion. Wall Street analysts expected earnings of 92 cents a share and revenue of $2.3 billion, according to a survey by FactSet Research. Sempra said it plans to begin construction of a liquid natural gas export facility, with the goal of opening it in 2016. 
SD: earns 4 cents, compared to 2-cent loss y-o-y;  record production in 1Q12;