Thursday, December 6, 2012

Random Note On Drilling Times to Total Depth

This is just a random comment comparing the length of time it took to get to total depth in the "old" days in the Bakken and how fast they are getting to total depth these days.

Both were in the Sanish, but by different operators, but about the same depth, about 16,500 feet.
  • 16953, 440, Fidelity, Fladeland 11-15H, Sanish, t4/09; cum 163K 10/12; 29 days from spud to total depth; total depth = 16,100 feet;
  • 23580, 1,295, Whiting, Iverson 41-14h, Sanish, t10/12; cum 6K 10/12; 12 days from spud to total depth; total depth = 16,576 feet;

Midnight Run Wells Have Been Updated

Now that all seven Midnight Run wells have been completed and reported, the results have been updated.

Money On The Move -- Rushing To Beat The ObamaCliff

I'm sure I'm missing as many as I'm catching, but this is almost becoming "comical" for lack of a better word.

Companies can't act fast enough to accelerate their cash dividends to beat the increase in taxes that will come next year.

The gap between the "haves" and the "have-nots" accelerates. My hunch is that after we get through the chaos and recession next year, these same companies will pay their usual dividends on the usual dates, thus rewarding shareholders for all the aggravation they will have gone through.

Enbridge Increases Dividend Unrelated to the ObamaCliff

From Yahoo!In-Play:
Enbridge increases dividend by 12% to $0.315; strong outlook for growth; sees EPS of $1.74-1.90 vs $1.84 Capital IQ Consensus Est : Co announced that its Board of Directors has declared a quarterly dividend of $0.315 per common share, payable on March 1, 2013 to shareholders of record on February 15, 2013. The dividend reflects a 12% increase from the prior quarterly rate. Enbridge also announced a guidance range for 2013 adjusted earnings of $1.74 to $1.90 per share. 
Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here. 

Enbridge Partners Will Invest $3.4 Billion in Projects to Handle All That Bakken Oil; Unspecified Amounts To Be Funded by Enbridge

From Yahoo!In-Play:
Enbridge Energy to invest $3.4 bln in light oil market acces program: Co announced its plans to invest in a Light Oil Market Access Program to expand access to markets for growing volumes of North Dakota and western Canada light oil production. The overall Program includes a number of individual projects, some of which will be jointly funded by the Partnership and Enbridge, and certain projects that will be funded entirely by the Partnership. Enbridge Partners' investment in the Program is expected to be approximately $3.4 billion.
Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here. 

Wells Coming Off Confidential List Friday

Bakken Operations

Active rigs: 182 (two rigs in North Dakota are slated to head to Montana after completion of current wells; one is a KOG well; one is an Oasis well)

Wells coming off the confidential list on Friday
  • 21501, 160, Samson Resources, Oakville 8-5-161-92H, Black Slough, t11/12; cum --
  • 22305, 406, Hunt, Shell 2-6-7H, Parshall, t10/12; cum 9K 10/12;
  • 22563, 704, Fidelity, Hukkanen 11-23H, Sanish, t6/12; cum 39K 10/12;
  • 22611, drl, Denbury Onshore, Gilbertson 31-16SWH, Siverston,
  • 22989, 281, Samson Resources, Border Farms 3130-6TFH, West Ambrose, t10/12; cum 11K 10/12;

Twelve (12) New Permits

Bakken Operations

Active rigs: 182 (steady)

Twelve (12) new permits --
Operators: Fidelity (5), Whiting (4), Hess (2) Great Plains 
  • Fields: Sanish (Mountrail), Robinson Lake (Mountrail)
  • Comments: Great Plains has a permit for a well in Stark County; Whiting has a permit for a well in McKenzie County; all five Fidelity permits are in Sanish oil field
Wells coming off confidential list today were reported earlier; see sidebar at the right

One producing well completed:
  • 22307, 173, Hunt, Oakland 2-31-30H, Parshall oil field, t9/12; cum 8K 10/12;

Could The Bailout Be Reversed? And Other Trivial Links -- NOT THE BAKKEN


December 9, 2012: EPA will review mileage claims for the Ford Fusion and the C-Max hybrids.

Original Post

I always thought the 29-day GM bankruptcy was fishy. I'm not alone.

Speaking of cars, it turns out those high mileage claims for Ford's Fusion and C-Max hybrids can't be confirmed. Sort of like global warming.  The claims: 47 mpg. Wow, the conventional Honda Civic on the open road, downhill, with a wind assist, at 55 mph, can get 49 mpg.
In the Consumer Reports tests, the Fusion hybrid delivered 39 mpg overall and 35 and 41 in city and highway conditions, respectively.
The C-Max hybrid achieved 37 mpg overall, with 35 and 38 for city and highway.
“These two vehicles have the largest discrepancy between our overall mpg results and the estimates published by the EPA that we've seen among any current models,” the magazine said.
Still speaking of cars, more chariots on fire:
Ford is recalling more than 89,000 new Escape SUVs and Fusion sedans because the engines can overheat and catch fire.
The company says the 2013 vehicles have 1.6-liter engines and were sold in the U.S. and Canada.
Ford says it's working on a fix and is asking owners to call their dealers, who will loan them another car at no charge until the problem is solved.
The company says it has reports of 12 fires in Escapes and one in a Fusion.
Is it just me, or is the phenomenon of chariots on fire more common than it was back in the "good ol' days"?

Gazprom: First LNG Delivery Via "Northern Sea Route"

Link to Oil & Gas Journal:
The marketing arm of OAO Gazprom reports an LNG carrier it holds under charter successfully delivered last month the first LNG cargo via the “Northern Sea Route,” that is, over the top of Europe to Asia via seas usually icebound.
Gazprom Marketing & Trading employed the 147,500-cu m Ob River LNG carrier operated by Dynagas (Greece) to move a cargo during Nov. 9-18 of this year from Statoil’s Snohvit plant in Hammerfest, Norway, to Japan’s Tobata regasification terminal.

The company reported that waters of the Barents and Kara seas were mostly ice-free on the voyage, but passage between Vilkitskogo and Bering straits encountered “young ice” nearly 1 ft thick.

US Production To Increase Faster Than Projected Earlier -- EIA

Link here to Oil & Gas Journal.
Advanced technologies will increase US oil production more quickly than previously forecast, the US Energy Information Administration said as it released its 2013 Annual Energy Outlook reference case. Production will rise more quickly than demand as more stringent motor vehicle efficiency standards take effect, it indicated.

The reference case is the earliest release of EIA’s annual projections and provides only a baseline for scenarios that will be developed for the final AEO, to be released next spring, Sieminski said. It also marked the first time that IEA has projected estimates to 2040 and used a Brent crude reference price, he added.
Data points, US domestic oil production:
  • 2011: averaged 5.67 million bopd
  • 2025: 6.79 million bopd (est) [prev est: 6.4 million bopd]
  • 2035: 6.26 million bopd (est) [prev est: 5.66 million bopd]
Meanwhile imports will fall from 8.67 million bopd in 2011 to 7.08 million in 2025, and 7.06 million bopd in 2035

  • Domestic production: 6 million bopd in 2011 --> 6 million bopd in 2035
  • Imports: 9 million bopd in 2011 --> 7 million bopd in 2035

Oil Companies To Invest Almost $30 Billion in Eagle Ford in 2013

Link here to Oil & Gas Journal.
Wood Mackenzie Ltd. calculates oil and gas companies will spend $28 billion in the South Texas Eagle Ford play during 2013.
Callan McMahon, WoodMac upstream analyst, said the anticipated Eagle Ford growth will concentrated on counties having crude oil and condensate exposure.
“The pace of growth in the Eagle Ford shale shows no sign of slowing down, and our analysis indicates that Gonzalez, DeWitt, and Karnes counties have established themselves as the sweet spots of the play, and now account for over 50% of daily liquids production,” said McMahon.

A Good Time To Re-Read an Earlier Post on the Bakken

For newbies: With rare exceptions, I do not edit posts once they have been posted with one exception: I update data about wells once they come off the confidential list.

If I want to edit a post, I clearly label the "updates."

At today there is an article suggesting that CLR is fairly valued. I don't have formal training in reading financial statements or estimating the "correct" valuation for a company, so I cannot comment on the author's conclusion, methods, or data used to make the assessment.

However, unless I missed it, the article appears to have been written before the results of CLR's much anticipated Charlotte 4-22 were known, and before CLR's press release announcing new estimates for original oil (OOIP) in place in the Bakken Pool. And again, unless I missed it, the article does not reference the new EURs coming out of the "better" Bakken, i.e., 1.5 million bbls vs the generally accepted/historical 350, 000- to 750,000-bbl EURs. KOG has recently suggested EURs of one million bbls but 1.5 million bbls is entirely new.

On this website, the second iteration of the Million Dollar Way, I have written 8,968 posts, and have posted 8,894 of them. In addition, the vast majority of posts relating to the Bakken (and several other pet subjects) are frequently updated. Suffice it to say, there are a lot of posts. And yet, there are only a handful that are particularly noteworthy.

Newbies should take a look at the August 29, 2012, post: reviewing the CLR corporate presentation in which I inferred a trillion-barrel original-oil-in-place (OOIP) Bakken Pool reserve. 

That was written before we knew the results of CLR's TF3 Charlotte well. In light of these results, one might enjoy reading that post again. It's a long post, directed for folks who are somewhat unfamiliar with the Bakken. Regular readers already know all this stuff.

Quote of the Day; Meanwhile Actions Speak Louder Than Words -- Anti-Gun Pol Arrested For Trying To Carry Gun Unto Plane

Here we go again:
"It is not a tradition to call it a Christmas tree." -- to paraphrase Lincoln Chafee, Governor, Rhode Island, December 6, 2012
Gov. Lincoln Chafee (I-R.I.) told on Wednesday that his administration calls the decorated evergreen tree erected in the Rhode Island State House in December a “holiday tree”--rather than a "Christmas tree"--because that is what the tree is traditionally called
Oh, really? 

Google "holiday tree" and the first wiki hit is: "controversy.

Google "holiday tree" and the first wiki hit is all about the tradition.

Cue up Connie Francis.

I can't make this stuff up. When I was growing up, we always called it a Christmas tree.

For more outlandish quotes, go to "quote of the day."


Meanwhile, the hypocrisy of it all:
Today's arrest of Illinois State Sen. Donne Trotter by authorities at O'Hare International Airport for having a gun in his carry-on bag is a revealing look at the hypocrisy of anti-gunners, the Citizens Committee for the Right to Keep and Bear Arms said.
According to the Chicago Sun-Times, Trotter was arrested at a security checkpoint early this morning. A candidate for the 2nd Congressional District seat vacated recently by Rep. Jesse Jackson, Jr., Trotter had a .25-caliber Beretta semiautomatic pistol in his bag.
The Chicago Tribune said Trotter told police he worked late last night as a security guard and didn't realize the pistol was in his bag. [Wow,  how many times have I had heard that?}
"Trotter is a South Side Democrat and he was a leader in the move to ban so-called 'assault weapons' during his first term as a state representative," noted CCRKBA Chairman Alan Gottlieb.
"A man who favored banning firearms for thousands of his fellow Illinois residents shouldn't even have a gun, much less be packing one illegally into an airport."
Trotter has reportedly been charged with one count of attempting to board an airplane with a weapon, which is a Class 4 felony.
Illinois State Senator. Night security guard. Anti-gun. Class 4 felony.

Where's Bob Costas?

I can't make this stuff up.

Another Two-Fer: Harold Hamm and The Top 25 Oil and Gas Companies in the World

Huge thanks to Don for alerting me to this "two-fer" in Forbes: Harold Hamm in his own words; and, slide show of the world's top 25 oil and gas companies. You might be surprised.

At the bottom of a most incredible "story in his own words," you will find a slide show of the world's top 25 oil and gas companies. Only one US company made the top five; one two US companies made the top 10 (and then, just barely); and the three largest US oil and gas companies did not make the top 20.

Iran is still listed as number three, behind Saudi national oil company and Russia's state oil company. Sinopec is #5. That's how fast China has come along.

Vern Whitten Photographs - Again, So Incredible

Here are some aerial photos Vern Whitten took in Western ND just after the first snowfall:
Our next flight in the Bakken region is next week. Let me know if you have sites you’d like to photograph.

Wow, these are incredible.  Again, so many gift ideas.

Vern Whitten Photography
(701) 261-7658

Happy Days Are Here Again -- What ObamaCliff -- First Time Claims Well Below the Magic Number

Later, 3:53 pm: unemployment rate takes huge jump; back to 8.3% (was 7.4% last month). Cue up Connie Francis.

Original Post
Wow, I'm glad I didn't listen to the interview with the Labor Secretary today (I assume CNBC interviewed a Labor spokesman based on this great news).

Remember: the magic number is 400,000

This is why I post the magic number: I have a tendency to forget things.

During the worse part of the unemployment picture, some months ago, the magic number was 400,000 -- the number of first-time applications for unemployment benefits. A number lower than than this was needed to suggest modest job growth.

So, today, happy days are here again:
The number of people seeking U.S. unemployment aid fell sharply last week as a temporary spike caused by Superstorm Sandy has faded. Weekly applications have fallen back to a level consistent with modest hiring.

The Labor Department said Thursday that applications dropped 25,000 last week to a seasonally adjusted 370,000. 
Let's see what the less volatile four-week moving average is: 
The early impact of Sandy can still be seen in the four-week average. It rose to 408,000 last week. 
Oh, darn.

And this follows, of course:
Before the storm hit on Oct. 29, applications had fluctuated this year between 360,000 and 390,000. They topped 400,000 for most of last year. That has coincided with only modest declines in the unemployment rate.

The Spike in the Price of Gasoline in California: the Calm Before the Storm

There are stories that the recent spike in the price of gasoline in California will moderate.

We will see. New regulations affecting gasoline went into effect in November.  That was last month. Oil companies have already warned they will pass the costs to consumers.

I've opined that the recent spike prepared consumers for the potential shock in November. Consumers, state government, and the oil industry have a new data point concerning what consumers are willing and able to pay in California. There were no riots in the streets, no lawsuits, just a speech by Governor Brown allowing a hastier transition to winter-blend gasoline. 

A Boston Consulting Group study estimates the cost of gasoline would increase by $2.70/gallon if all of California's 2006 global warming law were implemented. Much of that increase could come by 2015.

For more, click here.

Random comment: in business, there is something know as the "moat." The fourteen refineries in California are protected by a huge moat due to state regulations. During the last 20 years the moat has widened: four refineries in the state have shut down rather than invest in expensive upgredes to comply with fuel regulations. -- WSJ at the link.

Thursday Morning Links: Non-Bakken Links; Story on Guar;

For newbies: if you came here for the Bakken, scroll down. The wells coming off the confidential list have been posted. At that same post, a nice RBN Energy article on Bakken pricing in light of the flood of new oil hitting the US market.

Now, the links for today: from the WSJ, from readers, from wherever. No update on the ObamaCliff, but the picture is becoming clearer: a) no deal before December 31, 2012; b) workers will see increased taxes coming out of their pay checks in January; c) taxes on dividends won't be an issue until April, 2014; d) DoD will immediately cut positions, but not personnel; using smoke and mirrors, they can move the 2013 spend plan to the left while the political theater plays out; e) states counting on federal money will see a significant cut, throwing state budgets into disarray; f) folks with dividends and capital gains won't be affected until April, 2014; g) sometime in late January, a compromise will be reached; h) January will be chaotic but by summer things will be back to normal, assuming one considers a recession "back to normal."

Natural gas: front page story, WSJ: US gas exports clear hurdle
Shipping some of the newly abundant U.S. natural gas overseas would benefit the nation's economy more than keeping it all at home, according to a long-awaited government study that has the potential to reshape the global energy market. The endorsement could turn the tide in a politically sensitive issue.
Gas producers are eager to export more, while big consumers including manufacturers and chemical companies are leery that exports could raise domestic prices. Environmental groups, meanwhile, fear that allowing exports would encourage more natural-gas production.
Or not. Economic suicide groups (ESGs) and faux environmentalists (FAs) will have the last say in this administration if history is any guide.

Deals: A huge Wall Street deal yesterday suggests that oil and gas are more valuable than gold and copper, Freeport's stock collapsed 16% on the announcement. The WSJ has a huge story on the deal.

Guar: a bubble goes pop, WSJ, p C1 -- a classic bubble story.
... a recent sharp decline in the export price for guar gum to $7,000 a ton, from a peak of $27,000 a ton in May, has caused trouble for the likes of Mr. Parihar. "I just hope that prices rise again. Otherwise, I am ruined," he said.
The bust also hurt oil-services companies like Halliburton Corp. that depend on guar gum, a product made from the bean in India and exported to the U.S. and other markets. The gum is used to thicken water that is mixed with sand and pumped horizontally into the cracks in shale rock to free the gas, a process called hydraulic fracturing.
Go to the link for the rest of the story.

Music: Perhaps one of my favorite stories today. I was an early adopter of Pandora, but have since moved on. I can do pretty much what Pandora does for free. The more Pandora sells, the more it loses. Something tells me this is not what they teach at Harvard school of business.  I haven't read the story, yet, but I assume this is because every song played results in a royalty payment that must be paid by Pandora. And Pandora listeners don't have to pay to subscribe to Pandora for basic services. And if one puts Pandora in a back window, one doesn't even see any advertising (I don't know if they even have visual ads; I haven't visited Pandora in months.)

Sotheby's set a record yesterday for a work on paper, at least by some measures, when it sold a Raphael drawing for $47 million. -- WSJ, p. A2. The drawing: "Head of a Young Apostle." This was nearly twice the estimate ($24 million); the drawing was Raphael's last, nearly completed painting, "The Transfiguration" which hangs in the Vatican.

This is how you destroy the domestic oil industry. Protect the Lesser Prairie Chicken; slice and dice the eagles -- op-ed, WSJ.
The U.S. Fish and Wildlife Service recently announced that it will formally consider listing the Lesser Prairie Chicken—whose habitat includes some of the nation's major energy fields—as a threatened species under the Endangered Species Act. This clearly is another desperate ploy by the Obama administration to further its campaign against oil and gas drilling. Such egregious overreach has been a specialty of the Environmental Protection Agency in the past. The administration has now found another agency to do its bidding.
The Lesser Prairie Chicken is a ground-nesting bird native to portions of Texas, Colorado, Kansas, New Mexico and Oklahoma. In Texas, it is found primarily in the Texas Panhandle and the Permian Basin. Listing the bird as threatened or endangered would make drilling all but impossible in these economically thriving regions. The Permian Basin alone produces more than one million barrels of oil a day, accounting for almost 70% of Texas' total production and 20% of the nation's oil production. It also supports thousands of jobs and provides millions of dollars in state revenue.
Meanwhile, solar farms destroy desert tortoise habitat and wind farms have a broad waiver to slice and dice the national symbol.

ObamaCare (not my word, see Wiki): Speaking of birds, this turkey will be in court for decades: the opening for a fresh ObamaCare challenge -- op-ed, WSJ
ObamaCare is being implemented, having been upheld as constitutional by the Supreme Court in June in a series of cases now known as National Federation of Independent Business v. HHS. It is becoming increasingly clear, however, that the court took a law that was flawed but potentially workable and transformed it into one that is almost certainly unworkable. More important, the justices also may have created new and fatal constitutional problems.

ObamaCare, or the Affordable Care Act, was conceived as a complex statutory scheme designed to provide Americans with near-universal health-care coverage and to effectively federalize the nation's health-care system. The law's core provision was an individual health-insurance purchase mandate, adopted by Congress as a "regulation" of interstate commerce. The provision required most Americans to buy federally determined minimum health-care insurance, or to pay a penalty more or less equivalent to the cost of that coverage.
World food prices fell in November: foreshadowing the Great Recession of 2013.