Friday, November 22, 2013

Six (6) New Permits -- The Williston Basin, North Dakota, USA; Halcon, QEP, WPX All Report Big Wells; QEP Has Three More Great Wells In The Helis Grail

Active rigs: 185

Six (6) new permits -- 
  • Operators: MRO (2), Slawson (2), Oasis (2)
  • Fields: Chimney Butte (Dunn), Stockyard Creek (Williams), Willow Creek (Williams)
  • Comments: The Stockyard Creek never ceases to amaze me
Wells coming off the confidential list were posted earlier; see sidebar at the right.

CLR renewed four permits: the Garner wells on 32-157-98 and the King wells on 5-157-98.

EOG canceled one permit, a Vanville well, 12-159-91.

Eleven (11) producing wells were completed:
  • 24738, 2,171, HRC, Fort Berthold 152-94-15B-22-6H, a Sanish well, Antelope, t10/13; cum --
  • 25624, 1,080, Whiting, Iverson 44-11H, Sanish, t10/13; cum --
  • 25728, 892, Whiting, Brown 41-28-2XH, Sanish, t10/13; cum --
  • 25330, 1,695, Statoil, Arvid Anderson 14-11 7TFH, Alger, t11/13; cum --
  • 25918, 248, Whiting, Littlefield 21-7-2H, Sanish, t11/13; cum --
  • 25441, 2,988, QEP, Kummer 1-6-7BH, Grail, t11/13;
  • 25442, 1,581, QEP, Kummer 2-6-7-8LL, Grail, t10/13;
  • 25440, 2,661, QEP, Kummer 6-7-5-8LL, Grail, t11/13;
  • 24935, 216, CLR, Tangsrud 7-1H3, Hayland, t10/13; cum --
  • 24936, 360, CLR, Tangsrud 8-1H1, Hayland, t10/13; cum --
  • 23317, 1,105, WPX, Adam Good Bear 15-22HW, Van Hook, t11/13; cum --

Around The Horn

Wow, what a great week for energy.

I was surprised to see another nice Friday on Wall Street. What is this, the third or fourth Friday in a row where the Dow has ended positive. I'm always surprised traders are willing to bet "higher" on a Friday, not knowing what the weekend might bring.

Most encouraging this week: the price of NYMEX/WTI held at about $94. I believe "experts" consider "sustained high prices" for oil anything above $85, maybe above $80. I think most of us are happy to see "$100 oil" but worry about a "bubble" and "demand destruction" when NYMEX/WTI goes above $105. And the effect on the economy for those holding a diversified portfolio.

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or think you might have read here. 

Oil holding above $90 was a) nice to see; and, b) somewhat of a surprise, for this time of year.

Those were my thoughts as I started to "go around the horn" to see what folks were saying about the market. To my astonishment, the very first story I read was optionMonster's "energy is coming back to life," and the paper is flowing into Schlumberger.

I have long forgotten but I think Burlington Northern was one of my first equity investments, some 30 or 40 years years ago. MDU was an early investment, about the same time. Schlumberger was also very, very early for me, and I've kept it all these years, accumulating a little bit now and then. I've left a lot of money on the table (wow, I hate that cliche) with Schlumberger, but I have no regrets. I cannot time the market.

It was nice to see that optionMonster's story.

So, what else was happening around the horn.

I know "everyone" loves Cramer. The Street: next stop for Baker Hughes is $65 (currently $58). A digression: it is impossible to articulate how big the three (?; two for sure) BHI complexes are in Williston, North Dakota, the heart of the Bakken. They are absolutely huge. They alone provide an indication of how long the drilling will continue in the Bakken. But I digress. What did The Street say in that article?

I've never tracked the performance of BHI in my portfolio; it's a long term holding that I will leave to the granddaughters. I have never quit accumulating shares in Baker Hughes; it, too, is one of my long term holdings. But it's fun to see "nice stuff" written about it:
With Schlumberger and Halliburton posting better-than-expected third-quarter earnings results, it certainly seems as if business conditions in North America has taken a turn for the better. That certainly bodes well for Baker Hughes, which enjoys roughly 50% of its revenue from that region.
While Baker Hughes has consistently been overlooked when discussing the "Big Three" within the energy services space, Baker Hughes stock has actually outperformed Schlumberger by 8%. It seems management is finally ready to take that extra step forward to produce the sort of results the Street has been waiting for. With growth having returned to North America and abroad, these shares still look undervalued by at least 10%.
I don't believe The Street has ever doubted that the energy sector -- which has been marred by weak oil prices and soft rig counts -- would rebound in a meaningful way. The question has been if/when the market did recover, would Baker Hughes regain its trading status as a strong oil producer as opposed to natural gas, where there has been some continued weakness? These and other questions were answered convincingly following the company's third-quarter earnings results, which included a 22% jump in profits.
Okay, so that's the drilling services companies. What did the majors (CVX, COP, XOM) do?

Three nice stories coming out/regarding CVX which I won't link: a) the Ecuador legal story; b) one SeekingAlpha writer making the case for CVX over XOM; and, c) CVX thinking twice about throwing money down a drain. Good for them; not chasing production.

Some analysts aren't all that happy with XOM even after Warren Buffett initiated a huge stake but  XOM is near its 52-week high after languishing earlier this year.

Both COP and PSX were "up" today, and COP was near its 52-week high. Sweet.

I won't be looking at the Bakken operators today; they were down so far earlier this week, it will be awhile to see them recover. One exception: TPLM. Up almost two (2) percent but off it's 52--week highs. I could be way wrong, but I think TPLM's holdings are about right where the new ONEOK natural gas processing plant will be.

Some years ago, back in late 2011, I happened to drive by the first Stateline natural gas processing plant going up. It was incredible. I did not know what it was. Regular readers probably remember all my posts on the Stateline which I finally figured out, thanks to readers at the time. A lot of those readers seemed to have disappeared. I miss them, but that's life. I lost them about the time this blog was hacked and I changed my URL. The new ONEOK plant will be twice the size of their biggest plant in North Dakota (to the best of my knowledge); I hope to see it while it is being built. I would like to be there during change of shift. The traffic will be incredible: two hundred F-150 pick-up trcks coming and going, each carrying one or two construction workers.

Both ENB and EEP were up today. That's how good the market was today. It seems every time I've checked the past few weeks ENB and EEP were "red." EEP pays 7.3%; ENB pays almost 3%. Mr Bernanke pays about 0.1%.

So, is that it? I'm not looking at the Bakken operators. I looked at a pipeline company, the drilling services companies, and the majors.

Oh, one fracking sand company. I bet some folks did not know there was a way to "buy" fracking sand" on the NYSE. Yes: EOG. They have committed to their own ("owned") 20-year supply of fracking sand; they have their own CBR terminals; and, my hunch is they are selling sand to other operators. Could be wrong.

I can't follow BNI any more. Warren bought it. Is UNP a proxy? Not really. But UNP ... wow, I'm impressed. It's finally moving. Up about a percent today, and near its 52-week high. I can only imagine what BNI would be doing if it were still around. The UNP story brings us to a CAT scam (not a CAT scan -- that's medical, but a CAT scam). Allegations of a CAT subsidiary disposing of evidence by dumping perfectly good train parts into the ocean.

I'm in a great mood: regular readers know when I'm in a good mood -- the posts are very, very long, and ramble forever. I should put paid ads inside these long blogs. Not worth the effort. LOL.

I'm in a good mood. The market should have done well today. There wasn't one story about some EU country going broke; Bernanke is done testifying for the week; there's no hint of tapering for another month; gasoline is relatively cheap; and ObamaCare stories are fading away (about as fast as early adopters are avoiding the website, I guess).

Have a great weekend.

One more daily activity report for the week will be out later tonight, and then I get to do my least favorite activity tomorrow morning: post the "top stories" for the week, which always seem so old.

Good luck to all. 


Meanwhile, over at SeekingAlpha, "Valuentum" is reporting EOG and CLR are two Bakken takeover candidates:
... the 2013 edition highlighted Continental Resources and EOG Resources as two of our favorite M&A candidates. Continental Resources is the largest leaseholder in the Bakken (1), while EOG Resources is the largest leaseholder in the Eagle Ford (EOG has a nice position in the Bakken as well).
"Valuentum's" conclusion:
Continental Resources and EOG Resources continue to execute nicely. We like both as M&A targets and would not be surprised to see a major take a stab at either one to mitigate their own earnings pressure. We see valuation upside to $148 per share in Continental and $196 per share in EOG Resources on the basis of their respective fair value estimates. However, investors should be cognizant of the volatility of energy prices and the large impact they may have on Continental's and EOG's respective intrinsic value estimates. In any case, these two energy ideas are among the most exciting in the oil and gas space, in our view.
All things being equal, I think CLR is more sensitive to the volatility of crude oil prices. Transportation issues, weather, and infrastructure can play havoc with Bakken operators. In contrast, the Eagle Ford is near the refineries, located in a state with long history of infrastructure development, and no weather issues. And, there might even be a slight edge to the Eagle Ford when it comes to "social acceptance." The Bakken runs the risk of "Bakken fatigue."

Update On The Western Canadian Oil Sands Even Without The Keystone XL

A reader sent this link/story from The New York Times. It's a nice update. The lede:
Suncor Energy, Canada’s top petroleum producer, announced on Thursday that it would expand its oil production in 2014 by 10 percent in another sign that the Obama administration’s delay in approving the Keystone XL pipeline extension is not holding back growth in the western Canadian oil sands fields.
“We’re set for a strong year of continued production,” Suncor’s chief executive, Steven W. Williams, said. The company announced a capital spending program of $7.45 billion for 2014, $477 million more than it had forecast earlier this year.
Suncor, which is based in Calgary, produces oil and gas around Canada, and has operations in North Africa and the North Sea. But its oil sands operations are the main driver for the company. In the most recent quarter, its oil sands output rose 16 percent from the year before for a record of 396,000 barrels a day, nearly 20 percent of the country’s total oil sands production.
The company said it expected its oil sands production to increase again next year to 430,000 barrels a day.
Some data points.

  • currently 2 million bopd from the Canadian oil sands
  • forecasts of 5.2 million bopd by 2030
  • Keystone XL was to have had capacity of 800,000 bopd; to originate at Hardisty, Alberta
  • recently announced: three new CBR projects with combined capacity of 350,000 bopd
  • CBR to quadruple over next few years to 900,000 bopd
  • Enbridge will build a $1.4 billion pipeline from Fort Hills mine to Hardisty, Alberta
  • Gibson Energy will build a CBR terminal in Hardisty (Canadian Pacific Railway); 140,000 bopd
Anticipated production: Suncor's Fort Hills mine
  • $13 billion project
  • joint venture: Suncore, Total (France), mining firm Teck Resources
  • shelved during financial crisis of 2008
  • revival: will increase oil sands production by 180,000 bopd
  • mining life of 50 years

ObamaCare Website And Security Issues

Health expert: the government website security is "worse" than it was before the "fix." December 3, 2013. 

We knew this back in early October, 2013. John McAfee is probably the most trusted name in computer/internet security.

North Dakota: Best Run State -- 24/7 Wall Street

24/7 Wall Street - Yahoo!Finance is reporting that North Dakota is the best-run state, followed by:
  • Wyoming
  • Iowa
  • Nebraska
  • Utah
  • Vermont
  • Minnesota 
  • Alaska
  • South Dakota
  • Texas
  • Kansas
The list is surprising, to say the least.

From the bottom up, worst is New Mexico, followed by,
  • Illinois
  • Rhode Island
  • Nevada
  • Arizona
  • Louisiana
  • New Jersey
  • South Carolina
  • Connecticut
  • Alabama
And then the rest.

A Note To The Granddaughters

Earlier I linked to a Wall Street Journal story on the Coen brothers new film.  I first saw the story in the on-line WSJ. When I got home, I read the story from the print edition. The article is about the role T Bone Burnett played in the Coen brothers' musical journey over their film journey.

The last couple of paragraphs of that article:
Mr. Burnett led the selection of the all-acoustic soundtrack, which draws from the folk canon with traditional ballads such as "Hang Me, Oh Hang Me" and "Fare Thee Well." After rehearsals overseen by Mr. Burnett, the film's musical performances were shot live.
The Coen brothers aren't professional musicians (Ethan plays some guitar). But Mr. Burnett, who first contacted them after seeing their 1987 movie "Raising Arizona," says the directors have an easy communication with musicians about "tone." Likewise, musicians recognize that the Coens build music into the foundation of their films, he says: "Everybody knows they're on our side."
Who wudda guessed, Raising Arizona. That's one of my favorite movies, and I watch it probably once a year. I last watched it about six weeks ago.

TPLM And HK Are Both Trading Pre-Market And Trading To The Upside

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here.

I am tracking HK and TPLM a bit more closely right now for two reasons:
  • skeptics are suggesting operating cash flow and lack of venture capital could hurt small Bakken operators (think BEXP in the very, very early days; KOG in the very, very early days)
  • TPLM has the majority of their acreage, I think, right where the new ONEOK natural gas processing plant will be built
By the way: in 2006 the total natural gas processing capacity in the entire state of North Dakota was 227 million cubic feet per day; this new ONEOK facility will have capacity almost matching that, at 200 million cubic feet per day.

$700 Million And Millions More Yet To Come: A Webpage; Gamma-Ray Physics And A Note To The Granddaughters

Yahoo!News is reporting:
Technology experts say healing what ails the website will be a tougher task than the Obama administration acknowledges.
"It's going to cost a lot of tax dollars to get this done," says Bill Curtis, senior vice president and chief scientist at CAST, a French software analysis company with offices in the U.S.
Curtis says programmers and systems analysts start fixing troubled websites by addressing the glitches they can see. But based on his analysis of the site, he believes the ongoing repairs are likely to reveal even deeper problems, making it tough to predict when all the site's issues will be resolved. [For what it's worth, I've heard the same deep analysis by folks here in Starbucks.]
"Will it eventually work? Yes, because they have to make it work," he says. But it'll be very expensive."
Curtis and other technology executives say the site's problems are the result of poor management of its many working parts. They also believe, as Congressional testimony has revealed, the site suffered from a lack of testing once all its systems were in place.
The federal health insurance exchange website —which cost taxpayers more than $600 million to build, according to the Government Accountability Office— has been crippled by technical problems since its October 1 launch.
Since then, everyone from top White House officials to the contractors who worked on the site have been called before congressional committees to determine what went wrong and who is to blame. ["... from top White House officials...." I assume the president himself is learning HTML. There is nothing this guy can't do once he sets his mind to it. It sort of puts Michelle's garden into perspective which I think died due to sequestration.]
The White House originally promised to have the site running smoothly by the end of November. But at a news conference last week, President Obama said he couldn't guarantee that the site will be completely bug free by then. ["... by the end of November... " what year? Folks have got to learn to listen closely to spokespeople in Washington.]

A Note To The Granddaughters

This is so incredibly fascinating.

The Christian Science Monitor is reporting a massive gamma-ray burst but scientists are not yet able to explain it. It really helps to be watching re-runs of The Big Bang Theory every night to keep up with physics. LOL.

So, for the granddaughters.

Based on increasing energy:
  • alpha rays
  • beta rays
  • gamma-rays
Gamma rays occur naturally on earth from radioactive decay, but the astronomical event witnessed by scientists in the linked article above are too large to result from radioactive decay. From wiki:
A notable example is extremely powerful bursts of high-energy radiation normally referred to as long duration gamma-ray bursts, which produce gamma rays by a mechanism not compatible with radioactive decay. These bursts of gamma rays, thought to be due to the collapse of stars called hypernovae, are the most powerful events so far discovered in the cosmos.
Wouldn't it be interesting if this event was extraterrestrial intelligence doing the equivalent of earth beings doing atmospheric testing of hydrogen bombs in the previous century. That's what I think. Astronomers think this most recent event is similar to the collapse of huge stars, but I think it's "extraterrestrial intrastellar nuclear testing." Just saying.

Magnetic fields and these rays
  • Alpha rays: deflected by magnetic fields
  • Beta rays: deflected by magnetic fields
  • Gamma-rays: not (easily) deflected by magnetic rays
  • Alpha rays: particles with mass
  • Beta rays: particles with mass
  • Gamma-rays: no mass
  • Alpha rays: charged
  • Beta rays: charges
  • Gamma-rays: no charge
  • Alpha rays: 2 protons + 2 neutrons, identical to a helium nucleus (He +2)
  • Beta rays: high-speed, high-energy electrons (e -1) or positrons (e +1)
  • Gamma-rays: emitted by the nucleus or by means of other particle decay
  • X-rays: emitted by electrons outside the nucleus
Distinction between gamma rays and x-rays
  • gamma-rays: from the nucleus
  • x-rays: from electrons (outside the nucleus) 
Gamma rays, two sources
  • gamma decay: an excited nucleus emits a gamma ray almost immediately upon formation
  • collapse of hypernovae  
Again from wiki:
Another example is gamma-ray bursts, now known to be produced from processes too powerful to involve simple collections of atoms undergoing radioactive decay.
This has led to the realization that many gamma rays produced in astronomical processes result not from radioactive decay or particle annihilation, but rather in much the same manner as the production of X-rays.
Although gamma rays in astronomy are discussed as non-radioactive events, in fact a few gamma rays are known in astronomy to originate explicitly from gamma decay of nuclei (as demonstrated by their spectra and emission half life). A classic example is that of supernova SN 1987A, which emits an "afterglow" of gamma-ray photons from the decay of newly-made radioactive nickel-56 and cobalt-56.
Most gamma rays in astronomy, however, arise by other mechanisms. Astronomical literature tends to write "gamma-ray" with a hyphen, by analogy to X-rays, rather than in a way analogous to alpha rays and beta rays. This notation tends to subtly stress the non-nuclear source of most astronomical "gamma-rays."
Now back to the Christian Science Monitor story:
An exploded star some 3.8 billion light-years away is forcing scientists to overhaul much of what they thought they knew about gamma-ray bursts – intense blasts of radiation triggered, in this case, by a star tens of times more massive than the sun that exhausted its nuclear fuel, exploded, then collapsed to form a black hole.
Last April, gamma rays from the blast struck detectors in gamma-ray observatories orbiting Earth, triggering a frenzy of space- and ground-based observations. Many of them fly in the face of explanations researchers have developed during the past 30 years for the processes driving the evolution of a burst from flash to fade out, according to four research papers appearing Friday in the journal Science.
The burst, known as GRB 130427A, dubbed a long-duration gamma-ray burst (GRB), is typically seen in the distant, early universe, Dr. Dermer said during a briefing Thursday. This one was much closer. And while typical long-duration bursts last from a few seconds to a few minutes, GRB 130427A put on its display for 20 hours.
The event's duration, relatively close proximity, and the range of observatories in space and on the ground that could monitor it at a range of wavelengths has provided scientists with an unprecedented opportunity to explore the workings of one of the more extreme ends a star can inflict on itself.
The encouraging news: Traits seen in the gamma-ray emissions from initial burst through the afterglow compare favorably to the traits seen in the behavior of gamma rays in more-distant, long-duration bursts.
GRB 130427A “topped the charts” in the amount of gamma-ray photons it released, the energy levels some of those photons achieved, total explosion energy, and its gamma-ray brilliance, added Paul Hertz, who heads NASA's astrophysics division in Washington. At visible wavelengths, the burst was the second brightest GRB researchers have seen.
I think the extraterrestrials are getting better at increasing the duration of gamma-ray bursts. 

For what purpose?

Government Approves Williams Request To Expand Nation's Largest Natural Gas Pipeline System, Transco

Williams Partners receives FERC approval for Transco Pipeline expansion designed primarily to serve new gas-fired power-generation in Virginia:
Co announces it has received Federal Energy Regulatory Commission approval to expand Transco, the nation's largest natural gas pipeline system, to provide service to a customer's new, gas-fired, power-generation plant in Virginia. 
A unit of Dominion (D) plans to construct the 1,358-megawatt facility in Brunswick County, Va., to replace generating capacity from retiring coal-fired plants.
The ~$300 mln Transco Virginia Southside Expansion is designed to provide 270,000 dekatherms per day (dth/d) of incremental transportation capacity in Virginia and North Carolina by September 2015. Of the total expanded capacity, more than 90 percent will serve Dominion Virginia Power's new power plant; the remainder will serve Piedmont Natural Gas Company's (PNY) local-distribution business in North Carolina.
Putting that into perspective: Williams will commit about $300 million to expand the nation's largest pipeline system; the expansion will serve the very population-dense northeast and east.

Meanwhile, ONEOK will commit close to a billion dollars (initial budget $780 million) to expand natural gas gathering, processing, and planting, in North Dakota (fly-over country). 

The Williston Wire

It is easy to subscribe to The Williston Wire. Short notes, no links.

ONEOK to invest up to $780 million more in oil patch.

Number of North Dakota millionaires nearly doubles.

Trinity Health adds new psychologist in Williston.

Electricland, Reynolds Market, ALCO opens in Sidney.

Most other notes have been previously posted on the blog.

Friday; Bakken, Quiet; AAPL Moving Pre-Market

AAPL up $6.00 in pre-market trading. 

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here. I have never invested or traded in AAPL: never have, never will. But it's a fun company to follow. And I am Apple Fanboy #3. And currently "padless."

Active rigs: 184

RBN Energy: natural gas prices held in check by abundant supplies
The CME natural gas futures market has been trading in a narrow 40 cent range between $3.40/MMBtu and $3.80/MMBtu since the end of the summer. The onset of winter and the first storage withdrawals last week (according to EIA) have done little to jump start prices. The prompt Henry Hub futures market closed at $3.702 yesterday (November 21, 2013). The dominating story remains increased supply from new production. Today we look at how supplies are weighing on spot prices and futures market speculation.
The Wall Street Journal

Senate Dems change the rules; will pack the courts.

Doctor's fees get slashed under ObamaCare. One can see how this will play out; it's not rocket science.

Reported previously: California called Obama's bluff. "No" on the rollback

You have got to be kidding: colleges no longer generate enough tuition to keep up with inflation. What inflation?
Nearly half of the nation's colleges and universities are no longer generating enough tuition revenue to keep pace with inflation, highlighting the acceleration of a downward spiral that began as the recession ended, according to a new survey by Moody's Investors Service.
The survey of nearly 300 schools reflects a cycle of disinvestment and falling enrollment that places a growing number at risk. While schools for two decades were seeing rising enrollments and routine increases of 5% to 8% in net tuition, many now are facing grimmer prospects: a shrinking pool of high-school graduates, depressed family incomes and precarious job prospects after college.
The musician behind the Coen Brothers music: T Bone Burnett.
Filmmakers Joel and Ethan Coen made one of their biggest contributions to the music world indirectly, with their movie about a slacker and serious weed smoker named the Dude.
"Musicians perceive the Coen brothers reverently just for 'The Big Lebowski,' " says T Bone Burnett, an eminently connected music producer who oversaw the 1998 soundtrack. "That movie has been a staple on tour buses for decades."
Since then, Mr. Burnett has become the conduit for the Coens' more direct impact on the music business.
For the coming film, "Inside Llewyn Davis," set in the New York folk scene of the early 1960s, Mr. Burnett assembled a murderers' row of performers with a reverence for roots music. Justin Timberlake acts and sings in the movie, and Marcus Mumford (of top-selling band Mumford & Sons) helped oversee the music. Many of those involved, including Joan Baez, Elvis Costello and Jack White, aren't even on the soundtrack; they were recruited by Mr. Burnett for a related star-heavy concert revue.
The project also showcases artists more accustomed to working the music industry's margins. With the "Llewyn Davis" soundtrack, which also spawned a concert film (due next month on Showtime), the Coens are expanding on a blueprint they created with the 2000 film "O Brother, Where Art Thou?" That soundtrack, a survey of rawboned country music and bluegrass, was a surprise smash. It won the top Grammy award, sold 8 million copies and spun off an all-star concert tour, which was documented on a DVD and a live album that also won a Grammy.

Why I  love blogging. Had I not blogged, I would never have know about methane hydrates. Rigzone is reporting that DOE is expanding research on methane hydrates, funding seven universities, including University of Texas.