Saturday, December 14, 2013


Triangle Petroleum
Continental Resources
Whiting -- always good
Kodiak Oil & Gas
Oasis Oil & Gas 
Emerald Inc
Marathon Oil
Northern Oil & Gas (NOG)
EOG -- highly recommend; note particularly the average production of Eagle Ford wells compared to Permian wells:

December, 2013, presentation.

For Investors Only

I subscribe to only one publication: The Wall Street Journal. Well, that's not quite correct. I also subscribe to BloombergBusinessweek but I have no idea how that happened. I've talked about it before.  I certainly won't continue the subscription. It is incredibly .... not good.

On the other hand, though I don't subscribe to it, every time I pick up a copy that happens to by lying (laying?) around, I am truly impressed with The Economist. So much so I may actually subscribe (I pulled out a subscription insert from a copy I found over at my son-in-law's). $139/51 weeks.

This most recent issue is filled with interesting subjects, and very little fluff.

Investors may be interested in this article featured on the cover: Blackrock.  The graphic at the link of its top 20 holdings is interesting. Note what the firm's top 20 investments are in. And then note what this risk-averse firm does not hold in its top 20.

Four of the top 20 holdings are in energy (five if you include Berkshire Hathaway, which may not be far-fetched if one looks at Warren's holdings). Note the one automobile company. One "retail." But again, note what sector is not represented at all in the top 20.

North Dakota Credit Rating Raised To AAA

The Dickinson Press is reporting:
Standard & Poor’s Rating Services has upgraded North Dakota’s credit rating from AA to AAA, making the state one of only 15 in the nation to hold the financial services company’s top credit rating, Gov. Jack Dalrymple announced Friday.
The major credit house also upgraded North Dakota’s appropriation debt rating and obligation debt rating to better reflect the state’s “very strong capacity to meet financial commitments,” the governor’s office stated in a news release.
The only question is: You mean to say there were fourteen other states with AAA rating when North Dakota did not have such a rating these past two years? What took so long?

One "Green" Map Showing How Shale Oil Made North Dakotans Rich In Five Years; Will The Bullet Train Reach Its Destination? As Posted Earlier, Now Confirmed -- Thousands Of Enrollee Applications Did Not Reach Their Destinations; Did HHS Just "Take-Over" The US Insurance Industry? Has US Health Care Just Been Nationalized?

CarpeDiem has an incredible map of the United States. Not much explanation needed, and no comments necessary.
The Other Trainwreck

The Los Angeles Times is reporting:
The state's strategy of tapping $3.2 billion in federal money to begin construction of an ambitious bullet train project may be legally flawed and could put the state in financial jeopardy, key lawmakers say.
After recent legal rulings that bar the use of state money for the project, legislators from both political parties say that even the use of federal funds is questionable and the entire project needs to be reassessed.
U.S. Rep. Jeff Denham (R-Turlock), the chairman of the House rail subcommittee, and Rep. Tom Latham (R-Iowa), chairman of the appropriations panel for transportation, have asked the Government Accountability Office to investigate the issue.
"It has been a colossal failure," Denham said. "They are trying to make up the rules as they go along."
I honestly thought there was nothing that could compare with the federal trainwreck (aka, ObamaCare) but I'm beginning to wonder.


Did HHS just "nationalize" the US insurance industry? Was their a takeover?

The other day the federal government "told" insurers to accept/pay claims even if folks do not pay their premiums in early 2014. Obviously there had to be a reason for this "directive." There are two major reasons that folks who are willing and able to pay their premiums, in fact, won't pay their premiums, at least early on: a) the software won't be written by January 31, 2014 (very likely); and/or, b) the applications completed on-line in October and November did not reach the insurers (confirmed).

Well, now we know. The applications did not reach the insurers.

The Washington Post is reporting that "thousands" of on-line applications never reached their destination. And, of course, you just know that "thousands of others" reached their destinations in multiple copies or with significant errors.

Back to the scarier story: did HHS just nationalize US health care? Not to worry. The insurers can play hardball, too. As I understand the Forbes article, HHS is simply telling insurers that if they don't "honor" implied commitments, HHS could "ban" certain insurers next time around. All that does it cancel more insurance policies. More likely, the insurers will buckle, but they will require co-pay and deductibles up front, with premiums to be paid within 30 days. This is essentially a 30-day "premium-to-be-paid" following the first medical visit. It will, however, be interesting to see how this plays out. Generally speaking, the first thing emergency rooms, clinics, and hospitals ask for is evidence of insurance. It will be interesting how quickly insurance companies get proof of insurance out to folks who have not paid their premiums. This is an absolute mess.  

Global Warming Hits Lake Sakakawea In The Bakken Oil Patch; Roughnecks To Start Drilling Ice (Fishing)

The Minot Daily News is reporting:
Lake Sakakawea is rapidly approaching a complete freeze.
If the massive reservoir is officially declared frozen-over prior to Dec. 20, which appears to be a certainty, it will mark the shortest season of open water in the history of the state's largest body of water.
On Thursday, much of the reservoir was covered in ice but there was some open water, primarily in the area immediately above the dam. The water there is some of the deepest in all of Lake Sakakawea and is considered the last portion of the reservoir to freeze each year. From a nearby overlook leading to the dam's intake structure, engineers from the Garrison Dam power plant make daily observations of ice formations and remaining open water.
I grew up in North Dakota. This is an incredible story. I do not recall it ever being this cold this year in the winter. Our cold month was February. 

Ice fishing in North Dakota, Devils Lake

Week 50: December 8, 2013 -- December 14, 2013

Production hits new state record
KOG, XTO leading the way on density well drilling

90% of Bakken oil could go by rail in 2014
Update on flaring issues -- Petroleum News

MRO to invest $1 billion in North Dakota in 2014; MRO to increase activity by 20% in the Bakken
New refinery proposed; west to Devils Lake; $225 million  
Blame it on the Bakken -- huge building boom in Fargo - 350 miles from the oil patch 

Natural gas spikes in New England; initial post here; RBN Energy predicts it here
If this were the Daytona 500, the Bakken is at "Mile 50"; 30 years of drilling yet to go
Four permits near Bismarck; well outside the Bakken area of operations; permits here
Morton County: $1,500/mineral acre?
Acquisition target?
Light refining has hit a wall; refiners in the driver's seat
BLM permit backlog -- an astounding 525 applications and the number keeps growing

Harold Hamm, CLR/CEO, says Keystone XL not needed 
Final phase of Seaway Pipeline Expansion to come on-line in 2014
How the Seaway Pipeline Expansion will affect the Bakken

For  investors only
CLR upgraded to investment quality -- Moody's
Mike Filloon focuses on American Eagle
Triangle Petroleum has a blow-out quarter

Pad Drilling Vs Density Drilling

I'm in the middle of a swim meet, so I'm not concentrating as much as I should, so take everything I write this morning with "a grain of salt," as they say.

The Dickinson Press has a story on pad drilling today, something regular readers have known about for two, three, four years -- whenever Harold Hamm (CLR) introduced Eco-Pads, a copyright term, by the way, I believe.

In my mind, there is a difference between pad drilling and density drilling. Perhaps one can think of density drilling being a subset of pad drilling, though technically there would be no reason why density drilling couldn't be done on individual well sites, but that would be a real waste. So, for now, in my simple mind, density drilling is a subset of pad drilling. Another way one could say it, I suppose, is that density drilling is facilitated by pad drilling.

Be that as it may, the linked Dickinson Press article is about pad drilling and not density drilling.
Multi-well pads are becoming bigger and a more common sight in the western North Dakota Oil Patch.
The pads consolidate impacts to nearby landowners and the environment to one concentrated spot, rather than single wells being sprinkled across the landscape.
The wells’ coziness doesn’t extend underground though — horizontal drilling allows the wells to start in one spot but spawn in various directions, to wherever the oil is.
So far this year, 60 percent of the wells permitted were for shared pads, up from about a third from 2011, according to Department of Mineral Resources data.

For Investors Only: AAPL Bears ; ATT Increases Quarterly Dividend By One Penny

From a SeekingAlpha post:
The fact that it's cheaper for Apple to make $1 than for Google and Amazon is an outstanding competitive advantage that isn't eroding despite the commodization of mobile. The company's stagnant R&D spend is offset by low M&A costs.
How accurate that is, I don't know. But it's an interesting observation, if accurate.

There's some "corollary" in the Bakken. It turns out, based on a comment from a reader, that there is a significance difference among the various operators on their ability to run an efficient operation (and, in turn, control costs).

There is some suggestion that some of the less efficient operators (and small Bakken operators) may not be around in 2016.

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

ATT increased its quarterly dividend b one penny. 

Petroleum News Has An Update On Flaring Issues In The North Dakota Bakken

Petroleum News is reporting:
The number of applications for flaring exemptions in North Dakota is up two to three times what is typical for the month, according to Lynn Helms, director of the state Department of Minerals Resources Oil and Gas Division.
Most of the flaring-related applications that the North Dakota Industrial Commission will consider in hearings scheduled for Dec. 18 and 19 are for flaring natural gas from wells that are not yet connected to gathering infrastructure and the operators want to continue producing oil at maximum rates beyond the 60 days of unrestricted production allowed under state rules. That comes as no surprise to Helms since the commission has been issuing these types of exemptions for six months at a time and many are due to expire on Dec. 31.
Back on November 23, 2013, I wrote (
I've been posting an abbreviated summary of the dockets since 2009 and I don't think I've ever seen so many cases requesting permission/waivers for unlimited flaring as in the December, 2013, hearings.

Petroleum News Update On Well Density In The Bakken; KOG, XTO Leading The Pack; Data To Be Collected

Petroleum News is reporting
North Dakota operators continue to increase well densities on Bakken petroleum system spacing units. In applications that the North Dakota Industrial Commission will consider during hearings on Dec. 18 and 19, numerous operators are seeking authority from the commission to drill up to 30 wells on existing 2,560-acre spacing units, up to 16 wells on existing 1,280-acre units, and up to four wells on existing 320-acre units. Those infill efforts will result in spacing unit densities of one well for every 85.3 acres in the 2,560s and an even higher spacing unit density of one well for every 80 acres in the 1,280- and 320-acre units. These are some of the highest spacing unit densities that the commission has ever considered.
“These spacing requests are very significant, in the fact it is some of the highest we have ever seen,” Department of Mineral Resources Assistant Director Bruce Hicks told Petroleum News Bakken in a written statement. “Should the commission approve these cases, it should allow operators the ability to vertically test the stratigraphic limits of the Bakken and Three Forks Formations. It will give operators the chance to review scientific data as to what the best possible well densities should be for a particular area.”

The operators seeking the highest well densities are Kodiak Oil and Gas (USA) and XTO Energy. Kodiak is seeking permission to drill up to 16 wells on two existing 1,280-acre units in the Truax field in southern Williams County. XTO wants to drill four wells on an existing 320-acre unit in the Squaw Creek field in far eastern McKenzie County. In both cases the resulting density is one well for every 80 acres in the spacing unit.
I really have to thank the reader who sent me this story. I never would have guessed KOG and XTO led the pack in density drilling. I thought it would have been CLR, #1 and, then maybe KOG, or even someone else. But XTO (XOM's deep pockets) is interesting; and talk about a feather in KOG's cap to be leading the pack. Good for them.

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

New Link At The Sidebar: Futures Pricing, CME Group

A big "thank you" to a reader who has provided a much more useful link for crude oil / natural gas pricing. Right now it's near the top, "Futures," but I do occasionally move things up and down on the sidebar, especially during earnings season.

The link will take you to CME Group. When you get to the site, scroll down a bit. Look for "Energy," currently in the top row.

By rolling over the symbol a pop-up will appear telling you what the symbol stands for. Clicking on the symbol will provide more information than most folks would ever need.