Tuesday, November 3, 2015

November 3, 2015

Oasis 3Q15 conference call.

Forbes: only 1% of the Bakken play breaks even at current oil prices.  For the archives.

Dickinson Press: US oil refiners look abroad for crude oil supplies as North Dakota boom fades. This is a Reuters story. For the archives.

Tesla:
  • Loss per car sold at record high: $19,810
  • Negative cash flow worsened to $51,344 per car sold
  • Reduction in 4Q guidance by 1,500 cars, or 3%, combined with slight 1% reduction in customer deposits
  • Management guided gross margins down for 4Q, “slightly”
  • Thanks to much-lowered stock sentiment over the last month, the immediate stock reaction was still positive 
Girl Scout cookies now $5 / box in some parts of the country. Did they just price themselves out of business? I thought $4 / box last year was approaching the limit, but then a single croissant in Starbucks is a couple of bucks.
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Reporting Wednesday, November 4, 2015

Abraxas (AXAS), forecast, a loss of 2 cents; AP report; misses by one cent; a 3-cent loss;
Chesapeake (CHK), forecast, a loss of 13 cents; Zacks; 5-cent loss, which is much better than the forecast 13-cent loss.
Continental Resources (CLR), forecast, a lost of 12 cents; AP story; in line, lost 12 cents;
ETP, after market close; 
Facebook (FB), forecast, 27 cents; WSJ story; 11% increase in third-quarter earnings; huge beat; 32 cents; shares up; 
Marathon Oil (MRO), forecast, a loss of 40 cents; AP story here; appears to be a huge beat; loss at 20 cents vs 40 cents forecast;
Sandridge (SD), press release; 7-cent loss; to acquire North Park Bsin Niobrara shale oil assets for $190 million; acquies Pinon Gathering System - eliminates $40 million of annual expenses
Transocean (RIG), forecast, 68 cents; press release; beats by 21 cents; 87 cents EPS;

Nine (9) New Permits -- The Bakken, North Dakota, November 3, 2015

Active rigs:


11/3/201511/03/201411/03/201311/03/201211/03/2011
Active Rigs69186181188194

Wells coming off the confidential list Wednesday:
  • 27420, SI/NC, CLR, Garfield Federal 5-5H1, Banks, no production data,
  • 31104, A, CLR, Hawkinson 15-22H, Oakdale, no test date; cumulative -- 167 bbls on one day; no production for three months except for that first day of production; back on line 10/15 - 3K/month, cum 10K 1/16;
Nine (9) new permits --
  • Operators: EOG (6), XTO (3)
  • Fields: Antelope (McKenzie), Bear Creek (Dunn)
  • Comments: the EOG permits are in the same area as the recent EOG Hawkeye permits; scroll to bottom of this post to see more.
Two (2) producing wells completed:
  • 29229, 2,934, Statoil, Heen 26-35 6TFH, Todd, frack data not yet posted, t10/15; cum 46K 1/16 -- only 38 days in last two months;
  • 29613, 1,148, WPX, Olive Mae 7-8-9HX, Van Hook, Bakken (NOS), 1920-acre spacing, t10/15; cum 95K 1/16;
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EOG Hawkeye Activity
Antelope Oil Field Area

Updates

November 4, 2015: EOG added another permit to this area. It is is section 25-152-95, in the NWNW corner where the dark circle is located in the first graphic below. 

Original Post
 
Some days ago, EOG had permits for a number of new Hawkeye wells in Clarks Creek/Antelope oil fields. This was the graphic I developed to capture those new permits.



Today, EOG has permits for six more Hawkeye wells in the same general area.

First, this is a graphic of the "entire area" with the left half marked "A" and the right half marked "B" to correspond with the graphics down below.



Area A:





Area B:

Are Operators Using The Relaxed SI/NC Rules To Delay Reporting Otherwise "Confidential Material"? FAQ, Page 2

This is Page 2 of the FAQs

Note: for readers with knowledge about the Bakken, and particularly the new SI/NC rules, your input would be much appreciated. I posted my response below but could certainly be wrong on some of the details. 

In response to a post regarding a well on SI/NC (DUC) status, a reader wondered whether operators might be using the relaxed standards to delay reporting otherwise "confidential" information. It's a very good question because the well at the linked post certainly must be fracked and yet it remains on the SI/NC list without a completion date, an IP, or any frack data at the file. It's possible the operators are using the relaxed standards to delay reporting fracking data, but that's hard for me to accept.

[Update: see first comment; this particular well has been fracked; information at FracFocus.]

Below is my "official" response to the question, but I can see where I might be wrong.

This will also be tagged as Page 2 of FAQ.

101. Might Bakken operators use the new relaxed standards to delay reporting otherwise "confidential" information?
This is how I see it. At the six-month mark, the wells come off the confidential list. In the old days, if they were not completed by that time, they went to DRL status. That was because once a well reached total depth, the company would frack the well per the fracking schedule, and the state gave the operators a year in which to complete a well once it was spud. But regardless, it was no longer confidential.

Some time ago, early this year, before the NDIC acted, the operators simply drilled to total depth and told the NDIC they were not going to complete the wells until some time in the future. I assume the operators were waiting to see if prices changed and, if not, would work with NDIC to take next step.

The NDIC took the next step, relaxed the standards, and the wells now come off the confidential list at the six-month mark, and if not completed, and if the operator does not plan to complete them within the year, they go to SI/NC (Shut In/Not Completed) status, or in shorthand, DUC -- Drill Uncompleted. If they plan to complete them or are in the process of completing (fracking) them at the time they come off the confidential list, they go to DRL status.

But in all cases, at the six month mark, they are no longer on the confidential list.

When the wells come off confidential list and go to SI/NC status, the file report now contains the sundry forms that are required.

To answer your question: No, the operators are not using SI/NC status to keep their well information confidential. When a well is put on SI/NC status I know everything about the well from the file report had the well been reported as active. The only thing missing is the frack data (and the IP) because the well has not yet been fracked. And, of course, if not completed, no test for an initial production number. I'm not even sure an IP is required by law (I see some wells with no IP reported) and there is no rule on how an IP must be calculated based on what little I know about following the Bakken since 2006 or thereabouts.

Second part of note: there is a difference between royalties getting paid and the confidential list. Once an operator starts selling the oil, that information must be made known to the state. That is not confidential. Even if they start selling it the month they drilled (never happens), they have to report production to the state. (There is a lag time - 30 - 90 days or something, which I've talked about before but have long forgotten the specifics. But that's simply an administrative fudge to give the operators time to get the paperwork in order, etc., etc.)

There may be typographical errors in this note. There may be factual errors. This is how I understand it; I could be wrong, but I bet I'm pretty close to right.
102. What do you mean by "choking back"? This comes from the posting of November 7, 2015.  At that link, see my comments. I have been using the phrase "choking back" incorrectly. I have been / had been using it to describe any situation in which it appeared the operator was purposely limiting production of oil from a given well for a particular reason, often associated with the price of oil. As a "broader" example, I would say that the oil and gas industry is "choking back" production in the state of North Dakota due to low prices. This is not the conventional use of the the phrase in the oil and gas industry, at least as far as I know. Obviously, wells are taken off-line for operational reasons (nearby fracking, putting in pumps, etc), and the operator is purposely taking the well off-line which will obviously limit oil production. I will probably consider using different terminology going forward but consider my use of "choking back" in the past as incorrect in most instances.

Off The Net For Awhile -- November 3, 2015

This is an interesting article. I will come back to it later. Right now, off the net for awhile. Going biking.

Google vs Amazon / Apple.

Certainly This Well Has Been Fracked -- November 3, 2015

Updates

March 27, 2016: yes, the sundry form has finally been scanned in at the NDIC: 41 stages, 3.5 million lbs; other information below

November 4, 2015: yes, this well has been fracked. The information can be found at FracFocus; the lag time might be 3 - 4 weeks, but certainly not the lag time we see here. Fracking details:
  • The frac job was from 6/2-6/6 2015
  • ~110,000 bbls of fluid
  • ~3.5 million lbs of proppant (All sand, no ceramics) 
Original Post
 
Certainly this well is fracked, but if not, natural fracking results in a great well. The well shows great production. The NDIC data shows that it is SI/NC. No fracking data at the file report.
  • 30398, 1,891, Newfield, Gariety 150-98-30-31-4H, 15 days spud to TD, within the middle Bakken 100% of the time; 84.2% in the 15' primary middle Bakken target; 10.8% in the middle Bakken "B" facies; 5% in the middle Bakken "E" facies;  Siverston, huge wall; t6/15; cum 282K 4/18;
 ********************************

The NDIC scout ticket showing that this well is SI/NC:

NDIC File No: 30398    
Well Type: OG     Well Status: NC     Status Date: 5/19/2015     Wellbore type: Horizontal
Location: NWNW 5-150-98     Footages: 330 FNL 360 FWL    
Current Operator: NEWFIELD PRODUCTION COMPANY
Current Well Name: GARIETY 150-98-6-7-4H
Field: SIVERSTON
Spud Date(s):  5/3/2015
Completion Data
   Pool: BAKKEN     Status: SI     Date: 5/19/2015
Cumulative Production Data
   Pool: BAKKEN     Cum Oil: 98964     Cum MCF Gas: 172714     Cum Water: 38167
Monthly Production Data
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN9-2015301799918107644434836323482218
BAKKEN8-2015312428124043686141091346966116
BAKKEN7-2015312771527487924148470395128680
BAKKEN6-201521289692875115621483171820029928
 

Closing Out The Three Polls At The Sidebar -- November 3, 2015

Time to clean up the sidebar at the right; closing out the current polls.

What is primary reason for the recent rise in the price of WTI (up again today, over 2%):
  • strength/weakness of the dollar: 12%
  • fundamentals (US production declining): 35%
  • Russia involvement in Syria: 18%
  • market manipulation: 20%
  • short squeeze: 12%
  • Fed rate / budget deal: 2%
Today at Reuters:
Crude prices rose more than 2 percent on Tuesday as a rally in U.S. gasoline and diesel added support to oil markets already boosted by an industry strike in Brazil and force majeure for Libyan crude loadings.
Brazil production: 13% cut due to labor strike.The production hit comes as Petrobras is particularly strapped for cash.
This was a hard one: at what rate could DUCs be fracked during first six weeks of next turnaroud:
  • 70 / week: 25%
  • 56 / week: 23%
  • 42 / week: 48%
  • Other (20, 25, and 30 per week, each one vote): 4% 
This was actually the most important to me, to help me better understand the Bakken. Why do you think BR plans to re-enter #20336?
  • re-work with no "major" activity: 8%
  • re-frack: 37%
  • drill a new horizontal sidetrack in same middle Bakken target: 16%
  • drill a new horizontal to target a different formation in the middle Bakken: 37%
  • never completed: 3%

Tuesday, November 3, 2015 -- Part II; Ford's Numbers Are Staggering; Mustang Sales Increase 121%; Ford Edge Up 39%

US auto sales for October, forecast 17.7 million annualized vs September's 18.2 million

Fiat Chrysler October sales rise nearly 15 percent. AP is reporting:
The Italian-American automaker reported sales of about 196,000, led by the booming Jeep brand with a 33 percent increase. Sales were just over 170,000 a year ago.
It was Fiat Chrysler's strongest October since 2001, when most automakers offered zero percent financing in the aftermath of the Sept. 11, 2001 terrorist attacks. 
Ford:
  • total sales up 13%; best October performance in 11 years;
  • retail sales up 13%; best October performance in 11 years;
  • F-Series retail sales up 12%; drove total F-Series sales up 3% for highest October since 2004
  • commercial vans up 75% for best October since 1988
  • Ford-brand SUV sales up 12% for best October since 2004
  • New Explorer up 30%
  • all-new Edge up 39%
  • Ford-brand car sales up 17%
  • Mustang increasing 121% -- its best October performance since 2006
  • Fusion posts best October ver
  • all-new Lincoln MKX posts record October sales
GM:
  • 16% sales gain (compared to same month a year earlier)
  • Chevy brand up 18%
  • Cadillac rose 13%
  • GMC rose 18%
  • Silverado: most important and popular vehicle, up 10%
  • GMC Sierra: sister pick-up, fell slightly
Three interesting headlines over at Yahoo!Finance today:
  • get ready for a bigger Santa Claus rally (strategist)
  • government spending about to boost economy for the first time since 2010
  • China says GDP growth at least 6.5%

Slideshow: crude oil production by state; Alaska, Oklahoma dropping like rocks; ND flat; Gulf of Mexico surging; Texas, slight decline to flat.

Tuesday, November 3, 2015; After Huge Beat, Greenbrier Raises Dividend From 15 Cents To 20 Cents

Tweeting now: Shell splits off shale, oilsands operations into separate unit to boost returns from unconventional resources.

Tweeting now: weekly rail traffic data -- analysts say things are getting worse, but the graph does not exactly support that assertion (a dynamic link). Four years (2012 - 2015, inclusive) are tracked; one can argue 2014 was the outlier; if so, 2015 looks no worse then previous years, perhaps better.

Increased dividend: Greenbrier Cos (GBX) -- from 15 cents to 20 cents; earlier at the blog --

Active rigs:


11/3/201511/03/201411/03/201311/03/201211/03/2011
Active Rigs69186181188194

RBN Energy: Houston: Infrastructure Response to Shale Era Crude Oil Supply Transformation.
Prior to 2012 the only U.S. produced crude delivered by pipeline to Houston area refineries came from offshore Gulf of Mexico or onshore Louisiana fields. The majority of supplies were imports delivered by waterborne tanker. But in just three short years between 2012 and 2015, roughly 2 MMb/d of crude pipeline capacity was built or repurposed to deliver surging light shale crude production and heavy crude from Canada into the Houston area. Refiners have adapted quickly to take advantage of new sources of supply. But with much of the newly minted infrastructure underutilized, midstream companies still need to improve pipeline connectivity and storage accessibility to overcome area logistical challenges. Today we review RBN’s latest Drill Down report on Houston crude infrastructure – released today -- and announce RBN’s new infrastructure database and mapping system, called MIDI.
In 2011 average waterborne imports to Houston area ports were 1.7 MMb/d – enough to supply more than 70% of local refinery needs. Since April 2012 when Phase 1 of the Seaway pipeline reversal (150 Mb/d) came online to deliver crude from the Midwest Cushing, OK trading hub to Houston, that position has been largely reversed as multiple new pipelines have come online delivering domestic and Canadian crude to the Houston area – pushing out imports in the process. In July 2015 crude delivered by pipelines developed since 2012 accounted for about 55% of Houston supply and waterborne imports had dwindled to 0.8 MMb/d. Our latest Drill Down report – available exclusively to Backstage Pass subscribers provides detailed analysis of the changing crude supply/demand balance for 9 refineries and two condensate splitters in the Houston area that between them consume about 2.4 MMb/d.