Tuesday, November 22, 2016

Whiting Sells Two NG Plants In North Dakota; Vietnam Cancels Two Nuclear Power Plants -- Coal Is Much, Much Cheaper -- November 22, 2016

Breaking news: Trump will not investigate Ms Clinton's "server" issue

Coal: Vietnam's National Assembly halt plans to build 2 multi-billion-dollar nuclear power plants with Russia and Japan, parliament delegates say, citing lower demand, rising costs and safety concerns - Reuters, Breaking News.
This comes on the heels of the UN climate scam in disarray and the decision to delay implementation of the new climate plan scam by a full year.
Kashagan oil field begins commercial output. Reuters.

OPEC meeting: Production freeze (Russia, Iraq, Iran) vs production cut (Saudi Arabia).

Developer says DAPL will not be re-routed. This is a re-print of an earlier story. One wonders if the recent news report that Sunoco will acquire ETP changes things?

Russian Northern Fleet: no change; remains off the coast of Syria. Most recent ping, 18 minutes ago. Tug at 8.8 knots, heading south. If it's heading anywhere, it's heading back to Tartus.

Global warming: for those paying attention to the weather over the past ten years, three things stand out:
  • NOAA keeps "re-adjusting global temperatures;
  • the weather has really settled down; fewer big storms ("no" historic hurricanes in over a decade; very quiet summer tornado seasons); and, 
  • earlier winter snowstorms and more snow earlier
Today: Tokyo sees "first November" snow in 54 years. Link here.
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Back To The Bakken

Active rigs:


11/22/201611/22/201511/22/201411/22/201311/22/2012
Active Rigs3865191184183

RBN Energy: more lessons learned from five years of crude oil, natural gas, and NGL forecasts.

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Whiting Sells Midstream Assets in the Bakken

Zeit's take on Whiting's divestiture over at SeekingAlpha.
  • Whiting has brought to fruition another important deleveraging initiative, further reducing the risk of financial distress
  • The price received - ~6.4x-7.0x estimated 2017 EBITDA - is somewhat disappointing, but represents an outcome of a broadly marketed auction
  • The news gives certainty with regard to a long anticipated divestiture
  • Overall, the announcement is likely to have neutral to modestly positive implications for the stock
Over at Seeking Alpha: Whiting's midstream assets -- selling the Belfield and Robinson Lake gas plants.
  • Sale of Whiting's remaining 50% interest in Belfield and Robinson Lake gas plants announced. $700M in total proceeds, Whiting to receive $375 million
  • A potential sale was discussed at the recent Bank of America Merrill Lynch Conference.
  • Sale proceeds can be used to repay portion of 2018 Notes, and reduction of interest expense relieves pressure on financial covenants in 2017
  • Whiting Petroleum presented at the Bank of America Merrill Lynch Global Energy Conference on Thursday, November 17, and the presentation touched on many topics
One, in particular, piqued our interest. We've known for a while now that Whiting has been preparing its two natural gas processing plants in North Dakota for sale, the Belfield plant in the Pronghorn field and the Robinson Lake plant in the Spanish field. The Robinson Lake plant has a 130 mmcf/d capacity, whereas the Belfield plant has a 30 mmcf/d capacity.
Whiting has a 50% interest in each of the plants, having sold the other half in Robinson Lake in 2009 and Belfield in 2012.
Lo and behold, four days later, Whiting announces the sale of the plants for $700 million to an affiliate of Tesoro Logistics Rockies, LLC. Whiting's share of the sales proceeds will total $375 million.
Last year, Oppenheimer estimated that together the two plants generated close to $50 million in EBITDA, and at the BAML Conference, Michael Stevens, Whiting CFO, stated that a fair multiple would be 8x-10x. As such, we believe the likely increase in value was due to Whiting's efforts to reconfigure its contracts with third-party producers.
Whiting shares soared 12%

4 comments:

  1. Bruce-RE the DAPL Protesters.
    Amazingly silent in this whole affair is the Three Affiliated Tribes at Newtown.
    They have probably the best wells in the Basin.
    Can you imagine what would happen to their budget if they were unable to market their product and ship via pipeline?

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    1. Yes, I've thought about that also. Not sure what to say. If the Bakken were producing 2.2 million bopd which Bentek predicted it could (if unfettered), the pipeline issue would be much more serious. I suppose folks are fortunate this pipeline issue is taking place when there is relatively adequate take-away capacity.

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  2. I'm sure you will see it soon Kemp has a story about what happens if sanctions with Iran are brought back. Interesting story line.

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    Replies
    1. I haven't seen it yet; I will watch for it.

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