Sunday, May 15, 2016

Austin Chalk

News

June 18, 2018: "Analysts" are suggesting frackers will move to the Austin Chalk next.

April 6, 2018: COP announces acquisition in Austin Chalk.

February 26, 2018: EIA update.

December 7, 2017: EOG produces 675,000 bbls of oil in nine months from one well in the Austin Chalk

January 6, 2017: contributor bullish on EOG's play in the Austin Chalk in the Eagle Ford. If that link breaks, the summary is noted here.

December 14, 2016: minor comments from a contributor over at SeekingAlpha on Austin Chalk and COP. 

July 10, 2016: Pantheon Resources has permission to frack VOS #1, Tyler county, onshore East Texas. 

May 7, 2016: EOG 1Q16 conference call; new play for EOG. Big story

The Austin Chalk

Chalk vs limestone, a meandering note.

To the best of my knowledge, the first time I mentioned the Austin Chalk on the blog was a couple weeks ago with regard to the recent 1Q16 EOG earnings conference call.

The tea leaves suggest that this will be an important play. I have it linked at the list of other formations at the sidebar at the right.

Some data points from the "Austin Chalk" summary provided by oilandshalegas.com.
  • it overlies (is above) the Eagle Ford in south Texas
  • geographically, 300 miles in length by 30 miles wide (compared to the Three Forks in North Dakota which might be 150 miles by 100 miles)
  • ranges in thickness fro 3 feet to 60 feet (very similar to the middle Bakken or Three Forks on the thinner end of the scale)
  • average targeted depth is around 5,500 feet compared to around 9,000 feet for the middle Bakken and slightly deeper for the Three Forks
For EOG, Eagle Ford leases "hold" minerals in the Austin Chalk. I assume that would be true throughout the Eagle Ford for all operators. 

A Few Miscellaneous Notes Regarding The Earlier Halcon Presention Post -- May 15, 2016

I had forgotten I had this tag: "boe/acre." I have only used it once before, unfortunately, forgetting to tag other posts in which boe/acre was discussed.

I was reminded of this in a post earlier today comparing Halcon's prospects in the Bakken and in the Eagle Ford.

In that post, Halcon suggested around 6 middle Bakken wells in each DSU (generally 1280 acres) with an additional 6 Three Forks wells in the same DSU. Operators are targeting 950,000 bbls EUR in these better spots, but let's go with 750,000 bbls/well EUR in each of the formations.

(12 x 750,000) / 1280 acres = 7,000 boe/acre.

By the way, Halcon did not address the Austin chalk in their 1Q16 presentation.

Here is the 1Q16 transcript.

Sources Of US Electricity Generation, 2015

Original Post
A graphic worth a thousand words:
 

Hydroelectric power, biomass wood, and biomass waste, for the most part should be classified as renewable.

However, wind and solar are definitely in a class by themselves: intermittent, unreliable, unpredictable, deadly, expensive, and requiring fossil fuel back-up.

Newfield Will Report Two Nice Bakken Wells Monday -- May 15, 2016

Monday, May 16, 2016
  • 31879, drl, CLR, Corsican Federal 6-15H1, Sanish, no production data, likely to be on "drl" status;
Sunday, May 15, 2016
  • 29131, 876, Hess, BW-Erler-149-99-1522H-4, Cherry Creek, t41/6; cum --; spud date November 15, 2015; drilling rig, December 19, 2015; cease drilling December 30, 2015;
    gas at 625 units; well estimated to have been drilled 100% in the middle Bakken; some flaring while drilling; no frack data yet
  • 31878, drl, CLR, Corsican Federal 5-15H, Sanish, no production data,
  • 32037, 2,981, Newfield, Skaar Federal 153-96-30-4H, Sand Creek, t2/16; cum 54K after 41 days;
Saturday, May 14, 2016
  • 32038, 2,202, Newfield, Skaar Federal 153-96-30-3H, Sand Creek, t2/16; cum 54K after 44 days;
*************************************

32037, see above, Newfield, Skaar Federal 153-96-30-4H, Sand Creek:

DateOil RunsMCF Sold
3-20163660472599
2-20161721119912

32038, see above, Newfield, Skaar Federal 153-96-30-3H, Sand Creek:

DateOil RunsMCF Sold
3-20163346666809
2-20161981321663

Musings -- May 15, 2016

Yesterday my wife happened to make a comment about the oil industry and in my reply, a monologue she most likely found boring, inaccurate, and irrelevant, I happened to mention Dodd-Frank. In this week's issue of The New Yorker, there is a one-piece op-ed on the Obama reform law. I was surprised how accurate I actually got some of the facts. Some data points from the article:
  • Dodd-Frank: the centerpiece of Obama's reform effort
  • it will likely be changed regardless of who the next president is
  • for some, it did not go far enough; for others, it went too far
  • everyone agrees: following Dodd-Frank, banks have performed dismally; their 1Q16 earnings suggest this year will be another rough year for banks
  • returns on bank equity have fallen
  • bonuses and salaries are being slashed
  • GS cut the amount it set aside for compensation by 40%
  • payroll is down
  • banks have eliminated tens of thousands of jobs; banks are now embarking on a new round of sever job cuts
  • most agree: regulators have simply made banking less profitable than it once was
  • big banks now have to carry almost twice as much capital as they did before the financial crisis
  • new Fed rules will require them to set aside another $200 billion on top of that
  • the capital carrying costs have resulted in big banks getting smaller
  • Citigroup: shed $700 billion in assets in past 7 years
  • GS: shed a quarter of its assets
  • Morgan Stanley: shed a quarter of its assets
  • JP Morgan: cut assets last year to avoid a capital surcharge
  • GE: effectively got out of the financial business altogether by selling off most of its GE Capital
The writer suggests that this is all good for the US.

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Downgraded

Moody's downgraded. Who would have thought?
  • Saudi Arabia
  • Bahrain
  • Oman
Unchanged for Kuwait and Qatar.

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The Income Inequality Page
"We" Are Paid Based On How Society Values "Us"

In dollars.
  • Top tier athletes: 8-figure
  • CEOs of Fortune 500 companies: 7-figure
  • US presidents: mid-6-figure
  • physicians: low- to mid-6 figure
  • retired US presidents: low-6-figure
  • pilots of large-body commercial aircraft: low-6-figure
  • many Americans: high 5-figure
  • many blue-collar Americans: mid-5-figure salaries
  • at $15/hour, 40-hours / week, Walmart's entry level worker: low 5-figure ($30,000)
  • spouses of retired US presidents: $20,000
Considering that all spouses of retired US presidents have been female, it seems a case could be made for sexual discrimination. It is shameful that advocates for women like Hillary and Pocohontas have not changed this. The president himself could change this easily with an executive order, restructuring the payout but not increasing the total presidential/spousal retirement pay package.

Even spouses of 30-year military retirees are better protected in retirement than retired spouses of presidents. 

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Apparel Retailers

Who would have thought?
#1: Walmart
#2: Amazon
*****************************
War Legacy

Who would have thought?

From The New York Times, President Obama will be the first US president to have waged war the entire eight years of his two term presidency. And doesn't have much to show for it. The JV team scored again over the weekend in Yemen and Iraq.

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Turkey's Slide In (Muslim) Authoritarianism

This is an international story that will probably end up being a big story yet within my lifetime. If one googles the subject, one will see any number of articles on this story in major news outlets including the Boston Globe (today) and The New York Times November, 2015. 

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Top Shelf

Halcon: 1Q16 Presentation

This is not an investment site. Do not make any investment, financial, travel, relationship, or work-related decisions based on what you read here or what you think you may have read here. This is for my own use to help me understand the Bakken. If this is important to you, go to the linked source. I often round numbers without indicating that the numbers have been rounded. I often intersperse personal observations/comments without indicating that the comments are opinion. There are no hidden agendas. I honestly have not checked to see if I am still invested in Halcon. In fact, I can't remember if I ever invested in Halcon in the first place. [Later: I believe I have; I can't remember if I ever sold or if it is still languishing in some on-line account somewhere.] Having said that, among the operators in the Bakken, Halcon has always impressed fascinated me, along with Slawson, EOG, and about ten others.  In a long note like this there are likely to be typographical and factual errors. No animals were injured in the process of putting this post together.

I track Halcon and other Bakken operators over time at this post.

Note:  I added this later:
Two biggest takeaways from this presentation:
  • comparing HK reserves in Texas vs ND; quite an eye-opener and is a reminder how good the Bakken really is
  • the fact that Williams County is the key for Halcon and most of Williams County, right now, is probably outside the core area of the Bakken
Halcon presentation, May, 2016.

27 slides.

Same theme as we've seen in most other E & P presentations: very little on actual operations; focus on survival; financial information

Quick overview:
  • Bakken/TF: 120,000 net acres; 122 million boe proved reserves; = 1,000 boe/net acre
  • El Halcon (Texas): 88,000 net acres; 22 million boe provide reserves; = 250 boe/net acre
  • Production: 2016E -- 40,000 boepd on high end; 80% oil
  • D & C Capex: $150 million
  • 2016 budget: 55% decrease from 2015 budget; $150 million D&C, 2016
  • modest reduction in production year over year (about 8 percent)
  • only one active rig in ND: running in FBIR area of the Bakken
  • EURs will average >900,000 boe
Historical $ LOE / boe
  • 2012: $15.63
  • 2013: $11.49
  • 2014: $9.52
  • 2015: $8.21
  • 2016: $8.00E
Historical $ G&A / boe
  • 2012: $15.81
  • 2013: $58.99
  • 2014: $5.98
  • 2015: $4.82
  • 2016: $4.00E
Drilling inventory:
  • 1,000 economic gross operated locations in core areas at $60 WTI
  • 5+ years of drilling inventory w/10 rigs running (18 wells/rig/year)
  • Assumptions:
  • middle Bakken: 4 - 7 wells/DSU
  • Three Forks: 4 - 7 wells DSU in FBIR
  • El Halcon (Texas): 1,000' spacing
Bakken/Three Forks acreage
  • 100% of acreage is HBP
  • all existing gas production tied into pipeline
  • expect to spud 15 gross operated wells with 1 rig; average working interest, 64%
  • acreage: appears about 75% in northwestern Williams County
  • acreage: appears about 25% in FBIR, Mountrail
  • most of Williams County company-operated
  • most outside Williams County: non-company operated
Slide 11: 100% of acreage is economic at today's oil prices and costs
Years of inventory in FBIR (assumes 18 wells drilled/rig/year)
  • one rig: 11
  • two rigs: 5
  • three rigs: 4
  • Cost well completion
  • 4Q14: $11 million
  • current AFE: $6.2 million
The key for Halcon: Williams County
Years of inventory in Williams County
  • one rig: as many as 33 years
  • two rigs: 17 years
  • three rigs: 11 years
This correlates with what I've read elsewhere: HK won't drill in Texas for remainder of 2016 at these prices

Last line last slide before appendix: HK will be an attractive acquisition target post-restructuring 

*************************************

Blowing bubbles (or not) waiting for HK to restructure --

NotBlowingBubbles_May_14_2016
 
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Notes to the Granddaughters

Years ago, I forget exactly when, perhaps in 2000 I began a very, very aggressive reading program. I started with the Greek and Roman classics and moved forward, ending with the novels in the early 20th century (Virginia Woolf).

Somewhere along the way, I read Clarissa by Samuel Richardson. I saw it as a challenge; and although I remember few details, one will not forget having read it. I often wondered whether it was worth reading it outside the fact that it was a challenge "conquered."

Yesterday I had my answer. Yes, it was worth it. In this week's New Yorker issue there is a 5-page essay (and a sixth with a full artist's rendering of Samuel Richardson's bust) by Adelle Waldman, "critic at large," titled: "The Man Who Made The Novel."

Some data points from the essay (and elsewhere):
  • Richardson, an accidental novelist
  • his first novel after the age of 50
  • three novels (I had remembered only the first two: Pamela and Clarissa; a third was  Sir Charles Grandison)
  • little formal schooling
  • epistolatory novels
  • 1739 began; 1740 published, Pamela
  • many consider Pamela the first modern English novel
  • quick recap:
  • progenitor of modern novel: Cervantes, Don Quixote
  • father of historical novel: Sir Walter Scott
  • first journalist: Daniel Defoe, The Journal of the Plague Year
  • Lawrence Sterne
  • Samuel Richardson
  • Pamela became the first novel printed in America when Benjamin Franklin reprinted it from the fourth London edition
  • Clarissa's most notorious feature: it's length; it is by far the longest novel in the English canon; Clarissa runs some nine hundred seventy thousand (970,000) words. War and Peace: 560,000 words
  • Grandison was a particular touchstone for Jane Austen according to her nephew
  • it's hard to think of a work of fiction so exclusively internal as Clarissa until Dostoyevsky's The Idiot and harder still to think of a romance
  • Harold Bloom: "The finest novel in the English language. The only novel that can rival even Proust."