Tuesday, October 25, 2016

Free College Opportunity In The Bakken; Saudi Central Bank Asks Banks To Re-Schedule Property Loans -- October 25, 2016

Link here over at Reuters.

Obviously Saudi Arabia is not going to go the way Venezuela went --- or, could it. Remember, a Saudi finance official says Saudi Arabia could go bankrupt in two years.

Maybe it's "tick-tick-tick-Saudi-Arabia."

From a John Kemp tweet yesterday: Brent and WTI timespreads have weakened significantly as traders become more pessimistic about oil market rebalancing in 2017.

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The Bakken Economy

Wow, this is really quite amazing. Look at the map at the linked article below. Hillary and Bernie talk about free college education. The Bakken is actually doing it (and not costing taxpayers a dime).

From The Williston Herald:
Williston State College expanded its Regional County Scholarship to include Burke, Divide, McKenzie and Mountrail in February 2016, but the WSC Foundation has an ambitious plan for 2017 — adding five counties in northeastern Montana
The college announced Monday that high school graduates and those who earn GEDs in Daniels, Richland, Roosevelt, Sheridan and Valley counties will be eligible for the WSC scholarship that would provide free tuition and fees for the first two years of their college experience. This inclusion could bring in 600 more graduating seniors.  
“An expansion of the WSC Foundation Regional County scholarship program into northeastern Montana is a natural extension of what has traditionally been a fertile recruitment region for the college, drawing on the close economic and cultural ties that have long existed between northeastern Montana and northwestern North Dakota,” explained John Miller, acting president of WSC.

We Have More Than The Bakken In North Dakota -- Random Update Of A Lodgepole Well -- October 25, 2016

I could not find anything in the file report to explain the recent (modest) bump in production. This well was drilled in 2010 and has produced more than 600,000 bbls of oil:
  • 18496, 474, Armstrong Operating, Gruman 18-3, Patterson lake, t3/10; cum 630K 8/16;
Production profile last two years:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
LODGEPOLE8-201631826982720347933360
LODGEPOLE7-201631830183310345333100
LODGEPOLE6-201630819082070332431860
LODGEPOLE5-201617459046400181717390
LODGEPOLE4-201614357835250138613220
LODGEPOLE3-2016368574102422280
LODGEPOLE2-201614314529550113910750
LODGEPOLE1-20160000000
LODGEPOLE12-201516340133910139313190
LODGEPOLE11-201530676769040275226140
LODGEPOLE10-201531681767200285827150
LODGEPOLE9-201530687769210287517231014
LODGEPOLE8-201528633162210267425450
LODGEPOLE7-201531750375490275026070
LODGEPOLE6-201530733474580249823600
LODGEPOLE5-201531737073030262342476
LODGEPOLE4-201530719672460253802400
LODGEPOLE3-2015317171724402603526193

Obama Administration: Fairly Modest Annual Income In The US Works Out To $12/Hour -- October 25, 2016

ObamaCare premiums will more than double in Arizona. But what amazes me is this:
But HHS said if that hypothetical consumer has a fairly modest income, making $25,000 a year, the subsidies would cover $280 of the new premium, and the consumer would pay $142. Caveat: if the consumer is making $30,000 or $40,000, his or her subsidy would be significantly lower.
Poverty definition by same HHS:  family of four: $24,205.

So, a moderate income in the US, as defined by HHS, is also "poverty."

Let them eat cake. A "fairly modest income" in the US is now defined as $25,000 / year.

Let's do the math. $25,000 / year. Divided by 52 weeks = $480/week. Divided by 40 hours = $12 / hours. Easy.

If $12/hour equates to a "fairly modest income," no wonder "they" want $15/hour -- they would feel like millionaires -- but no longer eligible for ObamaCare "help." 

Wow.

The Obama Legacy.

For those who have forgotten the vote.

I used to give some folks the benefit of the doubt regarding ObamaCare. No more. If you still support ObamaCare you are either brain dead or not paying attention.

GOP needs to run, not walk, away from this in 2017. ObamaCare will die on the vine. Big Pharma and Big Health will sort it out. At $600/EpiPen.

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The JV Team Now Controls More Of Iraq

Link here.

Wow.

The Obama Legacy.

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US Leaves The World Stage Under President Obama

Great Britain to fill the gap.
The U.K. said it would deploy tanks and drones alongside 800 troops in Eastern Europe, the first of several expected moves by the North Atlantic Treaty Organization to help counter growing fears about Russia in the region.
The U.K. troops will deploy next spring and be joined in Estonia by forces from France and Denmark, said Michael Fallon, the British defense secretary said. The force, he said, will likely include tactical drones, Challenger 2 main battle tanks and Warrior armored infantry fighting vehicles.
Meanwhile, in the Mideast, the Russians will establish their first-ever permanent naval station, large enough to handle their entire Northern Fleet. 

The Cold War is back. Ronald Reagan is rolling over; he can't watch.

Wow.

The Obama Legacy.

Last military salute for Barack: less than 87 days.

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Back To Coal

From IER.
Many of France’s nuclear units are down for inspection. As a result, coal and natural gas generation has more than doubled. Last month, generation from fossil fuels was the highest in 32 years in France and nuclear generation was the lowest since 1998.
As a result, French month-ahead power prices escalated to near the highest levels since 2009.
Germany is replacing its nuclear units with renewable energy (wind and solar) as part of its energy transition, the so-called Energiewende. It is using mainly coal to back-up its intermittent renewable energy and as a result, it has increased its coal-fired generation.
Due to the higher cost of wind and solar units, residential electricity prices in Germany have escalated and are 3 times that of the United States.
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Apple Cash

A record: more than a quarter trillion dollars.

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The Perfect "Teen Cave"

When I was growing up in Williston, North Dakota, we called this a "basement."

Cleveland Leads Chicago Early In The First Game -- October 25, 2016

Updates

Later, 10:35 p.m. Central Time: it's over. Bottom of the 8th -- Cleveland, 6 - Chicago, 0. 

Later, 9:37 p.m. Central Time: top of the 7th - Cubs with bases "loaded," no outs, and behind 3 - 0. Did not capitalize.

Later, 9:17 p.m. Central Time: Chicago needed to pull this pitcher about four innings ago.

Original Post
 
A reader noted that I had not posted a note about, perhaps the most important event this year, namely that the Chicago Cubs are once again in the World Series. This is their second consecutive century in which they have made it to the "big game." They did it in the 20th century, and here they are again, early in the 21st century. Halley's Comet comes to mind. Although, I guess even Halley's Comet comes around more often than the Cubs making it to the World Series.

The reader assumed I did not like baseball.

That would be correct.

Well, not entirely correct. It's not that I don't like baseball, it's just that on my list of things to follow each day, MLB is about #45, just below the garage bands in Portland, OR, and generally, on any given day, I don't get past #3 or #4 on my list of things that interest me.

It has not always been like that.

I have two fond memories.

#1. The Minnesota Twins.

In high school, I think it's safe to say that my favorite class was chemistry in my junior year, 11th grade, and my favorite teacher was Mr Ceglowski. The district superintendent and school principal had strict rules and regulations about students and homework and classwork and the World Series. Mr Ceglowski was the only teacher that I know in the entire Williston public school system who would bring a huge television set into his classroom and turn on the World Series. And to make sure he wasn't breaking any rule or regulation he put the volume on "mute" and continued to teach about atomic shells and subshells, and barbell-shaped orbits and the periodic table. No teacher could be more cool than that. And, yes, of course, it was the Minnesota Twins.

Let's see. 1967 - 1969, what were the Minnesota Twins doing? Here it is.

My closest friend, every bit a BFF, is a huge Minnesota Twins fan. He was also a great catcher in those days in Williston, playing for various Little League teams. I also played, but it was not a pleasant memory. It was not an unpleasant memory, either. I never understood batting averages but that's probably because mine was 0.000 and I didn't understand why you needed three digits after the decimal to record a batting average. No matter how you rounded 0.000 it was still 0%.

#2. Los Angeles Dodgers.

When I was in graduate school, my future in-laws lived in San Pedro, CA, south Los Angeles, and they loved the Dodgers. The high point of many summers was a ride in the open-air "jeep" to Dodger Stadium to watch the home team. Wow, I had never been to an MLB game before and this simply blew me away. The view from the outdoor stadium is spectacular; the weather was spectacular.

#3. Boston Red Sox. Okay, I said I only had two fond memories of MLB, but I guess I had several more. Years ago when "dating" a Boston woman -- the "love of my life" -- I went to my first (and only) Boston Red Sox game while she was at work. The Boston stadium is downtown and it's a "walk-up" stadium. I couldn't believe it. I walked from the Back Bay in Boston to the Red Sox stadium and I bet I paid not more than $5 for a seat. As far as I recall, the "love of my life" was not a fan of baseball. For her, the closest thing that came to "baseball" was ballroom dancing.

#4. Texas Rangers. This will be the last. Every summer, my son-in-law gets us tickets to the "all-you-can-eat" corner the Texas Rangers stadium here in Arlington, TX. The stadium is about 15 minutes down the road; the parking is neighborhood parking, practically. A short walk to the stadium, and then up to "all-you-can-eat" corner -- the price of admission includes unlimited food at that location: hot dogs, popcorn, nachos, everything. The only thing one pays for is the beverage. Although some beverages may be free. I forget.

I don't watch baseball during the regular season, but that's true for all sports, except NASCAR. But in the playoffs and the championship season, I tend to watch everything.

So, yes, I will be watching the Cubs and the Indians. Right now, 0 - 2, Cleveland ahead in the second inning.

Chipotle Profits Plunge 95% -- Wanna Get Away? -- October 25, 2016

Chipotle.
The burrito chain on Tuesday reported same-store sales fell a worse-than-expected 21.9% in the third quarter. Analysts were anticipating a drop of 18.7%. Profit fell 95% in the quarter. Still, the decline marks a recovery from prior months, including its steepest sales decline in January, when same-store sales fell 36.4%.


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Their Problem: No One Believes Them

Scientists say Antarctic ice shelves melting.

The same scientists that told us we would be seeing more hurricanes -- they said that eleven years ago. We've now gone a record eleven years without a major hurricane hitting the US despite rising CO2.

Crying wolf one too many times.

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There Has To Be A Statute Of Limitations

This happened ten years ago. Can you imagine all the IRS forms that would need to be re-completed. This is government run amok.
Mr. Carter didn’t spell out how officials would resolve the problem. During the early 2000s, the California National Guard awarded thousands of soldiers with bonuses to persuade them to re-enlist, as the conflicts in Iraq and Afghanistan drove demand for military manpower and strained U.S. military forces.

Oasis: When Planning Meets Opportunity -- Bakken 2.0 -- October 25, 2016

I made a big deal out of the SM Energy - Oasis deal, linked at the sidebar at the right. That announcement was the culmination of a number of data points that suggested to me we were seeing the beginning of Bakken 2.0, as of October, 2016.

I had no doubts the SM Energy - Oasis deal was a big deal but it's always nice to see others write about it. I was quite surprised to see that a business magazine no less than Forbes wrote about that deal. A huge "thanks" to a reader for sending me that link.

The link is here: Oasis Petroleum's Bakken acquisition: when planning meets opportunity. Some excerpts and/or data points:
“You may all go to hell and I will go to Texas.” – Davy Crockett, after losing his bid to be elected to serve in congress from Tennessee
Over the last six months or so, it has sometimes seemed as if everyone in the oil and gas industry has been in the same mood as Davy Crockett was on one famous day early in 1836.  
The rush by oil and gas operators to either obtain new positions or enlarge existing stakes in the West Texas/Southeast New Mexico Permian Basin has been the ongoing news of the summer and into the fall.  Just last week, we saw Dallas-based RSP Permian and Denver-based SM Energy complete acquisitions of thousands of leasehold acres in the Permian, both at an announced cost of more than $40,000 per acre, which has become the going rate in the Basin.
Last week, I found the SM Energy transaction especially interesting since, to help raise funds for its entry into the Permian, the company sold its position in North Dakota’s Bakken Shale.  The buyer in that transaction was Oasis Petroleum, one of the most active drillers in the Bakken over the last several years.
I'll archive the article, in case it disappears, but won't post any more here; I will let you enjoy the article at Forbes

CLR's Wiley And Bailey Wells In Pershing Oil Field

Updates

November 25, 2018: graphic updated --


Original Post

By the way: this is CLR's second 10-well pad in two consecutive days. Supports my thesis that we're seeing the early days of Bakken 2.0. 

Ten-well Bailey/Wiley pad permitted October 25, 2016. In a straight line west-to-east, each well vertically separated only 45 feet from its neighbor. This is the proposed location for these ten new wells (five Bailey wells and five Wiley wells):


The ten-well pad in the graphic above: each well will be 1,265 feet from the north line, and they will extend from 2,076 feet from the west line to 1,516 feet from the west line. Each well will be 45 feet vertically from its neighbor. The ten wells, west to east, these are huge wells, posting 40K to 55K in first full month of production:
  • 33117, 1,962, CLR, Bailey 8-24H, Pershing, 66 stages; 16.1 million lbs, t6/18; cum 185K 10/18 --; see this note;
  • 33116, 1,733, CLR, Bailey 9-24H2, Pershing, t6/18; cum 112K 10/18;
  • 33115, 1,950, CLR, Bailey 10-24H, Pershing, t6/18; cum 112K 10/18;
  • 33114, 1.495, CLR, Bailey 11-24H2, Pershing, t6/18; cum 90K 10/18;
  • 33113, 1,563, CLR, Bailey 12-24H, Pershing, t6/18; cum 15K 10/18; off line a lot;
  • 33112, 2,526, CLR, Wiley 8-25H, Pershing, t7/18; cum 157K 10/18;
  • 33111, 1,881, CLR, Wiley 9-25H2, Pershing, t7/18; cum 75K 10/18; off line all of 10/18;
  • 33110, 1,720, CLR, Wiley 10-25H, Pershing, t7/18; cum 131K 10/18;
  • 33109, 1,923, CLR, Wiley 11-25H2, Pershing, t6/18; cum 120K 10/18;
  • 33108, 1,547, CLR, Wiley 12-25H, Pershing, t7/18; cum 121K 10/18;
Other wells sited in that same section, 25-150-97:
  • 17742, 668, CLR, Wiley 1-25H, t6/09; cum 177K 10/18; huge jump in production in 7/18 after neighboring wells fracked;

  • 19935, 309, CLR, Wiley 2-25H, a Three Forks well, 30 stages, 2.8 million lbs, t12/11; cum 202K 10/18; huge jump in production in 7/18 after neighboring wells fracked;
  • 19933, 495, CLR, Bailey 2-24H, a Three Forks well, 24 stages, 2 million lbs, t1/12; cum 161K 10/18; huge jump in production in 7/18 after neighboring wells fracked;
  • 19936, 724, CLR, Wiley 3-25H, 30 stages, 2.7 million lbs, t12/11; cum 192K 10/18;
  • 19934, 877, CLR, Bailey 3-24H, t12/11; cum 237K 10/18; huge jump in production in 5/18 after neighboring wells fracked

  • 28561, 759, CLR, Bailey 4-24H2, a Three Forks well, 40 stages, 8.2 million lbs, t9/15; cum 196K 10/18; huge jump in production in 5/18 after neighboring wells fracked
  • 28562, 1,474, CLR, Bailey 5-24H, 30 stages, 6.1 million lbs, t5/15; cum 229K 10/18; nice jump in production in 5/18 after neighboring wells fracked
  • 28563, 985, CLR, Bailey 6-24H1, a Three Forks well, 30 stages, 6.2 million lbs, t8/15; cum 173K 10/18;
  • 28564, dry (casing would not hold; would be plugged, re-permitted), CLR, Bailey 7-24H, t10/14;
  • 29808, 1,145, CLR, Bailey 7-24XH, t12/15; cum 259K 10/18;
  • 28565, 1,212; CLR, Wiley 4-25H2, Pershing, t8/17; cum 91K 10/18; huge jump in production in 5/18 after neighboring wells fracked
  • 28566, 693, CLR, Wiley 5-25H, Pershing, t8/17; cum 230K 10/18; huge jump in production in 5/18 after neighboring wells fracked
  • 28567, PA/dry, CLR, Wiley 5-25H,t1/15; no production,
  • 30578, 1,188, CLR, Wiley 6-25H1, Pershing, t8/17; cum 205K 10/18;
  • 30577, n/d, CLR, Wiley 7-25H, Pershing, t8/17; cum 236K 10/18;
Just north of this section, see this post:
  • 17770, 406, CLR, Bailey 1-24H, a Three Forks well, 22 stages, 1.7 million lbs, t4/10; cum 189K 10/18; stripper well, June 17, 2016;

Thirteen New Permits; Twenty-four (24) Permits Renewed -- October 25, 2016

Active rigs.


10/25/201610/25/201510/25/201410/25/201310/25/2012
Active Rigs3568194182188

No wells come off confidential list Wednesday.

Thirteen (13) new permits:
  • Operators: CLR (10), Kraken Operating, LLC (3)
  • Fields: Pershing (McKenzie), Lone Tree Lake (Williams)
  • Comments: Kraken has been on the blog before:
See location of proposed site for the new 10-well CLR pad in Pershing oil field: link here

Twenty-four permits renewed:
  • XTO (8): eight Maddy Federal permits in McKenzie County
  • QEP (6): six Tipi permits in McKenzie County
  • CLR (4): four Bohmbach permits in McKenzie County
  • Hunt (4): two Trulson permits in Mountrail County; one Cook permit and one Halliday permit, both in Dunn County
  • WPX (2): two Wolf Chief permits in Dunn County
WPX canceled one permit: a Wolf Chief permit in Dunn County.

No DUCs reported as being completed.

WTI Back Toward $50 -- Not Good News For The Saudis -- October 25, 2016

Apple Watch: after hours -- shares steady, slightly green.
  • 3:05 p.m. CT -- gradually creeping up; earnings not announced yet
  • 3:09 p.m. CT -- someone must know something; just turned red; after-market trades slightly down from the close; buy on the rumor; sell on the news; closed at $118.25; big question, will shares go below $115 in after-market trading?[See below -- id did.] Now, right at $118 at 4:11 p.m.
  • 3:26 CT -- first significant movement since close of market -- and the direction? Up. But didn't last even a minute; back to red, just slightly. A lot of trades must be happening as we approach the 4:30 ET mark; yup, now it's green again at 4:27
  • 3:28 p.m. CT -- definitely green;  
  • 3:30 p.m. CT -- there we go -- up over $120! But immediately drops back.
  • 3:34 p.m. CT -- down over a dollar; someone must know; now under $117 (3:34)
  • 3:35 p.m. CT -- down to $116; will it go below $115?
  • Over at Twitter the numbers are out: EPS at $1.67 beats $1.66 forecast; revenue of $46.9 billion in line; guidance of $76 - $78 billion, above expected guidance of $75 billion; shares immediately jumped 2.5% but then fell back; $115.88 at 4.39 p.m. ET. 
  • 5:19 p.m. CT -- this is probably the low for the night: $114.90.
Saudi Arabia: tough OPEC equation with mounting "exemptions." -- Bloomberg. This is Bloomberg's analysis of the Iraq "exemption." Saudi has three choices:
  • carry a greater burden within the group;
  • cede market share to other producers (I'm not sure how that differs from the previous bullet); or, 
  • lose credibility by softening the terms of the deal.
In a worst-case scenario, Saudi Arabia will have to cut production by more than 1 million bbls/day, sending the kingdom's output to a two-year.

This is a disaster for Saudi Arabia. Even if they cut by more than 1 million bbls/day, there is no guarantee that the price of oil will rise enough to meet their budget needs. They could end up draining cash reserves even faster than they are now, which by the way, I cannot find the September numbers even though it is almost November. The most recent update, which included the August numbers, have been out there forever.

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Back to the Bakken

Active rigs:


10/25/201610/25/201510/25/201410/25/201310/25/2012
Active Rigs3568194182188

RBN Energy: US producers are coming back, despite low prices.

Big story everywhere: from NPR to The Wall Street Journal -- as premiums jump 25% and insurers flee, administration extends sigh-up for Affordable (LOL) Care Act. I think everyone pretty much agrees this is the beginning of the end. Next iteration: HillaryCare. At some point, ZombieCare -- it will never, ever die.

Lots of business stories:
Other news.
Tesla: from Investopedia --
In an interview with the Washington Post, Fisher said Tesla had taken a basic platform and “added so many overly complicated features”, such as automated front doors, middle-row seats on power sliders etc. “All those things add up in a way that can bring the platform down,” he said. “The falcon-wing doors are kind of an accident waiting to happen,” Jake Fisher, Consumer Reports’ Director of Automotive Testing, said.
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Talk About A Market That Can't Get Any Traction

Apple is expected to announce 3Q16 earnings after the market closes. Apple had done well as of late after the Samsung implosion, or should we say, "Samsung explosion"? It is expected that Apple will announce first full-year revenue decline since 2001. The shares are still up despite that bit of negative news and on a day where the market is negative. It is barely up, about 35 cents on $118/share.

Late afternoon trading: Dow 30 down 43 points; WTI below $50 at $49.81
  • new highs - 62: BHI, BAX (a huge whoop), SandRidge Energy, 
  • new lows - 28