Tuesday, March 14, 2017

Filloon Over At Seeking Alpha, 2nd Of 2 Today -- March 14, 2017

Link here.

The Million Dollar Way (The Bakken Oil Blog) is not an investment site. Do not make any investment, financial, travel, job, or relationship decisions based on what you read here or what you think you may have read here.

Mike remains very bullish:
The pullback of oil prices to the tune of 10% last week has provided a unique opportunity. The U.S. Oil ETF could be headed lower in the short term. After the OPEC deal, oil prices increased but many oil weighted names did not follow suit. The Energy Select Sector SPDR and SPDR S&P Oil & Gas Exploration & Production popped on the news, but pulled back. 
This is usually a good indicator that oil prices will correct or operators and oil service will catch up. We now know oil prices outpaced, but this could be a positive. We believe oil still trades between $60 and $70 by year-end. If correct, we should see some traction during the driving season, and continued gains through 2017.
And more:
Some funds are throwing in the towel, but this may be premature. Shale production has increased more than expected, but little time has been given for OPEC cuts to take hold. Things could be tough for the next few weeks, but if so, there are opportunities in west Texas. The Permian continues to see costs decrease, and production increases. Delaware production results have been better than in the Midland Basin. It is possible Delaware acreage valuations will equal or surpass the basin to the east. If so, operators could see much better returns in 2017. While it is difficult to predict oil prices, the current environment is still bullish. If one believes this is true, the Permian is the place to be.  
Data points:
  • laterals are getting longer
  • Concho apparently leading the way on longer laterals; it has experimented with four-mil laterals
  • the biggest issue is its ability to stimulate the source rock that distant from the vertical (by the way, I mentioned that issue several years ago when discussing the Bakken)
  • cost to complete a well: $8.5 million (compare to $6.5 million in the Bakken)
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Middle School Open House

Visiting the library --

On this particular evening, the family was visiting with the middle school teachers and looking at the projects in the classroom. Sophia left us to explore the school on her own. We found her in the library looking at a book she had picked out herself and was sitting on the couch. Her older sister found her and and this was the photo:

2 comments:

  1. Looks like ND is bullish, too!

    http://www.willistonherald.com/news/regulators-say-reports-of-oil-s-demise-overblown/article_0ae898da-046b-11e7-ae9f-17da19be308d.html

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    Replies
    1. Very interesting; I had not seen that. Nice article. Note Marathon: from one rig in early 2016 to six now. Also, MRO has a robust re-frack program and I don't think re-fracking relates to the number of rigs. Whiting is also very, very active, for some reason.

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