Thursday, July 27, 2017

The Energy And Market Page, T+188 -- Earnings Calls -- Statoil, CalFrac -- July 27, 2017

HESM: Hess Midstream MPL -- I believe this is a new issue; 27.03 cents payable August 14, 2017; record date, August 4, 2017; ex-div, August 2, 2017. See disclaimer.

The usual disclaimer.

Fracking in the Bakken, from CalFrac's 2Q17 earnings conference call:
  • added two frack spreads in Colorado
  • larger jobs in the Marcellus and the Bakken
  • smaller jobs in Colorado
  • had to put on hold plans to frack in Texas
  • would like to have all frack teams reconstituted by end of year; not likely to happpen, partly due to workforce; 300,000 people left the industry in the downturn
Operating in the Bakken, from Statoil's 2Q17 earning conference call:
  • decreased CAPEX possible because --
  • efficiency gains
  • rigs drill 6% to 9% more meters / day
  • 4% to 2% less time on each well
  • 35% less cost per well
  • strict prioritization
  • added a second completion crew in July
  • production onshore is reduced y-o-y; but increased q-o-q, mainly Bakken
  • Kayak discovery, relatively small but could impact decision on Castberg later this year
  • improving cash margins toward the target of $12.50 per bbl in 2018
  • three most prolific basins in the US: Eagle Ford, Bakken, Marcellus (note which basin was not mentioned)
  • slightly higher activity level planned for 2H17 in the Utica and the Bakken
  • 900 wells with a breakeven of $50 and below; half of those 900 have a breakeven of $40 or below 
Curious. After setting record highs for quite some time now, how many individual issues are still touching new highs? On the NYSE:
  • new highs: 141 -- including Boeing, Coke
  • new lows: 21 -- including QEP, Snap, Sonoco Products
Maybe tax reform is not needed?

Another record: Dow 30, closing above 21,700 yesterday, closed just shy of 21,800 today. Wow!

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Catalyst: A Feline Analyst?

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2 comments:

  1. Whiting Petroleum released its 2Q2017 earnings statement last night.

    Whiting is interesting because 93.6% of its production comes from the Bakken and 5.9% from the Niobrara, both of which are shale plays.

    Whiting lost $66 million in 2Q2017, compared to a $301 million loss in 2Q2016.

    Whiting has greatly improved well productivity. It is almost double what it was back in 2014, as one can see from the graph.

    https://s4.postimg.org/qdxs2pdcd/Captura_de_pantalla_1294.png

    Completed well cost in the Williton Basin was $7.0 to $7.6 million, less than several years ago in spite of the added cost of much larger frac jobs.

    Two bits of bad news, though. Whiting is still selling its oil at an $8.20 per barrel discount to weighted average NYMEX price. Wasn't Dakota Access Pipeline supposed to lower this discount?

    The other bad news is that Whiting is still carrying $9 billion of assets on its books consisting mostly of pre-2016 wells that cost a third more to drill and complete yet produce half as much as what Whiting's 2016-17 wells do. Whiting used only $220.6 million in investing activities in 2016 and $204,126 in the first half of 2017. The result is that depreciation, depletion and amortization for 2Q2017 were a whopping $21.46 per barrel ($220 million in total for 2Q2017).

    From looking at this graph from Whiting's 2Q2017 investor presentation, and going by rules of thumb that I have found useful in evaluating the feasibility of drilling prospects, it looks to me like Whiting needs a minimum oil price of something like $50 to $55 to make the economics of its forward-looking drilling program look attractive.

    https://s21.postimg.org/hn9mlcvaf/Captura_de_pantalla_1295.png

    ReplyDelete
    Replies
    1. A lot of these things were already built into contracts -- transportation -- and before DAPL went on line, I suppose.

      I won't argue with the data you have or your conclusions -- I've never done good financial analysis of anything in the oil sector (or anywhere else, for that matter).

      Delete