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!

Catalyst: A Feline Analyst?

Via twitter:


  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.

    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.

    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).