Wednesday, March 15, 2017

Poll: Where Is Price Of WTI Headed? -- March 15, 2017

From an earlier post:
From a post less than a month ago:
Dennis Gartman (CNBC contributor) who said oil would never see $55 again, turned bullish this week, suggesting one could see another $6 - $8 on the upside vs only $2 to $3 on the downside.
I don't particularly care for Dennis Gartman, but having said that, was he wrong or was he simply early in his suggesting that oil at $55 was the new floor?

Poll at the sidebar at the right:
Dennis Gartman:
  • was wrong; oil is falling to $45 and we won't see $60 for quite some time
  • was early: oil will be at $60 by end of the year

Saudis Report Big Jump In Production; Kuwait Warns -- March 15, 2017

I don't always "like" Zero Hedge but the site has had a number of interesting posts recently. A big "thank you" to readers fro alerting the posts to me.

Most recently, March 14, 2017: oil tumbles after Saudis report big jump in production; Kuwait warns of drop to $45.

Did Kuwait happen to mention that they have significantly increased the number of active rigs over the past few months? An inconvenient truth, I suppose.

Another DUC Reported -- March 15, 2017

Eight new permits:
  • Operators: Marathon (5), Whiting (3)
  • Fields: Antelope (McKenzie), Truax (Williams)
  • Comments:
Two producing wells (DUCs) reported as completed:
  • 30770, 494, XTO, FBIR Grinnell 34X-33F, Heart Butte, t2/17; cum --
  • 30771, 403, XTO, FBIR Grinnell 34X-33B, Heart Butte, t2/17; cum --
Active rigs:


3/15/201703/15/201603/15/201503/15/201403/15/2013
Active Rigs4630112190185

One well coming off confidential list Thursday:
  • 32754, SI/NC, XTO, Bear Creek Federal 31X-3FXG, Bear Creek, no production data,
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Soooo Yesterday

New, safer US rail cars gather dust even as ethanol trains grow longer -- Reuters via The Dickinson Press. Data points:
  • last Thursday, EBR (ethanol-by-rail) derailed in Iowa
  • mile-long, 100-unit rail cars -- "rolling pipelines"
  • ethanol transporters using cars deemed too unsafe to carry crude oil
  • yet, ethanol is more explosive than oil
A reminder: not one death in the US due to CBR derailment.

Idle Rambling; Trying To Read The Tea Leaves -- March 15, 2017



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I thought the 2016 crude oil reserves were insane -- way off the chart -- and, here we are in 2017 -- more than ever.

Worth Repeating -- Break-Evens In The Bakken -- March 15, 2017

From an earlier post, November 25, 2016:
From The Sidney Herald: Break-evens are lowest right now in Dunn County at $15 West Texas Intermediate, followed by McLean County at $16, McKenzie at $17 and Williams County at $24. Williams County’s break-even rose $1 and was the only county to post an increase.
“Industry efforts have moved to lower and lower break-even prices, so when we get into the third quarter of this year, we can break even on wells under $30 a barrel, meaning all counties in North Dakota are better than break-even for drilling,” Helms said. “Industry is looking at adding a dozen rigs.”
From an October 28, 2016: Whiting says it can make money on $25-oil.
For newbies: operators and analysts have all kinds of ways of determining break-even points. How folks calculate these numbers can vary widely.

I would think the following would add huge expenses for operators:
  • up-front one-time lease money
  • building the pads
  • building the roads out to the pads
  • putting in water/waste-water infrastructure
  • wasted time putting up/taking down rigs; moving from site to site
To great extent, these are all history with pad drilling. 

Random Update Of An Enerplus 3-Well Pad In Spotted Horn Oil Field -- March 15, 2017

Rig on site. All wells on confidential list. Don't know anything about them.


The wells:
  • 32887, Wasp, middle Bakken,
  • 32886, Ladybug, Three Forks,
  • 32885, Beetle, middle Bakken
I assume they will run east, under the lake.

The Market And Energy Page, T+54 -- March 15, 2017

Mid-Day Trading

Later, 1:39 p.m. Central Time: Yellen/Fed chairwoman -- television crawler -- inflation driven by energy prices -- who's kidding whom: natural gas dirt cheap and crude oil below $50; the only expensive energy out there is wind and solar and it makes up a trivial amount of total energy used; inflation is currently not an issue; the issue is jobs. The Fed has a dual mandate: inflation and jobs. 

Later, 1:22 p.m. Central Time: the Fed raises rates and the market soars, up 90 points. What gives? The Fed raised rates in line, 25 basis points. Could have raised rated 50 basis points.

CLR's Burr Federal wells being drilled. Graphic update here.

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Opening

Crude oil numbers: another huge analyst-miss. Forecast for a build of 3.5 million bbls. The actual number: down about 300,000 bbls.  WTI remains unchanged, $48 and change.

Iso Express: about $75/MWH at the moment (11:07 a.m. Central Time).

The day the Fed begins raising. Later: Feds raise rates 25 basis points. Poll-takers got it right:
  • 74% said the Fed would raise rates 25 basis points
  • 16% said the Fed would raise rates 50 basis points
  • 9% said the Fed would not raise rates
American Pie, Don McLean

The Political Page, T+54 -- March 15, 2017

Trump's taxes:
  • Rachel  owned!
  • Trump's rate: 25%; pays $38 million on $150 million income
  • MSNBC Comcast: 24%
  • Obama's rate: 19%
  • Bernie's rate: 13% -- he should be embarrassed; but absolutely no shame; sad, sad, sad
  • Hillary, biggest grifter of all: Trump didn't pay federal taxes
  • nine MSNBC talking heads had liens placed against them for failing to pay taxes
The tax filing released was from 2005.

If one assumes the filing was leaked, one might be able to assume the one who leaked the filing also had access to Trump's filings from other years.

This tax filing was from 12 years ago.  If above assumptions are correct, one can also assume this was the worst example the "leaker" could find regarding Trump's tax filings.

Wow.
I wonder what Rachel pays as a percent of her income?

What about Warren Buffett?
Buffett said he pays about 16 percent in income taxes, while any employee making between $100,000 and $200,000 typically pays about 20 percent in taxes. We rate this claim True. Says Warren Buffett has publicly said his secretary "should not be paying a higher tax rate" than him (sic). -- Oct 18, 2016
The CBS take? Multi-billionaire Donald Trump pays a rate lower than ordinary Americans. And yet, Donald Trump pays a higher rate than Warren Buffett. And, Donald Trump pays a rate almost twice what Bernie Sanders pays.

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On The Road Again


And not a fund-raising trip to California. How refreshing. To Detroit and to Tennessee.

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The President Is Getting His Mojo Back

After a week of of healthcare obsession when it seemed that nothing else got done, it appears President Trump is finally getting his mojo back.

Earlier this week he said he would drop "climate change" from environmental reviews. Today it's being reported he will pull back EPA's fuel efficiency determination, "opening the door for reduced standards."

This is the lede
:
A senior White House official confirmed Tuesday that President Trump will reexamine fuel efficiency standards set in place during the Obama administration, opening the door for the regulations to potentially be reduced in the coming years.
If I read that correctly, not only does the incredibly incredible, ridiculous standards Obama tried to impose on the auto industry days before he left office, it appears that -- again, if I'm reading that correctly -- things could be "pulled back" even more significantly. I'm probably misreading that. That's fine.

By the way, this puts the CAFE review back on the original schedule. Obama tried to unilaterally fast-track it through an executive order. Trump will put it back through the bureaucratic committee process, guaranteeing that new standards will be slowed down, if not gutted completely.
The Environmental Protection Agency ignored “a voluminous record of data” when it determined earlier this year that the regulations were appropriate, and the agency plans to formally rescind that decision on Wednesday, the official said. The EPA will then restart a review of the fuel efficiency rules that is expected to be complete in 2018.
On top of all this, Trump has directed that EPA lose a significant amount of funding going forward. 

By the way, everyone knew Obama's new standard was a joke. The new standard was not 50 mpg or 60 mpg or 45 mpg but 54.5 mpg. The "point-five" was clearly an inside joke.

The Ides Of March, 2017

Active rigs (53% more rigs than one year ago -- Bakken operators must not have gotten the OPEC memo on cutting production):


3/15/201703/15/201603/15/201503/15/201403/15/2013
Active Rigs4630112190185

RBN Energy: why new rules on low-sulfur bunker fuels will boost diesel margins.

Scott Adams: the survivor bias in climate models.

Chinese Purchase Of Oil From US SPR -- March 15, 2017

Previously reported: the seven companies that would be purchasing oil from the US SPR.

Today, a stand-alone story over at Platts: China makes first-ever US SPR crude oil purchase. Data points:
  • first such purchase by a Chinese company
  • a move that further underscores growing Chinese interest in US crude
  • PetroChina International, overseas trading arm of state-owned giant PetroChina
  • bought 550,000 bbls; $28.8 million; $53.36/bbl
  • no decision on where the oil would go
  • deliveries most likely in May and June, but possibly as early as April
  • the volume and price prompted a Shanghai-based analyst to call it a "profile-building exercise by PetroChina" -- a marketing exercise

Smith Bay: Another Elephant I Had Not Heard Of -- March 15, 2017

Bloomberg has the story; it's a "fun read."
  • Jim Musselman, Texas wildcatter
  • his first elephant: 1999, off the coast of West Africa; sold his company to Hess Corp for $3.2 billion
  • another elephant: 2007, off the coast of Ghana; worth at least $4 billion to Exxon
  • forms a new company after the Ghana chapter: Caelus (named for the Roman sky god)
  • discovered another elephant, this time, North Slope, Alaska: Smith Bay
  • Smith Bay: 150 miles west of Prudhoe Bay
  • the shallow estuary could yield 6 billion bbls; the nearby tundra could yield 4 billion more
  • Caelus plans to drill a $100 million test well
  • Musselman hopes to turn Smith Bay into another Prudhoe Bay
  • challenges: 
    • North Slope Alaska oil -- $50/bbl to break-even (compare with $20/bbl in the Bakken)
    • another 150-mile pipeline to connect with the Trans Alaska Pipeline 
  • last year: TAP -- 515,000 bopd flowed in 2015; a quarter of the amount that flowed 30 years ago 
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The Apple Page

The very first Apple computer sold for $666.66.

Over at Macrumors
According to some, the number of the beast in the Book of Revelation, and Eve's first bite of the forbidden fruit in the Garden of Eden from Genesis, respectively. The end, and the beginning.

That Didn't Last Long -- Even Saudi Arabia Has Decided After Two Months To Throw In The Towel -- March 15, 2017

From Bloomberg: Saudis tell OPEC they "eased" cuts to pump 10 million bbls.

Crazy headline; easier to understand: "Saudis increased production in February." These are the data points:
  • Saudi Arabia raised output back above 10 million bopd in February, the second month into six months of cuts
  • the action reverses about a third of the cuts it made the previous month
  • production was boosted 263,300 bopd back to 10.011 million bopd
  • KSA energy minister says that, nonetheless, the volume of crude oil supplied to markets fell by 90,000 bopd to 9.9 million as extra supplies were moved into storage
  • even after the increase, Saudi Arabia's data show the kingdom is cutting output more than required under the terms of the OPEC agreement set at the November 30, 2016, meeting
  • crude in New York fells as much as 2.7% to $47.09 / bbl after the report
  • Saudi's ceiling per the OPEC cut: 10.058 million bbls (February production: 10.011 million bbls) delta = 47,000 bbls (a number so low vs global production as to be completely meaningless)
  • external sources suggest Saudi's output fell by 68,100 bopd to 9.797 million bopd (again, quibbling over numbers so small as to be ludicrous)
  • when one includes output increases from Iran, Nigeria, and Libya -- permitted under the agreement -- OPEC's total production remains about 200,000 bopd above the target set
So, Iran, Nigeria, and Libya are 200,000 bopd above the limit, and now KSA adds another 263,300 bopd, KSA's increase was greater than that of three other countries combined.

Something tells me that there is no love lost between KSA and Iran over this whole charade.

Back of the envelope:
  • 10.011 million x 47 = 470.517
  • 9.747700 million x 51 = 497.133
I think KSA needs to hire some Disney MBAs or Apple MBAs to work on "price points." Clearly, whatever KSA is doing, it's not working. 

Random Look At Unusual Configuration Of Whiting Wells In Area Of A Microseismic Array -- March 15, 2017

I may complete the narrative regarding these two screenshots at a later date, but for now this should suffice.

This interesting configuration of wells in section 6-153-92, Sanish oil field:


From my August 19, 2010 post:

Largest array: North Dakota has the largest buried microseismic array in the world, Geo News, July, 2010.



All six wells are Whiting wells, 640-acre spacing.

The two middle Bakken wells were drilled somewhat earlier (a couple of years earlier) than the four Three Forks wells.

All four Three Forks were completed / tested almost simultaneously (within a few days/weeks of each other).

All four TF wells were completed with 23 stages, 1.7 million lbs white sand.

All six wells were mediocre at best; most of the wells I would consider poor wells, and even more so considering they are in the Sanish oil field.