Tuesday, June 20, 2017

Breaking News -- Via Twitter -- June 20, 2017

SAUDI ROYAL DECREE RELIEVES MOAHMMED BIN NAYEF AS CROWN PRINCE, REPLACES HIM WITH MOHAMMED BIN SALMAN.

From wiki:  The Crown Prince of Saudi Arabia is the second most important position in Saudi Arabia, second to the king, and is his designated successor.

From NBC News:
Saudi Arabia named Defense Minister Mohammed bin Salman, the king's son, as crown prince by royal decree on Wednesday, the official Saudi Press Agency announced.
Prince Mohammed, 31, replaces Muhammad bin Nayef as the heir-apparent to King Salman, 81, who assumed the throne in January 2015. Bin Nayef, a nephew of the king's, was also removed as deputy premier and interior minister.
Prince Mohammed will remain defense minister.
No reason for the replacement was immediately announced, but Prince Mohammed, not Bin Nayef, was tapped to meet with U.S. President Donald Trump at the White House in March, a meeting that was widely hailed as a success in Saudi Arabia. 
No reason given, but perhaps the Russians interfered with this, just as they interfered with the 2016 US elections depriving Ms Hillary Clinton her god-given right to be POTUS.

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A World Of Our Own

A World Of Our Own, The Seekers

Welcome Back, Old Friend -- June 22, 2017

This well has been off-line since December, 2014. It is now back on-line. It produced all of 375 bbls of oil over 14 days in 4/17:
  • 17727, 975, EOG, Fertile 5-04H (1 sec), Parshall, t8/09; cum 159K 12/14; off-line as of 12/14; back online as of 4/17; 
Don't Forget To Remember Me, The Bee Gees

US Now Surpasses Saudi Arabia In Crude Oil + Petroleum Liquids -- June 20, 2017

Reposting.

I originally posted this story as one of several stories 'cause I thought it had simply to do with Saudi Arabia. In fact, it was a story on global reserves.

What I find amazing, is that very few folks in America will even learn that the US now surpasses Saudi Arabia in crude oil and liquid petroleum:

Saudi Arabia's reserves grow, from Platts, data points:

  • due to the kingdom lowering tax rates for state producer Saudi Aramco
  • recoverable oil resources grew by 73 billion bbls this year
  • the new number: 276 billion bbls in reserves
  • Saudi re-claims the global top spot for oil resources
  • tax rate for Saudi Aramco cut to 50% from 85% as part of moves to attract private investors ahead of the planned IPO in 2018
  • only other countries to increase their reserves last year were Kazakhstan and the US
  • US: the increase was 13 billion bbls; new total: 263 billion bbls (in same ballpark as Saudi Arabia)
  • if NGLs were included in the total, the US would surpass Saudi Arabia by 50 billion bbls
  • globally: world's total recoverable resources have rise 29 billion bbls since 2016; total stands at 2.2 trillion bbls now; or 73x the current annual production rate
  • as much as 40% of the recoverable oil requires oil prices higher than $80/bbl
This is all due to the Bakken. Period. Dot.

Memo to self: remember to send note to Jane Nielson.

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Melancholy Vs Depression

This was the BeeGee's first #1 single.

1971.

The year I met the love of my life.

How Can You Mend A Broken Heart, The Bee Gees

US Surpasses Saudi In Crude Oil, Liquids Recoverable Reserves; Britain's Energy Needs At A Crossroads -- June 20, 2017

Britain's reliance on imported gas to jump; giant storage site axed -- Reuters. Data points:
  • Rough facility
  • Britain will lose its largest natural gas storage site
  • with closure of Rough, Britain loses about 70% of its storage capacity
  • reliance on imported natural gas will increase
  • wholesale gas prices will become more volatile; more vulnerable to price spikes
  • Britain already imports half its natural gas from Norway, continental Europe, Qatar (LNG)
  • winter requirements particularly noteworthy; Rough provided 10% of Britain's peak winter demand
  • European utilities are losing billions of euros on gas storage, triggering site closures, and divestments
Australian shortage? Can Elon Musk help? Australia will restrict natural gas exports due to domestic shortage. Say what? PennEnergy, data points:
  • restrictions to begin next year
  • will take action in an effort to contain soaring energy prices in the domestic market
  • Australia is about to overtake Qatar as the world's largest exporter of LNG
  • problem: no new coal-fired power stations are being built to replace aging generators that will soon be decommissioned
  • "...Australia will not tolerate customers in Japan paying less for Australian gas than some Australian businesses are charged." -- Prime Minister Malcolm Turnbull
  • regulations will be issued July 1, 2017; constraints take effect, January 1, 2018
  • political divide is likely contributing to the problem
  • Elon Musk has said he could solve the problem in 100 days if Australia requested his help
  • see also this post, April 20, 2017 
  • see also this post, March 10, 2017
  • see also this post, also on March 10, 2017
Saudi Arabia's reserves grow, from Platts, data points:
  • due to the kingdom lowering tax rates for state producer Saudi Aramco
  • recoverable oil resources grew by 73 billion bbls this year
  • the new number: 276 billion bbls in reserves
  • Saudi re-claims the global top spot for oil resources
  • tax rate for Saudi Aramco cut to 50% from 85% as part of moves to attract private investors ahead of the planned IPO in 2018
  • only other countries to increase their reserves last year were Kazakhstan and the US
  • US: the increase was 13 billion bbls; new total: 263 billion bbls (in same ballpark as Saudi Arabia)
  • if NGLs were included in the total, the US would surpass Saudi Arabia by 50 billion bbls
  • globally: world's total recoverable resources have rise 29 billion bbls since 2016; total stands at 2.2 trillion bbls now; or 73x the current annual production rate
  • as much as 40% of the recoverable oil requires oil prices higher than $80/bbl
ND rigs: at $43, the number of active rigs in ND may decrease; pace of rig count growth may slow in the Permian; other issues -- Chron

Wow, That's A Surprise -- Active Rigs Up To 59 -- June 20, 2017

Active rigs:

$43.346/20/201706/20/201606/20/201506/20/201406/20/2013
Active Rigs592977189187

Re-posting: connecting the dots -- Hess sells NM Permian assets; considers ND Bakken its core. If the price of oil fails to come off recent lows and trend back toward $60, it is very likely that the number of active rigs in North Dakota will fall once again. However, one theme of the blog has been that the Bakken is actually better for some operators than others, and that was validated to some extend by the news that Hess sold its Permian assets in New Mexico ($600 million) to focus on the Bakken and two off-shore plays. These are the advantages I see for the Bakken right now vs the Permian:
  • the Bakken has an incredible infrastructure in place
  • the geology of the middle Bakken is extremely well understood
  • the Bakken is oil rich, about 94% of recoverable petroleum production is crude oil; the Permian has a fair amount of natural gas
  • DAPL
Amazon: disruptive. This comes on the heels of my long meandering note about Amazon earlier today; and, also this long meandering note on Amazon.

Five (5) new permits:
  • Operators: Oasis (4), MRO
  • Fields: Sanish (Mountrail), Reunion Bay (Mountrail)
  • Comments: the Oasis permits are for a 4-well pad in SWSW 11-153-93 (see graphic below)
Twenty-four (24) permits renewed:
  • EOG (10): ten Riverview permits, McKenzie County 
  • Whiting (6): one Pronghorn permit, Billings County; and, three Moccasin Creek permits, Dunn County; two Two Shields Butte permits, Dunn County
  • HRC (5): five Fort Berthold permits, McKenzie County
  • Slawson (2): two Nightmaker permits, Mountrail County
  • Petroshale: one Petroshale US permit, McKenzie County
Dry hole:
  • 32152, dry, CLR, Bohmbach 5PA, Elm Tree; from the sundry form received June 21, 2017: 
".... landing the curve on target in the Three Forks 2 interval on 6/9/2017. During trip out of hole prior to running intermediate casing, it was determined that the 9-5/8" surface casing had parted. Due to the location and severity of the part, it was determined the most prudent course of action was to P&A the well." Original permit: Bohmbach 5-26H2, Three Forks, second bench, 2560-acre spacing; 
Four-well pad proposed by Oasis (see above):



Other wells of interest (note #24166 is a Three Forks well):
  • 17582, 1,019, Oasis, Mimir Uran 11-11H, t11/109; cum 189K 4/17;
  • 24194, 3,518, Oasis, Lite 5393 11-11B, t6/13; cum 217K 4/17;
  • 24166, 3,188, Oasis, Travel 5393 14-12T, t5/13; cum 252K 4/17;

Amazon -- June 20, 2017

I find the hysteria about the Amazon - Whole Foods hook-up fascinating. I was part of the hysteria the day it was announced. Since them, plenty of time to think about it.

I did not care for this article; the writer seemed not to understand the current US laws on monopolies.

At this point in time, 2:23 p.m. Central Time, June 20, 2017, this is how I see Amazon:
cloud computing; and,
Amazon Prime
And that's it. I'm not sure where The Washington Post fits into the mix but that story may be told another day.

But this is how I see Amazon:
cloud computing; and,
Amazon prime.

According to the linked article Amazon controls 40% of internet cloud computing. Its only real competitor might be Alphabet/Google. Ankle-biters would include Apple, Microsoft, Yahoo, Facebook, others.

The linked article has been corrected. It originally said Amazon also controlled 30% of on-line and off-line retail sales. That has since been corrected; Amazon was responsible for 30% growth in on-line and off-line retail sales in the past year. Big difference. I believe I read somewhere else that Amazon controls 8% of US on-line and off-line retail sales -- it's interesting the writer did not provide that data point. It suggests to me the writer realizes his/her thesis that Amazon is running a monopoly is absolutely poppy-cock. Controlling 8% of any market is nowhere close to a monopoly. Give me a break.

Anyway, back to Amazon Prime and cloud computing. 

How does Whole Paycheck fit into Amazon?

There's a lot of talk about all the reasons Amazon bought Whole Paycheck.

Including distribution centers.

Distribution centers make no sense whatsoever. Absolutely doesn't fit the business model. Incredibly inefficient. The reason folks order on-line is so they get the stuff delivered to their door; not so they have to drive somewhere to pick it up. Incredibly inefficient for Amazon and incredibly inefficient for the customer.

This is where I think Whole Paycheck fits. First, three facts:
  • Whole Paycheck is a really, really upscale restaurant;
  • every regular shopper at Whole Paycheck is also an Amazon Prime member; 
  • Jeff Bezos goal seems to be to really impress the Amazon Prime member's experience; and,
  • Jeff Bezos keeps looking for "freebies" to offer Amazon Prime members who are willing to pay huge bucks to be a member of what might become an exclusive club with 75% of US citizens enrolled (LOL)
Because I'm running out of time: Whole Paycheck becomes another "freebie" for Amazon Prime members. Amazon Prime members loved Amazon Grocery Delivery but it was too costly for Jeff Bezos and not universally available. Whole Paycheck will go a long way to solving those two problems. Amazon Prime members will be thrilled to shop for fresh produce at Whole Paycheck, even if they have to do their own in-store buying.

Readers can connect the dots. For Jeff Bezos, it's always been all about the customer.

Network Business News -- Inability To Respond Quickly -- June 20, 2017

I've talked about this before. CNBC has challenges with "turning on a dime."

When big stories break, CNBC reacts, but it's takes a few days or even weeks to flesh out the story.

For example, today, without question, the big story is WTI dropping below $43. But yet, the network is spending an inordinate amount of time on the "tax story" and "manufacturing in the US." Apparently, today's CNBC theme is "Manufacturing in the US."

Like any network show, the producers need time to put it together. The deadline is a "rolling deadline." The general theme for any day is being developed one to two weeks before the day the show is aired. About a week before the program is to be aired, interviews are set up, and 48 hours to 72 hours those interviews are finalized. Finally, on the date the program airs, the interviews go live. The journalists are on-scene -- locations were scouted out one to two weeks earlier. That's why networks "love" hurricanes, not tornadoes. The former provide one to two weeks for networks to prepare; tornadoes allow no preparation.

So, today a lot of time is spent on stories that are the old, old stories: tax reform, Tesla, REITs, infrastructure, manufacturing, etc.

But, in fact, the big story is WTI going below $43. That story trumps (no pun intended) every other network story right now. No one really believes we will see any meaningful tax reform this year (although "no one" could be really, really long). But regardless of what any talking head says about "tax reform" the fact is WTI below $43 is the big story of the day.

One talking head said oil below $43 is a mixed bag: some manufacturers will love it; their raw material costs much less. Others -- those in the E & P and shipment of oil will be hit hard.

But this is the rub: it may be a "mixed bag" but some parts of the sector will be hit harder than others. Users of crude oil / energy will see little change with $43-oil vs $50 oil. Contracts for $48 oil were made months ago.

On the other hand, E & P and oil shippers will see cash flows change fairly quickly; yes, contracts are already in place, but contracts only cover part of their commitments.

My hunch: next week about this time, we will start seeing stories on $40-oil.

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First World Problems

Illinois may lose contract with Powerball and Mega Millions lotteries.  The state needs to pay the lottery upfront, every June 30th -- and with literally no money for discretionary spending, Illinois may have no other choice but to end its association with the regional and national lotteries.

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So Out Of Touch

White trash

McDonald's Hits New High -- June 20, 2017; Chevron Phillips Update; Capitulation

ICYMI: WTI dropped below $43 earlier today. Yesterday I first started talking about "capitulation." I haven't heard that exact word used today on CNBC but they have certainly danced around it. 

It never quits: Chevron Phillips Chemical completes part of $6 billion Gulf Coast petrochemical investment. Data points:
  • expected to start up in 3Q17
  • will produce at least 500,000 metric tons of product annually
  • the most-recently announced units are part of the company's $6 billion US Gulf Coast Petrochemicals Project
  • final portion of that investment entails the construction of a new ethane cracker in Baytonw, which is expected to be complete in 4Q17

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Notes To The Granddaughters 

I was going to write about McDonald's this past Sunday but simply ran out of time, ran out of energy.

Maybe I can do that now.

Two weeks ago, after swimming lessons for Sophia, her dad took the three of us to a high-end restaurant for breakfast. Unfortunately, at 11:05 a.m. the restaurant was no longer offering the breakfast menu. That was fine. We had a nice lunch.

One week later, after swimming lessons for Sophia, she and I were hungry for breakfast. Her dad was not with us; he was working. I took Sophia to our local McDonald's. I believe it was her first time ever in a McDonald's and her parents would probably "die" if they knew I took her for breakfast there.

I ordered coffee, a hash brown for me; and, then a stack of pancakes and apple juice for Sophia. While fixing her pancakes (butter and syrup), Sophia ate my hash brown -- without asking. LOL. She devoured the first two of three pancakes and then went to play in PlayPlace; later she came back and watched her favorite videos (YouTube) on my laptop. By that time time, I had thrown out her third pancake --- wow, was she upset. She was looking for that third pancake.

She was enjoying her video and PlayPlace so much, I went outside to get a newspaper left in the car to read. The McDonald's manager thought I was leaving, and said good-bye as I walked out the door. I stopped and said I was just going out to the car for a moment and would be back in; Sophia was really enjoying the experience.

After I got my newspaper, Sophia and I stayed there another half hour or so. We were about halfway across the parking lot when leaving when the McDonald's manager rushed out after us, carrying a little fluffy gift for Sophia: a Ty-branded big-eyed fluffy little "thing."

To say I was impressed would be an understatement.

I have found that any individual McDonald's takes on the "flavor" of its neighborhood. I dread going into a McDonald's in the inner city of a city like St Louis, but in the more "high-end" neighborhoods of north Texas, they are incredible.

By the way, every McDonald's employee that day was wearing an employee-shirt with "UberEATS" emblazoned on the front.

And, yes, I just checked, McDelivery is available in my zip code.

Wow, What A Great Basin -- Take A Well Off-Line For 15 Days And Watch Production Jump -- June 20, 2017

Wow, what a great basin. Operators can take a well offline for 15 days and see a huge jump in production when the well comes back online.

There are a number of story lines that could be addressed but I often get ahead of my head lights. 

Fracked 7/18/2011 (at FracFocus). No sundry forms suggesting this well was re-fracked.

The three-month production profile:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN4-2017309553965812644818753271554
BAKKEN3-20171412901271192913549090
BAKKEN2-20172829163070363325001509313

The graphics



The well:
  • 19289, 386, WPX, Beaks 36-35H, Mandaree, 16 stages, 1.5 million lbs, t5/11; cum 270K 4/17;
The pad:

 
Production data: my hunch is that if you have read this far, you missed an even bigger point. Look at the test dates for the various wells in the map graphics above (three of the five were fracked in late 2015; one was fracked in early 2017).

The production profile posted above was only for the most recent production data, following the 2017 frack.

What happened after the 2015 frack? Here that data is:

BAKKEN1-20162631963132423127361712403
BAKKEN12-201530799181107281682543391303
BAKKEN11-20153200315204730
BAKKEN10-201528432383182177011800
BAKKEN9-2015278419287201520566410
BAKKEN8-2015241662156538230031431983
BAKKEN7-20153016631845121630052004293
BAKKEN6-201530191817601161353025020
BAKKEN5-20153122442329165140552543412
BAKKEN4-2015211618160489429231827493
BAKKEN3-20153120882057151537762840101

WTI Now Below $43 -- Drops More Than 3%-- June 20, 2017

CNBC starting to report the same thing that we've been reporting for the past six months, maybe longer.

What a doofus
 
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Notes To The Granddaughters

During my 30-year career in the USAF, there was only one "major" aircraft platform that I was not allowed to fly on despite my training and qualifications, the RC-135. This report suggests why: http://www.foxnews.com/world/2017/06/20/breaking-news-armed-russian-jet-comes-within-5-feet-us-recon-jet.html.

Hopefully the link won't be broken; it's an incredible story.

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Best Father's Day Gift

This will clearly be a conversation piece when traveling .... perhaps a chick magnet? LOL.

Random Update Of Recent Completion Strategies In The Bakken -- June 20, 2017

Disclaimer:
  • in general, does not include completed DUCs
  • the list was not triple-checked; there may be factual and typographical errors
  • the list may not be all inclusive
Completion "strategies" for the month of June, 2017 -- the Bakken:

Date
File #
Operator
Stages
Million Lbs
Field
Notes
June 2, 2017
28434
EOG
46
11.9
Parshall

June 3, 2017
32514
EOG
46
29.0
Squaw Creek

June 3, 2017
28435
EOG
50
12.7
Parshall

June 4, 2017
32513
EOG
44
28.0
Squaw Creek

June 4, 2017
32512
EOG
37
17.0
Squaw Creek

June 4, 2017
31756
CLR
38
17.0
Catwalk

June 8, 2017
31889
HRC
33
9.9
Antelope
Three Forks
June 11, 2017
31992
Oasis
36
4.1
Siverston
Three Forks
June 11, 2017
31991
Oasis
36
4.1
Siverston
Bakken
June 12, 2017
28728
EOG
26
6.1
Parshall
Bakken
June 13, 2017
32210
Oasis
50
4.1
Siverston
Three Forks
June 14, 2017
29299
EOG
23
7.0
Parshall
Bakken
June 15, 2017
29298
EOG
27
8.0
Parshall
Bakken
June 18, 2017
32209
Oasis
50
4.0
Sivertson

June 19, 2017
32820
WPX
61
6.9
Mandaree
Three Forks 
June 20, 2017
32438
Nine Point
31
10.0
Williston

June 20, 2017
26432
WPX
61
9.1
Mandaree