- ConocoPhillips' Q3 EPS report was proof positive its strategic plan is working to perfection
- led by the company's leading Eagle Ford position, it earned over half-a-billion bucks in the Lower 48 segment
- the Alaska segment also was very strong, delivering net income of $427 million, up more than 4x yoy
- COP is one of the highest quality global E&P companies in the energy sector and is a free cash flow cow at current oil and gas prices
- for those keeping track - after another $900 million of share buybacks during the quarter - COP's outstanding share count at the end of the quarter was 1.172 billion, down 4% from year-end 2017. That means COP generated an estimated $1.62/share in free cash flow during Q3 alone. Even with another 7% increase in the quarterly dividend in the last month to $0.305/share, the quarterly dividend equates to only 18% of the free cash flow the company generated during the quarter. Point is, COP's biggest problem these days is what to do with all the cash it's generating. Answer: Share buybacks and proof that the company was not joking when in July it announced it was expanding the 2018 planned share repurchases by 50% to $3 billion and increased the total share repurchase authorization from $6 billion to $15 billion. Simply put, COP is a cash cow at current global and domestic oil and gas prices.
In responding to a question on the Q3 conference call about when Eagle Ford production would start to top-out and level off, Al Hirshberg - EVP of Production & Drilling - said:
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what your read here or what you think you may have read here.So, there's still more room for us to run there and more room for us to grow .... we're not in the flattening out mode like we have talked about in the Bakken where we were looking to kind of hold steady. The Eagle Ford is going to continue to grow for quite some period of time. It's not the – the flat spot on is not in sight. It's not something that's going to happen next year.
Breaking news: at last count, the Germans had zero (0) horizontal oil wells; the French had zero (0) horizontal wells; and the Brits had two (2) new horizontal wells permitted. Earlier this week, while the first of two UK wells was being hydraulically fractured, a micro-seismic event (0.4 on the Richter scale) was noted; the operator was alerted to proceed with "all due caution." Sometime in the last twenty-four hours, another seismic event was noted; this time, the event registered 0.76 the Richter scale. Well, let Tsvetana tell the story:
Less than two weeks after Cuadrilla resumed hydraulic fracturing in the UK for the first time in seven years, the company paused fracking at its drilling site in northwest England on Friday morning after a 0.76 on the Richter scale micro seismic event was recorded, the latest of some dozen seismic events since fracking started, but one that was above the 0.5 threshold requiring a halt.
According to regulations, in case of micro seismic events of 0.50 on the Richter scale or higher, fracking must temporarily be halted and pressure in the well reduced.
On Friday morning, a 0.76 on the Richter scale event was recorded, in an event classed as “red” in the traffic light monitoring system regulated by the Oil and Gas Authority, Cuadrilla said today, adding that “All the relevant regulators were informed without delay and we have verified that the well integrity is intact.”
Work will now pause for at least 18 hours and is expected to resume in the morning on Saturday, October 27, the company said.
Comment: I assume if much more of this goes on, the Brits will join the French and the Germans with zero (0) new horizontal wells.This is interesting. In the US, most of us like to believe that seismic events associatied with fracking are due to injecting produced water / brine produced from fracked wells back into salt water disposal wells. It has been my understanding that fracking itself was not associated with seismic events. I believe Oklahoma has had the most experience with this issue.
If I recall correctly, at least one seismic event has been associated with oil and gas activity in North Dakota but I thought it was believed to be associated with injecting produced water into a salt water disposal well. I've long forgotten the specifics. I think it's been over a year since I've read any articles coming out of Oklahoma regarding seismic events. However, the first hit returned by a google search just now was to a Business Insider article dated February 2, 2018, and yes, the correlation was with disposing produced water into saltwater disposal wells and not due to fracking directly.
Back to the Bakken
Eleven new permits:
- Operators: WPX (6); Kraken Operating (3); Lime Rock Resources (2)
- Fields: Spotted Horn (McKenzie); Lone Tree Lake (Williams); Murphy Creek (Dunn)
- Comments: WPX has permits for a six-well Bird Bear / Hackberry pad in 35-150-94; Kraken Operating has permits for a three-well Ruffing pad in 22-157-99; and Lime Rock Resources has permits for a 2-well a "Twist and Neal" pad in lot 2, section 4-143-95;
- EOG (6): six Hawkeye permits in McKenzie County
- Bruin E&P Operating (5): two Johnson permits; one Sylte permit, two Helstad permits, all in Williams County
- QEP (2): two Vegas permits, both in McKenzie County
- Oasis: a Hendricks permit, and a McFarland Federal permit, both in Williams County
- 33795, 138, Crescent Point Energy, CPEUSC Nelson 8-30-31-157N-99W TFH, Lone Tree Lake, t9/18; cum 5K after 14 days;
- 33789, 385, Crescent Point Energy, CPEUSC Nelson 5-30-31-157N-99W MBH, Lone Tree Lake, t9/18; cum 9K after 14 days;
- 33793, 158, Crescent Point Energy, CPEUSC Nelson 4-30-31-157N-99W MBH, Lone Tree Lake, t9/18; cum 8K after 14 days;
- 31419, 2,009, Rimrock Oil & Gas, Moccasin Creek 16-26-27-13H, Moccasin Creek, t6/18; cum 64K 8/18;
- 31420, 1,396, Rimrock Oil & Gas, Moccasin Creek 16-26-27-12H3, Moccasin Creek, t6/18; cum 70K 8/18;
- 32630, 2,018, Rimrock Oil & Gas, Moccasin Creek 16-26-27-13H3U, Moccasin Creek , t6/18; cum 69K 8/18; ("H3" suggests a "third bench" well, but in fact this is a Three Forks first bench; the earlier Moccasin Creek wells were KOG permits; this was a Whiting permit)
- Note: #22462, a middle Bakken well, is on this same 4-well pad; it is back on-line; no jump in production;