Thursday, November 1, 2018

This Is Actually Getting Somewhat Alarming -- November 1, 2018

Updates

November 2, 2018: from the reader who probably follows this as closely as anyone, see first comment --
I'm watching two things: 'Daily regional average temperatures and departure from normal' on the dashboard: https://www.eia.gov/naturalgas/storage/dashboard/;
and the 8 to 14 day outlook: http://www.cpc.ncep.noaa.gov/products/predictions/814day/.
Based on those, I expect a larger build next week, maybe another small one for the coming week, before the serious heating season starts. 
Original Post

For those just coming to this topic for the first time, see this post first.

In the small print in the narrative below, the EIA notes that there was a "net increase" of 48 Bcf from the previous week. Although small, at least there was a "net increase." A reader suggests that historically, the first weekend in November is the last weekend of the year in which there will be a net increase. After that, NG storage historically declines until the following spring (late March / early April / late April).

The reader suggests that on occasion the "net increase" will continue through the second weekend in November.

In other words, in another week or so, we should know where we stand going into winter.

EOG: Net Income Of $1.2 Billion Vs $101 Million One Year Ago; $2.05/Share Vs 17 Cents/Share One Year Ago -- 3Q18

EOG:
  • exceeds high end of oil and NGL production targets 
  • generates significant free cash flow 
  • achieves improved well performance and lower costs in Delaware Basin 
  • secures 2019 services at competitive prices and raises 2018 CAPEX guidance range to $5.8-$6.0 billion 
  • targets further well cost reductions in 2019 
EOG

From the company's press release:
The company reported third quarter 2018 net income of $1.2 billion, or $2.05 per share. This compares to third quarter 2017 net income of $101 million, or $0.17 per share. Net cash from operating activities in the third quarter 2018 was $2.2 billion.

Adjusted non-GAAP net income for the third quarter 2018 was $1.0 billion, or $1.75 per share, compared to adjusted non-GAAP net income of $111 million, or $0.19 per share, for the same prior year period.

Third Quarter Review EOG set a company record and exceeded the high end of its target range for crude oil volumes in the third quarter 2018 by producing 415,000 barrels of oil per day (Bopd), an increase of 27 percent compared to the same prior year period. Natural gas liquids (NGL) production increased 46 percent while natural gas volumes grew 13 percent, contributing to total company production growth of 25 percent.

Per-unit operating expenses declined during the third quarter 2018 compared to the same prior year period. General and administrative expenses fell 20 percent, transportation costs declined 15 percent and depreciation, depletion and amortization expenses fell 13 percent, all on a per-unit basis. EOG generated $2.3 billion of discretionary cash flow in the third quarter 2018. After considering exploration and development expenditures of $1.7 billion and dividend payments of $107 million, EOG produced free cash flow during the third quarter of $503 million.

Mini-Fracks? CLR's Brandvik / Wehdahl Wells In Corral Creek -- November 1, 2018

Link here. At the link scroll down until you get the wells. Note the amount of water being used to frack these wells. I'll come back to these later, but too much happening right now.

**********************************

Market close: lots of earnings coming out --

EOG:
  • exceeds high end of oil and NGL production targets 
  • generates significant free cash flow 
  • achieves improved well performance and lower costs in Delaware Basin 
  • secures 2019 services at competitive prices and raises 2018 CAPEX guidance range to $5.8-$6.0 billion 
  • targets further well cost reductions in 2019 
AAPL:
EPS, $2.91 vs; $2.78; revenue, $62.9 billion vs $61.6 billion; huge beats; 46.9 million iPhones sold vs 47.5 million forecast; average selling price of iPhone, $793 vs Wall Street expecting, $751; AAPL shares down 5%; analyst: unhappy with iPhone sales (LOL) and guidance; one CNBC analyst almost sounds as if he is really, really worried about a Chinese slowdown suggesting the demise of Apple by this time tomorrow -- disclaimer -- this is not an investment site. Do not make any investment, financial, travel, job, or relationship changes based on what you read here or what you think you may have read here. Apple, Inc,'s new motto: "don't get mad, get even." Apple will no longer give unit sales figures in future reports. Mistake? They should have made this decision / made this announcement in a quarter in which they had increasing unit sales. AAPL shares down 7% after results and these announcements. Apple, Inc. , falls below $1 trillion market evaluation.
Starbucks: beats across the board; SBUX up 7.5% after earnings released; this will generate a lot of talk tomorrow;

CBS: beat on top and bottom; shares up about a percent after earnings released; "best 3rd quarter ever";

Kraft Heinz: misses earnings; beats on revenue; shares plunge; down 6.5%; continues its yearly downtrend; in the food space, only Campbells has done worse; this will generate a lot of talk tomorrow;

Shell: profit surges;
Shell said its quarterly profit on a current cost-of-supplies basis—a number similar to the net income that U.S. oil companies report—was $5.6 billion, up from $3.7 billion a year earlier.
Still, on an adjusted basis, its results came in slightly below the company-provided analyst consensus.
Investors, still burned from the sharp decline in oil prices in 2014, have taken a tough line on such surprises in recent quarters. Shares in the company were down nearly 3% in early London trading, weighed down by the price of oil. The price of international Brent crude futures have slid from a four-year high earlier this month and the market is continuing to sell off.
***************************************
EOG

From the company's press release: the company reported third quarter 2018 net income of $1.2 billion, or $2.05 per share. This compares to third quarter 2017 net income of $101 million, or $0.17 per share. Net cash from operating activities in the third quarter 2018 was $2.2 billion.

Adjusted non-GAAP net income for the third quarter 2018 was $1.0 billion, or $1.75 per share, compared to adjusted non-GAAP net income of $111 million, or $0.19 per share, for the same prior year period.

Third Quarter Review EOG set a company record and exceeded the high end of its target range for crude oil volumes in the third quarter 2018 by producing 415,000 barrels of oil per day (Bopd), an increase of 27 percent compared to the same prior year period. Natural gas liquids (NGL) production increased 46 percent while natural gas volumes grew 13 percent, contributing to total company production growth of 25 percent.

Per-unit operating expenses declined during the third quarter 2018 compared to the same prior year period. General and administrative expenses fell 20 percent, transportation costs declined 15 percent and depreciation, depletion and amortization expenses fell 13 percent, all on a per-unit basis. EOG generated $2.3 billion of discretionary cash flow in the third quarter 2018. After considering exploration and development expenditures of $1.7 billion and dividend payments of $107 million, EOG produced free cash flow during the third quarter of $503 million.

WTI Drops Almost 2%; Drops Below $66 -- November 1, 2018

Active rigs:

$63.5511/1/201811/01/201711/01/201611/01/201511/01/2014
Active Rigs68533470193

Seven new permits:
  • Operators: Oasis (6); CLR
  • Fields: Banks (McKenzie); Elm Tree (McKenzie)
  • Comments: Oasis has permits for a 6-well Joplin pad in section 32-153-97; CLR has a single new permit in Elm Tree oil field
One permit renewed:
  • Enerplus: a Hall permit in McKenzie County
Eighteen permits canceled:
  • Enerplus (9): one Schwinn permit; one Huffy permit; one Beans permit; one Terrier permit; one Log House; one Carp permit; one Round House permit; one Curve permit; and one Deuce permit, all in Dunn County; 
  • XTO (5): three Tobacco Garden permits and two Arlene Federal permits, all in McKenzie County
  • Resource Energy Can-Am (4): a Kenyon permit; a Curly permit; an Armstrong permit, and, a Border Ranch permit, all in Divide County 
Three producing wells (DUCs) reported as completed:
  • 33738, 2,024, Hess, BB-Federal B-151-95-2122H-7,
  • 33736, 1,968, Hess, BB-Federal B-151-95-2122H-9,
  • 34013, 1,696, XTO, Serrahn 11X-5E,

Jobless Claims Lowest In 45 Years; The Market, Energy, And Political Page, Part 3, T+80 -- November 1, 2018

Jobs: making America great -- first time unemployment claims drop again.
  • weekly jobless claims drop 2,000 to 214,000
  • continuing claims decrease to 7,000 to 1.63 million
  • the number of Americans receiving benefits was the lowest in more than 45 years
  • hardly seems like any recession on the immediate horizon; maybe I'm missing something
Iran hit by virus? Being reported out of Israel -- Israel silent as Iran is allegedly hit with computer virus more virulent than Stuxnet. If any accuracy to the report, coincides nicely with US sanctions on Iran to be in place on November 3, 2018 -- just a couple of days from now.

Natural gas shortage projected for Canada: this is a repeat of a story posted a few days ago. See "tag" for other posts, same story.
A natural gas shortage in Canada is expected to last through the winter months, forcing gas users ranging from industrial forces to local governments to seek alternative fuel sources and strategies for slashing consumption and conserving the gas they have. The shortage stems from this month’s pipeline explosion near Prince George, British Columbia.
In the aftermath of the explosion, FortisBC, one of British Columbia's largest utilities, says that their supply of natural gas will be reduced by a whopping 50 to 80 percent throughout the coldest months of the year. This sudden squeeze will necessitate a lot of unforeseen expenditures on alternative fuel sources. This is a cost that will be passed directly onto consumers, affecting everything from the price of gas and heating to even the price of vegetables, among other subsequent price hikes.
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on anything you read here or think you may have read here.

AAPL: to report after market close today.

XLNX: after all the commotion these past few weeks, I completely forgot about XLNX -- hit a new high yesterday, I believe. Regardless, up a little today and trading at a new high.

Absolutely Amazing How CLR Is "Attacking" Brooklyn Oil Field North Of Williston -- November 1, 2018

The company added six more permits yesterday for the Brooklyn oil field. To date, this year, so far:
  • 35672, H1,
  • 35673, 
  • 35674, H1,
  • 35675, H1,
  • 35676, 
  • 35677, H1,
  • 35659, Richmond 9-26HSL 1, runs north; 5120-acre unit; Three Forks B1;
  • 35658, Addyson 10-23HSL 1, runs south; 5120-acre unit; Three Forks B1;
  • 35657, Boston 4-25HSL, runs south; 5120-acre unit; middle Bakken;
  • 35656, Boise 4-24HSL, runs north, 5120-acre unit; middle Bakken;
  • 35644, H1,
  • 35643,
  • 35642, H1
  • 35641,
  • 35580, H1,
  • 35579,
  • 35566, H1,
  • 35565,
  • 35564, H1,
  • 35563,
  • 34698, H1,
  • 34697,
  • 34696, H1,
  • 34695, H1,
  • 34694,
  • 34693, H1,
  • 34692,
  • 34691, H1,
  • 34690, H1
Over at NDIC well search, it appears:

Total permits, so far: 139
  • Addyson: 6
  • Barney: 7
  • Bismarck: 7
  • Boise: 9
  • Boston: 9
  • Charleston: 7
  • Gjorven: 11
  • Gronfur: 6 (includes Gronfur SWD)
  • Helena: 8
  • Juneau: 10
  • Mildred: 8
  • Olympia: 7
  • Rennerfeldt: 8
  • Richmond: 6
  • Rolf: 5
  • Sacramento: 9
  • Springfield: 6
  • Topeka: 9
How many wells might be drilled in the Brooklyn oil field? With 36 sections, or 18 1280-acre sections
  • 1280-acre units
    • middle Bakken, 18 x 6: 108 wells
    • Three Forks, H1: 18 x 6: 108 wells
    • Three Forks, lower benches: 18 x 8 = 144 wells
  • 2560-acre overlapping units: 
    • middle Bakken: 9 x 2 = 18 wells
    • Three Forks, H1: 9 x 2 = 18
    • Three Forks, lower benches: 9 x 2 = 18
    • 5120-acre units
    • middle Bakken: 4 x 2 = 8
    • Three Forks, H1: 4 x 2 = 8
    • Three Forks, lower benches: 4 x 2 = 8
  • Total:  438 wells
  • Currently: 139 permits

The Market, Energy, And Political Page, Part 2, T+80 -- November 1, 2018

Canadian producers turning to oil trucks: Bloomberg. Data points:
  • phenomenon has been noted for about three to four months
  • 500 miles by truck for Canadian producers to get oil to pipeline and rail terminals
  • most notable increase in truck traffic seen in Saskatchewan 
  • WCS selling for as much as $52.40 less than WTI -- the biggest spread/discount since 2008
  • August: 230,000 bbls by truck
  • a typical truck: 250 bbls of oil
  • cost, for 500 miles: $30/bbl one way if the tanker returns empty
  • Enbridge Line 3 expansion won't be completed by late next year (very, very iffy, in my mind)
  • record CBR: 230,000 bopd
  • constraints worsened when BNSF required more secure, hard-to-obtain tanker cars
  • impact on Bakken oil 
Canadian producers turning to US shale: Encana buys Newfield Exploration.

McDermott to sell storage tank and pipe business: Rigzone.

NuStar: to exit Europe; will sell storage terminals to Inter Terminals Ltd. I would not have posted this except for the fact we have a huge NuStar storage facility in our "neighborhood" here in north Texas.

The Market, Energy, And Political Page, T+80 -- November 1, 2018

Tax refunds: to be 26% bigger in 2019 -- Morgan Stanley
  • crumbs -- Nancy Pelosi
Dow Jones, historical, one year. One's perspective, I guess, depends on the y-axis:




Graphic Of The Day -- November 1, 2018

From twitter:


*****************************************
US Gasoline Inventory

Link here.


Active Rigs In North Daktoa --Update -- November 1, 2018

The NDIC shows 71 active rigs in North Dakota. Some of these are drilling salt water disposal wells.

The top ten:
  • CLR: 9
  • Hess: 6
  • XTO: 6
  • Whiting: 5
  • Oasis: 4
  • BR: 3
  • Slawson: 3 
  • Enerplus: 3
  • Kraken: 3
  • WPX: 3

Of the 71 active rigs:
  • SWD: 3
  • non-Bakken: 2 (?)

The 71 active rigs:
  • Abraxas: 1
  • Armstrong Operating: 2
  • Behm Energy: 1 -- Nygaard 29-8V
  • Bruin: 2
  • BTA Oil Producers: 1
  • BR: 3
  • CLR: 9
  • Enerplus: 3
  • Hess: 6
  • Hunt: 1
    Hydra Services, SWD: 1
  • Iron Oil: 1
  • Kraken: 3
  • Liberty Resources: 1
  • Lime Rock Resources: 1
  • Marathon: 2
  • McKenzie Energy, SWD: 1
  • Newfield: 1
  • NGL Water Solutions, SWD 1
  • Nine Point Energy: 1
  • Oasis: 4
  • Petro Harvester Operating: 1
  • Petro Hunt: 2
  • Petroshale: 1
  • Rimrock Oil & Gas: 1
  • Slawson: 3
  • Southwestern Production Corp: 1 -- TMW 33-23
  • Whiting: 5
  • WPX: 3
  • XTO: 6
  • Zavanna: 1

Is The Bakken Facing Another Round Of Takeaway Constraints, Part 2 -- RBN Energy -- November, 1, 2018

Newfield: in the news today -- futures suggest NFX to jump 25% on opening this morning
*************************************
Back to the Bakken

Wells coming off the confidential list today -- Thursday, November 1, 2018:
34754, SI/NC, Hunt, Trulson 156-90-11-14H-4, Ross, no production data,
34260, SI/NC, MRO, Walking Eagle USA 44-12TFH, Reunion Bay, no production data, 
32959, SI/NC, Oasis, Ceynar 5298 44-32 14TX, Banks, a DUC but still huge production being reported, t--; cum 104K 9/18;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN9-201830188191886636194398462488114485
BAKKEN8-20183124366243404414050182404079279
BAKKEN7-20183117222172013795438434366341304
BAKKEN6-20182919967199673804846065420423559
BAKKEN5-20183123534236115701654367519571914
 
32958, SI/NC, Oasis, Ceynar 5298 44-32 15BX, Banks, a DUC but still huge production being reported, t--; cum 106K 9/18;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN9-201825219412198724893458233226513158
BAKKEN8-201831248212480027971521793849313190
BAKKEN7-20183120600205752266245762439621304
BAKKEN6-20182920016200162244843756397333559
BAKKEN5-20183018976192063278841487390931914

31259, SI/NC, Oasis, Kjorstad 5300 34-22 4T, Willow Creek, a DUC but still nice production being reported, t--; cum 64K 9/18;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN9-20182912948129971563017839175950
BAKKEN8-20183117361171972347119479192190
BAKKEN7-2018228305825623289952309338
BAKKEN6-201830130221299333922937856813445
BAKKEN5-20182511975118703195911906100331663


Active rigs:

$64.8811/1/201811/01/201711/01/201611/01/201511/01/2014
Active Rigs69533470193

RBN Energy: is the Bakken facing another round of takeaway constraints? Part 2. Archived.
Pipeline capacity constraints are nothing new to producers in the Bakken. Prior to the completion of the Dakota Access Pipeline (DAPL) in mid-2017, market participants had been pushing area pipeline takeaway to the max. When DAPL finally came online following a lengthy political and legal battle, producers and traders were able to breathe a sigh of relief. But with Bakken production steadily increasing over the past 18 months and primed for future growth new constraints are on the horizon. Over the next year or so, Bakken output could overwhelm takeaway capacity and push producers to find new market outlets. The questions now are, which midstream companies can add incremental capacity, how much crude-by-rail will be necessary, and is there a chance a major new pipeline gets built? Today, we forecast Bakken supply and demand, discuss some upcoming projects and lay out the possible headaches for Bakken producers heading into 2019.