Thursday, May 16, 2019

Five New Permits; WTI Trading Right At $63 -- May 16, 2019

WTI: things can't be too bad in the Mideast; WTI did go up 1.6%; up over a dollar, now trading at $63.04. 

Active rigs:

$63.045/16/201905/16/201805/16/201705/16/201605/16/2015
Active Rigs6559502883

Five new permits:
  • Operators: CLR (4); Crescent Point Energy
  • Fields: Murphy Creek (Dunn County), Rainbow (Williams)
  • Comments:
    • CLR has permits for a 4-wellJack pad in lot 1/section 4-145-95, Murphy Creek
    • Crescent Point Energy has a permit for a single CPEUSC Dorothy well in section 30-158-98, Rainbow oil field
Five producing wells (DUCs) reported as completed:
  • 34049, 4,527, MRO, State Kreiger 14-36H, Bailey, t4/19; cum --; section 36-146-94;
  • 34048, 2,849, MRO, State Kelling 14-36TFH, Bailey, t4/19; cum --; section 36-146-94;
  • 34050, 3,562, MRO, State Oster 14-36TFH, Bailey, t4/19; cum --; section 36-146-94;
  • 34044, 4,519, MRO, Rafter 44-35H, Bailey, t4/19; cum --; section 35-146-94;
  • 34046, 3,091,  MRO, Two Bar 34-55H, Bailey, t4/19; cum --; section 35-146-94;
    • neighboring wells:
      • 16736, just returned to production; see recent production profile below;
      • 25484, off line
      • 25482, off line
A neighboring well:
  • 16736, 377, MRO, Bill Connolly 21-25H, Bailey, t1/08; cum 233K 3/19; recent production; note, 4,502 bbls over 5 ays extrapolates to 27,000 bbls over 30 days; see first comment -- was re-fracked (part of the MRO re-fracking program in the Bailey ...
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN3-20195450237552027831545572030
BAKKEN2-20190000000
BAKKEN1-20190000000
BAKKEN12-20180000000
BAKKEN11-201812344031969
BAKKEN10-201831844680243786420128
BAKKEN9-20183081791014376647858

Off For The Rest Of The Day -- Going Biking Before The Storm Hits -- May 16, 2019

This is mid-May, isn't it?

The Kennedy Klan, no doubt, is packing up, getting ready to head west to go skiing. Good for them.


Did Jeff Bezos Unwittingly Dodge A Silver Bullet? -- Thank-You Letter To Occasional-Cortex? -- May 16, 2019

NYISO.

This most incredible story is followed here.

Link here to banner story below


One wonders.

Corporations like Amazon, and CEOs like Jeff Bezos seldom make decisions based on emotion, or so one would hope. Most of us thought that Jeff Bezos pulled the Amazon HQ2 project out of Long Island over a tiff between him and Occasional-Cortex and the Democratic leadership in Albany, NY.

Now, I'm not so sure.

Was this the real reason Jeff Bezos decided to "get out of Dodge," as they say?


Two things.

Jeff Bezos and his people would have had to know about high electricity costs in NYC and Long Island.

What's the most expensive "thing" a high tech company has? People. Okay. What's the second most expensive "thing"? Electricity. After that, everything else.

So, even before the "NY-Denies-Pipeline-Permit" story, Jeff Bezos knew that energy and the cost of electricity was going to be a huge issue. He probably never imagined that access to electricity was going to be an issue. Or access to natural gas.

His HQ2 might not have required any natural gas; it could have all been managed with electricity, but all those new employees buying homes; all those new retail stores opening in Long Island -- like restaurants, etc -- many will require natural gas hook-ups and all will require electricity -- produced by natural-gas plants served by the pipeline.

So two things:
  • Jeff Bezos already knew about the soaring electricity bills in NY
  • was Jeff Bezos aware of the natural gas pipeline expansion issue, also?
Occasional-Cortez is looking more and more brilliant every day. Jeff Bezos dodged a silver bullet.

He needs to send a thank-you note to Occasional-Cortex.

By the way, on global warming, Occasional-Cortex has already won the debate with Boring Biden. She is clearly correct; he is so wrong. Perhaps more on this later.

Warren Buffett, Vicki Hollub, OXY, Anadarko, And All That Jazz -- May 16, 2019

Updates
August 7, 2019: financing.

July 22, 2019: Buffett's deal --
Buffett will receive an 8% return on his preferred shares to finance the deal plus warrants to buy common shares, a similar structure the financier used before in taking stakes in Bank of America Corp. and Goldman Sachs Group Inc. Icahn claimed that at least one large investor that he knows of would have provided the financing without the warrants.
The financing deal: $10 billion. Buffet getting $800 million / year on this deal? [Ten year bond? about 2%.]
June 10, 2019: Rigzone analysis.
  • 10,000 drilling sites
  • pipeline assets: $8 billion
  • Algerian assets: $9 billion
  • price of Anadarko: $40 billion
  • $40 billion - $20 billion (asset sales) = $20 billion
  • $20 billion / 10,000 wells = $2 million / well
  • EURs of 1 million bbls @ $50/bbl = $50 million / well
June 4, 2019: update on debt concerns here. 

Original Post
 
Anyone who can convince Warren Buffett to spend $10 billion on shale in a 90-minute meeting has my vote.

It would be interesting to see the details. Buffett is generally pretty shrewd. My hunch: he gets his $10 billion back before OXY shareholders see their gains. 

Re-posting:
OXY - Anadarko

Also from twitter: OXY-Anadarko: FT link here; data points --
  • $56 billion gamble
  • on the hot seat: Vicki Hollub
  • three years on the job as CEO of OXY
  • most ambitious move of her career
  • Anadarko: assets around the world, from Texas to Mozambique
  • will double the size of Occidental
  • will also saddle OXY with debts of around $50 billion
  • OXY's shares dropped to a 10-year low
  • this is the deal: after 15 years into the shale revolution, investors across the US oil and gas industry want it to start paying off for them
  • US acts like a "swing producer": a source of supply that can respond within months
  • US shale: buffers Mideast tensions
From the linked article:
To win Anadarko, Occidental had to see off its larger rival Chevron, which took some swift manoeuvring, while the two companies had competing bids on the table. Ms Hollub flew to Omaha, Nebraska for a 90-minute meeting with Warren Buffett on April 28, securing a $10bn investment from Berkshire Hathaway that allowed her to rejig Occidental’s offer to include more cash, avoiding the need to put the deal to a vote of her own shareholders. 
Long, long article. Much more at the link. Archived.

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

Screenshots from the FT article linked above on the OXY-Anadarko story:


From Twitter This Morning -- May 16, 2019

Twitter today:
  • Venezula -- tick, tick, tick -- running out of motor fuel
  • Brent crude oil futures rise more than a dollar in early trading: as high as $72.80; now at $72.89
    • WTI, right now, 9:55 a.m. CT, May 16, 2019: up $1.06, up 1.71%, trading at $63.08; whoo-hoo!
    • California gasoline tied directly to Brent (which trades about $10/bbl higher than WTI)
    • higher Brent: due to fundamentals (supply/demand) or saber-rattling?
  • long winter, severe winter: delaying housing construction season; negatively impacted PVC; PVC now inexpensive; could spur home building; spur consumer confidence
  • Argus Media launches "new face" on twitter
  • US crude oil reaching new destinations around the world as Chinese buying slowed
  • richest county in North Dakota refuses to address school needs -- again
  • those attacks on Saudi pipelines? funded by Iran; carried out by the Houthis
  • crudehead: refining margins are going to get better and better
  • Trump said to be annoyed with advisors pushing for armed conflict with Iran; Trump is said to be saying those advisors are getting way ahead of themselves
  • Platts' take on rising US crude oil inventories: due to rising imports; imports did rise (and they rose significantly, but I have trouble believing that's the reason for rising US crude oil inventories -- rising imports). If so, more heavy oil needed to balance all that light oil showing up at the refineries; and, oh, by the way, now that the winter/summer switch is complete; maintenance is complete, refining capacity will increase from current 90% -- meaning, yes, refiners need to increase heavy oil imports -- so, I've talked myself into agreeing with Platts
  • and, last but not least, the Houston Ship Channel re-opened to two-way traffic after wreckage removed; this "problem" was solved in almost record time; wow, I'm glad the USACE was not involved; they would still be putting together a group to study the wreck; point fingers
*****************************
OXY - Anadarko

Also from twitter: OXY-Anadarko: FT link here; data points --
  • $56 billion gamble
  • on the hot seat: Vicki Hollub
  • three years on the job as CEO of OXY
  • most ambitious move of her career
  • Anadarko: assets around the world, from Texas to Mozambique
  • will double the size of Occidental
  • will also saddle OXY with debts of around $50 billion
  • OXY's shares dropped to a 10-year low
  • this is the deal: after 15 years into the shale revolution, investors across the US oil and gas industry want it to start paying off for them
  • US acts like a "swing producer": a source of supply that can respond within months
  • US shale: buffers Mideast tensions
From the linked article:
To win Anadarko, Occidental had to see off its larger rival Chevron, which took some swift manoeuvring, while the two companies had competing bids on the table. Ms Hollub flew to Omaha, Nebraska for a 90-minute meeting with Warren Buffett on April 28, securing a $10bn investment from Berkshire Hathaway that allowed her to rejig Occidental’s offer to include more cash, avoiding the need to put the deal to a vote of her own shareholders. 
Long, long article. Much more at the link. Archived.

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

Screenshots from the FT article linked above on the OXY-Anadarko story:


The Fallout Begins -- New York Denies A Pipeline Permit -- The Morning After -- May 16, 2019

Updates

June 6, 2019: New Jersey regulators deny key permits for the New Jersey-to-New-York-Under-The-Hudson pipeline.

June 5, 2019: New Jersey regulators to decide on several permits for same pipeline.

June 3, 2019: another pipeline at risk. New York state to become a "no-growth" state.

May 22, 2019: Con Edison follows suit; limits new service.

May 20, 2019: moratorium back on. New natural gas hook-ups in NYC/Long Island on hold. Second moratorium in 2019.

May 16, 2019: even oilprice weighs in on this decision. 

Original Post 

This story will now be followed here. New tag: Pipeline_Expansion_NY.

This will likely be the most interesting energy story affecting New York City this year.

For background, see this post.

Today, a google search:


Solar Minima -- May 16, 2109

I've only recently come across this blog: the next grand minimum. I'm finally coming around to the science of solar minima, and the sun's 11-year cycles but not yet sure which blogs to follow with regard to this subject.

A google search, Scientific American, solar minima, resulted in this as the top hit: https://www.scientificamerican.com/article/solar-minimum-forecasting/, from 2010.

A reader suggests Valentina Zharkova, professor in Mathematics at Northumbria University. She has a BSc/MSc in Applied Mathematics and Astronomy, a Ph.D. in Astrophysics, certificate in project management.

Jobless Claims Plummet -- Making America Great -- May 16, 2019

Huge drop in jobless claims: drop 16,000 to 212,000.
  • Bernie: resist!
  • Buttigieg: change course!
  • Beto: re-launch, but first, get a haircut. 
  • Biden: what just happened? Am I on the Dinah Shore show today?

From the linked story:

The numbers: The number of people who applied for unemployment benefits last week fell to the lowest level in a month, dragging new jobless claims back near a post-recession low and suggesting all is well in the U.S. labor market.

Dragging? An unusual word to say the least for such great news. LOL. 

Economists forecast the number would go to .... drum roll ... 217,000. Whatever. 

Oil Stock Dividends Are "Soaring" This Year -- Sources -- May 16, 2019

Updates

May 21, 2019: see examples of soaring dividends here


Original Post

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or think you may have read here.

For an alternative view:
  • US shale boom about to go bust: Nick Cunningham
  • US shale: not a revolution, but a retirement party: Art Berman
Today, we have this story from the same group of folks: why oil stock dividends are soaring this year. The headline seems to be a bit of hyperbole based on the story itself. If examples of any of these "soaring dividends" were given, I missed them. Data points:
  • some independent US drillers are starting to increase dividends this year
  • some of these dividends had been slashed/frozen as a result of the price slump in 2015 and 2016 (the Saudi Surge or "Saudi's trillion-dollar mistake")
  • however, publicly-traded US shale companies still underperforming the market in general
  • have amassed large amounts of debt
  • having trouble raising capital through banks
"Last year, equity and bond issues by US drillers slumped to $22 billion -- the lowest level since 207, according to an analyst at The WSJ."

One, of course, could argue that the US drillers did not need to raise as much capital as in 2015 and 2016.

Just saying.

That First Attempt At A Plastics Plant For North Dakota? Promoter Filing for Bankruptcy -- May 16, 2019

From The Williston Herald. A long, long article with ND officials suggesting "second attempt" will have much greater chance of succeeding, suggesting first attempt was "too fast too soon."

CEO William Gilliam, Badlands NGLS, filing for Chapter 7 bankruptcy in a Colorado court.

Gasoline Demand -- May 16, 2019

Updates

Later, 8:57 a.m. CT: ah, yes. The EIA has now re-posted the correct graph.


Original Post 

Link here.

This is interesting. Late yesterday afternoon EIA had the chart updated for "gasoline demand." I did not take a screenshot at that time because it was late; I would do it today.

Now, this morning, the EIA has the old chart back up -- last week's data.

When they get the new chart up, I will post it. However, the data will show that demand dropped slightly week-over-week but demand in the most recent reporting week (week ending May 10, 2019) was very slightly ahead of last year at the same time.

If the "current" chart is the correct chart there seems to be a problem over at the EIA.

Current chart, screen shot at 7:34 a.m., May 16, 2019.


Compare with the screen shot one week ago.

The numbers on the "current chart" have been updated, but the chart/graph itself is the old graph.

Three Wells Coming Off Confidential List Today -- May 16, 2019

NEW Permian oil to feed global markets: Bloomberg.
  • for alternate views: US shale is about to go bust -- Nick Cunningham
  • US shale, a retirement party, not a revolution -- Art Berman
Schlumberger to sell $400 million in drilling assets.

Brazil? Peak oil? What peak oil? Brazil's offshore making a comeback -- state wants to grow off-shore production by 200 percent -- Rigzone

 *******************************
Back to the Bakken 

Wells coming off confidential list today -- Thursday, May 16, 2019:
  • 35155, SI/NC, XTO, Bullberry Federal 24X-2C, Lost Bridge, no production data,
  • 34859, SI/NC, MRO, Rochelle USA 21-17TFH, Reunion Bay, no production data,
  • 34239, 605, Oasis, Aagvik 5298 42-23 9B, 50 stages; 6 million lbs; Banks, t12/18; cum 3/19; note the small amount of proppant for a middle Bakken well; that's the amount of proppant one would expect for a Three Forks well;
The Aagvik wells are tracked here. #34239 is another huge Aagvik well --

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN3-20193123717239771475274977718122948
BAKKEN2-2019282825428375167248863987805638
BAKKEN1-201931305143071428399908557470415934
BAKKEN12-20183127474272973883264659064659
BAKKEN11-20181692268756274136260626

Active rigs:

$62.775/16/201905/16/201805/16/201705/16/201605/16/2015
Active Rigs6559502883

RBN Energy: Delek's US's crude oil gathering system in the Midland Basin, part 5.
Crude oil gathering systems do just that — they gather crude from multiple well sites — but the drivers behind their initial development can vary widely. Some gathering systems are developed by oil producers to reduce their use of trucks and more efficiently transport increasing volumes of crude from the lease to takeaway pipelines. Others are the brainchildren of savvy midstream companies that see an opportunity to serve multiple producers in a fast-growing production area. And then there are systems like the one refiner Delek US is now expanding in the Permian’s Midland Basin near the company’s Big Spring, TX, refinery. It’s designed to feed locally produced crude directly to that refinery — and possibly other Delek refineries too — and may potentially be used to help fill a long-haul takeaway pipeline that Delek still hopes to co-develop with partners. Today, we continue our series on Permian gathering systems with a look at Delek’s 200-mile Big Spring project, part of which is already up and running.