Monday, July 15, 2019

DUCs In The Permian Continue To Build -- July 15, 2019

Someone else (Z4 Research, in this case) is following the number of DUCs also. From earlier this afternoon (July 15, 2019):
Permian growth is expected to be 34,000 bopd above July (last month July was to be up 55,000). Meanwhile Permian DUCs continued to build through June (latest data) at about the same rate they have been (up 42 this month) while overall oil shale play DUCs fell 41 in June.
Tag: DUCs.

Bakken DUCs are tracked here. The May, 2019, data (Director's Cut) will be released tomorrow.

Let Me Go My Merry Way, Charlie Rich

It's hard to believe this song was actually written by Charlie Rich -- it sounds like a much older song, a folk song from the Deep South, from a different era. Or perhaps taken from an old spiritual. I don't know. But it sounds eerily familiar.

Later, a day or so later: this song was driving me nuts. I knew I had heard it somewhere before .... a reader sent me a suggestion ...

It took awhile but I finally connected the dots. This song was driving me nuts. I knew I had heard it before.

This is the song that drove me nuts:


A reader suggested:


which was close, of the same genre, but it wasn't it.

Then, after listening to the song that was driving me nuts, listening to it over and over, I realized with each re-listening I was only a few neurons from making the connection.

Finally, I got it. I found the song. After a dozen times playing a few bars during the middle of the song, I realized I had heard the song before.

But where?

Finally, another several times listening to the song, and then it came to me, a .... movie ... a movie .. a Disney movie perhaps?

And the the last neuron connected. I had the song. You may or may not agree, but the tune, the male voice, even the message of the lyrics -- it all fit ..

... you can listen to the Charlie Rich song a few times, ...
... and then listen to Randy Newman's "You Got A Friend In Me" from Toy Story 1
It doesn't matter whether you agree with me that the two songs sound alike but for me the mystery is solved. I can go to bed tonight without this song driving me nuts. 

Agriculture -- Part 5, July 15, 2019

Updates

August 16, 2019: 2Q19 earnings -- 
  • net income of $867M in the fiscal third quarter, or $2.71 per share, compared with $$849M, or $2.59 per share a year ago
  • worldwide net sales decreased 3% Y/Y to $10B
  • segment sales: 
    • equipment -3%; 
    • agriculture & Turf. -6%;
    • construction & Forestry +1%. 
  • "Results reflected the high degree of uncertainty that continues to overshadow the agricultural sector," CEO Samuel Allen declared. "Concerns about export-market access, near-term demand for commodities such as soybeans, and overall crop conditions, have caused many farmers to postpone major equipment purchases." 
  • lowered outlook again: net sales are now projected to increase by about 4% (from a prior 5% and 7%) for fiscal 2019, with net income attributable to the company forecast to be about $3.2B (from a previous $3.3B and $3.6B).
Original Post
 
Wow, wow, wow, earlier today I posted this:
Look at this, DE: trading near its 52-week high, is up over 1% in early morning trading

Which reminds me, the China-US tariff tiff --

  • when did you last see an article on how expensive stuff is getting because of the China-US tariff war; you haven't; because it hasn't happened; 
  • generally speaking Deere's prospects can be directly correlated with how farmers are doing, or how analysts think farmers will do 
    • April 15, 2019:  170
    • May 13 2019: 135
    • July 15, 2019: 167
  • behind the scenes, my hunch is that Trump-Xi are making a lot of US agricultural deals
  • corn prices are going to come in really high later this year
  • if I recall correctly, Trump administration blinked on biofuel quotas (but don't quote me on that)
  • and, headline over at Yahoo!Finance: China's economy grows at slowest pace since 1990s (this could spur China to get serious about negotiating with Trump
Disclaimer: this is not an investment site. Do not make any investment, job, career, travel, relationship, or financial decisions based on what you read here or think you may have read here.

So, this morning I write this long note about Deere. Now tonight I notice that Tractor Supply Company (TSCO) is up over 3% in overnight futures. Checking a bit deeper it turns out that Tractor Supply came very close to hitting a 52-week high today, an intra-day high of $113.14, vs a 52-week high of $113.54. And now tonight, trading 3% higher, trading at $115.00. Very, very interesting. First Deere, then Tractor Supply. Dare we look at any others? Not tonight.

Notes From All Over -- Part 4, July 15, 2019

ICYMI: the NDIC Director's Cut (May, 2019, production data) was delayed; it is now scheduled to be released tomorrow. The Bakken Expo in Bismarck opens tomorrow, I believe. My hunch is that officials may want to use the most recent production data in their remarks. Look for at least one production record to have been broken in May, 2019. Wow, I love to blog about the Bakken.

The Bakken Expo: after opening remarks by the event organizers, Governor Brent Sanford of North Dakota will speak for 30 minutes. 

Disclaimer: I am inappropriately exuberant about the Bakken. 

NDIC:I've often said North Dakota / NDIC seems to be the most transparent regulator in the country. Regardless of what you think about California politics and its policies regarding Big Oil, the actual "transparency" of its regulatory commission is incredibly bad -- or the governor is incredibly inept.

The Desert Sun (USA Today network) reported that fracking permits in California have doubled  since the new governor entered office and he was completely unaware of that. With everything on his plate, I wouldn't expect the governor himself to track oil permits but certainly he would have a staffer that would check in on that at least once a month. Good grief. So, either it's extremely difficult to track oil and gas permits in California or the governor is incredibly inept. Whatever. This note has little to do with California and everything to do with appreciating how transparent and the NDIC is and how user-friendly its sites are.

CO2: China greenhouse gas emissions soared 50% from 2005 - 2014, inclusive. But Germany is doing its part to combat that by going coal-free.

Boeing: there was another article out today about Boeing / MAX 737 -- things not looking good and the extent to which Boeing is holding back the Dow. Having said that, all three indices apparently set new records today. Making America great.

They're reading the blog: earlier today, in a minor note, I noted that no one has talked higher consumer prices due to Trump tariffs on Chinese goods. There was lots of talk about that happening but to date there have been few examples. Well, today, over at Yahoo!Finance, they have story pushed by the AAFA CEO that Amerians will see higher prices this fall when they shop for back-to-school clothes. We'll see. If states are worried about possible high cost of clothing this fall due to tariffs, the states could declare tax-free "back-to-school" shopping for a few weekends. Texas does that every autumn: offsets any price increases and gets folks out to the malls. As for seeing increased prices due to tariffs, I doubt it. Trump/Xi agreed to suspend any new tariffs while negotiations continue.

USAA - Schwab: Schwab in talks to buy USAA's wealth management division for $2 billion. We just talked about this the other day. USAA has roughly $100 billion in wealth management assets. If Schwab pulls this off, this is a huge story. Schwab already has more than $3.5 trillion in client assets. To put that in context, Merrill Edge was reported to have a paltry $200 billion under management back in the fall of 2018. Schwab acquiring USAA wealth management division would be in the same ballpark as acquiring Merrill Lynch.

MRO With Three New Permits In The Very Prolific Bailey Oil Field -- July 15, 2019

Active rigs:

$59.317/15/201907/15/201807/15/201707/15/201607/15/2015
Active Rigs5867582973

Three new permits (#36735 - #36737, inclusive):
  • Operator: MRO
  • Field: Bailey (Dunn County)
  • Comments: MRO has permits for a 3-well Ritter/Emil/Kloster pad in section 12=146-94, Bailey oil field; as active as the Bailey oil field is, this section only has three horizontals running through it, including a section (line) well:
    • #33535, 6.204, MRO, Arkin 44-12TFH, Bailey, 4 sections, t1/18; cum 330K 5/19; see production profile below, pay particular attention to first 21 days of production;
    • #16993, 125, MRO, Buehner 44-12, Bailey, t10/08; cum 226K 5/19; came off line in 5/19; was taken off line when #33535 was fracked; had significant jump in production when it was brought back on line 5/18; see production profile below;
    • 16654, 311, MRO, Buehner 34-12H, Bailey, t8/07; cum 191K 5/19; lousy production since 2018; off line first four months of 2019; back on line for 9 days in 5/19;
Twelve permits renewed
  • Crescent Point Energy (4): four CPEUSC Jean permits, all in Williams County
  • Enerplus (2): a Huntsman permit and a Blackwidow permit, both in Dunn County
  • BR (2): two Remington permits, both in McKenzie County
  • Texakota: a Hemsing permit in Williams County
  • CLR: a Juneau permit in Williams County
  • Liberty Resources: a Herseth permit in Burke County
  • EOG: a Burke permit in Mountrail County
 *******************************************

#16993, selected production when neighboring well was fracked/tested 1/18:
BAKKEN7-20183160285937362035982266798
BAKKEN6-201830578256524868442829101005
BAKKEN5-2018131971180933041513603674
BAKKEN4-2018002220000
BAKKEN3-20180000000
BAKKEN2-20180000000
BAKKEN1-20180000000
BAKKEN12-20171520344037
BAKKEN11-2017144354865839627417
BAKKEN10-201731859909250120186861
BAKKEN9-201730845794150837214420
BAKKEN8-201731865871110792315288
BAKKEN7-201731845814124804439181

#33535:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN5-20193175097428107709053836658
BAKKEN4-20193062516188763384647619312
BAKKEN3-201930575563156337839860871825
BAKKEN2-201928109841066275401236598731639
BAKKEN1-20193114808146061016918010168080
BAKKEN12-201811509051364386393735320
BAKKEN11-20182681778220812612845121540
BAKKEN10-20183113470134431004918987179270
BAKKEN9-2018301340213563109561721015992169
BAKKEN8-20183117882177711321221963189321546
BAKKEN7-20183120109201091775324387209571811
BAKKEN6-2018302487724753206822298420948180
BAKKEN5-20183124053240962185624700210801853
BAKKEN4-20183031906320232964930733255781489
BAKKEN3-20182529123290222561224033185032172
BAKKEN2-20181735695361703535523990126537313
BAKKEN1-201821611866046217719382181429117169

Headline Not Particularly Helpful -- July 15, 2019

Updates

July 20, 2019: a breath of fresh air. After the misleading headline and poor writing regarding a recent "pipeline leak/spill" (see original post), The Bismarck Tribune did a thousand-percent better with report of a second, similar leak, again east of Williston. Story here. Marked improvements:
  • headline clearly states it was "produced water," not oil
  • the lede provides very good description of location in general (3 miles southwest of Epping, and specifically (pastureland)
  • in the lede includes owner of the pipeline
  • leads with amount of leak in barrels (which we like but is not the industry standard) and then provides the industry standard (in gallons)
  • really, really good reporting with perfect headline
Original Post
 
The Bismarck Tribune has a headline today: "Williams County pipeline leak spills into Missouri River tributary." Two things the headline conveniently left out:
  • it was a "produced water" pipeline, not an oil pipeline (but yes, produced water probably has some oil in it)
  • the name of the tributary (all we got was "about 20 miles east of Williston; in this day and age, someone would have the exact GPS coordinates)
It appears the leak occurred "on/in" the ground and then an unknown amount of the produced water made its way to a tributary of the Missouri River; this is much different than a pipeline transiting (above, below, or through a waterway).

I'm glad these stories still make headlines: it tells me such spills are incredibly rare, to still get a headline above the fold on the front page.

This particular pipeline was owned by a midstream company involved in wastewater disposal; it was reported the same day it happened; and, regulators are already in place to observe the clean-up and mitigation.

My hunch: it will be a non-story by tomorrow, and we will be fortunate to get some type of follow-up through the Tribune

May, 2019, Production Data -- Director's Cut

Updates

May, 2019, data:

Original Post

Director's cut, May, 2019, data, is scheduled to be released later tomorrow, Tuesday. The schedule changed; see first comment.

Crude oil production:
  • May, 2019 (preliminary):
  • April, 2019 (final):
  • January, 2019, all-time high: 1,403,808 bopd
Delta, crude oil:
  • May, 2019 (preliminary):
  • April, 2019 (final):
  • delta, month-over-month, bbls:
  • delta, month-over-month, percent:
Natural gas production:
  • May, 2019 (preliminary):
  • April, 2019 (final):
BOE:
  • April, 2019 (final), likely an all-time high:
  • May, 2019 (preliminary):
Producing wells:
  • May, 2019:
  • April, 2019: 15,490 (preliminary, new all-time high)
  • March, 2019: 15,353 -- well below the all-time high of 15,409 in January, 2019
  • February, 2019: 15,154
  • January, 2019: 15,409
 Permitting:
  • June:
  • May; 140
  • April: 129
  • March: 133 
  • February: 109

Chinese Crude Oil Refining Hits An All-Time Record -- July 15, 2019

See this note, about coal. And the graphic at this note, world electricity generation by fuel.

Now this, from Reuters: China -- June, 2019 -- crude oil throughput rises to record on new plants.
  • year-over-year, up almost 8%;
  • China's crude oil throughput at a record high last month (June, 2019); and, 
  • it's being reported day in and day out that the Chinese economy is slowing. Okay.
[To compare, US data at this EIA site:
  • it looks like the US might have hit an all-time high of 17.981 million b/d one year ago, August, 2018
  • most recent data: first week, July, 2019: 17.438 million b/d]
But let's see if you can guess most recent crude processing volumes for China as reported in that linked Reuters story:
  • 3 million b/d
  • 13 million b/d
  • 23 million b/d
  • 35 million b/d
Whatever the number is/was, the rates:
  • were supported by the start-up of two major new refineries
  • both at 400,000-bpd
I don't know about others, but an increase in crude oil refining by almost 8% year-over-year for an economy like China is not trivial.

By the way, China's crude oil imports increased by 15% year-over-year, also .

China: helping make America great. 

Stop These Things -- UK -- July 15, 2019

From "Stop These Things":
The cost of Britain’s ‘green’ energy policies is staggering: power prices have surged and the worst is yet to come.
Notwithstanding efforts from those in on the greatest scam of all time, the facts can’t be concealed: Britain’s heavily subsidised and chaotically intermittent wind power fleet is responsible for power prices increasing at double-digit rates, as John Constable notes at the link above.
Old story? Hardly. Dated January 16, 2019 -- earlier this year.

Scotland hits wind record.

Huge Thanks To Z4 For The Alert; Merger In The Permian -- July 15, 2019

From Rigzone, July 15, 2019, another Permian merger:
  • Callon Petroleum to acquire Carrizo Oil & Gas
  • all-stock transaction
  • $3.2 billion
  • 200,000 net acres in the Permian Basin and Eagle Ford shale
  • more than 90,000 net acres in the Delaware Basin
  • 2,500 total gross horizontal locations
Net acres valued at $16,000/acre (of course, this includes current production).

From the archives, JAG:
  • 75,000 net acres
  • x $16,000/acre = $1.2 billion
  • JAG's market cap today: $1.826 billion
  • or, $1.83 billion / 75,000 = $24,000/net acre
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, career, or relationship decisions based on what you read here or what you think you might have read here. 

NOG (link here):
  • 170,000 net acres (?)
  • market cap today: $735 million 
  • $4,000 / net acre

Notes From All Over -- Part 3, July 15, 2019 -- Williston Airport, Halliburton, Rig Counts

Rig counts: the Permian led the US in rig count decline last week. Link here for those interested.
  • almost a 1,000 active rigs in the US
  • about 500 rigs in Texas
  • 60 rigs in North Dakota: #2 producer in the US with 6% of all active rigs in the US
  • about 30 rigs in McKenzie County, the #1 producing county in the US; about 3% of all rigs in the US
  • doing more with less
EIA dashboards:
Enplanements, Williston airport
Wow, this is amazing. I did not see this coming --
  • Halliburton celebrated its 100th anniversary
  • but get this: Halliburton opened its new home in the old Baker Hughes facility -- HalWest
  • Halliburton built a "much larger cement plant" at HalWest
  • from the Halliburton website:
Cement: In 1922, Halliburton quickly became the leading authority on cementing with the patented jet mixer, and its book of cementing tables remains the industry standard today. Over the past century, Halliburton has continued to pioneer cementing innovations, from equipment to slurry design to 3D modeling and predictive analysis. Today, Halliburton has more than one hundred cement labs around the world, providing fast and local tailoring to customer needs. And even as Halliburton has added other capabilities to its portfolio, cementing remains at the heart of its operations.
    Hydraulic fracking: Although Erle P. Halliburton started his company with a revolutionary cementing process, it was the foray into hydraulic fracturing that transformed his company into a global oilfield services leader. In 1949, Halliburton performed its first commercial hydraulic fracturing job on an oil well 12 miles east of Duncan, Oklahoma. Today, the Halliburton Production Enhancement product service line has the biggest global presence among the Company’s fourteen product service lines. In 2012, Halliburton introduced Frac of the Future, a new approach to fracturing that, in addition to providing improved productivity and efficiency for operators, addressed health, safety, and environmental concerns. Utilizing advances in pumping design, sand delivery, and pump monitoring, Halliburton sought to reduce each job’s footprint, emissions, and risks to personal safety and the environment.

Notes From All Over -- Part 2, July 15, 2019

Not so fast. Remember all that talk back in 2014, 2015, 2016, 2017, and 2018 -- that there was going to be a really big decline in oil production because the majors were delaying, deferring, or downright exiting deep ocean drilling. Pundits suggested that the emphasis on shale was going to turn out badly.

So, where are we today? It turns out that global oil supply in the first half of 2019 exceeded demand by almost one million bopd. Think about that: oil supply exceeded demand by almost 200 million bbls in 1Q19 which represents ... two days of global demand. Earlier it had been estimated that global supply would exceed demand by only 0.5 million bopd, about a day's worth of demand over six months.

Now this, from the Rigzone staff -- oil and gas discoveries in 2019 (so far) see a 35% increase.

Wow. Two words: peak oil.

Oil and gas discoveries in 2019 see a 35% increase.

This is not production from current plays. This is discovery.

Remember all that talk back in 2014, 2015, 2016, 2017, and 2018 -- that there was going to be a really decline in oil production because the majors were delaying, deferring, or downright exiting deep ocean drilling. Pundits suggested that the emphasis on shale was going to turn out badly.

Discoveries in 2019 have resulted in a 35% increase in "new" oil and gas:
  • in the first half of 2019 alone, the world has uncovered almost 7 billion boe 
  • deepwater is leading the way
  • most of this is in the form of gas discoveries
  • participants: Russia, Guyana, Cyprus, South Africa, and Malaysia
  • high-risk frontier plays in deepwater are back on the map for explorers
  • 30 of the 56 identified global conventional discoveries in 2019 have been located offshore 
    • rounded: 30 is half of 60
By the way, the IEA now suggests there might be a decline in oil production in the next few months, but we will see a new flood of production in 2020. The headline said a "huge glut of oil will be seen in 2020.

Peak oil? Hardly.

Barry: everything I've read / watched on television's WeatherChannel suggests tropical storm was a non-story. It was even a stretch to call it a hurricane. It was upgraded to a hurricane for a few minutes before it hit landfall; when it hit landfall, it was back to a tropical storm/tropical depression. We'll see this week how quickly they recover.

Notes From All Over -- Part 1, July 15, 2019

Permian update: From The Washington Post via The Grand Forks Herald  today -- things are slowing down in the Bakken. Lots could be said but I think regular readers of the blog and those who have some familiarity with the shale revolution probably have their own thoughts on this.

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

US equity futures: right now, it looks like we could have another record-setting day:
  • WTI: up very slightly
  • S &P 500 futures: up about 6 points, about 21 points above 3,000
  • Dow: up almost 60 points, about 368 points above 27,000
  • NASDAQ: up 17 points; within 23 points of hitting 8,000 
In early-market trading (I'm surprised by all the pre-open trading)
  • NOG (surprising; usually these little guys don't trade this early): up 1%
  • CVX: green but flat
  • COP: ditto
  • OXY: climbing the wall of worry; up 1/4%
  • XLNX: almost a percent
  • TSLA: up over 1%
  • F: down about 1/3%
Look at this, DE: trading near its 52-week high, is up over 1% in early morning trading

Which reminds me, the China-US tariff tiff --
  • when did you last see an article on how expensive stuff is getting because of the China-US tariff war; you haven't; because it hasn't happened; 
  • generally speaking Deere's prospects can be directly correlated with how farmers are doing, or how analysts think farmers will do 
    • April 15, 2019:  170
    • May 13 2019: 135
    • July 15, 2019: 167
  • behind the scenes, my hunch is that Trump-Xi are making a lot of US agricultural deals
  • corn prices are going to come in really high later this year
  • if I recall correctly, Trump administration blinked on biofuel quotas (but don't quote me on that)
  • and, headline over at Yahoo!Finance: China's economy grows at slowest pace since 1990s (this could spur China to get serious about negotiating with Trump
So, where were we?
  • T: up a bit
Oh, look at this: over the weekend, we were told to watch "the banks" today; they are reporting and the whisper numbers suggested some good news and here's the first bit of good news -- "Citi kicks off earnings season with better-than-expected results

There was a headline, by the way, that earnings were really going to suck this quarter, but, it was the time to buy --


Yes, the market looks about six months out on slow news days.

Seven Wells Coming Off Confidential List -- July 15, 2019

Director's cut, May, 2019, data, is scheduled to be released later today. The April, 2019, data was posted here. The number I will be watching: crude oil production --
  • all-time high, January, 2019: 1,403,808 bopd
  • April, 2019, preliminary crude oil production: 1,390,138 bopd
  • projected final crude oil production number for last month: 1,392,810 (if so it was an increase in production month-over-month (April over March, 2019)
Wells coming off the confidential list today, over the weekend -- Monday, July 15, 2019: 22 for the month; 22 for the quarter;
  • 35525, SI/NC, MRO, Hayes 14-31H, Killdeer,
  • 34354, 2,485, CLR, Hawkinson 16-22HSL 1, First Bench Three Forks, 37 stages; 16 million lbs, Oakdale, t2/19; cum 94K in less than 3 months;
  • 34352, 2,698, CLR, Morris 5-23H2, Second Bench Three Forks, 41 stages, 11.3 million lbs; Oakdale, t4/19; cum 85K in 28 days;

Sunday, July 14, 2019: 19 for the month; 19 for the quarter;
  • 35526, SI/NC, MRO, Gwen 44-36TFH, Killdeer,
  • 31805, SI/NC, EOG, Riverview 25-3031H, Clarks Creek,
Saturday, July 13, 2019: 17 for the month; 17 for the quarter;
  • 35081, 3,556, CLR, Carson Peak 8-35H2, Second Bench Three Forks, 52 stages; 14.2 million lbs; Oakdale, t5/19; cum 116K in 46 days;
  • 31806, SI/NC, EOG, Riverview 24-3031H, Clarks Creek,
The EOG Riverview wells in Clarks Creek are tracked here, but have not been updated in the past few months.

Active rigs:


7/15/201907/15/201807/15/201707/15/201607/15/2015
Active Rigs5667582973

RBN Energy: where US exports of butane and natural gasoline end up.
When it comes to U.S. NGL exports, propane and ethane grab most of the attention. Each accounts for a big share of the typical NGL barrel, and ethane exports are a frequent topic of conversation because of the potential for growth — especially if the U.S. and China find a way to end their trade war. But three other so-called NGL “purity products” — normal butane, isobutane and natural gasoline — are being exported in increasing volumes too, providing important supplemental revenue to NGL producers and marketers. What’s their story? Today, we look at the export volumes and destinations of three often overlooked purity products.
Propane and ethane are the BeyoncĂ© and Jay-Z of NGL purity products — they’re always in the spotlight — while normal butane, isobutane and natural gasoline are backup singers, almost always in the shadowy background. No matter the NGL, though, the name of the game nowadays is exports — thanks to the Shale Revolution, the U.S. produces far more purity products than it consumes, and exports (whether by pipeline or ship) are needed to keep markets in balance. 
Propane export volumes have risen from less than 100 Mb/d 10 years ago to ~1 MMb/d in recent months (and to nearly 1.2 MMb/d in June 2019. We also said that further gains in propane exports are likely into the 2020s as U.S. NGL output continues to rise and domestic demand for propane remains close to flat on an annual basis. Last month we looked at ethane exports (first by pipeline to Canada, and later by ship to other countries), which rose from next to nothing in 2014 to an average of more than 260 Mb/d in the first four months of 2019. Ethane, like Jay-Z (rapper, entrepreneur, recording executive), is in a category of its own, in that it can be “rejected” into natural gas for its Btu content and otherwise has only niche markets in the U.S. and overseas — namely, as a feedstock for steam crackers.