Wednesday, October 30, 2019

Gasoline Demand Spikes -- Might This Have Something To Do With Price? -- October 30, 2019

Updates

October 31, 2019: I completely missed this. But a reader caught it. The reader points out, and I agree, the gasoline demand is due to a) low price; and, b) full employment (maybe not in that order). Much appreciated. See first comment.

Original Post 

In the DFW (north Texas) area, Gas Buddy shows regular unleaded gasoline easily found at $2.10/gallon. In fact, earlier in the week three neighborhood service stations advertised regular unleaded gasoline for $2.08/gallon. It appears the most common price for this gasoline is $2.19/gallon. In Long Beach, CA, the same grade of gasoline appears to be running about $3.69/gallon.

Link here.


If I was allowed only one metric to track / "evaluate" the US economy, it would be gasoline demand.  I have said that many times.

See this link: Through July of this year (2019), the all-time high was last June, 2018, at 9.797 million bbls, followed by August, 2018, of 9.778 million bbls per day. I assume that record could be eclipsed when the August, 2019, data is released.

However, until that data is released, it should be noted that for the most recent week for which data is available (week ending 10/25/19), gasoline demand was 9.784 million bbls per day, which eclipses the August, 2018, data, and is very close to the record set in June, 2018.

Yes, I notice that the data above is a four -week average where the link with monthly data is a monthly average -- slightly different ways of measuring the demand. Be that as it may.

The second point, and this is comparing apples to apples, the rate of growth in gasoline demand in the last few weeks it significantly greater than the rate of growth one year ago.

All things being equal, the recent spurt in gasoline demand is quite remarkable.

This is not the type of graph I would associate with "recession is right around the corner."

Active Rigs In North Dakota Back To 60; Twelve DUCs Reported As Being Completed -- October 30, 2019

Active rigs:


$55.0610/30/201910/30/201810/30/201710/30/201610/30/2015
Active Rigs6068523470

No new permits today.

Twelve producing wells (DUCs) reported as completed:
  • 33688, 304, Crescent Point Energy, CPEUSC Berner 2-19-18-157N-99W, Lone Tree Lake, t10/19; cum --;
  • 33684, 368, Crescent Point Energy, CPEUSC Berner 3-19-18-157N-99W, Lone Tree Lake, t10/19; cum --;
  • 33682, 63 (no typo), Crescent Point Energy, CPEUSC Berner 7-19-18-157N-99W, Lone Tree Lake, t10/19; cum --;
  • 33687, 311, Crescent Point Energy, CPEUSC Nelson 2-30-31-157N-99W, Lone Tree Lake, t10/19; cum --;
  • 33683, 378, Crescent Point Energy, CPEUSC Nelson 3-30-31-157N-99W, Lone Tree Lake, t10/19; cum --;
  • 33685, 374, Crescent Point Energy, CPEUSC Nelson 6-30-31-157N-99W, Lone Tree Lake, t10/19; cum --;
  • 33681, 49 (no typo), Crescent Point Energy, CPEUSC Nelson 7-30-31-157N-99W, Lone Tree Lake, t10/19; cum --;
  • 35418, 567, Kraken, Dragseth 9-4 3H, Winner, t9/19; cum --;
  • 35417, 648, Kraken, Dragseth 9-4 4H, Winner, t9/19; cum --;
  • 35429, 590, Kraken, Knox 16-21 2TFH, Winner, t9/19; cum --;
  • 35428, 723, Kraken, Knox 16-21 3H, Winner, t9/19; cum --;
  • 34563, 1,065, Abraxas, Ravin 9H, North Fork, t5/19; cum 106K 9/19;

CLR

CLR web page here

As of October 30, 2019 (3Q19 earnings) CLR will be tracked here.

3Q19 earnings presentation here

3Q19: From the press release:
  • $158.2 million in net income in 3Q19, or $0.43 per diluted share
  • $199.4 million adjusted net income in 3Q19, or $0.54 per diluted share (non-GAAP)
  • 198,074 average daily 3Q19 oil production up 20% over 3Q18
  • 332,315 boepd average daily 3Q19 production up 12% over 3Q18
  • Bakken: 145,436 average daily 3Q19 oil production up 13% over 3Q18
  • 57 gross operated wells deliver 2,313 boepd average/well initial rate
  • South: 44,854 average daily 3Q19 oil production up 62% over 3Q18
  • SpringBoard exceeded 3Q19 target by 31%: 23,641 bopd; 4Q19 target raised to ~24,000 Bopd
  • CLR STACK: two, 7-well oil units deliver exceptional results: 38,320 bopd combined initial rate
  • $187 million of share repurchases executed through October 29, 2019
  • quarterly dividend of $0.05 per share in November 2019
Continental Resources (CLR) -- brought forward from "Bakken operators."
  • CY18 and 4Q18 results; full year income at $1 billion;  4Q18 Bakken production: 186,934 bopd; 183,836 boepd; 2018 was "break out year" for debt reduction; cash build;
  • 3Q18 results; Bakken production, 167,643 boepd; added two rigs to the Bakken; now with eight; many records set; earnings beat expectations; presenation;
  • 2Q18 presentation: step change in well performance across the Bakken
  • May, 2018, presentation: 796,000 net acres in the Bakken; 161K boepd, up 48% over 1Q17; 1,100 mboe EUR type curves ($7.9 million) vs 980 mboe EUR type curves in 2017; see SeekingAlpha article;
  • March, 2018: 1.1 million-bbl EUR type curves; 
  • August, 2017: 806,000 net acres in the Bakken; 1.1 million boe EURs
  • CLR transfers 67 wells to Kraken Operating, October 27, 2016
  • August, 2016: sells 80,000 non-core Bakken assets; $222 million;
  • 2Q16 corporate presentation;
  • 1Q16 corporate presentation
  • 2015 corporate presentation: CAPEX cut 41% due to oil price slump
  • 2014 analyst day: 1,197,884 net acres (892,824 ND; 305,060 MT); 109,000 boepd; 8 wells in each MB and TF1, 4 wells in TF2; enhanced completion --> 25% uplift in EUR; long-stroke pumping units;
  • 2Q14:  ND Bakken - 95K boepd; MT Bakken - 14K;
  • 22 rigs beginning of 2013 in the Bakken; will reduce to 20 rigs due to efficiencies
  • Well cost: $8.3 million; goal - $8.2 million by year-end 2013
  • 1Q13: net Bakken production: 76,900 boepd; gross >100,000 boepd; 1.2 million acres;
  •  785 million boe proved reserves year-end 2012; 54% increase YOY
  • 2Q12: average production of 94,852 boepd
  • 4Q11: 901,098 net acres
  • 4Q11 production: 75,219 boepd
  • 2009 production: 14,000 boepd
  • EUR: 603K boe per well 

Keystone Pipeline (Not Keystone XL) With Leak In Northeastern ND -- Extent Unknown -- October 30, 2019

Link here.
  • current leak near Edinburg, ND, Walsh County; discovered Tuesday, October 29, 2019
    • when discovered, flow turned off
  • Edinburg: about 45 miles northwest of Grand Forks, ND
  • this was the pipeline that was built in 2010
  • goes through seven US states
  • carries Canadian heavy oil from western Canada
  • extent of leak unknown; should know more Thursday, October 31, 2019
  • it has experienced spills in the past
    • 2011: 14,000 gallons (350 bbls) leak in southeastern ND, near the South Dakota border
    • 2017: 210,000 gallons (5,000 bbls) leak in northeastern SD, near the ND border

CLR 3Q19 Earnings -- October 30, 2019

From the press release:
  • $158.2 million in net income in 3Q19, or $0.43 per diluted share
  • $199.4 million adjusted net income in 3Q19, or $0.54 per diluted share (non-GAAP)
  • 198,074 average daily 3Q19 oil production up 20% over 3Q18
  • 332,315 boepd average daily 3Q19 production up 12% over 3Q18
  • Bakken: 145,436 average daily 3Q19 oil production up 13% over 3Q18
  • 57 gross operated wells deliver 2,313 boepd average/well initial rate
  • South: 44,854 average daily 3Q19 oil production up 62% over 3Q18
  • SpringBoard exceeded 3Q19 target by 31%: 23,641 bopd; 4Q19 target raised to ~24,000 Bopd
  • CLR STACK: two, 7-well oil units deliver exceptional results: 38,320 bopd combined initial rate
  • $187 million of share repurchases executed through October 29, 2019
  • quarterly dividend of $0.05 per share in November 2019
Note, repeating:
  • CLR STACK: two, 7-well oil units deliver exceptional results: 38,320 bopd combined initial rate

Random Update Of An Old Bakken Well In Squaw Creek; No Evidence Of A Re-Frack -- October 30, 2019

Until recently, I had not seen FracFocus with frack data before 2012 (in the Bakken). That doesn't mean FracFocus did not have such data or that wells were not fracked before 2012 (obviously not the case), it simply means I had not see FracFocus data for Bakken wells fracked before and during 2012; I had looked at a lot of those wells that were drilled / completed before and during 2012.

Today, I see that FracFocus has the data for a well that was fracked in late 2011, a one-day frack on December 30, 2011, and tested on January 4, 2012. FracFocus shows 2.1 million gallons of water, 82% by mass; sand, about 6.5% by mass. Neither FracFocus nor NDIC suggests this well was ever refracked.

The well
  • 20238, 180, WPX, Spotted Horn 26-35H, 30 stages; 3.3 million lbs; Squaw Creek, t1/12; cum 216K 8/19;
Recent production:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN8-20192713035130061705818341165013220
BAKKEN7-20190000000
BAKKEN6-2019205561539019246782442992554
BAKKEN5-20191300042039
BAKKEN4-20196252470385692438100
BAKKEN3-201912411421157579148216
BAKKEN2-20192881783525018667140
BAKKEN1-20193112581223420210112480
BAKKEN12-20183113901481394218212550

If the "average" production just prior to 8/19 can be taken to be about 1,500 bbls/month, then the jump in production to 14,483 bbls (normalized to 30 days), then we have a 10-fold increase in production.

This well had been previously identified/listed as a well of interest but that frack data had not been posted until now. 

US Crude Oil Inventories Surge; Notes From All Over, Part 3 -- October 30, 2019

EIA: weekly crude oil inventories (remember, API: small build, less than a million bbls, reported yesterday):
  • weekly change:  increased by a whopping 5.7 million bbls
    • WTI: drops a percent; now under $55
    • OPEC basket: drops about a percent; $61 and change
    • break-even for Saudi Arabia: $86.50 (link here; IMF)
  • US crude oil inventories: at 438.9 million bbls, now 1% above the five-year average
  • analysts: probably just a timing thing, a mismatch with export dates; not to worry
  • refiners: operating at 87.7% capacity; perhaps a bit better than last few weeks but incredibly low
    • MPC: largest US refiner -- down 2.3%; down $1.56
  • jet fuel? elites flying more than ever -- atmospheric CO2? what atmospheric CO2? -- jet fuel supplied was up 9.6% compared with same four-week period last year 
    • sadly, the grounding of 737 MAX isn't helping; much more fuel efficient; and so it goes
*******************************
Re-Balancing

Week
Week Ending
Change
Million Bbls Storage
Week 0
November 21, 2018
4.9
446.9
Week 1
November 28, 2018
3.6
450.5
Week 2
December 6, 2018
-7.3
443.2
Week 3
December 12, 2018
-1.2
442.0
Week 4
December 19, 2018
-0.5
441.5
Week 5
December 28, 2018
0.0
441.4
Week 6
January 4, 2019
0.0
441.4
Week 7
January 9, 2019
-1.7
439.7
Week 29
June 12, 2019
2.2
485.5
Week 38
August 14, 2019
1.6
440.5
Week 39
August 21, 2019
-2.7
437.8
Week 40
August 28, 2019
-10.0
427.8
Week 41
September 5, 2019
-4.8
423.0
Week 42
September 11, 2019
-6.9
416.1
Week 43
September 18, 2019
1.1
417.1
Week 44
September 26, 2019
2.4
419.5
Week 45
October 2, 2019
3.1
422.6
Week 46
October 9, 2019
2.9
425.6
Week 47
October 17, 2019
9.3
434.9
Week 48
October 23, 2019
-1.7
433.2
Week 49
October 30, 2019
5.7
438.9

***********************************
Miscellaneous

Jeffrey: homicide? Well, duh.

FDR: considered one of the best presidents ever; under whose watch did "Pearl Harbor" occur? Remained neutral until that attack. Neutral? With all that was going on in Europe? Just thinking out loud. 

Trump: gets almost the entire Mideast to join the US in sanctions on Iran. Timing is interesting. Baghdadi's dead. Haven't heard much out of North Korea lately. Just thinking out loud.

The market:

Notes From All Over, Part 2 -- October 30, 2019

PCG: in pre-market trading, PCG is up almost 20%, up almost a buck on a $5-stock.

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

APPL: reports after the market closes today.

Dow futures: climbing the wall of worry; counting on a Fed rate cut today. Consensus: 90% of analysts, "they" say, expect a cut in the "Fed's" interest rate. Before the market opens:
  • BA: after a huge day yesterday -- up over 2%; gained $8.05 -- this was the day the BA CEO testified before Congress; does one get the feeling that appearing before Congress is no big deal; Facebook did just fine after its CEO testified; now BA did just fine after its CEO testified
  • GE (not part of the Dow), one of the movers today -- up over 7% in pre-market trading; there must be a whole ecosystem of traders that do nothing but bottom feet -- if so, must be making a killing 
  • EW: looks like it hit an intra-day high yesterday
  • GNRC: after all the excitement, dropped back a bit yesterday
  • AMZN:
NASDAQ is up 13 points. At 8,067 -- see all-time highs below.
  • AAPL: after a 2.3% loss yesterday, up a bit today in pre-market trading; up $1.45
NASDAQ all-time highs:
  • closing: Friday, July 26, 2019 -- earlier this year -- 8,330.21
  • intraday: Friday, July 26, 2019 -- earlier this year -- 8,339.64 
Public school vacation in Chicago: continues. Into ten days; no end in sight?

Notes From All Over, Part 1 -- October 30, 2019

Tesla: one would think that the BYD story is very, very concerning for Tesla, which is pretty much focused on China. It's all about subsidies.

Tesla: filing shows US sales tumbled almost 40% in third quarter and yet their quarterly income was amazing. Something tells me analysts are poring over Tesla's most recent quarterly report. Things simply do not add up.
U.S. sales, which account for the biggest share of the company’s total revenue, fell to $3.13 billion from $5.13 billion a year earlier.
Sales in China rose 64% to $669 million and its other segment, which covers the rest of the globe, rose by more than a billion dollars to $1.83 billion.
“Musk & Co. are laser-focused on Europe and China for growth, while domestically, core demand is fading relative to other regions,” Wedbush analyst Dan Ives said, adding that U.S. growth will remain more challenging going forward.
In its earnings report earlier this month, Tesla reported a nearly 8% drop in total revenue to $6.30 billion, missing analysts’ average estimate of $6.33 billion.
Disclaimer: this is not an investment site.  Do not make any investment, financial, career, travel, job, or relationship decisions based on what you read here or think you may have read here.

Denver: more snow, record cold, winter storm warning in effect (winter won't officially be here for several more weeks).

North Dakota:



Idle Chatter, Petro-Hunt And The Charlson -- October 29, 2019

Disclaimer: I am inappropriately exuberant about the Bakken. In a long note like this, there will be factual and typographical errors. 

Of all the operators in the Bakken, Petro-Hunt seems to be off the radar scope.

Hold that thought.

There are a lot of great fields in the Bakken. It's impossible for me to come up with a top ten list. Some fields are hot for awhile, then activity slows down and another field becomes hot. Here are some of the fields that always get me excited:
  • Elm Tree
  • Banks
  • Grail
  • Stockyard Creek
  • Reunion Bay
  • Sanish
  • Parshall 
One field that doesn't get a lot of attention but is probably the most interesting. The Charlson. I've blogged about it several times. One of my better, longer posts on Petro-Hunt and the Charlson is at this link.

I was reminded of that when updating a 2560-acre drilling unit in the Charlson.

One of the wells:
  • 16452, 265, Petro-Hunt, USA 14D-4-1H, Charlson, single section, t10/07; cum 374K 8/19;
For newbies:
  • this well was drilled in the very first year of the Bakken boom, 2007
  • this well is now twelve years old
  • for such an old well, its cumulative production is mediocre at best -- but that's by today's standards; in 2007, EURs in the Bakken were pegged at 375,000 bbls; and guess what? that's exactly where this well is
  • but then this:
    • monthly production, after the dreaded Bakken decline, plateaued at around 3,000 bbls/month (which, by the way, is a nice well) 
    • last summer, the 11-year-old well was taken off line for three months to give it a breather (LOL)
    • when it came back on line, production jumped 17,000 bbls/month -- a 5-fold increase in production
  • but there's more: this was the production when this well was first drilled/completed:
BAKKEN2-20082926262633155350135010
BAKKEN1-20083131913198148417141710
BAKKEN12-20073040154051277563656360
BAKKEN11-20072750795120686653565350
BAKKEN10-200727752772981064926192610
BAKKEN9-200725645120000
BAKKEN8-20070000000
BAKKEN7-20070000000
BAKKEN6-20070000000
BAKKEN5-20070000000

The best this well did immediately after being completed, less than 8,000 bbls/month.

Then eleven years later, a jump in production from 3,000 bbls/month to 17,000 bbls/month.

Recent production:
BAKKEN1-201931843484153037788507885
BAKKEN12-20183110701106433439878208782
BAKKEN11-20183011206111863772815608156
BAKKEN10-20183111968120434857894908949
BAKKEN9-2018301435014365537310551010551
BAKKEN8-2018311743917616774412368012361
BAKKEN7-201812755272894030740807408
BAKKEN6-20180000000
BAKKEN5-20180000000
BAKKEN4-201819129413414751129911037
BAKKEN3-2018282503266689023401579761

From a sundry form dated November 26, 2007:
A 12 1/4" surface hole was drilled and 9 5/8" casing cemented without any problems.

An 8 3/4" hole was then drilled to 10,266' MD and 7" casing was ran and cemented.

A 6" hole was then drilled to 15,456' MD and a 4 1/2" liner set and cemented from 10,003' to 10,673' with the remainder of it left open hole. A coiled tubing motor was stuck and lost in the lateral at 10,640'.

When it -- the coiled tubing motor -- couldn't be recovered, a bridge plug was set at 9,953', a window cut in the casing, and a curve built to intersect the old lateral.

Even though the 2nd lateral was drilled in the same direction, it failed to intersect the first lateral. The second lateral was drilled to 14,570' MD and a 4 1/2" liner was ran and cemented from 9,610' to 10,675'.

The well was completed [sic -- drilled to depth] but would not flow so it was sand fractured. It was placed on rod pumping unit 11-21-2007.
Frack data at time of original completion, back in 2007:
  • open hole or perforated interval: 10,675' - 14,570'
  • 72,360 lbs mesh sand
  • 348,500 lbs mesh sand with 5,513 bbls of gelled water
IP: 265

(Some of the data below is a repeat from above.)

First twelve months production, May, 2007 - May 2008:
BAKKEN5-2008311397140370161816180
BAKKEN4-20082715971616333212321230
BAKKEN3-20082823712382211309330930
BAKKEN2-20082926262633155350135010
BAKKEN1-20083131913198148417141710
BAKKEN12-20073040154051277563656360
BAKKEN11-20072750795120686653565350
BAKKEN10-200727752772981064926192610
BAKKEN9-200725645120000
BAKKEN8-20070000000
BAKKEN7-20070000000
BAKKEN6-20070000000
BAKKEN5-20070000000

It was refracked from January 24, 2015, to January 26, 2015, according to FracFocus, with a very, very small completion: 1.3 million gallons of water; 88.9% water by mass; sand, 8.85% by mass. 

Plateaued to 2,000 bbls/month through most of its life; representative profile, July, 2016, to July, 2017:
BAKKEN7-20172525042194111316881557127
BAKKEN6-20171717511674190731692725347
BAKKEN5-2017144875444574263700
BAKKEN4-2017291712170813001936175610
BAKKEN3-20173125962620862300727910
BAKKEN2-20172826392639935295127560
BAKKEN1-2017202176217069221428321174
BAKKEN12-20163023502335623327403068
BAKKEN11-20163022602250687311202903
BAKKEN10-2016312498253289020161692108
BAKKEN9-2016121256116956710719870
BAKKEN8-20162420642097607218420170
BAKKEN7-20163128392879865289726810

It was taken off line for four months, summer of 2018, and this was the production when it came back on line; it was not re-fracked:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN8-201929252524522105625206252
BAKKEN7-20192641844264225112471012471
BAKKEN6-201930523553222648604106041
BAKKEN5-20193165616521201110508010508
BAKKEN4-201930655065132052599705955
BAKKEN3-201930679968022617677706568
BAKKEN2-201928741974932492648706341
BAKKEN1-201931843484153037788507885
BAKKEN12-20183110701106433439878208782
BAKKEN11-20183011206111863772815608156
BAKKEN10-20183111968120434857894908949
BAKKEN9-2018301435014365537310551010551
BAKKEN8-2018311743917616774412368012361
BAKKEN7-201812755272894030740807408

So, did you catch that. Petro-Hunt wasn't even going to frack this well. They drilled to depth. But the well would not flow. So, they pumped a bit of sand and a bit of water down the wellbore and they had a well.

There are some fields that seem particularly well-suited for re-fracks. The Charlson is one of them. Reunion Bay seems to be another.

By the way, look at this Petro-Hunt Charlson well, only three years old and trending toward one million bbls cumulative, and a very moderate frack:
  • 28016, 912, Petro-Hunt, USA 153-95-22D-15-1HS, middle Bakken, 37 stages; 4.7 million lbs, Charlson, t11/15; cum 721K 8/19; huge well; still at 8,000 bbls/month, 8/19;