Tuesday, December 17, 2019

A Bit More On The Reinstated Whiting Permit -- December 17, 2019

I often say the Bakken never ceases to amaze me. Well, here we go again. In today's daily activity report:
Most interesting: a Whiting permit reinstated --
  • #29504, an Oakland permit in section 29-151-103, McKenzie County
I didn't think about it much at the time, but then decided to see where it was located and take a look at the neighboring wells. Wow, this location is about as remote as one can get in North Dakota. It's just south of the river, far west McKenzie County, near Montana. There are very, very few wells in the area and the only well in the immediate area is this one:
  • 20185, 607, Whiting, Oakland 151-103-29B-22-1H, Glass Bluff, t4/12; cum 175K 10/19;
Recent production:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN10-20193186788711857637010
BAKKEN9-201930890877121576166140
BAKKEN8-2019225736589615234790
BAKKEN7-20193090565413158317710
BAKKEN6-2019297958681097821532235
BAKKEN5-2019318751079123589680430

By all criteria, particularly by today's standards, this is a fairly mediocre well at best, and now Whiting, the company that has been setting all-time records for canceling permits, has a permit in this immediate area re-instated. Makes absolutely no sense to me. So, we'll see.

Notes From All Over, Part 1 -- December 17, 2019

First things first, my go-to sandwich meat (after bologna and liverwurst): why Spam is breaking records.

Better call your Congressional representative: the "stretch IRA" is about to go away or at least be severely modified.

Economic cycles: "everyone" says we are "due" for a recession because it's been so long since the last recession. That, of course, makes no sense at all. Like flipping pennies. If one gets tails ten times in a row, the odds are still 50-50 that the next toss will result in heads (or tails). "Past performance is no guarantee of future results." I suggest we erase the economic-cycle graphs for the last one hundred years, and simply start with a fresh, new graph as of December 18, 2019. Now, with nothing to look at prior to December 18, 2019, when is the next recession likely?

Automobile service centers: no matter what you go in for, the mechanics will find additional work that needs to be done. The other day I went in to have my battery replaced. This car is very, very well maintained; I take it in like clockwork every six months for an inspection and an oil change, whether it needs it or not. Every six months. Last time I went in, it was deemed AAA+++ in mint condition, nothing else needed. But less then 3,000 miles later when I went in simply for a battery replacement, it was noted I needed:
  • two new front tires
  • new spark plugs
  • fuel system cleaning
Technically the tires were good for another 6,000 miles, I suppose, but with winter sleet, ice, and possibility of snow, the better part of valor ....

Mr Lonely, Bobby Vinton

It Gets Tedious; Disingenuous Reporting By The EIA -- December 17, 2019

Wow, I love this. Earlier today the EIA reported record US crude oil, liquid condensate, and natural gas prove reserves for 2018. I reported this earlier at this post.

The very first line of the EIA report:
Another year of stronger oil and natural gas prices increased 2018 oil and natural gas proved reserves in the United States to another all-time record level.
The EIA report also said this in the summary:
Proved reserves of crude oil in the United States increased 12%, from 39.2 billion barrels at year-end 2017 to 43.8 billion barrels at year-end 2018, setting another U.S. record for crude oil proved reserves. The previous record was set in 2017 (39.2 billion barrels).
So, in 2017 and 2018, the US set new all-time records for proved reserves of crude oil, liquid condensate and natural gas.

Trump was elected president in 2016 and he assumed the presidency in early 2017, remaining in office through 2018, and will probably be in office to the end of 2019 when another record will be set.

Of course, prior to his presidency we had this doofus (if you ever want to find this clip quickly, search "doofus"):

Doofus-in-Chief

We just can't drill our way to lower prices -- we also have to build pipelines. Gasoline is twice as expensive in California as it is in Texas (or so I'm told by my brother-in-law) -- 

This is what caught my interest: the all-time records set in 2017 and 2018 were a combination of a number of things which the EIA conveniently forgot to note. Most important was the favorable environment for the oil companies which was set by the commander-in-chief. One of the first things he did was clear the way for DAPL.

Of almost equal importance, of course, was the technology, skills, yada, yada, of US oil companies cracking the code to successfully produce shale oil.

Again, the very first line of the EIA report:
Another year of stronger oil and natural gas prices increased 2018 oil and natural gas proved reserves in the United States to another all-time record level.
In fact, crude oil and natural gas prices had nothing to do with record levels set in 2018. We don't need to go through that story, but this graphic pretty much says it all, which, by the way, was in the EIA report linked above:
 

It gets tedious.

Government Shutdown Averted -- It Only Cost $1.3 Trillion -- December 17, 2019

When I first heard the headlines to this story, it sounded like Democrat spending, but the GOP got what they wanted.
  • Good, bad, or indifferent, but for all those folks who did not like ObamaCare, the bill will repeal three ObamaCare taxes:
    • the medical device tax (benefits big, bad corporations)
    • the tax for "Cadillac care" health insurance policies (affected unions who negotiated great health care programs)
    • penalty tax on those who did not buy health insurance tax
  • the feds will raise the minimum age to 21 to buy tobacco in all forms, and vaping products
  • the Defense Department will receive $22 billion more than it received during the previous fiscal year
    • establishes a quasi-formal sixth branch of the US military, the Space Force
    • active duty military will receive the largest increase in basic pay in a decade, a 3.1% increase in pay
    • [military retirees were given a 2.8% in their 2020 pension in an earlier bill]
  • President Trump --- and I find this amazing-- got a lot for the southern wall
    • $1.375 billion (didn't Trump want $1.4 billion; so Nancy Pelosi can say he didn't get what he wanted)
    • the bill will also give Trump more flexibility where the wall will be built
  • the overall spending bill will exceed $1 trillion for the first time since 2012
  • as bad as it sounds, the spending bill will contribute to less than 5%of the GDP (on the down side)
  • and for years folks have been asking for "gun research": this bill provides $25 million for gun research 
Politics:
  • looks like Mike Bloomberg just got sucked into the #MeToo whirlpool 
  • Pocahontas: previously reported, but apparently it's getting more coverage -- she lost half her base when she said she would take away their private insurance; here's the thing ....

Otter Woman Wells Sited In Section 5-148-93; Mandaree Field Oil Wells

These wells are sited in lot 2/section 5-148-93, McGregory Buutes, but run north into two different drilling units to the north, in the Mandaree oil field.

The wells:
  • 33846, 3,642, WPX, Otter Woman 34-27HG, Mandaree, t8/18; cum 347K 10/19;
Full production:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN10-2019311134211340647819042169360
BAKKEN9-20193098879908589515023129320
BAKKEN8-2019311004210008650313959117470
BAKKEN7-2019311193911954754417378149890
BAKKEN6-2019301247312482829718735163140
BAKKEN5-20193115433154781056520306175180
BAKKEN4-2019301491614922950519716170180
BAKKEN3-20193118927188751193916062130770
BAKKEN2-20192821349213211324119609164860
BAKKEN1-20193030425304991725731664274530
BAKKEN12-20183134464345272371129724250690
BAKKEN11-20183038938388052329431656183288542
BAKKEN10-2018171840818497128111496642428622
BAKKEN9-20183031241311542480725399155166388
BAKKEN8-20183167066669216345954524237344817
BAKKEN7-2018250078000

The other wells on this pad:
  • 33847, 2,462, WPX, Otter Woman 34-27HP, Mandaree, t8/18; cum 257K 10/19;
  • 34247, 2,462, WPX, Otter Woman 34-27HEL, Mandaree, t7/18; cum 340K 10/19;
  • 34246, 2,913, WPX, Otter Woman 35-36HG, Mandaree, t7/18; cum 206K 10/19;
  • 34245, 2,535, WPX, Otter Woman 35-36HU, Mandaree, t8/18; cum 222K 10/19;

CLR WIth Two New Permits -- December 17, 2019

Active rigs;

$60.5612/17/201912/17/201812/17/201712/17/201612/17/2015
Active Rigs5268534064

Two new permits, #37267 - #37268, inclusive --
  • Operator: CLR
  • Field: Big Gulch (Dunn County)
  • Comments: 
    • CLR has permits for a Kate/Rodney pad in Big Gulch oil field, section 19-147-96;
Five permits canceled:
  • MRO: five permits in section 34-152-94; a Sterud USA permit; a Lana USA permit; a Leeda USA permit; a Nicholi USA permit; and, a Sabrina USA permit, all in McKenzie County
Five permits renewed:
  • Hess (5): three AN-Lone Tree and two AN-Double Bar V permits, all in McKenzie County
Two producing wells (DUCs) reported as completed:
  • 30596, 611, Sinclair, Ersa Federal 3-4H, Bully, t11/19; cum --;
  • 30597, 824, Sinclair, Ersa Federal 4-4H, Bully, t11/19; cum --;
For the archives:
  • six wells were transferred from MBI Oil & Gas, LLC, to McKenzie Energy Partners, LLC; very, very old wells;
Most interesting: a Whiting permit reinstated --
  • #29504, an Oakland permit in section 29-151-103, McKenzie County

Peak Oil? What Peak Oil? -- All-Time High, 2018 Data -- EIA -- December 17, 2019

Link here. The lede:

Another year of stronger oil and natural gas prices increased 2018 oil and natural gas proved reserves in the United States to another all-time record level. Crude oil and lease condensate proved reserves rose by 12%, and natural gas proved reserves rose by 9%. U.S. crude oil and lease condensate production increased by 17%, and U.S. total natural gas production increased by 12%.
  • Producers in Texas added 2.3 billion barrels of crude oil and lease condensate proved reserves, the largest net increase of all states in 2018. The increase was a result of increased prices and development in the Permian Basin of West Texas. 
  • The next largest net gains in crude oil and lease condensate proved reserves in 2018 were in New Mexico (750 million barrels) and in North Dakota (422 million barrels).
I'm not convinced the "increase was a result of increased prices."

The fact that the EIA specifically ignored technological advances speaks volumes. Even more egregious: ignoring the favorable environment for the US oil sector promoted by President Trump.

Back to some arithmetic. From the report:
North Dakota had the third-largest increase in crude oil and lease condensate proved reserves (422 million barrels) in 2018—an increase of 8% from 2017. North Dakota (and western Montana) is the core area of the Bakken shale play in the Williston Basin.
  • So, if 422 million bbls equals an increase of 8% from 2017, then, 
    • 422 = 0.08 x '2017 reserves'
    • 422 / 0.08 = '2017 reserves'
  • 5,275 million bbls of crude oil and lease condensate proved reserves or 5.275 billion bbls
  • at 1.5 million bopd --
  • 365 x 1.5 million bopd = 547.5 million bbls
  • x ten years = 5.475 billion bbls
To date, total production from:
  • the Bakken: 2,724,954,473 bbls (2.7 billion bbls)
  • the Bakken/Three Forks: 17,186,193 bbls (17 million bbls)
  • total oil produced in North Dakota: 4,616,619,414 bbls (4.6 billion bbls)
More from the EIA:
Proved reserves of crude oil in the United States increased 12%, from 39.2 billion barrels at year-end 2017 to 43.8 billion barrels at year-end 2018, setting another U.S. record for crude oil proved reserves. The previous record was set in 2017 (39.2 billion barrels).

Notes From All Over, Part 1 -- December 17, 2019

Hard to stop a train: video at this url -- https://www.foxnews.com/us/new-hampshire-climate-activists-seen-in-video-trying-to-block-freight-train-hauling-coal-tweet-claims.

Ford: keeping America great. Ford will invest $1.45 billion in two metro-Detroit auto plants; hire 3,000 more people: SUVs, pickup trucks, and EVs. Note: if SUVs are on truck chassis, it is my understanding the automotive CAFE standards do not apply. I could be wrong.

Doing what they can:
  • Sanders: resist!
  • Buttigieg: change course!
  • Pocahontas: here's the thing ...
  • Biden: what just happened?
  • Hillary: recalculating ... recalculating ... recalculating.
Boeing's decision: the nuclear option. BA fell 15% yesterday; pre-market trading looks like it might fall another 1%. [Later, at opening falls another $1.00 or so, but as much as $4.00 down before it "recovered."] [Later, Boeing removes Boeing 737 MAX from schedule until April, 2020.] The Boeing 737 MAX story is tracked here.

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.

Recession? What recession: PowerLine.

Note: I would assume there's a difference among: recession; slow growth; market pullback; profit-taking; correction; bear market; and, crash. And, then, of course, we haven't even begun to talk about duration, time span.

Boris: kicking the can down the road. Now says, "Brexit, deal-or-no-deal, by December 31, 2020." That's more than a year from now and on that news the British pound slumps.

********************************
The Market

Nose-bleed levels. Thoughts about where market will be February 15, 2020. One of three things will be true: the major indices will be higher, lower, or about the same as they are now, on February 15, 2020.
  • Headwinds
    • 4Q19 earnings will be reported between now and then
      • buy on the rumor; sell on the news
    • profit taking
    • fear
    • China-US jawboning
    • Mexico pushes back on USMCA
  • Tailwinds:
    • most investors FOMO; eager to put their side-lined cash into their IRAs, 401(k)s as soon as they can after the first of January; tons of money ready to go into these managed accounts
  • Huge unknown
    • geopolitical events
    • price of oil
      • trending toward $70 would be incredible for the oil companies
      • trending toward $50 is very possible; Saudi will do what it takes to prop prices; doubt they would launch the nuclear option (flood the world with oil if fellow OPEC members did not toe the line)
All things being equal, I think the 4Q19 earnings (a headwind) will be offset by all that money pouring into retirement accounts after the first of the year (a tailwind). 

My hunch, from where the major indices are now, December 16, 2019:
  • the S&P 500 will be down 5% on February 15, 2020
  • the Dow will be down 7% on February 15, 2020
  • the NASDAQ will be down 10% on February 15, 2020

Personal: as always, I remain fully invested but for the first time ever that I can recall, I am purposely selling some non-dividend shares to buy dividend-paying shares; commission-free trades have changed everything.

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.

***************************
Reflections
Lion And Mouse
A Lioness Ready To Burst Out

Olivia, 13 years old, was challenged, as part of a middle school are contest, to create something to "reflect" her self-image, or something to that effect. Her collage has been selected to compete at the next level. This is a collage, not a painting or drawing.

Fifteen Wells Coming Off The Confidential List; WTI Holding Above $60 -- December 17, 2019

Active rigs:

$60.4612/17/201912/17/201812/17/201712/17/201612/17/2015
Active Rigs5268534064

Wells coming off the confidential list -- 

Tuesday, December 17, 2019: 52 for the month; 257 for the quarter:
  • 35899, SI/NC, Slawson, Typhoon 149-93-07D-12H-TF, Big Bend, no production data,
  • 35337, drl, Hess, EN-Dobrovolny A-LE-155-94-1319H-1, Alger, 
  • 34778, 674, Enerplus, Serrano 148-94-11D-2H-TF, McGregory Buttes, t6/19; cum 140K 10/19; 41K/month;
  • 34777, 789, Enerplus, Tabiche 148-94-11C-2H, McGregory Buttes, t6/19; cum 98K 10/19; 26K/month;
  • 34775, 560, Enerplus, Santaka 148-94-11C-2H, McGregory Buttes, t6/19; cum 89K 10/19; 24K/month;
  • 34098, 175, Resource Energy Can-Am, Trooper 0409-1TFH, Blooming Prairie, t9/19; cum 11K 10/19;
Monday, December 16, 2019: 46 for the month; 251 for the quarter:
  • 35336, drl, Hess, EN-Ruland A-LE-155-94-1201H-1, Alger,
Sunday, December 15, 2019: 45 for the month; 250 for the quarter:
  • 35335, drl, Hess, EN-Ruland A-155-94-1201H-4, Alger,
  • 34096, 187,Resource Energy Can-Am, Trooper 0409-3TFH, Blooming Prairie, t9/19; cum 14K 10/19;
Saturday, December 14, 2019: 43 for the month; 248 for the quarter:
  • 35334, drl, Hess, EN-Ruland A-155-94-1201H-5, Manitou,
  • 35118, 1,089, Oasis, Kellogg Federal 5297 11-30 2BX, Banks, t7/19; cum 60K 10/19; 30K/moth
  • 34843, 132, Enerplus, Boreas 149-93-33C-28H, Mandaree, t6/19; cum 85K 10/19; 24K/month;
  • 34842, 342, Enerplus, Metis 149-93-33C-28H-TF, Mandaree, t6/19; cum 72K 10/19; 19K/month;
  • 34841, 1,012, Enerplus, Athena 149-93-33C-28H-TF, Mandaree, t6/19; cum 57K 10/19; 17K/month;
  • 34840, 504, Enerplus, Zeus 149-93-33D-28H, Mandaree, t6/19; cum 127K 10/19; 40K/month;
RBN Energy: Pacific Northwest gas supply route returns full force.
After more than a year of reduced natural gas flows, inspections and integrity checks, Enbridge's Westcoast Energy/BC Pipeline system in British Columbia returned its T-South segment to normal operating pressure, effective December 1, ending 13 months of restricted exports of Western Canadian gas supplies to the U.S. Pacific Northwest gas market. The outage and the resulting reduction in export flows out of Western Canada had prolonged effects on local and downstream gas flows and prices, including a run-up in prices at the Sumas, WA, border crossing point to an all-time U.S. record high of $200/MMBtu last winter. Today, we provide an update on Westcoast flows and their downstream impacts.