As I have often stated, I post so much every day, some good posts get overlooked. (The good news: the bad posts also get overlooked. Smile.)
For those interested in the Brent - WTI spread here are a couple of links:
It will be interesting to see the price of oil on Monday vis a vis Egypt, and the Brent-WTI spread.
This was posted on the 12th day of protests in Egypt, on a day in which things seemed a bit worse, but not yet a tipping point. With army tanks now taking up positions in Cairo (a new development on the evening of February 5, 2011), we may soon see a tipping point. When the army asks for the crowd to disperse and it doesn't, it puts the army one step closer to taking outright control. Army leaders are not used to folks disobeying their orders. And Mideast military leaders are probably even a bit less tolerant.
The leaders of the army are bright, well-trained men (and women?) who have been trained in the best senior service schools in England and the US. They have much to lose if a non-secular (as it has been called) party is allowed to participate in a new government. The Egyptian air force leadership would have similar leadership abilities and background.
Pages
▼
Saturday, February 5, 2011
Ulysses S. Grant, Mark Twain, and Nothing To Do With The Bakken
Some say the best biography or memoirs ever written were the memoirs of Ulysses S Grant. It is excellent; I've read it twice over the last few years and even put together an interactive project for middle school students based on Grant's memoirs.
In preparation for Mark Twain's autobiography, volume one which has just been published, I am reading Ron Powers'biography of Twain, c. 2005. It is excellent.
I never enjoyed reading Twain's works when I was in high school and it may be because I never "knew" him or his background. Now, after completing the first twelve chapters of the Powers' biography, I am hooked. I can't wait to go back and read (and re-read) some of Twain's works. I look forward to his autobiography, though I u derstand it's a difficult read.
What makes Twain's story particularly interesting is the contemporary relationship and the geographic relationship between Ulysses S Grant and Mark Twain.
They spent much of their young lives on the Mississippi or the rivers on the east draining into the Mississippi.
They both joined the army before the Civil War, but whereas one went on to become a famous general, the other went AWOL.
Throughout the Powers' biography, there are references to the war and to General Grant.
In July,1863, General Grant seized Vicksburg, a turning point in the war. Meanwhile Mark Twain was returning to Carson City, Nevada, following a remarkable and expensive vacation in San Francisco. Twain had followed his older brother out west. His brother had been appointed the secretary (the president's representative) of the Nevada Territory by President Abraham Lincoln and Mark would his unofficial aide.
The rest, of course, is history.
In preparation for Mark Twain's autobiography, volume one which has just been published, I am reading Ron Powers'biography of Twain, c. 2005. It is excellent.
I never enjoyed reading Twain's works when I was in high school and it may be because I never "knew" him or his background. Now, after completing the first twelve chapters of the Powers' biography, I am hooked. I can't wait to go back and read (and re-read) some of Twain's works. I look forward to his autobiography, though I u derstand it's a difficult read.
What makes Twain's story particularly interesting is the contemporary relationship and the geographic relationship between Ulysses S Grant and Mark Twain.
They spent much of their young lives on the Mississippi or the rivers on the east draining into the Mississippi.
They both joined the army before the Civil War, but whereas one went on to become a famous general, the other went AWOL.
Throughout the Powers' biography, there are references to the war and to General Grant.
In July,1863, General Grant seized Vicksburg, a turning point in the war. Meanwhile Mark Twain was returning to Carson City, Nevada, following a remarkable and expensive vacation in San Francisco. Twain had followed his older brother out west. His brother had been appointed the secretary (the president's representative) of the Nevada Territory by President Abraham Lincoln and Mark would his unofficial aide.
The rest, of course, is history.
IPs and What They Mean -- Bakken, North Dakota, USA
It's a very quiet weekend -- except in Egypt -- and when it gets quiet, I tend to look for something to write about.
So this is a throw-away posting. I wouldn't pay much attention to this one.
It brings up an issue not much talked about any more: the significance of the initial production (IP) number.
Because different methods are used to calculate IPs, and because different factors can affect IPs, and for conspiracy theorists, producers can manipulate IPs, I think most agree that an IP is nothing more than just one data point that starts the discussion.
I was reminded of this when I went back to look at a Continental Resources well that reported an IP of 15 barrels back in June, 2008. That was the Mathistad 1-35H well, #16983. This was one of two wells that supported Harold Hamm's argument that the Bakken formation and the Three Forks formation do not communicate with regard to oil production.
Anyway, for a well that started out in life with an IP of 15, how has it done?
As of June 30, 2012, the total amount of oil produced from this well with a pathetic IP is ... drum roll ... drum roll ... 176,394 barrels.
Now, at an average of $50/bbl, that works out to about $9 million. So I assume the well has paid for itself.
So, how is this well doing now?
For the 2010 calendar year, this well produced 40,000 bbls of oil, averaging 3,300 bbls/month.
For the 2009 calendar year, the well produced no oil or minimal amounts of oil for three months; in the "average" 2009 month, the well produced an average of 4,000 bbls/month, and produced a total of 35,000 bbls in those nine months.
In its first year, after that initial production, it produced 20,000 bbls in the first full month of production, and then quickly declined to 6,600 bbls by the end of the year. But from then on, the decline has been much slower, and seems to have leveled off at 3,000 bbls/month.
At 3,000 bbls/month and with oil at $50/bbl, it will produce about $1.8 million worth of oil this year at the wellhead. Not bad for a well in its third year of production, and probably paid for at the wellhead.
Especially for a well that had a reported IP of 15 barrels.
So, how did the other well do, #18013, Mathistad 2-35H? This well targeted the middle Bakken.
The Mathistad 2-35H reported an IP of 842 bbls in July, 2009, almost a year (to-the-day) later than Mathistad 1-13H. As of December 31, 2010, this well has produced a total of 95,247 bbls. [January 31, 2011: 97K x $50 = $5 million; not yet paid for itself at the well head.] cum 127K 6/12;
In calendar year 2010, it produced 36,000 bbls of oil, or an average of 3,000 bbls/month, almost identical to its twin.
Like I said at the beginning: this is a throwaway posting, but I was curious what a well could produce despite an IP of 15. For those interested in more about these two wells, one can read what the thoughts were in "real time" regarding these two wells over at the Bakken Shale Discussion Group board.
So this is a throw-away posting. I wouldn't pay much attention to this one.
It brings up an issue not much talked about any more: the significance of the initial production (IP) number.
Because different methods are used to calculate IPs, and because different factors can affect IPs, and for conspiracy theorists, producers can manipulate IPs, I think most agree that an IP is nothing more than just one data point that starts the discussion.
I was reminded of this when I went back to look at a Continental Resources well that reported an IP of 15 barrels back in June, 2008. That was the Mathistad 1-35H well, #16983. This was one of two wells that supported Harold Hamm's argument that the Bakken formation and the Three Forks formation do not communicate with regard to oil production.
Anyway, for a well that started out in life with an IP of 15, how has it done?
As of June 30, 2012, the total amount of oil produced from this well with a pathetic IP is ... drum roll ... drum roll ... 176,394 barrels.
Now, at an average of $50/bbl, that works out to about $9 million. So I assume the well has paid for itself.
So, how is this well doing now?
For the 2010 calendar year, this well produced 40,000 bbls of oil, averaging 3,300 bbls/month.
For the 2009 calendar year, the well produced no oil or minimal amounts of oil for three months; in the "average" 2009 month, the well produced an average of 4,000 bbls/month, and produced a total of 35,000 bbls in those nine months.
In its first year, after that initial production, it produced 20,000 bbls in the first full month of production, and then quickly declined to 6,600 bbls by the end of the year. But from then on, the decline has been much slower, and seems to have leveled off at 3,000 bbls/month.
At 3,000 bbls/month and with oil at $50/bbl, it will produce about $1.8 million worth of oil this year at the wellhead. Not bad for a well in its third year of production, and probably paid for at the wellhead.
Especially for a well that had a reported IP of 15 barrels.
******
So, how did the other well do, #18013, Mathistad 2-35H? This well targeted the middle Bakken.
The Mathistad 2-35H reported an IP of 842 bbls in July, 2009, almost a year (to-the-day) later than Mathistad 1-13H. As of December 31, 2010, this well has produced a total of 95,247 bbls. [January 31, 2011: 97K x $50 = $5 million; not yet paid for itself at the well head.] cum 127K 6/12;
In calendar year 2010, it produced 36,000 bbls of oil, or an average of 3,000 bbls/month, almost identical to its twin.
******
Like I said at the beginning: this is a throwaway posting, but I was curious what a well could produce despite an IP of 15. For those interested in more about these two wells, one can read what the thoughts were in "real time" regarding these two wells over at the Bakken Shale Discussion Group board.
Marathon Oil: To Drill Up to 145 Wells in Williston Basin in 2011 -- $1 Billion Investment -- North Dakota, USA
Updates
October 3, 2018: MRO to sell UK assets to focus on US shale.
July 6, 2018: global update for MRO.
June 17, 2013: Tyler Formation well information is released; Rundle Trust 21-29TH
December 12, 2013: unsolicited e-mail from a reader --
I am a land owner/mineral owner in Dunn county. I have been hearing for some time that OXY has sold out some, most or all of their working interests in North Dakota. It's starting to look like these rumors might actually be true, OXY hasn't been issued any new drilling permits recently and they are trying do complete a great deal of wells by years end. Recently they have been modifying certain valves at the well sites in a way that is very similar to the way Marathon prefers operations to be set up. Have you heard anything about the sale of OXY?September 19, 2013: MRO presentation at UBS Global Gas and Oil Conference, Houston
July 13, 2012: MRO -- 30-stage fractures now the norm.
January 27, 2012: Marathon to increase dividend to 17 cents/share.
November 29, 2011: Marathon Petroleum Company (MPC) is cheap -- SeekingAlpha.com.
July 31, 2011: MRO will re-frack 18 Bakken wells in 2011.
July 26, 201l: Archived investing stories on MRO up to the date.
July 1, 2011: Effective this date, MRO (upstream) split from MPC (downstream)
Original Post
Link here.Marathon Oil will significantly increase its exploration and production program in 2011.
Marathon Oil's 2011 CAPEX of $5.3 billion will include up to 145 wells to be drilled in the Bakken in North Dakota.
Back-of-the-envelope calculations: 145 wells x $6.5 million/well = $942 million, which can be rounded to $1 billion. In comparison, MRO will spend a third of that ($300 million) on oil sands in Canada.
Interestingly enough, all this activity won't increase production all that much in the short term. In 2010, MRO produced 390,000 boepd on average; it is estimated that MRO will produce no more than 400,000 boepd in 2011, and could even drop to 380,000 boepd.
MRO has 385,000 net acres in the North Dakota Bakken.