Friday, July 27, 2012

Friday Morning Links -- 800,000 BOPD?

Independent Stock Analysis: Shale Underestimated.
The last director's cut: 640,000 bopd.  The production numbers are delayed by about two months.

But then this, with no link to the original source that suggests 800,000 bopd:
Authorities in North Dakota said drillers hit pay dirt in the Bakken formation with nearly every attempt. Production there averages around 800,000 barrels per day, according to some estimates.
Does someone know something the rest of us don't -- 800,000 bopd? Monthly production is increasing by about 5% each month, so 640,000 x 1.05 --> 670,000 bopd (June); then, --> 700,000 bopd (July); and, maybe, --> 740,000 bopd (August). 

Lynn Helms did say that production was going to jump in the next few months due to a number of additional frack spreads being brought to Williams County to try to clear up the backlog of wells waiting to be completed.

I suppose it's possible that we are already near 800,000 bopd in the Bakken, but it seems a stretch. We won't know for several months.


Economy stalls: growth down to 1.5 percent; talk of recession,
The U.S. economy grew at an annual rate of just 1.5 percent from April through June, as Americans cut back sharply on spending. The slowdown in growth adds to worries that the economy could be stalling three years after the recession ended.
Market's response: green. The movers and shakers already knew this


VOG: increases availability of credit facility; up to $20 million


  1. Bruce:

    What are your thoughts on the looming slowdown in the Bakken? Do you feel this is simply an election year annomally like in 2008 or is there more to it.

    I work for a large multi service oilfield company and from what I had heard a little over 1 month ago we needed to prepare to have 50 rigs stack out.

    At this time there were roughly 218 rigs now we are at 207 (a minimal loss of 11 rigs). But I have also been noticing something else here.... It seems as though companies such as nabors are indeed stacking some rigs, however it also appears as though they are replacing them with the ever more popular joystick "B-Rigs" which i'm fairly confident even a 12 year old with zero experience can operate.

    1. I honestly have no idea; even in a casual conversation at the local diner, I would say "I don't know." ("I don't know" for short term -- 6 - 12 months; long term: extremely bullish)

      Having said that:

      1) it has nothing to do with politics/election year; it's all about the economics of each well

      2) reading the 2Q12 conference calls provides some insight and it keeps coming back to this: the companies do not want to slow down in the Bakken but they are re-evaluating their 2013 plans for drilling

      3) the rigs are more effective, and so fewer rigs are needed for same production (OXY USA said so in their conference call; they said they will decrease worldwide rigs from 75 to 70 but will produce the same amount with 70 as with 75; they said they were not slowing their pace of drilling (that post is in draft; I will put it up after I complete this note). So, maybe less work with less rigs (but only marginally) but production continues to increase

      4) we are in a different "world" now, in the Bakken: more and more leases are held by production and the urgency is less to get a well in to save a leave (also said in conference calls, I believe it was Hess that said that). So, again, they will look at the economics of each well

      5) OXY said their production worldwide increased this past quarter, and much of it was due to the Bakken; as you know, OXY has been a big "down" on the Bakken, so for them to say that, it is quite exceptional

      6) The recent Bentek Energy study is incredible for the long term

      7) ONEOK just announced they will build yet another 100 million cubic per day natural gas facility -- this one near Watford City, its second (so, if rigs decrease a bit -- less work there, there will be more work for another large natural gas facility)

      8) companies have a business plan and a CAPEX plan, and they generally stick to it on a 6- to 12-month basis;

      So, bottom line for me: the folks on the ground / in the trenches in Williston will see "relative" slowdown in certain areas off and on, but unpredictable where and by whom. Many of the big-name Bakken-centric companies have nowhere else to go (no acreage in the Eagle Ford, for example) and they need to keep drilling (as long as they make a profit) for the cash flow to maintain their CAPEX / business plan.

  2. Anybody have any statistics on how many new walking rigs are replacing conventional one? That could explain much of the stack out.

    wouldn't conventional rigs be needed in Marcellus and the Utica, where topography and trees limit movement of walking rigs?

  3. In July 2011 there was a 10.2% increase in average daily production following a 6.0% increase the previous month. Hitting 800k average would be a compound increase of 11.8% for each month. Does seem high in relation to last several months, especially with a roughly consistent number of rigs in the field.

    1. I agree, 800,000 bopd this soon would be quite a stretch, but it will be interesting to see.

      I think if we get anywhere near 800,000 this calendar year (2012) that alone will be quite a story.