Wells Coming Off Confidential List; Nine (9) New Permits -- The Bakken, Williston Basin, North Dakota, USA; Buffett Reallocates; Update On Iranian Embargo: Petrobras Worst Performing Oil Company This Past Year

These wells come off confidential list on Wednesday:

• 21449, 612, CLR, Borten 1-9H, Wildrose oil field; t5/12; cum 25K 6/12;
• 21724, 800, Hess, SC-Nelson 157-99-3031H-1, Lone Tree Lake; t6/12; cum 24K 6/12;
• 22273, 609, CLR, Steele 2-24H, Banks, t5/12; cum 22K 6/12;

Nine (9) new permits issued August 14, 2012:

• Operators: Petro-Hunt (2), Newfield (2), CLR (2), SM Energy, OXY USA, Murex
• Fields:  North Tioga (Burke), South Tobacco Garden (McKenzie), Murphy Creek (Dunn), West Ambrose (Divide), Rawson (McKenzie)

OXY USA has a wildcat in Dunn County.  This is a "real" wildcat for the Bakken; it is very far east; in the southeast corner of Dunn County; about a mile southeast of Murphy Creek; there is nothing currently active in this immediate area. The name of the proposed OXY wildcat well does not have the typical "H" designation for a middle Bakken/TFS well. [Update: the folks over at the Bakken Shale Discussion Group noted this OXY wildcat. Teegue provides "explanation." Most like it's a vertical well targeting the Duperow with no implications for the Bakken. Rufus noted the wildcat on the permit list; probably read it here first. Smile.]

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Independent Stock Analysis: a particularly nice article at Bloomberg on Petrobras -- this has been blogged about before.  Also, at BloombergBusinessWeek: apparently the world does not need Iranian oil. We saw this movie during the Libyan revolution. 

RBN Energy: natural gas "close-shave"; the link provides a nice quick look at coal/natural gas pricing for power plants:

That window was open all summer until a “close shave” occurred in July.  On July 23, natural gas fuel costs rose above coal when natural gas NYMEX prices hit $3.12/MMbtu and NYMEX Appalachian coal was $55.75/short ton ($/ST). That event technically put an end to the coal-switching window based on our simple model (other locations and price indicators produce different heat rates – for example powder river basin coal is far less expensive for Midwest generators).

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From the link above: 

Iran’s oil exports have fallen by about 1.4 million barrels per day, which “substantially exceeds” an earlier estimate of 900,000 barrels ...

That’s a 50 percent cut in Iran’s crude exports in the past year, quite a bit steeper than the gradual “20 to 30 percent” decline predicted in June by Iran’s government, which gets about 80 percent of its revenue from oil. At $100 a barrel, that’s roughly $100 million a day in revenue that is no longer flowing into Iran’s coffers. And inflation is starting to take hold—the price of chicken has tripled since last year. [Remember: the government of Iran subsidizes gasoline for its citizens -- or at least did.]

The Goldman report estimates that U.S. sanctions have cut demand for Iranian crude by about 350,000 barrels per day, and that the European Union embargo have reduced it by another 600,000 barrels per day. The extra 500,000 barrel loss comes from the fact that Iran can no longer get ships from other countries to carry its oil. The EU sanctions ban European insurance companies from covering ships carrying Iranian oil—a big problem for Iran considering EU companies control at least 90 percent of the oil tanker insurance market, according to the Goldman report. If you were feeling dodgy about carrying Iranian oil before, you’re certainly not going to do so without insurance.

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From the Petrobras link:

Petroleo Brasileiro SA, the world’s worst-performing major oil company this year, is heading for its first annual output drop since 2004 as offshore discoveries fail to counter declines at aging fields. [Some of the same issues with which Mexico is dealing.]

Petrobras, as the Rio de Janeiro-based company is known, had its first loss in more than a decade in the second quarter after output fell 1.1 percent amid declines at the offshore Campos Basin, maintenance-related shutdowns at platforms and the closing of Chevron Corp.’s Frade field, where Brazil’s state- controlled oil producer has a minority stake. 

“We’re not bullish on Brazilian production -- they’ve got massive declines,” Jamie Webster, the head of market intelligence at PFC Energy Inc. in Washington, which covers the global energy industry, said in a telephone interview. “It wouldn’t take much for them to have reduced production.” 

It looks like Brazilian government regulations are a major reason for the declining output, but two other reasons were not discussed (unless I missed them). 

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For investors only: OAS is starting to move again. Disclaimer: this is not an investment site.

I just posted highlights of OAS' corporate presentation for August at this site.

I am sharing information. Make no investment decision based on anything you read at this blog. At Motley Fool today: an Oasis in the oil patch. I have made the following point often on this blog:

Among the smaller companies with wide open growth potential that is rarely mentioned in the press is Oasis Petroleum.


Oasis, like Kodiak Oil and Gas, which gets more media love, is a Williston Basin pure play.  The company has about 320,000 net acres in the Williston Basin making it a top ten lease right holder, though not of the scale of top dog Continental Resources, which holds almost 900,000 acres. 

I think CLR holds close to 954,000 net acres unless there is news that I missed, which is possible.

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For investors only, a note about the "scary" headline yesterday that Warren Buffett slashed his stock market holdings: Buffett's Berkshire Slashes Stock Holdings.  Wow, talk about a misleading headline -- almost as bad as some of my headlines at this blog. Berkshire did not slash its holdings; it reallocated its holdings, a huge difference. For some of us it was great news, for two possible reasons. 

First, for those who hold Berkshire shares, Buffett got rid of several dogs and replaced them with some great value/growth stocks. And for some of those who do not hold Berkshire shares there was also good news. For example: 

Berkshire added a stake now worth about $1 billion in Phillips 66.

National Oil Well Varco is another addition. That holding is worth almost $216 million.

Berkshire also more than quadrupled its stake in Viacom to 6.8 million shares from 1.6 million. Those holdings are now worth about $335 million.

It also more than tripled its holdings of Bank of New York Mellon to 18.7 million shares from 5.6 million. It's now worth almost $290 million.

I don't own shares in National Oil Well Varco but I think it's a great move on Buffett's part. The company has been in the news lately and has a huge complex west of Williston in the Bakken.  I was quite thrilled to see his position in Phillips 66, though I thought he already had a significant position through COP, but I don't know.

His reallocation looks like he is betting on continued consumer recession, and further energy resurgence.

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Later: now the headline story -- Obama's chances of re-election are higher than "you" think; presidents get re-elected when the market is up and the market looks to be heading up.

Earlier: Associated Press is pro-Obama. Lead story at Yahoo!News/AP is a breath-taking story that after voting against the trillion-dollar Obama stimulus program, Paul Ryan worked to steer that stimulus money to his home state. Hey, maybe I'm wrong. Maybe AP is pro-Ryan: I would hope he would do exactly that. Duh. No link necessary. Trust me.