Wednesday, April 25, 2012

Speculators Doing It Again......

Speculators driving down the price of gasoline (futures)

Well now those greedy, market-destabilizing, market-manipulating speculators have changed course, and they're now driving gasoline futures prices down, see chart [at link].

"U.S. gasoline-futures prices have dropped 16 cents a gallon over the past eight trading days, as more U.S. crude becomes available for refining into gasoline and fears about a shortage of refining capacity fade.

Whiting Reports -- in Passing -- a Record IP for a Whiting Three Forks Well in the Sanish Oil Field -- The Bakken, North Dakota, USA

From Whiting's 1Q12 earnings press release (my post) or direct to Whiting's press release.

In that press release:
Highlighting recent drilling results in our Sanish field was the completion of the Stubstad 14-6TFX. This cross-unit well flowed 2,249 BOE per day from the Three Forks formation on April 4, 2012. The Stubstad well, which was drilled on the southwest side of the field, recorded the highest initial production rate for a Whiting-operated Three Forks well in Sanish field.
For newbies: for me, WLL has the most interesting strategy in the Williston Basin. With regard to the North Dakota Bakken, it has its northern ops centered around the Sanish oil field, its cash cow, and the Hidden Bench/Tarpon prospects near the bull's eye of the Bakken; and, it has its southern ops centered around Belfield where some of the highest leases ever have been recorded in the Bakken.  In addition, Whiting has a Montana prospect (Missouri Breaks, in its infancy) and Big Island in southwestern North Dakota with multiple payzones, other than the Bakken/Three Forks, are being tested.

Mobile Water Treatment System to the Bakken - Sionix

From a message board:
Sionix Corporation (OTCBB: SINX) ("Sionix" or the "Company"), a designer of patented water treatment systems, announced today that it has shipped its Mobile Water Treatment System (MWTS) to a staging area in North Dakota under the Water Treatment Agreement with McFall Incorporated announced on March 5, 2012. Designed to treat up to 9,600 barrels per day of contaminated drilling fluids at a drilling site, this MWTS will be deployed to a specific drilling rig and commence treatment operations in early May 2012. When treatment operations commence, further announcements will be made.
This is very interesting. Just the other day someone asked me what the next "big thing" would be in the Bakken for investors. I said "waste management."  

I know nothing more than what is posted above.

Nine (9) New Permits -- The Williston Basin, North Dakota, USA

Daily activity report, April 25, 2012 --

Operators: WPX (3), Whiting (2), Denbury (2), Slawson (2)

Fields: Heart Butte (Dunn), Sanish (Mountrail), Siverston (McKenzie), Boxcar Butte (McKenzie)

Slawson has a permit for a wildcat in McKenzie County.

Seven producing wells completed, including:
  • 19669, 1,179, XTO, Crystal 14X-34, McKenzie, Bakken, Mondak,
  • 19893, 2,112, BR, Gorhman 24-31 MBH, Dunn, Bakken, Bailey oil field,
  • 20324, 1,963, BR, Midnight Run 21-1TFH, McKenzie, Three Forks, Union Center oil field,
  • 20559, 1,675, BR, Shenandoah 34-36 TFH, McKenzie, Bakken/Three Forks, Keene oil field,
  • 20687, 1,482, BR, Capitol 34-7TFH, McKenzie, Three Forks, Westberg oil field,
  • 20832, 1,680, BR, Outlaw Gap 34-23TFH, McKenzie, Three Forks, Sand Creek oil field,
Every one of those BR wells was right in the bull's eye of the Bakken, the northeast corner of McKenzie County. Incredible. 

Six wells released from "tight hole" status; four were completed:
  • 21405, 1,766, QEP, MHA 4-06-01H-149-92, Dunn, Bakken 
Another 21 wells were reported as plugged or producing.

  • 20933, PNC, Fidelity, Perdaems 15-22H, Stark County

Global Warming --> 0.2 mm Rise in Ocean Levels Each Year

Link here to scientific article on undersea volcanic explosions.

There are any number of data points that might interest folks who are interested in an honest discussion of global warming, but this is the paragraph that caught my attention:
Co-author Professor David Vaughan (BAS) says,"This eruption occurred close to Pine Island Glacier on the West Antarctic Ice Sheet. The flow of this glacier towards the coast has speeded up in recent decades and it may be possible that heat from the volcano has caused some of that acceleration. However, it cannot explain the more widespread thinning of West Antarctic glaciers that together are contributing nearly 0.2mm per year to sea-level rise. This wider change most probably has its origin in warming ocean waters."
That was a "cut and paste" -- no typos, unless the original article is in question.

Let me repeat the the specific entry in that paragraph: 
"...the more widespread thinning of West Antarctic glaciers that together are contributing nearly 0.2mm per year to sea-level rise."
I have been visiting beaches along the New England coast for the past three years. There is no way that a 0.2 mm rise in the sea level on an annual basis is predictable or reproducible. And, just for sake of argument, after 100 years, that would be 20 mm? That would be 2 centimeters? I missing something?  One inch = 2.54 centimeters, so we're talking about less than an inch rise in sea level over the course of 100 years assuming every assumption, every prediction for the next 100 years is accurate. Let's say the ocean does rise one inch over the next 100 years; the Dutch handled the sea just fine, and that was in an earlier era.

No doubt I am missing something, but this "0.2 mm" number has been posted before as the scientific prediction in rise in sea level due to global warming. Wow. And on that, the EPA wants to stop the US from shipping coal to China.

17-Mile Pipeline -- $14 Million -- West of Stanley --> Rail Loading Station -- The Bakken, North Dakota, USA

Link here to the Bismarck Tribune.

Data points (some numbers rounded; link has exact data points):
  • short pipeline approved west of Stanley
  • 17 miles long; $14 million
  • will carry oil to a rail loading station in western Mountrail County; 50,000 bopd
  • --> 235 trucks/day taken of US Highway 2
  • Plains Pipeline LP

Here We Go: GeoResources Gets BuyOut Offer -- $20/Share Plus 1.9 Shares HK


Original Post 

Shares Jump 20%: That's Better Than AAPL's Jump! -- Just Saying

Mike Filloon's take on the buyout

Investors must like the deal: shares rose significantly today -- up about 20% in round numbers. For those who have been following the blog, I could be wrong, but I think GEOI was one of Filloon's favorites. I honestly can't remember, and too much is going on now to check. 

Link here.
Halcon Resources Corp said it would buy GeoResources Inc for about $973 million in a cash-and-stock deal, as CEO Floyd Wilson builds up the fledgling company's asset base as a prelude to an eventual sale.

GeoResources stockholders will receive $20 in cash and 1.932 Halcon shares, or $37.97, for each share they own. 
This is most interesting:

Wilson has made no secret that he plans to build a portfolio of liquids-rich assets before putting Halcon on the block a few years down the line.

Halcon, which trades under Petrohawk's ticker "HK", said it will divest some natural-gas weighted assets to raise additional cash to focus on core growth areas.
If this is "THE" Petrohawk of which I am familiar, this is most interesting. Did I read somewhere Petrohawk "discovered" the Eagle Ford. I can't remember; seems I read something along that line; will sort it out later.

Recent GEOI presentation:

I've not looked at the presentation yet. Don sent it to me; recommends looking at slides 8 - 10, 19 and 26. Noted that only 30% of GEOI production comes from the Bakken. Again, as Don says, these buyouts help put a value on these small energy companies.

Connecting some dots, a link to the Oil and Gas Journal, same story:
Floyd C. Wilson, Halcon Resources chairman, president, and chief executive officer, said the acquisition “will create a resource powerhouse with exposure to some of the most prolific unconventional liquids plays in the United States.”

The transaction will increase Halcon’s estimated proved reserves by more than 150% to 52.8 million boe, 69% of which is liquids, and boost its average net production by over 170% to 11,070 boe/d based on fourth quarter 2011 production rates.

Previously, Wilson was chief executive of Petrohawk Energy, which sold to BHP Billiton Ltd. for $12 billion last year.

Halcon Resources, a Tulsa independent, formerly was known as RAM Energy Resources.

XOM: Top Dividend Pay Among The Dow -- Passes ATT -- Earnings Tomorrow

Link here.

Possibly a misleading subject line. Go to link to see what "they're" saying. I'm not complaining, just want to make sure folks are not misled.

ATT is paying almost 6%, and on cost basis for long term holders, much better than that.

XOM, with announcement, will be paying about 2.6%.

CVX will raise its dividend from 81 cents to 90 cents; remember, CVX increased their dividend two quarters ago, back in November, 2011. In August, 2011, it had been paying 78 cents.

And, of course, with the COP/PSX spin-off later this year, investors will see another dividend increase among the majors.

Whiting Releases Earnings -- 1Q12

Link here.

Investors must have liked the numbers; significant share price increase today.

Highlights (some numbers rounded):
  • 1Q12 production up 22 percent year-over-year; up 14% sequentially
  • record production: 81,000 boepd; exceeded upper end of guidance
  • cash flow at a record level ($350 million)
  • despite moving 4,500 boepd to Whiting USA Trust II, still raising production guidance for 2012
  • raised CAPEX from $1.6 billion to $1.8 billion
  • completed 15 gross wells in the Sanish this quarter; now 233 producing wells in the Sanish
  • five drilling rigs in the Lewis & Clark and Pronghorn prospects; those two prospects 3.5 x the are of the Sanish field
  • Hidden Bench in McKenzie County: recently completed Tifft 21-18H, middle Bakken, 1,872 boepd
  • first test (for Whiting) of the Lower Bench of the Three Forks formation: Chitwood 44-36TFH, expected to be completed in May, 2012
  • Tarpon in McKenzie County: 6,000 net acres; potential for 12 middle Bakken and 8 Three Forks wells
  • Missouri Breaks: acquired 13,300 net acres in March; Richland County, MT
In a very small footnote, footnote 1 to "Other Financial and Operating Results": pre-tax cash settlement losses of $14.2 million on its crude oil hedges and gains of $0.4 million on its natural gas hedges during the first quarter of 2012. The company has about 117 million shares outstanding: $13.8 million/117 million shares --> 12 cents/share.

Remember: 83 cents net income/share and/or $1.03 adjusted net income/share

Video: "If I Wanted America To Fail" -- Not Directly Related to the Bakken -- But Close Enough


Later, 11:20 pm: several links,
Later, 5:30 pm: it is interesting how things work out.  The video below seems "over the top," but in fact is more subtle than most might realize. Regardless, a couple hours after posting it, I ran across the following article in which the Secretary of the Interior accuses "the House Republicans of living in an imagined energy world." In fact, right, wrong, or indifferent, there are a lot of folks outside the House who share the thoughts articulated in the video below. It is not just those inside the beltway as the secretary would suggest. From the link above:
Disputing the perception that Americans are deeply divided over energy policy, Salazar said outside of Washington, people generally agree on what needs to be done: reduce US reliance on foreign oil; expand offshore oil and gas activity, but do it safely and in the right places; broaden the national energy portfolio with more solar, wind, geothermal, and biofuels; and improve motor vehicle fuel economy.
Note that natural gas, which couldn't possibly be cheaper, was not even mentioned in in that paragraph. What is not said speaks volumes. 

Original Post

'Nuf said.

Except: I wish they would have gotten Morgan Freeman to do the narration.

Thank you to a reader for alerting me to the video. I had not seen it.

Absolutely Nothing To Do With The Bakken -- But Lots To Do With North Dakota -- Feds Will Ban 17-Year-Olds From Working On Family Farms

Well, not completely banning 17-year-olds from all farm chores (it appears, like city kids, they could still take out the garbage), but ..... well, .... see how you interpret the news:
The Department of Labor is poised to put the finishing touches on a rule that would apply child-labor laws to children working on family farms, prohibiting them from performing a list of jobs on their own families’ land.

Under the rules, children under 18 could no longer work “in the storing, marketing and transporting of farm product raw materials.”
It was also noted that the education and training traditionally provided by 4H and FFA will be replaced by a 90-hour federal training program. A normal week of school provides about 30 hours of education so I assume we are talking about a 3-week training program written by bureaucrats from DC. Why do the letters USSR keep crossing my mind as I write this?

I assume this also means that the royal daughters would not be allowed to work in the White House garden. It will probably be up to the legal profession to decide. If they are allowed to work in the garden, I assume they, too, would have to take the 90-hour training course. We're talking planting seeds and weeding, aren't we?

Every time I go back to North Dakota I try to take in a county fair. One of the highlights is seeing a 12-year-old (weighing all of 100 pounds) leading a 2,000-lb bull around the auction ring. Under the proposed rules, as I read it, the 12-year-old would not be allowed to "store," "market," or 'transport" this bull. 


EPA Gives "Green Light" to Frackers -- The Bakken, North Dakota, USA -- For Investors Only

Link here to

At least one other "celebrity" has talked about last week's EPA announcement concerning fracking (I won't mention names -- I don't want folks to stop reading -- smile). Kirk Spano (at the link) is the second I've come across.

The EPA announcement did not make headlines; in fact, I think it was announced pretty much outside the normal news cycle, but I can't say for sure. I didn't make much of it at the time because I am too much of a cynic when it comes to the EPA and the current administration. I pay less attention to what they say, and more attention to what they do.

But in this case, I may be wrong. This may be a bigger deal than folks realize, especially for investors. At the link:
Last week, tucked into the headlines was a story describing how the Environmental Protection Agency decided to give oil and gas companies until 2015 to fully comply with so-called "green completions" for their hydraulic fracturing operations. In the near term, this move removes the risk for companies engaged in "fracking" of having the EPA slow their high growth via the rapid implementation of new rules.
Kirk Spano argues that two things will follow from the EPA announcement:
a) the announcement itself will encourage investors to invest in the Bakken; it removes (albeit temporarily) the EPA's sword of Damocles hanging by a single thread over companies like CLR and Oasis; and,
b) if EPA is true to its word, it makes it easier for Bakken companies to meet their production goals
For investors, Kirk mentions the following companies:
  • CLR
  • Apache
  • National Oilwell Varco (nice building/complex west of Williston)
  • Baker Hughes (huge new complex west of Williston)
  • Carbo Ceramics (in discussions to build North America's largest ceramics distribution complex near Dickinson)
It is interesting to note that Kirk did not provide names of companies involved in manufacturing the natural gas / liquids separators that will benefit from the EPA rules that now go into effect in 2015. 

Fidelity Announces a Nice Well -- Not In The Bakken

From Yahoo!InPlay:
MDU Resources announces 'significant' well test results in Paradox Basin; Cane Creek Unit No. 26-2H well was tested at a stabilized rate of 647 barrels of oil per day and 561 mcf of natural gas per day: Co announced that its indirect wholly owned subsidiary, Fidelity Exploration & Production Company has completed a successful exploration test on its 75,000 net acres in the Paradox Basin.

Following two weeks of production, the Cane Creek Unit No. 26-2H well[, Paradox Basin, Utah,] was tested at a stabilized rate of 647 barrels of oil per day and 561 mcf of natural gas per day through a 7/64 inch choke with a flowing pressure exceeding 3400 psi.

The well is flowing from a short unstimulated horizontal section. The well production rate is being significantly restricted to manage production operations, gather performance data and minimize natural gas flaring. Fidelity drilled the Cane Creek No. 26-2H well to a total depth of 8,685 feet, including a 1,945-foot lateral that was cased and subsequently perforated over a 116 foot interval at the end of the lateral.

While it is too early to establish reserve potential for the well, a well drilled five miles to the southeast during the 1960s has produced over 1 million barrels of oil and a well seven miles northwest drilled in the 1990s has produced over 600,000 barrels of oil.
Initial production rates from the 26-2H well are "very encouraging; however, further data is required to give a reasonable estimate of ultimate recovery." In addition, Fidelity has drilled its second horizontal Cane Creek well, the Cane Creek Unit No. 18-1H, to a total depth of 9,272 feet, including a 1,154-foot lateral. This well will be completed across a 900 foot horizontal interval and should be put on production during May. Fidelity plans to drill additional Paradox wells in 2012 to further advance the appraisal process and commence the development phase.
The most interesting thing about this story are the cumulative production numbers for neighboring wells. I was running through similar numbers/wells in the Williston Basin going back to the 1950's and there were so many Madison wells with huge cumulative production numbers, I simply gave up posting them. I posted a few at the "Monster Wells" page.

Hess Reports Today

Link here.

Mixed report; pretty much in line.

North American Energy Independence Within Five Years?

Link here to RBN Energy.