Sunday, April 29, 2012

Random Dots Looking At Fracking: Is Fracking a Commodity? Simply Pressure Pumping?

Reading about Liberty Resources this past week got me to thinking about fracking, again. I'm not going to post any of my thoughts, but here are some dots that may pique your interest:

SeekingAlpha.com on CJES. The link to the CJES recent corporate presentation; no indication that CJES is active in the Bakken.

Liberty Resources.

Schlumberger transcript, 4Q11, Q & A:
Well, if you look at pressure pumping pricing levels, as I said, we continue to see downwards pressure on pricing in gas in Q4. The liquid basins, we saw pricing basically being flat, some contracts being up, and some contacts being down. Now how this is going to evolve, I think, is still uncertain at this stage, right? There is obviously a chance that the continued flux of capacity from the gas basins into the liquid basins is going to have an impact on liquids pricing as well. We haven't really seen any downwards trend yet. But clearly, over the past quarter, the pricing has been flat, so that's basically where we stand on that. In terms of our view on North America land, like we said before, we remain committed to the markets.
A horizontal well's production potential:
  • Location: maturity, porosity, permeability, trapping, TOC, thickness, 3-D seismography, arrays
  • Ability of horizontal bore to remain in target zone: 
  • Completion: fracking, drilling fluids, stages, method, sand, ceramics

Random Look at Oasis Wells in the Williston Area

Indian Hill, south of Williston, south of the river: eight wells in one section; Baker oil field; all wells are on 2-well pads; four 2-well pads in one section.
  • 22099, 863, Oasis, Yukon 5301 41-12T/Daphne 5301 41-12B, Baker oil field,  t9/13; cum 104K 9/16;
  • 22100, AB/1,317, Oasis, Achilles 5301 41-12B, Baker oil field, t2/12; cum 187K 1/15;

  • 22220, 1,962, Oasis, Jefferies 5301 43-12B, Baker oil field, t4/12; cum 214K 9/16;22
  • 22221, 1,379, Oasis, Innoko 5301 43-12T/Timmons 5301 43-12B, Baker oil field, t9/13; cum 133K 9/16;

  • 20863, 1,167, Oasis, Foley Federal 5301 43-12H, Baker oil field, t12/11, cum 235K 9/16;
  • 20864, 2,521, Bray 5301 43-12, Baker oil field, t1/12, cum 230K 9/16;

  • 22739, loc, Oasis, Linda 5301 44-12B, Baker oil field;
  • 22740, 3,863, Oasis, Larry 5301 44-12B, Baker oil field; t9/12; cum 229K 9/16;
Southeast of Williston, north of the river; seven Oasis wells in one section, in Crazy Man Creek, one section, 12-153-100; 2-well pads (except for a 22225).

  • 22303, 1,952, Oasis, Thomas S 5300 41-12B, Crazy Man Creek, t10/12; cum 275K 9/16;
  • 22304, 1,364, Oasis, Celia S 5300 41-12T, Crazy Man Creek, t10/12; cum 206K 9/16;

  • 19638, 2,563, Oasis, Davis 5300 42-12H, Crazy Man Creek, t9/12; cum 219K 9/16;
  • 19639, 2,414, Oasis, Cook 5300 42-12H, Crazy Man Creek, t9/11; cum 325K 9/16;

  • 22225, 868, Oasis, A K Stangeland 5300 43-12T, Crazy Man Creek, t9/12; cum 189K 9/16;

  • 22347, 2,621, Oasis, Basey 5300 44-12T, Crazy Man Creek, t9/12; cum 200K 9/16;
  • 22348, 2,661, Oasis, Kovars 5300 44-12B, Crazy Man Creek, t9/12; cum 203K 9/16;

A Closer Look at The Liberty Resources Wells -- The Bakken, North Dakota, USA

In response to earlier postings regarding Liberty Resources, a reader sent in the following:

Section 21-156-100; 18 oil storage tanks; pumping and flaring, East Fork; rumors of 3,000 bopd each well; early production
  • 21045, 3,205, BEXP, Ruth 28-33 1H, middle Bakken, East Fork, t4/12; cum 79K 9/12;
  • 21046, 2,264, BEXP, Jack 21-16 1H, middle Bakken, East Fork,  t5/12; cum 52K 9/12;
Section 18-156-100; 20 oil storage tanks; flaring
  • 21197, 1,100, Liberty Resources, Jackman 156-100-18-19-1H, East Fork, t4/12; cum 83K 9/12;
  • 21198, 961, Liberty Resources, Berger 156-100-7-6-1H, East Fork; t4/12; cum 96K 9/12;
Section 15-156-101; 20 oil storage tanks; being prepped for fracked
  • 22067, 758, Liberty Resources, Sylte 156-101-10-3-1H, Tyrone, t6/12; cum 81K 1/13;
  • 22068, 567, Liberty Resources, Sylte 156-101-15-22-1H, Tyrone,t6/12; cum 72K 1/13;
Other Liberty Resource wells of recent vintage:
  • 21680, 800, Liberty Resources, Nygaard 150-101-28-33-1H, Pronghorn, t9/12; cum 58K 1/13;
  • 21421, 648, Liberty Resources, Fritz 150-101-32-29-1H, wildcat (32-150-101), t5/12; cum 46K 9/12;
  • 22709, conf, Liberty Resources, Gullikson 152-103-31-30-1H, Glass Bluff,
  • 22401, 876, Liberty Resources, Lukenbill 155-101-11-2-1H, Cow Creek, t9/12; cum 67K 1/13;
  • 21141, 1,108, Liberty Resources, Anna 156-100-8-5-1H, East Fork, t8/12; cum 79K 1/13;
  • 22522, 522, Liberty Resources, Nelson 156-100-17-20-1H, East Fork, t8/12; cum 91K 1/13;
  • 20748, 599, Liberty Resources, Lindy 156-100-10-3-1H, East Fork, t5/12; cum 43K 9/12;
  • 20736, drl, Liberty Resources, Jackman 156-100-11-2-1H, East Fork,
  • 22495, 805, Liberty Resources, Borrud 156-101-1-12-1H, Tyrone, t8/12; cum 92K 1/13;
  • 21578, 470, Liberty Resources, Berger 156-101-9-4-1H, Tyrone, t7/12; cum 46K 1/13;
  • 21481, 691, Liberty Resources, Cornabean 156-101-25-36-1H, Tyrone, 7/12; cum 93K 1/13;

200 Days For Federal Permit

200 days to get a permit to drill on federal land.
The Bakken Oil play has taken off like wildfire. But oil companies say there are still several delays at the federal level. So independent oil and gas producers went to Washington to advocate for better policies to enhance drilling in the west.

Two hundred days is the average amount of time it`s taking oil companies in North Dakota to get drilling permits on federal land. That`s just one of the policies the Western Energy Alliance wants to change at the federal level.
I have mixed feelings on this one. With such a huge backlog of wells to be drilled, is 200 days all that important? Are there better issues to fight? Exactly what does the approving agency base its decision on anyway -- for granting a permit? Is 200 days even enough time to do an adequate job? I really don't know. The number of days required to issue a permit is way beyond me.

For Investors Only: XOM Could Increase Its Dividend Again

XOM just announced a 21% increase in its dividends. Some analysts suggest XOM could raise the dividend again before the year is over. Mature companies usually raise their dividends, at best, once a year. This would be quite out of the ordinary for a mature company like XOM to raise its dividend twice in one year.
Deutsche Bank opines that Exxon Mobil could further raise its dividend on top its 21 percent increase of earlier this week. The analyst at DB says that “If Exxon Mobil’s CEO [Rex Tillerson] stays true to his word… and keeps the yield competitive, there should be further dividend increases before next year. We believe shareholder pressure will remain high for this.”
Link is here.

GMXR Corporate Presentation -- Will Report Earnings May 2

Highlights of the corporate presentation, April 17, 2012.

Slide 3:
  • McKenzie County, GMXR, 3 wells, average: 1,973 boepd
  • 2,549, Lange 11-30-1H
    1,953, Neil 24-19MBH
    1,436, Taboo 1-25-36H
  • GMXR Bakken/Three Forks average: 1,420 boepd
Slide 4:
  • Natural gas hedges at $2.60 (2012) and $3.50 (2013)
  • Collars, spreads, etc., for oil: $100/$90
  • Some of their oil revenue from current wells protected with $106.40 swaps
Other:
  • signing contracts with ONEOK for natural gas gathering 
  • slide 6 shows how quickly this company is turning to the oil-rich Bakken
  • presentation shows nice history of the Bakken
  • nice graphic of Bakken Pool payzones, including four benches of the Three Forks formation
  • continuity of Three Forks across GMXR's position
  • 1,100, CLR, Charlotte 1-22, 2nd bench
  • 2,549, GMXR, Lange 11-30-1H, middle Bakken
  • 1,436, GMXR, Taboo 1-25-36H, middle Bakken
  • DRL, GMXR, Pojorlie, well cored through Three Forks, 1st bench
  • DRL, GMXR, Evonluk, middle Bakken
  • 1,953, WLL, Kubas 11-13TFH, Three Forks, 1st bench

  • nice graphic of decline curve, and explanation of data points
  • example of sliding sleeve
  • prospects in McKenzie, Billings, and Stark counties



    Minnesota Has Discovered Their Natural Resources Have An "All The Above" Flavor -- A Page From Obama's Playbook on Developing Natural Resources?

    Updates

    Later, 1:10 pm: Yes, I was correct. The article has been corrected. The Freudian slip in which it was suggested that the environmentalists will "sue," has been changed to the environmentalists "use" this land. That correction didn't take long.
    Original Post

    A most interesting story: it looks like when a state is financially in "deep do-do," even liberal states start to wake up: Minnesota just enacted a new law that will encourage development of their natural resources. Wow.

    First, the "cut and paste" from the link:
    The legislation demands that state managers now put more emphasis on raising money for state education efforts and less emphasis on ecological or recreation concerns.

    The 2.5 million acres, an area larger than Yellowstone National Park .... was given to the state by the federal government 150 years ago with the stipulation that any money made off the land — from logging, mining or land sales — be assigned to a trust fund that doles out money to school districts across the state.

    The land has been managed by the DNR for decades as if it were traditional state forest used by hunters, campers and hikers, ....

    Opponents say the bill effectively takes management of the 2.5 million acres away from the science-based DNR and gives it to lawmakers and a new trust lands czar that will overlook environmental impacts, hunters, hikers and other people who sue the land.
    Teachers and students get at least an equal spot at the table with the Sierra Club. Incredible.

    The reason I was quick to "cut and paste" this portion: my hunch is that the story will be corrected in a moment.

    But before it is, note that last paragraph:
    "...  and a new trust lands czar that will overlook environmental impacts, hunters, hikers and other people who sue the land."
    Or maybe not. That's exactly who will sue to keep the land a private reserve for hunters, hikers, and huggers.

    I can only assume the state of Minnesota looked across the state line to see how NDIC's three-person commission was managing the natural resources of North Dakota and said, "wow."

    Maybe The Top Story of The Year: Why BEXP Has The Best Wells In the Basin

    Link here.

    [For newbies: Statoil bought BEXP.]

    Housekeeping: Updated IPs for 1Q12 Wells

    Periodically I go back through my "New Wells Reporting" pages and update IPs for wells that went to DRL status after coming off the confidential list.

    I have just updated the wells for 1Q12.  About 20 wells were updated; nothing exciting to report. 

    Update On Another Nice Helis Well -- The Bakken, North Dakota, USA

    Helis reports another nice well:
    • 21331, 2,164, Helis, Foreman 5-2/1H, Spotted Horn, Bakken, 
    This was back on April 18, 2012. I'm still getting caught up with reporting new well results after Karen quit posting the data earlier this month.

    Helis has reported some nice wells.

    One WSJ Op-Ed Piece Paid for The Subscripton -- Aubrey McLendon

    I don't know if you can get to this article without a password; hopefully you can it.

    It reminded me how much I enjoy the Wall Street Journal -- but then I'm reminded of that every day.

    In this case, it's an opinion piece by the WSJ editorial staff on CHK's CEO. Actually it's hardly an opinion piece. It's simply a collection of Aubrey's thoughts on energy and politics expressed during a recent visit to the WSJ offices.

    This on the Keystone decision is typical of his comments:
    ...the message the president should have delivered in January when he rejected the pipeline. "What he should have said is: 'OK, so we're not going to build Keystone and you the American people, I just want you to know that this will result in higher gasoline and diesel prices for you for the rest of your lives because I just woke Canada up from a 50-year slumber and I slapped them in the face and they will now build a pipeline to Vancouver. And the Chinese today are celebrating. And as a consequence prices for oil in the U.S. will be higher.'"

    Warming to the topic, he relates with more than a little dismay that after the rejection of Keystone XL "then [Mr. Obama] comes to Oklahoma and stands in front of a bunch of pipe—which I don't think he knew what it was—and says, 'I'm going to greenlight southern Keystone.' It didn't need any presidential decisions to be made. I mean the only presidential decision is the 12 inches at the Canadian border. We needed that."
    And on fracking:
    ...I think we're moving beyond the whole fracking controversy as [the Environmental Protection Agency] kind of systematically takes a step back from all their allegations." Several hours after Mr. McClendon's visit, the EPA announced draft fracking rules that were less onerous than expected.

    Not that he fears a temporary ban in any case. "You want to go ban fracking for a year? Knock yourself out. It would be marvelous for our share price," because the limit on supply would send gas prices soaring. "Essentially every well in the U.S. is fracked," he continues, and therefore a ban on gas production would eliminate the energy on which utilities and their customers rely. "You'll kill tens of thousands of people, freeze them out. You'll starve them out. It's completely unthinkable."
    I hope you can get to the link.

    He didn't mention the Bakken. Or least the WSJ didn't mention it.