Montana: On Pace To Set Record For Oil Permits; Natural Gas Drilling At Standstill

Full story at Rigzone.com.

The Bakken Never Fails To Surprise --

Updates

July 29, 2012: in addition to notes in the original post from the conference call, this exchange was recorded from the conference call and posted at another site:

Steve, you did mention some bolt-on acreage acquisitions in the Williston, can you just talk about where your position is now? I know, you dropped some rigs, and I think, you’ve been less enthusiastic but where are you acreage-wise now in the Williston?

Stephen I. Chazen – President and CEO: I think we’re north of 300,000 acres.

If OXY does indeed have more than 300,000 acres in the Bakken, that is significant. Early in 2011, they had 200,000 acres; at end of 2011 they had 277,000 net acres in the Bakken. So, going from 200,000 to 300,000 net acres in the Bakken this past year is noteworthy. [OXY entered the Bakken by purchasing Anschutz 188,000 net acres in 2010.]

Original Post

For quite some time I have questioned the "poor" initial production (IPs) numbers recorded by OXY USA.

Occidental, itself, is on record as saying that the Bakken is expensive, it has better prospects, and, although it won't be leaving the Bakken, it will be cutting back in the Bakken.

And, then yesterday, or today, I forget, I posted a stand-alone suggesting that OXY's IPs are improving.

Then this, tonight, it is being reported that the OXY chairmen, Steve Chazen is quoted as saying:

".... much of the company's increase in production, which was at a record level in the second quarter, came from the Bakken Shale."

Wow, who would have guessed? As noted, the Bakken never fails to surprise.

I find it impressive that he even mentioned the Bakken. In the last conference call, I don't think it was even mentioned, until the Bakken came up in Q&A, and then it was pretty much avoided. It certainly sounded like the Bakken was the poor stepdaughter for this company.

OXY is a $70 billion (market cap), international company.  If "much of the company's increase in production, which was at a record level in the second quarter, came from the Bakken Shale" what does that say about the Bakken-centric companies like CLR (market cap: $12 billion) and WLL ($5 billion). OXY has about 200,000 net acres in the Bakken; CLR, almost a million; and, Whiting, around 700,000 net acres.  The numbers are changing, but in 2011, Whiting and OXY each had about 15 active rigs; CLR, 24 active rigs, in North Dakota.

So, I was pretty much blown away by OXY's CEO saying that much of OXY's record production can be attributed to the Bakken.

The source of the comment is at Rigzone.com. Other data points:

• the company will decrease total number of rigs from 75 to about 70
• pace of drilling will not slow down; they will drill as much as they have with fewer rigs
• they plan to increase CAPEX for 2012 more than planned
• CAPEX will increase about a billion dollars, from $8.3 to $9.2; a little more than half of the increase will go toward the Al Hosn Shah gas project
• don't expect any M&A activity; they have time to wait; in no hurry

The Al Hosn Shah gas project is a $10 billion project shared by Abu Dhabi and Occidental, announced last year.

The Bakken Never Fails to Surprise: Which Company CEO Said ...

"... much of the company's increase in production, which was at a record level in the second quarter, came from the Bakken Shale."

Answer at end of an earlier post.

Proposed Pipeline Regulations Move Very, Very Slowly

From the Dickinson Press/InsideClimate News.com: it reads more like an op-ed piece than a news story.

Efforts to beef up oversight of the nation's oil pipelines are progressing so slowly that it's unlikely any additional safeguards will be in place before construction begins on thousands of miles of new pipelines, including the proposed Keystone XL. 

Reporter listed as: Guest Writers.

The Keystone XL 1.0 pipeline is dead. 

Now we don't even know who writes these articles, unless of course that's his/her real name, which is possible.

Flurry of Permit Activity Continues in Heart Butte; New Permits Announced for Today; Wells Coming Off Confidential List Tomorrow

The flurry of activity continues in Heart Butte with another three (3) permits for wells in that field, this time for XTO, as noted at the daily activity report for July 26, 2012. Regular readers of the blog probably have an idea why this flurry of activity.

For tomorrow, the following wells come off the confidential list:
20796, conf, Whiting, Ridl 34-12TFH, Zenith,
22154, conf, CLR, Pittsburg 2-19H, Banks,
22219, conf, Ballantye Oil, Wiborg 3-5, Southwest Landa,

Wow, Thirteen Companies Announced Increased Dividends

... including Baxter, by a significant amount. Baxter is not an energy company.

Disclaimer: this is not an investment site; do not make any investment decisions based on anything you read at this site.

When I first started investing on my own, about 40 years ago, I remember following dividend announcements in the WSJ on a regular basis. About the only financial news I had on a regular basis was that of the print edition of the WSJ. Wow, have times changed.

I missed this one yesterday: Apple increased its dividend from 12 cents to $2.65/share. OK.

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Note: first comment -- actually fourteen (14) companies announced dividend/distribution increases.

A Nice Early Comparison Between Eagle Ford and The Bakken

Link here to Oil and Gas Journal.

This is my favorite line, validating what I've been blogging for quite some time (that part in bold):

The IHS Herold Eagle Ford Regional Play Assessment said typical well performance as well as peak-month production of the Eagle Ford’s best wells exceeds wells drilled in the Bakken formation, often considered the tight oil standard.

Note the price they are paying for acre in the Eagle Ford:

The Eagle Ford’s favorable outlook is reflected in a competitive merger and acquisition environment, with implied deal values averaging $14,000/acre for Eagle Ford acreage in 2011 and top prices approaching $25,000/acre, IHS said.

It's my understanding that the Eagle Ford play is much thicker than the Bakken. How this all plays out has to do with the economics of each well. Period. Dot.

Apple's New Store in Barcelona, Spain -- And, Yes, Absolutely Nothing To Do With The Bakken

Photos of Apple's new store in Barcelona.

Apple's first retail store was at Tysons Corner, Virginia, in 2001. After more than ten (10) years, I am not aware of any retail technology store that approaches the phenomenal success of the retail Apple stores. The stores are simply incredible.

Microsoft got back into the retail store business in 2009, after an aborted start back in 1999 - 2001, run by Sony. I have not yet been in a Microsoft store, and doubt that I ever will. I noted in an earlier post that Microsoft will soon be opening a store in a downtown mall across the street from Apple's flagship store in Boston.

I have to chuckle. I went to the Apple store a few days before my cross-country trip to buy a charger for one of my Apple products. They were not on display. The Apple employee told me they have them in stock, that they were in back, and if I wanted, they would bring it out for me to purchase. I suggested that I just wanted to see it. The employee said that it was simply a charger, not much to look at. He was correct, but it was an interesting take on the situation. I ended up buying it sight unseen.

Yes, it was not much to look at. Simply a white charger.

Elsewhere...

Updates

July 27, 2012: Twenty (20) hours after the request was posted elsewhere, no one had yet answered at that site. Interesting. 

 

Original Post

.... a reader is asking for IPs for:

• 21734, drl, Chesapeake, Olson 12-139-104 A 1H, wildcat, Golden Valley County, s12/11; cum 0 bbls;
• 21143, drl--> IA, Chesapeake, Schoch 21-137-97 A 1H, wildcat, Stark County, s12/11; cum 0 bbls;
• 21885, drl, Chesapeake, Grenze 26-138098 A 1H, wildcat, Stark County; s12/11; cumulative oil: 1 bbl (no typo: one bbl of oil)

Two of the three bbls remain on "drill" status, while the third one is now listed as "IA": inactive.

See first comment:

• 21139, 0, Chesapeake, Zent 30-138-95-A 1H, wildcat, Stark County, t12/11; cum 2,263 bbls 5/12; producing about 700 bbls/month past three months 

Wow -- ONEOK To Increase Investments in the Bakken

Updates

May 22, 2017: announces completion of new Bakken offices in Sidney, MT.
 
March 1, 2017: very upbeat 4Q16 and full year report.

December 2, 2016: one year ago,  shares trading at $20; today, shares trading at $55.

January 15, 2015: corporate presentation, January 8, 2015.

January 14, 2015: ONEOK increases dividend. 

December 15, 2014: ONEOK to add de-ethanizers at their two NG plants west of Williston, Stateline I and Stateline II.

July 30, 2013: update on projects in the Bakken for 2Q13.

January 17, 2013: ONEOK announces it will build a fifth natural gas gathering and procession plant in North Dakota, to be named Garden Creek III. 

December 10, 2012: public hearing on Garden Creek II, to be co-located with Garden Creek 1, ten miles northeast of Watford City; 100 million cubic feet/day of natural gas; 

November 27, 2012: ONEOK will not go forward with Bakken Crude Express Pipeline.

October 22, 2012:  Link to Oil & Gas Journal here, re: ONEOK, update:

Data points:

• ONEOK announces "open season" for previously announced Bakken Crude Express Pipeline
• 1,300 mile crud oil pipeline
• from Williston Basin to Cushing hub
• 200,000 bopd
• construction to begin in early 2014; completion by mid-2015

September 24, 2012: Earnings forecast; dividend increase; outstanding report; 

September 7, 2012: ONEOK's presentation at Barclays. SeekingAlpha.com transcript here.

September 5, 2012: ONEOK presents at Barclays; transcript.

September 2, 2012:  Update on the ONEOK Bakken NGL Pipeline; problems in Crook County, Wyoming

Original Post

A huge "thank you" to a reader for sending me this note; I would have missed it.

The other day, in a series of comments regarding natural gas and ONEOK, I came very, very close to suggesting it was just a matter of time before ONEOK would announce another natural gas gathering and processing plant. Wow, I wish I had posted that, but I have become so well-known for my bias regarding the Bakken, I have backed off adding comments about what I think we might see in the Bakken.

Here's that story from Yahoo!Finance:

ONEOK Partners, L.P. today announced plans to invest approximately $980 million to $1.1 billion between now and 2014 to:

• Build a new 75,000 barrel-per-day (bpd) natural gas liquids (NGL) fractionator, MB-3, at Mont Belvieu, Texas, and related infrastructure;
• Build a new 100 million cubic feet per day (MMcf/d) natural gas processing facility – the Garden Creek II plant – in eastern McKenzie County, N.D., in the Bakken Shale in the Williston Basin, and related infrastructure;
• Increase capacity on the Bakken NGL Pipeline to 135,000 bpd from 60,000 bpd; and
• Build a new 40,000 bpd Ethane/Propane (E/P) splitter at Mont Belvieu, Texas.

This is an incredible announcement coming when it does -- regular readers have been treated to a series from articles from RBN Energy, ISA, and from readers talking about the coming natural gas boom in North Dakota.

And don't forget this Forbes article that Don sent me some time ago and I linked: natural gas is headed to $8.00.

Earnings Out Today: LINN, NBL, NOV, XOM

XOM, at Bloomberg:

Second-quarter net income was $15.9 billion, or $3.41 a share, compared with $10.7 billion, or $2.18, a year earlier, Irving, Texas-based Exxon said in a statement today. Excluding one-time gains that accounted for almost half of the quarter’s profit, per-share income was $1.80, or 15 cents lower than the average of 15 analysts’ estimates compiled by Bloomberg.

Exxon fell short of estimates for the second straight quarter amid a widening production decline that Chairman and Chief Executive Officer Rex Tillerson is attempting to reverse with $37 billion in capital spending this year. The company pumped the equivalent of 4.15 million barrels of crude a day during the April-to-June period, the lowest in two years. 

NOV, transcript:

Investors like results; share price up almost 10%.

NBL, from In-Play:

Noble Energy misses by $0.26, misses on revs: Reports Q2 (Jun) earnings of $0.77 per share, excluding non-recurring items, $0.26 worse than the Capital IQ Consensus Estimate of $1.03; revenues rose 14.7% year/year to $966 mln vs the $1016.75 mln consensus.  "The second quarter was another good quarter for Noble Energy. Production and operating costs were in line with our expectations, and we brought online our second major project at Galapagos. The growth of crude oil and liquids continues to be a key driver of our results as they accounted for nearly 50 percent of production and 85 percent of revenue for the quarter. Galapagos, as well as the horizontal programs in both the DJ Basin and Marcellus Shale, will make significant contributions to our production growth in the second half of the year. We continue to make excellent progress on our major international developments, which will extend our growth profile into 2013 and beyond. Exploration activity will move forward into the second half of the year, as we test and appraise several sizable opportunities in our key offshore basins." 

LINN, at Bloomberg:

Oil and gas company Linn Energy reported a lower-than-expected quarterly profit on weak natural gas liquids (NGL)prices.

Linn said weak NGL prices would hurt its 2012 earnings, but recent acquisitions and a shift to oil drilling are expected to mitigate the weak prices.

Again, this is not an investment site. Do not make any investment decisions based on what you read at this blog. I include this information to help me keep the Bakken in perspective as to what is happening in the oil and gas industry at large.

During earnings seasons I am overwhelmed with data, so I depend on readers to send in links that might interest others and to make comments. 

Incredible Post at Politico.com: US Could Become Energy Exporter

A huge "thank you" to a reader. I would have missed this story at Politico.com:

We have the potential to become the world’s swing supplier of energy. For the U.S. economy and its North American neighbors, Mexico and Canada, the reality is nothing short of revolutionary.

This felicitous scenario is now possible because the energy world has been turned upside-down. While policymakers globally have focused on alternatives to hydrocarbons, from solar and wind to plant matter, the game-changing technologies that have emerged are in the traditional sectors — unleashing staggering quantities of natural gas, oil and coal.

Politico.com is a politic-centric blog. Why the following:

In hydrocarbon-friendly states, tax coffers are bulging and job markets are booming, largely from production on private and state-controlled lands. Ohio alone stands to reap 200,000 new jobs by 2015 and $22 billion in economic growth. In the Western states, a mere few dozen proposed oil and gas projects could generate 120,000 jobs and $400 billion cumulative benefits over 15 years.

It turns out that Ohio is the #1 swing state for the November presidential election. Google it and you will find that Ohio is the state most visited by President Obama. Then google "ohio-Obama-oil" and see what you get.

Ohio is mentioned on the first page of the story; the Bakken is not mentioned at all. Huh? What? Maybe I missed it.

There have indeed been real technology gains in alternatives. But many analysts act as if the hydrocarbon industries operate in a parallel universe — where two decades of profound advances in information and materials sciences never took place. For it’s with hydrocarbons that new technologies have been transformative.

With these advances, the U.S. has emerged as the world’s fastest-growing producer of oil and natural gas. Production growth these past few years has reversed a 40-year decline. All this has happened in an environment either hostile to or, at best, neutral toward hydrocarbons.

That in bold? I've been saying that for years. I've shortened it to "permitorium."  Can you imagine where the US would be if there was some common sense in the White House to offset ideology?

Are OXY USA Wells Getting Better? IPs Seem To Be Improving

From today's daily activity report:

• 21264, 509, OXY USA, Emil Veverka 2-1-20H-143-95, Murphy Creek, t1/12; cum 14K 5/12;
• 21635, 681, OXY USA, State Dukart 1-24-13H-143-95, Murphy Creek, t5/12; cum10K 5/12;

Those are pretty IPs for the Bakken, although generally, I associate Murphy Creek with better IPs, but I could be wrong. If I have time, I will check later.

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Answer to the question posted at 10:52 p.m. EDT, July 26, 2012: Occidential (OXY USA).

Thursday Morning Links -- CLR Putting Oil in Storage; Crude-by-Rail 40%; XOM Earnings Surprise; NYT in Williston; ATT On a Tear

See disclaimer and welcome: this is not an investment blog; make no investment decisions on what you read at this blog. 

Continental Resources (CLR) posts 2Q12 production results: production up 76% yoy, and 11% over 1Q12.

From Yahoo InPlay:

Continental Resources reported 76% production increase YoY in Q2 of 2012: Co announced that expects to report record total production of 94,852 barrels of oil equivalent per day (boepd) for the second quarter ended June 30, 2012, a 76 percent increase over production of 53,984 boepd for the second quarter of 2011.

During the quarter, production exceeded sales by 147,000 barrels of oil as a result of the Company placing oil in storage in anticipation of higher prices. The Company expects to report an average realized oil price of $80.56 per barrel and an average realized natural gas price of $3.51 per Mcf for the second quarter of 2012, yielding an average realized price of $61.69 per Boe (barrels of oil equivalent). 

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At Independent Stock Analysis, this one caught my eye, but there are several others:

“North Dakota Department of Mineral Resources director Lynn Helms says as much as 40 percent of the state’s oil exports are being shipped by train” at Fuel Fix.  

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With recent comments from "anon 1" about the Eagle Ford, this should be interesting from RBN Energy:  The Eagle Ford Crude Story, Part II.

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For investors only, from Yahoo In-Play: 

Exxon Mobil clarification: Large Q2 earnings beat included special items: Earlier we reported Q2 EPS of $3.41 (net income of $15.91 bln) beat the $1.96 consensus, however that included a $7.5 bln net gain associated with divestments and tax related items. Backing out that $7.5 bln gain, Q2 EPS was closer to ~$1.80, below consensus. Our original earning comment has been edited.

XOM popped to ~$87 on the headline "beat" but subsequently sold off the the $84 level after the release was parsed. The stock is currently just below the $85 level (-0.3%) in the premarket.

Comment: one has to chuckle. Too hard to explain.

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Will it ever end? I thought the EPA testing at Dimock, Pennsylvania, was complete. Hardly. It is being reported that the EPA has concluded ALL water testing at Dimock. The story does not explicity say (although I read through it quickly and could have missed it) that this testing had nothing to do with fracking. This time it had to do with non-fracking chemicals:

Overall during the sampling in Dimock, EPA found hazardous substances, specifically arsenic, barium or manganese, all of which are also naturally occurring substances, in well water at five homes at levels that could present a health concern. In all cases the residents have now or will have their own treatment systems that can reduce concentrations of those hazardous substances to acceptable levels at the tap. EPA has provided the residents with all of their sampling results and has no further plans to conduct additional drinking water sampling in Dimock.  

No further plans to conduct additional drinking water sampling in Dimock. I guess even the EPA gets tired of some of this craziness.  I assume the EPA has moved on to North Dakota.

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The New York Times went to Williston and this is all they could find on the downside due to the boom: traffic, housing challenges, and dust. That was it. Traffic, housing challenges, and dust. What they did not find: terrorists; roadside bombs; civil war with threat of chemical agents; starvation; empty shelves; lack of water, sewer, electricity; joblessness; gouging at the grocery stores; problems with fracking; oil spills; derailments; lack of shelter. All they found was traffic, housing challenges, and dust. My hunch is the journalist never really went to Williston; she posted her story from Ohio. Had she actually been in Williston, she would have mentioned mosquitoes.

[NY Times reported a loss...again.
The net loss was $88.1 million, or 60 cents a share, compared with a net loss of $119.7 million, or 79 cents a share, in the period a year earlier, when the company wrote down the value of its regional newspapers, which it later sold.]

By the way, speaking of traffic: I haven't been in NYC recently, but my hunch is that traffic in NYC is much, much worse than anything in Williston. When in Williston I only have two rules: a) avoid left hand turns at all costs; and, b) if in a left hand turn lane, stop as far back as possible to allow trucks to make that challenging left turn. Of course traffic is worse in Williston than it once was: hello!

Oh, and this. The Bakken boom began in Montana in 2000; in North Dakota in 2007. The Bakken boom may be the biggest energy story of the decade (2000 - 2010), and it took five years, or 12 years, depending on where you want to start, for the NY Times to travel that far west of the Hudson. Incredible. 

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Actions have consequences. By killing Keystone XL 1.0, the President has made it easier for the Chinese to get another foot in North America's energy-resource door. Great article/link at the WSJ sent to me by a reader. Thank you.

President Obama may not want to exploit the energy buried in Canada's Alberta oil sands, but China sure does. Think of Monday's $15.1 billion offer by China's state-owned Cnooc to buy Canadian energy giant Nexen as a post-Keystone XL Pipeline bid to replace the U.S. as Canada's biggest energy investor and market.

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For investors only, at Forbes, ATT on a tear:

Data continued to be AT&T’s primary growth driver, with revenues from wireless data and U-Verse broadband and video services growing respectively by 19% and 38% over the year-ago quarter. More importantly, however, the carrier saw discipline in meting out handset subsidies and operational efficiency return to its ranks as wireless EBITDA margins came in at 45% and operating margins at a best-ever 30.3%.

On the subscriber additions front, AT&T was able to add 320,000 postpaid connections during the quarter, a sequential increase of more than 70% as the new iPad bolstered net additions despite a saturated wireless market. Increasing competition from rivals Verizon and Sprint in an increasingly saturated wireless market is gradually causing subscriber growth to slow, and the availability (or not) of LTE in certain markets could be key to attracting new subscribers as well as retaining old ones from hereon.

I have used Sprint forever, and am still a Sprint customer, but ATT has nothing to fear from Sprint.  ATT is up a staggering $1.00 today, a new 52-week high (one of many this year) and still pays over 5%. Compare that to US Treasury bonds.

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Meanwhile, for those interested in US-owned companies, GM hits a new low.

General Motors Co. stock fell 1.2 percent Wednesday, closing at $18.80, down $0.22, on worries about Europe — the first time the Detroit automaker's stock has closed below $19 a share since its initial public offering.

The Detroit automaker has seen its share price tumble by more than 52 percent since it reached a high closing price in January 2011 of $38.90, just after going public in November 2010. The company has shed more than $30 billion in market capitalization over the last 18 months, and now is worth about $29 billion.

And GM is still $42 billion in the hole; President Obama says otherwise. 

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WOW! What is the capital of Israel? I thought it was Tel Aviv, but I guess it's much more complicated.

 

Nine (9) New Permits -- Daily Activity Report -- July 26, 2012 -- Several Nice Wells; Is OXY USA Getting Better IPs?

Nine (9) new permits -- July 26, 2012

• Operators: XTO (4), Fidelity, Crescent Point Energy, Legacy Oil, Liberty Resources, and CLR
• Fields: Avoca (Williams), Glass Bluff (McKenzie), North Souris (Bottineau), Little Muddy (Williams), Heart Butte (Dunn), Midway (Williams), Stanley (Mountrail)

Wells coming off the confidential list:

• 19835, 711, Hess/American Oil, Skjei Midwest trust 15-35H, Rainbow, t5/12; cum 12K 5/12;
• 20601, 1,059, EOG, Mandaree 16-04H, Squaw Creek, t5/12; cum 10K 5/12; spacing: E2
• 21264, 509, OXY USA, Emil Veverka 2-1-20H-143-95, Murphy Creek, t1/12; cum 14K 5/12;
• 21534, 783, Petro-Hunt, Zabolotny 144-98-3A-10-1H, Little Knife, t5/12; cum 781 bbls 5/12;
• 21635, 681, OXY USA, State Dukart 1-24-13H-143-95, Murphy Creek, t5/12; cum10K 5/12;
• 21658, 901, KOG, Grizzly 149-104-15-12-1-2H, Mondak, t4/12; cum 8K 51/2;
• 21786, 1,494, Denbury Onshore, Rink 12-4ESH, Garden, t4/12; cum 19K 5/12;
• 21991, 1,134, Zenergy, Schmitz 4-9H, Indian Hill, t4/12; cum 23K 5/12;
• 21996, 380, SM Energy, Torgeson 14-19HN, West Ambrose,  t6/12; cum 956 bbls 5/12;

Producing wells completed:

• 20590, 493, Zavanna, Skogen 17-20 1H,
• 19429, 683, CLR, Hunter 1-8H,
• 21295, 979, CLR, Peterson 156-99-29-32-1H,

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Note for the Granddaughters

We had a great day in southern California. We took the bikes to the end of Gaffey Street in San Pedro, and then explored the Pacific Coast. I was quite surprised that the older granddaughter found dozens of hermit crabs in the tide pool. She really knows her marine biology. The younger one knows no fear. She loved the biking.