Tuesday, September 25, 2012

Random Note on the Mogen Wells in Hawkeye Oil Field

This is what got me into such a good mood today, this note sent in by a reader, and posted over at the Hawkeye oil field site:
Update on Mogen wells in the Hawkeye Field.
20738 33053035800000 HA-MOGEN-152-95- 0805H-2HESS CORPORATION HAWKEYE SWSE 8 152 95 11/20/2011 233606 22817 335500 
16694 33053028110000 HA-MOGEN-152-95 0805H-1 HESS CORPORATION HAWKEYE SWSE 8 152 95 11/2/2007 142818 13374 258428 
The new Mogen #20738 has produced 100K more in nine months,than the Mogen #16694 has produced since 11/2007. However, the older well has been IA since the new well started producing.
And that's the kind of note that gets me excited again about the Bakken.

In my shorthand:
  • 16694, 348, Hess, HA-Mogen-152-95-0805H-1, Hawkeye, F, t12/07; cum 143K 7/12; inactive for the past year (since 1/12)
  • 20738, 1,496, Hess, HA-Mogen-152-95-0805H-2, Hawkeye, F, t12/11; cum 234K 7/12;
The Hawkeye oil field is an old field, and it is smack dab in the middle of one of the sweet spots in the Bakken, northeast McKenzie County, about ten (10) miles from Banks oil field. 

But look at that second Mogen well: 234K in about seven months -- incredible. I used to say that at the 100,000-bbl threshold a Bakken well was well on its way for paying for itself. Costs have gone up significantly, and maybe the new threshold is 200K bbls. If so, this well is on its way to paying for itself and will now produce for the next thirty (30) years.


*******************************
Put on your headphones and play this loud, real loud:


My significant other flies in tonight.

Terrific Tuesday -- An Incredible Daily Activity Report; Manufacturing Phase Begins North of Minot?

Wow, I'm in a great mood.

I just posted a very long reply to a comment but "blogger" won't take long comments, so I will copy and paste it as part of stand-alone post, but that will come later.

First, today's daily activity report, and it was an incredible report.

Fifteen (15) new permits.
  • Operators: Surge (4), Slawson (4), BEXP (2), Corinthian (2), Fidelity, Mountain View, Zavanna
  • Fields: Briar Creek (McKenzie), Big Bend (Mountrail), North Fork (McKenzie), North Souris (Bottineau), Souris (Bottineau), Foreman Butte (McKenzie), 
Comments: Fidelity has a permit for a wildcat in Stark County; Mountain View has a permit for a wildcat in Divide County

For newbies: remember, "Souris, North Souris, Bottineau, Surge, Corinthian" are all SPEARFISH wells. This should get the MINOT folks excited. This is all north of Minot. The SPEARFISH is to MINOT what the Bakken is to Williston. Is the manufacturing phase beginning north of Minot?

New wells coming off confidential list were reported earlier and can be found at the sidebar at the right.

In addition, several producing wells were completed:
  • 18446, 118, Petro-Hunt, Fort Berthold 152-93-18B-19-1H, 
  • 20248, drl, Murex, Allison Ann 7-6H, 
  • 20532, 3,088, BEXP, Garmann 19-18 1H, Banks, t8/12; cum 4K 7/12;
  • 20830, 95, Murex, Kimberly Dawn 30-31H, 
  • 21645, 400, Hess, SC-1WX8-1H, 
  • 21904, 1,542, QEP, MHA 4-06-07H-147-92, Heart Butte, t8/20/12; cum --
  • 21905, 2,223, QEP, MHA 2-06-07H-147-92, Heart Butte, t8/17/12; cum --
  • 21906, 2,142, QEP, MHA 4-32-33H-148-92, Heart Butte, t8/15/12; cum -- 
  • 21908, 2,180, QEP, MHA 2-32-33H-148-92, Heart Butte, t8/22/12; cum --
  • 22007, 2,700, BEXP, Panzer 22-23 1H, 
  • 22867, 1,052, Whiting, Pennington 11-3TFH,
The four QEP wells are one one pad, it appears, but two run south under the river; two run east under the river. This is in Heart Butte. This is going to be a huge area. Huge. [I was manic before I started this stand-alone post. After posting these and looking at the GIS map, I need to get back on my med.  Incredible. I posted a link to an Oil Drum article earlier today; today's daily activity report puts the Oil Drum essay in perspective. 

I'll probably write about this again, but note the test dates for the QEP/MHA wells: could these be "zip" or "zipper" fracks, doing one right after the other? Regardless, this is pretty incredible, and this is what the "manufacturing" stage is going to look like. But instead of one pad reported on any given day, we may see several pads -- but that's in the future. For now, enjoy what we are seeing. And now you see why I like the larger-acre spacing units.  Congrats to some well-deserving mineral owners!

********************


On another note, I only looked at one of the well files of the four QEP MHA wells reporting IPs yesterday (the 2,000-bbl IPs in Heart Butte). The sundry form for that one well regarding completing/fracking the well was not yet scanned in. I didn't check the others; if I remember, I will check them later.

The reason this is important: if I call recall correctly, QEP stated at the time they bought Helis acreage: QEP does not use ceramic proppant; they use all sand whereas Helis uses a lot of ceramic proppant. If I recall correctly, QEP stated that there was no difference in initial production whether one used sand or ceramic. Long-term differences are not yet known, of course.

********************

In addition to all this, another twenty-two (22) wells were reported as producing or plugged, and one knows that in the Bakken, they are "all" producing.

I have to chuckle. A long, long time ago, Chester sent in a comment wondering why I re-posted/transcribed the daily activity report. I couldn't print the comment because a) it was full of spelling and grammatical errors (I didn't want to embarrass Chester); b) it used unacceptable language; and, c) the comment added nothing to the discussion. But today is a good example of why I transcribe DARs: it forces me to really look at them as I go along. I can't just scan a report and tell myself I will come back to it. I have to actually type it out, and that gives me a good feeling for what's going on in the Bakken and to put Oil Drum essays in perspective. 

West Capa Oil Field

In these long posts there will be typographical and factual errors. If this information is important to you go to the source, generally the NDIC.

Updates

October 15, 2014: if this is your first time to this page, be sure to read the comments; some interesting history.

West Capa oil field has been updated. If I recall, no new wells have been reported since I did the last update but there have been some significant increases in total production in some wells since the last update.

What surprises me most: this field is just across the river (in Williams County) from perhaps the sweetest spot in the Bakken (northeast McKenzie) and yet the wells in this field (the West Capa) do not seem as good as those across the river. It is possible they will get better with new completion techniques.

There is currently one rig operating in West Capa. There is another rig in the area, but it is in the Grinnell oil field just to the south.

Permits

2017 (none as of September 20, 2017)

2016
None.


2015 (the list is complete)
30917, 464, XTO, Smouse 31X-28DXA, t2/16; cum 75K 7/17;
30665, 376, XTO, Smouse 31X-28H, t3/16; cum 52K 7/17;
30664, 603, XTO, Smouse 31X-28D, t3/16; cum 57K 7/17;
30652, 752, XTO, Smouse 31X-28C, t3/16; cum 79K 7/17; 


2014 (the list is complete)
28650, 1,701, XTO, HM Hove 34X-33H, t2/15; cum 160K 7/17;
28553, 1,580, XTO, HM Hove 34X-33D, t3/15; cum 152K 7/17;
28552, 1,302, XTO, HM Hove 34X-33G, t3/15; cum 138K 7/17;
28551, 1,057, XTO, HM Hove 34X-33C, t3/15; cum 152K 7/17;
27925, 1,294, XTO, Willey 31X-3H, t10/14; cum 67K 7/17;
27748, 655, XTO,  Willey 31X-3F, t10/14; cum 59K 7/17;
27747, 812, XTO, Willey 31X-3G, t10/14; cum 53K 7/17;
27746, 1,268, XTO, Willey 31X-3D, t10/14; cum 51K 9/15;

2013  (list is complete)
26845, 446, XTO, Roxy 21X-6F,  t12/14; cum 166K 7/17;
26844, conf, XTO, Roxy 21X-6A, t11/14; cum 187K 7/17;
26843, 1,986, XTO, Roxy 21X-6E, t11/14; cum 129K 7/17;
25851, 1,501, XTO, Wallace 21X-2A, t12/13; cum 108K 7/17;
25850, 990, XTO,  Wallace 21X-2E, t12/13; cum 56K 7/17;
25369, 1,559, XTO, Thaxton 24X-35A, t9/13; cum 126K 7/17;
25368, 1,325, XTO, Thaxton 24X-35E, t9/13; cum 103K 7/17;
25149, 539, XTO, Wallace 21X-2F, t12/13; cum 113K 7/17;

Prior to 2012 (all 2012 permits included) -- see below 

Original Post

Note: it is impossible to keep the fields updated. The purpose of these field updates is to a) give me an idea of where the fields are located; b) who "owns" them; c) how they are being developed; and, d) a general feeling for how "good" the field might be.

West Capa oil field is in/near the heart of the Bakken; it is located just a bit to the northeast on the other side of the river from the sweet spot of the Banks and Camp oil fields. It borders Truax which is to the west, which is a very, very good field for KOG.  West Capa is just north of the river, east of Williston. State Highway 1804 runs west-east through the field splitting the field to the north and to the south.

West Capa is just a few miles to the southwest where oil was first discovered in North Dakota.

One enters the field from the west about 25 miles from Williston; State Highway 1804 will swing north on its otherwise west-east route; if one were to continue straight east at that point, one would travel just five more miles to get to the Links of North Dakota.

It looks like the field is "owned" by XTO, a wholly-owned subsidiary of XOM. XTO had this acreage and was developing it before XTO was bought by XOM, if I remember correctly (I often get these "facts" incorrect, so I always appreciate corrections).

The wells look pretty good and it appears they are improving. I have not looked at the well files, but if there is a general trend of improving, I assume it is because the frack design is changing (more stages; more proppant).

West Capa wells with file numbers greater than 16XXX, with one exception (I was curious what Hess was looking for back before the current boom):
  • 13746, 33 (no typo)/SWD, Hess, Kamp SWD 34-23; a Silurian; t12/95; cum 12K 9/97;
  • 16676, 223, Murex, Ryan Thomas 27-23H, t11/07; cum 245K 7/17; Bakken;
  • 16828, 392, XTO, Kelly 41X-3, t1/08/ cum 100K 7/17; Bakken;
  • 17823, 617, XTO, Smouse 31X-28, t7/09; cum 98K 7/17; Bakken; went inactive 4/15; back on-line 8/16;
  • 18102, 806, XTO, H M Hove 34X-33, t4/10; cum 168K 7/17; Bakken;
  • 18894, 870, XTO, Woodrow 34X-32, t5/11; cum 150K 7/17; Bakken;
  • 18944, 907, XTO, Helen 11X-5, t1/11; cum 143K 7/17;   Bakken;
  • 19014, 717, XTO, Klepp 21X-1, t8/10; cum 154K 7/17; Bakken;
  • 20062, 1,359, XTO, Christiana 21X-6B, t4/12; cum 178K 7/17;
  • 20250, 1,944, XTO, Wayne 34X-34, t3/13; cum 214K 7/17;
  • 21376, 900, XTO, Willey 31X-3, t3/12; cum 115K 7/17; went inactive 2/14 for about 9 months;
  • 21894, 707, CLR, Kiefel 1-36H, t4/12; cum 195K 7/17;
  • 22139, 1,148, XTO, Christiana 21X-6G, t4/12; cum 149K 7/17;
  • 22275, 1,672, XTO, Rose Federal 34X-34C, t1/13; cum 157K 7/17;
  • 22325, 856, XTO, Wallace 21X-2B, t5/12; cum 91K 7/17;
  • 22514, 1,023, XTO, Thaxton 24X-35B, cum 77K 7/17;
  • 22515, 437, XTO, TAxton 24X-35F, t9/13; cum 122K 7/17;
  • 22681, 2,298, XTO, Roxy 21X-6B, 8/12; cum 234K 7/17;
See comment below about some history of this field. So that the comment is not lost, I will also post it here:
Just some history on the Capa Field area... The first oil test in this immediate area was the Big Viking well which was drilled in 1928. This well was located less than a mile south of the 13746 Kamp well which you referenced.  
The Big Viking was drilled with "cable-tool rig" which pounded a hole in the earth to 4600 feet.  
The second well of importance was the California Company (now Chevron) Kamp which was drilled to 10,281 feet in 1937 using a rotary rig. No significant oil or gas shows were reported but the well did drill through the Madison, Bakken, Three Forks and into the Devonian/Duperow formation.  
A half-mile west of this early test, Hess drilled a Kamp well in the 1980's which has produced nearly 900,000 barrels of oil from the Silurian zone at about 11,000 feet. The Hess well did have an oil show on a drill-stem test of the Duperow at about 10,000 feet.  
If the 1938 test had been successful our North Dakota oil history would likely be a lot different. The discovery well, as we all know, was the Amerada Clarence Iverson well drilled in 1951. This discovery was about 6 or 7 miles northeast of the early Big Viking and California Kamp wells. Like the old story about dry-holes, they didn't drill exactly in the right spot and they didn't drill deep enough!
Didn't drill in exactly the right spot and they didn't drill deep enough! Smile.

St Louis Company Sets Up Shop in Killdeer; Developing Round-About At Intersection of 20 / 200

Link here at Dickinson Press/Inside Climate News.
After a slowdown in St. Louis, J.M. Marschuetz construction began searching for other projects and thought western North Dakota’s roads that have been crumbling under oil field traffic could use some TLC, so the suburban St. Louis-based company expanded further than it had before, Vice President Michael Marschuetz said. 
The company plans to service the Williston, Killdeer and Dickinson areas and has set up shop in Killdeer. 
The 25-year-old company moved to the area in the past year. They are the firm building the roundabout at the intersection of highways 22 and 200 just south of Killdeer.
Go to the link for additional information.

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Note to the Granddaughters

One of the many experiences the granddaughters and I have enjoyed is whale watching on the East Coast and the West Coast of the United States. I can't remember if I've posted about the phenomenal experience we had a couple months ago whale watching out of Boston.

I have several "whale" books in my library including, Eye of the Whale: Lyric Passage from Baja to Siberia, Dick Russell, c. 2004, but I am still learning about them. Interestingly, there is a  fairly long section in Simon Winchester's Atlantic about whaling. I have never read Herman Melville's Moby Dick; I never understood the fascination. But now, having read Winchester's Atlantic, I am intrigues. Funny how things work out.

At the peak of whaling when Melville was writing, as many as four hundred (400) whales were brought in by the whaling fleets each year. But then this: "in the 1060's, when Russian and Japanese factory ships were operating at full bore, as many as twenty-five thousand (25,000) sperm whales were taken from the North Pacific each year." Wow. And, all of a sudden I have more respect for Greenpeace. 

Speaking of books, on the way into Boston this evening (I try to ride into Boston every evening on my bicycle during nice weather), I discovered a new "bookstore." It's on Brattle Street near Harvard Square. It's an outside bookstore. The vendor is not there. There is a locked money box. Each book is clearly labeled on the front how much each book costs. Completely on the honor system. The outdoor bookstore has been in operation for five years. Completely on the honor system. 

North Dakota's "Legacy Fund" > $535 Million

Link here to the Dickinson Press/Inside Climate News.

The "Legacy Fund":
in existence since August, 2011 (thereabouts); 13 months old according to DP/ICNvoters approved in 2010
accrues from 30 percent of the state's oil tax collections
cannot be spent until 2017
requires two-thirds of Legislature to approve spending
first deposit: September, 2011
most recent deposit: $45 million; growing faster than anticipated
Back-of-the-envelope calculations: 2017 --> 60 months from now x $50 million/month --> $3 billion. My understanding is that the money is invested in money market accounts.

If $45 million represents 30 percent for the most recent month, what was the total? $150 million.

For Investors Only: EOX

Emerald Oil (EOX) prices public offering of 93.75 mln shares of its common stock to the public at $0.80 per share. From Yahoo!In-Play.

Joining Lawrence Welk Among Music Greats From North Dakota

Alf Clausen has been nominated for 23 Emmy Awards, winning twice.

Starting early in season two, he has since scored every episode of "The Simpsons." Viewers will enjoy "The Simpsons" for its 24th season this year, with first episode this season this Sunday night.

It turns out that he scored the music for one of my favorites shows, long ago: "Moonlighting." According to the Wall Street Journal where he's quoted, Mr Clausen says "Moonlighting" was his crowning achievement. Google scoring 'the simpsons'
Mr Clausen was trained as a jazz musician on bass and French horn. While at North Dakota State University, he took a correspondence course in big-band writing offered by Boston's Berklee College of Music. ... later he moved to Boston.
Who wudda guessed?

Note to the Granddaughters

I played coronet in middle school and high school band for three or four years, until Mr Syverson could no longer take my lack of musical abilities. He figured that a "bad" French horn player was better than "no" French horn player, so he had me switch. I don't recall lasting into my senior year, but I suppose it was possible.

The Demise of the Big Box Store / Brick-And-Mortar

Foot Locker, Updates

March 13, 2018: Toys 'R Us preparing to close all stores; liquidate.

November 1, 2017: Book World to close; based in Appleton, WI; operates 45 book stores in seven states, including 20 in Wisconsin; liquidating its inventory; closing all locations after 41 years of being in operation.

May 21, 2017: Staples -- bleak, The Street. Flashback: judge nixes Staples-Office Depot merger -- antitrust law. Judge had not heard of Amazon.

May 16, 2017: as planned, Rue21 filed for bankruptcy protection on Monday (yesterday). Meanwhile, Dick's Sporting Goods shares tumbled on weak sales; biggest one-day drop in 3 years. Again, much of what Dick's sells can be ordered through Amazon or bought at Wal-mart. 

May 6, 2017: Mountain Gander closing stores nationwide ... acquired by Camping World Holdings Inc. last week. Gander Mountain said the move means it will continue to be a part of the “specialty outdoor market,” though it’s unclear from the statement how it will continue to serve customers.
Gander Mountain has been in business for 57 years and has locations in 26 states. [Update, May 7, 2017: there is some confusion here. The new owner says he did sell the entire inventory, but he plans to keep at least 70 locations open.]

Read more here: http://www.charlotteobserver.com/news/local/article149059559.html#storylink=cpy

May 5, 2017: not a "big box" store, but a "big restaurant" is said to be preparing for bankruptcy filing

May 4, 2017: story on See's Candies, but mentions large number of retailers that have gone bust; See's Candies is doing just fine, mind you.

April 29, 2017: luxury fashion brand Vince is the next retailer likely to go under.

April 21, 2017: Bebe Stores announces it is closing.

April 9, 2017: Rue21 to file for bankruptcy protection; retail stores on fastest pace ever for store closing.

April 4, 2017: Payless Shoes files for bankruptcy protection. 400 stores close. 

March 27, 2017: is it all over for Whole Foods; customers are voting with their feet; heading to Krogers.

March 24, 2017: GameStop shares down 12% on lower earnings. Sears closer to the end. 

March 21, 2017: Payless Shoes to file for bankruptcy as early as next week.

February 26, 2017: in addition to JCPenney, five other retailers closing a large number of big box locations: Sears, Macy's, Kohl's, and CVS Pharmacy.

February 24, 2017: USA Today suggested these big box stores are in trouble, at least to some degree:
  • Aeropostale clings to life
  • PacSun emerges from bankruptcy protection
  • Sears and K-Mar struggle
  • Macy's is getting smalelr
  • JCPenney is shrinking
February 24, 2017: JC Penney will close 140 stores nationwide, as sales weaken; more sluggist growth seen ahead.

February 19, 2017: Wal-Mart's problems

February 15, 2017: Warren Buffett sold off almost all of his shares in Walmart. Replaced Walmart with airlines.

January 7, 2017: Nieman Marcus, The Limited, Sam's

December 6, 2016: southern California apparel company -- American Apparel -- looking to move to lower cost state. 

December 4, 2016: increasing speculation that Sears/K-Mart will declare bankruptcy soon

October 4, 2016: posted at this site.

August 3, 2016: Office Depot to close 300 stores after regulators stuff the Staples / Office Depot merger. 

July 13, 2016: The Street takes a look at Staples. The writer says that Staples will keep shrinking, mostly due to Amazon. Shares have nosedived 42% over the past year; the S&P 500, over the same period, up about 2%.

June 28, 2016: is Forever 21 about to "go under"?
A shipping firm that delivered clothing to Forever 21 Inc. stores has abandoned the retailer, saying business has slowed so much that the work is no longer profitable.
EZ Worldwide Express is sizing down after canceling Forever 21’s shipping contract. Under that deal, EZ Worldwide Express agreed to be Forever 21’s exclusive carrier for at least 171 stores until 2019, according to documents filed in U.S. Bankruptcy Court in Newark, N.J.
The Elizabeth, N.J., company, filed for bankruptcy in January (2016). Since then, it has laid off about 200 workers and plans to sell about 140 vehicles and other equipment, including tractors, forklifts and conveyor belts that it no longer needs after the loss of Forever 21’s business.
May 19, 2016: Sports Authority will close all stores.

May 12, 2016: any wager on when either (or both) file for bankruptcy, Staples or Office Depot?

May 7, 2016: Lands' End struggling.

May 6, 2016: JCPenney next to go under?

May 3, 2016: Sports Authority, Aeropostale, and New York Fairway Supermarkets.

March 8, 2016: Sears looking for $750 million loan to stay afloat.

March 3, 2016: Sports Authority bankrupt and closing 140 stores.

February 26, 2016: the Wall Street Journal is reporting --
Dismal holiday results from retailers are prompting executives across the industry to shrink or adapt their stores, and rethink the cost of growing their online operations.
Declining shopper traffic is prompting companies such as Macy's Inc. and Wal-Mart Stores Inc. to close low-performing locations this year. The shift to online shopping also is vexing chains: Nordstrom Inc. said it would curtail technology spending after profits fell 29% last quarter, in part because of costs related to Web sales.
Sears said last month that it planned to close 50 stores, but on Thursday it hinted that it likely would reduce its footprint even further. The company noted that more than half the leases on 1,253 stores expire in less than five years.
Moreover, Sears has the right to terminate space with respect to 266 stores that it contributed to Seritage Growth Properties, a real-estate investment trust it created last year.
February 26, 2016: Kohl's is closing stores as the department store industry collapses

October 20, 2015: Amazon.com hiring more than JC Penney, Walmart combined.

October 15, 2015: not really "big box," but is Walmart down and out?

October 5, 2015: American Apparel files for bankruptcy protection

June 19, 2015: Office Depot shareholders approve sale to Staples

June 16, 2015: Gap to close one-quarter of its retail clothing stores.

March 3, 2015: Target to cut thousands of jobs in $2-billion cost-cutting exercise

January 8, 2015: CNBC is reporting that Macy will shutter 14 stores. See more on big box stores here.

January 8, 2015: USA Today is reporting: Wet Seal is closing 338 stores and laying off 3,700 employees in an effort to avoid a bankruptcy filing.

January 8, 2015: USA Today is reporting:
Despite a better-than-expected holiday shopping season, it wasn't enough to keep J.C. Penney from announcing it will shutter 39 underperforming stores and lay off 2,250 workers.
Penney said the mall-based stores in 19 states will close by early April. Word of the store closures - which represent about 4% of the middle-market chain's stores - came just days after Penney said holiday sales rose 3.7%.
October 28, 2014: Sears layoffs swell to 7,000 (original report was "only" 5,000 layoffs); as more stores added to list of closure; and one distribution center closed.

May 20, 2014: Staples shares plummet -- down almost 13%.
Shares of Staples are getting reamed this morning after the struggling office supply retailer announced first quarter earnings fell short of analyst estimates and cautioned for the current period. For the quarter ending May 3 Staples said it earned $0.18 on $5.65 billion in revenue. Wall Street had been looking for $0.21 on $5.61 billion in revenue. Same store sales declined 4%.
Staples says it expects to earn somewhere between $0.09 - $0.14 in the current quarter compared to a $0.15 average estimate.
Guiding lower is becoming a quarterly event for Staples. In March the company announced plans to close 225 of its U.S. stores. As of this morning Staples says 80 of those locations will be shuttered by the end of the current quarter. About the only positive during the period was 6% growth at Staples.com. Staples is still the second largest on-line retailer in the world though Walmart is quickly closing the gap.
January 22, 2014: A day late, a dollar short, CNBC is now reporting on the impending demise of the big box store

January 21, 2014: Sears to close its downtown Chicago flagship store due to flagging sales.

January 16, 2014: Best Buy is bludgeoned. Investors on Wall Street who never get out to shop in the country's malls are unaware that the big box stores have become show rooms for Amazon. 

November 25, 2012: big-box stores wrestle e-commerce gorilla, WSJ
Indeed, Amazon, whose global revenue from retail totaled $46.5 billion in 2011, is the gorilla in the e-commerce room. 
By comparison, Wal-Mart has said it expects to do over $9 billion in global e-commerce revenue in fiscal 2014, beginning in February. 
Amazon sells many of the same products as big-box stores but can undercut them on price due to lower overhead. It also uses computer algorithms to adjust prices in real time. Traditional retailers often can't move as rapidly because online prices must match those in stores.
September 26, 2012: I have thought about my earlier comment regarding TRU (see below). I think I'm wrong. Now: to store, shipping is free; to home, orders > $49 are free; so it may not seem as bad as it might. I also assume I was wrong yesterday when I suggested ordering on-line, TRU would ship the item to the store; I assume they would do that only if the item was not already available there. Now it sounds more like one-day layaway. Maybe it will work but adding staff to make it work seems problematic. Bottom line: I'm probably wrong. Maybe TRU should market it as "same-day layaway" or "one-day layaway."


Original Post

September 25, 2012: Staples accelerating closure of previously announced closures.

September 25, 2012: Toys 'R Us -- new business model -- folks order on-line; pick-up product in store; this will be interesting to watch. Two thoughts: it's possible busy folks enjoy shopping on-line, only to have to drive to the nearest Toys 'R Us store; find parking; walk to customer service; stand in line; etc., etc. Second thought: we now have a middle person in the mix to mess up the order -- minimum-pay associates receiving, retrieving items. Big Box stores are geared for large shipments to arrive; now they will be getting individual packages that need to be stored in such a way they are easily retrievable when the customer comes in. Recipe for success or recipe for disaster. Wouldn't "free" shipping be easier and more reliable? The whole goal is to get more foot traffic; I don't see it. The demographics don't work: unless it's grandparents doing most of Toys 'R Us shopping, it won't work. Young parents today are wired to the 'net. They love ordering on-line and getting stuff delivered.

The Red Queen: Long, In-Depth Article on the Bakken At The Oil Drum: Break-Even Point for Bakken Oil: $90

Updates

April 29, 2013: Rune Likvern, who wrote the first "Red Queen" article for The Oil Drum has a follow-up, asking: Is the typical NDIC Bakken tight oil well a sales pitch? Rune is still fascinated by the decline curve of Bakken wells. I think he misses the point: the important metrics are a) EURs, and, b) internal rates of return. I can guarantee that oil companies are not throwing $10 million into a well to hype a sales pitch. With regard to EURs, the important metrics to track: a) original oil in place; b) additional pay zones (four benches in the Three Forks); and, c) improving recovery rates. Would it matter if all the oil was drained from a well in one year if it provided 100% return on one's investment. I think not. In fact, it might be kind of nice: drill that well, make a 100% return, and then reclaim the land for farming after one year. The real question is this: is secondary and tertiary production feasible from the Bakken using current technology? It looks like the industry has 30 years to work on that problem.

October 9, 2012: Mike Filloon's response to the Red Queen fairy tale.

October 1, 2012: with adequate takeaway capacity, Triangle Petroleum says break-even point is $45.

September 26, 2012: It looks like the folks over at the Bakken Shale Discussion Group have found this article, also. Note: do not reference the MDW blog if you visit the BSDG -- you will be voted off the island. Smile.
Original Post

The Oil Drum has a very, very long article, highly analytical, highly statistical article regarding the Bakken.

The article has two themes:
  • the horrendous decline rate of the Bakken is concerning
  • the break-even point for Bakken oil is $90
The article begs an obvious question. I will be interested in seeing the comments. The article was just posted so there has only been one comment.

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If you find The Oil Drum article depressing, this should cheer you up.

Bonaparte's RetreatSegawa Shinji, instrumental

Bonaparte's Retreat, Willie Nelson


Reply to a comment. 

I received a very nice comment/reply to this post and to one of my replies. I replied but the reply was too long for "blogger." Instead of deleting that long reply, I simply cut and pasted it here. I consider my "comments" less well thought out and less well written than stand-alone posts, but I didn't want to lose this. The reply has to do with the comment regarding the need to "increase the pace of well completion" if "we" want to hit the 1 million bopd threshold.

Here's the reply:

Thank you; agree 100%.

1. The million bopd seems to be a nice round number, but the Bakken is made up of many, many oil companies, and they will do for their company what is best; they individually won't be worrying about total basin production.

2. I've blogged about this before, but a major component of valuing an oil and gas company is how well that company manages its reserves. There is no reason to sell oil at a discount once you have your leases held by production. Perhaps it would be best to produce enough oil to meet certain "internal" targets, but to manage the reserves in such a way that one sells oil when the price is higher, if you follow what I'm saying.

3. In other words, if the price of oil comes down significantly, oil companies will want to hold back on selling their oil at a discount. Obviously they have to meet their contracts and that's why they hedge (collars, etc).

4. As I've said many, many times, the business of the business is what shareholders are interested in. For me, the Bakken has proven itself. I will continue to champion it, and post/link stories about anticipated production numbers, but asset (reserves) management for an individual company is more important than production per se.

Again, if you follow me. [I would rather have my company well 50 bbls at $200/bbl, than 100 bbls at $50. Sure, production from 50 bbls to 100 bbls is doubled, but had the company waited for a higher price....you get the drift. Production is only part of the story.

So, switching gears. Pad drilling will introduce another wrinkle.

During the exploration phase, one could predict on a monthly basis how many wells would report an IP once they came off the confidential list.

During the transition to pad drilling, predicting could be more difficult. Let's say there are six wells on a pad. In the old days, once they drilled a non-pad well to total depth, they moved the rig, completed the well as soon as possible, and reported the IP; meanwhile the rig was moving to a new location and drilling. But on a monthly basis, that one rig was drilling a well, and perhaps that well or another well was being completed.

With pad drilling, they will drill to total depth, BUT they won't complete/frack the well. They will drill the next well. And they won't complete/frack that well. They won't frack any of the six wells until all have been drilled to total depth. So, we could see a month go by, or even two months, or even three months go by when no wells are completed by that one rig. All of a sudden folks are going to start getting worried; what happened; why aren't they completing the wells? It's an operational, scheduled delay. They will frack all six when the last well is drilled.

Once all companies are in the manufacturing stage this artificial backlog will take care of itself, but we could see some choppiness for one to two years as all-Bakken pad drilling gets into place. What I see so far on the GIS map server, it will be a long time -- maybe five years, maybe longer, before we are into all-Bakken pad drilling. So, there are many, many variables.

Right now, the most interesting metric is the number of new permits each month. A record was set this most recent month (July, 2012) and I suspect we are going to see some more records. According to the Director's Cut, there were 266 new permits in July, 2012 (surpassing the old record of 245 set in 2010). My records show 261 new permits in August but I don't count SWD wells, so maybe a new record in August. For September (only 30 days) we are on track for 253 new permits; it won't be a record but it will beat the 2010 record.

Bottom line: expect some choppiness in well completion during the transition stage to pad drilling. Best metric to follow to predict the future with regard to well completion: new permits (now setting records).

Oh, one last thing: don't forget "wet" natural gas. The "wet" natural gas to oil ratio is increasing and "wet" natural gas is valuable; not as valuable as oil, but more valuable than most lay folks know. This is a long note, and there may be typographical errors. The Apple autochecks spelling and does some strange things.

So, that was the reply. Not ready for prime time, and needs to be re-done later as a stand-along post.

Random Note on Share Price of CVX, XOM This Past Week

Just the other day I posted that prices for shares of CVX and XOM have held up remarkably well despite the drop in the price of oil from $100 to $90 last week.

So I was quite surprised when I read the following lede at SeekingAlpha.com:
From September 14 to September 19, 2012, crude oil prices dropped about 8% from approximately $100 per barrel to $92 per barrel. Many major international oil producers (explorers and refiners) including Exxon Mobil (XOM) and Chevron (CVX) saw their stock prices decline when stock investors decided to sell due to their worries over the diminishing short-term profit margin outlook for oil producers. 
Oh, really? Here is the reality according to Yahoo!Finance: Share prices of CVX dropped negligibly between September 14, 2012, and September 19, 2012, and actually increased between September 14, 2012, and September 24, 2012. What about XOM? dropped slightly through September 19, 2012, and pretty much level through September 24, 2012.

Again, I am really, really impressed with share price of XOM and CVX despite volatility of the price of oil this past week.

By the way, Motley Fool had a nice article on CVX earlier this month. Some trivia I did not know about CVX:

  • Chevron is the world's biggest producer of geothermal energy, which is obtained from the heat of the earth.
  • The company is one of the major installers of solar systems in education institutions. Its solar success stories include systems now operating in the South San Francisco Unified School District, the Contra Costa Community College District in San Francisco's East Bay, and the Los Angeles County Metropolitan Transportation Authority.
Disclaimer: this is not an investment site. I invest in many oil companies, and have done so for 30 years. Other than automatic dividend reinvestments, I have no plans to buy or trade shares in any oil company in the next month or so. 

Ammonia, Natural Gas, Fertilizer, and The Bakken

RBN Energy: another outstanding article.
The N-Flex “mobile” ammonia plant idea is more interesting if the technology can be scaled to take advantage of natural gas that is otherwise going to waste in North Dakota. The economics of small-scale production may be quite different and the resulting output will require transportation to reach the farm market. The hefty margins for large-scale production will probably be reduced considerably by these inefficiencies. However, if the capital costs of production on this small scale are more palatable than for a large plant, the idea could create a niche market. The success of the idea probably still depends on ammonia prices being driven by high crop prices rather than following the price of natural gas. Large-scale producers are unlikely to stand idly by and watch their market share disappear either. 
It doesn't take a rocket scientist or a Harvard MBA to see the opportunity for North Dakota entrepreneurs.

San Francisco Vs Man-Camps

This puts the man-camps into perspective.

San Francisco considers approving nation's tiniest micro-apartments.

The artist's schematic at the link is priceless.

It's interesting to look back on the size of dorm rooms that I lived in for four years. I was lucky: only two students per room. It is not uncommon for some colleges to accommodate three students per dorm room. Now that I think about it, I'm starting to wonder about all the folks who've complained about man-camps. Dormitory living: wow. Four years. But I digress.

Back to the San Francisco story:
New York City has launched a pilot project to test them out. Boston is doing it too. 
But here in San Francisco, where a growing number of residents are being priced out of the housing market by a revived tech economy, city leaders are considering the smallest micro-units of all. At a minimum 150 square feet of living space — 220 when you add the bathroom, kitchen and closet — the proposed residences are being hailed as a pivotal option for singles. 
The micro-units will probably go for $1,200 to $1,700 a month, Wiener said. According to the real estate service RealFacts, an average studio apartment in San Francisco now goes for $2,075.
Hmmm. They look a lot nicer than dorm rooms. And about the same as man-camp accommodations, although the latter provide meals 24/7, laundry, and security.