Thursday, May 9, 2013

Fourth Quarter Fiscal Year 2013 Results for TPLM

It was interesting to see Mike Filloon's comments regarding Triangle Petroleum and its quarterly earnings report.

Most companies are reporting their 1QFY13 results: results for the first quarter of 2013: January, February, and March of 2013.

In Triangle's case, however, they are reporting what they call their fourth quarter of 2013. I assume the fourth quarter, 2013, for TPLM, January, February, and March, 2013, which means that "we" are already almost halfway through the first quarter 2014 for TPLM.

This is the earnings conference call transcript for 4QFY13 for TPLM.

Japanese Oil Imports Rising (4 Million BOPD); US Imports Dropping, On Pace To 6 Million BOPD

Platts is reporting:
  • Japan's Apr 11-20 crude imports jump 25% on year to 4.21 mil b/d, MOF data shows.
Meanwhile, US oil imports have fallen to their lowest level since 1987, on pace to drop to 6 million bopd by 2014.
  • Japanese, that small island nation, has a population of 128 million.
  • US, that relatively large non-island nation, has a population of 314 million. 
So, it looks like the Japanese, with a population a third the size of the US, is headed towards 5 million bopd while the US is headed towards 6 million bopd. What an incredible gift President Obama was handed, and somehow he can't get his speechwriters to write uplifting, optimistic, "morning in America" speeches. Instead, off to Mexico to apologize how the US has created all of Mexico's problems, and talking about red lines which turn out to be beige, or pink, or burnt orange, but not red.

[Disclaimer: that is my worldview, a worldview that is not shared by the majority of Americans. The data regarding oil imports is accurate, to the best of my knowledge, based on linked sources.]

Wells Coming Off The Confidential List Friday; OXY USA Has A Nice Well

NOTE: for some reason these wells were not reported today.

21832, see below, OXY USA, Beatrice Kubischta 3-15-22H-143-96, Fayette
23731, conf, Statoil, Delorme 12-3 4TFH, Painted Woods,
23768, conf, Slawson, Waterbond 7-27-34TFH, Van Hook, 
23777, see below, Triangle, Skesvold Trust 151-101-32-29-1H, Ragged Butte,
24208, conf, QEP, MHA 7-04-33H-150-92, Heart Butte,


21832, see above, OXY USA, Beatrice Kubischta 3-15-22H-143-96, Fayette:

DateOil RunsMCF Sold

 23777, see below, Triangle, Skesvold Trust 151-101-32-29-1H, Ragged Butte:

DateOil RunsMCF Sold

Evidence That Global Warming Has Ended Continues To Accumulate

Two and three years ago, in 2010 and 2011, the high number of tornado activity was blamed on global warming. Some thought it was a joke at the time.

Now, USA Today is reporting:
The USA in the last 12 months has seen the fewest number of tornadoes since at least 1954, and the death tolls from the dangerous storms have dropped dramatically since 2011.
Just two years after a ferocious series of tornado outbreaks killed hundreds of Americans, the USA so far this year is enjoying one of the calmest years on record for twisters. Through Thursday, tornadoes have killed only three Americans in 2013; by the end of May 2011, 543 Americans had died.
The evidence that the recent period of global warming has ended continues to accumulate.

QEP Midstream Partners Files For $400 Million IPA

Reuters is reporting:
QEP Midstream Partners LP, the operating arm of oil and natural gas exploration company QEP Resources Inc , filed with U.S. regulators to raise up to $400 million in an initial public offering of common stock. 
The Denver, Colorado-based company told the U.S Securities and Exchange Commission in a preliminary prospectus that Wells Fargo was underwriting the IPO. 
QEP Midstream was formed to own, operate, acquire and develop midstream energy assets. Its customers include Anadarko Petroleum Corp, EOG Resources Inc and Questar Corp.
A reader (thank you) sent me a portion of the prospectus:
Our primary assets consist of ownership interests in four gathering systems and two FERC-regulated pipelines through which we provide natural gas and crude oil gathering and transportation services. Our assets are located in, or are within close proximity to, the Green River Basin located in Wyoming and Colorado, the Uinta Basin located in eastern Utah, and the portion of the Williston Basin located in North Dakota, which are currently among the most economic and active drilling regions in the United States.

On A Day When The Market Was Down A Bit, CVX Rose To A New 52-Week High

I'm not exactly sure why CVX rose to a 52-week high today when the rest of the market was generally down but it is interesting to note that CVX won a huge case against the US government's Department of Energy.

Bloomberg is reporting:
Chevron Corp. is entitled to unspecified damages against the federal government in a contract dispute over oil deposits in California worth $37 billion, the U.S. Court of Claims ruled.
The Department of Energy “repeatedly and materially violated” two agreements governing determination of equity interests in oil and gas deposits located in the Elk Hills Reserve of California, Judge Susan Braden in Washington wrote in a 90-page ruling.
Chevron “is entitled to be compensated for damages, in an amount to be determined, including sanctions for DOE and the government’s ‘bad faith’ conduct and abusive discovery tactics,” Braden wrote in the ruling made public yesterday. 
But that's not the only thing remarkable about this story.

Go to the link.

This should get your attention:
Occidental Petroleum bought the government’s stake in Elk Hills, one of the largest remaining oil fields outside Alaska, for $3.65 billion in 1997. That’s about $3.65 for each barrel of oil-equivalent it contains. Chevron and Occidental are not operating the oil and gas field together. 
A Note To The Granddaughters

I have hit a wall. It is impossible to keep up with the Bakken. I was overwhelmed by the daily activity report today: 22 new permits and huge wells being reported by Burlington Resources. And everything suggests we are not even out of the first inning. Last year, in late 2012, I thought we were further along in the Bakken, but clearly we are not. Even without the doubling of the Bakken/Three Forks based on the USGS 2013 survey, what we are seeing in the Williston Basin suggests this is so much bigger than we thought, even in 2012.

I was recently sent a huge slide presentation from the Williston Economic Development office presented in Las Vegas on April 17, 2013. The slide presentation is overwhelming.  One photo in the slide presentation from Vern Whitten photography:

I may  have seen this photograph before; I can't recall. But it really is amazing. 

The Bakken activity is simply impossible to keep up with. It appears that whatever folks think about the Bakken, they are underestimating how big it is going to be. At one time 24,000 wells seemed to be an exaggeration. Then Harold Hamm suggested 48,000 wells. The "word on the street" is that the new number is 80,000 and some say that number is conservative. There is a number that is being bandied about that is so high, I will not post it here. For time/date purposes, I will bury it deep in the blog where it is unlikely to be found, but will be interesting to look back on in the year 2040 when I am long gone.

This is the photograph that probably pushed me to the wall. I simply cannot keep up. This is a Vern Whitten photograph of the activity in the Bakken. It is just one of several incredible, indescribable photographs of Bakken activity.

Or I may just be hungry. 

Twenty-Two (22) New Permits -- The Williston Basin, North Dakota, USA; Burlington Resources With Two Huge Wells; KOG With Some Huge Wells In Truax Field

Active rigs: 183

Twenty-two (22) new permits --
  • Operators: KOG (12), XTO (4) G3 Operating (3), Whiting (3)
  • Fields: Truax (Williams), Moccasin Creek (Dunn), South Heart (Stark), Tobacco Garden (McKenzie), McGregory Buttes (Dunn),
  • Comments: 6 of KOG's permits in Moccasin Creek; 6 of KOG's permits in Truax
Wells that came off the confidential list were posted earlier; see sidebar at the right.

Two producing wells completed:
  • 23837, 2,444, BR, Waterton 11-29MBH, Keene, middle Bakken;
  • 23838, 2,334, BR, Waterton 21-29TFH, Keene, Three Forks;
A little bit more about the 22 permits:
KOG with permits for two (2) more P Evitt wells in section 12-154-98; there are already 5 wells in this section; this will now bring the number to seven (7)
KOG with permits for a 6-well pad in Moccasin Creek, section 33-148-93. There are already two wells in this spacing unit:
  • 18656, 2,035, KOG, Moccasin Creek 13-34-28-2H, t8/10; cum 297K 3/13; 
  • 18707, 1,713, KOG, Moccasin Creek 13-34-28-1H, t9/10; cum 308K 3/13; 
KOG with permits for four wells in section 9-154-98 has a well in that spacing unit:
  • 20856, 1,349, KOG, King 3-8H, Truax, t1/13; cum 68K 3/13;
XTO has permits for a four-well pad in section 4-150-99 in Tobacco Garden; XTO already has four wells in this section, so that will bring the total to eight (8) wells in this section

Results of BLM Auction: North Dakota, Montana

Billings Gazette is reporting.

Data points for the May 8, 2013, sale:
  • 32 parcels in ND and MT, 7,349 acres -- 11 sections, about 1/3 of a township; inconsequential
  • leases good for 10 years
  • highest big: $280,800; Irish Oil & Gas, 71-acre parcel; about $4,000/acre; Roosevelt County
The next auction is scheduled for July 16, with 90 parcels up for lease totaling almost 19,500 acres.

From The Utica: Magnum Hunter Takes Delivery Of Fifth Robotic Rig; 16 Rigs On One Drilling Pad In Ohio

Oil & Gas is reporting:

Data points:
  • the Schramm T500 XD robotic rig
  • traditional rigs: on rail; move left-right, front-back
  • T500XD: a walking subbase, lifts the entire rig 6 inches off the ground; turn and rotate 360°.
  • Can drill to 19,000 feet (not deep enough for the Bakken)
But get this:
Magnum Hunter said it has recently constructed one pad site in Ohio that can handle as many as 16 new drilling locations, eight in the Marcellus and eight in the Utica.
The press release is here.

The Utica is located "several" thousand feet below the Marcellus.
The Utica Shale is much deeper than the Marcellus. The Utica Shale elevation map shown as Figure 2 in the right column of this page has contour lines that show the elevation of the base of the Utica Shale in feet below sea level. In some parts of Pennsylvania the Utica Shale can be over two miles below sea level. However, the depth of the Utica Shale decreases to the west into Ohio and to the northwest under the Great Lakes and into Canada. In these areas the Utica Shale rises to less than 2000 feet below sea level. Beyond the potential source rock areas the Utica Shale rises to Earth's surface and can be seen in outcrop. An outcrop photo of the Utica Shale near the town of Donnaconna, Quebec, Canada is show in the right column of this page as Figure 3.
Though the vertical distance between the two is significantly different, one can think of the Bakken-Three Forks and the Marcellus-Utica. Or if purists don't like that, then, think of the "u" in Utica as "underneath" the Marcellus. I can never keep the two formations straight. 

It Looks Like That Stunning Jobs Report Isn't Fooling Anyone: Oil Is Down Over A Buck Today

Background here.

I apologize for posting this again. I posted it just the other day, but I honestly don't know what I love more: the way Willie Nelson can play the guitar; his strumming is so distinctive. Or the angelic voice of Emmylou Harris -- her voice is also so distinctive.

Til I Gain Control Again, Willie Nelson, Emmylou Harris


One of my favorite sites to track global warming is "Real Science." This is quite incredible. The faux environmentalists have scared us into thinking that anthropogenic global warming will result in a one-degree rise -- maybe, a two-degree rise -- in the global temperature over the next century. The link asks if perhaps President Obama turned down the thermostat too much this year. This is the coldest spring since 1975, and back in 1975 there were Time Magazine cover stories of the coming Ice Age. Look at the temperature map at that link -- especially the Bakken.

But the link that is the most fun is this, the graph that was posted yesterday, May 8, 2013. Steven Goddard, the webmaster, notes that the temperature in the United States has dropped 3 degree this year:
If the current trend continues, the US will approach absolute zero by the end of the century. This is appropriate, because we have a bunch of zeroes running the country.

Investment In The Bakken

The other day I mentioned that venture capitalists from Wall Street, Connecticut, and Singapore come out to the Bakken, talk a good story about investing in the oil patch, then leave and never come back, unable to come up with an idea for investment in the western counties of North Dakota. The StarTrib talked about these venture capitalists/out-of-state investors.

My contention is that investing in the oil patch in North Dakota, a relatively small area in the western part of the state, essentially four counties, and three cities (Williston, Watford City, and Dickinson), is pretty much going to be limited to oil and gas industry and will come from within that sector. The most recent example was the announcement of a new midstream company, Oasis Midstream Services, a wholly-owned subsidiary of Oasis.

I was struggling to figure out where the Wall Street, Connecticut, and Singapore investors would do better, trying to capitalize on the Bakken.

A story in The Dickinson Press today answered that question. Interestingly enough, Carpe Diem featured a Minneapolis Fed study (easily accessible in the Business Insider) that provides additional support.

The problem with the western counties: lack of work force and lack of transportation infrastructure. The answer: Fargo and Grand Forks. Fargo at the intersection of two major freeways. Both cities with railroad and better air connections. [Update, May 12, 2013: actually, the best two cities: Fargo and Bismarck, followed by Minot and/or Grand Forks. If it weren't for Fargo, Grand Forks would definitely be ahead of Minot, but Fargo takes too much from Grand Forks, leaving Minot in contention for #3.]

Having just read the history of the Institute of Advanced Studies at Princeton (think Manhattan Project during WWII), outside investors coming to North Dakota to capitalize on the Bakken might do well to visit with the movers and shakers at the two universities along the Red River of the North.

Both Microsoft and McDonald's have large operations in Fargo, if I remember correctly. Software and french fries. Or maybe it's Grand Forks. Whatever.

A Note To The Granddaughters

As noted earlier, I am in my information theory phase, having just completed George Dyson's Turing's Cathedral and James Gleick's The Information. I am now reading Inventing Los Alamos, by John Hunner.

After overseeing building the Pentagon, Colonel (and then soon after that, General) Leslie Groves was responsible for the Manhattan Project. He selected J. Robert Oppenheimer to run the Los Alamos facility.
Born in New York City on April 22, 1904, Oppenheimer went to Manhattan's Ethical Culture School and then to Harvard. In his third year at Harvard (where he graduated summa cum laude), Oppenheimer took six courses and audited foru more. The normal quota was five courses. ... After Harvard, Oppenheimer went to Cambridge in England and then, in 1927, on to Gottingen University in Germany, where he neglected to enroll. Three weeks after he finally did enroll at Gottingen, Oppenheimer received his Ph.D. He was just twenty-four years old. His Ph.D. thesis was a brilliant paper on quantum mechanics. Back in the United States in 1929, he received a dual appointment at the University of California at Berkeley and the California Institute of Technology in Pasadena as a professor of physics. During the summer breaks from his hectic travels between Pasadena and Berkeley, he vacationed at his cabin in the mountains of northern New Mexico. -- p. 20.
Hunner goes on:
Even though Oppenheimer was a theoretical physicist, other fields attracted his interest. At eleven, he joined the New York Mineralogical Society. The next youngest member was in his sixties. Fascinated by the Hindu religion, Oppenheimer taught himself Sanskrit (his eighth language) so he could translate its religious texts. Until 1936, he was apolitical, but then the Great Depression and the Spanish Civil War awakened his social consciousness. -- p. 20.

Not Everyone Likes Us --

The things one finds on the net (warning: parental guidance recommended; language; content):

Not Everyone Likes Us, Hank III

Note the video description: "Copyright infringement intended."

I assume this video won't be up long.

But that's not why I posted it.

Look at the most recent comment:
This song got me out a ticket in North Dakota. Doing 65 in a truck; 45 on a back farm road. The officer must have been surprised to see a black man and jammin' Hank 3rd. He saw I was from Texas, tipped his hat, told me to take it easy, 'cause the next time will be a fine. Thanks Hank, this one's for the south! 
North Dakota law enforcement just being friendly.

Years ago, I had similar experience. Given a warning. 

Facebook Mobile Phones Launched At $99 A Few Weeks Ago, Now 99 Cents

Reuters is reporting:
Richard Windsor, an independent analyst, said in his Radio Free Mobile blog that the price cut was a worrying sign for social network Facebook and its future in mobile.
"The final verdict on Facebook Home was brutally handed down yesterday with AT&T slashing the price of the HTC First from $99 to $0.99," Windsor said.
Yes, one might say that. 

Thursday Morning Links

From Politico, noting that like Dick Cheney, President Obama finds it best to meet in secret when meeting with the private energy industry:
The White House did not respond to queries from Politico about why the public and press were excluded from the discussion, which took place at the Energy Department.
During Obama's first bid for the White House, the freshman senator complained about then-Vice President Dick Cheney's private meetings with energy industry representatives.
"The oil companies were allowed to craft energy policy with Dick Cheney in secret while every other voice was silenced ­ including the NASA scientists who tried to warn us about the dangers of climate change," Obama said in a June 2007 campaign speech.
"When there are meetings between lobbyists and a government agency, we won't be going to the Supreme Court to keep it secret like Dick Cheney and his energy task force, we'll be putting it up on the Internet for every American to watch."
And so it goes. The mainstream media won't note this. The mainstream media is just happy the president acknowledges that the energy industry exists.

WSJ Links

Section D (Personal Journal):
Section C ( Money & Investing):

Section B (Marketplace):
Section A:
  • Benghazi stories are the headline stories. Apologists for the president (who went to bed when he heard the embassy was under attack) and SecState (who missed the 3:00 a.m. call but was spinning the story by 6:00 a.m.) should be ashamed.
  • The two brothers of the Cleveland man who enslaved three women for a decade were not aware of what he was doing. The fact that the windows of the house were completely blacked out; no one had access to the house; a nude woman was seen crawling on the floor/backyard (I forget the details); etc., were apparently not noted.
  • Bangladesh factory toll surpasses 800: as the Illinois representative would say -- "death is a part of life." A lot of quotable quotes came out of the Benghazi hearing yesterday.
  • Kurdish rebels are pulling out of Turkey; latest step in ending the 3-decade feud between the Kurds and Turkey.
And how about this for timeliness? From the Canadian Water Security Agency, something rarely seen:

Ice Surge, Saskatchewan, May 1, 2013

Growers To Build $1 Billion Fertilizer Factory Near Grand Forks, ND: Natural Gas From The Bakken

The Dickinson Press is reporting.
North Dakota corn growers are planning a $1 billion nitrogen fertilizer manufacturing plant to be built near Grand Forks in rural Grand Forks County. 
The plant will produce nitrogen fertilizer by converting gas currently being flared from oil wells in western North Dakota, according to Tom Lilja, president of the North Dakota Corn Growers Association. Other details will be released during today’s news conference.
The facility, which has been estimated to cost between $1 billion and $1.5 billion, could supply fertilizer for up to 12 percent of the corn and wheat acreage in North Dakota, South Dakota and Minnesota, Lilja said last summer, when the group initially announced plans to build a plant somewhere in North Dakota.
If I have time, I might come back to this. This addresses an issue that was raised earlier. Perhaps investors coming to the Bakken are looking for opportunities in all the wrong places. 

Update On The Second Of Three New Refineries In North Dakota: Thunder Butte, On The Reservation

Link here to The Dickinson Press.

It looks like they plan to break ground in August.

Multi-Part Series on Bakken Trends, 1Q13 -- Michael Filloon

The first in the series was linked earlier.

Here is Part II.

Again, Mike is stressing the cost of wells, which is coming down faster than most folks realize, he has previously said:
There are many variables driving what could be a run on Bakken stocks (and others). The first is pad drilling. This not only decreases drilling costs and time, but most importantly allows zipper fracs. Without going into a great amount of detail, it essentially means the completion crew can complete several wells at the same time.
For some operators, three completions can be done in the same amount of time as doing just one completion on a single well. Other costs are decreasing, such as proppant and f rac fluids. All said, costs are down 20% from 2012 and look to drop another 10% to 20% by 2013 year end. Pipe continues to be put in the ground providing for clean water to the well site.
It also allows for crude, produced water and gas to leave the well site without using trucks. Bidding jobs have become easier as wait times have decreased to a manageable level. Not only can operators choose the least expensive, but also have the option to pay a little more for a Haliburton crew for a little more to make sure things get done right.

RBN Energy: Freedom Pipeline, From The Permian to California, Part II

RBN Energy: looks at the new pipeline from Texas to California being offered by Kinder Morgan, the Freedom Pipeline, Part II.

Wow, look at the amount of foreign oil that California buys. It appears that more than half of all oil refined in California comes from foreign sources. Wow.

What's the phrase? Carrying coal to Newcastle?

With regard to the Bakken:
We covered crude by rail delivery to the West Coast recently.
We noted then that crude by rail has been slow to penetrate into California. That is partly because state regulations have delayed the building of rail unloading terminals because the permitting process is complex. A lot of crude is being railed to refineries in Washington State from the Bakken or to marine terminals in Washington and Oregon.
Some of that crude will reach California refineries by barge or tanker. Some refiners – notably Alon and recently Valero have announced plans to build rail terminals at California refineries – so far with the intent to rail light crude from the Bakken or heavy crude from Canada.  Crude is also being sent by rail from the Permian Basin – where a number of rail loading terminals have been built including a KM/Watco terminal at Pecos, TX.
Recent company presentations estimate crude by rail costs from the Bakken to central California at $13/bbl and to Southern California at $14/bbl. We did not find a published rail rate from West Texas to California but have heard estimates in the $8 -$10/bbl range plus terminal and lease charges.  If this is the case then shipping Permian crude to California by rail will be less expensive than Bakken or Canadian alternatives. Although KM have not published their pipeline tariff yet it will almost certainly undercut rail freight door to door. So if California refiners decide that they need to start using inland US domestic or Canadian crudes then they might as well lock in the least expensive delivery option.

Jobless Claims Fall To Lowest Level In Almost 5 1/2 Years; The Sequester Appears To Be Working


Later, 10:14 am: I was caught off-guard by the headline, until I read the story. See below. Another great example of how the mainstream media spins bad news. But the market was not taken in by the spin. The headline: jobless claims to lowest level in almost 5 1/2 years. Should be huge news for the market, wouldn't you think? Both the market in general and the price of oil are down today, that's how impressed "they" are with the jobless numbers.

Original Post

[I was excited, also, until I read the entire article. "No change" from last week. However, if there is an improvement it may be due to folks who can no longer tour the White House are actually looking for jobs.]

Reuters is reporting:
The number of Americans filing new claims for unemployment benefits dropped to its lowest level in nearly 5-1/2 years last week, signaling labor market resilience in the face of fiscal austerity.
Initial claims for state unemployment benefits fell 4,000 to a seasonally adjusted 323,000, the lowest level since January 2008, the Labor Department said on Thursday.
Claims for the prior week were revised to show 3,000 more applications received than previously reported.
Economists polled by Reuters had expected first-time applications to rise to 335,000 last week.
Actually, when you read the report, it's not quite as good as the headline would suggest.

First, the previous week numbers were revised upward by 3,000.

This week the number dropped 4,000. In the big scheme of things, that's a wash.

Only because of the big drop last week, are things what they are.

Having said that, the only thing that has changed in the past few weeks, coinciding with the better jobs numbers: the sequester.

The four-week moving average for new claims, a better gauge of job market trends, dropped 6,250 to 336,750 - the lowest level since November 2007.