Monday, May 27, 2013

Internal Clash At OPEC Over American Oil Production

Rigzone is reporting:
The evidence so far indicates that the revenues of African members, such as Algeria and Nigeria, are suffering the worst effects from the North American oil boom, while Gulf countries, notably Saudi Arabia, pass relatively unscathed.

So while Riyadh plays down the threat, Nigeria has deemed U.S. shale oil a "grave concern."

U.S. crude production has risen to a 21-year-high as a new combination of technologies has unlocked large resources of oil previously trapped in shale rock in North Dakota and Texas. In tandem, exports from three of OPEC's African members: Nigeria, Algeria and Angola to the U.S. have fallen to their lowest level in decades, dropping 41% in 2012, according to the U.S. Department of Energy.
I've blogged about this before. I misread the tea leaves in an earlier post. This article brings more clarity.

Memo to Nigeria: I think you have a problem. 


For the truckers tonight:

Six Days On The Road, Dave Dudley

It's Come Down To This, But At Least I'm Glad To Be In Texas -- Must Be A Slow News Day

Reuters is reporting:
Lawmakers sent the governor a bill that says students and teachers are allowed to say "Merry Christmas" and "Happy Hanukkah." They also sent him a sweet piece of legislation - a proposal to make the pecan pie the state pie of Texas.
Actually, the story was on tax cuts for businesses of all sizes in Texas. North Dakota and Texas are both open for bizness. 

Airline Boardings Hit A Record For April In The Bakken Oil Patch

The Dickinson Press is reporting:
Grand Forks all had their highest April boardings on record this year.
The state Aeronautics Commission says boardings at the state's eight large airports were up nearly 5.5 percent overall from April 2012. Williston had the biggest increase, with a rise of more than 162 percent.
Williston is in the heart of the booming western oil patch. Aeronautics Commissioner Larry Taborsky says an increase in airline service in North Dakota is another reason for the jump in boardings.

Random Update: Netflix; San Antonio Spurs Into The 2013 NBA Finals

A Note To The Granddaughters

[Update, later, 11:20 pm: as noted below, I followed through with plans to walk to the Sports Bar -- a 12-minute walk. Watched the San Antonio Spurs sweep the Grizzlies. In fine style. Into the NBA finals.]

Flashback to March 21, 2013. Sometimes I wish I took my own advice. Smile. Since then the stock has soared.

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you read here. 

I don't have a television. In the move, I gave our big television and the DVD player to the movers. I also gave away the smaller, very old (ancient) set. But without cable (and no antenna-over-the-airway access) the television was not much use. I've been watching a lot of DVD's on an Apple monitor. I had forgotten how crisp, clean, the videos are on the Apple monitor. And it's a huge monitor, an easy replacement for a television.

For sports, it's a 12-minute walk to the nearest sports bar, where I watched, last night: a) NASCAR Coca-Cola 600; b) LA Kings lose to San Jose Sharks in hockey; and, c) Miami beat the Pacers. Tonight I will wander back to the sports bar and watch the San Antonio Spurs, who lead the series 3-0, one game away from the NBA finals.

However, once we get moved into our new apartment, I will buy a large flat-screen "smart" television. The Samsung "smart TV" is absolutely incredible, and my hunch is that Apple's iTV is even better.

The big decision will be whether to get cable television. My wife will probably want it, but I think I could do without it. And Netflix is the reason why.

Netflix is bringing back "Arrested Development."

Other reasons I don't need television:

Lian Lunson wrote and produced "Leonard Cohen: I"m Your Man," a documentary.

Lian Lunson's "Boom Boom Room" is in pre-production. If it lives up to her Leonard Cohen documentary, it's going to be an indie blockbuster.

For Investors Only -- SeekingAlpha On US Gasoline Exports

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you read here.

SeekingAlpha has a great article on US gasoline exports.
Despite all the press LNG export licenses are generating these days, those LNG plants are years away from becoming operational. The real action in the U.S. energy export market today is with gasoline.
An article in this week's Barron's seemed a bit perplexed as to why gasoline prices were so high when U.S. oil inventories are brimming at their highest levels in 30 years. But the article never mentions gasoline exports, which I believe are a major factor in determining the price of WTI. 
The writer then links to a Bloomberg article to support his view. 
U.S. gasoline exports have nearly tripled in the past 10 years to over 3 million barrels per day (126,000,000 gallons/day). Despite increased U.S. oil production over that period, it is not surprising that the price Americans drivers pay for a gallon of gasoline has tracked this export curve higher.
Several story lines here, but I think most of them are obvious.

Random Update On The Lower Benches Of The Three Forks, EOG's Experience -- Mike Filloon

From Mike's most recent SeekingAlpha post:
EOG's second bench of the Three Forks result was better than I expected. The River View 3-3130H had an IP rate of 3,150 barrels of oil per day. This does not include gas or natural gas liquids, and I should point out its Antelope Prospect has a higher gas/oil ratio (GOR) than Parshall Field. It also had a first bench result in the Antelope. West Clark 101-2425H had an IP rate of 2,205 bopd. EOG has stated that it believes the second bench could be better than the first or Bakken in this area. Craig Cooper has stated this in several occasions in comments over the past year, and it would seem he was and is correct.
Mike mentions Craig Cooper. At this link, one can see Craig Cooper's comments on fracking in the Bakken and elsewhere. Very, very educational.

Craig also commented on an earlier Mike Filloon article in which Mike suggested some EOG Bakken wells in the Parshall oil field model to 2-million-bbl-EURs:
[Mike] generated the 1800-day IP rates for the wells with insufficient production using the average depletion. [He] multiplied this number by 1800 days to get the total oil produced by each well to date. The model [he uses] estimates half of all well production is attained at 5.5 years. Being conservative, [he uses] five years for EURs. These numbers are very good, and derived from short laterals. If these wells were completed as 10000 foot laterals and NGLs and natural gas are figured, several would model to EURs over 2 million barrels of oil.

Wells Coming Off The Confidential List Over The Long Memorial Day Weekend

Tuesday, May 28, 2013:
22059, A, Whiting, BSMU 2304, Big Stick, a Madison well;
23146, 851, Fidelity, Miriah 19-30-29H, Sanish, t12/12; cum 50K 4/13;
23240, see below, Baytex, Marilyn Nelson 29-32-162-98H-1BP, Whiteaker,
23242, 102, CLR, Addyson 2-23H, Brooklyn, t3/13; cum --
23635, 256, Whiting, Perzinski Family Trust 34-19PH, Heart River, t12/12; cum 19K 3/13;
24285, drl, CLR, Hawkinson 10-22H1, Oakdale, no production figures,
24405, drl, KOG, P. Thomas 153-98-5-3-2-1H, Truax, no production figures,  

Monday, May 27, 2013:
23826, drl, Hess, EN-State D 154-93-2635H-5, Robinson Lake, no production figures
24134, drl, Hess, LK-Little Chase Creek 147-97-2116H-3, Little Knife, no production figures
24349, 28, Ballantyne, Brandy 10-21, Spring Coulee, no production figures,

Sunday, May 26, 2013:
23206, 1,115, Sequel, McGregor 24-16H-2128-15895-MB, McGregor, t3/13; cum 27K 3/13;
23615, 1,708, Murex, Amber Elizabeth 36-25H, Alexander, t1/13; cum 45K 4/14;
23816, 413, American Eagle, Terri Lynn 3-3N-163-101, Colgan, t3/13; cum 5K 3/13;
24212, drl, SM Energy, Jeglum 3-29HNB, Colgan, no production data,
24286, drl, CLR, Hawkinson 11-22H2, Oakdale, no production figures,
24309, 653, MRO, Gary Bell USA 23-36H, Wolf Bay, t1/13; cum 18K 3/13;

Saturday, May 25, 2013:
23825, drl, Hess, EN-State D 154-93-2635H-4, Robinson Lake,
24133, drl, Hess, LK-Little Chase Creek 147-97-2116H-4, Little Knife,
24289, 370, CLR, Stedman 2-24H-2, Hebron, t2/13; cum 13K 3/13;


23146, see above, Fidelity, Miriah 19-30-29H, Sanish,

DateOil RunsMCF Sold

23240, see above, Baytex, Marilyn Nelson 29-32-162-98H-1BP, Whiteaker:

DateOil RunsMCF Sold

23635, see above, Whiting, Perzinski Family Trust 34-19PH, Heart River,

DateOil RunsMCF Sold

23206, see above, Sequel, McGregor 24-16H-2128-15895-MB, McGregor:

DateOil RunsMCF Sold

23615, see above, Murex, Amber Elizabeth 36-25H, Alexander:

DateOil RunsMCF Sold

24309, see above, MRO, Gary Bell USA 23-36H, Wolf Bay:

DateOil RunsMCF Sold

24289, see above, CLR, Stedman 2-24H-2, Hebron:

DateOil RunsMCF Sold

Another News Article On GE Moving Into The Oil Patch -- This Time: Fracking

The AP is reporting:
One of America's corporate giants is investing billions of dollars in the new boom of oil and gas drilling, or fracking. General Electric Co. is opening a new laboratory in Oklahoma, buying up related companies, and placing a big bet that cutting-edge science will improve profits for clients and reduce the environmental and health effects of the boom.
"We like the oil and gas base because we see the need for resources for a long time to come," said Mark Little, a senior vice president. He said GE did "almost nothing" in oil and gas just over a decade ago but has invested more than $15 billion in the past few years.
GE doesn't drill wells or produce oil or gas, but Little said the complexity of the fracking boom plays into the company strengths. Wells are being drilled horizontally at great depths in a variety of formations all around the country, and that means each location may require different techniques.
Jeff Immelt is/was President Obama's economic adviser. It looks like Jeff is confident the president won't screw up fracking, though some states will (most notably New York, and probably California).

See also this post of April 11, 2013:
Jeff Immelt, it appears has finally seen the light. Renewable energy, solar and wind, are at the bottom of the barrel in returns. At least compared to the oil and gas industry.
General Electric has announced that it will build a new Global Research Center in Oklahoma dedicated to driving innovation and technological advancements in the oil and gas sector and bringing products to market faster. The new facility, which is GE Research's first sector-specific Center, represents a $110 million investment by the company and will result in the creation of 125 high-tech engineering jobs initially, in disciplines ranging from mechanical and electrical to systems and software engineering. These researchers will join GE's global network of 50,000 world-class scientists and engineers who are working to solve some of the world's toughest challenges.
GE Oil & Gas is the company's fastest-growing business, with revenues of more than $15 billion and earnings and new orders having each grown 16 percent in 2012. GE has grown its oil and gas portfolio to win in today's dynamic landscape, bringing to bear industry-leading technologies and services in turbomachinery, subsea drilling, pressure control, remote monitoring and diagnostics.

Global Warming Dumps Three Feet Of Snow On Upstate New York -- Better Get Fracking!

AP is reporting:
A Memorial Day weekend storm has dropped three feet of snow on a New York ski mountain near the Vermont boarder.
Whiteface Mountain spokesman Jon Lundin says 36 inches of white powder has blanketed the nearly 5,000-foot tall mountain in the Adirondacks.
He says Mount Mansfield, in Stowe, Vt., had 13.2 inches of snow Sunday, the latest in the season it's ever had a foot.
I thought I wouldn't need the "globalwarming_2012_2013" tag any more. On July 1, 2013, I will be switching to the "globalwarming_2013_2014" tag. 

For all the activists who thought their children or grandchildren would never see snow again, take them up to New York and/or Vermont in June. The snow may still be there.


Earlier this weekend: freezing concerns in the northeast. AccuWeather is reporting:
Since Memorial Day is typically deemed as the unofficial start to summer, many people of the Northeast may find it hard to believe that frost and freezing temperatures are a concern tonight (Sunday, May 26, 2013).
And quite widespread:
The same unseasonably cold air that led to substantial snow in the northern New England mountains will make for a chilly night through the Northeast tonight.
West of I-95 (and west of I-81 from southern Pennsylvania to northern Virginia), temperatures will be cold enough for areas of frost to form.
The same can be said for northern Michigan and southern Ontario.

Investment Trends, The Bakken, 1Q13, Part IV -- Filloon

Part IV.
Well costs continue to head lower. Most operators are reporting well costs decreasing 20% to 30% year-over-year. The unusually late winter in North Dakota forced some to put off completion work until the second quarter and just focus on getting wells drilled.
This is much more convenient now that pads production looks to increase exponentially over 2012. Companies like Kodiak put its mobile rigs to work punching holes. Since there was little to no completion crews to worry about, Kodiak didn't have to worry about time frames and how that would affect fraccing. Once the drilling is completed, the completion crew will zipper frac the wells. This can decrease times by a third. This coupled with lower oil service costs across the board, increase rates of return to levels that are much more economic.
Drilling in the first quarter threw analyst projections off as costs were higher as more drilling work got done, but very few wells were put to sales. I am expecting some very big top and bottom line numbers in the third quarter of this year.
An incredible amount of information in this post, again, as usual.

From an earlier post:

Part I and Part II were linked here.

Part III:
The first quarter has turned out to be much better than expected in the Bakken. Most operators spent time drilling from pads, which was a good thing as the winter lasted longer with more snow than originally expected. Pad drilling requires that all the wells be drilled before completion work begins. Batch drilling saves time and money.
Zipper fracs allow multiple wells to be fracced at the same time, which also lowers costs. The larger percentage of drilling vs. completion work means less production began in the first quarter. This did lower revenues, but more importantly, is the beginning of a new dynamic in the Bakken and at other basins in the United States.
Completing multiple wells with in a short time frame means production will be very high at those times. This means some quarters will have high revenues and EPS while others could be very low. This lumpy production will provide buying opportunities in the first and second quarters of the year. In parts one and two of this series, I discussed how the Bakken operators continue to benefit. Part 3 also touches on these points, but more importantly, starts with Oasis, which blew the doors off estimates.
Cost of wells is well below $10 million. 

Huge amount of information regarding Oasis.

With regard to COP:
Now the Eagle Ford, Permian, and Bakken have higher margins than the average of all of Conoco's production combined. This shows the economics of shale liquids are very good. Conoco's WTI/Bakken differentials are minus $5, and the Eagle Ford is plus $5. Even with well cost improvements in the Bakken, the Eagle Ford continues to be a better overall play.
Costs for OXY USA wells has come down significantly:
Occidental is realizing improved well costs throughout all of its U.S. acreage. From 2012 to 2013, the Williston Basin has seen a 32% decrease. This was the best percentage of all U.S. plays for Occidental. Its drilling program is now planned months in advance. This not only decreases costs associated with downtime, but it has been able to decrease the number of hours needed to complete the wells. It has decreased the number of strings of casing. It has switched its cemented liners for slotted liners. Occidental is optimizing water usage, by using flow back-end or produced water on completions. Stimulation contracted costs are also headed lower. Four months ago, Occidental Bakken well costs averaged $10 million. Today the average is $8.2 million with a goal of $7.5 million. In 2013, it will run 6 to 7 rigs.