Sunday, August 4, 2013

Mike Filloon On Halcon's 2Q13; Comments From HP Transcript That Pertain To The Bakken

Mike Filloon at SeekingAlpha on Halcon's 2Q13

Comments From HP Transcript That Pertain To The Bakken
Transcript here.

Mechanical and SCR rigs are going to the sideline and are being replaced by new technology AC drive rigs. And H&P FlexRigs continue to lead this replacement cycle.
I think that we're seeing the market shift to more and more pad-capable rigs. We lead in that space. And I think we're going to continue to see customers look for that. We've said -- we've talked about all of our pad-capable rigs are AC drives.
Q: in light of the general lack of sense of urgency for putting new rigs to work or the increased drilling efficiency, ... what's your sense on how your customers are looking at spending plans in the second half of the year?
A: what we're hearing is the improvement in commodity prices has been off of plan and you know that they did a lot of their budgeting in the $80, $85 range and stress test that down to $70 to $75. And I think that's the world they expected to see. And now, we're in a world where we have prices in excess of $100. .... So I think that we're hearing a more upbeat sense from our customers and discussions.
I just remembered, we have had some conversations as well on FlexRig5s in the Permian as well. But again, we're still a little bit early on as much as the pad drilling as we've seen as an example in the Eagle Ford or the Bakken. But I do think we'll have FlexRig5s. As that market matures and goes to more pad drilling, I think, we'll see that happen.
Q: First, just wondering on rig efficiencies and how much is left out there?
A: Even with all the improvements that we've seen over the last 3 years, we continue to see improvements in 2013. And as we've said before, Dave, it's not just the rig, it's a lot of other things associated with the rig and working together as a team with your customer.
... old mechanical rigs, it's about 1,000-horsepower, that take 6, 7 days to move, FlexRig can move in 3 days.
For a discussion on AC rigs, look at this very, very old, 2006 Oil & Gas Journal article:
Nabors Drilling is introducing a new series of programmable AC electric (PACE) rigs. The rigs are being built in North America, the Middle East, and in China, and moving into many markets.
Nabors says that AC power provides more accurate control of speed and torque than direct current. AC electrical systems also require less maintenance and facilitate online diagnostic checks of equipment and systems. AC-powered drilling rigs have fewer electrical connections and better motor efficiency and produce less noise and fewer emissions, enjoy better power distribution, says the company. Nabors has been working with AC top drives for more than a decade. 
The HP transcript refers to "SRC rigs" as the older, mechanical rigs. I assume SRC stands for a silicon-controlled rectifier, converting AC to DC, but this is way beyond my expertise. But it helps with the lingo that you might hear being used in the Bakken. 

Regular Readers Know Why I'm Posting This -- The Writing Is On The Wall

Reuters is reporting: police arrest more than 200 at Chevron refinery protest --
Police arrested more than 200 demonstrators for trespassing at Chevron Corp in the California city of Richmond on Saturday to mark the one-year anniversary of a massive refinery fire and to protest a proposed Keystone XL tar sands pipeline.
The arrests came as a throng of sunflower-carrying picketers chanted, "Hey hey, ho ho, fossil fuels have got to go," as people of all ages walked onto Chevron's property to draw attention to a growing movement against fossil fuel.
Police Captain Mark Gagan said the arrests, all peaceful, included three people in wheelchairs and demonstrators as young as 18 years old. Media reports said most of those arrested were cited and released.
Environmentalist Bill McKibben, who is leading a call for using only renewable energy, was one of the first to be handcuffed. He had earlier joined Richmond Mayor Gayle McLaughlin in a rally, one in a series across the nation over the environmental consequences of continuing to burn oil and to protest TransCanada Corp's proposed Keystone XL pipeline.
Note Bill "Keystone" McKibben presence.  I assume he flew in by jet.

Sunday Night Notes -- Gordman's To Minot -- OTTR, OAS, NOG, CLR, CLRN Report This Week

Platts is tweeting:
Slight downward tick in oil rading in opening hour. At 2300 GMT, NYMEX crude dn 9 cts to $106.85, Brent $108.88, dn 7 cts.
Spread: almost exactly $2.00. For all intents and purposes, parity.

More spinoff from the Bakken; The Minot Daily News is reporting:
Minot residents who are delighted to finally have a Gordmans in town can pat themselves on the back because they are a big reason the national retailer chose to come here.
The company held a grand opening ceremony Friday morning at its new store in Southgate Crossing. Jeff Gordman, president and CEO of Gordmans, said his company's mission is to delight its guests. It was Gordmans that was delighted, however, when Minot residents started writing in to request a store in the Magic City.
"This started several years ago, and apparently was started by one very passionate guest who got all of her friends to submit the same request, which was, 'We really want you in Minot' for a variety of different reasons," Gordman said. "And they all ended with, 'Why not Minot?' And I am so ecstatic that we listened to our guests and decided to locate in Minot."
Minot is the third Gordmans location in North Dakota, following Fargo and Grand Forks. Gordman said the company plans to open a fourth store in Bismarck next year.

Market Action Last Week (I'm Finally Getting Caught Up) 
Earnings Are Tracked Here

Wow, Murphy Oil has been on a tear. Beat on earnings by 20 cents; missed on revenue; transcript

A reminder: OTTR reports tomorrow, Monday, after market close.

A reminder: Oasis will report earnings Tuesday after market close. Oasis hit a new high Friday, and is on a tear. Investors must have liked KOG's earnings.

DNR, MRO: to report Tuesday, also. 

CLR: will report on August 7, I believe.

NOG will report this week also, August 8, after market close.

CLNE -- ditto (after market close, August 8).

COP: hit a new high Friday; blows XOM And COP away on cash margin improvement --

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

Nine Companies Announced Increased Dividends Friday ...

...including Union Pacific, and it was a big jump -- from 69 cents to 79 cents, and it still only pays 1.93%.

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read at this site or think you may have read at this site. This site is for entertainment, education, and updates on O'BamaCare, train wrecks, and global warming, not necessarily in that order. 

With regard to that UNP dividend, Zacks is reporting:
The dividend hike reflects the company’s strong free cash flow and confidence in generating solid reinvestable returns for its shareholders. The regular dividend of 79 cents equates into an annual dividend of $3.16, which translates into a dividend yield of 1.94% based on the current market price.   
This is the second dividend hike by Union Pacific in the last one year after the railroad operator raised its quarterly dividend by 15% in Nov 2012 from 60 to 69 cents. The company has paid dividends on its common stock for 114 consecutive years. The recent hike dividend reflects an almost 150% increase in the last 3 years.
Investor confidence in Union Pacific was also solidified with its recent earnings beat. For the second quarter of 2013, the company reported adjusted earnings of $2.37, surpassing the Zacks Consensus Estimate of $2.35 and year-ago earnings of $2.10.

Wells Coming Off The Confidential List Over The Weekend, Monday; Liberty Resources Reports A Big Well Statoil Reports A Big Well; More And More Pad Drilling Reports

Monday, August 5, 2013
  • 20736, 873, Liberty Resources, Jackman 156-100-11-2-1H, East Fork, t3/13; cum 62K 6/13;
  • 23674, 2,811, Statoil, Esther Hynek 10-11 7H, Alger, t6/13; cum --
  • 24088, drl, Statoil, Sax 25-36 6TFH, Banks, no data,
  • 24305, drl, MRO, Helgeson 41-30H, Bailey, producing,
  • 24506, drl, Hess, BB-State 151-96-3625H-5, Blue Buttes, no data,
  • 24604, drl, KOG, P Wood 154-98-4-27-34-13HB, Truax, no data,
  • 24705, 828, OXY USA, Stag 1-35-23H-142-96, Russian Creek, t5/13; cum 14K 6/13;
Sunday, August 4, 2013
  • 21707, 1,462, BR, Keene 44-35MBH, Little Knife, t5/13; cum 10K 6/13;
  • 23078, drl, CLR, Oscar 3-24H, Stoneview, no data,
  • 23123, drl, HRC Operating, Fort Berthold 148-94-19D-18-3H, Eagle Nest,
  • 24496, 790, Whiting, Koppinger 31-13PH, Green River, t2/13; cum 25K 6/13;
Saturday, August 3, 2013
  • 23461, 825, MRO, Hansen Ranch USA 44-10TFH, Bailey, t6/13; cum 15K 61/3;
  • 24087, drl, Statoil, Sax 25-36 5TFH, Banks, no data,
  • 24300, 795, Whiting, Tank 34-7H, Dollar Joe, t2/13; cum 38K 6/13;
  • 24345, 526, HRC Operating, Pederson 1-17-20H,  Little Muddy, t3/13; cum 18K 6/13;
  • 24505, drl, Hess, BB-State 151-96-3625H-5, Blue Buttes, no data,

24345, see above, HRC Operating, Pederson 1-17-20H,  Little Muddy:

DateOil RunsMCF Sold

24300, see above, Whiting, Tank 34-7H, Dollar Joe:

DateOil RunsMCF Sold

23461, see above, MRO, Hansen Ranch USA 44-10TFH, Bailey:

DateOil RunsMCF Sold

 24496, see above, Whiting, Koppinger 31-13PH, Green River:

DateOil RunsMCF Sold

 23123, see above, HRC Operating, Fort Berthold 148-94-19D-18-3H, Eagle Nest:

DateOil RunsMCF Sold

24705, see above, OXY USA, Stag 1-35-23H-142-96, Russian Creek:

DateOil RunsMCF Sold

20736, see above, Liberty Resources, Jackman 156-100-11-2-1H, East Fork:

DateOil RunsMCF Sold

Back At The Ranch...

... be sure to visit Jessie Veeder's blog today.

You know she's North Dakota through and through when you see this: sunflower seeds --
... when you live in the middle of nowhere, pretty much everywhere you need to go involves a road trip.  So it’s a good thing  I’ve had years to master hours of car time. Sunflower seeds.
Wow, isn't that the truth? I think I grew up on sunflower seeds.  And shelled sunflower seeds should be outlawed except, perhaps, for salads. Where's Mayor Bloomberg.

Hey, speaking of Mayor Bloomberg, has anyone noticed the new 16-oz Coke cans? At least I think they are 16 ounce-cans. I just noticed them the other day; I forget where, maybe Target. But they were "huge" -- much taller than the standard 12-ounce cans.

Yes, here's a link. Sounds like they might still be hard-to-find. Wow, talk about a clash of titans: Warren probably loves the big-can idea; his close friend Mayor Bloomberg probably hates them.

Coca-Cola: talk about throwing this in Mayor Bloomberg's face. By the way, Mayor Bloomberg's "big gulp" law was found unconstitutional.

Random Update On Crew Camps In The Oil Patch

PrairieBusiness is reporting:
Williams County, which includes the city of Williston, has had the often unenviable experience of being the epicenter of the largest oil boom of our time.
For half a decade, the county has served as Ground Zero for magnificent growth, and all of its side effects. Crew camp lodges and RV parks of varying degrees of quality began springing up seemingly overnight as the boom began and provided shelter for workers when other housing wasn’t available.
They have now become common sights along the roadways of Williams County, but county officials would prefer to limit, and eventually eliminate, temporary housing in favor of newly built permanent residences. In 2011, the county placed a moratorium on new temporary housing units while it evaluated options and growth patterns, allowing only those with previously approved permits to operate.
After two years of deliberations, the commission recently decided to gradually phase-out existing temporary housing facilities. As part of the decision, RV parks in the county will be allowed to operate only until October 2014. Other temporary housing facilities must apply for conditional use permits and, if approved, will be allowed to operate until 2015.
Go to the link for a huge amount of information.

This link is likely to break sooner than later. Just saying. 

BNSF Hauls >50 % Of Total Bakken Production In North Dakota; But Agriculture Is Still #1 For The Railroad

PrairieBusiness is reporting:
BNSF Railway Co. recently opened a new economic development office in Bismarck, N.D., expanding the company’s presence in the state and giving BNSF the ability to better serve existing and new customers across the region.
“Adding an economic development office in North Dakota helps us continue strong relationships with state and local economic development partners across the region, as well as create new opportunities to support economic growth,” says Amy McBeth, BNSF Railway spokesperson.
But this is the best story line:
BNSF handles nearly 2 million carloads in North Dakota each year and has experienced rapid growth in the transportation of crude oil by rail. Currently, the company hauls more than 50 percent of the total Bakken crude production in the state. However, agricultural transportation remained the company’s largest business in the state in 2012

Mike Filloon On KOG's 2Q13 Earnings

SeekingAlpha is reporting:
Kodiak crushed EPS estimates in Q2, reporting $.22 versus the Street's estimate of $.13. It had revenues of $178 million missing by $8 million. These results couldn't have come at a better time, with many analysts wary with its most recent purchase of Liberty.
The EPS beat is important, as no one questions its abilities as an operator. It continues to outperform in the Bakken, using all the best stuff which continues to drive IP rates. Kodiak's issues have been around cost, and some believe management has increased its total acreage too quickly. This quarter is hopefully a sign of things to come.

For The Global Warmers In Minnesota ...

Bemidji, MN, had an overnight low of 39, and International Falls, at 38 degrees. 

Some things probably shouldn't be posted:

The Sid Shuffle

I Apologize: This Is A Bit Catty

But there are two ways of looking at this story, reported by Prairie Business:
As the oil and gas industry continues to drive billions of dollars of activity in North Dakota, its southerly neighbor is looking for ways it too can benefit from the economic boom. In May, the Governor’s Office of Economic Development hired Black Hills Business Strategy to conduct a 14-month-long study to evaluate opportunities for the state to capture a bigger piece of the energy pie. 
There are two ways to look at this story:
  • either, South Dakota is really, really late to this game, or
  • this should confirm how long folks think the Bakken is going to last
But, now after six years of Bakken boom in North Dakota, the state lets a contract for a 14-month-long study, and then, of course, 12 months to evaluate the study, and then another 12 months for the legislature to act. Really, really bizarre.

McKenzie Consulting would have required the study to be completed in six weeks.

You Just Know What Video Is Coming Up Next, Don't You?

The Dickinson Press is reporting: what part of "no" don't you understand?
A Fargo-based census worker who recently quit her position after filing formal complaints against the bureau with two different federal agencies said field reps are facing undue pressure to complete surveys, even if it means harassing potential respondents and returning to homes where people were hostile or threatening.
“Now, ‘no’ doesn’t mean ‘no.’ ‘No’ means I’ll be back in half an hour knocking on your door,” said Sally Stutlien.
In letters to The Forum newspaper and U.S. Rep. Kevin Cramer, R-N.D., Stutlien wrote that a “shocking amount” of taxpayer dollars is spent doing “stakeouts” outside homes and repeatedly calling and going back to households after residents declined to participate.
The interesting thing is that the census bureau's job will be made much easier when O'bamaCare kicks in and EVERYONE has to file with the IRS. EVERYONE.

So, for census workers, what part of "no" don't you understand?

What Part of "No" Don't You Understand, Lorrie Morgan

However, when it comes to Lorrie Morgan, I would not complain if she began to stalk me. LOL.

Fargo Business Woman Cashing In On The Bakken -- Another Great Bakken Story

The Dickinson Press is reporting:
Carol Rogne’s business is based in Fargo, but its growing customer base is in North Dakota’s Oil Patch.
DFC Consultants, which Rogne founded in Dickinson 24 years ago, offers business software and other services.
Rogne, a Dickinson native, moved the main corporate office to Fargo, but in the past few years she’s watched more and more of her business shift to her home region.
New and expanding companies, particularly oilfield service companies, find that they need more sophisticated software to keep up with the accounting or to track service calls and materials, she said.
Companies also need to be able to compile that information quickly so they can provide an invoice to customers.
“Everything is just so quick-paced out there,” Rogne said.
Don't you just love that "so quick-paced out there" comment? NoDaks have a way of understating things.

Excellent Article On Pad Drilling In The Bakken

Unconventional Oil & Gas Center is reporting:
Activity will catch up as the Bakken serves up additional efficiencies in drilling and well completion in 2013. This is the year the play transitions to pad drilling, an important inflection point that shortens the cycle time on generating new wells in unconventional drilling.
A Hart Energy survey found two thirds of Bakken shale wells drilled on pads at the mid-point of 2013. Pad drilling share is expected to grow to 73% of all wells in 2014 as the play moves beyond lease capture and delineation into the resource harvest phase of the unconventional cycle.
The article is chock full of interesting data about pad drilling in North Dakota. I hope the linked article is not moved to archives any time soon. It's a must-read.
There are three main story lines in the linked article
  • production was impacted by a very wet spring; but operators will catch up this year
  • data points about pad drilling; how it differs from pad drilling for natural gas
  • the middle Bakken is delineated; operators are now focused on delineating the Three Forks
That last bullet is the most important.

Samson Oil & Gas Deal To Sell Montana Acreage Not Yet A Done Deal

The Fairfield SunTimes is reporting that -- apparently -- Samson Oil & Gas' proposed sale of its Roosevelt County, Montana, acreage/assets is off/on hold/extended. At the linked article:
Last month the Sun Times was the first to disclose the buyer is believed to be Texas based Taurus Energy. Taurus was incorporated in Montana in January, but lists a Texas address.
Nice little scoop by a local newspaper. Helps fill in the dots in the Bakken.

Wow, Talk About A McGuffin; A Real Forrest Gump

FoxBusiness is reporting:
Obama said ... the evidence was that TransCanada Corp's Keystone XL pipeline, which would carry 830,000 barrels per day of crude from Canada's oil sands and the Bakken shale in North Dakota and Montana to refineries on the U.S. Gulf Coast, would not be a big jobs generator.
He said it might create 2,000 jobs during the construction for a year or two and then 50 or 100 jobs thereafter. 
[His own] State Department's analysis in March was that Keystone would support 42,100 direct and indirect jobs.
But, of course, that was the same State Department advising him on Benghazi.

I wonder if the US interstate system (except for a few toll roads) has any permanent employees. The interstate system was a huge jobs program with a great strategic purpose, not unlike the US natural gas and crude oil pipeline system.

For O'Bama to say the Keystone, with 50 permanent jobs, is not a jobs program, reveals just how much of a Forrest Gump he really is.

But again, TransCanada made a mistake by opening the door to that argument: arguing that the Keystone was a jobs program. 

Old News ... But Still Catching Up: NYT Business Deal Of The Year

The New York Times sells The Boston Globe -- > 90% loss.

Breitbart is reporting:
After purchasing the Boston Globe in 1993 for a then-record $1.1 billion, the financially troubled New York Times just announced it sold the 141 year-old paper to Boston Red Sox owner John Henry for a mere $70 million. That's a straight 93% loss. 
But the details of the deal suggests things are worse than the headline suggests. The Times had to swallow pension liabilities now estimated at over $100 million. Is The Times too big to fail?
Figuring in two decades of inflation would only make it worse -- as does the fact the Times retains the Globe's pension liabilities, estimated at over $100 million.
The Times announced in February that it was putting the : up for sale. News reports claimed that bids had been as high as $100 million. What might have sweetened the lower offer for the Times is that Henry offered a straight cash deal, which is expected to close sometime in September or October. 
Considering all the free business advice The Times has provided over the year, it certainly seems they really weren't all that astute. Today it's announced they sold it for $70 million in an improving economy; two years ago they turned down 3x that much when the economy was in even worse shape.
In 2011, the Times turned down a $300 million offer from Aaron Kushner, CEO of Freedom Communications, Inc., publisher of the Orange County Register and other newspapers in California. This offer even included the assumption of pension liabilities, which are currently estimated at $110 million.
The Times itself reports that today's sale to Henry does not include pension liabilities. Apparently, those remain a Times' responsibility and expense. 

However, one can understand why the most liberal newspaper in America would not sell to the most conservative newspaper in the world.