Sunday, August 11, 2013

Random Update On The Tara Jo Wells in Reunion Bay

As pointed out by a reader:
  • 21458, 1,597, MRO, Tara Jo USA 34-12H, Reunion Bay, t1/13; cum 202K 2/14; 30 stages, slightly less than 2 million lbs; 
  • 23176, 1,490, MRO, Tara Jo USA 34-12TFH, Reunion Bay, t1/13; cum 168K 2/14; 30 stages, slightly less than 2 million lbs;
In that same spacing unit:
  • 18514, 672, MRO, Howard USA 11-1H, Reunion Bay, t6/10; cum 316K 2/14;15 states, 2.5 million lbs;
In case you all missed it, the Tara Jo wells have each produced in excess of 110,000 bbls of crude oil each, and they haven't reached the 6-month anniversary yet (at the time of the original posting). Remember the good old days in the Bakken, when a 100,000 bbls by the end of the first 12 months was impressive?


I always find it amazing how one's mind works (or doesn't work). I honestly did not consciously recall the sisters' names, but something about Tara Jo reminded me of that classic (or not), "Petticoat Junction" series. Now I know why: the three sisters (which I had to look up at wiki: Betty Jo, Billie Jo, and Bobbie Jo). My subconscious mind actually stored some of this stuff all these years. Deep, deep subconscious.

Petticoat Junction Theme and Opening

I guess the Scandinavian equivalent of Petticoat Junction in the Bakken is Johnson Corner.

You know, had they combined "Petticoat Junction" and "The Beverly Hillbillies" into a one-hour show, we would have been well on our way to the first crude-by-rail sitcom.

The Beverly Hillbillies

Wells Coming Off The Confidential List This Past Weekend, Monday; Four (4) Wells Make The High IP List; Many Outstanding Wells Being Reported

Monday, August 12, 2013
  • 22698, 1,320, XTO, Star 21X-14B, Grinnell, t7/13; cum --
  • 23182, conf --> loc, Hess, SC-Tom 153-98-1514H-3, Truax, no data, 
  • 23435, 1,267, Whiting, Marsh 44-9PH, Dutch Henry Butte, t2/13; cum 35K 6/13;
  • 23576, 2,061, Whiting, Havelka 11-15PH, Dickinson, t2/13; cum 28K 6/13;
  • 23577, 1,192, Whiting, Havelka 21-15PH, Dickinson, t2/13; cum 59K 6/13;
  • 23708, 937, KOG, P Thomas 153-98-5-10-11-8H, Truax, t6/13; cum 10K 6/13;
  • 23863, 487, Hunt, Frazier 1-3-10H, Frazier, t6/13; cum 7K 6/13;
  • 23894, 146, Corinthian Exploration, Corinthian Backman 12-34 1H, North Souris, another very nice Spearfish well, t2/13; cum 16K 6/13; 19 stages, 163K lbs proppant; 3,000 feet deep vertically; < 6,000 feet total depth; five days to drill; 320-acre spacing;
  • 23895, 133, Corinthian Exploration, Corinthian Backman 4-34 1H, North Souris, a very nice Spearfish well; t3/13; cum 18K 6/13; 20 stages; 180K lbs proppant; 3,000 feet deep vertically; < 6,000 feet total depth; 4 days and 1 hour to drill to total depth
Sunday, August 11, 2013 
  • 23285, drl, Statoil, Charlie Sorenson 17-8 3TFH, Alger, no data,
  • 23383, 2,343 HRC, Fort Berthold 148-94-36C-25-3H, McGregory, t5/13; cum 44K 6/13
  • 23436, 597, Whiting, Marsh 41-16PH, Dutch Henry Butte, t6/13; cum 6K 6/13;
  • 23579, 1,897, Whiting, Havelka 14-10PH, Dutch Henry Butte, t2/13; cum 47K 6/13;
  • 23845, 488, OXY USA, Ridl 1-24-25H-142-96, Russian Creek, t2/13; cum 26K 6/13;
  • 23978, drl, Statoil, Rose 12-13 6H, Avoca, no data, 
  • 24660, 511, CLR, Salo 4-26H, Hamlet, t5/13; cum 14K 6/13;
  • 24827, conf, QEP, Hemi 2-27-34BH, Grail, see this post; t6/13; cum 53K 6/13;
More wells below the video. 


Wow, we're "sailing" now; there are going to be some very nice wells reported tomorrow.

Sailing, Rod Stewart


Saturday, August 10, 2013
  • 21466, 2,448, MRO, William USA 31-2H, Reunion Bay, t7/13; cum --
  • 23646, 2,325, BR, Copper Draw 24-22TFH 2SH, Johnson Corner, 4 sections, t7/13; cum --
  • 24448, 709, SM Energy, Legaard 2-25HNB, Colgan, t7/13; cum --
  • 24606, drl, KOG, P Wood 154-98-4-27-34-13HA, Truax, no data,
  • 24826, 1,936, QEP, Hemi 1-27-34BH, Grail, see this post; t6/13; cum 48K 6/13;
  • 24858, drl, XTO, Star 21X-14F, Grinnell,
A Note to the Granddaughters

For the archives, for my granddaughters. I never knew where the terms long ton, short ton, etc., came from.

From The Kingdom of Infinite Number: A Field Guide, Bryan Bunch, c. 2000, p. 113 - 114:
In the Proto-Indo-European ancestor language of English, the original word for 12, similar to that of 11, meant "two over." This meaning is carried into German as well as English, although replaced with "two [more than] ten" in Romance languages. In Germanic tradition, 12 is the basic unit of measurement, as in 12 pence to the shilling, 12 troy ounces in a pound of gold, and 12 inches in a foot. This was true in early times, as can be observed in Old Norse, which even uses "12 and 3" in some instances to mean 15. The primacy of 12 was firmly established in much of Europe by Charlemagne in the eighth century.
The Germanic "great hundred" is 120, which is 100 what 12 is to 10, and the "great thousand" is the remnant of this old Germanic unit in English is the long ton, which is 2,240 pounds instead of the 2,000 pounds of the ordinary ton (another name for the "great hundred" in English is the" long hundred"). Note that a long ton is 2 measures of a thousand pounds plus 2 measures of a great hundred pounds.
I am sharing this book with my older granddaughter; it is filled with odds and ends like the above, as well as some neat tricks for multiplication and division. For example, I'm sure everyone else knows this, but I never thought about it before. If multiplying 36 x 25, just add two zeros to the "36" to get 3600, and then divide by 4 to get 900.

If multiplying 36 x 26, just add 36 to 900 to get 936.

Of course, calculators are now used and permitted to be used everywhere but these little tricks might impress some geeky nerd at some little middle school social event. Laugh out loud. The 10-year-old granddaughter doesn't show much interest, but the 7-year-old does. She asked me if she can take my books to college when I die. Seriously. I can't make this stuff up.

First Full Month Production From This QEP Grail Well Not Yet Reported; Still On Confidential; Better Get A Cup Of Coffee: This Is A Long Post

This should be a fun well to watch come off the confidential list; it should come off the confidential list on August 11, 2013 -- hey, that's this weekend. We will see tomorrow (Monday).

24827, conf, QEP, Hemi 2-27-34BH, Grail:

DateOil RunsMCF Sold

But it gets better. I suggest that readers over the age of 65 with a heart condition should be sitting down:

24826, conf, QEP, Hemi 1-27-34BH, Grail:

DateOil RunsMCF Sold

These two wells are on the same pad. There is a third older well on the pad:

19104, 1,203, QEP, Henderson 16-34/27H, t5/11; a Three Forks well, cum 215K 6/13;

The initial Three Forks zone to be targeted was set at 9 feet thick

Now it gets really, really interesting:

19104, the Henderson well, was taken off-line for the past four months, but is back on line now; it was taken off-line, I assume, while the other two wells were being fracked.

When it came back on line, look at what it produced in 6 days: 11,183 barrels. Either it was re-fracked (?) or fracking the other two wells on the same pad made a huge difference. [Later: Don points out that it's possible that the wells were placed on a pipeline and the chokes were wide open; or similarly, the tanks on the pad would have been empty after four months of being off-line and they could have opened the choke to fill the tanks. Also note the significant change in the natural gas to oil ratio.]

11,183 bbls in 6 days translates to 56,000 bbls in 30 days:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Prior to being taken off-line, for whatever reason, it was producing "only" 5,000 bbls/month.

And, if you have read this far, one more tidbit. Note: this well was taken off-line for four months. I forget, but a company, I think it was Triangle Petroleum, just mentioned that it can leave wells on-line while simultaneously fracking wells on the same pad. Not that it makes much difference, I suppose, when a well will be producing for 35 years in the Bakken, for individual mineral owners it has to be nice when a well is not taken off-line for several months.

This, obviously, has a number of story lines. Maybe we will know more tomorrow.

There are four other completed QEP wells in this section.

Memo to self: go back to the file report and note the QEP discussion about commingling; should be posted.

Executing The Plan -- A More Detailed Look At EOG's 2Q13 Earnings Presentation

Somewhere around 2008, EOG started announcing in their public statements that they were going to turn their focus from natural gas to oil. I can't remember if I actually posted a note when they first started talking about that switch, but I remember the "talk" vividly.

Back on April 24, 2010, an individual posted elsewhere noted the same thing:
They have publicly said for the last couple of years that they are switching their focus from gas to oil and that they are working on several horizontal oil plays in addition to the Bakken and the Barnett Combo. However, they would not publicly comment on those plays until they were ready as they want to lease acreage before any public announcements. 
By the way, that particular post is interesting for any number of other reasons. But I digress.

As I was saying: somewhere around 2008, EOG publicly announced they were changing their focus from natural gas to oil. I believe at that time, more than 50% of EOG's revenues were from natural gas (I could be way wrong on that, but I certainly saw EOG primarily as a natural gas company, something akin to Chesapeake).

So, how has EOG done? How well has EOG executed this plan? This caught me by surprise: look at slide 3 of their 2Q13 earnings presentation:
Natural Gas 
- North America – no dry gas investments, assoc'd gas drives modest growth profile
- International – profitable flat production profile
That's pretty impressive -- actually, very, very impressive: NO DRY GAS investments in North America. I assume that internationally, EOG continues to derive a positive cash flow from legacy natural gas investments but has minimized additional dry gas investment overseas.


Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here. I post this data because it helps explain the Bakken and/or put the Bakken into perspective. 

Some other random data points from that presentation:
  • EOG added a threshold asset in 2013: the Delaware Basin Wolfcamp
  • top three onshore domestic horizontal plays: Eagle Ford, Bakken/Three Forks, Delaware Basin Leonard/Wolfcamp
  • high rates of return; ~ 100% direct ATROR
  • majority of US oil prices based on LLS; $9.50/bbl premium over WTI
  • self-sourced sand is a discriminator for this company
  • CBR innovator; loading facilities in all three major domestic plays
  • US horizontal crude oil growth 2005 - 2013: only two major drivers -- the Bakken and the Eagle Ford
  • EOG has 12 years of drilling inventory in the Eagle Ford; 12 years of drilling inventory in the Bakken
  • This will change once they get going but right now EOG shows an incredible inventory of 83 years of  activity in the Leonard, and 118 years (no typo) in the Wolfcamp; 25+ years in the Midland Basin Wolfcamp. Overall EOG says their current acreage has a drilling inventory of greater than 15 years
  • cash margins: 41% (2010), 56% (2011), 71% (2012), 75% (1H13)
  • cash margins: $20 (2010), $29 (2011), $34 (2012), $40 (1H13)
  • dividends: 24 cents (2006), 58 cents (2009), 75 cents (2013E)

This is a portion of Slide 12 of the presentation. Note that production in the Bakken is leveling off; compare this to the Eagle Ford:

 The question is whether the rate of production in the Bakken will increase once the delineation of the Three Forks is further along.

EOG's Leonard Prospect In The Delaware Basin, Part Of The Permian Basin, West/Southwest Texas

This is simply some housekeeping for me. I don't expect there to be anything new.

There was quite a bit of talk about the "Leonard" in EOG's most recent earnings call. It's probably been mentioned before but it was new to me. A quick google search doesn't provide a lot of specific information.

But drilling down, these are my thoughts.

First, the Mid-Continent Oil Province is made of hundreds of oil fields from Kansas south into Texas.

There are several basins within this "oil province."

One of the basins, of course, is the Permian Basin in west Texas.

Within the Permian Basin there are other basins including the Delaware Basin and the somewhat smaller and shallower Midland Basin was just east and the much smaller Marfa Basin was to the southwest.

In slide 31 of the recent EOG presentation, one sees the Delaware Basin, almost identical in shape to the Midland Basin which is just to the east.

EOG divides the Delaware Basin into the Leonard prospect, to the north, and the Wolfcamp prospect to the south. It is confusing because the Wolfcamp is in the southern half of both the Delaware Basin and the Midland Basin. The two basins (the Delaware and the Midland) are "connected" by the Wolfcamp channel, as it were.

In the past, I simply separated out the "Permian" as one of the big three: Williston Basin (Bakken), West Gulf Basin (Eagle Ford), and the Permian Basin (multiple plays).

But unlike the Williston Basin and the West Gulf Basin, it appears the Permian Basin is going to get more attention by operators as they delineate the various smaller basins in this larger Basin. 

This Is One Of Those Articles In Which The Punch Line Sneaks Up On You

The Oil Drum has a nice essay this morning. Be sure to read to the very, very end.
In this regard it is well to remember the case of Poland, where the presence of gas-bearing shales led to predictions that the industry would “transform Europe.” But then the results of the well tests came in, and the volumes of natural gas available were reduced by up to 90%. Although 40 wells have been drilled, to date none are reported to have produced commercial quantities of natural gas, although in only four cases was there fracking of the horizontal well section. Three major oil companies have backed away from committing to the program, and that initial enthusiasm is now considered to have been a “bubble,” while Chevron is seeing more protests over their planned fracking tests.
This collapse of hope for a potential resource has led the Polish Government (responsible for ensuring that the country has enough fuel at a viable price) to move back toward the greater use of lignite as a power source. Coal is the fuel for the power stations that produce 90% of the country's electricity, and lignite is readily and cheaply available. Prices for lignite (a brown coal that is softer and not yet fully geologically morphed into the harder black coal most envisage when coal is discussed) are quoted as giving a price of $2.00 per gigajoule, roughly a fifth of the cost for black coal. The country has large deposits of lignite, much of which is available for surface mining, at relatively low financial cost.
The government decision underscores a point that I have made a number of times, namely that as other fuel costs increase, more and more countries will move to the use of coal where it is domestically available and relatively inexpensive in financial cost to produce.