Thursday, September 5, 2013

WTI-Brent Spread Widens On Libyan Reports

Market Realist is reporting:
The WTI-Brent spread continued to trade wider last week, moving from $4.62 per barrel to $6.36 per barrel. Over the short term, the spread likely moved wider, as supply disruptions from Libya have persisted due to unrest. Despite last week's wider movement, the spread has moved narrower throughout much of 2013. In early February, WTI traded at points as much as ~$23 per barrel below Brent crude, but the spread had steadily narrowed since then to trade at current levels of near parity. The significant tightening of the spread since February has been a positive for domestic oil producers (relative to international producers), as it means that the discount they receive to international crudes has been decreasing.
A long, long analysis at the link.

At Bloomberg today (a dynamic link; will change over time):
  • WTI: $108.44
  • Brent: $115.26
And to think some folks elsewhere would like their Bakken wells shut in because the wells are flaring natural gas. Whatever.

Talk about a misleading headline. It's accurate, but this guy should never have been arrested in the first place; had he not been arrested, a bail hearing would never have come up. This looks like harassment.  My hunch: there are a lot more important things than "lying" about one's finances when setting bail. Call in Judge Judy.

Generally speaking, the more time the president has to twist the arms of Congressmen, the more likely the president will get the votes he needs. That was certainly the case with O'BamaCare. But with the Syrian Missile Crisis, it may turn out just the opposite. Case in point: an early supporter who has changed his mind. It may have to do with evidence. So far, John Kerry and the president haven't shown any evidence to the American people. Meanhwhile, Vladimir Putin has a 100-page paper out there. And now the videos of the "moderate" rebels who are Mr McCain's friends, over in Syria, will start showing up.

Ten (10) New Permits -- The Williston Basin, North Dakota, USA; MRO With A Nice Well; KOG Will Report A Huge Well Tomorrow

Active rigs: 187

Ten (10) new permits --
  • Operators: KOG (5), HRC (2), Hess, Petro-Hunt, SM Energy
  • Fields: Marmon (Williams), Charlson (McKenzie), Stockyard Creek (Williams), North Tioga (Burke), Hawkeye (McKenzie)
  • Comments: KOG has a permits for a wildcat in Big Stone, Williams; I am surprised how many wells are going into Stockyard Creek so early in the boom; Willistonites can drive a few miles east these nice summer evenings just to look at all the activity; watch out for the trucks
Wells coming off the confidential list today were posted earlier; see sidebar at the right.

Two (2) producing wells were completed:
  • 24438, 527, Petro-Hunt, Sorenson 152-96-24D-13-5H, Union Center, t8/13; cum --
  • 24972, 1,867, MRO, Nelson 11-25H, Bailey, t8/13; cum --
There were a couple of name changes; this one is similar to a name change yesterday:
  • 24465, loc, North Plains, Stewart 160-100-28-33-3B-1H was simply Stewart 3B-28-1H 
Wells coming off confidential tomorrow (Friday):
  • 22984, 640, OXY USA, Schafner 1-29-34H-142-95, Manning, t3/13; cum 21K 7/13;
  • 23193, drl, Statoil, Hospital 31-36 5H, Alger, no production data;
  • 23950, 2,411, KOG, Charging Eagle 15-21-16-2H3, Twin Buttes; t7/13; cum 31K 7/13;
  • 24598, 203, Samson Resources, Bonneville 3625-3TFH, West Ambrose, t6/13; cum 10K 7/13;
  • 24965, drl, CLR, Tangsrud 5-1H, Hayland, no production data;

23950, see above, KOG, Charging Eagle 15-21-16-2H3, Twin Buttes:

DateOil RunsMCF Sold

Beating Swords Into Plowshares, And Building LNG Tanks Out Of Wind Turbine Towers


September 6, 2013: a reader was nice enough to send the news story related to the post below. Thank you. The Jamestown Sun is reporting:
The company that took over DMI Industries — a wind turbine plant located here — has reopened the plant to manufacture containers for energy-related products.
Dallas-based Trinity Industries told city leaders the West Fargo plant now will produce containers that can hold 100,000 gallons of products such as water, propane or anhydrous.
The West Fargo plant has been open for the past six weeks with about 40 employees on the job. The first product was shipped from the plant last week.
The company plans to grow to more than 75 employees in the coming months, said Mark Vaux, West Fargo economic development director in a statement.

Original Post

I can't make this stuff up. How times change.

Remember the old DMI manufacturing plant in Fargo, making the tall cylindrical towers for wind farms? Owned by Otter.

Anyway, apparently they are building tanks for pressurized LNG to sell to China in that Fargo facility. One of the original posts regarding the closure of the DMI plant was here. My how times change.

This post is based on very fragmentary information; there may be errors. Here's another link but haven't found a press release, etc.

Global Warming Hitting Both The Arctic And The Antarctic: So Much Ice In The Arctic, Barges Can't Get Through

IceAgeNow is reporting:
Many Northern coastal communities running short on supplies.
Normally, a supply barge arrives in the Amundsen Gulf in early summer to replenish stocks of fuel and other necessities, says the CBC. But this year, that trip is being held up by ice. As much as 30 to 40 per cent of the Arctic Ocean remains covered in ice.
“We have not seen ice with this type of coverage in quite a few years and I really don’t know how far back we might’ve seen it,” says Bill Smith, a spokesman with Northern Transportation Company Ltd., which services the communities.
As a result, the communities of Sachs Harbour and Ulukhaktok will have to wait another few days before their supplies get replenished.
And look at the graph posted in The Guardian: record amount of ice gain in the Arctic this year. It is stunning to say the least.

The same guys -- O'Bama and Kerry -- taking us to yet another Mideast war, this time in Syria, are still talking about global warming.

And so it goes.

Random Note On A Monster Well

There is nothing in the well file (Basic Services) to explain why this well is on "inactive" status.
  • 16997, 1,520, EOG, Van Hook 1-13H, Parshall, t6/08; cum 500K 7/13; placed on inactive status in 4/13; appears to be pumping again in 7/13;
From what I can tell on the GIS map server, nothing is going on this area. There is a well in the final states of being completed one mile north, but the horizontal will not pass through section 13 (#16997)

Interestingly enough, another well, one mile east, and in the same section that the new horizontal will pass through, is also listed as being on "inactive" though it produced one day in July:
  • 16971, 1,148, EOG, Evenson 1-18H, Parshall, t5/08; cum 310K 7/13; placed on inactive status in 4/13; appears to be pumping again 7/13;
One possibility: neighboring wells, even a mile away, might be taken off status during drilling, fracking operations, though it seems like a long time to be taken off-status. Just idle rambling, trying to learn more about the Bakken.

I track "monster" wells here

The well in final stages of being completed:
  • 25056, conf, EOG, Van Hook 33-1218H, Parshall, 1920-acre spacing (L-shaped);

Pay It Forward -- Hopefully US Utilities Are Watching

Over at The Oil Drum, a very, very long article -- worth reading: the political and economic consequences of the last ten years of renewable energy development.

The only thing the writer did not mention in this phenomenally long post that seems to cover everything about the political and economics costs of wind: the numbers simply do not add up.

Speaking of wind, it looks May and I missed the 200-person Cape Cod rally for Cape Wind. Bummer. 

Someone commented that, in fact, closer to 135 hippies were there.

But this surprised me: I thought Cape Wind was a done deal. This suggests it is still being debated. I thought it was being built.

And then this: yet another new "foe" to the project. Curiouser and curiouser. This project is now over ten (10) years in planning, promoting. It looks like Nebraska has its Keystone; Cape Cod has its Cape Wind. Good luck to all. If nothing else, it provides everyone an opportunity to get out, do some hiking, socializing with like-minded activists (on both sides of the fence), and, pretty much, just enjoy life. For me, I enjoy smaller, more intimate groups, for example, Omaha Steak hamburgers with my granddaughters.

Timing Is Everything

At SeekingAlpha, a suggestion that further M&A activity is likely in the oil patch.
There is still value out there for those who know where to look, but some of the best shale plays are now getting to where we view the acreage as fairly valued. What we mean by this is fairly valued for today, not that there is not any future upside down the road. The key for investors now is to focus upon these names with acreage which will be increasing in value and also seeing production increases. We have highlighted numerous names over the years but there are still more out there where the risk/reward scenario is attractive. It is a great time to be in these names and we think that the party can continue for a few more years.
The writer does not mention Oasis, but does write:
Very few people have the ability to set our inbox on fire, but Jim Cramer did that with his discussion of potential takeover targets in the oil and natural gas E&P names. Most of our readers wanted to know our take on two names he pointed out, Kodiak Oil & Gas and SandRidge Energy, which we have discussed over the years in our commodity articles. Kodiak we actually discussed recently in that fashion but still think that they have a bit of a dark cloud over them because of their failed sale this past year. It should not matter, but in business it does. SandRidge is a different story. 
Yes the price is manageable for a number of players, but the assets are gassier than previously expected and the company is now essentially focused on one growth play which is not in the top five plays to be involved in on anyone's list that we have seen. If someone is going to buy SandRidge it will only be after the company has effectively proven solid reserves and shown that considerable liquids are located throughout their acreage in both Oklahoma and Kansas.
Ignore the part about Jim Cramer. LOL. 

Around The Horn -- Early Morning Trading

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. 

KOG up slightly; trading at new highs, $10.24.

Investors love the Oasis story: up $2.00, 5%. At $9,000/acre this was a nice story; complements their existing acreage. Lenders have faith.

CVX and COP up slight; XOM flat.

EOG up $2.00; up 1.25%; hits new high, $162.62. Sweet.

CHK flat, but shows green (one penny); better than red.

SD up 1%. SD continues its nice run.

HK up 2%; TPLM up about 1.25% -- another nice move.

AMZG: up; trading at new highs ($2.42); this has been a huge story.

UNP up almost a dollar.

I don't follow BNSF (BRK) much any more; BRK follows the market in general.

ENB, EEP both up nicely.

SRE continues to struggle.  TransCanada flat.

Every Bakken operator, it looks like is doing very, very well on the Oasis announcement. Based on recent deals, it looks like acreage in the North Dakota Williston Basin Bakken is holding its value at $7,500 to $15,000/acre. 

The nice moves for the Bakken operators come on a day when the market is fairly flat; oil is flat; and investors are conflicted about better economic data; flat employment numbers; impending war with "boots on the ground." To coin a phrase.

Thursday Morning News, Views, And Links -- Part II

Active rigs: 187 (sweet)

WSJ Links

American Crystal Sugar takes unusual late loan of $71 million from USDA:
As the U.S. Department of Agriculture scrambles to boost sugar prices and keep processors from defaulting on government loans, one sugar company recently borrowed more.
The $71.2 million loan, made to American Crystal Sugar Co., a sugar-beet processor in Clay County, Minn., was reported on the USDA's website Tuesday. The loan represents 20% of the $355 million processors owe by the end of the month. The USDA said it would announce later this week whether any defaults occurred on $41.7 million in outstanding loans that were due at the end of August.
It is rare for sugar processors to take out loans this late in the crop year, which ends on Oct. 1. Most processors borrowed late last year or in early 2013, before forecasts for a good harvest sent prices tumbling and raised fears of mass defaults.
China bought new cars so fast in the last decade that it became the world's largest market by 2009. Inevitably, the country's drivers are starting to buy used cars in large quantities now.
Used-car sales in China equaled 41% of new-car sales last year, up from 11% in 2008. They should equal new sales by 2020, says Ivo Naumann of AlixPartners, an advisory firm. In Beijing, consumers already bought more old cars than new ones last year, and this ratio may rise as cars age: Americans buy four times as many old cars as new ones. The big change, though, will be in quality. More consumers will consider resale values, Mr. Naumann says. This should help foreign brands like or . Local car makers such as could suffer.
Car sales show US shifting gear.
Car dealers had a very good August. That may signal the U.S. economy is finally getting dealt a better hand.
General Motors, F, Toyota Motor  and Chrysler Group on Wednesday all reported a strong increase in light-vehicle sales last month, to an annualized 16.1 million cars, according to Autodata, the strongest since October 2007. Industry watcher WardsAuto had expected 15.7 million, while Kelley Blue Book was looking for 15.6 million, suggesting that a late-month lift pushed sales higher.
Demand looks set to remain strong through the remainder of 2013, with dealers running short of some popular vehicles. Ford said it plans to raise production by 7% year over year in the fourth quarter to 785,000 vehicles.
Are you as insulted by that automatic 18% tip restaurants charge for large parties as some folks are? Apparently the IRS has lost its appetite for that automatic 18% tip:
An updated tax rule is causing restaurants to rethink the practice of adding automatic tips to the tabs of large parties.
Starting in January, the Internal Revenue Service will begin classifying those automatic gratuities as service charges—which it treats as regular wages, subject to payroll tax withholding—instead of tips, which restaurants leave up to the employees to report as income.
The change would mean more paperwork and added costs for the restaurants—and a potential financial hit for waiters and waitresses who live on their tips but don't always report them fully.
I agree completely; it's no longer a tip. It's service charge.

Keurig machines to dispense soup

US car sales soar to pre-slump level.

Energy-hungry China struggles to join shale revolution.
When Royal Dutch Shell PLC began a multibillion-dollar effort to tap China shale gas a few years ago, it seemed like a can't-miss wager. China has the world's most extensive shale gas reserves, biggest energy market, and a government pushing for expanded gas production.
But for Shell and its state-controlled partner, China National Petroleum Corp. the reality on the ground makes its bet look riskier.
The region's rough terrain, poor infrastructure and deeply buried gas formations present tough technical challenges. The area is so densely populated and intensely farmed that drilling sites are being built within 360 feet of homes in villages like Maoba—upsetting residents who complain of noise, dust and environmental concerns. To ease the way, Shell and its partners are compensating local residents and local government officials for using their land and roads and other inconveniences.

Upping The Ante: 62 Stages -- EOG

I don't know if I can find it, but about a year ago or so, I posted a note about the Bakken operators -- I believe it was BEXP -- who said they had the capability to frack 60 stages. EOG tested that capability. I've always said the Bakken was about much more than just the oil. It's the largest on-shore unconventional oil exploration and production laboratory in the world. Later, I will post a story showing how big a global story this really is. At the link, scroll down to the China shale oil story.

For now, congratulations to the roughnecks and frack spreads for a successful 62-stage frack (at least I hope I read the report correctly; I go through things quickly and often make errors; readers are kind enough to point out my errors).  
  • 23763, 1,519, EOG, Van Hook 127-0107H, Parshall; 62 stages; 12.43 million lbs all sand; middle Bakken; t4/13; cum 135K 7/13;
  • 23764, 2,342, EOG, Van Hook 20-0107H, Parshall; 55 stages; 10.9 million lbs all sand; middle Bakken; t4/13; cum 153K 7/13;
23763, see above, EOG, Van Hook 127-0107H, Parshall; a huge well

DateOil RunsMCF Sold

23764, see above, EOG, Van Hook 20-0107H, Parshall; a huge well:

DateOil RunsMCF Sold

In this same section is sited:
  • 16965, 1,109, EOG, Hauge 1-01H, Parshall, a short lateral; t6/09;  cum 421K 7/13;

From The Halls Of Montezuma To The Sands Of Syria (But Not Tripoli, Any More)

Benghazi, on the shores of the Mediterranean, close enough. I guess the President missed that part of the US Marines hymn.

So, now, unto the sands of Syria. Those boots are made for walking.

These Boots Are Made For Walking, Nancy Sinatra

For a peace-loving, Nobel-Peace-Prize winning "no-drama" O'bama is certainly full of surprises.

With regard to "boots on the gound":
One of two things. This was O'Bama's plan all along and he simply never told the American people, hoping Brits would support his plan, and then he would go against Syria. OR, he is taking advantage of the Congressional enthusiasm to go to war, and broadening his mandate as much as possible to give him all the flexibility he needs.

In hindsight, it certainly looks like a president would not go to Congress for authority to lob a dozen cruise missiles; he went to Congress for broad military invasion.  It's "war powers" act, not a "lob a couple of cruise missiles" act. 
But folks are correct: one has to give the president as broad a mandate as possible when going to war (Pelosi's words); one can't legislate a war.
Yesterday, I suggested the president had a tiger by the tail.

Today, in one of the op-ed pieces in the WSJ, Axelrod is quoted as saying, "the dog caught the car." Big car; little dog. Of course, no matter how big the dog is, the car is much bigger.

I Told You So -- Again --

While standing in the Starbucks line, reading The Wall Street Journal, I see that the Americans appear NOT be be losing their love affair with the automobile.

Regular readers remember the CNBC fluff piece suggesting Americans were losing their love affair with the automobile because fewer miles are being driven. Less than a week later, both Chrysler and Ford report surging car sales.

Now, today, in a story almost as prominent as the story about Syria, The WSJ reports that US car sales soar to pre-slump level:
The U.S. auto industry has shifted into high gear with new-car buyers snapping up vehicles last month at a pace not seen since before the financial crisis.
Low interest rates and slow-but-steady job growth are encouraging consumers to trade in cars and trucks that average about 11 years old, say auto makers, which are adding production capacity and overnight shifts to satisfy demand. 
All told, buyers purchased 1.5 million vehicles last month, up 17% from a year ago, with nearly all major auto makers reporting double-digit sales gains. The demand has customers scrambling for certain models and colors, and prices climbing on hard-to-find cars including Nissan Motor Co.'s compact Sentra, Ford Motor Co.'s Fusion sedan and Subaru's Forester wagon.
The faster-than-expected rebound in the U.S. is a bright spot for U.S. and other car makers coping with slumping demand in Europe and uncertainty in some big developing markets. Strong sales helped lift the Dow Jones Industrial Average nearly 100 points on Wednesday. General Motors Co. shares rose 5%, to $35.85, and Ford shares climbed 3.5%.
Something tells me CNBC will simply ignore their earlier story and move on. 

Busy, Busy Morning -- Now The Jobs Report -- Let's See How The Numbers Are Spun Today; The Report Is Incomplete; Numbers Estimated

Reuters is reporting:
The number of Americans filing new claims for jobless benefits fell last week to a near five-year low, a sign of economic health that could help convince the Federal Reserve to wind down a bond-buying stimulus program.
Initial claims for state unemployment benefits slipped 9,000 to a seasonally adjusted 323,000, the Labor Department said on Thursday. Claims for the prior week were revised to show 1,000 more applications received than previously reported. 
Claims are now near their levels in January 2008, the early days of the 2007-09 recession. The lowest level this year was 322,000 earlier this month. 
Economists polled by Reuters had expected first-time applications to fall to 330,000 last week. 
A department analyst said data for three states was estimated because the states did not provide data in time for the report.
  • last week's numbers were revised upward by 1,000
  • this week, three states numbers were estimated -- we've seen how that has worked out in the past
My hunch: the numbers will be revised up 3,000 when the official reports come in.

The four-week moving average:
The four-week moving average for new claims fell to its lowest level since October 2007, before the recession began. This measure, which is closely followed because it irons out week-to-week volatility, dipped 3,000 to 328,500.

And This I Why I Love To Blog -- Always A Surprise -- Oasis Acquires Over 160K Net Acres In The Williston Basin.


September 16, 2013: Oil & Gas 360 has an article on the Oasis deal over at SeekingAlpha:
Oasis founders Tommy Nusz and Taylor Reid both had promising careers at Burlington Resources, a company steeped in entrepreneurial moxy, an ethic they brought to fast-moving Oasis Petroleum.
Burlington Resources was acquired by ConocoPhillips in 2005 and once the golden handcuffs that chained talent to the combined company were unlocked, many Burlington executives left to chart new courses for their futures. Since starting Oasis Petroleum, Nusz and Reid have maintained a singular focus on the Williston Basin, making the company one of the few sizable pure plays for investors seeking exposure to the Bakken and Three Forks oil shale plays. In our view, the company's most recent acquisitions strengthen the Oasis brand and give the company the assets and visibility to continue to deliver on its brand promise: "Grow Oil Production and Reserves to Build Long-Term Per-Share Value."
With the three strokes of the pen, Oasis expanded its acreage position by 161,000 net acres and solidified its position as one of the larger operators in the Williston Basin with a total footprint of 492,000 net acres and 1,959 net operated drillable and economic locations.
September 10, 2013:  do you remember that poll asking how big the Zenergy deal would be if there was to be a Zenergy deal? Here was that original post/poll

September 10, 2013: Steve Zachritz on the deal $4,800 with the current production figured in.

Original Post
From the press release:
Oasis Petroleum Inc. today announced that the Company signed four separate and unrelated purchase and sale agreements to acquire certain assets in the Williston Basin totaling approximately 161,000 net acres for $1,515 million.  On a combined pro forma basis, Oasis will have approximately 492,000 net acres with recent production of approximately 43,000 barrels of oil equivalent ("Boe") per day, based on internal operational reports.
I'll do the math later.

Four separate and unrelated purchases, apparently.

The vast majority of the new acreage, 135,000 acres, I believe, has no depth limitations.

43,000 bopd at $50/day = $2 million/day (the 43K represents all, not just recent acquisition)

$1.5 billion / 161,000 acres = $9,000/acre.

This may be the best "quick" link for an overview of the deal.  That link is one of several links at this "overall" link.  The sale and purchase agreement (Oasis, Zenergy, et al) is located here.


Connecting some other dots:

In the video, Anne Kirkpatrick is the daughter of Slim Dusty and Joy McKean (one of two sisters on stage to Slim's right). Ann, of course, is the young woman to Slim's left.

Lights On The Hill, Slim Dusty

Thursday Morning News, Views, And Links -- Part I

Active rigs: 187 (190 last year at this time)

RBN Energy: the coming glut of light sweet oil at the Gulf; will result in downward pressure on the price of oil; Cushing had an escape valve (reverse the pipelines; additional pipelines out); the Gulf has no escape valve (generally, oil cannot be exported from the US)

A reader sends this Motley Fool article: North Dakota to the feds on fracking -- stay away. Also the usual list of operators in the Bakken that the Motley Fool always highlights. Readers might be interested in looking at what American Eagle has done this year (linked earlier).

Chesapeake is pulling out of New York stateReuters/Rigzone is reporting:
Chesapeake Energy Corp will finalize an agreement next week to drop about 12,000 acres of land leased for energy drilling in New York state, as a moratorium on fracking continues into its sixth year.
Reuters reported last month that Chesapeake decided to walk away from about 100 leases in Broome and Tioga Counties in the south of the state, ending a two-year legal battle with landowners who wanted to cancel expired leases or renegotiate for better terms.
Lawyers representing Chesapeake said in a letter to the U.S. Court of Appeals for the Second Circuit on Tuesday that they were in the final stages of negotiating a settlement and that a deal is expected to be made official next week.
It looks like New York and France have something in common. Insanity.

On a more pleasant note to end this post: stunning photographs of Theodore Roosevelt National Park in North Dakota, which, if we are fortunate, will never see a wind farm. 

Okay, one more: a hawk in slow motion and why a pheasant doesn't stand a chance.