Some Idle Musings

Updates

October 1, 2013: another "Debbie Downer" story for Statoil.  

Original Post

One gets a general feeling that Norway/Statoil is "anxious" about how their oil industry is going.

There have been a number of stories about Statoil/Norway suggesting all is not perfect in the land of the midnight sun. I generally do not post those articles. But the stories have to do with taxes, Norway's new government, carbon capture costs, challenges in the Arctic, etc.

The Chinese oil companies are in everyone's rear view mirrors.

Yesterday, The Dickinson Press posted a story about a group of Norwegian officials traveling to North Dakota for a weeklong study of the Bakken.

There have been several articles recently about possible merger and acquisition activity in the Bakken.

In the past week, both WallStCheatSheet and Bloomberg had an article about a possible takeover candidate in the Bakken.

Some Bakken operators have said pretty clearly they would be interested in talking M&A activity.

Some data points in the table below. I left some columns empty in case I want to add something later.

Disclaimer: all data comes from Yahoo!Finance and or MWD databases. The former may be somewhat outdated (I assume Yahoo!Finance depends on quarterly data); and, MWD databases may be completely inaccurate, but they are what I have. I also make a lot of typographical errors. This entire post is for my benefit to help me keep track of things going on in the Bakken. I am posting it FYI only. Do not make any investment decisions based on anything you read at this blog or think you may have read at this blog.

Company	MkCap	Debt	Total	Acres/Bakken	OperCashFlow
STO	72.15 B	24.10 B	96.25 B	258,000*	17 B
WLL	6.67 B	2.25 B	8.92 B	697,000	1.51 B
OAS	4.24 B	1.20 B	5.44 B	492,000	600 M
KOG	3.01 B	1.45 B	4.46 B	196,000	392 M
TPLM	0.891B	1.05B	1.95 B	144,350	30 M

* STO: 378,000 acres in the Williston Basin Bakken (258,000 in North Dakota; the rest in Montana). This is the acreage that MWD last recorded that BEXP had before it was bought by Statoil; since then I do not know how much the acreage has changed.

All acreage figures rounded to nearest thousand.

Some idle chatter.

It's hard for me to deal with "billions," so dropping some zeroes, if the decision to buy a house that cost $544,000 or another house that cost $446,000 spread out over 30 years would almost be moot. At 5% over 30 years, the first house wold have a monthly payment of about $2,900; the the second house would cost about $2,400/month. (And if the second house was in a jurisdiction with higher property taxes, the difference becomes even less. But I digress.)

Both Oasis and Kodiak are pure E&P Bakken operators.

WLL does much more than just E&P; and, it has operations throughout the west and south United States. A buyer could sell off non-E&P assets and get a toehold in more than just the Bakken.

Doing some simple division yields some interesting numbers.  

Again, there could be some huge errors in the numbers above. But that's where I'm starting.

Miscellaneous Energy Links From Last Week; Takeover Candidates; Road Construction In North Dakota

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.

On Friday, WallStCheatSheet identified Oasis as one of four companies that might be a takeover candidate:

In September, Oasis has reached agreements to add 161,000 acres in the Williston Basin, which includes the Bakken formation, providing it more real estate in the region relative to its $5.2-billion enterprise value than any similar-sized rival, said data compiled by Bloomberg. Now that Oasis is one of the largest landholders in the biggest continuous shale-oil deposit in the United States, and Sterne Agee Group Inc. said that it might entice takeover interest.

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Bloomberg also reported on Friday:

No explorer in the oil-rich Bakken shale formation offers more bang for the buck than Oasis Petroleum Inc. 

Oasis this month signed agreements to add 161,000 acres in the Williston Basin, which includes the Bakken formation, giving it more real estate in the region relative to its $5.2 billion enterprise value than any similar-sized competitor, according to data compiled by Bloomberg. With Oasis now one of the biggest landholders in the largest continuous shale-oil deposit in the U.S., Sterne Agee Group Inc. said it may lure takeover interest.

Companies mentioned: Statoil and Repsol. And more:

Oasis agreed this month to spend about $1.5 billion on four separate acquisitions of assets in the Williston formation, which encompasses the Bakken and Three Forks shale formations, boosting its holdings by 49 percent to 492,000 acres. After the deal, the company will be the seventh-largest holder of Bakken acreage, according to data compiled by Bloomberg.

Oasis’s enlarged Bakken position signals its “commitment to be a pure-play” and makes the company more enticing to acquirers, Tim Rezvan, a New York-based analyst at Sterne Agee, wrote in a Sept. 10 report.

“The Bakken naturally comes to the top of everybody’s list” for U.S. oil-play acquisitions, Andrew Coleman, a Houston-based analyst at Raymond James, said in a phone interview. Oasis has “a nice footprint of acreage. As you get to a position that is closer to a top-five position in the Bakken, the bigger guys, the international guys may want to come in.” 

Much more at the link. 

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MDU press release last Monday re: road construction in North Dakota:

Knife River Corp., a subsidiary of MDU Resources Group Inc., has received a $51 million North Dakota highway construction contract for a bypass project on Highway 85. This is the largest road construction contract Knife River has been awarded in the state.

Just A Quick Reminder

Comparing the Bakken to other oil plays in the United States.

Wells Coming Off Confidentail List Over The Weekend, Monday; Oasis And Newfield To Report Nice Wells

Monday, September 23, 2013
24259, drl, BR, Glacier 14-9MBH, Clear Creek, no production data,
24634, drl, Statoil, Blanche 27-22 7H, Painted Woods, no production data,
24998, 1,565, Newfield, Lawlar 150-98-18-19-3H, Siverston, t7/13; cum 16K 7/13;

Sunday, September 22, 2013
23602, 284, Baytex, Pulvermacher 34-27-162-99H 1NC, Ambrose, t5/13; cum 16K 7/13;,
24137, 266, North Plains, Sorenson 160-100-27-34-4A-1H, Smokey Butte, t5/13; cum 25K 7/13;
24787, drl, KOG, Smokey 13-7-19-14H3M,  Pembroke, no production data,
24929, conf-->loc, CLR, Tangsrud 12-1H3, Hayland, no production data,
24943, 1,780, XTO, Sax 41X-26D, Siverston, t8/13; cum --

Saturday, September 21, 2013
23093, drl, QEP, MHA 3-06-31H-150-92, Heart Butte, no production data,
23097, drl, QEP, MHA 2--06-31H-150-92, Heart Butte, no production data,
23464, 428, Triangle, Dwyer 149-101-2-11-1H, Antelope Creek, t5/13; cum 36K 7/13;
23702, 3,072, Oasis, Taylor N 5200 14-29B, Camp, t4/13; cum 46K 7/13;
24022, 1,549, Oasis, Autumn Wind State 5601 14-16B, Tyrone, t3/13; cum 39k 7/13;
24633, drl, Statoil, Blanche 27-22 2TFH, Painted Woods, no production data,
24809, drl, CLR, Wahpeton 9-16H,  Banks, no production data,
24870, drl, Hess, EN-Fretheim A 155-93-3334H-7, Robinson Lake, no production data,
24940, 27, Corinthian, Backman 15-35, North Souris, a Spearfish well, t6/13; cum 1K 7/13;
24973, 2,437, MRO, Brigner 24-24H, Bailey, t7/13; cum 11K 7/13;
24996, 1,541, Newfield, Lawlar 150-98-18-19-2H, Siverston, t7/13; cum 19k 7/13;;
25095, drl, Hess, LK-Bice 147-97-1201H-5, Big Gulch, no production data,
25113, 1,592, MRO, Glenn Scott 24-31H, Murphy Creek, t7/13; cum 14K 7/13;

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23702, see above, Oasis, Taylor N 5200 14-29B, Camp:

Date	Oil Runs	MCF Sold
7-2013	750	0
6-2013	11206	5829
5-2013	10950	11172
4-2013	19288	10901
3-2013	3301	0

Best Quote Of The Day

CNBC is reporting: Government Motors ...

... plans to more than double the range of the typical electric vehicle—while also sharply driving down the cost, according to a senior official.

But with mounting concerns about the slow consumer response to the first wave of battery electric vehicles, Doug Parks, GM's global product development chief, cautioned The Associated Press that it was not yet sure if or when such a vehicle—projected to cost just $30,000—would ever go into production. 

As I told Don yesterday:

I also plan on building an electric automobile manufacturing plant outside my apartment complex. My goal is to design and manufacture an electric SUV that will go 500 miles on a single charge and will cost less than a Ford Focus. I have the same concerns as GM, however: "I am not sure if or when such a vehicle would ever go into production." I'm not even sure I will get around to building the plant. But I dream about it.

LOL.

This is a news story?

Random Look At Global Coal Data Points

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 am posting this story for the data points regarding global coal, and not for investment purposes.

SeekingAlpha is reporting:

Environmentalists preaching the death of coal in the United States may be basing their expectations more on hope than on reality. The 15 gigawatts (GW) of coal-fired capacity that have been shut or converted since 2009 only accounts for about 4.5% of the 318 GW used in power generation. Only 3.8 GW of capacity are expected to be shut in 2014, just over one percent of total capacity, compared to 10.9 GW closed in 2012.

While the share of electricity generated by coal in the United States has dropped to 37% in 2012 from over 50% as late as 2003, it is expected to stabilize around 40% over the coming years. Further, natural gas prices could jump over the next few years as export capacity increases to countries where prices are between three and five times more expensive than the U.S. spot price.

The marginal loss of coal-fired capacity in the United States is dwarfed by growth across the rest of the world. Approximately 90 GW of capacity is expected to be built in 2013 with 304 GW coming online by 2017.

The real growth story in coal is in emerging Asia which accounts for 90% of the expected capacity build. China produces more than 70% of its electricity from coal and uses so much of the commodity that imports increased by a compound annual rate of 17% over the three years to 2013. While growth in electricity generation (graph below) has slowed, it is still averaging an increase of 5% to 10% per year. Growth should be fairly sustainable as 300 million people move into the cities over the next six years and require more power.

Weekend Links, News, And Views; Norway Abandons Carbon Capture; BNSF Announces Minnesota CAPEX; Bloomberg On Futility Of Renewables; France And Germany Appear Tone-Deaf

Norway abandons its "much-vaunted" plans to capture carbon dioxide and store it underground: mounting costs and delay. The BBC is reporting:

The outgoing government in Norway has buried much-vaunted plans to capture carbon dioxide and store it underground amid mounting costs and delays.

The oil and energy ministry said the development of full-scale carbon dioxide capture had been discontinued.

It said it remained committed to research into carbon capture.

When the Labour Party presented the plan in 2007, it was hailed as Norway's equivalent of a "Moon landing."

Prime Minister Jens Stoltenberg and his allies lost a general election to conservatives and centrists this month, and are due to step down shortly.

Even the outgoing liberals saw the debacle it was. 

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Some years ago when I noted the increasing rail traffic in North  Dakota due to the oil and gas industry I opined the regional economy would be spurred by capital expenditures on improving rail and maintenance. I remember someone wrote in to comment that BNSF had been shipping grain for decades and the company would not see any increased expenses because of the oil and gas industry; maintenance and improvements would remain the same. Prairie Business is reporting:

BNSF Railway Co. plans to invest an estimated $95 million on maintenance and rail capacity improvement and expansion projects in Minnesota this year.

BNSF’s 2013 capacity projects in Minnesota include terminal improvements at Northtown Yard in Minneapolis to expand rail car classification and inspection capacity by reconfiguring tracks and switches, expanding parking capacity at BNSF’s automotive facility in St. Paul to support growth in new automobile traffic, as well as signal upgrades for federally mandated positive train control.

BNSF will continue its robust maintenance program in Minnesota, which will include more than 1,800 miles of track surfacing and undercutting work, and the replacement of 55 miles of rail and about 290,000 railroad ties.

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Bloomberg has a nice article on why "wind and solar can't save climate" (whatever that means; I did not know the "climate needed saving"; whatever). The entire article provides data like this:

Wind energy’s paltry power density means that enormous tracts of land must be set aside to make it viable. And that has spawned a backlash from rural and suburban landowners who don’t want 500-foot wind turbines near their homes. To cite just one recent example, in late July, some 2,000 protesters marched against the installation of more than 1,000 wind turbines in Ireland’s Midlands Region.

Consider how much land it would take for wind energy to replace the power the U.S. now gets from coal. In 2011, the U.S. had more than 300 billion watts of coal-fired capacity. Replacing that with wind would require placing turbines over about 116,000 square miles, an area about the size of Italy. And because of the noise wind turbines make -- a problem that has been experienced from Australia to Ontario -- no one could live there. 

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But don't tell that to Germany. Nature is reporting that Germany will continue its renewable program despite the facts:

But the economic challenges are daunting, with the total costs of the Energiewende estimated to top €1 trillion. Europe's deep financial crisis looms large over a project of that scale, warns Roger Pielke Jr, an environmental-policy researcher at the University of Colorado Boulder. “The German public has so far shown great willingness to pay for the transformation, but there will be limits to that willingness, especially if the economic climate gets rougher.”

For example:

For German consumers, the costs of that shift are apparent in their monthly electricity bills. The statements include a litany of 'shared costs' that are split by all households to fund the Energiewende — and result in some of the highest electricity prices in Europe. (Heavy industries are currently exempt from paying the surcharge.)

The shared costs are a mechanism for promoting green forms of energy, which are more expensive to produce than electricity from coal and natural gas. Germany's Renewable Energy Act (EEG), the legal force behind the Energiewende, allows owners of solar panels and wind turbines to sell their electricity to the grid at a fixed, elevated price. Renewable-power producers cashed in an estimated €20 billion last year for electricity that was actually worth a mere €3 billion on the wholesale electricity market. The difference came out of the pockets of consumers.

It will be interesting to check back in on Germany in 10 years.

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But even France can out-do the Germans in craziness (though that hardly needs repeating). Bloomberg is reporting:

France will introduce a levy on nuclear energy as well as a tax on carbon emissions from fossil fuels to raise billions needed to boost renewable power and improve energy efficiency.

“All change is expensive in the short term even if it’s beneficial in the long term,” French Prime Minister Jean-Marc Ayrault said today in a speech about the environment in Paris.
The nuclear levy will be applied to Electricite de France SA’s existing atomic reactors, he said. The carbon tax will be introduced “progressively” on fossil fuels in order to earn 4 billion euros ($5.4 billion) in 2016. 

The country gets about three-quarters of the power it produces from EDF’s 58 nuclear reactors, more than any other nation. The energy transition will cost an estimated 20 billion euros a year, Hollande said yesterday.

Wow.

I can't think of a more regressive tax than increased taxes on utilities.

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And with that Mr Hollande becomes the "O'Bama of Europe." Reuters is reporting:

French President Francois Hollande saw his approval ratings fall to their lowest level so far in a monthly poll that showed less than a quarter of voters were satisfied with his actions. 

Taking a page from President O'Bama's playbook:

The poll also showed Hollande's ratings among supporters of the Green party had slid by 19 points since last month, a sign of growing tensions between Hollande's Socialists and their Green allies in government.

Hollande this week outlined plans to slash fossil fuel use, supported by a new carbon tax, in an announcement seen as aimed at reassuring the Green party.