Sunday, October 6, 2013

Road Construction In North Dakota -- It Just Keeps Building

Do you remember this post back on June 1, 2013: $1 billion North Dakota road construction program will be biggest in the state's history?

I honestly thought it couldn't get much bigger than that. Then Don happens to see this data point:
The North Dakota Department of Transportation is aggressively addressing infrastructure improvements to enhance safety and traffic movement in western North Dakota. The NDDOT invested approximately $940 million in state projects from 2008-2012 to preserve and improve transportation infrastructure in this area. The state is investing an additional $1.16 billion in the 2013-2015 biennium, as well as continuing to plan and work on future road projects.
The link will be added to my "Data Links" page. 

Wells Coming Off The Confidential List Over The Weekend, Monday -- Hess, Arsenal Report Nice Wells

Monday, October 7, 2013 -- 7th day of the government shutdown
  • 20140, drl, XTO, Mandal Federal 41X-29C, Haystack Butte, no production data,
  • 23096, drl, QEP, MHA 1-06-05H-149-92, Heart Butte, no production data,
  • 23653, 745, Whiting, Marsh 14-9PH, Dutch Henry Butte, t4/13; cum 35K 8/13;
  • 24838, drl, CLR, Wahpeton 3-16H3, Banks, no production data,
  • 24982, drl, BR, CCU Four Aces 44-21MBH, Corral Creek, no production data,
Sunday, October 6, 2013 -- 6th day of the government shutdown
  • 23725,  766, Hess, LK-Trotter-146-97-3625H-4, Little Knife, t8/13; cum 24K 8/13;
  • 24011, drl, MRO, Cummings 44-31TFH, Big Bend; 11K first month;
  • 24361, drl, Statoil, Knight 35-26 3TFH, Banks, no production data;
  • 24737, drl, HRC, Fort Berthold 152-94-15A-22-7H, Antelpe, no production data,
  • 24992, 2,736, BR, Cleo 41-1MBH, Cross, 2 sections; t9/13; cum --
Saturday, October 5, 2013 -- 5th day of the government shutdown
  • 23759, 1,350, Arsenal, John Paul 11-2H-155-91, Stanley, t7/13; cum 32K 8/13;
  • 24580, 305, Petro-Hunt, State 158-91-16D-9-1H, Kittleson Slough, t6/13; cum 16K 8/13;
  • 24721, 985, Whiting, Kostelecky 31-29PH, South Heart; t4/13; cum 36K 8/13;
  • 24837, drl, CLR, Wahpeton 2-16H2, Banks, no production data,
  • 24936, conf-->loc, CLR, Tangsrud 8-1H1, Hayland, no production data,
  • 25031, drl, Hess, EN-Sorenson A 154-94-0211H-3, Alkali Creek, no production data,

23725,  see above, Hess, LK-Trotter-146-97-3625H-4, Little Knife:

DateOil RunsMCF Sold

 23759, see above, Arsenal, John Paul 11-2H-155-91, Stanley:

DateOil RunsMCF Sold

If You Go Away, Shirley Bassey

Sunday Evening Ramblings -- So This Is What A Government Shutdown Feels Like: 90% Of The Government Keeps Functioning; Government Workers On Paid Vacation; EPA Shut Down; Refracking In The Bakken

I enjoyed the rambling yesterday morning: it cut down on a lot of clutter. Instead of a bunch of individual stand-alone posts, it was just one long post.

Let the rambling begin.

So, what have we learned on day 6 of the government shutdown?
  • 83% of the government is still functioning
  • almost anybody connected to the military is essential
  • bringing back "all" the military civilians will move the overall "83%" figure closer to 90%
  • the EPA is shut down
  • the few furloughed government workers are on paid vacation (they will all get back pay and they are eligible for unemployment benefits while sitting this out -- what's not to like?)
  • national parks and military memorials (WWII, Iwo Jima) are the only "real" things closed in a government shutdown
  • according to one poll, only 10% are affected by the shutdown
  • no one from the national park service reads this blog
Prior to the shutdown, almost nothing was working in this economy except the oil and gas industry and now, not even the President or Congress are working. The POTUS has said he will not negotiate. And, of course, with 90% of the government still up and running (but not working) and the government workers on paid vacation, there's not much to negotiate. Why didn't the powers that be think of shutting down the government when ObamaCare was being voted upon? It would have saved a lot of unnecessary trouble (and spending).

Wow, I need some music for a Sunday night.

Killing Me Softly, Perry Como

Switching gears ('cause this blog is subtitled "All Bakken All The Time"), I missed this. Over at SeekingAlpha a trusted source Bret Jensen discusses Emerald and NOG. Emerald used to be VOG. NOG and VOG. VOG and NOG. If I remember correctly, brothers are CEOs. This is where my "snapshot" comes in handy. EOX sold its Colorado acreage this past year and is now completely focused on the Bakken, all 48,000 acres. Market cap is $330 million + debt of zero dollars = $330 million. At $10,000/acre, $480 million. It was up 7% on Friday. The stock is selling at $7.50. Back in February 2012, it was selling for $25.

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.

But I'm digressing. The reason I wanted to highlight Bret Jensen's article is because of one of his comments he made in passing. On Thursday, October 3, the 3rd day of the government shutdown, Sun Trust Robinson recommended Whiting as a "top pick due to revolutionary completion techniques."

Quick, to Whiting's September 30, 2013, presentation, and some data points on completions:
  • will double down on the density in its Pronghorn prospect: 6 / 1280 vs initial plan of 3/ 1280
  • new completion techniques extend their Lewis & Clark prospect to western edge of the field
  • at Pronghorn, a pilot at the Obrigewitch unit tested their new cemented liner completion approach, achieving a significantly higher IP than adjacent wells that used a sliding sleeve completion
  • higher density drilling in the middle Bakken in Hidden Bench is being considered
  • new Missouri Breaks cemented liner completion designs has yielded strong results
  • doubling down on Missouri Breaks density: 8 / 1280 vs current plan for 4 / 1280
  • downspacing in WLL's cash cow, the Sanish, could add up to 3 additional middle Bakken wells per 1280-acre unit
  • WLL also plans to refrack several wells in the Sanish in 2013
But what really got my attention were the slides on its play in its Redtail Niobrara prospect:
  • Whiting is accelerating its Redtail development
  • currently a 2-rig program; will add a 3rd rig in October
  • Whiting is going to a 16 well/drilling spacing unit
  • so far, has drilled 46 wells; has 21 more permitted locations; the additional 2-year inventory is 33; WLL estimates 2,992 future wells bringing the total to 3,390 total well. 
  • So, again, they have drilled 46 wells; they will get to 3,390 wells with 16 wells/DSU in the Niobrar
  • I'm not sure about the size of the DSU in the Niobara, but on slide 32, WLL mentions 960-acre units
  • recovery rate in the Niobrara: somewhere between 10% and 20%
So, that's it for Whiting.

Goldman Sachs likes Oasis. Sun Trust likes Whiting.


There is so much going on in the North American oil and gas energy revolution, it's hard to know what to post and what not to post. I really did not want to post this article, but when readers send me articles, I obsess about whether to post or not to post. I listened to the Perry Como song above twice before finally deciding to reject this story. And then I saw the $35 billion price tag again. That's a huge project. So, we will link the article. Bloomberg reports that a Malaysian company will invest $35 billion in western Canada to produce, gather, and ship liquid natural gas from western Canadian oil sands to Prince Rupert, British Columbia. Some data points:
  • the Malaysian company, Petronas, bought Canada's Progress Energy Resources, for $5 billion in 2012
  • after Canada initially blocked the takeover (the Keystone XL debacle probably changed some Canadian minds)
  • the pipeline will be built by Keystone XL's TransCanada Corporation
  • the acquisition made Petronas the second-biggest stakeholder in the Montney shale-gas area of British Columbia
  • the acquisition gave Petronas full control of three Progress Energy fields in which Petronas previously only held stakes
So, $35 billion for Malaysia-Canada, and President Obama can't even come to a decision on a $2 billion cross-border pipeline. For the US under President Obama: a lost decade.

Finally: California's Alternative To Oil -- Transportation Fuel From Waste

A reader sent me this story several days ago; I finally got around to it.

From the press release:
North America’s largest provider of natural gas for transportation, announced today that it will be the first company to commercially distribute a renewable natural gas vehicle fuel, called Redeem, made from waste streams such as landfills, large dairies and sewage plants directly to fleets around the country and at the 35 public Clean Energy stations throughout California. Thousands of cars, taxis, shuttles and industrial fleets in California are now using Clean Energy’s Redeem, which is up to 90% cleaner than diesel and 100% renewable.
“It’s a landmark day for Clean Energy as the first company to make this revolutionary and renewable transportation fuel made from waste available to our customers,” said Andrew J. Littlefair, president and CEO of Clean Energy. “Our goal is to produce and distribute 15 million gallons of Redeem in our first year which can make significant progress towards achieving California’s climate change goals and show that this is a viable, cleaner and abundant alternative fuel source for our future.” 
Pretty impressive: 15 million gallons of biomethane.

California uses about 15 billion gallons of gasoline every year. 15 million gallons represent 0.1% of 15 billion gallons. Of course there's some conversion factor for gasoline/methane but others can do the math. I'm moving on.  

Another Metric To Track Performance Of Bakken-Focused Companies

When the earnings reports start coming out next month, we will be inundated with data points. I have great difficulty tracking all the data points.

I guess if I had only two metrics for Bakken-focused companies the second metric would be related to their daily rate of production, such as  "year-over-year percent growth in production."

Even if I had the data I wouldn't know what to make of it. I don't know what industry standards are.

So, this throw-away Motley Fool article was incredibly useful to me. This data is nothing new; it's easily found at every corporate presentation, but I guess the data was just too overwhelming for me. But now I have a data point that puts things in perspective.

According to Motley Fool,
EOG is expected to deliver best-in-class crude oil growth through 2017. This year the company is expected to grow its oil production by 35%, which is the minimum rate it has delivered since 2010. That's well above Devon for example which is expected to grow its oil production by 16%-19% this year and Occidental which will only grow its oil production by 8% this year. With investors putting such a premium on companies that can grow oil production these days, this is an important consideration.
Note: there are two important data points in the "production-growth metric." Obviously KOG should increase production on a percentage basis at a greater rate than XOM.

KOG, OAS, CLR, and WLL would be in a different class than XOM, CVX, and COP. But if you are a "splitter" and not a "lumper," then even KOG and OAS would be in a different class than WLL and CLR.

This earnings season I'm going to try tracking "production-growth-year-over-year" for the various Bakken-focused operators.

Here's a start, for me.

Continental Resources, Inc. expects to increase total crude oil and natural gas production in a range of 26% to 32% in 2014, based on non-acquisition capital expenditures of $4.05 billion.  Continental expects average daily production in 2014 will be in a range of 170,000 to 180,000 barrels of oil equivalent (Boe) per day, with an exit rate for December 2014 of approximately 200,000 Boe per day.
From the Motley Fool article linked above, the company expects a 35% growth rate.
  • 3Q13: 37,707 boed/d (an increase of 237% yoy; guiding >40% production growth in 2014

  • 3Q13: 35,400 boepd; 125% production increase year-over-year (3Q12 - 3Q13)
  • 2Q13: 23,500 boepd -- an 88% increase in production  year-over-year; (if I did the math correctly and read the corporate graphic correctly -- big "ifs")
  • 2Q12: 12,500 boe/d
Increased average daily production to 30,171 barrels of oil equivalent per day, a 48% increase over the second quarter of 2012