Monday, October 21, 2013

Lowest Bidder And O'BamaCare

This is kind of cool.

The other day I mentioned that the ObamaCare website would have been built by the lowest bidder.

Now this, from the president's press secretary:

October 22, 2013: Karl then asked Carney about the main contractor that built the website, CGI, and why they were hired after being fired by a provincial health agency of Ontario, Canada. Carney again refused to answer, referring him to Health and Human Services.

From Consumer Reports:
Consumer Reports, which publishes reviews of consumer products and services, advised its readers to avoid the federal health-care exchange “for at least another month if you can.” “Hopefully that will be long enough for its software vendors to clean up the mess they’ve made,” the magazine said, having tested the site themselves over the course of the past three weeks.
Noting that only 271,000 of the 9.47 million people who tried signing up in the first week managed to create an account, Consumer Reports then provided a few tips to those attempting to slog through the application process. From attempting successive logins because “error messages . . . may not always match reality” to checking one’s inbox frequently because missing an e-mail a user will be timed out of the site and forced to start from square one, none of the suggestions guaranteed success.
The magazine has also released a string of scathing reviews. On October 1, the day the Obamacare exchanges went online, the magazine told people to be patient: “Don’t worry if you can’t sign up today or even within the next couple of weeks.” A week into enrollment, they urged again to “wait a couple weeks and hope that the site irons out its many problems” because the is “barely operational.”

The "Deepest" Horizontal Well To Date In Williams County

My sister tells me the "deepest" horizontal well to date in Williams County is the Memphis 2-4H well:
  • 23714, 892, CLR, Memphis 2-4H, Last Chance, t2/13; cum 53K 8/13:
NDIC File No: 23714    
Well Type: OG     Well Status: A     Status Date: 1/25/2013     Wellbore type: Horizontal
Location: SWNW 3-153-100     Footages: 1980 FNL 489 FWL    
Current Well Name: MEMPHIS 2-4H
Total Depth: 26908     Field: LAST CHANCE
Spud Date(s):  10/16/2012
Cumulative Production Data
   Pool: BAKKEN     Cum Oil: 52804     Cum MCF Gas: 43151     Cum Water: 41501
Production Test Data
   IP Test Date: 2/12/2013     Pool: BAKKEN     IP Oil: 892     IP MCF: 926     IP Water: 276

Wells Coming Off The Confidential List Tuesday: EOG With A Huge Spotted Horn Well; EOG With Two Huge Parshall Wells;

Active rigs: 182

See Mike Filloon's SeekingAlpha article today. 

Wells coming off the confidential list Tuesday:
  • 23065, 282,  EOG, Bear Den 20-1708H, Spotted Horn, huge well, 41K in third full month, t6/13; cum 50K 8/13;
  • 24298, drl, HRC, Fort Berthold 148-95-13A-24-4H, Eagle Nest, no production data,
  • 24671, 871, EOG, Van Hook 30-1113H, Parshall; t6/13; cum 128K 8/13;
  • 24672, 720, EOG, Van Hook 29-1113H, Parshall, t6/13; cum 112K 8/13;
  • 25156, 673, CLR, Columbus Federal 1-16H, Baker, t7/13; cum 21K 8/13;
  • 25237, 2,966, BR, Everglades 31-3TFH, Keene, t9/13; cum --
  • 25368, 1,325, XTO, Thaxton 24X-35E, West Capa, t9/13; cum --
  • 25383, drl, XTO, Allie 31X-24H, Capa, no production data,

24671, see above, EOG, Van Hook 30-1113H, Parshall; a huge well:

DateOil RunsMCF Sold

 24672, see above, EOG, Van Hook 29-1113H, Parshall, a huge well:

DateOil RunsMCF Sold

Five (5) new permits -- The Williston Basin, North Dakota, USA
  • Operators: Hess (3), Whiting, Crescent Point Energy
  • Fields: Sanish (Mountrail), Hawkeye (McKenzie), Winner (Williams)
  • Comments:
Wells coming off the confidential list were posted earlier; see sidebar at the right.

Three (3) producing wells were completed:
  • 25162, 507, CLR, Raymond 1-21AH, Oliver, t10/13; cum --,
  • 25937, 381, Whiting, Waldock 14-4-2XH, Sanish, t10/13; cum --
  • 23286, 2,316, Statoil, Bures 20-29 4TFH, t9/13; cum --
There were two (2) dry holes:
  • 23971, dry, Strike, Waind 18-12, Bottineau County,
  • 21284, dry, Cirque, Old Engine Oil 16-4H, Mercer County,

ObamaNation -- Lame Duck Presidency

August 3, 2014: Reuters is reporting:
President Barack Obama dismissed Russia as a nation that "doesn't make anything" and said in an interview with the Economist magazine that the West needs to be "pretty firm" with China as Beijing pushes to expand its role in the world economy.

Obama has tried to focus U.S. foreign policy on Asia, a response to China's economic and military might. But for months, that "pivot" has been overshadowed by a flurry of international crises, including Russia's support for separatists in eastern Ukraine. 
Russia is the world's third-largest oil producer and second-largest natural gas producer. Europe relies heavily on Russian energy exports, complicating the West's response to the Ukraine crisis.
Don and I had the same reaction to this story: this guy is a nut. Remember: he also said that no American CEO or businessman "built" their own company. This guy is getting more and more delusional as a) his polling numbers fall; and, the world gets more and more out of control. With his approval ratings well below 50%, maybe below 40% depending on the day, Obama, more and more, must "cater" to his base -- the Trayvon Martins and Maxine Waters of the world.   

March 30, 2014: in the original post I noted that on/about October 23, 2013, more than ever, it appeared the White House was spiraling out of control. That was before President Obama lost the Ukraine. In "Saturday Morning Musings, March 29, 2014" I posted an update on a most interesting week. In all my years of blogging, I had the impression that the week of March 23, 2014 -- just five months later than the original post, was another incredible week for investors in the oil and gas sector.

On another note, there have been very few stories on fiscal challenges facing cities and states. Note the "doomsday" updates for cities and states below, and note there have been no updates in a long time. This certainly suggests the economy is improving, albeit slowly.
Original Post

I am removing a number of links from the sidebar at the right. The Obama Presidency has become irrelevant for me. I will continue to post updates for archival purposes to help keep the Bakken in perspective, but this is pretty much the end of the Obama presidency for all practical purposes.

My internet viewing habits have not changed in the past six years. My primary source of news are the mainstream links (CBS, ABC, NBC, FoxNews, London Telegraph, London Mail OnLine, Bloomberg, Breitberg, the Huffington Post) at the Drudge Report. Drudge, himself, never posts or writes any stories. He simply links a gazillion other outlets.

Perhaps it is just my imagination but on/about October 23, 2013, more than ever, it appeared the White House was spiraling out of control:
  • restricting news outlets from reporting government data
  • restricting government bureaucrats from disseminating government data
  • revelations that the president has eavesdropped on German chancellor's mobile phone
  • news that the president may, in fact, delay the individual mandate for ObamaCare
The List 
  • May 1, 2015: half of the 17 state exchanges are in deep doo-doo. Can't afford it. 
  • January 7, 2015: PreferredOne, Minnesota, drops out of ObamaCare. Can't afford it.
  • November 29, 2014: "the Schumer speech"; admits that ObamaCare was a debacle; we are now in the third quarter of the four-quarter football game called ObamaCare. The mid-terms were a disaster; Senator Schumer says ObamaCare was a mistake; the former OMB budget analyst whose forte is "numbers," is caught padding the numbers for ObamaCare; says she is outraged;  
The Day ObamaCare Died

  • November 7, 2014: Obama's team got a shellacking in the mid-term elections; may be one of the worst, if not the worse, ever mid-term election for an incumbent Senate majority; all about ObamaCare; the GOP picked up 8 or 9 Senate seats; and will pick up another if, as expected, Landrieu loses in Louisiana
  • November 3, 2014: the mid-term elections tomorrow; referendum on ObamaCare; sure it's about the economy, but it's "always" about the economy; after tomorrow's election, we start the third quarter of ObamaCare (continuing to use the football analogy). For all intents and purposes, the game is over, but we still have a full half (two quarters) to live through. "Open Season" for the second year of ObamaCare begins in two weeks; premiums are said to be rising 6%; my hunch: that figure will be revised, significantly upward. Numbers re-enrolling expected to decline significantly.
  • October 7, 2014: Wal-Mart, Target, Home Depot will no longer provide health insurance coverage for part-time employees (those working less than 30 hours); so now folks will need two jobs to reach 40 hour+/week and neither employer will provide health care coverage
  • September, 2014: IRS will be sending letters to "hundreds of thousands" of folks to ask them to reconcile their stated income when applying for ObamaCare and their income as reported to the IRS last year. Might not be a pretty picture. 
  • August 8, 2014: essentially "everyone" will be exempt from ObamaCare for 2015. If not exempt, they will have a case for a waiver if they so desire. More e-mails missing from HHS over ObamaCare.
  • June 7, 2014: The Congressional Budget Office has quietly dropped projections that ObamaCare will decrease the US deficit. As Hillary would say, "does it even matter?" The question is no longer "whether" but "how much will ObamaCare add to the deficit?"
  • May 20, 2014: ObamaCare is now mainstream (link to follow). Any hope of repealing it long gone. Republicans don't even talk about repealing it any more. Everyone talks about "fixing it." Obama will have his "FDR" legacy. 
  • May 15, 2014: half-time is almost over. The half-time show is coming to an end. We are now hearing, as predicted, premiums are going to go up significantly in 2015. There are two story lines here: first, premiums are going up significantly in 2015. Second, some folks have only paid their first premium for 2014 (sticker shock) and now they are going to be told that their premiums will be even higher in 2015; they have not had a chance to get used to the unexpectedly high premiums. 
  • April 1, 2014: half-time. The enrollment period for 2014 is "officially" over, though it's probably been extended in several states (it was extended in California). We haven't even gotten to the second half and insurers are already worried about the backlash when they announce the premiums for 2015
  • March 26, 2014: coming up to half-time, the ObamaCare "drop-dead" deadline (March 31, 2014) has been delayed two more weeks, on the "honor" system. Musings on ObamaCare to date. The administration crows that 6 million signed up, topping their target. The original target was a paltry 7 million but lowered to 6 million. During the Obama/Hillary presidential nomination content in 2008, it was said that 30 million to 46 million Americans were uninsured. ObamaCare had nothing to do with uninsured minions; it had to do with cost shifting health care costs from the CEO to the employee.
  • February 4, 2014: barely into the second quarter, and we're getting an update from the booth (CNBC, The Washington Times) -- Congress is reporting that the estimate has now tripled, the number of folks that will be locked out of the job market due to ObamaCare. The second quarter is not going to look pretty for the home team. 
  • January 5, 2014: We are underway: the second quarter. Both sides are now trotting out human interest stories, how good ObamaCare is, how bad ObamaCare is. "They" say ObamaCare is now fully executed; not quite true: the employer mandate was delayed a full year, and the individual mandate for all intents and purposes is all delayed a full year. Everyone has estimates of the number of folks who enrolled (mostly Medicaid, it appears), but the government can not even tell us how many have paid their first premium. There are occasional stories about the real metrics that are not being followed in the media (who enrolled; how many have paid). And now Forbes provides another ankle-biting article on ObamaCare: the "taxes" Americans will now pay for ObamaCare.
  • Updates, analysis of the first quarter of the ObamaCare debacle: the website rolled out in October; the chief information officer resigned in November; the chief operating officer (#2 in the chain) retired in December; federal enrollments shockingly low; overall enrollment may be less than 2 million; goal was at least 3 million at this point; insurers "need 7 million"; the ObamaCare act was necessary for the 30 million uninsured, it was said; at least 8 million have lost their coverage since October (two months); corporate mandate delayed a year; individual mandate effectively delayed indefinitely; deadlines extended; chaos and confusion; White House won't consider putting a single person (a "CEO") in charge of his biggest program despite requests of insurers, his own political party [even the quasi-governmental US Postal Service has a "CEO" that takes all the heat for problems]
  • The break between the first and second quarter. What to watch for in the second quarter: off-side penalties. 
  • The end? Obama repeals ObamaCare for 2014. The end of the first quarter: the rollout was a debacle, and now we learn that Obamacare shuns the best hospitals in the world (MD Anderson, Cedars Sinai Los Angeles, Mayo)
  • The Passing Game, the first quarter: fraudulent subsidies will be passed on to taxpayers
  • The Ground Game, the first quarter: not going well; Obama says shop around; his czar says if you want to keep your doctor, you will have to pay more; get over it;
  • Rollback: Obama says "Yes"; states say "No on rollback to canceled policies"
  • The Rollout:  ObamaCare -- the death spiral begins
  • The Prelude:  ObamaCare; no additional posting to this site as of October 24, 2013 
  • ObamaCare Cost Shifting 
  • The website and security issues
  • ObamaScare Headlines
Renewable Energy
Robert Malsam nearly went broke in the 1980s when corn was cheap. So now that prices are high and he can finally make a profit, he's not about to apologize for ripping up prairieland to plant corn. 
Across the Dakotas and Nebraska, more than 1 million acres of the Great Plains are giving way to corn fields as farmers transform the wild expanse that once served as the backdrop for American pioneers. 
This expansion of the Corn Belt is fueled in part by America's green energy policy, which requires oil companies to blend billions of gallons of corn ethanol into their gasoline. Ethanol has become the No. 1 use for corn in America, helping keep prices high. 
"It's not hard to do the math there as to what's profitable to have," Malsam said. "I think an ethanol plant is a farmer's friend." 
What the green-energy program has made profitable, however, is far from green. A policy intended to reduce global warming is encouraging a farming practice that actually could worsen it. 
That's because plowing into untouched grassland releases carbon dioxide that has been naturally locked in the soil. It also increases erosion and requires farmers to use fertilizers and other industrial chemicals. In turn, that destroys native plants and wipes out wildlife habitats.
External links removed from the sidebar

OFF THE NET -- New AMZG Corporate Presentation

I won't get to The Bakken Shale Discussion Group until later this evening or until tomorrow.

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

From a reader regarding AMZG: at the presentation, see their new slides on capitalization and valuation compared to KOG, OAS, TPLM, EOX. Also, Northland Securities initiated coverage at outperform.

For Investors Only

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or anything you think you might have read here. 
  • Sixteen companies announced dividend increases, most of them relatively small.
  • HAL beat estimates by one cent. Oil will trade below $100 today.
ObamaCare: predictable. It appears the program has begun its death spiral. There are so many story lines here, I don't know where to begin. These are some of the story lines:
  • ObamaCare will define the Obama presidency, his legacy
  • it was fortunate that the Tea Party was not successful in defunding ObamaCare; the President and Congress own ObamaCare
  • by the end of the year (2013), ObamaPhone folks will realize ObamaCare is not free
  • folks now realize that ObamaCare will not cover the poorest of the poor; one must have income to qualify; 30 million will still be uninsured (or whatever the number might be)
  • we will see the biggest act of civil disobedience in the history of the US as folks fail to enroll
  • large health care insurers will report record profits by mid-2014; premiums doubled; little new care will be provided
  • physicians will realize how bad things are by the end of 2014
  • ObamaCare will not survive as it is currently laid out
  • Sebelius has one month to turn things around
  • from the Wall Street Journal:
    The Affordable Care Act's botched rollout has stunned its media cheering section, and it even seems to have surprised the law's architects. The problems run much deeper than even critics expected, and whatever federal officials, White House aides and outside contractors are doing to fix them isn't working. But who knows? Omerta is the word of the day as the Obama Administration withholds information from the public. 
    Health and Human Services Secretary Kathleen Sebelius is even refusing to testify before the House Energy and Commerce Committee in a hearing this coming Thursday. HHS claims she has scheduling conflicts, but we hope she isn't in the White House catacomb under interrogation by Valerie Jarrett about her department's incompetence. The department is also refusing to make available lower-level officials who might detail the source or sources of this debacle. 
    Ducking an investigation with spin is one thing. Responding with a wall of silence to the invitation of a duly elected congressional body probing the use of more than half a billion taxpayer dollars is another. This Obama crowd is something else.
    I don't know if folks caught "Saturday Night Live" a couple nights ago, but the ObamaCare debacle was the joke for a very, very long segment.  
The Bakken:
Wall Street has discovered "the Bakken" -- in this context:
At the time I truly had no idea where the Bakken was headed. Within a year or two it was obvious that "the Bakken" was more than a geographical location. In addition to being a laboratory for testing new ideas in unconventional oil exploration and production, "the Bakken" has now come to mean, for me at least, anything that has to do with horizontal drilling and completion (generally fracking) in unconventional shale and oil deposits.

Has Wall Street Finally Discovered The Bakken?

Related links: is something going on with Oasis? At that link, there is another link; be sure to follow that story also.

Now, another story suggesting that Wall Street has finally discovered the Bakken: every investor should own oil shale stocks at SeekingAlpha.

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

Whilst GS's remarks, and their mention of some specific stocks, were received positively by the Street, the firm was only confirming what many followers of the shale oil drillers have known for some time - that the best oil shale drillers are set to enjoy many years of strong and increasingly profitable growth.
Indeed, Goldman's comments are not optimistic. Industry insiders would argue that Goldman Sachs and many other analysts don't typically highlight the real strength of the multi-year growth model that's driving the business. True, it is becoming generally known that efficiency and savings from pad-drilling, upgrades to completion techniques and improvements in down-spacing are all combining to propel growth over the coming years. Many analysts are now incorporating these factors into their assumptions and estimates. However, what the analyst community has yet to bring into the public domain is the fact that, on top of these various positives, there is a new game-changing fracking methodology in town. This will be looked at later.
 This story and others like it explain to me why The Oil Drum went belly up. It also is one more nail in the coffin in those skeptics who got the Bakken wrong.

Price Of Fracking Sand Could Go "Parabolic" -- Mike Filloon

Mike Filloon at SeekingAlpha.
I first addressed better source rock stimulation in November of 2012. EOG Resources pioneered fraccing shorter and wider fractures.
Before this, operators were trying to create longer fracs in an attempt to garner increased shale surface area contact deeper into the shale. It was believed this would maximize recoveries, but it also created issues. Longer fractures are further from the well bore. This distance is difficult to bridge, as it has to push proppant over a greater distance. Less proppant is secured in the fractures and this increases crushing and closure of those fractures. This significantly decreases EURs. Thinner fractures also have less surface area, which creates greater pressures. These greater pressures require more resilient ceramic proppant, which is approximately 10 times more expensive than sand. Since EOG Resources creates shorter, wider fracs, it reduces that pressure allowing for the use of all sand fracs. The increased void created by this completion design requires more proppant.
In some cases, these wells use up to a million pounds of sand for every 1000 feet of lateral. EOG first used this in the Eagle Ford and Permian Basin.

Monday; Spearfish-Like Oil Heavily Discounted At Gulf Coast

Active rigs: 184

RBN Energy: Brent and WTI take separate paths.
The Brent premium to West Texas Intermediate (WTI) on Friday (October 18, 2013) was $9.14/Bbl – indicating a new disconnect between US crude prices and international levels. Unlike last time a big Brent premium to WTI opened up in 2010 the price of Light Louisiana Sweet at the Gulf Coast is still tracking with WTI rather than following Brent. This suggests that the US Gulf Coast is long crude at the moment and that imports of Brent priced crude are not required. Today we discuss the current Gulf Coast crude market.
Note: "imports of Brent-priced crude are not required."

I think we may close the nominations for the 2013 Geico Rock Award and simply give it to the publisher of The Dickinson Press. 

More from the RBN Energy story:
This sudden divergence in the Brent price runs counter to the thinking of many analysts. That is because it signals that US Gulf refineries currently have adequate crude supplies and do not need imported barrels – certainly of light crude but also of medium grades as well -  i.e. any crudes with prices linked to Brent. If there were demand for these imported barrels then theoretically the price of LLS would be tracking closer to Brent because those imports would compete with LLS for the attention of Gulf Coast refiners.
With LLS at a near $6/Bbl discount to Brent the Gulf Coast is not attracting imports.
Why is that such a shock? After all, US production has been increasing in leaps and bounds and we know that a lot of shale crude has been arriving at Gulf Coast refineries from North Dakota, the Permian Basin and the Eagle Ford. The reason for the surprise is that Gulf Coast refineries were (up until early October) running at over 90 percent of capacity and although more domestic crude is making its way to the region, most believed that refiners still need plenty of imported supplies to make up their feedstock requirements.
But this week, prices seem to be telling us that the Gulf Coast is awash with crude supplies. LLS crude is trading at a $3/Bbl premium to WTI – less than the cost of transport from Cushing to the Louisiana Gulf Coast (where LLS is delivered at St. James). The Houston price for WTI is tracking neck and neck with LLS. So Louisiana refiners are getting adequate supplies from local offshore production, barges from Corpus Christi or rail from North Dakota and have no need for Cushing barrels. In any case the current work to reverse the Ho-Ho pipeline means there is no pipeline link from Houston to St James. Even heavy crudes look to be over supplied at the Gulf Coast at the moment.
The price of two heavy sour grades – West Texas Sour and Southern Green Canyon  - were discounted last week by more than $7/Bbl to WTI due to low demand for these crudes by Houston refineries. In short – Houston and Louisiana Gulf Coast refineries appear to have plenty of crude.

Results And Closing Three Polls

Will oil drop below $100 by the end of October, 2013?
  • yes: 39%
  • no: 61%
Futures today: oil just below $100.

Are you affected by the government shutdown?
  • yes: 18%
  • no: 60%
  • what government shutdown: 22%
  • yes, I have a business near a national park: 0 votes
Apple Inc is committed to 100% renewable energy because ..
  • it is the right thing to do: 6%
  • it makes economic sense: 85
  • it is good public relations: 67%
  • one other over-riding reason: 19%

Wells Coming Off The Confidential LIst Over The Weekend, Monday; Some Huge Wells; Even OXY Has A Huge Well

Monday, October 21, 2013
  • 23028, 803, OXY USA, State 3-16-21H-14-96, Fayette, t4/13; cum 31K 8/13;
  • 24290, 276, CLR, Stedman 4-24H-1, Hebron, t8/13; cum 6K 8/13;
  • 24414, drl, Statoil, Garmann 19-8 4TFH, Banks, no production data;
  • 24628, 2,971, BR, Badlands 21-15MBH, Hawkeye, t8/13; cum 13K 8/13;
  • 24749, 1,915, Newfield, Anderson Federal 152-96-9-4-11H, Westberg, t8/13; cum 15K 8/13;
  • 25027, 281, Slawson, Jericho 4-5H, Big Bend, t9/13; cum 14K 8/13;
  • 25214, 65, Legacy, Legacy Et Al Emery Norm 4-19H 2H, Red Rock, a Spearfish well; t6/13; cum 4K 8/13;
  • 25233, 1,836, BR, Everglades 31-3MBH, Keene, t8/13; cum 14K 8/13;
  • 25234, 2,879, BR, Everglades 41-3TFH, Keene, t8/13; cum --
Sunday, October 20, 2013
  • 23306, 1,508, WPX, Blackhawk 1-12HY, Moccasin Creek, t8/13; cum 17K 8/13;
  • 24297, drl,  HRC, Fort Berthold 148-95-13A-24-5H, Eagle Nest, no production data,
  • 24844, drl,  CLR, Wahpeton 7-16H3, Banks, no production data,
  • 25179, drl,  KOG, P Wood 154-98-4-26-35-14H, Truax, no production data,
  • 25236, 2,594,  BR, Everglades 21-3MBH, Keene, t9/13; cum --
Saturday, October 19, 2013
  • 21628, 273, CLR, Winkler 1-3H, Border, t7/13; cum 13K 8/13;
  • 22665, drl, Enerplus, Mustang 149-93-29A-32H TF, Mandaree, no production data,
  • 23027, 1,388, OXY USA, Dennis Kadrmas 3-9-4H-143-96, Fayette, t4/13; cum 52K 8/13;
  • 24032, 744, Fidelity, Mularchek 6-7H, Heart River, t4/13; cum 44K 8/13;
  • 24748, 2,095, Newfield, Anderson Federal l152-96-9-4-3H, Westberg, t8/13; cum 14K 8/13;
  • 24941, 1,847, XTO, Sax 41X-26C, Siverston, t8/13; cum 14K 8/13;
  • 24942, 2,035, XTO, SAX 41X-26H, Siverston, t8/13; cum 18K 8/13;