Saturday, March 22, 2014

Random Look At Some Interesting Names Of Bakken Wells

Some time ago I noted that CLR might be naming their wells after the home towns of their roughnecks, or perhaps their well supervisors. I first noted that, I think, in their Brooklyn field. Now some new names suggesting the same.

  • In Dollar Joe: the Annapolis wells, the Raleigh wells
  • In Indian Hill: the Cincinnati wells, the Scottsdale wells
SM Energy is starting to name wells after NFL greats, in (training?) Camp oil field:
  • Elway 1-32H
  • Manning 1-32H
  • Davis 1-32H
A personal observation. Both my brother and I were recipients of "college scholarships" from the Eckert Foundation; the "scholarships" came with a very low interest rate; both the capital and the interest had to be repaid; due to a mix-up with names, I paid off both my brother's scholarship and my own. Smile. In Elk old field, three new "Eckert Foundation" wells. The Elk oil field is just south of Williston, on the south side of the river, east of the highway. [March 30, 2014: see comments below. My apologies to the Alva J Field trust. It was the Alva J Field trust who provided low-interest loans to my brother and to me; I had the Eckerts and Alva J Field mixed up. Again, my apologies to Alva J Field.]

For Investors Only

I have opined almost from the beginning that ObamaCare was/is a godsend for investors and for corporations. I was reminded of that again while reading Sylvia Nasar's Grand Pursuit: The Story of Economic Genius.

It's hard to believe (with hindsight being 20/20) that Keynes wrote in the early 1920's, during the interwar years: "... inflations and deflations made it difficult for investors and businessmen to calculate the effects of decisions and, to a much greater degree than the public appreciated, distorted decisions to save or invest." -- p. 284.

Before ObamaCare there were two huge problems for businesses of all sizes vis a vis health care: inflationary costs and unpredictability. Unpredictability is the bigger of the two problems. With ObamaCare, both of those problems have been solved. Corporations can now plan precisely what their health care costs will be going forward by cost-shifting their employees over to ObamaCare. Many (most) have already done that: instead of offering a company health care program, CEOs can give their employees a fixed monthly amount to help pay health insurance premiums. CEOs will determine the amount to be paid, not Blue Cross/Blue Shield. That is huge. [By the way, cost-shifting employees to ObamaCare is the patriotic thing to do; ObamaCare is the law of the land.]

But there's something else going on in America that will help investors: the energy revolution.

Long-time readers will remember the posts by analysts suggesting that the "Bakken experiment" has resulted in flattening the volatility of the price of crude oil. I assume folks remember the volatility of crude oil that started with the OPEC embargo back in the 70's and continued through the early years of the Bakken boom -- fifty years of volatility. The price of oil would fall, only to surge with the "outbreak" of any "world crisis." Folks were wringing their hands when oil hit $150/bbl but the actual price was less of a problem than the volatility. Keynes had figured out that "... inflations and deflations made it difficult for investors and businessmen to calculate the effects of decisions and, to a much greater degree than the public appreciated, distorted decisions to save or invest." Likewise, it is now apparent that the volatility of the price of oil was a much bigger problem than the actual price. If the actual price -- whether high or low -- was predictable, businessmen could plan. With volatility, they could not.

It is now apparent that the energy wealth in North America has evened out that volatility. Best example: oil hardly moved during the Crimean crisis. I think the entire range for WTI during this period was between $98 and $101. That is an incredibly narrow range, even in "normal" times, but it is absolutely incredible during a US-Russian "crisis."

All things being equal, ObamaCare and the "Bakken experiment" will be huge for investors going forward. Regardless of what happens politically with ObamaCare, this genie cannot be put back in the bottle -- corporations have been given the green light to cost-shift health care costs to their employees, and they are not going to go back to the way things were. 

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

The Way We Were, Barbra Streisand


  1. I see SM named those wells after Denver Bronco Stars………..KOG is based in Denver Colorado ………..could there be some enticing going on for a future sale???……….hmmmmmmm.

    1. Possibly, but from their website, SM Energy also has regional headquarters in Denver:

      The company operates in four core areas managed by four regional offices: Mid-Continent, Rocky Mountain, Permian, and South Texas & Gulf Coast regions are operated out of its offices in Tulsa, Oklahoma; Billings, Montana; Midland, Texas; and Houston, Texas, respectively. Each office is staffed with a full complement of geologists, geophysicists, engineers, and landmen who have extensive experience in the region or basin where they work. The Denver, Colorado headquarters provides financial and administrative support for the regional operations.

  2. My wife got an "Eckert" loan back in the early 80's. Her family barely had a pot to pee in. Wow, so fortunate to get a loan for a minimal interest back in the early 80's when interest was often +15%. She grew up on a farm and her parents were asset rich yet they lived on 10K per year often getting a operating loan to survive the summer. Her family took one vacation while she grew up to the Black Hills of South Dakota. Now her father has partial minerals on the land and has bought a JD tractor with a grapple to replace the 60's era Oliver that spewed hydraulic fluid every round bale what a change of kids now have received grants (not loans) of $2500 for simply being residents of Williams county. Lord knows my wife and I are much better off than Mr Eckert and his wife who were educators and childless and left their legacy to gift the residents of northwest North Dakota. Wow!!!!!

    1. Great comment. Thank you for taking the time to write. Yes, I had forgotten these were "loans." I think that was because when I was a senior in high school I was so naive I really didn't understand the difference between loans, scholarships, grants, etc. The Eckert "loans" were loans, of course, but they were selective to whom they were given, based on scholarship.

      And, yes, I was remiss in not noting the Eckerts themselves were childless. There are very few things I would change if I could live my life over, but if there was one thing I could change it would be this: to visit the Eckerts personally and thank them for all they did for so many, and especially for me. I graduated from college with very little in loans to repay. The Eckert loan was a small, but significant contribution. It may not have been the difference between college or no college, but it made a difference with opportunity to work after-hours in research, rather than have to take a part-time job just to make ends meet.

  3. My daughter just told me that these grants are from the Alva J Field trust, not the Eckert foundation. Whoops. Same concept though. Thanks for your great blog, carry on.

    1. Yes, now that you mention it, they might have been Alva J Field loans/grants.