I spend a lot of time updating various oil fields. I literally go through hundreds of wells every week. For all the talk of uneconomical wells in the Bakken I don't see many older Bakken wells being abandoned. One could argue that oil companies keep some uneconomical wells open and producing simply because they are too busy to reclaim abandoned well sites. It can also be argued that a lot of these uneconomical wells might be kept active to hold the leases by production. What I find interesting, is that even when I find wells (or fields) that seem to be uneconomical, operators continue to drill in those fields, or near those wells. Some of these operators have many, many other better fields to drill, and yet even the fields that seem on the surface (no pun intended) not so great, those fields are still being drilled. The operator I find most interesting is EOG: the company reports very few new wells despite a gazillion identified drilling locations) and has only 5 active rigs today in North Dakota. I have to scroll all the way back to July 23, 2014, for the most recent well that EOG has reported. I don't see any EOG wells reported yet this quarter. [Update: see comment dated October 25, 2014:
I find it interesting that 3 of EOG's rigs have been on the same well since July, and SST 58 has been in Montana for quite a while yet still shows on the ND list. EOG also picked up H+P 454 nearly 2 months ago but hasn't been changed to EOG on the list. It still shows as drilling for XTO.
Note: I often miss things, make mistakes. If this information is important to you, visit the source, generally the NDIC.
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Price Slump Won't Stop The Bakken Boom
It seems this story was posted earlier, but the WSJ says it was posted "15 hours ago." Whatever. The WSJ is reporting:
With oil prices sliding, energy investors are worried, while Saudi Arabia and Russia no doubt hope, that low prices will cap America’s boom in shale-oil production.
Green-energy types sit by, happy to see turmoil in the fossil-fuel sector.
Three factors make it unlikely that the decline in oil prices will bring the shale revolution to an end.
First, shale production is profitable at today’s lower prices. We know this because the boom began during the Great Recession years of 2008-09, when prices fell below $50 a barrel. The price U.S. shale producers got for their oil during the boom averaged around $85 to $90, even though the world price stayed well over $100. That spread—the difference between the West Texas Intermediate (WTI) and world (Brent) price—was a direct consequence of too much domestic oil chasing too little capacity to move, store and use it. Yet in the past five years alone more than $500 billion of private investment went into hydrocarbon infrastructure.
U.S. shale output was obviously profitable enough to spur the stunning growth in production and infrastructure when domestic prices were in the same range as world prices today.
Second, shale production is getting more efficient, which means that profits are possible at prices even lower than today. Smart drilling techniques—horizontal drilling, hydraulic fracturing and information technologies that accurately locate where to place rigs and enable precise steering of the drill through meandering horizontal hydrocarbon-rich shales—are far more productive than when the boom started. According to the Energy Information Administration, the quantity of shale or natural gas produced per rig has increased by more than 300% over the past four years.
This rise in productivity matches (in equivalent terms of capital cost per unit energy out) the improvements in solar power, but it took 15 years for solar’s gains. Solar is now experiencing a slow-down in efficiency improvements; there is no sign of a slow-down in shale technology.
The third factor is the profound economic leverage afforded by the enormous scale and diversity of America’s hydrocarbon infrastructure. Many oil-producing nations have only a few big oil fields and a handful of companies, sometimes just one. The U.S. has dozens of world-class fields, thousands of production companies, tens of thousands of related businesses, and millions of miles of pipe and rail.
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Earnings Calendar
About the only earnings announcement that interested me today was UPS:
UPS reported third-quarter 2014 adjusted earnings per share of $1.32, beating the Zacks Consensus Estimate of $1.28. The bottom line also grew 13.8% from $1.16 earned per share in the corresponding quarter last year.This is not an investment site. Do not make any investment, financial, or relationship decisions based on what you read here or think you may have read here.
Edwards Lifesciences up almost 11% after yesterday's report.
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Daisy