Monday, March 17, 2014

I Was In The Wrong Military For 30 Years -- Nothing To Do With The Bakken

A reader sent me this:

Twelve (12) New Permits -- The Williston Basin, North Dakota, USA

Active rigs:

Active Rigs191185205170103
Twelve new permits --
  • Operators: Slawson (4), Hess (3), CLR (3), American Eagle, Denbury
  • Fields: Stockyard Creek (Williams), Little Knife (Dunn), Ukraina (Billings), Alkali Creek (Mountrail), Cedar Hills (Bowman)
  • Comments: American Eagle has a permit for a wildcat in Divide County. Denbury has the Cedar Hills permit; Denbury is known for EOR.
Wells coming off confidential list were posted earlier; see sidebar at the right.

Three (3) producing wells completed:
  • 24802, 0, CLR, Rollefstad Federal 10-3H-2, Antelope, a Sanish (Thre Forks well), t1/14; cum 0
  • 26232, 414, Triangle, Dwyer 150-101-35-26-4H, Rawson, t2/14; cum 15K 1/14;
  • 26278, 454, Oasis, Johnson 5601 41-24T, t2/14; cum --
Wells coming off the confidential list Tuesday:
  • 25642, 530, OXY USA, State Brian Sadowsky 2-3-10H-142-97, Willmen, t9/13; cum 28K 1/14;
  • 26029, drl, KOG, P Earl Rennerfeldt 154-99-1-3-27-1H, Stockyard Creek, no production data,
  • 26081, drl, BR, Big Bend 11-2MBH, Camel Butte, no production data,
  • 26251, 1,167, Newfield, Eide 150-99-7-6-3H, Tobacco Garden, t1/14; cum 13K 1/14;
  • 26369, 569, CLR, Palahniuk 1-1H, Whitetail, t1/14; cum 6K 1/14;

Random Update On Emerald Oil -- Mike Filloon

Contributor over at SeekingAlpha.
Emerald's 4Q13 was difficult, as it ended the year with a big bottom line miss.
This was not surprising, as it has continued to use slickwater fracs, which are more expensive than a standard completion.
The size of the miss is more important. It has been effective from a production standpoint in central to northwest McKenzie County.
We are starting to see more operators discussing the use of this type of completion like Oasis (OAS), but the expense has been an issue for operators. We know northeast McKenzie and southwest Mountrail counties are considered the best Bakken acreage. This does not mean it has the most upside, as we already have a good idea of how these areas will infill. The upside is in downspacing, and added locations in 2014. Emerald's acreage has some of the thickest shale in the Bakken.
Whiting (WLL) is currently testing downspacing this area with more than double what Emerald is. Continental Resources (CLR) is even tighter with respect to its Wahpeton pad. Once proved, northwest McKenzie County could provide more locations per section than anywhere in North Dakota.
Triangle Petroleum (TPLM) also operates in this area, and has had excellent results. It would seem Triangle knew about the geological advantages, and why this area was its focus during the operated Triangle land grab.
If I am correct, the acreage values in this area could go up significantly. This area won't produce the IP rates of northeast McKenzie County, but it could produce significantly more resource.

Random Update On Helmerich and Payne

This is not an investment site, but I learned early on one cannot follow the oil and gas industry, nor can one really understand the Bakken, without following the companies. One learns who is doing what and, to some extent, how well they are doing it in the industry by watching their share price.

It was back on January 27, 2011, a little over three years ago when I noted a brand new name to me in the drilling business: Helmerich and Payne. During the week of January 31, 2011, HP was selling for $59. I have mentioned Helmerich and Payne often since that first time.

Today, I see HP has surged over $3.00 and is now solidly above $100/share.

Disclaimer: again, 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.

Catching Up -- Monday Midday News -- Odds And Ends -- Nothing About The Bakken

Earlier I asked if you could spot the "spin" or misinformation in this story --
A new study by shows that about one third of uninsured Americans are going to remain without coverage and opt to pay the penalty.
I asked my wife what "one-third" was. She said 33%.

I then asked what if I mentioned "something was about one-third," what would she think? She said 25%. And that's about right. Most folks when they hear about one-third would think less than one-third, otherwise the story would have said more than one-third.

So, in the linked story, exactly what percent is about one-third? Forty-one percent. LOL. Technically, by one percentage point, 41% is closer to one-third than to one-half, but in "most" people's minds, 41% is most closely associated with almost half, as opposed to about one-third. Common sense tells me about half of all uninsured Americans are going to remain without coverage.

But it's actually worse. Human nature is such that if an unknown individual phoned you, and out of the blue, asked if you planned to buy health insurance, most thinking folks would automatically say "yes" if only not to sound stupid. Not having health insurance is considered pretty risky by most folks. So, the bias is towards saying "yes, I plan to buy health insurance." My hunch is that it will be well over half (i.e., well over 50% of uninsured folks) who will not enroll or will not pay their first premium.


In that linked article above:
Through February, young people made up about 27 percent of total enrollees--well below the White House’s 40 percent benchmark. Still, administration officials have repeatedly said they expect a crush of young people to sign up ahead of the March 31 deadline.
At Least They're Using Renewable Energy

The DailyCaller is reporting:
Americans living in the Northeast and Mid-Atlantic U.S. are increasingly turning to a source of heat favored by humans for thousands of years: wood.
More and more people are using wood as their main source of heat as opposed to heating oil and kerosene.
The Energy Information Administration reports that, “All nine states in the New England and the Middle Atlantic Census divisions saw at least a 50% jump from 2005 to 2012 in the number of households that rely on wood as the main heating source.”
Those who switched to wood burning were spared high fuel oil and kerosene prices during this year’s harsh winter.
The Turks completed deforested their country doing the same thing centuries ago. There is a rumor that the governor of New York is not going to allow diesel trains to traverse his state; he wants the railroad to return to wood-burning steam engines. Just a rumor.

The Algore Solar Cortex Revisited

The TimesHerald is reporting that US Coast Guard cutters are having trouble cutting through the ice on Lake Superior:
Cutting through ice 30 inches thick in places, the Adler's crew took 21 hours to go three miles.
"I had never seen anything like this before," said Boatswain Mate Second Class Jacob Nielsen, who arrived on the ship last summer from Maine.
Even Lake Superior veterans understand this polar vortex inspired winter is unique.
"They're saying this is the worst ice season since the mid-90s," says Tony Maffia, the Alder's captain. He calls it "a once in a generation-type of thing."
Others call it a result of an Algore solar cortex event.

Has the deadline passed? Game, set, match?

If I remember correctly, John Kerry drew a "red line" in the "Black Sea" last Friday saying Russia had until Monday to reverse course. I haven't heard a thing from Kerry so far today (although, to be fair, I have not seen/listened to CNN, MSNBC, or CBS). It's possible, the Russians walked backwards into the Crimean, satisfying Kerry's definition of "reversing course."

Something tells me the Europeans consider this "game, set, match." Both gold and oil are down about one percent. All things being equal, one would assume both oil and gold would be surging. I still say Putin is a better community organizer than our own Nobel-peace-prize-winning president. Putin has organized the entire western community against his moves, and he still presses on.

From The ObamaCare Files

From an article on ObamaCare:
When is the media going to point out how big of a joke this is? I just received my first invoice for the silver plan in the mail today for about half of my husband's take home pay. It's higher than a rent payment, car payment, and car insurance combined.
We were offered no subsidies because my husband is offered even more expensive insurance through work. They based it on the $150 2x a month that he can spend to insure himself, not the almost $900 a month it would cost to get the #$%$ health care coverage (60/40) offered for our family.
It was also solely based on my husband's income since I just graduated and just very recently took a temp job to gain experience. We are being forced to choose insurance or a roof/food/etc. Well, I do have to say, my invoice, as I'm sure thousands of others, went right into the shredder.
But hey, I can name a few dozen working adults with no family and no bills that were enrolled in "medicaid"; some of whom make just as much as we do. And I don't want free insurance; just affordable, decent coverage.
But, for now it's more affordable to pay cash. Keep on reporting these numbers, I can't wait to see what the numbers show for people who actually made their payments.  

For Investors Only; US Industrial Production Up Three Times More Than Expected In February Despite Global Warming

Early morning trading: market up almost 200 points; certainly takes the wind out of that Crimean story.

When it rains, it pours: GM recalls another 1.5 million vehicles in three separate recalls; takes $300 million charge.


This could simply be an anomaly, but one has to wonder if cheap energy might not be playing a role:

US industrial production up 0.6% in February vs. 0.2% estimate

0.6% doesn't sound like much, but it is three times what folks expected. Three times.

From The Street:
Baker Hughes was upgraded at Goldman Sachs to buy from neutral. Twelve-month price target is $72. Company should benefit from an improving pressure pumping market, Goldman said.
From Yahoo!In-Play:
S&P futures vs fair value: +9.00. Nasdaq futures vs fair value: US indices are indicated higher, following form with European bourses, which are bouncing back some from last week's big losses.  The Crimea referendum went as expected, which is to say annexation to Russia was favored by voters -- and overwhelmingly so with 95.5% of the vote going that way.  European markets standing their ground in the wake of that vote has provided some support this morning, but it can be regarded as a tenuous move knowing that sanctions will be forthcoming from the West.  The questions are just what form the sanctions will take and when.
My hunch is that, like the BP spill, the after-actions will be worse than the event. In other words, EU and US sanctions against Russia will cause more economic havoc than the election/annexation. Wait until Putin messes with the US Treasury market. I honestly don't get the west's concern. This area of the Crimean is as Russian as it gets; the folks in the area had an election that was probably as "fair" as an election in Chicago, and they chose to align with Russia. What's so surprising about that? The western world invaded Vietnam, Kuwait, Iraq, Afghanistan. From my perspective, it's all political theater. They say Mr Obama "rejected" the election results, whatever that means.

By the way, John Kerry said today was the deadline: if Russia didn't meet Kerry's "demands," "bad things" would happen. It will be interesting to see what Kerry has to say today. So far, nothing has been reported from his office; they must be working the press release.

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. 


I agree with Joseph Curl in The Washington Times: we did all this for 4 million people, most of whom were already insured? I can't wait to see the earnings reports for the health insurers in 3Q14, 4Q14, and 1Q15.

The Fiscal Times notes that one-third of the uninsured won't sign up for ObamaCare; they will take their chances and pay the penalty. What penalty? All they have to do is declare a "hardship." If unable to come up with a "hardship," the penalty is $75. People who don't sign up for ObamaCare aren't worried about the penalty -- they can't afford the $500/monthly premium that gives them a $6,000 annual deductible.

Spring Flooding, The Bakken, 2014

Spring flooding in North Dakota, southwest of Williston, causing problems for Zavanna well.

The Dickinson Press is reporting.

Also, the Little Missouri River north of Killdeer is starting to spill over its banks due to ice jams. 

Happy St Patrick's Day -- Monday, 2014

Active rigs:

Active Rigs190185205170103

RBN Energy: the Jones Act and CBW.
The requirements the Jones Act places on ships operating between U.S. ports add significant costs, including those that are associated with less-favorable economies of scale at U.S. shipyards, a lower level of competition among U.S. ship builders, and higher wages and insurance costs for Jones Act workers.   Those higher costs have reduced the number of ships built for “coastwise” and inland movement of crude oil, and the relatively small size of the U.S.-flagged fleet and increased competition for Jones Act vessels has resulted in sharply higher charter costs and shipping fees. And charter costs and shipping fees, of course, are key factors in determining whether transporting crude on a Jones Act vessel makes economic sense in a particular situation.
As we noted above, the demand for Jones Act vessels is at or near an all-time high, mostly due to the boom in crude-by-water. As noted above, the utilization rate for inland tank barges currently is between 90% and 95%, and the utilization rate for coastwise tankers and barges is at about 90%; 95% utilization is considered to be the maximum achievable rate.
New Jones Act tankers and barges are being built to address that shortfall in capacity. For example, SeaRiver Maritime, a wholly owned subsidiary of ExxonMobil, is awaiting delivery later this year of two crude tankers. And State Class Tankers, which is being acquired by Kinder Morgan Energy Partners, has commissioned the construction of four Medium Range (MR) Jones Act tankers, each with a capacity of 330 MBbl, that will be delivered over the next two years.  But some new vessels being built are replacing older tankers and barges being retired, and the potential for more additions to the Jones Act fleet is limited by the capacity of U.S. shipyards to build them.
Finally, the report provides an extensive listing of leading Jones Act vessel owners—and, in an appendix, a list of the 42 U.S.-flagged coastal tankers and a list of 49 articulated tug barges (ATBs) with capacities of 140 MBbl or more. The owners list includes companies such as Crowley Maritime and Kirby Corp. that focus on shipping, as well as producers (ExxonMobil and ConocoPhillips, among others) and midstream companies with Jones Act vessel fleets. The list details the companies’ vessel assets, and publically announced plans to acquire additional tankers and barges.
The Jones Act trade will continue to evolve, of course, as oil price differentials change, new pipeline capacity becomes available, and the costs associated with Jones Act shipping rise and fall. But our Crude-by-Water and the Jones Act report provides a detailed perspective on the subject, and important, up-to-date information for crude oil producers and marketers angling to maximize their crude oil netbacks.
The Wall Street Journal

Two old stories getting older: the missing plane and the massing of troops along the Crimean border.
 Surgeon General nominee on hold.

Presidential elections in Syria scheduled for this summer.

The Los Angeles Times

Two old stories getting older: the missing plane and the massing of troops.  

Ethanol Costs More Than Gasoline?

One would think ethanol is as flammable as crude oil, but ...

Ethanol prices surge as rail problems cut supply. The Wall Street Journal is reporting:
Ethanol for delivery in April rose 6.9% last week to $2.467 a gallon, the highest settlement since Dec. 4 on the Chicago Board of Trade.
Prices are up 40% from a low of $1.757 a gallon reached Jan. 27. A bitterly cold winter and rising crude-oil shipments have caused railroad traffic to back up in the Midwest, where most U.S. ethanol is made, using corn grown in the region.
The snarl is preventing the biofuel from reaching the coasts, where refiners mix it with gasoline or it is exported. "You just can't get it moved to where you need it to go," said Jerrod Kitt, director of market information at Linn Group, a Chicago-based brokerage.
"You could definitely see $3 [a gallon] ethanol in the Midwest." In New York Harbor, where shipping costs usually bump up ethanol prices by 10 cents a gallon over the Chicago benchmark, buyers are paying about $1 more per gallon, according to data from pricing service Platts.
The higher prices are because railcars are so scarce, said Matt Clausen, an ethanol trader at CHS Inc., an Inver Grove Heights, MN, agribusiness cooperative. At the same time, demand from buyers such as Canada and the Philippines has remained robust because Brazil, the second-largest producer behind the U.S., is exporting less ethanol while it uses more of the biofuel, analysts said.
Again, another great article in the WSJ.