Monday, April 14, 2014

Memo To Self: Follow-Up On This Two Years From Now To See How Saudi's Fracking Is Coming Along

OilPrice is reporting:
In an attempt to reduce its domestic consumption of oil, and therefore free up more product for export to the world markets, Saudi Arabia plans to become one of the first countries outside of North America to use shale gas for power generation.
The US shale gas boom transformed the country from the largest gas importer in the world, to a potentially huge exporter, and Saudi Arabia hopes that fracking will supply it with an abundance of natural gas that can be used for domestic power generation.
My hunch: this is about the last time we see an article on this "development."

Futures: Brent Is Surging -- Up Almost 2%, Nearing $110; WTI Holding Steady; Random Update On Advanced Biofuels

Futures mean squat, but ....

... a dynamic link that will change over time.

With oil solidly over $100, we can't get inexpensive biofuels fast enough. Fortunately, the Spaniards have answered the call. The New York Times is reporting:
There is an old joke in the energy business that advanced biofuels are the fuel of the future, and always will be.
A Spanish company, Abengoa Bioenergy, has bet $500 million on robbing that joke of its punch line. In the middle of a cornfield here it is building a 38-acre Erector set of electrical cable and pipe that will soon begin producing cellulosic ethanol, which it calls a low-polluting alternative to petroleum products. This is just as the George W. Bush administration and Congress intended seven years ago with legislation promoting energy independence.
But even as Abengoa and other companies prepare to produce significant amounts of cellulosic ethanol, using corn stalks and wheat straw as opposed to corn itself, the appetite for such fuels seems to be diminishing.
Never mind. I missed that last line the first time reading the article: "... the appetite for [biofuels] seems to be diminishing."

It looks like the "old joke in the energy business about advanced biofuels" will be around for awhile. LOL.

A Note to the Granddaughters

Grammy returns to Grapevine tomorrow after being gone for about two weeks. It will be very, very good to have her back.  I sense a "but."

But I'm going to have to give up the man-cave experience. Wow, what an incredible two weeks. Up most mornings by 5:00 a.m. for four hours at Starbucks. The rest of the day revolved around responsibilities with the granddaughters. The day concluded with a Omaha Steak dinner most nights.

So, tonight/tomorrow: vacuum cleaner through the house. Haircut. Straighten up the living room. And the kitchen.

Probably less blogging. The time at Starbucks will be slightly less. Maybe only two hours at Starbucks and then I bicycle back home to pick Grammy up and take here to breakfast at a wonderful coffee/pastry shop on Main Street in Grapevine.

Worse: I'll have to share time with the granddaughters with Grammy.

Thirteen (13) New Permits -- The Williston Basin, North Dakota, USA; BR With Two "High-IP" Wells

Active rigs:

Active Rigs188186206174107

Thirteen (13) new permits  --
  • Operators: Hess (7), Oasis (2), CLR (2), XTO (2)
  • Fields: Hawkeye (McKenzie), Truax (Williams), Cherry Creek (McKenzie), Crazy Man Creek (Williams), Gros Ventre (Burke), Siverston (McKenzie)
  • Comments: It's been a long time since we've seen a Crazy Man Creek permit; don't judge a field by its IPs -- Oasis keeps drilling in the Gros Ventre which seems to be a mediocre field, the economics must work
Wells coming off the confidential list today were posted earlier; see side bar at the right.

One (1) producing well was completed:
  • 26464, 1,857, MRO, Kimball 14-35TFH, Reunion Bay, t3/14; cum --
Wells coming off the confidential list Tuesday:
  • 25914, drl, Zavanna, Bills 5-8 1H, Crazy Man Creek, no production data,
  • 26167, 2,044, BR, Crater Lake 21-14MBH, Hawkeye, t3/14; cum --
  • 26168, 2,520, BR, Crater Lake 31-14MBH, Hawkeye, t3/14; cum --

More Construction Workers Needed In North Dakota

The Williston Wire links The Dickinson Press: the boom is not over. Not by a long shot, despite reports in the Atlantic Monthly to the contrary:
Comparing current predictions for oil production and related community growth to lower ones from just a year ago, economist Dick Gardner said the change between the years shows the boom is here to stay and hasn’t peaked yet.
Especially because of new fracking technologies, drilling efficiencies and multi-well pads, oil production is growing more and expected to last longer than most thought a year ago, said Gardner, from the Center for Rural Entrepreneurship.
Permanent population in the Dickinson region — which includes eight southwestern North Dakota counties — is projected to increase from about 43,300 now to about 66,400 in 2020 and 82,000 in 2039. Permanent housing units, meanwhile, will grow from approximately 23,000 now to nearly 45,000 in 2039. For both projections, the year-over-year growth will slow down a little after 2020, according to analysis.
From The Williston Wire:
The oil boom that has pulled in construction workers and contractors from across the country to North Dakota has led to a building boom that now requires even more workers. The huge population growth has created a demand for new government buildings, schools, hospitals recreation centers and more quality-of-life projects, reports South Dakota newspaper the Rapid City Journal.
In response to the demand, a coalition of six labor unions called Dakota Construction Careers has launched a recruiting campaign to attract both current construction workers and people outside of the industry willing to learn a trade to western North Dakota.
For those looking for specific work in the Bakken, check out the job-sites at the sidebar at the right, including the one most recently added:

Also from The Williston Wire:
North Dakota officials are predicting a big surge in crude oil output in the next few months as the industry emerges from a tough winter. 
About 650 wells had been drilled, but were not producing at the end of February because it was too cold to inject water and chemicals for the final step, called hydraulic fracturing, the state Department of Mineral Resources Oil and Gas Division said recently. 
"As we see winter weather and road restrictions go away, we are going to see a big surge in well completion," Lynn Helms, the division's director and North Dakota's top energy production official, said on a conference call. 
Comment: North Dakota will blow through one million bopd by mid-summer. Remember: the "official" data is 45 days delayed. For example, production for the month of March, 2014, through the last day of March, 2014, will be posted on/about May 15, 2014. My hunch is we will get a pre-release of the milestone. [Note: "we" passed the 1.1 million bopd some time ago if the Montana/North Dakota Bakken is considered.]

From The Williston Wire, this is a must-read: the world's largest truck wash is located in the Bakken, reported in The Bismarck Tribune.
Old records get smashed just about every day in the oil patch, so it's no real surprise that it now may be home to the world's largest truck wash.
At least that’s owner Jeff Schutz’s take on the scale of the Kwik n Kleen at the corner of U.S. Highway 85 and N.D. Highway 68 just outside Alexander.
He’s developed wash stations throughout the Midwest and a fleet of mobile wash units and he’s sure there isn’t a bigger truck wash anywhere on the planet in terms of speed and water capacity. He opened Kwik n Kleen four days ago, good timing since just about every rig out there is sporting a few layers of mud and grime from greasy roads and springtime slush.
If the $6 million wash is one for the Guinness World Records book, like Schutz says his research finds, it stands to reason everything about it is sized off the charts.
Trucks roll through a 200-foot-long wash bay spaced with electronic eyes that start and stop all the wash, chemical and rinse cycles along the full length.
But besides the sheer length and height of the wash, which occupies the highway corner with same dominance an indoor sports arena would, for Schutz, it’s all about the water.
With the well-received new recreation center in Williston, Watford City is looking to replicate the project. Again, from The Williston Wire: Imagine Watford City having a facility that would have an indoor swimming pool, two sheets of ice for hockey and figure skating, as well as a 3,000 seat venue that could hold concerts, sporting events and conventions.  The facility would also include a walking/running track, meeting and conference rooms, and space for gymnastics and dance clubs and the Watford City Senior Citizens.  All of that and much more is possible, according to Brent Sanford, Watford City mayor, if voters approve a half cent city sales tax increase June 10th.

This is something you don't see often. The owners of Fuddruckers in Williston are expanding to Minot. For newbies, it usually works the other way, if it happens at all. 

Update On Samson Oil & Gas -- On A Pretty Exciting Day For Shale Oil; Zeits On Halcon

A reader sent me this link, updating Samson Oil & Gas; it's a nice layout.

From the same source, more on the Rennerfeldt wells, which I posted earlier.

One has to chuckle: the smaller the operator, the bigger and more frequent the press releases. Except for CLR which seems to have a press release several times a day, some days.


The way folks are talking about the GDP well in the TMS today makes one wonder what "we're" doing wrong to get the message out about the Bakken.  LOL. Twice.

Even Richard Zeits seems overly enthused with his article over at SeekingAlpha:
This morning, Goodrich Petroleum (GDP) announced the result of its Blades 33H-1 well in Tangipahoa Parish, Louisiana, which was anticipated sometime this week. According to the company's press release, the well has achieved peak 24-hour average production rate of 1,250 barrels of oil and 115 Mcf of gas per day on a 14/64-inch choke from a 5,000-foot completed lateral. The result is excellent and in line with the early performance of GDP's Crosby 12H-1 well, the strongest well in the play to date that has produced almost 170 Mboe in the first 13 months.
At one time, it was the expectation that a Bakken will would produce 100,000 bbls in the first 12 months, so 170,000 bbls in the first year is, indeed, a good well. But EOG raised the bar in the Bakken: EOG now looks for 100,000 bbls in the first six months. It won't happen every time, but it is happening more and more. EOG even has a few wells that hit 200,000 bbls in the first six months

In addition to the spectacular EOG (which can be tracked using the "tag"), I track "monster wells" here.

Having said all that, however, the GDP well is huge news for Halcon, which I posted earlier. Halcon is positioned incredibly well.

The big story here, though, is the overall shale potential in the United States. It was huge before the TMS; in one day, the bar has been raised. Again.

For Investor's Only; Lots Of Green

Snapshot taken at 10:58 a.m. Central Time, April 14, 2015, one business day after the mini-crash. (The mini-crash was pretty much biotech and tech in general. WTI held and oil-related stocks were relatively unaffected by the mini-crash last week.)

It's important to remind newbies: I track companies to help me follow the Bakken (I also track some other companies to follow other sectors, see welcome/disclaimer for how this all started). Just because I list a ticker symbol does not mean I have any recommendations regarding buying, selling, or trading that stock.

I will tell you, over the past several years, I missed huge opportunities in AAPL, AXAS, BEXP, KOG, CRR, HP, MDU, ISIS, CAH: some I never bought; some I sold way too early, one I recently re-bought. And I have no regrets. Never look back except to learn from mistakes.

Midday trading: trading at new highs -- CLR, ECA, EPD, ERF.

The dollar is rising -- and even so, WTI/Brent is up. Good news.

Against the Wind, Bob Seger

The Director's Cut Is Out; Huge Increase In Permitting (Anticipated); Number Of Producing Wells Hits Another New High; Bakken Pricing Trending Higher; President Obama Already Asking Insurers For Estimates Of 2015 TrainWreck Premiums

The Director's Cut is out.

Disclaimer: this update is always done in haste; typographical errors are likely. This is for my use only. Others should go to the source

February, 2014: 951,340 bopd  (all-time high was 976,453 in 11/13) (a 1.7% increase)
January, 2014: 935,126 bopd
December, 2013: 926,687 bopd

Producing wells
February, 2014: 10,186 (new all-time high)
January, 2014: 10,114
December, 2013:10,040

March, 2014: 250 drilling (all time high was 370 in 10/2012)
February, 2014: 180 drilling
January, 2014: 253 drilling
December, 2013: 227 drilling 

Today: $87.00/bbl  (all-time high was $136.29 7/3/2009)
March, 2014: $86.72/bbl
February, 2014: $86.98/bbl
January, 2014: $74.20/bbl
December, 2013: $73.47/bbl

Rig count
Today: 188
March, 2014: 193
February, 2014: 189
January, 2014: 188
December, 2013: 190

The rig count was down 12% from the high. McKenzie County remains most active.

Days from spud to initial production decreased 10 days to 122 in the previous director's report. In today's report, days from spud to initial production decreased another 8 days to 114 days. 

There are still over 100 wells shut in for the Tioga gas plant conversion in an attempt to minimize flaring, but the biggest production impact story continues to be the weather. Add to that 4 days with wind gusts too high for completion work and "progress is slow."

The percentage of gas flared is unchanged at 36% largely due to temporary shut-down of the Tioga gas plant on December 26th for expansion. The new plant is now operating and should be at full capacity soon. This matches the historical high of 36% in 9/2011.

The number of rigs actively drilling on federal surface in the Dakota Prairie Grasslands is unchanged at 1.

The Trainwreck of 2015

I've opined for some time now that all the chatter over how many folks actually enrolled in ObamaCare was just that -- chatter.

The proof will be in the pudding: earnings reports for 3Q14, 4Q14, and 1Q15, all quite some time from now.

However, Forbes is reporting we may see hints of what the 2015 premiums might be:
Beginning this week, when health insurance companies begin reporting their first quarter earnings, consumers and investors will begin to know whether — and possibly how much — premiums will rise in 2015 for plans sold on marketplaces under the Affordable Care Act.
Although health insurers are still tallying their new enrollment from last-minute signups to the plans they offered on government-run exchanges for this year, the Obama administration and state insurance directors are already asking for rates for next year, insurers tell Forbes. Consumers will begin to sign up for plans in the next open enrollment period that begins in November.
My hunch remains:
  • open season will be delayed until after the elections (public won't see premiums until open season)
  • President Obama will cap 2015 premiums at 2014 levels
I could be wrong, but I believe the "open enrollment period" used to be October through December. Note that in the linked article above, the "open enrollment period" this year begins in November. It will be a no-brainer to delay the open enrollment period until after November 15. Shoot, just tell the mainstream media last minute changes to the federal website necessitates a delay until November 15th. LOL.

Right Down The Line, Gerry Rafferty

Halcon Up Almost 10% Today; For Investors Only

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

This is what makes blogging about the Bakken so much fun: one never knows where one will end up. From the Bakken, I ended up following GEOI, which was bought by Halcon, and Halcon eventually led me to Tuscaloosa Marine Shale.

One can track back on the blog if interested, starting with Halcon at the sidebar at the right. If you do, you will eventually reach the recent Halcon presentation (a PDF). 

Today, HK is up almost 10%. The jump is probably due to a Goodrich Petroleum well noted at this blog.

Now back to the linked presentation, now that it has downloaded. Halcon has:
  • about 142,000 net acres in the Bakken
  • about 100,000 net acres in the Eagle Ford
  • about 300,000 net acres in the Tuscaloosa
I had forgotten all of that. You know, Halcon is not a small entity any more. 500,000 net acres in three incredible plays. Let's put that in perspective: KOG has slightly less than 200,000 net acres in one play, the Bakken, and most of that is concentrated in a few locations in the Bakken.

KOG: market cap -- $3.6 billion
HK: market cap -- $2.2 billion

$3.6 billion / 200,000 acres = $18,000/acre
$2.2 billion / 542,000 acres = $4,000/acre

For Investors Only; HK Up Almost 10% In Early Trading; Triangle Petroleum To Note Unexpected Gain, Reschedules Earnings Call; Samson Oil Sells Interests In Rennerfeldt Wells, Do Not Meet Company's Expectations; Walgreens Under Pressure To Relocate Overseas

 Early morning trading that caught my attention:
  • TPLM: up 2%
  • HK: up almost 10%

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. 


Samson Oil & Gas provides update on the process of selling its interests in the Rennerfeldt 1-13-H : Samson advises that it is in the process of selling its interests in the Rennerfeldt 1-13-H and the Rennerfeldt 2-13H well bores for a net $200,000 over the costs incurred to date. Samson's decision is based upon its technical review of the production performance of the middle Bakken wells in and adjacent to the North Stockyard project. This review led Samson to conclude that there is a correlation between lateral length, number of frac stages, proppant volume placed and both the production performance and ultimate recoverable reserves. The sale does not include any acreage. 
  • Samson's assessment of these two wells does not indicate a correspondingly critical assessment of other wells in the North Stockyard Project. The technical difficulty with the Rennerfeldt wells is that they have a restricted lateral length (3,600 to 3,700 feet) due to their geographic location and thus are not as long as the other North Stockyard Field wells. 
  • In addition, the Rennerfeldt wells were designed with 15 sliding sleeve frac stages and to place 1.5 million pounds proppant. Accordingly Samson is of the view that this design puts the investment opportunity in these wells at a disadvantage by comparison to the two Matilda Bay wells and the eight Three Forks wells that are planned in the next phase of the development of North Stockyard.
Triangle Petroleum to recognize gain on Caliber investment for fiscal year 2014 and reschedules Q4 And FY2014 financial and operational results conference call:
  • Co announced that it expects to recognize a gain on its investment in Caliber Midstream Partners for fiscal year 2014, that it has rescheduled its fourth quarter and full fiscal year 2014 financial and operational results conference call to Thursday, April 17, 2014 at 8:30 AM MT (10:30 AM ET), and that it intends to file its fiscal year 2014 Annual Report on Form 10-K with the SEC on Wednesday, April 16, 2014.
  • During preparation of its fiscal year 2014 audited financial statements, the co concluded, after consultation with KPMG LLP, the co's independent auditor, that it should recognize a gain in fiscal year 2014 on the fair value of the co's trigger units, trigger unit warrants, and warrants in Caliber, the co's midstream services JV. The gain recognition results from the classification of the trigger units, trigger unit warrants, and warrants as equity investment derivatives, which are revalued periodically in accordance with U.S. generally accepted accounting principles. The co expects to recognize a non-cash, pre-tax gain and an increase in Triangle's equity investment in Caliber of ~ $39.7 mln for fiscal year 2014. The co also plans to file restated financial statements with the SEC under the cover of Form 10-Q/A for the third quarter of fiscal year 2014 (period ended October 31, 2013) to recognize the portion of the associated gain attributable to that period.
Why COP is holding up well. Bret Jensen over at SeekingAlpha.

Speaking of taxes? All those whiners complaining about American companies re-locating overseas to save on taxes. I have not problem with that -- international/global companies should relocate if it makes sense overall. The Financial Times is reporting that Walgreens is coming under pressure to do just that -- to relocate to Europe:
Walgreens has come under pressure from an influential group of its shareholders, who want the US pharmacy chain to consider relocating to Europe, in what would be one of the largest tax inversions ever attempted.
At a private meeting in Paris on Friday, investors owning close to 5 per cent of Walgreens’ shares lobbied the company’s management to use its $16bn takeover of Swiss-based Alliance Boots to re-domicile its tax base.

I believe last night was the fifth episode of "Cosmos."  The two granddaughters come over every Sunday night, 8:00 p.m. to 9:00 p.m. to watch "Cosmos" with me. I am really impressed how both the 7-year-old and the 10-year-old stay engaged. The younger one sketches while the older one follows the narrative, very closely.

Last night, she was just seconds ahead of the narrative (and way ahead of me) explaining why neutrinos reach the earth sooner than photons when a supernova explodes. Recall that nothing can go faster than photons, which begs the question: how do neutrinos get to the earth first? Just seconds before the narrator explained the answer, the older granddaughter saw the answer. I was quite impressed. I had not even caught it.

During the program, the narrator asked the question, "what held the protons together in the nucleus?" He said it was the neutrons. That did not make sense to me. So today, looking up the answer on the internet. I thought it was the strong force, gluons, etc, and did not understand what role the neutrons might play in holding the protons together in the nucleus.

Yes, at the link, it is the strong force, carried by gluons, that hold the protons together. So, how are neutrons involved? From the link:
These experiments indicated that the strong nuclear force is short ranged but has a repulsive core. When the nucleons are less than 0.5 fm (10^-15 m) apart they do not 'feel' the strong nuclear force. This facet of a repulsive core is, sometimes, referred to as 'asymptotic freedom'. Because of these 'outer' and 'inner' aspects of the strong nuclear force, the nucleons tend to remain at an average distance from each other (here protons and neutrons have been referred to as nucleons). This spacing of the nucleons leads to a saturation of the strong nuclear force, which depends upon the number of nucleons present and, thus, the mass number A. 
So, protons would be repulsed by the strong nuclear force if they come too close together. What maintains their separation? Again, from the link:
The protons are charged, and they do repel one another. However, neutrons, which have 0 net charge fills a space in between the protons and allows them to be less repulsive, much like having an object between two similar poles of two magnets.
So, that helps. 

On another note, a most fascinating organism is the "water bear," the tardigrade. Our older granddaughter knows all about the tardigrade, and recognizes it immediately. It's kind of funny how often it shows up on "Cosmos." It was made the episode last night. I remarked to Arianna that I had never heard of the "water bear" until she mentioned it to me, and I had seen it on "Cosmos." How did that happen? How did I miss it all these years? They've been known for years; I don't even recall Dawkins mentioning them in his opus The Ancestor's Tale.

Active Rigs Down To 189; Spring Road Restrictions In Effect?

Active rigs:

Active Rigs189186206174107

Spring road restrictions in effect?

RBN Energy: a continuation of series on the crude oil storage along Texas coast. Two words: maxed out.

The Wall Street Journal

Ukraine heats up.

Taxes: the jump in federal tax rates that kicked in last year is causing sticker shock for many higher earners this tax season. I think that's what Warren Buffett wanted; higher tax rates for the rich.

Two Libyan oil facilities set to reopen.

"Odd-hour" workers face loss of employer health plans under ObamaCare. And so it goes.

'Captain America'wins another box office weekend; $40 million ins its second weekend, edging out newcomer 'Rio 2.'

The Los Angeles Times

Suspects in killings of four (4) women in Orange County were sex offenders; they were on probation and required to wear GPS devices. Why does this not surprise me?

For the working poor, new health premiums can be a burden.

A nice Masters finish yesterday.

The Dickinson Press

Continental Resources pipeline leaks 560 bbls of crude oil near Medora.


A record number of Californians -- 60% -- say they pay too much in taxes. They are correct. Whenever I visit California I ask myself what Californians get in return for their high taxes, compared to those in Texas.