Sunday, May 18, 2014

Putin's Crimean Gambit: Baltic Countries In Play; Trillions Of Dollars Worth Of Oil In The Black Sea

This past week I had a bit of fun comparing Putin's strategy in the Crimean and the EU/US response to that event to a chess game. Previously posted:
The chess game began with Putin's brilliant handling of the Russian winter Olympics, an opening "knight" move to "F3." The Crimean was a pawn. Eastern Ukraine was perhaps another knight. Latvia is a pawn en passant.
Losing Germany as an ally on sanctions, that's worth at least a loss of a knight for the US.
The Chinese-Russian natural gas pipeline was at least a loss of a rook for the United States, possibly even worth the queen. The loss of Russian rocket engines was a bishop loss for Russia, but that was more than made up for by the Chinese-Russian hegemony, worthy of castling early.
At that point: Russian had lost a couple of pawns and a bishop, and had two knights on the attack, in the center of the board, and had already castled. The US had lost several pawns, a knight, and a rook, or possibly the queen.

To this can be added two more moves.

First, it looks like Putin's might take two or three more pawns: the Baltic nations. Germany's Der Spiegel via Reuters is reporting that there is not much the west can do if Putin decides to take back the Baltic states.
NATO would struggle to defend the Baltic states from any Russian aggression "with conventional means", Germany's Spiegel magazine reported on Sunday, citing sources close to the organization and a draft of a NATO planning document.

Eastern European states are nervous about Russia after it annexed Ukraine's Crimea region and massed 40,000 troops on Ukraine's borders.
The United States has sent 600 soldiers to the three Baltic countries - Estonia, Latvia and Lithuania - and Poland to take part in exercises to bolster NATO's presence in eastern Europe.
Second, it looks like Putin takes a second rook, meaning Putin has captured two rooks or a rook and the queen. The second rook (or a queen): trillions (yes, trillions) of dollars of off-shore oil. The Dallas News is reporting:
When Russia seized Crimea in March, it acquired not just the Crimean Peninsula but also a maritime claim more than three times its size with the rights to underwater resources potentially worth trillions of dollars.
Russia portrayed the takeover as reclamation of its rightful territory, drawing no attention to the oil and gas rush that had recently been heating up in the Black Sea.
But the move also extended Russia’s maritime boundaries, quietly giving Moscow dominion over potentially vast oil and gas resources while dealing a crippling blow to Ukraine’s hopes for energy independence.
Moscow did so under an international accord that gives nations sovereignty over areas up to 230 miles from their shorelines. Russia had tried, unsuccessfully, to gain access to energy resources in the same territory in a pact with Ukraine less than two years earlier.
 So, at this point, Putin's knights remain on the attack; he controls the center of the board; he has castled; and has taken the following pieces: the queen, a rook, a knight, and several pawns. Putin has lost only a pawn, maybe two, and a bishop.

The Baltic countries could easily become a bargaining chip for Putin: their continued sovereignty in exchange for unfettered claim to the Black Sea.  It's very similar to the Cuban missile crisis when Russia agreed to remove missiles from Cuba in exchange for the US dismantling nuclear-tipped missiles in Turkey aimed at Russia.

Random Look At A Re-Entered / Re-Completed Well By A Relatively Unknown Player In The Bakken

Note: Thunderbird Resources LP acquired this well from GMX Resources which filed for bankruptcy protection some time ago. There is more information regarding Thunderbird Resources wells below the table. Update regarding GMXR bankruptcy and reorganization/Thunderbird Resources.
  • 21947, 161, Thunderbird Resources LP/GMX Resources, Fairfield State 21-16-1HRE, St Demetrius, originally completed with 37 stages; 1.2 million lbs; Three Forks; first IP, 9/12 = 161; second IP, 1/14 = 576; this well was re-entered and the well was renamed Fairfield State 21-16-1HRE from Fairfield State 21-16-1H.

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Thunderbird Resources has the following wells and field:
  • 21002, 384, Thunderbird Resources, Wock 21-2-1H, New Hradec, t10/11; cum 58K 6/14;
  • 21892, LOC, Thunderbird Resources, Frank 31-3-2H, New Hradec,
  • 21893, LOC, Thunderbird Resources, Frank 31-3-1H, New Hradec,
  • 21213, 240, Thunderbird Resources, Frank 31-4-1H, New Hradec, t12/11; cum 35K 6/14;
  • 21214, conf, Thunderbird Resources, Frank 31-4-2H, New Hradec,
  • 22065, conf, wildcat, Thunderbird Resources, Lower Thirty Federal 21-4-1H, 4-141-100, near Whiskey Joe/Big Stick
  • 22048, conf, wildcat, Thunderbird Resources, Franks Creek Federal 24-8-1H, 8-141-100, near Whiskey Joe/Big Stick
  • 24073, conf, Thunderbird Resources, Little Missouri Federal 24-10-1H, Whiskey Joe,
  • 21540, 521, Thunderbird Resources, Evoniuk 21-2-1H, Tree Top, t1/12; cum 37K 6/14;
  • 21947, 161/576, Thunderbird Resources, Fairfield State 21-16-1HRE, Whitetail, t9/12; t1/14; cum 20K 6/14;
  • 24639, TA, Thunderbird Resources, Fairfield State 21-16-2H, Whitetail, 30 stage; 2.5 million lbs sand/ceramic; no explanation; no IP; no geology report as of 6/14; SWD, dockets, September, 2014
  • 22207, 1,443, Thunderbird Resources, Basaraba 34-35-1H, Magpie, t9/12; cum 65K 6/14;
  • 24586, conf, Thunderbird Resources, Charlie State 21-16-1H, Charlie Bob,
  • 23658, 2,856, Thunderbird Resources, Heiser 11-2-1H, Beicegel Creek, t2/13; cum 58K 6/14;
  • 21589, 1,296, Thunderbird Resources, Johnston 31-4-1H, Butte, t6/12; cum 50K 6/14;
  • 25122, conf, Thunderbird Resources, Watson A S24-11-1H, Ranch Creek,
  • 25123, conf, Thunderbird Resources, Watson B Ne4-11-1H, Ranch Creek
  • 21544, 2.496, Thunderbird Resources, Akovenko F24-34-2H, Ranch Creek, t11/12; cum 55K 6/14;
  • 21545, 1,409, Thunderbird Resources, Akovenko 24-34-1H, Beicegel Creek, t5/12; cum 38K 6/14;
  • 21582, 2,285, Thunderbird Resources, Lange 11-30-1H, Bennett Creek, t4/12; cum 75K 6/14;
  • 25172, conf, Thunderbird Resources, Lange 11-30-3H, Bennett Creek,
  • 23634, 2,004, Thunderbird Resources, Lange 44-31-2H, Bennett Creek, t2/13; cum 51K 6/14;

Random Look At A Recently Re-Entered And Re-Completed Well

Be sure to look at the jump in production of this well after it was re-entered and re-completed:
  • 19157, 1,476, EOG, Bear Den 04-20H, Spotted Horn, one-section spacing; t3/13; cum 201K 3/14
I follow this well here

In addition, I track re-entered, and re-completed well here.

Soccer Champion!

Bakken Five-Year Drilling And Completion Trends

DTC Energy Group, Inc., posted a nice update of the Bakken, a five-year drilling and completion analysis. It was posted October 10, 2013, so it is slightly dated. Most importantly, it discusses sliding sleeve, plug-and perf, and hybrid, but does not mention coiled tubing fracks.

The article is also weak in talking about how much proppant is typically being used.

For Investors Only: Dividends In Energy

On May 13, 2014, I posted:
The big story today, for investors: BHI raised its dividend, the first time the company has raised its dividend since 2008. Anadarko raised its dividend by 50%. Now, I look for an announcement that CVX or XOM or both to announce a 2-1 split. COP did the spin-off and raised dividends significantly in the last couple of years; CVX beat the Ecuador rap, and XOM is, well, XOM. So, we'll see. 
Then last night:
Readers may have noticed I've reported that a fair number of energy companies have recently declared increased dividends or dividends for the first time in quite some years. It was just something I noticed; no statistical analysis to see if accurate. Interestingly, the lead story in this week's issue of Bloomberg Businessweek, "Choosing Profits Over Productivity," which according to the writer/editor: "Bottom line -- productivity growth is stalling while companies spend their $2 trillion cash hoard on buybacks and dividends." Wow: saying exactly what I thought I was seeing. It's a nice two-page article.
Then, earlier today, Fitzsimmons on Phillips 66:
The headline suggests Phillips 66 is an outstanding dividend growth stock.

In the last couple of days, on a couple of different occasions, I posted comments about the dividend phenomenon noted this past earnings season. It's nice to see this observation validated. The dividend announcement that really surprised me was the one by Baker Hughes: the company is raising its dividend for the first time since 2008. That speaks volumes. Then the Phillips 66 article: the company has raised its dividend four times since 2012 (and they were increases of 25%, not trivial; the most recent announcement was an exception: 28%).
Completely unintentionally, while looking for something else, I stumbled across this article which I'm sure everyone else noticed -- actually I saw it earlier but due to a busy earnings season could not get to it, and then forgot about it. Motley Fool discusses this champion dividend payer: ENB --
This stock is one of the most stable income investments I have ever found.
The company’s facilities are some of the lowest risk and most irreplaceable assets in the world. Thanks in part to the monopoly status it holds on these properties, the company has reported record profits quarter after quarter.
That’s great news for its shareholders because this company returns almost all of its earnings to investors. Over the past decade, the firm has increased its dividend threefold and now pays $1.40 per share in dividends every year. This may very well be Canada’s top dividend stock — and it’s just be getting started.
But Enbridge might just be getting started. Thanks to the energy boom we are witnessing across the continent, the amount of oil and gas currently being pulled out of the ground is only a sliver of what we’re likely to see in the years ahead.
According to a recent report from Citibank, the combination of new oil sands production and shale drilling could grow North America’s petroleum output more than 50% by 2020. By the end of the decade the continent could achieve energy self-sufficiency. It’s a remarkable turnaround from only a few years ago when experts had left the domestic energy industry for dead.
To accommodate this boom, North America will require a massive build-out of its energy infrastructure. Companies that collect, store, and ship these oil and gas products are poised to make a fortune.
The article is a tease to get you to subscribe to their newsletter, but it was nice to see the article, continuing this unexpected discussion of dividends.

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. 

After Dithering For Six Years ... Was It All A Hoax To Form A New Government Agency? Here It Comes: The Federal Fracking Permitting Agency (FFPA)

President Obama, at this linked Argus Media story which appears not to be a hoax:
The Obama administration plans to take steps to streamline federal permitting of infrastructure projects, including renewable energy generation, electricity transmission and pipelines. [Some murmuring in the audience. The Tea Party is on the edge of its collective seat.]
The plan announced yesterday by President Barack Obama calls for better coordination among agencies, making it easier for the public to track permit reviews and an interagency "permitting center" to help implement the reforms at executive branch agencies. [LOL]
"We are cutting bureaucratic red tape that stalls good projects from breaking ground," Obama said. [The speech was momentarily interrupted by fifteen minutes of laughter.]
The plan calls for 15 specific reforms to meet overall goals for speeding up reviews and improving transparency, such as developing coordinated project schedules, posting more projects to an online "dashboard," and improving project planning and site selection early in the process. [Some squirming among the Sierra Club who had hoped for 17 specific reforms. The Native American Senator from Massachusetts is checking her notes.]
Environmentalists said the plan will help speed permitting of "worthy projects" that will increase US use of renewable energy. [NY Times reporter is mouthing: "what worthy projects?"]
I'm not exactly sure what renewable energy - wind or solar -- uses pipelines.  LOL.

I'm not sure why anyone would even consider "unworthy" projects.

It will take at least two months for each agency director to review fracking permits, leading to a two-year frack permitting process. Regular readers remember the BLM permitting process when the boom first began; it was "a two-year process" to get a permit in Fort Berthold until North Dakota Senator Byron Dorgan stepped in and got that "fixed." Now, as far as I know, permits on Fort Berthold are approved in as timely a matter as non-BLM state permits. Don't quote me on that.

By the way, the dashboard concept is interesting: the first major operating system to use a desktop "dashboard" was Apple Inc. Google "dashboard desktop" and the first hits are all Apple.

Global Warming or Perpetual Winter?

IceAgeNow is reporting:
Rockford, IL, had never had accumulating snow after May 2nd … until this year… two weeks past the latest date. Records since 1905.
It’s also the longest snow season in 109 years in Rockford … started October 22 and most likely ended May 16th.
It has snowed in the U.S for 9 straight months now since the rare September snowfall in Wyoming.
This might be a good year for the Kennedy clan in Massachusetts to visit Illinois or Wyoming; it might be the last year their children see snow. LOL.

Wells Coming Off Confidential List Over The Weekend, Monday, May 19, 2014; QEP Reports A Huge Bakken Well Monday; Several "High-IP" Wells Being Reported; 6 of 17 Wells To DRL Status

Monday, May 19, 2014
  • 23355, drl, Bakken Hunter, Pacer 3427 2MBH, Ambrose, producing,
  • 25846, 1,014, Emerald Oil, Caper 5-22-15H, Boxcar Butte, t11/13; cum 47K 3/14;
  • 26146, 1,223, WPX, Alfred Old Dog 19-18HY, Reunion Bay, t4/14; cum 2K 3/14;
  • 26267, drl, Petro-Hunt, Van Hise Trust 153-95-28D-21-6H, Charlson, no production data,
  • 26714, 74, Corinthian Exploration, Corinthian Lochner 16-33 1H, North Souris, looks like a nice Spearfish well, t12/13; cum 13K 3/14;
  • 26916, drl,  Samson Resources, Comet 2635-8H, Ambrose, no production data,
Sunday, May 18, 2014
  • 25601, 1,461, KOG, P Scanlan 153-98-16-9-11-16H3, Truax, no production data,
  • 26235, 2,270, QEP, Moberg 3-18BH, Grail, a huge well, t11/13; cum 91K 3/14;
  • 26294, drl, HRC, Fort Berthold 148-94-35C-26-4H, McGregory Buttes, no production data,
  • 26403, drl, CLR, Raleigh 2-20H1, Dollar Joe, no production data,
  • 26439, 2,084, BR, CCU Four Aces 14-21TFH, Corral Creek, t4/14; cum --
  • 26727, 2,403, MRO, Herb 14-35H, Killdeer, 4 sections, t4/14; cum --
Saturday, May 17, 2014
  • 24347, 547, Whiting, Redmond Federal 31-28PH, Fryburg, t11/13; cum 19K 3/14;
  • 24348, 136, Whiting, Redmond Federal 1-28PH, Fryburg, t11/13; cum 10K 3/14;
  • 26342, 2,706, HRC, Miller 157-101-12D-1-2H, Otter, t2/14; cum 17K 3/14;
  • 26438, 2,405, BR, CCU William 44-20MBH, Corral Creek, t4/14; cum --
  • 26971, drl, Statoil, Ross-Alger 6-7-7TFH-R, Alger, no production data,

 26235, see above, QEP, Moberg 3-18BH, Grail:

DateOil RunsMCF Sold

Trans Mountain: Reason #43,583 Why I Love To Blog

For background, start here: activist environmentalists.

Here is the home page for TransMountain. The project overview:
Trans Mountain is proposing an expansion of its current 1,150-kilometre pipeline between Strathcona County (near Edmonton), Alberta, and Burnaby, BC. The proposed expansion, if approved, would create a twinned-pipeline that would increase the nominal capacity of the system from 300,000 bopd to 890,000 bopd. 
  • Projected capital cost: approximately $5.4 billion
  • Approximately 994 km of new pipeline
  • Reactivation of 193 km of reactivated pipeline
  • 12 new pump stations to be built
  • 20 new tanks to be added to existing storage terminals in Burnaby (14), Sumas (1) and Edmonton (5)
  • Westridge Marine Terminal in Burnaby to be expanded with three new berths
  • Existing line to carry refined products, synthetic crude oils, light crude oils with capability for heavy crude oils
  • Proposed new line to carry heavier oils with capability for transporting light crude oils
This is not the first time the Trans Mountain line has been expanded. In fact, since operation began in 1953, the capacity of the pipeline system has been increased numerous times, with the initial expansion in 1957.

The most recent expansion project took place between 2006 and 2008 with the construction of 13 new pump stations and modifications to existing stations. Also during this time, the Anchor Loop project added 160 kilometres of new pipe through Jasper National Park and Mount Robson Provincial Park between Hinton, Alberta and Hargreaves, BC.
At present, the Westridge Marine Terminal handles approximately five tankers per month. Should the proposed expansion be approved, the number of tankers loaded at the Westridge Marine Terminal could increase to approximately 34 per month.
Kinder Morgan has a huge page on the Trans Mountain pipeline.

So, what's the status of Trans Mountain? (Note: Canada's National Energy Board -- NEB -- appears to be equivalent to the US FERC). GlobalPost is reporting:
Texas-based Kinder Morgan's $5.4-billion pipeline expansion would have the capacity to transport up to 890,000 barrels per day from Alberta to the company's Westridge terminal in Burnaby.
The National Energy Board hearings into Kinder Morgan's proposed pipeline expansion through Alberta and British Columbia will begin in August and hear from more than a thousand people, groups and communities.
But only 400 of the more than 2,118 applicants who applied to be interveners in the hearings will be allowed to participate.
Why I Love To Blog

And that leads me to reason #43,583, why I love to blog.  In the emotional / political arena, I have always been bothered by President Obama killing the Keystone.

However, in my investing arena, my reaction is completely different. Note: in one of the current polls I ask whether "killing the Keystone" has actually benefitted you as an investor. The answer will differ from investor to investor, but nimble investors very likely profited from Obama's decision: three winners come to mind immediately: a) Warren Buffett (owns the regional railroad monopoly serving the Bakken); b) rail industry in general (for multiple reasons); and, c) Kinder Morgan.

The discussion, for the investor, now shifts from TransCanada -- which by the way, will do very, very well with/without the Keystone -- and Kinder Morgan. Kinder Morgan is an international company but most of us probably still think of it as an American company. TransCanada sounds like a Canadian company. So, all things being equal, what's not to love if one is an American? Irony?

There are two or three big stories here, of course.

The biggest story: walk softly and carry a big stick. Ever since the Keystone was killed, we have heard nothing about the pipeline from two players that walked very, very softly but wielded huge sticks: Kinder Morgan and Warren Buffett.

Which, of course, raises another question but one which I will not ask.

Moving Canadian Crude Oil To The West Coast Or To The Gulf Coast?

That's an interesting question. Canada definitely has close ties to China. One might argue that Canada is "closer" to China diplomatically and culturally than the United States. The US has a glut of oil arriving at the Gulf and it will only "get worse" -- depending on one's definition of "worse." China is going to need a lot of Canadian oil. Some of that Canadian oil will find its way to California, which also needs its own source of oil.

From a pro-growth, free-market, capitalist point of view, one can argue it would have been the best of all worlds for both pipelines to have been built and then let the market play out. At the other end of the continuum, from an activist environmentalist's point of view, it would be best to kill both pipelines.

Regardless of how it works out, it looks like western Canadian oil is reaching all three coasts: the west coast, the east coast, and the Gulf Coast.

Comprehending The Size Of The Bakken

Fitzsimmons On Phillips 66

Over at Seeking Alpha.

There are a handful of "Bakken" contributors over at SeekingAlpha that are particularly good; Mike Fitzsimmons is one of them.

The headline suggests Phillips 66 is an outstanding dividend growth stock.

In the last couple of days, on a couple of different occasions, I posted comments about the dividend phenomenon noted this past earnings season. It's nice to see this observation validated. The dividend announcement that really surprised me was the one by Baker Hughes: the company is raising its dividend for the first time since 2008. That speaks volumes. Then the Phillips 66 article: the company has raised its dividend four times since 2012 (and they were increases of 25%, not trivial; the most recent announcement was an exception: 28%).

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.

Other data points from the linked article:
  • in addition to the dividend story, PSX has appreciated 150% since its spin-off just two years ago
  • another 13% growth anticipated for this year
  • company plans to double its size within five years (that certainly fits the North American energy revolution, a "big story" followed at the link)
Fitzsimmons argues that Phillips 66 could be the best shale play in the US, and links you to his article of November 27, 2013.

One data point:
  • building an LPG export facility near its Sweeny, TX, refinery
I would like to see more on "shale" -- despite the headline, nothing was said about the shale industry except that it was a "revolution."