Thursday, August 7, 2014

Miscellaneous Headlines From Rigzone -- August 7, 2014

Rigzone has several stories today that are quite interesting, and helps put the Bakken into perspective. Again.

First, this headline: Statoil's Arctic Summer Campaign Fails.
Statoil has failed to find any oil in its summer campaign in the Norwegian Arctic, an area which the firm has called an "exploration hot spot" with high potential. Statoil said its third well in the Hoop prospect, among the northernmost wells drilled anywhere, showed only a small pocket of uncommercial gas. Two previous wells showed no oil and only small amounts of gas.
It has been suggested that Statoil could buy another Bakken operator to help shore up production. Statoil produces about 2 million bopd. Oasis, for example, produces about 40,000 boepd. CLR? 100,000 bopd from the Bakken. I could be off on the numbers; just thinking out loud.

And then this: China Finds Shale Gas Challenging, Halves 2020 Output Target.
China has halved the quantum of shale gas it expects to produce by 2020 after early exploration efforts to unlock the unconventional fuel proved challenging, according to an industry website and a government source.
China, believed to hold the world's largest technically recoverable shale resources, is hoping to replicate the shale boom that has transformed the energy landscape of the United States. About four years of early evaluations and drilling have so far yielded one large find - Fuling field - in the most prospective gas province of southwest Sichuan, but experts say the Fuling success is hard to repeat due to complex geology and high cost of production.
China is having trouble recovering their natural gas, and halves their 2020 output target; meanwhile, US producers keep increasing their projections and actual production. Perhaps China's reserves are harder to tap; maybe not. Perhaps we are seeing the skill of our own geologists, engineers and roughnecks. 

Rigzone had at least two articles today suggesting that Barack Obama is indeed going back into Iraq. It would have been nice to have stopped the insurgents BEFORE they captured Iraq's largest dam. It has to be a bit disconcerting waiting until AFTER the insurgents took control. Taking the dam was probably the tipping point; President Obama really had no choice. Good, bad, or indifferent, President Obama now appears to be in "react" mode, responding to events as they spiral out of control rather than trying to shape future events. Be that as it may, it appears that the US going back into Iraq will push the stock market lower (futures are already 80 points down) and push the price of oil up. Friday could be a very, very interesting day.

Disclaimer: 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.

By the way, back to the Mideast and oil. Rigzone is also reporting:
An oil company owned by Israeli billionaire Dan Gertler said on Thursday it had discovered around 3 billion barrels of oil in the Democratic Republic of Congo, an amount similar to the proven reserves of oil producers Britain and South Sudan.
The crude was discovered around Lake Albert on Congo's eastern border with Uganda, Oil of DRCongo said in a statement.
An analysis of seismic survey data "indicates around 3 billion barrels of oil in place", it said, although it was not yet clear what portion was recoverable.
And elsewhere, with regard to Russian sanctions, another well-thought-out debacle:
Putin bans agricultural imports from EU, US and other countries that placed sanctions on Russia. Specifically:
The Prime Minister Dmitry Medvedev said at a televised cabinet meeting yesterday that Russia’s retaliatory ban covers all imports of meat, fish, milk and milk products, fruit and vegetables from the United States, the European Union, Australia, Canada and Norway. It will last for one year.
This particular blurb did not mention wheat. I'm not sure if that was significant or not. If this ban does remain in place for a year it will truly disrupt supply chains. Certainly, US farmers can sell agricultural products to South American companies who will in turn sell to Russia, but Norway and the EU have a slightly different problem: there really is no other "middleman" for EU. I didn't realize that Finland and Sweden were both part of the Union, but Norway was not. This could be particularly challenging for he Scandinavian countries and Poland. Germany is Russia's #1 trading partner, I think I recall reading recently.

I don't know if Americans know it or not, but 2% of our fish imports come from Russia. It's very likely President Obama could put a ban on Russian fish and Russian caviar. I can't make this stuff up.

Twelve (12) New Permits -- North Dakota; Eleven (11) Producing Wells Completed; August 7, 2014; Triangle Reports Six (6) Nice Wells; Enerplus Reports A Huge Well; Barack Back To Bombing Iraq? US Open Borders Policy Extends To Northern Border? Antarctic Hits Record Cold; Sea Ice At Record Highs; Denbury Has A Nice Red River Well

From "Overheard" in The Wall Street Journal:
Amid war and rumors of war, it seems odd that oil prices have dropped over the past month. That might be because another war could be brewing: within OPEC.
Saudi Arabia this week released September official selling prices for its oil. It offered bigger discounts for Asian and U.S. buyers against August's levels.
As energy economist Phil Verleger pointed out in a recent report, this could indicate a growing battle for market share. With U.S. shale-oil output rising, U.S. imports of oil from West Africa have plummeted from an annualized average of two million barrels a day in late 2007 to about 300,000 barrels a day currently. That forces countries such as Nigeria to target other markets, like Asia—putting them in direct competition with Saudi Arabia and other OPEC members
As OPEC's biggest producer, Saudi Arabia can choose to accommodate competing barrels by cutting its own output—or price its own oil more competitively to defend its market share. That raises the risk of a price war in the cartel.

Northern Oil & Gas beats by $0.07, misses on revs; co raises 2014 production guidance to +20-25%, from +15% YoY growth: Reports Q2 (Jun) earnings of $0.29 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus Estimate of $0.22; revenues fell 22.5% year/year to $74.6 mln vs the $97.17 mln consensus.

2014 guidance- co raises production guidance

  • Net well additions remain on pace for Northern to add ~44 net wells for the full year 
  • However, Northern now expects full year 2014 production to increase between 20% and 25% over 2013, versus prior guidance of a 15% increase.
  • This improved outlook is driven in part by the excellent field conditions during the second quarter, as well as new completion designs.
  • These new completion designs also appear to be driving a moderate increase in completed well costs, as the weighted average AFE cost of Northern's 23.5 net wells in process as of June 30, 2014 was $9.2 million.
  • If the AFE cost trend continues, Northern would expect its full year 2014 drilling and completion capital expenditures to increase by ~5% over prior guidance.
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.

Wells coming off the confidential list Friday:
  • 26475, 203, Murex, Gary Lee 31-30H, Alexandri, producing, t5/14; cum 3K 6/14;
  • 26538, 625, OXY USA, Mildred Sadowsky 2-11-14H-142-97, Willmen, t2/14; cum 28K 6/14;
  • 26941, 99, Corinthian, Corinthian Skarphol 16-29 1H, North Souris, a Spearfish well, t3/14; cum 9K 6/14;
  • 27053, 171, Denbury, CHSU 14B-26NH 15, Cedar Hills,a South Red River B well, t4/14; cum 15K 6/14;
  • 27134, drl, Hess, SC-Tom-153-98-1514H-7, Truax, no production data,
  • 27271, 690, WPX, Glenn Fox 13-24HW, Van Hook, t7/14; cum 7K 6/14;
  • 27295, drl, Hess, EN-Ortloff-156-94-2635H-6, Big Butte, no production data,
  • 27557, 2,013, XTO, Kaye Federal 43X-4E, Lost Bridge, no production data,
Active rigs:

Active Rigs192181199184141

Twelve (12) new permits --
  • Operators: WPX (5), EOG (4), Petro-Hunt (2), Whiting
  • Fields: Reunion Bay (Dunn), Parshall (Mountrail), Charlson (McKenzie), Bell (Stark)
  • Comments:
Wells coming off the confidential list today were posted earlier; see sidebar at the right.

Eleven (11) producing wells completed:
  • 27046, 1,135, Whiting, Anna Bartleson 44-20-2H, Sanish, t7/14; cum --
  • 27083, 1,200, BR, Denali 44-33TFH, Johnson Corner, 4 sections, t7/14; cum --
  • 26878, 1,367, XTO, FBIR Buyblackhawk 24X-27F, Heart Butte, ICO, t7/14; cum --
  • 23541, 1,545, Enerplus, Honor 150-94-06B-18H TF, Spotted Horn, t6/14; cum 31K 6/14;
  • 27047, 1,297, Whiting, Bartleson 44-20H,  Sanish, t7/14; cum --
  • 26231, 329, Triangle, Dwyer 150-101-35-26-3H, Rawson, t4/14; cum 46K 6/14;
  • 26494, 173, Triangle, State 154-102-25-36-5H, Rosebud, t4/14; cum 27K 6/14;
  • 26725, 436, Triangle, Hovde 150-100-6-7-1H, Spring Creek, t4/14; cum 62K 6/14;
  • 26723, 447, Triangle, State 152-102-36-25-5H, Elk, t41/4; cum 39K 6/14;
  • 26735, 750, Triangle, Wisness 150-100-23-14-5H, Timber Creek, t4/14; cum 42K 6/14
  • 26736, 766, Triangle, Wisness 150-100-23-14-6H, Timber Creek, t4/14; cum 46K 6/14;
The Wall Street Journal

Iraqi War #3? Obama approves airstrikes on Iraq.

WSJ survey: economists see 2H14 GDP growth of 3%.

For Obama, Iraq move is a policy reversal. Now, back to vacation plans and more golfing.

US firms stockpiling titanium parts in case Russia bans export; the metal is critical to building jetliners.

Surprise! Brazil's new oil output is rising fast. Petrobras gets nearly a quarter of its 2 million bopd poroduction from fast-growing 'pre-salt'discoveries offshore, helping stem declines in the state-owned oil company's mature fields. This was not expected by some, including me.

Doomsday: magazine sales in US drop 12% in 1H14 from a year earlier; paid subscriptions dropped 2%.

USDA's world cotton price nears threshold level that triggers US government loan-repayment assistance to farmers.

Falling natural-gas prices dim utility stocks.

The Los Angeles Times

It appears that President Obama's air force has bombed, or will bomb, or might bomb, or might consider maybe bombing ISIS forces now that there are reports that they have seized Iraq's largest dam (?). Conflicting reports coming out of different news agencies. Why are we going back in, now? On another note, I know when the previous president went into Iraq he went in with an international coalition of forces, the backing of the UN, and on the basis of testimony from Colin Powell (who later said it was "bs"or something to that effect). It appears this time, the president is going in alone, as in unilaterally. I can't make this stuff up. I truly thought Mr Obama thought more bombing would simply lead to another cycle of more fighting.

John Walsh, Montana, has quit the US Senate race; couldn't dodge plagiarism charges.

The 14-y/o female arrested with four other teens after a USC student was fatally beaten has been charged with seven (7) -- "book her, Dano" -- felonies in connection with a robbery following the deadly assault. She faces charges of carjacking, one count of second-degree robbery, one count of attempted second-degree robbery, two counts of assault with a deadly weapon, and two counts of assault likely to cause great bodily injury during a robbery. Not charged with any hate crime?

The Washington Times

Apparently the US "OPEN BORDERS" policy now extends to the north, also. In addition to the OPEN BORDERS policy along the US-Mexican border, it appears that we now have an OPEN BORDERS policy over Alaska. The Washington Times is reporting that Russian bears have crossed into Alaska at least 16 times in the last couple of weeks.  


The Sultans of Swing, Dire Straits

Weather, climate, extreme weather, a warming hiatus? 
Call it what you want. Baby, it's cold outside.
Antarctica hits record cold: -67 degrees. Polar bears not seen

cfact is reporting:
Thirteen members of the British Antarctic Survey were trapped and in danger of freezing to death when their base, Halley VI, lost power.  Power went down on July 30th and is now partially restored.  The BAS waited to report the incident until power came back up, however now reports that the incident was so serious that all science activities have been suspended and emergency contingency plans to abandon some of Halley’s eight modules and attempt to shelter in a remaining few have been prepared.
The incident is particularly serious, as the station is likely completely cut off from rescue for months.  The incident occurred during the height of the Antarctic winter while southern sea ice is at or near record highs.
Twenty-nine Thirty excuses. If you can't explain the pause, you can't explain the cause. 

Random Update Of All Wells On Confidential List -- North Dakota -- August 7, 2014

Confidential wells, as of August 7, 2014: total - 2,232 (only oil and gas permits; does not include SWD wells). Data not double-checked. There may be errors.

Compare with list back in October, 2013. Some selected comparisons are in parentheses (October, 2013) below.

Abraxas: 11 (6)
American Eagle: 39 (24)
Anschutz: 1 (#28350)
Armstrong: 1
Bakken Hunter: 5
Ballard Petroleum: 3
Baytex: 4
BR: 116 (131)
CLR: 306 (282)
Corinthian: 13
Cornerstone: 5
Crescent Point: 12
Denbury: 7 (plus an additional SWD permit)
Emerald: 17 (9)
Enduro: 32
Enerplus: 55
EOG: 29 (43)
Fidelity: 12 (15)
Fram: 6
Gadeco: 2
Hess Bakkken: 250 (143)
HRC: 45 (100)
Hunt: 29
KOG: 44 (102)
Legacy: 26
Liberty Resources: 4
Luff: 1
MRO: 88 (80)
MBI: 1
Mountain Divide: 4
Murex: 9
Newfield: 65
Oasis: 92 (75)
Peregrine: 1
Petro Harvester: 3
Petro-Hunt: 100 (95)
PetroGulf: 2
QEP: 87
Roff: 1 (#28571)
Samson Resources: 28
Sinclair: 10
Slawson: 96
SM Energy: 35
Statoil: 106 (141)
Strata-X: 4
Strike Oil: 1 (#23970)
Texakota: 9
Thunderbird: 8
Triangle: 12 (13)
True Oil: 4
Welter Consulting: 1
  • #28388 -- this is their third permit in as many years; their 2012 well and their 2013 well were both dry
Wesco: 1 (#19217)
Whiting: 66 (77)
WPX: 77
XTO: 169 (wholly-owned subsidiary of Exxon Mobil)
Zargon: 2
Zavanna: 45 (27)
Zenergy: 0 (23) -- Zenergy sold its Bakken assets in late 2013.

Obama's Blind Spot: Oil And Gas And America's Greatness -- August 7, 2014; The Marcellus To Surpass Qatar In Natural Gas Production

From a comment from another discussion board:
"...I'm a huge believer, as some of you know, in anecdotal [data points], and there were 2 interesting pieces of anecdotal [data points] that surfaced this week. The EIA said on Monday that Marcellus production will be at 15.5 billion Bcf per day in August, and they projected it will surpass Qatar's gas production in September. Now Qatar is the world's third-largest producer of natural gas. I think that gives you an idea of the extent of the production ramp-up that's occurring in the Marcellus..."
And we won't hear a thing on this milestone from the current administration. A lot of hard-working, blue-collar workers are making this happen. 

Of course, in his defense, I don't recall Ronald Reagan or either of the Bushes giving a shout-out to the American oil and gas industry either; but, RR, and the Bushes, often visited industrial sites and were always giving speeches on the excellence of the American worker. I remember all the excitement about the movie, a day without Mexicans. I would love to see the sequel, "A Day Without Exxon, Chevron, and Conoco."

This is really quite the story. For as long as I can remember, I always thought Qatar was the #1 (or very nearly the #1) producer of natural gas. Now, it is projected that the Marcellus will surpass Qatar, and that despite all the obstacles to developing the Marcellus, obstacles that Qatar does not face. 

Conference On Completion Strategies Announced; Houston, September 30, 2014

Houston, TX, conference announced, with relevance to the Bakken.

"Comparing Design Philosophies for Cost-Effectively Optimizing Design and Equipment Selection for Well Site Facilities in Onshore Unconventional Oil & Gas Fields"

Or, "Completion Strategies in the Bakken, Permian, and The Eagle Ford."

This is North America's first congress dedicated purely to the onshore facilities engineering discipline.

Thursday: Jobless Claims Plummet -- August 7, 2014

Active rigs:

Active Rigs191181199184141

RBN Energy: an update on Canadian pipelines taking Bakken crude to eastern Canadian refineries. An absolute must-read for those interested in the Bakken, and particularly, Enbridge.

Eastern Canadian refineries are importing record volumes of light US crude - 263 Mb/d in May 2014 according to the Energy Information Administration (EIA). By the end of 2014, pipeline reversals and expansions to the Enbridge network will increase the flow of light crude to eastern refineries from Western Canada and North Dakota. The result could be even more imports from the US. Today we continue our series reviewing the extent and impact of Enbridge projects to move crude east.

Reporting today:

Jobless Claims Plummet; Four-Week Average Hits 8.5 Year Low -- August 7, 2014

Reuters is reporting:
The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to a further strengthening of labor market conditions.
Initial claims for state unemployment benefits decreased by 14,000 to a seasonally adjusted 289,000 for the week ended Aug. 2, the Labor Department said on Thursday.
The prior week's claims were revised to show 1,000 more applications received than previously reported.
Economists polled by Reuters had forecast claims rising to 305,000 for the week ended Aug. 2. Volatility related to the summer automobile plant shutdowns for retooling pushed claims to a 14-year low in July.
So, the economists forecast a rise to 305, 000 and now only do the claims come down, they plummet. 


However, note that last sentence: volatility related to summer automobile plant shutdowns....

It's been reported for the past several weeks now that the automobile manufacturers expected their best year in quite some time. I believe I read that July auto sales were the best in six years. Perhaps the auto manufacturers did not shut down as much as expected, to keep up with new demand. Just a thought. 
Most of that volatility has worked its way through the data. The four-week average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 4,000 to 293,500, the lowest level since February 2006.