Tuesday, September 9, 2014

A Month Ago, EIA Predicted US Crude Oil Output To Slow To 800K In 2015; Now, One Month Later, EIA Predicts The Growth To Be 1 Million BOPD

This is for Jane Nielson:

Rigzone is reporting:
The U.S. government on Tuesday jacked up its forecast for oil production next year by 250,000 barrels per day (bpd) as the boom in shale oil drilling continues to confound expectations of slower growth.
The U.S. Energy Information Administration now expects domestic output to rise to 9.53 million bpd, growing by around 1 million bpd for a third consecutive year, according to its latest monthly short-term energy outlook. A month ago the EIA had predicted output growth would slow in 2015 to 800,000 bpd.
The U.S. shale boom has allowed producers to unlock thousands of barrels of reserves, putting the United States on course to become the largest producer of oil globally, which would dramatically reduce its dependence on imports. 
The EIA also raised forecasts for 2014 U.S. output to 8.53 million bpd from the previous estimate of 8.46 million bpd. It said U.S. growth would account for 91 percent of the 1.3 million bpd rise in global oil output next year.
Meanwhile, the Keystone XL is not going to be approved. Trust me.

***************************
An "aha" moment

I'm in my Inside Llewn Davis phase. As I wrote elsewhere regarding this movie:
I like the Coen Brothers but delayed seeing this movie for quite some time after seeing the trailer. I didn't think I would care for it. I didn't. Not the first time, or the second time. But then I started to really "see" the movie the third time I watched it. Now, each time I watch it, the movie gets better. It's all about the dialogue and the music.

When one sees the road trip with John Goodman, one starts to realize this could be a sequel to O Brother, Where Art Thou.  The music, I think, is better than that in "O Brother"; but unlike "O Brother," there is no plot per se. It's all about the journey, not the destination. [By the way, that's why I enjoy following the Bakken; it's all about the journey, not the destination.]

All I can say is this: if you watch it and don't like it, watch it a second time. If you still don't like it, watch it a third time, really late at night when you have no other distractions, and watch it from the perspective of a film critic. By the third viewing, you will be hooked, and will watch it again.
Tonight, my fourth viewing, I caught something (so obvious) that I had not seen before. When they arrive in Chicago, they stop at a roadside restaurant, of the Fred Harvey chain. I recall seeing the scene in an earlier viewing, but it did not "connect." This time it did.

This past summer we spent several days in the Grand Canyon area, and in the process came to learn of Mary Colter, the architect who worked for both the Santa Fe Railway and the Fred Harvey Company simultaneously, designing restaurants and hotels along the Santa Fe Railway route from Chicago to Los Angeles.

This is one of those rare "aha" moments when watching period pieces.

[By the way, the Coen Brothers do a great job showing the hypnotic effect of driving long distances in snow storms. They grew up in a suburb of Minneapolis and spent their coming-of-age years in the northeast, so they had plenty of driving-in-the-snow experiences.]

Results Of The August 2014, Oil And Gas Lease Sales -- North Dakota; Williams County Minerals At $9,500/Acre

I can't remember if I posted this data. If I did, I did not link it. So here it is (again?):

Billings County:
  • mostly small bonuses
  • the high appears to have been four 80-acre tracts for $725/acre, Empire Oil Company
McKenzie County:
  • sales were, of course, for a higher bonus
  • two 80-acre tracts for $1,400/acre
  • an 80-acre tract for $1,500/acre
  • two very small tracts for $2,600/acre
  • Ancient Sunlight Resources paid $6,100/acre for four 160-acre tracts
Mercer County:
  • all tracts for less than $10/acre; most for $1 - $3/acre
Stark County:
  • Herco paid $900 and $950/acre for four 80-acre tracts; 
  • mostly in the $100 to $200/acre range
Towner County:
  • lots of tracks, all for $1/acre
Williams County:
  • two tracts only; Liberty Resources paid $9,500/acre for an 80-acre tract, and a 20-acre tract

Halcon With Five "High-IP" Wells; Hess To Report A Nice Well Wednesday -- September 9, 2014; Most Wells Will Go To DRL Status

Wells coming off the confidential list Wednesday:
  • 23749, drl, CLR, Rochester 5-24H1, North Tobacco Garden, no production data,
  • 26262, 1,055, Emerald, Caper 3-15-22H, Boxcar Butte, t3/14; cum 39K 7/14;
  • 27202, drl, Petro-Hunt, Watterud 160-95-11D-2-1H, Stoneview, no production data,
  • 27243, 95, Denbury, CHSU 11-35NH 15, Cedar Hills, a Red River well, t4/14; cum 8K 7/14;
  • 27555, drl, MRO, Keith 44-31TFH, Reunion Bay, no production data,
  • 27693, 1,048, Hess, HA-Swenson-152-95-1819H-6, Hawkeye, t6/14; cum 40K 7/14;
Active rigs:


9/9/201409/09/201309/09/201209/09/201109/09/2010
Active Rigs198185191199143

Wells coming off confidential list today were posted earlier; see sidebar at the right.

Sixteen (16) new permits --
  • Operators: Whiting (4), QEP (4), Enduro (4), Hess, (3), CLR
    Fields: Dollar Joe (Williams), Newbug (Bottineau), Sanish (Mountrail), Ranch Creek (McKenzie), Grail (McKenzie), Capa (Williams)
  • Comments:
Seven (7) producing wells completed:
  • 26069, 1,704, BR, Big Jon 11-2MBH-ULW, Camel Butte, 4 sections, t8/14; cum --
  • 20100, 435, Enerplus, Yellowbird 6A-1H, Mandaree, 1 section, t7/14; cum --
  • 25596, 2,706, HRC, Fort Berthold 147-94-2B-11-5H, McGregory Buttes, t8/14; cum 1K 7/14;
  • 25597, 2,750, HRC, Fort Berthold 147-94-2B-11-4H, McGregory Buttes, t8/14; cum 1K 7/14;
  • 26295, 2,569, HRC, Fort Berthold 148-94-35C-26-3H, McGregory Buttes, t8/14; cum 7K 7/14;
  • 26294, 2,567, HRC, Fort Berthold 148-94-35C-26-4H, McGregory Buttes, t8/14; cum 6K 7/14;
  • 26293, 2,769, HRC, Fort Berthold 148-94-35C-26-5H, McGregory Buttes, t8/14; cum 7K 7/14; 
Dry hole:
  • 26117, dry, HRC, Pasternak Trsut 157-100-19C-18-3H,  
*******************************
The Wall Street Journal

Almost two-thirds of Americans back attacking militants; the President probably needs more time to think about it.

Second story on front page: Apple. First impressions of the iPhone. Can Apple solve riddle of mobile payments? Heard on the Street: new iPhones are more important to Apple's bottom line, but a lot of credibility is riding on its smartwatch.

Religious groups continue with lawsuit on contraception rules in ObamaCare -- the first clear sign the administration's latest compromise won't end end the legal battle over this issue.

Senators criticize militarization of local police departments. City of Ferguson weighs changes in wake of fatal police shooting. Oh, this should be good. Disarm the police.

Another poll suggests Democrats might lose the Senate. My hunch: won't happen.

Russia urges Kiev to talk with rebels.

The retail store Target to focus on two or three sectors.

Wow, NFL blackouts may be a thing of the past (TV blackouts if low ticket sales).

Trump Entertainment Resorts files for bankruptcy.

McDonald's sales woes continue -- August sales fell almost 4%, month-over-month.

But, Krispy Kreme profit rises 22% on sales growth.

Hmmmm...Verizon and Sprint quick to offer iPhone 6 deals. Sprint: $50/month - unlimited.

This should be fun to watch: university activists want schools to divest portfolios of fossil fuel companies. Oh, why not?

Americans don't want US government bonds. For the fourth-straight session, Treasury bonds pulled back this week, with the yield on the benchmark 10-year note climbing to the highes level in more than a month: about 2.4%. Oh, goodie.

Op-ed: Obama's return to Iraq reveals how wrong he has been about the world. Dick Cheney is still right.

Op-ed: Obama's student loan blowout -- a new study shows how grad schools will soak taxpayers for years.

The Los Angeles Times

President Obama talks Islamic State strategy with House, Senate leaders; he needs more time to think about this, it appears.

Iowa ex-city manager opens fire at meeting, killed with own gun. I don't know the laws about guns in Iowa, but I quit looking when I found this: the state of Iowa grants gun permits to the blind.

DNA ties Ashkenazi Jews to group of just 330 people from the Middle Ages.
“Ashkenaz” in Hebrew refers to Germany, and Ashkenazi Jews are those who originated in Eastern Europe. (Sephardic Jews, by contrast, are from the areas around the Mediterranean Sea, including Portugal, Spain, the Middle East and Northern Africa.) About 80% of modern Jews have Ashkenazi ancestry, according to the Hebrew University of Jerusalem. Albert Einstein was an Ashkenazi Jew, as were Gertrude Stein and Carl Sagan. Steven Spielberg and Scarlett Johansson are also Ashkenazi Jews, along with three current members of the U.S. Supreme Court (Ruth Bader Ginsburg, Stephen Breyer and Elena Kagan).
*******************************
They Said It, Not Me
Dear Mr General Secretary: If you really wish to cut back on CO2 emissions, then you should NOT jet around the globe in your UN jet to supposedly see climate change with your own eyes.
Perhaps you have heard that the Pacific Atolls are living corals that are growing along with sea level rise.
The glaciers already melted before, 1000 years ago during the Medieval Warm Period when it was as warm as today. Currently the Sahel desert regions are not expanding as you claim, rather they are becoming greener. Moreover the rainforests of Brazil are threatened foremost by deforestation thanks to palm oil and biofuels. That is something to be really worried about, and not about climate change.
As opposed to the UN General Secretary, many world leaders have obviously realized that the science is overheated. An increasing number of scientists are distancing themselves explicitly from the catastrophe mindset. After 16 years of no global warming, the basis for trust between policymaking and the IPCC scientists is sustainably disturbed. We believed you and you’ve disappointed us, the scathed politicians bemoan behind closed doors.
So it is little surprise that hardly anyone has the desire to attend the Climate Summit Circus. Already in May, 2014, German Chancellor Angela Merkel respectfully declined - she had other more important appointments. What could they possibly be about? Even today there is still no entry in Merkel’s Online appointment book for the 23rd of September. Perhaps an appointment with the hairdresser that can no longer be put off? Crochet evening with good friends? Let’s keep it a surprise for now.
Meanwhile, forecast for up to 6 inches of snow in the Black Hills over the next day or so.

***************************
Inside Llewyn Davis

The movie opens, "The Gaslight Cafe, 1961."

From wiki, Bob Dylan:
In May 1960, Dylan dropped out of college at the end of his first year. In January 1961, he traveled to New York City, hoping to perform there and visit his musical idol Woody Guthrie who was seriously ill with Huntington's disease in Greystone Park Psychiatric Hospital. 

From February 1961, Dylan played at various clubs around Greenwich Village. He befriended and picked up material from many folk singers in the Village scene, including Dave Van Ronk, Fred Neil, Odetta, the New Lost City Ramblers, and Irish musicians The Clancy Brothers and Tommy Makem.

Active Rigs In North Dakota -- 198 -- September 9, 2014; How The Bakken Impacts US Supply Chains; The Bakken Experiment Saved The US Rust Belt

Rigs

The race is on!

Today: 198 active rigs in North Dakota. On this date, it was all the way back to 2011 where we had more active rigs -- 199. Add the two Oasis rigs in Montana and "we" are up to 200 active rigs "almost" in North Dakota. I assume Slawson and CLR also have some Montana rigs, but the "official" race is "active rigs in North Dakota as reported by the NDIC."

Active rigs:


9/9/201409/09/201309/09/201209/09/201109/09/2010
Active Rigs198185191199143

**************************
The Retail Boom Begins

From KXNews:
"We have an almost unimaginable opportunity right here. I would challenge you to find any community in the continental united states of 35,000 people which is two hours away, not in traffic but at highway speed to the nearest significant retail development."
Actually, the catchment area far exceeds 35,000 people, and the driving time, door-to-door certainly exceeds two hours.

************************
Natural Gas and the Road To New England

From the DNR message board today:
I looked at an interesting report on natural gas supply/demand to 2020.
New England supply has gone from 5bcf/d in 2012 to projected 32bcf/d in 2020. Pipes don't catch up with supply until 2017.
But project 90bcf/d supply in 2020 and 5bcf/d potential shortage.
The rest of the country demand is growing 3x the supply growth in the New England.
LNG, exports to Mexico and Canada, power generation: $100 billion of export, chemical projects on the Gulf Coast to 2020, 85k jobs building the facilities.
The natural gas infrastructure companies should do well for a few more years. And the oil infrastructure companies as well.
The US gas discount to global prices is 1/3 of the trade deficit.
I still think this revolution is as big as the social media, Apple/smart phone phenom and maybe longer-lasting. I still think Williams might be one of the easiest bets on this growth, and it yields around 4% now. EPD, KMI, ETE will be continue to be winners as well.
**************************
The Eagle Ford / Eaglebine

Located just east of the prolific Eagle Ford shale, production from the Eaglebine play has yet to take off. In good part that is because takeaway capacity is currently limited to trucks. All that is about to change with the new 60 Mb/d Sunoco Logistics Eaglebine Express pipeline due online by the end of 2014. And last month two midstream companies announced competing pipeline projects that would add as much as another 400 Mb/d of takeaway capacity in 2016. Today we review recent developments in the Eaglebine basin.
The Eagle Ford, a rectangular box running southwest to northeast, right through, on the south side of Bexar County. The Eaglebine continues, as another rectangular box, to the northeast of Eagle Ford.A And then the Woodbine sand play takes a 90-degree turn, a rectangular box running northwest to southeast, it's southern quarter underlying the northern quarter of the Eaglebine. 

*******************************
How The Bakken Boom Impacts US Supply Chains

This is an incredible essay written by Jason Craig over at the C. H. Robinson blog sent to me by a reader. Thank you. It begins:
For those of you on the coasts (all three of them—East, West, and Gulf) you may be vaguely aware of the Bakken oil boom in North Dakota.
For those of us in neighboring states, North Dakota is the source of a clich├ęd “giant sucking sound,” the likes of which this generation has never experienced. And it has all happened incredibly quickly.
The Ninth District Federal Reserve Bank (FRB) has been diligently monitoring and quantifying this boom. They recently calculated that North Dakota just topped an average output of 1 million barrels of oil per day. Typically, you can get 19 gallons of gasoline out of a barrel of oil. Therefore if that oil was turned into gas, North Dakota alone would produce 19 million gallons of gas per day!
The astonishing part of this situation is how quickly it came about. The Bakken oil boom is a little more than four years old. Check out the amazing chart [at the linked article] from the FRB that measures the daily output of oil over the last ten years.
But it's not just the US supply chains, but how the entire "Bakken experiment" led the American energy revolution. It didn't just happen. 

 ****************************
The Bakken Spurs Development In The Rust Belt

I've talked about this before, how the Bakken has far-reaching effects on the rest of the US. Nice to see this being reported in The New York Times. President Obama is becoming more vocal about the role he played in the US energy revolution [I think someone said he wrote a paper on the feasibility of combining horizontal drilling with fracturing while he was attending Harvard.]  My hunch is that the stories in The New York Times don't appear by coincidence or randomly. President Obama will still give his "global warming" speeches but such speeches no longer matter. That train left the station a long time ago, some time last autumn (2013). The New York Times is reporting:
YOUNGSTOWN, Ohio — Waist-high weeds and a crumbling old Chevy mark the entrance to a rust-colored factory complex on the edge of town here, seemingly another monument to the passing of the golden age of American industry.
But deep inside the 14-acre site, the thwack-thwack-thwack sound of metal on metal tells a different story.
“We’re holding our own,” said Greg Hess, who is looking to hire draftsmen and machine operators at the company he runs, Youngstown Bending and Rolling. “I feel good that we saved this place from the wrecking ball.”
The turnaround is part of a transformation spreading across the heartland of the nation, driven by a surge in domestic oil and gas production that is changing the economic calculus for old industries and downtrodden cities alike.
Here in Ohio, in an arc stretching south from Youngstown past Canton and into the rural parts of the state where much of the natural gas is being drawn from shale deep underground, entire sectors like manufacturing, hotels, real estate and even law are being reshaped. A series of recent economic indicators, including factory hiring, shows momentum building nationally in the manufacturing sector.
And no earthquakes in Ohio reported this past week.

The usual bone for the environmentalists:
The environmental consequences of the American energy boom and the unconventional drilling techniques that have made it possible are being fiercely debated nationwide. New York officials have imposed a moratorium on hydraulic fracturing, or fracking, because of concerns that the fluids injected into the shale to free oil and natural gas deposits might contaminate the local drinking water.
Although that danger worries environmentalists here as well, there has been much less opposition because residents are so desperate for the kind of economic growth that fracking can bring, whatever the risks.
Vallourec, a French industrial giant, recently completed a million-square-foot plant in Youngstown to make steel pipes for the energy industry, the first mill of its kind to open here in 50 years. The facility, which cost $1.1 billion to build, will be joined next year by a smaller $80 million Vallourec plant making pipe connectors.
But politically, even Mr Obama can read these tea leaves:
Ohio’s unemployment rate in July was 5.7 percent, well below the national average of 6.1 percent. That’s a sharp reversal of the situation four years ago, when unemployment in Ohio hit 10.6 percent, significantly above the country’s overall jobless rate at the time, as manufacturers here and elsewhere hemorrhaged jobs. In the Youngstown area, the jobless rate in July was 6.7 percent, compared with 13.3 percent in early 2010.
Ban fracking at your own political risk. 

********************************
The Obama Presidency: Fail

I have posted this a number of times. Unless something incredibly unforeseen happens in the next 18 months, President Obama will go down as a footnote in American history fifty years from now. I think he will get favorable press for the next ten years, but historians writing about the American presidency twenty years from now will have little to say about President Obama. I think he realizes that, and that explains all the golfing. It will be a toss-up between President Obama and President Carter among the least distinguished modern presidents. Obama will get the nod for the impact he had on race relations.

It's one thing for me to say that, and it's one thing for Fox News to say that, but when the AP is reporting it, it speaks volumes. The AP, yes, the AP, is reporting:
President Barack Obama's legacy isn't looking so hot — at least according to what respondents told a Washington Post-ABC News poll released Tuesday morning.
The poll found a 52% majority of Americans believe Obama's presidency is, on a balance, a "failure," compared to 42% who believe it to be a success. Those on the "failure" side were far more likely to have said they "strongly" held that belief.
A full 56% said they disapproved of the way he has been handling international affairs, while 54% disapprove of his handling of the economy. Overall, 65% said the country is on the "wrong track."
That's really all you have to read of that news article. There's something much, much better to read. Whatever you think about the president, especially if you are among his cult followers, I challenge you to read an op-ed in today's Wall Street Journal on Alexander the Great, 2014
What does Vladimir Putin want? Not money, power, territory, or revenge. The Russian strongman is after bigger game
Bret Stephens has it exactly right. If you disagree, then you are back to money, power, territory, or revenge.

***********************
God Has A Sense Of Humor
400 PPM

It's not even October yet. Bloomberg is reporting:
Cold is about to sweep into the northern U.S. Plains from Canada and drop temperatures to winter-like levels.
Readings in Calgary were forecast to drop to 27 Fahrenheit (minus 3 Celsius) later this week and snow was flying there yesterday, according to Environment Canada.

That will be a welcome change for energy traders after a mild summer, although it’s just a glimpse of what may come.
While the temperatures will drop, they won’t be falling too far where it counts.

******************************
For Investors Only

Trading at new highs today: EEP, EPD, EW, GPRO, MSFT, NFLX, PAA, RAIL, TRP, UAL, YHOO.

Regular readers know my love for McDonald's when traveling because of their free wi-fi. But they have their challenges. Bloomberg is reporting: the world’s largest restaurant chain posted the worst same-store sales decline in more than a decade, hurt by sluggish demand in the U.S. and a health scare involving a Chinese supplier. I can't talk to the the health scare involving a Chinese supplier, but with regard to US store sales, McDonald's seems to be a lot like Obama: taking its base for granted, and throwing everybody under the bus. Cleanliness? Pretty bad across the country. Friendliness of the staff? Really quite good in fly-over country but in the busy metropolitan areas they might be friendly but English is the not the first language of the front-line employees. I can (grudgingly) put with that, but the fact that McDonald's, in general, does everything possible to discourage the use of electric outlets, pretty much really, really turns me off. If their wi-fi wasn't so dependable, I would go elsewhere. I don't think McDonald's gets it. 

Mike Filloon With A Bakken Update, September 9, 2014

Before we get started, a quick read on the economic boom in Williston and the Bakken, being reported by KXNews:
Business in the Bakken is strong as ever.
That's according to investors and land developers at the Williston Economic Development Summit.
Commercial Real Estate Investor Steve Michel says that the competition bar has been raised and new construction is being built to higher quality.
He says he anticipates Williston needing 24,000 housing units by 2020.
He says the cost of construction is up and the need for hotels has plateaued, but more could be needed down the road.
(Steve Michel, Michel Commercial Real Estate) "The Bakken is happening and this train ain't stopping. Whatever you were a success at somewhere else, if you bring that same skill set here and get to know the territory, you'll likely have success here too."
Stropiq principal Terry Olin says retail is an obstacle Williston will need to over come to ensure a solid future.
When Stropiq arrived in Williston in 2013 to invest in retail, Olin says the investments didn't exist.
That's why he has introduced Williston Crossing --- a 200 acre shopping complex built north of Williston in conjunction with NorthStar Center.
These folks did their homework. At one time there was talk of "New Williston" on Indian Hill, south of the river, but it's obvious the developers looked at driving patterns and realized the better spot was north of Williston, between Minot and Boom City. 

It's possible that before it's over, we will see a huge development of McMansions overlooking the Missouri from Indian Hill, but right now the commercial action is north of Williston. The "Million Dollar Way" is clearly the "Billion Dollar Way."

***************************************

In less than two (2) hours the big Apple event. I slept in late this morning, getting off to a slow start. I will leave the house about 11:30 a.m. CDT to go to Starbucks to watch the Apple presentation streaming live. Should be a great day.

I see Mike Filloon has a "Bakken update" on a Permian IPO. Remember: my site is not an investment site. My "welcome" page explains why I pay attention to the investment side of things, however. Do not make any investment decisions based on what you read here or what you think you may have read here.

I like the fact that Mike continues to call it a "Bakken update," though it is very possible he will call it something else sooner than later. Whatever.

Today, Mike Filloon's article is on Parsley:
  • Parsley starts off with an excellent Q2, beating EPS by 56% and Revenues by over 6%.
  • Parsley's core northern Upton acreage is one of the better areas in the Midland Basin.
  • Its Reagan County acquisition has very thick Wolfcamp intervals providing possible upside to the number of wells/section.
  • The Midland Basin has 3000 to 4000 feet from 12 prospective intervals, which may be the best horizontal play in the U.S.
  • Parsley May Grow Faster Than All Of The Pure Play Midland Basin Small Caps. 
This on the Bakken:
The Bakken has seen more traffic than any other horizontal play in the U.S. and we still don't know how all of the intervals produce and downspace. Continental has been the most aggressive, drilling 32 wells per section. This means 8 wells in four intervals. Although this went well, it is very possible it will be able to downspace further. Newer completion designs frac heavy, close to the well bore. This means more fractures are created near the horizontal, which produce better than the older designs that fracced deep into the shale. This is important, as it allows wells to be placed closer, allowing for more wells per section. Geology also changes significantly from one section to the next, and these changes could mean significantly thicker shale. It could also mean a decreased thickness, which would be negative for the operator. Knowing the geology is very important, as acreage values move more on possible resource than almost any other variable.
And then this in the Midland area:
The Midland operators have a much higher valuation than those in the first table. This is significant, and consistent in the fact the market will pay more for Permian names. So why does the market pay more? Looking at well results, there are some very good wells in central Midland County. These wells are not as good as those targeting the middle Bakken in Parshall Field. Nor are they as good as the Eagle Ford wells in Gonzales County. Well costs are fairly low, but as low as in the Niobara. I am not saying that the Wolfcamp well results are not good, as we believe the economics are sound. We believe the answer has more to do with geology.
Well spacing and the total number of economic intervals are still not known in the Midland Basin. We do know that there are a large number of intervals, with exceptional thickness. If compared to the Bakken, we see it has four total intervals. This includes the middle Bakken and 3 Three Forks' benches. At its thickest point along the Nesson Anticline, the Bakken/Three Forks is roughly 375 feet thick. The 375 feet does include a fourth Three Forks bench, but there has been little to no development. To put this into perspective, there are 12 potential horizontal targets in the Midland Basin. Those potential targets have a total thickness of 3,000 to 4,000 feet. This is the reason that northern Midland Basin EV/EBITDA ratios are higher than the Bakken, Eagle Ford or Niobrara. It comes down prospective resource.

American Eagle's Most Recent Corporate Presentation -- September 9, 2014

A reader just sent me this link, noting that American Eagle appears ready to announce production from its four-well pad.

Data points from the presentation. Recall -- Richard (Dick) Findley is chairman; credited with discovering the Elm Coulee in the Williston basin in the 1990s (previously posted).

Net acreage
  • all (?) in northwest corner of Divide County (along Canadian border)
  • 46,800 net acres
  • 66% operated
  • 65% HBP
Divide County, Spyglass prospect
  • shallower; superior rock quality; relatively high EUR wells; high oil content 
  • shallower: lower drilling cost
  • superior rock quality: reduced proppant volumes; no ceramic required
  • 2.5 million lbs vs 4 - 5 million lbs (often with ceramic) in rest of Bakken
  • 89% oil
Three Forks Long Lateral
  • $6.4 million well completion costs (drill and complete)
  • EURs of 400,000
  • $50+ / boe cash margin 
  • 45% - 50% IRRs (exceeds the Bakken in general -- 36%)
Economics
  • 45%+ IRRs
  • 21-month paybacks (remember, EOG wants one-year paybacks)
  • $7.0 million per well
  • EURs: 393,000
Infrastructure
  • oil trucked to rail terminals
  • natural gas capture should go from 85% to 100% if plans work out with Tioga Hess plant
  • electrical infrastructure should reach Spyglass by end of 2014
Development plan
  • proved reserves: 7.6 years of inventory
  • undeveloped area: 8.5 years of inventory
The four-well pad of interest:
  • 27916, conf,  George 3-1-163-102
  • 28117, conf, AMZG, Crestone State 3-1-163-102,
  • 28430, conf, AMZG, Iver 3-1-163-102,
  • 28572, conf, AMZG, Massive State 3-1N-163-102,

Chinese Buying Super-Tankers -- Including The World's Largest Super-Tanker -- To Store "Cheap" Oil -- September 9, 2014

Updates


December 26, 2018:
December 13, 2014: FuelFix update It's the first link at that site.

November 22, 2014: update in BloombergBusinessweek
 
Original Post

Reuters is reporting:
A Chinese trading firm has booked the world's largest super-tanker to store crude at sea, adding to a growing flotilla of vessels used for floating storage as benchmark oil prices slip below $100 a barrel.
Industry sources said Chinese firm Unipec, the marketing arm of Beijing-backed oil giant Sinopec, has booked the 3.2-million-barrel TI Europe, one of just a handful of Ultra Large Crude Carriers (ULCC) still in service. It is listed as the world's largest ocean-going vessel by tonnage, and is as long as the Empire State building is tall at 380 metres.
The booking is the latest sign that soaring oil supplies and tumbling prices are prompting traders to store crude in volumes not seen since the financial crisis more than five years ago. Analysts estimate more than 50 million barrels of oil may already be placed in storage.
The move also demonstrates the growing clout of state-backed Chinese firms in international oil trading, with Unipec and PetroChina establishing sophisticated dealing desks in key hubs like London and Singapore in recent years. Unipec plans to ship cheap oil from Europe and store it off Singapore aboard the ULCC, trading sources said.
Previously reported, elsewhere: Russia increasing energy ties with China.

In the linked story above: "[China] plans to ship cheap oil from Europe and store it off Singapore aboard [these super-tankers].  "Cheap oil from Europe." I haven't heard that phrase in a long, long time. This has to have Saudi Arabia very, very worried. Just three days ago, September 5, 2014, I wrote: 
Saudi Arabia is in trouble:

  • US domestic oil pricing competitive with Saudi oil (fact)
  • Saudi running out of oil (controversial; not all agree)
  • Saudi resides in a bad, bad neighborhood (fact); building the "Great Wall of Saudi"
  • Saudi depends on US companies for technology (fact)
  • Saudi doesn't have much else going for it, other than oil (and camels) 
  • Saudi uses 25% (or more) of its own production for its own internal consumption
  • Saudi needs $100 oil to maintain lifestyle for the rich (and hijabbed)
I guess we can add "cheap oil from Europe" as a threat to Saudi's oil. This is getting very, very interesting. At one time there were "conspiracy theories" that Saudi was funding anti-fracking activities in the US. Looking at the list above, .....