Tuesday, November 11, 2014



November 21, 2014: I don't particularly "like" this story. I think it's way too early to say. But I will link it for archival purposes. Bloomberg is reporting:
OPEC was mistaken in thinking that U.S. shale oil production would be unprofitable once crude prices slipped below $90 a barrel, according to Pulitzer Prize-winning author Daniel Yergin.
Original Post

Reuters via Rigzone is reporting:
A subtle shift may be taking place within OPEC as it heads into its most important meeting in years, according to delegates with the producer group, as the discussion over whether it needs to cut output to defend oil revenues quietly intensifies.
OPEC's Secretary General Abudulla al-Badri this week urged markets not to panic over the drop in prices to a 4-year low near $81 a barrel, while Kuwait's oil minister said OPEC was unlikely to cut output when it meets on Nov. 27 in Vienna.
But privately, more delegates within the Organization of the Petroleum Exporting Countries are starting to talk of the need for the group to take some action, although they warn that reaching an agreement will not be easy.
That could involve reducing output by around 500,000 barrels per day (bpd), the amount OPEC is currently producing above its output target of 30 million bpd, according to its own figures. That could serve as a face-saving compromise between those willing and opposing a formal cut.
Mixed Messages

A big "thank you" to Don for noting the irony or mixed messages in this report. The AP is reporting:
While the Obama administration, Congress and the Coast Guard all say maintaining at least one heavy icebreaker is essential for maintaining U.S. security and science, no funding proposals have yet gained momentum to have a new heavy U.S. icebreaker built before age forces the Polar Star out of service, any time from five to 20 years from now.
Without active heavy icebreakers, "the control of the Arctic is in the hands of Russia," California U.S. Rep. John Garamendi, the ranking Democrat on the House subcommittee that oversees the Coast Guard and maritime affairs, said Tuesday.
The Arctic is estimated to hold more than 10 percent of the world's undiscovered oil reserves, nearly one third of undiscovered gas reserves, and remains a strategically critical area for the United States, congressional researchers said earlier this year.
Melting ice means traffic has increased in the Bering Strait, between Russia and Alaska, 118 percent since 2008. More melting means more vessels will be coming within harm's way of ice.
Meanwhile, researchers say study of the 1.5 million-year-old ice of the Antarctic is critical to tracking the Earth's increasingly variable weather and the course of man-made climate change.
Under the Obama administration, the US has pretty much written off the Arctic. 

94-Stage And 102-Stage Frack In The Bakken -- November 11, 2014; Record IP In The Bakken


April 7, 2015: these record fracks -- see Whiting's Flatland Federal wells
Original Post

More on this later. Press release:
The first well, in the Middle Bakken formation, was completed with 94 stages and was flowing 7,120 BOE/d on October 10, 2014, according to the operator. When the well was completed, it established a world record for number of stages in a single well.
Soon after, an offset well in the Upper Three Forks formation was completed with 104 stages. This well was flowing 7,824 BOE/d on October 11, 2014. This was a hybrid completion comprising 97 NCS GripShift cemented casing sleeves, with seven NCS BallShift cemented ball-drop sleeves in the lower section of the well. In both wells, all stages were successfully fractured.
Readers, I'm sure, will be interested to learn which wells these are.

NCS Energy earlier reported a 92-stage frack in the Eagle Ford.

For newbies, the standard is about 36 stages in the North Dakota Bakken, but we will still see 24-stage fracks, and anything above 40 stages gets my attention.  

Question #9 at my FAQ page, which will have to be updated: What is the record IP to date in the Williston Basin? 
More to follow: in 2Q14 earnings report, WLL: Tarpon Well Completed in 2nd Bench of Three Forks Flowing 6,071 boepd. Not a record in the Bakken -- see Statoil's #23992. But still, this is huge for the second bench.
Statoil reported an IP of 5,417 on September 26, 2013: #23992, Beaux 18-19 7H, Banks oil field. Based on its IP for natural gas (9,663), this well had an IP of 7,083 boepd
Statoil reported an IP of 5,387 on July 19, 2013: #23387, Beaux 18-19 4H, Banks oil field. This might be a new record (this is the IP for crude oil only).
The initial production of any well, self-reported by the producer, is becoming less meaningful over time. Having said that, it looks like the record IP for a Bakken well is now 5,200a Newfield well (July, 2011): 18691, 5,200, NFX, Wisness Federal 152-96-4-2H, Westberg, Bakken.
Statoil reported on July 10, 2013: 23385, 5,070, Beaux 18-19 6H, Banks, t6/13; cum -- ; 7 days to drill the lateral; I did not see completion data; 31 swell packers planned; 
Two earlier wells: a Whiting well which had an IP of 4,761 boepd: file #17612, 4,761 boepd IP, Whiting, Maki 11-27H, Mountrail County, Sanish field.  This is still current as of February 20, 2010. Since then, BEXP claims to have set a record with the Sorenson 29-32 1-H, #18654, with a 24-hour flowback of 5,133 bopd. However, the NDIC reported an IP of 2,944. BEXP also reported the Jack Cvancara 19-18 #1H (this site is down) in the Ross project area with a 24-hour flowback of 5,035.
New record in the Bakken, November 3, 2011The Tarpon Federal 21-4H is a Whiting  Petroleum operated well and had a 24-hour initial production (IP) rate of 7,009 barrels of oil equivalent (BOE), setting a new Williston Basin record for a Bakken well.
Whiting said this was a record TFS well at the time, early 2012, file #20526, Smith 34-12TFH, 2,446, 102K in first 4.5 months.

What We Will Be Talking About Wednesday -- November 11, 2014; Samson Resources Bakken Assets In Play?

Reuters is reporting:
KKR & Co,which led the acquisition of oil and gas producer Samson Resources Corp for $7.2 billion in 2011 and has already sold almost half its acreage to cope with lower energy prices, plans to sell its North Dakota Bakken oil deposit worth less than $500 million as part of an ongoing downsizing plan, according to people familiar with the matter.
KKR, one of the world's biggest private equity firms with $96 billion in assets under management, overpaid for Samson, and persistently low natural gas prices have hampered its ability to finance the company and added to its debt burden, the people said. KKR's plan was to shift Samson's assets from natural gas production more into oil and liquids.
A big "thank you" to a reader for sending me the link. The article above says assets are "worth less than $500 million." Compare with $650 million paid in this post.

Again, this is simply information for my interest. If this information is important to you, go to the source. Do not rely on this blog. The glob is for my benefit to help me better understand the Bakken; others are welcome to read what I post, but I certainly would not make any financial, investment, or relationship decisions based on what one reads here or what one thinks they may have read here. 

Deep-Sea Drilling
We Feel Your Pain

With slump in oil prices I put Venezuela at the top of the list for pain, followed by deep-sea drillers, and then Russia. Pundits suggest various OPEC counties are near the top of the list, but I don't think quite as high as other folks might think. Be that as it may, with regard to deep-sea drillers, Transocean says they will likely retire additional rigs:
Transocean Ltd, the owner of the world's largest offshore drilling fleet, said it was likely to retire additional rigs as the company continued to face pressure due to slowdown in an oversupplied rig market.
The drilling contractor's shares rose as much as 3 percent in early trading after the company reported better-than-expected quarterly results on Monday.
The recent slide in oil prices has weighed on demand for offshore services as oil and gas producers cut costs. Day rates for offshore rigs are expected to drop further over the next few quarters as oil companies shy away from expensive production.
Analysts believe the offshore industry will remain over-supplied for the next one to two years, as rigs ordered during the previous boom hit the sea.

Old news. I don't think Libya will be much of a factor either way for the next few years.

Strong Dollar

Fast Money: strong dollar could send oil to $30/bbl. If it gets to a $30/bbl, airline fares will be cut in half; gasoline will go to 80 cents/gallon. Happy days are around the corner. 

Other News

Wall Street Journal

I know this is an important issue, but it was interesting that it was the headline story in almost every newspaper today: Obama urges FCC to protect net neutrality. After one of the biggest midterm election upsets ever, the stuff going on in the Mideast, Putin, the Polar Vortex, and everything else, and the headline is Obama and net neutrality? 

ObamaCare enrollment for 2015 is going to tank

Doctors cash in on drug tests for seniors.

I think this is an under-reported story, the midterm election shellacking. Eisenhower was the last Republican president in the "old era." The sixties -- the decade of the 60s -- was an incredible decade for America. It is interesting "to see America in the 60's" at the JFK museum in Dallas -- the walk through the sixth floor and one is immersed / taken back to the 60's. JFK set in motion some programs / idealism that may be only now starting to burn out 50 years later. It will be interesting if 100 years from now, historians bookend the last 50 - 60 years with JFK at one end and Obama at the other end. When one looks at the red / blue map that will be in place on January 20, 2015, it is truly  remarkable. Then this article in the WSJ today: Democrats are short of fresh new faces. Not completely. They have Pocahontas. Who barely won when she ran, and now her state has a Republican governor. There won't be a man that looks like President Obama on the 2016 ballot for US president in 2016. A lot of dots to connect. 

US Postal Service hacked.

Recession? Depression? The Road to New England. Federal regulators effectively banned all cod fishing for the next six months and are considering cutting the amount of cod New England fishermen will be allowed to catch by as much as 75% next year. Something tells me New England has bigger things than global warming to worry about.

The note above about JFK and BHO bookending the last five decades -- now this: Detorit looks to re-engineer how city government works.

This is interesting: feds want states to produce plans to have "high-performing teachers regardless of race or income." Really?

The tea leaves suggest Israel and the West Bank are about to blow. Up. Again.

The US will delay delivery of F-16 fighter planes to Iraq, citing security reasons.

Russia-China deal could further hit natural-gas prices.
Having failed to reach common ground with Congress, "Obama seeks common ground with China."

I saw this while I was on vacation: ATT gets a foothold in Mexico.

Another "red line" in the sand over Iran's nuclear program blows away.

Rocket scientists will attempt the challenging task of trying to land a probe on the surface of a comet. Rumors that Harry Reid is on the probe are probably untrue.

GM will trim workers and production at two Michigan assembly plants; too many Cadillac ATS, CTS, Buick Verano, and Chevrolet Sonics. I need to get out more; I've never even heard of a Verano.

UAW expects VW to recognize the union as the bargaining unit at its Chattanooga manufacturing plant.

Boehner: does not want Federal government to mandate internet sales tax.

FCC / internet neutrality: Obama vs Congress? Non-gamers vs gamers?

The Los Angeles Times


A Note to the Granddaughters

I have a huge warm spot for the folks in Massachusetts, especially in the Boston area, and on Cape Cod. My comments about "the road to New England" have nothing to do with the Massachusetts folks; it's all about the decisions that their politicians are making.

My daughter and son-in-law, and two granddaughters, lived in a Boston suburb for four years; we were with them, in the Boston area, for much of that time.

I bicycled almost everywhere in the area, including much of Boston, year-round, including during the winter when streets were closed due to snow / snowplows.

We made several weekend trips to the tip of Cape Cod and fell in love with Provincetown. I sometimes think that Provincetown was my favorite spot, and I have pretty much lived and visited everywhere with some notable exceptions (but not many). In another life, in a life in which I was not married, or did not have children, I might live in Provincetown.

One of our favorite restaurants was the Morning Glory in Gloucester.  Both my wife and I loved it. We tried to get to Gloucester once a month.

I read two books on the Massachusetts lobster industry and that gives me an idea of the challenges in the cod fishing industry. Truly, very, very sad.

Ten Wells Come Off Confidential List Wednesday -- North Dakota; EOG To Report A Well With More Than 130,000 Bbls In Less Than Four Months

Hess, through Reuters via Bakken.com has optimistic report:
Oil and gas producer Hess Corp boosted its five-year production forecast on Monday, shrugging off the recent sharp drop in oil prices and touting development of shale formations and deepwater wells.
The bullish forecast – executives said production could increase by double digits through the decade – sets an ambitious target and shows the company’s confidence that oil prices will rebound from their more than 25 percent drop since June.
Executives said production in North Dakota’s Bakken shale formation, the jewel in the crown of the company’s onshore production, is especially resilient.
“Even at current prices or below, there’s still many areas for attractive investment in the Bakken,” Chief Executive John Hess said at the company’s annual investor day on Monday. “We’re positioned well to capitalize on growth” at low oil prices.
The company expects its production to grow 6 to 10 percent each year through 2018, an uptick from its previous forecast of 5 to 8 percent growth.
Active rigs:

Active Rigs191182191200158

Wells coming off confidential list Wednesday:
  • 26076, 688, OXY USA, Harry Stroh 3-8-5H-143-96, Fayette, t5/14; cum 76K 9/14;
  • 26459, 1,182, EOG, Wayzetta 44-0311H, Parshall, middle Bakken; 46 stages; 14 million lbs sand, t5/14; cum 148K 9/14;
  • 26749, 243, Murex, Carson Gregory 31-30H, Gooseneck, t7/14; cum 28K 9/14;
  • 27164, drl, Hess, GN-Norman-158-97-3427H-1, New Home, no production data,
  • 27184, 267, American Eagle, Annie 15-32-164-101, Colgan, t7/14; cum 12K 9/14;
  • 27191, 753, Fidelity, Bismarck State 34-27-28H, Stanley, t6/14; cum 77K 9/14;
  • 27771, drl, Hess, BL-Iverson B-155-95-0708H-3, Beaver Lodge, no production data,
  • 27949, 804, CLR, Annapolis 4-29H, Dollar Joe, t8/14; cum 32K 9/14;
  • 28024, 910, XTO, Bang 31X-29G, Murphy Creek, no production data,
  • 28117, 281, American Eagle, Crestone State 3-1N-163-102, Skjermo, t10/14; cum 2K 9/14;

26076, see above, OXY USA, Harry Stroh 3-8-5H-143-96, Fayette

DateOil RunsMCF Sold

26459, see above, EOG, Wayzetta 44-0311H, Parshall:

DateOil RunsMCF Sold

 27191, see above, Fidelity, Bismarck State 34-27-28H, Stanley:

DateOil RunsMCF Sold

 27949, see above, CLR, Annapolis 4-29H, Dollar Joe:

DateOil RunsMCF Sold

US Switching From Coal To Natural Gas -- Market Realist -- November 11, 2014

Still catching up. From the other day. Market Realist is reporting, part 4: why the switch to natural gas.

Part 3: why you should care about Obama's war on coal.

A seven-part series.

Miscellaneous Wind Stories

North Dakota presses on. This is kind of cool -- it's a great story for those who like this sort of stuff. The good news? Hillary, Barry, and Pocahantas will all say "they didn't build that." The Dickinson Press is reporting:
A North Dakota wind farm proposed in the migration route of an endangered bird has been revived after the developer unsuccessfully sued Xcel Energy for pulling out of the project in 2011.
San Diego-based EDF Renewable Energy first proposed the 100-turbine, 150-megawatt Merricourt Project in 2008.
The wind farm would straddle southeastern North Dakota’s McIntosh and Dickey counties and produce enough renewable energy to power 43,500 homes, the company said.
Xcel Energy Inc. signed a $380 million deal to purchase the wind power and assets from EDF, formerly known as enXco.
But Minneapolis-based Xcel terminated the contract after EDF failed to secure a site permit from state regulators by March 31, 2011. The delay was blamed in part on concerns raised by federal officials about the potential effects on the endangered whooping crane and threatened piping plover.
By the way, that "piping plover"? It's one of the poster birds for the environmentalists. Even the folks in Massachusetts are starting to say that if the piping plover cannot recover after 50 years of humans protecting it, it wasn't meant to be.

Obama's Failing Solar Farm
On Life Support
Feds Could Help

SBYNEWS is reporting:
Obama gave the California-based Ivanpah Solar Electric Power Plant $1.6 billion of your tax dollars already claiming that it would bring a thousand jobs and power to millions of people. 
But the plant is still failing financially and now is demanding another $539 million taxpayer bailout to keep it afloat. 
Like all of Obama’s so-called “green energy” projects, this is a massive failure and a giant waste of tax money. 
After already receiving a controversial $1.6 billion construction loan from U.S. taxpayers, the wealthy investors of a California solar power plant now want a $539 million federal grant to pay off their federal loan
"Wealthy" investors? I hope they are wealthy; that's what investing is all about. And if the federal government is offering grants, they should take it.

I'm sort of a spectator in all of this, but I do pay high electric rates in Texas through NRG:
The Ivanpah solar electric generating plant is owned by Google and renewable energy giant NRG, which are responsible for paying off their federal loan. If approved by the U.S. Treasury, the two corporations will not use their own money, but taxpayer cash to pay off 30 percent of the cost of their plant, but taxpayers will receive none of the millions in revenues the plant will generate over the next 30 years. 
In the big scheme of things, it matters not to me.  But if the grant helps hold down my utility costs, I say, "go for it."

Halcon Will Cut Five (5) Rigs Originally Planned For 2015; Seven (7) New Permits -- North Dakota

The IPs of the wells coming off the confidential list over the weekend and Monday were posted earlier; the IPs for wells coming off confidential today will be reported tomorrow, I assume. 

This is from yesterday's daily activity report; I'm not sure when it was posted, but it was not posted last night, or if it was, I missed it (but I don't think so). There will be no daily activity report for today. Yesterday:

Seven (7) new permits:
  • Operators: Murex (4), Statoil (2), Triangle
  • Fields: Sandrocks (McKenzie), Cow Creek (Williams), Todd (Williams), Elk (McKenzie)
  • Comments:
Active rigs:

Active Rigs191182191200158

RBN Energy: something bad about to happen. Supply and demand, natural gas.

Global Warming
Early November, 2014, Polar Vortex (Unnamed)
November 12, 2014 -- 

Minnesota shatters snow record from 1898 -- predicted by warmists -- global warming will result in more snow
Arctic blasts pummels USA -- unexplained; stuff happens
Only six (6) states not expecting snow in coming week (and one of them may be Hawaii)
Winter still a month away
Twelve (12) years since Dallas has had two consecutive days so cold 
Wyoming wind chill warning: 35 below 
Central Ontario snowfall could reach 20 inches 
Cold to freeze East 
Shattering snowfall records in Minnesota, Wisconsin, Michigan -- predicted by warmists -- global warming will result in more snow
All 50 states brace for freezing temperatures -- November 13, 2014
Cold freeze moves east -- November 13, 2014
Denver cold shatters two records, including low temp record set in 1882 -- November 13, 2014
Coldest November in decades -- November 14, 2014
Michigan town receives one month's snow -- in one day --November 14, 2014
Storm dumps four (4) feet of snow on Wisconsin town -- November 14, 2014
Ice on Lake Superior -- almost a month early -- November 16, 2014
Harsh cold to set records in south, freeze northeast -- November 16, 2014

Warren Buffett

BRK-B traded at all-time highs today; closed slightly down. UNP traded at all-time highs -- look at the chart -- dividends up from 13 cents/share to $1.00/share (based on post 2-1 split). Memo to self: send another thank-you note to Minnesota, Iowa, and Nebraska for stopping the pipelines, and encouraging more and more rail.

I pointed out to my brother-in-law visiting from California all the 110-tank unit trains in the Dallas-Ft Worth area carrying Permian and Eagle Ford oil here in north Texas.

The Dow itself was flat (up slightly), continuing to trade at/near all-time highs. Fifth straight record high, according to radio news.

Remember, this is not an investment site. Do not make any investment, financial, or relationship decisions based on what you read here or what you think you may have read here. Make no travel plans based on what you read here. I post quickly and frequently; typographical and factual errors are likely. If this information is important to you, go to the source.

This is kind of cool. Comparing AAPL vs UNP over the past two years, AAPL has shown a 44% appreciation in share price vs an astounding 99% appreciation in share price of UNP (pretty much doubling) over the past two years.  

I guess this came out yesterday: Halcon resources with a big miss, 3 cents vs 6 cents forecast. Press release.  Halcon operates 8 rigs acorss its holdings; Halcon will cut five rigs originally planned for 2015. Currently operating 3 rigs in the Bakken. Snapshot here.

A Note to the Granddaughters
Veterans Day

Our local school district in Texas does not "take" the Veterans Day holiday. The students show up for school and most of the day is spent studying Veterans Day. The program at our school included a one-hour event honoring local veterans (parents and grandparents of children attending the school), followed by tea and coffee in the lunchroom. The day started out with the Pledge of Allegiance to the United States AND the pledge to HONOR the state flag of Texas.

Each of the veterans, there were about 35, were given time at the mike to introduce themselves and say where they served. It was quite touching to hear from the vets who served as rangers, or airborne, search and rescue, or forward controllers in Vietnam. A few young vets from Iraq and Afghanistan were there. I crossed paths with an SR-71 pilot; we were both stationed at Mildenhall Air Base in the late 80's. 1980's. 

Yesterday, I visited the JKF site in Dallas, Dealy Square -- the convergence (memories of Vietnam today; memories of JFK yesterday) was quite striking.

And regular readers know where we are going with this. The program ended with the students singing this song and the veterans standing when their song was sung:

Military Salute to the Troops, Gene Simmons