Thursday, February 5, 2015

Weatherford To Cut 5,000 Jobs -- February 5, 2015; 2015: The Year Of Cutbacks

Reuters at Rigzone is reporting:
Weatherford International Plc plans to cut 5,000 jobs, or about 9 percent of its workforce, by the end of the first quarter as the oil services company tries to save costs amid sinking oil prices and budget cuts. The job cuts will focus on both operating and support positions and a majority of the reductions will be in the Western Hemisphere, the company said in a statement.
Weatherford, which currently employs about 56,000 people across the world, expects the job cuts to result in annualized savings of over $350 million.
Add the Weatherford cuts to earlier announced cuts:
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The Midnight Fugue Begins

All My Loving, Paul McCartney

$200 Oil -- February 5, 2015

The other day a Saudi spokesman suggested "we" could see $200 oil. I didn't link the article; I'm not even sure I read it. I don't spend much time reading what folks predict for oil prices; it seems to be a fool's errand, as they say.

Having said that, add this to the dots to connect when thinking about $200 oil (I might come back to this and write a bit more on what I wrote a reader with regard to $200 oil but this will have to do for now; I'm behind in all the news stories that start showing up after the midnight hour.

Reuters via Rigzone is reporting: Oil Majors Fail To Find Reserves To Counter Falling Output.
Big oil companies had a poor record of finding and producing oil and gas last year, according to figures out in the past week – and big cuts in spending in response to falling crude prices could undermine their plans to turn that around. Four of the world's six biggest oil firms by market value – Royal Dutch Shell, Chevron, BP and ConocoPhillips – released provisional figures showing together they replaced only two-thirds of the hydrocarbons they extracted in 2014 with new reserves.
Combined, those four and industry leader Exxon Mobil posted an average drop in oil and gas production of 3.25 percent last year. All predict their output will increase and new reserves will be added in coming years. But the 2014 results echo longer-term trends.
Then this:
The latest collapse has seen prices halve since June. In recent months, the biggest oil groups on both sides of the Atlantic have announced sharp cuts in capital expenditure (capex) out as far as 2017, as they seek to preserve cash to maintain dividends. Investors have largely welcomed the focus on dividends. But some say the cuts could come back to bite the industry. 
Much more at the link.

The Clock Is Ticking .... February 5, 2015

Reuters via Rigzone is reporting:
Tumbling crude oil prices have started the clock ticking on a potential $5.3 billion, two-year tax break for North Dakota's oil producers.
The countdown, which started this week, holds the promise of a silver lining of sorts for oil producers and their contractors in the No. 2 oil-producing U.S. state, many of whom have struggled with a roughly 50 percent drop in oil prices since last June.
North Dakota officials designed the tax waiver in 1987 to encourage drilling. Here's how it works:
North Dakota waives its 6.5 percent oil extraction tax if the monthly price of benchmark West Texas Intermediate (WTI) crude at the Cushing, Oklahoma, transport hub falls below $52.59 per barrel for five consecutive months.
For January 2015, the average price was $47.98 per barrel. "Since January prices were well below the required price for the large trigger, we are now in our first month," said Ryan Rauschenberger, North Dakota's tax commissioner.
The average monthly price has to be below the $52.59 level for each of the next four months. If it's off even one month, the clock resets.
The tax returns if the average price exceeds that level for a subsequent five consecutive months.
How much difference does the extraction tax make?
Rauschenberger estimates North Dakota will take in $2.9 billion in oil taxes in the next two years without the oil extraction tax. With the tax, the projection is $8.2 billion.
But already:
A mild incentive just took effect this week for new wells. The state will cut the oil extraction tax rate to 2 percent from 6.5 percent on the first 75,000 barrels of oil produced (or oil worth up to $4.5 million) on wells drilled between now and June, or until the oil price hits $72.50 per barrel. This short-term cut was designed to occur more frequently and offer a milder incentive than the larger, longer-lasting cut.

Update On EOG Well Permitted For Gas Injection (#16986); Update On EOG Well Approved For Water Injection (#17170) -- February 5, 2015

Updates

Water flooding:
  •  16986, INJP/1,347, EOG, Parshall 20-03H, s1/08; t 5/08; AL; cum 275K 11/17; short horizontal. 
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN9-20155222248138108824
BAKKEN8-201531171416931001957531271
BAKKEN7-201531173017221110967660154
BAKKEN6-201530168117031136896641105
BAKKEN5-201531193619191376100476782
BAKKEN4-2015261566156013207626309
BAKKEN3-201531196219691773970471344
BAKKEN2-20152817851814190292476519
BAKKEN1-20153114731466170088764785
 
  • 17170, 667, EOG, Wayzetta 4-16H, Parshall, Bakken, s4/08; t7/08; cum 487K 11/17;-- pretty impressive -- now on pump; > 300K after first 3 years; a short lateral; 6 frack stages (?);
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN9-201530244123533961883160694
BAKKEN8-2015312273237826720051393422
BAKKEN7-20153026482557500192317407
BAKKEN6-2015302569256763419611674103
BAKKEN5-20153127692771308201518250
BAKKEN4-201530265427384641576171375
BAKKEN3-20153131213033387167501485
BAKKEN2-2015282839278853816071122313
BAKKEN1-20153134253496481157296441

Original Post

This is an update of a well previously approved for water injection. In June, 2014, EOG requested approval for gas injection of this well.
  • 16986, PWI/1,347, EOG, Parshall 20-03H, s1/08; t 5/08; AL; cum 258K 9/16; short horizontal.
Production profile since August, 2011:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN12-201441000900
BAKKEN11-201483743492411741590
BAKKEN10-2014261914212118571313117024
BAKKEN9-20142725692399136520996571314
BAKKEN8-20140000000
BAKKEN7-20140000000
BAKKEN6-20142513971561348311300
BAKKEN5-2014529401051167216560
BAKKEN4-20144180891600
BAKKEN3-2014125908516000
BAKKEN4-2012130005800
BAKKEN3-20123018001843219233121860
BAKKEN2-20122920542136245257124260
BAKKEN1-20123126452583301293227770
BAKKEN12-20113122782251298204318880
BAKKEN11-20111912361260275122811400
BAKKEN10-2011312586261729924132127131
BAKKEN9-201130187718842401662777735
BAKKEN8-201131193219292441693726812

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

Completely unrelated, this is the production profile of an EOG well that was permitted for water injection in February, 2012.
  • 17170, PWI/667, EOG, Wayzeta 4-16H, Parshall, Bakken, s4/08; t7/08; F; cum 461K 9/16; -- pretty impressive -- no pump; > 300K after first 3 years; a short lateral; 6 frack stages (?);
Production profile only since November, 2011, a couple months before water injection began. Note, also the jump in production in January, 2014. The well file did not suggest the reason.

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN12-20142832873216507941409364
BAKKEN11-201430376637616301384968232
BAKKEN10-201431407346685761486326970
BAKKEN9-20143042143695435155961369
BAKKEN8-20143146154605821169741540
BAKKEN7-2014152073204859578210704
BAKKEN6-2014305842617420232294432101
BAKKEN5-20143159785615284024611754552
BAKKEN4-20143058155841334325362041345
BAKKEN3-2014315590556438282589241818
BAKKEN2-20142861726183595426802420121
BAKKEN1-2014317058708983481894878861
BAKKEN12-201328419898968652
BAKKEN11-20130000000
BAKKEN10-20130000000
BAKKEN9-201315268725461544975584319
BAKKEN8-201387987751028476209230
BAKKEN7-201316132112372824343540
BAKKEN6-201326213623617228797510
BAKKEN5-201329208218409529177780
BAKKEN4-20133019742031121025362041345
BAKKEN3-2013311869183216208166610
BAKKEN2-2013281475158621486595190
BAKKEN1-2013311558137046375694160
BAKKEN12-20127370121445120
BAKKEN11-20120000000
BAKKEN10-20129768919245370181144
BAKKEN9-20123024622439941119210393
BAKKEN8-2012262243226311529638460
BAKKEN7-20123117301757169979060181
BAKKEN6-201294463791216133900
BAKKEN5-20120000000
BAKKEN4-2012222506252277129411840
BAKKEN3-20123141954229204234721920
BAKKEN2-2012917031639327767320
BAKKEN1-20123035083505104223620910
BAKKEN12-20112836253614103220720670
BAKKEN11-20113037173728113236522150

Random Look At Statoil Cvancara Well That Was Re-Fracked Two Years Later; No Production In Between Fracks -- February 5, 2015

Updates

February 26, 2016: this well is back on-line; update here is quite extensive
 
Original Post
 
This is somewhat interesting. This Statoil Cvancara well is on a five-well pad. It is currently listed as IA at the NDIC website, but my hunch is that it is back on line and will be back on active status within the next month or so. Note the production profile for this well:

21957, 1,779, Statoil, Cvancara 20-17 4TFH, t7/14; cum 17K 12/14;

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN12-201425137781315527258000
BAKKEN11-20140030000
BAKKEN10-20144446261450145
BAKKEN9-2014304120114215114
BAKKEN8-2014310300000
BAKKEN7-2014313340331042761282418101014

This well was originally fracked 8/31/12: 5 stages; 534,092 lbs of proppant (sand + ceramic); obviously something went wrong with the frack or they were simply seeing what 5 stages would do (I doubt it) -- at the time of the application, they were planning on 33 swell packers to complete the well.

They came back and re-fracked on 6/11/2014: 35 stages; 3.3 million lbs proppants
(again, sand + ceramic).

Even though it was re-fracked in July, 2014, the well did not reach significant production until several months later, December, 2014. There may have been operational reasons -- there are four other wells on that pad and another multi-well pad in the immediate area.

The TransCanada / BNSF Dots Are Connecting -- February 5, 2015

Last night a reader sent me a link suggesting that due to the six-year delay in getting the Keystone XL approved, TransCanada was ready to go to Plan B -- CBR.

Now, tonight, Don sends me the connecting dot: BNSF announces a $326 million plan to upgrade rail infrastructure in Minnesota. The Grand Forks Herald is reporting:
BNSF Railway Company allocated the $326 million as part of its $6 billion capital expenditure program for 2015. Maintenance and expansion of key routes in the state are part of the company’s effort to respond to increased rail congestion in the state.
Projects will include nearly 270 miles of track surfacing and replacement of 125 miles of track.
Commuter rail traffic that operates on the BNSF network of rail, such as Northstar and Amtrak, should experience less frequent delays as a result of expanded routes and traffic control projects. She also said the company is adding locomotives and staff to help address increasing demand from shippers from all sectors.
2015 will be the third year in a row the company has broken its all-time capital expenditure budget.  
Expansion has become necessary due to a spike in crude oil rail shipments. According to the Association of American Railroads, the amount of crude oil terminated carloads -- cars which were unloaded -- in the U.S. increased nearly sixfold from 2011 to 2013, from just less than 75,000 to nearly 450,000. McBeth said Minnesota has experienced a “significant” increase in rail traffic due to oil drilling in North Dakota’s Bakken oilfields.
The dots really do connect. By the time TransCanada talked to the press about CBR, one knows that TransCanada had already been in talks with BNSF. Or least was watching what BNSF was planning.

It's also possible that BNSF knows that the Keystone XL is dead in the water. BNSF would know that from a) reading the tea leaves -- even I can guess the Keystone XL is likely dead under this administration; and/or b) Warren Buffett called up President Obama to chat the other day.

Random Look At A Whiting Well In Bell Oil Field, February 5, 2015

Link here to original post regarding this well.

This is another good example of a middle Bakken whose production defies the usual decline curve.

Whiting well in Bell field, a TFS well:

  • 20893, 2,805, Whiting, Mastel 41-18TFH, Bell,  t11/11; cum 339K 12/14; 30 stages; 2 million lbs;
The well file does not provide any clue; it's possible some work-over work was done in September, 2014, but regardless, look at the production profile of this well, how monthly production jumped from 3,400 bbls/month last summer (7/14) to over 6,000 bbls a few months later (12/14).  Production profile only from 1/14 reproduced below:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN12-201431612461152644681467520
BAKKEN11-201430698170963055745573950
BAKKEN10-20142229112740280641053908156
BAKKEN9-20141615001529346341933870
BAKKEN8-20143131963183782729272300
BAKKEN7-20143133613379884720971470
BAKKEN6-20143035033488930718671260
BAKKEN5-20143134343431839690368410
BAKKEN4-201430394539658637695756868
BAKKEN3-20143137313764941752374640
BAKKEN2-20142837253820847741573590
BAKKEN1-20143143794340883806880060

End To Ukraine Crisis? -- February 5, 2015; Our Man Kerry Is On The Scene; Lois Lane And Jimmy Olsen Have Also Arrived

The Telegraph is reporting:
Angela Merkel and Francois Hollande's peace plan proposes autonomy for pro-Russian separatists in eastern Ukraine in a larger area in return for a ceasefire, according to Germany's Sueddeutsche Zeitung newspaper.
If Merkel and Hollande leave Kiev without "Peace In Our Time," it could get really, really ugly. 

After Kiev, Merkel flies to Moscow.

At the linked article, there are two major concerns: predictably unpredictable no-drama Obama, and John "Dead Last" Kerry. Those two guys have the uncanny ability to snatch defeat from the jaws of victory.


Fourteen (14) New Permits -- February 5, 2015

Reporting tomorrow:
Statoil (STL.OL): no forecast; 1:00 a.m. ET

Active rigs:


2/5/201502/05/201402/05/201302/05/201202/05/2011
Active Rigs136191182202165

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

Fourteen (14) new permits --
  • Operators: Hess (4), BTA (3), WPX (2), Whiting (2), XTO (2), CLR
  • Fields: Manitou (Mountrail), Beaver Creek (Billings), Spotted Horn (McKenzie), Reunion Bay (Dunn), Bully (McKenzie), West Capa (Williams), Ellisville (Williams)
  • Comments: BTA's last permit was back in 2012, it appears; first new permits for BTA in quite some time (BTA Oil Producers, LLC)
Wells coming off the confidential list Friday:
  • 25168, 892, Sinclair, Saetz Federal 43-36H, Lone Butte, t11/14; cum 11K 12/14; 
  • 27117, 1,357, EOG, Parshall 53-1014H, Parshall, t8/14; cum 100K 12/14;
  • 27258, 1,347, Whiting, Dolyniuk 41-25PH, Zenith, t8/14; cum 54K 12/14;
  • 27259, 841, Whiting, Dolyniuk 21-25PH, Zenith, t8/14; cum 40K 12/14;
  • 28363, drl, BR, CCU Pullman 5-8-7TFH, Corral Creek, no production data,
  • 28813, drl, SM Energy, James 16-35H, Camp, producing, some production,
  • 28908, A, CLR, Margaurite 1-15H, Sanish, no test date; no IP; producing,
  • 28941, drl, XTO Energy, Allen 21X-17B, Dollar Joe, no production data,
********************************************

27117, see above, EOG, Parshall 53-1014H, Parshall:

DateOil RunsMCF Sold
12-2014121494831
11-2014234108890
10-2014127153798
9-2014266171145
8-201424347389

UNP Increases Dividend -- February 5, 2015

Union Pacific announces 10 % dividend increase to $0.55/share and $4.3 billion capital plan for 2015:
  • The Board  approved the Company's 2015 capital program of ~$4.3 billion, up about $200 million versus 2014, driven primarily by equipment acquisitions and infrastructure investments. 
Williams Partners and Crestwood Midstream Partners announce commissioning of Bucking Horse Gas processing plant in Niobrara Shale play: Co and Crestwood Midstream Partners today announced the commissioning of the Bucking Horse gas processing facility located in Converse County, Wyoming, adding 120 million cubic feet per day of processing capacity in the Powder River Basin Niobrara Shale play.

Valero Energy Partners beats by $0.04, beats on revs: Reports Q4 (Dec) earnings of $0.32 per share, $0.04 better than the Capital IQ Consensus Estimate of $0.28; revenues rose 3.4% year/year to $34.18 mln vs the $32.98 mln consensus. 
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Just A Reminder

From the president's speech at the National Prayer Breakfast this morning:
At the National Prayer Breakfast, President Obama reminded attendees that violence rooted in religion isn’t exclusive to Islam, but has been carried out by Christians as well.


This would have been a whole lot better than the speech:

My Sweet Lord, George Harrison

TransCanada (Keystone XL) About Ready To Go To Plan B -- February 5, 2015

A reader sent me this link. I'm almost certain I had read this somewhere else earlier, but maybe my mind is playing games with me. TransCanada will enter the CBR business while the Keystone languishes:
TransCanada has hinted at a rail link to connect its customers to the US market in the past, but talks with customers appear to have advanced as the company has faced six years of delays in waiting for Washington to approve its 830,000-bpd Keystone XL pipeline proposal. President Barack Obama has been warned off approving the pipeline by environmentalist activist donors, who insist that it should be scrapped, since it would encourage production of carbon-intensive oil sands.

Pipelines are widely considered to be safer and more environmentally friendly forms of oil transport, compared to rail. TransCanada has stated that oil by rail emits three times the greenhouse gases of pipelines, although rail companies dispute the figure.

Mr Girling said the company does not expect to be "a big player" in the rail business, but forecasts the industry's capacity to rise to two million bpd, "as we wait for pipeline approvals.
And then this:
"At US$50 a barrel, the oilsands are still going to get developed anyway ... I don't think anything the EPA said the other day changes any of those facts. We don't need to do another market study to tell us that."
At least three story lines.

First: TransCanada has been incredibly patient with this administration.

Second: Rail is going to get even busier -- worse nightmare for true environmentalists (not faux environmentalists don't care).

Third: Slump in oil prices may be affecting Canadian oil sands, but the price does not seem to be killing the Canadian oil sands. I was always under the impression that it would cost more to develop Canadian oil sands than to develop the Bakken but it appears I was wrong (like the Bakken, more likely one cannot lump the entire Canadian oil sands into one sandbox).

Gallup Uses ObamaCare Standard To Define Full-Time Work Week; US Payroll To Population Employment Rate Hits New Record Low For January -- February, 5, 2015

Don sent me the link. This is a very interesting story.

This is from today's Gallup essay.

See if you spot the story lines as you start with the graph and then go through the essay.


Some background and comments:

Gallup has tracked this only since 2010 -- it's a new metric.

This is the percent of the US adult population employed full time for an employer.  So this would not include self-employed; it might not include owners of mom-and-pop businesses.

Gallup notes the data for January, 2015, reveals that P2P hit its highest mark for any January since 2010. From Gallup:
The U.S. Payroll to Population employment rate (P2P), as measured by Gallup, was 44.1% in January. This is statistically similar to the 44.3% measured in December, but it is the highest measurement of P2P for any January since Gallup began tracking the metric in 2010. January is typically one of the lowest months for P2P in any year.
My first question: what is the definition of full-time? It turns out to be 30 hours.

We'll come back to that in a minute.

Second question: how is the data obtained? Landline telephone and cellphone.

Third question: who is excluded? Gallup does not count adults who are self-employed, work fewer than 30 hours per week, who are unemployed or are out of the workforce as payroll-employed in the P2P metric.

" ... out of the workforce ... " I think one can already see what the means.

Now back to the first question: the definition of full-time. Growing up I was always told that "full-time" meant a "forty-hour week."

With ObamaCare I was the first blogger with no advertising who suggested that ObamaCare would result in a new Federal standard for a full-time workweek: 30 hours. It turns out I was correct. In fact, I have a "29-hour-work-week" tag at the bottom of the blog.

ObamaCare was signed into law on March 23, 2010, by President Obama.

Gallup began tracking this metric that same year (2010) and used the ObamaCare standard as full-time: 30 hours. 

It would be interesting if Gallup would include in this survey, this question to those who work 30 hours but less than 40 hours: do you consider yourself working full-time? My hunch is close to 100% of respondents would say one of the following a) my employer considers it full-time; b) the government considers it full-time; c) I do not consider it full-time; d) I don't know if it's full-time or not but it's not enough to support my family, working only 30 hours.

Hopefully, ObamaCare doesn't change the definition to 20 hours for full-time employment. Gallup would have to change its metric, its poll.

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Re-Set

For me, the big takeaway regarding all these "job" statistics: sometime in the past twenty (20) years, for whatever reason, definitions regarding employment have changed. It doesn't matter why the definitions have changed (policy changes, automation, economy, you name it); the fact is that full employment which used to be 4% is now 8%. With the social safety network in place, many of the 8% unemployed are doing better financially than if they worked.  

Even if folks don't accept 8% as full employment, it's hard to see much difference between 5.6% (current unemployment rate -- yes, I know it's one big like) and 4% (assuming that wasn't one big lie back in the 1960's).

What 44 Rigs In North Dakota Looks Like, February 3, 2016


February 3, 2016: this is what 44 active rigs in North Dakota looks like (there are no rigs outside this area; for the first time in a long, not one rig in southwestern North Dakota:



 
August 23, 2015: I forgot to get a screenshot of the GIS map server when the number of rigs hit a post-boom low of 68. The rig count today is 76. The wells outside the core area of the Bakken is interesting considering the low price of oil today (about $40/bbl WTI):




May 4, 2015: 84 active rigs (one active rig in southwest North Dakota). The rig in southwest North Dakota:
  • 30755, conf, Denbury Onshore, CHSU ML 41-36NH 15, Cedar Hills;
The nearest horizontal to that well in this section:
  • 14024, 270, Denbury Onshore, CHSU ST Skull Creek 14-36NH 15, a South Red River B well, Cedar Hills, t9/97; cum 366K 3/15;


April 22, 2015: 90 active rigs (no active rigs in southwest North Dakota):



March 24, 2015: 100 active rigs (no active rigs in southwest North Dakota):




March 11, 2015: 111 active rigs:


 
March 1, 2015: 119 active rigs:
 
February 5, 2015: 136 active rigs:
 


 
What the North Dakota Bakken looked like on January 15, 2015, 156 rigs:

 We will compare this graphic with the 3Q15 graphic later in the year.

Williston's Sloulin International Airport Named Airport Of The Year -- TSA -- February 5, 2015; Active Rigs Down To 136

The Williston Herald is reporting:
There are 428 TSA airports in the nation and, of them all, one has been selected the fairest in the land. That airport is none other than Sloulin Field International Airport, right here in Williston.
Sloulin Airport has won Airport of the Year award from the Transportation Security Administration for its exemplary customer focus and efficient operation while maintaining required security standards. Airport director Steve Kjergaard couldn't be happier about that.
"This is pretty distinct and a high honor," Kjergaard said. "They view this as, 428 airports each year are TSA airports, and you were the best out of that 428 nationwide."
Pretty impressive. 

Active rigs down to 136:


2/5/201502/05/201402/05/201302/05/201202/05/2011
Active Rigs136191182202165