Monday, March 9, 2015

Catching Up -- Part II -- March 9, 2015; Widening The Moat -- Apple; ObamaCare Premiums About To Surge -- Congressional Budget Office; The New MacBook Pro Is Thinner Than The Mac Air -- Incredible

Reporting tomorrow:
Emerald Oil, forecast 4 cents; after market close;

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Non-Bakken News
Apple 

I am now just catching up on the Apple presentation today -- AppleWatch, MacBook, and Mac Air -- and I am really, really impressed. Pundits often refer to Apple innovations as revolutionary or evolutionary. Without question, pundits will call today's announcements "evolutionary" but in the big scheme of things, they continue to be revolutionary (and few, if any, will agree with me). 

First the Apple Watch. Investors were not impressed with the Apple Watch (presentation). Two quick points (I missed the presentation; haven't seen television, heard radio, or done much internet surfing yet today because I was out and about with the granddaughters all day, so I don't "know" much about the presentation or the investors today). Yahoo!Finance is reporting:
  • the investors already knew "everything" about the Apple Watch before the presentation today (the price, the Sports Model, etc); Apple share price had already "baked" the Apple Watch in; the fact that Apple's share price did not fall was the big news
  • the Apple Watch adds a new layer to the Apple ecosystem; mangling metaphors, it widens the moat
Then the new MacBook. Note: this is a MacBook -- not an Air and not a MacBook Pro. Years ago I had the white "plastic" MacBook; I loved it, but it was showing its age when my family bought me a new MacBook Pro as a gift. Now the MacBook is back. The new MacBook is the lightest one yet—and is thinner than the Air. Consumer Reports is also reporting
Tim Cook announced a new, 12-inch MacBook that weighs just 2 pounds. That's half a pound lighter than the current 11.6-inch MacBook Air.
The new laptop is very thin at 13.1 mm, and unlike the Air, it has a Retina display with a resolution of 2304x1440. Prices start at $1,299 for a machine with a 1.1-Ghz Core M processor, 256GB of SSD storage, and 8GB of RAM. It launches April 10.
Apple's new laptop extends the company's tradition of jettisoning ports and drives that most people still use and like. The computer will have a single USB Type C port for both charging and handling wired connections. Many people will appreciate USB C because there's no wrong way to plug in the cable—the connector is symmetrical. More significant, perhaps, is that the connection allows for much faster data transfer.
Apple Watch could be Apple's first flop of the century. Fiscal Times is reporting:
By the way, all of these options [other Smart Watches] are significantly cheaper than the Apple Watch, which begins at a hefty $350. Snazzier versions will presumably cost more.
Sure, Apple has the brand, the audience, and the status, but is that enough to keep it off clearance shelves? Only time will tell.
Several comments:
  • it may very well flop
  • Apple is not expecting to sell very many; first production run is very thne; limited editions are limited
  • money is no object for the Hollywood crowd
  • the Apple Watch is not competing with watches; it's a fashion statement; as I said earlier, every mistress / kept woman in Hollywood will have a limited edition Apple Watch by Christmas

[Update, March 14, 2015: Holman Jenkins, Jr., who has been reporting most on Apple for the WSJ comes close to why Apple developed the Apple Watch -- he mistakenly calls it the iWatch.]

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Washington Times is reporting: ObamaCare premiums are about to spike. And this is before the Supreme Court ruling --
Obamacare exchange customers are about to see spikes in their premiums, the Congressional Budget Office predicted Monday, saying insurers that offer plans are facing twin pressures from the government and the marketplace that will mean hikes of more than 8 percent a year through 2018.
Now in the second year of full operation, the exchanges are critical to the success of the law. The government is using tax subsidies to attract more customers to help offset costs for the rest of the system.
Nearly 11.7 million Americans bought plans on the exchange in the second enrollment period, Health and Human Services Secretary Sylvia Mathews Burwell announced Monday afternoon, hours after the CBO’s analysis was released.
The CBO said premiums for the key “benchmark” exchange plans will rise an average of 8.5 percent per year from 2016 to 2018, faster than the rest of the health care market.
The law was written in such a way that this was all but inevitable, and predictable. 

So, What's Going On In The Sanish? CLR's Burr Federal Wells -- March 9, 2015

Updates

November 21, 2018: graphic updates of the three 8-well Burr Federal pads:



July 30, 2018: as expected, CLR did frack the Burr Federal wells; production data has been updated below.

November 28, 2017: some older CLR Burr Federal wells are being shut in suggesting CLR is getting ready to frack some of the Burr Federal wells that have not yet been fracked. See production updates and status of wells below.


August 30, 2017: production updates as of 6/17;

March 15, 2017: drilling as we speak --




December 6, 2016:



October 8, 2016: minor correction on the NDIC map. The two CLR wells, #32126 and #32129, were annotated in the wrong location initially (see diagram at March 27, 2016, entry, below). The NDIC has correct that, and moved the locations to proper position in the NWSW quadrant of the section as seen in this screenshot taken on the date noted:




August 5, 2016: IPs and production data has been updated.

March 27, 2016: this is what section 25-153-93 looks like now (look at all the new locations and all the wells that have been drilled since the last time we looked:



There are 34 wells sited in this section, though the 34 wells are not all drilling the same drilling unit.


Original Post
 
In the process of looking up something else, I ran into this striking little graphic, section 25-153-93:

Yes, you counted correctly: 17 well locations on one pad (or two very close, neighboring, pads). And, note the rig. These are sited in the Sanish, Whiting's field, but will run into Elm Tree oil field.

Zooming out:


I count 26 wells sited in this section, although not all of them are in the drilling unit shown.

These wells are located in the Sanish oil field, in Mountrail County, just across the river from the sweet spot in McKenzie County. These seventeen wells will run west into sections 26/27/34/35-153-93 -- a 2560-acre spacing unit, almost (if not all) completely under the river.

The 8-well pad to the west of the two large pads:
  • 30492, 506, CLR, Burr Federal 9-26H1, Three Forks first bench, 4 sections, apparently "A"  as of 11/15; 4 days of production; off-line for first six months, except for 4 days; finally started producing 3/16; huge well, 30 stages, 5.9 million lbs; t3/16; cum 338K 9/18; shut in as of 9/17; back on line 3/18; huge jump in production;
  • 30493, 812, CLR, Burr Federal 10-26H, 4 sections, minimal production 11/15; t12/15; cum 278K 9/18; shut in as of 9/17; back on line 3/18; huge jump in production 4/18;
  • 30494, 629, CLR, Burr Federal 21-26H2, see notes for #30492; t3/16; cum 186K 9/18; shut in as of 9/17; back on line 3/18; minimal jump in production;
  • 30495, 629, CLR, Burr Federal 11-26H, t1/16; cum 222K 9/18; minimal jump in production after coming back on line;
  • 30496, 678, CLR, Burr Federal 12-26H1, Sanish, 4 sections, t4/16; cum 105K 9/18; shut in as of 9/17; back on line as of 3/18; not much change in production after coming back on line;
  • 30497, 661, CLR, Burr Federal 13-26H, Sanish, 4 sections; t1/16; cum 182K 9/18; shut in as of 9/17; back on line as of 3/18; minimal change in production after coming back on line;
  • 30498, 966, CLR, Burr Federal 22-26H2, Sanish, 4 sections, t3/16; cum 145K 9/18; shut in as of 9/17; back on line as of 3/18; small jump in production after coming back on line; 
  • 30503, 759, CLR, Burr Federal 14-26H, Sanish, 4 sections, t12/15; cum 281K 9/18; shut in as of 9/17; back on line as of 3/18; huge jump in production after coming back on line;
The 9-well pad to the east of the two large pads:
  • 30522, 804, CLR, Burr Federal 15-26H1, Sanish, t6/18; cum 57K 9/18;
  • 30523, 1,332, CLR, Burr Federal 16-26H, Sanish, t6/18; cum 80K 9/18;
  • 30524, 884, CLR, Burr Federal 23-26H2, Sanish, fracked 10/23/17 - 10/23/17 -- problem? only one day frack; 7.8 million gallons of water; 88% water; t5/18; cum 32K over 47 days; apparently no problem with the frack; Three Forks 2; 63 stages; 8.1 million lbs; t5/18; cum 94K 9/18;
  • 30525, 1,482, CLR, Burr Federal 17-26H, Sanish, a very nice well, 71K in 2 months; middle Bakken, 64 stages; 15.3 million lbs; t5/18; cum 129K 9/18;
  • 30526, 1,016, CLR, Burr Federal 18-26H1, Three Forks 1, 63 stages; 15 million lbs, t6/18; cum 119K 9/18;
  • 30527, 1,457, CLR, Burr Federal 19-26H, middle Bakken; 64 stages; 15.2 million lbs; 41K first full month; t4/18; cum 174K 9/18;
  • 30528, 935, CLR, Burr Federal 24-26H2, Three Forks 2, 63 stages; 8.1 million lbs; t3/18; cum 117K 9/18;
  • 30529, 1,485, CLR, Burr Federal 20-26H, 2560-acre spacing, 26/27/34/35-153-93, middle Bakken, 62 stages; 14.9 million lbs; t5/18; cum 118K 9/18;
  • 30530, PNS --> LOC, CLR, Burr Federal 25-26H1
The 8-well pad to the north of the two large pads noted above:
  • 32125, 1,276, CLR, Burr Federal 1-26H1, Sanish, t7/18; cum 102K 9/18;
  • 32126, 1,434, CLR, Burr Federal 2-26H, Sanish, t7/18; cum 106K 9/18;
  • 32127, 768, CLR, Burr Federal 6-26H2, Sanish, t7/18; cum 37K 9/18;
  • 32128, 1,593, CLR, Burr Federal 3-26H, Sanish, t6/18; cum 97K 9/18;
  • 32129, 832, CLR, Burr Federal 7-26H1, Sanish, t8/18; cum 24K 9/18;
  • 32130, 895, CLR, Burr Federal 4-26H, Sanish, t6/18; cum 95K 9/18;
  • 32131, 926, CLR, Burr Federal 8-26H2, Sanish, t8/18; cum 21K 9/18;
  • 32132, 1,434, CLR, Burr Federal 5-26H, Sanish, t7/18; cum 55K 9/18;
What about the other wells in that drilling unit and sited in section 25-153-93:
  • 17240, 1,680, Whiting, Roggenbuck 11-25H, t10/08, cum 295K 5/18; bump in production in 4/12 after being off-line for several months;
  • 30570, 994, Whiting, Roggenbuck 11-25-2H, t7/15; cum 176K 5/18;
  • 30571, 785, Whiting, Roggenbuck 11-25-2TFH, t9/15; cum 120K 5/18;
  • 20586, 337, Whiting, Roggenbuck 11-25TFH, t10/11; cum 141K 5/18;
  • 30572, 1,269, Whiting, Roggenbuck 11-25-3H, t6/15; cum 191K 5/18;
  • 24573, 896, Whiting, Roggenbuck 21-25TFH, t4/13; cum 140K 5/18;
  • 24572, 1,739, Whiting, Roggenbuck 21-25H, t4/13; cum 169K 5/18;
  • 19271, 1,820, Whiting, Roggenbuck 24-25H, t1/11; cum 220K 5/18;
  • 17939, 1,878, Whiting, Roggenbuck 14-25H, t12/10; cum 334K 5/18; bump in production in 7/14 after being off-line for about a month;
  • 30795, loc, Whiting, Bartelson 34-30H, last checked 6/17;
  • 30796, PNC, Whiting, Bartelson 34-30-2TFH, last checked 6/17;
  • 26051, 1,390, Whiting, Bartelson 34-30TFH, t1/14; cum 166K 5/18;
  • 19068, 2,271, Whiting, Bartelson 44-30H, 29 stages; 3.2 million lbs; t12/10; cum 302K 5/18; huge bump for one month, January, 2014; had been running about 2,400 bbls/month during latter half of 2013; then in January, 2014, 8,739 bbls over 18 days but then down to 1,693 bbls over 19 days in February, 2014; after that, back to 3,000 bbls/month; the huge bump; immediate decline suggest some type of anomaly?

Catching Up -- Monday, March 9, 2015

OPEC trying to break North American frackers -- Bloomberg, January 9, 2015
OPEC not targeting North American frackers -- Yahoo!Finance, March 9, 2015

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Exxon: counting on shale oil in three states -- North Dakota, Oklahoma, and Texas. Arkansas OnLine is reporting
In a world of $55-a-barrel oil, Exxon Mobil is relying on shale fields in Texas, Oklahoma and North Dakota to fund the next wave of big overseas projects it needs to thrive in the future.
Exxon unveiled plans last week to double the amount of oil it pumps from U.S. shale fields during the next three years, even as it moves more cautiously on investments in big projects elsewhere. Decades after quitting many U.S. fields to pursue bigger reserves from the Middle East to the North Sea, Exxon now sees its U.S. assets as its most reliable cash engines.
With its leading technology, expertise and market clout, the biggest U.S. oil producer has been able to reduce costs and improve efficiency in domestic shale fields it began acquiring in 2010. That progress, coming even as the price of crude has dropped, has allowed Exxon to generate "attractive returns," said Chief Executive Officer Rex Tillerson.
"It might surprise some people how attractive some of these things are in this environment," Tillerson told a gathering of investors in New York. North American shale "is more resilient than some people think it is."
Exxon expects its worldwide production of crude and natural gas to climb 7.5 percent to the equivalent of 4.3 million barrels a day by the end of 2017, the Irving, Texas-based company said. The last time Exxon performed at that level was 2011.
Price slump is blessing in surprise for unconventional oil. 24/7 is reporting:
Despite the doom & gloom, something new is happening in the oil industry. You need to prepare for the coming surge.
One of the subtlest, most effective moves in sports is the head-fake. It's a thing of beauty when done well. In the energy commodity business, it can be disastrous to anyone who falls for it.
Right now, everyone is focused on low crude oil prices, and the subsequent layoffs and rig shutdowns that follow. I say it's a head-fake, because too many companies are buying into the narrative and scurrying for cover, while the smart money slips past them to victory.
Despite lower prices and dire news, particularly in the American oil markets, the fundamentals generally point to a flurry of need. If oil prices can merely get back to the $60-$70 a barrel range in the next 12 months, and stay there for a reasonable period of time, U.S. production is poised to respond.
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From a reader:

If you have Neflix, a must watch: 30 For 30: Of Miracles And Men (2015). The reader loved it; said to be the "Russia's version of the "1980 Miracle On Ice."

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The Apple Juggernaut -- WSJ

The link
An investor who bought Cisco on the day of the Nasdaq’s record in March 2000 and held that investment would have suffered a 53% loss through last Friday on a total-return basis, including price moves and dividend payments. [Wow -- including dividends.]
Buying and holding Intel in the same period would have resulted in a 25% total-return loss. Buying and holding Microsoft and Oracle would have produced total-return gains of 18% and 10%, respectively, but would have lagged behind the 98% return on the S&P 500 in the same period. [Wow -- Microsoft at 18% trailed ATT at 39%.]
Apple? Up 2,652%.

Catching Up -- Part III -- March 9, 2015; Whiting Sale -- Zeits -- Seeking Alpha

Over at Seeking Alpha, Richard Zeits on Whiting's announcement it is up for sale.

Summary:
  • The report in the Wall Street Journal of a strategic sale process at Whiting comes as a surprise.
  • Despite the elevated debt level, the company appears to be solidly positioned strategically, with an extensive and economically competitive asset base.
  • Waiting out for a cyclical recovery would appear to make more strategic sense. 
Zeits concludes: several thoughts come to mind in this regard:
  • Could the process be undertaken in response to an unsolicited offer? A bid at a significant premium, particularly an all-cash bid, can trigger a review of strategic alternatives, or even put the company "in play." I should also note that given the depressed commodity price environment, the Board would likely have a very defensible "just say no" option.
  • Is the threshold for the acquisition premium set at a very high level? If indeed the case, the initiative could provide support for the stock price, but would hardly be a responsible course of action.
  • Could Wall Street Journal exaggerate the significance of what the publication referred to as an auction process? Nothing can be ruled out.