CLR To Sell 80,000 Non-Core Assets In The Bakken -- August 18, 2016

Updates

August 23, 2016: it appears the Rainbow Project is included in the CLR sale.
 
August 21, 2016: A reader asks a very interesting question, see first comment at this post:

How do I find out if the Rainbow Project was sold by Continental resources in this last sale of 80,000 acres for $222 million.

The Rainbow Project was mentioned at the blog at this link: http://themilliondollarway.blogspot.com/2013/04/samson-oil-and-gas-to-acquire-net-1225.html.

There was also a note on the Rainbow Project at this link: http://www.oilandgas360.com/samson-oil-and-gas-limited-deal-with-slawson-exploration/.

According to Business Wire, The Rainbow Project is located in Sections 17, 18, 19 and 20 in T158N R98W.

Personal comment: if this is the area under discussion, it certainly seems like an area that CLR might sell.
Perhaps a reader might have an answer. Unless one has "inside information" or "unique access" to the buyer or seller, my hunch is that the answer to the question will be somewhat difficult to find in the short run. Within a few weeks, we should start seeing transfer of wells from CLR to another operator. 

Original Post 

CLR to sell 80,000 net mineral acres in the Bakken for $222 million.  About $2,750/acre. Enough cash to complete 70 wells. Each completed well will produce at least 100,000 bbls in first six months. At $30/bbl, about $210 million at the wellhead. My own back-of-the-envelope calculations. Others will have different numbers. Because there's only a gazillion different assumptions and methods to do the calculations.

Active rigs:

	8/18/2016	08/18/2015	08/18/2014	08/18/2013	08/18/2012
Active Rigs	33	74	193	183	199

RBN Energy: new crude oil pipeline from hubs to refineries. Another nice data point: even short inter-state pipelines can cost upwards of $2 million / mile.

In recent years, Valero has invested more than $200 million on changes that allow the Home of the Blues refinery (our nickname for it, not Valero’s) to process more light sweet oils like those readily available from Cushing, the “pipeline crossroads of the world” and the planet’s largest crude oil storage and distribution hub. 

The Valero refinery currently gets the majority of its crude from the St. James, LA hub via Capline, a 1.2-MMb/d (but lately very underutilized) pipeline that moves crude north from St. James to Patoka, IL; crude bound for Memphis hops off Capline in Collierville, TN, then flows west on Valero’s 52-mile, 210-Mb/d Collierville Pipeline. 

The question for Valero became, why source crude from St. James (a smaller hub that receives heavier Gulf of Mexico and imported crude, as well as lighter oil –– by rail –– from North Dakota) when you could access the much larger, more liquid hub at Cushing –– and the wider variety of lower-cost light crudes available there? 

As we said in our first look at Diamond two years ago, to take advantage of what for a while were big discounts for Bakken crude, Valero was moving significant volumes of North Dakota oil by rail to St. James, and from there via Capline and Collierville to Memphis, a round-about and (as Bakken differentials to Louisiana Light Sweet withered away) increasingly expensive delivery approach (then estimated at more than $15/bbl  from Bakken to St. James to Memphis). 

This Diamond is no zirconium –– that is, it’s not cheap (an estimated $900 million). But when it finally comes online (in late 2017, a year later than originally scheduled due to permitting delays), the pipeline will enable Valero to receive Bakken, Denver-Julesburg, Permian, Anadarko and other light crudes from the Cushing hub for far less per barrel.

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Nigeria: A Loss Of 750,000 BOPD; Highest Since 2009

From the EIA today:

Crude oil production disruptions in Nigeria reached 750,000 barrels per day (b/d) in May 2016, the highest level since at least January 2009. The increased disruptions come as militants continue to focus attacks on oil and natural gas infrastructure in the West African region. Nigeria is a member of the Organization of the Petroleum Exporting Countries (OPEC) and was Africa's largest oil producer until Angola's oil production surpassed Nigeria's earlier this year. --- EIA

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Jobs: jobless claims at 262,000 vs 265,0000. That's a decrease of 4,000 from previous week. 

Claims have now been below 300,000, a threshold associated with a strong labor market, for 76 straight weeks. That is the longest such stretch since 1973, when the labor market was much smaller. 

You have to scroll well down into the article to see this buried near the end: "The four-week moving average increased 7,750 between the July and August survey periods, suggesting another month of strong job gains."

In Massachusetts, it was reported today that the unemployment rate has dropped to 4.1% -- the lowest in 15 years. There are some good things happening out there. 

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For Newbies -- A Reminder

For some great graphics of the Bakken, see Mike Filloon's most recent contribution at SeekingAlpha.

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The Market

I see that SolarCity is restructuring.  Cutting CEO pay to $1 is a stunt; even Steve Jobs understood how that could be turned into a great deal.

Closing: it looks like the market will finish fairly flat, up about 8 points, but that's better than being down 8 points. NYSE:

• new highs: 162, a huge increase from the opening; add EOG (a huge whoop); ONEOK (a huge whoop); Tenaris (wow); and, yes, XLNX did trade at a new high; but it's not on the NYSE (I forgot, that's why I had not seen it among the new highs)
• new lows: 8

Mid-day trading: the Dow 30 has turned negative, down 24 points. NYSE:

• new highs: 140, a huge increase from the opening; add Schlumberger (a huge whoop);
• new lows: 5; add Ruby Tuesday

Opening: Futures indicated a "down" market, but in fact, the market is up a bit on the opening. Up about 11 points at 10:00 a.m. Central Time.  NYSE:

• new highs: 66, including -- BRKB (a big whoop); CLR (wow); Enerplus (another wow); WPX (a big whoop); XLNX for some reason is not listed -- it is clearly trading at its 52-week high, though it may have hit this number before; it's all-time high (excluding the bubble back in 2000 - 2001) was around $53.84; currently at $52.63.
• new lows: 2 

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WMT

It's interesting to follow Wal-Mart over the years. If there is one thing they seem to have done well is minimize stepping in their own poop over "politically-correct" issues. In the "politically-correct" issues -- like minimum wages -- they've managed those minefields with finesse. (I know no one agrees with me; that's fine.)

What makes me think about this is Target. Among all the big-box stores they seemed to have stepped in it repeatedly.

It began with their response to the credit card breach back in 2013. It could have happened to any other retailer (but it didn't; not in the same sense, coming after Black Friday; by a retailer that seemed least likely to have such a breach) but what made it worse, was the way Target handled it.

Now, we have the self-imposed PR disaster regarding their bathrooms. How in the world does a big box store get more stories written about their bathrooms than their earnings? Remember the brouhaha over Wal-Mart announcing several store closures and then said it had to do with substandard plumbing in their bathrooms. That story had no legs; it did not last. But the Target story continues.

Today, the first headline: Target will install single stall bathrooms in all their stores. That sounds pretty good.

But then this headline, over the The Christian Science Monitor: Target to expand single-stall restrooms without budging on bathroom policy. Of course, now that they've gotten themselves into this situation, it's not easy to get out. Target now has a third option: a private bathroom for those who feel uncomfortable using the traditional bathroom facilities.

Interestingly, most Target stores already had private bathrooms: 1,797 stores. This new initiative only affects 297 stores, and the headlines continue.

It seems they would have been better off putting in private bathrooms in those 207 stores and making no public announcement. I doubt most folks choose their big box store based on corporate bathroom policies. Except when the headlines start appearing.

On another note, WMT earnings were out today and they were stellar.