Saturday, August 6, 2016

Mega-Fracks In The Bakken -- Mike Filloon -- August 6, 2016

What a treat! Two Filloon articles in two consecutive days. This one looks good. It will be interesting to see if any of the 200 mega-fracks have been posted on this blog (unfortunately, only a map is show; individual wells are not identified by file number).

It is interesting that I use certain terms on the blog that I came up with myself, not taking them from other sources. Others now use some of those same terms, but it's unlikely they came from this blog; they simply made sense.

  • well costs continue to decrease while well designs improve.
  • as operators get better at creating induced fractures, more proppant is required.
  • mega-fracs have shown a significant improvement in recoveries and this is why we are seeing operators complete more wells like this
  • from 2004 to 2013 operators increased proppant usage by 636% in ND
  • in 2011 only one mega-frac was completed, but this increased to 78 in 2014
First, the definition of a mega-frack. Filloon's 200 hundred biggest fracks by proppant volume in the Bakken/Three Forks:
  • proppant: a range of 8 million to 28 million lbs
  • fluids: a range of 50,000 to 460,000 bbls
  • average amt of proppant: 11 million lbs; weighted toward sand
  • average amt of frack fluids: 166,000 bbls
The best well design in the Bakken may be: hybrid fracks (large volumes of proppant in concert with slickwater).

Slickwater operators include:
  • Emerald
  • EOG
  • QEP
Tesla: Here It Comes

MuskMelon says Tesla needs a huge cash infusion to keep operating.
Tesla Motors Inc on Friday disclosed $1.1 billion in third quarter cash requirements in payments and planned expenditures, about a third of the cash on hand mid-year, in a new sign of pressure on the electric vehicle maker.
The company is finishing construction of a massive battery factory in Nevada, the Gigafactory, and ramping up for production next year of a mass market sedan, the Model 3. That has raised questions about whether the company will need to raise new cash to reach its goals.
It said in the filing that it had $3.25 billion in principal sources of liquidity as of June 30, 2016, including $1.7 billion from a public offering in May and a $678 million credit line.
The filing also said that in July it had repaid that $678 million credit line and that it intended to repay principle on $411 million of 2018 convertible notes in the third quarter and could spend more on the securities.
It was just two days earlier, we raised the question, rhetorically, how long it would take for MuskMelon to confirm Tesla needed to raise more money. 

Back of the envelope calculations:
  • Tesla has 148 million shares outstanding.
  • An additional share offering of 10 million shares at $220 = $2.2 billion
  • An additional share offering of 5 million shares at $220 = $1.1 billion
  • 10/148 = 7%
  • 5/148 = 3%
Based on my "experience" with the Bakken, a 10% dilution when offering additional shares seems to be fairly standard. 

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