Wednesday, February 17, 2016

From The Williston Wire, February 17, 2016

Renaissance On Main scheduled for mid-February opening. Construction is wrapping up on a major project in Downtown Williston. "Following much anticipation, Renaissance On Main is set to get the green light," said Kathy Hagen, Marketing/Advertising/Event Coordinator for The Renaissance Companies. The brand new, mixed-use building located on 2nd and Main Street in the heart of Downtown Williston is scheduled to open their doors to their first residential and office occupants as of mid-February.

 Renaissance On Main, February 10, 2016
Photo in public domain, no copyright

TruWealth Financial to relocate to Renaissance On Main. While many lament a regional slowdown, the boutique financial planning firm, TruWealth Financial, has had a milestone year. Early this year, the firm spent significant time and energy to improve their clients' access to a greater variety of products and services when they changed their broker/dealer and secured a partnership with Lebenthal Wealth Advisors, LLC, a wholly-owned subsidiary of New York-based Lebenthal Holdings, LLC. Since then, owners Brent Lee and Brion Norby have added three homegrown professionals to their team and they have secured new office space in the new Renaissance On Main building.
Free money. The Williston City Commission has approved grant requests totaling $50,000 for 15 nonprofit projects in the Williston region. The commission approved the funding requests at its meeting on Tuesday, Feb. 9, 2016. Each year, the Williston STAR Fund board of directors conducts a thorough review of projects seeking Community Enhancement funding. In order to qualify for the CE grants, the group applying for the funding must be able to show how their project improves the quality of life in Williston by stimulating economic growth, promoting tourism and / or creating jobs.

Enrollment record. For the second year in a row, Williston State College (WSC) has broken its spring enrollment record, based on the fourth week census totals released Tuesday, February 9, 2016. Full-time students have increased by 21% over 2015, leading to a 14% increase of scheduled credit hours. 

Replaced Windshield

I couldn't be in a better mood; I am thrilled.

I have always wondered what it would cost to get a windshield replaced. I was surprised how inexpensive it is -- at least here in north Texas.   

Active Rigs In North Dakota Drop Below 40; EOG Reports Two Huge Wells; Nine (9) New Permits -- February 17, 2016

Wells coming off the confidential list Thursday:
  • 29055, 799, EOG, Van Hook 132-1319H, Parshall, ICO, TD, 18,748 feet; t8/15; cum 103K 12/15;
  • 29056, 754, EOG, Van Hook 25-1319H, Parshall, ICO, TD, 18,589 feet; t8/15; cum 96K 12/15;
  • 31489, SI/NC, XTO, Cheryl Federal 24X-12EXF, Grinnell, no production data,
Active rigs:

Active Rigs39135185181197

Nine (9) new permits  --
  • Operators: Petro-Hunt (5), Whiting (4)
  • Fields: Charlson (McKenzie), Twin Buttes (Dunn)
  • Comments: for Petro-Hunt, it will be a USA 5-well pad; for Whiting, it will be a Charging Eagle 4-well pad; the Petro-Hunt wells will be just a couple of miles northwest of Petro-Hunt's monster well in the Charlson, #16059. For an example of some incredible Petro-Hunt wells in the Charlson, click on this post.
No producing wells reported as completed.

Due to my traveling, it appears I forgot to post these three producing wells reported as completed on February 11, 2016:
  • 29494, 274, XTO, Rita 44X-34H, Tobacco Garden, t1/16; cum --
  • 30788, 679, XTO, Rita 44X-34D, Tobacco Garden, t1/16; cum --
  • 31004, 207, XTO, Rita 44X-34HXE, Tobacco Garden, 4 sections, t1/16; cum -- 
On that same date (February 11, 2016), five new permits were reported: three for MRO, and two for Enerplus.

And, just to close the loop, on that same date (February 11, 2016), six permits were renewed:
  • Whiting, 3 -- two Olson permits and one Periot permit, all in Williams County
  • BTA, 2 -- both Agate permits, Golden Valley County
  • Petro-Hunt -- an Overlee permit in Burke County

 29056, see above, EOG, Van Hook 25-1319H, Parshall:

DateOil RunsMCF Sold

29055, see above, EOG, Van Hook 132-1319H, Parshall:

DateOil RunsMCF Sold

Free Tuition At Williston State College Extended To Four Additional Surrouding North Dakota Counties -- February 17, 2016

Tuition is free for Williams County high school graduates who choose to attend Williston State College, previously reported.

A reader tells me: The February 10, 2016, Crosby JOURNAL reports that the offer has been extended to high school graduates this spring from Burke, Divide, McKenzie, and Mountrail Counties.

This may help explain why WSC is reporting a second consecutive record spring enrollment number. 

I think it -- the free tuition -- is pretty cool. As the reader said, "I'm feeling the Bern."

LA Times On Soros, Buffett -- February 17, 2016

Over the past week or so, I've received links from readers regarding investments by Soros and Buffett. I did not post them, mostly because I simply ran out of time. The Los Angeles Times, it appears, saw those same multiple articles, and consolidated them into their own article:
If the old investing adage is true that "the time to buy is when blood is running in the streets," then the time to buy into oil is now. The blood of oil investors is running thick indeed in the markets, so the smart thing to do may be to buy.
At least that seems to be the thinking of master investors Warren Buffett, George Soros and David Tepper, all of whom have just disclosed stakes in the Houston pipeline company Kinder Morgan. Buffett's stake of 26.5 million shares, valued originally at $396 million, was disclosed in a public filing Tuesday. Kinder Morgan jumped by about 10% to $17.35 in morning trading on Wall Street on Wednesday, giving Buffett a paper profit of about $60 million. Until the recovery, the share price had fallen by about two-thirds in a year. 
Soros, who has been taking a generally bearish approach to the oil patch, has disclosed a Kinder Morgan stake of 50,700 shares, worth now about $887,000. Hedge fund manager Tepper's disclosed holding is about 9.5 million shares, worth about $163 million as I write on Wednesday. None of them hold a commanding stake in the company: Buffett's shares come to about 1.2% of the total outstanding and only about one-third of a percent of the $130-billion portfolio of his Berkshire Hathaway holding company.
Also in the Times, and absolutely awesome:
The architect John Lautner — Frank Lloyd Wright disciple, iconoclast and reluctant Angeleno — produced a number of strikingly unorthodox, gravity-defying houses in the decades after World War II. For pure drama, few can match the 1963 Sheats-Goldstein house just above Beverly Hills.
The living room, familiar to fans of the 1998 Coen brothers film "The Big Lebowski," where it belonged to a pornographer and loan shark played by Ben Gazzara, begins dark and cave-like, tucked under a coffered concrete roof. Then, as you move out toward the pool, the roof shoots skyward like an ascending airplane wing, bringing you face to face with a view that puts much of Los Angeles at your feet.
Now the house is poised to meet a much wider audience. James F. Goldstein, who bought the property in 1972 and has made improving and expanding it an expensive personal crusade, has agreed to donate it to the Los Angeles County Museum of Art.
The bequest, to be announced at a news conference at the house Wednesday afternoon, includes an endowment of $17 million for a maintenance fund, as well as a so-called skyspace artwork by James Turrell and a building adjacent to the main house holding an office and nightclub. The museum has estimated the total value of the gift at $40 million, though Goldstein called that figure "conservative."
"For me it ranks as one of the most important houses in all of L.A.," said Michael Govan, the museum's director and chief executive. "And as one of the most L.A. houses, because of its connection to the view, that long view toward the ocean."
My wife is relieved that Donald Trump did not buy it.

You can see a bit of the house in this scene. Unfortunately not in English, but perhaps that is just as well: 

"The House" in The Big Lebowski

Director's Cut: December, 2015 Data; On A Monthly Basis, December Production Exceeded November Production -- The Difference One Day Means


Later, 7:18 p.m. Central Time - Seeking Alpha's summary --
  • North Dakota's crude oil production fell in December for the first time in three months, down 2.5% to 1,152,280 bbl/day, as oil producers begin to acknowledging the low-price reality rolling over the entire energy industry.
  • Only 41 drilling rigs are operating in the state as of Wednesday, the lowest level since July 2009, and North Dakota producers have cut back requests to drill new wells, with only 78 permitted in January compared to 125 in November. 
It should be noted that Seeking Alpha, in the note above, did not include the price that Bakken oil was trading for today. It would have led to heart attacks among some traders.
Original Post
See disclaimer below.

Link here.

The Director's Cut is out, February 17, 2016, with December, 2015, data.

North Dakota oil production for the month of December decreased by about 2.5%, almost a 30,000 bopd decrease compared to the previous month, November, 2015.

Because so much is carried forward from previous posts, there are likely to be errors in previous data; I would go to the source if this information is important to you.

Top four producing oil fields in the Bakken at this link.

Some data points of interest with regard to the Red Queen

Number of producing wells
  • December, 2015: 13,119 (preliminary, previous all-time high was 13,190 back in October, 2015)
  • November, 2015: 13,100
The number of well completions has stabilized month-over-month: 77 (final) in November to 76 (preliminary) in December.

Daily oil production (bopd):
  • December, 2015: 1,152,280 (preliminary)
  • November, 2015: 1,181,787 (final, revised) 
  • Delta:  29,507/ 1,181,787 = 2.5% decrease month-over-month
Daily well production: so, the number of completions falls sharply; the number of producing wells rose slightly from 13,100 to 13,119.
  • November: oil/well/day: 88.79 bopd
  • December: oil/well/day: 87.83 bopd
Director's Cut
December 2015 Data

December, 2015, data is presented here.

I track the "cuts" here

Disclaimer: this update is always done in haste; typographical and factual errors are likely. This is for my use only. If this is important to you, you should go to the source

Note: facts and opinions are interspersed in the note below. Do not make any investment or financial decisions based on what is posted below; there will be factual and typographical errors. If this information is important to you, go to the source. 

The November data is posted at this link:

Important data points:
  • Today, pricing: $16.50
  • Bakken (ND sweet crude) price in January, 2016: $21.13
  • Fracklog: 945 (24 less than at end of November)
  • Statewide flaring: 15%
Delta, crude oil production
  • 1,181,787 - 1,152,280 = -29,500 bopd
  • -29,500 / 1,181,787 = 2.5% decrease month-over-month
  • December, 2015:1,152,280 (preliminary)
  • November, 2015: 1,181,787 (final, revised)
  • October, 2015: 1,171,119 (final, revised)
  • September, 2015:  1,162,159 (final, revised)
  • August, 2015: 1,187,631 (final, revised)
  • July, 2015: 1,206,996 (final, revised) 
  • June, 2015: 1,211,328 (final)(second highest; highest was December, 2014)
  • May, 2015: 1,202,615 (final)
  • April, 2015: 1,169,045 (final)
  • March, 2015: 1,190,502 (final); 1,190,582 bopd (preliminary)
  • February, 2015: 1,178,082 bopd (revised, final); 1,177,094 (preliminary)
  • January, 2015: 1,191,198 bopd (all time high was last month)
  • December, 2014: revised, 1,227,483 bopd (all-time high)
Producing wells:
  • December, 2015: 13,119 (preliminary, slight increase, month-over-month)
  • November, 2015: 13,100 (final revised, decreased from last month)
  • October, 2015: 13,190 (final revised, new all-time high)
  • September, 2015: 13,036 (final revised -- new all-time high)
  • August, 2015: 13,031 (final revised -- new all-time high)
  • July, 2015: 12,965 (final revised -- new all-time high)
  • June, 2015: 12,868 (final revised -- new all-time high)
  • May, 2015: 12,679 (final revised -- new all-time high)
  • April, 2015: 12,545 (final revised -- new all-time high)
  • March, 2015: 12,443 (final revised -- new all-time high)
  • February, 2015: 12,199 (final revised -- new all-time high)
  • January, 2015: 12,181 (preliminary -- new all-time high)
  • December, 2014: 12,134 (preliminary, new all-time high)
  • November, 2014: 11,951 (revised); 11,942 (preliminary, new all-time high)
  • October, 2014: 11,892; revised 11,942 (preliminary, new all-time high)
  • January, 2015: 78 drilling
  • December, 2015: 95 (steep decline)
  • November, 2015: 125
  • October, 2015: 152
  • September, 2015: 154
  • August, 2015: 153
  • July, 2015: 233
  • June, 2015: 192
  • May, 2015: 150
  • April, 2015: 168
  • March, 2015: 190
  • February, 2015: 197
  • January, 2015: 246
  • All-time high was 370 in 10/2012
  • Today, February 17, 2016: $16.50
  • January, 2016:$21.13
  • December, 2015: $27.57
  • November, 2015: $32.16
  • October, 2015: $34.37
  • September, 2015: $31.17
  • August, 2015: $29.52
  • July, 2015: $39.41
  • June, 2015: 47.73
  • May, 2015: $44.70
  • April, 2015: $38.33; $36.25 (lowest since February, 2009, and January, 2015) (all-time high was $136.29 7/3/2008)
  • March, 2015: $31.47
  • February, 2015: $34.11
  • January, 2015: $31.41
  • December, 2014: $40.74
Rig count:
  • Today: 41 - lowest since November, 2009, when it was 40 (all time high was 218 on 5/29/2012)
  • January: 52
  • December: 64
  • November: 64
  • October: 68
  • September: 71
  • August: 74
  • July: 73
  • June: 78
  • May: 83
  • April: 91 (lowest since January 2010)
  • March: 108
  • February: 133
  • January: 160
  • December, 2014: 181
Director's comments[see source]
The number of well completions has stabilized month-over-month: 77 (final) in November to 76 (preliminary) in December.
Well completions:
  • December: 76 (preliminary)
  • November: 77 (significant difference from preliminary figure)
  • October: 43 (final)
  • September: 123 (final)
  • August: 115 (final)
  • July: 119 (final)
  • June: 149 (final)
  • May: 116 (final)
  • April: 102 (final -- astounding drop)
  • March: an astounding 194 (final)
  • February: 42
  • January: 63
  • December: 173 (preliminary)
  • November: 48
  • no significant precipitation events
  • 5 days with wind speeds in excess of 35 mph (too high for completion work)
  • 2 days with temperatures below -10F
Wells waiting to be completed:  
  • At the end of December: ~ 945 wells waiting to be completed; 24 less than at the end of November
  • capture target, current, January - December, 2015: 77% (had been 80%)
  • capture target, April, 2016 - October, 2016: 80% (had been 90%)
  • capture target, November, 2016 - October, 2018: 85%
  • capture target, November, 2018 - October, 2020: 88%
  • capture target, after October, 2020: 91%
  • flaring capture percentage in December: 85%
Gas capture statistics:  
  • statewide: 85% (October 2014 target was 74%; CY 2015 capture target is 77%)
  • FBIR Bakken: 85%

Devon To Slash CAPEX For 2016 By 75% -- February 17, 2016

Tweeting now: Devon slashes CAPEX for 2016 by 75%, plans to trim workforce by 20% (1,000 employees + 600 from divestitures).

Pyrrhic Victory And The Definition Of Winning -- February 17, 2017

Over at Twitter, John Kemp is asking: Is Saudi Arabia winning the war against shale?

As Bill Clinton would say, it depends on the definition of "winning."

Bloomberg is reporting: Saudi Arabia's credit rating outlook cut to negative at S&P.
Saudi Arabia, the world’s largest oil exporter, had the outlook on its credit grade cut to negative by Standard & Poor’s while other struggling energy-producing nations had their ratings lowered.
The Saudi kingdom could lose its AA- credit ranking, the fourth-highest debt grade, in two years if its “liquid assets” decline or its fiscal position weaken, S&P said in a statement Monday. The rating company also cut the grades of Oman, Bahrain, Kazakhstan and Venezuela by one step, citing lower oil prices.
A 50 percent drop in oil since June is eroding government revenues of energy exporters and dimming their growth prospects. S&P said oil will average $70 a barrel by 2018, down from a forecast of $85 in December, when it lowered Saudi Arabia’s outlook to stable from positive.
“Given its high dependence on oil, Saudi Arabia’s currently very strong fiscal position could weaken owing to the oil price decline,” analysts led by Trevor Cullinan at S&P wrote.
Saudi Arabia, which relies on oil and gas for about 90 percent of government revenue and for 85 percent of its exports, may face “sustained” budget deficits over the next few years as lower crude prices persist, the rating company said.
If one goes to the most recent edition of Encyclopedia Brittanica to look up "Pyrrhic Victory" there is a graphic of the price of oil over the past 24 months superimposed over a map of Saudi Arabia. 

Credit ratings can be found here. The second to the lowest is Venezuela at CCC, extremely speculative. At the bottom of the list is Puerto Rico at CCC-, "in default with little chance of recovery." Argentina has the unusual designation of SD/RD: it has defaulted on some obligations, but is paying on others.

With regard to Saudi other phrases come to mind: too big to fail; saving face; trillion-dollar mistake.

Wednesday, February 17, 2016; The Charade Of The Hillary-Bernie "Close Race"

I'm still way behind in my blogging, but I will eventually get caught up. I'm expecting the February Director's Cut to be released today so it will be even busier than I had hoped. Just not enough hours in the day.

Active rigs:

Active Rigs41135185181197

RBN Energy: the future of oil production in the Gulf of Mexico (archived).
Crude oil production in the Gulf of Mexico (GOM) has been riding high in recent months, still surfing the wave of deepwater and ultra-deepwater projects whose development started in the “good ole days” of $100/Bbl oil. Some incremental output is still being added, keeping GOM production levels high even as onshore oil output is declining in response to low crude prices and drilling cutbacks. But exploration and production companies (E&Ps) are cutting their spending on offshore projects, and unless oil prices start to rebound soon the Gulf too will see a leveling off—and after that, a gradual fall--in production. Today, we conclude our series on resilient production levels in the GOM with a look at recent cutbacks and what they may mean for Gulf oil output in 2016 and beyond.
U.S. oil production as a whole has been declining the past few months in response to plummeting prices, but that overall decline in output has come despite gradually rising production in the GOM. As we said in Episode 1, that’s because the incremental gains in output the Gulf has seen over the past few months are the result of investment decisions that E&Ps active in the GOM made a few years ago, when a barrel of crude was selling at a price equivalent to a very nice dinner out instead of the price of a hearty breakfast for two at Denny’s.
We also pointed out that while it may take much longer (and cost much more) to develop new production areas in the deepwater and ultra-deepwater Gulf than in tight oil plays on land, the output of the best GOM wells typically remains relatively high for several years, not just for a couple of years as is the case with shale wells on terra firma. In other words, if all drilling in the Gulf were to stop today, the GOM would still be producing a lot of oil five or even ten years from now; the same couldn’t be said, of course, if all shale drilling were to stop on a dime in the Permian Basin or the Bakken, with their wells’ high initial production rates and rapid production fall-offs. In Episode 2, we discussed the major GOM projects that two of the most active E&Ps in the Gulf—Shell and Noble Energy—either brought online in 2015 or plan to start up this year (2016). And last time, in Episode 3, we looked at the rest of the big GOM projects with production starting in 2016, including those operated by LLOG Exploration, Chevron, and Anadarko Petroleum.

In the lead essay in this week’s “The Talk of the Town” in The New Yorker, George Pucker talks about the presidential primaries in a “cutesy” sort of way. The first sentence in the second paragraph:
Direct primaries — the selection of candidates by voters instead of by party leaders — came into existence a hundred years ago. They were the inspiration of reformers who wanted to take power away from political machines and corporate interests, and return it to the people, who were believed to be wiser and more capable than the bosses, because they were less self-interested.

LOL.Tell that to Bernie Sanders. In the popular vote he swamped Hillary in the New Hampshire primary and tied her in Iowa (it was not entirely clear whether he might have won; though we will see later, whether he won or not, did not matter). Despite his impressive showing in both states, where does Bernie stand? He stands well behind Hillary because, as those “less self-interested voters” have found out, she “won” the majority of “superdelegates” by a wide margin. The “superdelegates” represent the party, the political machines, and the corporate interests.

Bernie Sanders noted this early on when he said the system was rigged.

The New Yorker, a staunch supporter of Hillary, conveniently edited Pucker’s article printing the myth that “less self-interested voters” were choosing among the two or three Democratic presidential wannabes. The hypocrisy.

[February 18, 2016: if you need more proof that the DNC leadership / the party machine will elect Hillary, don't take it from me. From The Hill: AP: Clinton raking in superdelegate votes.
Hillary Clinton has increased her lead in the Democratic primary since her resounding loss to Bernie Sanders in New Hampshire by wooing 87 new party superdelegates to support her campaign over the past week.
The Associated Press reports that Sanders won the support of 11 superdelegates over that same time period.While Sanders holds a small lead among pledged delegates awarded to him for his showings in Iowa and New Hampshire, Clinton's massive superdelegate lead puts her ahead 481-55 in delegates to the Democratic National Convention, according to the AP's count. Superdelegates are party leaders — mainly members of Congress and the Democratic National Committee — who are allowed to support the candidate of their choosing at the summer nominating convention.]
In the same issue, James Surowieckie has a one-page essay on the slump in the price of oil as it relates to the stock market. There is nothing new there. He maintains global demand is not the issue; it continues to slowly and gradually increase, year-over-year. Supply is the problem. He does not that the US is a net importer, still importing 5 million bopd more than it exports.

But this is where he gets it wrong. He says that the US consumer has saved 190 billion dollars over the last six quarters which should be a godsend to the US economy. Again, writers are missing the 800-pound gorilla in the room: healthcare. Whether ObamaCare has made it worse or not is for others to decide. I don’t think it takes a rocket scientist to sort that one out. At $500/family member each month, the cost to the US citizen is substantial (not so much for non-citizens).

360 million x $250 / month = 90,000 million/month in healthcare premiums. $90 billion dollars each month and most of that money not likely “used” by the payee. In the last six quarters, that translates to $540 billion — substantially more than the $190 billion saved in gasoline costs.

This from the James Suvowiecki article: an October study by the JP Morgan Chase Institute found that consumers spent around seventy to ninety cents of every dollar they saved from lower gas prices.

We’ve done the math before. The savings translates into a McDonald’s dinner for four once every week or so for all Americans.

Let’s do the math another way. James says the country has $190 billion dollars in savings over the past 72 weeks. $190 billion / 360 million = $500/72 weeks = $7/week/American.

A #1 value meal at McDonalds: Big Mac, medium fries, and a soft drink — $7.00.

The law of big numbers always seems to work out. So, Americans are saving $7/week on their gasoline costs and paying $250/month on ObamaCare.