Monday, March 7, 2016

Adult Coloring Books Driving Barnes & Noble's Earnings -- March 7, 2016


Later, 10:34 p.m. Central Time: after posting the following, I sent a copy to my wife (who is out in California for a couple of weeks). She said this "fad" has been going on for at least two years. She, our older daughter, and our oldest granddaughter often "work" on them while talking; helps relieve stress, she says. I'm always the last to know.
Original Post
Over the weekend, in between games during the Charles Dutton Water Polo Tournament here in north Texas, our granddaughter and I would visit the Barnes & Noble up the street. It was her suggestion.

I had not been there in awhile; coming into the music and DVD section, just before going through the merchandise "detector" I saw a stack of "coloring books," something I don't recall seeing before, at least not this many. I pointed the table full of "coloring books" out to Arianna and said "coloring books have come a long way since when I was a kid."

Today, of all things, I run across this article in the WSJ: Barnes & Noble earnings for 4Q15 were better than expected. Why?
    • An uptick in print sales, driven in part by the success of adult coloring books, has bolstered the retailer’s expectations
    • Excluding sales related to its Nook device and e-book business, same-store sales were up 1.3% in the third quarter. And the company still expects sales on that basis to rise 1% for the full fiscal year, which ends April 30.
    • Barnes & Noble said it expects to have closed eight stores by the end of fiscal 2016, the fewest since fiscal 2000 when it closed five locations. Barnes & Noble had previously forecast that it would close 13 stores this fiscal year.
    • During a call with analysts, Ronald Boire, Barnes & Noble’s chief executive, said reducing Nook losses is the retailer’s priority. He said that while the company is committed to its digital customers, it is exploring all options. The retailer is currently winding down the sale of its Nook devices and e-books in the U.K.
Who would have ever guessed: Barnes & Noble reporting a better quarter based on "adult coloring books." Next thing you know Playboy will announce no more nudity in their magazines. Oh, that's right, they already have.

Running Track

Bakken Economy -- March 7, 2016

Catching up. Some of these articles are a bit dated; I am just now getting caught up on some of these.

From The Bismarck Tribune, a week or so ago:
BNSF Railway Co. will continue to invest in North Dakota in 2016, though at a reduced rate.
The company released a statement saying it plans to spend more than $100 million in North Dakota this year. About $326 million was spent on rail capacity improvement projects in 2015, and $506 million was spent on infrastructure in 2014.
BNSF invested more than $1.1 billion in North Dakota from 2012 to 2014.
Spending this year will be focused on maintenance projects rather than the additional capacity built to meet customer demand in prior years, according to a company statement. This will include replacing and upgrading rail, rail ties and ballast, as well as continued installation of centralized traffic control signaling projects near Dickinson and Jamestown.
Maintenance will be performed on more than 740 miles of track, including the replacement of about 55 miles of rail and 240,000 ties and signal upgrades.
From The Williston Wire, last week:
RDO Equipment Co. will celebrate a Customer Appreciation Open House at its new Williston location on Wednesday, March 16 from 10 a.m. until 2 p.m. RDO Equipment opened its first store in Williston in 2009. In early 2016, construction was completed on the new location at 14057 49th St. NW. The new site offers more than 36,000 square feet, 12 service bays and a drive-through wash bay. The original location is now home to RDO Truck Center.
Set in the heart of downtown Williston, Renaissance on Main (ROM), located on the corner of 2nd and Main Street, is opening the door to the new city center. ROM offers elegant office space along with retail and residential space. Williston Economic Development Executive Director, Shawn Wenko states, "Not only is it a top quality commercial and residential complex; it's going to be a showcase piece for our downtown." The public is invited to get its first peek at this exciting new development, during an Open House on Thursday, March 17th from 2-5 p.m. 
Local restaurateur Jason Esperum has opened his second restaurant in Williston. Esperum's newest eatery is Quinn's Bar and Burgers located in the former Blaine's Auto Body Shop at 2406 2nd Ave. W. Quinn's features hand ground burgers in a 21 and over bar setting. In addition to Quinn's, Esperum owns Lucy Lu's Restaurant and Bar in Downtown Williston.
I am really going to miss this one; this should be fun: The Williston Area Chamber of Commerce and Murphy Motors are gearing up for the annual ShamRockin' the Bakken / Taste of Williston on Thursday, March 17 from 5:30-10 p.m. at the Grand Williston Hotel and Conference Center. The St. Patrick's Day Celebration will feature some of the area's tastiest food and beverages; live music from Whiskey Rebellion; plus much  more. Admission is $20 per person.
From Reuters, by-line, Grand Forks, ND:
In a basement lab of a North Dakota research center, Beth Kurz and an assistant are peering through a scanning electron microscope, studying samples from the state's vast Bakken shale oil formation. Kurz, a hydrogeologist, is part of a team, which looks at using carbon dioxide to coax more oil out of wells that have already been hydraulically fractured, or fracked, in the process of extracting oil from shale rocks.
"No one is sure just yet how this process can work in the Bakken," said Kurz. "We're hoping to crack that riddle."
The use of CO2 in fracking, for example, could cut production costs in North Dakota's largest oil-producing county by about 10 percent. That, according to Reuters calculations, would bring costs to around $24.30 per barrel, below current market prices.
So far, the process has worked in laboratory conditions, but not yet in field trials, so it is unclear how quickly it could be commercially deployed.
Hess Corp, North Dakota's third-largest oil producer, is studying how it can lengthen the horizontal wells and use cheaper materials in fracking.
Services giant Schlumberger NV, licensed a new process last fall that slashes the number of pumps needed to frack a well.
With regard to that last story, this from an article from the North Dakota Geological Survey:
Enhanced oil recovery (EOR) projects in North Dakota have met with varying degrees of success. Some failed to produce any incremental oil while others successfully increased recovery. Most of the unsuccessful EOR projects were attempts to waterflood Madison reservoirs in north-central North Dakota.
The failure of these waterfloods is inexplicable because waterfloods in the same strata in Canada have been successful. One explanation is that project operations were conducted differently while another explanation is that reservoir properties in North Dakota differ from similar reservoirs in Canada. Carbonate reservoirs are often inhomogeneous and only a thorough understanding of the reservoir characteristics and careful planning can compensate for these inhomogeneities.
The EOR projects attempted in North Dakota are listed in Table II [the table is missing from the article]. Each of the listed EOR projects has a unique identifying abbreviation that corresponds to those in figure 28, a location map of all the active units in North Dakota [Figure 28 is also missing from the article].

In 1983, Chevron Oil Co. attempted to unitize Little Knife Field to institute a CO2 flood for pressure maintenance. A successful pilot study involving five wells had shown that the program would probably be successful (Desch et al., 1984), but the unitization attempt failed because the 80% of the royalty interest owners necessary to ratify a unitization agreement in North Dakota was not attained.

Recent CO2 enhanced recovery programs in Canada have apparently been successful. These successful programs, coupled with the apparent success of the Chevron pilot program at Little Knife Field, might point to a future need for CO2. There are two sources of CO2 presently available to operators in the Williston Basin. The first source is the Wyoming Thrust Belt, where CO2 is produced together with other natural gasses. The second source is the coal gasification project at Beulah, North Dakota where CO2 is a byproduct of the process. A pipeline is being built to transport CO2 to the Weyburn Field in Saskatchewan and startup of a CO2 flood may begin during 1999. The pipeline's route takes it past many other fields that are suitable for CO2 programs and perhaps some other fields will be CO2-flooded soon.
From The Bakken, July 31, 2013:
The EERC team is also working to establish the best possible approach to enhanced oil recovery (EOR). For the past year, the team has been analyzing and working to test the use of CO2 injected into an oil well as a vehicle to mobilize previously trapped oil droplets, allowing for the recovery of more oil. Currently, oil recovered in the resource is roughly 3 to 5 percent. “If we can change 3 to 5 percent to 4 to 6 percent,” he says, that is very meaningful. “The denominator on this research is so huge that single type percent increases in recovery are extremely meaningful. A 1 percent increase of recoverable oil translates to roughly $150 billion of value.”

To find that value, EERC has started to analyze two unsuccessful Bakken EOR pilot projects: one in the Elm Coulee field of Montana and the other in Mountrail County of North Dakota. The team has arranged a data-sharing agreement that will help them better understand the efforts. According to Harju, the EERC team has developed some exciting tests that could help prove Bakken EOR by 2014. 
Other links:

No Global Warming For 58 Years -- NOAA Data -- March 7, 2016

The graphs and discussion below the break may be hard to follow for warmists. In a nutshell:
  • NOAA stated they have 58 years of graphic data documenting global temperature (fact)
  • they chose to show only the most recent 37 years when stating last year was the "hottest year ever" (fact)
  • they chose not to show the entire 58 years (fact)
  • the entire 58-year graph reveals there has actually been as much cooling as there has been warming since the 1950's (you decide; see graphs below)
From RealScience:
In their “hottest year ever” press briefing, NOAA included this graph, which stated that they have a 58 year long radiosonde temperature record. But they only showed the last 37 years in the graph.

NESDIS Strategic Communications

Here is why they are hiding the rest of the data. The earlier data showed as much pre-1979 cooling as the post-1979 warming.

2016-03-07060229I combined the two graphs at the same scale below, and put a horizontal red reference line in, which shows that the earth’s atmosphere has not warmed at all since the late 1950’s.
The omission of this data from the NOAA report, is just their latest attempt to defraud the public. NOAA’s best data shows no warming for 60 years. But it gets worse. The graph in the NOAA report shows about 0.5C warming from 1979 to 2010, but their original published data shows little warming during that period.
Warmists won't be able to read / understand these graphs, and for them, the science is settled.

For the rest of us, it's becoming more and more interesting.

Eventually, there will be too much data for the scientific community to ignore and we will have an honest and open scientific inquiry.

Much, much more at the link. 

Seven (7) New Permits -- March 7, 2016

Active rigs:

Active Rigs35114191186204

Remember: the Saudi Surge / Slump continues. Seven (7) new permits:
  • Operator: Sinclair
  • Field: Lone Butte (McKenzie)
  • Comment: a 7-well pad in NWNW 8-147-98 in graphic at bottom of post;

Seven permits renewed, including (note: five counties represented) --
  • XTO, 3 permits, TAT State Federal wells in Dunn County
  • Petro-Hunt, one M. Thorson permit in Burke County
  • Thunderbird Resources, one Watson A permit in McKenzie County
  • Hunt, one Oakland permit in Mountrail County
  • EOG, one Hardscrabble permit in Williams County
Two (2) producing wells completed:
  • 30813, 294 (no typo), XTO, Klamm 34X-9G, API 33-053-06768, fracked 11/30 - 12/23/2015, Siverston, t2/16; cum -- (on line for four days in 12/15; then taken off-line)
  • 30814, 95 (no typo), XTO, Klamm 34X-9D, API 33-053-06769, Siverston, fracked 12/6 - 22/2015; t2/16; cum -- on line for one day in 12/15; then taken off-line)
Wells coming off confidential list Tuesday:
  • 29762, 959, XTO, Homer 14X-32A, Grinnel, t1/16; cum 4K 6 days production;
  • 30075, 1,283, BR, Cecilia Stroh 44-7MBH, Cabernet, t2/16; cum --
Sinclair's proposed 7-well pad (see above):

Some Fun With The Madison North-Northeast Of Minot -- March 7, 2016.

Disclaimer: in a long note like this there will be typographical and factual errors. I may be coming to or leading myself to conclusions that are completely wrong. I may be seeing things that don't exist. I am inappropriately exuberant about the Williston Basin. Do not make any financial, investing, or travel decisions based on what you read here. If this information is important to you, go to the source. This has not been triple-checked. There may be simple typographical errors that need to be fixed. Sometimes simple typographical errors result in huge errors.
Now to the post

Take a look at this stand-alone post first regarding the new Chatfield Madison wells.

While you're doing that, here's some background music, assuming your mobile device can multi-task:

Sweet Jane, Lou Reed
Also, scroll through some Madison wells at the "monster well" site.

With that background, I'm going to take a look at the early production of some of these "monster Madison" wells. When I did the first run, everything was done, of course, randomly. What I post below might have some cherry-picking (to make a point) but not much.

The Madison well and early production:
  • Drilled back in 1953, #165, 645/PNA, Hess, Beaver Lodge-Madison Unit G-11, Beaver Lodge; t6/53; cum 1.02 million bbls;
  • Drilled back in 1953, #345, 504/PNA, Hess, Tioga-Madison Unit L-144, Tioga, t8/53; cum 2.1 million bbls:
  • Drilled back in 1958, #1824, 328/PA, Hess, Blue Buttes-Madison Unit L-306, t6/58; cum 1.01 million bbls 2/05:
  • Drilled back in 1958, #1918, 187/PA, Hess, Blue Buttes-Madison Unit M-405, Madison, Blue Buttes, s7/58; t8/58; PNA 8/09; 1.28 million bbls:

Okay, we'll quit there. There was no cherry-picking. I simply took the first four Madison wells with more than a million bo cumulative and then posted the first six months of production. In almost all cases, in general, subsequent production does not exceed initial production unless they go back in and "re-do" the well in some way.

There are exceptions. Look at the production profile in this well, in the first few years. The sundry forms in the well file are not helpful; there is no explanation why this well's production surged some months:
  • Drilled back in 1977, #6165, 772, Petro-Hunt, Klatt 2-19-3D, Madison, Little Knife, t7/77; cum 1.50 million bbls 10/15:

Now go back and look at the production profiles of the three new Chatfield Madison wells (the link again).

There are two points to make:
1. Those three new Chatfield Madison wells are producing at 5,000 bbls/month compared with less than 1,000 bbls/month for what became "monster wells" decades later, but there is a gotcha!

2. Even wells that produced 3,000 or 5,000 bbls/month early on could surprise us and go on and produced upwards of 15,000 bbls/month many months or years later. 
Remember, these Madison wells are a) shallow; and, b) not fracked. Shallow? Note that the new Chatfield Madison well reached TD in less than 5 days; 4,667 feet.

There was a third point I was going to make, but now I forgot it. Give me a minute.

Oh, yes, that was the third point: Madison wells are a) shallow; and, b) not fracked. 

Oh, yes, the gotcha: notice the number of days those early Madison wells were producing -- less than 10 days per month. The production for the new Chatfield Madison wells is for a full 30-day month.

Of course, I don't have an explanation for why those early Madison wells were on line for so few days when they were just starting out but the interesting thing is that when they went to a full 30 days production was not necessarily much better (at least in the half dozen or so wells I looked at). Could it have been due to takeaway capacity back in the 1950's? Was it due to regional refinery capacity? Too many things to think about. So many story lines.

But now that I've seen the early production numbers of these new Chatfield Madison wells and compare them to "monster Madison wells" it makes me think these may be monster wells some day in the future.

$50 Oil By The End Of The Year? March 7, 2016


Later, 12:45 p.m. Central Time: see first comment. I had to take a moment to learn about oxygenates (again). See wiki.

From EIA: US oxygenate plant production of fuel ethanol --

Original Post
$40-oil is the new $70-oil for US shale.

$50-oil is no better than $30-oil for Saudi Arabia.

Things will have to move faster than this if Saudi wants to feel better about such things.

Bloomberg is reporting: oil will be back at $50 by the end of the year.
Major OPEC producers are privately starting to talk about a new oil price equilibrium of $50 a barrel, adding to signs that the market's long, deep rout is officially over, says one of the industry's leading prognosticators.
Credit Suisse suggests we might see $50 oil by May.

One swallow does not a spring make.

I don't know if folks have noticed, but gasoline has increased "fairly significantly" over the past couple of weeks. This is mostly due to winter / summer changeover at the refineries, but it seems to be moving more quickly than one would expect.

Generational Differences

The other day I pointed out the following license plate to our 12-year-old granddaughter while leaving Barnes and Noble, Southlake, TX:


I asked her what she thought it might mean. I made the mistake of giving my answer before she could answer and thus spoil the opportunity for her original thought.

I told her it could stand for a great poker hand: 4 kings and a joker (where the joker is wild, of course).

Not missing a beat, seriously, not one step later, one nano-second later, Arianna thought it meant "For kids, J. K. Rowling" because the car was parked outside a bookstore.

One Swallow Does Not Make A Spring ... March 7, 2016

From Aristotle.

One instance of an event (such as the completion of a single DUC) does not necessarily indicate a trend, but something to note.

A Note for the Granddaughters

Early Sunday Evening, March 6, 2016

Bloomberg posted a story Sunday evening (tonight) at 6:00 p.m. or thereabouts suggesting that "the worst may be behind us."  I've provided the link and a portion of the story as an update to an earlier post.

Mulholland Drive Now Part Of The Criterion Collection

Life is "funny." People are attracted to different things for different reasons. My wife hates Mulholland Drive. It's one of my favorite movies. Did we have this discussion before in which I provided a definition of what makes a "top 10" movie for me? If not, some other day.

Of the movies on my "top 10" list this is perhaps the only one I cannot watch often (along with Dr Zhivago), maybe once every ten years. Considering that it came out in 2001 I guess that means I've watched it once, or twice. It comes up now because it has now become part of the Criterion Collection and I finally ordered this copy.

It's hard not to call Mulholland Drive "soft-porn" but it is what it is. I don't suppose it's any "worse" than "old" Playboy (the "new" Playboy, as of March, 2016, no longer shows any nudity -- well, sort of "no" nudity).

The back stories about Mulholland Drive are fascinating and the stories of the real-life actors and actresses are likewise just as fascinating.

The critics "Ebert and Roeper" provide their top ten movies each year. For 2001, Mulholland Drive was #5 on Ebert's list and #3 on Roeper's list. And that's why I say life is funny. On Ebert's list I have only seen three of the ten movies, including Mulholland Drive. On Roeper's list, I have seen only two, and one of them was Mulholland Drive. 

The Cowboy, Mulholland Drive

The following video is only a minute-and-a-half of a much longer, and incredibly interesting "interview" with Naomi Watts and David Lynch. This interview and a couple of the other interviews was worth the entire price of the DVD.

David Lynch and Naomi Watts

Monday, March 7, 2016

Active rigs:

Active Rigs35114191186204

RBN Energy: natural gas storage limite -- summer battle ahead to keep the lid on inventories.
On Friday (March 4, 2016) the April NYMEX/CME futures contract settled at $1.666/MMBtu, the lowest contract settlement since 1999. Rock bottom prices reflect a growing supply/demand imbalance and concerns about hitting storage capacity limits later this year.
Last Thursday’s EIA report showed U.S. gas inventory stands 827 Bcf above last year at this time and 687 Bcf above the 5-year average.
These are the biggest surpluses the market has seen since 2012.
Moreover, our latest NATGAS Billboard storage outlook shows March withdrawals lagging way behind last year and expanding the surplus further heading into April. In today’s blog, we look at how a similar situation was resolved in 2012 and what it will take to bring down the surplus this year.
First we take a look at where we are now in early March – the last month of the winter withdrawal season. The latest Billboard storage estimates (RBN’s new natural gas market report developed with Criterion Research, as of March 4, 2016) indicate the market will withdraw a net 70 Bcf between now and March 25, including the likelihood of two weekly injections (yes – we mean injections) in mid-March. That’s compared to last year’s 248-Bcf draw in the same period and a 5-year average draw of 245-Bcf. Injections are not uncommon in March as the weather begins to transition from winter to spring and overall temperatures rise. However, considering that storage inventories started this March much higher than last year or the 5-year average, early injections this year will only exacerbate the current oversupply conditions. Based on these storage estimates, our Billboard analyses projects that natural gas in storage will end the withdrawal season (Nov-March) slightly above 2,400 Bcf, about 900 Bcf higher than 2015 and about 800 Bcf above the 5-year average, which is an enormous surplus in storage heading into the summer injection season (April-Oct).
This surplus is the key feature of the market this year. It not only reflects the current imbalance between supply and demand but also indicates how big a correction is needed to bring the market back into balance. There are very specific implications for the gas market in 2016 because the surplus cannot grow indefinitely as storage capacity is finite. Limited storage capacity not only puts a ceiling on inventory levels but also puts a time constraint on drawing down the mountain of gas already in storage. Last year, inventories peaked at their all-time high of 4,009 Bcf in November. If the market were to end March with a 900-Bcf surplus versus last year, as Billboard projects, and carry that surplus through to November 2016, inventories would peak at 4,909 Bcf. But as we pointed out in Hot Stuff, this is not physically possible, given that U.S. storage capacity is only believed to be 4,300 Bcf. So the outstanding market question is how exactly will storage balance this year and what will it take? Basically the solution has to come either from lower supply (meaning less production) or higher demand.