Thursday, October 20, 2016

North Range Resources Drilling Again -- October 20, 2016

Active rigs:

Active Rigs3368191184186

Wells coming off confidential list Friday:
  • 25347, IA/5, Williston Exploration, Rocky Ridge-Fritz 1, Rocky Ridge, minimal production, last produced 63 bbls in one day back in 2/16;
  • 31123, 2,175, Oasis, Lefty 5200 12-30 9B, Camp, 36 stages; 4.1 million lbs, t4/16; cum 75K 8/16;
  • 32604, 1,529, Hess, HA-Rolfsrud-152-96-1720H-8,Westberg, t9/16; no production data,
One new permit (with an interesting file number):
  • Operator: North Range Resources, LLC
  • Field: Grassy Butte (McKenzie)
  • Comments: #09762 -- Sheep Creek Storm 2-1 in 1-145-100; it really does show up with this number as confidential and nothing else to be seen; down in the SE corner of McKenzie County; there's another well in the local area also being drilled, #33042, conf, North Range Resources, Placid 28-2V, Rough Rider field; at NDIC's "well search" page, North Range Resources, LLC, has seven oil & gas permits in North Dakota, most (all?) in this area; all confidential except one PNC: one active (#6959); and, one inactive. #6959, Duncan Federal in Scairt Woman oil field, was a reasonably good well; drilled in 1979; re-entered in 1995; it targeted three formations over the years (Madison, Duperow, and Red River; the Madison is still producing a bit; it looks like the Madison might have been re-drilled 5/16, and is producing a bit;
No DUCs reported as being completed.

Seven permits renewed:
  • BR (4): two Atlantic Express permits, and two Pacific Express permits, all in Dunn County
  • MRO (2): two Clarice USA wells in Dunn County
  • EOG: a Ross permit in Mountrail County

31123, see above, Oasis, Lefty 5200 12-30 9B, Camp:

DateOil RunsMCF Sold

Newell, South Dakota

My dad was born at home on a farm just a mile south of Newell, South Dakota. Grew up there, and graduated from Newell High School. I don't recall what dad told me about the physician getting there in time for the delivery, but I know he was born during the middle of the winter, in early February. The high for the day was 16 degrees; the low, 4 degrees. That's Farhenheit.

I've probably driven by this ranch any number of times.

Nothing About The Bakken -- Entirely Political, I Suppose -- Just Idle Chatter -- If You Came Here For The Bakken, Scroll Down Or To The Sidebar At The Right -- October 20, 2016


October 22, 2016: right, wrong, or indifferent; whether you agree with the thesis in this Huffington Post article, it is interesting how easy it would be to amend Hillary's quote at the very end of the article. For better understanding, it's best to read the entire article at the link, the original post below, and then focus on this line from Hillary:
"I will not cut benefits,” Clinton said Wednesday night. “I want to enhance benefits for low-income workers and for women, who have been disadvantaged by the Social Security system.”
It would take little to change this to:

"I will not cut benefits. I want to enhance benefits for low-income workers, for women, and for African-Americans, who have been disadvantaged by the Social Security system and by the legacy of slavery.”
Original Post
Folks may or may not be paying attention, but the pot of gold at the end of the rainbow for African-Americans is "reparations." (It came up recently in a column in The New Yorker.)

Some years ago, African-American think tanks brainstormed on a strategic path to "reparations."

A "strategic" plan is generally a plan for some outcome 25 to 30 years down the road. Think tanks put up easels and whiteboards and smart boards with "where we are now" to the far left, and an "our goal" in a speech bubble at the far right.

Some years ago, before Barack Obama was elected president, African-American think tanks held conferences to work out strategic plans to finally "get" the pot of gold at the end of the rainbow.

Along that continuum, probably near the center, from the far left easel in the room ("where we are now") to the smart board at the far right with the speech bubble "reparations" was one stepping stone titled "a movement."

The think tanks realized that for their goal of reparations "a movement" was needed. At the time, no one had any idea of what that movement might be or what that movement might look like. But is was a spaceholder, an empty speech bubble looking for an opportunity.

Fortuitously for anyone who can claim to have a slave in his or her past, including some of Thomas Jefferson's descendants, I suppose, along came #BlackLivesMatter. The movement.

I was reminded of that when reading this story from The Seattle Times: 2,000 Seattle teachers wear "Black Lives Matter" shirts to class.

Major stepping stones along the path of a strategic plan have offshoots. The movement bubble had lots of empty bubbles that would need to be filled. One of the bubbles was labeled "Sports." Again, no one knew how that would play out, but the "Kaepernick phenomenon" is likely to replace "Pink - Breast Cancer Awareness" in the NFL as the next big "charity" to support. Instead of "pink socks" and "pink ribbons" NFL players will be wearing black hashtags (#) and black bandannas. 

The pot of gold at the end of the rainbow came very, very close to becoming a talking point this presidential campaign season, and perhaps only because of overreaching (Ferguson, Baltimore, and Cleveland) was the topic put on the back burner, but it will be moved back to the front of the stove sooner or later.

The method of paying out reparations will not be an issue. Most likely, the first step will simply be an increased allotment in social security for all seniors who are African-American (major voting bloc). Done. This is not rocket science. Newborns will be given "starter-amounts" in IRA-like accounts, most likely managed by Goldman Sachs.

It's very possible that some second grader whose teacher wore one of those "Black Lives Matter" shirts to school in Seattle this week, will grow up to be president and will find herself in the second to last speech bubble on one of those easels at one of those think tanks campaigning for that pot of gold at the end of the rainbow.

Because if Black Lives Matter, reparations matter. I can already see the SNL skit.

The Apple Page

IBM: Macs are up to $453 less expensive than PCs over four years.
There were assumptions early on that Macs would be significantly more expensive than PCs, but over the last year, IBM has found that it's actually PCs that are more expensive. Over a four-year lifespan, Previn says IBM saves up to $543 per Mac compared to a PC.
But isn't it expensive, and doesn't it overload IT? No. IBM found that not only do PCs drive twice the amount of support calls, they're also three times more expensive. That's right, depending on the model, IBM is saving anywhere from $273 - $543 per Mac compared to a PC, over a four-year lifespan. "And this reflects the best pricing we've ever gotten from Microsoft," Previn said. Multiply that number by the 100,000+ Macs IBM expects to have deployed by the end of the year, and we're talking some serious savings.
At last year's Jamf conference, Previn made similar comments. At the time, it had been only months since IBM deployed the Macs, but already, IBM had been noticing savings because Macs required less management and setup efforts than PCs, despite costing more up front
"Every Mac that we buy is making and saving IBM money," Previn said last year, and at this year's conference, that remained true. "Every Mac we buy is in fact continuing to make and save IBM money," he reiterated.

Macs are continuing to grow in popularity with IBM employees, and 73 percent say they want their next machine to be a Mac. To keep up with demand, IBM is deploying 1,300 new Macs each week, using Jamf and Apple's Device Enrollment Program to get new users set up quickly.

If UNP Is A Proxy For Health Of US Economy -- Sobering Results -- October 20, 2016

Some might argue that the "strength" of the US railroads is a proxy for the national economy. If so, this is very, very sobering:
UNP plummets; drops almost 7% in trading as it misses estimates. Earned $1.36 vs estimates of $1.39. Profits dropped 13%.  
Unfortunately we can't see as easily what BNSF is doing because it is wholly owned by Berkshire Hathaway and BNSF operating results will be tucked away in the BRK quarterly reports. We do have this data regarding BNSF, for the week ending October 8, 2016:
  • total railcars fell 9.2%, year-over-year
  • even carloads other than coal and coke fell almost 6%
  • coal and coke fell 13.4%; for UNP, the fall in the same category was 9.1%
  • 90% of all BNSF's coal tons originate from the Powder River basin in Wyoming and Montana
  • the fall in BNSF's overall carloads was almost double the overall fall reported by all US railroad companies
BRK-B is flat today, actually green, but gaining only one penny on a $144 share.

Note: this is not an investment site. Do not make any investment, financial, travel, job, or relationship decisions based on what you read here. The blog is to assist me in understanding the Bakken and to place it in context with global events and Washington, DC, politics. I often make factual and typographical errors (which are corrected, if found; errors are not done on purpose). If this stuff is important to you, don't rely on the blog; go to the source. The stuff coming out of Washington, DC, is no doubt much more accurate. And there (in DC) they have no hidden agendas.

The Venerable Bede

Several years ago I first heard of the venerable Bede. I picked up a copy of his history of the English church. I have read it at least once. I forgot how many times I have re-read bits and pieces of it. I have forgotten more about Bede than I care to share. I was quite surprised, and then, very, very elated to find several pages on Bede in Michael Pye's The Edge of the World, c. 2015.

No doubt others have figured all this out about Bede, but Pye does an incredible job of telling us what Bede figured out on his own. Bede was writing in the 7th century. In some respects, he was probably as good a scientist as Aristotle, the first scientist.

Bede figured out that the tides were influenced by the moon; to know this, Bede had to "know" that the earth was round (it was not until 1492 or some years after that, that the fact the earth was round was accepted by most -- not all -- some Flatlanders are said to still exist among us).

He also was the first to realize that a better calendar was needed if Christians were going to be able to predict when Easter would fall around the world. To do this, he had to "find names for years in the future, something which neither Germans nor Romans did: they both named years after the king, emperor or consul in power at the time, so that Bede's own monastery was begun in the twenty-ninth year of the reign of King Ecgfrith rather than what we know as 674 CE. He used thought and facts to solve an immediate problem..."
For centuries his work was mined for astronomical information. When it was finally printed and published eight centuries later -- in Basle in 1529 and then in Cologne in 1537 -- it was not out of antiquarian interest. It still had immediate, practical value, despite the need for notes to explain all the difficult bits. 
Indeed, his work has often survived better than his reasons for doing it. We still date events from the 'year of our Lord', Annus Domini, the year of Christ's birth; that was Bede's invention -- part of his solution to the problem of the calendar.

Christianity was only just growing out of its eschatological phase, when the world was expected to end an day, and Bede wanted to rewrite world history and its ages to prove that the world still had a long time to live. He wanted to place himself in time, past and future, and in doing so he built the Western calendar as we know it.
A Note To The Granddaughters

In the above note on Bede, I mentioned Basle (Switzerland) and Cologne. I have fond memories of both cities. Remind me, and I will relate those stories later, but not enough time now. 

Russia's Biggest Military Offensive Since The Cold War -- October 20, 2016

Americans are pre-occupied with:
  • the presidential election;
  • NFL ratings; and,
  • whether their malls will be open on Thanksgiving.
Meanwhile, Russia is said to be launching biggest military offensive since the Cold War -- The [London] Telegraph.

The warning is not from a blog or from a newspaper but from NATO:
Russia has begun its biggest surface deployment since the end of the Cold War as it aims to effectively end the war in Syria on the eve of the US election, Nato officials warned last night.
Purpose? According to western intelligence:
The Kremlin is sending the full might of its Northern Fleet and part of the Baltic Fleet to reinforce a final assault on the city of Aleppo in a fortnight, according to Western intelligence. The final bombardment is designed to shore up the Assad regime by wiping out rebels – paving the way for a Russian exit from the civil war.
This is not simply an a/c carrier group. It is the nation's entire Northern Fleet and much of the Baltic Fleet in the largest surface deployment since the end of the Cold War
The additional military firepower is designed to drive out or destroy the 8,000 rebels in Aleppo, the only large city still in opposition hands, and to allow Vladimir Putin, the Russian president, to start a withdrawal.

Exxon's CEO Comments Not Good News For Saudi Arabia -- October 20, 2016

Reported earlier:
Saudi Arabia to offer international investors $17.5 billion in bonds: Gulf countries are increasingly raising funds through international markets -- The Wall Street Journal
Saudi Arabia plans to raise up to $17.5 billion by selling bonds for the first time to international investors this week, two people aware of the transaction said Wednesday.
The kingdom also tightened its pricing guidance for the potential multi-tranche issue, which along with the estimated issue size reflects a strong appetite for the potential issue, bankers say.
For the five-year tranche, Saudi Arabia said it would pay around 1.4 percentage points above U.S. Treasurys, compared with an initial guidance of around 1.6 percentage points above U.S. Treasurys.
Reported earlier:
Data points at Bloomberg:
  • central bank pledge of $5.3 billion failed to ease liquidity crunch
  • the interest rate banks charge one another for loans rose by the most since August over the weekend for the KSA; extending a trend that's slowing earnings and corporate borrowing for Saudi Arabia
  • the rate for Saudi Arabia grew much faster than Gulf peers
  • rates for KSA would only go down if there's a much larger cash injection; $5 billion won't cut it
  • loans-to-deposit ratio among Saudi banks, a key measure of liquidity, rose to 91% in August, the worst since 2008
Both of those blog postings were posted just a few days ago, in October, 2016.

Flashback to May 22, 2016:
Saudi Arabia faces a vicious liquidity squeeze as capital continues to leak out the country, with a sharp contraction of the money supply and mounting stress in the banking system.
Three-month interbank offered rates in Riyadh have suddenly begun to spiral upwards, reaching the highest since the Lehman crisis in 2008.
Reports that the Saudi government is to pay contractors with tradable IOUs show how acute the situation is becoming. The debt-crippled bin Laden group is laying off 50,000 construction workers as austerity bites in earnest.
Today, Exxon Mobil CEO says the price of oil will remain in $50 - $60 range for years. Not good news for the Saudis. 

Random Notes Regarding Recent SM Energy - Oasis Deal; SM Eenrgy Sells Some Bakken Assets To Oasis; SM Energy Adds To Permian -- October 20, 2016

This is a screenshot from a 2016 Oasis presentation showing its Bakken assets prior to the SM Energy acquisition:

This is a screenshot form a 2016 SM Energy presentation showing its Bakken assets prior to selling 55,000 net acres to Oasis:

From an SM Energy presentation in 2016 showing the production curves for SM Energy's holdings in Divide County vs their holdings in McKenzie County to the south.

SM Energy has an October, 2016, presentation in which they detail their Permian acquisition. It's a presentation well-worth reading. SM Energy presentations can be found here; I assume some of these presentations will eventually go away.


Bakken Update: RSP Permian's Silver Hill Acquisition -- October 20, 2016

From SeekingAlpha.

  • The Acreage in Loving County has eight proven intervals, with the Wolfcamp providing very good economics at $50/Bbl
  • RSPP only strengthens its position, as its Loving acreage may be better than its core in Midland
  • The average Silver Hill well economics in 2016 have a type curve that produces a net of over $3 million in just 31 months
  • RSPP has a high ceiling in Loving, because its well design is much better than Silver Hill's so well performance should improve
Less than 30 minutes ago I noted in a post that operators and investors are starting to look at a different method of "measuring" mineral acres. Obviously the have been doing this internally for quite some time, and anyone paying attention has done the same thing. But generally, it was done in a "qualitative" manner. Now it's being done in a "quantitative" manner.

From the linked Filloon update:
We really liked this purchase based on the location. 41,000 net acres may not seem huge when looking at deals in other US plays. It is a huge deal, based on the large number of intervals. Looking at horizontal acres (if we consider all of the intervals and locations that can be drilled per section) it comes out to 512,000 net acres. It contains 5,800 economic locations.
RSPP's Delaware leasehold has a combined thickness of 4,500 feet compared to 1,800 in Midland. The majority of Delaware intervals produce more resource per foot on a BOE basis. IRRs are a little better in Midland, but natural gas percentages are higher in the west. Silver Hill has completed 37 wells.
Valiant Ambition: George Washington, Benedict Arnold, and the Fate of the American Revolution
Nathaniel Philbrick
c. 2016
DDS: 973.4 PHI
Chapter 9
Unmerciful Fangs
Begins with Joseph Reed, champion of Pennsylvania's radical Constitutionalists.
Fell out with Geo Washington in the winter of 1776 over his clandestine correspondence with Charles Lee.

Reed adamant in hanging colonists accused of treason. Went after well-to-do Quakers.

Reed and Cadwalader: former friends; began to despise each other; Benedict Arnold was the litmus test.

Arnold, as governor of Philadelphia had been targeting the radical Constitutionalists.

Reed becomes president of the state's Supreme Executive Council, making him the most powerful man in one of the most powerful states in the country.

But things intervened.

Geo and Martha Washington moved from Middlebrook, NJ, early winter, 1778, to Philadelphia for temporary winter quarters, so that he could meet with Congress on plans. 

Washington increasingly upset over Benedict Arnold fighting with the states' other leaders.

Late January, 1779, Geo Washington back to Middlebrook.

February: Geo Washington planning trip to New York via New Jersey. Remember: most Brits have gone south.

By now, Reed going after Benedict Arnold. But not enough evidence to convict him.

Geo Washington refused to take sides.
Arnold's life falling apart: marriage on the rocks; financially in deep trouble; leg not healing; a total mess. And Reed still after him.

Many areas of the country where colonists deeply divided. By 1779, Arnold believed the experiment in independence had failed.

Arnold wanted the Brits back, but that was assuming they could win the war. A big assumption. Spain was about ready to join the French on the side of the colonists.

But the small British Army continued to hassle the poorly fighting colonists in New York area; it was hard to say who might win. Arnold decided to tip the scales.

Arnold still a huge supporter of Geo Washington, but writes a hysterical letter to Washington on May 5, 1779 -- and references "money" which will be his downfall. 

And that's where the chapter ends. Arnold's court martial had been delayed from May to June and he intimated to Washington he would send out feelers to the Brits if necessary, and that if that was treason, he should be found guilty and executed.

So, at this point, we have two punch-drunk armies (as Philbrick calls them) with no clear winner. The colonists remain divided. France has joined the colonists against the Brits, and the Spanish may soon do likewise. Benedict Arnold, a broken man, is ready to put out feelers to the Brits to try to tip the scales in their direction. And he has sent a letter to the only man who might help him, suggesting what he is thinking.

Oil Drops Back To About $51 -- October 20, 2016

Jobs: first time unemployment claims surge; back up to 260,000; an increase of 13,000 from the previous week's revised level (previous week revised up by 1,000). The 4-week moving average was 251,750, an increase of 2,250 from the previous week's revised average.

The DOL said there were no special factors impacting this week's initial claims. Mainstream media suggested claims could rise following Hurricane Matthew, when in fact, South Carolina was one of two states with largest decreases in new unemployment claims. States with largest gains in unemployment claims, the usual suspects: CA, PA, TX, NY, WA.

The Wall Street Journal suggests that the surge in claims was due to Hurricane Matthew. The DOL said there were no special factors impacting this week's initial claims, and South Carolina was one of two states with largest decrease in new unemployment claims. Florida was not mentioned by the DOL. The WSJ says the number was also impacted by Columbus Day. Really?

Interestingly, the Journal was way off on its forecast. The Journal anticipated 250,000 new claims, a slight increase.

This is what the Journal said about the holiday:
The Columbus Day holiday, on Oct. 10, also makes the data difficult to read. Holiday periods can affect seasonal adjustment of the data. 
I do believe these holidays happen every year; are predictable; and, unremarkable. All things being equal, holidays should result in few applications because state and federal offices would be closed, making it more difficult to get some claims filed -- or least delaying them into a new week. Maybe that was it. The surge was due to folks waiting a week to file claims. LOL.

Shale Drillers Are Going Long, Not Deep, In The Oil Patch

From Bloomberg/Rigzone. It looks like SM Energy learned the technology for going long in the Bakken and is now taking that technology to the Permian. Very interesting story.
Long is the new deep.
Just ask SM Energy Co., which on Tuesday spent $1.6 billion to expand its acreage in America’s most prodigious oil patch, the Permian Basin.
The unique geologic makeup of the Permian, consisting of multiple layers of oil- and gas-trapping shale that span hundreds of miles, is well suited for a technique that’s allowing producers to pull more crude out of fewer wells.
Explorers there are drilling longer and longer wells, running thousands of feet sideways to tap as much of the crude-bearing rock as possible.
The technique means owning drilling rights across 1,000 acres in the Permian may actually be just as valuable as holding ones for 5,000 because you’re having to bore less wells.
It’s a strategy more and more companies are taking advantage of to cope in an era of historically low oil and natural gas prices. This ability to bore longer so-called laterals “adds enormous value to each well that we drill,” Herbert Vogel, SM Energy’s executive vice president for operations, said during a call Tuesday on its purchase of 35,700 acres in the Permian from QStar LLC. “I can’t understate how much of a difference contiguous acreage makes.”
The average length of laterals has increased by hundreds of feet in both oil- and gas-bearing rock this year, with an unofficial record 18,544 feet, about 3.5 miles, claimed by a well in Ohio. Denver-based SM said it expects to drill 10,000-foot (3,048-meter) laterals over most of its Texas property in the Permian. And it’s not alone.
This is interesting because the other day a small operator noted they had 1,000 surface acres but 5,000 net mineral acres, or something to that effect, which I had not seen before and which did not make sense. Operators may subtly be changing the say they "market" their mineral acres.

Mineral acres (surface acres) may mean one thing to traditional leaseholders, but they may mean something different to operators and investors, if that makes sense.

Other data points at the linked article:
  • unofficial record of 18,544 feet (3.5 miles); claimed by a well in Ohio (I assume this is the horizontal segment only); a "super lateral"
  • SM Energy: expects to drill 10,000-foot laterals over most of its Permian acreage
  • doubling laterals from 5,000 feet, combined with other techniques, could make a well 4.5x more valuable
  • it only takes two to three days to drill that extra 5,000 feet; only spending 10% more (does not include additional fracking cost); getting a 25% net increase in productivity
  • Chesapeake: stretching to an average 8,000 in Eagle Ford; and, 10,000 in Haynesville (Louisiana)
  • Eclipse Resources plans two, 19,000-foot lateral in the Utica but not unless oil tops $50/bbl

Exxon's CEO doesn't see "supply shortage" pushing up oil prices. Says ample production from US shale regions will keep prices subdued for years to come, disagreeing with others in the industry who have warned about a looming shortage.
Other speakers at the conference echoed his views. 
ConocoPhillips CEO Ryan Lance estimates that new wells are viable in the Permian, Eagle Ford and Bakken shale basins at just $40 a barrel. 
Production in the Permian can grow by 300,000 barrels a day for the next 10 years “easy,” said Scott Sheffield, chief executive officer of Pioneer Natural Resources Co., which is adding five drill rigs in the basin. 
“It’s difficult to see a big supply precipice out there,” Tillerson said. “It’s difficult to see a big price blowout. 
”Despite persistent fears of bankruptcies in the U.S. oil patch as banks cut lending to the energy industry, Tillerson said the current boom-and-bust cycle has “confirmed the viability of a very large resource base in North America,” adding that shale would serve as “enormous spare capacity” to meet future demand. 
The comments are likely to reinforce the emerging view at the Oil & Money conference, which every year gathers some of the leading industry voices, that oil prices will remain at around $50 to $60 a barrel for the next few years.
Saudi can't make it on $50 to $60 a barrel for the next few years. If things go the way they seem to be going, there may be a  huge shakeup in Mideast leadership economically and militarily.

Back to the Bakken

Active rigs:

Active Rigs3368191184186

RBN Energy: for the first time, LNG exports impact US natural gas supply, demand, and price. Part 2.
After about four weeks offline for modifications and maintenance, Cheniere’s Sabine Pass liquefaction terminal in Cameron Parish, Louisiana began accepting nominal deliveries of feed gas starting last Friday, indicating the facility is due to ramp up to capacity any day now. Since the first export cargo in February, about 130 Bcf, or 0.6 Bcf/d, of natural gas has been delivered to the terminal.
While those aren’t quite game-changing volumes yet, deliveries just prior to the outage were averaging more in the vicinity of 1.2 Bcf/d and indications are that deliveries could ramp up to more than 1.0 Bcf/d in short order with the restart and grow to more than 2.0 Bcf/d by the end of 2017. It’s clear that LNG exports are quickly becoming a prominent and inescapable feature of the U.S. natural gas market.
Today, we wrap up our series on the growing impact of LNG exports on the U.S. supply/demand balance.
 Fear-Mongering With Large Numbers

New Yorkers subsidizing aging nuclear plants "could" cost them -- worse case scenario -- $8 billion.


Over 12 years.

New York state population: 20 million.

Works out to 9 cents/day/New Yorker.

Once the judge sees that bottom-line number, he/she will throw out the suit. As frivolous.

The Market

UNP plummets; drops almost 7% in trading as it misses estimates. Earned $1.36 vs estimates of $1.39. Profits dropped 13%. 

Mid-day trading: that was a nice reversal. Now up about 20 points. NYSE:
  • new highs: 47 -- CNOOC;
  • new lows: 16
Open: Dow 30 down 60. Market must be worried about last debate; new polls. Profit-taking in oil, or reality sets it: drops over 2% and back to barely above $50. 

Bank of New York Mellon surprises. Top line and bottom line both beat estimates. Forecast 81 cents; actual, 90 cents.