Whiting, EOG, Oasis To Report Huge Wells Monday; Oil Up $2.15; Futures Up; Good Directions -- December 11, 2016

Futures. Dow 30 futures are up 54 points. Futures don't mean squat ...

Unless. WTI jumps $2.15....

Because. Saudi ready to cut more and ...

Shorts. Worried about OPEC cheating but ...

Could happen, but that's not what the tea leaves suggest. We've seen this movie before. In 1985, Saudi's daily output was around 3.5 million bopd, down from 10 million in 1981. Saudi had lowered their production to prop up prices, but the other OPEC countries were found to be cheating. In response, the Saudis began producing at full capacity. Oil prices plummeted, falling as low as $7/bbl. So ....

Saudi panic. Saudi's breakeven price this year (2016) is $90. Next year, it's $80, or so they say. KSA made one $1 trillion mistake; can't afford another.

Playing shorts like a fiddle? Off-shore can't ramp up; other OPEC countries probably at maximum anyway; US shale -- we'll see.

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Analysts

“Assuming reasonable compliance levels, these cuts will be enough to push the market into deficit,” said Neil Beveridge, a senior analyst at Sanford C. Bernstein in Hong Kong. “This level of coordination is unprecedented.” -- Bloomberg

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The Political Page

Tea leaves? Rex Tillerson out of the running for SecState? Rick Perry for SecEnergy? Heidi for SecAgriculture? Would follow another North Dakota personality as SecAgriculture: Ed Schafer. One wonders what Schumer would promise Heidi if she would turn down Trump's offer -- Senate now at 52 - 48 -- Schumer can't afford Senate to go to 53 - 47.

Pennsylvania learns tomorrow if their votes have been all for nought/naught. I doubt any sane judge would make that ruling. But who knows?

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Active rigs:

	12/11/2016	12/11/2015	12/11/2014	12/11/2013	12/11/2012
Active Rigs	40	65	186	192	183

Wells coming off confidential list --
Monday, December 12, 2016

• None. 

Sunday, December 11, 2016

• 32339, 1,556, Whiting, Carscallen 31-14-3H, Truax, the Carscallen wells are followed here; 45 stages, 8.2 million lbs; t7/16; cum 41K 10/16; 
• 32417, 257, EOG, Austin 421-2821H,  Parshall, 44 stages; 17 million lbs, t6/16; cum 125K 10/16;

Saturday, December 10, 2016

• 31327, 733, Oasis, Johnsrud 5198 12-18 4T2, Siverston, 36 stages 4 million lbs, t6/16; cum 100 10/16;
• 31328, 714, Oasis, Johnsrud 5198 12-18 5B, Siverston, 36 stages, 4 million lbs, t6/16; cum 126K 10/16;
• 32368, 1,764, Whiting, Carscallen 31-14-2H, Turax, 45 stages, 8.7 million lbs, t7/16; cum 140K 10/16;

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 31328, see above, Oasis, Johnsrud 5198 12-18 5B, Siverston:

Date	Oil Runs	MCF Sold
10-2016	30193	60862
9-2016	29500	32283
8-2016	22266	30588
7-2016	28141	34550
6-2016	16005	14950

31327, see above, Oasis, Johnsrud 5198 12-18 4T2, Siverston:

Date	Oil Runs	MCF Sold
10-2016	24001	46703
9-2016	14729	19449
8-2016	19827	24927
7-2016	24534	40337
6-2016	17169	20794

32417, see above, EOG, Austin 421-2821H,  Parshall:

Date	Oil Runs	MCF Sold
10-2016	27811	9916
9-2016	28379	14961
8-2016	29105	13882
7-2016	31212	7860
6-2016	8634	1164

32339, see above, Whiting, Carscallen 31-14-3H, Truax:

Date	Oil Runs	MCF Sold
10-2016	7239	20672
9-2016	3813	8127
8-2016	8262	22092
7-2016	18716	37854
6-2016	2677	2502

32368, see above, Whiting, Carscallen 31-14-2H, Turax:

Date	Oil Runs	MCF Sold
10-2016	22997	58071
9-2016	27860	52005
8-2016	36588	53657
7-2016	40916	60777
6-2016	11411	15802

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Southern California, December 10, 2016

September, 2016, Crude Oil Production -- North Dakota --

Disclaimer: I only went through this exercise once. It has not been double-checked. There are a gazillion possibilities for errors. I might check it later; maybe not. I was just curious. Do not quote me on any of this. I can guarantee there are errors, although (hopefully) minor errors.

This is taken from the NDIC September, 2016, productivity spreadsheets. If this information is important to you, go to the source.

OPERATOR	CRUDE OIL SEPTEMBER 2016
CLR	2,736,305
HESS	2,734,712
Whiting	2,723,465
XTO	2,200,708
Statoil	2,072,393
BR	1,903,339
MRO	1,474,297
EOG	1,438,153
Oasis	1,434,268
QEP	1,371,969
HRC	862,910
SM Energy	804,187
WPX	738,884
Slawson	674,734
ERF	637,140
Newfield	519,787
Zavanna	375,447
Denbury	307,461
Triangle	275,629
Liberty	134,719

Later: although Jill Stein does not have any oil wells in North Dakota (to the best of my knowledge), I understand she is looking for $3 million in donations to order the NDIC to do a "recount." Apparently the difference between production totals for CLR, Hess, and Whiting are concerning to her. Hillary Clinton has not yet recused herself from the "recount" effort.

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A Note To The Granddaughters

Two books and a movie that go well together:

• Woody Allen's Midnight In Paris
• Mademoiselle: Coco Chanel and the Pulse of History, Rhonda K Garelick
• The Paris Wife, a novel by Paula McLain 

Hedging Could Cause Problems For Some Oil Companies; EOG, CLR Are Not Hedged -- Filloon -- December 11, 2016

OPEC cut/freeze: Saudi Arabia turns to shock and awe, with bigger cuts and more countries joining, after disappointing market reaction to initial OPEC deal. -- John Kemp, via Twitter. 

Active rigs:

	12/11/2016	12/11/2015	12/11/2014	12/11/2013	12/11/2012
Active Rigs	40	65	186	192	183

Bakken update: from Filloon over at SeekingAlpha --

Summary:

• Non-OPEC cuts in oil production total between 612,000 bpd and 558,000 bpd.
• Non-OPEC cuts could take time to play out, as OPEC allowed natural declines to be used as a 2017 oil production cut
• The Saudi Oil Minister stated there could be a more sizable cut announced in the near future
• The Saudis have found the leadership role in OPEC again, and orchestrated a historic cooperative effort with non-OPEC nations

Other data points:

• Oil prices may rise from 15% to 35% over the course of the next 12 months. The initial cut by OPEC caused a 15% increase in the price of oil. This was a short squeeze. $52 proved to be a significant resistance level, as producer hedging has the benefit of contango. 

• Contango is a bearish situation that occurs when oil prices are higher in the future. Backwardation is bullish as front month prices are higher. 

• Since oil prices are now higher by $3 to $4/bbl over 12 months, operators can hedge production for better forward prices. Operators hedge to guarantee a price for production. This is encouraged by banks. Cap ex plans can be developed, as it provides revenue certainty. 

• Operators in the Permian, SCOOP/STACK, core Eagle Ford, and core Bakken see decent returns at $54/bbl or $55/bbl. Producer hedging is creating difficulties breaking to the upside. 

• Although many media outlets have reported a 558,000 bpd cut, the 12 nations reporting totaled 612,000 bpd. The OPEC/Non-OPEC cut represents 2% of world production. 

• The size and scope of cooperation is significant, and could move trading ranges higher. 

• Kazakhstan was a surprise with it's 50,000 bpd cut. It had planned to bring a new field online next year. Significant pressure must have been placed on the country, as the IEA had estimated it would increase production in 2017 by 160,000 bpd. Russian production is also a mystery. It self-reports at 11.2 million bpd. 

• Analysts have noted Russian production closer to 10.7 or 10.8 million bpd. It is possible Russia isn't cutting. OPEC has stated it would accept natural declines as cuts. It is possible these cuts may come into effect over time, and not on January 1st.

• Most of the Bakken and Eagle Ford need a steady $60/bbl oil price to increase production. Both plays will continue to see a production decrease. This will offset gains in better plays. 

• It is very important to take a look at operator's hedge books before investing. Companies like Continental and EOG Resources are not hedged and will realize the full value of a drop in world crude inventories. Many of the Permian players will report sizeable hedging losses next year if oil takes off. Many have swaps in the mid-40s.

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A Note to the Granddaughters

A beautiful, beautiful day in north Texas. A bit cool like the rest of the country but very, very pleasant. Arianna, oldest granddaughter, will be Denton all day today for water polo tournament. Four games back-to-back this morning, then afternoon break, to be followed by two early evening games. Arianna is starter on two teams, and reserve on two older-girls team and the National Program team. Pretty exciting.

After dropping her off, I drove into Denton to get cup of McDonald's coffee. Highlight of that trip: I spotted a bald-headed eagle flying above the highway in downtown Denton. Pretty cool. I've seen many eagles in North Dakota; not sure if I've seen an eagle in this part of Texas before. Will add to my bird-spotting list.