The Million Dollar Way (The Bakken Oil Blog): 05/03/17

Wednesday, May 3, 2017

Midnight At The Oasis -- May 3, 2017

This is pretty cool. I found this story linked over at Outrun Change.

Just the other day I wrote:

And as the price increases based on these "emotional" stories that the drawdown continues, US shale will increase, and soon OPEC will become even more nervous about losing market share, and then OPEC cuts will end, as the new mantra becomes: "every Arab for himself."

In other words, "the end of the cartel."

The author of the article at the link at Outrun Change above writes:

A cartel is able to hold its members only when it fulfills their objective of higher prices, which has not been the case with OPEC. The member nations will now look to fulfill their objective by cheating and acting individually, according to their requirement.

Saudi Arabia, which was the leader of OPEC and the price setter of the world, is losing its clout in OPEC. Even in the current round of production cuts, most of the work is being done by Saudi Arabia, whereas the other members are shying away from their designated quotas.

OPEC has far outlived the average lifespan of a cartel, but if the OPEC members don’t regroup and act together, chances are that the cartel will come to an end very soon.

So, there you have it. OPEC will be with us as long as there's oil, but as a functioning cartel, it seems to be coming to an end.

Midnight At The Oasis, Maria Muldaur

Stuff Happens! Natural Gas Well "Explodes" -- This Would Be Bad In Texas; In Colorado, Color Anadarko Toast -- May 3, 2017

Link here to The Wall Street Journal.

Anadarko Petroleum Corp has worked hard to be a good neighbor in fast-growing Colorado, where sprawl has encroached on oil and gas operations, and homes and wells are sometimes now side by side.

Through a hotline and a community engagement team that often goes door-to-door, the company has tried to proactively defuse tensions with those who live and work near its sites. It implemented plans to minimize truck traffic and noise and lower methane emissions, and has tried to make its operations as small and unobtrusive as possible.

That goodwill campaign now faces a tough test, following an explosion last month that killed two people at a home built less than 200 feet from a natural gas well operated by Anadarko.

Need to re-think that setback rule, I suppose, for new housing developments.

The Wreck of the Edmund Fitzgerald, Gordon Lightfoot The nut of the story:

Authorities on Tuesday said the April 17 blast at a home in Firestone, a town about 30 miles north of Denver, was caused by unrefined and odorless gas that appears to have leaked from an abandoned gas line attached to the well.

The line had been cut at some point near the home’s foundation, and the gas went into the soil before migrating into the home through a French drain and sump pit, said Theodore Poszywak, chief of the Frederick-Firestone Fire Protection District.

The well was drilled in 1993 by Gerrity Oil & Gas Corp. and later acquired by Anadarko in 2014. The single-family home was built in 2015. Homeowner Mark Martinez and his brother-in-law, Joey Irwin, were killed. Mr. Martinez’s wife, Erin, was severely injured.

Anadarko has responded by voluntarily shuttering more than 3,000 wells that it operates across northeast Colorado. Its shares were down nearly 8% Wednesday afternoon,

following the news about the cause of the blast, and first quarter earnings released late Tuesday that were below analysts’ expectations.

Wow, It Never Quits: Now We Have Record Snowfall In Kansas! Quick Call The Kennedy Klan -- May 3, 2017

Link here.

Between April 29 and May 1, 2017, a vigorous weather system delivered intense rain, heavy snow, and tornadoes across the central and southern United States.

On May 1, the Moderate Resolution Imaging Spectroradiometer (MODIS) on NASA’s Terra satellite captured a natural-color view of a wide band of snow dropped by the storm.

The snow that fell on western Kansas—up to 20 inches (51 centimeters) in some areas—was the heaviest on record for this late in the season, according to the Dodge City bureau of the U.S. National Weather Service.

I wonder if Stephen Colbert mentioned that Kansas was a snow holster for warmists.

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Actions Have Consequences

Good, bad, or indifferent, this never would have happened under President Obama: Puerto Rico files for biggest ever US local government bankruptcy.

Bank Of North Dakota -- Record Profits -- Again -- May 3, 2017

Link here. Data points:

for 2016, profits: $136.2 million
for 2015, profits: $130.7 million
third consecutive year with more than $100 million in profits
2017 estimate: $140 - $145 million in profits
thirteen years of record profits
the state could ask for some of those profits to be used for budget shortfall; first time since 2007 that profits would be utilized in that manner
bank's loan portfolio: largest ever -- nearly $5 billion in 2016, an increase of almost $450 million since 2015
increases in loans for business, agricultural, student and residential loans

I don't know if 3% profit is good or bad ($150 million / $5 billion).

Several Nice Wells To Be Reported This Week; Rigs Back Up to 50 -- May 3, 2017

Active rigs:

	5/3/2017	05/03/2016	05/03/2015	05/03/2014	05/03/2013
Active Rigs	50	27	86	185	192

Four new permits:
Operators: Enerplus (3), Whiting
Field: Eagle Nest (Dunn); Truax (Williams)
Comments:

Three producing wells (DUCs) reported as completed:

30336, 787, CLR, Hendrickson Federal 4-36H, Spotted Horn,
30384, 503, EOG, Fertile 68-0410H, Parshall, t3/17; cum 5K 3/17;
31766, 1,296, Hess, A-State-152-95-1621H-5, Hawkeye, t4/17; cum 3K after 2 days;

Wells coming off confidential the next two days -- Thursday, May 3, 2017:

29878, SI/NC, WPX, Etstatis 32-29HS, Eagle Nest, no production data,
29879, SI/NC, WPX, Etstatis 32-29HB, Eagle Nest, no production data,
30243, 2,634, HRC, Fort Berthold 152-93-7C-6-11H, Four Bears, 36 stages, 5.5 million lbs; , t12/16; cum 90K 3/17;
30871, SI/NC, BR, Curtis 21-16 TFH-3NH, North Fork, no production data,
31990, 1,216, Oasis, Rolfson S 5198 12-29 6T, Siverston, Three Forks First Bench, 36 stages, 4.1 million lbs, t11/16; cum 121K 3/17;

Friday, May 4, 2017:

29103, 780, EOG, Parshall 403-3534H, Parshall, Bakken, 27 stages, 7.3 million lbs, t11/16; cum 45K 3/17;
29104, 1,221, EOG, Parshall 404-3534H, Parshall, Bakken, 22 stages, 5.8 million lbs, t11/16; cum 43K 3/17;
29105, 953, EOG, Parshall 405-3534H, Parshall, Bakken, 21 stages, 5.7 million lbs, t11/16; cum 49K 3/17;
30872, SI/NC, BR, Saddle Butte 21-16 MBH -3SH, North Fork, no production data,
32485, SI/NC, Hess, BB-Chapin A-151-95-0403H-5, Blue Buttes, no production data,

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29105, see above, EOG, Parshall 405-3534H, Parshall:

Date	Oil Runs	MCF Sold
3-2017	4680	5301
2-2017	6124	5183
1-2017	11129	3571
12-2016	13334	7110
11-2016	13801	6793

29104, see above, EOG, Parshall 404-3534H, Parshall:

Date	Oil Runs	MCF Sold
3-2017	3892	2859
2-2017	6411	4038
1-2017	7881	3014
12-2016	12877	3373
11-2016	12124	6074

29103, see above,, EOG, Parshall 403-3534H, Parshall:

Date	Oil Runs	MCF Sold
3-2017	2692	1104
2-2017	6946	3409
1-2017	10447	7230
12-2016	12344	7124
11-2016	12300	5341

31990, see above, Oasis, Rolfson S 5198 12-29 6T, Siverston:

Date	Oil Runs	MCF Sold
3-2017	17089	58236
2-2017	20307	43355
1-2017	26219	47674
12-2016	31516	53571
11-2016	26550	46299

30243, see above, HRC, Fort Berthold 152-93-7C-6-11H, Four Bears:

Date	Oil Runs	MCF Sold
3-2017	13788	16931
2-2017	19648	26219
1-2017	23509	27224
12-2016	31848	33326
11-2016	546	0

Oops! Burning Through Cash; But Investors Don't Care - May 3, 2017

Tesla.

Revenues: slightly better than expected: $2.70 billion vs 2.62 billion
EPS: a loss of $1.33 vs $0.81 forecast

Shenanigans -- Oil Numbers -- May 3, 2017

Earlier this morning I posted this:

The big question is: how did the crude oil market react to the news that there was a paltry drawdown in US crude oil storage this week? The price of WTI dropped below $48 yesterday. Traders are obviously seeing the same problem.

The bigger question is: when did traders get this information? Based on the time of the price move, it is clear to me that "inside" traders got this information yesterday; the rest of us got it today. The big move in WTI pricing was yesterday. Today, the price of WTI moved just one cent -- WTI is down $0.01 today (at this moment -- May 3, 2017; 12:35 p.m. CDT). Just saying.

The point is this: this morning I suggested that "inside" traders knew yesterday that the drawdown in US crude oil supplies that wold be reported today. Today we see further proof -- from Twitter:

Yesterday afternoon, "inside" traders got the news. The "official" report was embargoed until today for the rest of us.

Finally -- The Experts "See Through" OPEC -- "Disingenuous" Says One Analyst -- FT -- May 3, 2017

We saw this some time ago. It was represented in the graph at this post and the update at this post. The Financial Times is reporting:

As oil prices languish near $50 a barrel, energy traders are starting to point the finger at one previously overlooked culprit: exports.

For all Opec’s self-imposed production restraint the group’s exports have fallen by less than their output cuts might imply. Morgan Stanley analysts say that while Opec has hit its target by cutting as much as 1.4m barrels a day of output to try and support the market, shipping data suggests the group’s exports have declined by less than 1m b/d since the start of the year.

Consultancy Energy Aspects echo this view, arguing the discrepancy between the group’s production and exports risked being seen as “disingenuous” by a market that has been rapidly “losing faith” in the group.

Analysts at Energy Aspects say tanker tracking data suggests Opec’s exports have fallen by as little as 800,000 b/d so far in 2017 as some members have supplanted oil lost to production cutbacks with crude from storage, or have freed up barrels for export as they carry out maintenance at domestic refineries.

One thing not mentioned in the article: the only ones who really know how much Saudi Arabia is producing is Saudi Arabia itself. So we have two problems:

trusting Saudi Arabia's numbers (and the rest of OPEC's numbers)
the oil coming out of storage

Saudi Arabia is in a fight for its life. Does one think they would change their ways now?

As is it: 200 days until US crude oil is "re-balanced."

EPD -- Surprise Beat -- Whoohoo! -- May 3, 2017

Disclaimer: this is not an investment site.

My two favorite words are "surprise" and "beat" when seen in a headline for an energy earnings story.

Especially when the two words are next to each other.

Example. From Zacks, May 3, 2017: Enterprise Product Partners (EPD) Q1 Earnings & Revenue Beat.

My bad. No "surprise" in that headline.

I guess it was subconscious. My subconscious mind read the headline as a "surprise beat." LOL.

Whatever.

Data points from the linked article:

EPS: 36 cents vs forecast 32 cents (surprise percent: 12.5%)
revenue: $7.32 billion vs forecast $6.713 billion (huge)
bottom line: also improved from same quarter one year ago
revenues increased to $7.32 billion from $5.00 billion (46% increase) from year-ago quarter
quarterly distribution: increased 5.1% y-o-y to 41.5 cents
adjusted cash flow: $1.1 billion
adjusted cash flow coverage: 1.3x
partnership retained $238 for CAPEX, reducing debt, yada, yada, yada

The headline may not have had the word "surprise" but the story and the graph at the linked story used "surprise" a lot.

A New Metric: Weeks To "Re-Balance" -- May 3, 2017

As promised, some days ago, a new metric. This will give me something to do, and it should be lots of fun, something to look forward to each Wednesday.

These are the "facts." For years (decades?) the US got along just fine with 350 million bbls of crude oil in storage and 21 days' supply based on "current" usage at the time.

Today, the US has 530 million bbls of crude oil in storage and 32 days' of supply based on "current" usage.

I define "rebalacing" as getting back to 21 days of supply or 350 million bbls of crude oil in storage (yes, there will be a slight change as US demand for crude oil increases or decreases; folks who understand calculus will note that).

So, here we go.

First, the John Kemp weekly graph:

The EIA does us a disservice by not including the line for 2014 or 2010. The average is skewed by the last two years of production. If one removed the last two years of production, the 10-year median would be a whole lot lower.

But I digress.

Second, the spreadsheet. This week the spreadsheet is very, very short -- two rows -- because we just started the spreadsheet.

The first column is the number of weeks that the data has been tracked at the blog.

The second column is the date the data was posted by John Kemp.

The third column is the "drawdown" in crude oil in millions of bbls as noted by John Kemp (source: EIA).

The fourth column is the amount of US crude oil in storage in millions of bbls (not including the SPR).

The fifth column is the number of weeks it will take to "re-balance" based on this week's drawdown.

So, for this week, the drawdown was an incredibly paltry 0.9 million bbls.

That brings us to 528 million bbls.

528 - 350 = 178 million bbls.

178 million bbls divided by this week's drawndown (an incredibly paltry 0.9 million bbls) = 198 weeks.

At the rate that US crude oil supplies decreased this week from a week ago, it will take 178 weeks to get back to 350 million bbls of crude oil in US storage. That's almost four years. (Data for week 2 and following weeks was added after the original post.) (Update: methodology was wrong in some parts of this table; it has been updated and corrected at this post):

Week	Date	Drawdown	Storage	Weeks to RB
Week 0	Apr 26, 2017		529	180
Week 1	May 3, 2017	0.9	528	178
Week 2	May 10, 2017	6.0	522	29
Week 3
Week 4

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The big question is: how did the crude oil market react? The price of WTI dropped below $48 yesterday. Traders are obviously seeing the same problem.

The bigger question is: when did traders get this information? Based on the time of the price move, it is clear to me that "inside" traders got this information yesterday; the rest of us got it today. The big move in WTI pricing was yesterday. Today, the price of WTI moved just one cent -- WTI is down $0.01 today (at this moment -- May 3, 2017; 12:35 p.m. CDT). Just saying.

NDIC GIS Map Server Still Down -- May 3, 2017

Updates

Later, 6:55 p.m. Central Time: see first comment; hopefully back up tomorrow.

Original Post

It looks like the file reports / scout tickets / well production history data site is back up and current (subscription required).

The GIS map server has been down for about a week.

Cleveland

The "mother of all stacked plays" -- 2012. The four major zones in this area:

Granite Wash;
the Tonkawa oil play;
the Marmaton; and,
the Cleveland formation.

Grows along Texas-Oklahoma line -- 2011.

The Energy And Market Page, T+103 -- May 3, 2017; "Plus-Size" iPhones And Connecting The Dots

47.74: WTI.

Thinking outside the box: Trump's US looks past energy independence to global dominance -- Bloomberg.

The lede (memo to self: note to Jane Nielson):

The U.S. is in the position to be energy-dominant, not just independent, thanks to fracking and plans to loosen drilling regulations, Interior Secretary Ryan Zinke said Monday.
Some data points

oil production may increased by 17% to 10.24 million (currently 9.2 million; EIA suggested some time ago US could reach 9.9 million by 2018)

"God has a sense of humor -- he gave us fracking" -- Zinke

Nice. BP's profit triples on higher oil prices, higher output.

Who wudda guessed? Crescent Point Energy Corp -- in past five years has snapped up more oil assets than any of its peers in North America. -- Bloomberg. Data points:

drilling new wells in Uinta Basin, Utah
developing operations in the Bakken
from 2012 through last year; completed 15 acquisitions -- the most of any oil explorer and producer on the the continent
value of those acquisitions: $6 billion; ranked 5th -- overshadowed by megadeals from giants such as Devon and Encana;
acquisitions averaged about $400 million/transaction
most recent acquisition: bought 8,500 acres in North Dakota, $100 million in cash; sold conventional assets in Manitoba for about same amount; essentially trading one property for the other

Permian-related? I don't know. Anadarko Petroleum posts bigger-than-expected loss as costs rise -- Reuters.

Noble to exit Marcellus: Reuters.

U.S. oil and gas producer Noble Energy Inc said on Tuesday it would sell all its natural gas production assets in the Marcellus shale field for $1.23 billion, as it shifts focus to liquids-rich, higher-margin assets.

Devon announces similar asset sale: Reuters.

U.S. oil producer Devon Energy Corp said it would divest about $1 billion of its assets, and also reported a quarterly profit that beat analysts' estimates.

The assets include certain portions of its Barnett shale properties focused around Johnson County, Texas.

The sky is falling, the sky is falling. CNBC. Or not. All morning CNBC has been reporting that Apple shares are plunging after disappointing results yesterday. Reality: Apple shares down 0.83%. Reality: EPS beat. Reality: will return $60/share to shareholders through 2019. Reality: largest dividend payer in the world. The dots connect: MSNBC - CNBC - Apple.

Connecting dots:

Tim Cook was surprised to see that "plus-size" iPhones outsold "standard-size" iPhones
CNBC noted that almost a million folks "cut" their cable cord in first quarter
but it took Cramer to connect the dots: millennials using large iPhones to stream Netflix, Amazon

Get real (adult language):

Reality: movies looking pretty good on iPhones -- The Verge, March 30, 2017:

But months later came the first iPhone, with Steve Jobs touting the new device as a great way to watch Pirates of the Caribbean on the go. Jobs, of course, had famously said he was “not convinced people want to watch movies on a tiny little screen” years before introducing video-capable iPods. And although the first iPhone was notably larger than those iPods, it has to have been the device Lynch was thinking of when he derided the idea of watching movies on phones.

The Political Page, T+103 -- May 3, 2017

Jobs: 177,000 vs forecast 175,000 -- weekly ADP report.

NOKO: China urges its citizens who may be in North Korea (generally in Pyongyang) to return home. That message was released by the Chinese some days ago. Nothing new; nothing imminent.

What goes around, comes around: Burlington College (VT) trumps "Trump college."

Does Slow Growth in Oil Sands Output Justify New Pipeline Capacity? -- RBN Energy -- May 3, 2017