Monday, May 22, 2017

Why I Love To Blog -- Reason #23 -- May 22, 2017

Weeks ago, if not months ago, this was the first ad-free, no-subscription/password-required blog on the Bakken that saw through the smoke and mirrors of OPEC's production cuts (wink, wink). This was the first ad-free, no-subscription/password-required blog to note that whatever cuts Saudi agreed to were more than made up by taking oil out of storage.

Finally, "everyone" has caught on and it's been reported everywhere. Most recent example: The Wall Street Journal.

But there's a "new game" in town: talking about getting crude oil inventories back to the 5-year average.

The problem with that: the 5-year average was greatly affected by the Saudi surge in production 2014 - 2016. See graphic at this post.

To make this meaningful, we need to get global crude oil inventories back to pre-2014 levels and back to an 18-day supply level vs the current 32-day supply level.

Notes From The Man-Cave

An incredibly beautiful Texas evening. Cool, no breeze, feels like 74 degrees. Wow, pretty good: weather channel says it's 72 degrees.

On the patio -- man-cave -- listening to ABBA in the background, surfing the net, and occasionally reading the current issue of The New York Review of Books. Perhaps the best is the essay on Wilkie Collins. I only know of him because a female friend in another life-time told me about Wilkie Collins and The Woman In White. It was because of her -- the female friend in another life-time, not the woman in white -- that led me to reading the Wilkie Collins novel. I've completely forgotten the story line; I may have to re-read it. LOL.

Interestingly enough, The Woman In White was also referenced in the recent biography of Bram Stoke, the author of Dracula. Yes, that Dracula. 

Seven XTO DUCs Completed; Five New Permits -- May 22, 2017

Active rigs (it's hard to believe that a year ago there were only 25 active rigs in North Dakota):

Active Rigs512582189185

Five new permits:
  • Operators: MRO (4), CLR
  • Fields: Bailey (Dunn), Rattlesnake Point (Dunn)
  • Comments: see graphic below
Four permits renewed:
  • QEP: four MHA permits, all in section 26-148-92, Dunn County
Seven producing wells (DUCs) reported as completed:
  • 31091, 1,604, XTO, Nordeng 34X-23A, Siverston, t4/17; cum --
  • 31092, 1,182, XTO, Nordeng 34X-23AXB, Siverston, t4/17; cum --
  • 31093, 1,351,XTO, Nordeng 34X-23EF, Siverston, t4/17; cum --
  • 31094, 1,221,XTO, Nordeng 34X-23B, Siverston, t4/17; cum 13K 3/17;
  • 31095, 892, XTO, Nordeng 34X-23F, Siverston, t5/17; cum --311
  • 31142, 1,495, XTO, Nordeng 34X-23E, t4/15; cum --
  • 31489, 713, XTO, Cheryl Federal 24X-12EXF,  Siverston, t4/17; cum -- 
  • see also #20862
Operator Transfer, from Mountain Divide, to Future Acquisition Company, LLC. Future Acquisition Company is headquartered in Houston, TX; it was formerly known as Future Petroleum Company, changing its name to Future Acquisition Company in June, 2013. It operates as an LLC, a subsidiary of Taos Resources Holding Company LLC.
  • 11 wells
  • all in Divide Count
  • permit numbers 23XXX - 28XXX
  • Wigness, Leininger, Olson, Heckman, Charlotte, BJNJ, Reistad, Aaberg wells
MRO's Proposed Location For Four More Wells

ONEOK Opens New Offices In Sidney, MT -- May 22, 2017

From The Crude Life, data points (see first two comments):
  • 20-acre complex; 60,000 square of finished office, shop, warehouse (average Wal-Mart, I believe is a million square feet, to help put this in perspective)
  • room for growth
  • chose Sidney: 
    • it has roots there with its legacy facility
    • near center of its operations in eastern Montana, northwest ND, and southwest ND
    • original legacy facility was the Grasslands Plant, 15 miles southeast of Sidney
    • Sidney is also where ONEOK's natural gas pipeline there which is the transition between natural gas and natural gas liquids; where ONEOK's Bakken natural gas liquids pipeline starts; moves south, taking liquids to southern markets
  • article mentions bringing Lonesome Creek and Bear Creek on-line
  • not mentioned: less traffic; probably more economical to build in Sidney, not Williston; also some tax advantages for workers living in Montana vs North Dakota

The Political Page, T+122 -- May 22, 2017


Later, 8:17 p.m. Central Time: only because my wife was watching CNN was I watching it when Erin Burnett ("Out Front") and Anderson Cooper were reporting on the blast in Manchester, UK, that killed at least 19 and injured another 50.  Obviously from the very beginning, it was a terrorist attack, but both Erin and Anderson (bless their hearts) were saying there was no evidence that this was a terrorist attack, and had talking heads to confirm that there was nothing to suggest this was a terrorist attack, despite the fact that the Drudge Report banner already blared that it was a "nail bomb." I know that Erin and Anderson (newsreaders) would not have time to scan the internet for updates but their producers certainly let them down.

Original Post
Both Bannon and Priebus leave Mideast tour early; heading back to Washington, DC. Much, much speculation. I wonder if they were on same plane.

John Podesta appears to be losing it.  He's probably not part of Hillary's inner circle any more.

New Supreme Court justice Gorsuch dissents as Supreme Court upholds ban on big-money gifts to parties. Good news for GOP.

Iran: sad to see Obama Hillary defeated.

Snowflakes: wow, regardless of where you stand politically, there is no question that the New York elite are still hung up on the fact that Trump defeated Hillary. In the current issue of The New Yorker these three essays:
  • "Trump' Constitutional Crisis," David Cole, ACLU lawyer; the writer's constitutional crisis, Comey being fired, who, by the way, served at the "pleasure" of the president
  • "How He Used Facebook to Win," Sue Halpern, who apparently was unaware that Hillary had full access to social media and the entire mainstream media eating out of her hand 
  • "A Better Way to Choose Presidents," Eric Maskin and Amartya Sen; the essay begins with the French election but that was just a "bait and switch"; the last half of the essay was on the Electoral College -- another horse that has been beaten to death
And, of course, the cover of the current issue of The New Yorker has the usual cartoon caricature of Trump.

Wow, the New York elite just can't get over it, can they?

Another tarmac talk about grandchildren? James Comey's testimony delayed so that he can talk to Robert Mueller. There are only two reasons Comey would want to meet with Mueller: a) to talk about their grandchildren; and/or, b) to get the stories straight. Just kidding. There are at least a dozen other reasons. 

Cereal In Bed

The Energy And Market Page, T+122 -- May 22, 2017

US gasoline demand: I've written about this many, many times, but unable to explain it -- falling US gasoline demand despite a great economy. Now, in Barron's, May 22, 2017, page M1: is Amazon behind the recent drop in miles driven by Americans? US miles driven averaged 1.5% growth in the three months ended February, down from almost 3% in 2016. If consumers shop more on-line, there's less need to drive to the store or mall. I find that a stretch, but I have to admit that on Sunday, yesterday, the US Postal Service delivered two products to my door, each of which would have normally necessitated trips to opposite sites of town. Barron's may be on to something.

Saudi Arabia: Without question, the top energy and market story over the weekend had to do with all the deals being announced in/with Saudi Arabia as a result of President Trump's visit there.

Norway: reports production decline, Norwegian Continental Shelf, month-over month (April vs March).

BRK: Barron's has a great article on Warren Buffett / Berkshire Hathaway in the May 22, 2017, issue. This is what caught my eye (business, 2016 net billion revenue, 2016 net income, % of latter):
  • Berkshire Hathaway Energy: $17.9  --  $2.3 -- 12.85%
  • BNSF: $19.8 -- $3.6 -- 18.18%
  • Geico: $25.5 -- 0.5 -- 1.96%
  • Manufacturing, service, and retailing: $120.1 -- 5.6 -- 4.66%
Many, many story lines, I assume.

Highs: new 52-week highs -- BAX, XLNX.

Cash flow. My understanding is that once Tesla begins ramping up automobile production, it will take much more money to ramp up than what it has taken to get to where they are today. Here's someone's synopsis of Tesla's cash flow over the past three years:

It's not just the numbers, or perhaps even the SIZE of the numbers, but look at the trend on the net income line vs revenue.

Nuverra Bankruptcy; The Trials And Tribulations Of SM Energy -- Filloon -- May 22, 2017

Nuverra (formerly Power Fuels) files for bankruptcy protection. Not sure of the date the company first announced it was considering protection; the date it publicly said it would file; and the exact date of filing, but the latter must be very recent. One can go back and find many articles on pros and cons of investing in this company:
I find it interesting that one of the bigger oilfield services companies in North Dakota (and the heart of the Bakken in this case) filing for bankruptcy did not appear in The Bismarck Tribune, unless for some reason it did not get picked up by Google.

As far the founder of Power Fuels:

The Gambler, Kenny Rogers

Trials And Tribulations Of SM Energy
At SeekingAlpha:
  • SM Energy has underperformed Permian operators in 2017 due to lackluster well results
  • Blissard 20-29 1H has produced more oil in 4 months than the average of all SM's Permian wells curved to 18 months
  • It is just one result, but this is in line with other top operators and might be the start of much better initial production rates going forward
This is the operator that was predominantly a natural gas company when it entered the Bakken. It said repeatedly -- at least that was my impression -- the company would "never leave" North Dakota. The company left North Dakota in 2016, but has delayed selling its Divide County assets due to poor prices.

From the linked article:
SM's average completion produces considerably less when compared to the average of all locations. This is significant, as SM's produce 158,930 BO compared to the 201,310 BO for the group over 18 months of wells life. One of SM's newest completions could change this. Blissard 20-29 1H only has 4 months of production, but is significantly outperforming its older location.
Back to the Bakken

Active rigs:

Active Rigs512582189185

RBN Energy: the series continues -- takeaway capacity in the Marcellus / Utica. This post is on the takeaway projects to the southeast US.
One of the major target markets for Appalachian natural gas is the U.S. Southeast. More than 32 GW of gas-fired power generation units are planned to be added in the South-Atlantic states by 2020 and LNG exports from the Southeast are increasing.
Of the 15.5 Bcf/d of takeaway capacity planned for Appalachia, close to 5 Bcf/d is targeting this growing demand. Despite the need, these pipeline projects designed to increase southbound flows from the Marcellus Shale have faced regulatory delays and setbacks. Today, we provide an update on capacity additions moving gas south along the Atlantic Coast.