Tuesday, June 13, 2017

CFOs And COOs Are Earning Their Pay -- June 13, 2017

I think this may be the biggest untold story coming out of this month's Director Cut. For the operators in the Bakken, the CFOs and the COOs are earning their pay.

COOs: despite taking more wells out of production, operators increased overall crude oil production in the Bakken. COOs would have called the shots, deciding what wells to shut in / take out of production.

CFOs: meanwhile, more wells are being drilled but not completed. These wells cost money to drill and yet they won't generate any cash flow until they are completed. The CFOs have to "find the money" to drill new wells while operating cash flow remains a challenge.

I'm really quite impressed. I would love to hear from those in the field the observations they made and the thoughts they had regarding this month's North Dakota crude oil production data (April, 2017).

Another Midstream Assets JV In The Permian Basin

Data points from Reuters:
  • WPX Energy
  • privately held Howard Energy Partners
  • oil gathering and natural gas processing infrastructure in the Permian Basin
  • pipeline is designed to move 125,000 bopd
  • natural gas plant: 400 million cf/d initial capacity
  • WPX will receive $300 million upfront in cash from Howard Energy

Active Rigs In North Dakota Jump To 55, Compared To 28 One Year Ago; EOG Renews Fifteen West Clark Permits -- June 13, 2017

Active rigs:

Active Rigs552875185185

Three new permits (two others were posted earlier):
  • Operators: Enerplus (2), Lime Rock (1)
  • Fields: Spotted Horn (McKenzie), Stanley (Mountrail)
  • Comments: as noted, two additional permits were posted earlier
Seventeen permits renewed:
  • EOG (15): fifteen West Clark permits, McKenzie County, all in section 1-151-95
  • Hess (2): two RS-State permits, both in Mountrail County

April, 2017, Production Data Has Been Posted; Production Exceeded Expectations: Natural Gas Production Hits All-Time Record -- June, 2017, Director's Cut

The Director's Cut for April, 2017, data has been posted. North Dakota crude oil production increased by 2% month-over-month.

From the Director's Cut: both DUCs and inactive well count increased. It is the inactive well count in this case that is most interesting; despite more wells going inactive, the total production increased 2%.
  • Estimated wells waiting on completion is 830, up 141 from the end of March to the end of April. 
  • Estimated inactive well count is 1,466, up 167 from the end of March to the end of April. 
The Bismarck Tribune story here. Data points:
  • exceeded expectations
  • natural gas production hits an all-time time as operators focus on the core care of the Bakken
  • average production: 1.05 million bopd 
  • natural gas production: jumped 6% to more than 1.8 billion cubic feet / day -- a new record
  • Lynn Helms: 55 is like the peak (number of active rigs in North Dakota) for 2017
  • overall flaring: 10.4%; concerning is that federal delay in pipeline permitting makes capturing gas difficult on the reservation; current 15% of natural gas the reservation is flared
  • 70% of ND oil was transported by pipeline in April, up from 58% in March
  • cost benefits of DAPL won't be seen for 6 months or so (contracts, etc)
Reuters reports the story here. My favorite line in the Reuters story:
North Dakota regulators said in a statement they expect oil prices to be weak through at least October. OPEC members last month agreed to maintain their own production cuts, though rising output in states like North Dakota has been offsetting the cartel's moves.
Graphs at outrunchange here.

From The Director's Cut

Oil production
  • April, 2017: 1,050,630 bopd
  • March, 2017: 1,025,690 bopd
  • Delta: +2.4% or + 24,940
Producing wells:
  • April, 2017: 13,717
  • March, 2017: 13,693
  • Delta: +24 wells or 0.18%
  • April, 2017: 58
  • March, 2017: 93
Oil price:
  • today: $35.50
  • May: $37.85
  • April: $39.86
  • March: $38.13
Rig count:
  • today: 55
  • May: 50
  • April: 50
  • March: 46
Wells not producing:
  • waiting on completion: 830; up 141 from the end of March to the end of April
  • estimated inactive well count: 1,466; up 167 from the end of March to the end of April
Takeaway capacity:
  • remains dependent on CBR to coastal refineries

Well, That Didn't Last Long -- The Energy And Market Page, T+144 -- June 13, 2017

By the end of yesterday, based on what talking heads were saying about the "correction" or "pullback" or "plunge" in the NASDAQ, I thought the world was coming to an end. LOL. Not really. I took advantage of it. Whether that was a good move or not remains to be seen.

Today, I see the NASDAQ has recovered a bit.

In addition, it appears that the Dow 30 has hit a new record high, up around 90 points.

The Dow 30, S & P 500, and Russel 2000 all hit record highs.

The NASDAQ rose 45 points. 

Peak Oil? What Peak Oil? Look At What Statoil Is Doing -- Look At What Iraq Is Doiing -- June 13, 2017

Active rigs:

Active Rigs532875185185

RBN Energy: the series continues -- Appalachia gas supply vs takeaway capacity.

Bakken takeaway: pipelines can now handle all of the current Bakken crude oil output. But that doesn't mean the complete end of CBR.

Another DAPL? TransCanada (think Keystone XL) asked US State Dept to pause its review of an oil pipeline that would originate in northwest North Dakota and carry oil to Canada. Data points, from The Bismarck Tribune:
  • Upland Pipeline
  • would originate 15 miles southwest of Williston
  • 126 miles in North Dakota; crossing border near Flaxton, ND
  • would carry Bakken crude ot Canadian markets, as well as the US East Coast
  • would connect with TransCanada's Energy East Pipeline
  • pause requested to put review in sync with Canada's review of TransCanada's proposed Energy East Pipeline System
Under-the-water minerals: ND attorney general "the new law" doesn't apply to contested minerals west of the US Highway 85 bridge, known as the Wilkinson case; McKenzie County Farmer.

Many, Many Stories Today -- Quickly

Saudis miffed: OPEC oil output jumps 336,000 bopd in May on increases in Libya, Nigeria, and Iraq. This may or may not have been a surprise to those watching this but it is not helping OPEC / non-OPEC attempt to re-balance. Add this to the increase in US production.

On the other hand, from Reuters: signs of US inventory declines, lower Saudi exports. Data points:
  • Saudi Arabia says it will cut crude oil allocations to Asia in July by 300,000 bopd (compare with previous story)
  • deeper cuts than the cuts in June
  • sources said volumes to the US would be cut by about 35% in July
  • Genscape forecasts a draw of more than 1.8 million bbls at the Cushing
  • analysts suggested last week's 5% plunge in oil prices was excessive; the build of 3.3 million bbls last week was an anomaly
This will be very, very interesting to follow. We'll know a bit more tomorrow.

Peak oil? What peak oil? From Reuters via Rigzone -- Statoil plans to more than triple its production in Brazil; wants to become sole operator for the entire Carcara discovery (among the world's biggest in recent years)
  • Statoil has invested more than $10 billion in Brazil
  • Statoil: largest foreign offshore operator
  • Peregrino heavy oilfield 85 km off the coast of Rio de Janeiro is the biggest Statoil opperates outside Norway 
  • Peregrino: producing 90,000 bopd; Statoil accounts for 60% of that
  • by 2030, Statoil's production from the field expected to more than triple
  • phase 2 development is expected to add 250 million bbls of reserves at a break-even price of below $45 a barrel, down from an estimate of $70/bbl
TSLA: increasing chatter that Tesla will miss its self-imposed deadline to ramp up in July. Shares up almost $8 in pre-market trading.