Sunday, December 24, 2017

Idle Meanderings On Christmas Eve While Waiting For The Next Event -- December 24, 2017

There are five stories that fascinate me at the moment:
  • internationally: the growing gap in energy growth in the US and energy constraints in the EU
  • nationally: the continued success of the US shale revolution
  • inter-region (Bakken / Permian): the Oasis decision to expand into the Permian
  • the state (North Dakota): the Legacy Fund
  • regionally: how long North Dakota crude oil production can remain above one million bopd
The Oasis Decision To Expand Into The Permian

The bitcoin phenomenon helps me put the Oasis decision to expand into the Permian into perspective. The most perplexing question was not "why did Oasis make the decision to expand into the Permian?" but, rather,  "whatever possessed Oasis to pay $50,000 / acre to enter the Permian?"

Corollaries to that question:
  • did Oasis overpay?
  • what is the value of a Permian mineral acre?
  • how does one determine the value of something?
I was reminded of that when watching CNBC last week when someone asked an expert what the intrinsic value of the bitcoin was. He evaded that question by replying, "Well, what's the intrinsic value of the dollar?"

With the bitcoin, we know how low it can go: zero.

With the bitcoin, we have no idea how high it can go.

Not knowing the latter, we can't make any estimate of its intrinsic value.

That's not true of the intrinsic value of the Permian. We don't know how low the value of the Permian will go or how high it might go. But for the Permian, we have models. And from the models, we can at least opine on the intrinsic value of the Permian. For the bitcoin, there are no models.

Did Oasis Overpay For The Permian?

I've addressed that before and am not going to go into that again. Whether they overpaid or not is in the eye of the beholder, but based on the data we have one can argue it did not cost Oasis all that much.

Big Fish In A Small Pond, 
Small Fish In A Big Pond

Two things generally happen to small fish in a big pond: they grow bigger or they get eaten.

A corporation is not a fish, and unlike what might happen to a fish, there are additional "things" that can happen to a corporation. But having said that, in the big scheme of things, oil companies tend to get bigger or they tend to get eaten.

Shell Signs Agreement WIth Kuwait To Supply The Country With Natural Gas, A Pressing Requirement For This Nation -- Bloomberg -- December 24, 2017

Of the ten world's biggest natural gas reserves, four of them are in the Mideast, but then we get this story from Bloomberg via Yahoo!Finance:  Kuwait signs LNG import deal with Shell, has "need for gas."
Kuwait Petroleum Corp. signed a 15-year liquefied natural gas import deal with Royal Dutch Shell Plc to help the oil exporting nation meet growing domestic energy demand.
The sales purchasing agreement with Shell International Trading Middle East Ltd. will start in 2020. Shell has supplied Kuwait with the super-cooled fuel since 2010 and declined to say how much gas is covered under the new contract.
While KPC is working to boost local natural gas production, Kuwait has a “pressing requirement” to secure natural gas supplies in the meantime.
LNG could help meet Kuwait’s domestic demand for power to run air conditioners during hot summer months and cut the amount of crude oil burned instead of exported for profit. The contract will cover 2 million to 3 million metric tons of LNG a year, priced at 11 percent below a Brent benchmark, a person familiar said, asking not to be identified because terms of the deal are private.
This comes on the heels of a story that Saudi Arabia is shopping for shale gas properties in the Permian. And all this time, I thought the Mideast had an inexhaustible supply of oil and natural gas. 

The Bakken Strikes Back, Version 2 -- Peak Oil -- December 24, 2017

Link here.

Merry Christmas

Sophia bought presents for the dogs she encounters on her walks to the park. This is her with one such dog, Huey, and the toy she got him.



#AllPackagesMatter -- December 24, 2017

Somehow, I just can't get too excited about this first world problem, and apparently neither did UPS. I have studied this "problem" for years, and it appears the secret lies with "early mailing" but I could be wrong. And, oh, by the way, last time I checked, brick and mortar stores will be open until late today. As we used to say in Williston, if you can't find it at Walmart, you don't need it.

On another note, the twelve days of Christmas this year have been the best ever:

By the way, it appears Santa is on his way:

Top Bakken Stories Of 2017

Top stories by month for the year, 2017 are linked here.


Elevator speech: there were two stories that dominated the Bakken in 2017:
  • the successful opening of the DAPL
  • North Dakota crude oil production maintained greater than one million bopd against all forecasts
Internationally, two big energy stories impacting the Bakken in 2017:
  • Re-balancing
    • OPEC is successful in holding the line; by the end of the year, re-balancing was down to 30 weeks
  • surge in US crude oil exports
Nationally, the biggest story to affect the oil patch: pending

Top Stories Of 2017
By Category
Top Story of The Year: President Trump takes office

The world: "global synchronized economy" becomes the go-to phrase for "Trump rally" (stock markets surged in 2017)

Most surprising story of 2017: despite all the hysteria, war did not break out on the Korean peninsula, nor in the Mideast; global economies surged (well, sort of)

The most egregious story to come out of the Bakken: North Dakota State wants a "stay" on the mineral rights case. This was the case:
The state legislature, in an attempt to resolve disputed mineral rights that are hampering development of minerals in the Lake Sakakawea area, had commissioned a study of the historical, high water mark of the Missouri River prior to building Garrison Dam, which created Lake Sakakawea. Their legislation would also restrict the state’s mineral rights to that historical ordinary high water mark.
The US: the signing of the GOP tax cut bill, the largest in US history

North Dakota, energy: successful opening of the DAPL

North Dakota, energy, runner-up: USGS says it will re-assess the Bakken

North Dakota, technology: EERC and CO2 re-capture initiatives

Most exciting small non-operator in the Bakken: NOG

Most exciting micro operator in the Bakken: White Butte

Most exciting small operator in the Bakken: Oasis

Most exciting large operator in the Bakken: MRO

The deals: Oasis sells off some Bakken assets to enter the Permian

Record price per Bakken mineral acre: n/a

Bakken operators, rigs: n/a

Bakken operations, production: North Dakota crude oil production remains over one million bopd

Bakken operations, density: White Butte Jore Federal

Top prediction for 2018: Lynn Helms opines "fast and furious" for 2018

Biggest story in takeaway capacity: DAPL

CBR: disappearing

Pipeline: DAPL

Fracking: mini-re-fracks; re-fracking

Flaring: reverses direction, trending in the wrong direction

Natural gas: surge in North Dakota natural gas production

Refining: announcement that construction of the Davis refinery (near Belfield) to commmence in early 2018

Investment story of the year: n/a

The "Other" Williston Basin formations: n/a

Bakken economy (too many to list): Williston airport moves long; this is #6 on the Williston Herald's top ten list; link here. Also here, if that link breaks.

History: n/a

Week 51: December 17, 2017 -- December 23, 2017

Top Bakken post this past week
The Bakken strikes back -- Richard Zeits

No longer a crime to accidentally kill a migratory bird 
24 wells on 640-acre spacing: the White Butte Jore Federal wells
Oasis Bakken well design shows large increase in oil production
MRO reports a record DUC
Random look at three Charlson oil field wells with unexplained jumps in production
Random look at high-producing wells in North Dakota
Bridger/Bonneville wells updated; production jump
Newfield completes seven huge DUCs
Over one weekend: ten wells come off confidential list; four more DUCs, two huge Oasis Lawlar wells announced

12-mile, 2-foot diameter pipeline proposed in heart of the Bakken

Random look at a mini-re-frack

Bakken economy
Legacy Fund receives record yearly deposit for December, 2017
North Dakota population drops for first time in 15 years -- loses about 155 people

Re-balancing down to 30 weeks  

Natural gas liquids primer now available from the DOE for free with just one click