COP Temporarily Exits The Permian; Will Focus On The Eagle Ford /Bakken -- But Also Assets In Alaska -- July 5, 2018

Wow, look at this. Again, this is not an investment site.

I have no idea if lessons learned during the Bakken revolution influenced what is going on in Alaska, but one wonders. Look at this SeekingAlpha link regarding COP.

This is a rig targeting a conventional target.

From the screenshot, COP:

• the increase in length to 28,000 feet is 40% greater than previously
• 1.4 of what = 28,000 feet? 20,000 feet? 
• 1.4 x 20,000 = 28,000 feet

I don't know if that's TD (vertical + horizontal) or simply the length of the horizontal; it appears they are talking about the horizontal length.

• using this method, COP hit a new record for highest initial production in Alaska, >10,000 bopd

Now compare with the Bakken:

• TD: routinely 20,000 feet (vertical + horizontal)
• horizontal alone: 9,000 feet
• initial production, about 15,000 bbls/month, but CLR might have set a Bakken record with >80,000 bbls/month or about 2,500 bopd (an outlier right now)

From the SeekingAlpha article:

• cost of producing Alaska conventional crude oil for COP: $30 / bbl

Also from the article, the writer reminds us that COP has recently announced that the company is "exiting" the Permian in the near term:

The plans to defer Permian growth are not that significant. However, the ability to move the capital budget to other basins is very significant. Many have wondered how oil production can grow when all those Permian challenges are front page news. The answer is that the capital simply shifts to areas without problems.

The Eagle Ford and the Bakken have become far more competitive now that the Permian production sells at a discount. Plus both have some idle pipeline capacity.

Management has plans for even more basins in the future. It is highly likely that there will not be an interruption in the unconventional growth plans at all. Some of these other basins already have pipeline capacity additions under construction and are planning for still more capacity. Therefore some of the basins may "never" suffer the challenges of the current Permian situation.

This is the second source that has said the Bakken has "some" idle pipeline capacity. And there's been a bit of a resurgence in CBR in the Bakken. Some have suggested that lack of takeaway capacity is the reason for the number of DUCs we see in the Bakken. That may be right, I don't know. But with refineries operating at 97%+ capacity, I wonder if it might be something else that accounts for DUC data.

Remember, John Kemp says we are in a period of "severe backwardation."