Monday, July 30, 2018

WTI Back Above $70 -- July 30, 2018 -- 100% Of Wells Coming Off Confidential List Go To DUC Status

CAT: beats earning by 24 cents. Shares jump 3.3%, up almost $5/share. Also raising full year guidance. But look at that difference year-over-year -- that's the big story. One quarter ago, $1.35; this year, $2.82. Trump tariffs -- apparently CAT not affected. Tax reform -- probably a huge reason -- what companies are allowed to expense to expense in one year.  From
The new law increases the amount of business property purchases that you can expense each year under Section 179 to $1 million (from $500,000 previously). Normally, spending on business property (machines, computers, vehicles, software, office equipment, etc.) is capitalized and depreciated so that the tax benefit is spread out slowly over several years. Section 179 allows you to get the tax break immediately in the year the property is placed into service. 
But it can't be all related to tax reform. Look at sales, especially internationally where tax reform would not have made a difference:
Sales were up 24 percent from a year ago to $14 billion, driven by double-digit growth across all markets.
In the Asia-Pacific region, which accounted for nearly a quarter of company revenues, equipment sales surged 39 percent from a year ago, helped by increased construction activity and infrastructure investment in China. Sales got a lift from a stronger Chinese yuan, as well.
Texas pipelines: bigger oil pipelines are coming to west Texas to ease bottleneck. And with sub-headline Rebecca Elliott is our newest nominee for the Geico Rock Award: drillers are pumping so much oil and gas that pipelines considered more than adequate just a few years ago now are overwhelmed. Say what? That story has to be at least a year old, and now that's a headline over at WSJ.

Texas to 'shatter" oil production; with fewer rigs and workers. No one talks about the Red Queen any more. Over at Rigzone:
Six months ago, Texas was on the cusp of breaking oil production records. In June, crude oil production reached 4.3 million barrels per day, putting Texas on track to “shatter” the previous record of 1.263 billion (sic) barrels in 1972.
“We’re going to blow that record out of the water,” Karr Ingham, Texas oil economist and creator of the Texas Petro Index (TPI), said during a mid-year briefing in Houston July 26. “Both crude and natural gas production will easily set new annual production records in 2018.” 
Ingham called the natural gas production “extraordinary” considering about 92 percent of the active rigs in Texas are drilling for crude oil. He said natural gas production growth is largely accidental, produced from wells that are drilled to produce crude oil. 
Comment: same thing happened in the Bakken boom: natural gas was an irritating by-product.
Comment: I'm not sure what the writer means by "puts Texas on track to "shatter" the previous record. I would argue that 4.3 million bopd has already "shattered' the previous record of 1.3 million bbls in 1972. So much for "Peak Oil" theory.

Back to the Bakken

Wells coming off the confidential list over the weekend, Monday. As I mentioned over the weekend, I expected 50% to 75% of wells coming off confidential this week to go to DUC status. Today, all four went to DUC status:

Monday, July 30, 2018:
  • 34429, SI/NC, MRO, Otis 11-28TFH, Bailey, no production data,
  • 33393, SI/NC, WPX, Hidatsa North 14-23HD, Reunion Bay, no production data,
Sunday, July 29, 2018:
  • 34428, SI/NC, MRO, Klaus 11-28H, Bailey, no production data,
  • 33645, SI/NC, WPX, Hidatsa North 14-23HUL, Reunion Bay, no production data,
Saturday, July 28, 2018:
  • None.
Active rigs:

Active Rigs62613573191

RBN Energy: the next round of US liquefaction plants and LNG export terminals.
Federal regulators are preparing to accelerate their review of a wave of applications to build new liquefaction plants and LNG export terminals — most of them sited along the Gulf Coast and scheduled for commercial start-up in the early 2020s. Only a few of the multibillion-dollar projects are likely to advance to final investment decisions (FID), construction and operation, but even they will have profound impacts on U.S. natural gas production, pipeline flows, and the global LNG market. Today, we begin a look at projects still awaiting FIDs, their developers’ efforts to line up Sales and Purchase Agreements (SPAs), and the Federal Energy Regulatory Commission’s (FERC) push to review project applications in a timely manner.

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