Monday, January 15, 2018

Majors Continue To Exit The Mideast -- Most Recent, Shell -- January 15, 2018

Link at WSJ.
Shell said Monday it is selling for an undisclosed amount a stake in the West Qurna 1 oil field in Iraq to Japan’s Itochu Corp.  , the latest step in a gradual retreat from the region. The company is also expected to give up its holding in Iraq’s Majnoon oil field later this year, though it will retain its natural-gas interests in the country.

Once it officially leaves Iraq later this year, Shell will have oil assets in Oman that produce about 220,000 barrels a day.Shell is keeping its considerable natural-gas interests in Middle Eastern countries, including Qatar, Oman, Egypt and Iraq, a strategy it has followed after its $50 billion deal to buy gas giant BG Group PLC in 2016. The deal also brought Shell big business in Brazil’s offshore oil fields, where it has centered its oil-production strategy.

The move reflects the waning attraction of the Middle East’s once-prized oil reserves, as companies find that the free flow of crude in the region often comes at a political or financial cost. U.S. oil giants Exxon Mobil Corp. and Chevron Corp. have ratcheted up their focus on shale interests on their home turf in recent years, though both retain interests in Iraq.
This is quite interesting. But, I'm too tired to say anything more, but it doesn't take a lot of dots to connect this story with the story earlier today about Ford's plans for EVs.

For The Archives

Oil market conquers its fears over shale -- in The WSJ. I really don't care about the article one way or the other, and would not have linked it except for the fact I wanted to post this comment (as usual, the comments are a better read than the article itself):
Another tired prediction of peak oil?  How many decades has this been going on?  Sorry, but the world is nowhere near peak oil, as the amount of oil and gas remaining has many decades of play in it.  Besides, your EV has to be charged from the traditional power grid.  The required power for universal EV usage will require doubling the national power generating capacity - hello King Coal.
This is the start of the article:
For more than three years, the ability of shale producers to rapidly dial production up or down has haunted the oil market, cutting off nascent rallies and keeping prices trapped around $50 a barrel or lower. Any move above that level stoked fears that producers would flood the market with oil once again, causing dramatic reversals in prices.
But now, U.S. crude futures are approaching $65—up more than 6% this year for the strongest first two weeks of a year since 2005. Brent, the global benchmark, traded above $70 on Monday, and some analysts say $80 crude isn’t out of the question this year.
Expectations surrounding shale haven’t changed dramatically. What has changed is a roaring global economy that has fueled demand for crude at a faster clip than many had anticipated. And the world is no longer awash in oil following more than a year of production cuts from some of the world’s largest exporters. 
By the way, WTI futures?

Wow, look at this: moving toward $65 overnight.

Military Pay

Active duty military will see largest pay increase in eight years -- President Trump wanted 2.1%; Congress wanted 2.4%.

"Compromise": 2.4%. Wow. Largest pay increase in eight years.

That was the good news.

The bad news: the military might not see their checks for awhile if Congress is unable to find short-term spending deal.

Here We Go -- January 15, 2018

Futures mean squat, but one can dream I suppose. Futures as of about 6:30 p.m. CT, January 15, 2018:

Shell Plans To Re-Develop The North Sea -- Peak Oil? What Peak Oil? Break-Even Price? $40/Bbl -- January 15 ,2018; Closing Out Two Polls

From Bloomberg:
Royal Dutch Shell Plc made one of its biggest commitments to the North Sea in 30 years, with plans to redevelop the Penguins oil and gas field.
The Anglo-Dutch oil major will build a floating production, storage and offloading vessel -- its first new manned installation in almost three decades -- to take output from eight wells it plans to drill. Peak production will be the equivalent of 45,000 barrels a day, with a break-even price of less than $40 a barrel, Shell said on Monday.
Penguins, a joint venture between Shell and Exxon Mobil Corp., is already operational after first being developed in 2002. Oil from the field -- about 150 miles (240 kilometers) northeast of the Shetland Islands -- will be transported by tanker to refineries, while the gas will be sent by a pipeline to the St. Fergus terminal in Scotland.
By the way, there's a story out there today -- I forgot to capture / link it, but Saudi's budget is still based on $80 oil. So when one sees a break-even price of less than $40/bbl it has to be concerning. And the reason that the Penguins is break-even at $40? All the infrastructure is in place.

Sort of like the Bakken. All the infrastructure is in place.

Closing Out Two Polls

The first poll.
We won't know until the November and December, 2017, data comes out in February/March, 2018, but I was curious whether readers thought the national drawdown in US crude oil reserves (being reported on a weekly basis) was due to weather-related events in the Bakken. According to the poll:
  • yes: 13%
  • no: 84%
  • other: 3%
That's my feeling also, that weather had little effect on national drawdown of oil reserves.

The second poll.

A reader was also curious if and when we might see drilling -- at least four new wells -- in the Tyler formation in North Dakota:
  • this year (2018) regardless of the price of WTI: 15%
  • this year (2018) only if WTI remains solidly above $60: 19%
  • slim to no chance this year unless WTI well above $75: 33%
  • no sooner than next year (2019), regardless of price: 10%
  • no sooner than 2020, regardless of price: 10%
  • no sooner than 2022, regardless of price: 14%
I was pleasantly surprised by the optimism shown in the results of this poll. Although there were almost too many choices to make sense of the poll (some might say), one could argue that close to 30% see Tyler activity possible this year; and, most agree that Tyler is dependent on price.

And Folks Complain About A Small Refinery Or A Single Oil Well

From arstechnica:

This land will never be used for anything else. Gone forever. 

Random Update Of EOG Activity In North Dakota In Calendar Year 2017


Later, 1:05 p.m. CT: see first comment. I accidentally deleted the comment but I was able to save the comment and re-post it -- about EOG drilling one well in North Dakota in 2017.

Original Post 

Someone mentioned the other day that EOG was not particularly active back in 2017, going so far as to say that EOG had no rigs in the Bakken in 2017 and drilled no wells in 2017. That's probably correct; readers generally follow these things closer than I do.

For what it's worth, these are the wells that EOG reported in calendar year 2017. Some of the earlier wells could have been drilled in 2016, and were completed within a year (and not reported as DUCs); many of the later ones certainly could have been DUCs. I normally "capture" DUCs" by placing IPs in bold/blue, but on quarterly reporting a lot of that is lost. However, going back and checking most of them, I did not find many that were initially reported as DUCs.

In a long note like this, there will be factual and typographical errors; if this is important to you, go to the source. In addition, some wells reported by EOG in calendar year 2017 may have been missed.

  • 33050, 1,703, EOG, Clarks Creek 75-0719HX, Clarks Creek, 4 sections, 57 stages, 15.1 million lbs; t6/17; cum 230K 10/17;
  • 32796, 2,518, EOG, Clarks Creek 73-0719H, Clarks Creek, 4 sections, GL, 55 stages; 13.2 million lbs, t6/17; cum 220K 10/17; 
  • 32795, 2,204, EOG, Clarks Creek 110-0719H, Clarks Creek, 4 sections, GL, 60 stages; 17.5 million lbs t6/17; cum 204K 10/17; 
  • 32316, 674, EOG, Van Hook 71-1411H, Parshall, 35 stages; 13.1 million lbs, t6/17; cum 105K 10/17;
  • 32315, 615, EOG, Van Hook 70-1411HX, Parshall, 28 stages; 10.6 million lbs; t6/17; cum 106K 10/17;
  • 28740, 697, EOG Parshall 161-2928H, Parshall, 26 stages, 6.3 million lbs, t1/17; cum 52K 5/17;
  • 28739, 564, EOG, Parshall 86-29H, Parshall, 23 stages, 5.6 million lbs, t1/17; cum 39K 5/17;
  • 28404, 1,399, EOG, Parshall 31-1820H, Parshall, 39 stages; 10.3 million lbs; all 100 mesh; t1/17; cum 74K 5/17;
  • 28402, 428, EOG, Parshall 30-1820H, Parshall, 40 stages; 10.4 million lbs; all 100 mesh; t1/17; cum 86K 5/17;
  • 28401, 1,611, EOG, Parshall 153-1820H, Parshall, 49 stages; 14.5 million lbs; 100 mesh, t1/17; cum 57K 5/17;
  • 28306, 603, EOG, Parshall 70-19H, Parshall, one section, 24 stages, 6.7 million lbs, all 100 mesh, t1/17; cum 61K 11/17;
  • 27445, 766, EOG, Parshall 158-20H, Parshall, one section, 22 stages, 7.6 million lbs, t1/17; cum 54K 5/17;  
  • 27444, 335, EOG, Parshall 78-20H, Parshall, one section, 24 stages, 8.6 million lbs, pt1/17; cum 35K 11/17;
  • 27391, 998, EOG, Parshall 68-1820H, Parshall, 52 stages; 14.6 million lbs; all 100 mesh; t1/17; cum 73K 5/17;
  • 27390, 918, EOG, Parshall 69-1820H, Parshall, 56 stages; 20.46 million lbs; 100 mesh, t1/17; cum 155K 11/17; 
  • 32514, 1,355, EOG, Mandaree 31-0706H, Squaw Creek, 46 stages, 29 million lbs; TD, 20,914 feet, t12/16; cum 410K 11/17;(19004)
  • 32513, 1,910, EOG, Mandaree 24-0706H, Squaw Creek, 44 stages, 28 million lbs sand; TD, 20,483 feet, t12/16; cum 228K 4/17; 19004) 
  • 32512, 1,505, EOG, Mandaree 30-0706H, Squaw Creek, 37 stages, 17 million lbs sand; TD, 20,495 feet, t12/16; cum 157K 4/17; (19004)
  • 29637, 1,103, EOG, Parshall 24-3332H, Parshall, 27 stages, 6.5 million lbs, t12/16; cum 39K 4/17; (#29635)
  • 29636, 1,673, EOG, Parshall 27-3332H, Parshall, 26 stages, 6.3 million lbs, t12/16; cum 63K 4/17; (#29635)
  • 29300, 804, EOG, Parshall 98-33H, Parshall, 21 stages; 6.1 million lbs, t12/16; cum 73K 11/17; (#17621 -- no jump in production; slight jump in production back in 5/15)   
  • 29299, 988, EOG, Parshall 97-3332H, Parshall, 23 stages; 7 million lbs; t12/16; cum 56K 4/17; (#17621 - no jump in production) 
  • 29298, 1,744, EOG, Parshall 96-3332H, Parshall, 27 stages; 8 million lbs, t12/16; cum 60K 4/17; (#17621 - no jump in production)
    29190, 622, EOG, Parshall 406-34H, Parshall, 21 stages, 5.05 million lbs; t11/16; cum 42K 3/17; (17580: see this post)
  • 29127, 1,584, EOG, Parshall 401-3534H, Parshall, 2 sections, 18 stages, 5.2 million lbs, t11/16; cum 40K 3/17; for more on this area, see "well of interest"
  • 29126, 955, EOG, Parshall 402-3534H, Parshall, 24 stages, 6.7 million lbs; t11/16; cum 59K 3/17; or more on this area, see "well of interest"
  • 29105, 953, EOG, Parshall 405-3534H, Parshall, Bakken, 21 stages, 5.7 million lbs, t11/16; cum 49K 3/17;
  • 29104, 1,221, EOG, Parshall 404-3534H, Parshall, Bakken, 22 stages, 5.8 million lbs, t11/16; cum 43K 3/17; 
  • 29103, 780, EOG, Parshall 403-3534H, Parshall, Bakken, 27 stages, 7.3 million lbs, t11/16; cum 45K 3/17;
    28728, 400, EOG, Parshall 28-2928H, Parshall, 26 stages, 6.1 million lbs, t12/16; cum 41K 4/17;
  • 28727, 374, EOG, Parshall 85-2928H, Parshall, 25 stages; 5.5 million lbs; t12/16; cum 37K 4/17; (#17933 -- jump in production; #17294 -- small jump in production 3/15, but not 12/16)  
  • 28726, 1,054, EOG, Parshall 29-2928H, Parshall, 31 stages, 6.5 million lbs, t12/16; cum 31K 4/17;
  • 28435, 871, EOG, Fertile 55-0333H, Parshall, Fertile 55-0333H, 50 stages; 12.7 million lbs; t12/16; cum 60K 4/17;28434, 1,308, EOG, Fertile 102-0333H, Parshall, 46 stages, 11.91 million lbs, t12/16; cum 126K 11/17; 
  • 31399, 795, EOG, Van Hook 36-35H, Parshall, t4/17; cum 109K 11/17;
  • 32119, 477, EOG, Van Hook 39-3526H, Parshall, t4/17; cum 81K 11/17;

Making America Great Again -- January 15, 2018

Disclaimer: this is not an investment site. Do not make any investment, financial, travel, job, or relationship decisions based on anything you read here or thought you may have read here. 

EPD: hikes dividend, "banks on transportion" -- Zacks -- well this is nice. 
Enterprise Products Partners L.P.’s EPD board of directors has announced an increase of 3.7% on an annual basis in its quarterly cash distribution.
The current dividend yield is 5.85%, lower than the industry’s yield of 6.20% but higher than the S&P 500 index’s 1.63%.
CVX: I could be wrong but I think CVX is at an all-time high. At this link, it shows CVX at the close at $133.60 on Friday vs $130.55 back in June, 2014. This is somewhat surprising considering that:
  • there seem to be many more E&P companies now than years ago
  • oil is nowhere near its $140 high -- or whatever it was
  • it's unlikely oil will get anywhere near $80 -- much less $140 -- any time soon
  • CVX market share has to have decreased over the years -- as for all majors
  • reserves may have decreased over time (I don't know) 
  • global demand is forecast to increase this year (2018) but not by all that much
And yet, CVX appears to be at an all-time high.

In my mind, only one thing can account for this: Trump policies, including the tax bill. [Later: okay, this, too: a weaker US dollar -- see XOM article below.]

Enbridge: to re-open shut-in line along the gulf but it's the last paragraph (in bold red/black) in the note below that caught my attention-- from Zacks --
Pipeline operator Enbridge ecently announced that it is planning to restart operations at its Garden Banks gas pipeline in early February. The 1 billion cubic foot per day (Bcf/d) pipeline will begin operations for some producers.
The pipeline in the Gulf of Mexico was shut down following a fire outbreak on Nov 8, 2017.  The incident resulted in stalling of operations on most of the platforms in the region, including Enchilada and Salsa platforms, operated by Royal Dutch Shell plc RDS.A and the Baldpate and Conger filed platforms, operated by Hess Corporation HES. Enbridge is separating its pipeline from the damaged platform Enchilada and expects to finish the task by the coming month. Production at the site was disrupted due to the unavailability of pipeline. Both Shell and Hess are yet to provide dates for restarting operations at the site.
Per the forecasts of the Energy Information Administration, oil production level in the Gulf of Mexico is expected to be flat in 2018 year over year. From 2019 onward, production in the region is expected to rise as seven new projects will come online.
XOM: from Investopedia --
Exxon Mobil Corp. shares could be headed much higher, and it will have rising oil prices to thank.
Shares have the potential to increase by nearly 20% over the longer-term from its current price around $87.50, to $105. That is because the stock is nearing a technical breakout from a multi-year downtrend, on the strength of surging oil prices.
WTI crude oil could see its price climb by nearly 18% to roughly $76, from its current price around $64.50. The rise in oil is being triggered by improving global economics, tightening supply, and weak a U.S. dollar.
MAGA: Wage hikes, bonuses, and benefits after the Trump tax bill was signed at this link.

RAM: the new 2019 Ram pickup.

Volkswagen: Volkswagen delivers record sales in 2017, more than half in China -- from 24/7 Wall Street. So what's going on in western Europe where
  • US sales: up 5.2% y/y
  • China sales: up 4.2% y/y
  • EU: sales down 2.9% y/y
  • but get this, in December, y/y, Canadian sales were up 54% 
  • December deliveries in China were up 12.9% year over year to 342,100 units, a new record for the month and the best-ever monthly total in the country
Making Tibet great again. I assume these are Tesla pickup trucks being delivered to Tibet. It also helps explain why Musk Melon uses "delivery data" rather than "sales data" for the monthly auto report.

Just the 100: another interesting Forbes list.