Tuesday, February 13, 2018

Abraxas Reports Two Completed DUCs; WPX With Six More Permits In Spotted Horn --February 13, 208

Active rigs:

Active Rigs583641137188

Eight new permits:
  • Operators: WPX (6); CLR (2)
    Fields: Spotted Horn (McKenzie County); Banks (McKenzie)
  • Comments: WPX has permits for a 6-well Grizzly pad in NWNW 25-150-94; CLR has permits for another 2-well Pasadena pad in SWSW 11-152-99
Four permits renewed:
  • Bruin: two Fort Berthold permits in Dunn County and two Borrud permits in Williams County
Two producing wells (DUCs) reported as completed:
  • 32632, 1,435, Abraxas, Yellowstone 3H, North Fork, t12/17; cum 13K after 11 days; (#18708)
  • 32633, 1,809, Abraxas, Yellowstone 2H, North Fork, t12/17; cum 28K after 20 days; (#18708)


NOT GOOD: API Shows US Crude Oil Inventories Grew By Almost 4 Million Bbls; More Than Forecast -- The Energy Page, T+23 -- February 13, 2018

Oil: today, API's crude oil inventory data: pending (4:30 p.m. ET, Tuesdays)
  • previous: a drawdown of 1.05 million bbls
  • forecast: a gain of 2.8 million bbls
  • actual: a gain of 3.947 million bbls
  • "not good" for oil bulls; great for consumers;
Oil: tomorrow: AEI crude oil inventory data:
  • US crude oil inventories: up another 1.8 million bbls (this is the third consecutive week that inventories have increases
  • now at 422.1 million bbls -- supposedly in the lower half of the average range for this time of year; I've always considered 350 million bbls about the average
Natural gas: Thursday, February 15: AEI natural gas storage report:
  • previous: -119 bcf
  • forecast: -179 bcf (private forecast)
  • actual: -194
  • compare: -120 Bcf last year and -154 Bcf for the five-year average (same link)
Prices: prior to release of data, February 13, 2018:
  • WTI: $59.26 (pretty much unchanged for the day); $59.18 after API crude oil inventory data came out;
  • Henry Hub natural gas: $2.614 (up 2.4%)
Treasury yields:
  • 10-year: 2.83% before the CPI came; 2.86% after CPI data came out
  • CPI: accelerates
Recommended Reading?

Nixon Shock -- Wikipedia.

Watergate -- Wikipedia.

Price of oil (WTI), sweet spot: from a post dated September 7, 2016 --
Early this morning, well before the article [at the linked post] was posted, I mentioned that I'm completely content with $45 oil. In fact, I argue that the sweet spot for WTI pricing right now is $46 to $52. I used $60 as the high end of the sweet spot. I find it interesting that this Bloomberg article chose exactly the same numbers.  
Somewhere Over The Rainbow

Somewhere Over The Rainbow, Jerry Lee Lewis

Cookies; Tracking 

A lot of folks (apparently) get upset with Google (et al) tracking their internet searches. I love it. I get targeted ads. I haven't had a Viagra ad pushed to me in years. LOL. Some weeks ago -- I had already forgotten until I saw the targeted ad a few minutes ago -- I was looking for a motel in a city which I hoped to visit sometime next month. Never found what I was looking for; moved on. Not sure if I want to travel next month.

A few minutes ago, a targeted ad popped up while looking for the Jerry Lee Lewis video above -- with prices for hotels in the city that I had planned to visit. Wow, great. Reminded me of something I was doing before I was bored/distracted/ frustrated and moved on.

The Political Page, T+23 -- February 13, 2018

Of all things, Victor Davis Hanson, whom I link on the sidebar at the right, will be featured on Rush Limbaugh this morning. It's not often that Rush let's anyone take "control" of his three-hour monologue.

Vic Hanson has posted several replies to his "angry readers." Enjoy.

Climbing The Wall Of Worry

Chesapeake Update -- Zeits -- February 13, 2018 -- For Newbies, Note The 2.6 BCF/D; The Importance Of DUCs -- Money In The Bank

Summary, link over at SeekingAlpha:
  • Chesapeake guided to sequentially lower production volumes in Q1 2018, following a very strong Q4 2017
  • spending within cash flow in 2018 means activity levels will be reduced as compared to the second half of 2017
  • however, even with this consideration in mind, the full-year production outlook is underwhelming.
  • with total debt again approaching $10 billion, Chesapeake cannot "drill its way out" of the leverage problem - significant asset sales is the only path to stability.
Then this:
For Q4 2017, Chesapeake Energy achieved its production goal of 100,000 barrels of crude oil per day, in-line with previous guidance. Natural gas and NGL production for the quarter were 2.6 Bcf/d and 59,500 b/d, respectively, above previous guidance.
These volumes represent a 10% sequential increase on a BOE basis, after adjusting for asset sales.
As a reminder, in the last six months Chesapeake significantly accelerated the pace of completions to monetize the company’s significant inventory of drilled but uncompleted wells.
During Q3 2017, Chesapeake emphasized completions in the Marcellus, Utica and Haynesville to position itself for winter demand for natural gas.
In Q4 2017, the company nearly tripled the pace of completions in the Eagle Ford, as compared to the preceding two quarters.
The “surge” in the number of new wells being brought online yielded an impressive ramp-up in production volumes during the second half of 2017.
The advantage of DUCs -- take note:
In retrospect, Chesapeake's decision to accelerate DUC conversions was well timed. Cash flows have benefitted from greater crude volumes sold into an attractive price environment that prevailed during the last several months. On the natural gas side, Chesapeake took advantage of the strong heating demand this winter for natural gas and NGLs.
Bottom line:
Chesapeake remains one of the most over-levered stocks in its peer group. If one were to plot the stock's trajectory versus several other high-leverage peers, the big decline since early January does not stand out as differential.
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship-related decisions based on anything you read here or think you may have read here.

By the way, for newbies, note Chesapeake's natural gas production: 2.6 Bcf/d. This seems to be a number that resonates across the global energy sector

Mideast Heating Up; Price Of Oil Not Yet Reflecting Reports -- February 13, 2018

I track "Mideast On The Brink" at the sidebar at the right: my most recent post --
February 13, 2018: the Mideast is heating up. Now that ISIS is out of the way, Iran and Syria have teamed up to drive other rebels out. I assume the Kurds will be caught in the cross-fire and Turkey will muddle US efforts. Israel has hit targets in Iran for the first time, it was reported last week, and Drudge suggested "fight's on." But this is the scary part: it appears that US and Russia are now directly involved. No links; stories everywhere. US fighters have killed "scores" of "Russian fighters" (not further defined) and this morning it is being reported that a US fighter knocked out a Russian tank in self defense. WTI down another 64 cents; now at $58.64.
Notes To The Granddaughters

Our youngest granddaughter, Sophia, who will be four later this year, has had a very close friend for a very long time, a small teddy bear (actually a little piggy, I guess), maybe about ten inches long, whom she calls "Corky." For as long as I can remember, wherever Sophia went, Corky went. Sophia and Corky had long conversations; of course, we have only heard one side of the conversations.

Then about three days ago, all of a sudden Corky was no longer around. Sophia was not a bit upset. When asked, she said that Corky was "with the monsters."

This morning when I was making breakfast for her and then taking her to Tutor Time, again, Corky was gone. I asked her where Corky was. She said that Corky was "with the monsters." In Corky's place, Sophia now has four much larger and more colorful teddy bears; it was quite a menagerie that accompanied us to Tutor Time this morning.

Her mother, our older daughter, has confirmed what we've noticed. Our daughter has not seen Corky in the past few days and Sophia seems not perturbed.

I wrote this to our daughter, bringing things up to date:
There was obviously a major "falling out" between Corky and Sophia.
Sophia has been watching some inappropriate Barbie cartoons on YouTube -- she no longer gets to watch them -- little girls arguing like little girls argue among themselves -- no big deal but just the same May (her Grammy) feels that Sophia does not need to watch those videos (I agree).

It's possible Sophia picked up something from the videos and then had an argument with Corky and now he's banished to the "monsters." Maybe Corky took the side of the argument of one of the little girls with whom Sophia disagreed.

Since your toilets are not clogged up, at least we know Sophia did not try flushing Corky down the toilet.

Corky has now been replaced with four -- count them, four -- bigger and more colorful teddy bears, including "Pumpkin Bear."
Later: photo of Sophia with two of her four new friends.

Worth Re-Posting -- February 13, 2018 -- North Dakota Natural Gas Production Setting Records

Rigzone, Eni, and others are making a big deal about the big natural gas field found off-shore near Cyprus (Mediterranean Sea), where Eni says it will produce 2.9 Bcf of natural gas by the end of the year (2018). Don't get too excited: the Bakken, an oily play -- not a natural gas play -- already produces more natural gas than Eni does from the Zohr field. From an earlier post:
February 12, 2018: Turkish warships are impeding a rig from reaching a location of Cyprus where Italian energy company Eni is scheduled to drill for gas. -- from Twitter. Update from Reuters. Turkey is wearing out its "welcome" in the EU. Eni says it will produce 2.9 Bcf per day from Zohr field by second half of 2019. Compare that "2.9 Bcf" to the Bakken: from the last Director's Cut,
What was North Dakota's natural gas production in the most recent month, November, 2017? Yup, another all-time high: 2.1 billion cubic feet / day.
Asian Demand For Natural Gas Surging

From Bloomberg:
Asia’s rapacious thirst for liquefied natural gas is sucking supplies from surprising places.
China to Japan and South Korea are paying top dollar for the super-chilled fuel. The pull is so strong that Norway’s Statoil ASA, which usually exports most of its LNG to Europe, is shipping a rare cargo east. It plans to send more.
Asia gets most of its LNG from Australia, including from the giant Gorgon project on the country’s northwest coast. Malaysia, Papua New Guinea and Indonesia are also big suppliers.
Statoil’s tanker, the Arctic Aurora, due in South Korea this week shows how the LNG market is becoming global, with more cargoes traveling long distances from the Atlantic to the Pacific region as China leads a landmark shift to burning gas instead of coal. For Statoil, it’s a chance to squeeze a little more profit from its overall gas production that’s already near full capacity.
“What we’ve seen in Asia is strong prices,” said Peder Bjorland, Statoil’s head of natural gas. But “it doesn’t help to have strong prices if you don’t have the shipping capacity. It’s been difficult to get hold of spot vessels.”
The producer has in the past sent cargoes to Malaysia, China, India and Japan, but it mainly serves the markets in Europe and the Americas.

WTI Starts The Day Under $60 -- February 13, 2018

WTI: now below $59.

WTI, once again, the global benchmark for pricing/trading? From oilprice.com:
The surge of supply has made WTI more useful to global traders and shippers. In 2017, trading volumes of WTI futures surpassed those of Brent by the largest margin in at least seven years. About 310 million U.S. crude futures contracts — worth $16 trillion — was traded on NYMEX, or nearly 30 percent more than contracts in ICE’s Brent crude futures.
Protesteth too much: Saudi Arabian oil minister tired of all this shale hype. I assume he does not let his staff read this blog.



February 19, 2018: everything went perfectly. The Shaden has now set sail for China.

Original Post

LOOP testing begins for bidirectional crude oil flows (loading/unloading) for supertankers in the GoM for export. Perhaps the biggest US energy story of the week: US supertanker terminal set to export oil for the first time.
The flood of crude leaving the U.S. could be about to get a major boost: the nation’s top imports terminal is testing one of the industry’s biggest tankers to load an export cargo for the first time.
If the trial run signals the start of regular exports from Louisiana Offshore Oil Port, it will be a step change in America’s capacity to export the burgeoning production that’s roiled global oil markets. The ability to load very large crude carriers, the industry term for giant ships able to carry two million barrels, will significantly cut the cost of shipping cargoes overseas. [Equal to the output of the entire Bakken production over two days.]
On its website, the terminal said it’s testing a supertanker following modifications last year to allow crude exports. Shipping data compiled by Bloomberg and cargo tracking firm Kpler show the tanker is the Saudi Arabian-owned Shaden, chartered by China’s largest oil trader last month.
LOOP has been a vital piece of U.S. energy infrastructure for more than 30 years, handling imports from across the world as well as gathering crude pumped from deepwater deposits in the Gulf of Mexico.
Again, you can track this vessel -- the Shaden -- at this site (track marine traffic). Most recent update, February 12, 2018, yesterday, suggests that this vessel is already underway. If accurate, the "test" must have been a success. The vessel is headed SE (134 degrees) at 0.6 knots; under own power.

The Electricity Page

North Dakota: on the low list, #5 nationwide. Two of the five, Washington state and Idaho blessed with hydroelectricity.

Back to the Bakken

Active rigs:

Active Rigs583641137188

RBN Energy: Mexico's increasingly open natural gas market, and CFEnergia's role in it.