Four New Permits; One DUC Reported As Completed -- February 23, 2018

Active rigs:

$63.55↑↑↑	2/23/2018	02/23/2017	02/23/2016	02/23/2015	02/23/2014
Active Rigs	57	41	39	126	187

Four new permits:

• Operators: Hess (3); Oasis
• Fields: Alkali Creek (Mountrail); Painted Woods (Williams)
  Comments:

Nine permits renewed:

• QEP (4): four Moberg permits in McKenzie County
• Enerplus (2): a Carp permit and a Beans permit, both in Dunn County
• CLR (2): two Syverson permits in Williams County
• Whiting: a Bartleson permit in Mountrail County

A dry hole:

• 31603, dry, CLR, Anderson 5-4H -- no sundry form yet to explain what happened but it certainly could have been a liner failure

One producing well (a DUC) reported as completed:

• 32498, 866, Hess, EN-Rehak-LE-155-93-0718H-1, Alger, t12/17; cum 2K after 16 days;

NDIC Hearing Dockets For March, And, April, 2018, Posted

Link here.

Dockets are tracked here. 

The usual disclaimer applies.

Highlights completed; I will come back and complete the entire dockets later. 

Wednesday, April 4, 2018

26494, XTO, petitions for an order for the unitized management of the Hofflund-Bakken Unit Area, consisting of lands within the Alkali Creek field, Capa field, Charlson field, Grinnell Field, Hofflund field, and West Capa field in Williams and McKenzie counties
26495, XTO, application for an order determining that the plan of unitization for the Hofflune-Bakken Unit Area (as described in case #26494) has been signed, ratified or approved by owners of interest owning that percentage of the working interest and royalty interest within said unit, Williams and McKenzie counties

Thursday, March 22, 2018 

26463, NDIC, consider the termination of the Tracy Mountain-Tyler unit, Billings County
26464, Resonance Exploration, Sergis-Madison, establish a 640-acre unit; establish a 560-acre unit; a multi-lateral horizontal well of each spacing unit; Bottineau County
26465, Resonance Exploration, Russell-Spearfish/Madison, establish a 640-acre unit; drill a multi-lateral horizontal well; Bottineau
26466, Liberty Resources, Gros Ventre or Enget Lake-Bakken, establish an overlapping 1280-acre unit; 8 wells; Mountrail
26467, Liberty Resources, Kittleson Slough-Bakken; establish a 1920-acre unit; 8 wells; Mountrail
26468, Newfield, Siverston-Bakken, establish an overlapping 2560-acre unit; 1 well; McKenzie
26469, XTO, Cedar Coulee-Bakken, establish i) an overlapping 1920-acre unit; 3 wells; ii) an overlapping 3840-acre unit, 2 wells; Dunn
26470, WPX, Squaw Creek-Bakken, establish an overlapping 2560-acre unit, 1 well; McKenzie
26471, Enerplus, Squaw Creek and/or Mandaree-Bakkekn, establish an overlapping 2560-acre unit; 1 well; Dunn, McKenzie
26472, EOG, reoke an Enerplus permit;
26473, WPX, pooling
26474, WPX, pooling
26475, WPX, pooling
26476, WPX, pooling
26477, WPX, pooling
26478, XTO, pooling
26479, XTO, Hofflund-Bakken; eleven (11) wells on an existing 1280-acre unit; Williams County
26480, XTO, SWD conversion
26481, Liberty Resources, pooling
26482, Liberty Resources, pooling
26483, Nine Point Energy, pooling
26484, Nine Point Energy, pooling
26485, Newfield, pooling
26486, Newfield, pooling
26487, Statoil, commingling
26488, Dahl SWD
26489, Dahl SWD
26490, Bennett SWD
26491, Nine Point Energy, pooling
26492, Nine Point Energy, pooling
26493, Nine Point Energy, pooling

Wednesday, March 21, 2018 

26438, Lime Rock, Dimond-Bakken; establish six 2560-acre units; 3 wells each; Burke County
26439, Lime Rock, Dimond and/or Vanville-Bakken; establish two 1280-acre units; ten (10) wells each; Burke County
26440, Lime Rock, Dimond and/or Vanville-Bakken; establish a 2560-acre unit; 3 wells; Burke County
26441, Whiting, Big Stone-Bakken; establish a 160-acre unit; a vertical well; Williams County
26442, BTA Oil Producers, relief, setback rule; 
26443, Foundation Energy, temporary spacing for a pool discovered with Lardy well (#29562); Golden Valley County
26444, Oasis, Tyrone-Bakken, establish an overlapping 2560-acre unit; 2 wells; Williams
26445, Oasis, Camp and/or Willow Creek-Bakken; establish two laydown 1760-acre spacing units, with 11 wells one one; and, seven wells on the other; Mckenzie, Williams
26446, NDIC to review permit of waste treating plant
26447, Steffes; indirect heating system location
26448, Lime Rock, commingling
26449, Lime Rock, Dimond-Bakken, authorize ten wells on each of eight 1280-acre units; a total of 80 wells; Burke County
26450, Whiting, Alger-Bakken; on an existing 1280-acre unit; 11 wells; Mountrail County
26451, Oasis, pooling
26452, Bruin, pooling
26453, Bruin, pooling
26454, MRO, Reunion Bay-Bakken, 8 wells on a 1280-acre unit; Mountrail
26455, MRO, Reunion Bay-Bakken, 2 wells on a 2560-acre unit; Mountrail
26456, MRO, Reunion Bay-Bakken; nine wells on each of two 1280-acre units; Mountrail County;
26457, MRO, Van Hook-Bakken, 9 wells on a 1280-acre unit; Mountrail
26458, MRO, conversion of exiting well to a SWD well
26459, BR, commingling
26460, BR, Croff-Bakken; authorize 14 wells on a 1280-acre unit; McKenzie
26461, BR, North Fork-Bakken, 2 wells on a 2560-acre unit; McKenzie
26462, BR, Little Knife-Bakken, 7 wells on a 1280-acre unit; Dunn

EIA Updates Their US Energy Mapping System -- February 23, 2018

Link here.

This is a lot of fun when you get used to using the interactive map.

For example. I don't know how accurate this is or how current it is, but this is the EIA data base for

• natural gas processing plants in North Dakota (and a bit of eastern Montana); and,
• CBR (rail) terminals

WTI Heading For A "64-Handle" -- February 23, 2018; Turkey Becoming Unhinged; Enerplus Crushes Earnings Forecast

Wow, I almost missed this -- I'm not sure what "suggested" I check the oil market at this moment, but there it is, WTI about $63.63. Remember: most operators in the Bakken, according to their 4Q17 earnings presentations are "cash-neutral" at $45 - $50. I don't think I saw any operator said they were "cash-neutral" at WTI greater than $50. The number to watch: $63.63.

From oilprice.com, all in 24 hours:

Note: I did not look at many or listen to many presentations but the few I did ...

Enerplus: quarterly profit beats expectations.  27 Canadian cents/share vs 17 Canadian cents/share. ERF shares up 7% today.

*******************************

Other News

Canadian Kinder Morgan's TransMountain: British Columbia backing down? It appears Alberta oil may, in fact, reach the west coast despite objections of "British Columbia."

Turkey becoming unhinged: Turkey's navy threatens to sink Eni drilling ship offshore Cyprus. Go ahead, do it. And kiss your aspirations to be a full member in the EU goodbye. Wow, what idiots. (Yes, I know there's a bit more to this. But not much.)

Wow, Mexico to emulate Venezuela? The front runner in the Mexican presidential election?
A "leftist" candidate who plans to "scrupulously review" his countries oil sector policies. Wants to discontinue crude oil exports to the US. Wow.  From wiki:

As in the 2006 and 2012 elections, the 2018 campaign has featured numerous accusations and attack ads directed at the leftist frontrunner candidate Andrés Manuel López Obrador (AMLO), who will be contesting the elections with the support of his party MORENA ("Movimiento de Regeneración Nacional", "National Regeneration Movement"). 

A Red Scare-like campaign has been used by the PRI and PAN candidates to convince voters that an AMLO victory would turn Mexico into "another Venezuela". In a speech, PRI president Ochoa Reza stated that "if the people from MORENA like Venezuela so much, they should just go and live in there".

The wall: come 2021, even the Californians will want that wall. See previous note above.

Oil imports from Mexico:

• 800,000 bopd: US imports from Mexico
• generally heavy to medium-light; sulfur content
  
• Isthmus: 21.8°.3.3% sulfur
• Maya: 33.4°; 1.35% sulfur
• Olmeca: 37.3°; 0.84% sulfur

Market Action For Selected Bakken Operators Over The Past Six Months -- February 23, 2018

Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on what you read here or what you think you may have read here.

Dislcaimer: this was done quickly and there will be typographical and factual errors. Opinions are interspersed with "factual data." If this is important for you, go to the source.

Disclaimer: The exact share prices were picked out quickly and may be off by a few pennies but, in general, they are close enough for purposes of the blog.

*************************************

This is kind of interesting. This blog is not an investment site and I really don't care about investments in the Bakken or the oil industry all that much in the big scheme of things with regard to the blog. I've talked about that many times and I think I talk about it on the welcome/disclaimer. It's hard to follow or understand the Bakken if one doesn't follow the (stock) market; US politics; and, global geopolitics. This post concerns the stock market.

Almost exactly six months ago, a "Karl Francis, long only" had a fairly long contribution to SeekingAlpha last August 23, 2017.

IP30 Data in the Bakken: from a SeekingAlpha article last August 23, 2017.

Karl Francis describes himself as "long only."

I thought the article was fairly balanced overall but I did not read it closely. One observation the writer made:

Average IP30 has been relatively flat from the second half of 2014 to the first half of 2016, but made a significant jump in the 2nd half of 2016, lifting the 2016 average to 690 bopd. There are two main reasons for this. The first is the extraordinary IP30 performance jump of a few companies, notably WLL and OAS. The second is the strongly falling contribution of under-performing XTO wells (from 83 new wells with IP30 in the first half to 20 in the second half of the year).

Disclaimer/note: as an aside, I don't know if the writer defined "IP30" nor do I know if he took into account the phenomenon of "constrained production" in the Bakken. I would like to see the IP30 in the Bakken defined as the max IP30. The first six months of unconstrained production in the Bakken is probably the best parameter (UP6M), followed by the "EUR type curve" once we have the UP6M.

Note: I find it interesting that the industry continues to use parameters suited for vertical, conventional wells instead of migrating to parameters better suited for horizontal, fracked, unconventional wells. 

Note: as another aside, I don't believe the writer took into account short laterals vs long laterals. In this case, it probably does not matter because my hunch is that 99.9% of all wells in his sample were long laterals, but if not, the small number of wells sampled (as the writer acknowledged) would have a huge affect if even a few short laterals were included in the data pool. 

Finally, done with disclaimers and notes: Although I thought it was a fairly balanced article (again, I didn't read it closely) I was surprised by how negative most of the comments were.

I assume the majority of folks that come to SeekingAlpha follow the market and probably invest in the market. Of those who invest in the market, I would not be surprised if a large percentage are short term traders ( horizons less than six months). 

It seems most folks commenting were looking at the Bakken as a whole from an investment point of view. I think they would have done better had they used the data to separate the wheat from the chaff, separate out the better companies from the others. (Defining "better" is in the eye of the beholder; it's very, very difficult, and the definition would vary among folks based on their knowledge of the oil industry).

Interestingly, in this case, it would not have mattered a whole lot, trying to separate out the better companies. With minor exceptions, for short term investors, the appreciation at the "high water" mark was exceptional (I doubt it got the attention of CNBC). At six months the appreciation is still remarkable (again with some exceptions). Whiting, up 60% at six months, as perhaps the best example, and, oh, by the way, the writer singled out Whiting as one of two Bakken operators with the "best wells." Another open book test.

As an aside, the biggest exception at six months was Newfield. The other poor performer was XOM (XTO is a subsidiary). I can't speak to Newfield, but I've long considered XOM to trade like a utility company, not an oil company. [Actually the biggest exception was HRC, but that's another story for another day.]

So, without further ado, a look at the share prices of the companies mentioned in the linked article below, at three months and six months after the article was posted.

	Aug 25, 2017	High During The Six-Month Period	Percent Change At The High	Feb 22, 2018	Percent Change Over Six Months
Hess	38.36	54.72	43%	47.08	23%
Whiting	17.68	31.38	77%	28.26	60%
CLR	33.42	58.33	75%	48.44	45%
XTO (XOM)	76.33	89.07	17%	75.86	-1%
Oasis	7.27	11.09	53%	8.37	15%
COP/BR	43.30	60.49	40%	54.91	27%
QEP	7.50	11.05	47%	8.63	15%
Statoil	18.62	24.22	30%	22.59	21%
EOG	84.62	118.47	40%	107.09	27%
MRO	10.99	19.28	75%	15.18	38%
SM Energy	13.54	26.84	98%	19.31	43%
Newfield	25.09	34.75	39%	23.46	-6%
WPX	9.91	15.76	59%	14.34	45%
Enerplus	8.76	11.65	33%	10.47	20%
Zavanna
Petro Hunt
HRC

Friday, February 23, 2018

Peak oil? What peak oil? During the past two years there have been numerous articles on lack of investment in offshore projects which some suggest are desperately needed to forestall a shortage of oil in the out year (think, "Peak Oil"). Today, from a GlobalData press release: investment of $97 billion on top ten offshore oil projects will add 1.6 million bopd by 2025. This appears to be an update of their January 26, 2018, press release when they said the top ten fields would add 1.1 million bopd, and the investment amount has increased from $85 billion to almost $100 billion. Now, an additional 1.6 million and $97 billion in spending. From the earlier press release:

• 10 projects selected from 126 onshore projects globally
• about $85 billion in CAPEX will be spent over the lifetime of these top 10 onshore projects
• these top 10 projects will produce almost 10 billion bbls of crude oil
• [for comparison, the Bakken, a reservoir of at least 500 billion bbls, at 20% primary production, will produce 100 billion bbls; so far the Bakken has produced about 1 x 365 x 8  = 3 billion bbls of crude oil]
• the average development breakeven = $55/bbl [for comparison, the breakeven across North Dakota is $21/bbl]
• projects in Russia have the greatest break-even at $92/bbl
• to bring the 10 projects online: $85 billion
• by 2025: CAPEX forecast at $50 billion
• conventional oil Kuyumbinskoye development in Russia leads capital investment with $13 billion over its development lifetime
• second, in CAPEX: Canada's Telephone Lake (Cenovus Energy), a $10 billion CAPEX development cost

****************************************  
Back to the Bakken

IP30 Data in the Bakken: from a SeekingAlpha article last August 23, 2017 -- I will come back to this one later today. 

Active rigs:

$62.74→	2/23/2018	02/23/2017	02/23/2016	02/23/2015	02/23/2014
Active Rigs	56	41	39	126	187

RBN Energy: a downside for many midstreamers in new tax law.

While the recently enacted federal tax cuts have been widely viewed as a boon to corporate America, including businesses in the energy sector, a new report by our friends at East Daley Capital finds a major drawback in the law for midstream companies. By slashing the corporate tax rate from 35% to 21% — and by allowing partnerships and “pass-through” entities to take a 20% deduction on their income pre-tax — the new law will increase the return on equity that midstreamers earn on their crude oil, NGL and natural gas pipelines.

That may well lead the Federal Energy Regulatory Commission (FERC) to re-set its formula rates for at least some gas pipelines, and also is likely to heighten regulatory scrutiny of the rates charged by the owners of oil and NGL pipelines. Today, we continue our review of East Daley’s new “Dirty Little Secrets” report with a look at the tax law, the higher pipeline ROEs resulting from the tax cuts, and the midstream companies that may be affected most.