Wednesday, June 6, 2018

Update On The Oldest CLR Anna Well -- June 6, 2018

This page will not be updated; the CLR Anna wells are tracked here. Production data for all the CLR Anna wells has been updated at that post.

The "original" CLR Anna well:
  • 23279, 767, CLR, Anna 1-27H, t11/12; cum 285K 10/17; (not re-fracked); note two "periods" in which there was a jump in production:
Monthly Production Data:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Iran Sanctions Begin To Bite (Again) -- Oilprice.Com -- June 6, 2018

After an initial hesitance over how the returning U.S. sanctions will affect Iran’s oil buyers, European refiners are beginning to wind down purchases from Iran after tanker providers, insurers, and banks began to shun Iranian deals and destinations for fear of exposing themselves to secondary sanctions.

Several large European companies in France, Spain, Italy, and Greece are reportedly admitting that they won’t risk U.S. sanctions and are unable to find tankers and insurer providers willing to facilitate shipments of Iranian oil to Europe, Reuters reported on Wednesday, citing company and trading sources.

Iran’s total oil exports have averaged around 2.5 million bpd in recent months, peaking in April, just before the U.S. withdrew from the Iran nuclear deal. Iran says that its May oil exports were higher than this year's average, but it now looks like European refiners are choosing not to risk and have started to figure out ways to wind down Iranian oil purchases.

Iran’s oil exports to Europe account for around one-fifth of the total, while most of the Iranian crude goes to China and to India.
Wow, I love this president.

"Returning....." --- finally someone got that right. It seems the mainstream media forgets that the sanctions are not "new." They were in place before Obama and Valerie Jarrett eased those sanctions. President Trump simply put the agreed-to sanctions back in place. Obama and Jarrett pulled the rug out from under our allies when they unilaterally eased the Iranian sanctions. [Today, it is being reported that the Obama administration may have also engaged in "illegal" banking activity in an effort to aid Iran. I don't know the specifics, but it should be easy to find. Yes, it was easy to find; here's one link, an NBC News link.]

I had forgotten this about sanctions. I read about it before when sanctions were first put in place, but forgot. Foreign leaders can talk all they want about how they will defy US sanctions, but once they find out that they can't find insurers for their ocean-going tankers ...

The Apple Page

From the linked article below:
  • Apple's iOS 12 will be available for iPhones launched as far back as 2013
  • this is unprecedented for Apple and smartphone makers
  • it also shows that Apple isn't trying to force you to upgrade your iPhone
Earlier today I listed several companies that exceed my expectations. (That does not mean I would invest in them; it simply means their products and/or service exceed my expectations.) One of those companies was Apple.

After years of refusing to get a smart phone, I finally gave in and bought my first smart phone. I bought the iPhone SE because it is the smallest. I've never had so much fun with a gadget.

Tonight I stumbled upon this story. I was not aware of this until just now. The story is linked here.
Apple said that iOS 12, its new software that will launch in September, will be available for iPhones dating back to 2013, including the iPhone 5s.
That's unprecedented for Apple or any other smartphone maker. Older Android devices are lucky to get a new version of the operating system more than a year or two after they're launched.
This means that people with older iPhones will get some (though not necessarily all) of the new features included in iOS 12. It also means they'll get the latest security patches from Apple and, since iOS 12 focuses on speeding up iPhones, presumably better performance.
Apple says iOS 12 can open apps up to 40 percent faster, open the camera app up to 70 percent faster and open the keyboard up to 50 percent faster than the previous operating system, so new software shouldn't feel so sluggish on older phones.
Are We Headed For A Clean Sweep?

Golden State Warriors lead the series 3 - 0.

CLR Is Blowing Away The Competition In The Bakken -- SeekingAlpha -- June 6, 2018

I've been updating a lot of old wells, and was quite surprised how well CLR seemed to be doing. It seemed the Syracuse wells were a great example of CLR's program in the Bakken. It was a pleasant surprise to see this story over at SeekingAlpha -- not a surprise with regard to CLR's success in the Bakken but a surprise that someone else has noted it and has posted an article over at SeekingAlpha.

The writer of that article immediately moves to the top of my list of favorite contributors over at SeekingAlpha. I haven't read the article yet, but he may have scooped Mike Filloon which is a real surprise. Mike Filloon recently "named" Newfield as the outstanding operator in the Bakken. I did not agree at the time, but did not say anything. I was more impressed with Whiting at the time.

Anyway, back to the linked article over at SeekingAlpha. Summary:
  • Continental Resources is blowing away competition in North Dakota and Oklahoma
  • costs savings and new well optimizations are driving record results
  • an expanding global economy, along with strong WTI prices and a superior production strategy, makes Continental a compelling investment idea
I've been building positions in two or three other publicly traded Bakken operators but I did not include CLR. I may have missed an opportunity. That's why -- disclaimer -- this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or think you may have read here.

Now the article: according to the writer, CLR is now in an all-out manufacturing mode:
Picture a huge yard right before you have to mow it, and that’s how Continental is approaching their Springer play in Oklahoma (SCOOP region). Springer economics are compelling. Due to innovations such as pad drilling, drill times are coming down significantly, and rates of return are exceeding 180%. Mowing a yard row by row is analogous to what Continental is doing in Springer, except one row, alone, spans almost nine miles wide. That's just the Springer area, or “Project Springboard”, as Hamm ambitiously calls it. The company plans to replicate the same process in the Woodford and Sycamore areas, next.
The prolific Bakken basin, in North Dakota, is also in all-out manufacturing mode for Continental. Like in the SCOOP, drilling times are dropping significantly, being measured in days now instead of weeks, and new completions designs are almost doubling oil & gas output. This step change in completions technology employed by CLR catapults them over peers to the number one spot as top producer in the Bakken, representing 15% of total production there. In addition, Bakken output was up 48% year over year from optimized completions, and those in turn, have lowered breakevens in the region to $28 per barrel. Rates of return in North Dakota are less than in Oklahoma, but are still pushing north of 140% for CLR. 
That's just the first page. The article is six pages long. 

Enjoy. You may want to archive. SeekingAlpha articles disappear behind a paywall after awhile.

By the way, the article at SeekingAlpha is not just an "investment article -- what makes it a great article is all the "education" one gets from the article with regard to how the shale industry is innovating.

Self Control, Laura Branigan

Contributor Over At Oilprice.Com -- Nominee for 2018 Geico Rock Award? -- June 6, 2018

Mr Cunningham is coming very, very close to being nominated for the 2018 Geico Rock Award. I think anyone following the Venezuela story knew the country and its oil sector were imploding. So, now, we get this headline (Venezuela’s Oil Meltdown Defies Belief) from and the story from Nick Cunningham:
Venezuela might have to declare force majeure on its oil exports as production plunges and its ports are unable to ship enough crude.
The ongoing meltdown in Venezuela’s oil sector could tighten the oil market more than expected.
Reuters reported Tuesday that Venezuela is considering declaring force majeure, a legal declaration made in extraordinary circumstances to basically get out of contractual obligations.
In other words, Venezuela’s PDVSA is essentially prepared to say that it can’t supply the oil that it promised. The utter collapse of the country’s oil production is obviously a big factor in PDVSA’s inability to ship enough oil.
Output is down below 1.5 million barrels per day and falling fast. But the tanker traffic at a handful of its ports has created unexpected bottlenecks, which have slowed loadings.
Clogged ports are the direct result of the seizure of operations on several Caribbean islands by ConocoPhillips last month. The American oil major sought to enforce an arbitration award, laying claim to a series of storage facilities on the islands of Bonaire, Curacao and Aruba.
I think folks have been suggesting for over a year that the Venezuelan oil industry was headed for a meltdown. What is going on now should hardly be a surprise. Happening faster than expected? It seems like the train wreck has been going on for a year or more.

I suggested yesterday that Venezuela's failure to meet oil contracts might be a bigger story than folks realized seems to be accurate. And yet, to the best of my knowledge, the story was hardly covered on CNBC.

Fairly Unremarkable Daily Activity Reports So Far This Spring/Early Summer In The Bakken -- June 6, 2018

Active rigs:

Active Rigs60522682194

Three new permits:
  • Operators: XTO (2); Liberty Resources
    Fields: West Capa (Williams); Big Meadow (Williams)
  • Comments:
Four permits renewed:
  • Slawson: four Gunslinger Federal permits in McKenzie County

RINs -- June 6, 2018 -- Off The Net For Awhile


Later, 3:32 p.m. CDT: the market closes up 346 points and CNBC calls it a pretty good day. Had the market slumped 346 points, CNBC would be suggesting a debacle due to Trump's tariff policies. Kudlow was on CNBC this afternoon. Analysts, right after the Kudlow press conference, said they were confused. Apparently investors were not confused by Kudlow. The market was up 200+ points before the Kudlow press briefing. After the Kudlow press briefing the Dow was up 346 points. Just saying.

Original Post 

I don't have much interest in this subject, but I post it for the archives and perhaps for other reasons. Whatever.

Over at SeekingAlpha, a contribution from Michael Fitzsimmons: Holly Frontier: A RIN diesel opportunity?
  • demand is soaring for diesel fuel by to power Permian operators' trucks, drilling rigs, fracturing pumps, compressors, etc.
  • this is a positive catalyst for local diesel suppliers like Holly Frontier
  • meantime, RIN exemptions powered the recent quarterly EPS report
  • with $781.5 million in cash at the end of Q1 ($4.40/share), the outlook for increased shareholder returns is excellent
This goes along with the RBN Energy post earlier this morning: Permian drilling activity drives diesel demand and projects to supply more of it. And based on what I saw during the Bakken boom it means that truck manufacturers are also being hit with huge demand.


An FBI director defying authority is a "firing" offense. End of discussion. Period. Dot.

Customer Satisfaction

I've talked about this before: Amazon Prime.

I was going to cancel my Amazon Prime subscription: I really don't need two-day (or even faster) delivery.

But then my wife mentioned, in passing, that she really enjoys the free movies that come with Amazon Prime.

That was just about the same time Amazon increased the subscription price for Prime from $99 to $119 -- a 20% increase on the very same day Amazon was announcing record earnings.

The other day I ordered a softcover book for a family member to be delivered to their home. The book cost about $13. Shipping, of course, was free -- which would have cost me $5 to $10 had I bought it locally and mailed it myself. Plus the inconvenience.

When it came to check out, Amazon told me that if I didn't need the book to arrive in two days, they would give me a $5 reward for letting them ship through "normal" channels, 3 - 5 business days. A no-brainer.

Today, I received the reward, expires by the end of the year. No problem.

A few more rewards like this and my $119 subscription price will effectively drop to what it was before, if not lower.

Amazon never seems to think of ways to please their customers.

$119/year seems steep, but it is amazing how one really is rewarded. It will be interesting to see how far Amazon can push the annual subscription price.

Rambling continues: companies exceeding my expectations --
  • Apple
  • Enterprise Rent-A-Car
  • Travelocity
  • Amazon
  • McDonald's
  • Starbucks
  • Wal-Mart (although I haven't shopped in a Wal-Mart in weeks)
  • Most gasoline service stations

Apple says they will work with third party managers to make it easier to use passwords.

It's even easier than that. Schwab now links one's touchID with their site. I "log into" my iPhone using iTouch. Now I can log into Schwab using iTouch. How much easier can it get?

[Later: I noted that Merrill Lynch offers the same. Gradually, typing in passwords across the net is going to be a thing of the past.]

US Crude Oil Inventories INCREASED This Past Week -- June 6, 2018


Later, 10:25 a.m. CDT: delayed reaction? Immediately after the EIA weekly US crude oil inventory number was released, WTI dropped ten cents. With a build of over 2 million bbls, one would have expected a bigger drop in the price of WTI. Well, that drop in WTI happened: it's now down a full dollar/bbl and trading well below $65/bbl. One has to ask: if CLR and others were going to hedge, did they wait too long by not hedging when WTI hit $72? Meanwhile, the Dow is back up 170 points. One would expect the Dow to fall with shares in oil stocks falling. It must be AAPL. Let's see. Nope, no AAPL. AAPL is trading slightly lower. Dow components suggest the Dow is moving up due to the banks and Boeing. To some degree, surprisingly, the oil companies are slightly positive. That could change by the end of the day.

Original Post

Weekly petroleum report, link here:
  • US crude oil inventories: increased by 2.1 million bbls
  • US crude oil inventories: 436.6 million bbls; "in the lower half of the average range for this time of year" -- per the EIA; my own "baseline" -- 350 million bbls -- so for me, an inventory of 437 million bbls is still a huge over-supply
  • total motor gasoline inventories increased by 4.6 million bbls last week (and yet gasoline prices are said to be going up)
  • distillate fuel inventories rose by 2.2 million bbls
  • refineries operating at 95.4% capacity -- a huge jump from the recent 91% to 93%; despite that, gasoline production DECREASED last week, slightly under the "benchmark" of 10 million bbl/day
  • distillate fuel production INCREASED slightly last week, slightly over the "benchmark" of 5 million bbl/day
Following the report, WTI dropped ten cents to $65.42/bbl.

Note For The Granddaughters

I cannot make this up.

Four days ago I was playing Magic: The Gathering with our oldest granddaughter. My iPhone was on the table. During play, I asked clearly and distinctly, "Seriously?" to some play that Arianna had made.

I was startled when I was interrupted by this from the iPhone: "Yes. I am serious. What can I help you with?"

I kid you not.

Now this, the photo sent to me by my wife (I had told her the story earlier):

Random Update Of A CLR Syracuse Well -- June 6, 2018

The Syracuse / Chicago wells are tracked here.

As promised, here's a stand-alone post for this well:
  • 19740, 646, CLR, Syracuse 1-23H, Banks, API - 33-053-03310, t7/11; cum 421K 4/18;
According to FracFocus it has not been re-fracked. Here's the recent production data:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

This was the production data for the first nine months following the original frack. Note that the January, 2018, production jump almost equaled that when the well was first drilled, back in 2011.


Learning More About The Bakken -- The Syracuse / Chicago Wells -- June 6, 2018

Disclaimer: I do these quickly and I may misread file numbers and misread the NDIC map, but I'm pretty sure I have this update and other updates on the blog correct.

Disclaimer: never make any decisions about Bakken investments based on what you read here. If this is important to you, go to the source.

Through a bit of serendipity, I learned a bit more about the Bakken which raises some questions regarding my thoughts about the jump in production in wells neighboring newly fracked wells. Having said that, in the big scheme of things, it does not matter to someone who participates in mineral rights royalties why an increase in production occurs. The purpose of the blog is not investment, per se, but rather, to better understand the Bakken. So, I'm still learning.

22375, about 700 feet to the east of #31068, API for #22375 is 33-053-03972. FracFocus suggests that this well was not re-fracked despite the jump in production from 15,00 bbls/month to 13,000 bbls/month.
  • 22375, 814, CLR, Chicago 2-26H, Banks, t6/12; cum 245K 4/18; 
Recent Production Data:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

23610, about 1,300 feet to the west of #31068.
  • 23610, 731, CLR, Akron 2-27AH, Banks, t5/13; cum 282K 4/18; 
Recent Production Data:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Original Post
Another CLR Syracuse well comes off confidential list today:
  • 30168, 2,107, CLR, Syracuse 7-23H, Banks, another huge Banks well for CLR; 140K in first four months, 4 sections; TD = 21,542 feet; 45 stages; 8.1 million lbs, 100-mesh; large/medium sand, plug & perf; t1/18; cum 144K 4/18; 
Monthly Production Data:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

The Syracuse / Chicago wells are tracked here, but I have not updated that page in awhile.

Current view of the Syracuse / Chicago well area. Compare with previous screenshots taken earlier at the link above.

The Market, Energy, And Politcal Page, T+2 -- June 6, 2018


Later, 11:53 a.m. CDT: this remains an open-book test --
  • TSLA: I've often said TSLA was a great trading stock; today TSLA is up $20
  • VLO: with Venezuela unable to fulfill latest contract, I said Valero would be scrambling to buy oil at spot price; and, here we go, VLO is down significantly today
Disclaimer: this is not an investment site.

Original Post

Atmospheric CO2: it appears that after a hiatus of some sort, is now back to posting atmospheric CO2 on a monthly basis. I could be wrong; maybe there was not hiatus and I was just not able to find it. Whatever. During the hiatus (?) I was using Scripps. The May, 2018, data has been posted. Many, many reports that because of slightly increasing atmospheric CO2, the earth is getting much greener. 

Posted: weekly EIA petroleum report.

GDP Now: the June 6th estimate will be out today. The previous estimate -
Latest forecast: 4.8 percent — June 1, 2018: The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2018 is 4.8 percent on June 1, up from 4.7 percent on May 31.
The nowcasts for second-quarter real consumer spending growth and second-quarter real private fixed investment growth increased from 3.4 percent and 4.6 percent, respectively, to 3.5 percent and 5.4 percent, respectively, after the employment report from the U.S. Bureau of Labor Statistics, the construction spending report from the U.S. Census Bureau, and the Manufacturing ISM Report On Business from the Institute for Supply Management were released this morning.
Finally, someone does the math:

That looks about right. A wiki source suggests a typical US 18-wheeler tanker holds 9,000 gallons or slightly more than 200 bbls.

Not idle chatter: the note above, about trucks, is not idle chatter. It might also apply to --
  • the Permian for the next year or so
  • Alberta if the Trans Mountain Pipeline Expansion project does not go through

The Market, Energy, And Political Page, T+6 -- June 6, 2018

Making America great again: US trade deficit narrows to seven-month low on record exports. And tariffs haven't even begun to kick in yet. What trade war? I'm at my local homeless shelter so I cannot see how CNBC is reporting this. Yes, I know that common sense tells me that once the tariffs kick in, the trade deficit will widen immensely. So, we'll see.

Tariffs: speaking of the "trade war," apparently China has already made some concessions.

Birthday present for the wife, just a suggestion: this is really, really clever. This is the ultimate in customer loyalty. My hunch is that Elon Musk could easily do the same thing -- it would raise a steady stream of cash without a lot of downside. From Bloomberg:
Mercedes-Benz is starting a car-subscription pilot in two U.S. cities, joining brands from Jeep to Porsche in testing alternatives to traditional vehicle ownership.
The app-based service initially available to drivers in Nashville and Philadelphia has three pricing tiers ranging from $1,095 to $2,995 a month.
Subscribers will get access to 30 different models, from C-Class sedans to GLE sport utility vehicles, and can swap cars as often as they like, depending on what tier they choose.
Mercedes is joining a pack of automakers looking to appeal to younger customers by offering access to cars through service more analogous to how Netflix Inc. sells movies or Uber Technologies Inc. dispatches rides. It’s also challenging its biggest German rival head-on: BMW AG launched a subscription pilot -- also in Nashville -- in April that charges as much as $3,700 a month. 
Just last week, Fiat Chrysler Automobiles NV announced it would launch a servcie starting in 2019 with its Jeep brand.
Autos; this is 100% anecdotal, based on no actual scientific study; and has no "basis in fact," I guess, as they say. But driving around north Texas (Dallas-Ft Worth) two of the most common cars I see: the Nissan Rogue and any number of different Jeep models. Last night when I took our oldest granddaughter to her water polo practice, in a very upscale area, the lot was full of Jeeps, many of which had all their doors removed. I haven't seen many yet with their tops off. I completely missed it, but apparently the 11th annual Jeep's Go Topless Day was May 19th, 2018.

Notes For The Granddaughters

Big bang or steady state? A nice review. The post appears to be part of a continuum of posts; from that post,one can move forward to newer articles or backward to older articles. 

Wednesday, June 6, 2018

June 6, 1944: the Normandy invasion -- the largest air, land, and sea invasion in history.

Color me surprised: I was surprised the market wasn't up yesterday. I expected the Dow to move up about a hundred points, so I was surprised to see it flat (to slightly red). Today I see futures suggest the Dow might open up well on the green side. So we'll see.

Color me surprised: I was also surprised that WTI did not move more yesterday on news that Venezuela failed to meet its crude oil contracts, and then had the nerve to threaten a force majeure. The government can call it that if they want, but it doesn't meet "my" criteria.

Color me surprised: I am very, very surprised the number of active rigs in North Dakota has not increased by now. Certainly we've moved into the height of the drilling activity by now, but still the number of active rigs remain at 61. Reminder to newbies: the number of rigs correlates somewhat to the state's overall production but that's not the only reason I follow the rig count. For me, the importance of the rig count is that it reflects the activity in the Bakken.

Bernie Sanders' Marxism: speaking of Venezuela, this is as good a time as any to remind millennials who love Bernie that if they want to see his Marxism in "axtion" take a vacation to Venezuela. The millennials should be reminded that Venezuela sits on the world's largest reserve of oil, way ahead of what Saudi Arabia has.

Apple: shares should move higher again today.

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

Robot: sometimes I think my blog has turned into a vehicle that a well-programmed robot could produce. Same format. Same "stories" being told over and over. I'm sure if Peggy Lee were alive she would ask, "Is that all there is?"

Back to the Bakken

Active rigs:

Active Rigs61522682194

RBN Energy: Permian drilling activity drives diesel demand and projects to supply more of it. And based on what I saw during the Bakken boom it means that truck manufacturers are also being hit with huge demand.
Drilling and completion activity in the Permian Basin doesn’t only produce vast quantities of energy, it consumes a lot of energy too, mostly in the form of diesel fuel to power the trucks, drilling rigs, fracturing pumps, compressors and other equipment needed to keep the oil patch humming. And while refineries within or near the Permian meet a portion of the region’s needs, rising demand for diesel there is spurring the development of new infrastructure — and the repurposing of existing assets — to bring additional fuel into the Permian from refineries along the Gulf Coast. Today, we discuss efforts to move more diesel to the oil fields of West Texas.
Texas consumes far more distillate — most of it ultra low sulfur diesel (ULSD) — than any other state: an estimated 485 Mb/d (or 20.4 million gallons a day) in 2016, the most recent year that state-by-state statistics are available from the Energy Information Administration (EIA). That was 82% more than California, and more than triple the distillate consumption of other high-population states like New York, Pennsylvania and Florida. Four-fifths of Texas’s distillate/diesel consumption is by the transportation sector, the vast majority of it by tractor trailers and other trucks that transport everything from petrochemicals to corn chips across the Lone Star State. In the past few years — and especially in the past two or three — diesel consumption has been on the rise in the red-hot Permian Basin in West Texas, and in neighboring counties in southeastern New Mexico. There, diesel is the king of fuels. It powers almost everything: the trucks that haul oilfield equipment, frac sand and water to well sites, the trucks that haul produced water from the lease to disposal wells, and, increasingly in recent months as takeaway pipelines out of the Permian have filled up, the trucks that transport crude oil long distances to downstream pipeline injection points (and sometimes all the way to Corpus Christi and Houston).