Friday, August 17, 2018

CLR With Plans For Ten More Putnam Wells -- August 18, 2018

Active rigs:

Active Rigs59533274194

Four new permits:
  • Operator: CLR
  • Field: East Fork (Williams)
  • Comments: permits for a four-well Putnam pad in NENW 25-156-100; back on August 10, 2018 -- from the daily activity report -- CLR has permits for a 6-well Putnam pad in NENE 25-156-100;
And that was all.

The Putnam Wells

The graphic:

The wells: 
  • 27049, 1,189, CLR, Putnam 1-25H, East Fork, t3/14; cum 359K 6/18;

Making Mexico Great Again -- August 17, 2018

Wow, I'm in a great mood. My seasonal allergies are kicking in but other than that ...

... I just got back from a 8-mile bike sprint. I took my usual 3-mile "relaxing" ride to Starbucks early this a.m. I got my blogging done and then had a "brain storm." I jumped on my bike and rode as fast as I could to Schwab in Southlake (TX), made an appointment for next week, and then continued the sprint back home.

First thing I see is this link sent to me by Don: NAFTA deal on track -- could bolster US - Mexican natural gas trade. Anyone who has been following this story and politics in Mexico, this is an incredible story on so many levels. From the article:
After some strong rhetoric on both sides, it now looks like the Trump administration and Mexican counterparts could have a preliminary NAFTA deal by the end of the month. This would be quite timely given that Mexico's newly elected President, Andres Manuel Lopez Obrador, will take office in December and has indicated he would respect renegotiations. In particular for my field, a bigger and better NAFTA would boost the growing U.S.-Mexican energy relationship built on free-trade.
As the go-to fuel, natural gas will increasingly be the story between the two nations. Mexico has accounted for the bulk of U.S. gas exports, with 90% coming from pipelines and the rest from LNG. The U.S. now accounts for 60-65% of Mexico's total gas supply. Since its domestic output comes along with crude oil extraction as "associated gas," Mexico's gas production has fallen 30-40% since 2010 alone, as its oil production has been spiraling since the 2004 peak.
And now, with AMLO wanting to ban fracking, U.S. gas could gain even more market share in Mexico. Although fracking isn't expected to be a significant source of domestic supply for at least five years, Mexico does have great shale potential: an EIA-reported recoverable shale gas resource of 550 trillion cubic feet. AMLO will serve just one 6-year term but has made answering the question of "When Will Mexico Start To Frack For Natural Gas?" even more difficult to gauge.
Mexico's goal is to expand oil production by 30% or so to ~2.6 million b/d, but the coming stream of new gas supply that would bring won't significantly reduce the need for more U.S. supply anytime soon. Just recently, as new pipeline capacity has been added and some lines became fully operational, pipeline imports into Mexico are breaking the 5 Bcf/d mark for the first time. That's over 6% of all current U.S. natural gas production  - and could reach over 6 Bcf/d next year. Ultimately, without the Mexican gas outlet for U.S. sellers, our prices would be ~40% lower, which again, could do more harm than good.
More at the link.

Now this.

I wrote this on the blog a couple of days ago:
My wife has signed up for a financial management course. It's a free course. Won't cost her a thing. She says she doesn't know anything about managing money. Actually she does quite well. I will be her instructor. The financial management course will be to show her where our assets are and how to access them after I die ... which, of course, could be sooner than later.
A reader noted that and suggested this video in response:


That suggestion can be interpreted at least two different ways: one humorous, one more serious. I took the suggestion as a very humorous suggestion.

But. having just talked with Schwab -- and, no this is not a paid advertisement -- I think I have a four-point plan that will work just fine.

Wow, what a great country.

Mr Klug Goes To Washington -- August 17, 2018 -- The Market, Energy, Political Page, Part 2 -- T+4

Making America great again, link here:
Mayor Howard Klug and City Administrator David Tuan are among a select group of North Dakota leaders, invited to the White House on August 30, where Trump administration officials are eager to hear about the North Dakota miracle. Chiefly, how western North Dakota has helped to not only feed the world, but keep its engines running. 
New airport on schedule, link pending -- original source has wrong link.
New airport construction is continuing to move forward and was the main focus of the Williston City Commission meeting Tuesday evening. The XWA project team received approval on two task orders for construction on the commercial parking lot and navigational aide installation. They also discussed a new provider for electronic advertising opportunities for the current airport, Sloulin Field International.
DAPL to expand, link here:
The CEO of Energy Transfer Partners said Aug. 13 he hopes to announce an expansion of the Dakota Access Pipeline soon. Kelcy Warren, CEO of the company that developed the $3.8 billion pipeline, participated in a roundtable discussion with U.S. Energy Secretary Rick Perry and other energy industry leaders at the University of Mary in Bismarck.
The Market, Energy, And Political News Of Note Today, Continues/Continued 

Does he ever sleep? Does he ever quit thinking? Wow, whether you love him, hate him, or somewhere in between, this president never quits. Now this: best advice ever -- Trump asks SEC to mull half-year corporate filings. Poll at the sidebar at the right: what are your thoughts? Perhaps base it on market cap? Perhaps by exception -- with SEC approval on case by case basis -- for companies like Tesla with huge market cap but earnings make little difference. I don't know.

Wow: the Dow held today; not up much, but up, after a 400-point surge yesterday. The other indices "red" but not by much. Correction: only one major index is still red, the NASDAQ -- think tech.

Nimble traders yesterday did well. I see some of the oil companies bounced back. But look at this:
  • AAPL: up another percent, trading at new all-time highs, now at $215/share, and this is after going "ex-div" as the big guys say
  • BRK-B: up a bit
  • WMT: green, but not by much; still not at $100
  • TSLA: dropping like a rock again
  • UNP: in a trading range; one to watch with expanding economy and all that talk about truckers not able to keep up 
  • ENB: up 3%
  • ETP: up 2.5%

Wanna See Some Other Great Wells That Just Reported? -- August 17, 2018

None of these wells had a constrained period. These were all DUCs that came off confidential list in 1Q18 -- and by early 3Q18 they had been completed. This is way faster than what I was seeing during the Saudi Surge, announced late 2014, effects seen early 2015 - early 2017.

None of these wells (at time of reporting) had a full 30 days of production. You can do the extrapolation. For example, that first well, 50,785 bbls in 22 days extrapolates to 69,000 bo in 30 days. Then the NG, 64,104 MCF = 10,688 boe over 22 days extrapolates to 14,556 boe. Add the bo and the NG boe and you get 84,000 boe in 30 days.

I remember some years ago when I was posting "monster wells" that I was cherry-picking. I certainly was. I didn't quite understand the "charge." Regardless, it's now almost impossible to cherry pick. If you doubt me, scroll through the wells that came off the confidential list 1Q18 -- except for a handful they are all completed -- DUCs and all. And the vast majority would be considered monster wells by the criteria used back in 2007.

Also, very few of those wells are using huge fracks. Many are still 45-stage fracks with 7 to 8 million lbs of proppant. Very few are the 60+ stage fracks, 10 million + lbs that CLR now considers its optimized completion strategy.

We're in "Bakken 2.5" but if the wells continue in this manner, I may move to Bakken 3.0.

And in NY state -- every year that goes by that fracking is banned, huge amounts of money being left on the table (or, more correctly, in the ground). My hunch is that New York state is banning fracking for reasons other than concerns about fracking per se. I don't know how well folks know New York state, but "upstate" it is absolutely gorgeous and lots and lots of really, really rich people live there, and millions of average and well-to-do New Jersey folks vacation in upstate New York. My hunch is that "these folks" are very concerned about turning upstate New York into "Saudi Arabia" or "western North Dakota." For that reason, I can't blame them. It's a legitimate concern. The topography between North Dakota and New York is incredibly different; and I strongly believe that North Dakota -- just a few counties at that -- was perfect, on so many levels for the oil industry. I'm not sure that New York state is where they should be drilling if there's more than enough oil and natural gas. It's unfair to the mineral owners, I know, but this is a democracy and compromises have to be made.

Wow, how did I get on that soapbox?

The wells:
  • 33583, 5,694, MRO, Sundby 24-11TFH, Bailey, t6/18; cum 51K after 22 days:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

  • 33443, 4,152, MRO, Marlene 34-11TFH, Bailey, t6/18; cum 44K after 25 days;
  • 33435, 4,538, MRO, Hugo 34-11H, Bailey, t6/18; cum 29K after 13 days;
  • 33582, 5,305, MRO, Morrison 24-11H, Bailey, t6/18; cum 42K after 16 days;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

  • 33581, 6,573, MRO, Olea 24-11TFH, Bailey, Three Forks B1, 45 stages; 11.776 million lbs, 262K/stage, t6/18; cum 55K after 22 days:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

  • 33580, 3,276, MRO, McFadden 14-11H,  Bailey, t6/18; cum 17K after 14 days;

  • 33599, 5,000, MRO, Gravel Coulee 14-11TFH, Bailey, t6/1; cum 42K after 16 days:
  • PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Wanna See Another Big Bakken Well? 172K In Less Than Four Months -- August 17, 2018

The well:
  • 23964, 2,712, WPX, Arikara 15-22HB, Reunion Bay, t3/18; cum 172K 6/18; 
Full production profile:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Another Arikara sister well:
  • 33642, 2,183, WPX, Arikara 15-22HQL, Reunion Bay, Three Forks NOS, 51 stages, 8.6 million lbs, t3/18; cum 159K 6/18; a huge, huge well;
Full production profile:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

And while we are at it, another sister well:
  •  33619, 2,229, WPX, Arikara 15-22HA, Reunion Bay, t3/18; cum 160K 6/18;
Full production profile:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

There seems to be a trend here.

And for newbies, there are even better wells than these in the Bakken. This is why the breakeven price in some areas of the Bakken is less than $20/bbl.

Another Arikara sister:
  • 23965, 2,528, WPX, Arikara 15-22HW, Reunion Bay, t3/18; cum 147K 6/18; 
Full production profile:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

There are more and there will be more but enough for now.

Bakken 2.5 -- 2017 Year-End Update -- NDIC

Selected slides from NDIC's 2017 year-end update, posted May 24, 2018.

The full presentation can be accessed here.

Year-end overview:

Productivity per new well by US shale play:
Breakeven costs across the Bakken:

Future (60,000 wells needed to drill out the Bakken; currently, around 14, 000):

Making America Great Again -- The Market, Energy, And Political Page, T+4 -- August 17, 2018

Follow-up from earlier this week when Walmart reported 2Q18 earnings.

This graphic is absolutely incredible (at least in my mind):

Before leaving the house today, I saw a snippet, and I mean a snippet, less than three minutes, of CNBC. Andrew Sorkin seemed surprised that the economy was doing so well. Confirmed exactly what Larry Kudlow said at the cabinet meeting yesterday: folks honestly did not believe this could happen. And some still don't believe it's has happened. That jobs could come back. The previous president told us that those jobs were never coming back. Wow. And when jobs come back, people have more discretionary income. And sales at Walmart go up.

By the way, not often talked about: all the money being left to baby boomers by the greatest generation. Folks who served in and lived through WWII are often credited with making America what it is today (see Tom Brokaw); they are now dying off in droves, but they are leaving their children, the baby boomers, a bit of a financial estate. I read somewhere that this is the first generation in US history -- the baby boomers -- that will inherit money from the previous generation -- or something to that effect. And it will continue to the next generation. The baby boomers (us) will be the second US generation to leave money to our heirs. From CNBC a year ago:
Intergenerational transfers of wealth create risks and opportunities for individual investors and the financial advisory industry.
Over the next 30 to 40 years, $30 trillion in financial and non-financial assets is expected to pass from the baby boomers — the wealthiest and one-time largest generation in U.S. history — to their heirs. Therefore, navigating this latest transition will be critical.
But I digress. The Walmart graph from The WSJ

From The Mind of Maxine Waters

DUCs In North Dakota Continue To Increase -- August 17, 2018

Before we get to the DUCs, let's look at the "breakeven" cost in the Bakken because that's probably of more interest to readers.

This is from yesterday's Director's Cut, June, 2018, data. Years and years ago, Whiting said they were profitable with  the price of oil below $25.
A few months ago a reader raised a question regarding my thoughts on DUCs.

I suggested that operators in North Dakota were "managing their assets," suggesting that it is not due to shortage of frack crews. Obviously it's a combination of both, but I think "managing their assets" is the bigger reason why DUCs are increasing. About two months ago, John Kemp said we were entering a period of "severe backwardation." For newbies, North Dakota doubled the number of months operators were required to complete their wells once spud. Up until the Saudi Surge of 2014 - 2016, North Dakota required operators to complete their wells within one year of spud; operators now have two years, and can go longer with a waiver.

Most sources with which I am familiar don't think DUCs are all that significant a metric to follow.

By the way, there should be an inverse relationship between DUCs and inactive wells, all things being equal, as we see an increase of pad drilling and infill drilling.

Except for a decrease back in January, 2018, the number of DUCs has been steadily increasing. The data is updated here; this page won't be updated.

These are the recent stats for DUCs:

June, 2018: 993, up 38 from previous report
inactive: 1,458, down 111

May, 2018: 955, up 13 from previous report
inactive: 1,569, down 48

April, 2018: 942, up 26 from previous report
inactive: 1,521, down 132

March, 2018: 916, up 15
inactive: 1,653, down 1

February, 2018: 901, up 48
inactive: 1,654, down 100

January, 2018: 853, down 24
inactive: 1,554, up 85

December, 2017: 877, down 6
inactive: 1,469, down 23

And the number month-over-month has also been increasing.
  • June: up 38
  • May: up 13
  • April: up 26
  • March: up 15
  • February: up 48 (North Dakota winters are at their worse in February -- an outlier)
  • January: down 24

Filloon On Cimarex In The Permian -- August 17, 2018; Pleasant Surprise -- Active Rigs In ND Jump To 60

Can US shale stop a global oil supply crisis? From oilprice. Some nice data points and interesting perspective. 

How many nails in a coffin does it take? 
Keystone XL delayed again, and this one is a long delay. and there is still a second court case in Nebraska that could upend everything. From oilprice: the US State Department must review the entire project now that Nebraska has approved an alternate route. And, of course, the alternate route in Nebraska is being contested in court. One would think that only the short segment in Nebraska that was revised would require an environmental impact study, but the judge ruled that the entire pipeline -- from Canada to Cushing must be reviewed -- start all over again. Not just an amendment.
Filloon: update on Cimarex as huge Permian wells increase oil outputs.

Opportunities abound in the oil sector after significant sell off.

Disclaimer: this is not an investment site.

Trucking: wow, how many times have we written about this in the past year? From The WSJ.

GOM: reduced royalty rates will lead to even greater increase in GOM activity -- Rigzone

Making America great again: youth unemployment hits 52-year low. From The WSJ. Headline/story: bark bigger than the bite. Note labor participation rate. What a great country.

Back to the Bakken

Wells coming off the confidential list today:
  • 32231, 2,706, WPX, Elm 19-18HQ, Mandaree, 4 sections, Three Forks, 41 stages; 6.1 million lbs, a nice well; 44K in less than 2 months; t6/18; cum 45K 6/18; [#20517 to the west, never taken off-line showed a nice little jump in production]
Active rigs:

Active Rigs60533274194

RBN Energy: how crude refiners, midstreamers and shipping companies are preparing for jIMO 2020. This will be very interesting. How will Canada be affected?
Implementation Day for the IMO 2020 rule on low-sulfur marine fuel — is ticking, and while that date may still seem far away, it is decidedly not.
The impending switch from 3.5%-sulfur fuel oil to marine fuel with sulfur content no higher than 0.5% will affect a broad swath of the energy sector worldwide, not to mention consumers of diesel and other low-sulfur distillates that will be in much higher demand by this time next year as the run-up to IMO 2020 kicks into high gear.
Already, complex and simple refineries alike are evaluating changes to their crude slates and planning to add equipment that will enable them to produce more high-value distillate and less “bottom-of-the-barrel” residual fuel oil, the source of high-sulfur marine fuel.
U.S. midstream companies are gearing up to export more light, sweet crude from the Permian and other shale and tight-oil plays to simple refineries that will no longer be able to get by refining heavy, sour crudes. Marine-fuel suppliers are testing various blends to see which might produce IMO 2020-compliant fuel at the lowest cost. As for ship owners, they’re preparing for topsy-turvy fuel prices in late 2019 and 2020 as this wrenching change plays out. Today, we consider key market participants’ latest thinking on the likely effects of the new rule for low-sulfur marine fuel.