Thursday, August 23, 2018

Canadian CBR Surged In June, 2018

We've talked about CBR-Canada a number of times recently; past blogs on CBR Canada:
Now, today, from SeekingAlpha;
  • Canadian crude oil exports by rail surged 87% in June from a year ago to more than 204.5K bbl/day, according to the National Energy Board; June was the last full month for which the NEB has relevant data
  • constraints on Canadian takeaway capacity has suppressed the price for the Canadian crude oil benchmark by as much as $30/bbl relative to the U.S. WTI benchmark
  • "With western Canadian pipelines full, greater volumes crude by rail volumes will continue to grow into the fall," [a spokesman] says, expecting movement to average between 200K-300K bbl/day for the full year
  • TransCanada is trying to expand that network to southern U.S. export terminals through the Keystone XL pipeline, although environmental challenges have delayed the project, and Kinder Morgan has tried to triple the capacity of its Trans Mountain network to British Columbia ports amid intense regional opposition

No New Permits Announced Today -- August 23, 2018

Active rigs:

Active Rigs62533176192

No new permits announced today.

One re-entry permit:
  • 24379, re-entry, Bruin E&P, Fort Berthold 152-94-15B-22-5H, Antelope,
Three producing wells completed:
  • 33933, 192, BR, Three Rivers 1C TFH, Charlson, t7/18; cum --
  • 34476, 386, Lime Rock Resources, Laura Sadowsky 2-1-36H-142-96, Manning, t7/18; cum --
  • 33262, n/d, Whiting, Wold Federal 44-7-4XH, Banks, 4 sections, t--;

The Best Energy Conference Of The Year -- Oil -- Enercom -- Presentations Available -- August 23, 2018

When I first started the blog, over ten years ago, I was blown away the first time I came across the presentations from the annual EnercCom conference -- I was amazed at all the information provided.

I'm still amazed.

If you run out of reading material for the weekend, go to this link:

Download the PDFs; they will disappear sometime in the next few weeks.

The video is also available for those who want additional information regarding the formal presentation.

The presentations where I will start:
  • NOG
  • US EIA
  • Enerplus
  • SM Energy
  • DNR
  • QEP
  • WPX
  • Whiting
  • EOG
If you read every one of the presentations, and, look at the aerial photos of western North Dakota taken by Vern Whitten, you will know everything worth knowing about the Bakken. Seriously.

The Next Big Thing -- August 23, 2018 -- Your iPhone Will Be Your (Only) Computer


Later, 3:52 p.m. CDT: this is really quite amazing. I attended an investing talk presented to sixteen of us, by invitation only. The presenter was a presenter from a wholly-owned Schwab subsidiary. Before the formal session began, I told the presenter about the "next big thing" below.

Lo and behold! It turns out that Schwab has opened its first "Office of the Future" -- a new concept for the Schwab office of future. The "first" test location nationwide was in Austin, TX, and has just opened. On site, it turns out, Schwab uses exactly the "next big thing" idea I posted below.

The concept Schwab uses is hosted by Cisco TelePresence. I confirmed that this was the first "office of the future" location for Schwab; the speaker confirmed that it was. He did not know where the second such office would be located, but he agreed that it most likely would be in Silicon Valley, California.

And here it is! Amazing. The office was opened June 4, 2018, apparently. See website.
Charles Schwab is growing in Texas, and especially in Austin. The financial services company has more than 1,900 employees now working at its corporate hub near The Domain, with more than 100 job openings — and room for many more.
Even if the site is behind a paywall, you can view the slide show. Making Texas great again. It looks like slide 16 of 31 is the slide you want to view if you looking at the "next big idea."

Original Post
Your iPhone will be your computer. It already is but I'm talking about the revolution coming in 2024.

Quick, how much "memory" does your current desktop or laptop computer have?
  • my MacBook Air, a fairly old model:
    • processor: 1.6 GHz, Intel Core i5
    • memory: 4GB
    • storage: 121 GB
  • the iPhone X:
    • main processor: 2.39 GHz (better than my computer)
    • capacity: 256 GB (more than twice my laptop; and much more than I need)
    • many, many more features than a desktop / laptop computer
      • camera
      • face recognition
      • ApplePay
      • touch ID
      • fits in my pocket 
Rumors suggest that Apple will finally announce an upgraded "Apple Mini" computer this September -- a computer about the size of a very, very small external hard drive -- no keyboard, no monitor, simply the CPU/computer that one carries in one's carry-on or purse or backpack or suitcase, and then connects with peripherals (monitors, keyboard, printer) at destination (home, office, travel).

By 2024, the iPhone will be used routinely as one's "only" computer -- replacing laptops and desktops.

One will simply "connect" the iPhone to any monitor/printer/keyboard anywhere.

One will get off the airplane, take an Uber to conference or to Starbucks or to office or wherever, and will place the iPhone on an external charger. The iPhone will be "connected" wirelessly (BlueTooth) to the peripherals (monitor/keyboard).

It will be another decade after that before the keyboard becomes redundant (user interaction: voice, eye/blinking movement -- the eye will focus on the target; an eyeblink will be the "click").

By the way, speaking of which, the rumors circulating right now suggest that Apple's September announcement of new hardware could be one of the bigger announcements in years. That would make sense:
  • Tim Cook is hitting his stride
  • the company has hit a market cap of $1 trillion
  • Apple has a huge cash horde
  • the distraction of the new "mother ship" will pretty much be over 
  • Apple's transition to "wearables" is gaining traction
  • laptops in Starbucks: "so 2015"
  • iPhones in Starbucks: "so 2018"

What Does This Tell Us About CLR? -- August 23, 2018

CLR reported this well today:
In its most recent corporate presentation, if I recall correctly, CLR's "optimized completion" strategy:
  • 60 stages
  • 10 - 15 million lbs proppant
  • 250,000 lbs/stage - 167,000 lbs/stage
Generally, in the Bakken, I am seeing:
  • long laterals (about 9,000 feet horizontal legs; 20,000 feet TD)
  • most operators going with 40 stages
  • about 175,000 lbs/stage (significantly less than what they are using in the Permian)
  • most operators going with about 8 million lbs of proppant, trending toward 10 million lbs
  • one operator says 
    • under 7.5 million lbs proppant, sub-optimal results
    • trending toward 15 million lbs proppant, no significant improvement
    • "Goldlilocks" completion strategy: 60 stages; 12 million lbs proppant
  • trending toward more use of "smaller" sand (three sizes: small, medium, large)
  • middle Bakken requires 20% more sand than the Three Forks first bench
  • CLR and one or two other operators starting to drill more T2 and T3 wells (second bench and third bench of the Three Forks)
  • best Three Forks first bench wells might be better than best middle Bakken wells (Lynn Helms suggested this years ago; at the time, no information on second and third bench wells)
So, what does this tell us about the Bakken or about CLR when we see 20 million bbls of sand being used (by the way, EOG has also use this amount of sand in several cases -- they were the first to use that much sand in the Bakken, as far as I can tell, and that was some years ago) -- but I digress -- what does using 20 million lbs of sand mean?
  • sand is incredibly inexpensive right now
  • spending less on drilling can be used to spend more on fracking
  • Harold Hamm's brother owns a fracking sand pit
By the way, what does the production profile look like for that most recent Vardon well? 122K in three months. 122K x $40 = $5 million. Average well cost to completion in the Bakken: they say $8 million.

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

The Market, Energy, And Political Page, T+9 -- August 23, 2018

NG fill rate, link here. I still think this is going to be the most interesting metric to follow this winter. If it's a cold winter, and if storage rates fall outside the historic minimum going into November, and if the US shale natural gas operators can meet natural gas demand this winter, it means tracking natural gas fill rate is almost meaningless:

Jobs, numbers come in 5K better than expected:
  • consensus: 215K
  • actual: 210K
  • change: 2K from previous week
  • CNBC analysis: yawn
Market opening:
  • Dow, irrelevant: down 39
  • Nasdaq: up 16 -- wow
  • S&P 500, the only that counts: flat
  • AAPL: up, 0.5%
  • SRE: up, 0.15%
  • UNP: down, 0.17%
  • EOG: down, 0.7%
  • OAS: down, 1%
  • NOG: down, 0.6%
  • BRK-B: flat
  • WTER: down 3%
  • BABA: up 4%
  • AABA: up 3.24%
  • ABBA: retired
Five undervalued energy stocks bound to make a comeback, link here:
  • DVN
  • COP
  • EOG
  • CHK
  • BP
Disclaimer: this is not an investment site. 

Making Texas great again. My new truck -- stopping at the bank to make a monthly payment. At $150/month it will take me 60 years to pay off the truck. But Sophia and I are going into the landscaping business and under the new Trump tax law, we will "write off" this truck as a capital expense this first year. I don't think we can mow $108,000 worth of lawns, but Sophia says we can do it. She will have to "give up" Tutor Time.

Getting Ready For The Annual Texas Truck Sale In Which Dealers Sell Off Their Smaller Units -- August 23, 2018

The "big unit" sale for Texas trucks occurs later in the year. These are just the small trucks right now.

Making Texas great again.

WTI Moving Up A Bit; Rigs In North Dakota Steady At 62 -- August 23, 2018

Bakken sale: US Energy Corp will will acquire Bakken assets for almost $20 million. For the archives; relatively inconsequential story but gives folks an idea of activity in the Bakken and what top tier acreage is selling for. Link here:
  • buyer: US Energy Corp
  • seller: APEG, an affiliate of APEG Energy II, LP
  • deal: 67 wells; 1.1 million boe of proved reserves
  • 400 boepd production 
  • 1,600 net acres
  • $17,800,000 / 1600 = $11,000 / acre
  • will double US Energy Corp's existing production base
  • website; I believe US Energy Corp is a non-operator in the Bakken; will check later 
  • not previously mentioned over at "Bakken operators"
Gasoline demand: yesterday afternoon -- US EIA says US Gulf Coast gasoline stocks build as refining holds above historic norms. Refiners have been operating at or near 98.1% capacity for several weeks now.

Gasoline demand: is a red herring, 2016 --- Forbes -- from the columnist who forecast the death of the Bakken, Art Berman. I'm beginning to think Art Berman is a red herring.

BABA: not ABBA. Up 3% in pre-market trading on 61% surge in revenues y/y 

Disclaimer: this is not an investment site.

Poll, results in which we asked about corporate earnings every six months instead of quarterly:
  • yes: 55%
  • no: 45%
  • Comment: I thought it would be closer to 10%, yes; 90% no. I am quite surprised.
Back to the Bakken

Wells coming off confidential list today -- 

Thursday, August 23, 2018
  • 34231, drl, CPEUSC, CPEUSC Elena 8-22-15-157N-100W TFH, Marmon,
  • 33230, 1,966, CLR, Vardon 4-14H, Siverston, 61 stages; 20 million lbs, t3/18; cum 132K 6/18; the Vardon wells are tracked here;
  • 24620, SI/NC, MRO, Coburn USA 41-30TFH, Reunion Bay,
Active rigs;

Active Rigs62533176192

RBN Energy: the crude hub at Cushing: what was, what is, and will will be.
The crude oil storage and distribution hub in the small town of Cushing, OK, is a marvel. With more than 90 MMbbl of tankage, 3.7 MMb/d of incoming pipeline capacity and 3.1 MMb/d of outbound pipes, Cushing’s nickname — “Pipeline Crossroads of the World” — is spot-on, not hyperbole. However, like a lot of other U.S. energy infrastructure in the Shale Era, Cushing’s role has been in flux. Permian oil production has been surging, the ban on U.S. oil exports is a fading memory, and the Gulf Coast — not Cushing — is where most U.S. crude production wants to go, for its concentration of refineries and export docks. That is not to say that Cushing is no longer important. Far from it. Today, we begin a blog series on how Cushing’s role has been morphing and why the Sooner State trading hub still provides critical support to producers, midstream companies and refineries alike.