The Million Dollar Way (The Bakken Oil Blog): 11/04/18

Sunday, November 4, 2018

Europe's Manufacturing -- EV -- Battery Problem -- November 4, 2018

Over at "the big stories," there is a section called "Europe at a tipping point." Europe has a huge energy problem.

It turns out it has a huge battery problem, too. Which means a huge EV problem. Which means a huge manufacturing problem.

See this article over at oilprice.com.

NASCAR -- Texas Motor Speedway -- Begins Momentarily -- November 4, 2018

NASCAR today, Texas Motor Speedway, a few miles west of where we live. This is what I will be watching: Martin Truex, Jr. mano a mano Joey Logano.

Logano: starting 8th; fourth row
Truex: starting 13th, seven row

NFL:

Friday morning, two days ago, Rush Limbaugh said he had forgotten there was a Thursday night NFL game
when he was reminded of that game, he asked who played; that's how far removed Rush is from the NFL, a sport for which he used to live, it seemed
today: I looked at the schedule; not one think catches my eye; maybe Dallas Cowboys tomorrow night; waiting to see Jerry Jones' fireworks; how long can he / will he put up with the Cowboys losing?

Update On Canadian-Massachusetts Power Line -- November 4, 2018

Background at this link. Data points:

Massachusetts needs more electricity; closing down coal and nuclear power plants
three sources:

renewable energy (which, of course, is not enough to make up for lost coal, nuclear)
natural gas pipelines from the west
hydroelectricity from Canada
proposed pipeline projects were killed early on even if they were ever considered

that left hydroelectricity from Canada but required huge, new, ugly, high-power transmission eline through Maine (LOL -- like that will ever happen)
145-mile long transmission line
transmission line: Avangrid
Maine's PUC holds the cards including the four ace

Update, as of November 2, 2018, from The Boston Globe, Talking Points PM:

Avangrid hoped to have state permits by end of 2018
now shooting for March, 2019
unfortunately, a separate review by Maine's environmental regulators was also required
and, oh by the way, federal regulators are also reviewing the high-energy transmission line
in-service deadline: 2022
unlikely allies

power plant owners in Maine who feel threatened by power plants in Massachusetts which apear to be heavily subsidized by the state of Massachusets
environmentalists worried about impact of the transmission line

allies hoping for a "Northern Pass scenario" -- death by regulator scrutiny

Northern Pass here; HydroQuebec and Eversource
and, here; it too was going to bring clean energy to Massachusetts; but it was quickly rejected

who, what killed the preferred route, the Northern Pass route? New Hampshire
the new project -- the one that goes through Maine:

New England Clean Energy Connect
$950 million project (or $1 billion in round numbers)

Maine will get nothing out of the deal. The project will put at risk Maine's own power companies, and will certainly detract from the beautiful scenery that draws tourists.

Wells Coming Off Confidential List This Next Week -- November 4, 2018

Six months ago it was early May; spring road restrictions in place?

Monday, November 12, 2018:
34368, conf, XTO, Cherry Creek State 14X-36EXF, Siverston, no production data,
32944, conf, Oasis, Ceynar 5298 42-32 9T, Banks, producing nicely;

Sunday, November 11, 2018:
34370, conf, XTO, Cherry Creek State 14X-36B, Siverston, no production data,
33222, conf, CLR, Miles 6-6H2, Dimmick Lake, producing nicely,

Saturday, November 10, 2018:
34495, conf, WPX, Howling Wolf 28-3HY, Wolf Bay, no production data,
33315, conf, Oasis, Muri 5198 11-4 3B, Banks, huge well:

Date	Oil Runs	MCF Sold
9-2018	32752	34667
8-2018	30881	39657
7-2018	34084	66943
6-2018	34986	65845
5-2018	3302	6401

Friday, November 9, 2018:
34269, conf, Oasis, Muri 5198 11-4 14T, Banks, producing nicely,

Thursday, November 8, 2018:
34494, conf, WPX, Howling Wolf 28-33HF, Wolf Bay, no production data,
33221, conf, CLR, Miles 7-6H, Dimmick Lake, producing nicely,

Wednesday, November 7, 2018:
None.

Tuesday, November 6, 2018:
34052, conf, WPX, Howling Wolf 28-33HZ, Wolf Bay, no production data,
33220, conf, CLR, Miles 8-6H1, Dimmick Lake, producing but not much;
30223, conf, BR, Jerome 41-15TFH, North Fork, just beginning to produce;

Monday, November 5, 2018:
30222, conf, BR, Jerome 41-15MBH, North Fork, just beginning to produce,

Sunday, November 4, 2018:
34262, conf, MRO, Yellow Otter USA 14-7TFH, Reunion Bay, no production data,
30547, conf, BR, Merton 41-15TFH ULW, Croff, no production data,
30221, conf, BR, Merton 41-15MBH, North Fork, no production data,

Saturday, November 3, 2018:
34664, conf, EOG, Wayzetta 164-23M, Parshall, target = Souris River; no plans to produce; no production data,
34261, conf, MRO, Young Woman USA 44-12H, Reunion Bay, no production data,

CVX Vs XOM -- Fitzsimmons -- 3Q18; Dividend Increase Over At COP? COP Turning Into A Cash Machine -- SeekingAlpha

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COP

From SeekingAlpha:

net income increased $1.9 billion, or $1.59 per share, in the third quarter ended September 30, 2018, which included a $345 million payment related to a settlement agreement with PDVSA
the dividend is now $1.22 per share on a yearly basis and a share buyback program of $3 billion
ConocoPhillips is turning into a cash machine. Debt reduction, share buyback, increased CapEx and dividend accretion are the topics, and they are a pleasant subject.

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 what you think you may have read here.

I've long maintained that at some point shareholders would be rewarded for their patience. I had missed the COP dividend announcement or if I posted it earlier I had forgotten about it.

COP dividends, quarterly:

February, 2014: 69 cents; February, 2014, was not so long ago
May, 2015: 73 cents
July, 2015: 74 cents
during 2016: 25 cents/quarter
during 2017: 26.5 cents/quarter
during 2017: 28.5 cents/quarter
apparently, next dividend will be 30.5 cents/share

Selected revenue data:

1Q16: $5 billion
3Q18: $10 billion

From the CEO:

"In the third quarter, we generated $1.6 billion, or $1.36 per share of adjusted earnings.

And here's some interesting perspective. The last time ConocoPhillips generated quarterly adjusted earnings of $1.6 billion from continuing operations was in the third quarter of 2014. Brent was over $100 per barrel and our production was almost 1.5 million barrels of equivalent oil per day.

So we're as profitable today as we were then despite prices being 25% lower and volumes being 20% lower. So bigger isn't always better."

Also, from the article:

ConocoPhillips' singularity is that the company presents a high exposure to Brent oil price which has yielded the company a definitive edge over its U.S. rivals, who have been hit by production transport bottlenecks that have weakened prices of Texas local crude.

These bottlenecks will be solved.

Shale:

Production in Lower 48 represents 32.8% of the total output including Libya. The Lower 48 includes the three US shale basins (Eagle Ford, Bakken, and Delaware) and also the production from the Gulf of Mexico.

Case Study: The "Bakken Phenomenon" -- November 4, 2018

I'm certainly watching a different movie than than picture show that he "peak oil" folks are watching. After spending an hour or so going through the comments over at a peak oil blog, it still appears that a) folks in general don't understand the Bakken; b) folks are still comparing conventional oil experience with tight oil experience; and, c) no one is talking about the "Bakken phenomenon" that I find so interesting.

I would love to opine on what this may mean for shale and for the Bakken operators specifically but I feel I may be getting too ahead of my headlights. We'll see.

By the way, in passing, it was recently noted -- perhaps in the "throw-away" Forbes article of a few weeks ago -- that conventional exploration and drilling is incredibly inefficient compared to shale exploration and drilling.

[By the way, a reader who comments regularly at this blog, also made a comment at the peak oil blog and gave me a "shout out" by name. Much, much appreciated. Thank you, coffeeguy.]

One individual in a comment over at a peak oil blog did notice the results of the "Bakken phenomenon" when he/she was doing an "annual survey" of Bakken production to try to prove a point. The individual noted that "for some strange reason there was a jump in production in wells that were drilled in 2008 which was not explained, so I threw out that year in my analysis."

Another case study. Let's take a look at #18105 in the screenshot below.

That's a busy, busy little corner of activity in the Bakken, isn't it?

The well of interest -- #18105 -- was drilled back in late 2009. By today's standards, it was a pretty mediocre well, and quickly plateaued to 2,000 bbls of oil per month. By "conventional standards" the production should continue to slowly decline, eventually peter out, maybe a work-over or two, but eventually be plugged and abandoned. When drilled back in 2009, the EUR was probably estimated to be 350,000 bbls at best with a primary production return of 3% at best.

The well:

18105, 860, Hess, BB-Federal A-151-95-0910H-1, Blue Buttes, t2/10; cum 399K 9/18;

At 400K cumulative bbls this well has already surpassed its EUR, and is only nine years old, and is expected to produce for another 25 years and will go through the typical Bakken life-cycle: drill, frack, re-work, mini-frack, re-frack.

This was an open hole frack with about 2 million lbs of sand, and about 800,000 lbs of ceramic; in other words, a small, fairly "archaic" frack. Right, wrong, indifferent, I think of an open hole frack as a one stage frack. Today that well would haven been fracked with 10 million lbs of sand in 40 stages.

The wells being drilled in that area today are expected to have EURs of one million bbls from a primary production return of 12%.

With that as background, let's take a look at the recent production profile of #18105.

This is only from the past 24 months or so, #18105:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold
BAKKEN	9-2018	29	6686	6893	1690	0	0
BAKKEN	8-2018	28	4808	4893	1658	6830	6830
BAKKEN	7-2018	31	8239	8140	2360	11456	11456
BAKKEN	6-2018	29	6553	6315	1383	7656	7656
BAKKEN	5-2018	21	4519	4195	1284	5883	5883
BAKKEN	4-2018	0	0	0	0	0	0
BAKKEN	3-2018	0	0	0	0	0	0
BAKKEN	2-2018	0	0	0	0	0	0
BAKKEN	1-2018	20	1349	1589	257	4003	4003
BAKKEN	12-2017	31	2135	2169	273	3808	3808
BAKKEN	11-2017	22	1609	1360	188	3875	3875
BAKKEN	10-2017	31	2214	2331	297	5559	5559
BAKKEN	9-2017	25	2099	1861	67	2679	2679
BAKKEN	8-2017	26	1598	1855	225	2449	2449
BAKKEN	7-2017	31	2122	2325	295	3172	3172
BAKKEN	6-2017	30	2470	2239	334	3275	3275
BAKKEN	5-2017	31	2037	2257	392	3142	3142
BAKKEN	4-2017	30	2564	2290	797	3277	3277
BAKKEN	3-2017	31	3089	3254	396	3504	3504
BAKKEN	2-2017	19	2840	2762	496	2594	2594
BAKKEN	1-2017	5	588	453	0	530	530
BAKKEN	12-2016	15	720	916	81	838	838
BAKKEN	11-2016	27	2713	2734	182	3219	3219
BAKKEN	10-2016	7	341	465	56	622	622
BAKKEN	9-2016	30	1898	1853	314	2970	2970

There is no evidence this well was re-fracked and had it been re-fracked, the production would have been significantly higher than what we see above. No one, in my view, has satisfactorily explained the "Bakken phenomenon." But one an oil well begins its decline, it's not supposed to show a jump in production, something we see over and over in the Bakken.

This jump in production won't "move the needle" when there are a small number of wells (16,000) but there is no doubt in my mind that we will see that "production needle move" when there are 32,000 producing wells in the Bakken. I could add more but that's enough for now.

This is the production profile after the well was initially completed/fracked back in 2010:

BAKKEN	10-2010	31	6914	6945	293	9689	9689	0
BAKKEN	9-2010	29	8029	8032	303	14684	14684	0
BAKKEN	8-2010	25	8594	8628	119	15037	15037	0
BAKKEN	7-2010	31	8362	8319	2762	11920	11920	0
BAKKEN	6-2010	30	8864	8827	170	12892	10719	2173
BAKKEN	5-2010	31	10385	10403	185	13763	13763	0
BAKKEN	4-2010	30	10898	10977	559	14241	14241	0
BAKKEN	3-2010	31	16578	16739	725	23097	23097	0
BAKKEN	2-2010	28	22238	22139	3376	29762	29762	0
BAKKEN	1-2010	5	14285	14027	130	18454	18454	0

Week 44: October 28, 2018 -- November 3, 2018

International:

Khashoggi off the front page, but my hunch is things are not going well for the Crown Prince
Venezuela is within a week of major social upheaval
Original Iran sanctions kick in today

National

Chevron production soars as company ramps up production in shale fields
Jobs report for October: incredible, more records set; jobless claims lowest in 45 years;
Hubbert peak oil curve re-visited; and, here; and, here; and, here;
WTI drops below $63
US oil exports continue to surge
The road to New England
US ethane: another bottleneck

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The Bakken

Operations
CLR continues to attack the Brooklyn oil field
Active rigs in North Dakota
CLR has added two rigs in the Bakken
Where's Newfield?
A whopping nineteen new permits issued
Don't often see this: Hess reports a huge DUC
CLR posts its 3Q18 presentation
Update on Slawson's Torpedo wells
EURs in the Bakken

Halo production
Kjorstad -- Willow Creek
Skarston -- Banks
Florida -- Camp -- CLR
Bohmbach -- Three Forks -- Elm Tree -- CLR
Antelope wells in Elm Tree

Pipelines
Takeaway constraints, revisited -- RBN Energy

Natural gas
Getting ready to start work on "new" natural gas plant near Watford City

Bakken 2.5
Mini-fracks in the Bakken?

Bakken 101
A look at a long lateral on a 5,120-acre spacing unit

Bakken economy
$60 million bond vote for two new elementary schools; expansion of new high school
EOG: net income of $1.2 billion vs $101 million one year ago

Commentary:
CLR, over at SeekingAlpha
Did DNR just swap 200,000 acres in North Dakota for 80,000 acres in the Eagle Ford?
Big Oil moves in on tight oil -- Forbes

The Million Dollar Way (The Bakken Oil Blog)

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