The Million Dollar Way (The Bakken Oil Blog): 11/07/18

Wednesday, November 7, 2018

Help Requested From Our Scandinavian Readers -- Nothing About The Bakken -- November 7, 2018

Updates

November 8, 2018: another reader provides this --

fin means nice or fine rom means room
saas could mean see, saw, seen or ridge or maybe sauce
Finsaas might be a fine ridge or view ???;
Romsaas could "a room with a view..of a ridge?.

For me, most important was his conclusion (with which I agree):

I think both Finsaas and Romsaas are Norwegian names.

And then this:

The feud between the Norse and Swedes goes back to 1814 to 1905 when Sweden controlled Norway and Norwegians had to pay taxes to Sweden. Most Norse came to America during this era and they felt the Swedes "lorded over them". Denmark controlled Norway until 1814, but they had made the mistake of supporting Napoleon. When he "met his Waterloo", the Danes were forced to cede Norway to Sweden. Norway got complete independence in 1905.

Later, 8:02 p.m. Central Time: a reader via e-mail and now a comment (see comments) suggest that these are Norwegian surnames.

Original Post

From The Huffington Post:

What did Olaf Finsaas know and when did he know it? Our government just figured out that there are 4.3 billion barrels of oil in an area that encompasses the North Dakota/Montana border. My farmer grandfather gets the last laugh.

Now, my own story and request for input:

The back story is too long to go into, so we will cut to the chase.

In Dore, ND, there is/was a Finsaas family (featured in The Williston Herald) in 2012.

When I was growing up, when my mom worked the swing shift at the hospital, we had an older woman watch over us at the house. We knew her as Mrs. Romsaas.

Now, here's where I need help. The internet is of limited help.

Is Romsaas / Finsaas: Norwegian, Swedish, Danish, or other? Probably not Irish.

My internet search suggests Swedish.

"Saas" is clearly the anglicized "Sås" which in Swedish, according to an internet source on recipes, is "sauce."

Generally, when I found a recipe with "sås" on the internet it was for a fish sauce/fish recipe.

"Fin" apparently means "delicate" and is used in conjunction when describing a Hollandaise sauce for salmon.

"Rom," interestingly enough, is very likely "rum" -- again, it was used in conjunction with a rum sauce for some (fish?) dish.

My Norwegian father was always a bit biased against the Swedes, something he "took" from his father. I never thought about it much one way or the other.

But it fascinates me to think that my father's Norwegian children may have been watched over by a Swedish woman during their early impressionable years. If so, my dad would say it explains a lot how his children turned out.

Saudi Import Figures For August, 2018, Posted -- The Surge Begins -- November 7, 2018

Back on October 1, 2018, I wrote this one liner:

Wrong? I thought I read somewhere that US crude oil imports from Saudi were surging. I must have misread -- link here --

Well, look-eee here.... at 1 million bopd, the highest Saudi import number since June of last year (2017). Sometime in the last six months or so the president started putting pressure on Saudi Arabia to open the spigots to prevent a jump in gasoline prices which might impact the midterm elections.

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No Segue

I had more time than usual to listen to CNBC today. I have never heard so much inanity when listening to folks trying to explain the Trump mid-term rally.

Most hilarious: they all said they predicted that the rally. What a bunch of buffoons.

Buffoon: Originally recorded as a rare Scots word for a kind of pantomime dance, the term later (late 16th century) denoted a professional jester, from wiki.

That's about right: professional jesters.

I need a song.

As Tears Go By, Marianne Faithful

Eight New Permits -- November 7, 2018

Gasoline demand:

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Back to the Bakken

Active rigs:

$61.66↓	11/7/2018	11/07/2017	11/07/2016	11/07/2015	11/07/2014
Active Rigs	67	54	38	64	193

Eight new permits:

Operators: Oasis (5); Bruin (3)
Fields: Banks (McKenzie), Antelope (McKenzie)
Comments: Oasis has permits for a 5-well A. Johnson / Joplin pad in lot 4, section 1-152-98; Bruin has permits for a 3-well Fort Berthold pad in 27-151-94

One producing well (a DUC) was reported as completed:

32481, 2,288, XTO, Werre Trust Federal 14X-34A, Bear Creek, t9/18; cum 24K after the first month;

Three permits renewed:

EOG: three Van Hook permits in Mountrail County

The Market, Energy, And Political Page, Part 5, T+1 -- Wednesday, November 7, 2018 -- Nothing About The Bakken

Something tells me the "daily note" is going to be busy, busy, busy for a few weeks.

Less than eighteen hours after the results of the midterm elections are known (for the most part), Season 3 of the Trump Presidency has begun. Season 2 was a short season, beginning only back in July, 2018. Until the "official" poster comes out, this will have to do:

So, with a new season, we should see some new characters come on board, while others depart. Already, one supporting actor has submitted his letter of resignation, US Attorney General Jeff Sessions. It sounds like Interior Secretary Ryan Zinke may be dusting off his resume, too. One wonders what part his inability to get Matt Rosendale elected to the US Senate played a part in all this. It sounds like Trump has a few more in mind who are likely to go through the DC revolving door. And that will leave room for Nikki Haley. The very last reporter at the long, long press conference today asked Trump a leading question; he ignored the question, though it was asked repeatedly, but my hunch is that he was doing all he could to keep from spilling the beans regarding Haley's future.

By the way, a digression: with the GOP holding the US Senate, the president has a bit more "room" when it comes to thoughts about what to do with Mr Mueller.

On a different note, it certainly looks like the mainstream media has never played chess. Using chess as an analogy, the GOP lost a couple of pawns in the midterm election yesterday but the Democrats lost a lot more. The biggest failure for the Democrats was the inability to get "Beto", a pawn" to the back row where he would have become a rook or a queen. He was taken out by a rook, Ted Cruz, perhaps with the help of the king (castling) one row short of his goal. The Democrats also lost a bishop or maybe even a queen when Heidi Heitkamp lost. She wasn't all that powerful, but had Heitkamp held her seat, and had Beto won in Texas, it's very possible the US Senate would have flipped, along with the US House.

The mainstream press seems absolutely surprised the US House flipped in the midterms: this regularly happens, they say, in the midterms, and, not only that, the polls all showed that it was going to happen. But the press will try to convince Americans this was a huge Trumpian loss. LOL.

I listened to a bit of Rush today. I was surprised he was so "negative" about the results. I agree with Trump. He said he would rather have lost the US House than to have held it by one or two seats.

The market certainly likes what it sees. The Dow (irrelevant) is surging, up 500 points and will probably not be any higher by the close simply because the market is governed by fear and greed, and at 500+ points, we are well past "greed" and getting into "fear."

The market is having the best "midterm day" since 1982. From wiki (something the mainstream press might be advised to read):

The 1982 United States House of Representatives elections was an election for the United States House of Representatives held on November 2, 1982, in the middle of President Ronald Reagan's first term, whose popularity was sinking due to economic conditions under the 1982 recession. [2018: the US equity market "in correction"; some sectors were in/near bear market conditions.]

The President's Republican Party lost seats in the House, which could be viewed as a response to the President's approval at the time. Unlike most midterm election cycles, the number of seats lost—26 seats to the Democratic Party—was a comparatively large swap. It included most of the seats that had been gained the previous election, cementing the Democratic majority.

Coincidentally, the number of seats the Democratic picked up (26), was the exact amount the Republicans needed to win the House majority. In the previous election of 1980 Republicans gained many seats as the result of the popularity of Ronald Reagan. Many of these elected officials lost their seats in 1982. [2018: the Dems gained 35 seats in the US House.]

I had the day off. I took advantage of that by watching CNBC. Every CNBC anchor seemed shocked -- shocked -- by the market reaction. Every pundit, it seemed, was talking off the same set of talking points, mainly that the market was happy to see that we will see gridlock. I disagree completely. Trump has it right -- which he articulated at his very, very long press conference. He was unable to negotiate with his own party in the US House. Now, with Nancy Pelosi in charge, he has someone with whom he can work. At least he has no false hopes. Think Jeff Flake.

Having said that, Trump - Pelosi - Flake, sounds really wonky. The market tells me this: investors interpret the midterm results as a Trump win.

What I love most: all analysts said this was all expected. LOL. My hunch: Jim Cramer, a) will say the same thing; he predicted it; and, b) will take credit for staying calm and remaining fully invested. LOL.

EIA Confirms API Data -- US Crude Oil Inventories Surged (Again) This Past Week -- November 7, 2018

Link here. Weekly US petroleum data --

US crude oil inventories: increased by 5.8 million bbls
US crude oil inventories: now at 431.28 million bbls; the blog's threshold: 400 million bbls
US crude oil inventories now 3% above the five-year average for this time of year
refiners are working at 90% capacity; unchanged from last week (89%)
gasoline production just below 10 million bbls/day
distillate fuel production right on glide path at 5 million bbls/day
total product supplied up by another 4% from the same period last year
distillate fuel supplied is up over 6% from same period last year

WTI: $61.89.

QEP Exits The Williston Basin; Becomes Pure-Play Permian Producer -- November 7, 2018

Updates

February 25, 2019: deal terminated. VEAC won't be buying QEP's assets in the Williston Basin.

December 15, 2018: major update at this post. The Vantage purchase of QEP's Williston assets is scheduled to close on March 14th.

Original Post

Maybe the mineral owners should have voted to let QEP unitize the Helis Grail. But we will never know, will we.

A reader alerted me to this. Thank you very, very much.

QEP exits the Bakken. The story is everywhere. One link here. Data points:

Vantage Energy buys

Vantage Energy: a new publicly traded company
Denver-based Vantage Energy
will focus on the Williston Basin, "including" the Bakken

meanwhile, QEP will become much more of a pure-play exploration and production firm focused almost exclusively on the Permian
$1.7 billion
acreage not mentioned in this article
from "Bakken operators", last entry:

about 120,000 acres in the Bakken
$1.7 billion / 120,000 = $15,000 / acre (rounded)

From that post:

March, 2018: will exit the Bakken and Uinta; looks like it becomes a pure Permian play
8 rigs; operational update, June 3, 2013;
QEP Midstream Partners, IPO filing, May, 2013; Uinta, Bakken
August 23, 2012: acquires 27,600 net acres from Helis, LLC, and Black Hills Corporation in deal worth $1.3 billion; if accurate, then about 117,600 net acres in the Bakken;
4Q11 (Filloon): 90,000 net acres: most of it inside the reservation
Three rigs; will add a fourth in 2012 (1Q12 report)
4Q11: 5,019 boepd
4Q11 (Filloon): Most interesting: its proposed 10-well pad; first test of 5 MB and 5 TF from one pad
Still natural gas heavy

Here we go, from MarketWatch:

Upon closing the transaction, Vantage Energy Acquisition Corp. will change its name to Vantage Energy Inc., which will be led by Mr. Biemans as Vantage's full-time Chairman, President and CEO. In addition to Mr. Biemans' leadership and the rest of the current Vantage team, Vantage expects to retain a significant portion of QEP's High Plains business unit team, including operations, engineering, geoscience, land, administrative and finance groups.

The transaction is subject to approval by VEAC shareholders and other customary closing conditions, and the new company will trade on the NASDAQ under the ticker "VEI" upon closing, which is expected to occur late in the first quarter or early in the second quarter of 2019.

The formation of Vantage creates a large-scale, pure-play Williston Basin operator with strong free cash flow and low-risk growth opportunities.

The acquired assets consist of more than 100,000 net acres and are currently producing at the rate of 46,000 barrels of oil equivalent per day.

Let's do some quick comparison (market cap / enterprise value)

VEI: $1.7 billion (pending) / $1.7 billion (pending)
NOG: $1.153 billion / $1.6 billion
OAS: $3.22 billion / $6.5 billion -- 66,000 bopd
DNR: $1.44 billion / $4.92 billion

Comment:

QEP was never a good fit for the Bakken
I always wondered how/why QEP entered the Bakken
when QEP entered the Bakken during the boom I was surprised
QEP got "lucky" with an incredible Helis Grail
now, it's time to move on
VEI seems to be a better fit for the Bakken, what little I know about VEI

Clearing Out The In-Box -- November 7, 2018

A scrap of paper I found in one of my old journals, undated:

HK: $2.7 billion; 142,000 net acres; 40,000 bopd
KOG: $3.5 billion; 173,000 net acres; 34,0000 bopd

Neither are with us any longer. If I recall correctly one filed for bankruptcy protection and re-emerged in fine shape; the other bought by another Bakken operator

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Anti-?

The other day I mentioned to my wife that it seems if one ever says anything negative about the state of Israel, someone will label that person as anti-Semitic. Being tagged with anti-Semitism may not be the kiss of death but it certainly comes close. But if one speaks out against Iran, or against Saudi Arabia, how is one labeled?

I said this to my wife:

speaking out against Israel can get one labeled, anti-Semitic
but what are you called if you come out against Iran?

Without missing a beat, my wife (a very liberal, strong Beto supporter), said: "Patriotic."

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Statesman

Trump is a true statesman -- or a great stand-up comedian -- see screenshot below.

Beto? Not so much, at least based on his concession speech in front of his parents and in front of millions of impressionable young adults who stayed up last night to him talk.

Now, back to the statesman:

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The Literature Page

The New Journalism, edited by Tom Wolfe, c. 1973.

From wiki:

The Armies of the Night is a nonfiction novel written by Norman Mailer and published by New American Library in 1968. It won the Pulitzer Prize for General Non-fiction and the National Book Award in category Arts and Letters.
The book's full title is The Armies of the Night: History as a Novel/The Novel as History.

Mailer essentially created his own genre;[citation needed] as the subtitle suggests; the narrative is split into historicized and novelized accounts of the October 1967 March on the Pentagon.

Mailer's unique rendition of the non-fiction novel was one of only a few at the time, and received the most critical attention. In Cold Blood (1965) by Truman Capote and Hell's Angels (1966) by Hunter S. Thompson had already been published, and three months later Tom Wolfe would contribute The Electric Kool-Aid Acid Test (1968).

The Market, Energy, And Political Page, Part 4, T+1 -- Wednesday, November 7, 2018

SRE: needs to change its ticker symbol to WOW. From SeekingAlpha:

Sempra Energy pre-market after coming through with strong beats on Q3 earnings and revenues, and reaffirming full-year earnings guidance
3Q18 revenues in the company's utilities segment rose 8% yoy to $2.46B, while sales in energy related businesses jumped 19% to $480M
SRE sees adjusted EPS of $5.30-$5.80 vs. $5.42 analyst consensus estimate.
SRE also announces its IEnova and Sempra LNG & Midstream subsidiaries have signed three Heads of Agreements with Total, Mistui, and Tokyo Gas for the full export capacity of Phase 1 of the Energia Costa Azul liquefied natural gas project located in Baja California, Mexico
the HOAs contemplate the parties negotiating and finalizing definitive 20-year sales-and-purchase agreements, with each of the companies purchasing ~800K metric tons/year of LNG

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The Literature Page

The New Oxford Annotated Bible; NRSV with the Apocrypha, an ecumenical study bible, Michael D. Coogan, editor, c. 1989; full price, $45; Barnes and Noble purchase in 2016.

It's been a long, long time since I've read the Bible from a historical point of view, and as a piece of literature. Of course, I know the New Testament very, very well -- at least the first four books, but the Old Testament has always played second fiddle for me.

I am now in that stage of life, and for whatever reason, I find the Old Testament -- as history and literature -- absolutely fascinating. One can go to wiki and find "an answer" for any question one might have about the Old Testament, but it is so much rewarding to stumble upon it (often, again) on one's own.

Two quick examples:

east of Eden: Genesis 3:24; and, Genesis 4:16 (the land of Nod, or as I used to think, "the land of nog", but that's another story for another time)
one-tenth: Genesis 14:20

When I saw "east of Eden" in context, I immediately thought of "beyond the pale," something I've discussed many, many times.

The Market, Energy, And Political Page, Part 3, T+1 -- Wednesday, November 7, 2018

Staggering: for those who may have missed it, Oasis is now modeling 1.5 million boe EUR type curves in the Bakken. Link here. It's likely CLR is doing the same thing, but I only recall 1.2 million boe EUR type curves - although they may be "bo" curves, and their graphics do show their wells exceeding the 1.2 million curve (but then, same Oasis; their graphs show wells exceeding the 1.5 million boe EUR curve). Again. I don't recall "boe" vs "bo" for CLR. For Oasis, they were using "boe" EUR curves.

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.

The market:

Dow (irrelevant) futures: up 232 points
WTI: up 1%; trading at $62.86

Comment: there's been a lot of hand-wringing regarding WTI trending towards $60. In fact, the recent high was around $70 and in the big scheme of things, there's not a lot of difference between $70 and $62, especially when one considers the production gains operators are making with fewer rigs, decreased costs. Throw in a bit of hedging by some of the operators and things appear fairly rose. As mentioned earlier, a credible floor trade yesterday suggest WTI's bottom was in. If so, clear sailing from here on out.

112: wow, I almost forgot. Perhaps the biggest US energy story overnight -- in Colorado, voters rejected Proposition 112. It looks like the vote was about 60% of voters supporting the state's oil industry; 40% thought oil companies should leave Denver.

Politics: a reader wrote to me regarding the election -- my not-ready-for-prime-time reply with minimal editing:

I think everything turned out just fine.

The US House has become quite irrelevant over time. We'll be inundated with politics for the next two years -- Trump, Pelosi, lawsuits, Mueller, but I'm hearing that Pelosi doesn't want to actually move forward on impeachment. If not impeachment, no action, and then it's just political talk.

But behind the scenes, Congress is going to want to spend huge amounts of money on infrastructure -- and no one cares about deficit spending any more -- good, bad, or indifferent -- and on top of that Congress will push for a huge middle class tax cut going into mid-terms; US Senate will "moderate" the huge tax cut but it will move the needle in the right direction -- cutting taxes.

Overall, I think it could not have worked out better.

I did not watch any television or listen to any news in the last 24 hours regarding the election except for three races: Heitkamp; Cruz; and proposition 112 in Colorado.

Except that we have to listen to Maxine Waters and Nancy Pelosi for the next 18 months, as an investor, I couldn't be happier. I'm waiting to hear from Jamie Dimon and Warren Buffett. My hunch: they are thrilled. For Jamie Dimon, had Elizabeth Warren taken control of the US Senate banking committee -- I don't think he even wants to think about that ....

I could have added one more thing: I happened to catch a talking head on CNBC say the other day that "neither party" can do anything regarding "entitlement reform." Talk of "entitlement reform" on CNBC? Give me a break. Entitlement reform. What a joke. I almost fell off my chair when I heard her say that -- first of all, it was a classic example of non sequitur -- and completely off-topic. I haven't heard anyone talk about entitlement reform in ages; have you? The only talk of "reform" I have heard has come from Bernie Sanders and he wants what the millennials and the "i" generations want: free college tuition; free health care for all.

The Market, Energy, And Political Page, Part 2, T+1 -- Wednesday, November 7, 2018

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.

Politics: could not have worked out better. The face of the US Congress: Maxine Powers and Nancy Pelosi.

Shale oil: this link was posted earlier. Nothing new that hasn't been said before, but the story is starting to gain some converts, particularly among the majors. Before we go any further, let's remind folks of this graphic, the Permian (56 wells on each pad in the Permian, and my hunch: that's conservative; they show only six wells strung over a mile; based on what I've seen in the Bakken, I think they can squeeze in eight):

and this graphic from the Bakken:

Shale oil vs conventional oil:

oil field development in shale is incredibly efficient
incredibly predicatable
no dry holes
scalable -- up and down
incredibly responsive to market forces
unlike deepwater drilling, we will never see a catastrophic blowout in shale that could literally destroy an operator
in deepwater drilling, even after one has discovered an elephant field, tens (hundreds?) of millions of dollars required for each deepwater drilling complex; in shale, once the first few wells are drilled, infrastructure is in place to bring on more wells at a fraction of the original development costs
once conventional field starts to deplete, it continues to deplete; we're starting to see signs that technology will reverse that trend in tight oil formations

I don't know if folks noted this Oasis' most recent corporate presentation: the company added Painted Woods to its core inventory. Painted Woods is one of the oldest fields in the Bakken Basin. The field is tracked here; I have not updated it in a long time. It's within bicycling distance from Williston.

The Market, Energy, And Political Page, T+1 -- Wednesday, November 7, 2018

Top energy story overnight? China's bid to take large stake in Rosneft fails. This speaks volumes about the state of China's economy. It would have been a big story -- but pretty much unreported -- had China acquired that stake in Rosneft. Instead, it's a big, big story. Link here. Data points:

a $9 billion stake in Russia's state-run oil producer came on the market
it was expected that China's CEFC Energy Co would grab it
at the "last minute", CEFC begged out -- and "begged" might be the exact right word -- it's got a huge problem with debt
Qatar Investment Authority swooped in to take that stake
Qatar Investment Authority: Qatar and the mining giant Glencore Plc
deal cements Doha's links with Moscow
Qatar facing isolation from Saudi Arabia; other Gulf countries
Rosneft stakeholders:

Russia, 50%
UK, BP: 20%
Qatar: 19%

Rosneft:

produces 4.5 million bopd
produces more oil than any other publicly traded company in the world

Qatar: posted earlier this morning, this link to a Bloomberg story on Qatar and quest to become world's natural gas king. Data points:

exports 77 million tons of natural gas annually
accounts for 26% of global supply of natural gas
plans to boost exports to 110 million tons by 2025
exploring for natural gas around the world, including Morocco, Cyprus, elsewhere
now has a $320 billion sovereign wealth fund
has won rights to the 2022 soccer World Cup
BMOC: Saad Sherida Al-Kaabi or simply "Al-Kaabi"

China: some nice data points in this article for the archives. Nothing that hasn't been said before.

Shale oil: for Art Berman. Nothing that hasn't been said before. Story over at oilprice.

Investing 101: MLPs. Again, story over at oilprice.

Clear Sailing From Here On Out? -- November 7, 2018

Bottom? A credible floor trader called it late yesterday afternoon -- WTI hit its bottom at $61.31 yesterday. Clear sailing from here on out.
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.

Buzz? Back to $100 oil. Here. Start of very strong cycle for oil and gas.

It's on: Qatar vs Australia vs the US vs Russia. Qatar takes steps to become world's gas king.