Friday, December 14, 2018

Eleven New Permits; Twenty-Five Permits Renewed; Five Producing Wells Completed -- Welcome To Bakken 2.5 -- December 14, 2018

Active rigs:

Active Rigs67524064181

Eleven new permits:
  • Operators: XTO (8); Newfield (3)
  • Fields: Heart Butte (Dunn); Pembroke (McKenzie)
  • Comments: XTO has permits for a 4-well FBIR Stephen pad in 19-149-91; and, permits for a 4-well Bird pad in 19-149-91; because all eight are sited in the same section, I assume four run south; four run north; Newfield has permits for a 3-well pad in lot 4, section 149-98-3-10-3H;
Twenty-five permits renewed:
  • White Butte (9): nine Jore Federal permits in McKenzie County 
  • WPX (6): sixLion permits in Dunn County
  • CLR (5): two Thronson permits and one Sorenson permit, all in Mountrail County; a Nutchatch permit and a Tanager permit, both in Divide County
  • EOG (5): five Round Prairie permits in Williams County
Five producing wells (DUCs) reported as completed:
  • 34102, 4,488, MRO, Julia Jones USA 13-14TFH, Reunion Bay, t11/18; cum --;
  • 21172, 5,067, MRO, TAT USA 12-23H, Reunion Bay, t11/18; cum --;
  • 33981, 5,386, MRO, Phyllis USA 11-23H, Reunion Bay, t11/18; cum --;
    • neighboring wells:  
      • 29211: off line; t6/15; cum 473K 8/18;
      • 19514: huge jump, 10/18; t4/11; cum 528K 10/18;
  • 33733, 1,063, Rimrock Oil & Gas, Two Shields Butte 14-21-16-2H3, Heart Butte, t10/18; cum 8K over 15 days;
  • 33734, 721, Rimrock Oil & Gas, Two Shields Butte 14-21-33-15H3, Heart Butte, t12/18; cum --;
    • neighboring wells:
      • 18989: off line, t12/10; cum 298K 10/18;

Director's Cut -- October, 2018, Data -- New All-Time High

The big story regarding the October, 2018, data? See survey at the sidebar at the right. 

With about one-fourth the record number of active rigs, North Dakota set another all-time record for crude oil production.

The usual disclaimer applies: this page is done very quickly. There will be factual and typographical errors. If this information is important to you, go to the source. 

The Director's Cut for the October, 2018, data has been posted. It will download as a PDF on your desktop.

The number is: 1,391,877 bopd

Crude oil production:
  • October, 2018: hits a new all-time high -- 1,391,877 bopd
  • September, 2018: was a new all-time high -- 1,359,282 bopd
  • delta, bbls: 32,595
  • delta, percent: an increase of 2.4% month-over-month
Producing wells:
  • October, 2018: 15,344 -- a new all-time high
  • September, 2018: 15,287 -- it was a new all-time high
Natural gas production:
  • October, 2018: 2,562,465 MCF/day -- a new all-time high
  • September, 2018: 2,532,018 Mcf/d -- it was a new all-time high
  • delta, cubic feet: 35,031 Mcf/d
  • delta, percent: 1.4%
  • October, 2018: 183
  • September, 2018: 113
Off line:
  • DUCs: 959, up thirty-one from last report (tracked here)
  • inactive: 1,363, down 23 from last report
  • total: 2,322 (more than the total number of wells that will be drilled in North Dakota this year)
  • statewide, captured: 2,035,436 Mcf/day -- daily rate (October, 2018)
  • NDIC says this is a new all-time high but they are talking about monthly capture
    • the September, 2018, daily capture was actually higher at 2,075,451 Mcf/day
    • the month of October, at 63,098,514 Mcf/day is higher than the month of September, at 2,075,451 Mcf/day
  • statewide, capture: 80% -- down from 82% last month -- wow!!
  • FBIR Bakken: 73% -- slightly better than the 71% reported last month
  • current goal: 88%

Off Net Net Until Late This Evening -- Good Luck To All -- December 14, 2018

I'll be off the net for the duration of the day, but if you have a sense of humor, google "horseface" and then click on images.

A huge "thank you" to a reader for this bit of fun.

Idle Rambling On Vantage And The "Helis Grail" -- December 14, 2018


Later, 5:53 p.m. CT: see first comment -- the Vantage purchase of QEP's Williston assets is scheduled to close on March 14th.

Original Post
Wow, this was out of the blue. I had forgotten all about it. I thought this happened a year or so ago. Time contracts / expands in the Bakken ... depending on the subject.

I really had forgotten all about this: Vantage Energy Acquisition buying out QEP's position in the Bakken, the "Helis Grail." That was announced only a month or so ago, November 7, 2018. It feels much longer ago than that. Like one or two years.

Bakken operators are tracked at this post, but it is not always updated in a timely manner.

The Vantage Energy's website is pretty much "empty."

Vantage is still trading on the NASDAQ under the "VEAC" ticker symbol. My understanding is that it would eventually trade under the VEI ticker symbol.

According to the NDIC web site, Vantage is not yet listed as an operator in the Bakken. My hunch is that Vantage will not be an operator. If not, they could contract with any number of the better operators in the Bakken. I can't imagine a "major" like MRO or XTO getting involved, but I could see Harold Hamm being interested. Slawson could possibly be interested, I suppose. Both CLR and Slawson seem to like to try new things, think outside the box, as they say.

Also, it appears that not one QEP well has yet been "officially" transferred to Vantage, at least according to the scout tickets. Perhaps by June, 2019, we will see that transfer. If so, it will be a list of 203 wells, I suppose.

See this post for a case study of the "Helis Grail."

VEAC's original press release:
  • $1.65 billion + 5.8 million shares of VEAC
  • VEAC is trading at about $10/share -- that adds another $6 million to the acquisition price
  • about $1.656 billion
  • 100,000 net acres
  • about $16,000 / net acre
  • producing about 46,000 boepd
The case study link above suggests that the Helis Grail is producing:
  • 1,000,000 boe per month
  • about 35,000 boepd
    at $30/boe = about $1 million / day or $365 million / year
  • $1.7 billion / $365 million = less than five years
  • imagine buying a $1.7 billion house, paying if off in five years, and then flipping it
A reader asked whether I thought Vantage would begin drilling any time soon.

So, just for the fun of it, this timeline:
  • Vantage (or the operator working for Vantage) will have first mention on the NDIC dockets not sooner than June, 2019
  • Vantage (or the operator working for Vantage) will have first new "Helis Grail" not sooner than December, 2019
So, we'll see.

On the other hand: QEP embarked on a major re-frack program in the "Helis Grail" about the time the announcement was made. Wouldn't it be interesting if we didn't see any new drilling for awhile, but simply an aggressive re-frack program. Since that data is not easily tracked (not shown on the daily activity report), one needs to watch the monthly production data, and re-check the scout tickets periodically. This could be quite entertaining to watch. Just think if Vantage were to keep the Red Queen from falling off the treadmill by not drilling any new wells. Wow.  I think it's going to be absolutely fascinating. Doesn't cost a lot to simply re-frack an existing well. $4 million/well? That certainly changes the "break-even costs."

I'm sure the reader asking about Vantage would be thrilled to hear from other readers their thoughts regarding Vantage.

It is incredibly fortuitous that we have the "peculiarities" of the "Helis Grail" to watch.

The Market, Energy, And Political Page -- December 14, 2018

Geico Rock Award: nomination -- honorary life-time award nomination ... drum roll ... for Algore.  The 2018 Geico Rock Award for 2018 will be announced in January, 2019. Current list here

Noonan: the most idiotic op-ed ever by Peggy.  It''s over in the WSJ. A reader sent me the link. In my not-ready-for-prime-time response, about the op-ed I wrote:
In my lifetime, the magic ponies go all the way back to JFK and Ronald Reagan.
I can't go back farther than I have personally experienced because prior to JFK anything I knew about presidents was second hand, from books, etc.
I'm not sure what the difference is between charisma and "magic pony."
Cunningham: op-ed almost as idiotic as Peggy's. Over at oilprice. Cunningham says the oil refiners are trying to get Americans to us more gasoline. Well, duh. That's like saying McDonald's is trying to get Americans to eat more hamburgers.

ISO New England, link here:
  • good day for consumers
  • the daily 0600 spike remained under $80/MWh
  • coal: 3%
Tesla: from a SeekingAlpha contributor --
  • Estimate: Tesla can deliver 91,085 vehicles, including 61,255 Model 3s in the fourth quarter - up 9% sequentially
  • Tesla could beat top-line estimates if they can prevent average sales price from slipping more than 4.5%, all else equal
  • The Model 3 MR will push ASPs down, but multiple Tesla price increases may offset those declines, giving Tesla a decent shot of beating analyst top-line estimates
John Kemp: the Reuters London-based oil analyst will be on vacation for two weeks, and completely off the grid; visiting New Zealand

COP: shale output to grow 25% in 2019 even as oil price slides -- from a SeekingAlpha contributor --
  • ConocoPhillips expects its shale production to increase 25% next year even as crude oil prices tumble, proving the industry’s resilience in volatile markets, CEO Ryan Lance tells Bloomberg
  • The CEO says COP's wells in the Eagle Ford Shale, Permian Basin and Bakken field generate cash when prices hover ~$50/bbl; the company pumped 313K bbl/day from the three regions combined during Q3, or 25% of the company’s global production
  • Production growth likely "slows down at $50 but I don’t think it stops at $50 and it certainly continues if prices get back to $60," Lance says, adding that skeptics thought shale "wouldn’t last long but it’s here, it’s a huge resource and it’s going to be resilient and long lasting."
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.

J & J: I'm not following the market at all right now (and won't until it re-sets and gets back to "normal."  Having said that I, this over at the Boston Globe:
Johnson & Johnson shares plunge after report that says it knew about asbestos in its baby powder: Reuters said the company knew for decades that asbestos was in its baby powder. (CNN) Read the Reuters story here.
If I remember correctly, Jim Cramer was huge "promoter" of J&J. I wonder what he has to say now. I can now put J&J in the same "basket" as Wells Fargo. 

"Helis Grail" Case Study -- December 14, 2018

Back-of-the-envelope calculations.

I was curious after a reader asked about Vantage Energy Acquisition Corporation.

The data below is for the "Helis Grail," the Grail oil field in North Dakota, and specifically, the Bakken pool in that field.  The "Helis Grail" is tracked at this post; it has not been updated in quite some time.

The "Helis Grail" oil field is "owned" by one operator.

Disclaimer: I am inappropriately exuberant about the Bakken. I often make simple arithmetic errors. I did this quickly and there will be errors. The way I do things / the way I look at things are often deemed bizarre. If this information is important to you, go to the source.

For newbies:
  • Extrapolating from actual number of days production each month to hypothetical 30-day month only works after steady state reached. In spreadsheet below, the data for this metric is probably meaningful for only September, 2018, and January, 2018.
  • The decline rate is well known in the Bakken
Data Points for Oil / Natural Gas Production in the Grail-Bakken

Link to NDIC's monthly production report index.

January, 2016 (31-day month)
  • 159 wells
  • days: 3759
  • oil: 840,089 bbls
  • gas: 1,241,917 MCF
January, 2017 (31-day month)
  • 182 wells
  • days: 4808
  • oil: 720,811 bbls
  • gas: 1,458,762 MCF
January, 2018 (31-day month)
  • 203 wells
  • days: 5824
  • oil: 669,332 bbls
  • gas: 1,851,525 MCF
September, 2018 (30-day month)
  • 203 wells
  • days: 5778
  • oil: 600,347 bbls
  • gas: 1,820,738 MCF

September 2018
January 2018
January 2017
January 2016

Number of wells
Oil Production
BOE natural gas
Total BOE
Average BOE / well
Days production
Average days production / well
Extrapolate full 30-day production average
Average oil production / well
Average boe production / well
Oil / BOE ratio

Number Of Active Rigs In North Dakota Remain At Four-Year High -- December 14, 2018

LNG demand forecast to surge. From Wood Mackenzie --
  • the world's top seven LNG buyers (think Asia: China, South Korea, Japan); account for more than one-half of the global LNG demand
    • CNOOC
    • CPC
    • JERA
    • KOGAS
    • PetroChina
    • Sinopec
    • Tokyo Gas
  • are becoming increasing active in contracting
  • the seven have announced more than 16 mtpa of contracts in 2018
  • growth in contracting is happening at same time as supply growth is poised to surge
  • 2019 could be a record year for "LNG project sanctions"
  • 220 mtpa of gas targeting final investment decision (FID) 
  • projects include
    • $27 billion Arctic LNG-2 project in Russia
    • one or more projects in Mozambique
    • three US projects
    • expansion and backfill projects in Australia and Papua New Guinea
OPEC: unplanned supply losses could double its cut -- Bloomberg
  • "unplanned cuts": Venezuela  
Back to the Bakken

Only one well coming off the confidential list today, and it will likely be a DUC -- Friday, December 14, 2018:
  • 34201, SI/NC, Hess, BB-Chapin-151-95-0506H-5, Blue Buttes, no production data, 
Active rigs:

Active Rigs67524064181

RBN Energy: oil price plunge clouds some E&Ps' 4Q18 outlook.
The third quarter of 2018 was a moment in the sun for U.S. exploration and production companies. The 44 major companies we track reported a 35% increase in pre-tax operating income over the previous quarter and seven-fold increase from the year-ago period on rising commodity prices and narrowing differentials in some key regions.
Oil-Weighted producers outside the infrastructure-constricted Permian posted generally higher realizations, and a number of Permian-focused E&Ps minimized the impact of takeaway constraints by employing basis hedges, utilizing firm transportation contracts and reducing their operating costs.
Diversified producers saw higher quarterly per-unit profits thanks to the tilt of their portfolios toward oil. And as lower Appalachian differentials lifted the realizations of Gas-Weighted producers, portfolio readjustments and the liquids content of production also positively impacted their profitability and cash flow. Today, we analyze third-quarter results by peer group, and discuss the potential impacts of the sudden plunge in oil prices this fall.