A Healthy Sign For The Bakken -- Number Of Active Rigs Holding Steady; Slightly Up -- January 29, 2019

A tree falls in the forest ... US puts a "de facto" oil ban on Venezuela ... as far as I can tell, no one noticed. Price of oil pretty much unchanged.

Saudi: pledges deeper oil cuts in February. Meanwhile, US shale production will continue to increase.

Beer. I seldom drink beer. I never drink Budweiser. The company has just give me another reason not to drink Budweiser. They now depend on wind energy to brew their beer. We'll see that in their Super Bowl commercial. 

*************************************  
Back to the Bakken

Enerplus: this Canadian company will focus on North Dakota this year. From The Calgary Herald, Enerplus to spend $600 million on growing North Dakota oil production. Data points:

• will spend between $565 million and $635 million this year; mid-point: $600 million
• only 7.5% of ERF budget will be spent in Canada in 2019
• 80% of ERF budget is allocated to fund a net 42-well drilling program in North Dakota; the rest of the budget will be earmarked for its assets in the northeast US and Colorado
• ERF: produced an average of 97,800 boepd in the 4th quarter; up from 88,600 boepd in the same period of 2017 
• let's do the math
• 80% of $600 million = $480 million
• $480 million / 42 wells = over $11 million / well

Wells coming off the confidential list today: Tuesday, January 29, 2019: 94 wells for the month; 94 wells for the quarter

• 34002, 1,954, Hess, SC-1WX-152-99-0809H-4, Banks, t1/19; cum 105K 2/21;
  
• 34001, 2,280, Hess, SC-1WX-152-99-0809H-3, Banks, t1/19; cum 210K 2/21;
• 33969, 1,077, Enerplus, Steel 147-93-09D-04H-TF, Moccasin Creek, t8/18; cum 270K 2/21; the "heavy metal" wells are tracked here;

Active rigs:

$52.42	1/29/2019	01/29/2018	01/29/2017	01/29/2016	01/29/2015
Active Rigs	66	57	38	45	146

RBN Energy: evaluating midstream companies' prospects in the shale era. Archived.

There’s a case to be made that midstream-sector stocks are being undervalued, in part because of the market’s stubborn adherence to an old — and now outdated — dictum that links midstream prospects to the price of crude oil. That maxim, based largely on the belief that lower prices result in declining production and pipeline volumes, has been undone by the Shale Revolution’s proven promise that, thanks to remarkable efficiency gains, production of crude, natural gas and NGLs can increase even during periods of not-so-stellar prices. Despite this new Shale Era rule, the outlook for individual midstream players can vary widely, depending on a number of factors, including their assets’ locations, their exposure to shipper-contract roll-offs and their strategies for growth. Today, we discuss key themes and findings from East Daley Capital’s newly updated “Dirty Little Secrets” report assessing the owners of U.S. pipelines, processing and storage facilities, export terminals and other midstream assets.

A newly issued, 217-page 2019 report examines 27 midstream companies in depth, and drives home the point that (1) production of crude oil, gas and NGLs continues to increase, even when prices sag, and (2)  midstream-sector EBITDA (earnings before interest, taxes, depreciation and amortization) has been growing with production, but that these positive trends are not reflected in midstream-company valuations. As evidence,

This disconnect between rising production in the U.S. and highly variable midstream valuations has left many investors scratching their heads, and led some to avoid midstream equities altogether. East Daley’s analysis suggests that low valuations and investor wariness are tied in part to the difficulty of quantifying the risks posed by specific midstream assets. To tackle this problem, they developed a “Treadmill Incline Intensity” (TII) index for assessing each company’s exposure to revenue declines from legacy pipelines, storage and other midstream assets through 2022 — this exposure might be tied to contract roll-offs, marketing risks, tariff rate cases and/or production declines in less-productive basins. Like the treadmill at your gym, the steeper the incline, the tougher the challenge. And some midstream companies are in for a real workout, with expected EBITDA declines from legacy assets in the 2018-22 period equal to more than 10% or even 15% of their total 2018 EBITDA. (Others are sitting pretty from a TII perspective, with little or no exposure to legacy cash-flow risk.)