Original Post
US equity markets. At the close, going into a weekend when anything can happen:
- S&P 500 surges: gains almost 14 points to close at an all-time high of 3,014
- DOW surges: gains almost 244 points to close at an all-time high of 27,332 (day before Trump appears to have more electoral votes than Hillary: 18,259; that's a 49% gain since November 8, 2016)
- NASDAQ: gains 48 points to close at 8,244
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Back to the Bakken
Royalties: ND Supreme Court sides with state in suit between state and Encana/Newfield over deductions from natural gas royalties.
Active rigs:
| $60.27 | 7/12/2019 | 07/12/2018 | 07/12/2017 | 07/12/2016 | 07/12/2015 |
|---|---|---|---|---|---|
| Active Rigs | 56 | 67 | 58 | 28 | 73 |
Nine new permits, #36726 - #36734, inclusive:
- Operators: CLR (8), WPX (1)
- Fields: Siverston (McKenzie County), Little Knife (Dunn County), South Fork (Dunn County)
- Comments:
- CLR has permits for a 5-well Vardon pad in section 14-150-97, Siverston oil field
- CLR has permits for a 3-well Marshall pad in section 24-145-97, Little Knife oil field
- WPX has a permit for a single Skunk Creek well in lot 2 / section 1-1-48-93; South Fork oil field
- XTO (7): seven Prairie Federal permits in McKenzie County
- Petro-Hunt (6): twoArsenal Federal permits; two Eric Stratton Federal permits, and two Mongoose permits, all in McKenzie County
- Hunt: an Oakland permit in Mountrail County
- 34559, 83, XTO, Bobcat Federal 11X-2F2-S, Bear Creek, t5/19; cum --; neighboring wells include #18112 (jump in production; #18089 back on line)
- 34360, 83, XTO, Bobcat Federal 11X-2E-S, Bear Creek, t5/19; cum --;
- 34359, 456, XTO, Bobcat Federal 11X-2A-S, Bear Creek, t5/19; cum --;
- 34356, 1,305, XTO, Bobcat Federal 14X-35A, Bear Creek, t6/19; cum --;
- 34358, 30, XTO, Bobcat Federal 14X-35EXH, Bear Creek, t5/19; cum --;
- 34911, 2,137, Hunt, Halliday 146-93-13-1H, Wolf Bay, t6/19; cum --; some huge wells in the general area;
- 34912, 1,134, Hunt, Halliday 146-93-13-1H, Wolf Bay, t7/19; cum --;
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Projected Number of Permits for Calendar Year 2019
For the number of days in the calculations below, I'm using "number of days" through Sunday, July 14, 2019, this weekend.
It's possible I have made simple arithmetic errors.
The number of permits issued each month by the NDIC may differ from what I have in my database, but if so, it will be very, very close, and won't affect the overall results.
Based on the number of permits in each of the following months, the number in bold is the projected number of permits for calendar year 2019 had the rate for the entire year remained the same as that one month. For example, based on the number of permits issued in April, 2019, had that been the "rate" for the entire calendar year (2019), 1,578 permits would be issued for calendar year 2019.
- January, 2019: 1,495
- February, 2019: 1,434
- March, 2019: 1,578
- April, 2019: 1,582
- May, 2019: 1,660
- June, 2019: 1,557
- July, 2019 (through July 14, 2019): 1,877 (it will be interesting to see if the number of permits for July, 2019, reverts to the "mean" so far this year)
- 1Q19: 1,497
- 2Q19: 1,071
- For the first fourteen days of 3Q19: 1,877
One can check the above projections with the actual number of permits issued in North Dakota over the past several years at this site:
- 2019 (estimate): likely to be somewhere between 1,400 and 2,000
- 2018: 1,466
- 2017: 1,189
- 2016: 818 (price of oil tanked due to Saudi opening their spigots)
- 2015: 2,055
- 2014: 3,012
- 2013: 2,671
- 2012: 2,522
- 2011:1,916
- North Dakota regulators generally approve permit applications in about 30 days
- permit applications should not be affected by the weather unless there is a lot of site visitation of which I am unaware, but certainly the 1,071 permits projected based on 2Q19 vs the 1,497 permits projected based on 1Q19 appears to validate that assumption; in ND, Jan-Feb-Mar are severe winter months; whereas Apr-May-Jun are much better weather months
- a permit is "good" for one year, but is easily renewed
- most operators determine CAPEX, number of rigs, permit applications, etc, six to twelve months prior to execution
- CAPEX is adjusted semi-annually when things are going well; quarterly when things seem a bit more bleak; and monthly, when things are going to hell in a handbasket
- the number of rigs and frack spreads correlate directly with CAPEX
- permit applications may or may not correlate with CAPEX; I don't know
- I would think operators would have a stack of permits in the hopper in draft status/nearly complete well in advance of submission;
- it appears NDIC can issue as many as 20 or more permits in one day based on historical data; in other words, it's not the NDIC holding things back once operators decide to proceed (obviously the NDIC is not accomplishing the entire process in one day, but the point is that the number of permits issued in one day is not capped by the regulator)
- the weekly rig count, week-over-week, is meaningless in the Bakken
- the monthly rig count, month-over-month, may be slightly more meaningful than the weekly change
- the monthly permitting activity gives one a much better idea of activity (and dare we say, production?) in the Bakken
Having said that, even the number of permits issued each year is coming down, and production continues to rise.