Tuesday, February 26, 2019

CLR With Big Plans For The Bakken -- February 26, 2019

From The Williston Herald:
  • Continental expects to nearly double its oil production within the next five years, and expects the Bakken to contribute between 50 to 60 percent of the total growth. 
  • Bakken key to Continental plans to double in size 
  • rigs flat for 2019, but number of wells expected to rise 
One wonders if CLR would be interested in the Helis Grail?


Between 2002 and 2004 the USAF sent me to a remote air base in northern England, Yorkshire County, on many occasions. During those two years, I probably visited Yorkshire a half dozen times. I often flew into Leeds, England, and then took a taxi to the air base.

Tonight while looking up the history of this tune, I see the story begins in Leeds. How interesting.

If you have trouble understanding the English, good news. The video has subtitles.

History of Yellow River

I don't know what it about this song that seems to make it the #1 song I want to hear when I first start surfing YouTube.

Hopefully I live long enough to share this with Sophia. I figure another seven or eight years.

Something To Consider

Ty Smith -- Modern Renaissance Man.


Clever idea.

But this guy says he's a musician. Amazing how little he seems to have heard when it comes to music.


Mother Nature Is Not Done With Winter Yet -- Didn't That Muskrat Predict An End To Winter, Already? -- February 26, 2019

Wow, when Mother Nature is on a roll, she's on a roll. This is weather, not climate. So, we're not talking about global warming, we're just talking about a very crazy winter.

First it was reported that North Dakota is experiencing the second coldest February on record (and by some measures, the coldest February ever).

Then it was reported that Los Angeles is experiencing the coldest February in 60 years.

And it's not over.

Link here.

If the forecasts for first week of March are verified, one of the coldest weeks of the winter season, compared to normal, is on its way.
At peak, it will feel more like midwinter than early spring for much of the Lower 48.
"The most unusually cold air in the Northern Hemisphere is set to nose-dive into the U.S. to start March," tweeted Ben Noll, an atmospheric scientist based overseas.
What that means on the ground is that large portions of the north-central U.S. could struggle to get above zero, with widespread nighttime lows in the minus-10 to minus-20 range a decent bet in that same region. It's also possible that every state except perhaps Georgia, South Carolina and Florida will face high temperatures at or below freezing during the stretch.
Years ago I remember all those stories about oranges freezing in Florida. I haven't heard those stories in a long, long time. Maybe we're back to "normal."

Link here.

This has to be very confusing for the millennials.

Well, This Can't Be Good -- Oasis -- February 26, 2019

Well, this can't be good:
As a result of the errors noted [below], the Company has identified a material weakness in its internal control over financial reporting.
Accordingly, management will disclose in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018 that its internal control over financial reporting and its disclosure controls and procedures are not effective as of December 31, 2018 and will receive an adverse opinion on internal control over financial reporting as of December 31, 2018 from PricewaterhouseCoopers LLP.
In response to the material weakness identified, management has developed a plan to remediate the material weakness, and has begun working on that remediation plan.
In addition, management performed additional analyses and procedures in order to conclude that the Company's consolidated financial statements for the year ended December 31, 2018 are fairly presented, in all material respects, in accordance with generally accepted accounting principles.
The errors:
For the quarter ended December 31, 2017, the Company revised the Consolidated Statements of Operations by increasing purchased oil and gas sales and purchased oil and gas expenses by $30.5 million and $30.4 million, respectively, and decreasing oil and gas revenues by $0.1 million.
For the year ended December 31, 2017, the Company revised the Consolidated Statements of Operations by increasing purchased oil and gas sales and purchased oil and gas expenses by $45.6 million and $45.3 million, respectively, and decreasing oil and gas revenues by $0.3 million.
For the quarter ended September 30, 2018, the Company revised the Consolidated Statements of Operations by increasing oil and gas revenues, purchased oil and gas sales and purchased oil and gas expenses by $1.6 million, $126.6 million and $128.2 million, respectively
As of December 31, 2017, the Company revised the Consolidated Balance Sheets by increasing both accounts receivable and accrued liabilities by $7.8 million. The amounts presented herein reflect the impact of this revision. 
That was buried deep in the press release. No one is going to see it unless they read every line.

But the good news:
Based on an analysis of quantitative and qualitative factors, the Company determined the related impact was not material to its consolidated financial statements, and therefore, amendments of previously filed reports are not required.
Oasis closed at $5.90/share at 4:02 p.m., February 26, 2019, down 3.12% for the day, and remained flat, at $5.90 after hours, at 5:37 p.m.

Oasis earnings statement released February 26, 2019, for 4Q18 and full year 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.

Unrelated but of note: this press release from earlier this month:
Former Attorney General of Louisiana, Charles C. Foti, Jr., Esq., a partner at the law firm of Kahn Swick & Foti, LLC, announces that KSF has commenced an investigation into Oasis Petroleum Inc.
On January 2, 2019, The Wall Street Journal reported in an article titled “Fracking’s Secret Problem—Oil Wells Aren’t Producing as Much as Forecast” that, according to a review of available public data on production, many of the Company’s shale wells, specifically those involved in the fracking process, were producing oil and gas at a much lower rate than the Company had forecasted to investors. Further, the report noted that “findings suggest current production levels may be hard to sustain without greater spending because operators will have to drill more wells to meet growth targets.”
4Q18 and Full Year

Website here.

Press release.

It's not good news when you have to wade through mountains of data to get to top line and bottom line results but here they are.

New income:
  • 4Q18: $222.0 million
  • FY18: a net loss of $35.3 million
  • adjusted net loss, non-GAAP: $7.3 million or 2 cents/share loss
    • the consensus was for a 4 cent gain, but I don't know if that was GAAP or non-GAAP
  • FY19, non-GAAP income: $79.6 million or 26 cents/share
Someone smarter than I will have to sort this out.

API Weekly Data Shows A "Surprise" Build In US Crude Oil -- February 26, 2019

WTI: recovers. I guess everyone has already forgotten President Trump's tweet of less than 24 hours ago. No, just joking -- it was the weekly API data.

API weekly data: link here. "Surprise" crude oil draw sends oil prices higher. "Surprised" again. I'm shocked. Shocked. Here are the numbers:
  • consensus: a build of 2.82 million bbls
  • actual: in fact, a draw of 4.2 million bbls
Folks, that's a swing of 7.02 million bbls. That's like the golfer leading the tournament playing 3 over and #2 playing 4 under for the day -- a swing of seven strokes. Not trivial. We'll see what the EIA data tomorrow shows.
Back to the Bakken 

Active rigs:

Active Rigs66574038121

Two new permits:
  • Operators: Bruin, Lime Rock Resources
  • Fields: Tyrone (Williams): Cabernet (Dunn)
  • Comments: 
    • Bruin has a permit for a Borrud well in lot 3, section 1-156-101, Tyrone oil field;
    • Lime Rock has a permit for a State well in section 25-144-97, Cabernet oil field;
And that was all.

EOG And Oasis To Report -- 4Q18 And Full Year 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. 

EOG: reports after market close today. Consensus: $1.35.

Oasis: reports after market close today. Consensus: 4 cents.

4Q18 and Full Year

Website here.

Press release.

It's not good news when you have to wade through mountains of data to get to top line and bottom line results but here they are.

New income:
  • 4Q18: $222.0 million
  • FY18: a net loss of $35.3 million
  • 4Q18: adjusted net loss, non-GAAP: $7.3 million or 2 cents/share loss
  • FY18, non-GAAP income: $79.6 million or 26 cents/share
Someone smarter than I will have to sort this out.

4Q18 and Full Year

Link here.  

  • 4Q18 income: $893 million or $1.54/share -- slamming consensus of $1.35 
  • 4Q17 income: $2.4 billion or $4.20/share 
But look at this, full year:
  • 2018: record net income of $3.4 billion or $5.89/share 
  • 2017: $2.6 billion or $4.46/share 
  • adjusted non-GAAP, 4Q18: $718 million or $1.24/share 
  • adjusted non-GAAP, 4Q17: $401 million or 69 cents/share 
But look at this, again, income:
  • full year, adjusted non-GAAP net income, 2018: $3.2 billion, or $5.54/share 
  • full year, adjusted non-GAAP net income, 2017: $648 million, or $1.12/share
Am I reading that correctly?

From the press release:
  • earns record net income in 2018 generates significant net cash from operating activities 
  • free cash flow exceeds fourth quarter crude oil and NGL production target midpoints 
  • increases proved reserves by 16% 
  • replaces 238% of 2018 production at sub-$10 finding cost 
  • targets improved capital efficiency, significant investment in high-quality new drilling potential and 12-16% U.S. crude oil volume growth in 2019, funded with net cash from operating activities at $50 oil

Marie Kondo: Your Refrigator Is Calling -- Nothing About The Bakken

The other day I mentioned:
  • tidying up
  • joy
  • Marie Kondo
Last night we received an e-mail from our middle granddaughter who has taken it upon herself to keep their refrigerator tidy and clean. Spoiler alert: she's going to be disappointed. It will be impossible to keep the refrigerator tidy and clean, and I bet her household is not unique.

Of all our expenses -- we are retired, old, no high school athletes living at home, surrounded by the best restaurants in the world, with several supermarkets within biking distance, all competing for our dollars -- our expense for food eaten as home is probably our smallest expense.

Major expenses: shelter, medical, dental, health insurance, life insurance, Starbucks, transportation, utilities, cable, telecommunications, toll roads, restaurants, massage parlors.

Eating at home is not on that list. Period. Dot.

We are very, very fortunate. I think about that often.

Having said the other side of the coin is this: Americans continue to struggle with obesity.

Our middle granddaughter implored family members and extended family members to eat the food in the refrigerator to clean it out.

No, Marie Kondo needs to write a book on tidying up the refrigerators of middle Americans. If it doesn't give you joy, throw it out.

This is not rocket science.

By the way, get rid of Saran Wrap.

Use those re-usable glass containers. Walmart has everything you need.

Best Movie Of All Time

It's been at the top of the list so long, I completely missed this. Citizen Kane is no longer the best movie ever.

BFI Sight and Sound is the "bible" for racking and stacking best movies of all time.

For decades, Citizen Kane held the #1 spot.

Quick! What move is now #1?

Link here.

Citizen Kane has dropped to number 2.

The Critics’ Top 10 Greatest Films of All Time
1. -- see the link --
2. Citizen Kane (Welles, 1941)
3. Tokyo Story (Ozu, 1953)
4. La Règle du jeu (Renoir, 1939)
5. Sunrise: A Song for Two Humans (Murnau, 1927)
6. 2001: A Space Odyssey (Kubrick, 1968)
7. The Searchers (Ford, 1956)
8. Man With a Movie Camera (Dziga Vertov, 1929)
9. The Passion of Joan of Arc (Dreyer, 1927)
10. 8 ½ (Fellini, 1963)
When you see #1 -- it doesn't even seem to fit in the list above. 

Tuesday, February 26, 2018 -- California Dreaming? Efforts To Curb Global Warming Have Worked, Can We Stop Now? -- Los Angeles Records Coldest February In 60 Years

EOG: reports after market close today. Consensus: $1.35.

Oasis: reports after market close today. Consensus: 4 cents.

Musk: wow, stories everywhere. It looks like the #1 reported story today -- Musk coming close to being held in contempt by the SEC. If so, the consequences? Absolutely none. Link here.

Looking For A Video

Yesterday we reported that February, 2019, was the second coldest February in North Dakota's history -- and the month is not yet over. Could become #1.

Now, a reader alerts me to this report: Los Angeles has coldest February in 60 years. 

Certainly we can do better, but for now:

California Dreaming, The Mamas and The Papas

The Oscars

I wasn't going to comment on the Oscars, but since a reader brought it up, my thoughts:
  • the Oscars were much, much better without a host 
  • there was very, very little political stuff; much, much less than the hype 
  • the media -- including Drudge -- blew the political stuff out of proportion 
  • I don't recall Trump's name mentioned even once 
  • the right wing media was upset with really only one rant; and that rant? "get out and vote" -- that was the rant -- hey, Mama Cass did that decades ago on the "Smothers Brothers" show (see below)
  • even Tina Fey, et al was subdued 
  • Tina Fey is as beautiful as ever; Amy? not so much 
  • one of the nice things about growing older: the pool of beautiful people gets larger and larger
  • I didn't see any of the movies this year, so no perspective on winners, losers
  • my wife was thrilled with most of the winners, losers 
  • my wife's biggest disappointment: Lady Gaga did not get Oscar for best actress 
  • but Lady Gaga did get an Oscar and she was in front row and holding it; I could / couldn't care less, but I have to say, I was happy for her; I would be happy for anyone who won such an award and seemed so gracious to have won
  •  the ads: no big deal one way or the other 
  • the show hardly ran long; over by 10:15 p.m. local time -- I would have expected it would have run to 11:00 p.m. or even later 
  • my wife thought Spike Lee's outfit was outrageous -- I loved it -- this is Hollywood
  • I missed Spike Lee's behavior after "best picture" was announced; can't comment
  • most of the writing for the presenters was atrocious 
  • overall, not particularly memorable -- but maybe that was for the best 
  • oh, by the way: the "red carpet" show before the show was the worst ever -- it got slightly better when Ryan Seacrest showed up -- in fact, he was out of breath, says he ran to get to the carpet; he seemed to have arrived late; my hunch -- he was called at the last minute when ABC/Disney realized they had a disaster brewing on the red carpet -- sent in Ryan to save it. And he did, but hanging on to an overturned canoe is not all that much to write home about
Now, the challenge of the day, looking for that clip when Mama Cass pleaded with folks to get out to vote.

Not all that difficult, but it was not on the "Smothers Brothers" show -- it was on the "John Denver" show:

Tuesday, February 26, 2019 -- Nothing About The Bakken But A Lot About Cable

Wall Street. Traders must have slept in this morning. SRE reported incredibly good results and yet SRE was in the "red" at the opening. In very, very early trading, SRE was up a penny. Wow. Finally, 9:42 a.m. Central Time, and SRE pops, up $1.77 or about 1.5%. SRE smashed estimates and announced a hefty dividend increase a couple of days ago. Pays about 3%. What's not to like.

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 think you may have read here.

Trump: gets all kinds of grief from the mainstream media for his "hastily" arranged trip to Hanoi to meet "rocket man." What? They would prefer the noise of "war drums"? For a disorganized, chaotic White House, Trump certainly seems to keep pressing. These are hard things to put together. Multi-tasking.

Surprises? Trump's fixer/lawyer begins three days of testimony today. Those who testify to Congress must provide a transcript/document to Congress prior to testifying. From early reports, nothing new. And, if there were truly any bombshells, one assumes such bombshells would have been leaked by now. So, same old story, just waiting for the mainstream spin. Maybe that's why Trump is in Vietnam right now -- folks can watch Congressional testimony on television or they can watch pageantry coming out of Hanoi. Trump: after several seasons of The Apprentice, he learned all about ratings and "must-see TV."

Cable: wow, cable is getting expensive. Let's say you are spending $50/month on cable; you negotiate with the company and you might be able to get it to $40/month for a year or so. If you are paying $150, maybe you can get $120. If you are paying $300/month, maybe you can get $250. The question becomes, if one is going to keep cable television is it worth all that much to negotiate with the provider on the monthly subscription? I don't know. For every price point, my hunch is that a similar amount passes through one's fingers for Starbucks; toll roads; beer; McDonald's, massage parlors.

Cable: I was thinking about that -- the monthly cost -- this past weekend. We complain every month about the high cost of cable. I don't bring it up with my wife any more. I've accepted it. Either we have it or we cut the cord completely. Cutting the cord completely: some cost savings but then we go à la carte with Netflix, Roku, Amazon, Apple, etc., and my hunch is that the total monthly savings would be nominal, the aggravation for an old geezer like me significant, and the only satisfaction: telling folks we don't get cable any more.

Cable: But this weekend is a great example. With Spectrum Cable, we get all the major networks (none of which I watch any more) but my wife lives for ABC Nightly News. That alone, for her, is worth the price of cable. Then she got to watch her "Super Bowl/World Series" Sunday night -- the Oscars. She really, really looks forward to and enjoys the Oscars. Me? I had four days of PGA tournament from Mexico. I had NASCAR in Atlanta, GA. I don't watch much basketball until the championships but all the college / pro basketball I could possibly want. And hen our British comedies on PBS Sunday night, and my wife loves the British mysteries earlier on Sundays. And I'm just getting started. TCM: classic movies, 24/7 with no commercial interruption. Big Bang Theory, The Simpsons, Seinfeld. So, I don't know . Yes, cable is expensive (relative to what?) but it's truly incredible what's out there.

Cable: the problem is not the cost. The problem is too much to watch.

Cable: folks will suggest that I'm rationalizing paying an exorbitant price for cable. That's fine. I'm just looking at a cup half full as opposed to a cup half empty, and when it comes to cable, the cup is overflowing. I even watched the Super Bowl for free.

Cable: four Sunday afternoons at Applebee's watching NASCAR and enjoying lunch costs about as much as the monthly cable subscription.

NASCAR: not sure where I'm going with NASCAR. I can't give it up, but I'm not getting much excitement out of it any more. I assume much of this is transition: from the "big names" of the past to the new generation of drivers. We'll see. I still try to catch it.

Bakken 101 For Newbies -- February 26, 2019

Some nice links with regard to a CLR well that came off the confidential list today:
For newbies, a lot gets packed into that short nugget.

34546: permit number. The Bakken boom began when permits were in the 16XXX series. So, 16,000 permits later.

1,475: bbls/day -- calculated for a 24-hour period; various ways of calculating that number. After years of doing this one gets a "feeling" for these IPs which vary from operator to operator, field to field, but 1,475 is a pretty good number for CLR. As a side note: BR is the outlier -- it consistently reports very, very low IPs (two-digit IPs are common) but then reports very, very good wells.

CLR: Continental Resources. Publicly traded company. Its ticker symbol.

Pasadena 6-11H1: legal name. Generally all wells in the same drilling unit have the same "leading name," in this case, Pasadena. Every operator has a different way of naming their wells. We discussed that a long, long time ago. In this case, the "6' is the chronologic number for this well, #6 in the Pasadena series of wells for CLR. Right now, CLR is up to #9 among Pasadena wells. The "11" is the section in which this well is sited. The legal name, in this case, does not tell us which units are in the drilling unit; the file report says it is 2560-acre unit or four sections. H1: a few months ago, I started putting in bold wells that target the Three Forks. Different companies designate middle Bakken wells and Three Forks wells differently. CLR uses a simple "H" for a middle Bakken well; "H1" for Three Forks first bench; "H2" for Three Forks second bench.

4 sections: size of the drilling unit.

57 stages, 6 million lbs: the frack ("completion") strategy. There has been a huge jump in the number of stages and the amount of proppant used to frack "shale" wells. Fracking strategies are tracked here. There is some suggestion that slightly less proppant is needed for Three Forks wells vs middle Bakken wells. I don't follow it closely enough to say, but it's my understanding that operators use appreciably more proppant in the Permian.

t11/18: the date the operator "tested" production from the well, generally done shortly after the well has been fracked ("completed").

cum 48K 12/18: cumulative production; the paperwork lags what is going on in the field by two months. This data is as of December, 2018, and this is being posted near the end of February, 2019. I round the production number. There is generally little production for the first couple of months after a well is fracked (for operational reasons). One really needs to see the production profile to get a feeling for what is going on.

And then the comments.

Rig Count Advances; SRE With Huge Beat; Update On XOM, CVX In The Permian -- Starting Out To Be A Great Day For Blogging -- February 26, 2019

First things first: a reader sent this to me. The reader loves pranks and has found a good one ... especially for those of us who love NASCAR -- link here.

Natural gas:

ISO New England, link here: spiked to $175/MWh earlier this morning with huge demand for hydroelectricity from Canada.

McDermott: offshore Saudi Arabia contracts go to McDermott. 

Quandary: debt payments putting crimp on dividend payouts. Tea leaves suggest 2019, and certainly 2020 - 2021, will be key years for the shale industry.

Disclaimer: this is not an investment site. Do not make any financial, investment, job, travel, or relationship decisions based on what you read here or what you think you may have read here.

SRE: maybe Warren should have bought SRE instead of doing that crazy Kraft-Heinz deal? Just saying -- link here --
  • revenue: $3.22 billion, up almost 9% year-over-year; beats by $280 million (almost 9%)
  • EPS: $1.56, beats by ten cents; GAAP EPS of $3.03, beats by a stunning $1.40
  • overall market: futures showing red but SRE futures not yet posting
Back to the Bakken

Wells coming off the confidential list today -- Tuesday, February 26, 2019: 111 wells for the month; 214 wells for the quarter
  • 34896, SI/NC, MRO, Linton USA 31-16TFH, Reunion Bay, no production data,
  • 34546, 1,475, CLR, Pasadena 6-11H1, Banks, 4 sections, 57 stages, 6 million lbs, t11/18; cum 48K 12/18; note the small amount of proppant used; the Pasadena wells are tracked here; fracking strategies are tracked here;
  • 33092, 2,646, CLR, Sakakawea Federal 10-19H, Elm Tree, 62 stages; 15.2 million lbs, t12/18; cum 21K after 11 days -- extrapolates to 50K over 30 days;
  • 30763, SI/NC, Slawson, Hunter 5-8-17MLH, Big Bend, no production data,
Active rigs -- nice -- up one more rig, now up to 67 --

Active Rigs67574038121

RBN Energy: Permian majors expand downstream crude refining capacity.
In the past month, two integrated majors with strong footprints in the Permian Basin announced plans to increase their refining capacity along the Texas Gulf Coast. During the last week of January 2019, ExxonMobil announced a final investment decision to expand its Beaumont, TX, facility’s capacity by 250 Mb/d, making it the largest U.S. refinery, and then confirmed an investment with Plains All American and Lotus Midstream to build a 1-MMb/d pipeline to ship crude to its Beaumont and Baytown, TX, refineries. In the same week, Chevron announced its purchase of the 110-Mb/d Pasadena, TX, Houston Ship Channel refinery from Brazil’s national oil company, Petrobras. Both Exxon and Chevron boasted record Permian production in their fourth quarter 2018 earnings calls. Today, we review Chevron’s purchase and Exxon’s expansion in light of Permian production growth and the changing Gulf Coast refining market.