Tuesday, March 12, 2019

It's Always A Surprise -- LOL -- March 12, 2019

Over at oilprice: surprise, yes, another surprise, crude oil draw sends oil prices up.
  • forecast: a build of 2.655 million bbls (again, the precision is incredible - 2,655,000 bbls)
  • actual: a surprise, yes, another surprise, crude oil draw of 2.6 million bbls
But it's the EIA data tomorrow (Wednesday) that really matters.

So, let's see what the price of oil was at the close, after this surprise draw:
  • WTI: up an astonishing 18 cents/bbl (or 0.32%)
  • Brent: up 8 cents/bbl (or 0.12%)
  • OPEC basket: okay, this was a nice price jump but I doubt it had much to do with the API data, up almost 2%; up $1.23 -- this "jump" was due to Saudi Arabia spokesman saying that country would do "anything" to support higher prices
See first comment. False precision.

Another Example Of MRO's Aggressive Bakken Re-Frack Program; New Wells Extrapolating To Nearly 100K Bbls/30-Day Month -- March 12, 2019

Have we posted this one?

The well:
  • 33928, 5,935, MRO, Honaker USA 41-30TFH, Reunion Bay, Three Forks, first bench, 45 stages; 6.5 million bbls, t1/19; cum 83K in 28 days -- extrapolates to 88,895 bbls/30-day month;
The scout ticket:
NDIC File No: 33928     API No: 33-053-08138-00-00     CTB No: 233927
Well Type: OG     Well Status: A     Status Date: 12/22/2018     Wellbore type: Horizontal
Location: NENE 30-152-93     Footages: 261 FNL 1025 FEL    
Current Well Name: HONAKER USA 41-30TFH
Total Depth: 20969     Field: REUNION BAY
Spud Date(s):  2/26/2018
Casing String(s):  9.625" 2167'   7" 11037'  
Completion Data
   Pool: BAKKEN     Perfs: 11140-20820     Comp: 12/22/2018     Status: F     Date: 1/5/2019     Spacing: 4SEC
Cumulative Production Data
   Pool: BAKKEN     Cum Oil: 82969     Cum MCF Gas: 109657     Cum Water: 82092
Production Test Data
   IP Test Date: 1/5/2019     Pool: BAKKEN     IP Oil: 5935     IP MCF: 7086     IP Water: 5189
Monthly Production Data:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Royalties: a mineral owner with 80 acres at $50-oil and an 18% royalty:
  • 80 / 2560 = 0.03125
  • 0.03125 x 82,447 bbls = 2,576 bbls
  • 2,576 x $50 = $128,800
  • 0.18 x $128,800 = $23,188 for the month of January, 2019
Disclaimer: I often make simple arithmetic errors.

From the file report: geologist's report not yet posted.

The graphics:

Wells of interest:
  • 24621, 5.414, MRO, Bobby Lee USA 41-30H, Reunion Bay, t1/19; cum 33K 1/19; 33K over 10 days extrapolates to 98,370 bbls/30-day month;
  • 33925, 5,395, MRO, Wendell USA 31-30H, Reunion Bay, t1/19; cum 38K over 12 days extrapolates to 94,620 bbls/30-day month;
  • 19230, 649, MRO, Goodall USA 11-29H, Reunion Bay, t1/11; cum 334K 1/19; re-fracked/tested 12/10/18 with an IP of 1,414: full production at this post; recent production:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Global Warming Driving (Undocumented?) Moose Into Williston? Or Is Their Migration Somehow Related To Trump? Is It Time To Build A Wall? -- March 12, 2019

From twitter:

From the January, 2018, issue of North Dakota Wildlife:
Moose are on the loose in western North Dakota. From Dickinson to Anamoose, and Williston to Underwood – and even all the way down to Bismarck – moose are becoming a more common sight on the landscape. But that hasn’t always been the case.

North Dakota’s highest moose densities today are found in the northwestern part of the state.

The largest members of the deer family were rare to nonexistent in North Dakota in the early 1900s. They reappeared again in the 1950s, and by the 1960s, a small resident population was established in the Pembina Hills. As moose numbers grew, the animals also began to populate the Turtle Mountains and surrounding area. That northeast corner of the state remained the only region where moose were reliably found through the early 1990s.

The first hunting season for moose in North Dakota was 1977, when 10 licenses were awarded to hunters. Since then, the moose population has continued to grow, and the state has had a moose hunting season every year since that first season. In fact, the season has grown along with the population. Since 1985, the North Dakota Game and Fish Department has made at least 100 licenses available to hunters every year.

But that doesn’t mean the moose population has grown consistently across the state. In the last 12 years, moose numbers have declined in the Pembina Hills area. Aerial wildlife counts conducted by Game and Fish biologists note that about 250 moose were spotted in that region in 1995, but only two cow moose were observed in the survey areas flown in 2017. 
Much more at the link. A great story. 

The Oasis Muri Wells In Banks Oil Field

The wells:
  • 34269, 567, Oasis, Muri 5198 11-4 14T, Banks, t6/18; cum 181K 3/20;
  • 33316, dry, Oasis, Muri 5198 1104 2T, failed cement liner after drilling to depth;
  • 33315, 788, Oasis, Muri 5198 11-4 3B, Banks, a huge well; t6/18; cum 331K 3/20;
  • 33314, TATD, Oasis, Muri 5198 11-4 4T, Banks, no data;
  • 33242, 1,129, Oasis, Muri 5198 12-4 5B, Banks, 50 stages; 10 million lbs, t6/18; cum 341K 3/20;
  • 33241, 643, Oasis, Muri 5198 12-4 6T, Banks, Three Forks, 50 stages; 4 million lbs, t6/18; cum 250K 3/20;
  • 33240, n/d, Oasis, Muri 5198 12-4 7B, Banks, t--; cum 232K 3/20;
  • 33239, 191, Oasis, Muri 5198 12-4 8T, Banks, Three Forks, 50 stages; 4 million lbs, t7/18; cum 218K 3/20;
  • 18980, 1,587, Oasis, Berquist 33-28H, Banks, t6/11; cum 416K 3/20; see production profile below;
  • 33588, 378, Oasis, Muri 5298 14-28 9T, Banks, t7/18; cum 216K 3/20;
  • 33587, 230, Oasis, Muri 5298 14-28 10B, Banks, t8/18; cum 337K 3/20;
  • 33584, 1,052, Oasis, Muri 5298 14-28 13TX, Banks, t7/18; cum 383K 3/20;
  • 33661, 498, Oasis, Berquist 5298 11-27 2B, Banks, t8/18; cum 321K 3/20;
The graphics:


Partial production profile of selected wells.

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Eight New Permits (BR And XTO) -- March 12, 2019

Active rigs:

Active Rigs64604532111

Eight new permits:
  • Operators: BR (5); XTO (3)
  • Fields: Pershing (McKenzie); Hofflund (Williams)
  • Comments:
    • BR has permits for a 5-well George pad in section 18-150-96 in Pershing oil field;
    • XTO has permits for a 3-well Frisinger pad in section 8-154-95 in Hofflund oil field;
Nine permits renewed:
  • EOG (4): four Clarks Creek permits in McKenzie County
  • CLR (3): three Micahlucas permits in Dunn County 
  • Equinor (2): two Jarold permits in Williams County
Three producing wells (DUCs) reported as completed:
  • 25958, 830, Equinor, Mark 4-9F 3H, Williston oil field, t2/19; cum --;
  • 35001, 1,553, Whiting, Lassey 14-34H, Glass Bluff, t2/19; cum --;
  • 35000, 1,637, Whiting, Lassey 44-33H, Glass Bluff, t2/19; cum --; 
Note: the Lassey wells are in far northwest McKenzie County, about six miles southeast of the confluence of the Yellowstone River and the Missouri River; probably Tier 2, maybe Tier 3 area; 

MRO Looking For The Next Big Play In US Crude -- March 12, 2019

The Louisiana Austin Chalk is tracked here and linked at the sidebar at the right.

From Rigzone today, data points:
  • MRO looks for the next big in US crude
  • MRO is again looking at cheap acreage in overlooked areas like the Louisiana Austin Chalk
  • Note: the article does not say the company is exploring the LAC; the article says the company is looking for plays like the LAC

Clearing Up Some Of That BP "Peak Oil" Confusion -- March 12, 2019

Link here.

EVs will drive electricity demand -- and it won't take many EVs to move the needle. That demand cannot possibly be made up through solar or wind. Nuclear plants are being shut down. Default "winner": natural gas.

Which Movie Are You Watching?

Venezuela Update -- March 12, 2019

Blackout, electricity grid down:
  • shut down the oil production / export sector
  • now we learn that drinking water is also shut down; pumps run on electricity
Put Another Log On The Fire
Another State Added To The List Hitting Record Low Winter Temperatures

Link here.

These articles are all about the weather. These are not climate stories. Not one article mentions global warming but come this summer, one hurricane and it will be attributed to global warming.

Put Another Log On The Fire, Tompall Glaser

Cold, cold winter. Great Lakes ice cover.

Link here for some great wildlife photos.

Greenpeace caught in huge lie

Williams County School District Looking To Finance Three New Schools -- March 12, 2019

A Look At The Bruin Fort Berthold Wells That Came Off Confidential List Today -- March 12, 2019

Disclaimer: in long notes like this (here and on all posts) there will be typographical and factual errors; if this information is important to you, go to the source. In this case, the source is the NDIC.

The wells:
  • 34529, 692, Bruin, Fort Berthold 148-94-28A_33-15H, McGregory Buttes, Three Forks, 46 stages; 11.6 million lbs, t10/18; cum 54K 1/19;
  • 34528, 392, Bruin, Fort Berthold 148-94-28A-33-14H, McGregory Buttes, Three Forks, 46 stages; 11.3 million lbs, t10/18; cum 49K 1/19;
  • 28629, 86 (no typo), Bruin, Fort Berthold 148-94-28A-33-12H, McGregory Buttes, Three Forks, 53 stages; 13.9 million lbs, t10/18; cum 32K 1/19;
  • 28628, 264, Bruin, Fort Berthold 148-94-28A-33-13H, McGregory Buttes, Three Forks, 54 stages; 14.1 million lbs, t10/18; cum 47K 1/19; 
The graphics:

The other wells in the graphic above:
  • 25534, 2,529, Bruin, Fort Berthold 148-94-33C-28-3H, Eagle Nest, t9/14; cum 261K 1/19; steady Eddy;
  • 26865, 1,604, Bruin, Fort Berthold 148-94-33C-28-8H, McGregory Buttes, t9/14; cum 255K 1/19; steady Eddy, but about half the production of #25534;
  • 26866, 1,726, Bruin, Fort Berthold 148-94-33C-28-9H, McGregory Buttes, 9/14; cum 225K 1/19; ditto, #26865;
  • 26867, 1,564, Bruin, Fort Berthold 148-94-33C-28-10H, McGregory Buttes, t9/14; cum 263K 1/19; ditto, #26865;

  • 22313, 1,545, Bruin, Fort Berthold 148-94-28A-33-2H, McGregory Buttes, t4/13; cum 179K 1/19; off line 3/18 through 10/18;
  • 22312, 452, Bruin, Fort Berthold 148-94-28A-33-1H, McGregory Buttes, t11/12; cum 265K 1/19; off line 3/18 through 10/18;

  • 29571, 1,471, Bruin, Fort Berthold 148-94-33D-28-6H, McGregory Buttes, t12/15; cum 134K 1/19; off line 7/18 through 10/18;
  • 24338, 2,576, Bruin, Fort Berthold 148-94-33D-28-4H, McGregory Buttes, t8/13; cum 492K 1/19; off line 7/18 through 10/18;
  • 24339, 2,302, Bruin, Fort Berthold 148-94-33D-28-5H, McGregory Buttes, t8/13; cum 434K 1/19; off line 7/18 through 10/18; look at production below;
  • 29572, 1,145, Bruin, Fort Berthold 148-94-33D-28-7H, McGregory Buttes, t8/15; cum 426K 1/19; off line 7/18 through 10/18; see production profile below;
Production profiles of some of these wells:

  • #24339, refracked/tested 7/17/18 -- 12 stages; 2 million lbs:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
  • #29572, re-fracked/tested, 7/12/18 -- 32 stages, 4.8 million lbs:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

NOG 4Q18 Earnings

Press release. Summary:

  • production increased 117% over the prior year and 36% over the prior quarter, averaging a record of 36,258 barrels of oil equivalent per day
  • lease operating expenses and general and administrative expenses were each down 26% per Boe from the prior year
  • cash flow from operations, excluding a $10.3 million net increase from changes in working capital, was $107.5 million
  • drilling and development capital expenditures totaled $78.2 million, a decrease of 4% from the prior quarter
  • net income increased to $218.3 million or $0.58 per diluted share from a $0.37 loss per diluted share the prior year. Adjusted Net Income increased to $94.8 million or $0.25 per diluted share. Adjusted EBITDA increased 157% over the prior year to $124.9 million
Full year:
  • production increased 73% over the prior year, averaging a record of 25,555 Boe per day
  • cash flow from operations, excluding a $25.7 million net decrease from changes in working capital, was $270.0 million
  • drilling and development capital expenditures totaled $260.9 million
  • net income increased to $143.7 million or $0.61 per diluted share from a $0.15 loss per diluted share in 2017. Adjusted Net Income increased to $140.7 million or $0.59 per diluted share
  • adjusted EBITDA increased 141% over the prior year to $349.3 million
4Q18: doing more with less -- production increased 36% from prior quarter; despite cutting CAPEX 4% from prior quarter

Guidance for 2019 base plan predicated on $50 WTI oil price environment:
  • 28 to 32 net wells 
  • severe 1H19 weather will result in increased weighting in 2Q19
  • CAPEX: $247 to $285 million
  • to include: $20 to $25 million in "ground game acquisitions, acreage, workover, etc.
  • production will continue to be flat: will range between 34,500 to 35,500 boepd
  • higher declines in 1Q19 but production growth will resume in 2Q, 3Q, 4Q19
"Red Queen"? NOG will add 28 to 32 net wells, but production will remain flat, maybe drop a bit on average over the year (2019)

Young Man, I Was Once in Your Shoes -- March 12, 2019

I wouldn't post this in a million years (sent to me by a reader) but it gives me a great excuse to post a great video:

YMCA, The Village People
Life Imitates Art 

Anyone remember "Home Alone."

Notes Re: A CLR Three Forks Anderson Well In Willow Creek -- March 12, 2019

CLR's Anderson wells in Willow Creek are tracked here: middle Bakken;  and, Three Forks, first bench. 

In general, CLR is fracking with 10 million lbs of sand (often more) and upwards of 60 stages. In this Three Forks, first bench well, the company fracked with 71 stages but a moderate to small amount of sand: 6.6 million lbs.

The well:
  • 34641, 1,899, CLR, Anderson 8X-14H1, Willow Creek, 71 stages, 6.6 million lbs, t10/18; cum 109K 1/19; 
From the file report:
  • objective: to steer within the 14-foot target zone located 8 feet to 24 feet below the Three Forks top
  • spud date: 4/8/18
  • TD: 5/10/18
  • TD: 22,143 feet
  • vertical hole, pause drilling; big rig: 4/10/18
  • resume  drilling: 4/29/18
  • reached KOP: 5/1/18
  • curve build began: 5/1/18
  • land curve: 5/2/18
  • drilling lateral: 5/5/18
  • cease drilling: 5/10/18
  • "majority of the well was drilled within the 14-foot target zone"
  • background gas ranged from 700 to 2,500 units throughout the lateral

Russia And The Arctic: The Obama Legacy -- March 12, 2019

Another footnote for the Obama presidency chapter in the next edition of US History: under President Obama, the US ceded the Arctic to Russia, the Canadians, the Norwegians, the Danes. See this post. The original post was dated May 11, 2013. Truly amazing. Now this story: Russia's next oil boom is happening in the Arctic. Memo from Vladimir to Barack: thank you, Mr Obama.
One of the major challenges of the 21st century is without doubt climate change.
For most countries, global warming poses a serious threat. Russia, however, has identified opportunities when it comes to the changing climate and the gradually decreasing icecap of the Arctic region. Moscow’s Arctic Strategy is intended to provide an edge for the Eurasian country in the areas of energy and defence while at the same time promoting the Northern Sea Route as an alternative shipping route.

Russia has vast oil and gas reserves in the Arctic. In terms of technically recoverable energy, the region contains as much as 90 billion barrels of oil and 47 trillion cubic meters of natural gas of which the Russian zone has the largest share, 48 billion barrels of oil and 43 trillion cubic meters of gas respectively. It amounts to 14 percent of its oil and 40 percent of its gas reserves. Despite global warming, the harsh weather conditions in the Arctic region require specialized infrastructure to extract and transport the oil to consumers.

Russia regards the Arctic as a strategic area where it is willing to invest significantly to secure the largest and most important share for itself. Moscow supports its claim by arguing that the crust structure of the Lomonosov ridge corresponds to the nearby Russian continental shelf which gives it the sole right to exploit much of the Arctic region. For this purpose, the Arktika research expedition vessel was dispatched in 2007.

Moscow is expanding its Arctic infrastructure with massive investments which dwarf those of the remaining littoral states. If the other Arctic countries do no begin investing in critical infrastructures such as harbors, airports and ice breaks, they could soon find themselves left behind in a new race for the North Pole.
Much more at the link.

Of course I don't agree with the premise of the disappearing Arctic ice cap (which turns out not be true except on the far western Arctic where it coincidentally / ironically benefits Russia. God has a sense of humor.

The big takeaway for me: regardless of what side of the global warming fence one stands, the writer suggests that Russia was looking for ways to take advantage of global warming, whereas the Obama administration -- like the Carter administration on peak oil -- simply wrung its collective hands, made speeches, and told Americans "it was out of our control."

QEP Earnings Transcript, 4Q18 -- Back Into The Bakken; One Rig; Seven Wells; Re-Frack Program If WTI Price Is Right -- March 12, 2019

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

The market, the Dow: after being up overnight, Dow futures are now slightly negative.

NOG: we'll get to the earnings report later, but NOG is up almost 10% pre-market trading; up 21 cents; up 9.46%; and, trading at $2.43. In early trading, NOG up 4.5%; up ten cents; trading at $2.32. Conversations of traders:
  • price target, $4 (well below the current earnings of $2.00 or thereabouts)
  • great EPS
  • huge earnings beat
  • "this should be trading much higher"
  • beat earnings estimate by 80%
XLNX: closed up 2.79% yesterday, and is up slightly this morning in pre-market trading. Trading at $122/share, XLNX was trading for $70 in late October, 2018.

Shell: Bloomberg is reporting that Royal Dutch Shell is "hunting" for deals to bulk up its position in the Permian Basin, where it rivals ExxonMobil and Chevron. So much for all those stories suggesting problems in the Permian.
Shell is considering a bid for Endeavor Energy Resources LP, one of the Permian’s largest-private operators, people familiar with knowledge of the matter said earlier this year. Sawan declined to comment on that or any specific targets but said any purchase would have “to afford our shareholders a very strong return on investment.”
Exxon and Chevron last week announced audacious plans to produce nearly 2 million barrels of oil between them from the Permian by the mid 2020s, more than OPEC member Nigeria. While the two U.S. explorers emphasized organic growth, Shell is looking for takeovers to take advantage of smaller drillers squeezed by cost pressures and investors hungry for returns.
Shell currently produces 145,000 barrels of oil equivalent a day from its existing Permian operations and plans to increase production by 30 percent a year for the forseeable future, the company’s U.S. President Gretchen Watkins said in an interview. Shell’s overall shale production, which includes Argentina and Canada, will reach half a million barrels a day by 2020.
First, regarding the termination of the QEP-Helis Grail-Advantage Energy deal:
I'll now spend a few minutes discussing the status of the Williston Basin transaction. As you're aware, QEP and Advantage Energy signed a purchase and sale agreement for the Williston assets on November 6, 2018. At that time oil was trading at $62 per barrel. The near-term price subsequently dropped to $40 a barrel before recovering to approximately $57 a barrel today. Given the deterioration in product price and that it became unlikely that the conditions to closing would be satisfied, Advantage and QEP agreed to terminate the purchase and sale agreement. We now intend to move forward with a pace development of the remaining high return Williston inventory to maximize the value of the asset. The Williston assets are well understood, remain cash flow positive at current oil price for the foreseeable future and are aligned with QEP's strategic focus on oil versus natural gas.
Q: My question on the Bakken. How do you anticipate maximizing the value and minimizing decline through this year and into 2020?
A: Yes. So we've got two opportunities.
We have a drilling package that looks very attractive. We also, I think worked through the refracs last year, worked through some mechanical issues and we're confident we have quite a large inventory of refracs.
With the asset coming back into the fold, we didn't want to go too hard too fast, and we also want to live with an overall cash flow for company.
The Williston Basin delivers free cash flow both on an asset level and with the corporate overhead included.
..... picking up the rig this year, drilling 7 wells will basically halt the decline.
We're also coming lower on the hyperbolic curve on individual wells.
So it's going to be, the decline's going to slow naturally by itself. And as we go forward, we have the opportunity if we want to see some growth [with] increasing price, we'll turn into the refracs.
And then ultimately, we have enough inventory to pick up probably -- we're going out probably 1 year, 1 1/2 years, pick up a second rig. So we've got our hands on the throttle. We can move that pretty quickly; our confidence aside on the results of the refracs, especially now we've gotten through a few mechanical issues. So again, pretty simple outcome. It dropped pretty hard. 
Q; And I'm just wondering, will that focus be in any one area? I mean is it in Bakken, the Permian or just sort of broad-based? 
A: The D&A cuts are the hardest thing we have to do; they impact people. I know we have a lot of our employees listening. And it's across the board. We were a company that were in multiple basins, and in a fairly short period of time it reduced down. So the G&A in the past had been fairly competitive.
If we do nothing, our G&A going forward into '19, '20, gets up into the $5 to $6 range. It's unacceptable. And so we need to pull back pretty hard. So we've taken a hard look at that. That was underway before I got here. And we've accelerated to certain things. And now we're looking at, we believe, when I look at the benchmark data, something at $3 or below is going to be very competitive. As we increase volumes in the Permian, you'll see that $3 per barrel come down with time.
I really don't think we're going to need to add a whole lot of G&A as we go forward. So we're trying to do a fundamental reset to what do we need? And we're going to remove everything that's kind of a nice to have and we're going to keep everything that's a need to have. And the most important thing is, through all the things that are going on and all the outside influences we've had and now the announcement on the strategic initiative, the most important thing we need to do is maintain good trust and communication with our employees; we've got some of the best in the industry.
We're doing some of our most interesting and best things in our Permian and now back into the Williston assets. And so that's going to be kind of our core challenge and our core focus. But it's something that has to happen. Talked to our employees about this and we're going to communicate more fully as we go forward over the next several days. But I hope that helps.
Q: The comment earlier that you can hold Bakken production flat with one rig, is that off of 4Q levels or is that off the low 20s levels implied by the guidance you gave earlier?
A: I'm saying once we hit kind of the level we've given guidance on for '19, by running one rig and doing the 7 wells and continuing on into the following year, we'd be able to keep the production flat.
If we want to see an increase in that or we want to offset that if we see some decline, we also have the refracs we can mobilize on pretty quickly.