Monday, April 8, 2019

Seven New Permits -- April 8, 2019

  • WTI: a huge day; up $1.32/bbl; up over 2%; closed at $64.40
  • Brent: before the opening today, folks wondered whether Brent would hit $71; it closed at $71.10, up 76 cents or a little over 1%
  • OPEC basket: up a bit but still trading below $70
Active rigs:

Active Rigs6458493191

Seven new permits:
  • Operators: XTO (4); BR (3): 
  • Fields: Camp (McKenzie); Dimmick Lake (McKenzie); 
  • Comments:
    • XTO has permits for a 4-well Don pad in section 15-152-101 in Camp oil field;
    • BR has permits for a 3-well State Dodge pad in section 21-151-96 in Dimmick Lake;
Dry hole:
  • 36141, dry, MRO, Gould 34-23H, Chimney Butte, PNC 3/28/19; most likely a bad casing;
One producing well (DUC) reported as completed:
  • 32232, 3,046, Bruin, Fort Berthold 152-94-15A-22-9H, Antelope-Sanish, t3/19; cum 48K 2/19; 
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

From an earlier post, #32233 on the same pad: one producing well (a DUC) reported as completed:

  • 32233, 2,324, Bruin E&P, Fort Berthold 152-94-15B-22-8H, Antelope-Sanish, t1/19; cum 51K after 35 days; (#24731; #25494; #32232; #24739; 24738; #24737; #18402; #20567)
    • 20567, a huge well; off line
    • 18402, ditto
    • 24737, back on line; huge jump in production;
    • 24738, back on line; looks like a jump in production;
    • 24739, huge, huge jump in production; must have been re-fracked; check later;
    • 32232, SI/NC but huge production to date; 50K in 33 days;
    • 25494, back on line; no jump in production?
    • 24731, huge well, never take off line; producing about 5,000 bbls/month; t10/13; cum 592K 2/19;

Monday, April 8, 2019 -- T+96, Part 3 -- Black Swan

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. 

Mid-afternoon trading: the overall market is doing better than that suggested by the Dow being down 120 points. My hunch is that Boeing accounts for much of the "drag." The two plane crashes are "old news" but the fact that Boeing is down almost 5% today (down about $20/share) suggest real concern. Boeing has cut back on production of the 737 Max 8. These are the headlines, and they are not good:

Some years ago the "buzzword" in business circles seemed to be "black swan." There were whole books written about "black swan." But now that we clearly have an example of a "black swan" right in front of us, I haven't seen that phrase used. It may be buried in stories that I have missed but it seems someone would use it in a headline.

From Investopedia: What is a Black Swan?
A black swan is an event or occurrence that deviates beyond what is normally expected of a situation and is extremely difficult to predict. Black swan events are typically random and unexpected.
There are three elements to a "black swan." The Boeing situation even meets the third element:  analysts early tried to "explain away" the event on "pilot error."

It turns out I am wrong. A nexus search reveals some interesting "black swan" / Boeing 737 articles. This was at/near the top of the google search and is quite interesting, from The Air Current: "737 Max airlines take cover under the wing of a black swan."

Many questions raised by that article. It does answer one question. Despite the grounding of the 737 Max there seems to be little disruption in service (ignoring the first week or so) -- with so many 737 Max models in use, why did we not see more disruption? Because, in the near term, there is more than adequate "seat supply" capacity. ["Little disruption in service" based on what I saw last week; I see a new headline above that suggests American Airlines is, in fact, canceling more flights becuase of this issue.]

Some weeks (months?) ago, the price of AAPL shares fell to the extent that it caused a number of analysts to be concerned. I know folks put "stop-losses" on their AAPL shares or sold them outright. Didn't Warren Buffett sell off some Apple shares; there were headlines that he did but there was some question; I never read the articles. But whatever caused Apple shares to drop a few weeks (months?) ago, it never bothered me. But, with Boeing it seems to be a very, very different story.

The analysts pretty much pooh-pooh any real damage to Boeing, at least in the articles I read, but there certainly seems to be a lot of "whistling in the dark."

Another Example Of A Low-Stage MRO Frack And Great Results -- April 8, 2019

The well:
  • 33665, 4,551, MRO, Wilkinson USA 11-1H, 45 stages, 8.5 million lbs, Reunion Bay, t1/19; cum 68K in 30 days; geological summary not yet on file;
See this note for background. 

Other wells on the pad:
  • 33666, 3,259, t2/19; cum 38K after 23 days;
  • 33667, 2,555, t2/19; cum 30K after 23 days;
  • 33668, 3,278, t2/19; cum 31K after 18 days;
And then look at this (also see this post):
  • 18514, 672, MRO, Howard USA 11-1H, Reunion Bay, t6/10; cum 519K 2/19; production profile (note that most recent production of 9,000 bbls was over 14 days); I haven't checked but I doubt that it was re-fracked -- but I will check later:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Two neighboring wells coming from the south:
23176, off line,
21458, off line,

What Cows Really Think

Monday, April 8, 2019 -- T+96, Part 2

Fracking: Westwood Energy suggests that a small amount of "frack horsepower" has recently been removed from active status, but the trend should reverse by 2Q19. It looks like the Permian and the Eagle Ford will show the largest increase; the Bakken remains unchanged.

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.

Market, pre-market: well, this is interesting. One doesn't often see this -- pre-market trading in either JAG or NOG, but today when not much is yet active, but JAG and NOG show nice price movement upward. Majors are now just starting to show some life. WTI still shows $63.37 and Brent crude is $70.73. The word on the street is that Brent will hit $71 today.

Early morning trading: absolutely flat, having clawed its way back from a pre-market of a -70 on the Dow.

WTI: wow -- it looks like WTI is driving some of the market today. WTI is up nicely and is close to $64. Brent has not yet hit $71. JAG is up nicely; NOG down a penny suggesting some profit-taking -- LOL.

Dreaming: FWIW, from Investopedia, nine companies that meet Warren Buffett's criteria for outright purchase:
  • Amphenol, $31 billion 
  • Anthem, $75 billion 
  • BlackRock, $71 billion 
  • Bristol-Myers Squibb, $76 billion 
  • General Dynamics, $49 billion 
  • Northrop Grumman, $47 billion 
  • Sherwin-Williams, $41 billion 
  • Target, $42 billion 
  • TJX, $66 billion
Mid-afternoon trading: the overall market is doing better than that suggested by the Dow being down 120 points. My hunch is that Boeing accounts for much of the "drag." The two plane crashes are "old news" but the fact that Boeing is down almost 5% today (down about $20/share) suggest real concern. Boeing has cut back on production of the 737 Max 8.
The Language Page
Ned and Norange 
A Two-Fer

This is so cool. Two questions were answered by one entry.

Sophia is learning Spanish as a second language at Montessori, and of course, naranja shows up on her word list. It's obvious naranja and orange have to be related, but how.

But even more "remote," how did we ever get Ned from Edward?

From The Language Instinct: How the Mind Creates Language, Steven Pinker, c. 1994.

Page 244:
Because of the language instinct, there is something much more fascinating about linguistic innovation: each link in the chain of language transmission is a human brain. That brain is equipped with a universal grammar and is always on the lookout for examples in ambient speech of various kinds of rules. Because speech can be sloppy and words and sentences ambiguous, people are occasionally apt to reanalyze the speech they hear -- they interpret it as having come from a different dictionary entry or rule than the ones that the speaker actually used.
A simple example is the word orange. Originally is was norange, borrowed from the Spanish naranja. But at some point some unknown creative speaker must have reanalyzed a norange  as an orange.

Though the speaker's and hearer's analyses specify identical sounds for that particular phrase, anorange, once the hearer uses the rest of grammar creatively, the change becomes audible, as in those oranges rather than those noranges.

(This particular change has been common in English. Shakespeare used nuncleas an affectionate name, a recutting of mine Uncle to my nuncle, and Ned came from Edward by a similar route. Nowadays many people talk about a whole nother thing, and I know of a child who eats ectarines and an adult called Nalice who refers to people she doesn't care for as nidiots.)
For The Archives

Saturday afternoon last, Sophia and I spent most of the day together. About 7:00 p.m. I took her home, where she ran to see her dad. I went out the back door down to the pool to skim the leaves that had accumulated that day.

About ten minutes later I walked past the house to go home. I purposely did not go back into the house. I heard Sophia crying quite loudly. I assumed it was over some disagreement between her dad and watching a "movie" on Roku.

Later that evening, by text, I asked Sophia's mom who Sophia was doing. She said that Sophia and her dad were in a "power struggle" over something. We could all guess. LOL.

Later, her mother wrote to say that everything was back to normal.

Today, on the way to TutorTime/Montessori, Sophia and I talked about a number of things. Then I casually mentioned the "discussion" she had with her dad when I dropped her off the other evening.

Sophia said it was not a discussion. She said she was crying because her dad "put on" a movie different than the one she wanted. I can understand that. The movie she wanted was "the Octonauts" -- a movie she has seen a gazillion times. Her dad suggested that a different movie and that's when the "discussion" began. LOL.

She said she "was standing there crying" because all she wanted was a "a hug."

Apparently she got her hug (I don't know which movie they watched) but she was fine after the hug.

And that was her story. It occupied a major part of our drive. I asked her how that situation might be handled better in the future. She said she did not know.

I mentioned that was part of "family dynamics." I asked her to repeat "dynamics" and said that family dynamics were like family relationships. She has one relationship with her mom, and one with her dad, and one with me, and one with her sisters, and so on , and those were all examples of dynamics.

Then we arrived at school. It will be interesting to see if she remembers that word. I'm sure it will be awhile before she understands the concept but it sure is fun having those little conversations. 

Monday, April 8, 2019 -- T+96, Part 1

India: from twitter -- India imported 400,000 bopd of Iranian crude oil in March, a nearly 60% increase from February and the highest level in five months based on shipping data and tanker traffic by Bloomberg analysts.

Poll: from twitter -- will Brent hit $71 today (Monday, April 8, 2019)? About two-thirds of respondents say "yes." Brent, before the US market opens, is trading at $70.59.

Tax freedom day: April 19, 2019. In Canada, they celebrated that day on June 10 last year (2018).  For Canadians, almost six months of earnings went to taxes; in the US 3.5 months.

OPEC, also from twitter today --

Outside Our Back Door

Actually about half-a-mile from our little hovel in Grapevine, TX:

About 24 head altogether.

Reason #76: Why I Love To Blog -- "They" Are Reading The Blog -- April 8, 2019

Four days ago, a "road-to-California" post consisted of one EIA graphic. That was it.

The graphic reminded all of us: a picture is worth a thousand words.

Apparently someone saw that graphic and decided it was worth a thousand words.

From the Center of the American Experiment, no state imports more electricity than California.

Now that I see the story here, and that headline, I realize that we need to do a "per capita" analysis.

Here's the graphic again:

The linked American Center article has another graphic, source / origin of California's electricity.

The narrative says wind is represented by "light blue" in the graphic above. I could not find "light blue" unless it is the very small amount sitting between hydroelectricity and natural gas. 

I don't want to spend a lot of time on this, but let's check per capita for a few states (electricity in million megawatthours per year):
  • California, population, 40 million; imports 75 -- 1.875 million mwh/year per capita
  • Virginia, population, 8.5 million; imports 35 -- 4.1 million mwh/year per capita
  • Ohio, population, 11.7 million; imports 32 --  2.7 ditto
  • Maryland, population, 6 million;  imports 30 -- 5 ditto
  • Tennessee, population, 6.8 million; imports 28 -- 4.1 ditto
So, it is what it is.

One major difference among the states listed, I suppose, is that of the five states, California is the one best able to be self-sufficient in energy production if it chose to be. One wonders if the bigger story might not be the eastern states (Maryland, Ohio, Virginia) that are really, really dependent on outside energy.

But, in the big scheme of things, does it really matter? 

Much more could be said but I will leave it at that.

Note: I did not double-check any of the figures. I often make simple arithmetic errors.

Seven Wells Coming Off The Confidential List Today -- April 8, 2019

Wells coming off the confidential list today, this weekend -- 
Monday April 8, 2019: 27 wells for the month; 27 wells for the quarter
  • 35216, SI/NC, XTO, Teddy Federal 12X-5A, North Fork, no production data, 
  • 33681, drl, Crescent Point Energy, CPEUSC Nelson 7-30-31-157N-99W TFH,  Lone Tree Lake, no production data,
Sunday, April 7, 2019: 25 wells for the month; 25 wells for the quarter
  • 30933, SI/NC, Armstrong Operating, Pederson 33-3, Hamlet,, no production data, 

Saturday, April 6, 2019: 24 wells for the month; 24 wells for the quarter
  • 35217, SI/NC, XTO, Teddy Federal 12X-5F, North Fork, no production data, 
  • 34999, 240, Lime Rock Resources, Jaeger State 2-34-26H-144-97L, Cabernet, t10/18; cum 62K 2/19; 
  • 34620, 1,002, Enerplus Camelia 148-94-16CH, Eagle Nest, t10/18; cum 48K 2/19;
  • 33665, 4,551, MRO, Wilkinson USA 11-1H, 45 stages, 8.5 million lbs, Reunion Bay, t1/19; cum 68K in 30 days;
Active rigs:

Active Rigs6258493191

RBN Energy: Permian crude differentials squashed amidst a potential overbuild.
Crude differentials in the Permian are getting squeezed. The spread between Midland and WTI at Cushing widened out to near $18/bbl at one point in 2018, when pipeline capacity was scarce. But that same spread averaged a discount of only $0.25/bbl in March 2019. Differentials between Midland and the more desired sales destination at the Gulf Coast are also in a vise. What gives? Production in the Permian continues to climb, but the rapid pace of growth we saw in 2018 has slowed down a bit lately, with fewer rigs in service and fewer new wells being brought on each month. More importantly, we’ve seen several new pipeline expansions and pipeline conversions come online in bits and bursts — in some cases, ahead of schedule — and this new chunk of pipeline space has compressed Midland pricing. In today’s blog, we begin a series on Permian crude takeaway capacity and differentials, with a look at the handful of new projects that have come online in the past few months and what has happened to Permian prices as a result.
It was only a matter of time before the crude oil market found a way to kill the price spread. It’s happened again and again. A few years back, pipeline takeaway capacity in both the Bakken and the Powder River Basin was limited, crude-by-rail was getting built out at an impressive clip, and traders were taking advantage of unique pipeline, rail, and trucking options to capture arbitrage opportunities on double-digit spreads. While producers were seeing low netbacks and weren’t happy, traders and end-market users were living the good life. Over time though, more than enough pipeline capacity got built out in those areas, spreads tightened, and most of the crude-by-rail and niche trucking opportunities were mothballed. Midstream companies saw wide price differentials, recognized the opportunity, built projects like the Dakota Access Pipeline, and the spread was dead.   
That’s similar to what we’ve seen materializing in the Permian Basin over the past six months or so.