Tuesday, July 2, 2019

Bad Day For WTI -- Down 5% -- Five New Permits -- July 2, 2019

  • weekly crude oil draw: 5 million bbls
  • forecast: 2.5 million bbls
WTI: drops almost 5% today; down almost $3/bbl. Closes near $56/bbl. Despite the "healthy" draw (API data above), WTI continued to fall.

Active rigs:

Active Rigs6067583075

Five new permits:
  • Operators: Hess (4); Slawson
  • Fields: Tioga (Mountrail County): Big Bend (Mountrail County)
  • Comments:
    • Hess has permits for a 4-well TI-Ives pad in section 6-157-94, Tioga oil field
    • Slawson has a single permit for a Hunter well in section 17-151-92, Big Bend oil field
Re-entry permit (see below):
  • 16654, 311, MRO, Buehner 34-12H, Bailey, t8/07; cum 191K 5/19; off line since 12/18; back on line 5/19 for nine days, small production;
Ten permits renewed:
  • XTO (5): five Johnson Trust permits in McKenzie County
  • CLR (5): three Morris permits and two Carson Peak permits, all in Dunn County
Three permits canceled:
  • Oasis: a Merritt permit in Mountrail County
  • XTO: a Zane Federal permit in McKenzie County
  • Whiting: a Stenehjem Federal permit in McKenzie County
Five producing wells (DUCs) reported as completed:
  • 35804, 1,738, Whiting, Link 24-12-3H, Foreman Butte, t6/19; cum --;
  • 35805, 2,084, Whiting, Link 24-12HU, Foreman Butte, t6/19; cum --;
  • 28956, 3,577, Hess, EN-Jeffrey-155-94-2215H-9, Alkali Creek, t5/19; cum 32K over 17 days;
  • 28955, 2,074, Hess, EN-Jeffrey-155-94-2215H-8, Alkali Creek, t5/19; cum 11K over 12 days;
  • 28954, 2,924, Hess, EN-Jeffrey-155-94-2215H-7, Alkali Creek, t5/19; cum 11K over 9 days;
Re-Entry (see above)

From the sundry form for work to be performed on/about August 1, 2019:
MRO is planning to sidetrack and refrack [note the spelling] this well. Originally an open hole completion in 2007 and drilled in northwesterly direction across DSU, with toe setbacks that were 500' FNL of section 1. This well had an original TD depth of 19,917' MD and TD'd at approximately 606' FNL 674" FWL of section 1. 
MRO plans to put a drilling rig on this well, and sidetrack at a tie-in survey of 11,848' MD and straighten lateral to north and extend the lateral to a PBHL (projected bottom hole location) of approximately 19,993' MD (approximately 175' FNL and 2250' FEL of seciton 1). [Note: the bottom hole will be 431 feet closer to the north line.]
MRO will then run a cemented liner for a 40-stage plug and perf style completion, completing the well when three additional infill wells from the same pad are drilled and completed
These wells are scheduled to be drilled in August and completed in October, 2019.
It should be noted that another Buehner well just to the east of this well, #16993, Buehner 44-12H, is now off line (as of 5/19).
  • 16993, 125, MRO, Buehner 44-12H, Bailey, t10/08; cum 226K 5/19; this well had a substantial jump in production 6/18 following completion of wells in the drilling unit to the east

That Didn't Last Long -- WTI Back Down Below $58 -- July 2, 2019

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.

It could be a brutal summer for investors, and, then, of course, we have October, only three months away.

WTI is back below $58 after briefly touching $60, and companies are warning investors that 2Q19 earnings are going to be "brutal."

Hang on.

Nine Billion Bicycles, Katie Melua

The Arikara Wells

Only one well coming off confidential list today -- Tuesday, July 2, 2019:
  • 35321, 3,448, MRO, Flynn USA 21-16TFH, Reunion Bay, but look at this -- 18,482 bbls over first nine (9) days; the wells in this area are going to be huge; some are already huge; see this post; t5/19; cum 294K 10/20; cum 337K 5/21;
The Arikara wells in this area:

  • 19768, 261, WPX, Arikara 15-22HC, Reunion Bay, t12/11; cum 699K 10/20; see this post F; re-fracked 1/18; cum 719K 5/21;
  • 33619, 2,229, WPX, Arikara 15-22HA, Reunion Bay, t3/18; cum 422K 10/20; cum 448K 5/21;

  • 33642, 2,183, WPX, Arikara 15-22HQL, Reunion Bay, t3/18; cum 540K 10/20; cum 560K 4/21;
  • 23965, 2,528, WPX, Arikara 15-22HW, Reunion Bay, t3/18; cum 485K 10/20; cum 507K 5/21; 
  • 23964, 2,712, WPX, Arikara 15-22HB, Reunion Bay, t3/18; cum 468K 10/20; cum 506K 5/21;
  • 23963, 2,017, WPX, Arikara 15-22HX, Reunion Bay, t3/18; cum 376K 10/20; cum 408K 5/21;
  • 23966, 2,086, WPX, Arikara 15-22HY, Reunion Bay, t3/18; cum 492K 10/20; cum 528K 5/21;
  • 23967, 2,367, WPX, Arikara 15-22HD, Reunion Bay, t3/18; cum 448K 10/20; cum 477K 5/21; original frack at time #19768 was re-fracked;
Note the huge jump in production in #19768 at the link. These wells produced in excess of 300K bbls of crude oil in the first year of production.

Notes From All Over -- Part 1 -- July 2, 2019

LNG: US could become third largest seller. At Rigzone, data points:
  • Ranking by the end of the year (2019)
    • Qatar
    • Australia
    • US
    • Malaysia
    • The US will surpass Malaysia this year
  • "Truly staggering" -- Rigzone staff
    • LNG exports from lower 48 only began in February, 2016 (Cheniere Energy, Sabine Pass, Louisiana)
    • by end of 2019: US will have doubled export facilities to six
  • US sends LNG to 30 nations 
  • largest buyers:
    • South Korea
    • Mexico
    • Japan
    • China (25% tariff on US LNG has crimped sales, but most think this is temporary)
  • US "capacity": 700 Tcf that can be produced even when prices are below $3/MMBtu
  • US LNG production will grow non-stop at 1 - 2 percent for decades to come, double the domestic consumption rate

From ZeroHedge. Unless I missed it, the most interesting metric was missing from the article -- how many days/weeks/months before Chicago runs out of cash. The good news: Chicago has a plan to get out of this mess.

Detroit is not on the list: google Detroit bankruptcy. One link to Detroit bankruptcy.

Floating Away

It was dusk so the picture is a bit dark.

WTI Slides; Active Rigs Remain Constant -- July 2, 2019

Only one well coming off confidential list today -- Tuesday, July 2, 2019: 2 for the month; 2 for the quarter;
  • 35321, SI/NC, MRO, Flynn USA 21-16TFH, Reunion Bay, but look at this -- 18,482 bbls over first nine (9) days; the wells in this area are going to be huge; some are already huge; see this post;
Active rigs:

Active Rigs6167583075

RBN Energy: going to California -- PBF Energy extends heavy crude bed with Martinez refinery buy.
Independent refiner PBF Energy on June 11 announced its plan to acquire Shell Oil’s Martinez, CA, refinery for about $1 billion; the deal is expected to close by the end of 2019. The purchase will give PBF its sixth U.S. refinery and add 157 Mb/d to the company’s existing 865-Mb/d refining portfolio, pushing its total capacity past 1 MMb/d. Post-acquisition, PBF will retain overall fourth place in the U.S. market, behind leaders Marathon Petroleum, with 3 MMb/d; Valero, with 2.6 MMb/d; and Phillips 66, with 1.9 MMb/d. With the exception of its 173-Mb/d Toledo, OH, plant, PBF’s refineries are equipped with cokers that extract value from the heaviest sour crudes. As such, the Martinez acquisition extends the company’s long-term bet that heavy crude refining margins will exceed those of simpler refineries processing light sweet grades, even as U.S. production of the latter soars. Today, we examine prospects for the Martinez refinery and the sweet/sour spread.
The U.S. refinery market has seen significant merger and acquisition (M&A) activity in the past two years, topped by Marathon Petroleum’s 2018 acquisition of rival Andeavor (formerly Tesoro) to create the U.S. largest independent refiner. In November of last year, smaller independent Par Petroleum snapped up U.S. Oil & Refining’s 41-Mb/d Tacoma, WA, plant from private equity-backed TrailStone, and in January (2019), Chevron purchased the 110-Mb/d Pasadena, TX, refinery from Brazil’s Petrobras.
Just last month, Midwest independent CVR Refining announced that its132-Mb/d Coffeyville, KS, refinery and 74-Mb/d refinery in Wynnewood, OK, could be sold under an asset review. These plants are changing hands despite strong margins experienced in 2018 and continued discounts for U.S.-sourced crude during the Shale Era as production exceeds refinery demand for light sweet grades.