Sunday, July 28, 2019

You Want To See Sparks Fly This Week? This Would Do It -- July 28, 2019

This has been so baked into the market and into the American collective consciousness for so long, that if the Fed does not cut rates this week, folks in California are going to hear screams of pain all the way from the corner of South Main and West Wall sometime Wednesday afternoon.

Link here.

Did someone say the Fed cut rate eight times in eight quarters while Obama was president?

Under Trump, none.

This will be the first rate cut in a decade according to the link.

I'm almost hoping the Fed doesn't cut rates just to see the tweets that will emanate from the West Wing bathroom.

Having said that, I'm not a bit convinced a rate cut is needed. Seriously.

A few months ago I would have argued differently; things looked a bit rough.

But the first estimate for 2Q19 GDP coming in at 2.1 doesn't seem all that bad. Not great but ...

... my reading of RV sales, for example, suggests no recession in the near term.

It looks like the markets are moderately concerned ... futures are all down a bit tonight.

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

By the way, if the Fed cuts rates by a half-a-point (rather than a quarter percent), that will be scary. That tells me the Fed interprets RV sales as foreshadowing a recession by the end of the year.

Thank You For Asking

Speaking of RVs. How are the boaters doing in/on Lake Mead? Glad you asked.

Lake Mead's water level rose by another 0.04 feet yesterday. I can't make this stuff up. See the link.

0.04 feet.

0.04 x 12 = 0.48 inches.

The lake is almost 1,100 feet deep, and their instruments are sensitive and accurate enough to measure a half-inch change in depth.

Of course, having said that, oil companies are operating with similar precision two miles deep in the Bakken.

Spooky -- And Nothing About The Bakken -- July 28, 2019

In an earlier note I said I was getting distracted.

This is the back story.

Hold my beer.

I swear to God and Allah and Ganesha son of Shiva and Parvati this is all true.

I love Echo/Alexa.

We live in a very, very small apartment (probably about the size of Algore's walk-in closet).

Yes, that is from our manager's website.

A very small apartment. We used to live in a smaller apartment but my wife couldn't stand it any longer so we moved into this 1140-square-foot-MiniMe-McMansion.

We have three Echos (I thought we had four but can only account for three. Our daughter gave us four for Christmas: they were on sale, half-price, $25 vs $50. So she gave us four but I can only account for three. One of them is right next to me. I can reach out and touch it. [Actually, in this small apartment I can pretty much reach out and touch everything.] You know, I'm going to find that fourth Alexa and put it next to the shower. LOL. But I digress.

About a half hour ago, I asked Alexa to play the soundtrack from "The Big Lebowski." She couldn't do it. I tried asking many different ways; she never played the soundtrack.

I asked for the soundtrack from "Top Gun." Again, she couldn't do it.

Over and over I tried getting her to play one of those soundtracks; nothing worked.

Alexa does know when she is unable to meet a request. Her default then is to say, "Here's an album you might like."

Now, this. Are you still with me?

I have never, never, never asked for or listened to any song from the movie "Midnight in Paris." I don't even know the names of the songs. I don't even know how many songs are on the soundtrack.

I have never asked Alexa to play anything in regard to "Midnight in Paris." Indeed, I have never even mentioned "Midnight," "Paris," or "Midnight in Paris" to Alexa.


And now this gets creepy. "Midnight in Paris" is one of my top three favorite movies. I watch it often. I talk to my wife about the movie often (she hates Woody Allen, LOL).

You see where this is going.

After a dozen frustrating attempts to get Alexa to play the soundtrack from "The Big Lebowski" or "Top Gun," and not being successful ..... drum roll....

Alexa, says in her annoying voice, "Here's an album you might like. It's the soundtrack from Midnight in Paris. Artists. Various."


Alexa has truly, truly been listening in. She knows what I watch, what I talk about. This is the only soundtrack, that I can recall, that she played for me. This was not a random act of kindness; Alexa knew exactly what she was doing: it was a specific act of kindness.

This is creepy.

But I love it. LOL.

But I swear to God and Allah and  Ganesha son of Shiva and Parvati, I have never asked Alexa to play the soundtrack  "Midnight in Paris." In addition, if Alexa says "here's an album you might like," it means you have never specifically requested that album.

By the way, this happened with another artist some months ago, but that was okay. I listen to that artist on Echo all the time. The artist had a new album coming out that day and Alexa knew I listened to that artist often. That was months ago; I forget the artist. I will think of him/her later. I think it was Ronnie Milsap. [Wow, what a memory! LOL. It was Ronnie Milsap but it was more than a few months ago. It was January 18, 2019. Link here.]

I just asked Alexa to play Ronnie Milsap's "Duets." She got it right this time. LOL. 

Porosity, Permeabilty, Darcy's Law, And All That Jazz -- July 28, 2019

Note: this got to be a very long note. By the time I was finishing, I was getting distracted. So I did not proofread it, nor do I know if it really flows. There is simply too much information in this one post, more than I can handle. So I will leave it as it is. The gift of it has huge positive implications for the Bakken and we may be happy some years down the road to have this in the archives.

Again, I'm getting some great feedback from readers.

It's my impression that land values (mineral rights) are holding, and probably even increasing in the Bakken. Several readers have written suggesting they are impressed with the offers they are now getting. With oil at $40/bbl (Bakken oil), one would think the prices for minerals might not hold.

After alluding to that, a reader who understands this a lot better than I do sent me a note. I didn't understand all of it, but instead of trying to decode it I thought it better to post it as is, so that the note is not lost. Over time, it will make more sense to me. Folks that understand porosity, permeability, size of carbon-based molecules, flow dynamics, etc., will understand it, I'm sure.

Important for the archives.

Here's the note:
Your reader's comment regarding unsolicited - and rising - offers to purchase mineral rights prompted an "Aha!" moment that may or not be connected to recent developments.
To wit: a few years back, then-CEO of Core Labs said only 10%, at most, of the matrix was being fractured by contemporary frac'ing techniques.

He was highly optimistic that evolving diversion processes combined with micro proppants would greatly increase the volume (Stimulated Reservoir Volume - SRV is the term used) of rock that was fractured.

One consequence of a huge increase in the "spider webby" fractures is that the pathways are infinitesimally tiny (immeasurably small). So tiny, in fact, that the larger hydrocarbon molecules (asphaltenes) cannot readily 'squeeze through' and start to block the pathways to the wellbore.

This results in higher and higher API numbers (specific gravity; Bakken already has a very high specific gravity) from the production stream along with a higher gas ratio as these lighter hydrocarbon molecules are smallest and are able to make it to the wellbore.

So, if Liberty is showing early, positive results from their test AND word is starting to spread, the ramifications could simply be enormous.

This speculation goes far beyond mere EOR as having a better grasp of "non-Darcy low velocity oil flow: it will reverbrate around ALL shale regions and - indeed - across the globe.
When I received the note I replied to the reader that "Darcy" was a new term for me -- a term I had just seen earlier today: Darcy's Law at this post.

There is so much packed into that note.

I googled "Core Labs 10% matrix" but was unsuccessful finding the specific article the writer alluded to. However, I did find this article which seems to be addressing the same issue raised by the reader. It's an old article (2017) and we've discussed the issue before but what caught my eye was the abstract as it were, echoing exactly what the reader said:
North American shale reservoirs contain billions of barrels of oil but the industry’s average recovery factor is typically well below 10%, compared with an average 30% for conventional reservoirs. Efforts to improve recovery from unconventional reservoirs are well under way.
Again, the specifics of the reader's note and the specifics of the linked EOG article (2017) may not quite match but in general these are my takeaways:
  • both the reader and the operators are talking about the same problem
  • as early as 2017 (and probably a lot earlier), operators were starting to work the problem
  • now, two years later, it is possible we're starting to see some of those solutions working?
  • if so, as the reader states, once this starts to be well known, "it changes everything"
There is a bit of irony here. The next USGS estimate of the Bakken is due out any day now. Wouldn't it be a hoot if the USGS estimates were already out-of-date?

By the way, for newbies, that 10% recovery rate is not trivial. In the early days of the boom, the talk on the street was that the recovery rate in shale was only going to be 1 - 3%. I think some operators will argue they are recovering in excess of 10% but I haven't heard / seen any recent numbers regarding percent of primary recovery in the Bakken.

With regard to Liberty Resources testing EOR, google "Liberty Resources" Bakken test. Much of this has been previously posted but I had forgotten much of it, and all of a sudden things again seem to be moving quickly in the Bakken.

By this time next year, perhaps we'll be hearing more about this in earnings conference calls. 

Patting Myself On The Back -- Readers Should Ignore -- July 28, 2019

Often, in the course of Bakken events, I need to search for data previously posted on this blog. With about 3,000 posts/year x 10 years, there have been a lot of posts. In addition, to minimize clutter, I combine a lot of stories, a lot of data in one post.

I am always amazed at what has been posted at this blog over the past ten years (technically 12 years, but that's another story for another time).

My hunch is that no one enjoys this blog as much as I enjoy it and as much as I've enjoyed it.

Much more to come. Thank you for taking time to visit the blog.

Value Of The Bakken -- July 28, 2019

Disclaimer: I am inappropriately exuberant about the Bakken.

Disclaimer: I am doing this while watching an old movie on the Civil War on TCM.

Disclaimer: I often make simple arithmetic errors.

Disclaimer: there will be factual and typographical errors on this page.

Disclaimer: the blogger app has embedded cookies. Whatever that means.

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

Finally, the note. 

This seems pretty straightforward, though I do make simple arithmetic errors and don't completely understand royalties and mineral rights.

But let's see where this leads.

A reader sent me a note saying he/she had been offered $5,333.33 for his/her interest in mineral acres in the Bakken.

The facts (a reader writes): 
  • the reader has 16.67% base royalty in 1.0000 net mineral acre in the NW quadrant of section 16 in T155N-R100W
  • the reader is being offered $5,333.33 for that interest
  • this particular mineral unit is located in the "best Bakken"; having said that, there are even better areas in the Bakken)
Let's do the math.

First step:
  • the reader has a typical base royalty in this mineral acre: 16.67% or one-sixth (in fact, one-sixth is pretty good; in the "old days," mineral owners typically received one-eighth)
  • the buyer is offering $5,333.33 for that one-sixth interest in one net mineral acre
  • therefore, one net mineral acre would be valued at $32,000 (6 x $5,333.33) 
  • to repeat: one mineral acre in the best part of the Bakken is being valued at $32,000 
Second step:
  • one net mineral acre: $32,000
  • the standard drilling unit in the Bakken is 1280 acres
  • a standard 1280-acre drilling unit is valued at $40 million (rounded) ($32,000 x 1280 acres) 
Third step: 
  • Bakken light, sweet is currently trading for about $40/bbl
  • the number of bbls to yield $40 million = 1 million bbls
  • current EUR in the best Bakken: 1.5 million bbls / middle Bakken well  
Bottom line:
  • I will let readers sort this one out.

Sports, Literature, Politics -- Nothing About The Bakken -- Juy 28, 2019

If you came here for the Bakken, scroll down or go to the sidebar at the right.



Later, 2:21 p.m. CT: wow, it's going to be a shoot-out. After five holes, Brooks Koepka is -2 for the day while, Rory is even for the day. Brooks is now in the lead, after five holes, by one stroke. Rory is in second, one stroke behind. Then comes Jon Rahm one stroke behind Rory, and then three players behind Rahm. Mickelson? Throw out the six outliers, and Mickelson is dead last.

Original Post

PGA: should be a good finish to the FedEx St. Jude Invitational. Started with 63 players; one of the few tournaments with no "cuts." Everyone who was invited and played, will play all four days. A few probably wish they could have gone home early. Some snarky comments:
  • Jordan Spieth: looks more and more like a "flash in the pan"
  • Rory McIlroy: good for him; comes back from a very poor Open in Ireland last week to lead St Jude after three rounds; will pair with Brooks Koepka in final grouping
  • story line: this is going to be a tough one; Brooks Koepka is the FedEx leader and PGA/media star right now, but the media sort of likes Rory right now; it will be interesting to listen to the "play-by-play"; I think Rory has the early emotional sentiment
  • Tommy Fleetwood: wow, what a great scrambler; both in this tournament and last week's Open
  • Phil Mickelson (1): he plays 'em all; what a trooper; where's Tiger? not here
  • Phil Mickelson (2), after front nine, drops down four more places; if one throws out the five outliers in this tournament, Mickelson could finish tied for dead last 
Item: pretty funny -- the individual who ended dead last in this tournament at 17 strokes over par, scored a "hole-in-one" in the final round (LOL):



Later, 2:57 p.m. CT: Kyle Busch wins first stage. Logano, #2. 

Later, 2:25 p.m. CT: incredibly exciting start. Now to settle in for a long afternoon. I will miss most of the race. I am going over to Sophia's house to put a beer can chicken on the Weber.

Original Post 

NASCAR: Pocono, today at 2:00 p.m. Being televised on an obscure network. Squeezed in between the Tour de France and a PBA (bowling) "tournament" today. LOL. I'm surprised the NASCAR race wasn't pre-empted by the National Spelling Bee. This is simply uncalled for: at 2:30 p.m. ET, the Tour de France will move to NBC and NASCAR will move to NBC Sports Network.

The Literature Page

For James Joyce fans who have not read Kevin Birmingham's 2014 biography: a must-read.

Word for the day: gynocracy.

From The Most Dangerous Book: The Battle for James Joyce's Ulysses, p. 84:
"I think active America is getting fed up on gynocracy and that it's time for a male review." -- Ezra Pound to John Quinn in 1915.
There may be sliver of difference between gynocracy and gynecocracy but I prefer the former. From "standard" sources, "gynecocracy" is "another term for gynarchy," which rhymes with anarchy.

And, of course that leads us to androcracy. Or it leads us to "The Squad."

We will stop here.


The best comment I've heard so far today:
The only person who learned anything during Mueller's testimony to Congress was Robert Mueller. He learned what was in the report that he wrote. 

Lots Of Activity In The Clarks Creek Area -- July 28, 2019

A random update of the area around the Enerplus "Lizard" pad; several of these Enerplus wells are coming off the confidential list this next week:

Wells Coming Off Confidential List This Next Week WIth Initial Production Data -- July 28, 2019

34895, conf, Kraken, Pocasset LE 29-32 1H, Oliver:

DateOil RunsMCF Sold

34155, conf, Oasis, Aagvik 5298 14-26 13BX, Banks, the Aagvik wells are tracked here:

DateOil RunsMCF Sold

34035, conf, Petro Harvester Operating Company, LLC, FLX3 28-33 163-91 D, Portal:

DateOil RunsMCF Sold

34176, conf, CLR, Ravin 8-1H2,  Dimmick Lake, producing, albeit not much;

35273, conf, CLR Carson Peak 5-35H2, Oakdale, the Carson Peak wells are tracked here:

DateOil RunsMCF Sold

34582, conf, Enerplus, Komodo 151-94-17A-20H-TF, Antelope-Sanish, ERF's "Lizard" pad is tracked here:

DateOil RunsMCF Sold

34584, conf, Enerplus, Crocodile 151-94-17A-20H-TF, Antelope-Sanish, ERF's "Lizard" pad is tracked here:

DateOil RunsMCF Sold

34583, conf, Enerplus, Alligator 151-94-17A-20H, Antelope-Sanish, ERF's "Lizard" pad is tracked here:

DateOil RunsMCF Sold

32950, conf, BR, State Dodge 2A, Dimmick Lake, producing, albeit not much;

Wells Coming Off The Confidential List This Next Week -- July 28, 2019

Monday, August 5 2019: 8 for the month; 57 for the quarter;
35982, conf, Sinclair, Uran 7-15H, 
34939, conf, Hess, EN-Kulczyk-154-94-2029H-12,
34895, conf, Kraken, Pocasset LE 29-32 1H,

Sunday, August 4, 2019: 5 for the month; 54 for the quarter;

Saturday, August 3, 2019: 5 for the month; 54 for the quarter;
34940, conf, Hess, EN-Kulczyk-154-94-2029H-2,
34155, conf, Oasis, Aagvik 5298 14-26 13BX,
34035, conf, Petro Harvester Operating Company, LLC, FLX3 28-33 163-91 D,

Friday, August 2, 2019: 2 for the month; 51 for the quarter;

Thursday, August 1, 2019: 2 for the month; 51 for the quarter;
34941, conf, Hess, EN-Kulczyk-154-94-2029H-2,
34176, conf, CLR, Ravin 8-1H2,

Wednesday, July 31, 2019: 49 for the month; 49 for the quarter;
35273, conf, CLR Carson Peak 5-35H2,
34582, conf, Enerplus, Komodo 151-94-17A-20H-TF,
31470, conf, Sinclair, Uran 6-15TFH,

Tuesday, July 30, 2019: 46 for the month; 46 for the quarter;
34584, conf, Enerplus, Crocodile 151-94-17A-20H-TF
34583, conf, Enerplus, Alligator 151-94-17A-20H, 
32950, conf, BR, State Dodge 2A TFS,

Monday, July 29, 2019: 43 for the month; 43 for the quarter;

Sunday, July 28, 2019; 43 for the month; 43 for the quarter;

Saturday, July 27, 2019: 43 for the month; 43 for the quarter;

Friday, July 26, 2019: 43 for the month; 43 for the quarter;