The Million Dollar Way (The Bakken Oil Blog): 08/29/19

Thursday, August 29, 2019

$325,000 Per Day -- But Fails -- August 29, 2019

Halo Effect -- Bakken Style -- August 29, 2018

Reporting today:

34789, 3,051, WPX, Sweet Grass Woman 22-15HD, Spotted Horn, t7/19; cum --; (#22629 -- still too early to tell, #29445 -- huge jump in production, #34646)

Four Sweet Grass Woman wells fracked; completed; reporting.

A neighboring well:

29445, 2,441, WPX, Emma Owner 23-14HB, Spotted Horn, t3/16; cum 518K 6/19; the Emma Owner wells are tracked here; recent production --

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	6-2019	30	10816	10596	8840	15031	13406	0
BAKKEN	5-2019	31	12016	12028	9513	16246	13778	700
BAKKEN	4-2019	30	12848	12942	10308	17371	14603	926
BAKKEN	3-2019	31	14060	13995	11805	19009	14571	2452
BAKKEN	2-2019	28	11256	11321	11265	15219	11722	1862
BAKKEN	1-2019	23	9132	9036	10881	12347	3815	7125
BAKKEN	12-2018	31	18159	18187	29445	24550	6586	15551
BAKKEN	11-2018	4	1798	1727	2245	2431	1206	726
BAKKEN	10-2018	17	3045	3089	2000	4116	1886	1513
BAKKEN	9-2018	13	2009	2039	1163	2717	1562	604
BAKKEN	8-2018	31	5000	4939	2380	6760	3984	1789
BAKKEN	7-2018	31	5393	5441	2053	7292	4505	1738

Appalachian Trail -- 2,200-Mile Barrier To Pipelines -- Industry -- August 29, 2019

Link here.

Environmental groups weighed in against US Supreme Court action to free up the 600-mile, 1.5 Bcf/d Atlantic Coast Pipeline, countering assertions that an appeals court ruling left unchecked could have widespread implications for eastern US energy projects.

The natural gas project, intended to move Appalachian gas to Mid-Atlantic markets, has faced a series of legal setbacks, including a 4th US Circuit Court of Appeals decision that struck federal authorizations allowing the pipeline to cross the Appalachian National Scenic Trail and national forests.

Dominion Energy and the US Department of Justice in June asked the Supreme Court take up the case, challenging the part of the ruling that found the US Forest Service lacked authority under the Mineral Leasing Act to grant the right of way to cross the trail because the land is under exclusive authority of the National Park Service.

If the case gets to the US Supreme Court, any guesses on how RBG will vote?

Colorado Oil And Gas Industry -- Unaffected By Politics -- Governor -- August 29, 2019

Five pinocchios.

Link here.

"Regulations have no effect on gas and oil industry in Colorado. It all has to do with supply and demand." -- Governor Jared Polis, Colorado.

SRC got out of Dodge just in time.

SoCal NatGas Injections At Risk -- Platts -- August 29, 2019

The graph is a bit hard to read at this link but it appears to be a bit more interesting than usual.

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Cognitive Dissonance

Being reported once again:

major genetic link to same sex behavior, but no "gay" gene
comment: most likely polygenetic morphism, like most other conditions

Four New Permits; A WPX Well With Huge Halo Effect -- August 29, 2019

Active rigs:

$56.52	8/29/2019	08/29/2018	08/29/2017	08/29/2016	08/29/2015
Active Rigs	63	61	53	30	76

Four new permits, #36924 - #36927, inclusive

Operators: Oasis (3); MRO
Fields: Baker (McKenzie); Antelope (McKenzie)
Comments:

Oasis has permits for a 3-well Dahl pad in Baker oil field, section 153-101-11;
MRO has a permit for a Weasel USA well in Antelope oil field, section 152-94-34

Seven permits renewed:

Slawson (4): two Vixen Federal permits, one Phoenix permit and one Jugard permit, all in Mountrail County
Whiting (3): two Koppinger permits and a Cymaluk Federal permit, all in Stark County

Twenty-one (21) permits canceled: correction to 8/24/2019 report:

QEP (15): fifteen permits in McKenzie and Dunn counties
Kraken Development III (5): five permits in Mountrail County
EOG: one Austin permit in Mountrail County

Four producing wells (DUCs) reported as completed:

34789, 3,051, WPX, Sweet Grass Woman 22-15HD, Spotted Horn, t7/19; cum --; (#22629 -- still too early to tell, #29445 -- huge jump in production, #34646)
34791, 3,114, WPX, Sweet Grass Woman 22-15HC, Spotted Horn, t7/19; cum --;
34792, 2,830, WPX, Sweet Grass Woman 22-15HY, Spotted Horn, t7/19; cum --;
34790, 2,578, WPX, Sweet Grass Woman 22-15HZ, Spotted Horn, t7/19; cum --;

Chicago Update -- Doomsday Re-Visited -- August 29, 2019

It's been awhile since there were any updates regarding "cities in trouble."

The most recent update, dated July 2, 2019. The city: Chicago.

Today: "Chicago mayor faces huge budget shortfall." Data points:

deficit / budget gap for 2020: $1 billion
nation's third largest city: annual budget of $10 billion
servicing debt costs: $2 billion
Chicago: largest net pension liability of any major US city: $40 billion
the estimate had been ... $30 billion
complaint: "wealthiest residents, wealthiest corporations need to pay their fair share."

Tea leaves: they will vote with their feet.

By the way, that $40 billion pension liability. That's not the complete story. From the zerohedge link:

Chicago has four city-run pension funds that collectively face a $42 billion shortfall. The Chicago Public Schools’ pension fund is short another $24 billion.

In all, there’s a $70 billion shortfall in the city-based funds alone.

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Dinosaur Notes

(in progress)

The Rise and Fall of Dinosaurs: A New History of a Lost World, Steve Brusatte, c. 2018.

Permian-Triassic extinction: world's most severe known extinction event, 252 million years ago. A bit of irony:

the frogs survived that extinction event, and are now facing another extinction event

Comment: reptiles and amphibians had fifteen minutes of fame.

The therapsids.

From wiki:

The Gorgonopsia ("Gorgon faces") are an extinct suborder of theriodonts. Like other therapsids, gorgonopsians were at one time called "mammal-like reptiles" in classical systematics; the term stem mammals or proto-mammals is currently preferred.

End of the Permian: just before the age of dinosaurs -- 252 million years ago

end of the Permian, top of the food chain:

slimy salamanders bigger than dogs
pareiasaurs: stocky beasts; four-feet; knobby skin, front-heavy build, generally brutish appearance; appearance of "mad reptilian offensive linemen
dicynodonts: rummaged around in muck like pigs; sharp tusks to pry up roots
gorgonopsians: bear-size monsters -- top of the food chain, eating pareiasaurs and dicynodonts
just before the dinosaurs

Early Mesozoic (Triassic, Jurassic, Cretaceous): age of dinosaurs -- 252 million years ago

Update On Alabama's Hartselle Sandstone -- August 29, 2019

From August 10, 2013, the Hartselle Sandstone, and then nothing since.

From 2016, this should load as a pdf (previously posted, but being re-posted as a reminder):

http://www.searchanddiscovery.com/documents/2016/51285hooks/ndx_hooks.pdf

Data points:

an abstract from "Search and Discovery Article #51285 (2016)
presented at AAPG annual convention, Calgary, Alberta, CA, June 19 -22, 2016
Mississippian age Hartselle Sandstone of northwestern Alabama
estimates:

7.5 billion bbls of bitumen (think western Canadian sands heavy oil)
roughly 350 million bbls within 50 feet of the surface

no commercial development has occurred as of yet
Alabama Oil Sands Program (AOSP) established
apparently still testing outcrops
the graphic at the linked article suggests AOS about one-third the geographic footprint of Alberta's Athabasca
Alberta's oil sands: 174 billion bbls of bitumen
Alabama: 7.5 billion bbls
comparable to early estimates of the Bakken

Tea leaves suggest exploiting the oil sands in Alabama won't happen any time soon.

How Fast Things Can Change -- August 29, 2019

SRE came under some pressure earlier this month when Mexico's AMLO started messing around with LNG pipeline contracts. It was a fascinating story to watch. Apparently one of the Mexican subsidiaries surged 7% when the issue was resolved. IEnova or something like that.

So, I was curious. How has SRE been doing?

Reminder: I haven't looked at the market in several weeks. I won't look at the market when it's this volatile. I only check my cash position. If my cash position has built up enough to warrant accumulating shares in some company, I then check that specific company. At all costs, I try to avoid looking at the market in general when things are this "crazy." I checked gold and silver yesterday because someone at Starbucks mentioned that both had appreciated; I was curious, but didn't do anything with either.

Back to SRE:

$142/share -- today -- just shy of an all-time high ($142.66 today's high vs 52-week high of $142.86)
P/E: 20
dividend: $3.87 (almost 3%) -- better than a 30-year US Treasury
August 5, 2019: $132/share
10/132 = 7.5%
1.07576 x 132 = 142 -- yup, checks
sort of similar to IEnova or something like that

I think this company lives and dies by:

LNG
Mexico
AMLO
California fires
California whimsies

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

From Morningstar, August 21, 2019:

We think NextEra Energy (NEE), Sempra Energy (SRE), and American Water Works (AWK) have the highest dividend growth potential, driven by strong capital growth opportunities and relatively low payout ratios.

We forecast Southern (SO) and Dominion Energy (D) will be dividend growth laggards, constrained by high payout ratios and capital investment needs.

Finally, PPL’s (PPL) struggles in the United Kingdom will probably result in no dividend growth and could lead to a dividend cut after the RIIO-ED2 regulatory outcome.

First CLR LCU Well Is Being Drilled -- August 29, 2019

A reader noted that CLR has started drilling the first Long Creek Unit well. The wells are tracked here. In addition to that first LCU oil well being drilled, a salt-water disposal well is also being drilled.

My Cup Is Half Full; For Some, The Cup Is Half Empty; For Many, The Cup Is Unchanged -- August 29, 2019

At least for most of us, in America, we have a cup.

Cognitive dissonance, whatever fits the journalist's worldview:

This is the one I like, but others may disagree. That's fine. Link here.

One month ago: consumer confidence surges to near-18-year high even as Fed gets ready to cut rates.

Today's jobless report, pending:

prior: 209K
revised: 211K
consensus: 213K
actual: 215K

I used to track the "magic numbers," but the data became somewhat meaningless after the mainstream media and administration economists kept changing the goalposts. The definition changes were most egregious during the "great recession." But the magic numbers before I quit posting them:

The Magic Numbers (changed with the Trump administration -- see earlier pages at the link for previous "magic numbers")

First time claims, unemployment benefits: > 250,000: economic stagnation

New jobs: < 150,000 new jobs: economic stagnation

Economists estimate the labor market needs to create about 125,000 jobs a month to keep the unemployment rate steady, though estimates vary -- Reuters.

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Word For The Day: Palaver

From the annotated Wuthering Heights, c. 2014, edited by Janet Gezari.

"Palaver": unnecessary or idle talk. English sailors learned the word from Portuguese traders on the west coast of Africa, who used the word to denote their conversations with the natives. It passed from nautical slang into colloquial use in the 18th century (1700s).

Notes From All Over, Part 1 -- August 29, 2019

Wow, it already feels like Friday.

But we will press on.

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Ethanol

EIA: US ethanol plant nameplate capacity up in 2019. Link here. Data points:

US with about 200 operational ethanol plants
spread across the US
increase in capacity year-over-year was 326 million gallons (per year)
16.542 billion gallons in 2018
16.868 billion gallons in 2018
percent increase, year-over-year: 2%

US gasoline demand, year-over--year. Link here.

this year four-week average, 08/23/19: 9.777 million bbls/day
last year (2018) four-week average, 08/24/18: 9.553 million bbls/day
year-over-year increase: 2%

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Japanese Beef

A reminder for me. Wagyu beef was on the menu at local restaurant we visited yesterday; I keep forgetting "definition" of wagyu. From wiki:

Wagyu is any of the four Japanese breeds of beef cattle. In several areas of Japan, wagyu beef is shipped carrying area names. Some examples are Matsusaka beef, Kobe beef, Yonezawa beef, Mishima beef, Ōmi beef, and Sanda beef.

In recent years, wagyu beef has increased in fat percentage due to decrease in grazing and an increase in using feed, resulting in larger, fattier cattle.

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Recession Fears

Overblown. The Wall Street Journal.

The yield curve is upside down, leading to worry about recession. Stocks declined last week after the 10-year Treasury yield fell below the two-year Treasury yield. Yet while an inversion of the yield curve has preceded all postwar recessions, not all inversions signal imminent recession. The curve was flat for most of the 1990s, and even inverted briefly in 1998, without a recession. Today, given the economy’s underlying strength, fears of immediate recession are overblown.

U.S. gross domestic product grew 2.1% in the second quarter, and the Atlanta Federal Reserve forecasts 2.2% annualized third-quarter growth. The generally accepted definition of a recession is two consecutive quarters of negative GDP growth. GDP consists of four components: consumption, government spending, net exports and business investment.

It should be noted that the mainstream media has a new definition of recession: GDP trending to less than whatever "they" want the GDP to be. Their definition of "recession" does not need to be:

rigorous
accurate
based on generally accepted criteria
based on negative GDP growth
based on any period greater than a day

I posted this mostly to note the generally accepted definition because one knows that will change over the next 24 months.

On another note, like the states, my hunch is that there will be winners and losers in the global economy.

Reminds me of the joke about two hikers in the wood confronted by an angry bear.

A few "facts" from the linked article:

Consumption looks strong.

Through July, retail sales have increased this year, consumer confidence has rebounded, and productivity—output per hour worked—has experienced some of the largest increases in decades.

When a recession occurs, weekly unemployment claims are first to tick up. They aren’t rising, and there are more openings than unemployed people. Given this labor-market strength, an increase in consumer spending—which accounted for 68% of GDP in 2018—is far likelier than a decrease.

Government spending accounted for 18% of GDP in 2018 and grew 3% during the first half of 2019 amid growing deficits. Net exports reduced last year’s GDP by 3.3%, down to 3.1% so far this year.

Today's jobless report, pending:

prior: 209K
revised: 211K
consensus: 213K
actual: 215K

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Closing The Loop

A reader recently pointed out, with regard to oil and gas permits in North Dakota:

permits > spuds (brilliant)
PNC (canceled permits significantly greater than 1%): accurate
permits: cheap and easy (tells me all I need to know about the source). Permits are neither "cheap" nor "easy." I assume the cost to prepare a greenfield oil and gas permit application runs into the hundreds of thousands of dollars. I wouldn't even know where to begin if I were tasked with preparing a permit.

New Mexico On Pace For Record $8 Billion Revenue -- Oil -- Source -- August 29, 2019

Updates

December 20, 2020: The New Mexico Public Regulation Commission on December 16, 2020, denied a request by El Paso Electric Co. to build a 228-MW natural gas-fired plant because it will not meet the state’s 2045 net-zero goal, even though the company has already started construction on the facility.

December 19, 2020: New Mexico will limit / ban freshwater for fracking. Developing.

Original Post: August 29, 2019

Link here to Las Cruces Sun News.

New Mexico is now on track to collect an unprecedented $7.8 billion in the budget year thanks to skyrocketing oil production, according to a new legislative revenue tracking report.

The report says total state revenue collections were roughly $273 million above projected levels through April largely because of oil production in southeastern New Mexico, the Albuquerque Journal reports.

The higher-than-expected revenue surge for the budget year that ended June 30 could allow for additional spending increases on public schools, roads, pension funds and other programs.

Based on more recent reports about faux environmentalists getting ready to stifle New Mexico's oil industry it will be interesting to see the follow-up to this story three years from now.

Colorado: No Legacy Fund Like That Of North Dakota -- August 29, 2019

From The Denver Post.

Nice to see North Dakota getting the exposure it is getting regarding the Legacy Fund.

In 2010, voters in North Dakota approved the creation of a state-administered fund that would collect hundreds of millions of dollars a year in severance taxes generated by the oil and gas boom ...

As production in the Bakken Formation raced upward from 112 million barrels in 2010 to nearly half a billion barrels last year, the severance taxes feeding the North Dakota Legacy Fund have swelled its balance to $6.2 billion. The fund last year generated $225 million in earnings and interest ...

The trust fund’s balance is expected to more than double over the next decade — to nearly $15 billion ...

Three years before voters in North Dakota went to the polls, a committee of 11 Colorado state lawmakers convened to take a look at how severance taxes were allocated in the Centennial State. After a half dozen meetings and a couple of field trips to mineral-rich Rio Blanco and Garfield counties, the group came to the conclusion that it would behoove Colorado to create a permanent trust fund “as a resource in the future when the mineral extraction industry declines.”

“Interest from a trust fund could also be used to provide additional resources for higher education to educate the state’s workforce,” the committee wrote in its 2007 report.

Fast forward to 2019 … and Colorado still has no permanent trust fund.

No Wells Come Off The Confidential List For The Next Three Days -- August 29, 2019

Keep America safe: the Trump wall. Lots of contracts. Lots of progress.

Keeping America great:

North America will account for approximately 73 percent of growth in new-build liquefaction capacity in the global liquefied natural gas (LNG) industry through 2023, according to a new report from the data and analytics firm GlobalData.

“North America is expected to add 26 new-build LNG liquefaction terminals during the outlook period,” GlobalData Oil and Gas Analyst Soorya Tejomoortula said in a written statement emailed to Rigzone.

North America’s largest new-build liquefaction terminal will be NextDecade Corp.’s 27-mtpa Rio Grande LNG project near Brownsville, Texas. The facility, set to begin operations four years from now, will produce LNG from low-cost natural gas from the Permian Basin and Eagle Ford Shale.

Old news, or new?

BP exits Alaska. Jeffery Hildebrand picks up the pieces. Link here.

IPO: may be heading for Asia. Link here.

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Back to the Bakken

No wells come off the confidential list today -- there was no February 29, 2019.

Wells come off the confidential list after exactly six months, based on "calendar date", not 180 days. August 29 - 31, inclusive, "follows" February 29 - 31, inclusive, none of which occurred this year.