OPEC basket: $22.83.
MDU: maintains its dividend payout.
California Resources: in talks for $600 million bankruptcy loan?
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Back to the Bakken
Active rigs:
| $25.65 | 5/13/2020 | 05/13/2019 | 05/13/2018 | 05/13/2017 | 05/13/2016 |
|---|---|---|---|---|---|
| Active Rigs | 16 | 64 | 60 | 51 | 27 |
Four new permits, #37571 - #37574, inclusive --
- Operators: Kraken (3); CLR
- Fields: Oliver (Williams); Rattlesnake Point (Dunn)
Comments: - Kraken has permits for a 3-well Raymond/Fairbanks pad in NENE 29-157-98, Oliver oil field;
- CLR has a permit for another Cuskelly well in NWNE section 07-146-96, Rattlesnake Point oil field;
It's possible this is what the permit renewal section should be:
- XTO (2): two Hartel permits in McKenzie County;
- Lime Rock Resources (2): two Robert Sadowsky permits, Dunn County; both of these permits were to expire May 4, 2020, based on letter dated April 6, 2020, from the NDIC in the file report; both scout tickets show the permits to be PNC as of May 9, 2020, but the wells' status are listed as loc.
- 32383, SI/A, CLR, Bohmbach Federal 9-26H1, Elm Tree, t--; cum --;
- 33797, SI/A, CLR, Antelope Federal 13-23H1, Elm Tree, t--; cum --;
- 32388, SI/A, CLR, Antelope Federal 12-34H, Elm Treek, t--; cum --;
- 36949, conf, Whiting, Arndt 11-24XH, Sanish,
So much for competing with the Saudis. If we stay in the 20s, rigs could drop to zero.
ReplyDeleteAgree 1,000%. The active rig count in North Dakota could go to zero. In fact, I have a post in draft that suggests just that as one of three likely outcomes of the current "Meltdown_2020."
DeleteI think there is an argument that could be made to drop rigs to zero in North Dakota but I will leave that for another day.
The interesting thing is that some folks have this exactly backwards. It was a huge mistake by the Saudis to try to destroy US shale; in fact, it is obvious they cannot compete with US shale. Already, MbS has said Saudi Arabia will cut production. The House of Saud is in deep, deep trouble.
The news coming out of Saudi, for the Saudis, is dire.
I don't know what the hand-wringing is all about. No one ever predicted this glut of oil --for decades, beginning in the 1960s, we were told that we would "soon" run out of oil -- Hubbert's Peak Oil theory comes to mind. That was brought home during the 70s with the OPEC embargo. I truly thought we would "run" out of oil and life would never be the same. It was my "coming of age" years and the "Saudi-manufactured" oil crisis / gasoline shortage / rationing had a great affect on me. I was truly worried that my grandchildren would never have the opportunity to drive a muscle car.
Now, due to the Bakken revolution and US shale it is obvious we will hit peak demand before we hit peak supply. In short, we will never, never, never run out of inexpensive, accessible, reliable energy again -- but it will be made up of "all the above": fossil fuel; renewable energy; etc.
So, we'll see. This is fascinating to watch. If this is one big re-set and oil now stays in the $20-range for the next twenty years -- wow, the overall impact will be positively incredible. There will be tectonic shifts in some industries but overall it's going to be incredible.
Imagine a world in which oil remains in the mid-$20s for the next several decades.
Saudis are dithering back and forth with being a monopolist. They could do 20 MM bopd if they wanted, and for decades. But prices would be $10. They know it is smarter to restrict production and raise price. But they hate how people take their market share.
ReplyDeleteSaudis have to pick the lesser of two evils. It's like if you had a choice between eating really hot pizza and burning the roof of your mouth and your throat. Or gettin a fork stuck in your eye. Neither one is great. But I'd take the pizza burning.
There is no peak oil (yet). There was a decline in freely competed oil, which allowed the Saudis and key OPEC allies to collude to raise prices. But then shale kind of screwed that up. But still. Shale only got us from ~100 sustained to approximately 50 sustained. It doesn't have the power to drive prices down to the 20s as we saw in most of the 90s and 00s.
Takes OPEC volumes to drive sustained prices down into the 20s. And they are not that stupid. This is why the strip shows prices gradually recovering over the next several years. (And why pre COVID, strip was in mid 50s, that's equilibrium. Maybe a little less or more, but about 50. Not Hamm's desired 80+, not my desired 20-.)
See: https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html
A lot of of issues raised in that comment. The only one I disagree with is: "[OPEC] is not that stupid." LOL.
DeleteIt will be interesting to see where the "sweet spot" settles. Some years ago I suggested $50-WTI (at that time, in current dollars) was the sweet spot for all involved: US producers and US consumers.
It appears that we won't see $50-WTI any time soon, and Saudi can't survive on $50-Brent or $50-OPEC basket, much less $40 and much, much less on the current $25.
But what an incredible windfall for US consumers.
As a consumer, I would prefer as cheap as possible. Like natural gas. Like computing power.
ReplyDeleteAs with farm price supports, I disagree with propping prices up. Let the producers compete dog eat dog. That is the very definition of free markets.
Recommendation: become a lobbyist. Go to Washington, DC, and lobby Congress to drop farm price supports. Good luck. Let me know how that works out.
DeleteAs long as you are at it, work on the minimum wage laws, also. Let workers compete for jobs, dog eat dog. And, as long as you are at it, get Congress to repeal child labor laws.
Thanks for your work in getting the data on ARMCO oil cost. So from what I see the cost is about $23 per barrel. Probability similar costs for other Arab producers. So at this price there is little or no cash available for the governments to support their country.
ReplyDeleteOn the shut-in wells in the Bakken, not so bad for the wells from what I see from the data that you have provided, increased production after months of shut in. From what I see is that in some cases some oil companies have done partial shut ins, selling oil under contract, not selling on spot marked. With reduced production it should lower the cost of moving oil by pipeline due to less volume of oil produced.
Your thoughts?
I can't disagree with your thoughts; seems spot on.
DeleteRight now: shale operators are in survival mode. We're going to see some interesting strategies by US oil companies: that which does not kill them, will make them stronger. That's what Saudi fears; if US shale is not broken by the end of the year, US shale operators could come out of this even stronger than they were a year ago;
Shale operators, I assume are biding their time, working with their bankers.
More than that, I won't hazard a guess; there are way too many moving parts.
There are so many ways to look at this:
Bakken compared to the Permian;
shale compared to conventional;
OPEC and the Mideast, in general;
If the Bakken, Permian, and US shale is "interesting" to watch, then it's going to be absolutely "fascinating" to watch the Mideast. Unless MbS sees something the rest of us are missing, I think his kingdom (and the House of Saud) is in deep, deep trouble.
I think September, 2020, is the month to watch, and, of course, the months leading up to September.
If OPEC basket doesn't trend significantly upward by end of September, 2020, something will have to give. I have no idea what that will be but it's way too quiet in the Mideast. The Arabs say they have a long, long time horizon, but no positive cash flow for six months will be a bit hard to swallow.
Good, bad, or indifferent, US shale operators will have to get back into the game if WTI hits $30 and then "we" are right back where we started.
Why September, 2020?
unless the US federal government wants to deal with a great depression, we better be past or getting past COVID-19;
school starts in September; the work force in the Bakken and the Permian will stick it out (even if unemployed) until August/September to see if they have work; if it appears the Bakken is going to be "down" after September, the work force will move "back home"; if the unemployed work force remains in place, the shale plays can start back up very, very quickly;
that will be the end of the third quarter;
September: another month or so and general election;
But it's hard for me to focus on the Bakken at this point, when I think the big, big story is Saudi Arabia -- what happens six months from now, when things for them probably won't look any better?
OIL (WTI) Commodity
ReplyDelete29.53
1.82 (6.57%)
It is Friday, a nice price trend is developing.
The big question will be how large will the over correction be?
The gas use is in the 7.2 range now Which is only about 2.2 away from normal driving use. SPR will cause draw sooner than expected.
Changes to boost economy, Low gas prices
Trillions of money in peoples hands. (not banks)
Talk and future execution of tax cuts (more money)
Infrastructure Bill, (American Products used)
Low interest rates (housing explosion)
Lower interest rates (trump a few time has suggest 0
or even less.
Executive order to reduce immigration (For work status)
North american trade agreement starts in June.
Talk of incentive's to bring manufacturing back (middle
class victory)
Brian.
Agree completely. Investors with a long time horizon will do very, very well. It certainly seems 2021 could be an incredibly good year. I might have to do another "Sixteen Reasons...."
Deletehttps://themilliondollarway.blogspot.com/2018/02/futures-mean-squat-but-february-26-2018.html.
Delete