Notes From All Over, Early Evening Edition -- March 31, 2020

Can you say "US Supreme Court"?

Texas Wuhan flu: the governor extends "sanctions." Interestingly, auto traffic at rush hour seems a bit busier than last week. I guess more folks are finding that their job is essential. Essential to keep them from going nuts at home. The city isn't making it any easier, closing city parks. I don't think the governor said anything about closing down parks. Whatever. Now we'll have five-year-olds on bikes on city streets. Whatever.

Most irritating: companies telling me "they are here to help" when they are closed and under-staffed. Whatever.

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Saudi Arabia In Deep Doo Doo

Saudi has two sources of income: oil and tourism.

Let's correct that: Saudi had two sources of income: oil and tourism. 

OIL: from a SeekingAlpha contributor. Some nice data points. I will archive this article. SA articles generally end up behind a paywall. From the article:

From the time period of 2014 to 2016, Saudi Arabia attempted to crush the U.S. shale industry, believing the shale industry couldn't produce oil at a breakeven basis for less than approximately $70 per barrel. They were completely wrong in that assessment, as we all know.

In 2014 Saudi Arabia had foreign reserves of $737 billion. In 2015 they had to spend a minimum of $250 billion of its foreign reserves, reserves they say that are lost forever.

It also went from a budget surplus to a record deficit in 2015 (at that time) of $98 billion. The majority of projections have Saudi Arabia with budget deficits through up to 2028.

With breakeven Brent of $84 per barrel, those projections would probably extend further if the country decides to attempt to drive the competition out of the market with more production and lower prices.

The IEA states that OPEC, from 2014-2016, lost about $450 billion in oil revenue as a result of low prices. To return to those levels or worse, at a time they're still trying to figure out how to bolster their foreign reserves and budgets, is unwise to say the least.

It's going to get even more tense amongst OPEC members when they come under enormous stress as a consequence of Saudi Arabia boosting oil production (including tapping oil reserves from storage) and exports.

TOURISM: this has previously been noted, albeit in passing, on the blog. From aljazeera:

Saudi Arabia has asked Muslims to wait until there is more clarity about the coronavirus pandemic before planning to attend the annual Hajj pilgrimage, the Minister for Hajj and Umrah said on state TV on Tuesday, March 31, 2020.

Earlier this month, Saudi Arabia suspended the year-round Umrah pilgrimage over fears of the new coronavirus spreading to Islam's holiest cities, an unprecedented move that raised uncertainty over the annual Hajj. 

Both were huge revenue sources for the government.

BR With Five New Permits In Elidah Oil Field -- March 31, 2020

Active rigs:

$20.48	3/31/2020	03/31/2019	03/31/2018	03/31/2017	03/31/2016
Active Rigs	43	66	60	49	30

 Six new permits, #37479 - #37484, inclusive:

• Operators: BR (5); Sinclair
• Field: Elidah (McKenzie); Lone Butte (McKenzie)
• Comments:
• BR has permits for a 5-well F Jorgenson pad in SESW section 11-151-97, Elidah oil field;
•  Sinclair has a permit for a Saetz Federal permit in NWSW 36-147-98, Lone Butte oil field;

One producing well (a DUC) reported as completed:

• 35697, drl, Oasis, Joplin 5397 42-32 9B, Eagle Nest, t--; cum --;

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BR

It's hard to believe that these are the first Bakken permits for BR this calendar year (as far as I can tell).

Producing wells sited in that same section:

• 18983, 494, CLR, Rolfsrud 1-11H, 24 stages; 2.5 million lbs; sand and ceramic; Elidah, t10/10; cum 323K 2/20; 
• 27561, 960, CLR, Rolfsrud 3-11H1, Elidah, t7/14; cum 162K 2/20;
• 27562, 993, CLR, Rolfsrud 2-11H, Elidah, t7/14; cum 215K 2/20; 

The section line well to the west:

• 27820, 1,392, BR, Rolfsrud Bull 44-10MBHULW, t10/14; cum 218K 10/19; off line as of 11/19;

Lowest I've Seen So Far 95 Cents/Gallon -- March 31, 2020

Way cheaper than milk. Competes with bottled water on price.

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Daily Local Grocery Story Visit

Wuhan flu, north Texas, DFW-area: I stopped by our local grocery story quite late in the afternoon. The parking lot was quite empty and not much foot traffic noted in the store. As well stocked as I've seen it with at least "everything" adequate, with a couple of exceptions. Still no paper products: toilet paper and paper towels. Plenty of whole wheat/honey wheat bread but no "white" bread (except in the bakery section. I've never seen so many eggs. Refrigerated dairy seems adequate.

On another note, the city seems to have closed down the local park. They've closed the parking lots. One can still enter the park to ride bicycles, job, walk dogs, but it sure looks like there will be a sign up tomorrow saying the park is closed.

Thinking Like A Wartime President -- March 31, 2020

Thinking like a wartime president.

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The Paleontology Page

Today's review of paleontology was the transition from fish to mammal-like reptiles, which for the most part:

• tectonic plates;
• Vaalbara
• Rodinia
• Gondwana in the southern hemisphere
• Pangaea
• evolution of amphibians
• the Triassic extinction (fourth in severity of the five major extinction episodes)
• also called the Triassic-Jurassic extinction; global; 76% of all marine and terrestrial species about 20% of all taxonomic families; 
• believed to be the key moment that allowed the dinosaurs to become the dominant land animals on earth
• the Permian-Triassic extinction (the "mother of all extinctions);
• 96% of all marine species and 70% of all terrestrial vertebrate species becoming extinct; even insects took a big hit; the only one in their (insect) history;
• the "Noah" of the survivors of the Permian-Triassic extinction? a pig-like herbivore, genus Lystrosaurus

From A Jack To A King -- Wow, The Bakken Never Quits -- March 31, 2020

From a jack to a king. LOL.

From a Jack to a King, Ned Miller
Elvis' version here.

It's hard to believe I missed this one. I don't think I've posted this one before but it's possible. Nope, I don't think so.

Jump in production from 2,000 bbls/month to 16,497 bbls/month; no re-frack according to FracFocus or NDIC file report.

The well:

• 22617, 448, CLR, Sorenson 1-21AH, 30 stages; 2.8 million lbs, Alkali Creek, t2/13; cum 343K 2/20;

The CLR Sorenson wells are tracked here.

A reader comments on this well. 

Graphics: also at the Sorenson link above --

Recent production:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	2-2020	29	4807	4639	4303	10505	10054	70
BAKKEN	1-2020	30	5610	5881	5170	10790	10199	200
BAKKEN	12-2019	30	8957	8748	7803	12961	10484	2087
BAKKEN	11-2019	30	13843	13691	11727	22121	10469	11256
BAKKEN	10-2019	23	9004	9390	7757	13695	3416	9994
BAKKEN	9-2019	30	14137	14169	13728	21180	1238	19537
BAKKEN	8-2019	31	15074	15068	14915	22636	3357	18860
BAKKEN	7-2019	31	14404	14436	13814	19228	806	18009
BAKKEN	6-2019	30	14552	14651	15758	16402	1313	14685
BAKKEN	5-2019	31	16497	15923	13543	18057	6233	11405
BAKKEN	4-2019	6	1256	1276	496	54	0	0
BAKKEN	3-2019	0	0	0	0	0	0	0
BAKKEN	2-2019	0	0	0	0	0	0	0
BAKKEN	1-2019	16	897	945	336	1987	1771	0
BAKKEN	12-2018	31	1886	1966	778	3961	3234	310
BAKKEN	11-2018	30	1811	1812	696	3473	2927	141
BAKKEN	10-2018	31	1930	1882	793	3673	2664	590

Random Look At The "Halo" Effect In The Bakken -- March 31, 2020

Four huge Kraken wells were fracked/stimulate/tested on/about July, 2020. These four wells "cut right across" an old Kraken well, almost perfectly perpendicularly. Note the "halo" effect on the old Kraken well, #22563. This old well, by the way, is an incredibly short horizontal, coming in at only 14,626 feet TD..

The wells:

• 36010, 860, Kraken, Bigfoot 23-11 LW 1H, Sanish, t7/19; cum 206K 1/20; a 46K month;
• 36011, 902, Kraken, Bigfoot 23-11 2TFH, Sanish, t7/19; cum 170K 1/20; a 31K month;
• 36012, 1,748, Kraken, Bigfoot 23-11 3H, Sanish, t7/19; cum 254K 1/20; a 54K month;
• 36013, 1,564, Kraken, Bigfoot 23-11 4TFH, Sanish, t7/19; cum 224K 1/20; a 41K month;

The old well:

• 22563, 704, Kraken, Hukkanen 11-23H, Sanish, t6/12; cum 168K 1/20;

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2020	29	2578	2667	2348	3039	1710	1100
BAKKEN	12-2019	30	3152	3476	3125	3716	69	3404
BAKKEN	11-2019	30	3622	3477	3371	4270	450	3613
BAKKEN	10-2019	31	3915	4296	3780	4745	87	4441
BAKKEN	9-2019	14	1466	669	1273	1777	0	1705
BAKKEN	8-2019	1	162	237	0	196	0	196
BAKKEN	7-2019	0	0	0	0	0	0	0
BAKKEN	6-2019	0	0	0	0	0	0	0
BAKKEN	5-2019	1	48	0	5	59	25	28
BAKKEN	4-2019	27	623	748	195	755	463	127
BAKKEN	3-2019	31	688	708	185	893	676	0
BAKKEN	2-2019	28	626	462	197	1157	793	0
BAKKEN	1-2019	31	722	984	223	911	666	0

The graphic:

What about those two other older wells? Glad you asked:

• 22853, 687, Kraken, Isaac 11-23H, Sanish, t7/12; cum 144K 1/20; "halo effect"; jump from 600 bbls/month to 2,800 bbl/smonth;

• 16935, 780, Kraken, Frandson 11-23H, Sanish, t6/08; cum 144K 1/20; "halo effect" less noticeable, and did not last as long, from 750 bbls/month, to 2,500 bbls/month, but quickly dropped back to 986 bbls in January, 2020;

Notes From All Over, Early Tuesday Morning Edition -- March 31, 2020

Biden koan: another one. I can hardly wait until he posts his first haiku.

Canadian dollar: link here. Looks like 1.4205 overnight. Bloomberg noted the same thing about a week ago. Sources say that  the Canadian loonie hit its all-time low on January 21, 2002, sliding to 61.79 cents US. On January 7, 2016, the Canadian dollar stood at 70.95 cents US. Almost exactly one year ago, Financial Post warned Canadian dollar could sink to record low of 62 cents. If 70.95 cents was the 10-year low, then I believe the Canadian dollar has set a new 10-year record low, at around 70.42 cents US. [One hour later, 5:44 a.m. CT: looks like a huge jump -- now touching 1.4235 or 70.25 cents US.] [Mid-day trading:a high of 1.43241 or 69.812 cents US.]

Saudi, an existential issue: Saudi's oil war could bankrupt the kingdom. Warning: consider the source. From March 15, 2020:

Those with a functioning memory may have thought that last week’s (~ March 10, 2020) decision by Saudi Arabia to maximise oil production to crash oil prices and bankrupt U.S. shale producers was an early April Fool’s Day joke.

Apparently, though, it is not, and collective amnesia seems to have gripped senior Saudis and other OPEC members alike about how disastrous the last Saudi Arabia-led attempt to destroy the U.S. shale oil industry from 2014 to 2016 actually was. Appalling though the consequences were last time for Saudi and its now-much-poorer allies, this time around things are likely to be much, much, worse.

The last time the Saudis tried this exact same strategy in 2014, it had a much greater chance of success than it does now.

Back then, it was widely assumed that U.S. shale producers could not produce oil on a sustained basis for a breakeven price of less than around US$70 per barrel of Brent. Saudi also had record high foreign assets reserves of US$737 billion in August 2014, allowing it real room for manoeuvre in terms of sustaining its SAR-US$-currency peg and covering the huge budget deficits that would be caused by the oil price fall caused by overproduction. In addition, Russia at that point was just an interested observer on the sidelines.

Saudi Arabia was so confident in its plan that in October 2014 during private meetings in New York between Saudi officials and other senior figures in the global oil industry, as analysed in full in my latest book on the global oil markets, the Saudis revealed that the Kingdom was willing to tolerate Brent prices ‘between US$80-90 per barrel for a period of one to two years’.

This was a 180 degree turn from the previous understanding by other OPEC members that Saudi was their champion, doing its best to keep oil prices high in order to boost the prosperity of OPEC member states. Saudi, nonetheless, at the New York meeting, made it clear that it had two clear aims in pursuing its overproduction/oil price crashing strategy. The first of these was to destroy (or at least slow down progress in) the developing U.S. shale energy industry and the second was to pressure other OPEC members to contribute to supply discipline. This marked a significant divergence from the acceptable range of prices previously stated by then-Saudi Oil Minister Ali al-Naimi as being: “US$100, US$110, US$95,’ per barrel.

More at the link. Best part of the op-ed? The opening line, "Those with a functioning memory..." Well, that certainly leaves out the Democrat presumptive nominee for president.

But wow, we're back at $100+ as the real number the Saudis need to stay solvent. They are truly in deep doo-doo.

We should see Saudi's February, 2020, foreign reserve assets posted tomorrow.

More. A lot of typos in the article at this link, and not sure of the source, but the data points are very interesting.

• coming up against coronavirus
• Saudi Arabia, population, 35 million, foreign reserve assets: $440 billion
• Russia, population, 147 million, national welfare fund, $156 billion
• the power of the Saudis is limited. “The current oil prices put an end to the ambitious program of renovation of the country. The Ministry of Finance of Saudi Arabia intends to reduce budget expenditures in 2020 by 30%. Riyadh will be much harder to implement generous social obligations, which may lead to growing discontent in the Kingdom
• According to experts Bloomberg David Fickling, if the cost of oil prices even in the $50-55 (two times higher than it is now) by 2024, foreign exchange reserves, Saudi Arabia will fall to five-month sum of imports and just a few months Kingdom, considered one of the richest in the world, will be in “incredible crisis”.

It's very possible that in my lifetime I will see the fall of the House of Saud.

No Wells Coming Off The Confidential List Today -- March 31, 2020

Active rigs:

$21.20	3/31/2020	03/31/2019	03/31/2018	03/31/2017	03/31/2016
Active Rigs	43	66	60	49	30

Wells coming off confidential list today --None. There was no September 31 six months ago.

RBN Energy: COVID-19 shutdowns compound weak gas demand fundamentals. Archived.

While the crude oil market meltdown has taken center stage in recent weeks, and for good reason, the natural gas market is bracing for its own fallout.

The CME/NYMEX Henry Hub April futures price, which was already at a multi-year low, buckled last week, falling to as low as $1.602/MMBtu on March 23, and expired Friday at $1.634/MMBtu, the lowest April expiration settle since 1995.

On its first day in prompt position, the May futures contract yesterday eked out a late-day, 1.9-cent gain that brought it back up near $1.70/MMBtu as traders continued weighing competing market factors. Gas futures earlier in March were initially buoyed by the assumption that the low oil-price environment would slow associated gas production — and it will, eventually. But that initial bullish sentiment was quickly usurped by the more immediate effects of demand losses resulting from the economic slowdown caused by COVID-19, as well as from mild weather. Today, we look at how these developments are shaping gas supply-demand fundamentals heading into the gas storage injection season.