Friday, May 29, 2020

Bruin's FB Bonita Wells In Four Bears

The wells:
  • 36658, drl/A-->AL/A, Bruin, FB Bonita 152-93-9B-10-15B, Four Bears, first production, 4/20, t--; cum 149K 12/20;
  • 36657, drl/A-->AL/A, Bruin, FB Bonita 152-93-9B-10-14T, Four Bears, first production, 4/20, t--; cum 126K 12/20;
  • 36656, drl/A-->AL/A, Bruin, FB Bonita 152-93-9B-10-13B, Four Bears, first production, 4/20, t--; cum 165K 12/20;
  • 36655, drl/A-->AL/A, Bruin, FB Bonita 152-93-9B-10-12T, Four Bears, first production, 4/20, t--; cum 136K 12/20;
  • 36654, drl/A-->AL/A, Bruin, FB Bonita 152-93-9B-10-10B, Four Bears, first production, 4/20, t--; cum 159K 12/20;
  • 36653, drl/A-->AL/A, Bruin, FB Bonita 152-93-9B-10-9T, Four Bears, first production, 4/20, t--; cum 140K 12/20;

Whiting With Three New Permits -- May 29, 2020

OPEC basket: $28.45, down 2%, link here; while WTI surged today.

Back to the Bakken

Active rigs:

Active Rigs1164655029

Three new permits, #37603 - #37605, inclusive --
  • Operator: Whiting
  • Field: Sanish (Mountrail)
  • Comments: 
    • Whiting has permits for three Brehm wells in SESW 35-153-92, all 460' FNL and all about 2300' FEL, Sanish oil field
    • 37605: TFHU; sections 4/5/8/9-152-92; Sanish pool is the interval from 50 feet above the top of the Bakken formation to above the top of the Birdbear formation; NDIC order #30846;
Four producing wells (DUCs) reported as completed:
  • 36858, SI/A, Slawson, Shakafox7-28-21MLH, Big Bend, t--; cum --;
  • 36656, drl/A, Bruin, FB Bonita 152-93-9B-10-13B, Four Bears, t--; cum --;
  • 36657, drl/A, Bruin, FB Bonita 152-93-9B-10-14T, Four Bears, t--; cum --;
  • 36658, drl/A, Bruin, FB Bonita 152-93-9B-10-15B, Four Bears, t--; cum --;

The Brehm Wells

29987, Brehm 12-27-2H, t4/15; cum 135K 3/20;
29986, Brehm 12-27-3H, t5/15; cum 119K 3/20;
28222, Brehm 13-7TFH, t9/14; cum 232K 1/20; off line 2/20; remains off line 3/20;
28221, Brehm 13-7H, t8/14; cum 330K 3/20;
27794, Brehm 42-35-3XH, t6/14; cum 127K 3/20;
27793, Brehm 42-35-2XH, t6/14; cum143K 3/20;
27676, Brehm 11-4-2H; t5/14; cum 206K 3/20;
27670, Brehm 11-4TFH, t5/14; cum 176K 3/20;
21270, Brehm 13-27TFH, t9/13; cum 270K 3/20;17337
24647, Brehm 11-4H, t2/13; cum 183K 3/20;
20677, Brehm 12-7TFH, t9/11; cum 256K 3/20; off line 8/19; back on line 3/20;
20217, Brehm 41-35XH; t7/11; cum 289K 3/20; off line 10/19; back on line 2/20;
19692, Brehm 42-35H, t8/11; cum 257K 3/20;
19364, Brehm 12-7H, t1/11; t1/11; cum 237K 3/20;
19320, Brehm 21-4H, t4/11; cum 251K 3/20;
19082, Brehm 12-27H, t1/11; cum 227K 3/20;
17337, Brehm 11-7H, t1/11; cum 262K 3/20;
16905, Brehm 44-5H, t9/08; cum 310K 3/20;

Random Update -- Wuhan Flu -- New York -- May 29, 2020

NDIC Hearing Dockets -- June, 2020

The NDIC hearing dockets are tracked here.

Link here.

The usual disclaimer applies. As usual this is done very quickly and using shorthand for my benefit. There will be factual and typographical errors on this page. Do not quote me on any of this. It's for my personal use to help me better understand the Bakken. Do not read it. If you do happen to read it, do not make any investment, financial, job, relationship, or travel plans based on anything you read here or think you may have read here. If this stuff is important to you, and I doubt that it is, but if it is, go to the source.

Highlights in bold.

Nothing of interest this month.

Wednesday, June 24, 2020
Seven Pages -- Very Few New Cases; 
Mostly Continued Cases
Mostly Pooling and Commingling Cases 

The cases, not permits:
  • 28496, Petro-Hunt, Charlson-Bakken, pooling; McKenzie;
  • 28497, Petro-Hunt, Charlson-Bakken, pooling;
  • 28498, Petro-Hunt, Phelps Bay-Bakken, pooling;
  • 28499, Hess, commingling;
  • 28500, Hess, commingling;
  • 28501, Hess, commingling;
  • 28502, Hess, commingling;
  • 28503, Hess, commingling;
  • 28504, Hess, commingling;
  • 28505, Hess, commingling;
  • 28506, BR, Keene-Bakken/Three Forks, fifteen wells on each of five 1280-acre units: sections 25/36; and sections 26/35, both in 153-96; and sections 29/32; sections 30/31, both in 153-95; and, section 3/10-152-96; McKenzie County;
Thursday, June 25, 2020
Five Pages -- Very Few New Cases; 
Mostly Continued Cases
No cases of interest
The cases, not permits:
  • 28507, CLR, Truax-Bakken, setback rules, McKenzie, Williams County
  • 28508, EOG, Spotted Horn-Bakken; multiple wells on a new overlapping 3200-acre spacing unit; sections 8/17/18/19/20-150-94; McKenzie County
  • 28509, EOG, Parshall-Bakken; i) create an overlapping 3840-acre unit; two wells; ii) drill multiple wells on an existing 3840-acre unit; Mountrail County
  • 28510, XTO, Haystack Butte-Bakken, pooling,
  • 28511, XTO, Haystack Butte-Bakken, pooling,
  • 28512, Peregrint Petroleum Partners, Rough Rider-Bakken; pooling,
  • 28513, Peregrine Petroleum Partners, polling, Flat Top Butte and/or Rough Rider-Bakken pool, McKenzieCounty;

Taking A Break -- May 29, 2020

Wow, I'm in a great mood. So much stuff going on; impossible to keep up. But I'm going to take a break. I will be back later this afternoon.

APPL breaks out past new buy point, story posted fourteen minutes ago. Link here.

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

The Geography Page

I remain in my Scotch-Irish phase.

Background: link here.

As stated earlier, I do not know the geography of the east coast of the United States at all. Some time ago I read the The Battle for New York : The City at the Heart of the American Revolution by Barnet Schecter for the sole purpose of better understanding that geography.

Now, I'm reading The Scotch-Irish: A Social History by James Leyburn. Incredibly good book for those wanting to learn the geography of the east coast from Chesapeake Bay down to South Carolina. Absolutely incredible.

From wiki:
The Great Valley, also called the Great Appalachian Valley or Great Valley Region, is one of the major landform features of eastern North America. It is a gigantic trough—a chain of valley lowlands—and the central feature of the Appalachian Mountain system.
The trough stretches about 1,200 miles  from Quebec to Alabama and has been an important north-south route of travel since prehistoric times.

Broadly defined, the Great Valley marks the eastern edge of the Ridge and Valley physiographic province. There are many regional names of the Great Valley, such as the Shenandoah Valley. From a large perspective the Great Valley can be divided into a northern section and a southern section....
The southern portions of the Great Valley are sometimes grouped into two parts, the Valley of Virginia and the Tennessee Valley.
Today, I'm reading about the Valley of Virginia.

Right, wrong, or indifferent, the Shenandoah Valley connected the north (the Allegheny Mountains) with the south (the Cumberland Mountains). The great Scotch-Irish migration was after traveling a bit north from the Chesapeake Bay into Pennsylvania, the Scotch-Irish headed south along the Shenandoah Valley.

Again, right, wrong, or indifferent, that's my understanding, and from there can build on that.

Word of the day: eleemosynary -- relating to or dependent on charity; charitable. Now, why in the world would anyone use eleemosynary when charitable works just as well? Perhaps one could fit it in a college application resume. LOL.

A Sophia Story

Sophia is pretty clever.

After school every day she gets a snack. It's the same old thing, every day.

But instead of asking specifically for something different, Sophia does it a bit differently. Periodically she would like a cupcake but knows if she asks for such she's unlikely to get it.

So, instead, she reminds me that Corky's birthday is "tomorrow." Corky has had about fifteen "tomorrow" birthdays in the past six months.

Well, birthdays require a birthday cake, but a cake would be too much for just Corky, Sophia, and me, so, the alternative: cupcakes. LOL.

I go out and buy a small package of six beautifully decorated birthday cupcakes for $3.99 at the grocery store next door and there you have it: instant birthday party for Corky.

I can't wait until Sophia is sixteen years old and figures out a clever way to ask her dad for a Jeep Wrangler for a birthday present. But she's learning.

Again, this is a great example of strategic thinking. Sophia works backwards. Her goal is a cupcake. Before cupcake, comes a cake. Before a cake, comes a birthday party. Before a birthday party, comes the honoree. The honoree needs to be somebody cute and non-threatening and really, really deserving of a birthday celebration, like Corky.  Note: the celebration is for someone else, not Sophia. Very heart-warming. Very generous. And very fake -- everyone knows Corky doesn't eat cupcakes.

And there you have it. One more ingredient: a gullible grandfather to make it all happen. LOL.

New "Deaths" Overnight -- Norway Vs Sweden -- May 29, 2020

Warning for millennials: there will be graphs on this page. Some math may be required. Some thinking may be required. 

Link here. Be sure to look at the "y" axis. I can't make this stuff up. If drawn to scale, the number of new deaths in Norway would not even be seen on a graph of the number of new deaths in Sweden.

St Greta? Crickets.

And we move on.

Enquiring Minds Want To Know -- Finishing Where I Left Off -- May 29, 2020

The following comments relate to the linked story far down below, below the "page break." A reader asked for my thought regarding that article. I read the article yesterday, started to reply, and then got side-tracked by grilling.

This is my not-ready-for-prime-time reply. In a long note like this there will be typographical and content errors. I don't proofread these long notes prior to posting. I post them and then come back to correct obvious errors. I often miss mistakes. I am not good at articulating my thoughts, but I think folks can get the gist of what I'm trying to say.

The thesis of the original article is that decreased CAPEX is going to lead to a "devastating supply crunch." Bottom line: that's not going to happen based on history, based on experience in the Bakken, and based on facts regarding costs going forward. There are a lot of things to worry about but CAPEX is not one of them.

So, let's begin. My thoughts regarding the linked story below the fold.

1. These stories have been a dime-a-dozen ever since I started blogging, back in 2007. and before that, The Oil Barrel, led the parade with these stories.

2. The thesis of this article: the decrease in CAPEX spending will result in a supply crunch. I remember the hand-wringing when folks said declines in CAPEX spending for off-shore drilling due to the US shale revolution would lead to $200-oil, or some other ridiculous number. I believe I even recall talk of $500 oil but maybe I'm mis-remembering.

3. That was before 2014 - 2016, the Saudi Surge. Again, there were any number of stories regarding "the end is coming" due to CAPEX spending falling off the cliff. They predicted by that by this time (2020), due to staggering CAPEX spending, we would be seeing $200 oil.

4. They were clearly wrong, and it's my impression that they were incredibly wrong because they did not understand the "Bakken," and articles like the one the reader asked about suggests many analysts still do not understand the "Bakken."

5. Prior to 2007, the "Bakken" did not exist. The discovery well in Montana was in 2000 and there was some activity after that in eastern Montana, but the boom took off with the discovery well in 2007 in/near Parshall, North Dakota. By 2010, the Bakken was hitting its stride, and we had not even heard of the Permian yet, or the Eagle Ford for that matter.

6. For the Bakken, the speed with which the Eagle Ford, and then the Permian, came along was downright frightening. From 2012, or thereabouts, to 2014, there was so much oil being produced by US shale and so much more predicted, it forced Saudi Arabia to take drastic action. US oil was pretty much forced to shut down. How did that turn out? The price of oil dropped from $100 to $60 pretty much "overnight." The price of oil never recovered.

7. But, wow, the number of stories coming out between 2014 and 2016, predicting $200 oil due to decreased CAPEX spending was staggering. I had several blogs on that, and several graphics. If I run across them I will link them but I'm not going to look for them now.

8. So, CAPEX plummeted after the Saudi Surge. How did that turn out? Not to long ago, oil was quoted in "negative" territory. The published price of WTI is now in the low $30-range; probably lower in the "unadvertised" market. Saudi Arabia apparently doesn't see much hope for the rest of the year, and neither does Morgan Stanley, forecasting maybe $40-oil by the end of 2020. That certainly doesn't look like a "devastating" supply crunch. Which reminds me: the authors of these stories never provide any timeline: is the "devastating supply crunch" going to occur one month from now, six months from now; a year from now; five years from now; or, in 2035?

9. Okay, that's history: the meme from 2014 to 2016 that decreased CAPEX would lead to much higher oil prices -- that clearly didn't happen. It's clear that analysts who wrote those stories were modeling conventional drilling and off-shore drilling because they did not understand (or believe) the shale oil story. They certainly weren't modeling on-shore shale.

10. Going forward. It took a lot of capital to build out the Bakken between 2007 and 2014 (and it's still going on): oil companies setting up shop; frack spreads coming together; pipelines (local, regional, and national); natural gas gathering and processing plants -- the amount of money was incredible. Prior to 2007, in North Dakota, almost no infrastructure for the coming boom. Now? That infrastructure is there and in excellent condition. Not a lot of CAPEX is going to be needed to cover infrastructure costs.

11. Most of the CAPEX in North Dakota is drilling and completing. Back in 2010, they were spending upwards of $12 million to drill and frack a middle Bakken shale well. It took sixty days to complete/frack a well. Operators now drill a well to total depth in less than two weeks on average; the "gold standard" is, apparently, about seven days: three days for the vertical portion; less than a day for the curve; and three days for the horizontal. Wells were costing about $7 million, in general, when I last looked, and some operators talked about getting costs down to $6 million. I didn't pay a lot of attention to "exact" numbers that they were quoting because there can be a lot of "smoke and mirrors" with accounting. But it was clear that the price of drilling/completing a well had fallen significantly. That will drive CAPEX down.

12. That leads us to the quality of the wells. In the early boom, the EURs were 300,000 bbls. Today, operators won't drill a well unless the EUR is a million bbls. That's going to take a lot less wells to produce the same amount of oil, and the wells are a lot less expensive -- that will all drive CAPEX down.

13. The huge upfront costs of leasing the land, building the roads out to the pads, building the pads, all of that is greatly, greatly reduced. That will drive lower CAPEX costs.

14. So, historically, all that hand wringing about CAPEX going over a cliff resulting in $200-oil never came to fruition. Going forward, it's going to take a lot less CAPEX to produce the same mount of oil.

15. A lot of operators may go broke; a lot of operators may disappear, but the oil is not going anywhere.

16. Bottom line: CAPEX is not my concern. There are a number of other concerns, but CAPEX is not one of them.

 The Issue Of CAPEX

A reader asked me my thoughts on this article:

The thesis:
At a time when the U.S. shale industry was going through a phase of a debt-fueled drilling frenzy, the rest of the oil world entered into a “Lower Forever” mindset in the famous words of Royal Dutch Shell PLC’s chief executive Van Beurden and started to seriously trim spending.
CAPEX investments across the globe crashed 66 percent between 2014 and 2016 to $322 billion and have never fully recovered.
Global E&P Capex spending in 2019 clocked in at an estimated $546bn, well below the $880bn recorded in 2014 during the last oil price boom. The latest spending cuts have set back the clock a good 13 years. Obviously, it’s just a matter of time before global production starts to suffer. Roughly 60 percent of the world’s oil comes from just 25 oil fields mainly in Saudi Arabia and the Middle East with an average age of over 70 years and already experiencing 6-7 percent annual declines. Further, the role of Saudi Arabia as a swing producer tends to be overstated, with its often-cited spare production capacity of 2.5mb/d closer to 0.5mb/d.
First line that caught my attention:
CAPEX investments across the globe crashed 66 percent between 2014 and 2016 to $322 billion and have never fully recovered.  
As usual, analysts use that data point all the time and never remind readers why CAPEX investments crashed 66 percent between 2014 and 2016.

Three Wells Coming Off The Confidential List -- May 29, 2020

OPEC basket: $29.03

Back to the Bakken

Active rigs:

Active Rigs1164655029

Three wells coming off the confidential list -- Friday, May 29 2020: 93 for the month; 143 for the quarter, 370 for the year:
  • 36208, drl/drl, XTO, FBIR Baker 34X-25D, Heart Butte, t--; cum --;
  • 34256, drl/drl, Crescent Point Energy, CPEUSC Tami 3-8-5-157N-99W MBH, Lone Tree Lake, , t--; cum --;
  • 33840, drl/NC, Crescent Point Energy, CPEUSC Tami 10-8-5-157N-99W TFH, Lone Tree Lake, t--; cum --;
RBN Energy: recent trends and outlook for Canadian crude oil, liquids and natural gas.
Canada’s energy sector has been hit hard by the recent oil price collapse that was initially set off by the now-ended Saudi Arabia-Russia price war and made much worse by the demand-destroying effects of the global COVID-19 pandemic lockdowns.
The impacts on Canada’s crude oil and natural gas sectors have been both dramatic and nuanced. For example, oil supply cutbacks have been rapid and substantial, while there has been virtually zero impact on natural gas supplies. Oil demand has been similarly affected, with refined product demand seeing a large swoon, while natural gas demand has suffered only a modest pullback. And for Canada’s energy exports, these have experienced some jolting swings in a matter of weeks, putting the whole sector under pressure to adapt where possible. Today, we highlight some of the recent market disruptions and their implications.