Monday, July 20, 2020

Reason #1 Why I Love To Blog -- Reader's Comments On Two Recent Posts -- July 20, 2020

Earlier I posted this:
  • 35912, F/NC, CLR, Jamestown Federal 14-17HSL1, Banks, t--; cum 109K 3 months, 7 days; a 40K month; Three Forks, the potential pay zone was determined by the desire not to be overly high in the first bench, with a broad clean zone with better drilling and oil show, but no markers to warn of Pronghorn approach. The uppermost zone was set in this territory purely for steering marker and turn-around room. A buffer over the lowest dolostone bed (which overlies the internal 1 in turn) was also maintained on the low side, in order to prevent approach to that lower dolostone, which is less than ideal for both oil production (although with gas levels noted, this may not be true of this particular area) and drilling rate. Late morning on July 22nd the upper Bakken shale was intercepted ....  a sidetrack was initiated at 10:30 a.m.; drilling ahead on the sidetrack commenced at 20:12 that evening; a single assembly through to TD; the well was completed on the morning of July 23rd. The lateral was drilled in less than 24 hours? Fracked 12/18/2019 - 12/28/2019; small to moderate frack with 7.3 million gallons of water; 88.7% water by mass.
A reader replied:
Regarding the operators drilling a lateral in one day, several Appalachian Basin operators (whom I have been monitoring for years now) routinely average 7 to 8 thousand feet in 24 hours with - I believe - the record setter being about 10,000'
The increased focus for Bakken operators may revolve around the precision involving the 'build/curve' and the landing point as those hydrocarbon bearing strata in the Bakken/TF are so thin ... relatively speaking
It is a great testament to the skills of the crews to be doing what they do.
Earlier I posted this: Completely unexpected: new LNG port proposed for Houston -- Rigzone. Data points:
  • Pilot LNG LLC
  • Galveston LNG Bunker Port project
  • Pelican Island, between Galveston and Texas City 
  • FID: 2Q21
  • project:
    • a floating liquefaction plant
    • would provide LNG marine fuel to vessels to the Texas ports of Houston, Texas City, and Galveston
    • would provide LNG to one of the US's largest port complexes
    • nameplate liquefaction capacity of 05 million tons per annum
    • 18,000 cubic feet of storage capacity
The same reader noted:
Regarding that floating LNG barge/ship set to produce .5 mtpa (million tonnes per annum ... ~65 Million cubic feet per day), this is a great example of what to expect in the coming years. 
If you look at the picture accompanying the Rigzone article, you may notice that the hardware is comprised of several modules
These modules are becoming almost interchangeable components separately manufactured in China, Italy, South Korea, Thailand, amongst other countries.
This GREATLY facilitates time-to-assembly (on site), reduces costs dramatically, and expands the markets for LNG that heretofore required massive infusions of capital, supply, and - ultimately - sizeable consuming markets.

This is ALL in the process of dramatic change (upheaval, actually) as everything becomes way faster and cheaper to produce ... this, while the accompanying innovative hardware to store/transport the product (LNG) is improving at lightening speed.
The fact that a 2 mtpa LNG plant is now being built way up in the woods of North East Pennsylvania (NEPA) is one example. Proposing that this could be done a decade ago would justifiably be deemed preposterous.

From fueling the new Tasmanian ferry to supplying  Fairbanks, AK, with cheap, year-round fuel, this LNG 'world' will continue to rapidly expand and evolve.
And, we both might add: the US will be a huge supplier of this fuel.

Speaking of Pennsylvania, a native thereof:

Medley, Bobby Vinton

Notes From All Over -- Late Night Edition -- July 20, 2002

I've never had a bumper fall off my car -- not even in that Saab - BMW crash in Germany. I was driving the Saab on the priority road at 100 kmh when a BMW pulled out in front of me -- no injuries and the bumpers stayed on ... on both cars .. but apparently bumpers falling off Teslas has become a "thing." LOL. From ZeroHedge:


... and not only a "thing" but more than expected. Say what? LOL.

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Apple Headlines Ahead of Earnings

Apple's iPhone SE a huge hit with consumers; people really like them.

Fast, faster, and faster: 5G, sub-6GHz, mmWave, and all that jazz.

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

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IBM Beats On Strength Of Cloud

Link here.
Revenue from the cloud business, previously headed by IBM's new boss Arvind Krishna, rose 30% to $6.3 billion in the second quarter.
Krishna took over as chief executive officer from Ginni Rometty in April, while appointing former Bank of America Corp's top technology executive Howard Boville as the new head of IBM's cloud business.
IBM's total revenue fell 5.4% to $18.12 billion in the quarter, but came in above analysts' estimates of $17.72 billion, according to IBES data from Refinitiv. Excluding the impact from currency and business divestitures, revenue declined 1.9%.
The company's net income fell to $1.36 billion, or $1.52 per share, in the quarter ended June 30 from $2.5 billion, or $2.81 per share, a year earlier.
Excluding items, the company earned $2.18 per share, above estimates of $2.07 per share.
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Amazon: Holy Book Sales, Batman!

Up $235/share today; up almost 8% and on top of that -- the surge held after hours with AMZN gaining another $11 / up another 0.35%.

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Peacock Streaming

Not that I plan to watch it much, but, wow, talk about easy to set up. And it's free. 

Galveston, Glen Campbell

I was going to quit with that one, but then this one popped up in rotation:

Medley, Glen Campbell

Both of them take me back to my days in the US Air Force. Wow, don't get me started.

A reader sent me a great note regarding an earlier post. I'll post that next. Stay tuned.

ZeroHedge Pranked -- Palestine No Longer Exists On Google Maps -- July 20, 2020

Updates

July 21, 2020: this was one big "prank" and apparently ZeroHedge fell for it. This story that "Palestine" was removed from Apple and Google maps was a fake story. Screenshots purporting to be early maps showing "Palestine"were in fact photoshopped. In fact, this hoax has been going back to at least 2018. Here are additional links: 
Original Post
 
See ZeroHedge

Israel, Lebanon, and Jordan. But no Palestine.



A "generic" search of the same area on Bing maps also does not bring up Palestine.

If one specifically searches for "Palestine" on Bing maps, the typical icon pops up over Palestine which is identified as "Palestine." But a more general search, and Palestine does not show up.

Enerplus With Eight New Permits: Middle East Producers To Accumulate Half-Trillion-Dollar Debt Within Three Years -- July 20, 2020

Mideast on the brink: Middle East producers to amass one-half-trillion dollars in debt in less than three years. Source. Look at the average oil price per bbl this year. Wow!!
Arab states of the energy-rich Gulf are expected to accumulate $490 billion in deficits by 2023 due to the double hit of low oil prices and the coronavirus slowdown, according to Standard and Poors.
The six-nation Gulf Cooperation Council is estimated to post a combined budget deficit of $180 billion this year alone.
It based its estimates on an average oil price of $30 a barrel this year, forecast to rise to $55 in 2022.

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Back to the Bakken

Active rigs:


$40.817/20/202007/20/201907/20/201807/20/201707/20/2016
Active Rigs1155685931

Eight new permits, #37721 - #37728, inclusive:
  • Operator: Enerplus
    Field: Antelope (McKenzie)
  • Comments:
    • Enerplus has eight permits for a "Winter Fur" pad in SWSE 33-151-94, Antelope oilfield, all 509' to 510' FSL and from 1918' to 1673' FEL
    • the winter fur permits: Ermine, Sable, Lynx, Beaver, Marten, Otter, Weasel, and Seal
Enerplus new pad:
  • These eight wells will run north.
  • The current, producing well section 33, a single-section well, running to the north:
    • 23177, 648, Enerplus, Coyote 151-94-33DH TF, Antelope, 1/13; cum 2197K 5/20; 
  • Three wells sited in section 28; sections 28/21-151-94:
    • 31943, from the north to the south; 690, Enerplus, Furlong 151-94-21A-28H, Antelope, t2/17; cum 402K 5/20;
    • 20783, from the south to the north; 1,399, Enerplus, Miles 151-94-28D-21H, Antelope, t9/11; cum 406K 3/20; remains off line 5/20;
    • 18303, from the south to the north; PA, Enerplus, Sherwood 28-44H, t9/11; cum 5K;

Random Note On Coffee Futures -- July 20, 2020

So, if cocoa futures are tanking because folks are not going out to eat as much, how is coffee doing? Pretty much mixed: in the past four months, some very bullish signs, and then other days, some very bearish signs.

From May 23, 2020: coffee futures crash.

And then, July 11, 2020, from a contributor at SeekingAlpha: fundamentals support a coffee turnaround.

I suppose there are many, many ways to explain the "difference" between chocolate and coffee during a pandemic. But I will leave that for another day. Or another reader.


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US Crude Oil Supply

Link here.

At 37.6 days vs a recent high of 42 days.

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Legacy Fund

Pending. We should see deposits data sometime this week, perhaps today. 

Off The Net -- Going Swimming -- 10:43 A.M. CDT -- Whoo-Hoo -- July 20, 2020

Nose-Bleed-Level Debt -- OXY -- July 20, 2020

If I'm reading the "financials" correctly (and I may not be -- you may want to fact check this, but ...) ...
  • OXY: market cap: $15 billion; trading at $16/share; shares up slightly pre-market trading; $42 billion in debt;

A Closer Look At The Two Wells Coming Off Confidential List Today -- July 20, 2020

Production data for two nice wells coming off confidential list today:
  • 35912, F/NC, CLR, Jamestown Federal 14-17HSL1, Banks, t--; cum 109K 3 months, 7 days; a 40K month; Three Forks, the potential pay zone was determined by the desire not to be overly high in the first bench, with a broad clean zone with better drilling and oil show, but no markers to warn of Pronghorn approach. The uppermost zone was set in this territory purely for steering marker and turn-around room. A buffer over the lowest dolostone bed (which overlies the internal 1 in turn) was also maintained on the low side, in order to prevent approach to that lower dolostone, which is less than ideal for both oil production (although with gas levels noted, this may not be true of this particular area) and drilling rate. Late morning on July 22nd the upper Bakken shale was intercepted ....  a sidetrack was initiated at 10:30 a.m.; drilling ahead on the sidetrack commenced at 20:12 that evening; a single assembly through to TD; the well was completed on the morning of July 23rd. The lateral was drilled in less than 24 hours? Fracked 12/18/2019 - 12/28/2019; small to moderate frack with 7.3 million gallons of water; 88.7% water by mass;
  • 35695, SI/A, Oasis, Joplin 5397 42-32 7B, Banks, t--; cum 104K in three months; a 41K month; middle Bakken; fourth of six wells on this pad; lateral took 5 days to drill; exposed 10,973' of uncased hole, entirely within the middle Bakken; background gases averaged about 1,000 units; at connections, gas over 6,300 units; fracked 11/25/2019 - 12/19/2019; huge frack, 19.04 million gallons of water; 92.13% water by mass; friction reducer at 0.06916 (high);
35912:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN5-20203128985291032483448404479970
BAKKEN4-20203028146281182688743481426970
BAKKEN3-20203139386392824378759146591460
BAKKEN2-20207125011231614348179001783664
BAKKEN1-202013013010000

35695:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN5-2020425128351462257240
BAKKEN4-2020282541225425284008147280560842
BAKKEN3-2020314078840763441531178541162911485
BAKKEN2-20202936838368214056596008945491386
BAKKEN1-20207921916255925882289281

Re-posting:
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Erasing The Native American

Mutual of Omaha to retire its corporate logo. Link here. Native American headdress coming down faster than Confederate statues.


Atmospheric CO2 Increases Year-Over-Year -- July 20, 2020

Global economy plummets; fossil fuel demand plummets. And, still, atmospheric CO2 rises significantly. Speaks volumes. 

Link here.


CVX To Buy Noble Energy: All Stock Deal; $13 BIllion -- July 20, 2020

Updates

July 21, 2020: This may be the best analysis yet of this deal. It's a huge deal. Link here at Rigzone.
According to Chevron, the acquisition will add approximately 18 percent to its year-end 2019 proved oil and gas reserves at an average acquisition cost of less than $5 per barrel of oil equivalent (boe) and nearly 7 billion barrels of risked resources for less than $1.50 per boe. The figures are based on Noble’s proved reserves at the end of 2019, Chevron added.
Chevron stated the deal boosts its U.S. onshore portfolio with assets in the DJ and Permian basins. The company pointed out the 92,000 acres in the Permian are “largely contiguous and adjacent” to its existing assets. Moreover, it noted the agreement includes an integrated midstream business and established position in the Eagle Ford. Outside the U.S., Chevron will gain a large-scale, producing presence in the Eastern Mediterranean in Israel as well as West Africa assets in Equatorial Guinea.

Later, 11:06 p.m. CDT: After today's announcement that Chevron will buy Noble in an all-stock deal, I'm getting the feeling that we're nearing the point when it will be very, very obvious "we're" culling the herd.

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

Wasn't Noble Energy one of the darlings of the shale oil sector? Now gone; bought by CVX. At least that's the plan.

If Noble is culled from the herd, how many more are yet to follow? What amazes me: it seems we still haven't lost many operators in the Bakken.

Forbes weighs in: Chevron's patience pays off with bargain deal for Noble Energy.
Later, 3:00 p.m. CDT: over the next few days, we'll see stories about this deal. Here's one, from Real Money -- "Chevron shows it's pretty slick with Noble Energy deal.
Just like Berkshire Hathaway, this energy giant proves how cash-rich companies will make mincemeat of the little guys in an economic downturn. [I assume the vultures are circling OXY.]

Two weeks ago [the writer] wrote a Real Money column about the absolute fleecing of Dominion by the Oracle himself, Warren Buffett, in Berkshire's purchase of Dominion's natural gas transmission assets.
Now, I feel compelled to write a bonus column about a similarly one-sided transaction in the energy industry. Chevron and Noble Energy announced Monday morning that Chevron would acquire Noble for 58 million shares in an all-stock transaction that values Noble's equity at $5 billion, or about $10.38 per NBL share.
This is absolute steal for Chevron, and as Yogi would say, deja vu all over again.
This is not an asset purchase; Chevron is buying the complete Noble Energy enterprise. So, in addition to assuming the $8 billion in net debt, non-controlling interest that Noble had as of March 31, Chevron gets Noble's holding in Noble Midstream Partners. As of December 31, 2019, Noble Energy owned 62.6% of the limited partner units of Noble Midstream Partners. So, Chevron is buying $500 million worth of valuable transmission assets in the deal, and that lowers the price for "core Noble" to an equity value of $4.5 billion. [I can't buy into analysis: shareholders were likely to get a whole lot less if Noble filed for bankruptcy.]
Original Post

Chevron to buy Noble Energy. From SeekingAlpha:
  • in the first significant M&A action since the coronavirus outbreak, Chevron agrees to acquire Noble Energy in an all-stock deal valued at $5B, or $10.38/share, a 7.6% premium over Noble's Friday closing price of $9.65
  • including Noble's hefty debt load, the deal would be valued at ~$13B
  • buying Noble enhances Chevron's presence in the Permian Basin with 92K largely contiguous and adjacent acres, and in Colorado's DJ Basin, and brings assets in the eastern Mediterranean and West Africa.
  • Chevron expects the acquisition to generate $300M in annual run-rate cost synergies before tax and be accretive to free cash flow, earnings and book returns one year after close.
  • Noble is Chevron's first major strategic move after walking away from a bidding war for Anadarko Petroleum last year.

Focus on Fracking: weekly edition posted. Lede:
  • 4,.34 million bopd of unwanted oil produced in June; drilling of new wells and completions of drilled wells lowest on record 
And a reminder: OPEC to relax production limits. OPEC basket is down slightly today.

Completely unexpected: new LNG port proposed for Houston -- Rigzone. Data points:
  • Pilot LNG LLC
  • Galveston LNG Bunker Port project
  • Pelican Island, between Galveston and Texas City 
  • FID: 2Q21
  • project:
    • a floating liquefaction plant
    • would provide LNG marine fuel to vessels to the Texas ports of Houston, Texas City, and Galveston
    • would provide LNG to one of the US's largest port complexes
    • nameplate liquefaction capacity of 05 million tons per annum
    • 18,000 cubic feet of storage capacity
Oil company spins off renewable energy portfolio? Come back to this later, maybe.

Race, in pre-market trading:

  • Moderna: drops 7% 
  • PFE: up almost 4%
  • JNJ: up almost 1% 
  • MRK: flat 

Chevron To Buy Noble -- July 20, 2020

Chevron to buy Noble. Is OXY next?
  • NBL: market cap: $4.63 billion; trading $10/share; jumps 10% in pre-market trading
  • OXY: market cap: $15 billion; trading at $16/share; shares up slightly pre-market trading; $42 billion in debt;
Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.

OPEC basket: down; trading at $43.22. Not good news for Saudi.

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Back to the Bakken

Active rigs:


$40.247/20/202007/20/201907/20/201807/20/201707/20/2016
Active Rigs1155685931

Three wells coming off the confidential list -- 

Monday, July 20, 2020: 50 for the month; 50 for the quarter, 496 for the year:
  • 35912, F/NC, CLR, Jamestown Federal 14-17HSL1, Banks, t--; cum 109K 3 months, 7 days; a 40K month;
  • 35695, SI/A, Oasis, Joplin 5397 42-32 7B, Banks, t--; cum 104K in three months; a 41K month;
Sunday, July 19, 2020: 48 for the month; 48 for the quarter, 494 for the year:
  • 37267, loc/NC, CLR, Rodney 4-20HSL1, Big Gulch,
Saturday, July 18, 2020: 47 for the month; 47 for the quarter, 493 for the year:
  • None.
RBN Energy: OXY's prospects hinge on oil price, cash flow as debt repayment looms.
With Broadway theaters shuttered and Hollywood studios on lockdown, one of the most compelling long-term American dramas is the ongoing saga of U.S. E&P Occidental Petroleum (Oxy). Act One was a compelling David-vs.-Goliath story as Oxy battled oil major Chevron in early 2019 to acquire Anadarko Petroleum and its prime Permian acreage. Among the most fascinating elements was the supporting cast, which featured business legend Warren Buffett, who contributed a critical $10 billion to push Oxy’s deal over the top, versus billionaire investor and corporate raider Carl Icahn, who led an unsuccessful struggle to stop what he called “the worst deal I’ve ever seen.” Oxy snagged Anadarko with a winning bid of $57 billion, the fourth-highest total for an oil and gas transaction and a 20% premium to Chevron’s offer, and predicted strong future production, dividend, and cash flow growth. But those optimistic projections have been upended in the ongoing Act Two, as plunging oil demand and prices from the COVID-19 pandemic have stymied planned asset sales and ravaged cash flows. Oxy has responded by reining in spending, revamping operations, refocusing divestment plans, and restructuring debt. But is it enough? Today, we analyze the company’s current strategies and financial maneuvering, as well as the near-term outlook, under a range of oil price scenarios.
Although almost all U.S. E&Ps have been rocked by the oil market crisis to some degree, Oxy faces an especially difficult challenge because of the massive debt it assumed in its purchase of Anadarko, which includes $11.1 billion due in 2021-22. Before we get to the implications of that debt and Oxy’s plans for navigating it, let’s quickly review the details of Oxy’s blockbuster acquisition of Anadarko.
On April 12, 2019, Chevron announced it had reached an agreement to acquire Anadarko for $65/share or, more precisely, $16.25/share in cash and $38.75/share in stock, plus the assumption of debt. Oxy, which said it had made several private offers to acquire Anadarko in 2018 and 2019, countered on April 24, 2019, with a bid of $76/share, including $38/share in cash, more than twice the cash Chevron was offering and a total 20% premium above Chevron’s bid. On April 30, Oxy boosted the credibility of its offer by announcing that Warren Buffett had agreed to contribute $10 billion of the $19 billion cash offer in exchange for Oxy preferred shares paying an 8% annual dividend. On May 9, Chevron declined to exercise its option to submit a revised bid, and the Anadarko board accepted Oxy’s offer, despite having to pay a $1 billion, or $2/share, deal-termination fee to Chevron.

An Enerplus Chokecherry Well In Mandaree Oil Field WIth Jump In Production -- July 20, 2020

This page will not be updated.

The Enerplus "Bush" wells are tracked here.

Back in 5/19; this well showed a jump in production after neighboring wells were completed/fracked, but the jump in production did not last long. See production at this post.

The well:
  • 22748, 729, Enerplus, Chokecherry 149-93-21-22H, Mandaree, t11/12; cum 259K 5/20; off line as of 2/20;