The Million Dollar Way (The Bakken Oil Blog): 08/25/20

Tuesday, August 25, 2020

Something Screwy Going On In Fargo -- Continued -- August 25, 2020

From a reader:

From another reader, local restaurant:

And, finally:

Active Rigs Down To Ten; Nine Permits Renewed; Five New Permits -- August 25, 2020

Active rigs:

$43.44	8/25/2020	08/25/2019	08/25/2018	08/25/2017	08/25/2016
Active Rigs	10	64	62	55	31

Five new permits, #37802 - #37806, inclusive --

Operator: all five -- CLR -- woo-hoo!
Field: Dimmick Lake (McKenzie)
Comments:

CLR has permits for five more Miles/Kennedy wells in SESW 31-151-96, Dimmick Lake;
the wells will be about 400' FSL and about 1200" FWL
the CLR Miles/Kennedy pad is tracked here; graphics updated at that post;

Nine permits renewed:

Zavanna (7): seven Hunter wells in McKenzie County;
Petro-Hunt (2): two Arsenal Federal permits in McKenzie County;

Four permits canceled:

Crescent Point: two Burgess permits and two Sylven permits, all in Williams County;

Random Update Of Another Incredible Bakken Well -- 250K Bbls Crude Oil In Six Months -- MRO -- Reunion Bay

The well:

35424, SI/A, MRO, Frances USA 11-15H, Reunion Bay, t--; cum 162K over three months; see below; see this post; cum 252K over six months;

Production to date:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	6-2020	29	22259	22278	15453	34444	126	32895
BAKKEN	5-2020	31	28658	28738	16319	39685	0	37898
BAKKEN	4-2020	30	39462	39727	21520	41247	0	38515
BAKKEN	3-2020	31	50326	50079	31219	38796	0	35316
BAKKEN	2-2020	28	40569	40680	29255	30498	0	27710
BAKKEN	1-2020	28	70751	70373	64655	71246	0	67083

Backed Into A Corner -- August 25, 2020

Updates

August 27, 2020: add Cuba to the list below.

Original Post

Backed into a corner:

Kuwait lacks liquidity to cover state salaries beyond October, 2020;
Iraq on the verge of being unable to pay state salaries;
at $40/bbl, oil is priced at 50% of what the Saudi budget requires (and on top of that, exports are decreasing)
XOM booted from Dow 30; has been in the Dow 30 from the very beginning -- different names, of course, over the years

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Television

Re-watching the LGPA, fourth round, Royal Troon. Sophia Popov. It's so much fun listening to the sportscasters who truly underestimated Popov ... until they could not ignore her any more. At the third hole, with back-to-back birdies, she extended her lead by four strokes. She was playing -5. Her closest competitor: -1.

Minnesota From The Air -- Vern Whitten -- August 25, 2020

Link here.

Click on the first photo and then click through them. Drag your cursor to far right or far left to get arrow move back or forward.

Again, they are quite spectacular.

My favorite: the state hospital in Fergus Falls, MN.

Be sure to send a note to Mr Whitten.

Vern Whitten Photography
www.vernwhittenphotography.com
(701) 261-7658

Humor For The Day -- August 25, 2020

CNBC talking heads continue to tell viewers that AAPL is too pricey but are recommending and buying SBUX.

P/Es:

SBUX (Starbucks): a P/E of 72.5 and it rose almost 4% today
AAPL: a P/E of 37

Okay.

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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The Tech Page

Sophia, age 3, alongside her older sister three years ago.

Sophia, three years later. By the way, among everything else, Sophia, now age six, is learning how to code.

The Bakken Is Back -- Natural Gas Transmission -- August 25, 2020

Before we get started, a reminder:

Northern Border Pipeline is a natural gas pipeline which brings gas from Canada through Montana, North Dakota, South Dakota, Minnesota, and Iowa into the Chicago area. It is owned by TC PipeLines, LP and ONEOK Partners and is operated by TC PipeLines, LP . Its FERC code is 89.

Another reminder: the Bakken is an oil play, not a natural gas play. To repeat: the Bakken is an oil play, not a natural gas play.

This was sent to me by a reader moments ago:

Resurging production in North Dakota's Bakken Shale following a wave of spring shut-ins has pushed Canadian exports to the US Midwest on Northern Border Pipeline down to its lowest flow volumes in more than 15 years, increasing the AECO hub's discount to Chicago pricing.

However, Index of Customer data shows a year-over-year increase in Canadian Exports on Great Lakes Gas Transmission line this winter.

Link here.

I don't have the automated tools I would need, and I don't have the time, but based on anecdotal data (daily posting of Bakken wells coming off the confidential list; initial production data of new wells; and, the EIA dashboards), it was very clear to me that Bakken natural gas production was going to surge following incredibly dismal months of May and June, 2020. I do believe May, 2020, was the worse of the few recent months. (Again, I am crude-centric, but as the Bakken play matures, the production of natural gas production increases with crude oil production.)

Check out the deposits in the Legacy Fund and it appears that is correct. The absolute worse months were June and July, 2020. August, 2020, deposits more than doubled those of July, 2020.

Apple And Oil -- August 25, 2020

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.

Apple, Inc:

judge threads the needle: orders Apple to not bloc Epic Engine, but allows Apple to keep Fortnite off platform; link here;
Apple to re-open a "small number" of stores that were closed twice by pandemic; link here;
Apple to open its first online store in India next month, September, 2020; link here;
last quarter, MacBook sales surged by a fifth compared to the same period last year; link here;

trend of working and studying remotely continues to grow

Fracking; from Texas Monthly -- the "mother fracker" reckons with the mother of all oil busts.

Pioneer CEO Scott Sheffield has been through more ups and downs than just about anyone in the business. This bust, he says, will change everything—forever. This article was part of Texas Monthly's July 2020 "The Pandemic Has Changed Everything" package.

The lede:

One morning in mid-April, Scott Sheffield, the chief executive of Pioneer Natural Resources, one of the largest oil producers in America, seated himself in the wood-paneled boardroom of his company’s headquarters in Irving, gazed into his computer’s camera, and begged a trio of Texas politicians for a lifeline. Over the past two months, oil prices had tanked 60 percent, effectively ending a years-long Texas boom and heralding what many in the industry were calling “the mother of all busts.”

As an estimated 30,000 viewers around the world watched online, Sheffield beseeched the three members of the Texas Railroad Commission, the elected body that regulates the state’s oil industry, to limit production, in a bid he hoped would ultimately boost the global price of crude.

Sheffield’s message bordered on heresy. He declared that the same oil revolution that had transformed the United States from petroleum importer to exporter had brought the industry to the brink of financial ruin. “It has been an economic disaster, especially the last ten years,” he said in testimony that had the feel of a key witness turning state’s evidence. “Nobody wants to give us capital because we have all destroyed capital and created economic waste.” If the government didn’t swoop in to save Texas oil producers from their excesses, Sheffield warned, “we will disappear as an industry, like the coal industry.”

It was a stunning admission coming from a man who has done as much as anyone to engineer a geological and geopolitical bonanza, one that now looks like a bubble. But the request for government intervention was also a characteristically strategic play for self-preservation by one of the longest-serving chieftains of the oil business—an industry that, following decades of expansion, now appears on the cusp of a slow, long-term decline.

It's a long article; I read through it quickly. Somehow the article did not resonate with me. Possibly because I do not follow the Permian. It certainly seems that based on what little I know, the Bakken and the Permian are two very different plays, about the only thing they have in common is that they are both shale plays.

I have to read the article again to see what I'm missing, but I guess I was "turned off" immediately when the CEO of Pioneer Natural Resources said that "if the government didn’t swoop in to save Texas oil producers from their excesses, Sheffield warned, “we will disappear as an industry, like the coal industry.”

Somehow I have trouble relating to that.

Three Wells Coming Off The Confidential List -- August 25, 2020

Hurricane update:

OPEC basket, link here: $45.19.

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Back to the Bakken

Active rigs:

$43.39	8/25/2020	08/25/2019	08/25/2018	08/25/2017	08/25/2016
Active Rigs	11	64	62	55	31

Three wells coming off the confidential list -- Tuesday, August 25, 2020:

28152, drl/NC, Hess, BW-Spring Creek-149-99-1201H-5, Cherry Creek, no production data,
35559, SI/A, Oasis, Bobby 5502 14-2 6B, Squires, 14K over 19 days extrapolates to 22K over 30 days;
35558, SI/A, Oasis, Bobby 5502 14-2 7B, Squires, 12K over 17 days extrapolates to 21K over 30 days;

RBN Energy: US LNG as swing supply amid shifting global market balance.

Not long ago, the economics for U.S. LNG exports were practically a no-brainer. Despite the longer voyage times and the resulting higher shipping costs from Gulf Coast and East Coast ports to Europe and Asia — by far the biggest LNG consuming regions — LNG priced at the U.S.’s Henry Hub gas benchmark presented a competitive alternative to other global LNG supply, much of which is indexed to oil prices, which were higher then. But earlier this year, as oil prices collapsed, COVID-19 lockdowns decimated worldwide gas demand, and international gas prices plummeted, the decision to lift U.S. cargoes has become much more nuanced, and the commercial agreements to support the development of new liquefaction capacity are much harder — if not impossible — to come by.
In the first few years since the U.S. began to export LNG in earnest in 2016, U.S. LNG producers and offtakers enjoyed a sort of honeymoon period. The first wave of U.S. export projects was well-subscribed, with over 90% of the capacity under long-term contract. The economics made sense. Abundant and still-growing gas supplies, particularly from the Marcellus/Utica and Permian basins, kept Henry Hub range-bound and relatively low compared with global LNG prices that were indexed to higher oil prices.

Additionally, growing gas demand in Asia and a tightening balance in Europe kept destination prices at significant premiums, providing attractive “arbs” (the difference between U.S. and export destination prices) and netbacks (the delivered price less the variable costs for moving a cargo) for U.S. offtakers. As additional liquefaction capacity came online in relatively rapid succession in 2016-19, utilization rates of each new capacity addition ran high, and exports grew steadily in lockstep with capacity, save for temporary reductions due to maintenance.

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The Literature Page

Word of the day: cursus.

Multiple meanings (at least five). I was most interested in cursus as a sequence of prayers. And that led me to the "Liturgy of the Hours."

Huge Petro-Hunt Charlson Well Off Line For Seven Months Returns To Production -- August 25, 2020

This well went back to "A" status 3/20:

16963, IA/423, Petro-Hunt, USA 35D-1-1H, Charlson Three Forks, t12/08; cum 787K 4/20; NOTE: this is a 640-drilling unit; this is a dual lateral; it's quite a story; off line again, 5/20; remains off line 6/20; last sundry form received in 2012; nothing to explain recent production;

Recent production:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	6-2020	1	103	0	0	107	107	0
BAKKEN	5-2020	0	0	0	0	0	0	0
BAKKEN	4-2020	27	4357	5061	193	5507	5319	0
BAKKEN	3-2020	22	6004	5365	2128	6486	6337	0
BAKKEN	2-2020	0	0	0	0	0	0	0
BAKKEN	1-2020	0	0	0	0	0	0	0
BAKKEN	12-2019	0	0	0	0	0	0	0
BAKKEN	11-2019	0	0	0	0	0	0	0
BAKKEN	10-2019	0	0	0	0	0	0	0
BAKKEN	9-2019	0	0	0	0	84	0	84
BAKKEN	8-2019	0	0	0	0	0	0	0
BAKKEN	7-2019	19	572	676	53	570	388	53
BAKKEN	6-2019	30	766	656	103	1324	1115	0

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Tuesday, August 25, 2020