Monday, October 19, 2020

A WPX Lead Woman Well Goes Over 500K Bbls Cumulative Crude Oil -- October 19, 2020

The WPX Lead Woman wells are tracked here.

One of the Lead Woman wells has just gone over a cumulative of 500K bbls of crude oil:

  • 34647, 3,165, WPX, Lead Woman 23-14HA, Spotted Horn; t12/18; cum 509K 8/20; 
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

CLR's Charolais SOUTH Federal Wells

The wells:

  • 37908, conf, H,
  • 37909, conf, H2,
  • 37910, conf, H,
  • 37911, conf, H,
  • 37912, conf, H2,
  • 37913, conf, H,
  • 37958, conf, HSL1,
  • 37044, drl/A, HSL, first production, 8/21; t--; cum 111K 11/21;
  • 37904, conf, H2,
  • 37903, conf, H,
  • 37902, conf, H1,
  • 37901, conf, H,
  • 37905, conf, H2,
  • 37906, conf, H,
  • 37907, conf, H1,

Wells of interest:

  • 32605, 1,995, CLR, Charolais North Federal 1-3H1, Elm Tree, t9/16; cum 848K 11/21; nice well from the beginning; still producing 7K bbls/month; never taken off line;
  • 37043, drl/A, CLR, Simmental Federal 13-16HSL2, Elm Tree, first production, 11/21; t--; cum 18K 11/21; drilled back in 2/21; off line with minimal intermittent production since then; first meaningful production, 11/21;


December 26, 2021: update here.   

Original Post

From today's daily activity report: nine new permits, #37905 - #37913, inclusive:

  • Operator: CLR
  • Field: Elm Tree (McKenzie)
  • Comment:
    • CLR has permits for nine more Charolais South Federal wells in NENW 15-153-94; Elm Tree oil field, from 198' FNL to 388' FNL and from 2381' FWL to 2500' FWL of section 15-153-94;
    • these nine new permits come a day following permits for four Charolais South Federal wells in SWSW 10-153-94; from 234' FSL to 269' FSL and from 1039' FWL to 956' FWL, Elm Tree oil field;
    • Note: these are Charolais SOUTH Federal wells; the CLR Charolais NORTH Federal wells are tracked here

The graphics:

Two wells of interest:

  • 32605, 1,995, CLR, Charolais North Federal 1-31H1, Elm Tree, t9/16; cum 816K 6/21;
  • 37044, 1,738, CLR, Charolais South Federal 2-10HSL, Elm Tree, minimal production, the well has been completed;

CLR Now Has Thirteen New Charolais South Federal Permits, Elm Tree -- October 19, 2020

Active rigs:

Active Rigs1561715631

Marathon went from four rigs to three today

Nine new permits, #37905 - #37913, inclusive:

  • Operator: CLR
  • Field: Elm Tree (McKenzie)
  • Comment:
    • CLR has permits for nine more Charolais South Federal wells in NENW 15-153-94; Elm Tree oil field, from 198' FNL to 388' FNL and from 2381' FWL to 2500' FWL of section 15-153-94;
    • these nine new permits come a day following permits for four Charolais South Federal wells in SWSW 10-153-94; from 234' FSL to 269' FSL and from 1039' FWL to 956' FWL, Elm Tree oil field;
    • Note: these are Charolais SOUTH Federal wells; the CLR Charolais NORTH Federal wells are tracked here
    • the CLR Charolais wells are monster wells; see production for #32605, a Charolais North Federal well; 

Two producing wells (DUCs) reported as completed:

  • 31793, drl/A, Petro-Hunt, USA 153-96-13A-24-1HS, Charolais, no production data,
  • 36021, SI/A, CLR, Nadia 6-19H, Jim Creek, t--; cum --;

Oman Is Having Trouble Balancing Its Books; Problems Began Well Before Chinese Flu Pandemic Of 2020 -- Financial Times -- October 19, 2020


October 20, 2020: OPEC+ is on the brink of a disaster. Link to Cyril Widdershoven.

Original Post

OPEC in deep doo-doo. The "Switzerland of the Middle East" is struggling to balance its books. And that began well before the Chinese flu pandemic of 2020. 

From OPEC press release: 

Oman is one of the ten non-OPEC participating countries of the 'Declaration of Cooperation', and has a long and rich history of collaboration with OPEC, spanning nearly three decades. ... “The greatest highlights in Omani-OPEC relations have occurred in the last 20 years.

Article over at Financial Times, behind a paywall, of course. 

From the article:

Sandwiched between Saudi Arabia and Iran, Oman has long prized its neutrality, garnering a reputation as the Middle East’s Switzerland.

But the Gulf state’s ability to steer clear of regional power struggles has been put at risk by economic woes that have been exacerbated by the coronavirus pandemic and the slump in oil prices. The IMF forecasts an economic contraction of 10 per cent this year, far steeper than the Middle Eastern average.

The crisis has been a baptism of fire for Sultan Haitham bin Tariq Al Said, who succeeded Qaboos bin Said Al Said in January after the death of the leader who shaped modern Oman during his half century on the throne.
The sultanate’s budget deficit is forecast to hit 20 per cent of gross domestic product this year after revenues tumbled. With modest hydrocarbon resources, Oman has around $16bn in foreign exchange reserves and another $16bn in readily available overseas assets, but the fiscal shortfall and maturing global bonds amount to more than $13bn a year for the next three years.

The sultanate, which borrowed $2bn from global banks in August, will need to draw down domestic deposits including from the sovereign wealth fund, asset sales and more loans in order to steady the budget. It is considering a return to bond markets to raise $2bn-$4bn. 

More EV Companies Coming To Market -- Most Of Them Have No Real Revenue -- Barron's -- October 19, 2020

Running out of toes and fingers to count all the new EV companies. From Barron's: after two high-profile EV companies went public through SPACs earlier this year, at least six more EV-SPAC mergers are on the horizon. More EV companies are coming to market. None of them have any real revenue. Link here. Paywall. One can find story here at MarketWatch, not yet behind paywall. Archived.


Apple iPhone 12 update:

  • Securities analyst Ming Chi-Kuo suggests iPhone 12 Pro demand is higher than expected. Link here
  • iPhone 12 Pro pre-orders are already selling out. Link here. Others have suggested that when the Apple site when live to begin taking orders for the iPhone 12, the supply of iPhone 12's were sold out in twelve minutes
  • Taiwanese carriers believe that sales of iPhone 12 models will be the strongest since the iPhone 6 and iPhone 6 Plus. Link here.

Deals In 2019

Nothing new here. Simply some book-keeping, tightening up the sidebar at the right:

The deals, non-deals, miscellaneous:

Conoco-Concho Deal Announced -- October 19, 2020

The joint letter to stockholders, dated December 11, 2020:

  • COP to issue common shares to complete the merger;
  • Concho shareholders will receive 1.46 shares of COP for each share of Concho;
  • based on average prices, the merger valued Concho at $49.30/share;
  • based on closing prices on day prospectus published, Concho shareholders received $58.36 in COP share value;
    • closing price of CXO, December 30, 2020: $58.26
    • closing price of CXO, October 16, 2020: $48.60
    • closing price of COP, December 30, 2020: $40.00
    • closing price of COP, October 16, 2020: $33.77

Dislaimer: I often misread and misunderstand financial statements, press releases, and news reports. The information on this page will contain typographical and content errors. If this information is important to you, go to the source.

Conoco-Concho deal announced. Links everywhere. Here's one. All stock. $10 billion.

  • 550,000 net acres; $18K/acre

From the linked article:

Adding Concho will dramatically alter Conoco’s production profile. The Midland, Texas-based shale company is entirely focused on the Permian and pumped 319,000 barrels in the second quarter, about six times what Conoco produced there.

The combination will save $500 million a year by 2022, and hand shareholders more than 30 percent of cash from operations through dividends and other distributions, the companies said.

Concho “was an attractive company and had one of the deepest tier 1 resource bases in shale,” analysts at Wells Fargo said in a note. With a deal premium of 15% along with the projected efficiencies, Conoco “seems to be getting a bargain.”

From Bloomberg Intelligence

“With Concho Resources’ stock down more than 40% in 2020, its sale to ConocoPhillips at a 15% premium to the October 13, 2020, close may not assuage holders of a best-in-class Permian E&P that’s generating free cash flow and has less burdensome debt than smaller, independent peers. 
Concho had laid out a reasonable road map of modest production married with capital efficiency, and we thought it would be a consolidator, even given CEO Tim Leach’s history of selling two other iterations of Concho.”


A good buy for COP:

  • ConocoPhillips is buying Concho Resources in an acquisition valued $9.7 billion, expected to close 1Q21. Concho’s current market capitalization is $9.3 billion.
  • In March 2018 Concho itself paid $9.5 billion for RSP Permian. At year-end 2019, Concho’s reserves had an SEC PV-10 value of $10.6 billion.
  • While oil prices are lower and the trajectory uncertain, COP is buying solid assets in the best U.S. basin at a reasonable cost.

On price, a good deal:

  • ConocoPhillips is upgraded to Buy from Hold with a $40 price target at CFRA in the wake of the company's $9.7B agreement to acquire Concho Resources, which the firm trims to Buy from Strong Buy. 
  • "We estimate the deal at about 6x projected '21 EBITDA, roughly in line with peers, and just a 14% premium relative to closing prices just prior to the [October 14, 2020] rumors of this potential tie-up," CFRA's Stewart Glickman writes. "COP is getting a good price for control of CXO, and significantly boosting its Permian Basin acreage in the bargain." 
  • Conoco would add ~288M shares in the deal, but Concho's projected free cash flow in 2021 - more than $570M - "should more than cover the incremental dividend obligation" of $480M, Glickman says, adding that there is some risk to COP that CXO may attract rival suitors. 
  • On Concho, Glickman is surprised the company's board agreed to the deal since Concho has the advantage of a large acreage position in the Permian Basin and has more time than most peers before significant long-term debt milestone payments arrive.

More sustainable E&P model:

  • Demand destruction and low oil prices have led to more acquisitions in the oil and gas space.
  • The ConocoPhillips purchase of Concho Resources is one of the biggest positive shale movements of late.
  • Headwinds in the form of the coronavirus' trajectory and economic impact make deals more likely.
  • The tie-up also has positive ramifications for an industry coming to terms with ESG investing demands which will only increase.

Bodes well for Permian Basin's long-term outlook:

  • ConocoPhillips' $9.7B deal for Concho Resources marks a strategic departure for the company, which has spent years shedding assets while peers chased aggressive growth, and gives the company a far larger footprint in the Permian Basin.
  • The combined company will be the largest U.S. oil independent, with production in the Permian second only to Occidental Petroleum, according to a J.P. Morgan analysis.
  • "The combination is remarkable. Just in regards to scale, ConocoPhillips is adding enough Permian production to nip at the heels of Exxon Mobil's massive program," said Robert Clarke, a VP at energy consultancy Wood Mackenzie, in a statement. "The combination bodes well for the Permian's longer-term outlook."
  • The purchase bodes well for additional potential M&A targets, including Cimarex Energy, Parsley Energy and Pioneer Natural Resources, Siebert Williams analyst Gabriele Sorbara says.
  • CFRA sees Cimarex, Diamondback Energy, Murphy Oil and PDC Energy as the most likely takeover candidates in the E&P sector.
  • Additionally, Conoco issued a surprise pledge to cut Scope 1 and 2 greenhouse gas emissions from its operations by 35%-45% by 2030 from 2016 levels, and eliminate them by 2050.
  • Once the Concho takeover is completed, Conoco says it will restrict drilling capital to projects that will turn a profit even if crude is trading for less than $40/bbl, which could remove some parts of the company's existing portfolio, such as fields in Alaska and western Canada.
  • Wall Street analysts spoke out favorably on the proposed deal before today's announcement.

Conoco confirms:

  • ConocoPhillips (NYSE:COP) agrees to acquire Concho Resources (NYSE:CXO) in all-stock transaction that values Concho at ~$9.7B.
  • ConocoPhillips says the new merged entity will be the largest independent oil and gas company, with pro forma production of more than 1.5M boe/day.
  • Under the deal terms, each Concho common share will be exchanged for a fixed ratio of 1.46 Conoco shares, representing a 15% premium to closing share prices on Oct. 13, the day before the first reports speculating a potential combination of the two companies.
  • ConocoPhillips and Concho expect to capture $500M of annual cost and capital savings by 2022.

Shale consolidation wave is fully underway

Last year seems so long ago now, but oil and gas people will recall that 2019 was supposed to have been when the big wave of M&A came to consolidate the U.S. shale drilling industry. The trend was building in April of last year, when Chevron and OXY spent a month fighting over who would win the chance to overpay for Anadarko Petroleum. Oxy won that competition and landed Anadarko for $55 billion — a princely sum that sparked speculation over who would sell next, and for the winning bidder was pounded by the market for having overpaid, but speculation about more consolidation - especially among the big players in the oil-rich Permian Basin - only continued to ramp up. Surely, more big deals were coming, and soon.

Well, “soon” turned out to be 15 months later, in July of this year, when Chevron was able to land the big fish it had been seeking in its $13 billion deal to acquire another large independent Permian player, Noble Energy NBL +1.4%. After Oxy’s deal for Anadarko failed to impress investors, more than a year had gone by in the shale patch without a single truly large M&A transaction taking place.

Initial Production Data For Wells Coming Off Confidential List This Next Week -- October 19, 2020

The wells:

  • 37426, conf, Slawson, Orca Federal 2-23-26H, Big Bend, no production data, 
  • 37239, conf, Slawson, Loon Federal 5 SLTFH, Big Bend, no production data, 
  • 37427, conf, Slawson, Orca Federal 4-23-26TFH, Big Bend, no production data, 
  • 35970, conf, Enerplus, Isle Royal 148-95-02A-11H-TF-LL, Eagle Nest,
DateOil RunsMCF Sold

New Wells Coming Off Confidential List This Next Week -- OCtober 19, 2020

Monday, October 26, 2020: 21 for the month; 21 for the quarter, 686 for the year

Sunday, October 25, 2020: 21 for the month; 21 for the quarter, 686 for the year
37426, conf, Slawson, Orca Federal 2-23-26H,
37239, conf, Slawson, Loon Federal 5 SLTFH,

Saturday, October 24, 2020: 19 for the month; 19 for the quarter, 684 for the year

Friday, October 23, 2020: 19 for the month; 19 for the quarter, 684 for the year
37427, conf, Slawson, Orca Federal 4-23-26TFH,

Thursday, October 22, 2020: 18 for the month; 18 for the quarter, 683 for the year
35970, conf, Enerplus, Isle Royal 148-95-02A-11H-TF-LL,

Wednesday, October 21, 2020: 17 for the month; 17 for the quarter, 682 for the year

  • None

Tuesday, October 20, 2020: 17 for the month; 17 for the quarter, 682 for the year

  • None

Monday, October 19, 2020: 17 for the month; 17 for the quarter, 682 for the year

  • None

Enerplus Reports A Nice "National Parks" Pad Well -- October 19, 2020

Saudi Aramco scales back expansion, link here:

  • $20-billion crude-to-chemicals plant will be scaled back
  • necessary "to preserve the world's biggest dividend"
  • will instead incorporate existing facilities into the Yanbu project instead of building an entirely new one;
  • looking to shelve the Yanbu project on Saudi Arabia's Red Sea coast or integrate it with existing refineries
  • Saudi state also reviewing plans to buy part of a LNG terminal in Texas and has put a $10-billion Chinese refining project on hold

OPEC basket, link here: $41.29.

Back to the Bakken

 Enerplus' "National Parks" pad is tracked here.

Active rigs:

Active Rigs1661715631

One well coming off confidential list --

Saturday, October 17, 2020: 19 for the month; 19 for the quarter, 684 for the year

  • 35969, drl/NC, Enerplus, Yosemite 148-95-02A-11H, Three Forks B1, Eagle Nest, t--; cum 65K 8/20; fracked 3/23/20 - 4/5/20; 6.43 million gallons of water (moderate-sized frac); 65% water by mass;

RBN Energy: LNG demand will flip natural gas flows and basis across the Texas-Louisiana border, part 3.