Sunday, February 28, 2021

Idle Thoughts Regarding The Bakken And Shale In 2021 -- February 28, 2021

This might be one of the most interesting years for the Bakken in quite some time.

  • across the board, operators in the Bakken say they are going to grow free cash flow; not grow production;
  • analysts suggest WTI will finish the year at $75; some suggest triple digit (hope springs eternal);
  • active rigs in the Bakken have bottomed out at 15 and remained there for quite some time;
  • there weren't many deals in the Bakken in 2020
  • Saudi, OPEC+, Russia: seem confused about what to do next
  • some analysts suggest supply won't meet demand as we come out of the Covid-19 pandemic lockdowns
  • the future of the DAPL?
  • middle Bakken permits still appear to be about 3:1 vs first bench;

So, some questions:

  • more mergers, acquisitions, deals in the Bakken in 2021?
  • will weget a chance to see if the Bakken can be a swing producer -- if demand exceeds supply will the Bakken surprise?
  • will we get a chance to see how Bakken operators manage their assets?
  • with minimal new drilling; some increase in fracking; will this impact production?
  • will we see change in that 3:1 ratio (new permits, middle Bakken vs first bench)?
  • will there be enough changes in the Bakken to justify a move to "Bakken 5.0"?
  • will average production trend toward 100 bbls/day/well (we got there during the boom; dropped to the low 70s; now about 78, if I recall correctly.

On another note: earlier the question was asked -- has the King had enough of MBS? It's a "fun" question to ask, but there's no way MBS is not the next King of Saudi Arabia. If MBS suddenly disappears, it will make England's War of Roses look like child's play. But we can dream, can't we?

Most surprising development in 2020:

  • increased interest in the Powder River Basin
  • both EOG and CLR made news in the PRB

Two CLR Morris Wells Coming Off Confidential List This Next Week -- February 28, 2021

This page will not be updated.

A couple of CLR Morris wells will be coming off confidential list this next week. The wells:

  • 37713, conf, Morris 12-26H1, Oakdale, no production data,
  • 37793, conf, CLR, Morris 14-26HSL2, Corral Creek, no production data,

The CLR Morris wells are tracked here.

Current graphic of the Morris wells:

Those wells in the southeast quadrant still on confidential:

  • 37713, conf, CLR, Morris 12-26H1,
  • 37714, conf, CLR, Morris 13-26H,
  • 37793, conf, CLR, Morris 14-26HSL2,
  • 37715, drl, CLR, Carson Peak 11-35H2,
  • 37716, conf, CLR, Carson Peak 12-35H1,
  • 37794, conf, CLR, Carson Peak 13-35H,
  • 37795, conf, CLR, Morris 14-35HSL2,

Some observations regarding those most recent permits:

  • added three more second bench Three Forks wells;
  • chronologic numbers are up to 14, but that's 2x = 28

Initial Production Data For Wells Coming Off The Confidential List This Next Week -- February 28, 2021

The wells:

  • 37713, conf, Morris 12-26H1, Oakdale, no production data,
  • 37672, conf, Minnkota Power Cooperative, J-ROC1 1, wildcat, no production data,
  • 36206, conf, CLR, Polk Federal 13-33HSL, Banks,
DateOil RunsMCF Sold
12-20203243968588
11-20203666268878
10-20201723130627
9-20202420
  • 35712, conf, Whiting, Renbarger 24-34HU, Banks,
DateOil RunsMCF Sold
12-20201127953881
11-20201763068036
10-20201986260458
9-20203270566516
  • 37793, conf, CLR, Morris 14-26HSL2, Corral Creek, no production data, 
  • 37308, conf, WPX, Crosby Chase 2-1HC, Spotted Horn, no production data, 
  • 36245, conf, BR, Maverick 2D MBH, 
  • 37704, conf, Petro-Hunt, USA 153-95-11C-2-1HS, Dimmick Lake, no production data, 
  • 37307, conf, WPX, Crosby Chase 2-1HY,
  • 37306, conf, WPX, Crosby Chase 2-1HG, Spotted Horn, no production data, 
  • 37639, conf, BR, Cherry Ice Cream 1V TFH, Haystack Butte, no production data, 
  • 37305, conf, WPX, Crosby Chase 2-1HZ, Spotted Horn, no production data, 
  • 35952, conf, Whiting, Renbarger Federal 34-33-2TFH, Banks,
DateOil RunsMCF Sold
12-2020164452773
11-20201959511640
10-2020983920739
9-20201177322567
8-2020096
  • 37715, drl/NC, CLR, Carson Peak 11-35H2, Oakdale, 
  • 37638, drl/drl, BR, Cherry Daquiri 1W MBH, Haystack Butte, no production data, 
  • 37637, drl/drl, BR, Cherry Margarita 1X TFH, Haystack Butte, no production data, 
  • 37636, drl/drl, BR, Cherry Claire 1Y MBH, Haystack Butte, no production data, 
  • 37635, drl/drl, BR, Cherry Tree 1Z TFH, Haystack Butte, no production data, 
  • 37304, drl/NC, WPX, Crosby Chase 2-1HIL, Spotted Horn, no production data, 
  • 37097, A/F, Hess, BW-Spring Creek-149-99-1201H-6, Cherry Creek, first production, 8/20; t--; cum 84K 12/20;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN12-20203122943230292981839267318687399
BAKKEN11-202030203762012931223413422533316009
BAKKEN10-202075116527690701185078663984
BAKKEN9-202030282622831047306582792289235320
BAKKEN8-2020369286659521617490265014821

Wells Coming Off The Confidential List This Next Week -- February 28, 2021

Monday, March 8, 2021: 13 for the month, 69 for the quarter, 69 for the year.
37713, conf, Moris 12-26H1,
37672, conf, Minnkota Power Cooperative, J-ROC1 1
36206, conf, CLR, Polk Federal 13-33HSL,

Sunday, March 7, 2021: 10 for the month, 66 for the quarter, 66 for the year.
35712, conf, Whiting, Renbarger 24-34HU,

Saturday, March 6, 2021: 9 for the month, 65 for the quarter, 65 for the year.
37793, conf, CLR, Morris 14-26HSL2,

Friday, March 5, 2021: 8 for the month, 64 for the quarter, 64 for the year.
37789, conf, K T Enterprises,

Thursday, March 4, 2021: 8 for the month, 64 for the quarter, 64 for the year.
37308, conf, WPX, Crosby Chase 2-1HC,
36245, conf, BR, Maverick 2D MBH,

Wednesday, March 3, 2021: 6 for the month, 62 for the quarter, 62 for the year.
37704, conf, Petro-Hunt, USA 153-95-11C-2-1HS,
37307, conf, WPX, Crosby Chase 2-1HY,

Tuesday, March 2, 2021: 4 for the month, 60 for the quarter, 60 for the year.
37306, conf, WPX, Crosby Chase 2-1HG,

Monday, March 1, 2021: 3 for the month, 59 for the quarter, 59 for the year.

  • 37639, conf, BR, Cherry Ice Cream 1V TFH,
  • 37305, conf, WPX, Crosby Chase 2-1HZ,
  • 35952, conf, Whiting, Renbarger Federal 34-33-2TFH,

Sunday, February 28, 2021: 23 for the month, 56 for the quarter, 56 for the year.

  • 37715, conf,  CLR, Carson Peak 11-35H2,
  • 37638, conf, BR, Cherry Daquiri 1W MBH,
  • 37637, conf, BR, Cherry Margarita 1X TFH,
  • 37636, conf, BR, Cherry Claire 1Y MBH,
  • 37635, conf, BR, Cherry Tree 1Z TFH,
  • 37304, conf, WPX, Crosby Chase 2-1HIL,
  • 37097, conf, Hess, BW-Spring Creek-149-99-1201H-6,

Saturday, February 27, 2021: 16 for the month, 49 for the quarter, 49 for the year.

  • None.

Covid Vaccine And EVs -- February 28, 2021

If one wants any more proof that what's holding back America, one doesn't have to look any farther than federal bureaucratic regulations and the Covid-19 vaccine story. In less than a year, three US vaccines have reached the market. Under normal circumstances, two of the three may have never seen the light of day, and none of the three would have come to market in less than five years, again, under normal circumstances.

Trump will get no credit. 

This was Trump's JFK moonshot.

This was Trump's Eisenhower's June 6, 1944.

This was Trump's Groves' / Oppenheimer's Manhattan Project. 

Overnight it was announced that the FDA had authorized emergency use of J&J's single-dose Covid-19 vaccine. Link here to Barron's and the paywall.  Shares of JNJ:

  • up 1.6% in after-hours trading on Friday
  • up 18% from a year ago

World Trade Center, the twin towers:

  • architects selected: September 20, 1962
  • the Port Authority begins acquiring property: March, 1965
  • construction began: March 21, 1966
  • ribbon cutting ceremony: April 4, 1973

Boston's Big Dig:

  • planning began: 1982
  • construction began: 1991
  • construction (considered) complete: 2006
  • project concluded on December 31, 2007, with dissolution of the partnership

*************************************
EVs

Two really good articles on EV -- neither with good news for EV enthusiasts -- in today's WSJ:
how Europe became the world's biggest EV market, and why it might not last;
what's missing in the electric vehicle revolution: enough places to plug in;

I'm too busy to provide many excerpts. I may come back to these articles.

  • Tesla: in deep doo-doo. It wins in three areas:
    • marketing;
    • luxury car market;
    • charging stations.
  • but this is where Tesla will lose: in the trenches:
    • 65 new EV models launched in Europe last year;
      • another 99 are slated to come to market this year in Europe
    • 30-some new EV models launched in China last year;
    • North America: 15 new launches last year (2020)
      • 2021: 64 are planned
  • luxury car market:
    • Tesla
    • BWM AG, Mercedes and Audi launched high-end EVs
      • this year Mercedes is set to launch the EQS -- a highly automated successor to the flagship S-class

***************************
Humbled

I am truly humbled. 

I share my thoughts on the Bakken on a blog simply because it was the easiest way for me to follow the Bakken. It was one of the best things I ever did. The blog has a lot of shortcomings, most of which won't improve over time. 

I am blown away -- and humbled -- to see the names of some of the analysts that follow my blog. Yes, there are ways to do that using social media. 

But I am truly humbled. It makes me want to get more serious about blogging about the Bakken. But wow, that would get boring. 

More On Buffett -- February 28, 2021

Before I get started, and before I forget:

  • F-150 crew cab lease: $450/month
  • Mercedes Benz GLA 250 SUV lease: $400/month

Updates

Later, 8:39 a.m.: I highly recommend investors sign up forYahoo!Finance Morning Brief. This is today's web version. After reading the two WSJ articles linked below, this article on WB appeared in my "Morning Brief": no such thing as 'too much': Warren Buffett quotes Mae West in defense of stock buybacks. It turns out: that link takes you to six more linked stories. Let's look at just one excerpt regarding buybacks:

According to Buffett’s logic, the buybacks were conducted to “enhance the intrinsic value per share for continuing shareholders and would leave Berkshire with more than ample funds for any opportunities or problems it might encounter.”

He blasted companies who repurchase stock “at simply any price,” calling that strategy “embarrassing” and just the opposite of what Berkshire likes to do.

He cited Apple’s stock — which he first purchased in late 2016 at a cost of $36 billion — as an example where his approach paid literal dividends. By July 2018, Berkshire held over a billion split-adjusted shares of the iPhone maker, or 5.2%, at a cost of $36 billion.

“Since then, we have both enjoyed regular dividends, averaging about $775 million annually, and have also — in 2020 — pocketed an additional $11 billion by selling a small portion of our position,” he wrote.

“Despite that sale — voila! — Berkshire now owns 5.4% of Apple,” Buffett declared. And because Apple continually bought back its own stock, that’s increased the value of Berkshire’s holdings, and helped boost shareholder value.

“Because we also repurchased Berkshire shares during the 21⁄2 years, you now indirectly own a full 10% more of Apple’s assets and future earnings than you did in July 2018,” the investor said.

“The math of repurchases grinds away slowly, but can be powerful over time. The process offers a simple way for investors to own an ever-expanding portion of exceptional businesses,” he added.

Original Post 

More -- but the same -- on Berkshire.

See this note from yesterday.

Now, today, these notes from The WSJ article on Buffett and Berkshire Hathaway today.

Observations:

  • Warren Buffett consistently and routinely chastises other companies for stock buybacks. This past year, BRK bought back a record $25 billion in its own shares; he defends. Fell on deaf ears. Mine.
  • again, the adulation Buffett gets: this was a very, very long article, but it wasn't until the penultimate paragraph that we read that BRK-A shares appreciated 2.3% in 2020; compare to the S&P 500: 16% in a booming stock market;
    •  the fact that BRK-A did so poorly speaks volumes about where investors/traders are putting their money; not in BRK
  • one does have to wonder; his fourth-quarter profits rose nearly 23% and his shares languish; without question, these are shares every investor should accumulate for the long haul
  • 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.
  • He admits he blew it on Precision Parts; he is too hard on himself; I was too hard on Buffett for blowing it on Precision Parts; this was related more to Covid-19 than anything else and completely unpredictable; a "black swan"; I take back my comments regarding Buffett and Precision Parts
  • I started out this note with a negative tone; after going through the article, and thinking about it, again, I apologize. I now appreciate Buffett more than ever. Seriously. I'm not being sarcastic.
  • Any "fund" that can increase its profits by almost 25% quarter-over-quarter and yet not attract buyers? The losers are the investors who don't accumulate shares in BRK; over time this will take care of itself
  • BRK-A's P/E: 16
    • most recent price: 368K
    • one-year target: 404K
  • BRK-B's P/E: --
    • most recent price: 240
    • one-year target: 260

Saturday, February 27, 2021

"Damn The Torpedoes, Full Speed Ahead" -- The CLR Flint Chips Federal And Dennis FIU Wells -- February 27, 2021

This page will not be updated.

This is just one of a gazillion examples I could show why I am inappropriately exuberant about the Bakken.

Imagine you are the heir to a homesteader who farmed 160 acres, in section 8-147-96, retained the minerals and passed them on to his grandchildren (one of whom was you) and great-grandchildren. The families are multi-millionaires many times over (or will be).

First, look at the activity several years ago at this link, the screenshots from 2015.

Now, look at what has happened since then, screenshots of the same area six years later.


These wells are on the pad to the west, running north to south:

  • 38117, conf,  Dennis FIU 13-8H1,
  • 38118,
  • 38119,
  • 38120,
  • 38121,
  • 38122,
  • 38123,
  • 38124,
  • 38125,
  • 38126,
  • 38127,
  • 38128, conf, CLR, Dennis FIU 6-8H,

These wells are on the pad to the east, running north to south:

  • 38129, conf, CLR, Dennis FIU 15-8HSL1,
  • 38130,
  • 38131,
  • 38132,
  • 38133,
  • 38134,
  • 38135,
  • 38136,
  • 38137,
  • 38138,
  • 38139,
  • 38140, conf, CLR, Dennis FIU 12-8H,

These wells are on the pad running diagonally, northwest to southeast:

  • 38146, conf, CLR, Flint Chips Federal 11-5H1,
  • 38147,
  • 38148,
  • 38149,
  • 38150,
  • 38151, conf, CLR, Flint Chips Federal 16-5HSL,

These CLR Dennis FIU and Flint Chips Federal wells are tracked elsewhere.

As I said in a recent note: I really don't care one way or the other how CLR the company does for its investors. Don't take that out of context. This is not an investment site. But just imagine one individual who started out in life driving water trucks for wells in Oklahoma and is now able to authorize his folks to apply for permits for siting 30 wells in one section and then watching them be drilled. 

Note: regardless of the density of wells in the Bakken, it is generally understood that in the core Bakken, it is expected that new wells have a EUR of at least one million bbls of crude oil.

CLR Getting Active In Cedar Coulee -- Update -- February 27, 2021

This page won't be updated. This well is tracked here. Is something going on? This well was taken off line almost two years ago, back in 4/19. Now, almost two years later, the well was brought back on line for 19 days, 12/20, producing 1,167 bbls of oil:

  • 24735, 981, Hess, LK-Pohribnak-147-96-16H-5, 1 section, t10/13; cum 221K 6/19; cum 223K 12/20;

It was noted:

  • December 4, 2020: CLR activity in this field, update.

There's a lot of activity about four miles south of the LK-Pohribak wells. See the graphics at that link posted December 4, 2020 (link). At that time, about three months ago, there was only one rig in section 32-147-96. Now there are four rigs:

These wells run west to east on one pad:

  • 37373, conf, CLR, Gale 5-32H,
  • 37374,
  • 37375,
  • 37376,
  • 37377,
  • 37378,
  • 37379, ros, CLR, Rodney 8-29H1,

These wells run north to south on one pad:

  • 37396, ros,  CLR, Rodney 10-29H1,
  • 37397,
  • 37398,
  • 37399,
  • 37400,
  • 37401,
  • 37402, 

These wells run north to south on one pad:

  • 37410,
  • 37409,
  • 37408,
  • 37941, ros, CLR, Bang 3-33H1,
  • 37407, ros, CLR, Gale 14-32HSL,
  • 37406,
  • 37405,

The CLR Rodney / Gale wells are tracked elsewhere.

NDIC's list of active rigs shows only two active CLR rigs, both drilling Rodney wells.  


Has The King Had Enough? -- February 27, 2021

I've said this more than once on the blog, my hunch: the old man's patience is running thin with his son. Worse, the heir, the Saudi Crown Prince, Prince Mohammed bin Salman age 35), has built up a large number of enemies within the extended royal family. He's not yet the king; his dad is still alive at age 85, about the same age as our president.

And, today there are reports of Iran-backed rebels firing missiles over Riyadh.

Link here.

Seldom discussed: Biden is "old school." He is a devout Catholic. Not much love lost between him and Saudi Arabia.

Saudi King snubbed Obama back in 2015. Payback is hell.  

Saudi Arabia with huge debt problem, February, 2021.

Official figures and data have shown that Saudi Arabia’s debt [is now] 21 times larger in just six years, as the kingdom has lost more than half a trillion dollars since King Salman came to power at the beginning of 2015.

The old man was right: the IPO was a really, really bad idea, November 24, 2020. 

Update, August 10, 2020:

Saudi Arabia

************************************
The Fine Arts Page

We finally got it framed!

Sophia drew this fox as part of an assignment earlier in the year. We finally got it framed.

Sophia is wearing "blue-light blocking" glasses that she wears when at the computer. 


American Household Income Surging! What Two Sectors Will Be The First To Benefit? -- February 27, 2021

Link here.

From the linked article;

Pandemic aid to households is pouring money into the U.S. economy, priming it for rapid growth this year. 
Household income—the amount Americans received from wages, investments and government programs—rose 10% in January from the previous month
The increase was the second largest on record, eclipsed only by last April’s gain, when the federal government sent an initial round of pandemic-relief payments. 
Household income has risen 13% since February 2020, the month before the pandemic shut down large segments of the economy. 
January’s increase in household income was almost entirely due to federal pandemic-relief aid included in a $900 billion stimulus program signed into law in late December. That package included one-time cash payments of $600 and a special weekly unemployment benefit of $300 that the government started sending to households.

Quick! Name the first "large" purchase Americans make when they experience a windfall (in cash)! From what sector do Americans make their second "large" purchase after the first?

And remember: the next stimulus checks will be arriving in less than a month.

And, some families will be eligible for up to $14,000.

And then this, from ZeroHedge:

Of course, in a month when household personal incomes exploded thanks to the $900BN stimulus checks, coupled with the collapse in Covid cases and hospitalizations, the resultant burst of economic strength is hardly a surprise.


On a trivial note:

A majority of Goldman's sector analysts report that business activity in their industry is at or above normal levels.

Most also indicated that last week's winter storm in the South and Midwest did not significantly affect their industry.

I opined before the Texas Freeze was even over that it would be forgotten in two weeks and everything would be back to "Covid-normal" in two months. GS seems to agree.

***********************************
Gender Differences: Undergraduate Degrees

Chart of the day from Mark Perry, with commentary.

Week 8: February 21, 2021 -- February 27, 2021

Top story of the week:

Top international non-energy story:

Top international energy story:

Top national non-energy story:

Top national energy story:

Top North Dakota non-energy story:

Top North Dakota energy story:

Geoff Simon's top ND energy stories:

Bakken 101:

Operators:

Operations:

Wells:

Fracking:

Pipelines:

Bakken economy:

Commentary:

Impressed. Not Impressed. -- Berkshire Hathaway -- Fiscal Year / Calendar Year 2020

Link here.

What am I missing?

This was the Bloomberg headline:

This was buried near the end of the story:


"Falling short." Holy mackerel. That's incredible. The oracle of Omaha, the Venerable Bede of investing, the superman of stock picking, the ... well, you get the point ... his fund gained 2% in a year when the market surged, when the S&P 500 apparently gained 16%. 

He overpaid --way overpaid -- for Precision Parts and sold Apple.

*********************************
Shhh! Class Is In Session

North Dakota Crude Oil Production Is Up Almost 40% Compared To May, 2020 Despite Active Rigs And Frack Spreads Trending Toward Zero -- February 27, 2021

Based on comments I get and based on comments over at twitter and based on articles by the likes of Art Berman, and then looking at the most recent dashboards, it still seems to me that folks don't understand shale, and they don't understand how unconventional plays are different from conventional plays, how the Bakken is different from Saudi Arabia.

It's almost as if those noted above don't take time to really study the data or the graphics like the one below.

For several years now, the number of rigs in North Dakota and the number of frack spreads in North Dakota have remained pretty much unchanged. Both, in fact, amazingly, are trending toward zero.

And yet crude oil production in North Dakota has not dropped off a cliff; 

  • oil production has actually remained quite steady over the last few months; and,
  • oil production is up an astounding 38% since last May, 2020.

Natural gas production

  • has increased by 50% since May, 2020; and,
  • flaring has decreased.

By the way, when was the last time you saw an article talking about "all" the flaring in the Bakken. I thought so.

Imagine production data from Saudi Arabia and/or Russia if their rig counts had trended toward zero for the past two years. Need I say more.

I think that's why EOG is talking about "Double Premium" and Ovintiv is talking about "Quintuple Premium." 

By the way, I've set a goal this year to learn how to spell "Ovintiv" without looking it up.

Much more could be written but I will leave it at that, for now. 

From the NDIC, at the link, "historical monthly oil production statistics":

From the same link, "historical monthly natural gas production statistics":


*******************************
Believe

Believe, Cher
 
From Cher's fan club:
Cher's Believe was the first commercial recording to feature Auto-Tune—an audio processor originally intended to disguise or correct off-key inaccuracies in vocal music recordings—as a deliberate creative effect. 
According to Rolling Stone's Christopher R. Weingarten, the "producers used the pitch correction software not as a way to fix mistakes in Cher's iconic voice, but as an aesthetic tool." 
When she beat out Britney Spears for Billboard's #1 single of 1999 with "Believe," it was hard to realize that was the same Cher who once knocked out The Beatles off the top of the charts with her first hit song back in 1965.

1965? I Got You Babe.

From cherscholar:

Perhaps the best example of "fleeting fame": Blondie.

Friday, February 26, 2021

Free Cash Flow -- EOG Vs CLR -- 4Q20 -- EOG's Focus on "Double-Premium -- Whatever That Is -- February 26, 2021

Free cash flow:

  • EOG: $666 million 4Q20; annualized: $2.7 billion for the full year;
  • CLR: $275 million full year;

Market cap:

  • EOG: $37 billion
  • CLR: $9 billion

EOG's "Double-Premium" strategy: for the life of me, I can't figure out what "they" mean by "double premium." Apparently I'm not the only one. From twitter today:


And then this from Onvintiv CEO over at Twitter. This has to be the funniest thing I've seen since Trump's "covfefe" tweet, link here (this link is worth the cost of the subscription to this blog):

The Cube™, lol: three layers of capital destruction. LOL. 

From NGI, "double the premium (archived):

The 2021 capex plan is designed to maintain oil production at the 4Q2020 rate of 434,000-446,000 b/d.

The budget also is designed to fund a growing exploration inventory. However, even if commodity prices were to improve, don’t look for EOG to boost spending or build volumes, Thomas said. 

The focus instead is centered around “double-premium” oil and gas potential, with wells needing a minimum 60% after tax real rate of return, i.e. ATROR. That would be an average flat $40/bbl West Texas Intermediate oil price and $2.50/Mcf Henry Hub natural gas.

About 500 net wells are scheduled for completion this year, nearly all in the Permian Basin’s Delaware sub-basin, as well as the Eagle Ford and Powder River Basin. In addition EOG is “accelerating leasing and testing of numerous high‐impact exploration projects,” such as Dorado, while funding international efforts and various environmental programs.

“The 2021 capital plan is consistent with the strategy we have followed over the last year of not growing production in an oversupplied market,” Thomas said. “We are focused on increasing returns, generating free cash flow and maintaining our productive capacity while the oil market rebalances.

Again, I have no idea what EOG means by "double premium." It sounds like they hope to generate increased free cash flow without a significant increase in production.

Graphics from EOG





Transcript, EOG.

Comments Regarding The Blog -- February 26, 2021

A few comments regarding recent comments.

In the last few days there have been some comments regarding non-fossil fuel energy: hydrogen, wind, solar, ammonia, biofuel, etc. 

Before we get too far afield, a few reminders to readers.

First comment

  • I am inappropriately exuberant about the Bakken;
  • with regard to energy, I really don't care about anything but oil and natural gas, preferably shale;
  • articles and blogs posted on non-shale energy subjects on the blog are posted simply to keep the Bakken in perspective;
  • investing and science projects are two separate things; just 'cause folks are investing in hydrogen, e.g., doesn't mean it will succeed as a going concern;
  • folks who think EVs are "the answer" haven't thought this through;
  • bottom line: I won't live long enough to see a viable alternative to ICE's around the world; in other words, fossil fuel will still be important for decades to come;
  • more could be written but I'm sure folks can fill in the gaps;
  • most likely I will not post comments in response to this; there are way too many other sites that can carry that water, as they say;

Second comment:

  • I wish there was an "app" that tracked spelling and grammatical errors over time;
  • I started the blog in 2007, but the current blog only goes back to 2009, about twelve years of blogging;
  • in 2007 I was 56 years old; I am now almost 70 years old;
  • anecdotally, it seems Sophia -- my editor -- is catching more typographical and spelling errors now than ten years ago; if there was an "app" that tracked such things it might be a great way to track my cognitive strength (or deterioration);
  • as I stated in the long version "disclaimer" and "welcome" I prefer readers not point out minor typographical / spelling errors; there would simply be too many; however, if one spots what appears to be a major error that affects the content of the article, please let me know. 

Third comment:

  • again, this is not an investment site:
  • I really don't care how companies do one way or the other; I track them because it helps me make sense of the Bakken; I only hope companies do well to keep their employees and pay them better and better wages;
  • I do invest in companies that are in the oil business, shale and non-shale, but have no particular investing interest in the Bakken;

Fourth comment:

  • comments for this particular posting are closed;
  • I won't post comments addressed to this post;
  • comments, in general, are posted only if they move the discussion forward;
  • I generally don't post comments from "anonymous"; even if folks use fake names, that's better than "anonymous"

Fifth comment:

  • my "favorite" companies in the Bakken: CLR, Slawson, Hess, Petro-Hunt, MRO, for different reasons;
  • at one time, EOG and Oasis were two of my "favorite" companies in the Bakken; no longer;
  • "favorite": has nothing to do with investment reasons but for helping me understand the Bakken;

Sixth comment:

  • it's a fool's errand to predict the price of oil going forward;

Seventh comment:

  • it's obvious we can drill our way to lower gasoline prices

Eighth comment:

  • I spoke about this a decade ago, and I'm not going to go through it again, but manmade global warming is a scam; in fact, the whole concept of global warming is probably a scam, but if there is global warming it's not caused by man;

Ninth comment:

  • I will quit now but may add more later.
  • if you want to understand my "moral compass," watch "The Andy Griffith Show" on a regular basis.

Hess With Five New Permits; Fifteen Permits Renewed;

Before I get started, a memo to self: some comments regarding recent comments -- I will post those comments later, if I remember. 

***************************************
Back to the Bakken

The daily activity report was not posted yesterday, so this will be a combination of yesterday's daily activity report and today's (Friday's) daily activity report.

Active rigs:

$61.50
2/26/202102/26/202002/26/201902/26/201802/26/2017
Active Rigs1551665740

Five new permits, #38176 - #38180, inclusive:

  • Operator: Hess
  • Field: Antelope (McKenzie County)
  • Comments:
    • Hess has permits for five AN-Norby wells in lot 1, section 4-152-94;
    • all will be sited 381' FNL and between 344' and 476' FEL;

Fifteen permits renewed:

  • NP Resources (6): two Ellison Creek Federal permits, Billings County; four Mosser Federal permits in Billings County;
  • Whiting (5): one Bartleson permit in Mountrail County; one Armas permit in Mountrail County; two Borseth Federal permits in McKenzie County, and one Roggenbuck Federal permit in Mountrail County; and one Armas permit in Mountrail County;
  • BR (3): one Mazamaphantom permit; one Phantom Ship permit; and, one Rollacleetwood permit, all in McKenzie County;
  • Slawson:  one Armada Federal permit in Mountrail County

One producing well (a DUC) reported as completed:

  • 37253, drl/A, EOG, Liberty LR 54-1416H, Parshall, first production; t--; cum --;

Ammonia As The Fuel Of The Future -- February 26, 2021

RBN Energy has talked about hydrogen and ammonia as energy/fuel options, and recently a reader has been sending me items regarding ammonia.

Interestingly enough, there's a fairly recent article on ammonia asking whether ammonia is the fuel of the future.

Link here, from the American Chemical Society, February 19, 2021. Hard to get much more current than that.

Archived

From the linked article:

Chemical companies smell an opportunity. Several firms are developing green ammonia, a route to ammonia in which hydrogen derived from water electrolysis powered by alternative energy replaces hydrocarbon-based hydrogen, making ammonia production virtually carbon dioxide–free. They are also investing in carbon capture and storage to minimize the carbon impact of making conventional ammonia, creating what the industry refers to as blue ammonia.

Tony Will, CEO of the world’s largest ammonia producer, CF Industries, sees a fundamental shift in the industry’s prospects. “Up to this point, we have made a business by selling the nitrogen value of the molecule,” he says. “What’s really exciting about this is now there is an opportunity and a market that values the hydrogen portion of the molecule.”

But establishing an ammonia fuel industry won’t be easy. By most estimates, green ammonia will cost two to four times as much to make as conventional ammonia. And some of the technologies needed to harness the molecule, such as ammonia-burning engines, are still experimental. Governments and the marketplace will have to decide if green ammonia is worth the effort.

Nature has given ammonia attributes that seem to make it a perfect commodity for a future hydrogen economy.

The bottom line for me: we will never run out of energy. Period. Dot.

It's just a matter of how much we want to spend on it.

No Wells Coming Off Confidential List; WTI Drops Back A Bit -- February 26, 2021

Enviable position: are there only two western countries that have both vast crude oil reserves as well as a robust domestic refining sector capable of satisfying national needs for gasoline, diesel, and other petroleum products? See below.

WTI
: all that talk about $100 oil? Not so fast.

China: crude oil reserves in storage near limit; reserves have reached a level equal to 100 days of imports. That number includes both SPR and commercial inventories.. To compare, US data (numbers rounded):

  • the US produces around 10 million bopd
  • in non-SPR  storage: around 600 million bbls
  • in SPR storage: around 600 million bbls; capacity -- 800 million bbls
    • maximum total withdrawal capacity: 4 million bopd

XOM: writes off one-third of its reserves. .

Dividends: E&Ps may have found a new way to keep investors happy. Link:

  • maintain quarterly / annual dividends at just the minimum that keeps long-term investors from selling; then,
  • pay generous special dividends when free cash flow surges

Apple: iPhone 12 series still strong despite weaker demand.

  • 2021 iPhone shipment estimates dropped from 236 million to 230 million
  • 230 million: a 13% increase, y/y (2021/2020)
  • Apple likely to discontinue iPhone 12 mini production 2Q21
  • makes up just 6% of iPhone 12 sales in the US in October/November, 2020
  • maybe only 5% of all iPhone 12 sales in January, 2021

**********************************
Back to the Bakken

Active rigs:

$62.75
2/26/202102/26/202002/26/201902/26/201802/26/2017
Active Rigs1551665740

No wells coming off the confidential list today

RBN Energy: eastern Canadian refineries shift to more domestic slates, part 3

Canada, like the U.S., is in the enviable position of having vast crude oil reserves as well as a robust domestic refining sector capable of satisfying national needs for gasoline, diesel, and other petroleum products. Refiners in both countries have also benefited in recent years from increasing oil production within their borders. Growth in the Alberta oil sands in particular has given refineries in both Western and Eastern Canada increased access to domestically sourced bitumen and upgraded synthetic crude oil. Today, we continue our series on Canada’s refining sector with a look at the refineries in the eastern half of the nation, and their increasing use of Canadian oil.

Thursday, February 25, 2021

Cleaning Out The In-Box --February 25, 2021

ATT -- Pay-TV: private-equity giant, TPG, to pay $1.8 billion for one-third interest in new DirecTV unit. Link to The WSJA stand-alone company. Data points:
  • ATT has been trying to sell this white elephant for years;
  • ATT paid $66 billion for this albatross in 2015
  • apparently six years later it's being valued at less than $6 billion
  • shares of T pretty much unchanged

Minimum wage: $15 / hour apparently not in the Covid-19 stimulus bill.

Mr Potato Head neutered: now, simply, Potato Head. So, what’s Mrs Potato Head? Later: I'm wrong: the franchise / the box is now called "Potato Head." But the family will still include Mr Potato Head and Mrs Potato Head, Spud, and Yam. Link here.

The Meme For US Oil Companies For 2021: Free Cash Flow (FCF) -- February 25, 2021

FCF is the meme for US oil companies in 2021. 

Another example; note the sources:

The EIA Dashboards, February, 2021

Mano a mano: Bakken wells still exceed the Eagle Ford and Permian for crude oil. The Bakken exceeds the Permian, mana a mano, more than two to one.

EIA dashboards:



Apple News -- February 25, 2021

Portland, OR, next? Link here

Apple today indicated that its retail store at the MacArthur Center shopping mall in Norfolk, Virginia will be permanently closing after over 14 years of business, although an exact closure date has yet to be announced by the company. 
See also.

Texas - 5; California - 1: Target - Apple forming a wonderful future together. Link here.

Target today announced it is building on its long-standing partnership with Apple to include a new "enhanced Apple shopping experience" in its stores across the United States.

  • T2180 (Monticello, MN)
  • T0324 (San Jose, CA)
  • T1397 (Oklahoma City, OK)
  • T2516 (Allen, TX)
  • T1766 (Hurst, TX) -- near Grapevine, TX
  • T1797 (Austin, TX)
  • T1032 (Irving, TX)
  • T1354 (San Antonio, TX)
  • T0687 (Gainesville, FL)
  • T1790 (Orlando, FL)
  • T1820 (Clearwater, FL)
  • T2848 (Miami, FL)
  • T1159 (North Wales, PA)
  • T2764 (Newark, DE)
  • T1266 (Woburn, MA)
  • T1532 (Nashua, NH)
  • T1915 (Latham, NY)

Back to the future: new MacBook Pro models to have HDMI port, SD card reader, and MagSafe (?). Link here

NDIC Daily Activity Report Not Posted Today -- February 25, 2021

Speaking of bonds:

Natural gas fill rate. Link here

*******************************
Back to the Bakken

Active rigs:

$63.28
2/25/202102/25/202002/25/201902/25/201802/25/2017
Active Rigs1549665740

No new permits.

EOG 4Q20 Earnings

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. 

Transcripts: link.

Press release: EOG Resources Reports Fourth Quarter and Full-Year 2020 Results; Raises Dividend by 10% and Announces 2021 Capital Program Focused on Improving Total Returns; Sets Goal to Achieve Zero Routine Flaring by 2025 and Ambition to Reach Net Zero Scope 1 and 2 GHG Emissions by 2040

From Reuters:

Oil and gas producer EOG Resources Inc on Thursday boosted its annual dividend by 10% after its fourth-quarter adjusted profit rose over 60% from the third, helped by a recent recovery in commodity prices.

Easing of COVID-19 related restrictions has sparked optimism among shale producers after they endured a year of destruction in crude prices and demand. U.S. crude rose to $63.53 on Thursday, its highest since May 2019.

Despite the higher commodity prices, EOG forecast this year's spending to be between $3.7 billion and $4.1 billion and will keep its output flat compared to the fourth-quarter rate of 801,500 barrels of oil-equivalent per day.

EOG's forecast of keeping production and spending flat or lower matches rivals like Diamondback Energy Inc and Occidental Petroleum Corp and highlights a recurring theme in shale that calls for prioritizing balance sheet cleanups above output growth.

"The 2021 capital plan is consistent with the strategy we have followed over the last year of not growing production in an oversupplied market," EOG Chief Executive Officer Bill Thomas said in a statement.

Dividend: annual rate at $1.65. 

From NASDAQ.com:

EOG Resources came out with quarterly earnings of $0.71 per share, beating the Zacks Consensus Estimate of $0.38 per share
This compares to earnings of $1.35 per share a year ago. These figures are adjusted for non-recurring items. 
This quarterly report represents an earnings surprise of 86.84%. A quarter ago, it was expected that this oil and gas company would post earnings of $0.16 per share when it actually produced earnings of $0.43, delivering a surprise of 168.75%.

Idle Rambling -- Mid-Afternoon -- Market Open -- Market Falling -- February 25, 2021

TSLA: Upon hearing the news before the market opened, that Tesla had temporarily shut down its Model 3 line in Fremont, California, I was surprised TSLA did not fall further. I guess it took a few hours for the traders to figure it out. This is bad, bad news, and TSLA investors are finally getting it. As I told a reader:

Yes, this semiconductor shortage is not good. It will shut down assembly lines in all auto factories and all truck factories.

Fortunately the president signed an executive order yesterday to solve this logistics problem. Like the Keystone XL, he now "owns" the semiconductor problem. Let's see if he can solve that problem as quickly as his predecessor solved the vaccine problem. 

TSLA fell more than 6% today, losing more than $44 (market still open at time of posting), and trading below $700. The semiconductor story is really the only story driving TSLA today but there are other headwinds: like lots and lots of competition; being outsold by GM EVs in China; and, solar energy coming under new review following the Texas Freeze.

Tesla, Model 3, Fremont, CA, will shut down for two weeks.

Sophia's Big Furry Friend -- February 25, 2021


Gluten-free doggie treat for Huey?

NDIC Hearing Dockets -- March, 2021

Link here

The NDIC hearing dockets are tracked 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.

Wednesday, March 24, 2021
Three Pages

These are case,s not permits:

  • 28698, NDIC, Eightmile-Bakken; consider appropriate spacing for wells completed in the 2560-acre spacing unit, sections 1/12-152-103 and sections 6/7-152-102; McKenzie, Williams
  • 28699, Petro-Hunt, flaring,
  • 28700, CLR, Phelps Bay and/or Elm Tree-Bakken; establish an overlapping 1280-acre unit, section 13-153-95 and section 18-153-94, two wells; McKenzie County
  • 28701, NDIC, plug and abandon #9126, a SWD well;
  • 28702, SureFire Energy LLC, construction of a treatment plant;
  • 28703, Whiting, commingling,
  • 28704, Whiting, commingling,
  • 28705, Whiting, pooling, Sanish-Bakken
  • 28706, Whiting, pooling, Sanish-Bakken,
  • 38707, Whiting, pooling, Sanish-Bakken,
  • 28708, Whiting, pooling, Sanish-Bakken,
  • 28709, Whiting, pooling, Sanish-Bakken,
  • 28710, Whiting, pooling, Sanish-Bakken,
  • 28711, Whiting, pooling, Big Bend-Bakken;

Thursday, March 25, 2021
Six Pages

These are cases, not permits:

  • 28712, NDIC, shut down Scout Energy, Little Knife-Madison Unit, Dunn County
  • 28713, Resonance Exploration, West Roth-Speafish/Madison pool, establish a 640-acre unit, a multilateral horizontal well not less than 330 fee to the north boundary; E/2 NE/4 and SE/4 of section 35, the W/2 of section 36-163-79, and the N/2 NE/4 of section 2162-79; Bottineau County
  • 28714, Resonance Exploration, South Westhope-Spearfish/Charles pool, establish a 400-acre unit, a multilateral horizontal well not less than 330 fee to the north boundary; SE/4 of section 22, the E/2 NW/4 adn NE/4 of section 27-162-80; Bottineau County
  • 28715, CLR, Little Knife-Bakken, establish an overlapping 2560-acre unit, sections 27/28/33/34-148-97; two wells; Dunn County;
  • 28716, RimRock Oil & Gas, Moccasin Creek-Bakken; establish an overlapping 3840-are unit; sections 34/35-148-93; and sectioins 2/3/10/11-147-93; one well; Dunn County
  • 28717, Nine Point Energy, Ft Buford-Bakken, eliminate the 1220 setback rule, authorizing a horizontal well to be drilled 500 feet from the east boundary on an existing 960-acre unit, E/2 and E/2 of sections 26/35-t-153-104, Williams County
  • 28718, Nine Point Energy, Briar Creek-Bakken, one well on an existing 1920-acre unit, sections 5/8/17-152-104, Williams, McKenzie
  • 28719, EOG, Parshall-Bakken; establish an overlapping 1920-acre unit, sections 25/36 and E/2 of sections 26/35-151-92; Mountrail
  • 28720, EOG, Deep Water Creek Bay-Bakken, i) an overlapping 2560-acre unit; one well; ii) an overlapping 3840-acre unit; one well; Mountrail, McLean
  • 28721, EOG, Alger-Bakken, establish an overlapping 5120-acre unit, sections 34/35-157-92 and sections 4/5/9/10/15/16-156-92; multiple wells; Mountrail County
  • 28722, Kraken Oil & Gas, Sanish-Bakken, establish an overlapping 2560-acre unit; on ewell; Mountrail;
  • 28723, Kraken Oil & Gas, Robinson Lake and/or Sanish-Bakken pool, i) establish an overlapping 1280-acre unit, sections 30/31-154-92; nine wells; ii) establish an overlapping 3840-acreunit, sections 24/25/36-154-93 and sections 19/30/31-154-92, one well, Mountrail County
  • 28724, White Butte Oil Operations, Clarks-Creek; flaring;
  • 28725, NP Resources, Beaver Creek-Duperow pool, establish two 320-acre units; one well per unit; Billings County;
  • 28726, NP Resources, Rough Rider-Bakken, four wells on a 1280-acre unit; McKenzie;
  • 28727, NP Resources, Pierre Creek-Bakken, establish one new 1280-acre unit, four wells; McKenzie;
  • 28728, NP Resources, Four Eyes-Bakken; establish one new 1280-acre unit, four wells;
  • 28729, CLR, pooling, Little Knife-Bakken;
  • 28730, Slawson Exploration, risk penalty legalese, file #37918, Big Bend-Bakken, Mountrail;
  • 28731, Slawson Explortion, risk penalty legalese, file #37919, Big Bend-Bakken, Mountrail;