Friday, March 5, 2021

Week 9: February 28, 2021 -- March 6, 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 North Dakota energy stories:

  • quick headlines;
  • North Dakota's rolling blackout probably made things worse;
  • oil prices will soon peak -- Lynn Helms
  • no drilling uptick despite $60/bbl oil -- Lynn Helms
  • DAPL, other uncertainties deter investment -- Lynn Helms
  • Dickinson representative expelled from House
  • load restrictions coming soon

Operators:

Operations:

Wells:

Halo effect:

Fracking:

Pipelines:

Other basins:

Bakken economy:

Commentaries:

Oasis Starting To Get Active In Willow Creek -- March 5, 2021

The Borden Federal wells:

  • 34337, PNC, Oasis, Borden Federal 5300 14-36 2BX, Willow Creek,
  • 34338, loc, Oasis, Borden Federal 5300 14-36 3B, Willow Creek,
  • 34340, PNC, Oasis, Borden Federal 5300 14-36 5T, Willow Creek,
  • 34235, drl/drl, Oasis, Borden Federal 5300 34-36 7B, Willow Creek,
  • 34110, PNC/dry, Oasis, Borden Federal 5300 11-35 3B, Willow Creek,
  • 34339, drl/drl, Oasis, Borden Federal 5300 14-36 9B, Willow Creek,
  • 20872, 3,694 Oasis, Borden Federal 5300 24-34H, Willow Creek, t9/11; cum 369K 1/21;
  • 34130, loc, Oasis, Borden Federal 5300 32-35 12T, Willow Creek,
  • 34133, drl/drl, Oasis, Borden Federal 5300 32-35 4B, Willow Creek,
  • 34132, drl/drl, Oasis, Borden Federal 5300 32-35 5B, Willow Creek,
  • 34236, loc/drl, Oasis, Borden Federal 5300 34-36 6BX, Willow Creek,
  • 34234, drl/drl, Oasis, Borden Federal 5300 34-36 8B, Willow Creek, 


Zavanna Stranger Wells in Poe Oil Field -- Update -- March 5, 2021

This page will not be updated. These wells are tracked here.

Four producing wells (DUCs) reported as completed, all wells are updated:

  • 35665, SI/A, Zavanna, Stranger 28-21 1TFH, Poe, first production, 12/19; t--; cum 132K 1/21;
  • 35666, SI/A, Zavanna, Stranger 28-21 2H, Poe, first production, 1/20; t--; cum 188K 1/21;
  • 35667, SI/A, Zavanna, Stranger 28-21 3TFH, Poe, first production, 12/19; t--; cum 136K 1/21;
  • 35668, SI/A, Zavanna, Stranger 28-21 4H, Poe, first production, 12/19; t--; cum 228K 1/21;
  • 35669, SI/NC, Zavanna, Stranger 28-21 5TFH, Poe, first production, 12/19; t--; cum 163K 1/21;
  • 35670, SI/NC, Zavanna, Stranger 28-21 6H, Poe, first production, 11/19, t--; cum 227K 1/21;
  • 35671, SI/NC, Zavanna, Stranger 28-21 7TFHXE, Poe, first production, 11/19; t--, cum 138K 1/21;

Powder River Basin -- EOG Corporate Presentation -- February, 2021

A lot of interest in the Powder River Basin, recently.

The Powder River Basin is tracked here.

EOG corporate presentation, February, 2021, Powder River Basin.



Griddy Update -- Texas February Freeze -- March 5, 2021

PSA: Sent to my e-mail address:
Michael Coleman with Public Citizen’s Texas office here. 
Sorry for the late Friday email, but just thought you might be interested in some news about Griddy, the retail electric supplier that sent some households $10,000+ bills after the Texas blackout. 
Public Citizen filed a protest at FERC on February 26, 2021,  regarding Griddy’s application to charge market-based rates. 
In our protest we noted that Griddy concealed from FERC its affiliation with a large financial firm Macquarie. 
Today, in direct response to our challenge, Griddy responded by withdrawing their application (filing attached).

WTI Closes Above $60; No New Permits; Number Of Rigs Remain Unchanged At Sixteen -- March 5, 2021

EVs:

  • TSLA: closes down 4%; down $24; closes below $600; 52-week high: $938;
  • NKLA: closes down 7%; down $1.13; closes below $15; 52-week high $93.99;

Buying opportunity?

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

Biden owns $6 gasoline in California: social media is starting to mention that President Biden owns $6 gasoline in California -- shutting down the Keystone XL; revoking federal drilling permits; slowing permit approval process; DAPL at risk. As states lift pandemic restrictions, gasoline demand will surge. Today for the first time ever, my corner service station (north Texas, DFW area) was sold out of gasoline. Went down the road but this is almost unheard of, our corner service station running out of gasoline. Occurred once before in my memory: Hurricane Harvey.

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Back to the Bakken

Active rigs:

$66.09
3/5/202103/05/202003/05/201903/05/201803/05/2017
Active Rigs1654696145

No new permits.

Four producing wells (DUCs) reported as completed:

  • 35665, SI/A, Zavanna, Stranger 28-21 1TFH, Poe, first production, 12/19; t--; cum 132K 1/21;
  • 35666, SI/A, Zavanna, Stranger 28-21 2H, Poe, first production, 1/20; t--; cum 188K 1/21;
  • 35667, SI/A, Zavanna, Stranger 28-21 3TFH, Poe, first production, 12/19; t--; cum 136K 1/21;
  • 35668, SI/A, Zavanna, Stranger 28-21 4H, Poe, first production, 12/19; t--; cum 228K 1/21;

WTI: $66. Rig Count Pretty Much Unchanged -- March 5, 2021

WTI: hits $66 going into the weekend.

Yesterday's meme: US operators rushing to add rigs. Today, not so much. Link here.

If there's a significant change in the number of active rigs this year, we should see it in July, maybe June if CEOs expedite plans. 

****************************************
Brent in Historical Perspective


Rambling Notes -- The Mid-Morning Edition -- March 5, 2021

Pardon the interruption, for the archives: CVX is now trading solidly above $107 and pays almost 5%.

Now, back to regular programming. 

GS: raises Brent to $80/gallon in 3Q21. That would make WTI about $75. Or $85. Or something else altogether.  

CLR

Was WTI about $55 not too long ago? Is WTI running about $65 now? Let's see -- a $10/bbl gift.

CLR: with almost no new money required, 160,000 bopd x 10 = $1,600,000 / day in additional free cash flow = 365 x 1.6 million = $600 million in additional free cash flow on an annual basis. 

In calendar year 2020, CLR said it had $275 million in free cash flow.

Guidance (link here):

  • Approx. $2.4 B of cash flow from operations; $1.0 B of FCF; 12% FCF Yield (non-GAAP);
    •  58% reinvestment rate; 3-4% total production growth; budgeted at $52 WTI & $2.75 HH  
    • $5 increase in WTI = approx. $250 million increase in cash flow

Most of their borrowing has been set for this year.

Some years ago, CLR said the "next year" was going to be a "break-out" year. I forget which year that was. It's very possible, CLR could have a break-out year this year. 

Of all the news coming out of CLR so far this year: their acquisition in the Powder River Basin. Among the US shale players, the PRB (J-D) is a bigger deal than I realized. Sort of sneaked up on me. If the Biden administration doesn't revoke the "permits in hand" in the PRB, CLR will be off and running, and expending only two rigs on the entire play. Talk about efficiency. 

Now, on another note. Speaking of borrowing.

The "big CAPEX" in shale has been spent. Not so for wind farms, renewable energy. Big CAPEX is yet to come. Along with higher interest rates. And the specter of the Texas February Freeze hanging over the industry. 

This from twitter.

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Jobs

From twitter:

A CLR Carson Peak Well Blasts Through 500K Bbls Crude Oil Cumulative With Less Than Eighteen Months Of Production -- A Second Bench Three Forks Well -- March 5, 2021

This page won't be updated.

The CLR Carson Peak wells are tracked elsewhere.

This CLR Carson Peak well went over 500K bbls crude oil cumulative in less than two years. The well:

  • 35273, 2,405, CLR, Carson Peak 5-35H2, Oakdale, t6/19; cum 72K in less than two months; cum 530K 1/21; note the dreaded decline rate.

Full production:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN1-202131191701917567765091150057272
BAKKEN12-202031209772091672424591645137297
BAKKEN11-2020302229222326765545289432981554
BAKKEN10-202031253302534583424360542956215
BAKKEN9-202030294292947387664015039121630
BAKKEN8-202031278652783998663583035150113
BAKKEN7-20202174216316111821176424
BAKKEN6-20200000000
BAKKEN5-2020313127931312105655160850921184
BAKKEN4-2020282920629220959038156366111208
BAKKEN3-20203137767377821260345162381826705
BAKKEN2-20202938874388821326340890332467363
BAKKEN1-20203138253381961467344916425052074
BAKKEN12-2019252036120396975222330209101191
BAKKEN11-20193023735237161142122626190233352
BAKKEN10-201931273712736812950230811252310289
BAKKEN9-20193029204292011487928550224945751
BAKKEN8-20193135137351401850334968289745691
BAKKEN7-20193141100410652409840882353225251
BAKKEN6-20192028750286341775724930188365806

The Carson Peak / Morris area is just a few miles east of the Gale / Rodney area. Look at all the "white" area that yet needs to be worked.

"Damn The Torpedoes, Full Speed Ahead" -- Random Update Of The CLR Gale / Rodney Manufacturing Site -- March 5, 2021

This page won't be updated; the CLR Gale / Rodney wells are tracked at the link below.

First, take a look at the graphics at this post

CLR said it would dedicate two rigs to this project. The rigs are on site. There is a third rig noted but it is drilling a salt water disposal well and not relevant to this post except to show how fast things are moving in this area.


WTI Goes $65; Active Rigs At 16; No Wells Coming Off Confidential List -- March 5, 2021

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. 

For investors:

First group:

  • 10-Year Treasury: link here. Surging. 1.598%; up almost 5 basis points.
  • DXY: link here. Up slightly at 91.94.
  • Silver: link  here. Most interesting -- all that talk about silver surging, is back down to $25.23, and down 24 cents today.
  • CBOE volatility index: link here. At 26.7, down 6.6%.

Second group:

30-Year Treasury: link here. 2.319%, up slightly.

Dow: up 200 points pre-market.

Buzz:

  • meme: bonds hindering stock market;
  • history: once investors get used to current interest rates (and the trend), money will flow back into the stock market;
  • we've had much worse "inflation" in the past and the market did just fine

Airlines taking flight:

  • the one thing people are most inclined to do once they get the vaccine -- fly. Link here

Jobs:

  • 379,000 jobs added in February. It would have been a lot better had welders returned to Keystone XL;

WTI: Wood Mackenzie stepped out on a limb yesterday suggesting/implying that WTI could hit the $65 - $70 range by April. Well, hellooooooo -- $65.10 today.

  • CLR: could have another big day; up over 4% in pre-market trading:
  • Hes: up almost 3% in pre-market trading
  • EOG: up over 3% in pre-market trading
  • CVX: could close at another all-time high after dropping back from an intra-day high of $108 (rounded) yesterday; today CVX is up 2.44% / $107.05 in pre-market trading; and still paying 5%;
  • XOM: up 2.44% in pre-market trading;
  • BRK-B: surprisingly strong; pre-market, up 1.45%; flirting with $250.00
  • TSLA: early morning -- on an "up" day for the market, TSLA shed 5%; down another $40; trading below $600.

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Back to the Bakken

Active rigs:

$65.10
3/5/202103/05/202003/05/201903/05/201803/05/2017
Active Rigs1654696145

No oil and gas wells coming off confidential list.

RBN Energy: the Patoka hub gains stature as crude oil flows south. Archived.

The crude oil hub in Cushing, OK, is larger and grabs the headlines, but don’t you forget about the Patoka hub in south-central Illinois. It plays critically important roles in receiving Western Canadian, Bakken, and other crude, distributing it to a slew of Midwestern refineries, and directing oil south to the Gulf Coast on the Energy Transfer Crude Oil Pipeline to Nederland, TX — and soon on Capline to St. James, LA, when reversed flows on that large-bore pipe begin in early 2022. 
Better still, there are great stories behind the development of the Patoka storage and distribution hub and how it works. Today, we begin a series on the second-largest crude oil hub in PADD 2 and why, with the upcoming Capline reversal and other changes, the hub is more relevant than ever.

Wind Worked Until It Didn't -- The Texas February Freeze -- The WSJ -- March 5, 2021

From The WSJ:

The Texas wind industry suffered a devastating financial blow during last month’s electricity crisis, which hit roughly half of the state’s wind farms and may force some to seek bankruptcy protection or relinquish control to Wall Street.

With ample breezes and open spaces, the Lone Star State has become the biggest producer of wind power in the U.S. It now derives roughly 23% of its power on an annual basis from the renewable energy source.

But a financial arrangement that helped wind companies thrive in Texas now threatens to crush many operators, after an unusually strong winter storm led officials to drastically raise wholesale prices in the state’s deregulated power market and caused blackouts that left millions in the dark for days.

Many wind farms in Texas, to get construction financing, enter into long-term hedged contracts with financial institutions in which the wind farm operator agrees to provide a steady stream of electricity to the counterparty.

If it cannot deliver electricity—because the wind isn’t blowing—the operator agrees to pay to purchase electricity on the wholesale market, or agrees to pay the counterparty to purchase it on its behalf.

In return, the financial institution, often a Wall Street bank, agrees to pay a set price for the electricity. The bank can then resell the electricity on the state’s wholesale power market, potentially clearing a profit.

When the wind is still and operators need to purchase power to fulfill their obligations, it typically costs somewhere between $0 and $50 per megawatt hour. But during the February blackouts, when some wind farms stopped running after ice built up on their fan blades, operators were forced to pay $9,000 a megawatt hour. (The average price in 2020 was $22.18.)

Over a four-day span at such prices, a midsize wind farm could easily end up owing $50 million or more for electricity.

The wind farms that had to purchase power for days at the record-setting $9,000 per megawatt hour price—the highest allowable under the Texas rules—effectively wound up owing more money than some of the farms are worth.

For instance, in a state court filing, the owner of a 210-megawatt wind farm mostly in Deaf Smith County in the Texas panhandle said its counterparty on its hedged contract, JP Morgan Chase & Co., said it owed $71 million—while its annual revenues were only $15 million.

Much more at the link, but finally some clarity. 

See also, The Economist analysis.

Odds And Ends -- Early Morning Edition -- CBR, Why Saudi Is "Holding The Line" -- March 5, 2021

YCC: yield control curve, link here.

Dry hole:

  • ExxonMobil hits third dry hold offshore Guyana;
  • the company said every well, even dry holes, provides valuable data;
  • the article did not say how much it costs to drill dry holes that provide valuable data;
  • I've lost the bubble whether off-shore Guyana is still considered in its exploratory phase or development phase; I assume the former, although it may be a "mix"
  • there are no dry holes in the Bakken (or the Permian, for that matter); 
    • do not take that out of context

Rig counts: S&P Global Platts;

  • rig count leaps 30 to 491
  • twelve of those in the Permian
    • the jump may have simply been mobilization of rigs "frozen" by the Texas February Freeze
    • the freeze hit the Permian and Eagle Ford Shale in South Texas particularly hard. At peak, up to 4 million b/d of the US' total 11 million b/d of oil production was offline, although most of it was quickly restored within a few days
  • nine basins
    • liquid-rich: six -- Permian, Eagle Ford, Scoop-Stack, Denver-Julesburg, Williston, Marcellus wet
    • dry gas: three -- Haynesville, Marcellus dry, Utica
  • the Permian dwarfs the other eight

Keystone XL? Who needs the Keystone XL? USD Group nearing completion of Hardisty-to-Port Arthur (Canada to Texas) CBR network; link here at twitter;
at S&P Global Platts;

  • Canadian crude exports are holding steady to US Gulf Coast;
  • shipping crude by rail from Hardisty to the US Gulf Coast: $12 - $18 / bbl
  • interim plan
  • western Canadian oil pipeline volumes should increase by the end of 2021
  • Enbridge Line 3 Replacement project;
  • TC Energy's base Keystone system through optimization expansion

Why Saudi is "holding the line." Link here.