The Million Dollar Way (The Bakken Oil Blog): 03/21/21

Sunday, March 21, 2021

Busy, Busy, Busy In The Bakken -- March 21, 2021

Random screenshot while waiting for "Focus on Fracking" to be posted.

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At The Barber

About a month after the Texas Deep Freeze back in February, 2021.

Notes From All Over -- Sunday Night Edition -- March 21, 2021

Global warming.

Mobility trends. Most of Europe returns to modified lockdowns, but Italy's is most severe. From an Apple app; corroborates the headline story:

Now, floods. All we've heard about for the past several years from this area: unrelenting drought. Now it's floods, but we are still able to predict the two-degree rise global temperature one hundred years from now.

Australian authorities are planning to evacuate thousands more people on Monday from flood-affected suburbs in Sydney’s west, which is set for its worst flooding in 60 years with another day of drenching rain expected.
Unrelenting rains over the past three days swelled rivers in Australia’s most populous state of New South Wales (NSW), causing widespread damage and triggering calls for mass evacuations.
“Flooding is likely to be higher than any floods since Nov 1961,” NSW emergency services said in a tweet late Sunday. Authorities expect the wild weather to continue until Wednesday.

Gasoline Update -- March 21, 2021

I'm not an "energy cynic," but in this case, the "energy cynic" and I are on the same page of music, as they say:

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Divergence of Data

EIA and GasBuddy data continues to diverge.

See most recent EIA data at this link.

From Patrick De Haan, GasBuddy data:

Saudi Aramco Reports -- March 21, 2021

Updates

March 22, 2021: Cyril Widdershoven has a piece on the takeaway(s) from Saudi Aramco's 2020 earnings report.

March 22, 2021: the fallout continues --

Bloomberg; same story here without the paywall;

Aramco oil payments to Saudi state fall 30%to $110 billion;
Aramco's debt-to-equity ratio surged to 55% over 2020;

Quartz: Saudi Aramco is no longer the world's most profitable company

that distinction now falls back .... to Apple
Apple netted $57.4 billion in FY20 vs $49 billion for Aramco
had Apple and Aramco shared same "fiscal years" (i.e., calendar years), the disparity would have been even bigger
Apple smashed revenue records in the holiday shopping season; in that quarter alone, made almost $23 billion profit
on top of that Aramco is committed to paying that $75 billion annual dividend (actually, they have little choice)

Original Post

Most interesting story. Data points to follow. Isn't there some proverb about lipstick and pigs or silk purses and pig ears? More later. Too much breaking right now.

Saudi Aramco reporting full year 2020 earnings today.

Net profit, calendar year:

2020, forecast: $49.5 billion (186.1 billion riyals)
2020: $49 billion (183.76 billion riyals); down 44% from previous year
2010: $88 billion (330.69 billion riyals)

Dividend:

$75 billion (vs free cash flow of $49 billion)
guidance: no change for 2021
note: the $75 billion was a demand set by the king in exchange for agreeing to an IPO

Free cash flow:

2020: $49 billion
2019: $78.3 billion

Guidance:

CAPEX, 2020, last year: $27 billion
CAPEX, 2021, previously: $40 - $45 billion
CAPEX, 2021, current guidance: $35 billion (a 30% increase)

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CAPEX -- Major Integrated Companies

Take a look at this from twitter posted earlier today, change in 2021 CAPEX from two years ago, 2019 :

Link here. I didn't want people to think I'm making this up. LOL.

Let's run through that screenshot: Saudi says they cut production, cut exports, and may continue to do the same to support crude oil prices for the next month or so. [Note: all things being equal, Saudi Arabia will increase production in the next few months to meet demand for air conditioning for summer heat -- happens every year. So when you read that Saudi Arabia is increasing oil production sometime in the next couple of months, see if you can find anywhere in the story if Saudi is doing that to increase exports. If not, that will be buried in the last paragraph, if it's reported at all.]

So, despite the tea leaves suggesting Saudi Arabia will maintain current production levels, they are increasing upstream CAPEX by one percent [Reuters says “full” CAPEX is being increased 30 percent], and earlier it was reported that Saudi Arabia had decided not to increase any offshore drilling where it's more expensive and will focus only on onshore drilling. Hmmm.

Meanwhile, while Saudi Arabia is increasing upstream CAPEX (only one percent from this source -- see the Reuters source) the other majors are significantly cutting back on CAPEX. Look at these numbers:

Four companies pivoting from oil and gas to renewable energy:

BP: CAPEX to be cut by 16%
Shell: CAPEX to be cut by 17%
Total (France): CAPEX to be cut by a whopping 38%
OMV (Austria oil and gas): CAPEX to be cut by 30%

Two companies sticking with oil and gas (at least for now, although one may be waffling)

CVX: to cut CAPEX by a whopping 39%
XOM: to cut CAPEX by a staggering 52%

No Tweet? First Car Built In China For The US Market Is The Official SUV For The NCAA Men's Basketball Tournament -- March 21, 2021 -- March 21, 2021

This story would have generated a tweet from President Trump. From President Biden, crickets.

Part of the president's "Make America Last" policy.

In the news today:

The official SUV, produced by General Motors (GM), of the National Collegiate Athletic Association’s (NCAA) annual “March Madness” tournament is made in China.

Last week, Buick — a division of GM — announced its 2021 Buick Envision is the official SUV of March Madness.
The 2021 Buick Envision debuted just yesterday, dropping in with an all-new second generation for the nameplate.

Now, GM Authority has confirmed that the next-gen model will continue to be built in China. [Emphasis added]

The 2021 Buick Envision will be produced at the SAIC-GM Jinqiao South plant in China. From there, the new Envision will be shipped to each of the four markets where the Buick brand is available, including the U.S., Canada, and Mexico (comprising the North American market), as well as in China.
For reference, the first-generation Buick Envision was also produced in China, but at a different facility, namely the SAIC-GM Dongyue North plant. Like the 2021 Envision, the first-gen model was also sold in China and throughout North America. [Emphasis added]

“The Envision is the first car built in China for the U.S. market. Last year, Americans purchased 42,000 Envisions, which are made by a joint venture between General Motors and SAIC Motor, a state-owned Chinese automaker,” [a news editor] wrote.

Truly March Madness. Sad. On so many levels.

I did not fact-check the story. Others can fact-check it. I need to move on.

The Bakken -- March 21, 2021

Note: in a long note like this there will be typographical and content errors. I often see things that don't exist. If this is important to you, go to the source. I am inappropriately exuberant about the Bakken. Facts and comments will be interspersed. It may be difficult to recognize the comments or separate them from the facts. This post was not proofread prior to final posting. I may or may not proofread it later. The mainstream media seldom, if ever, reports some of the observations that are made in this post.

In the graphics below,

in the first graphic, a three-well pad; an old well and two new wells; one assumes the two new wells on confidential list will run to the northwest, parallel to the older well;
in the second graphic, the entire section of interest; note four "older" wells running to the south; no big deal; except ....
in the third graphic, note that two horizontals are likely to cut right across these south-running horizontals; one already does;

Production, below the graphics, note the production profile of the four south-running wells; things to note:

the four wells running south were taken off line in the spring of 2020; they were probably taken off line while the wells from the southeast (still confidential) were being fracked;
the oldest well, #17668, was also taken off line during this same time frame and was recently taken off line again in late 2020; it might be coming back on line; it produced for three days in 1/21;
three of the fourth south-running horizontals, almost eighteen months old now are still flowing, without a pump (it should be noted that paperwork often lags what is going on in the field);
two of the wells, not yet eighteen months old, have already reach 500K bbls crude oil cumulative;
the oldest well under consideration, #17668, has produced 668K bbls over its lifetime but there's more to it:

his well had produced 505K bbls of crude oil from 2009 to 2019, ten years. And then, between late 2019 and very, very early 2021 (seventeen months), this well produced another 163K bbls of crude oil -- a well that is now in its twelfth year of production.
this is not an unusual phenomenon in the Bakken and is clearly something unique in unconventional oil; I don't follow other unconventional plays, so I do not know if this phenomenon is seen elsewhere; if not, then it's unique to the Bakken

Other comments:

Petro-Hunt "owns" the Charlson oil field;
like the Bailey oil field, the Charlson seems favorable for re-fracks and the halo effect; this does not seem to be true of all fields in the Bakken;
there is very little talk in the mainstream press about the phenomenon of a huge production jumps in Bakken wells even after ten years of production;

Graphics:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2021	3	159	0	1347	26	12	14
BAKKEN	12-2020	0	0	0	0	0	0	0
BAKKEN	11-2020	0	0	0	0	0	0	0
BAKKEN	10-2020	0	0	0	0	0	0	0
BAKKEN	9-2020	6	2834	3333	697	4273	4231	0
BAKKEN	8-2020	31	16760	17296	4297	23789	23464	109
BAKKEN	7-2020	2	1113	0	378	966	823	130
BAKKEN	6-2020	0	0	0	0	0	0	0
BAKKEN	5-2020	0	0	0	0	0	0	0
BAKKEN	4-2020	21	6591	7140	1323	9515	9375	0
BAKKEN	3-2020	31	14827	14965	3455	21081	20599	266
BAKKEN	2-2020	29	16672	16778	4261	23094	19707	3185
BAKKEN	1-2020	31	18860	18850	5080	25596	0	25380

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2021	31	17485	17624	6498	55041	39343	9558
BAKKEN	12-2020	31	20995	20796	5519	66399	47938	11030
BAKKEN	11-2020	30	23109	23266	5396	70204	36892	24884
BAKKEN	10-2020	31	27030	26941	6135	71326	44511	15737
BAKKEN	9-2020	30	31687	31770	5986	67234	51730	3669
BAKKEN	8-2020	31	39800	41090	6391	50202	36190	3694
BAKKEN	7-2020	2	1664	0	104	1688	0	1575
BAKKEN	6-2020	0	0	0	0	0	0	0
BAKKEN	5-2020	0	0	0	0	0	0	0
BAKKEN	4-2020	21	8804	9279	522	11763	2968	8225
BAKKEN	3-2020	31	23357	23241	2742	38220	7438	28931
BAKKEN	2-2020	29	33526	33783	5549	61392	13311	45223
BAKKEN	1-2020	31	39862	39666	6494	65390	15622	46906

CBR On Steroids -- March 21, 2021

Updates

March 23, 2021: further reporting from the Calgary [Alberta] Financial Post.

March 22, 2021: 75% chance regulators won’t approve it.

Original Post

The headlines:

Canada's Canadian Pacific railway to buy Kansas City Southern: $25 billion. Reuters.
Largest deal of 2021. ZeroHedge.
Will link Canada, US, and Mexico. Yes, Captain Obvious. The Wall Street Journal. But will also link Pennsylvania-to-Florida corridor. Maybe change the name to Can-Am-Zephyr.

My not ready-for-prime-time reply to the reader who alerted me to the story early this morning:

I think I blogged about KSC a couple of times on the blog.

KCS's "monopoly" into Mexico is huge. I was tempted to invest in KCS for that reason alone years ago but there was huge risk that new Mexican president would put huge restrictions on KCS. I was happy with BNSF and UNP.

Deal:
The KCS deal: $30 billion.
Buffett's BNSF deal: $34 billion.
Track:
Canadian Pacific: 14,700 miles
KCS: 3,400 miles
Buffett's BNSF: 32,500
UNP: 32,100
In this case, the relatively few KCS miles of track make the Canadian Pacific a "much bigger" company than just adding the two: the sum of the parts is much greater than the whole.

So:
CN buys 3,400 miles of track for $30 billion.
Buffett bought 32,500 miles of track for $34 billion.
I must be missing something or have the numbers wrong. Folks can fact-check me on the numbers.

BNSF and UNP overlap / compete west of the Mississippi. BNSF and UNP are huge out of Chicago, south to Texas, west to California.

Regulators probably would have frowned on Buffett buying KCS, and if the money numbers above are correct, I doubt Buffett would have wanted to spend that much money on another railroad.

But this deal is huge. Besides the Canadian to Mexico angle, Canadian Pacific now has access to Norfolk Southern which is the entire east coast of the US (Alabama to Pennsylvania) through the Meridian Speedway.

This is simply huge.

CBR: Suggestion -- overlay the new CN-KCS route with the might-have-been Keystone XL. This is not rocket-science.

This was almost a no-brainer in retrospect. With or without oil / CBR, this is a huge deal for CN -- Canadian wheat direct to Mexico. Several story lines here; maybe later.

When was the cherry placed on top of this sundae? When the Keystone XL was killed.

It takes "years" to put together a $30-billion deal -- this certainly suggests CN was ready to pounce if the Keystone XL was killed.

Memo to self: what company manufactures oil tankers and hoppers for railroads?

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.

Graphics:

How long is the Meridian Speedway? 320 miles, from Meridian, MS, to Shreveport, LA. How big is the Meridian Speedway? It has its own wiki entry. This was a joint venture between KCS and a subsidiary of Norfolk Southern Railway.

Link here, also.

Streamlined route when traveling from the Northeast to Dallas and back
- Fastest route from the Northeast to Dallas
- Minimal potential for winter weather delays through a more southern route
- Limited exposure to congestion and crosstown hassles present in other interchange cities
Rail-controlled and asset-based Trailer on Flat Car and Container on Flat Car service
End-to-end steel wheel interchange for our intermodal customers
Fastest route from southern California to the southeast portion of the U.S.

Link here. I like this map better for various reasons.

If "they" can make money on shipping wheat by rail (WBR), certainly "they" can make money by shipping "crude" by rail (CBR). And look how that CP line runs right where the DAPL runs. This is not rocket science, and it's very, very good news.

The East Frisian Page -- Nothing About The Bakken -- March 21, 2021

East Frisia is a small coastal region in northwestern Germany, bordering the Netherlands.

1. If East Frisia were a country, its annual consumption of tea at 300 liters per capita would be the highest in the world. But it's not a country. So, let's ask this question: at 290 liters tea per capita which country is in first place?

__ India
__ England
__ Ireland
__ Turkey
__ Kuwait

Link here.

From Wiki, East Frisia.

In an otherwise coffee drinking country (Germany), East Frisia is noted for its consumption of tea and its tea culture.

Per capita, the East Frisian people drink more tea than any other people group, about 300 litres per person every year.

Nearly 75 percent of all tea imported to Germany is consumed in this region.
Strong black tea is served whenever there are visitors to an East Frisian home or other gathering, as well as with breakfast, in mid-afternoon and mid-evening.

The tea is sweetened with kluntjes, a rock candy sugar that melts slowly, allowing multiple cups to be sweetened.

Heavy cream is also used to flavour the tea. The tea is generally served in traditional small cups, with little cookies during the week and cake during special occasions or on weekends as a special treat. Some of the most common traditional cakes and pastries to accompany tea are apple strudel, black forest cake, and other cakes flavored with chocolate and hazlenut.

2. Name the breed of horse Zorro rode in The Mask of Zorro (1998) and The Legend of Zorro (2005).
__ Arabian
__ Friesian
__ Morgan
__ Budweiser Clydesdales

Answer at wiki if I forget to provide answer later.

3. From germangirlinamerica.

What else is East Frisia "famous" for?

The birthplace of the Mennonites. Their founder was Menno Simons, 1496 - 1561.

Initial Production Data For Wells Comiing Off Confidential List This Next Week -- March 21, 2021

The wells:

36542, conf, Zavanna, Blue Heeler 20-17 2H XE, Stony Creek, the site needs to be updated, but the Blue Heeler wells are tracked here:

Date	Oil Runs	MCF Sold
1-2021	22636	31216
12-2020	27535	25756
11-2020	30832	26145
10-2020	2228	833
9-2020	32	139

36056, conf, CLR, Gordon Federal 15-8H, Haystack Butte. The Gordon Federal wells are tracked here:

Date	Oil Runs	MCF Sold
1-2021	35537	54263
12-2020	33907	48279
11-2020	29576	42716
9-2020	273	0

36055, conf, CLR, Gordon Federal 14-8H1, Haystack Butte. The Gordon Federal wells are tracked here:

Date	Oil Runs	MCF Sold
1-2021	24178	36117
12-2020	9461	14198
11-2020	17301	25003
9-2020	84	0

36544, conf, Zavanna, Blue Heeler 20-16 4H, Stony Creek, the site needs to be updated, but the Blue Heeler wells are tracked here:

Date	Oil Runs	MCF Sold
1-2021	16986	25298
12-2020	30998	33766
11-2020	4284	5634
9-2020	37	0

37395, conf, MRO, Wallentinson USA 44-8H, Reunion Bay,

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2021	31	34831	35044	19865	76226	73975	1916
BAKKEN	12-2020	31	47561	47675	28598	81463	78477	0
BAKKEN	11-2020	20	44750	44448	29560	59480	56702	0
BAKKEN	10-2020	19	49493	50851	38867	56516	51105	2480
BAKKEN	9-2020	10	27585	25838	21622	32614	29722	1069

37034, conf, Zavanna, Leopard 20-17 2TFH, Stony Creek:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2021	31	16288	14928	23446	26348	24957	929
BAKKEN	12-2020	31	21203	19345	28873	28041	26844	735
BAKKEN	11-2020	30	24314	22688	33214	25239	24354	438
BAKKEN	10-2020	19	19969	19438	27502	21997	21507	207
BAKKEN	9-2020	1	102	31	6176	92	77	0

34653, conf, Petro-Hunt, USA 153-95-3D-10-5H, Charlson, see this post.

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2021	12	5906	5342	1302	7388	7031	336

Wells Coming Off The Confidential List This Next Week -- March 21, 2021

Monday, March 29, 2021: 25 for the month, 81 for the quarter, 81 for the year.
None.

Sunday, March 28, 2021: 25 for the month, 81 for the quarter, 81 for the year.
None.

Saturday, March 27, 2021: 25 for the month, 81 for the quarter, 81 for the year.
None.

Friday, March 26, 2021: 25 for the month, 81 for the quarter, 81 for the year.
None.

Thursday, March 25, 2021: 25 for the month, 81 for the quarter, 81 for the year.
None.

Wednesday, March 24, 2021: 25 for the month, 81 for the quarter, 81 for the year.
36542, conf, Zavanna, Blue Heeler 20-17 2H XE

Tuesday, March 23, 2021: 24 for the month, 80 for the quarter, 80 for the year.
36056, conf, CLR, Gordon Federal 15-8H,
36055, conf, CLR, Gordon Federal 14-8H1,

Monday, March 22, 2021: 22 for the month, 78 for the quarter, 78 for the year.
36544, conf, Zavanna, Blue Heeler 20-16 4H,

Sunday, March 21, 2021: 21 for the month, 77 for the quarter, 77 for the year.
37395, conf, MRO, Wallentinson USA 44-8H,

Saturday, March 20, 2021: 20 for the month, 76 for the quarter, 76 for the year.
37034, conf, Zavanna, Leopard 20-17 2TFH,
34653, conf, Petro-Hunt, USA 153-95-3D-10-5H,

BAKKEN	9-2020	30	31936	32005	7305	50281	39341	1889
BAKKEN	8-2020	31	38645	38556	8274	50312	30069	11634
BAKKEN	7-2020	1	273	0	12	8	0	6
BAKKEN	6-2020	0	0	0	0	0	0	0
BAKKEN	5-2020	0	0	0	0	0	0	0
BAKKEN	4-2020	21	9460	9924	1653	13850	3362	9833
BAKKEN	3-2020	31	22857	22742	4036	33929	6836	25374
BAKKEN	2-2020	29	32751	32992	7605	53130	11148	39556

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Sunday, March 21, 2021