Enerplus Reports A Nice Heart Butte Well; War Has Begun -- February 17, 2022

Updates

Later, 10:06 a.m.: headline in WSJ confirms earlier note -- hostilities have begun. When is an incursion not an incursion? 

Later, 10:20 a.m.: wow, talk about a rigged women's figure skating at the Olympics. The favored-to-win, having tested positive for an illegal substance, is allowed to continue competing. Favored to win, she does not even medal. Her teammates won gold and silver. Had she won a medal there would have been no medals ceremony. We'll probably never see her again. My heart goes out to Ms Valieva; absolutely sickening. Talk about child abuse. Many things bothered me today; this may have bothered me the most.

Original Post

Futures: after a decade of blogging about oil, I finally understand futures, backwardation, and contango. 

An analogy: booking an airline flight.  

Six months ago, I booked a flight from DFW to Portland, Oregon. The cost: $256. Today, six months later, that flight now costs $656. Six months ago I was willing to pay $256 for a flight I would take six months from then. I did not know what the price would be six months ago, but I assumed it would be more expensive than $256. 

So, now we have oil futures. The futures curve is not a forecast of where commodity prices are heading, but rather a snapshot of what the market is willing to pay for delivery in the future.

Ukraine: has the invasion already begun? Shelling has already begun; Russia has expelled the US deputy ambassador to Russia; and, US SecState changed plans at last minute to speak at UN.

PEMEX: previously reported that Pemex would begin curtailing exports of crude oil this year, and completely end exports in 2023. There may have been an explanation and, if so, it just got worse. From Bloomberg: forecasts now suggest that Mexico will have to import crude oil to produce enough fuel for its own country. See also this article by Michael Kern.

WTI: $91.18.

Fair value, WTI: $122, link here. 

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Back to the Bakken

Active rigs:

$91.75	2/17/2022	02/17/2021	02/17/2020	02/17/2019	02/17/2018
Active Rigs	33	15	56	64	56

Thursday, February 17, 2022: 34 for the month, 89 for the quarter, 89 for the year

• 34063, conf, Enerplus, Orbweaver 149-92-32C-29H, Heart Butte: first production, 8/21; t--; cum 128K 12/21;

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	12-2021	18	18131	18109	21383	13021	9296	318
BAKKEN	11-2021	24	26951	26990	31734	21035	16379	280
BAKKEN	10-2021	31	39478	39513	52996	44431	24690	14053
BAKKEN	9-2021	17	24843	24680	34537	22423	14015	4621
BAKKEN	8-2021	14	18127	17828	37818	13988	7271	4686

RBN Energy: is western Canada's gas production renaissance in jeopardy?

The gradual increase in Western Canada’s natural gas production in recent years has been powered by the highly prolific Montney formation, a vast unconventional resource that straddles the Alberta/British Columbia border. 

With Western Canadian gas price benchmarks at multi-year highs and producers enjoying their best financial position in ages, it would seem logical to expect more gas production growth from the Montney in the future. However, a recent ruling by the BC Supreme Court could negatively affect the pace of well developments and jeopardize future growth in the Montney formation. In today’s RBN blog, we consider this possibility.