Two Wells Coming Off Confidential List; What's Oil Doing? March 30, 2022

Watch this space: RMDs.

Essay: if you have time for just one essay today, read today's "Ross Rant" sent to me by a reader;

• pretty much something for everyone
• I think "Ross" was too "negative" on Biden; not "hard enough" on the EU
• I think he forgets that "no one" pays attention to Biden, except for the gaffes
• the gaffes telegraph what Biden is really thinking 
• as far as giving away classified information, the Russians already know
  
• humanitarian crisis already in Poland, next Germany; Macron watching

Bill Ackman:

• has annualized 17%, net of fees, over the last eighteen years - source;

Ukraine:

• food basket to much of Europe
• half of the food for the World Food Program comes from Ukraine
• 2022-2023: Ukraine will become a net importer of grain - source;

Sanctions starting to bite:

• first real signs of well-head production declines are starting to be seen; source;
  
• one-two punch:
• some countries will quit buying from Russia; others will take up some of that slack
• production in Russia: relies on foreign expertise, equipment: that's a much bigger obstacle
• analogy: US supply chain issues the past 24 months
• now Russia: the supply chain issues writ large
• we will soon see that Russia relies on rest of world much more than world relies on Russia
• unsold oil forces Russian operator to cap pipeline flows; source;  
• fields will start to cut back on production
• risk of losing shut-in wells;
  

Oil, data points:

• OPEC+ now forecasts 600,000 bopd surplus 1Q22; previously, one million
• first 27 days of March: OPEC crude oil exports fell on average 363,000 bopd; averaged 21.421 million bopd
• Saudi looking to raise May crude prices to Asia to new record levels;
• if so, OPEC basket record: $110 going back to 2012; OPEC Basket;
• this speaks volumes about all those stories about all that cheap Russian oil getting to China, India;
• my hunch: Saudi knows all about Russia's need for foreign investment to keep oil flowing
• proxy for US shale: DVN
• up 6 cents yesterday
• up 72 cents in pre-market trading today
  

Oil:

• Brent: up 2.8%; up $3.12; trading pre-market at $113.30;
• WTI: up 3.1%; up $3.23; trading pre-markeet at $107.50
• Note: what's "oil doing?"

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Back to the Bakken

Active rigs: 

$106.90	3/30/2022	03/30/2021	03/30/2020	03/30/2019	03/30/2018
Active Rigs	34	14	44	66	60

Thursday, March 31, 2022: 47 for the month, 156 for the quarter, 159 for the year

• None.

Wednesday, March 30, 2022: 50 for the month, 159 for the quarter, 159 for the year

• 38547, conf, Ovintiv, Wisness State 152-96-16-21-21H, Westberg, no production data,
• 38293, conf, CLR, Springfield 11-8HSL, Brooklyn, no production data,

Tuesday, March 29, 2022: 48 for the month, 157 for the quarter, 157 for the year

• 37860, conf-->loc/drl, CLR, Clear Creek Federal 10-35H2, Westberg, no production data,

RBN Energy: crude oil prices, drilling activity and the new energy-world order. 

Just a few years ago, when the Shale Revolution had matured into the Shale Era, the world settled into a nice groove, with crude prices generally rangebound between $40 and $70/bbl. As the U.S. looked to assume OPEC+’s role and evolve into the world’s swing supplier of oil, ramping up production when prices rose and slowing it down when they fell, it seemed reasonable to expect that market-driven responses would help maintain stability. Well, things haven’t turned out that way. 

COVID, the emphasis on ESG, a hydrocarbon-averse administration, and Russia’s war on Ukraine combined to put “reasonable expectations” in the trash. An entirely new set of expectations is emerging, and few metrics explain it better than today’s different-as-can-be relationship between crude oil prices and the U.S. rig count, as we discuss in today’s RBN blog.