The Million Dollar Way (The Bakken Oil Blog): 02/02/22

Wednesday, February 2, 2022

Gasoline Demand -- February 2, 2022

First Of Two BR (COP) Rigs Sited -- February 2, 2022

A reader wrote to tell met that BR (COP) will have two rigs in the Bakken. This rig, Nabors B2, appears to be the first, a rig on #37925.

BR has a rig on this five-well pad in Pershing oil field:

37925, conf/rig on site, BR, Lone Beaver 1-1-17MTFH, North Fork,
37693, conf, BR, Lone Beaver 1-1-17TFH, North Fork,
37694, conf, BR, Lone Beaver 2-1-17TFH, North Fork,
37695, conf, BR, Lone Beaver 4-1-17MBH, North Fork,
37696, conf, BR, Lone Beaver 5-1-17TFH, North Fork,

Lime Rock Resources With Two New Permits; Fifteen Permits Renewed; BR With One Of Two Rigs Now Active -- February 2, 2022

MPLX eyes expansion of Whistler Pipeline:

link here;
Permian natural gas pipeline;

eyeing expansion from existing 2 Bcf/d p to 2.5 Bcf/d
2.5 Bcf/d is the maximum Whistler can be expanded without building a new pipeline;
450-mile pipeline from Agua Dulce, TX, near Corpus Christi
came online in August, 2021
late January, 2022: announced plans to build a 35-mile lateral to extend the pipeline deeper into the Permian's Midland Basin near more gas processing plants; this lateral will be completed by late 2022

natural gas takeaway capacity is quickly becoming the biggest bottleneck for the basin's future oil and gas production growth
would also consider new long-haul Permian natural gas pipeline
Tornado 2 gas processing plant comes online late 2022
much more at the link

$100 oil is now becoming the consensus:

link here;
UBS is added to those below calling for $100-Brent oil:
Goldman, JP Morgan, Morgan Stanley
$90 by end of March, 2022
$100 by September, 2022
Brent has already crossed above $90 multiple times already this year

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

Active rigs (I'll update this later, if necessary):

$88.26	2/2/2022	02/02/2021	02/02/2020	02/02/2019	02/02/2018
Active Rigs	34	14	54	64	57

The NDIC shows 36 rigs:

one is a CCS well:
one is a SWD well, so that means 34 active oil and gas wells
and, this is huge in a sense: a reader wrote me a couple days ago that BR (COP) was preparing two rigs for the Bakken; here's one of them:

37925, drl/conf, BR, Lone Beaver 1-1-17MTFH, North Fork,

Two new permits, #38767- #38768, inclusive:

Operator: Lime Rock Resources
Field: Murphy Creek (Dunn County)
Comments:

Lime Rock Resources has permits for two Eleanor Twist wells, to be sited in Lot 3 section 3-143-95; and,
sited between 540 FNL and 590 FNL and between 1826 FWL and 1888 FWL

Fifteen permits renewed:

Whiting (7): seven permits for the following wells, all in Williams County: Larson, P Bibler, P Earl Rennerfeldt, Roggenbuck Federal, Satterthwaite, Rooggenbuck, and Iverson
Petro-Hunt (6) three Estby permits; three Jorgenson permits, all in Burke County;
Rimrock Oil & Gas: a Skunk Creek permit in Dunn County
Hess: an RS-State permit in Mountrail County

What's Going On? February 2, 2022

FB: misses; down almost 23% after hours. Company blames inflation, supply chain disruptions and users shifting to "cheaper products" that do the same thing.

Apple could have said the same thing but smashed records and expectations.
analysts looking for revenues of $30 billion; came in between $27 and $29 billion.
EPS: $3.67 vs $3.84 expected.
revenue: another source said $33.67 billion vs $33.4 billion expected
also: guidance -- weaker-than-expected forecast

Spotify: down another 187% after hours. Subscriber guidance disappointed investors. Something for Apple to think about.

QCOM: easily beats 1Q22 (October - December) sales, earnings goals. profit taking after hours, but still a great day. Link here.

EPS: $3.23 vs $3.01 expected
sales of $10.7 billion vs $10.44 billion forecast
one year earlier, QCOM earned $2.17/share on sales of $8.23 billion

Pricing:

oil down marginally: yesterday's API report was more bullish than today's EIA report
natural gas is surging: up 15%; up 70 cents; trading at $5.453.

Market reflections:

SRE: up $1.61; up 1.18; this $124 stock is trading for $137.73;
KMI: flat; up slightly;
ENB: up 1%; up 43 cents; this $38 stock is trading for $43;
EPD: flat; up slightly; trading at $23.84;
LNG: up 1.22%; up $1.40; trading at $116.45

The PayPal debacle:

PayPal is plunging; no one has anything good to say about the company on "talk" television;
other similar companies, like Block, are also falling;
no one is mentioning the gorilla in the room: Apple.
Apple opened its "Wallet" to all credit cards; essentially eliminates the need for third party hardware that attaches to the iPhone and/or third-party software for payment

WTI hit $89 earlier today; fell back to $88.

fell back not because of OPEC maintaining production increase; rather,
the crude oil draw reported by EIA was disappointingly low compared to API data yesterday;
the bad news: gasoline prices are lagging crude oil prices; gasoline prices will catch up as we move close to driving season;
it is interesting that tensions between Russia / Ukraine seem not to be influencing price of oil

MPC: I said once upon a time I would never invest in refineries (again), but then:

some months ago, starting building a position in MPC;
wasn't following; wasn't paying attention; it's a long-term holding that I will continue to build
today, a talking head on CNBC mentioned outstanding MPC results; I never knew; MPC up over 5% today;

ISO NE: burning oil. That same CNBC correspondent mentioned Boston burning oil to keep the lights on; was dumbfounded; finally folks are reading the blog; reporting the ISO NE story. I honestly don't think a lot of folks were aware of this.

COP earnings: to be released tomorrow morning, February 3, 2022, before market open;
what's in store?"

consensus: $2.18 EPS forecast vs a loss of 19 cents last year
revenue forecast: $13.34 billion; up 120% year-over-year

AAPL: nip and tuck whether it will finish in the green today.

Weekly EIA Report -- February 2, 2022

Link here.

US crude oil inventories decreased by an incredibly small one million bbls from the previous week.
US crude oil inventories are now 9% below the five-year average, at 415.1 million bbls.
US crude oil imports average 7.1 million b/d; increased by almost a million bbls per day from the previous week.
US refineries operated at 86.7%, trending down.
Distillate fuel inventories decreased by 2.4 million bbls and are 19% below the five-year average.
Jet fuel supplieed was up 29% compared with the same four-week period last year.

That minimal draw on crude oil is why oil stocks (shares) are down across the board today.

GM: I track EVs elsewhere. Guidance:

will spend $35 billion on EVs and autonomous vehicles
will build third EV truck factory;
will build fourth battery factory.

OPEC: no surprises. Won't meet quotas. Bullish.

Europe's midstreamers are being hit with fairly massive IT attacks.

Texas freeze:

forecast for less than two days
starts today, Wednesday
will barely drop below 28° at worse, and that just for a few hours
at noon, I was outside, still comfortable with sweater; no jacket or parka needed
forecast for snow, but less than an inch
ends Friday
schools canceled for both Thursday and Friday

UNP partners with self-driving trucks.

Original Leigh Price Paper -- 2000 -- Origin And Characteristics Of The Bakken Source System

Link here.

This was one of first source documents I ever read and ever posted with regard to the Bakken.

A lot of folks have probably never heard of it, much less read it. I will post some highlights from the document over the next few weeks.

OPEC Meeting Concludes; WTI Surges -- Now Over $89 -- February 2, 2022

After OPEC meeting:

Brent > $91
WTI > $89
steepest backwardation in over 30 years!!

Equinor: strikes water! But no oil. Ginny Prospect.

Norwegian oil and gas player Equinor has found no hydrocarbons in the stacked Ginny/Hermine exploration prospects in the Norwegian Sea.

Link here. Agree completely.

Europe: in industrial recession. No energy. Industrialists in Germany must be going nuts.

Europe: EU now says nuclear power and natural gas investments can be counted as "green" over coming years -- WSJ. Greta's head is exploding.

Europe: EU inflation unexpectedly accelerates to an annual record of 5.1%. Looks like previous record going back to 2008 was 4.1% or thereabouts.

MPC:

results better than expectations;
new $5 billion share repurchase authorization;
this is on top of ongoing $10 billion program which is 55% complete;
shares: up 3% yesterday; flat in pre-market today;

US oil production: up to 11.6 million bopd

output constrained by labor shortages; truck / trucker shortage
OPEC meeting today; won't have press conference. Why? Don't want to be asked questions about Ukraine; Putin's right hand energy man at the conference.

OPEC meeting: apparently concluded in a record-low sixteen minutes. Say what? No headlines; nothing new. Wow, wow, wow: after conclusion of OPEC meeting, WTI surges; up 1.36% now trading solidly above $89. Pre-market trading after this announcement:

XOM: down 17 cents, but this is after a 6.4% jump yesterday;
CVX: up another 0.5% after a 2.6% jump yesterday;
EOG: up 0.7% after a 1.52% jump yesterday;
HES: flat
comment: almost as if investors don't understand what this means for oil sector;

ISO NE: big story finally being reported on CNBC; never thought I would hear this on CNBC; Becky certainly avoided that topic after it was brought up: ISO NE burning oil.

GM:

plans to build a third EV pickup truck
GM looking to build a more affordable pickup truck (remember: Tesla says no plans for a more affordable pickup truck

PayPal: this is going to ruin the day for many. Down another 22% at the open. Was selling for $300 one year ago (February, 2021); now at $137 (February, 2022).

Jobs: companies unexpectedly cut 301,000 jobs in January as omicron slams labor market -- ADP

first reported net job loss since December 2020
pandemic-sensitive leisure and hospitality industry hardest hit;

Hess Reports A Nice EN-Rice Well In Manitou Oil Field -- February 2, 2022

The Hess EN-Rice wells are tracked here.

Reporting today:

37332, conf, Hess, EN-Rice-A-155-94-0310H-2, Manitou, a very nice well:

Date	Oil Runs	MCF Sold
12-2021	20118	21844
11-2021	14300	15615
10-2021	23719	30929
9-2021	28089	49677
8-2021	37900	41124

Seasonal Flu Update -- Februrary 2, 2022

Here it is, February, the flu season is almost over, I assume. Have we heard anything about "seasonal flu" this year? Not in my neighborhood. But then I don't get out much and when I do, I don't talk about religion, politics, Covid, or seasonal flu.

Link here.

I guess this is why.

Note: "influenza" includes "Covid-19" in these graphics.

Four Wells Coming Off Confidential List; WTI Holds Above $88 -- February 2, 2022

MDU: big story -- lost in shuffle. Link here.

natural gas pipeline
North Bakken Expansion project
capacity: 250 million cubic feet per day
potential: up to 625 million cubic feet per day
completion -- look at this -- a 15,426-foot horizontal directional drill of a 24-inch pipeline
crossing Lake Sakakawea on the Missouri River
just less than three miles long: one of the longest of its kind in the world
project completed under a shortened timeframe; reduced original schedule by two months after a delay in receiving approval from the FERC (I'm shocked, shocked -- a FERC delay?)
total project expansion: 100 miles of pipeline, a compressor station expansion; a new compressor station;
with this project, MDU subsidiary now has total pipeline capacity greater than 2.4 billion cubic feet of natural gas per day (memo to self: check Hess / North Dakota)

Active rigs, always an estimate:

$88.16	2/2/2022	02/02/2021	02/02/2020	02/02/2019	02/02/2018
Active Rigs	32	14	54	64	57

Wednesday, February 2, 2022: 7 for the month, 62 for the quarter, 62 for the year

38385, conf, Hunt, Blue Ridge 159-100-6-7H2, Green Lake, some production;
37981, conf, CLR, Clear Creek Federal 3-26H, Westberg, no production reported;
37912, conf, CLR, Charolais South Federal 14-10H2, Elm Tree, no production reported;
37332, conf, Hess, EN-Rice-A-155-94-0310H-2, Manitou, a very nice well;

RBN Energy: proposed changes to 45Q tax credit could survive a "build back better" defeat, part 5.

As noted several times on the blog, this will drive faux environmentalists nuts that Big Oil is going to be subsidized by the US government to do something it would be doing anyway.

Notes From All Over -- February 2, 2022

And, so we begin:

NFL: record after record after record. Americans can't get enough. Do we need to go year-'round?

Hollywood Reporter: TV ratings, NFL conference championships hit multi-year highs;
Sports Illustrated: NFL has best viewership ratings since 2015.
reminder: Amazon Prime Video has TNF.

MDU: big story -- lost in shuffle. Will post as stand-along. Link here.

natural gas pipeline
North Bakken Expansion project
capacity: 250 million cubic feet per day
potential: up to 625 million cubic feet per day
completion -- look at this -- a 15,426-foot horizontal directional drill of a 24-inch pipeline
crossing Lake Sakakawea on the Missouri River
just less than three miles long: one of the longest of its kind in the world
project completed under a shortened timeframe; reduced original schedule by two months after a delay in receiving approval from the FERC (I'm shocked, shocked -- a FERC delay?)
total project expansion: 100 miles of pipeline, a compressor station expansion; a new compressor station;
with this project, MDU subsidiary now has total pipeline capacity greater than 2.4 billion cubic feet of natural gas per day (memo to self: check Hess / North Dakota)

Driftwood LNG plant: Tellurian to begin work in April, 2022. That was not on my bingo card.

Louisiana
$16.8 billion
"enough cash to cover first year of construction" -- say what?
"to build regardless of whether there is sufficient financing" -- say what?

EPD: on fire. 4Q21 results.

Let's check in on ISO NE:

low demand at 5:00 a.m. -- less than 15000 MW
already, electricity over $200 /MWh; 8th decile:
still no coal? Link here.

Semicondutors surging:

AMD gaining on Intel.
Short squeeze? XLNX:

on January 14, 2022: 11.71 million shares shorted; short % of float: 5.34%
on December 14, 2021: 10.5 million shares shorted;
a lot of folks bet against the AMD - XLNX merger

Apple: surprise hardware winner -- link here:

one core piece of hardware struggled until the pandemic

I bought one of these 27-inch desktop computers back in 2020, and it was best purchase I ever made;
getting more use out of it than ever imagined;

adult daughter who worked from home, lots of video-meetings with patients, bought same one; huge deal;
PC sales were declining prior to the pandemic;
huge jump in 2020;
another semiconductor company that beat the supply change challenge;

GM: record sales in 4Q21.

what supply chain shortage?
GM profit up 56% to $10 billion in 2021.
GM's average vehicle sales price rose almost 20% in 4Q21 from a year ago.
getting tired off all this supply chain shortage as an excuse.
Tesla's business model becoming mainstream: order your vehicle; pay $100 down; and wait one to three years.

Welcome to my world: link here.

Rigs don't matter (don't take that out of context): link here.

Texas "freeze" panic. Am I missing something?

Harold Hamm Foundation: donates $2 million to University of Mary.

Covid-19 vaccine for those under five years of age? If asked, I will say "no." But I doubt anyone will ask me.

Covid-19: February 1, 2022

The beginning of the end, back in December, 2021. The beginning of the end, or over?

Denmark lifted "all" restrictions yesterday.

Norway lifting "all" restrictions today.

Denver, Colorado, USA, lifted "all" restrictions today with some exceptions: public schools, public transportation.

There will be a flood of new automobiles hitting the showroom by mid-summer. GM said today they are ramping up as the supply chain shortage is starting to come to an end.

Semiconductor stocks are taking off, Watch US equity market today.

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Wednesday, February 2, 2022