The Million Dollar Way (The Bakken Oil Blog): 09/06/22

Tuesday, September 6, 2022

Off The Net For The Night -- September 6, 2022

I've hit a wall. It's not as bad as it sometimes hits. I have to take a break. I assume I will post at least one blog tomorrow but it could be delayed.

E-mail won't be answered, and comments to blogs won't be moderated and/or posted overnight.

Liberty Resources Az / Az W Wells -- Enget Lake

From the daily activity report, September 6, 2022:

Horizontal, re-entry, approval:

38417, conf, Liberty Resources, Az W 158-93-13-24-1MBH, Enget Lake,

There are four drilling sites on this pad. The other three:

38416, conf, Liberty Resources, Az W 158-93-13-24-5MBH, Enget Lake,
38415, conf, Liberty Resources, Az W 158-93-13-24-2MBH, Enget Lake,
38414, conf, Liberty Resources, Az W 158-93-13-24-3MBH, Enget Lake,

Of interest, this well to the east:

35090, 1,094, Liberty Resources, Az 158-93-13-24-4MBH, Enget Lake, t3/19; cum 233K 7/22;

Natural Gas Sell-Off -- Did The US EPA Have A Hand In It? September 6, 2022

There was a headline today that "natural gas sold off today." I don't know accurate that headline is/was. Oilprice.com suggests natural gas fell 1.65% to $8.011, about a buck lower than recent highs and as much as almost two dollars lower from just a few months ago, all this coming at a time that the energy crisis worsens in Europe.

From yesterday on the blog:

Natural gas: I've said from the beginning, I have a pretty good understanding of oil -- understanding maybe five percent of all there is to know, but I have no understanding of natural gas. After years of blogging, I have learned one thing about natural gas. Producers can produce a lot of it very quickly, if necessary. And today, we see it again. From Charles Kennedy:
And that's why I've never been a big fan in investing in pure-play natural gas producers. From the linked article:
U.S. natural gas futures shed around 5% on Tuesday, hitting a four-week low as soaring output coupled with lower demand forecasts drags prices down, despite the fact that inventories are 11% lower than their five-year norm. Output is still holding strong after the latest report from the Energy Information Administration (EIA) for the week ending August 26, which showed a natural gas inventory build of 61 billion cubic feet. While that brings inventory to 2,640 Bcf, it is still 228 Bcf below levels at the same time last year–heading into the winter season.

Also prompting the decline is the outage at the key Freeport LNG export plant on the Gulf coast.
That outage means traders are calculating some 2 billion cubic feet of gas per day that is not being consumed by Freeport for export and is remaining on the domestic market.

Freeport–which accounts for some 20% of U.S. LNG export capacity–looks set to remain offline until sometime in the first half of November, at which point we could see only a partial startup, ramping up to full capacity by the end of that month. Freeport, however, has already pushed back a restart date several times since declaring force majeure–and then revoking it–in June.
I anticipated this on August 20, 2022.

It now appears there may be more to the story and that the US EPA may have had a hand in it.

I'm too tired to post any more tonight. I assume if this is accurate -- that there is more to the story and the US EPA may have had a hand in it -- we'll hear more about it tomorrow.

As for me, I'm headed off for some reading and for some old Perry Mason television.

From 2019, A Saudi Analysis Of The Bakken -- September 6, 2022

This was first posted back in 2019 / 2021. It took a little time to find. I don't want to lose it again, so I'm re-posting it for the archives and tagging it.

Nothing new here; for my personal archives only.

Links:

Five New Permits; A Horizontal Re-Entry Approved; Fifteen Permits Renewed; Two Permits Canceled; One DUC Reported Completed -- September 6, 2022

Natural gas: I've said from the beginning, I have a pretty good understanding of oil -- understanding maybe five percent of all there is to know, but I have no understanding of natural gas. After years of blogging, I have learned one thing about natural gas. Producers can produce a lot of it very quickly, if necessary. And today, we see it again. From Charles Kennedy:

And that's why I've never been a big fan in investing in pure-play natural gas producers. From the linked article:

U.S. natural gas futures shed around 5% on Tuesday, hitting a four-week low as soaring output coupled with lower demand forecasts drags prices down, despite the fact that inventories are 11% lower than their five-year norm. Output is still holding strong after the latest report from the Energy Information Administration (EIA) for the week ending August 26, which showed a natural gas inventory build of 61 billion cubic feet. While that brings inventory to 2,640 Bcf, it is still 228 Bcf below levels at the same time last year–heading into the winter season.

Also prompting the decline is the outage at the key Freeport LNG export plant on the Gulf coast.
That outage means traders are calculating some 2 billion cubic feet of gas per day that is not being consumed by Freeport for export and is remaining on the domestic market.

Freeport–which accounts for some 20% of U.S. LNG export capacity–looks set to remain offline until sometime in the first half of November, at which point we could see only a partial startup, ramping up to full capacity by the end of that month. Freeport, however, has already pushed back a restart date several times since declaring force majeure–and then revoking it–in June.

I anticipated this on August 20, 2022.

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

Active rigs: 43.

WTI: $86.75.

Natural gas: $8.021

Five new permits, #39224 -- #39228, inclusive:

Operator: Hess
Field: Beaver Lodge (Williams)
Comments:

Hess has permits for three BL-Herfindahl wells and two BL-Domy wells, all in NENE 30-156-95;

to be sited 655 FNL and between 762 FEL and 894 FEL.

Horizontal, re-entry, approval:

38417, Liberty Resources, Az W 158-93-13-24-1MBH,

Fifteen permits renewed:

Enerplus (9): the following permits in Dunn County: Troop; Skulk, Canidae, Fennec, Sly, Vulpes, Kit, Renard, and Swift
XTO (3): three Carus State Federal permits in Dunn County;
Petro-Hunt (3): three State permits in McKenzie County;

Two permits canceled:

Whiting: a KCH Murphy LW permit (Mountrail County) and a Cymbaluk Federal permit, Stark County;

One producing well (a DUC) reported as completed:

38599, 761, Murex, Borstad 34-10H-1 2MB, West Tioga, Williams County; t--; cum no production data; --;

Hess cancels five SC-Bingeman permits.

Off The Net For Awhile, But Tell Me Again, Gasoline Demand Is Below That Of 2020 -- September 6, 2022

Link here.

I spent a lot of time in this area many decades ago. I don't miss it. At all.

Several Wells Coming Off Confidential List -- September 6, 2022

The Far Side: link here.

WTI: $87.06. Volatile.

Natural gas: $8.395.

Active rigs: 46.

Wednesday, September 7, 2022: 8 for the month, 58 for the quarter, 397 for the year

38006, conf, Hess, CA-E Burdick-155-95-2932H-5, Capa, t--; cum 61K 7/22;
37371, conf, Petro-Hunt, Jorgenson 158-94-2B-11-1HS, East Tioga,

Tuesday, September 6, 2022: 6 for the month, 56 for the quarter, 395 for the year

37372, conf, Petro-Hunt, Estby 159-94-35C-26-1HS, East Tioga,

Monday, September 5, 2022: 5 for the month, 55 for the quarter, 394 for the year

35443, conf, Whiting, Lapica 34-23TFH, Alger, t--; cum 80K 7/22;

Sunday, September 4, 2022: 4 for the month, 54 for the quarter, 393 for the year

36643, conf, Hess, BL-S Ramberg-155-95-0601H-4, Beaver Lodge, t--; cum 130K 7/22;

Saturday, September 3, 2022: 3 for the month, 53 for the quarter, 392 for the year

37339, conf, Whiting, Ark 21-15-2H, Dollar Joe, t--; cum 90K 7/22;
35444, conf, Whiting, Lapica 34-23HU, Alger, t--; cum 90K 7/22;

RBN Energy: piping refined products from the Midwest to the East Coast, part 2. Archived.

Since the century turned, there’s been a big buildup in refining capacity in the U.S. Midwest, primarily to process the increasing volumes of heavy sour crude being piped in from Western Canada. Over the same period, refining capacity in the Mid-Atlantic region has declined by more than half, mostly for economic reasons — including the lack of pipeline access to favorably priced U.S. shale oil — but also due to events, such as the devastating June 2019 fire at Philadelphia Energy Solutions’ 330-Mb/d refinery in Philadelphia, which led the facility’s owner to shut it down. In addition to spurring more refined product imports to the Mid-Atlantic and increased flows to the region on Colonial Pipeline, the changing market dynamics prompted a push to increase pipeline flows of gasoline and diesel east from the Midwest to markets in Pennsylvania and beyond. In today’s RBN blog, we continue a review of the U.S.’s still-morphing refined product pipeline networks with a look at recently added capacity from PADD 2 to PADD 1.

In this blog series, our aims are to provide an overview of the U.S.’s major refined product pipelines and to describe how the network continues to be reworked — extended, expanded, repurposed and/or reversed — to reflect changing market dynamics. In Part 1 we took a big-picture view, looking at many of the large pipelines and pipeline systems that transport gasoline, diesel and jet fuel long distances from refineries to refined product terminals throughout the U.S. We noted that, in addition to these long-haul, higher-volume pipelines, there are scores of shorter, lower-volume pipes that fan out from these lines to distribute refined products to terminals in smaller cities and towns. In most cases, gasoline and diesel are transported “the last mile” to service stations by truck.

Today, we begin a review of significant changes that the midstream sector has been making to existing networks to reflect major market shifts, such as the combination of declining refining capacity in the East Coast (PADD 1) and the push by refineries in the Midwest (PADD 2) to transport more of their refined products to the East Coast. In an upcoming blog, we’ll look at market shifts instigating a number of refined product pipelines in Texas and other states in PADDs 3 and 4 (Gulf Coast and Rockies, respectively).

Midwest refineries made a big bet on Western Canadian heavy sour crude in the 2000s, investing billions of dollars in expansions and equipment upgrades (such as new cokers) that increased their ability to break down low-API oil into valuable products such as gasoline, diesel and jet fuel. Commitments to make these big investments — BP spent $4.2 billion to add a coker and make other improvements to its Whiting refinery in northwestern Indiana and Marathon Petroleum spent $2.2 billion on a coker project at its Detroit refinery — were made as several oil sands producers in Alberta were bringing new production online and before the Shale Revolution took hold and Bakken production of light sweet crude took off. Back then (in “the aughts”), the prevailing opinion was that easier-to-process lighter crudes were becoming scarcer and likely to get more expensive and heavy crude would be more abundant and cheaper.

STR And MNRL — Bloomberg — In Pre-Market Trading MNRL Up Almost 8% -- September 6, 2022

The Deal

Breaking: deal announced. Also here.

all-stock merger;
aggregate enterprise value: $4.8 billion, based on closing prices
brings together two of the largest public companies in the oil and gas mineral and royalty sector with complementary high-quality assets in the Permian Basin
259,510 net royalty acres
32,800 boepd
50.3 net line-of-sight wells
annual operational cash flow projected: $15 million
projected too reduce Sitio's 2W22 G&A per boe by 19% to $.172 per boe for the combined company
float to increase Sitio's publiic float almostt 6x; from $320 million to $1.9 billion

For comparison, Devon, 1Q22:

$45 billion
616,000 boepd

Two metrics:

Sitio-MNRL: $4.8 billion / $32,800 boepd = $146 thousand / boepd
Devoon: $45 billion / 616,000 boepd = $73,000 / boepd

Original Post

Before we get started, this "ESG" thing is working to our advantage.

STR website.

It started here.

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. Full disclaimer at tabbed link.

All my posts are done quickly: there will be content and typographical errors. If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them.

Pre-market, September 6, 2022:

STR:

market cap: $2 billion
p/e: 23
forward yield: 11.54%
trading at $25

MNRL:

pre-market: up almost 8%;
market cap: $1.8 billion
p/e: 14
trading at $30

Wordle -- The New York Times -- September 6, 2022

Link here.

The favorite starting word among players [is] ADIEU, the French word for “farewell.”

It was used by an average of 5 percent of users each day, which still included millions of people. And even after a June 22 CNET article discouraged using ADIEU — because its abundance of vowels may interfere with the chance of getting some good consonants — it was still one of the top five guesses.

Most popular "wordle" first guesses: adieu, audio, stare, raise, arise.

Finding a good balance of non-repeating vowels and commonly used consonants, such as R, S, T or N, is also said to give the player an advantage.

And yet, there are nuances to that strategy.

In a request from The Times for the experiences of players, Kat Whyte of Central Point, Ore., said that she starts with ADIEU. “It contains all the vowels except O and possibly Y,” she said, adding, “D is fairly common.”

On the other hand, fellow Wordle player Michael Lounsberry of Seattle said, “Finding consonants is where it’s at! Finding vowels is a bad strategy.”

The second attempt, the prevailing wisdom goes, should use completely different letters to increase the likelihood of solving the daily puzzle in the fewest guesses.

Me? I haven't missed a game in months. I often stay up to midnight just to get the next puzzle. With one exception -- and that was some months ago, I never miss. I generally get it on the fourth try. Seldom on the sixth. Very seldom on the third.

My starting word used to be adieu, but now I use adept. I was surprised to see adept not among the most frequently first used words.

My wife uses adieu after I suggested it to her. She generally solves the puzzle much more quickly than I do, generally in three tries.

The game is not yet monetized. That was a prerequisite for the inventor of the puzzle to "give it" to The NY Times for free. I believe the small print says it must be kept "free" for a certain number of years, after which The NY Times can monetize the puzzle.