No Wells Coming Off Confidential List -- April 11, 2023

Locator: 44359B.

Inflation: clearly transitory. Link here. Cooling off. 

Investing: I'm almost back to "where I was."

North Texas: beautiful, beautiful morning. Bike ride as soon I complete this post. 

Ovintiv: see below. For investors in energy, I think there's a "new" way to think about shale. Maybe I will talk about that later but because this is not an investment site, I have to think twice (or thrice) before posting such notes. 

Blog: if you read only one other blog today, I would recommend this one -- today's RBN Energy blog on SPOT -- it will be available for a limited amount of time and will then disappear behind a paywall:

RBN Energy: Why SPOT will change everything in the U.S. crude oil export market. Archived.

If you think, as we do, that (1) U.S. crude oil production is likely to increase by 1.5 to 2 MMb/d over the next five years, (2) almost all those barrels will be light-sweet crude that needs to be exported, and (3) exporters will overwhelmingly favor the marine terminals that can accommodate Very Large Crude Carriers (VLCCs), it would be hard to ignore the game-changing impacts that Enterprise Products Partners’ planned Sea Port Oil Terminal could have. SPOT, which could be completed as soon as 2026, will have robust pipeline connections from the Permian and other shale plays and be capable of fully loading a 2-MMbbl VLCC in one day, enough to handle virtually all the incremental exports we’re likely to see over the next five years.

In today’s RBN blog, we discuss the fast-increasing role of VLCCs in U.S. crude oil exports and the potentially seismic impacts of the SPOT project. RBN’s middle-of-the-road “Mid” forecast sees U.S. crude oil production increasing to 14 MMb/d by 2028, about 2 MMb/d higher than the 2022 average, with three-quarters of that incremental output coming from the Permian and most of the rest from other shale plays that also produce high-API-gravity, low-sulfur oil. Given that U.S. refineries’ ability to economically process light-sweet crude is essentially maxed out, it’s a good bet that almost all those incremental barrels will be bound for export terminals along the Gulf Coast. At’s just as likely that, on their way to overseas refineries, as many of those barrels as physically possible will be headed through terminals like the Enbridge Ingleside Energy Center (EIEC) and South Texas Gateway (STG) — both in the Corpus Christi area — whose docks can receive and load VLCCs with minimal reverse lightering, the most cost-effective way to move massive volumes of oil to Europe and Asia.

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Back to the Bakken

Active rigs: 42.

Peter Zeihan newsletter.

WTI: $79.49.

Natural gas: $2.213.

Wednesday, April 12, 2023: 26 for the month; 26 for the quarter, 281 for the year
39184, conf, Ragnar Exploration, Galt 1-22H,
38875, conf, Ovintiv, Clear Creek Federal 152-97-36-25-8H, Westberg, these wells are tracked here.

Tuesday, April 11, 2023: 24 for the month; 24 for the quarter, 279 for the year
None.

RBN Energy: Ovintiv doubles down on the Permian's Midland Basin. 

It would be an understatement to say we’re sensing a trend here. Over the past couple of years, there’s been an absolute frenzy of producer M&A activity in the Permian, much of it involving big E&Ps getting bigger and private equity cashing in on assets they’ve been developing since the 2010s. The latest multibillion-dollar deal involves Ovintiv, whose recently announced plan to acquire the Midland Basin assets of three EnCap Investments-backed producers will nearly double Ovintiv’s oil and condensate output in West Texas, lower its per-barrel production costs, and add more than 1,000 well locations to its inventory. Oh, and via a separate but related deal, Ovintiv will exit the Bakken by selling its assets there to another EnCap affiliate. In today’s RBN blog, we look at what the M&A artist formerly known as Encana is up to.