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Wednesday, August 14, 2024

A Reader Has Several Questions Regarding The Bakken -- August 14, 2024

Locator: 48419B.

In a long note like this, there will be content and typographical errors. This is the first iteration for this post. It will go through several iterations, updates, corrections. The usual disclaimer for the blog still applies. 

My comments are a bit disjointed below because I was updating things, and going back and forth while studying the maps and production data. But I think the reader can get the gist of what I'm saing.

A reader had a question: how will four new wells affect three existing wells?

The graphics are below.

The three existing (older) wells are identified with red ovals.

The four new wells, still on confidential list, are on a 4-well pad, the pad identified with a blue oval.

The existing wells are in three adjacent stand-up 1280-acre spacing units; the three wells run south to north.

The new wells, on a four-well pad, as noted, are on a laydown 1920-acre (three section) spacing unit; the horizontals run from west to east.

First question: how will the new wells affect the existing / producing wells in regard to their "status" once the new wells are completed?

Answer: this is crucial -- all wells "stand alone." It does not matter that new wells are being drilled in the same area -- in the sense that the old wells will still exist, regardless of new wells being drilled. So, ignore the new wells; the existing wells keep "doing their thing."

In this case, the new wells are not even in the same spacing units as the existing (older) wells.

Second question: how will the new wells affect the existing / producing wells in regard to "actual production"?

1. If the reader has minerals in all six sections of the existing wells, the reader will participate in oil royalties from the four new wells.

2. If the reader has minerals only in the south sections (sections 4, 5, and 6) the reader will not collect royalties from the four new wells. [This applies to the reader.]

3. If the reader has minerals only in the north sections (31, 32, and 33), the reader will collect royalties from the four new wells. [This does NOT apply to this reader.]

4. In this case, the reader says he/she has a mineral interest only in the south section. This means that the reader will not participate in the new horizontal wells.

Break, break.

Now, how will the new wells affect the production of the existing wells/ To some extent, it depends on whether the existing wells and the new wells are targeting the same formation. Based on the names of the wells and the reader's input, it appears that the existing wells and the new wells are all middle Bakken wells.

Assuming they are all middle Bakken wells, it is likely that the new wells will "enhance" the production of the existing wells. In some Bakken fields in North Dakota, new wells have a huge "positive" effect on existing (older) wells, whereas in other Bakken fields, new wells have little effect on existing (older wells).

These wells are in the Painted Woods oil field. In this field, newer wells tend to have little to no effect on existing (older) wells.

So, what's likely to happen:

1. The operator will take the existing (older) wells off line while the newer wells are fracked. Generally, once the wells are drilled to depth, the operator will frack the four wells in short order. Existing (older) wells may be taken off line for a short time -- as little as one month in some cases -- or much longer -- sometimes months.

2. Once the new wells are fracked and associated work on these wells completed, which may be several months from now, the existing (older) wells will be brought back on line. This does not always happen; this will be discussed in greater detail below.

3. When the older wells are brought back on line, initial production may be less, the same, or more than what the production was prior to being taken off line. But within a few months, production from the older wells will be back to what the production was before they were taken off line.

4. All things being equal, the new wells should have much better production than the old wells because the operators have gained a huge amount of experience over the years of drilling the Bakken.

What could happen?

If the new wells are really, really, really good, and the old wells are "petering out" and getting too expensive to maintain for the amount of oil being produced, the operators could take the older wells off line permanently.

What else is likely to happen?

If the wells are really, really, really good -- and even if only pretty good -- the operator will drill four more horizontal wells in a laydown 1920-acre unit consisting of sections 4, 5, and 6. 

These are the graphics:



 








Everything above is a mixture of fact and conjecture (opinion) based on my experience following the Bakken since 2007. I have no formal training in oil exploration / production, and no background in the oil business or geology. Everything above could be absolutely wrong, and/or interpreted incorrectly by readers. But I'm pretty sure I know what's going on. If I'm wrong, I will be quite surprised, though absolutely anything is possible.

Later, I will look at the production profiles of the existing wells and see if anything else comes to mind.

I doubt I will spend much time on the new wells because they are still on confidential list, but we'll see.

Once I post this, I will wait for the reader to see if he/she has more questions, or if something needs clarification, but I probably won't get to those questions for another 24 to 48 hours.

Bottom line: because the reader has a mineral interest only in the south section in the 2-section, 1280-acre unit, the reader will NOT receive royalties from the new horizontal wells to the north BUT and this is a huge "BUT" -- the operator will eventually drill four similar horizontal wells west to east, cross the south unit, and the reader will participate in those four wells. There is no way to guess when the operator will drill these four wells -- it could be next year or ten years from now, but it will happen (conjecture) based on how things are being done in the Bakken.

I will correct the formatting of this post later. 

The original question from the reader (with some mild editing):

We have an interest in a well that is in a 1280-acre standup drilling unit. Our interest is in the south section of this two section drilling unit. This well was drilled in 2010 and is still producing as of the last royalty payment received.
Apparently, a new 1920-acre extended lateral drilling unit was formed but in a lay down configuration. This lay down drilling unit runs through the north section of our drilling unit but not in the south section where we have an interest.
Back in May, Grayson Mill began drilling four new wells from west to east in this new drilling unit. The question is, does this new drilling unit negate our current drilling unit and well altogether possibly leaving us hung out to dry? Answer: no. The new spacing unit, the new wells, do not "negate" your current drilling unit. Your drilling unit exists forever for the existing well. That can't be changed. 
Would our well likely be shut in permanently due to this new unit configuration? Answer: yes, it's possible but not likely.
Our well and the new four wells are all middle Bakken wells so at some point the well bores will cross and being that the MB seam is not that thick, you would think there will be some drinking of each other's milkshake? Answer: impossible to quantify. But in all my years of looking at production profiles, I have come to certain conclusions but it's an opinion with which most folks would disagree with me, so I won't opine.
And think what the effect could be on our well when fracking occurs on the new wells. I realize they shut existing surrounding wells in while fracking occurs close by, but this is an actual well bore crossing. At the end of the day, I have a feeling this is not a positive situation for our interest. Yes, they will take the wells off line while the new wells are being fracked -- in fact they are already off line -- see below. No one can predict whether the wells will be brought back on line but my hunch is that they will be brought back on line -- see below -- but it is very iffy.

The area of concern: sections 4, 5, and 6 - T154N R102W (Wing, Mortenson, and Jack Erickson) and sections 31, 32, 33 - T155N R102.
The four new wells are sited  in section 31-T155N  R102W. (Marilyn wells). I believe all these wells are currently Grayson Mill wells. Yes, they are all Grayson Mill wells.

With regard to the "milkshake" analogy, there's no way to quantify that. I can opine on that but I doubt anyone would agree with me. The new wells are too far away to affect the south section (some may disagree with that) so if the operator shuts in the existing wells, he is shutting in a lot oil, suggesting to me, the operator won't shut in the older wells at this time. [I just checked the production profile of the existing wells. Those three older wells were shut in the last 17 days of May, 2024, and the entire month of June, 2024. Prior to being taken offline, the wells were each producing around 800 bbls off oil / month which is getting pretty low. The good news is that the operator still shows these wells as active. I'm betting they come back on line but not 100% comfortable in that bet.]

The worse thing that could happen, is YES, the operator could shut in the reader's well. But, long term, the operator, as mentioned above, will eventually drill four new horizontal wells across the south section where the reader has minerals. 

From the reader's perspective, this is likely to be bad news -- these new wells being drilled. From my perspective, it's great news. It tells me the operator is interested in this area. It's unfortunate for this reader that the new wells were not one mile to the south but eventually wells will be drilled there also (conjecture).

One last thought: if the new wells really, really affected the older wells positively, then it's even less likely the operator would shut in the older wells. But again, in the Painted Woods oil field I have not seen much of a halo effect. I would love to be pleasantly surprised in this situation.

Columbia President Resigns -- August 14, 2024

Locator: 48418GAZA.

Tag: Columbia president resigns


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Good Vibrations

Link here.

Intel -- Lunar Lake -- Core Ultra 200V

Locator: 48417INTEL.

Original Post
August 14, 2024

September 3, 2024: Lunar Lake now shipping. Re-named: Core Ultra 200V.

Intel's Lunar Lake, wiki, August 14, 2024.

Intel's Lunar Lake changes everything about X86. Forbes, July 3, 2024.

Intel sells stake in chip designer Arm Holdings, Yahoo!Finance, August 14, 2024.

Could Intel be booted from the Dow? Asking for a friend, August 14, 2024.

From Forbes, wow, this sounds like Apple's M4 -- SoC --

This year’s Computex in Taiwan, arguably the largest and most influential PC trade show in the world, saw Intel unveil more details about its Lunar Lake processor during CEO Pat Gelsinger’s keynote. I was personally surprised that Intel didn’t lead with Lunar Lake and PCs during Gelsinger’s presentation, considering that Computex is predominantly a PC-oriented show. Instead, it led with data center and server AI products, which I believe was a mistake because most people’s focus at the show is on PCs. But it seems clear there was an executive decision on Intel’s part to talk up its competition with NVIDIA.

Just before Computex, I had the opportunity to attend Intel’s Tech Tour in Taiwan, the company’s third such architectural briefing series around the world. The purpose of these tours is to showcase Intel’s latest innovations and shine a light on the local Intel teams that make its global success possible. Last year’s Meteor Lake processor briefing was held in Penang, Malaysia, where the company does a lot of its packaging and testing. Taiwan is strategically important for Intel because it is the heart of the PC ecosystem, and all PC vendors have a significant presence there.

Lunar Lake is Intel’s best bet to compete with the rising threat of Arm-based architectures, especially those coming from Apple and Qualcomm, which deliver both high performance and efficiency for laptops. While AMD also offers some competition, its AI processors have been positioned more for high performance than low power consumption. Lunar Lake’s specs and design also align with Microsoft’s vision of what makes a Copilot+ PC.

To accomplish all this, Lunar Lake is not just another incremental improvement over Intel’s previous designs; it is a radical departure for the traditional x86 paradigm that has dominated the PC industry for decades. At a platform level, Lunar Lake is an evolution from last generation’s Meteor Lake with further improvements to performance and efficiency and a continuation of its advanced packaging design. This includes the introduction of on-package memory.

One of Intel’s most important ingredients in accomplishing this task was radically changing how it implemented its different types of CPU cores. Lunar Lake is a significant departure because it focuses on power efficiency and does so by prioritizing a cluster of four Skymont efficiency cores (sometimes called E-cores) over Lion Cove performance cores (P-cores) for most tasks. By isolating the efficiency cores into a four-core cluster, Intel is also able to keep as many workloads as possible on the smaller, more efficient cores before lighting up the bigger, more power-hungry performance cores.

One of Intel’s engineering achievements for Lunar Lake is that in certain workloads Skymont’s single-threaded performance is anywhere from 38% to 68% faster than the last generation. Not only that, but the new Skymont cores are much more dynamic, delivering the same performance at one-third the power, 70% greater performance at the same power or even 2x the performance at marginally higher power. The four-core cluster can deliver up to 2.9x the performance of two of Meteor Lake’s E-cores at the same power.

These new E-cores are so performant that they are effectively on par with earlier Raptor Cove performance cores found in Intel’s 13th and 14th Gen desktop CPUs. The Lion Cove P-cores also deliver a 14% uplift over their Redwood Cove counterparts in Meteor Lake, making them the fastest cores in the CPU. Intel has architected these cores’ power and performance curves to overlap perfectly, maximizing the performance and power efficiency of the SoC. The next generation of Thread Director is designed to make sure that workloads are appropriately sent to the right cores, optimizing for efficiency and prioritizing the E-cores for the first time ever.

Lunar Lake is Intel’s first implementation of its second-generation GPU architecture, dubbed Xe2. This is the same GPU architecture planned for the company’s much-anticipated discrete Battlemage GPUs that are expected to ship soon. Intel says that the new Xe2 architecture is 50% faster than its predecessor inside of Meteor Lake and features new XMX engines, which increase AI performance to 67 TOPS. Intel has also spent the last year working on improving graphics drivers for its Xe family of GPUs, which means that the Xe2 architecture will come out of the gate much more optimized for most games, including older titles.

This, paired with the expected 48 TOPS from the NPU on the same SoC, delivers well over 100 TOPS of platform AI performance, which makes for a nice statistic but will almost never be possible to utilize all at once. The important part is that the NPU and GPU are each quite performant and can deliver high-end AI experiences that developers want their users to have. What’s more important is how efficiently the GPU and NPU deliver this level of performance—and how that preserves battery life. Intel says that its fourth-generation NPU is twice as performant at the same power as the last generation and capable of four times as much peak performance.

Much, much more at the link. 

By the way, articles like this in Forbes were the reason I finally subscribed to Forbes

List of Intel CPU microarchitectures.

I have no idea why wiki does not list Intel Lunar Lake at this page.

Meteor Lake.

Comment: personal investing --

  • I have no positions in Intel --
  • I'm overweight in tech, right now --
  • I have positions in seven incredibly good tech companies and don't see the need for any more --
  • I would not replace any of my tech positions with Intel --
  • but, having said all that, I'm going to be watching Intel like a hawk for the next twelve months and if there is any hint that Intel starts to move like I think it could -- I'll be the first to start a new position --
  • if I rode Intel down to $20 with the recent sell-off, I might:
    • hold, hoping for better times; or,
    • sell it all, take the tax loss harvest, and then buy back in 30 days
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Disclaimer Briefly 
Reminder
  • I am inappropriately exuberant about the US economy and the US market, 
  • I am also inappropriately exuberant about all things Apple. 
  • See disclaimer. This is not an investment site. 
  • 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. 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.
  • Reminder: I am inappropriately exuberant about the US economy and the US market, 
  • I am also inappropriately exuberant about all things Apple. 

Cisco Will Cut 7% Of Workforce -- Earnings Beat -- August 14, 2024

Locator: 48416CISCO.

Link here. Perhaps Cisco will start with those workers who prefer to work at home, not come into the "office."

The Permian, The Bakken, And The Gulf Eating OPEC's Lunch -- This Graph Is Simply Amazing -- August 13, 2024

Locator: 48415B.

Under the Biden administration, link here.


Re-posting:

Locator: 48408PEAKOIL.

Link here

US crude oil field production.

Since August, 2022, not one month less than 12 million bopd.

One year later, August 2023, hit 13 million bopd and never dropped below that 13-handle except for one month -- January, 2024.

Chevron's Anchor Project -- First To Use 20,000 PSI-Technology

Locator: 48414CVX.

Anchor Deepwater Development.

Original post: August 14, 2024.

Links.

Offshore Technology, August 13, 2024:

  • deepwater US Gulf of Mexico
  • first to deploy 20,000 psi-technology;
  • Anchor field is estimated to contain up to 440 million bbls of recoverable oil equivalent;
  • has commenced oil and natural gas production
  • located 180 miles off the coast of Louisiana; launched in December 2019 (literally at outbreak of Covid-19 pandemic)
  • an FPU with production capacity of 75,000 bopd and 28 million cubic feet per day of dry gas;
  • subsea wells (multiple) operate at water depths of 1.524 kilometers
  • Chevron: 63% working interest
  • Total Energies: 37%

WoodPLC, posted August 14, 2024: 

  • the industry's first deepwater ultra-high pressure development to achieve a final investment decision and one of the largest projects in the US energy industry
  • digitally executed: 100% digitally executes; cloud-based; data-driven engineering
  • reduced engineering manhours by 20%

WorldOil, August 12, 2024:

  • seven subsea wells tied into the Anchor FPU located in the Green Canyon area

Offshore Magazine, August 13, 2024:

  • could operate up to 30 years
  • could ultimately lead to 30 million boe recovered
  • final FID, late 2019, $5.7 billion

NASDAQ, August 13, 2024: 

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Back of Envelope

Running the numbers:

  • $5.7 billion / 440 million = $12.95 / bbl
  • 75,000 bbls x $60 = $4.5 million / day = $1.6 billion / year

EIA Weekly Petroleum Report, Gasoline Demand -- August 14, 2024

Locator: 48413B.

EIA weekly petroleum report, link here:

  • crude oil in storage: 5% below historical average;
  • refiners: 91.5%
  • jet fuel: up 16% y/y

Gasoline demand, link here:

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Back to the Bakken
 

WTI: $76.98.

Active rigs: 37.

One new permit, #41025:

  • 41025, Grayson Mill, L And E 9-4 5H, Ragged Butte, NWNW 15-151-101, 
    • to be sited 349 FNL and 425FWL;

One permit canceled:

  • 40894, Prairie Horizon Land Development, Grasshopper 1, Stark Co

One producing well (a DUC) reported as completed:

  • 39677, 527, Petro-Hunt, Burian 144-98-14B-23-3H, Billings County;

Global Warming -- Whoo-Hoo -- August 14, 2024

Locator: 48412GLOBALWARMING.

New tag! GlobalWarming_2024_2025.

Link here.

This confirms / corroborates earlier stories already posted.

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The Book Page

A Plausible Man: The True Story of the Escaped Slave Who Inspired Uncle Tom's Cabin, Susanna Ashton, c. 2024.

Foxconn -- Nvidia -- AI -- August 14, 2024

Locator: 48411AI.

AI, two camps:

  • AI is hyped;
  • AI is not hyped.

I'm in the second camp.

Exhibit A: Foxcon.

Link here.

Foxconn is known internationally because it makes iPhones for Apple — but the Taiwanese tech giant is reaping the benefits from the artificial-intelligence boom, too.

The company’s AI server sales jumped 60% over the second quarter, an earnings report published on Wednesday showed.

Its profit climbed for the fourth straight quarter to 35.045 billion New Taiwanese dollars ($1.08 billion), beating the NT$33.73 billion figure analysts were expecting, according to data from FactSet. Revenue rose 19% to NT$1.551 trillion, a record for the three months ending June 30, powered higher by a 60% surge in AI server sales.

“The performance of AI servers was more robust than expected and drove revenue growth of the group to be better-than-expected,” spokesman James Wu said on an earnings call.

Taipei-listed shares of Hon Hai Precision Industry, as Foxconn is officially called, climbed 2.5% to close at NT$185.50 on Wednesday.

Slumping iPhone sales have been a cause for concern on Wall Street this year—even though Apple has promised to pack the next iteration of its flagship device with a bunch of generative AI features.But Foxconn has sought to diversify away from electronics in recent years and in October expanded an existing partnership with chip maker Nvidia to build a new class of data centers powering AI technology. It has a goal of eventually capturing 40% of the overall server market.

Ibotta Lemon -- August 14, 2024

Locator: 48410LEMON.

Updates

August 26, 2024: Amazon aggregators feeling the pinch. That dot-com bust? Exhibit A:

Original Post 

No, I never invested in Ibotta. 

We'll discuss this later.

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Dot-Com Bubble

Ibotta reminds me of the dot-com bubble

From my perspective, the dot-com bubble was nothing more than venture capitalists throwing millions (billions?) of dollars to Harvard MBA graduates who were building websites -- with or without a viable product.

Not part of the 2000 dot-com bubble, but Ibotta seems to be cut from the same cloth. 

How it works.

I'll be surprised if Ibotta is still active ten years from now.

***********************************
Disclaimer Briefly 
Reminder
  • I am inappropriately exuberant about the US economy and the US market, 
  • I am also inappropriately exuberant about all things Apple. 
  • See disclaimer. This is not an investment site. 
  • 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. 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.
  • Reminder: I am inappropriately exuberant about the US economy and the US market, 
  • I am also inappropriately exuberant about all things Apple.

ENB Hits 52-Week High -- August 14, 2024

Locator: 48409ENB.

Tea leaves: Fed will not cut in September.

ENB:  

From Motley Fool, August 12, 2024, link here:

Enbridge reported solid second-quarter performance earlier this month. The midstream energy company posted an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $4.3 billion, representing an 8% increase from the previous year’s quarter. Besides, its distributable cash flow for the quarter stood at $2.9 billion, representing a 3% increase compared to the prior year’s quarter.

During the quarter, it completed the acquisition of Questar Gas Company and Wexpro, and hopes to close the acquisition of Public Service Company of North Carolina in the third quarter. These acquisitions would diversify its business and enhance its cash flows, thus strengthening its long-term dividend growth prospects. Further, the company is progressing with its $24 billion secured capital program, spending $6 to $7 billion annually. These investments would strengthen its asset base, driving its cash flows.

Moreover, Enbridge has rewarded its shareholders by paying dividends for the last 69 years and has raised the same for the previous 29 years at an around 10% CAGR (compound annual growth rate). It currently offers a forward dividend yield of 6.9% and trades at an attractive NTM (next 12 months) price-to-earnings multiple of 17.7.

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Back to the Bakken

WTI:$77.57.

Thursday, August 15, 2024: 34 for the month; 90 for the quarter, 416 for the year
40466, conf, Kraken, Milloy 10-3-34 3H,
40387, conf, WPX, Missouri River 25-26HY,
39798, conf, Enerplus, Garnet 148-95-03B-10H,
Wednesday, August 14, 2024: 31 for the month; 87 for the quarter, 413 for the year
40467
, conf, Kraken, Milloy 10-3-34 2H,
40386, conf, WPX, Missouri River 25-26HIL,
40262, conf, Empire North Dakota, Whooping Crane 29-15 1H,
39253, conf, Hess, SC-4WX-153-98-3130H-5,

RBN Energy: New England hopes new life for Everett LNG will help ease reliability concerns, despite Mystic's closure.

The 1,413-MW Mystic Generating Station, a longtime workhorse for New England, shut its doors for good May 31. Located in Charlestown, MA, on the north side of Boston, Mystic is adjacent to the Everett LNG terminal, which supplied 100% of Mystic’s natural gas for several decades. The power plant’s closure meant the Everett terminal might also be history. However, the Massachusetts Department of Public Utilities (DPU) recently approved new contracts that will keep Everett LNG open for at least six more years. In today’s RBN blog, we’ll discuss the combined impact of Mystic’s demise and Everett’s stay of execution, how the region has handled this summer’s heat wave, and what could be in store for next winter.