Eight New Permits; Six Permits Renewed; Three DUCs Reported As Completed -- January 2, 2025

Locator: 44591B.

Active rigs: 34.

WTI: $73.28.

Eight permits approved, #41470 - #41477, inclusive:

• Operators: Enerplus (6); Hunt Oil Company
• Fields: Little Knife (Dunn County); Ross (Mountrail County)
• Comments:
• Hunt Oil has permit for two State C wells, SWSW 3-156-90, 
• to be sited 357 FSL and 513 / 543 FWL;
• Enerplus has permits for six Crying Tree wells, SWSE 8-147-97, 
• all to be sited outside the spacing unit; the spacing units: section 5 / 8 -147-97, to sited 935 / 1023 FSL and 1614 / 1704 FEL.

Crying Tree wells: there are already at least nine producing Crying Tree wells and another Crying Tree already permitted. So that suggests at least 15 Crying Tree wells -- but I could be wrong on that, but that is what it appears right now.

Six permits renewed:

• Grayson Mill, all in Todd (Williston) oil field: one Hawkeye (#35866) and five Pyramid permits (#35867 - #35871, inclusive). The pad has ten permits / wells on the northwest side of Williston, at the corner of 52nd Street NW and between 32nd Avenue West / Easy Street. I can't make this stuff up. 
• the Pyramid wells are mediocre at best; it will be interesting if this changes with six more Pyramid/Hawkeye wells to be drilled.
  

Three producing wells (DUCs) were reported completed:

• 38098, 246, BR, Stafford 12-34TFH, McKenzie County;
• 40564, 4,974, MRO, Whitaker 34-11H, Dunn County;
• 40614, 4,989, MRO, Elliot 34-11TFH, Dunn County;

The well that is currently still producing, closest to this group of new MRO wells noted above, is 0.25 miles away, situated in a section east of this MRO section, and operated by a different company than MRO:

• 17976, 110, BR, Patton21-1H, Bailey, t9/09; cum 340K 11/24, note the huge jump in production, from 910 bbls over 29 days (9/24) to 6,206 bbls over 30 days, 11/24. The most recent sundry form is dated August, 2022, and does not provide any helpful information regarding the huge jump in production:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	11-2024	30	6206	5938	2660	0	0	0
BAKKEN	10-2024	17	1899	1823	1732	1213	861	146
BAKKEN	9-2024	29	910	1111	356	1063	688	35
BAKKEN	8-2024	30	961	669	456	999	583	40
BAKKEN	7-2024	31	926	895	474	986	561	42
BAKKEN	6-2024	28	941	1144	487	983	594	49
BAKKEN	5-2024	31	1059	900	523	1081	646	54
BAKKEN	4-2024	30	1144	1150	539	1076	643	57
BAKKEN	3-2024	31	961	918	442	834	398	48

American Exceptionalism -- Investing -- January 2, 2025

Locator: 44590INVESTING.

Wow, wow, wow, I'm in a great mood. 

For an investor, 2025 is going to be an incredible year. 

The key thing to remember: the stock market (aka, "Wall Street") is not the economy. 

The American economy is going to do very, very well particularly when compared to the rest of the world. 

So, let's leave it at. The American economy is going to do very, very well.

But that doesn't mean the stock market (aka, "Wall Street") is going to do well. It's hard for me to believe that after two years of back-to-back gains of 20% in the market (actually almost 25%) will mean a third year of the same. But nearly 100% of analysts expect the stock market (aka, "Wall Street") to end the year higher than when it started. It's hard for me to be a contrarian, but after two years of back-to-back gains of 20% in the market (actually almost 25%)....

If that ends up being true, that the market will end up higher by the end of the year compared to the beginning, investors will be very, very happy and very, very well rewarded.

On the other hand, it the market has a significant reversal, it offers an opportunity for investors to invest in the market at lower prices. Warren Buffet appears to be betting on the latter. 

But that doesn't mean the economy is / will be doing poorly. The US economy in 2025 is going to do incredibly well. We'll talk about that later, but maybe not this week. If the US economy in 2025 does incredibly well, and the market disappoints the average investor, not to worry. The incredible US economy will continue into 2026 (tailwinds) and the market will eventually catch up. Investors who continue to invest in stocks this year (2025) will be rewarded, sooner or later.

If the stock market reflects the economy then investors should see a  market that ends higher at the end of the year than when it started.

If the stock market falls, it simply offers investors an opportunity to invest in some great American companies. And wait for things to turn around in 2026.

One caveat: if the market does poorly this year compared to the economy, then the market becomes a stock pickers' market. Again, I think that is where Buffett excels. 

So, bottom line for me this year:

• I will stick with large cap American companies.
• I won't be adding to my positions in high-flying tech stocks. 
• I added cautiously to my tech stocks this past year, but it was back in 2023 that I made my huge positions in high-flying tech stocks. That's over for awhile until I see which way the wind is blowing. 
• There is one exception. I will continue to add to a position that I just started in the past six weeks (which rules out Apple; I've held Apple for quite some time).
• I won't be adding to my oil and gas positions simply because I've built up such huge positions over the years, mostly through dividend reinvestment.

That leaves nine other sectors, sectors about which I know very, very little.

So, except for

• one tech company,
• one restaurant,
• one construction company, I will be putting all new money into broad-based ETFs, not "specialty" ETFs.

I can't be more specific than that, because it doesn't matter. Everyone has their own ideas on how to invest. I'm about the last person anyone would want to follow. 

But it's going to be a great year for investors.

**********************************
Disclaimer
Brief Reminder 

• I am inappropriately exuberant about the Bakken and I am often well out front of my headlights. I am often appropriately accused of hyperbole when it comes to the Bakken.
  
• 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 something appears wrong, it probably is. Feel free to fact check everything.
  
• 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 Bakken, US economy, and the US market.
• I am also inappropriately exuberant about all things Apple. 
• And now, Nvidia, also. I am also inappropriately exuberant about all things Nvidia. Nvidia is a metonym for AI and/or the sixth industrial revolution.
  
• Longer version here.   

Feels Like Monday -- WTI Surges -- $73.62 -- Thursday, January 2, 2025

Locator: 44588B.

Tesla: link here. Down 5% in early morning trading.

Apple: feeling competition pressure in China. Cut iPhone prices in China. This comes after the US holiday season. Shares slide 2%. Headlines suggest the world as we know it is ending.

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

WTI: $73.62. Whoo-hoo! What's up? No idea why (the sudden jump in price). Oil rallies despite large jump in fuel inventories. Over at oilprice.com. Up $1.90 today; up 2.65%.

Wells coming off confidential:

• Friday, January 3, 2025: 4 for the month, 4 for the quarter, 4 for the year,
• 40081, conf, Hess, EN-Trout-157-93-3130H-2,
• 40080, conf, Hess, EN-Trout-157-93-3130H-3,
• Thursday, January 2, 2025: 2 for the month, two for the quarter, two for the year,
• 17309, conf, BR, Washburn 44-36H,
• Wednesday, January 1, 2025: 1 for the month, one for the quarter, one for the year,
• 37665, conf, BR, Kellogg Ranch 1B MBH,

RBN Energy: two links today -- 

First: top 10 energy prognostications for 2025. 

Second: has the Trans Mountain expansion shifted western Canada's crude oil exports?

After a decade-long odyssey and a cost-per-mile that must make public-sector accountants in Ottawa wince, the Canadian government-owned Trans Mountain Expansion Project (TMX) — which nearly tripled the capacity of the original Trans Mountain Pipeline (TMP) from Alberta to the British Columbia (BC) coast — finally came into service in May 2024. As one of Canada’s most anticipated energy infrastructure projects in many years, the 590-Mb/d TMX pipeline — built alongside the long-standing 300-Mb/d TMP — was widely touted by its advocates as a surefire way to boost exports of Western Canadian crude and reduce the nation’s near-complete reliance on exporting crude oil to — and through — its primary customer, the U.S. In today’s RBN blog, we discuss some of the surprising (and not so surprising) market developments since the expansion project started.

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The RBN Energy's Top Ten Prognostications

10. Big ammonia ships will replace orders for LPG carriers.

This phenomenon is already underway, and it’s gaining steam. In 2024, orders for the workhorse vessel of international propane and butane shipments, the Very Large Gas Carrier, or VLGC, dropped like a rock. But at the same time, contracts for Very Large Ammonia Carriers (VLACs) skyrocketed to 34 new orders, expanding the VLAC orderbook to 55. We expect there will be many more VLAC orders coming in 2025, and that VLGC orders will evaporate. So what’s going on? These VLACs are not cheap, running between $120-125 million each. Is there really that much new ammonia production that needs to be shipped around the world? Hardly. Most big ammonia projects are experiencing delays or are just languishing, waiting for the right combination of subsidies and economic incentives to get them off the ground. So why the frenzy around ammonia shipping? It turns out that these new VLACs can easily flip to LPG service — so if promised big ammonia shipments are years in the future, no problem. In the meantime, they will just keep busy moving LPGs. Could that result in an overbuild of ships in LPG service? Yup, sure could. Just not in 2025.

9. Not enough new LNG capacity coming in 2025 to support the current natural gas forward curve.

In the prognostication business, there’s nothing more dangerous than predictions about forward prices, but sometimes you’ve just got to do it. The 2025 natural gas forward curve predicts a $1/MMBtu increase over 2024, from $2.40/MMBtu to $3.40/MMBtu. While this might have seemed plausible with three new LNG export facilities coming on, which is what we expected in early 2024, one delay after another has shifted the timeline. Golden Pass won’t start taking feedgas until late 2025 at best, and Plaquemines LNG, which recently shipped its first cargo, will take 18 months to ramp up fully. The one bright spot is Cheniere’s Corpus Christi Stage III expansion, with Train 1 producing its first LNG in late December (with “substantial completion” of the train to follow by the end of Q1 2025) and two more trains coming online later in the year. But add it all up and ramp actual flows based on what we’ve seen in the past, and on average over 12 months we are talking only 1.6 Bcf/d of new capacity in 2025 over 2024. That is slightly less than the nearly 1.9 Bcf/d growth in U.S. gas production we are projecting, coming primarily from the Permian and Eagle Ford. Of course, an onslaught of cold weather or a hot summer could wipe out 0.3 Bcf/d of market length in a heartbeat. But all things being equal, the odds of a $1/MMBtu increase in natural gas prices next year driven by growth in LNG exports looks pretty dicey.

8. LPG terminaling rates are high and will stay that way through 2025.

7. The Midland-to-Houston WTI price differential will justify pipeline capacity expansion.

6. No offshore SPM crude oil terminal will be sanctioned in 2025. 

We really hope to be proved wrong on this one, but it just looks like this is a case where the benefits do not justify the cost. Since 2018, numerous offshore single-point mooring (SPM) terminals have been proposed along the Gulf Coast to fully load a Very Large Crude Carrier (VLCC) without reverse lightering. Currently, only the Louisiana Offshore Oil Port (LOOP) can handle VLCCs but it is limited to two ships per month on average, far below the one per day a couple of the SPMs could manage. The remaining projects — Energy Transfer’s Blue Marlin, Sentinel Midstream’s Texas GulfLink, Phillips 66’s Bluewater Texas, and Enterprise’s Sea Port Oil Terminal (SPOT) — have faced regulatory hurdles but made progress, with SPOT receiving its U.S. Maritime Administration (MARAD) license in April. Yet none have reached a final investment decision (FID) after nearly seven years of development. The problem is shifting market dynamics. Initially, U.S. crude exports to Asia (15,000 nautical miles from the Gulf Coast) justified VLCC efficiencies, but Europe now takes 45% of exports compared to 40% to Asia, driven by demand shifts due to the Ukraine war and declining North Sea production. The shorter 5,000-nautical-mile trip to Europe diminishes the economic advantage of VLCCs, making shippers hesitant to commit to long-term capacity deals for the SPM terminals. Granted there are still good reasons for one or more of the SPMs to be sanctioned. But it is more difficult today to get shippers signed up than it originally looked, and that’s a situation that will likely get worse before it gets better.

5. There's more hype than Mcfs in the natural gas for data centers' gold rush.  

4. At least in the short term, the future of US hydrogen production is blue. 

This prognostication title is our feeble attempt at a double entendre, of sorts. Yup, the future of hydrogen is blue. From one perspective, it’s blue because blue hydrogen projects — those producing hydrogen from natural gas with emissions mitigated by carbon capture — are expected to produce far more hydrogen than green hydrogen projects, which use electrolysis powered by renewable energy. And from another perspective, the clean hydrogen outlook is blue, as in “It’s got the blues,” because progress on subsidies and tax breaks tied to hydrogen development has been painfully slow, with convoluted rulemaking casting doubt on whether the federal government’s hydrogen initiatives will happen at all. Despite blue hydrogen dominating near-term capacity projections, with about two-thirds of potential output tied to such projects, challenges loom large. The CO2 emissions from these projects must be permanently sequestered — stored forever in deep underground formations. But progress has been hampered by long permitting delays and limited project approvals. There’s also much uncertainty around the 45V tax credit for clean hydrogen, the focus of heated debate since the Inflation Reduction Act (IRA) passed in August 2022. Final rules were expected by year-end but did not materialize. And of course, who knows what will happen when President-elect Trump takes office. He has been skeptical of clean-energy initiatives in general and the IRA specifically, so 2025 looks to be a blue year for hydrogen, unless some of the big project developers succeed in lobbying for positive changes to the permitting process.

3. Ethane prices are set for a strong 2025, but key markets must align.

2. Permian natural gas prices will be back sooner than expected.  

2024 was an ugly year for natural gas prices in the Permian Basin. Pipeline capacity was maxed out, forcing producers without contractual capacity to pay to have their gas taken away, with Waha prices settling below zero 42% of the time and averaging minus $0.53/MMBtu from March to September.

The new 2.5-Bcf/d Matterhorn Express pipeline, launched in October, offered only partial relief as maintenance on other pipelines kept capacity constrained, resulting in persistently low prices through mid-November. Even after a modest recovery from late November through most of December, Waha prices dropped below $1/MMBtu in the last few days of the year. Going into 2025, with Matterhorn running at full capacity, positive prices should dominate most of the year. However, periods of pipeline maintenance are likely to create more rounds of price volatility, including occasional dips below zero.

Relief should come in 2026 with two new capacity additions: a 570-MMcf/d expansion of Kinder Morgan's Gulf Coast Express (GCX) pipeline to South Texas’s Agua Dulce hub and the 2.5-Bcf/d Blackcomb pipeline from WhiteWater and Targa, also targeting Agua Dulce.

Until then, rising associated gas production will keep the pressure on, with Permian gas output expected to hit takeaway capacity limits between December 2025 and February 2026, raising the risk of prolonged negative pricing until mid-2026 when the new capacity is operational.

1. Trump's 2025 energy goals face new industry realities.