Flashback: Bakken Update -- EOG, Whiting Well Results Prove Parshall Field More Productive Than The Sanish -- Michael Filloon -- July 14, 2013

It's hard to believe this SeekingAlpha article by Michael Filloon is still available on the internet. 

Archived.

The article begins:

There are no two better fields in the Williston Basin for middle Bakken results than Parshall and Sanish. Parshall and Sanish fields are the focal point of EOG Resources' (NYSE:EOG) and Whiting's (NYSE:WLL) Bakken plays. EOG and Whiting were some of the earliest operators; this kept acreage costs down but also provided its pick of the best leaseholds. These two fields have seen more development than any other area of the Bakken. All have very good results, but both have a different history. Geology is not much different, except the depth of the middle Bakken and Sanish Sands.

The Three Forks is also shallower than around the Nesson Anticline. Shale thickness seems consistent in both the middle Bakken and Three Forks. The isopach below shows Bakken thickness of over 120 feet. Keep in mind thicker shale does not necessarily mean better EURs; it could provide a larger number of locations. This is evident in the picture [at the article].

Whiting believes it can maintain seven locations per mile in the Sanish Field. The lower Bakken shale is extremely thick in both the Sanish and Parshall fields. It will maintain only three in the upper Three Forks. The Hidden Bench prospect is very interesting as it plans to drill eight locations in the middle Bakken, but this probably has to do with the Bakken Silt being thicker in this area. The upper Three Forks could be a big deal in this leasehold as it plans seven locations. It is twice as thick as in Mountrail County. The Pronghorn Sands may have something to do with this as well, but that is a guess on my part. Obviously, the Bakken is the focus in both Parshall and Sanish. 

The Three Forks is comprised of two to four layers or benches of shale. The Three Forks has seen less development than the middle Bakken. EURs of the Three Forks in Mountrail County have lagged other areas. Northeast McKenzie County's Three Forks' locations have been the best in play, but there have been excellent Pronghorn Sands results in Billings and Stark counties. As seen above, the first bench of the Three Forks is somewhat thin compared to McKenzie County. 

Much more at the linked article, including some incredible graphics. 

Meanwhile, dovetailing with this article, were comments sent to me by a reader about the same time I was re-reading the Filloon article above:

In the hydrocarbon world, your comments on the significance of 'stacked pay' are pretty much right on. 

Some other time, I may delve a bit into the 'stuff' that I have learned in this subject, with the Powder River Basin providing much of the raw data, operators' approach, economical viability ... or lack thereof. 

Pretty interesting topic that is much more complex than the superficial terms being bandied about might indicate.

Lastly, for today, you may find it instructive to track the geologist's reports on these Three Forks second bench wells, especially as the top of the TF 2B is reached. 

If the top of the next lower formation is noted, all the better as you will be able to identify the thickness of the second bench in that location. 

(Note, while the KOP - Kick Off Point - for the lateral will be [well] above the top of the next lower formation, often operators will deliberately drill deeper to get precise geological information. 

They will then cement in this exploratory 'hole' and resume the curve/lateral drilling). 

The production  numbers that both MRO and CLR are showing from these second bench wells are astonishing. 

I am certain the other Bakken operators are monitoring these developments very closely.

In reply:

• yes, periodically, I do track the thickness of the various Three Forks benches;
• yes, I have often seen the operators drill lower than the target, then cement that in, come back up and continue with the lateral through the planned target; and,
• yes, the production numbers are astonishing. CLR's acreage is across most of the Bakken so their wells may vary significantly; MRO seems to be concentrated in a much smaller geographic area that is either an incredibly good area, or they have really optimized their completion strategies, or perhaps a bit of both.

Mike Filloon Bakken Update -- October 7, 2018

Link here.

Archived.

Summary:

• COP's Anderson Ranch location produced 272 barrels of oil in the first 12 months of well life
• the move from sliding sleeves to cement casings in concert with broad volume increases in proppant continues to drive production improvements
• COP continues to push better production in the Bakken.  We expect this will drive production gains across all plays and provide better top-line numbers than are currently estimated
• US unconventional operators are currently undervalued amid higher oil prices and better well design

This is really, really cool. COP/BR's Anderson Ranch wells are tracked here. 

From Filloon:

Conoco has seen a relatively large jump in oil production per Bakken horizontal year over year.

We continue to see a jump in volumes of sand and fluids.

The improvement of 41 KBO and 63 MMcf in one year is quite good and is representative of its well design changes being implemented in a much more active manner.

A company like COP won't see the leveraged improvement of a focused, unconventional operator. That said, well design improvements will improve COP's results in the Bakken, Niobrara, Eagle Ford and Delaware.

The average increase in revenues per Bakken well is approximately $2MM. This is after we pull costs, logistics, NRI, etc.

It completed 83 North Dakota locations this year, providing a total of $170MM. This does not include its acreage in other major US plays. We continue to believe WTI is headed to $80/bbl and we are currently at the low end of the range.

Wow, What A Great Way To Start The Day: An Update On The Bakken -- Mike Filloon Over At Seeking Alpha -- August 24, 2018

Link here.

Summary:

• the Bakken continues to push ahead benefiting from higher oil prices
• Marathon has made positive changes and has the best oil production per location with its well design on completions from 6/2017 to 6/2018
• MRO's design improvements have increased revenues by approximately $1.3 MM/well
• MRO is beginning to see its core increase to the west, adding high end locations for future development

Archived.

Staggering. On an individual well basis, I don't think the Permian has anything that can compete with the Bakken. Note the EUR type curves at the linked article.

Disclaimer: I am inappropriately exuberant about the Bakken.

Note to self: memo to Art Berman and Janet Nielson.

Huge Shout-Out To Mike Filloon -- Thank You -- August 14, 2018

Filloon can be followed over at SeekingAlpha.

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Saudi Cuts Production

This is the third post regarding this Reuters story. For an earlier note on this article, see this post. I am posting this again, because of all the data points, from OPEC:

• this is from OPEC's monthly report -- OPEC's monthly reports shift like the blowing sand
• OPEC: lower demand for its crude oil next year as rivals pump more
• Saudi Arabia: eager to avoid a return of oversupply, has cut production
• OPEC: the world will need 32.05 million bopd from its 15 members, down 130,000 bopd from last month's forecast 
• 130,000 / 32.05 million = 0.4%
• OPEC prices topped out at $80 this year; have since slid to $73
• OPEC July production rose to 32.32 million bopd
• this is a "mere" 41,000 bopd from June as the Saudi cut offset increases elsewhere (other OPEC nations taking Saudi's market share?)
• OPEC: moderate demand growth next year
• demand to grow by 1.43 million bopd
• that's 20,000 bopd less than forecast
• a slowdown from 1.64 million bopd in 2018
• July: Saudi Arabia claims it cut production by 200,000 bopd to 10.288 million bopd

Bottom line: a lot of verbiage for not much change: when OPEC suggests demand will be 20,000 bopd less than forecast (just one month ago), one gets the feeling that there are a few princes behind a computer with too much time on their hands.

Bottom line: no matter how many times I look at Saudi's production figures, they always seem to be about 10 million bopd, never less, but not much more. More importantly, "they" always talk about production but never about domestic consumption which historically increases every summer (air conditioning demand) and will increase going forward under Prince Salman's Vision 2030.

Bottom line: parsing OPEC's monthly letters feels a lot like listening to Steve Liesman parsing "the Fed's" by monthly minutes.

Bottom line: by the way, if that is accurate that next year global demand will be 20,000 bopd less than forecast, that makes Williams County in the Bakken, a swing producer. Harold Hamm, alone, can increase / decrease production by that much electronically and remotely from Oklahoma. 

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How To Read Tea Leaves

From Your Essential Guide to Tasseography.

Update On Encana -- Eagle Ford, Permian -- Filloon -- July 9, 2018

Disclaimer: this is not an investment site. This is being posted to compare other shale plays with the Bakken and to better understand the Bakken and put it in perspective to other plays.

Over at SeekingAlpha:

• wide Midland differentials will continue to create issues for operators
• ECA is protected in 2018 and 90% of Midland barrels will be unaffected in 2019
• ECA has the ability to increase production in the Eagle Ford, as those horizontals are outperforming Midland
• Permian differentials continue to widen. This will be difficult for operators as realized prices continue lower. We saw take away issues in the Bakken before the DAPL, and some analysts believe it will continue through the end of 2019. ECA is uniquely positioned due to 90% of its Midland barrels being protected from logistical issues. If ECA needs to increase production, it is able to do so in the Eagle Ford where differentials are tight.

Investing in unconventional oil producers is difficult. Volatility can be extreme, as there are many moving parts to consider. The Eagle Ford, Bakken, Permian, STACK/SCOOP, and Niobrara all have good and bad points.

The Permian was thought of as the best play going into 2018, but now we are seeing worries related to widening differentials.

This has occurred in the past with respect to other plays, like the Bakken. Well costs in the Permian are also rising, and this is another variable to watch. When looking at operators through 2018 and 2019, logistics must be considered. Options in other plays are also important. The industry has recorded some recent massive well results in the Eagle Ford. This could provide an increase in EV/EBITDA for operators in and around Karnes County.

More:

In 2017, ECA completed 37 horizontals in Karnes County. Some of these locations were huge. One location produced 409 MBO in 10 months.

The average of those 37 wells was reduced significantly by the handful of poor producers. Ten locations produced more than 200 KBO in the first 10 months of well life.

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The Sports Page

Updates

Later, 1:09 p.m. CDT: I came home at lunch to catch "Power Lunch" on CNBC. It's been a huge day for the market (the Dow is up over 305 points) and this evening President Trump in prime time will announce him nominee for the Supreme Court. And what are they talking about over at "Power Lunch"? LOL. All of the talking heads were in front of a green screen and a larger-than-life photo of golf courses and Tiger Woods, and they are asking whether Tiger Woods can ever win another tournament  -- ah, yes here it is -- the next major tournament is "The Open" which will be televised by NBC. CBS has the PGA Championship, but after that, of the last four tournaments of the year, including the TOUR Championship and the Ryder Cup, NBC has all four. NBC needs to remind folks that Tiger Woods can still win. As I've said before, Tiger Woods may be playing as well as he has ever played; the problem: the younger folks coming up the leader board are playing better. My hunch is that as Tiger Woods gets closer to the CUT line on Friday, the more aggressive he will have to play, making it even more difficult for him. The same is true on Sunday if he's within two or three strokes of the leader.

But eleven strokes back (and coming in fourth) from the leader in a no-name tournament (see below) with no-names competitors is not a good sign.

Original Post

[Originally posted in draft on July 1, 2018 -- brought forward.]

From Golf Week:

Rickie Fowler, at 29 and in his ninth PGA Tour season, is still stuck at zero major-championship victories – and he knows it.

Rickie Fowler is the only "other" name I recognize at the Quicken Loans TPC Potomac at Avenel Farms. Not quite accurate; going through the list again, I see Stewart Cink, and maybe a few others, if I really stretch my memory.

The "only" reason PGA "fair weather" fans are watching this tournament today is because Tiger Woods is still in it, tied for ninth, or thereabouts.

I assumed Tiger was in this tournament because he was looking for a win. The names on this list looks like the JV team of the PGA. This is like the Infinity (the "Saturday") race for NASCAR. If it were professional football it would be a Canadian Football League game or an arena football game. Whatever.

But wow, what a dismal line-up against which Tiger is playing. And he's in ninth place and not really improving his position, now about halfway through for the day. [In an incredibly weak field, Tiger placed fourth, 11 strokes under par; the winner, an Italian won, 21 strokes under par. Ricky Fowler, 8 strokes below par, finished twelfth.]

Anyway, for newbies, here's the background for this particular tournament over at GolfDigest.

Nearly 10 years ago—July 5, 2007 to be precise—that 120 players teed off in the first round of the inaugural AT&T National at Congressional Country Club.

The buzz around the event was only slightly below what one might expect at a major championship. After all, the tournament host was Tiger Woods—the No. 1 player in the world who had already won 12 major championships at age 31.

Congressional was a major-championship-caliber site, having held two U.S. Opens and a PGA Championship.

And the Washington, D.C., market, which had been thirsting for a big-time event after years holding what locals perceived as a second tier (at best) PGA Tour stop, finally had the sort of tournament it believed it deserved. In turn, Congressional was overrun with fans, and sponsors couldn’t sign up for corporate tents fast enough. A year after abandoning Washington, and the former Booz-Allen Classic, the PGA Tour came back to town, led by Woods on his white horse.

While Woods was certainly the major attraction, the quality of the invitational field was remarkable. Even Phil Mickelson, Woods’ long-time rival and nemesis, came to play. In all, there were 13 major champions competing, and three others who would subsequently win majors. Even without Woods’ 12 titles, the other 12 golfers had combined to win 18 majors to that point.

Flash forward to Thursday morning, June 29, 2017, when the 11th playing of the tournament with a different corporate sponsor (Quicken Loans) began. Woods was not only unable to play, after undergoing a fourth back surgery, but not even on site, dealing with the pain-killer issues that surfaced after his arrest for DUI over Memorial Day weekend.

The tournament site isn’t Congressional, but rather TPC Potomac at Avenel Farm (a name most people say incorrectly), a revamped course that hosted the previous tour event for most of 20 years to decidedly mixed reviews. “It isn’t as if Avenel is a bad golf course,” Davis Love III once said. “It just doesn’t look very good if you have to drive by Congressional to get to it.”

In a twist, it was Love who was hired to renovate the golf course in 2006. Now, players like it much better. But not THAT much better.

Now, flash forward to July 1, 2018, and it seems the event is even more trivial, more sad, more pathetic.

On another note:

Update On Pure Permian Play -- Energen -- Mike Filloon -- June 18, 2018

From SeekingAlpha:

Energen has been in the news lately with Icahn and Corvex mulling a bid to buy the company. The question seems to be why EGN? There are a number of reasons why the company is attractive. The shares seem undervalued at current valuations.

This seems linked to EGN's recent production improvements per location. EGN is a Permian pure play, and has continued to improve production results. The Permian has the most valued acreage, but widening differentials are providing value in some names. EGN's well design changes have amped up production per foot.

Its Gen 3 Delaware frac' design uses 1,800 to 2,400 lbs./ft. of proppant. It has also decreased frac' cluster spacing. These changes have provided a significant improvement, and could continue to do so. Delaware well results continue to improve, and we think it should still be the focus going forward. EGN production improvements have been significant, and we believe this will continue in 2018. We pulled production results from 2016 and 2017. Improvements as a whole have been much better than the average Permian operator. It's Delaware acreage is improving faster than Midland. Locations already produce approximately 40% more oil per foot. EGN also has 85% of its production on pipe. It has hedged for differential protection. Approximately 72% of production is hedged this year.

Compare Energen's frack design in the Permian with that of the Bakken: 1,800 to 2,400 lbs/foot of proppant:

• 9,000-foot laterals
• 10 million lbs
• 50 stages
• 10 million lbs / 9,000 feet = 1,100 lbs/foot (as much as less than half what they're using in the Permian)
• 10 million lbs / 50 stages = 200,000 lbs of sand / stage in the Bakken

Also, look at this (previously posted), link here; EIA's monthly drilling productivity report --

So, the Permian producers are using much more proppant / foot to get much less crude oil / well.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on anything you read here or what you think you may have read here.

Newfield Update -- Michael Fitzsimmons -- June 11, 2018

Over at SeekingAlpha. It was Fitzsimmons, I believe, who said Newfield was the top operator in the Bakken -- I could be wrong [I was wrong: it was Mike Filloon -- see this link] -- maybe I will look that up later ... but now... at the linked article:

• Q1 EPS was impacted by an (unrealized) $79 million derivative loss (-0.39/share)
• in the meantime, the company's Q1 domestic production was 39% dry gas
• the company has some prolific STACK wells, but the relatively high dry gas split and the hedging program are headwinds
• yet the stock has been beaten down, in part, owing to Oklahoma drilling restrictions due to high earthquake activity in the state
• it may have been beaten down too much - but where is the catalyst moving forward?

I've talked about hedges and derivatives before. CLR is not hedged (yet).

I'm Here But Blogging Might Be Delayed Awhile -- May 18, 2018

Candid:

Inappropriate exuberance:

MIA: in the graphic above, what major oil exporting country is not even shown? Yup, Mexico. And Norway.

Goldman Sachs: don't bet against oil. Okay, these are the folks that have, more than once, "warned" that oil could go below $20. Did anyone really believe that?  Now Goldman Sachs says that oil, after reaching $80 (Brent) "has room to run." Whatever.

Devon moving north over at SeekingAlpha. Mike Filloon --

• the northern Delaware core continues to move further north into New Mexico
• Devon's most recent 2nd Bone Spring locations have shown significant promise and improve the upside to other operators in the area
• We expect results to improve as operators refine well design

Devon's oil curve is much better than other operators here. Concho, Cimarex, and EOG round out the top four. The average Devon location produces almost twice as much oil as the other operators. 

Market: futures up nicely. Dow opens slightly negative but by 10:15 a.m. turns slightly positive. When it turned positive, UNP also went up a bit. 

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Back to the Bakken

Active rigs:

$71.51→	5/18/2018	05/18/2017	05/18/2016	05/18/2015	05/18/2014
Active Rigs	60	52	26	82	190

RBN Energy: FERC, pipeline MLPs, and the IRA, part 2.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you might have read here. This is an entertainment and education site, frequently short on both.

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Whiting Adds Three More Wold Federal Wells

From Thursday's daily activity report --

Six new permits:

• Operators: Hunt (3); Whiting (3)
• Fields: Wolf Bay (Dunn): Sand Creek (McKenzie)
• Comments: Whiting has permits for another 3-well Wold Federal pad in Sand Creek; Whiting's Wold Federal wells in Sand Creek are followed here;

FWIW: Update On Pioneer Production -- Mike Filloon -- May 5, 2018

Link over at SeekingAlpha.

• Pioneer continues to see large production increases per location, with 29KBO increase from 2016 to 2017
• Pioneer's Eagle Ford locations have shown more improvement than those in the Midland Basin
• we think PXD has further upside over the next 12 months based on these improvements

Operators in all US unconventional plays have announced oil production improvements in 2017.

Oil bears believe core locations are running low and we are seeing the end of this phenomenon. The best locations have been completed in most US plays, but improved well design continues to offset. Many operators are not doing enhanced completions on 100% of locations. As this ramp up continues, so will production improvements. If one wants an estimate of where others are headed, one needs only to look to EOG Resources. Some operators will never reach this level, but given the relatively large difference, just half the divide would be quite good.

Pioneer has arguably the best acreage in the Midland Basin. It also has an excellent Eagle Ford leasehold.  

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here. If this is important to you, go to the source.

Reminder for newbies: "enhanced completions" -- not the same as "enhanced oil recovery" (EOR).

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Pat: I Will Never Forget You

You have no idea how much I miss you. 


To Sir, With Love, Lulu    

Summer Wine, Nancy Sinatra, Lee Hazelwood.

I have no idea where Nancy Sinatra is these days, but I wish her all the best. Can you imagine growing up in West Hollywood, the daughter of Frank Sinatra? Time for a road trip on US Highway 66.

The Market, Energy, Political Page, Part 2, T+61 -- April 30, 2018

EOG update, Filloon: FWIW -- Mike Filloon updates EOG's well results in the Permian. Let's see how they compare to those in the Bakken, shall we? Summary:

• EOG's oil production improvements per well from 2016 to 2017 are muted when compared to other Delaware operators
• EOG's results are still better than most other operators, and decreased improvement could be due to the high bar set in 2016
• EOG still has the best well design in the industry, and results should be watched closely as it best provides insight into where the industry is headed

These results are simply incredible:

We pulled the data on 199 EOG Delaware Basin locations completed in 2017. This was done as a comparison to provide an idea of whether it has seen an improvement per location. It's best performing location was in Loving County. It produced 413 MBO in the first 6 months of well life. Over 20 locations model to more than 300 MBO in the first year of well life. These results are excellent, especially when we consider only 34 have a lateral length above 9,000 feet.

EOG: wow, back up to $118. 

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here. If this is important to you, go to the source.

Disclaimer: I make a lot of simple arithmetic errors. I often see things that do not exist; I read quickly and miss important points. Sometimes it takes me days (maybe even weeks) to see where I was wrong.

We'll sort this out later:

Here's the WSJ story: says it's a $23 billion deal. Deal values Andeavor at $152/share; roughly 25% premium.


And huge:

For long term investors: don't get hung up on individual "plays" you may have missed -- follow the story lines.  Do you really think that MPC is the only one that sees the future?

Newfield May Be The Best Producer In The Bakken -- Filloon -- April 18, 2018

Link over at SeekingAlpha.

• improving well productivity is being seen across all US plays, and some operators have done a better job of this than others
• NFX 2017 locations produced the most oil, followed by MRO and OAS
• the majority of NFX 2017 horizontals will produce more than 200 MBO in the first year of well life, with several over 300 MBO

Newfield has always been one of the better operators with respect to well design. It has had other issues, but it has been ahead of the technological curve. Well design and oil production is just one of many variables to consider, but it is extremely important in seeing where the industry is going. If an operator continues to outperform wells of other operators adjacent to the location, we see the under performing operators mimic that design.

This is the EOG Resources effect. It was doing huge, sand heavy frac jobs in areas operators said had too high of pressures. EOG proved the industry (or at least a large number of competitors wrong) wasn't looking at the situation correctly. The physics changed with the engineering, and we are still seeing its effect.

Newfield and EOG (EOG was still a great deal better) had outperformed in ND when the first horizontals targeting the middle Bakken were taking place. Newfield was working NE McKenzie, while EOG had a Parshall Field focus. Early results do not prove it will continue this into the future, but it has been consistent.

In ND, Newfield is the best operator based on oil production over the first 12 months of well life. This is based on locations completed in 2017. We pulled the data on 803 horizontals from 15 publicly traded companies. Continental is the most active followed by Exxon, and Whiting.

STACK/SCOOP Production Doubles -- Filloon -- April 10, 2018

Huge news for Harold Hamm.

Over at SeekingAlpha.

• production per well almost doubled from 2016 to 2017
• lateral lengths have increased slightly, but most of the increase is on a production per foot basis
• there are wide differences in productive by operator, indicating either a small core sweet spot, or a relatively large difference in well design

Well design continues to improve across the unconventional US. We have analyzed this across the Permian, Eagle Ford and Bakken confirming the presupposition as true. Enhanced completions work was implemented by EOG Resources  in the Eagle Ford. It moved sand heavy fracs to the Bakken's Parshall Field next. Both were unbelievably successful.

The implementation meant operators would need to use massive volumes of sand. This was cost effective, and frac sand is cheaper than ceramics. Other operators have started using this design, and implemented to a large degree. This isn't the case for all operators, but all are using more than 50% of the time. This is why production per foot should improve in 2018. This is without further stimulation improvements.

We don't know if operators can improve stimulation from here, but recent EOG completions in New Mexico are showing promise. We have also seen some excellent work by Concho across the Delaware Basin. There is upside to implementing design this year, with the possibility of further stimulation improvements as a variable difficult to assess.

Mike Filloon predicted this (massive amounts of sand to be used) several years ago but he was a bit early. Perhaps it was only because the Saudi Surge and the subsequent plummet in oil prices slowed things down -- temporarily. I don't know. Regardless, but we are now seeing at least one operator in the Bakken move to massive amounts of sand as routine (or at least it appears). See the Monroe wells with commentary here.

More from Mike at the link above:

Well design improvements have improved economics and decreased payback times. This should put a ceiling on oil prices, but not in a bearish fashion. The reasons for this is the decrease in world inventories. The removal of the glut has allowed prices to move higher, but more importantly stabilized downside. We should see a gradual increase in oil prices long term as better geology is completed. Shorter term we see WTI hitting a high between $70/bbl to $75/bbl. We may see this before the 4th of July holiday. This could push the US Oil ETF to $15/share in that time frame. Demand seems to be the catalyst, and could surprise to the upside.

Compare to the Bakken, the laterals in Oklahoma are short: only about a mile long compared to 2-mile laterals in the Bakken.

The Bakken's Still-Growing Water Midstream Sector -- RBN Energy -- April 10, 2018

China: blinked. Xi says he will reduce auto tariffs. And that was after one Trump tweet. No links; easily found.

WTI pricing: it's a fool's errand to predict oil prices, but Mike Filloon is no fool and I follow him closely. I don't know if folks saw this. Mike probably posts over at SeekingAlpha averaging about one article very seven to fourteen days; sometimes more frequently; sometimes less.

In his second to last contribution he suggested oil would get to $70 this summer, but "pushing above $75 will be difficult." I suggested that I saw $68, but $70 would be a struggle (except for maybe a short period during the peak driving season).

In his most recent post, Mike suggested, very clearly, he expected $70- or $75-oil this driving season (2018).

One could argue he has not changed his position on pricing, but being an inveterate optimist, I like to think that Mike was slightly -- very slightly -- more bullish in his most recent post with regard to the price of oil. 

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Back to the Bakken

Active rigs:

$64.60↑↑	4/10/2018	04/10/2017	04/10/2016	04/10/2015	04/10/2014
Active Rigs	58	52	31	93	190

RBN Energy: the Bakken's still-growing water midstream sector.

The Permian is a beehive of activity on the burgeoning water midstream front — the pipelines, saltwater disposal wells and other assets being built to facilitate the delivery of water to new wells for hydraulic fracturing and the transport of “produced water” from the lease to disposal or treatment sites. But the Bakken — arguably the birthplace of the water midstream sector nearly a decade ago — is no slouch, and a model of sorts for the infrastructure build-out now under way in the Permian. The volume of water needed for Bakken well completions is up sharply in recent years; more important still, the region is generating more than 1 MMb/d of produced water, and producers and water midstreamers alike are building new takeaway pipelines and drilling new SWDs to more efficiently deal with it. Today, we discuss water- and produced-water-related infrastructure in one of the U.S.’s largest production regions.

The trends toward longer horizontal wells and more intense well completions have resulted in the need for sharply higher volumes of fresh, treated or recycled water (and frac sand) in U.S. shale plays. Our understanding is that the completion of a typical horizontal well in the Bakken today requires 200 Mbbl or more of water — eight to 10 times as much as was needed to complete the much shorter laterals that were common in the early years of the Shale Era. All of that water needs to be delivered to the well site during the completion process — not an easy task in relatively dry western North Dakota.

Bakken Production Up 24% Year-Over-Year --- April 9, 2018

Zuckerberg: bans another data mining company. But only after NBC brought it to public attention. No link; story easily found.

Again: Permian bottleneck could impact global oil market -- oilprice.com.  

Enough is enough! KMI ready to call it quits. Trudeau tested. From The WSJ -- KMI ready to call it quits on the Trans Mountain pipeline expansion -- says politicians can't get their act together.

KMI threatened on Sunday to scrap its proposed expansion of the Trans Mountain pipeline if Canada’s provincial and federal governments cannot resolve their differences over the project by May 31.

The ultimatum, in which the energy company also declared it was halting all “nonessential” spending on the project, raised the stakes in the dispute over the pipeline expansion, which has been opposed by British Columbia, angering neighboring Alberta.

“We have determined that in the current environment, we will not put KML shareholders at risk on the remaining project spend,” said Kinder Morgan Chief Executive Officer Steve Kean in a statement.

The company cited “continued actions in opposition” to the project by British Columbia in pushing the company to making the ultimatum.

The company said it would consult with stakeholders until May 31 but would find it difficult to move forward if progress hasn’t been made by then, company spokesman Dave Conover said.

How much is the delay in completing the Trans Mountain pipeline costing the faux environmentalist Trudeau? I don't know, but to put it in perspective, the DAPL, much smaller than the Trans Mountain, from an earlier post:

DAPL adding $10 million / month to ND coffers; DAPL alone would have paid for schools in Williston in less than a year

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Back to the Bakken

Bakken boom: year-over-year (2017 vs 2016) -- production up 24% -- Filloon.

Active rigs:

$62.48	4/9/2018	04/09/2017	04/09/2016	04/09/2015	04/09/2014
Active Rigs	58	49	31	93	191

RBN Energy: Permian natural gas is increasingly headed to somewhere in middle America.

Permian Basin natural gas production is growing at a torrid pace. After starting 2017 just below 6 Bcf/d, production is set to breach the 8-Bcf/d mark soon on its way to 10 Bcf/d by the end of 2019. Pipelines flowing out of the basin are coming under increasing strain, and just about every single gas pipeline leaving the Waha hub in West Texas is now being utilized at levels not witnessed in years — if ever. Even routes north from the Permian to the Midcontinent and Midwest markets, traditionally only attractive on the coldest winter days, are starting to look viable year-round. Today, we look at recent gas-price and flow trends in the Permian natural gas market.

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The Trade War Page

The mainstream media might fact check this, but they won't report what they find.

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The Tesla Page

From twitter --

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US Health Page

Clearing out my inbox.

Cost of Narcan. Link at Business Insider.

FWIW: Filloon On The Eagle Ford -- March 31, 2018

Link here over at SeekingAlpha:

• Eagle Ford production per location improved 20% yoy from 2016 compared to Midland's 32.5% and the Delaware's 18%
• we expect more locations in DeWitt County as it continues to outperform on an oil production basis
• although non-core areas are not nearly as prolific, there is a rather wide area that can be developed with very good payback times
• a number of huge Eagle Ford locations have been completed recently, and although many have targeted the Austin Chalk it benefits the play

Our recent articles on the Permian's well design driven oil production improvements is also seen in other US plays. The evolution of design has been occurring over years. It is in Texas, Oklahoma, North Dakota, Colorado, Ohio and Pennsylvania. Each play will react differently to those changes.

We have seen a number of huge wells from several operators in the Eagle Ford. The Permian focus has drowned out talk of Gonzales and Karnes counties.

We think the Eagle Ford has been overlooked, but recent monster wells in the core could become more often than not. Better economics should push operators to increase production in the coming months as oil prices trade higher. We think WTI will increase to $70/bbl or $75/bbl this driving season.

These are the wells (indicated by the arrows) that interest me:

 

Shale Operators Running Out Of Core Drilling Locations? Not Yet -- Filloon -- March 28, 2018

Earlier this post: Update on the Permian -- Mike Filloon.  Link here. Part 2 here.

• Occidental, Chevron, EOG, and RSP Permian  have the top oil curves of operators with multiple completions
• Delaware well design improvements have increased oil production per location by 18% yoy. We believe there is greater upside in the Delaware in 2017 than in Midland. It is possible the Delaware has more upside than any other US play
• Lea County is starting to separate itself as the best county, although northern Loving has had a few mammoth results
• the drop in world oil inventories is enough to start pushing short pops in prices. We think WTI will push above $70/bbl by June, but pushing above $75 will be difficult 

There was something else Mike mentioned in that article -- in fact, he led with it:

In our previous article, we provided oil production data from the Midland Basin. From 2016 to 2017, this improved 32.5%.

Oil bears have stated that they believe operators will run out of core geology, and this will seal the fate of unconventional US oil producers. It is inevitable that shale will eventually dry up, but it doesn't seem to be occurring in the near future.

In a recent article, we provided an oil price estimate for the 2018 driving season. US operators continue to increase oil production, but it probably will not meet increased demand. We expect relatively large oil draws, and WTI to eclipse $70/bbl and peak at $75. This should push the US Oil ETF higher by 12% in just a few months. Oil prices should drop after and trade in the $60 to $70 range throughout 2018. It will be difficult to push oil prices above $75, as the resultant oil production could outpace demand.

Oil Production Jumps Over 30% In The Permian -- Filloon -- March 26, 2018

Update on the Permian -- Mike Filloon.  Link here. Part 2 here.

Peak oil? What peak oil? The US is on the threshold of the biggest oil and gas boom ever -- Fortune magazine.

The U.S. is set to enjoy the biggest increase in oil and gas production the world has ever seen over the next few years, according to a new report out Tuesday.

The report from the International Energy Agency (IEA), a Paris-based think tank, is a thumping endorsement for the shale sector’s resilience in the face of a two-year attempt by Saudi Arabia and others to squeeze it. That’s already visible in U.S. government forecasts, which say U.S. crude oil production will rise from an average of 9.2 million barrels a day this year to 9.9 million barrels a day in 2018, a new all-time high beating a record set in 1970.

The IEA said the U.S. will account for 80% of the increase in global oil supply between now and 2025, as shale producers find ever more ways to pump oil profitably even at lower prices. By the late 2020s, the U.S. will become a net exporter of oil for the first time since the 1950s.

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Back to the Bakken

Active rigs:

$65.73→	3/26/2018	03/26/2017	03/26/2016	03/26/2015	03/26/2014
Active Rigs	60	49	32	99	198

RBN Energy: Permain crude oil takeaway capacity maxing out? Sounds like the Bakken during the boom. A great problem to have.

Crude oil production in the Permian Basin is coming on strong — faster than midstreamers can build pipeline takeaway capacity out of the basin. You can see the consequences in price differentials.  On Friday, the spread between Midland, TX and the Magellan East Houston terminal (MEH) on the Gulf Coast hit almost $5.00/bbl, a clear sign of takeaway capacity constraints out of the Permian.

We’ve seen different variations of this scenario play out in recent years, most recently last fall, just before the first oil started flowing through the new Midland-to-Sealy and Permian Express III pipelines, and it’s not good news for Permian producers. Now Permian output is again bouncing up against the capacity of takeaway pipelines and in-region refineries to deal with it. As we’ve seen in the past, that’s a warning sign for possible price-differential blowouts. Today, we discuss the fast-changing market dynamics that put Permian producers at risk for another round of depressed Midland prices.

Graphics Don't Always Tell The Whole Story: Tell Me Again Why The Price Of Gasoline Is Going Up Here In Texas -- February 28, 2018; Filloon On Newfield

US gasoline inventory: tell me again why gasoline prices are rising, and why regular unleaded gasoline/gallon isn't below $2.00 in Texas?

US crude oil inventories. Some things to note about the graph below:

• the 10-year median includes the two years (end of 2014 to the end of 2016) that Saudi Arabia flooded the market with oil, in an unsuccessful attempt to "break" US shale producers;
• during nine of the ten past years the median has been affected by the fact that there has been no effort to curb global production by anyone, not even OPEC;
• it was only in the past year or so, that OPEC and Russia have tried burned off inventory and made a concerted effort to cut production; meanwhile, US producers are setting new production records;
• a 20-year median might be a bit more helpful but even that would be skewed by change in gasoline demand over the past 20 years;
• the best chart to follow crude oil inventories? The number of days of supply which is currently running about 24 days, well below the recent peak of 32 days but somewhat greater than bulls would like to see (18 - 20 days)

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Filloon: Newfield

FWIW, Mike has another of his SeekingAlpha contributions: Newfield well deisng improvements increase oil production over 30%.

• NFX overall oil production up over 30%.
• Utah has seen the biggest improvement followed by North Dakota.
• Oklahoma results have shown little improvement, but other areas more than offset. 

It has been a long time since Newfield  announced it was leaving the Bakken to focus on wells in Utah. While that idea didn't seem to work out, its leasehold in the SCOOP/STACK has interesting potential.

Play results have been inconsistent, but we are beginning to figure out what the play can do. Newfield is active in three main plays. The other two are the Uinta in Utah and Bakken in North Dakota. In this data analysis, we break down and model oil production as a whole and then broken down by play over time.

The Market And Energy Page, T+29 -- February 19, 2018

Oil companies starting to buy back their shares. Whoo-hoo!

Disclaimer: this is not an investment site. Do not make any job, travel, relationship, financial, or investment decisions based on what you read here or think you may have read here.

From The Wall Street Journal today: oil companies starting to buy back their shares.

Several oil and gas producers, including Pioneer Natural Resources Co. and Anadarko Petroleum Corp., have started the year by initiating or enlarging share-repurchase programs. The buybacks reflect oil prices that have climbed enough for them to drill profitably and shareholders who have urged companies to focus more on the bottom line.

It also suggests that energy producers think their shares, which have lagged behind the broader market, are underpriced.

Buying back stock reduces the number of shares in the market, boosting the value of those remaining. Doing so is a reversal from the past three years when energy producers pumped new stock into the market to raise cash so they could pay down debt and keep rigs drilling.

It would be nice to see more dividend increases also (some companies have already reported that they will increase dividends or distributions).

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The SandRidge / Midstates Merger -- Michael Fillon

Link here at SeekingAlpha.

Simply not appealing.

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Photograph By Sophia

FWIW: Filloon On Encana -- February 9, 2018 -- Wells Showing Massive Improvement -- Case For Many US Operators; Seems To Be Industry-Wide

Link over at SeekingAlpha.

Summary (look at these initial production numbers -- wow!):

• ECA has 9 horizontals producing over 300 MBO since January of 2016, and a large number that model over 300 MBO within the first year of well life
• ECA has had several recent locations at or well above the high end of its average, proving well design can continue to improve EURs
• a comparison of 2015 wells with those completed in 2016 or after shows an increase in oil production of 54 MBO in the first 16 months of well life

The biggest improvements have been seen in Texas. The Permian and Eagle Ford have seen record wells, and production numbers well above the high end locations just a year or two ago.

The issue seems to be how high the bar can be set. Operators are now focused on stimulating each foot in the best manner, and this has helped to keep US production high in the face of lower oil prices. Everyone continues to wonder if shale can keep oil prices lower for longer, or if OPEC can control prices.

Recent wells by Encana show a massive improvement. This is the case for many US operators, and seems to be industry wide.

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Cake