Sunday, May 18, 2014

Putin's Crimean Gambit: Baltic Countries In Play; Trillions Of Dollars Worth Of Oil In The Black Sea

This past week I had a bit of fun comparing Putin's strategy in the Crimean and the EU/US response to that event to a chess game. Previously posted:
The chess game began with Putin's brilliant handling of the Russian winter Olympics, an opening "knight" move to "F3." The Crimean was a pawn. Eastern Ukraine was perhaps another knight. Latvia is a pawn en passant.
Losing Germany as an ally on sanctions, that's worth at least a loss of a knight for the US.
The Chinese-Russian natural gas pipeline was at least a loss of a rook for the United States, possibly even worth the queen. The loss of Russian rocket engines was a bishop loss for Russia, but that was more than made up for by the Chinese-Russian hegemony, worthy of castling early.
At that point: Russian had lost a couple of pawns and a bishop, and had two knights on the attack, in the center of the board, and had already castled. The US had lost several pawns, a knight, and a rook, or possibly the queen.

To this can be added two more moves.

First, it looks like Putin's might take two or three more pawns: the Baltic nations. Germany's Der Spiegel via Reuters is reporting that there is not much the west can do if Putin decides to take back the Baltic states.
NATO would struggle to defend the Baltic states from any Russian aggression "with conventional means", Germany's Spiegel magazine reported on Sunday, citing sources close to the organization and a draft of a NATO planning document.

Eastern European states are nervous about Russia after it annexed Ukraine's Crimea region and massed 40,000 troops on Ukraine's borders.
The United States has sent 600 soldiers to the three Baltic countries - Estonia, Latvia and Lithuania - and Poland to take part in exercises to bolster NATO's presence in eastern Europe.
Second, it looks like Putin takes a second rook, meaning Putin has captured two rooks or a rook and the queen. The second rook (or a queen): trillions (yes, trillions) of dollars of off-shore oil. The Dallas News is reporting:
When Russia seized Crimea in March, it acquired not just the Crimean Peninsula but also a maritime claim more than three times its size with the rights to underwater resources potentially worth trillions of dollars.
Russia portrayed the takeover as reclamation of its rightful territory, drawing no attention to the oil and gas rush that had recently been heating up in the Black Sea.
But the move also extended Russia’s maritime boundaries, quietly giving Moscow dominion over potentially vast oil and gas resources while dealing a crippling blow to Ukraine’s hopes for energy independence.
Moscow did so under an international accord that gives nations sovereignty over areas up to 230 miles from their shorelines. Russia had tried, unsuccessfully, to gain access to energy resources in the same territory in a pact with Ukraine less than two years earlier.
 So, at this point, Putin's knights remain on the attack; he controls the center of the board; he has castled; and has taken the following pieces: the queen, a rook, a knight, and several pawns. Putin has lost only a pawn, maybe two, and a bishop.

The Baltic countries could easily become a bargaining chip for Putin: their continued sovereignty in exchange for unfettered claim to the Black Sea.  It's very similar to the Cuban missile crisis when Russia agreed to remove missiles from Cuba in exchange for the US dismantling nuclear-tipped missiles in Turkey aimed at Russia.

Random Look At A Re-Entered / Re-Completed Well By A Relatively Unknown Player In The Bakken

Note: Thunderbird Resources LP acquired this well from GMX Resources which filed for bankruptcy protection some time ago. There is more information regarding Thunderbird Resources wells below the table. Update regarding GMXR bankruptcy and reorganization/Thunderbird Resources.
  • 21947, 161, Thunderbird Resources LP/GMX Resources, Fairfield State 21-16-1HRE, St Demetrius, originally completed with 37 stages; 1.2 million lbs; Three Forks; first IP, 9/12 = 161; second IP, 1/14 = 576; this well was re-entered and the well was renamed Fairfield State 21-16-1HRE from Fairfield State 21-16-1H.

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN3-201415288020091021023022125177
BAKKEN2-20141224602661874522562153103
BAKKEN1-2014246904655732509536123553006
BAKKEN12-20130000000
BAKKEN11-20130000000
BAKKEN10-20130000000
BAKKEN9-20130000000
BAKKEN8-2013001320000
BAKKEN7-20130000000
BAKKEN6-20130000000
BAKKEN5-20130000000
BAKKEN4-20130000000
BAKKEN3-20130000000
BAKKEN2-20130000000
BAKKEN1-20130000000
BAKKEN12-20121088228294202
BAKKEN11-2012297809104397883633250
BAKKEN10-201227833680551661258032
BAKKEN9-20122111118977650474284190
BAKKEN8-201219920111546046


Thunderbird Resources has the following wells and field:
  • 21002, 384, Thunderbird Resources, Wock 21-2-1H, New Hradec, t10/11; cum 58K 6/14;
  • 21892, LOC, Thunderbird Resources, Frank 31-3-2H, New Hradec,
  • 21893, LOC, Thunderbird Resources, Frank 31-3-1H, New Hradec,
  • 21213, 240, Thunderbird Resources, Frank 31-4-1H, New Hradec, t12/11; cum 35K 6/14;
  • 21214, conf, Thunderbird Resources, Frank 31-4-2H, New Hradec,
  • 22065, conf, wildcat, Thunderbird Resources, Lower Thirty Federal 21-4-1H, 4-141-100, near Whiskey Joe/Big Stick
  • 22048, conf, wildcat, Thunderbird Resources, Franks Creek Federal 24-8-1H, 8-141-100, near Whiskey Joe/Big Stick
  • 24073, conf, Thunderbird Resources, Little Missouri Federal 24-10-1H, Whiskey Joe,
  • 21540, 521, Thunderbird Resources, Evoniuk 21-2-1H, Tree Top, t1/12; cum 37K 6/14;
  • 21947, 161/576, Thunderbird Resources, Fairfield State 21-16-1HRE, Whitetail, t9/12; t1/14; cum 20K 6/14;
  • 24639, TA, Thunderbird Resources, Fairfield State 21-16-2H, Whitetail, 30 stage; 2.5 million lbs sand/ceramic; no explanation; no IP; no geology report as of 6/14; SWD, dockets, September, 2014
  • 22207, 1,443, Thunderbird Resources, Basaraba 34-35-1H, Magpie, t9/12; cum 65K 6/14;
  • 24586, conf, Thunderbird Resources, Charlie State 21-16-1H, Charlie Bob,
  • 23658, 2,856, Thunderbird Resources, Heiser 11-2-1H, Beicegel Creek, t2/13; cum 58K 6/14;
  • 21589, 1,296, Thunderbird Resources, Johnston 31-4-1H, Butte, t6/12; cum 50K 6/14;
  • 25122, conf, Thunderbird Resources, Watson A S24-11-1H, Ranch Creek,
  • 25123, conf, Thunderbird Resources, Watson B Ne4-11-1H, Ranch Creek
  • 21544, 2.496, Thunderbird Resources, Akovenko F24-34-2H, Ranch Creek, t11/12; cum 55K 6/14;
  • 21545, 1,409, Thunderbird Resources, Akovenko 24-34-1H, Beicegel Creek, t5/12; cum 38K 6/14;
  • 21582, 2,285, Thunderbird Resources, Lange 11-30-1H, Bennett Creek, t4/12; cum 75K 6/14;
  • 25172, conf, Thunderbird Resources, Lange 11-30-3H, Bennett Creek,
  • 23634, 2,004, Thunderbird Resources, Lange 44-31-2H, Bennett Creek, t2/13; cum 51K 6/14;

Random Look At A Recently Re-Entered And Re-Completed Well

Be sure to look at the jump in production of this well after it was re-entered and re-completed:
  • 19157, 1,476, EOG, Bear Den 04-20H, Spotted Horn, one-section spacing; t3/13; cum 201K 3/14
I follow this well here

In addition, I track re-entered, and re-completed well here.

*********************************
Soccer Champion!



Bakken Five-Year Drilling And Completion Trends

DTC Energy Group, Inc., posted a nice update of the Bakken, a five-year drilling and completion analysis. It was posted October 10, 2013, so it is slightly dated. Most importantly, it discusses sliding sleeve, plug-and perf, and hybrid, but does not mention coiled tubing fracks.

The article is also weak in talking about how much proppant is typically being used.

For Investors Only: Dividends In Energy

On May 13, 2014, I posted:
The big story today, for investors: BHI raised its dividend, the first time the company has raised its dividend since 2008. Anadarko raised its dividend by 50%. Now, I look for an announcement that CVX or XOM or both to announce a 2-1 split. COP did the spin-off and raised dividends significantly in the last couple of years; CVX beat the Ecuador rap, and XOM is, well, XOM. So, we'll see. 
Then last night:
Readers may have noticed I've reported that a fair number of energy companies have recently declared increased dividends or dividends for the first time in quite some years. It was just something I noticed; no statistical analysis to see if accurate. Interestingly, the lead story in this week's issue of Bloomberg Businessweek, "Choosing Profits Over Productivity," which according to the writer/editor: "Bottom line -- productivity growth is stalling while companies spend their $2 trillion cash hoard on buybacks and dividends." Wow: saying exactly what I thought I was seeing. It's a nice two-page article.
Then, earlier today, Fitzsimmons on Phillips 66:
The headline suggests Phillips 66 is an outstanding dividend growth stock.

In the last couple of days, on a couple of different occasions, I posted comments about the dividend phenomenon noted this past earnings season. It's nice to see this observation validated. The dividend announcement that really surprised me was the one by Baker Hughes: the company is raising its dividend for the first time since 2008. That speaks volumes. Then the Phillips 66 article: the company has raised its dividend four times since 2012 (and they were increases of 25%, not trivial; the most recent announcement was an exception: 28%).
Completely unintentionally, while looking for something else, I stumbled across this article which I'm sure everyone else noticed -- actually I saw it earlier but due to a busy earnings season could not get to it, and then forgot about it. Motley Fool discusses this champion dividend payer: ENB --
This stock is one of the most stable income investments I have ever found.
The company’s facilities are some of the lowest risk and most irreplaceable assets in the world. Thanks in part to the monopoly status it holds on these properties, the company has reported record profits quarter after quarter.
That’s great news for its shareholders because this company returns almost all of its earnings to investors. Over the past decade, the firm has increased its dividend threefold and now pays $1.40 per share in dividends every year. This may very well be Canada’s top dividend stock — and it’s just be getting started.
But Enbridge might just be getting started. Thanks to the energy boom we are witnessing across the continent, the amount of oil and gas currently being pulled out of the ground is only a sliver of what we’re likely to see in the years ahead.
According to a recent report from Citibank, the combination of new oil sands production and shale drilling could grow North America’s petroleum output more than 50% by 2020. By the end of the decade the continent could achieve energy self-sufficiency. It’s a remarkable turnaround from only a few years ago when experts had left the domestic energy industry for dead.
To accommodate this boom, North America will require a massive build-out of its energy infrastructure. Companies that collect, store, and ship these oil and gas products are poised to make a fortune.
The article is a tease to get you to subscribe to their newsletter, but it was nice to see the article, continuing this unexpected discussion of dividends.

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or think you may have read here.