What We Will Be Talking About Wedneday -- SunEdison Shares Plunge -- November 17, 2015

Media-ite is reporting:

For First Time Ever, Both Fox News and FBN Rank in Top 5 of All Cable TV Last Week. 

FBN hosted the GOP presidential debate earlier in the week, and all networks covered the Islamic terrorist attack in Paris. Unlike CNBC, FBN was given very, very marks for the way they "managed" the debate.

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What We Will Be Talking About Wednesday

This is not an investment site. Do not make any investment or financial decisions based on what you read here or think you may have read here.

Barron's is reporting:

Shares of solar installation firm SunEdison are down $1.51, or 33%, at $3.05, continuing to feel the after-effects of a disappointing Q3 report on November 10th, that has been followed by stock sales by prominent hedge funds.

Today’s news brings some potentially troubling findings about the company’s debt position, and some worrying signs from Vivint Solar, the residential installation firm that SunEdison is acquiring for $2.2 billion.

Yesterday afternoon, Vivint reported Q3 revenue that topped analysts’ expectations, and profit that was short by a couple pennies. The stock today is down $1.16, or 12%, at $8.42.

The results “severely call into question the health of the Vivint Solar organization (especially in the context of strong results from Sunrun and SolarCity)” writes Credit Suisse’s Patrick Jobin, who has a Neutral rating on the shares.

In particular, installations of only 61 megawatts in the quarter, and a 7% decline in megawatts booked, suggest that “For the company to still achieve prior 2015 guidance of 290-310 MW, Q4 installations would have to be 118-138 MW (+95-128% sequential), a very long putt in our view.”

Jobin thinks the poor showing implies the acquisition itself may be hurting operations, and also that SunEdison investors should be concerned about what the company is likely to be acquiring at this point.

This was from just a few days ago (November 10, 2015): SunEdison Tanks --

Despite revenues increasing more than expected, shares tank. Business Insider is reporting:

SunEdison shares dropped by more than 22% in trading on Tuesday. 

The renewable-energy firm reported third-quarter results before the market open, and posted a wider-than expected loss (excluding some items) of $0.92, versus the estimate for $0.65, according to Bloomberg.

Revenues of $476 million beat the consensus forecast for $452.6 million.

Data points:

• at $5.59/share; lowest in more than two years
• announced last month to lay off 15% of its workforce 
• major investor: hedge fund, Greenlight Capital
• Greenlight Capital recorded its worst monthly performance since October, 2008, most due to SunEdison
• shares popped by as much as 6% on October 30, 2015, on rumors that another hedge fund billionaire had bought a position in SunEdison

For more on Vivant and Solar City (both with similar business models), see this dismal outlook as reported by Motley Fool. 

Long term, I think it's becoming clear that leases and power purchase agreements won't be the dominant financing option for homeowners. SolarCity may already be playing from behind with these market changes.

Five (5) New Permits; HRC Reports Two High-IP Bakken/Three Forks Wells -- November 17, 2015

Active rigs:

	11/17/2015	11/17/2014	11/17/2013	11/17/2012	11/17/2011
Active Rigs	64	184	183	187	201

One producing well completed:

• 29391, 1,142, XTO, Johnsrud Federal 34X-14H, Bear Den, 18-foot target zone with the first bench TF; within target zone 94.%; t11/15; cum 2K 9/15 (10 days of production); API 33-053-06257; from FracFocus:

• 8/22 - 25/15: 2.6 million bbls water, proppant 11%
• 9/30 - 10/1/15: 1.6 million bbls water, proppant 13%

Wells coming off the confidential list Wednesday:

• 27103, 2,808, HRC, Fort Berthold 148-94-27C-22-8H, McGregory Buttes, 23 stages, 3.5 million lbs, t5/15; cum 88K 9/15;
• 27105, 2,552, HRC, Fort Berthold 148-94-27C-22-7H, McGregory Buttes, a Three Forks well, 31 stages, 4.7 million lbs, t5/15; cum 69K 9/15;
• 31100, SI/NC, Hess, BL-Iverson C-LE-155-96-1423H-1, Beaver Lodge, no production data,
• 31140, SI/NC, Statoil, Cheryl 17-20 XE 1H, Banks, no production data, 

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27105, see below, HRC, Fort Berthold 148-94-27C-22-7H, McGregory Buttes:

Date	Oil Runs	MCF Sold
9-2015	8302	10580
8-2015	3056	4833
7-2015	15843	11444
6-2015	27261	23458
5-2015	13756	13935

27103, see below, HRC, Fort Berthold 148-94-27C-22-8H, McGregory Buttes:

Date	Oil Runs	MCF Sold
9-2015	12445	8876
8-2015	3744	2739
7-2015	19223	14231
6-2015	29393	26927
5-2015	22881	25907

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Five (5) new permits:

• Operator: Slawson
• Fields: Big Bend (Mountrail)
• Comments: based on location of the pad and the name of the wells (Submariner Federal) these wells will run west-to-east under the river. Of the five new permits, four will most likely be 1280-acre spacing; one will be on an overlapping 1280- or 2560-acre drilling unit.

TransCanada: Mexico Is A Bigger Deal Than The Keystone -- November 17, 2017

BloombergBusiness, today, writes that TransCanada will build the Tuxpan to Tula natural gas pipeline in Mexico:

TransCanada won the rights last week for its sixth pipeline in Mexico, one of the company’s key targets for growth. The Nov. 10 decision came four days after the U.S. denied TransCanada’s bid to build its Keystone XL oil sands project across the border into Nebraska where it would connect to existing pipes leading to Gulf Coast refineries.

That's what it says, TransCanada's "sixth pipeline in Mexico."

But just a few days ago, Oil & Gas Journal wrote:

By 2018, with Tuxpan-Tula, TransCanada will have five major pipeline systems, with $3 billion invested in Mexico.

Yes, I checked that several times, and "cut and copied" it directly to the blog.

So BloombergBusiness says this will be TransCanada's sixth, and Oil & Gas Journal says it will TransCanada's fifth pipeline in Mexico.

Other data point points from the BloombergBusiness article:

• TransCanada beat out Carlos Slim's Grupo Carso and Sempra Energy for this pipeline
• TransCanada now holds the rights to develop and operate 2,000 kilometers of pipelines in Mexico
• TransCanada currently only operates gas pipelines in Mexico but wants to expand to oil and power generation
• with Mexico much less difficult to deal with, TransCanada argues that Mexico is a bigger deal than the Keystone XL
• the company said it plans to extend its dividend growth plan of 8 to 10 percent annually through 2020 as more and more Mexican projects come on line
• there is little pushback in Mexico once the government approves a project
• Mexico plans to expand its pipeline infrastructure 75% by 2018 and is seeking as much as $10 billion in investment for 24 new projects in the short term

And then this:

• Mexico is planning to hold as may as five pipeline auctions before the end of January, 2016, and TransCanada will look at all of them.

After all, with the Keystone XL killed, TransCanada has other eggs to fry, or whatever the idiom is.

Pipeline, The Ventures

Walmart Beats -- November 17, 2015

National Oilwell Varco to close another Texas facility, cut jobs:

The facility, at 6738 Sideview Road in San Angelo, will cease operations, which will be finalized between January 15 and January 29, 2016.

The company did not specify a reason for closing the support facilities, though it cited economic reasons for closing other Texas facilities in previous WARN letters this year. Those letters have included 85 job cuts in Houston; 150 in Willis, north of Houston; and 110 in Mineral Wells, in North Texas.

Speaking of which, a reader wrote to tell me that OXY USA took the sign off its building in Dickinson earlier today, November 17, 2015.

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Wal-Mart Beats

Yahoo!Finance is reporting:

Wal-Mart (WMT) gave an upbeat earnings outlook for the current quarter after posting earnings per share that topped Wall Street views in its latest quarter. However, sales slightly missed forecasts, falling more than 1% from a year earlier on weak sales overseas. 

Shares up nicely.

And this is the answer to the oft-asked question: Wal-Mart or Walmart?

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Walmart vs Kroger, Whole Foods

I don't recall ever being in a Kroger supermarket before this past weekend. I assume I have, just didn't know it or don't remember.

My granddaughter and I were looking for a place to eat during a break in the water polo tournament, and on our way to Jersey Mike's subs in Flower Mound, TX, we walked by a Kroger. I've never met such friendly employees in a grocery store before, nor have I seen a nicer store.

When we walked in, an employee asked us if we wanted coffee and a donut. I assumed it was a fund-raising effort by some organization but it turned out to be simply Kroger's way of greeting us this particular Saturday morning. She had just run out of coffee, but told me there was more coming, but if I was in a hurry, there was also (free) coffee just inside the store.

The store was bright, not particularly busy, and seemed to have a really nice selection. I didn't do much comparison shopping but did note that there was an ample supply of 20-lb turkeys for 59 cents/pound (store brand) and Butterball 20-lb turkeys for $1.19/pound. So much for the media scare that there would be a shortage of turkeys this year, and if one found them, they would be overpriced. Yes, I know there's a lot of bone in a turkey but these prices are better than the prices we are used to paying for chicken in many cases.

Throughout the store there were many samples to try, and we almost did not need to go to lunch. But my granddaughter loves Jersey Mike's (this was my first time) and so we watched what we ate at Kroger and then went to Jersey Mike's. Best subs I have ever had. I told that to my daughter, and she says Jersey Mike's subs are good, but there is one sub restaurant that was better, but she couldn't remember the name; they were in Charleston, SC.

I have trouble with those who think Walmart and Kroger / Whole Foods are competitors. I think the customer profile for Walmart is a whole lot different from that of either Kroger or Whole Foods. I'm not saying which store will do better, Walmart or Kroger financially or is a better investment, I'm just saying that if given a choice, I would go to Kroger to shop for groceries before I would go to Walmart. But then that's me, and I'm not raising a family of six on blue collar wages.

Evidence Of Communication Between Wells -- November 17, 2015

Updates

April 26, 2016: in the original post, it was noted that #26158 was taken off-line (status: inactive). As of November, 2015, this wells was back on line:

• 26158, 3,771, Statoil, Johnston 7-6 3TFH, Banks, t11/14; cum 67K 2/16;

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	2-2016	22	6895	7397	7691	12292	11236	591
BAKKEN	1-2016	25	13396	13316	12341	22228	20262	978
BAKKEN	12-2015	28	16274	16317	14975	27740	26382	177
BAKKEN	11-2015	21	12614	12039	18486	25698	23888	965
BAKKEN	10-2015	0	0	0	0	0	0	0
BAKKEN	9-2015	0	0	0	0	0	0	0
BAKKEN	8-2015	0	0	0	0	0	0	0
BAKKEN	7-2015	0	0	120	0	0	0	0
BAKKEN	6-2015	8	3838	3826	1834	5467	5028	439
BAKKEN	5-2015	27	4147	4221	2267	18398	14921	3477

 

Original Post

 

This is a long note. There will be typographical and factual errors. I may be seeing things that do not exist. If this is important to you, go to the source.

While looking up this well for other reasons I happened across this little gem, which is another pixel in the Bakken mosaic, helping me to better understand the Bakken.

29564, SI/NC, Statoil, Skarston 1-12 XE 1H, Banks, no production data,

I think this is a big, big deal, but then I am inappropriately exuberant about the Bakken. I get excited about a lot of things that turn out not to be so exciting and I have been accused of "childlike glee" (yes, that accusation followed one of my book reviews over at Amazon.com).

So with childlike glee and with inappropriate exuberance I post the following -- a small excerpt -- from the file report on this well:

As a measured depth of 20,411', April 4, 2015, the decision was made to stop and circulate out gas while transferring mud and increasing the mud weight. The decision was then made to continue to circulate off bottom while preparation could be made to switch the drilling fluid to oil-based mud. The oil-based mud was then increased to 12 ppg. It was found that even with 12 ppg oil-based mud, the shut in casing pressure (SICP) continued to increase while the well was shut in. It was then decided that the mud weight should be increased further to near 14.2 ppg. This process took several days to complete.

It was later discovered that the unidentified mineral was in fact, ceramic proppant. This is sometimes used as frac sand, or in conduction with quartz sand. It was also later confirmed, that there was in fact communication with an adjacent well that had been recently completed. 

It was believed that this communication between wells was causing the increased pressure and fluid gains.

This adjacent well was the Statoil Johnston 7-6-3TFH (#26158).

The mud weight was increased to 14.2 ppg....after drilling resumed, the pressure increased, and fluid gains were seen. The decision was then made to shut the well in and circulate bottoms up. This yielded a trip gas of 4,602 units, and a large flare ....
...drilling resumed .. while drilling ahead within the lateral, the ROP was near 35 ft/hr.

The slow ROP was due largely to the high mud weight. This caused the pump pressure to be near the maximum pump pressure rating of 5,000 psi at half pump strokes of the previous salt water driling fluid. Even with the high mud weight, slow ROP, and going through the gas buster, the background gas was near 750 units, and a 3 - 10 foot flare produced.

While nearing the end of the drilling, the report continues:

Bottoms up was circulated through the choke, after getting back to bottom. This resulted in a 10'flare and a trip gas of 6,282 units. ... [several challenges ensued]...the lateral was called TD at 20,823 feet (approx 1225 feet early) on April 14, 2015.

Separation and formations:

Horizontal separation between the laterals of the Skarston well and the Johnston well: about 600 feet. 

Vertical separation between the two laterals, approximately, 130 feet, it appears.

• The Skarston well, TVD = 10,903 feet
  The Johnston well, TVD = 11,035 feet

The target formations:

• Skartson: middle Bakken
• Johnston: Three Forks

The Johnston well:

• 26158, IA/3,771, Statoil, Johnston 7-6-3TFH, Banks, 35 stages, 4.5 million lbs sand and ceramic, t11/14; cum 18K 9/15; there is no information in the file report why this well is now inactive 

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	9-2015	0	0	0	0	0	0	0
BAKKEN	8-2015	0	0	0	0	0	0	0
BAKKEN	7-2015	0	0	120	0	0	0	0
BAKKEN	6-2015	8	3838	3826	1834	5467	5028	439
BAKKEN	5-2015	27	4147	4221	2267	18398	14921	3477
BAKKEN	4-2015	30	0	0	0	0	0	0
BAKKEN	3-2015	31	0	0	0	0	0	0
BAKKEN	2-2015	28	0	0	0	0	0	0
BAKKEN	1-2015	31	0	0	0	0	0	0
BAKKEN	12-2014	31	0	0	0	0	0	0
BAKKEN	11-2014	30	10319	10137	16985	0	0	0