Nice Update On Where Saudi Arabia And Iran Stand With Regard To Crude Oil -- Rigzone -- September 27, 2016

Rigzone link here. Some data points:

To "square the books":

• Saudi Arabia needs $67 oil
• Iran needs $61.50 oil
• currently: about $45

Fiscal deficit:

• Saudi Arabia: fiscal deficit equal to 13.5% GDP
• Iran: compare at 2.5% GDP
• Saudi Arabia: facing double-digit deficit this year
• Iran: nearly balanced its budget this year after economic reforms in 2012/2013 following sanctions 
• Saudi Arabia, 2015, drew down $115 billion last year; 1H16, drew down $52 billion

Economic growth:

• Saudi Arabia: slowly sharply; about 1%
• Iran: accelerating toward 4%

Production:

• Saudi Arabia: around 10 million bopd
• Iran: about 3.4 million bopd; target 4 million bopd

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Bakken Revolution

From The Wall Street Journal today: two years into oil slump, US shale firms are ready to pump more:

Few predicted that in the fall of 2014, when Saudi Arabia signaled that it wouldn’t curb its output to put a floor under crude prices. Oil pundits concluded that a brutal culling would force higher-cost players known as marginal producers—a group that includes shale drillers—out of the market.

But the greatest consequence of the Saudi decision and subsequent price drop is that it has delayed costly oil megaprojects, from deep-water platforms off Angola to oil-sands mines in Canada.

“The U.S. isn’t the marginal barrel but the most flexible,” said R.T. Dukes, an analyst at Wood Mackenzie. “We’ll be the fastest to snap back.”

More than 100 North American energy producers have declared bankruptcy during this downturn, but even companies working through chapter 11 keep pumping oil and gas. Many exit bankruptcy stronger thanks to a balance sheet that has been wiped clean. SandRidge Energy Inc., which filed in May, will exit next month after erasing nearly $3.7 billion in debt.

Many shale operators are still struggling at current prices, drilling at a loss and tapping Wall Street for new infusions of cash. But the strongest producers, including EOG Resources Inc. and Continental Resources Inc., soon will be able to generate enough money to pay for new investments and dividends—as well as boost production—even at low prices, analysts say.

U.S. production began inching up in July, shortly after oil prices rebounded to $50-a-barrel territory. Producers quickly put 100 rigs back to work this summer.

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The Political Page

I did not watch "the debate" last night. Based on how little reporting I see this morning regarding "the debate" it appears I did not miss anything.

This is the USC-LA Times poll from this morning (it is a poll released every day; 3,000 likely voters nationwide). I assume the poll is too early to reflect the sentiments of last night's debate. Red is Trump, blue is Hillary:

Drudge Report poll shows Mr Trump beat Ms Clinton by about 94% to 6%.

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The Market

Close: up 133 points. NYSE --

• new highs: 78 -- FedEx
• new lows: 21 --

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The Apple Page

Problems with math?

Earlier this month, Apple unveiled the new (and slightly improved) Apple Watch. The Apple Watch has a battery life of about 18 hours, meaning that most people tend to leave their watches charging on their nightstand overnight. Given that the Apple Watch doesn’t last through the night, and also is considerably bulkier than the average FitBit or Jawbone tracker (and probably uncomfortable to sleep in), it’s not entirely clear how Apple intends to leverage the existing watch into something that could track sleep. 

I don't know about you, but if my watch battery lasts 18 hours, that will get me through the night.

Oh, I see. You mean if I get up at 6:00 a.m. and then go to bed at 11:00 p.m. the battery will die at midnight -- 18 hours.

Yes.

Oh, I see.  I guess that's why my wife has two Apple watches. I don't think Apple has a problem.

Help Me Make It Through The Night, Norah Jones

Bakken Losing East Coast Market To Rising Imports -- RBN Energy -- September 27, 2016

Active rigs:

	9/27/2016	09/27/2015	09/27/2014	09/27/2013	09/27/2012
Active Rigs	34	71	190	184	189

RBN Energy: Bakken producers losing the East Coast market to rising imports.

The prospects for sellers of Williston Basin/Bakken crude oil in what once was a prime growth market—the U.S. East Coast—have been dwindling fast, as have the volumes of Bakken crude being railed and barged to refineries along the Mid-Atlantic coast and the Canadian Maritimes. Today we look at how a combination of weak crude oil prices, declining production, high relative freight costs, and the lifting of the U.S. crude oil export ban have opened the door to more imports from West Africa, and left Bakken producers out in the cold.

The Bakken remains an American success story, but the play’s star has certainly faded along with declining crude prices. As North Dakota oil production ramped up in 2013 and 2014 (peaking at 1.3 MMb/d in December 2014), shipments of Bakken crude to the U.S. East Coast via rail rose in tandem.  From only 10 Mb/d in 2011, Bakken barrels railed to the East Coast ultimately reached 431 Mb/d in May 2015.

In the early days of CBR, midstream companies, marketers and refiners rushed to develop the infrastructure (rail terminals, rail fleets, etc.) to serve refineries in the Mid-Atlantic states and Maritime Canada. But unfortunately, about the time all that infrastructure was in place, crude prices started to decline, the number of active drilling rigs in the Bakken plummeted, and crude oil production there fell to less than 1.0 MMb/d. 

The decline in production continues today; Energy Information Administration’s (EIA’s) Drilling Productivity Report projects that Bakken crude production now (as of September 2016) languishes at only 875 Mb/d. Rail shipments to the East Coast in June 2016 averaged only 132 Mb/d, a decline of 69% since the peak in May 2015.

Statoil Reports Two Huge Bakken Wells; Twenty (20) Permits Renewed -- September 26, 2016

Active rigs:

	9/26/2016	09/26/2015	09/26/2014	09/26/2013	09/26/2012
Active Rigs	34	71	190	184	187

Wells coming off confidential list Tuesday:

• 31360, SI/NC, Statoil, Samson 29-32 8TFH, Banks, no production data,

Four new permits:

• Operator: Oasis
• Field: Siverston (McKenzie)
• Comments:

Five (5) producing wells completed:

• 30434, 451, SM Energy, Anne 13B-19HN, West Ambrose, t9/16; cum --
• 30436, 285, SM Energy, Anne 13-19HS, Ambrose, t9/16; cum --
• 30437, 353, SM Energy, Anne 13-19HN, West Ambrose, t9/16; cum --
• 30944, 4,040, Statoil, Richard 8-5 XE 1H, Banks, 4 sections, t8/16; cum --
• 31140, 4,290, Statoil, Cheryl 17-20 XE 1H, Banks, 4 sections, t8/16; cum --

Wells released from tight hole status:

• 21535, EXP, Cornerstone, Tafelmeyer C-3625-6490, Customs,
• 26563, EXP, Resource Energy Can-Am, Blanca State 14-36-164-101, Colgan,
• 29380, EXP, MRO, Tucker 44-20TFH, Bailey,
• 29402, EXP, SM Energy, Seattle Federal 14X-35H, Camp,
• 29403, EXP, SM Energy, Seattle Federal 14-35H, Camp,
• 29404, EXP, SM Energy, Seattle 14X-35H, Camp,
• 29408, EXP, Resource Energy Can-Am, Jim 16-35-164-102, Skjermo,
• 29456, EXP, Enduro Operating, NSCU J-717-H2, Newburg,
• 29458, EXP, Enduro Operating, NGMU 13-H1, North Grano
• 29479, EXP, Resource Energy Can-Am, Ekness 4-5N-163-102, Skjermo,
• 31361, SI/NC, Statoil, Topaz 20-17 8TFH, Banks, no production data,
• 31985, EXP, Slawson, Pike Federal 9 SLTF2H, Big Bend,
• 32024, EXP, MRO, Ness USA 31-17H, Reunion Bay,
• 32025, EXP, MRO, Becky USA 31-17TFH-2B, Reunion Bay,
• 23026, EXP, MRO, Hans USA 31-17TFH, Reunion Bay,
• 32027, EXP, MRO, Post USA 41-17TFH-2B, Reunion Bay,
• 32028, EXP, MRO, Ballmeyer USA 41-17TFH, Reunion Bay,
• 32171, SI/NC, Petro-Hunt, Dolezal 146-97-31D-30-2H, Little Knife, no production data,
• 32280, SI/NC, XTO, FBIR Blackmedicine 24X-21C, no production data,

Twenty (20) permits renewed:

• XTO (10), six Cindy Blikre permits, two Lyla permits, and two Roberta permits, in Williams County
• Newfield (3), three Schneiderman permits in McKenzie County 
• MRO (3), an Archie, an Erbie, and an Arnew permit, all in Dunn County
• MRO (2), a Dragswold USA and a Shirley Doll USA permit, both in McKenzie County 
• MRO, an Eagle USA permit in Dunn County
• Slawson, a Pike Federal permit in Mountrail

Update On Oasis; Update On Permian Natural Gas -- September 26, 2016

Monday afternoon: 104 degrees in Los Angeles. 

Oasis: according to Emergent Group --

• about 485,000 net acres in the Bakken (compare with around 100,000 for CLR)
• production: about 50,000 boepd (an increase from previous guidance)
• completed 16 wells of the 53 expected; all in McKenzie County
• cut capital expenditures for drilling and completion by just over half for 2016
• capital expenditures for drilling and completion for 2016: $200 million
• total budget: about $400 million
• to date, 2016: spent about 55% of total budget (includes about $90 million in D&C capital)
• about 83 DUCs in "Bakken core counties"; with 83 DUCs, ranks among the top five operators in the Bakken with DUCs
• about 45% of DUCs are located in Wild Basin (just east of Indian Hill); others located in Indian Hills and Alger (35% of inventory); Red Bank and Montana (20% of inventory) 
• spud to rig release has decreased another 2.1 days this year; now down to 13.5 days; was 22 days in 2014
• but: negative cash flow for first six months of 2016 -- almost $600 million negative cash flow; for all of 2015 and YTD, had cash flow of $46 million (positive)
• rig history: 16 (4Q14); 5 (1Q15); 3 (2Q15 - 4Q15); since then, down to 2. 
• my notes show that in 1Q14 earnings report: 505,960 net acres; 16 rigs; 44,000 boepd

Norwegian Tesla owners sue:

• PennEnergy link
• more than 100 owners sue (specifically, 126)
• horsepower dispute
• Model S P85D said to deliver only 469 hp, versus promised 700 hp

Active rigs in North Dakota:

	9/26/2016	09/26/2015	09/26/2014	09/26/2013	09/26/2012
Active Rigs	33	71	190	184	187

RBN Energy: Update on the Permian -- natural gas output remains high; processing capacity being added.

Natural gas production volumes in the Permian Basin are very near the all-time record of 6.9 Bcf/d set last September, and crude oil and gas producers alike see nothing but blue skies for the highly prolific West Texas/Southeast New Mexico play. The Permian already has a lot of gas processing capacity, but a good bit of it is older, and parts of the region—especially the super-hot Delaware Basin—need more of the big, efficient cryogenic plants that can process 100 to 200 MMcf/d. Today, we continue our review of gas production and processing in the biggest U.S. gas-producing region that is not named Marcellus.

The past two years have been a challenging time for crude oil and natural gas producers in most of the U.S., but much less so for exploration and production companies in the 75,000-square-mile Permian Basin. In rock ‘n’ roll terms, the Permian is a lot like Bruce Springsteen––it’s been a consistent producer (of both gas and oil) for decades, and it has more respect today than ever. (You might even call the Permian “The Boss” of hydrocarbon output.)

Thanks to favorable production economics and multiple pay zones, output levels in the Permian dipped only slightly as oil and gas prices tumbled, and have since rebounded. Crude oil has always been the big draw for Permian producers, but most of the wells there also produce large volumes of liquids-rich or “wet” natural gas that needs to be processed to extract natural gas liquids (NGLs). In its latest Drilling Productivity Report, the Energy Information Administration  projected that the Permian would produce an average of nearly 6.9 Bcf/d in October, 2016, only 30 MMcf/d less than it did at its peak a year ago.

Gas production in the Eagle Ford in South Texas, meanwhile, is projected to fall below 5.6 Bcf/d in October—a 25% drop from its all-time  high in February 2015. (Of course, Appalachia, with the prolific Marcellus and Utica plays, still reigns supreme as far as gas is concerned, with almost 25 Bcf/d now being produced in the region based on RBN production numbers).

Richard Zeits on global oil glut: over at SeekingAlpha. According to the Venezuelan oil minister,

"Global production is at 94 million barrels per day, of which we need to go down 9 million barrels per day to sustain the level of consumption."

He knows a lot more than I do about this, but I think his numbers are a bit off. 

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First Ethane Shipment From Gulf Of Mexico Arrives In Europe (Norway)

From Fuelfix. Data points:

• Enterprise Products Partners press release
• Enterprise Products Partners opened the country's second ethane export terminal on the Houston Ship Channel earlier this year
• delivered its first shipment to Norway
• the first US ethane export terminal: 230 miles southwest of Philadelphia -- capacity of 35,000 bbls/day began shipping overseas in March
• Enterprise's export terminal, Morgan's Point: capacity of 200,000 bbls/day

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Spin

Even The Wall Street Journal has its spin: US new home sales down but "broader trend" still positive. I guess that's why the market (Dow 30) is in free fall, down 136 points at the moment -- mid-day trading. Data points:

• August's 7.6% drop is largest since September, 2015
• but here's the good news: analysts had expected an 8% drop
• and more broadly, through the first eight months of 2016, new-home sales were up 13.3% compared with the same period in 2015

Analysts use the word "volatile" when reporting this. 

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Sports 

NFL

Carson Wentz

• Cleveland Browns "passed" on Carson Wentz in the NFL draft earlier this year
• Philadelphia Eagles under Wentz: 3 - 0; no fumbles, no interceptions; demolished the Pittsburgh Steelers 34-3 yesterday, and Steelers starting quarterback played the entire game, I believe
• Wentz: 23/31 passes; 301 yards; two TDs
• last week he set record for rookies; this week he may have set record for all NFL quarterbacks with regard to three-game start
• NFL director of football communications: Wentz is first player in NFL history with at least 100 attempts, 60 completions, five TDs, no interceptions in first three career games
• Wentz: NDSU phenomenon (Fargo, North Dakota)

Vikings: huge win

Dallas: huge win 

Golf

Arnold Palmer dies

Phil whines

Saudi Arabia Injects $5.3 Billion To Stabilize Banking Amid Crunch -- September 25, 2016

Washington Post article here.

Same story at Arabian Business.

Same story at NASDAQ.

At Bloomberg:

The announcement comes as the world’s biggest oil exporter prepares to sell its first international bonds to finance a budget deficit that the International Monetary Fund expects to reach about 13 percent of economic output this year. The economy will likely expand 1.1 percent in 2016, according to a Bloomberg survey, the slowest pace since 2009.

The Saudi index for banking shares has declined 17.6 percent this year, compared with a 14.4 percent drop for the benchmark Tadawul All Share Index.