Abraxas Reports Two Completed DUCs; WPX With Six More Permits In Spotted Horn --February 13, 208

Active rigs:

$59.06↓	2/13/2018	02/13/2017	02/13/2016	02/13/2015	02/13/2014
Active Rigs	58	36	41	137	188

Eight new permits:

• Operators: WPX (6); CLR (2)
  Fields: Spotted Horn (McKenzie County); Banks (McKenzie)
• Comments: WPX has permits for a 6-well Grizzly pad in NWNW 25-150-94; CLR has permits for another 2-well Pasadena pad in SWSW 11-152-99

Four permits renewed:

• Bruin: two Fort Berthold permits in Dunn County and two Borrud permits in Williams County

Two producing wells (DUCs) reported as completed:

• 32632, 1,435, Abraxas, Yellowstone 3H, North Fork, t12/17; cum 13K after 11 days; (#18708)
• 32633, 1,809, Abraxas, Yellowstone 2H, North Fork, t12/17; cum 28K after 20 days; (#18708)

   

NOT GOOD: API Shows US Crude Oil Inventories Grew By Almost 4 Million Bbls; More Than Forecast -- The Energy Page, T+23 -- February 13, 2018

Oil: today, API's crude oil inventory data: pending (4:30 p.m. ET, Tuesdays)

• previous: a drawdown of 1.05 million bbls
• forecast: a gain of 2.8 million bbls
• actual: a gain of 3.947 million bbls
• "not good" for oil bulls; great for consumers;

Oil: tomorrow: AEI crude oil inventory data:

• US crude oil inventories: up another 1.8 million bbls (this is the third consecutive week that inventories have increases
• now at 422.1 million bbls -- supposedly in the lower half of the average range for this time of year; I've always considered 350 million bbls about the average

Natural gas: Thursday, February 15: AEI natural gas storage report:

• previous: -119 bcf
• forecast: -179 bcf (private forecast)
• actual: -194
• compare: -120 Bcf last year and -154 Bcf for the five-year average (same link)

Prices: prior to release of data, February 13, 2018:

• WTI: $59.26 (pretty much unchanged for the day); $59.18 after API crude oil inventory data came out;
• Henry Hub natural gas: $2.614 (up 2.4%)

Treasury yields:

• 10-year: 2.83% before the CPI came; 2.86% after CPI data came out
• CPI: accelerates

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Recommended Reading?

Nixon Shock -- Wikipedia.

Watergate -- Wikipedia.

Price of oil (WTI), sweet spot: from a post dated September 7, 2016 --

Early this morning, well before the article [at the linked post] was posted, I mentioned that I'm completely content with $45 oil. In fact, I argue that the sweet spot for WTI pricing right now is $46 to $52. I used $60 as the high end of the sweet spot. I find it interesting that this Bloomberg article chose exactly the same numbers.  

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Somewhere Over The Rainbow

Somewhere Over The Rainbow, Jerry Lee Lewis

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Cookies; Tracking 

A lot of folks (apparently) get upset with Google (et al) tracking their internet searches. I love it. I get targeted ads. I haven't had a Viagra ad pushed to me in years. LOL. Some weeks ago -- I had already forgotten until I saw the targeted ad a few minutes ago -- I was looking for a motel in a city which I hoped to visit sometime next month. Never found what I was looking for; moved on. Not sure if I want to travel next month.

A few minutes ago, a targeted ad popped up while looking for the Jerry Lee Lewis video above -- with prices for hotels in the city that I had planned to visit. Wow, great. Reminded me of something I was doing before I was bored/distracted/ frustrated and moved on.

The Political Page, T+23 -- February 13, 2018

Of all things, Victor Davis Hanson, whom I link on the sidebar at the right, will be featured on Rush Limbaugh this morning. It's not often that Rush let's anyone take "control" of his three-hour monologue.

Vic Hanson has posted several replies to his "angry readers." Enjoy.

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Climbing The Wall Of Worry

Chesapeake Update -- Zeits -- February 13, 2018 -- For Newbies, Note The 2.6 BCF/D; The Importance Of DUCs -- Money In The Bank

Summary, link over at SeekingAlpha:

• Chesapeake guided to sequentially lower production volumes in Q1 2018, following a very strong Q4 2017
• spending within cash flow in 2018 means activity levels will be reduced as compared to the second half of 2017
• however, even with this consideration in mind, the full-year production outlook is underwhelming.
• with total debt again approaching $10 billion, Chesapeake cannot "drill its way out" of the leverage problem - significant asset sales is the only path to stability.

Then this:

For Q4 2017, Chesapeake Energy achieved its production goal of 100,000 barrels of crude oil per day, in-line with previous guidance. Natural gas and NGL production for the quarter were 2.6 Bcf/d and 59,500 b/d, respectively, above previous guidance.

These volumes represent a 10% sequential increase on a BOE basis, after adjusting for asset sales.

As a reminder, in the last six months Chesapeake significantly accelerated the pace of completions to monetize the company’s significant inventory of drilled but uncompleted wells.

During Q3 2017, Chesapeake emphasized completions in the Marcellus, Utica and Haynesville to position itself for winter demand for natural gas.

In Q4 2017, the company nearly tripled the pace of completions in the Eagle Ford, as compared to the preceding two quarters.

The “surge” in the number of new wells being brought online yielded an impressive ramp-up in production volumes during the second half of 2017.

The advantage of DUCs -- take note:

In retrospect, Chesapeake's decision to accelerate DUC conversions was well timed. Cash flows have benefitted from greater crude volumes sold into an attractive price environment that prevailed during the last several months. On the natural gas side, Chesapeake took advantage of the strong heating demand this winter for natural gas and NGLs.

Bottom line:

Chesapeake remains one of the most over-levered stocks in its peer group. If one were to plot the stock's trajectory versus several other high-leverage peers, the big decline since early January does not stand out as differential.

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

By the way, for newbies, note Chesapeake's natural gas production: 2.6 Bcf/d. This seems to be a number that resonates across the global energy sector. 

Mideast Heating Up; Price Of Oil Not Yet Reflecting Reports -- February 13, 2018

I track "Mideast On The Brink" at the sidebar at the right: my most recent post --

February 13, 2018: the Mideast is heating up. Now that ISIS is out of the way, Iran and Syria have teamed up to drive other rebels out. I assume the Kurds will be caught in the cross-fire and Turkey will muddle US efforts. Israel has hit targets in Iran for the first time, it was reported last week, and Drudge suggested "fight's on." But this is the scary part: it appears that US and Russia are now directly involved. No links; stories everywhere. US fighters have killed "scores" of "Russian fighters" (not further defined) and this morning it is being reported that a US fighter knocked out a Russian tank in self defense. WTI down another 64 cents; now at $58.64.

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Notes To The Granddaughters

Our youngest granddaughter, Sophia, who will be four later this year, has had a very close friend for a very long time, a small teddy bear (actually a little piggy, I guess), maybe about ten inches long, whom she calls "Corky." For as long as I can remember, wherever Sophia went, Corky went. Sophia and Corky had long conversations; of course, we have only heard one side of the conversations.

Then about three days ago, all of a sudden Corky was no longer around. Sophia was not a bit upset. When asked, she said that Corky was "with the monsters."

This morning when I was making breakfast for her and then taking her to Tutor Time, again, Corky was gone. I asked her where Corky was. She said that Corky was "with the monsters." In Corky's place, Sophia now has four much larger and more colorful teddy bears; it was quite a menagerie that accompanied us to Tutor Time this morning.

Her mother, our older daughter, has confirmed what we've noticed. Our daughter has not seen Corky in the past few days and Sophia seems not perturbed.

I wrote this to our daughter, bringing things up to date:

There was obviously a major "falling out" between Corky and Sophia.

Sophia has been watching some inappropriate Barbie cartoons on YouTube -- she no longer gets to watch them -- little girls arguing like little girls argue among themselves -- no big deal but just the same May (her Grammy) feels that Sophia does not need to watch those videos (I agree).

It's possible Sophia picked up something from the videos and then had an argument with Corky and now he's banished to the "monsters." Maybe Corky took the side of the argument of one of the little girls with whom Sophia disagreed.

Since your toilets are not clogged up, at least we know Sophia did not try flushing Corky down the toilet.

Corky has now been replaced with four -- count them, four -- bigger and more colorful teddy bears, including "Pumpkin Bear."

Later: photo of Sophia with two of her four new friends.