It's Always Darkest Before The Dawn -- December 4, 2018

From Bloomberg:

The North American fracking market -- already expected to be a downer for the holidays -- is turning out to be even worse than expected, according to the world’s biggest oil-service provider.

Schlumberger Ltd. expects sales in the U.S. and Canada to drop 15 percent in the final three months of the year compared with the third quarter, the company said Tuesday. A trio of factors including a plunge in crude prices, exhausted exploration budgets and maxed-out pipelines in America’s busiest field is prompting oil companies to let go of frack crews.

“We are seeing a significantly larger drop in activity than we expected, which is leading to a larger drop in pricing than we anticipated,” Patrick Schorn, executive vice president at the Houston- and Paris-based company, said in prepared remarks for an investor presentation. “We continue to see the weakening of the hydraulic fracturing market as temporary, with the expectation of a gradual recovery taking place over the first half of 2019.”

The number of fracking crews at work in the Permian Basin of West Texas and New Mexico is down 13 percent from a 2018 high in June, according to Primary Vision Inc. Fracking, which involves blasting water, sand and chemicals underground to release trapped hydrocarbons, is the most expensive part of drilling wells.

This is just the latest in a series of downward revisions by Schlumberger. In September, the company said a dearth of new pipeline capacity in the Permian was cooling off the red-hot region, leading to lower-than-expected third-quarter fracking results. Then a month later, the company said the fourth quarter would be even worse.

Update On Vaca Muerta -- December 4, 2018

Another reason why I love to blog. Because of the blog, I know a little bit about the Vaca Muerta; it's tracked here through a link at the sidebar at the right. The Bakken, at 1.3 million bopd, also puts the production goal in the graphic below in perspective:

North Dakota wells, including legacy wells going back decades, currently average just under 100 bbls/well/day. This includes a lot of old legacy wells which produce very, very little.

But let's use the 100 bbs/well/day as a starting point.

60,000 bopd / 100bbls = 600 wells.

$2.3 billion / 600 wells = $4 million / well.

If these are all new wells with production that average much better than 100 bbs / well, then significantly fewer wells and higher cost per well.

Coming at the data from a different direction, if each well costs about $10 million, then we have 230 wells, or 260 bopd per well, which seems about right considering these would be "new" wells producing at the high end of production prior to the typical tight oil decline rate setting in.

Regardless, 60,000 bopd is literally a drop in the bucket compared to global production / demand of 100 million bopd.

Six DUCs Reported As Completed -- December 4, 2018

Active rigs:

$53.25	12/4/2018	12/04/2017	12/04/2016	12/04/2015	12/04/2014
Active Rigs	64	53	39	64	191

Two new permits:

• Operator: WPX
• Field: Antelope (McKenzie)
  Comments; WPX has permits for a two-well Ruby pad in section 31-151-94;

Six producing wells (DUCs) reported as completed:

• 34495, 2,429, WPX, Howling Wolf 28-33HY, Wolf Bay, t11/18; cum 1K after 17 days; note: come back and check #23778 when it comes back on line in a month or so; also check #24429 and #24379 when they come back on line in a few months;
• 34053, 2,395, WPX, Howling Wolf 28-33HT, Wolf Bay, t11/18; cum 1K after 17 days;
• 34815, 2,328, WPX, Howling Wolf 28-33HIL, Wolf Bay, t11/18; cum 2K after 17 days;
• 34051, 3,477, WPX, Howling Wolf 28-33HD, Wolf Bay, t11/18; cum 1K after 17 days;
• 34494, 2,115, WPX, Howling Wolf 28-33HF, Wolf Bay, t11/18; cum 1K after 18 days;
• 34015, 1,498, WPX, Serrahn 11X-5EXH, Siverston, t7/18; cum 54: 19/19; note: neighboring well, #27512 showed huge jump in production after this frack; come back and check #21683 and #21682 when they come back on line;

The Market, Energy, And Political Page, Part 2, T+28 -- December 4, 2018

Apple Watches: it's not even Christmas yet, but it appears folks are buying a lot of stocking stuffers. Folks in the business of watching shipments are estimating that Apple shipped 4.2 million Apple Watches during the 3Q18. If so, shipments were supposedly up 54% year over year. I remember when Apple introduced the Apple Watch folks said not many would be sold. But note this fro the linked site:

Apple Watch shipments were up 54 percent year over year, with Apple having shipped an estimated 2.7 million devices in the third quarter of 2017. Apple's jump in shipments wasn't enough to make it the top wearable vendor, however, with that title going to Xiaomi. 

Xiaomi shipped an estimated 6.9 million wearable devices during the quarter, giving the company 21.5 percent market share, while Apple came in at 13.1 percent market share. Fitbit trailed Apple in the number 3 slot with an estimated 3.5 million wearable devices shipped.

Another Huge US Crude Oil Inventory Build -- Up Another 5 Million Bbls -- Despite A Forecast For A 2-Million-Bbl Draw -- December 4, 2018

I will be placing two recent posts in "draft" status -- taking them off the net for now, so that Bakken-specific posts are at "the top" while I'm off the net.

I will re-post those non-Bakken posts later.

US crude oil inventory reports, API: link here, posted, 3:30 p.m. CT. "Surprising build in inventories." Am I missing something here?

• What's so surprising about this? 
• it was reported earlier today that three OPEC countries significantly increased exports last month
• Trump's "bait and switch" on the Iranian sanctions resulted in a huge export glut
• Trump wants gasoline prices to go lower -- Saudi over the bbl with Khashoggi killing -- reported earlier today in Financial Times
• gasoline demand is well off the demand last year at this time 
• the Bakken -- as a proxy for the shale revolution -- is setting all-time production records despite 2,000 wells off-line 
• the Permian is yet to hit its stride
• that build? It was huge. A whopping 5.36 million build 
• forecast: a 2.267 million draw 
• that's a swing of over 7 million bbls -- and in the wrong direction for oil bulls

WTI: after the news -- down a paltry 36 cents though oilprice "oil prices sink" after release of API inventory data; but if EIA confirms a whopping build tomorrow, "Katy, bar the door."

Regular, unleaded gasoline down to $1.83 here in Texas; rarely; generally about $2.09; in our neighborhood, $2.29.

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By The Way, Speaking Of Hyperbole

Is it just me or is all that talk about a huge oil find off Guyana that big a deal? I really don't know. Everyone seems to think it's a big deal. Motley Fool has a story today saying that the Exxon Guyana discovery keeps getting bigger and bigger. I don't know if today's Motley Fool story is a note about a previous discovery or if this is another discovery. Whatever.

By 2025, Exxon says its partnership with Hess and China's CNOOC should be able to produce 750,000 bbls oil per day. North Dakota is coming close to producing twice that much on a daily basis, and its production is significantly constrained. Unfettered, the Bakken could produce over 2 million bopd. And they say the Permian is a whole lot bigger than the Bakken. Which means the Guyana discovery is ... well, maybe not that big in the big scheme of things. Again, I don't know. But it certainly seems "Guyana as an elephant field" is becoming a meme. Or a trope. Or a cliche.

Exxon says the jointly held acreage position off Guyana could hold more than 5 billion bbls of recoverable oil. The Bakken is likely to greatly exceed that. We're just waiting with bated breath for the next USGS survey of the Bakken which seems to be moving with glacial speed.

But it is, what it is.