Monday, Miscellaneous -- April 13, 2015

Golf is back.

Jimmy Johnson wins.

Apple sells out of its Apple Watch in six hours; one million on-line orders placed. Many won't get their watches until May or June. Some will be waiting until July. And the watch hasn't even gone on sale yet; those were pre-orders. The watch goes on sale April 24th.

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Yemen.

The lead story above the fold in today's WSJ: US widens role in Yemen conflict. The US and Saudi Arabia are at odds on how the fight should be fought. I doubt Saudi is taking much advice from President Obama. If anything, the Saudis are re-reading his "Arab Spring" speech he gave in Cairo some years ago.

News of Obama's fourth war (Iraq, Afghanistan, ISIS being one, two, and three) continues on page A6 and dominates the entire page of "World News." The first story: US moves to step Iran arms flow to Yemen. The second story on that page: Saudis deny fighting proxy war with Tehran. Every story on page A6 has to do with Yemen. The third story: Pakistan's decision to stay out of Yemen is causing a cleavage between the country (Pakistan) and its traditional allies in the Gulf, as the Yemen crisis begins to remake alliances across the Muslim world. And just a few months ago, Yemen was President Obama's poster child for Muslim countries that "go democratic."

Saudi Arabia is going to spend a lot of money defending itself. They can count on the US Navy to protect their sea lanes (or can they?) but they know they have to fight their own wars on the peninsula. Of course, while keeping the Houthi rebels hunkered down, Saudi Arabia will be putting together an Arab army (at Saudi's expense) to begin the ground offensive.

And that's the southern front. On the east, Iran; and, in the north SyriaIran (or is is IranSyria?).

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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.

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For Investors

COP

From Seeking Alpha:

For a major E&P company, ConocoPhillips  has grown production substantially faster than its peers since the company's spin-off in 2011. 

Previously, management had a plan of 3%-5% overall production growth and 3%-5% margin growth between 2013 and 2015. Then crude oil prices halved and Conoco has had to rethink its strategy for the last year of its plan. 

On last week's annual analyst day presentation, Conoco unveiled a new three year plan which reflects the current reality of commodity prices, and builds on the operational successes of the past three years. Conoco's new 'three-year plan' involves several major bullet point goals: Increase cash flow margins from $22 per barrel (in late 2014) to $25 per barrel by 2017, achieve cash flow neutrality by 2017 assuming $75 Brent and $70 WTI and production growth of 2%-3% with a continuing shift toward liquids and away from gas. Late last year Conoco announced a new, much-reduced capital spending regimen of $11.5 billion, down from $16 billion in 2014. On last week's analyst day presentation, management reaffirmed that capital expenditure guidance would be in the new 'three-year plan.'

An excerpt from COP's analysts' day transcript regarding the Bakken was posted here.

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The Map

Link here.

A reader asked me if I really thought the House of Saud might fall. The short answer: I don't think so.

Having said that, I have made some huge errors in my predictions on the blog, so I may be wrong here also. I don't think the House of Saud will fall (and it certainly won't fall any time soon), but a) nothing lasts forever; and, b) the House of Saud will have some huge new military expenses. In the past, they got away cheap with promised US protection. At one time Saudi Arabia's oil was part of America's national security; not so much any more. Not with the resurgence of the North American energy industry.

I can still connect the dots to seeing a fast-track Keystone XL. Not that such a fast-track is very likely, but I can connect the dots. This link on Motiva Enterprises is a huge dot.

Monday, April 13, 2015

Active rigs:

	4/13/2015	04/13/2014	04/13/2013	04/13/2012	04/13/2011
Active Rigs	93	189	186	208	173

RBN Energy: five Marcellus / Utica midstream players.

MarkWest Energy Partners is clearly the big dog in the Marcellus/Utica, with by far the largest gas processing and fractionation capacity there. But several other significant players in the region--Blue Racer Midstream, Utica East Ohio Midstream, Williams Partners and Pennant Midstream among them—have also been developing the region’s midstream infrastructure, enabling producers to ramp up their output of natural gas and NGLs. Today we continue our review of NGL-related assets in the Upper Ohio River Valley with a look at five additional midstream companies in the hunt. 

Producer interest in the Marcellus in southwestern Pennsylvania and northern West Virginia and in the Utica in eastern Ohio has been rising quickly since 2011--and it’s expected to continue as more take-away capacity for natural gas and NGL comes online, offering producers access to markets as far away as Texas. In our series on the region’s NGL-related infrastructure, we’ve describe the region’s history and hydrocarbon potential generally (in Episode 1) and in more detail (Episode 2). 

Next, (in Episode 3) we discussed the eight major pipelines that move natural gas through and out of the region; considered the gas processing and fractionation assets of MarkWest (Episode 4 and Episode 5); and described the pipeline interconnections between MarkWest’s eight (and soon nine) gas/NGL complexes in the region—and then explained how the elements of MarkWest’s “machine” are designed to function efficiently, even in the event of NGL-takeaway disruptions (Episode 6). In our last blog in this series, we started our look at other providers of midstream services in the Marcellus/Utica by considering the assets of Blue Racer, a joint venture of Caiman Energy II and Dominion (Episode 7). This time, we look at the remaining players in the region and list their gas processing plants, fractionators, and NGL pipelines that link those facilities to the outside world.

In addition to its 49% stake in UEO (thanks to its February 2015 merger with Access Midstream), Williams Partners owns 100% of Appalachian Midstream, which operates (and owns between one-third and two-thirds of) 11 natural gas gathering systems in the Marcellus—some in the dry-gas part of the Marcellus in northeastern Pennsylvania and some in the wet-gas part in southwestern Pennsylvania and northern West Virginia. Appalachian Midstream also owns the gas processing plants and pipelines shown in the southeastern part of Figure #1 [at the linked article]. The company’s 700 MMcf/d of gas processing capacity is split between two sites in Marshall County, WV--500 MMcf/d at Fort Beeler and 200 MMcf/d at Oak Grove—that together can produce up to 87 Mb/d of mixed, y-grade NGLs (blue dots). Its fractionation assets include a 40 Mb/d de-ethanizer at Oak Grove (green dot); the residual mixed NGLs then is fractionated at Williams’ 42 Mb/d C3+ fractionator at Moundsville—also in Marshall County (orange dot). Ethane separated out at Oak Grove is delivered to market via Williams’ 50-mile, 12-inch-diameter Ohio Valley Ethane Pipeline (OEVP, green line) from Oak Grove to MarkWest’s NGL hub at Houston, PA (shown in black since it is not owned by UEO). From there, ethane can flow into Mariner East, Mariner West and/or ATEX. 

We should note that Williams Partners holds a 58% stake in Caiman II, which owns half of Blue Racer. In Episode 7 we covered how Blue Racer moves ethane from its Natrium complex to Oak Grove via a 15-mile (Blue Racer-owned) ethane-only pipeline, and that from there the ethane moves to Houston (PA) via Williams’ OEVP.

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NOG

NOG press release: Northern Oil and Gas, Inc. today announced that its bank syndicate group reaffirmed and maintained the existing $550 million borrowing base under Northern's revolving credit facility during the semi-annual redetermination period.

Comment: this is in-line with earlier posts on "redeterminations."

Wait Until "They" Attack A Saudi Oil Field -- April 12, 2015

According to the WSJ, Iraq now joins Syria and Yemen as failed states. It gets worse. The Telegraph is reporting:

Islamic State militants on Saturday launched suicide attacks against the Baiji oil refinery, Iraq's largest, a senior army officer said. 

The jihadist group claimed it broke in but the Iraqi army said the site, which has been the scene of fierce battles since IS swept across the region last year, remained under its control. "Today Daesh (an Arab acronym for IS) launched an attack against the Baiji oil refinery," said a major general from Salaheddin province, in which Baiji is located. 

He described the attack on the refinery, which lies around 200 kilometres (120 miles) north of Baghdad, as "the fiercest since we broke the siege a few months ago."

However this plays out, imagine the reaction when ISIS attacks a Saudi oil field.

Remember that acronym: Daesh.

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Chillin'

Wells Coming Off The Confidential List Over The Weekend, Monday -- April 12, 2015

Monday, April 13, 2015

• 25072, 1,449, Newfield, Sand Creek State 153-96-16-2H, Sand Creek, one section, not the production profile, 30 stages; 1.8 million lbs, t1/15; cum 34K 2/15;
• 28039, 504, OXY USA, William Kubischta 4-11-14H-143-96, Fayette, 40 stages; 3.4 million lbs, total drilling days 15, t10/14; cum 49K 2/15;
• 29156, drill, XTO, Hanson 11X-12A, Murphy Creek, no production data,

Sunday, April 12, 2015

• 26836, 861, WPX, Wolf Chief 27-34HW, Mandaree, t3/15; cum 5K 2/15; only 9 days of production;
• 26933, drl, CLR, Patterson Federal 7-13H, Camp, no production data,
• 28915, 1,194, Hess, EN-VP and R-154-94-2536H-3, Alkali Creek, t3/15; cum --
• 28986, drill, CLR, Bismarck 6-9H1, Brooklyn, no production data,
• 29012, 1,521, XTO, Nelson 24X-11E, Garden, t3/15; cum -- 
• 29155, drl, XTO, Hanson 11X-12E, Murphy Creek, no production data,
• 29388, drl, SM Energy, George 1B-17HN, Colgan, producing? on DRL status but two days of production = 618 bbl.

Saturday, April 11, 2015

• 26389, drl, BR, CCU North Caost 41-25MBH, Corral Creek, no production data,
• 28923, drl, Slawson, Howo 8-33-4TF2H, Big Bend, no production data,
• 29189, 1,896, BR, Ora 32-24MBH, Haystack Butte, t12/14; cum 6K 2/15; only 8 days of production (3 days in December; 5 days in February)
• 29442, drl, MRO, Force 44-20TFH, Bailey, no test date; one day of production = 595 bbls
• 29483, SI/IA, Statoil, Bures 20-29 5H, Alger, no production data,
• 29627, 821/SI, CLR, Mary 1-16XH, Ranch Creek, t2/15 cum 13K 2/15

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25072, see above, Newfield, Sand Creek State 153-96-16-2H, Sand Creek:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	2-2015	28	9698	9766	1055	13989	0	13737
BAKKEN	1-2015	25	24203	23916	4850	38756	0	38756

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Breaking News: 1000's Of Wells Left Unfracked

This is nothing new to those following the US oil and gas industry. 24/7 Wall Street is reporting:

There are roughly 2,500 to 3,500 drilled, but uncompleted oil wells in the U.S. 

As many as 1,400 of those wells are located in the Eagle Ford shale play in south Texas. 

In February EOG Resources Inc said it would delay a significant number of well completions and plans to close out 2015 with 285 uncompleted wells, up from 200 at the end of 2014. 

Continental Resources Inc., Apache Corp., and Anadarko Petroleum Corp.have also said that they plan to delay well completions until crude oil prices pick up again. 

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Global Oil

I don't think there's anything new in this article that regular readers are not away of, but it has a number of interesting data points.

From this weekend's edition of the WSJ:

Saudi Arabia is struggling to maintain its share of the global oil market in a contest that pits the world’s largest crude exporter against traditional allies in the U.S. and Persian Gulf. 

The Saudi kingdom’s oil exports declined 5.7% in 2014 compared with 2013. Oil shipments to its fastest-expanding customer, China, reached their lowest levels since 2011 in the first two months of 2015, according to the China General Customs Administration. And its U.S. sales nearly halved in January compared with a year earlier, according to the U.S. Energy Information Administration. China and the U.S. are Saudi Arabia’s biggest importers, with 10% and 8%, respectively, of the kingdom’s production. 

The assumption: Saudi Arabia, with its vast reserves of inexpensive-to-produce crude, would be well-positioned to maintain market share and even get new customers after Brent crude-oil prices fell below $50 a barrel early this year from highs of $115 in 2014. On Friday, Brent crude settled at $57.87, up 2.3% on the day. 

Instead, the kingdom has been forced into a fight with OPEC members, cutting its selling price to Asian customers six times in nine months. But Russia and Saudi Arabia’s Persian Gulf allies have outmaneuvered it, cutting better deals with Chinese, Indian and European refineries, industry analysts said. Kuwait, for instance, boosted its exports by signing a 10-year supply deal last year with China’s largest refiner, China Petroleum & Chemical Corp., known as Sinopec. 

The competition could intensify as Persian Gulf countries like Kuwait and the U.A.E. move to boost production to keep market share as global energy demand is expected to rise in the next decade. 

Saudi Arabia’s share of total world output of crude oil fell slightly in 2014 compared with 2013, from 10.3% to 10.2%, according to the International Energy Agency, a Paris watchdog.

Much, more at the link.

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Muscle Shoals

A reader recommended the DVD Muscle Shoals. I ordered it from Amazon a few days ago; the US Postal Service delivered it today -- on a Sunday. It is an incredibly good documentary. I did not know about Muscle Shoals; makes me wonder how I could miss something so big. "Everybody" recorded here, including the Rolling Stones, Aretha Franklin, Linda Ronstadt, Bob Dylan (his first grammy), Lynyrd Skynyrd, Alabama, and the list goes on and on.

A huge "thank you" the reader for the recommendation.

The Dickinson Press Has Another Story On Man-Camps -- This Time One Out East -- April 12, 2015

Link here.

Over the years it's been interesting to see how various news outlets spin a story, something I did not pay attention to until I started blogging.

This is how different news outlets would report this story:

The Williston Herald: would ignore the story entirely; a man-camp? The city has been there, done that, and is now looking at a $500 million shopping hub to be built by a Swiss company; and then the newspaper would get back to sports. 

The Wall Street Journal: huge fertilizer factory to be built in eastern North Dakota; to take advantage of cheap labor, energy; will provide more jobs than the Obama stimulus program; will take 3 years to build; will require significant new housing; huge impact on local economy. 

The Atlantic Monthly: what happened to Poppers' proposal for converting North Dakota to a buffalo commons? 

The New York Times: should Hillary Clinton visit North Dakota? 

Drudge Report: Minnesotans See More Opportunity In Neighboring State

The Dickinson Press: OMG! It's another man-camp proposal!

In case the link to the story breaks:

While the man camps in the Oil Patch are just 330 miles west of Grand Forks, they seem like part of a different world to many people in eastern North Dakota. 

But with 2,000 workers expected in Grand Forks for construction on the planned $1.85 billion Northern Plains Nitrogen fertilizer plant, the need for some sort of temporary labor housing — commonly called man camps or crew camps — in Grand Forks is likely, city officials say. 

Feland and a city planner said any man camp in Grand Forks would be different from what is in the Oil Patch in the sense that it will be more limited and more temporary. 

“It’s not going to look like what you see out west,” Deputy City Planner Ryan Brooks said. 

But University of North Dakota researchers studying man camps said they expect to see many similarities between a crew camp in Grand Forks and those in Williston and other western North Dakota towns. 

“It won’t be different in the sense that every type of workforce housing that exists in the world exists in Williston,” said Bill Caraher, history professor at UND and part of the North Dakota Man Camp Project, which has researched man camps in the state for about three years. Any type of man camp that may end up in Grand Forks is already in the Oil Patch, he said.

That's the best line in the entire article:  “It won’t be different in the sense that every type of workforce housing that exists in the world exists in Williston."

The Bakken was (and still is) a great laboratory for the oil and gas industry.

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Lost Credibility

George Friedman, in Barron's, p. 7: "Netanyahu, and by extension, Israel, have lost much credibility ... for a decade or more, Netanyahu has engaged in his Chicken Little art of insisting that Iran is just a year or two away from developing a bomb. Yet, the doomsday never comes.

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GDP In Real Time

From Barron's, p. M1: The Federal Reserve Bank of Atlanta has created GDPNow, an online forecast of its US GDP estimates prior to release.

It's an automated real-growth estimate, updated in real time, that tracks 13 components of GDP growth  as they're reported. The project goes back only to the second half of 2011, but in seven quarters from late 2011 to early 2014, its accuracy beat flesh-and-blood economists 5 out of 7 times, with one loss and one tie. The model is especially good when the expected growth is less than 1%.

In 2015's first quarter, GDPNow sees 0.1% growth. If correct, that would startle human economists, who expect 1.5% to 2.0%.