Statoil Reports A Very Nice Banks Field Well -- August 16, 2016

Active rigs:

	8/16/2016	08/16/2015	08/16/2014	08/16/2013	08/16/2012
Active Rigs	32	74	194	182	200

No wells coming off the confidential list Wednesday.

Three new permits:

• Operator: Sinclair Oil & Gas
• Field: Robinson Lake (Mountrail)
• Comments:

One producing well completed:

• 29683, 3,895, Statoil, Richard 8-5 7H, Banks, on a multi-well pad, t7/16, cum --

Zavanna has temporarily abandoned three Sigurd wells in Williams County.

The other wells on two pads in the immediate area of #29683:

• 29685, 2,068, Statoil, Richard 8-5 XW 1TFH, Banks, 41 stages, 6 million lbs, t7/16, cum --
• 29684, 2,052, Statoil, Cheryl 17-20 XW 1TFH, Banks, 40 stages, 5.8 million lbs, t7/16, cum --
• 29683, see above,
• 29612, SI/NC, Statoil, Cheryl 17-20 7H, Banks, no production data,
• 29682, SI/NC, Statoil, Richard 8-5 3TFH, Banks, no production data,
• 29681, SI/NC, Statoil, Richard 8-5 8TFH, Banks, no production data,
• 29611, SI/NC, Statoil, Cheryl 17-20 8TFH, Banks, produced 5K over first 30 days, not fracked;
• 29680, SI/NC, Statoil, Richard 8-5 5H, Banks, no production data,
• 29610, SI/NC, Statoil, Cheryl 17-20 5H, Banks, no production data,
• 32289, SI/NC, Statoil, Cheryl 17-20 1H-R, Banks, no production data,

• 22322, 4,630, Statoil, Cheryl 17-20 2TFH, Banks, 39 stages, 4 million lbs, t4/13; cum 223K 6/16;
• 21815, 4,680, Statoil, Richard 8-5 1H, Banks, 42 stages, 4 million lbs, t4/13; cum 283K 6/16;
• 21814, dry, Statoil, Cheryl 17-20 1H, Banks, casing collapse

George Carlin On CAVE Dwellers; SeekingAlpha Contributor On The Eagle Ford -- August 16, 2016

For now, just this (strong language, it's George Carlin, after all):

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Would George Carlin Still Like The Eagle Ford?
Actually I'm Not Sure He Would Like Anything

From a SeekingAlpha contributor.

Summary:

• New highs brought new found confidence to oil producers and a sense of relief that the oil market was headed towards recovery.
• Producers in the condensate window of the Eagle Ford could still be facing differentials as high as $15/Bbl behind WTI.
• The two main drivers of the lack of activity in the Eagle Ford are crude quality and capital scarcity. 

As one of the basins with premier acreage and economics, one would expect the Eagle Ford to see an increase in activity with the rise in prices. However, the Eagle Ford has fallen out of favor with the market despite improving well performance and declining costs. The two main drivers of the lack of activity are crude quality and capital scarcity.

Much more at the link, including a great "stratigraphic" of the Permian. 

Idle Chatter: Warren Buffett, BNSF, Apple, The iCloud, And All That Jazz -- August 16,2016

From February 6, 2014:

About the same time, literally, about the very same time the Legacy Fund was being put together, this news story from The Los Angeles Times:

Billionaire investor Warren Buffett's $34-billion acquisition of railroad giant Burlington Northern Santa Fe Corp. is the biggest bet yet on a U.S. economic recovery, one that could resonate from the international sea lanes to the railroads crisscrossing the country.

Burlington Northern is the nation's largest rail transporter of coal and grain and provides a vital link for consumer goods from Asia to the Midwest, many of them flowing through the ports of Long Beach and Los Angeles.

"It's an all-in wager on the economic future of the United States," Buffett said in a statement announcing the deal Tuesday. "I love these bets."

I have since read that "the all-in wager" was not an exaggeration. Apparently, the purchase of the Burlington Northern could have broken Berkshire Hathaway.

I remember that interview: 

"It's an all-in wager on the economic future of the United States," Buffett said in a statement announcing the deal Tuesday. "I love these bets."

I was reminded of that story, that interview, when I happened to note that Union Pacific Railroad announced today an increase in its dividend, payable in February. I didn't think much about it at the time; I just posted it. [It may be just me, but dividend announcements seem to be coming more frequently in energy-related companies lately. I'm thinking of Marathon, PSX, Apache, and now UNP, which I think of an energy-related company.]

So, how did Warren's "all-in wager" turn out?

From Bloomberg just a few months later, November 10, 2014:

Days after Warren Buffett announced his $26.5 billion buyout of railroad BNSF, he insisted that he’d paid a steep price to own a business that would benefit his company, Berkshire Hathaway Inc., over the next century.

“You don’t get bargains on things like that,” he said in a November 2009 interview with Charlie Rose that aired on PBS. “It’s not cheap.”

Five years later, that assessment rings a bit hollow. Buoyed by an onshore oil boom, BNSF has become a cash machine for Buffett. The railroad had sent more than $15 billion in dividends to Berkshire through September 30, 2014, according to quarterly regulatory filings, the latest of which was released last week.

More stunning: The business is on pace to return all the cash Buffett spent taking it private by the end of this year.

Annual revenue at the railroad has risen 57 percent, and earnings more than doubled to $3.8 billion since Buffett bought it. Sales have climbed even as BNSF faced increased public scrutiny over service delays and safety.

“He stole it,” said Jeff Matthews, a Berkshire shareholder and author of books about the company. “He’s got to feel really good that he bought it when he did, because it’s a wonderful asset, and it’s done nothing but get more valuable in the time that he’s owned it.”

The railroad’s profit continued its climb in the third quarter as revenue from agricultural and industrial shipments, including oil, rose. The business accounted for more than a fifth of Omaha, Nebraska-based Berkshire’s net income in the period, according to a November 7, 2014, regulatory filing.

Buffett is "fun to watch." He's unpredictable. For someone who says he doesn't understand technology and who says he tends to stay away from technology companies, recently we learn that he has increased his holdings in Apple. Significantly.

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Idle Chatter

The preceding all came about because of a sidebar e-mail conversation I've been having with an investor who is a whole lot smarter than I am. I told him that I am shifting my investment strategy a bit. That led to a discussion on Warren Buffett and NOV.

My reply to the reader's note to me:

Yes, but again, I think there are too many oil service companies that are great candidates -- with my luck I'd start investing in Weatherford, and BRK would buy NOV or vice versa. That's true in other sectors as well, but there are so many oil service companies. I could even see him buying BHI after it got so beat down after failed merger.

And with his interest in pipelines, WMB seems an incredibly interesting target.

• NOV: $13 billion
• Weatherford: $5 billion
• BHI: $22 billion
• WMB: $20 billion

BNSF cost Buffett $26 billion (or $34 billion -- see above) and at the time, I believe he said that was almost "betting the farm" on one company. I think he said it was a bigger deal than he felt comfortable with or something along that line.

So, BHI and WMB would be similar risks with less reward than BNSF.

NOV seems a bit less expensive in comparison and would still be big enough to get his name on the front page of business sections of newspapers. Which he likes.

Weatherford: if under consideration, he would have his secretary make the decision.

I did this quickly so hopefully the market caps are correct. But when I look at those four and look at Buffett's energy holdings, and recent WMB history, WMB looks very, very enticing. That TRANSCO pipeline from Texas to the Northeast or vice versa, alone, must get Buffett excited.

This is, of course, not ready for prime time. It is simply idle chatter, throwing some stuff around while drinking virtual coffee at the iCloud Cafe, 100 Heavenly Way, PSR J1302-6350.

Note: this is not an investment site. Do not make any investment, financial, travel, job, or relationship changes or decisions based on what you read here. Do not put down any money with Virgin or SpaceX for a trip to the iCloud Cafe. If any of this stuff is important to you, and I doubt that it is, go to the source. 

Midland Basin Data Points With New Acquisition -- August 16, 2016

Updates

August 17, 2022: NOG's bolt-on acquisition in "core area" of the Midlland; Howard County, TX.

January 10, 2017: update on Permian valuation, Midland, Southern Delaware = $26,000 / acre.

November 18, 2016: largest "continuous" oil discovery ever made in the United States.

Geologists say a new survey shows an oilfield in west Texas dwarfs others found so far in the United States, according to the US Geological Survey.

The Midland Basin of the Wolfcamp Shale area in the Permian Basin is now estimated to have 20 billion barrels of oil and 1.6 billion barrels of natural gas, according to a new assessment by the USGS.

That makes it three times larger than the assessment of the oil in the mammoth Bakken formation in North Dakota. The estimate would make the oilfield, which encompasses the cities of Lubbock and Midland -- 118 miles apart -- the largest "continuous oil" discovery in the United States, according to the USGS. [To put the 20 billion bbls of crude oil in perspective, it is estimated by some that the Bakken has 50 billion bbls of recoverable crude oil by primary production.]

Original Post

 

The Midland Basin is a "component" of the Permian Basin. I will add "Midland Basin" as a separate link at the sidebar at the right, which will link to this page in the future.

[By the way, a 3-part series on the Midland/Permian: http://themilliondollarway.blogspot.com/2014/12/the-permian-geologic-overview-december.html.]

Link here.

Parsley Energy Inc., Austin, has agreed to acquire undeveloped acreage and producing oil and gas properties in Glasscock County, TX, along with associated mineral and overriding royalty interests, for $400 million in cash.

The assets cover 9,140 net acres near existing Parsley leasehold, with estimated current net production of 270 boe/d from 67 gross (60 net) vertical wells.

The acreage features 215 net horizontal drilling locations in the Lower Spraberry, Wolfcamp A, and Wolfcamp B formations, based on 660-ft between-well spacing, with an estimated average lateral length of 7,500 ft. Average working interest from the identified drilling locations is 92%.

Separately, the firm says its first producing horizontal well on its Glasscock County acreage acquired in May has shown encouraging results. The Dwight Gooden 6-7-01AH well, 2.5 miles west of the acreage to be acquired, completed in the Wolfcamp A interval with a 5,890-ft stimulated lateral, registering a peak 30-day initial production rate of 1,161 boe/d, or 197 boe/d/1,000 stimulated ft.

Normalized to 7,000 lateral ft, the well is outperforming the firm’s 1 million boe EUR type curve for Midland basin Wolfcamp A/B wells by 10% after almost 90 days of production, generating 82% oil during that timeframe.

Note:

• $400 million / 9,140 net acres = $44,000 / mineral acre
• short laterals
• 660-foot spacing
• 82% oil 
• outperforming the firm's 1 million boe EUR type curve

Norwegian Oil Production Highest In 5 Years; Consumer Prices Unchanged Month-Over-Month; Decline In Fuel Costs, Airlines, Etc., Offset Costs For Medical Care Which Showed Biggest Increase Since February; Chariots On Fire; 32 Active Rigs In North Dakota -- August 16, 2016

Active rigs:

	8/16/2016	08/16/2015	08/16/2014	08/16/2013	08/16/2012
Active Rigs	32	74	194	182	200

RBN Energy: Marcellus / Utica takeaway capacity to the southeast. The series continues.

Venezuela update. From Reuters / Rigzone:

Venezuela, which holds the world's largest crude reserves, is on track to suffer its steepest annual oil output drop in 14 years as it suffers the effects of an economic crisis and years of under investment and mismanagement, according to data seen by Reuters and interviews with company sources and workers.

The state-run oil company, Petroleos de Venezuela (PDVSA), is struggling to stem a production decline that has accelerated this year as a result of payment delays to suppliers, lack of investment in equipment, and poor planning in the country's vast oil fields.

In the 12 months to June, Venezuela's crude output fell 9 percent to 2.36 million barrels per day (bpd), while the Organization of Petroleum Exploration Countries (OPEC) has boosted its output by 4 percent, according to the group's official figures.
Venezuela's oil minister and PDVSA president, Eulogio Del Pino, last month confirmed a 220,000-barrel-per-day production decline -- around 8 percent -- so far this year compared with 2015.

Norway. July oil production highest level in five years. Why? Because many fields are producing "above prognosis." Oil output was 10% above July, 2015, and about 18% higher than the previous month. Norway produces about 1.7 million bopd, up 300,000 bopd in the past couple of months.

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The Market

Closing: market down 53 points. NYSE --

• new highs: 86, Enerplus,
• new lows: 3 (somewhat surprised)

Mid-day trading: Market down 65 points. Chariots on fire: Tesla cooperating with French authorities investigating car fire. 

Opening. Some profit taking. Market down 40 points.

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Health Costs Surge In July
And 2017 ObamaCare Premiums Are Yet To Be Set

 
US consumer prices unchanged in July as fuel costs ease. In the small print -- which could have been in the headline -- costs for medical care showed biggest increase since February.

It was the first time in five months the consumer-price index failed to advance and followed a 0.2 percent gain in June, Labor Department figures showed Tuesday in Washington. Excluding food and energy, prices rose 0.1 percent, less than projected. 

Inflation continues to tread below the Fed’s goal as U.S. companies remain challenged by frugal consumers and competition from cheaper goods made overseas. With price pressures elusive, central bankers will be less willing to raise borrowing costs.

This has nothing to do with "frugal" consumers. They are tapped out with rent increases, medical expenses and healthcare premiums. And monthly telecom bills.

The biggest slump in hotel room rates in eight years and the largest drop in airline fares since July 2015, offset continued rent increases, which had been propping up core consumer prices. Medical care costs rose 0.5 percent, the biggest gain since February.

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Aetna Pulling Out Of ObamaCare Has Legs

Now, over at USA Today: Aetna's exit deals blow to ObamaCare, patients.

The insurer blamed heavy losses for the move. In doing so, the company suggested that too many sick people are buying plans, not enough healthy people are paying premiums to make up for it and the government isn't making policy changes to fix it.

But the U.S. Department of Health and Human Services says that it has implemented new regulations to make the exchanges more appealing to insurers. For example, HHS says new rules make it more difficult for Americans to abuse the system by buying insurance when they need it and dropping it when they don't, which is illegal and extremely unprofitable for insurers.

"They did respond to some degree," but insurers are "not satisfied" with the moves, said Marianne Udow-Phillips, director of the Center for Healthcare Research & Transformation at the University of Michigan, in an interview.

One more step toward "the public option" (i.e., the USNHS).

 *********************************

Racial Wealth Divide 

Yahoo!Finance is reporting:

The report finds that over the past 30 years, the average wealth of white families grew by 84%, which is 1.2 times faster than the average rate of growth for Latinos, and three times the rate of growth for blacks. By 2044, when America becomes a majority-minority country, the wealth gap between white families and black families will double.

By 2044, America will be a majority-minority country, meaning that whites will only make up 49.7% of the population. Current minorities like Latinos, African Americans, Native Americans and Asians will soon make up a majority of the American populace.

It will take black families around 228 years, and Latino families 84 years, the report estimates, to achieve the same average wealth white families have today.

What do the experts blame this on? The housing bubble.

I would add that burning down your own neighborhood doesn't exactly help.

I don't know about you, but "the housing bubble" wasn't the first thing I thought of when I saw the headline, racial wealth divide. And when you look at the graph, there is nothing to suggest that the "housing bubble" disproportionately affect non-whites.

Suggested solutions by the author or experts:

• reforming the tax code
• appointing a wealth tsar 

I'm thinking, maybe, reparations would work, also.

If you really want to see the "racial wealth divide" widen, ban fracking and watch what happens when Saudi Arabia / OPEC are back in the driver's seat.

Another incredibly superficial article based on a single graph, a single data point.