Monday, July 30, 2018

Bakken Casualties -- Motorcylcists -- July 30, 2018

Another motorcycle fatality in western North Dakota, this one near Killdeer. I think this is the fourth motorcycle casualty reported in the Bakken in the past month. Link at The Bismarck Tribune.

Disclaimer: this is not an investment site. 

So, how's the market doing today?
  • Dow: down about 46 points; other indices also in the red; NASDAQ down 1%
  • WTI: drops back below $70, but still up 1.86% for the day
  • CVX: up 1.31%
  • COP: up 1.26% -- I still highly recommend folks read the most recent COP earnings transcript to learn more about the Bakken;
  • OAS: up 1.85%, but off it's recent highs
    NOG: up an astounding 4.46%, now trading near $3.40
  • SRE: flat;
  • Chesapeake: surges after announcement to sell assets in the Utica;
  • AAPL: down about a percent; going into tomorrow when earnings reported after-hours;
    TSLA: well below $300 -- the threshold at which traders get back into this trading stock; now, below $290 and it continues to drop; now down about 3%; volume? way down; traders waiting? certainly reminiscent of share price action, March - April, 2018; one wonders if the June, 2017, peak was "too far, too fast"? trading range since then, but recent trend concerning for those with large positions in TSLA
Disclaimer: this is to an investment site. This is the same idle chatter I would have if I were at the "deli" in Williston, ND.

What else? How are the pipelines doing? Most of which I've lost interest in.
  • ENB: up a percent; paying just under 6%;
  • EPD: down a percent and a half; paying 6%;
  • ETP: up 1.3%; paying almost 12%;
  • TransCanada (TRP): flat, paying 4.8%;
  • KMI: down about 3/4th percent; paying 4.4%
  • WMB: up 1.6%; paying almost 5%; enters the DJ, exits the Four Corners Area;
Others:
  • BRK-B: up about half a percent
  • UNP: up about a quarter percent
  • CAT: up 1.3%
  • DE: down a quarter percent; well off it's 52-week high; a buying opportunity? a P/E of 25;
Stock picker's market.

Watch: CBS -- we've seen this movie so many times, it's an open-book test.

10-year bond: under 3% but just barely
TSLA bonds: just bounced off "threshold" of "88"

*******************************
Speaking of Casualties: Netflix In Free Fall

A reader spotted this some weeks ago.

Disclaimer: cause and effect has not been proved.

Netflix announces that former-President Obama has signed with the network.

Netflix is now in free fall.


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QEP Re-Fracks Its MHA Wells In Deep Water Creek Bay -- July 30, 2018

For newbies: I've always maintained the number of rigs in the Bakken was irrelevant with regard to the amount of production (do not take that out of context). For me, the purpose of tracking the number of wells was that it was a good indicator of the amount of activity in the Bakken. The other reason, of course: everyone tracks rig count, even if it really doesn't matter any more. LOL.

I digress.

If folks have been paying attention, the number of rigs in the Bakken has actually been decreasing these last couple of weeks after hitting a recent high of 70. And yet, we are going to see new production records for the next several months. What's going on? Re-fracks. And re-fracks are not reflected in rigs counts.

I assume QEP has been re-fracking for awhile; I don't know. But now we have some examples of QEP re-fracking. This was in a field not often followed by me. I will have to go back and check QEP's "Helis Grail" field. [Later: yup. QEP has begun re-fracking in the Bakken. Link here to Grail oil field.]

The well:
  • 20271, 592, QEP, MHA 5-13-14H-150-91, Deep Water Creek Bay, API - 33-055-00142; t12/17; cum 231K 5/18; no report of the re-frack in the file report, but at FracFocus, 10/16/17 - 10/25/17; 6.6 million gallons of water; 85% water;
Production profile:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN5-201824729372621034840562191801
BAKKEN4-20183010172102591387951203599362
BAKKEN3-20181660885866908535642160690
BAKKEN2-2018238117821011207480924071301
BAKKEN1-201831117121160026148751023853649
BAKKEN12-201731134741342240361880810476690
BAKKEN11-2017227098699147916445504163
BAKKEN10-20170000000
BAKKEN9-201772421956776760
BAKKEN8-2017316716702323213210
BAKKEN7-2017318688652878764551
BAKKEN6-2017293453349469974217
BAKKEN5-2017318869202276709242
BAKKEN4-2017304844634276382300

And I find this interesting. This well is pretty isolated. There are only three horizontal wells in this drilling unit.
  • 20271, above
  • 19683, on the same pad, and paralle with #20271, also re-fracked; 766, QEP, MHA 2-13-14H-150-91, Deep water Creek Bay, t12/11; cum 231K 5/18; huge jump in production; same profile as above;
  • 17940, a bit farther south on a separate two-well pad, also re-fracked, 1,217, QEP, MHA 1-13-14H-150-91, t1/10; cum 367K 5/18; production profile:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN5-20183111676117907444493526771011
BAKKEN4-20181968166562885326891733248
BAKKEN3-20181966906982595337352202670
BAKKEN2-20182491058923948048333508390
BAKKEN1-201830150351533916952835138343937
BAKKEN12-201731191391869737343908434575219
BAKKEN11-20171545194206418010850854
BAKKEN10-20170000000
BAKKEN9-2017624125216913491981151
BAKKEN8-20173114361446848105410540
BAKKEN7-20173115321588918166112382
BAKKEN6-201730165916659132095792895
BAKKEN5-2017311792175496920993211357
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QEP Begins Major Refrack Program In The Bakken -- July 30, 2018

Link here to Grail oil field.
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For Newbies: The Burr Federal Wells -- July 30, 2018; Meanwhile, CLR's Oakdale Whitman Wells Are Being Re-Fracked

Updates

February 5, 2023: four Whitman wells completed, producing, and now being reported, #38494 - #38497, inclusive.

December 18, 2022: another monster CLR Whitman well has been completed and is now being reported.

July 24, 2022: upwards of a dozen CLR Whitman wells are being fracked.

December 25, 2020: link here. A nine-year-old Whitman well produced in excess of 630,000 bbls of crude oil in the last twenty-six months.

December 19, 2018: updated here.

October 23, 2018: update here.

July 31, 2018: huge mistake on my part regarding the Whitman wells. See comment from reader. Corrections and clarifications have been made -- continue reading.

First correction is easy:

  • 20210, 803, CLR, Whitman 2-34H, Oakdale, API - 33-025-01259; t9/11; cum 1.597 million bbls 8/18; see production profile below; FracFocus: no re-frack; original frack, 24 stages; 2.4 million lbs sand; in addition to the 1.6 million bbls of oil, a cum of 1650315 MCF gas (275K boe natural gas -- so we're talking close to 2 million boe so far; cum 1.794273 million bbls 10/22;
Second correction (not a correction so much as an update): as the reader noted, the original #20212 was not drilled to planned depth and not completed back in 2011 due to downhole issues. Last summer, CLR went back in, drilled to planned depth and fracked the well. From the file report:
  • spud date: January 19, 2011
  • original TD date: April 23, 2011 -- to 13,681 feet, equivalent to a short lateral
  • re-entry date: July 5, 2017
  • TD date: July 8, 2017 (only three days to drill to depth after re-entry)
  • TD: 21,230 feet
  • an Upper Devonian Three Forks well within the Rocket prospect
  • introduction: Well drilling operations ceased on April 23, 2011, after dangerous levels of oil and gas pressure rendered further drilling unwise at the time. The well has been in production in its incomplete form (13681' MD reached, open hole, no fracking) since that time and has produced approximately 120,000 bbls of petroleum.  
  • this report primarily concerns re-entry drilling information only, as complete data from the original drilling was generated by a different mud-logging company and is at points incomplete. Where available, salient points from the original drilling events have been included.
  • the well plan ... three scenarios were foreseen ... the rig operators prepared for all events, the high-pressure scenario being the most dangerous, but likely manageable...
  • original (back in 2011) drilling efforts ceased at 13681' MD for high (dangerous) levels of oil and gas pressures. As of 2017, these were deemed low enough for re-entry to attempt drilling to the originally planned TD point, hopefully to produce at least moderate amounts of oil, as indicated by original production levels.
  • background gas levels were initially 600 - 1200 units with circulation through the gas buster, which was activated after the first trip gas at 10,000 units. This well had been hard to control when the first segment was drilled in 2011, so all precautions for safety and control were observed.  
  • gas increased to 1800 - 2200 units at 17500' MD, when the formation took a relatively sharp turn and then rolled over, similar to the structure observed from the initial segment and may have signaled a fracture and/or stratigraphic trap of less, but still significant, production as the first one.
  • the Upper Devonian Three Forks formation was intercepted at 11596' TVD ( ~ 8618' SS).
  • it was determined initially that the ideal target would be approximately 15' thick, beginning 15' below the Three Forks top, and extending to 30' below the same reference point.
Original Post 

A reminder: the Burr Federal wells are being updated now that they are coming back on line after being off line while neighboring wells were being re-fracked. See this post. Other than a few exceptions, the older wells are showing an incredible jump in production after coming back on line. Two examples are given at the link. Truly amazing. Whether these wells are being re-fracked or not, I have not checked. At this point, at least for me, machts nichts; it hardly matters what explains this; it is a huge "win" for mineral owners, and the state of North Dakota.

**************************
Meanwhile, Is Something Going On With CLR's Whitman Wells?
Yup: A Re-Entry And Frack Of A Well That Was "Aborted" Back In 2011 Due To Dangerous Gas Levels

Section 34-147-96, Oakdale oil field; only three older wells sited in this section. One was off-line for a few months recently and is now back on line; the other two are now off line. FrackFocus will be checked.

The wells:
  • 17061, 664, CLR, Whitman 11-34H, Oakdale, API - 33-025-00723; t6/08; cum 452K 8/18; see production profile below; FracFocus: no re-frack; 6/21; taken off line 9/21 when lots of activity in this area; remains off line 7/22; back on line 8/22; huge jump in production; cum 502K; cum 586K 10/22; see this note; off line 10/22; cum 586K 10/22;
  • 20210, 803, CLR, Whitman 2-34H, Oakdale, API - 33-025-01259; t9/11; cum 1.597 million bbls 8/18; see production profile below; FracFocus: no re-frack; original frack, 24 stages; 2.4 million lbs sand; in addition to the 1.6 million bbls of oil, a cum of 1650315 MCF gas (275K boe natural gas -- so we're talking close to 2 million boe so far; [Update: this well went off-line 9/17, and did not come back on line until 8/18; in 8/18, only four days of production of 2,075 bbls which extrapolates to 15,000 bbls in one month; cum 1.768492 million bbls crude oil 6/21; off line while neighboring wells are being fracked ccum 1.789484 million bbls crude oil, 3/22; ccum 1.798307 million bbls 12/22;
  • 20212, 482 (1,008 reported on the sundry form), CLR, Whitman 3-34H, Oakdale, Three Forks first bench, API - 33-025-01261; t9/11; cum 181K 5/18; see production profile below; well, isn't this interesting -- yup, this well was fracked 9/23/17 - 10/5/17; 9.8 million gallons of water; 84% water; 15% sand; sundry form in file report: 61 stages; 14.5 million lbs sand; [Update: this well went off line 4/18 and came back on line 8/18; in 8/18 produced 4,731 bbls over 4 days which extrapolates to 35,000 bbls in one month]; interesting profile; see this post; cum 948K 6/21; cum 1,037,348 bbls 1/22; update here; off line while neighboring wells are being fracked cum 1.059338 million bbls crude oil, 3/22; offline for a couple of months; now back on line; cum 1.073319 million bbls 10/22; 1.085820 million bbls 12/22;
  • 38494, drl/A, permitted 8/18/21, CLR, Whitman FIU 7-34H1, Oakdale, reporting, but no production, 7/22; a monster well; t--; cum 88K 10/22; cum 172K 12/22;
  • 38495, drl/A, ermitted 8/18/21, CLR, Whitman FIU-8-34H, Oakdale, reporting, but no production, 7/22; a monster well; cum 119K 10/22; cum 201K 12/22;
  • 38496, 1,396, CLR, Whitman FIU 9-34H2, Oakdale, minimal production, Oakdale, another huge well; t--; cum 55K 10/22; cum 94K 12/2;
  • 38497, 1,446, CLR, Whitman FIU 10-34H, Oakdale, 2K over 7 days which extrapolates 10K over days; Oakdale, another huge well; t--; cum 54K 10/22; cum 82K 12/22;
  • 38613: 2,070, CLR, permitted 10/13/21, CLR, Whitman  FIU 10-34H1, Oakdale, NWNW;; 34-147-96; 543 FNL and 301 FWL; a monster well; cum 129K 10/22;
  • 38532, AL/A, CLR, Whitman  FIU 12-34H2, Oakdale, a huge well; t--; cum 86K 10/22; cum 124K 12/22;
  • 38533, conf, CLR, Whitman  FIU 13-34HSL1, Oakdale, a nice well; t--; cum 46K 10/22; cum 67K 12/22;
  • 38499, 2,432, CLR, Whitman FIU 5-34H, Oakdale, minimal production; a monster well; t--; cum 150K 10/22; cum 231K 12/22;
  • 38500, 1,917, CLR, Whitman FIU 6-34H2, Oakdale, minimal production; a monster well; t--; cum 121K 10/22; cum 190K 12/22;
The graphic:


17061:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN5-201831237822201542695239454
BAKKEN4-20183023712166160272424840
BAKKEN3-201831244023871522619234230
BAKKEN2-20182822942581111225120270
BAKKEN1-201864960403513030
BAKKEN12-2017100011110
BAKKEN11-2017200022220
BAKKEN10-20170000000
BAKKEN9-20177420545306696130
BAKKEN8-20173119722157114305428060
BAKKEN7-2017311982181111529142448218

20210 (a huge, huge well):
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN5-20180000000
BAKKEN4-20180000000
BAKKEN3-2018002210000
BAKKEN2-20180000000
BAKKEN1-20180000000
BAKKEN12-201720019000
BAKKEN11-2017322021100
BAKKEN10-201732380100
BAKKEN9-20171638293858232480047030
BAKKEN8-2017319112914342810829105900
BAKKEN7-20172662576352117685153261380
BAKKEN6-2017309377940633311517112840
BAKKEN5-201731102181010635712107118610
BAKKEN4-2017288004810132793328923220
BAKKEN3-201731101491013731811626113810
BAKKEN2-2017289545944628510713104940
BAKKEN1-20173110635107573501204211508297
BAKKEN12-201631106971058431511582113540
BAKKEN11-201629105391068935511311110960
BAKKEN10-201631114621148431512258120100
BAKKEN9-20161987458486137836682170
BAKKEN8-2016002370000
BAKKEN7-201630105341055835011332100351065
BAKKEN6-20163011354112794401259689453412
BAKKEN5-20163112067119914791411513656212
BAKKEN4-201627101891012852811146109730

20212:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN5-2018004030000
BAKKEN4-20181632393127473246523760
BAKKEN3-201819548656317564317413950
BAKKEN2-20182553105088595444542610
BAKKEN1-201831105131072518698937864150
BAKKEN12-2017312190321790484124087238390
BAKKEN11-201730194521980953791966718479968
BAKKEN10-201721121501140168471354971916268
BAKKEN9-20170000000
BAKKEN8-20170000000
BAKKEN7-20170000000
BAKKEN6-20170000000
BAKKEN5-20171002000
BAKKEN4-20175380363981151140
BAKKEN3-201761573200108990
BAKKEN2-2017416217001740158
BAKKEN1-2017315828401540153
BAKKEN12-20162147001620146
BAKKEN11-201631521840500
BAKKEN10-2016215127821231150
BAKKEN9-2016314800300
BAKKEN8-201621410280080
BAKKEN7-201671892032589880
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WTI Back Above $70 -- July 30, 2018 -- 100% Of Wells Coming Off Confidential List Go To DUC Status

CAT: beats earning by 24 cents. Shares jump 3.3%, up almost $5/share. Also raising full year guidance. But look at that difference year-over-year -- that's the big story. One quarter ago, $1.35; this year, $2.82. Trump tariffs -- apparently CAT not affected. Tax reform -- probably a huge reason -- what companies are allowed to expense to expense in one year.  From alloysilverstein.com:
The new law increases the amount of business property purchases that you can expense each year under Section 179 to $1 million (from $500,000 previously). Normally, spending on business property (machines, computers, vehicles, software, office equipment, etc.) is capitalized and depreciated so that the tax benefit is spread out slowly over several years. Section 179 allows you to get the tax break immediately in the year the property is placed into service. 
But it can't be all related to tax reform. Look at sales, especially internationally where tax reform would not have made a difference:
Sales were up 24 percent from a year ago to $14 billion, driven by double-digit growth across all markets.
In the Asia-Pacific region, which accounted for nearly a quarter of company revenues, equipment sales surged 39 percent from a year ago, helped by increased construction activity and infrastructure investment in China. Sales got a lift from a stronger Chinese yuan, as well.
Texas pipelines: bigger oil pipelines are coming to west Texas to ease bottleneck. And with sub-headline Rebecca Elliott is our newest nominee for the Geico Rock Award: drillers are pumping so much oil and gas that pipelines considered more than adequate just a few years ago now are overwhelmed. Say what? That story has to be at least a year old, and now that's a headline over at WSJ.

Texas to 'shatter" oil production; with fewer rigs and workers. No one talks about the Red Queen any more. Over at Rigzone:
Six months ago, Texas was on the cusp of breaking oil production records. In June, crude oil production reached 4.3 million barrels per day, putting Texas on track to “shatter” the previous record of 1.263 billion (sic) barrels in 1972.
“We’re going to blow that record out of the water,” Karr Ingham, Texas oil economist and creator of the Texas Petro Index (TPI), said during a mid-year briefing in Houston July 26. “Both crude and natural gas production will easily set new annual production records in 2018.” 
Ingham called the natural gas production “extraordinary” considering about 92 percent of the active rigs in Texas are drilling for crude oil. He said natural gas production growth is largely accidental, produced from wells that are drilled to produce crude oil. 
Comment: same thing happened in the Bakken boom: natural gas was an irritating by-product.
Comment: I'm not sure what the writer means by "puts Texas on track to "shatter" the previous record. I would argue that 4.3 million bopd has already "shattered' the previous record of 1.3 million bbls in 1972. So much for "Peak Oil" theory.

**************************************
Back to the Bakken

Wells coming off the confidential list over the weekend, Monday. As I mentioned over the weekend, I expected 50% to 75% of wells coming off confidential this week to go to DUC status. Today, all four went to DUC status:

Monday, July 30, 2018:
  • 34429, SI/NC, MRO, Otis 11-28TFH, Bailey, no production data,
  • 33393, SI/NC, WPX, Hidatsa North 14-23HD, Reunion Bay, no production data,
Sunday, July 29, 2018:
  • 34428, SI/NC, MRO, Klaus 11-28H, Bailey, no production data,
  • 33645, SI/NC, WPX, Hidatsa North 14-23HUL, Reunion Bay, no production data,
Saturday, July 28, 2018:
  • None.
Active rigs:

$70.13↑↑7/30/201807/30/201707/30/201607/30/201507/30/2014
Active Rigs62613573191

RBN Energy: the next round of US liquefaction plants and LNG export terminals.
Federal regulators are preparing to accelerate their review of a wave of applications to build new liquefaction plants and LNG export terminals — most of them sited along the Gulf Coast and scheduled for commercial start-up in the early 2020s. Only a few of the multibillion-dollar projects are likely to advance to final investment decisions (FID), construction and operation, but even they will have profound impacts on U.S. natural gas production, pipeline flows, and the global LNG market. Today, we begin a look at projects still awaiting FIDs, their developers’ efforts to line up Sales and Purchase Agreements (SPAs), and the Federal Energy Regulatory Commission’s (FERC) push to review project applications in a timely manner.
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