WTI Breaks Below $67 Despite Iranian Oil Coming Off Global Market -- October 30, 2018; Miexco Makes History: Takes First Shipment Of Bakken Oil

Apple, Inc: to announce hardware updates this morning; 10:00 a.m. ET/9:00 a.m. CT -- from NYC

Earthquakes: British update later this morning; should be fun

Eagle Ford: link to EIA's dashboard will be added to the blog's featured links.

E15: I'm impressed voters are watching so closely.

COP: SeekingAlpha and COP shares.

Putin - MbS alliance, from twitter:

Mexico cancels new airport: wow. This is what the populist mandate killed:

• one of the world's biggest, most modern airports in the world
• ability to handle 100 million passengers / year
• lots of dollar figures; a bit confusing; data below may be incorrect; see linked article
• contracts awarded so far; now null and void: $7.7 billion; work on new airport is 30% complete
• alternative plan: to add two runways to current airport;
• current airport is 20 percent completed; required $14 billion; about $3 billion has been invested so far
• independent analysts suggest the decision will cost $6 billion 
• new Mexican president says the country will save $50 billion
• one word: Venezuela 
• a decision to kill a bullet train, I would understand; a decision to kill this project seems beyond the pale; suggests to me that Mexico's finances are in a world of hurt -- especially in light of Mexico now importing Bakken oil

**********************************

Back to the Bakken

Wells coming off confidential list today -- Tuesday, October 30, 2018:

• 34510, SI/NC, MRO, Monteau USA 34-7H, Van Hook, no production data;
• 34346, 401, Nine Point Energy, Sigma Lee 155-103-14-23-6H, Squires, 50 stages; 10 million lbs, t5/18; cum 43K 8/18; :
• 34321, 420, Nine Point Energy, Sigma Lee 155-103-14-23-7H, Squires, 51 stages; 10 million lbs, t5/18; cum 52K 8/18; 
• 34227, 1,269, Kraken Operating, Redfield-Colfax LE 24-13 1TFH, Lone Tree Lake, Three Forks, 60 stages; 15million lbs, t5/18; cum 78K 8/18;
• 34186, 1,131, Kraken Operating, Redfield East 24-13 2TFH, Lone Tree Lake, Three Forks, 60 stages; 15.3 million lbs, t5/18; cum 67K 8/18;
• 34185, 1,371, Kraken Operating, Redfield East 24-13 3H, Lone Tree Lake, 60 stages; 15.4 million lbs, t5/18; cum 88K 8/18;
• 34184, 1,130, Kraken Operating, Redfield East 24-13 4TFH, Lone Tree Lake, Three Forks, 60 stages; 15.4 million lbs, t5/18; cum 77K 8/18;
• 34183, 1,403, Kraken Operating Redfield East 24-13 5H, Oliver, 60 stages; 15.4 million lbs, t5/18; cum 97K 8/18;
• 34182, 1,663, Kraken Operating, Colfax 19-18 4H, Oliver, 60 stages; 15.4 million lbs, t5/18; cum 87K 8/18;
• 34181, 1,150, Kraken Operating, Colfax 19-18 5TFH, Oliver, Three Forks, 60 stages; 15.3 million lbs, t5/18; cum 78K 8/18;

The comments below are from geologists' reports at Terra Guidance. These are some of the best, if not the best, reports I have seen coming in from the Bakken. Others have great reports, but the reports seem to keep getting better. A great "public library" of information is building with regard to the Bakken. It will soon rival the fabled library at Alexandria, Egypt.

Comments regarding these seven Kraken wells, from #34181:

• a seven-well pad
• Three Forks target was 21' thick, with the top of the target window 11' below the top of the Three Fork and the bottom of the window set 21' below the top of the Three Forks
• total lateral length of 9,909'
• above target: 2.17% (215')
• in target: 60.2% (5,962')
• below target: 37.7% (3,732')
• gas units: one gas unit equals 100 ppm
• gas detection system measures: C1, C2, C3, IC4, NC4, H2S, CO2
• gas sensors: from 0 to 10,000 gas units
• trip gas maxed at 9,911 units
• spud date: November 12, 2017
• landing point: November 18, 2017; intermediate casing point, November 19, 2017
• total depth reached: November 24, 2017

Comments regarding these seven Kraken wells, from #34185:

• a seven-well pad
• middle Bakken target was 44' thick, with the top of the target window 15' below the top of the middle Bakken and the bottom of the window set 25' below the top of the middle Bakken
• total lateral length of 10,200'
• above target: 10.43% (1,064')
• in target: 81.65% (8,328')
• below target: 7.92% (808')
• gas units: one gas unit equals 100 ppm
• gas detection system measures: C1, C2, C3, IC4, NC4, H2S, CO2
• gas sensors: from 0 to 10,000 gas units
• max daily gas: 4,006 units
• spud date: December 15, 2017
• landing point: January 12, 2018; intermediate casing point, January 13, 2018
• total depth reached: January 16, 2018

Note: in a long note like this, there will be factual and typographical errors. If this information is important for you, go to the source.

Active rigs:

$66.58↓↓	10/30/2018	10/30/2017	10/30/2016	10/30/2015	10/30/2014
Active Rigs	67	52	34	70	190

RBN Energy: oil flows across the Gulf of Mexico no longer a one-way street. Archived.

Phillips 66 loaded its first Panamax tanker for export to Mexico over the weekend. Late on Sunday night, the SCF Prime signaled that it was headed for Pajaritos, Mexico, after loading at Phillips' terminal in Beaumont, TX.  Mexico is making history with this pivotal first purchase of Bakken crude from Phillips 66 at the U.S. Gulf Coast (USGC). Up until now, the crude oil trade between the U.S. and Mexico had been a one-way street, with oil moving from Mexico to the U.S. and not the other way around. But now, as Mexico’s state-run oil company Petróleos Mexicanos (Pemex) faces dwindling oil production and refinery outputs, importing light, sweet crude from the U.S. is a new avenue to revive Mexico’s refinery utilization. Today, we examine the new shift in the traditional flows of crude oil across the Gulf of Mexico.

A Reader Weighs In On Likely Impending Natural Gas Shortage(s) This Winter -- October 29, 2018

My "comments were restricted" the past few days because I was getting too much spam. A regular reader who understands the natural gas sector way better than I do took advantage of "restricted comments" by sending a lengthy note instead. This might be more than most want to read, but for those following natural gas this winter, this is well worth your time.

For now, I will just copy and paste what the reader wrote. Hopefully you will find it as fascinating as I did. Hopefully the reader does not mind that I took this route. If the reader wants it removed, just let me know.

From a reader:

Thursday last week you posted a link to an RBN Energy article titled Gas Storage Inventories Are Near Historic Lows. What If This Winter Turns Frigid?”  .. there was a graph in that article i found interesting and pulled out to annotate and use for my own blogs...i had intended to give you the 30 second version in a comment, but since i'm emailing you, i'll just include the whole thing (red markings mine):




According to most tellings, the natural gas injection season traditionally ends with the first weekend of November, after which natural gas inventories typically begin to fall, as increasing amounts of natural gas are pulled from storage for heating as temperatures fall heading into winter…in fact, however, we find that the recent history of natural gas storage (xls) shows that there have actually been increases in natural gas supplies during the first full week of November in 4 out of the last 8 years, so we have to consider that might be possible again this year…either way, we can only expect a few more weeks of increases before natural gas supplies peak before winter and start downhill…to assess where we now stand as compared to other years when prewinter supplies were low, we’re going to include a graph from RBN energy that shows US natural gas storage history for a few of those key years as compared to last year and the five year history..





 

The above graph comes from the RBN Energy analytical post titled “Colder Weather – Gas Storage Inventories Are Near Historic Lows. What If This Winter Turns Frigid?” and as published it shows the natural gas storage history for 2005 in billions of cubic feet in yellow, for 2014 in orange, for 2017 in green, and natural gas storage for 2018 year to date in blue.




It also shows as blue dots what is presumably the EIA forecast for what appears to be the last 4 weeks of the injection season, which would include a forecast for this week’s report that we just covered, since the cited RBN post was published on October 24, the day before this weeks natural gas storage report was released.





Also shown in a grey shaded area above is the 5 year range of natural gas in storage for any given date during the year, and then the average amount of natural gas in storage for any given date during those 5 years is shown by a grey dotted line.




Finally, as an addition to the original graph, in red I have penciled in the amount of natural gas storage for the last 11 weeks of 2013, reasons for which i’ll explain shortly…




So to begin with the obvious, this year’s natural gas storage levels in blue have been well below 2017’s gas in storage in green and the 5 year average in grey dots; over recent weeks it has also been below the 5 year range, and below the amount of gas stored during 2014, which was prior to this year the lowest level in over a decade.




But as you can also see, this year’s natural gas in storage has tracked pretty close to the level of 2005 (yellow), the lowest in 13 years ...




So with that, we’ll look at the actual amounts of gas in storage from the historical natural gas storage archive files (xls)...




As we mentioned earlier, our natural gas supplies had risen to 3,095 billion cubic feet by October 19th of this year; that would compare with the 3,139 billion cubic feet of natural gas that were in storage on October 21st of 2005, so we are pretty close to that level…




First point: However, after rising to 3,229 billion cubic feet on November 4th, 2005, the EIA’s presumable end of season comparison, natural gas supplies went on to peak at 3,282 billion cubic feet on November 11th, 2005, a 57 billion cubic feet increase during the 2nd week of November, which is one of the largest if not the largest increase that late in the year…so while we may match 2005 storage levels on November 2nd of this year, it seems highly unlikely that we’d match 2005’s November 11th high after that…




Now, the last thing I want to note on that graph is the 2014 natural gas storage levels…that’s the winter we were hit with repeated outbreaks of “the polar vortex”, and as a result our natural gas supplies fell to a low of 824 billion cubic feet by March 28th of that year, the lowest in the modern records, and stayed at 5 year lows throughout the summer until December of that year…so to compare supplies going into this coming winter to that of 2014, we’d have to go back to the fall of 2013, which is why i penciled in those dots and red line on this graph…




... on October 18th, 2013, US natural gas supplies were at 3,741 billion cubic feet, and they rose to a high of 3,834 billion cubic feet three weeks later on November 8th….which leads us to our ....




Second point: With our recent October 19th supplies at 3,095 billion cubic feet, that means that if our natural gas usage this winter is similar to that of 2014, our natural gas supplies would fall to just 178 billion cubic feet by the end of the heating season…that would certainly imply widespread natural gas shortages, and answer the question that the RBN post didn’t, i.e., What If This Winter Turns Frigid?

Comments Are Turned Back On -- October 29, 2018

I've turned "comments" back on. Assuming I checked the correct boxes and saved the changes.

Periodically I have to turn off the "comments" because I'm getting too much spam. I apologize for the inconvenience.

Back To Denbury And That News Earlier Today -- October 29, 2018 -- It Appears DNR Just Swapped 196,000 Acres In The Bakken For 84,000 Acres In Eagle Ford?

Over at "Bakken operators," recent entries regarding Denbury, prior to today's announcement:

• July 20, 2016: Denbury sells the remaining non-core Bakken assets for $58 million; buyer not identified; amount of acreage not identified;
• October 2, 2013: corporate update; their production in North Dakota is their biggest 
• September 20, 2012: XOM to buy all DNR acreage in the Williston Basin Bakken (North Dakota and Montana); $1.6 billion deal; 196,000 Bakken acres; but DNR gets XOM acreage in Wyoming and Texas; see XOM below;
• August, 2012, corporate presentation (dynamic link)
• ~ 200,000 acres (August, 2012, corporate presentation); according to "anonymous," DNR has 66,000 acres in Ward County, too far east for the Bakken; whether they still have the acres or not is unknown; but off the books, and the rig there will not be kept (will let contract expire)
• Back to 266,000 net acres (Enercom Conference, August 16, 2011); note -- previously planned to add 7th rig by January, 2012; now by end of 2011 (not much difference, but moved up) -- nope, now down to 4 rigs  (1Q12 conference call); back to six (6) rigs through 2012; see below, 4Q11 -- 4 rigs ("wrote off" 66,000 acres in the Almond prospect)
• 266,000 net acres (April, 2011; IPAA conference presentation)
• 275,000 net acres in the Bakken (January, 2011; agrees with corporate presentation)
• Cherry Prospect: Siverston field, 
• Fields, SW of the river: Camp, Cherry, Lone Butte, Bear Creek, Charlson, and Murphy Creek
• Field: NE Foothills in Burke (+/- value)
• Field: Almond in Ward County (76,000 acres; almost no proven value yet) Update: 4Q11 -- removed from inventory; no value; removed the one rig that was there
• Analyst's number: 300,000 net acres (December 31, 2010)

Note: DNR had around 275,000 net acres in the Bakken at one time; in 2012, it was announced that XOM would buy all DNR acreage in the Bakken (operator would be XTO).

So, DNR very likely sold 275,000 net acres of Bakken for around $5,000/acre (a "WAG" as they say), or $1.4 billion and now a few years later spend about that much money to buy 84,000 net acres in the Eagle Ford. [My bad: I see now that the deal was spelled out  -- XOM would buy 196,000 Bakken acres from DNR fro $1.6 billion.]

Today's news: buys Penn Virginia assets in Eagle Ford for $1.7 billion; 84,060 net acres.

CLR Earnings -- 3Q18 -- CLR Has Added Two Additional Rigs In The Bakken

Prior to today, over at "Bakken operators" these were most recent entries for CLR (2017 - 2018):

• 2Q18 presentation: step change in well performance across the Bakken
• May, 2018, presentation: 796,000 net acres in the Bakken; 161K boepd, up 48% over 1Q17; 1,100 mboe EUR type curves ($7.9 million) vs 980 mboe EUR type curves in 2017; see SeekingAlpha article;
• March, 2018: 1.1 million-bbl EUR type curves; 
• August, 2017: 806,000 net acres in the Bakken; 1.1 million boe EURs 

Now, let's look at 3Q18 earnings, sources:

• press release
• AP snapshot 
• Reuters

Data points:

• income
• net income: $314 million; $0.84 per diluted share
• adjusted net income: $337 million; 40.90 per diluted share
• results topped Wall Street expectations: Zacks -- 81 cents/share 
• revenue
• revenue: $1.28 billion
• results topped expectations: $1.21 billion
• production
• production, average 3Q18: 296,900 boepd (beats 3Q18 guidance and consensus)
• production, average 3Q18: 164,605 bopd (up 5% sequentially; and up 17% yoy)
• percentage oil: 164,605/296,900 = 55%
• Bakken production
• 167,643 boepd; up 23% yoy; compare with 161K boepd back in May, 2018; 
• 7K x 365 days = 2,555K (2.5 million bbls) x $50 = $127 million and my hunch it didn't cost an extra penny to grow that production -- at least not many extra pennies; the wells are just getting that much better; and costs are coming down;
• expects strong finish for CY2018 with "70 of our forecasted 2018 Bakken wells scheduled to be completed by year end"
• shares are up 28% in last 12 months; trading at around $50
• production records hit
• added two rigs in the Bakken, bringing its current total to eight
• production is expected to average 1.3 million bbls in November, 2018 -- EIA
• oil production remains unhedged
• some rivals, including EOG and Pioneer Natural Resources have warned investors that hedging may affect profits