Wednesday, June 4, 2014

In Other News -- June 4, 2014; North Dakota Bakken In The WSJ Again

The Wall Street Journal

Widening US trade gap dims growth views.

Federal Reserve officials growing wary of market complacency -- from the June 3, 2014  on-line edition / June 4, 2014 edition:
Federal Reserve officials are starting to wonder whether a tranquillity that has descended on financial markets is a sign that investors have become unafraid of the type of risk that could lead to bubbles and volatility.
The Dow Jones Industrial Average, up a steady if unspectacular 1% since the beginning of the year, has consolidated big gains registered last year. The VIX, a measure of expected stock-market fluctuations based on options trading, has gone 74 straight weeks below its long-run average—a string of steadiness not seen since 2006 and 2007, before the financial crisis and recession.
Moreover, the extra return that bond investors demand on investment-grade corporate debt over low-risk Treasury bonds, at one percentage point, hasn't been this low since July 2007. The lower this "spread," the less risk-averse are bond investors.
The Fed's growing worry—which could influence future interest rate decisions—is that if investors start taking undue risk it could lead to economic turbulence down the road. 
Or maybe they're finally worried about the US debt at $17 trillion, headed toward $18 trillion.

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Down that slippery slope:
As the U.S. oil-and-gas boom rolls into its second decade, a new idea is starting to resonate with regulators and communities: Certain places should simply be off-limits to drilling.
That is not how it has worked up until now. Over the past decade, oil and gas wells have been drilled for hydraulic fracturing in suburban subdivisions, airports, public parks and golf courses. As long as energy companies leased the mineral rights, they could drill almost anywhere.
Now this all-or-nothing approach is starting to weaken as the fracking juggernaut, which has created jobs and lowered the U.S. trade deficit, has left some communities feeling trampled.
North Dakota, which has rolled out the red carpet for rigs, is reconsidering whether it should issue drilling permits near some historical sites, parks and areas of particular beauty. The state last month said that any requests to drill near designated areas would result in additional scrutiny and require public comment. The new approach reflects "growing momentum from the public to make sure the state is protecting some of the most scenic and historic places," said Alison Ritter, a spokeswoman for the state's Department of Mineral Resources.
I love the photo of the beautiful town on the prairie at the linked article.

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Crude oil pipelines vs water pipelines:
The Mobile, AL, legal battle reflects growing conflict between some water systems and pipeline companies.
Environmental activists have long cited drinking-water concerns as a basis for opposing pipelines. But in the past few years, utilities have begun voicing similar worries too—in lawsuits and regulatory comments, with the media and on the Web.
Officials say they have been motivated by recent high-profile spills in Arkansas, Michigan and elsewhere, as well as by the race to build and upgrade pipelines to accommodate the U.S. oil-and-gas boom brought on by hydraulic fracturing. "It's about critical infrastructure coexisting," says Lisa Ragain, a risk consultant for water systems. "It's an awareness-building campaign…getting a sector that is very far removed from the provision of safe drinking water to understand what that entails."
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Gender bias alleged at UCLA's Anderson Graduate School of Management, one of the nation's top-ranked business schools, is "inhospitable to women faculty," according to an interanl academic review. [Comment: what does not kill you, makes you stronger. -- Fred Nietzsche]

Mr Sterling to drop lawsuit; sell L.A. Clippers.

State income-tax credits, carpool access lanes, employer support, charging stations, etc., etc., has Atlanta leapfrogging Seattle as the #2 metropolitan market for electric cars in the US behind San Francisco.
Los Angeles Times

Bergdahl. 

Route 66. In a few weeks, I will be taking a road trip with the two granddaughters from Dallas to Los Angeles, with a side trip to the Grand Canyon. We will taken as much of Route 66 as we can. I particularly look forward to Oatman, AZ. It's gonna be a scorcher.

Reminder: CLR's Corporate Presentation, June, 2014 Is Available

PDF at the CLR website.

In the June, 2014, NDIC dockets:
  • 22545, CLR, Cedar Coulee-Bakken, 16 wells on each existing 1280-acre unit in Zones IV, Vi, and VI; 32 wells on each 2560-acre unit in Zones VII, VIII, and IX, Dunn
  • 22546, CLR, Corral Creek-Bakken, 16 wells on each existing 1280-acre unit within Zones II, III, and IV, Dunn
  • 22547, CLR, Jim Creek-Bakken, 16 wells each existing 1280-acre unit within Zones I, II, III, IV, V, and VI; 16 wells on each existing 1920-acre unit within Zone VII; 32 wells on each 2560-acre unit in Zones VIII and IX; Dunn
  • 22548, CLR, Haystack Butte-Bakken, 16 wells on each existing 1280-acre unit within Zones II, III, IV, V, and VI; 32 wells on each 2560-acre unit in Zone VII; Dunn, McKenzie
  • 22549, CLR, Rattlesnake Point-Bakken, 16 wells on each existing 1280-acre unit withink Zones I, II, and III; 16 wells on each existing 1920-acre unit within Zone IV; 32 wells on each 2560-acre unit in Zones V and VI; Dunn
  • 22550, CLR, Oakdale-Bakken, 16 wells on each existing 1280-acre unit within Zone I; 32 wells on each 2560-acre unit in Zones III and IV; Dunn
  • 22551, CLR, Chimney Butte-Bakken, 16 wells on each existing 1280-acre unit within Zones I, II, III, IV and V; 32 wells on each 2560-acre unit in Zones VI, VII, VIII, IX, and X; Dunn
If you are wondering how 32 wells in one drilling spacing unit (DSU) are spaced in each formation, go to slide #9 of the 34-slide presentation.

While you are at the presentation, look at slide #10. For quite some time, CLR has estimated the "average" EUR across the Bakken to be 603,000 boe. In slide #10, note the comments about the "robust Hawkinson pad:
  • 13 of the 14 wells on the Hawkinson pad are trending 50% above 603,000 boe model EUR
  • the Hawkinson wells were completed using "standard design," 100,000 lbs proppant/stage, and 30 stages
Comment: a long, long time ago, I opined that placing new wells near existing wells would improve EURs. A lot of folks suggest otherwise. [1.5 x 603,000 = 900,000 boe, something Filloon predicted for quite some time for the better Bakken]

Then go to the next slide, the "promising preliminary results of the Rollefstad pad:
  • existing well IPs averaged 1,330 boe
  • new well IPs averaged almost 3,000 boe
  • 7 wells completed with 200,000 lbs of proppant, 30 stages (30 x 2 = 6 million lbs)
  • 1 well was completed with 300,000 lbs, 30 stages (30 x 3 = 9 million lbs)
Nine million lbs is similar to the amount EOG is using but EOG is using significantly more stages, and thus less proppant per stage (if I remember correctly) 

The entire presentation is worth viewing. Slide #25 is a "sleeper." There are two graphics on that slide. Look at the one on the right: the "603,000 BOE EUR Model." Note the x-axis. Three generations of roughnecks, roustabouts, and maintainers will be drilling and maintaining CLR wells.

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Another Inconvenient Truth

The chart-of-the-day, Carpe Diem. 


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 Whistling Past The Graveyard

I still get a kick out of mainstream media spin. After another horrendous job report today, Reuters is still able to post this headline: "Economy On Solid Ground Despite Cooler Hiring." For months, maybe years, Reuters has been telling us that the data suggests employers are laying off fewer folks, hiring more. 

Random Note From Most Recent Oasis Corporate Presentation

At my "Snapshot" page, I have this recent information regarding Oasis:
  • September, 2013: announces acquisition of 161,000 net acres for $1.515 billion; brings total total Williston Bakken acreage to 492,000 net acres; 42K bopd;  
  • December 31, 2013: summary, calendar year, 2013: 515,314 net acres; 34,000 boepd; 150 wells in 2014
  • March 31, 2014: 506,960 net acres 
  • 1Q14 earnings; sold some non-core assets; acreage should change; sold Sanish non-core for $183.4 million
Of interest was the statement in the 1Q14 earnings summary: "sold Sanish non-core for $183.4 million." At the time I was unable to find the amount of acreage that was involved in this sale. I did not see it but could have missed it.

I was hoping that the company's most recent corporate presentation would shed more light but it did not; it confused matters by saying only this -- "divested non-operated properties for ~$322 million" -- slide 17.

For now, I will ignore the $322 million figure and go back to the earlier information.

Everyone agrees that at the end of calendar year 2013, the company had 515,314 net acres in the Bakken.

Everyone agrees that in June, 2014, the company had 506,960 net acres in the Bakken.

The earning statement for 1Q14 said the company sold Sanish non-core acreage for $183.4 million.

515,314 - 506,960 = 8,354 acres divested.

$183.4 million / 8,354 acres = $22,000 / acre.

Disclaimer: I often make simple arithmetic errors. I often make wrong assumptions. I often misread things. There is no attempt to mislead; I do these "back-of-the-envelope" calculations for my benefit only. It seems like I've posted this information before; if it looks familiar, maybe I have posted it before; I don't remember. 

Question Regarding Inflatable Packers And June NDIC Hearing Dockets -- North Dakota

In the June NDIC Hearing Dockets, OXY USA has several cases with regard to using inflatable packers:
OXY USA has eight (8) cases requesting "an exception to NDA 43-02-03-21 and any other applicable regulations to allow the use of inflatable packers in the casing string in connection with cementing operations for the isolation of oil, gas or water-bearing formations.
We are hoping a reader out there will provide a bit more background why these cases are required.

There are sites on the internet with some background/explanation but I'm not sure why this requires permission from the NDIC. Maybe I'm misreading the cases.

One source:
http://weatherford.com/Products/Drilling/InflatablePackers/index.htm
This has a bit more background/explanation:
http://www.glossary.oilfield.slb.com/en/Terms/p/packer.aspx
but again I don't know why it requires NDIC permission. I think this is the first time I've ever seen a case for inflatable packers, but early on I might have missed them, not knowing as much about the dockets.

Hopefully someone can provide a bit of background. Thank you.

Number Of Active Rigs Jumps To 193; Fifteen (15) New Permits; KOG, XTO Each WIth "High-IP" Wells

Wells coming off confidential list Thursday:
  • 26474, 52, Corinthian, Corinthian LIndstrom 5-34-1H, Souris, a Spearfish/Madison well; t2/14; cum 8K 4/14;
  • 26680, 2,664, BR, CCU Burner 41-26MBH, Corral Creek, t4/14; cum 7K 4/14;
Active rigs:


6/4/201406/04/201306/04/201206/04/201106/04/2010
Active Rigs193189214171121


Fifteen (15) new permits --
  • Operators: Hess (10), KOG (4), Whiting, 
    Fields: Little Knife (Dunn), Westberg (McKenzie), Ellsworth (McKenzie), Epping (Williams), Sanish (Mountrail)
  • Comments:
Wells coming off the confidential list were posted earlier; see sidebar at the right.

Five (5) producing wells were completed:
  • 24804, 1,031, CLR, Wahpeton 14-16H2, Banks,  t5/14; cum --
  • 25333, 2,791, XTO, Martin Federal 21X-33A, Cedar Coulees, t4/14; cum 9K 4/14;
  • 25535, 2,083, KOG, P Thomas 154-98-14-33-4H, Truax, t51/14; cum --
  • 26171, 1,299, Hess, SC-4WX-153-98-3130H-1, Banks, t5/14; cum 12K 4/14;
  • 26404, 1,602, Annapolis 3-29H, Dollar Joe, 4 sections, t4/14; cum 11K 4/14;