Sunday, February 28, 2016

Wells Coming Off Confidential List Over The Weekend, Monday -- February 28, 2016

Monday, February 29, 2016
  • None.
Sunday, February 28, 2016
  • 29746, 756, CLR, Helena 7-7H1, Brooklyn, t9/15; cum 22K 12/15;
  • 31721, 33, Petro Harvester, Busch Trust 06-07 163-92 B,  Portal, a Madison well, t12/15; cum 1K after 27 days
Saturday, February 27, 2016
  • 31549, SI/NC, SM Energy, Rodney 13B-9HS, Colgan, no production data,
  • 31719, 359, Petro Harveser, Busch Trust 31-20 164-92 A, Portal, a Madison well, t12/15; cum 10K 12/15; a nice Madison well;
  • 31827, SI/NC, EOG, Austin 455-1510H, Parshall, no production data,
*******************************************

31719, see above, Petro Harveser, Busch Trust 31-20 164-92 A, Portal:

DateOil RunsMCF Sold
12-201588330
11-20156210

29746, see above, CLR, Helena 7-7H1, Brooklyn:

DateOil RunsMCF Sold
12-2015852011338
11-201558315873
10-2015593409
9-201569036512
8-20154150

At Least Green Activists Will Get To Say They Meant Well -- February 28, 2016

See this note of February 11, 2016, regarding MDU and the challenges utilities face.

Now this note from Bloomberg on intermittent energy and utilities and Buffett's comments:
Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., said subsidized wind and solar power in the U.S. may erode the economics of electric utilities that care little for efficiency.
“The joke in the industry was that a utility was the only business that would automatically earn more money by redecorating the boss’s office,” Buffett wrote Saturday in his annual letter to shareholders. “Some utilities ran things accordingly. That’s all changing.”
Utilities across the country have been grappling with how to integrate wind farms and solar plants into their systems and business models. Cheap power from large-scale renewables has undercut the profitability of conventional electricity generation from coal and nuclear sources. In addition, rooftop solar panels have sapped sales for power distribution companies.
Berkshire is both a utility owner and a producer of electricity from renewable energy. After it pledged in July to almost double its $16 billion investment in renewables, its Nevada utility, NV Energy, persuaded state regulators to raise fees and cut credits for new home-solar customers. Nevada casino operators have tried to break away, saying they can buy cheaper power in the open market, including some from renewable sources.
But Oregon has it all figured out. From The Wall Street Journal: How Utilities Team Up With Greens Against Consumers. Oregonians are learning that electric companies like renewables because costlier systems increase profits.
If you can’t beat ’em, join ’em. This is the attitude that large electric utilities in Oregon have brought to their state’s 2016 legislative session. Threatened with a sure-to-pass ballot initiative from energetic green activists, Portland General Electric and Pacific Power decided to forestall the referendum by cutting a deal instead.
The utilities’ bargain—tucked inside Oregon’s H.B. 4036, which the House passed last week, and S.B. 1547, which it is expected to take up soon—gives the greens what they want: no coal serving Oregon customers within two decades and a huge expansion of renewables to 50% of the power supply by 2040.
What do utilities get in exchange? Oregonians already have little choice in which company serves them, but the legislation restricts competition even further—in case customers of a newly clean-and-green utility have second thoughts when they see their power bills rise. Under the proposal consumers would essentially buy out power companies for their remaining investment in coal plants, as well as cover the projected cost of decommissioning these plants before the end of their useful lives.
The bill also carves out special ratemaking treatment for everything from investments in renewables and energy storage to charging stations for electric vehicles. 
And at the end:
In a paramount irony, the Oregon bill probably will not result in the closure of a single coal plant, even though consumers are being charged for the cost of decommissioning. One utility subject to the legislation, Pacific Power, has a stake in coal plants that serve customers in six states. It could simply reallocate coal-generated power to customers outside Oregon. The other utility, Portland General Electric, co-owns a coal plant with several Montana utilities. It could easily sell its interest in the plant in 2030 or swap its output with another utility for an allocation of hydroelectric or gas-fired power.
At least green activists will get to say they meant well. 
It looks like Buffett will play both sides of the utility coin: tax credits for intermittent energy and steady dividend income from utilities that learn how to play the game. 

At Risk: 235,000 BOPD Of Venezuelan Heavy Crude Oil --- February 28, 2016

 Updates

March 5, 2016: the vulture has landed

February 29, 2016: in the original post I mentioned that I could think of several "vultures" ready to swoop in on PDVSA. Today it's being reported that China gave Petrobras a $10 billion loan in exchange for oil

Original Post
 
Reuters is reporting: worse case scenario -- 238,000 bbls of Venezuela heavy oil at risk (archived).
State-run firm PDVSA faces around $5.2 billion in payments to bondholders in 2016, much of it in October and November, a sum that some experts say it will be hard-pressed to meet after the government used nearly all of its available cash reserves to pay $1.5 billion in maturities last week.
A default could curtail some of the OPEC member's exports by crippling its ability to import crude and fuels used to blend its extra heavy oil, experts and sources say.
With the risk growing and payment delays to suppliers already emerging, some firms that sell to PDVSA have begun hedging their bets by using intermediaries or seeking higher prices, fearful they might never get paid, according to sources who deal with the firm.
Without imports of light crudes and diluents like naphtha that have rose to some 110,000 barrels per day (bpd) in 2015, PDVSA may be unable to export an estimated 235,000 bpd of its own heavy blends, according to calculations based on Thomson Reuters trade flows data - a disruption that could help curb an oversupplied global market.
I can think of any number of "vultures" ready to swoop in to "save" PDVSA. China is near the head of the list.

The light oil that Venezuela desperately needs, of course, comes from the US, which could aggravate the oil glut at Cushing.

It was reported on February 2, 2016, that Venezuela was importing light oil from Russia Urals and the United States because its own production of light oil fell short of that needed to blend with its heavy oil. 

Saturday, February 27, 2016

A Day Late, A Dollar Short -- February 27, 2016

I don't think there's been an 6-year period in modern history in which geo-politics has changed so much at the detriment of the US.

The Drudge Report has this headline: massive Russia deployment in Armenia rattles Washington. The story is reported at The Washington Post with this headline: the Russian-Armenia alliance is threatening Turkey, a critical US ally.

This was reported at the blog a few days ago, and now The Drudge Report and The Washington Post and the Obama administration are now aware of this.
The February 21, 2016, front-page article “For Turkey, high stakes as troubles intensify” highlighted a critical development: The growing military alliance between Russia and Armenia is threatening Turkey, an indispensable U.S. ally and partner in the fight against the Islamic State.
The announcement that Russia is sending a new set of fighter jets and combat helicopters to an air base only 25 miles from the Turkish border is just the latest example of this alliance.
The two countries’ economic and military ties run deep, bolstered by economic and security agreements and two military bases — including one just outside the Armenian capital. Most significant, Armenia is the only country in the region that shares a border with Turkey and has Russian troops permanently stationed.
Although Armenia has welcomed thousands of Russian troops and advanced weaponry, these developments seemed to have escaped the notice of U.S. officials, who were settling in for the holidays while Russia and Armenia signed a sweeping air defense agreement two days before Christmas.
It’s time for Washington to assess who our real allies in the region are. A couple of points:
  • Turkey is hardly an indispensable US ally
  •  Turkey has been a fair-weather friend, at best, for the past two decades
  • Turkey was not particularly helpful for the second Gulf War in which Bush toppled Saddam Hussein
  • Turkey has been "swinging" to an Islamic Republic for the past decade and as such is hardly much of a US ally any more
  • if the US has any real ally in the area it's Kurdistan, and Turkey has been waging war on the Kurds for as long as I can remember (I was stationed in eastern Turkey, 1994 - 1996, and saw the Turkish war on the Kurds first-hand
At the end of the day, some folks in Washington may be "rattled" but:
  • Obama and his staff certainly aren't; this all occurred while the president was golfing the weekend of Scalia's funeral
  • the US military "puts up with Turkey" but no one in the Pentagon has seriously considered Turkey a true US ally for decades.
********************************
A Note To The Granddaughters

The most difficult movie, without question, for me to watch is Doctor Zhivago. I don't recall when I last saw it, perhaps when I saw it for the first time, many years ago. I am watching it again. Last night I watched the first half; tonight I'm watching the second half.

Today, thinking back on the first half of the movie, I thought that the millennials supporting Bernie Sanders:
  • need to watch Doctor Zhivago (while reading the history of the Bolshevik Revolution at wikipedia);
  • need to read a really good biography of Ayn Rand; and,  
  • spend a year in Moscow, if they still don't "get it."
****************************
Value-Pricing At Disneyland

From The Los Angeles Times:
Disneyland and Disney California Adventure have been charging $99 for a one-day ticket. Under the new policy, each day on the calendar will be designated a "value" day, a "regular" day or a "peak" day. The new price will be $95 for a value day, $105 for a regular day and $119 for a peak day.
Over a 12-month period, 30% of the days will be "value" days, 44% will be "regular" days and 26% will be "peak" days, Disney calculates.
Disney has long been rumored to be considering a pricing change. Walt Disney Resorts put out feelers to annual pass holders last year, asking their opinion of a three-tiered pricing system aimed at charging more during Christmas, spring break and summer.
The pressure for Disney to address its overcrowding problem has been growing.
In the three-month period that ended in December, the company reported a 10% increase in visitors at its domestic parks, reaching a new attendance record. During the holiday season, Disneyland has been forced to shut its gates for a time when the park reaches maximum capacity.
Although daily ticket prices will rise for most days under Disney's new policy, park officials note that they are adding attractions to help justify the extra costs.
Disneyland is now working to add a 14-acre "Star Wars" land and plans to add a new stage show based on the popular "Frozen" movie later this year. An opening date for "Star Wars" land hasn't been announced.
"Soaring Over California," a simulator attraction at Disney California Adventure Park, is being overhauled with a new film that features giant-screen images from around the world. The revamped version is opening this year.

Week 8: February 21, 2016 -- February 27, 2016

In progress.

Operations
Whiting and CLR to stop fracking in the Bakken; EOG already had; Statoil already had
The number of active rigs heading toward 30
Wapiti Operating cancels their only two permits in North Dakota
Something for the Saudis to talk about at the Houston conference
Random look at possible halo effect between the TFH and the middle Bakken
A case study, Pershing oil field
Random update of crude oil production in North Dakota, November/December, 2015

DUC Update
2Q15 DUCs updated
The [London] Telegraph address the Fracklog
Random update of completed DUCs from 3Q15

CBR
Update on Rocky Mountain CBR

Miscellaneous
Williston High School Coyotes play last game in Phil Jackson Fieldhouse
Halliburton to slash 5,000 more jobs
Introduction to hedging in the Bakken
XOM fails to replace production for first time in 22 years

Bakken economy
North Dakota's Triple-A rating downgraded a notch by S&P
Williston Wire: North Dakota's largest airport terminal to open in the Bakken
Update on JE Dunn (same link)
Update on drones in North Dakota

Commentary
Ramblings on a Sunday morning
The definition of a swing producer 
The Saudis admit their target was US shale 
Why rig count does not matter 
The Mideast on the brink