Beyond The Pale -- Mexico Bans Fracking -- August 9, 2018

Mexico, apparently, has vast shale oil and natural gas reserves in a basin that directly connects to the Eagle Ford in Texas.

To date, Mexico apparently imports 85% of the natural gas it consumes.

It seems tapping their shale natural gas would be a no-brainer.

It's not.

The new president-elect of Mexico, declared last week, that he will ban fracking in Mexico.

Irina Slav, over at oilprice suggests that fracking the Burgos Basin makes no economic sense anyway, but still, just the fact that President-elect Andres Manuel Lopez Obrador has said he will ban fracking seems to be ... well, beyond the pale.

It will be interesting to see Obrador's plans for the rest of the country's oil / natural gas sector.

Something tells me the "road to Mexico" is quickly becoming the "road to Venezuela."

NOG Reports Earnings -- August 9, 2018

Fast And Furious

Beyond belief. Mexico bans fracking? 

Jobless claims: down 6,000 from a revised 219,000. First decline in three weeks. The new number, 213,000 was below the 217,000 estimate. Until recently, claims have not been this low since the early 1970s. From MarketWatch. Also at Econoday. Reuters says that jobless claims "unexpectedly fell."

The meter is running: Trans Mountain update. From Bloomberg -- the Canadian government may need to pay more to expand Trans Mountain. Kinder Morgan says:

• the expansion will cost 26% more than estimated -- from my perspective, 26% is not trivial
• it will take a year longer to complete
• new price estimate: $7.1 billion (although I had originally heard the cost was going to be $7.4 billion; so I don't see how this is a price increase); price increase is "based on the uncertainty the investment had encountered." -- and, of course, KinderMorgan is now a contractor to the owner of the project (the owner being Canada with very deep pockets)
• sounds a lot like the DAPL; at the end of the day, a few malcontents are going to cost consumers, taxpayers, others, a huge amount of money for no good reason

A target Saudi cannot afford to miss: unemployment. Link here at Bloomberg. 

I'm shocked! I'm shocked!: discrepancy over Saudi oil data could rattle markets. Link here over at The WSJ. Yesterday I posted:

Never mind: first we are told that Saudi production dropped in July, and then we are told Saudi reported record high production in July, and now this headline from oilprice: why Saudi oil production suddenly dropped. Apparently even Tsvetana is confused -- in her opening paragraph ... "as if oil market participants haven't had enough conflict market forces to digest ...."

Double standard? I came home yesterday after a bike ride, and opened up The WSJ online. The first headline that I see: the Albertsons - Rite Aid merger has been called off; and the meeting between these two companies to discuss this merger has been canceled. Now, how is this any different than Elon Musk tweeting his thoughts about taking his company private?

In the Albertsons - Rite Aid case, we have a story being reported by a journalist. We are getting the story second-hand; the journalist is reporting the story based on what he is being told and he/she is telling it from his perspective.

By the time The WSJ story was posted, how many "insiders" were already aware of this information. It was a long article and it obviously took time to compose. In addition, the reporter would have confirmed the story with at least one other source, I assume. That all takes time and while the story is being put together, background information obtained, other sources being contacted, any number of WSJ staffers had access to the story, and "insiders" were able to act on the news.

On the other hand, though details were lacking, we get the Tesla story directly from the CEO. If Elon Musk would have scheduled a meeting with the board of directors to discuss his idea, and then a spokesman for Tesla call The WSJ with the news and then let The WSJ report that story -- would that have been the appropriate way to do things? Would it have been better for the WSJ to report a story in which, "according to anonymous sources, Elon Musk is considering taking his company private"? And no one can say that tweeting such information is "unconventional" these days. We have the President of the United States tweeting daily, direct to the world, without going through reporters, his thoughts -- many of which can have great influence on the markets.

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Back to the Bakken

NOG: 2Q18 earnings. NOG shares drop almost 10% on opening. 

No wells come off the confidential list today.

Active rigs:

$67→	8/9/2018	08/09/2017	08/09/2016	08/09/2015	08/09/2014
Active Rigs	64	57	33	73	193

The arrow: on a day like this (and yesterday, too) it's hard to decide which way to place the arrow in the box score above. WTI took a 4% dive yesterday so the down arrows were appropriate, but in the overall scheme of things, $66 is still a nice price. The oil companies will survive on $50 WTI; thrive on $60 oil; and, post phenomenal results with $70 WTI.

RBN Energy: contenders in the race to build crude oil export terminals off the Texas coast.

Much like their heated competition to build new crude oil pipelines from the Permian to the Gulf Coast, midstream, logistics and trading companies are jockeying to construct the first new export terminal capable of fully loading Very Large Crude Carriers — Trafigura joined the fray earlier this week. While VLCCs are by far the most cost-efficient way to haul crude to Asia, their Godzilla-like physical dimensions restrict the number of land-based terminals they can use. And even those that can accommodate these seagoing behemoths can only load a VLCC part-way — “reverse lightering” out in deeper, open waters is required to fill the supertanker to the tippy top. So a handful of ambitious midstreamers are developing plans for offshore terminals out in deep water, miles from the Texas coast. Today, we continue our review of these proposals with a look at JupiterMLP’s plan for a terminal off Brownsville — and a new Permian pipeline to the city.

NOG 2Q18 Earnings

Press release.

NOG: pre-market trading -- up a nickel; up about 1.5%. [Later: about an hour into trading, NOG was down over 10%. Apparently analysts took a deeper look.] [Later, later: NOG shares have recovered a bit, now down only 5.3%, at 9:25 a.m. CDT.]

Twenty-Five Permits Renewed; WTI Plummets 4% During The Day; Recovers A Bit By End Of Day -- August 8, 2018

Fast and furious:

• India's top refiner buys US oil to partially replace Iranian crude. Making America great again.
• Canadian-Saudi spat: Saudi will stop exporting oil to Canada.
• Prince Salman's unemployment problem.

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Back to the Bakken

Active rigs:

$66.94↓↓↓	8/8/2018	08/08/2017	08/08/2016	08/08/2015	08/08/2014
Active Rigs	65	56	34	73	193

Eight new permits:

• Operators: WPX (6); BR (2)
• Fields: Squaw Creek (McKenzie); Corral Creek (Dunn)
• Comments: WPX has permits for a 6-well Minot Grady pad in SESE 23-149-94 (see below); BR has permits for a 2-well Prairie Roas/Meriwether pad in Lot 2/section 30-147-95;

Twenty-five permits renewed:

• Crescent Point Energy (8): four CPEUSC Jean permits; four CPEUSC Tami permits in Williams County
• BR (4): four Ivan permits in McKenzie County
• Hess (3): three BL-Myrtrice permits in Williams County
• Statoil (3): three Martin permits Williams County 
• Petro-Hunt (2): two Noonan Federal permits in McKenzie County
• Resource Eenrgy: one Marshall permit in Divide County
• MRO: one Jan permit in Mountrail County
• Zavanna: one Raven permit in McKenzie County
• BTA Oil: one Audrey permit in Golden Valley County
• Denbury Onshore: one CHSU permit in Bowman County

Three producing wells (DUCs) reported as completed:

• 33743, n/d, Bartelson Federal 44-31-4H, Sanish, t-- ; cum --
• 33745, n/d, Bartelson Federal 44-31-3TFH, Sanish, t-- ; cum --
• 34106, 2,051, Whiting, Ellis 24-31-2H, Epping, t7/18; cum -- 

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The Minot Grady Permits In Squaw Creek

In that section, there are only three wells:

• 21301, 1,086, Enerplus, Pointer 149-94-23AH, Squaw Creek, t9/17; cum 173K 6/18;
• 21300, conf, Enerplus, Terrier 149-94-23AH-TF, Squaw Creek,
• 19881, conf, Enerplus, Hall 23-21H, Squaw Creek,

21301:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	6-2018	25	8266	8072	4015	11528	7841	0
BAKKEN	5-2018	29	10076	10800	4132	9169	4392	20
BAKKEN	4-2018	30	11422	11661	5136	10280	0	5523
BAKKEN	3-2018	30	12268	11666	5862	11164	2387	4205
BAKKEN	2-2018	3	1513	2026	625	2313	1897	0
BAKKEN	1-2018	31	15785	15569	6773	14365	4746	4875
BAKKEN	12-2017	29	16220	16347	6223	20106	15798	0
BAKKEN	11-2017	30	21804	21946	9325	25399	20642	0
BAKKEN	10-2017	30	26010	26205	12909	23902	21756	0
BAKKEN	9-2017	30	31760	31772	17071	28901	9711	17060
BAKKEN	8-2017	12	18372	16996	21731	16718	0	16715

But, WPX is drilling these horizontals into sections 26/35 to the south. These are the wells in that drilling unit:

• 35011, conf, WPX, Spotted Horn 26-35HD, Squaw Creek,
• 35012, conf, WPX, Spotted Horn 26-35HA, Squaw Creek,
• 35013, conf, WPX, Spotted Horn 26-35HW, Squaw Creek,
• 35014, conf, WPX, Spotted Horn 26-35HB, Squaw Creek,
• 20238, 180, WPX, SPottedHorn 26-35H, Squaw Creek, t1/12; cum 186K 6/18;
• 35240, conf, WPX, Spotted Horn 26-35HUL, 

The new permits are "Minot Grady" permits -- a google search of "Minot Grady" -- suggests a nice backstory. 

The Market, Energy, And Political Page, T+69 -- August 8, 2018

Saudi Arabia turns up the heat: Canadian - Saudi "spat": makes Trump's trade wars look like child's play; Trudeau can't get a break; couldn't happen to a nicer guy; and, at Financial Times, Saudi Arabia turns up the heat:

Saudi Arabia is selling Canadian assets as the kingdom escalates its response to Ottawa’s criticism of the arrest of a female activist.

The Saudi central bank and state pension funds have instructed their overseas asset managers to dispose of their Canadian equities, bonds and cash holdings “no matter the cost”.

Third-party managers are estimated to be mandated to invest more than $100bn of Saudi funds in global markets. While the proportion of that figure invested in Canadian holdings would be “fairly small in absolute terms”, the asset sale sent a strong message.

The sell-off began on Tuesday and underlines how the Gulf monarchy is flexing its financial and political muscle to warn foreign powers against what it regards as interference in its sovereign affairs.

“This is severe stuff,” said one banker.

To repeat: severe.

Meanwhile, Canadians have started a "boycott America" movement. #CPM -- Canadian Products Matter.

What Saudi has now done:

• begun a sell-off of Canadian holdings 
• expelled the country’s ambassador 
• frozen new trade and investment with Ottawa 
• suspended a student exchange programme to Canada 
• halted Saudi Arabian Airlines flights to Canada 
• ended all medical treatment programmes in Canada 

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Missing In Action

A few weeks ago, the mainstream media was working overtime, it seemed, to plant stories that Melania was "missing in action." No one had seen her in weeks, they said.

The "story" continues but a little bit differently. On CNBC today, there was a short snippet of video of President Trump holding a dinner/meeting with business CEOs last night. At the end of the video and very briefly, a shot of FLOTUS standing up, nodding, suggesting she had just been introduced to the attendees.

Sort of takes a bit of wind out that "MIA" sail. There was no reason Melania had to be there, but she was.