Thursday, September 20, 2018

Summer's Over -- September 20, 2018


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This Is A Given ... But I Think He Is Only 2/3rd Correct

I think there is a very good chance the global internet will be split into at least three "domains": US, Chinese, EU. There are precedents: VHS tapes were region-specific.


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The Dreaded Bakken Decline -- September 20, 2018

Disclaimer: I am inappropriately exuberant about the Bakken.
Disclaimer: the "dreaded decline rate" in the Bakken has never bothered me.

Even though the "dreaded decline rate" never bothered me, I was always of the mind that the oil companies would "figure it out." The "production type curves" have borne that out. The decline rates have become less steep; they seem to plateau at higher levels; and once they reach their plateau they tend to stay there "forever." But this is what is unusual about Bakken tight, horizontal, unconventional wells compared to conventional, vertical wells: the former often see a jump in production for any number of reasons, and it appears one should anticipate a jump in production every five to seven years under optimum conditions.

A reader brought this well to my attention. I was initially concerned there may be a typo, and I would want to check this well again in six months to make sure these numbers are accurate. The best way right now to confirm the numbers are accurate would be to hear from a mineral owner who confirms the pay stub correlates with the data in this table.

Having said that, looking at the "bbls water" and "MCF prod" it appears the "bbls oil" is not a typo. I could imagine a typographical error in one cell or one column, but not typographical errors across the entire row.

I have not seen this before -- at least not to this extent -- this is simply incredible.

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-2018318023979817594031669781615605232
BAKKEN6-201830350213499220965631993489128128
BAKKEN5-201831293482934820751644184770716525
BAKKEN4-20183032546325462343064199640190
BAKKEN3-20183137721377392733776684764980
BAKKEN2-201828281142809624407548833376320952
BAKKEN1-20182519815198362931023272171675955
BAKKEN12-20173119133191123751928094185929316

Total production in July, 2018: 166,978,000 / 6001 = 27,825 boe + 80,239 bbls crude oil = 108,064 boe -- and this is in the eighth month of production. Unprecedented as far as I know. 

This well:
  • 33039, A, Oasis, Patsy 5198 12-17 8B, Siverston, 50 stages; 10 million lbs, t--; cum 282K 7/18;
Another Patsy well:
  • 33041, 606, Oasis, Patsy 5198 12-17 10B, Siverston, t1/18; cum 197K 7/18; again, note the amount of natural gas produced in July: 199,349,000 / 6001 = 33,219 boe + 56,235 = 89,454 boe -- again, in the seventh month, and well above what it was producing in any of the previous six months. I think I know why but won't talk about it now. By the way, note the IP of "606."
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-2018315623555939775311993491939315232
BAKKEN6-20183024611245902743777490773100
BAKKEN5-20183132023320233220175564753780
BAKKEN4-20183027088270883281659173589930
BAKKEN3-20183131098311103413059675594890
BAKKEN2-201828176731766127460345391692017451
BAKKEN1-201813864486442964332664865323933
 
The Oasis Patsy wells are tracked here.

Right now, three operators are really impressing me: MRO, Oasis, and Bruin.

I've not talked about Bruin but they have a number of surprisingly good "MHA" wells in Eagle Nest and McGregory Buttes, I believe. I haven't highlighted Bruin because there are simply so many better-than-average wells, but not as big as these MRO and Oasis wells. But Bruin either has found a great, great location or has some really good completion strategies. My hunch: a little of both.


The Oasis Patsy Wells In Siverston Oil Field Have Been Fracked -- September 20, 2018

A reader alerted me to this. Thank you very much.

The Patsy wells in the Siverston oil field are tracked here.

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The Book Page

My book of consequence this week: Sea of Dangers: Captain Cook and His Rivals in the South Pacific, Geoffrey Blainey, c. 2009.

I'm in my ocean-going phase, I guess. This must be the third or fourth book along this line.

I really don't know much about "Captain Cook." I actually feel "much more comfortable with Ferdinand Magellan. Even more so than Christopher Columbus, of all things.

Paging through the book quickly, I think the references to England, and specifically, Yorkshire or northern England was what caught my interest in the book and convinced me to check it out at the library. I don't care for the cover, but I love the gravitas of the book, the pitch, font, etc.

So, we'll see.

An example:
James Cook was born on October 27, 1728, -- so this is slightly more than a hundred years after William Shakespeare, and half a century before the US Revolutionary War -- in the Yorkshire village of Marton-in-Cleveland, about fifteen miles from the North Sea. His mother was from Yorkshire, his father from Scotland. To be born in Scotland was an advantage, for the Scots were probably the most literate people in the world at that time, it is almost certain that Cook's father could read and write.
Let me digress for a moment.

If that intrigued you -- that the "Scots were probably the most literate people in the world at that time," you will be enjoy reading a most compelling book on the subject, How The Scots Invented The Modern World, The True Story of How Western Europe's Poorest Nation Created Our World & Everything in It, Arthur Herman, c. 2002. I've read it twice and parts of it many more times than that: the takeaway: the church, the law, the university.

Back to the book.

Cook's first voyage from Whitby (a most wonderful city on the cost, northern Yorkshire) was in the Freelove, a brand-new collier, or coal ship, buit at Great Yarmouth and carrying a crew of nineteen, of whom ten were apprentices or "servants."

I haven't yet decided whether to take notes while reading the book like I usually do, or to simply enjoy the book.

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By the age of 17,  James Cook was living and working in the small fishing port of Staithes, about fifteen miles from his birthplace. Staithes is to the north of Whitby. While in England many years ago, I hiked the coast from Robin Hood's Bay to Whitby. Had we taken the inland route, the highway, it would have been about a two-hour walk, 5.5 miles. But along the very difficult and jagged coast, it took us six or seven hours, I think. I don't recall. But it was a very, very long hike, and very, very challenging. It would have been a tough hike for teenagers, and the two of us were each about 50 years old (both of us born in 1951 an this must have been in 2003).

I note that because in the book, the author describes Whitby which I recall vividly:
On a river estuary, at the foot of high cliffs, the cramped streets were bustling in daytime, and their little cottages housed families from which at least one person typically went to sea.
The river was the River Esk. The author fails to mention the great Whitby church. From wiki:
The Church of Saint Mary is an Anglican parish church serving the town of Whitby in North Yorkshire England.
It was founded around 1110, although its interior dates chiefly from the late 18th century. The church was designated a Grade I listed building on 23 February 1954.
It is situated on the town's east cliff, overlooking the mouth of the River Esk overlooking the town, close to the ruins of Whitby Abbey. Church Steps, a flight of 199 steps lead up the hill to the church from the streets below. The church graveyard is used as a setting in Bram Stoker's novel, Dracula. 
I remain a bit peeved with myself. I do not recall how much I knew of the Dracula connection when  I first visited Whitby. Suffice it to say, I would give almost anything to re-live that entire day.

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I have read that the origin of "Dixie" is unknown -- the Dixie in "I Wish I Was In Dixie." I'm sure many will disagree with that, that the origin of the word is unknown. Be that as it may.

From the book, in the 18th century, a seaman could easily calculate latitude but longitude was a different story. It was nearly impossible. Captain Cook trained himself and "slowly learned to compute longitude with more accuracy, using a reflecting telescope, than most captains in the Royal Navy."
In London in 1768, the Admiralty were searching for a mariner capable of carrying out an unusual mission in the Pacific Ocean .... to track the transit of Venus. Multiple observations of the transit of Venus across the diameter of the sun from scattered parts of the world would provide the data necessary to calculate the exact distance of the sun from earth, a measurement that would prove vital for navigation and many other activities, according to Edmond Halley (of Halley's Comet fame). 
Seven years earlier:
Two ships left England in ample time to view the transit expected on June 6, 1761. On one of the two ships were two astronomers, Charles Mason and Jeremiah Dixon. They observed the transit of Venus from an observatory in Cape Town. Later they made a reputation in British North America by surveying the state boundary known as the Mason-Dixon line. Today the evocative musical word "Dixieland" commemorates the astronomer Dixon. 
But the measurements in 1761 were not as good as hoped for. The next transit of Venus would occur on June 3, 1769, but then after that, it would another 105 years before it happened again. Thus, the observations and measurements in 1769 had to be accurate; no failures accepted this time.
Captain Cook had already been chosen when Captain Samuel Wallis returned to England from his exploration in the South Pacific in the Dolphin late in May, 1768. Captain Wallis reported that he had found the ideal island in which to set up an observatory. It was King George III Island, now known as Tahiti. There, Captain Wallis confidently advised, the skies would be clear on the vital day, and moreover the native inhabitants, he explained with not quite the same confidence, were likely to be friendly. In June, the Royal Society accepted his advice.

Cook's timetable required him to be in Matavai Bay in Tahiti a couple of months before the transit of Venus occurred. After the transit, Captain Cook was to open his secret instructions. While the voyage to Tahiti was public knowledge, Cook's subsequent search for the missing continent was intended to be a secret. The competitive game of colonial expansion called for secrecy.

Eighteen New Permits; MRO Reports Six Incredible Completed DUCs -- September 20, 2018

Market:
  • Dow (irrelevant): third day in a row; triple -digit jump; today up over 265 points
  • NASDAQ: closes above 8,000
  • S&P 500 (very, very relevant): hits an all-time high; trading above 2,900; 
  • Russell 2000: fourth of four major indices to jump significantly today
  • WTI: dropped below $71 but still solidly above $70
  • 10-yr bond: the market should have crashed today; yielding 3.08%; by the way, CNBC talking heads now scrambling to explain why a 10-year bond yield great than 3% is not a bearish indicator;
Active rigs:

$70.07→9/20/201809/20/201709/20/201609/20/201509/20/2014
Active Rigs66553267196

Eighteen new permits:
  • Operators: QEP (12); CLR (3); Whiting (3)
  • Fields: Van Hook (Mountrail), Pleasant Valley (Williams), East Fork (Williams), Beaver Lodge (McKenzie)
  • Comments: QEP has permits for a 12-well MHA pad in SENE 28-150-92; 3200-acre spacing units, sections 30, 29, 38, 27,26 (laydown); centered in section 28 --
 
One permit reinstated, with new name:
  • 34207, conf, BR, Anderson Ranch 1C MBH (Rader Ranch 1A MBH-ULW), Camel Butte, 
Seven permits renewed:
  • BR (3): two Renegade permits and one Chuckwagon permit, all in McKenzie County
  • Petro-Hunt (2): two Eric Stratton Federal permits, McKenzie County
  • QEP (2): two MHA permits in Dunn County
Six producing wells (DUCs) reported as completed:
  • 32011, 5,328, MRO, McMahon USA 13-34H, Reunion Bay, t8/18; cum --
  • 32013, 5,550, MRO, Tony USA 24-34H, Reunion Bay, t8/18; cum --
  • 32014, 5,666, MRO, Jackie USA 34-34TFH, Reunion Bay, t8/18; cum --
  • 32015, 5,156, MRO, Hal USA 34-34H, Reunion Bay, t8/18; cum --
  • 32851, 2,996, MRO, Brant USA 44-34TFH, Reunion Bay, t8/18; cum --
  • 32850, 4,871, MRO, Loftquist USA 34-34TFH, Reunion Bay, t8/18; cum -- 
    • nearby: 19064, 27366, 26806, 26807, 26805,
    • note: previously posted -- MRO is likely to be named the operator of the year in North Dakota

The Market, Energy, And Political Page, Part 3, T+38 -- September 20, 2018 -- This Is Why Gasoline Prices Are Plummeting

NG fill rate, link here:


From John Kemp over at twitter:


WTI: $71.07

Stock market: every major index green. After two huge days, the Dow (irrelevant) is up another 211 points.