Bakken Update: PBF Energy Misses, But Continues To Increase Bakken And Canadian Feedstocks [View article]
Aricool,
Thanks for the info. I did not know the light/sweet mix was that low. Right now the differential is real tight in the heavies, but I would guess that will widen in the third quarter.
Bakken Update: Investment Trends In The Bakken's First Quarter Of 2013, Part III [View article]
jjmc2001 and Craig,
There are two very big reasons (Craig's comment below would be three) for cost decreases. I think completion costs may be the most important. Back in the fourth quarter of 2011, costs per stage were $124000 (continental numbers which a little lower than other smaller operators). In the 3rd quarter of 2012 this was down to $98000/stage. In the fourth quarter of 2012 and the first quarter of this year it was at $90000/stage. I don't have concrete numbers, but I know that operators are now able to complete three wells (zipper fracs) in the same amount of time as a single well. Not only are completion costs headed lower, they are saving a huge amount of time. I will be real interested in how these costs will come out on paper later in the year. The second is water. Companies that are drilling their own SWD and putting in produced water pipe are saving around $2/bbl in costs. Fresh water lines are saving an additional $2/bbl in costs as well. This has pushed trucking costs down significantly (unless you are hauling the muck left in the bottom of reserve pits, there seems to be a very lucrative business in soil remediation). There are a lot of trucks sitting around and motivated companies to low ball upcoming contracts. Now that the Bakken is getting water lines in, there isn't as much congestion on the roads which looks to be moderating more in the future.
Bakken Update: Investment Trends In The Bakken's First Quarter Of 2013, Part III [View article]
solojif,
Thanks for the info. You are correct about this and I should have probably described this better. A few years ago when Brigham first started speaking about doing zipper fracs, it seemed to think this was the best way to go. I think operators like to do all of the drilling first because it is cheaper to have the completion crew on site without worries about drilling problems slowing things down. When the weather is bad, most of the operators were trying to get as many holes drilled as possible and doing the completions when the weather is better.
Bakken Update: Bakken Well Costs Are Decreasing Faster Than Companies Indicate [View article]
Aricool,
I had av unusually large position in PBF, so I sold some after a 10% move in a very short period of time. As for short term downside risk, not real sure. It is possible that WTI/Brent differential could pull back more, but hard to say anything for sure.
Bakken Update: PBF Energy Misses, But Continues To Increase Bakken And Canadian Feedstocks [View article]
Aricool,
Most of the Gulf Coast refiners can run either light/sweet or heavy/sour, depending on differentials. From what I understand the first quarter provided better economics for light and sweet so most of the refineries ran A higher percent of that this past quarter. I expect this will change, but in the short term light and sweet will be more favoriable.
Bakken Update: Investment Trends In The Bakken's First Quarter Of 2013 [View article]
Steven,
I have a price target in the $44-$46 range, so you are still good to go over the next twelve months. I had exited the position after a quick move 10% up. I re-entered after the earnings miss.
Bakken Update: PBF Energy Misses, But Continues To Increase Bakken And Canadian Feedstocks [View article]
Thanks for the link Goobie, very informative. Every barrel that finds its way to Canada not only removes it from the glut in the US, but also adds a barrel overseas. The $5/barrel differential (if we get there) is interesting.
Bakken Update: Investment Trends In The Bakken's First Quarter Of 2013 [View article]
g8tr,
I would lean towards OAS, just because it is a pure Bakken buy that covers a large acreage over a large portion of the play. I do think that a company would have to grossly overpay to get Kodiak, but that is just a feel I have for the company.
Bakken Update: PBF Energy Misses, But Continues To Increase Bakken And Canadian Feedstocks [View article]
Aricool,
The Utica is much like the Eagle Ford in that it has an oil window, condensate (wet gas) window and gas window. The condensate window has been the most economic because the higher concentrations of natural gas push the liquids towards the well bore at higher pressures. This is needed unless the shale is deep (at least 9000 feet) because a deeper formation has better pressure which pushes the liquids as well. The Utica's oil window is to the west of the play and gets gassier to the east. The Utica's depth is shallow to the north and gets deeper to the south. Because of this the northern part of the oil window is not producing like anticipated. There are some rumors that the oil window will not produce but there is no proof of that. The Utica will be a very good producer in time. I guess what I am trying to say is it is difficult to know where the crude will end up, especially when you look at demographics. I am not saying that you are wrong by any means, but it is tough to know how all of these areas will produce in a few years. Much of the Bakken crude that is being railed is on five year contracts, but after that it is again tough to know.
I wouldn't count on the oil export ban being lifted either. Again I could be wrong but that is a big political topic that most politicians will not touch. I would be all for it, as I am a capitalist but just don't think it will fly, at least anytime soon.
There are deeper formations out there, but they are not cheaper. These formations will cost significantly more to drill and complete, but could very well out produce the Eagle Ford and/or Bakken in its best areas. That is an assumption on my part, but there are plenty of deeper formations, and some haven't been touched yet.
Bakken Update: Bakken Well Costs Are Decreasing Faster Than Companies Indicate [View article]
Aricool,
You will definitely get another shot. I sold the majority of my position in PBF this am. Might have run away a little too soon, there may be more short term downside than upside. It has been a nice run.
Bakken Update: PBF Energy Misses, But Continues To Increase Bakken And Canadian Feedstocks [View article]
Aricool,
I wouldn't take any of these pipe projects as a for sure thing. The refiners pay more to rail, but only have to sign deals over a few years versus the much longer ones the pipelines want. The one worry for the Eagle Ford with respect to shipping crude to the east coast is the Utica. Much closer and depending on production increases, it could be the reason to add pipe. Bakken crude will finds its way one way or another, to the refineries. But at some point all US crude pricing will pullback significantly. I don't think it is as much a Bakken problem as it will be for all of them. When production outpaces refining capacity, we will see production cuts, or at least the producers will have to wait on the deeper formations they are looking at. Costs in the Bakken are higher, but that depends on where the service company is working. Plus they have to cut because of pad drilling and zipper fracs. Companies can now complete three wells in the same amount of time as it use to do one single well. As for costs, there is a huge difference in Williston vs. Mandaree. Costs on the reservation are very high, while other areas are beginning to decrease. I think wages will always be higher in ND because of the weather, but some of the other costs will mediate some as the areas are developed.
Bakken Update: Investment Trends In The Bakken's First Quarter Of 2013 [View article]
Pablomike,
OAS results were very good. I wish I would have been on that one as well. TPLM didn't say for sure what it would do with Rockpile. I think they would just about have to because of the limitations of using the revenues. If that happened the stock price would really move.
Bakken Update: PBF Energy Misses, But Continues To Increase Bakken And Canadian Feedstocks [View article]
Thanks for the info. I did not know the light/sweet mix was that low. Right now the differential is real tight in the heavies, but I would guess that will widen in the third quarter.
Bakken Update: Investment Trends In The Bakken's First Quarter Of 2013, Part III [View article]
There are two very big reasons (Craig's comment below would be three) for cost decreases. I think completion costs may be the most important. Back in the fourth quarter of 2011, costs per stage were $124000 (continental numbers which a little lower than other smaller operators). In the 3rd quarter of 2012 this was down to $98000/stage. In the fourth quarter of 2012 and the first quarter of this year it was at $90000/stage. I don't have concrete numbers, but I know that operators are now able to complete three wells (zipper fracs) in the same amount of time as a single well. Not only are completion costs headed lower, they are saving a huge amount of time. I will be real interested in how these costs will come out on paper later in the year. The second is water. Companies that are drilling their own SWD and putting in produced water pipe are saving around $2/bbl in costs. Fresh water lines are saving an additional $2/bbl in costs as well. This has pushed trucking costs down significantly (unless you are hauling the muck left in the bottom of reserve pits, there seems to be a very lucrative business in soil remediation). There are a lot of trucks sitting around and motivated companies to low ball upcoming contracts. Now that the Bakken is getting water lines in, there isn't as much congestion on the roads which looks to be moderating more in the future.
Bakken Update: Investment Trends In The Bakken's First Quarter Of 2013, Part III [View article]
Thanks for the info. You are correct about this and I should have probably described this better. A few years ago when Brigham first started speaking about doing zipper fracs, it seemed to think this was the best way to go. I think operators like to do all of the drilling first because it is cheaper to have the completion crew on site without worries about drilling problems slowing things down. When the weather is bad, most of the operators were trying to get as many holes drilled as possible and doing the completions when the weather is better.
Bakken Update: Bakken Well Costs Are Decreasing Faster Than Companies Indicate [View article]
I had av unusually large position in PBF, so I sold some after a 10% move in a very short period of time. As for short term downside risk, not real sure. It is possible that WTI/Brent differential could pull back more, but hard to say anything for sure.
Bakken Update: PBF Energy Misses, But Continues To Increase Bakken And Canadian Feedstocks [View article]
Most of the Gulf Coast refiners can run either light/sweet or heavy/sour, depending on differentials. From what I understand the first quarter provided better economics for light and sweet so most of the refineries ran A higher percent of that this past quarter. I expect this will change, but in the short term light and sweet will be more favoriable.
Bakken Update: Investment Trends In The Bakken's First Quarter Of 2013 [View article]
I have a price target in the $44-$46 range, so you are still good to go over the next twelve months. I had exited the position after a quick move 10% up. I re-entered after the earnings miss.
Bakken Update: Investment Trends In The Bakken's First Quarter Of 2013, Part II [View article]
Just haven't gotten to them yet.
Bakken Update: PBF Energy Misses, But Continues To Increase Bakken And Canadian Feedstocks [View article]
Bakken Update: Investment Trends In The Bakken's First Quarter Of 2013 [View article]
I would lean towards OAS, just because it is a pure Bakken buy that covers a large acreage over a large portion of the play. I do think that a company would have to grossly overpay to get Kodiak, but that is just a feel I have for the company.
Bakken Update: PBF Energy Misses, But Continues To Increase Bakken And Canadian Feedstocks [View article]
The Utica is much like the Eagle Ford in that it has an oil window, condensate (wet gas) window and gas window. The condensate window has been the most economic because the higher concentrations of natural gas push the liquids towards the well bore at higher pressures. This is needed unless the shale is deep (at least 9000 feet) because a deeper formation has better pressure which pushes the liquids as well. The Utica's oil window is to the west of the play and gets gassier to the east. The Utica's depth is shallow to the north and gets deeper to the south. Because of this the northern part of the oil window is not producing like anticipated. There are some rumors that the oil window will not produce but there is no proof of that. The Utica will be a very good producer in time. I guess what I am trying to say is it is difficult to know where the crude will end up, especially when you look at demographics. I am not saying that you are wrong by any means, but it is tough to know how all of these areas will produce in a few years. Much of the Bakken crude that is being railed is on five year contracts, but after that it is again tough to know.
I wouldn't count on the oil export ban being lifted either. Again I could be wrong but that is a big political topic that most politicians will not touch. I would be all for it, as I am a capitalist but just don't think it will fly, at least anytime soon.
There are deeper formations out there, but they are not cheaper. These formations will cost significantly more to drill and complete, but could very well out produce the Eagle Ford and/or Bakken in its best areas. That is an assumption on my part, but there are plenty of deeper formations, and some haven't been touched yet.
Bakken Update: Bakken Well Costs Are Decreasing Faster Than Companies Indicate [View article]
You will definitely get another shot. I sold the majority of my position in PBF this am. Might have run away a little too soon, there may be more short term downside than upside. It has been a nice run.
Bakken Update: PBF Energy Misses, But Continues To Increase Bakken And Canadian Feedstocks [View article]
Bakken Update: PBF Energy Misses, But Continues To Increase Bakken And Canadian Feedstocks [View article]
Bakken Update: PBF Energy Misses, But Continues To Increase Bakken And Canadian Feedstocks [View article]
I wouldn't take any of these pipe projects as a for sure thing. The refiners pay more to rail, but only have to sign deals over a few years versus the much longer ones the pipelines want. The one worry for the Eagle Ford with respect to shipping crude to the east coast is the Utica. Much closer and depending on production increases, it could be the reason to add pipe. Bakken crude will finds its way one way or another, to the refineries. But at some point all US crude pricing will pullback significantly. I don't think it is as much a Bakken problem as it will be for all of them. When production outpaces refining capacity, we will see production cuts, or at least the producers will have to wait on the deeper formations they are looking at.
Costs in the Bakken are higher, but that depends on where the service company is working. Plus they have to cut because of pad drilling and zipper fracs. Companies can now complete three wells in the same amount of time as it use to do one single well. As for costs, there is a huge difference in Williston vs. Mandaree. Costs on the reservation are very high, while other areas are beginning to decrease. I think wages will always be higher in ND because of the weather, but some of the other costs will mediate some as the areas are developed.
Bakken Update: Investment Trends In The Bakken's First Quarter Of 2013 [View article]
OAS results were very good. I wish I would have been on that one as well. TPLM didn't say for sure what it would do with Rockpile. I think they would just about have to because of the limitations of using the revenues. If that happened the stock price would really move.