Industry Update
Posted: Mon Nov 07, 2016 10:24 am
From John White at Roth Capital. John follows a lot of our model portfolio companies and he is kind enough to send me all of his reports. Note what he is saying about the increasing proppant loads per well. I am seeing the same thing. Companies are now using incredible amounts of frac sand (20-30 tons) per well. - Dan
Crude Oil/Macro: OPEC: On 11/4/2016 it was widely reported that Saudi Arabia has threaten to raise oil output again as sparring with Iran returns. CNBC reported that the dispute between Saudi Arabia and rival Iran resurfaced at a meeting of OPEC technical experts last week, with Riyadh threatening to raise oil output steeply to bring prices down if Tehran refuses to limit its
supply, OPEC sources said. Clashes between the two OPEC heavyweights, which are fighting proxy wars in Syria and Yemen, have become frequent in 2016.
At a meeting of OPEC experts last week, designed to work out details of cuts for the next OPEC ministerial gathering on 11/30/2016, saw Saudis and Iranians clashing again, according to four OPEC sources present at the meeting and who spoke to Reuters on the condition of anonymity. "The Saudis have threatened to raise their production and to withdraw from the meeting," one OPEC source who attended the meeting told Reuters.
The High Level Committee of experts will meet again in Vienna on 11/25/2016 to finalize the details ahead of the next meeting of OPEC ministers on 11/30/2016. CNBC reported that OPEC Secretary-General Mohammed Barkindo has said he is "optimistic" a final agreement will be reached.
Nigeria: On 11/3/2016, CNBC reported the Niger Delta Avengers have a message for Big Oil, "When we warn that there should be no repairs pending negotiation/dialogue with the people of the Niger Delta, it means there should be no repairs," said the militant group.
The Nigerian National Petroleum Corp. said on 11/2/2016 that militants bombed the country's second-largest pipeline system just two days after it resumed operations following an attack in July. The attacks show the Avengers, and other militants they've inspired, are willing to make good on threats to launch a second wave of attacks on foreign oil companies that defy the group's order to leave sabotaged infrastructure unrepaired until the government meets its demands.
During the week of 10/24/2016, the Avengers claimed responsibility for an attack on a pipeline that feeds the Escravos offshore terminal operated by Chevron (CVX-NC). Last spring, Chevron closed the facility due to fighting in the area.
The target of the 11/2/2016 attack was a flow station along the Trans Forcados pipeline, which feeds Royal Dutch Shell's (RDS-NC) Forcados export terminal. That terminal itself just recently resumed exports following a sophisticated underwater attack carried out by the Avengers earlier in 2016, which limited activity for eight months.
Delaware Basin Update: We reviewed the presentation accompanying Occidental Petroleum Corporation’s (OXY-NC) 3Q 2016 earnings conference call to see what this top notch operator was planning for the its Delaware Basin activity. OXY plans to, no surprise, increase the lateral length of its wells. OXY operated during 2016 using an average effective lateral length of ~5,200
feet and for 2017 is planning to increase this to an average lateral length ~9,000 feet. The same trend is present with proppant loads, with OXY employing about 1,500 lbs/ft during 1H 2016 and moving to 2,000 lbs/ft in 3Q 2016.
Frack-On!: As reported by Bloomberg on 11/3/2016, Chesapeake Energy (CHK-NC) said at an analyst conference that it set a record for fracking by pumping more than 25,000 tons (that’s 50 million pounds) of proppant down the wellbore of its Black 11-15-11 1H well in the Haynesville play, terming the operation “prop-a-geddon.”
Crude Oil/Macro: OPEC: On 11/4/2016 it was widely reported that Saudi Arabia has threaten to raise oil output again as sparring with Iran returns. CNBC reported that the dispute between Saudi Arabia and rival Iran resurfaced at a meeting of OPEC technical experts last week, with Riyadh threatening to raise oil output steeply to bring prices down if Tehran refuses to limit its
supply, OPEC sources said. Clashes between the two OPEC heavyweights, which are fighting proxy wars in Syria and Yemen, have become frequent in 2016.
At a meeting of OPEC experts last week, designed to work out details of cuts for the next OPEC ministerial gathering on 11/30/2016, saw Saudis and Iranians clashing again, according to four OPEC sources present at the meeting and who spoke to Reuters on the condition of anonymity. "The Saudis have threatened to raise their production and to withdraw from the meeting," one OPEC source who attended the meeting told Reuters.
The High Level Committee of experts will meet again in Vienna on 11/25/2016 to finalize the details ahead of the next meeting of OPEC ministers on 11/30/2016. CNBC reported that OPEC Secretary-General Mohammed Barkindo has said he is "optimistic" a final agreement will be reached.
Nigeria: On 11/3/2016, CNBC reported the Niger Delta Avengers have a message for Big Oil, "When we warn that there should be no repairs pending negotiation/dialogue with the people of the Niger Delta, it means there should be no repairs," said the militant group.
The Nigerian National Petroleum Corp. said on 11/2/2016 that militants bombed the country's second-largest pipeline system just two days after it resumed operations following an attack in July. The attacks show the Avengers, and other militants they've inspired, are willing to make good on threats to launch a second wave of attacks on foreign oil companies that defy the group's order to leave sabotaged infrastructure unrepaired until the government meets its demands.
During the week of 10/24/2016, the Avengers claimed responsibility for an attack on a pipeline that feeds the Escravos offshore terminal operated by Chevron (CVX-NC). Last spring, Chevron closed the facility due to fighting in the area.
The target of the 11/2/2016 attack was a flow station along the Trans Forcados pipeline, which feeds Royal Dutch Shell's (RDS-NC) Forcados export terminal. That terminal itself just recently resumed exports following a sophisticated underwater attack carried out by the Avengers earlier in 2016, which limited activity for eight months.
Delaware Basin Update: We reviewed the presentation accompanying Occidental Petroleum Corporation’s (OXY-NC) 3Q 2016 earnings conference call to see what this top notch operator was planning for the its Delaware Basin activity. OXY plans to, no surprise, increase the lateral length of its wells. OXY operated during 2016 using an average effective lateral length of ~5,200
feet and for 2017 is planning to increase this to an average lateral length ~9,000 feet. The same trend is present with proppant loads, with OXY employing about 1,500 lbs/ft during 1H 2016 and moving to 2,000 lbs/ft in 3Q 2016.
Frack-On!: As reported by Bloomberg on 11/3/2016, Chesapeake Energy (CHK-NC) said at an analyst conference that it set a record for fracking by pumping more than 25,000 tons (that’s 50 million pounds) of proppant down the wellbore of its Black 11-15-11 1H well in the Haynesville play, terming the operation “prop-a-geddon.”