Wednesday, May 27, 2015

Cry For Me, Venezuela; Apple Surpasses Google To Reclaim Title -- May 27, 2015

Iraq says they "will flood the market with crude oil."

Not good news for Venezuela.

Barron's is reporting that Venezuela is running on fumes.
Even though Venezuela tapped the International Monetary Fund in recent weeks to keep itself afloat, shoring up its currency is another matter.
The low price of oil has crushed the energy exporter’s budget. Russ Dallen, who contributes to a newsletter for investors, and writes about Latin America, writes today that “Venezuela’s situation continues to unravel at increasing speed as the bolivar tumbled 30% over just the last week, while the country’s international reserves simultaneously hit a new 12-year low, closing at $17.5 billion.”
He says the weak currency and decline in reserves means the country is “essentially running on fumes.” 
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Investopedia

Six stocks recommended by some contributor over at Investopedia:
  • PSX -- leads the list
  • Apple -- #2 on the list
  • Google
  • General Mills
  • Amazon.com
  • Disney
This is not an investment site. Do not make any investment or financial decisions based on anything you read at this site or think you may have read at this site. 

This is kind of cool: Apple surpasses Google (again) to reclaim title as "World's Most Valuable Brand."  The list for 2015:
  • Apple
  • Google
  • Microsoft
  • IBM
  • Visa
  • ATT
  • Vertizon
  • Coca-Cola
  • McDonalds
  • Marlboro

24/7 Wall Street On North Dakota Rig Counts -- May 27, 2015

24/7 Wall Street is reporting:
Is it possible that the never-ending rig count decline is ending in North Dakota? There could be good news headed the way of companies like Whiting Petroleum Corp., Nabors Industries Ltd, and XTO under Exxon Mobil Corp. . It appears as though the rig count in North Dakota may be confirming what some analysts and investors are looking at as a trough in the rig counts in North Dakota.
The current active drilling rig list in North Dakota was 84 for the May 25, 2015, date. While this is down from 191 at the same time in 2014 (and versus 186 in 2013 and 214 in 2012), it is little changed from the prior two weeks. North Dakota is effectively the second largest state for oil now, thanks to the Bakken shale region.
The news did not act as a driver for the stocks on Monday, but a strong “market sell” bias may be more of an issue than the North Dakota rig counts. It is one issue to try to call a bottom and another issue entirely for certain investors to try to say that the long decline may finally be reaching close to a trough. Picking exact bottoms can be a sucker’s game. Picking a trend can create large gainers, as long as the move isn’t more than 10% or 20% off the mark. As a reminder, stocks pop and drop on any given day, but the stock market tries to start discounting big trends sometimes two quarters out.
Regular readers know the fallacy of tracking rig counts to try to determine "the bottom."

I track rig counts to give me an idea of the amount of "activity" in the Bakken. Rig counts, as a single data point, is relatively useless to predict oil production coming out of North Dakota.

Crescent Point Energy To Acquire Legacy Oil + Gas For Shares -- May 27, 2015

Reuters is reporting (a big "thank you" to a reader for sending the link):
Crescent Point Energy Inc, Canada's No.4 independent oil and gas producer, said on Tuesday it has agreed to acquire Legacy Oil + Gas Inc for shares and debt worth C$1.53 billion ($1.23 billion), adding oil production in its core regions in Western Canada and North Dakota.
Crescent Point is offering 0.095 of its own shares for each Legacy share. Based on Crescent Point's closing price on Monday of C$30.00, the offer is worth C$2.85 per Legacy share.
Long, long history.

Two New 4-Well Pads Proposed By QEP In Heart Butte -- May 27, 2015

From two recent daily activity reports:


This is based on what I read but I could have misread something. I know the oval in section 24 should be a bit farther up. Don't make any financial or investment decisions based on what I post at this blog. If this information is important to you go to the source. I post this information solely for my own use to better understand the Bakken. Readers can use it however they want but don't quote me on it.

Wednesday -- Back To The Bakken With Some Great Stories, May 27, 2015

Active rigs:


5/27/201505/27/201405/27/201305/27/201205/27/2011
Active Rigs84190187214172

RBN Energy: nice update on Bakken operators. If that link is unavailable, here is another link, which will only be available a limited period of time.
Oil-Weighted exploration and production companies (E&Ps) are slashing capital spending in 2015, as they need to regain control of their costs in today’s lower oil price environment. With robust oil prices over the past three years, these companies only posted middling profitability as capital and operating costs ate up much of their incremental revenue.
The Large Oil Weighted E&Ps are cutting back less than the Small/Mid-Sized Oil Weighted E&Ps as they are more financially secure and have more ability to spend through the price cycle.
The Small/Mid-Sized Oil Weighted E&Ps are focused on getting their spending in line with cash flows and to get to a point where they are self-funding their capital investment. Today we explore how each of the companies in the two oil-weighted peer groups is trying to resolve these issues.
At Seeking Alpha, COP expanding in more ways than one:
Summary:
  • ConocoPhillips' Bakken/Three-Forks operations will continue to pump out production growth through 2017 and beyond.
  • Downspacing projects may boost Conoco's drilling inventory and resource potential.
  • The Middle Three-Forks remains the emerging play to watch going forward.
  • Expect an update on ConocoPhillips' completion optimization tests by year-end.
North Dakota, Montana, and South Dakota house the Bakken and Three-Forks formations, one of the symbolic oil-weighted plays of the North American energy revolution. Several shale developers have built up sizeable positions in the area to create lengthy production growth runways for themselves.
ConocoPhillips has made developing its unconventional resource base, which includes shale plays, its top priority going forward as its Surmont 2 and APLNG facilities are brought online this year. After building up a 620,000 net acre position in the Bakken/Three-Forks region that is primarily located in McKenzie and Dunn counties [two of the most prolific counties in the area], ConocoPhillips plans on putting its acreage to good use.
Filloon update on the Bakken, at Seeking Alpha:
Summary:
  • Core areas of the top U.S. plays produce excellent economics at $60/bbl realized oil prices.
  • Production per foot continues to improve, and at a faster pace than investors realize.
  • Oil service costs have decreased in 2015, and should continue to head lower through year-end.
  • We believe the Permian is the best area in the United States, and FANG has excellent acreage in Midland County.
Many have become bearish the oil markets; oil and gas have been removed from portfolios. However, we believe the pullback has created an opportunity. Buying unfavorable sectors is a common practice as markets recover. When dollars exit, value is found. Selling a down industry is a common mistake, as the initial pain of the pullback is realized and dollars are removed before the industry recovers.
The greatest fear of investors is the economic validity of unconventional production. This stems from a lack of understanding. Fracking has been around for decades, but its use in horizontal production has not. We believe current oil prices support the profitability of shale, and current well data supports this. Many of the newer plays have become uneconomic, as have marginal areas of the Big Three. The Bakken, Eagle Ford, and Permian still have significant inventories of core wells to complete.

The Canadian Fire Continues; Statoil And MEG Energy Evacuating Non-Essential Staff -- May 27, 2015

An update on an earlier story on this fire, Reuters at Rigzone is reporting:
Statoil ASA and MEG Energy Inc evacuated non-essential staff from oil sands projects in northeastern Alberta on Tuesday as wildfires raged through the key crude-producing region.
The two are the latest of several oil producers, including Cenovus Energy Inc and Canadian Natural Resources Ltd , to move staff away from the potential danger.
At least 233,000 barrels per day of oil sands production, 9 percent of Alberta's total oil sands output, have been suspended in the province's northeast because of the fire risk, though none of the projects have been damaged.
The Alberta government said there are 66 forest fires now burning in the province, with 19 considered out of control. Statoil evacuated around 110 employees from its 20,000 barrel per day Leismer project as a precaution, although production is unaffected and the company does not anticipate having to shut down operations.

Tuesday, May 26, 2015

Minimal Blogging -- We've Lost Our Internet Connection At Home Due To Texas Thunderstorms, Flooding, And Gremlins; Whiskey For My Men, Beer For My Horses

There is nothing about the Bakken in this post. If you came here looking for the Bakken, move on, skip this post. I am posting this mostly for the archives, for the granddaughters.

I'm at Starbucks doing a bit of internet surfing. Fortunately they are open to 10:00 p.m. tonight. I'm not sure when our internet will be back up. Our internet at home is always "iffy" but with storms, flooding, and the usual gremlins, it's even worse right now. As in "not working."

The good news is that I read a bit more at home and watch a few more DVDs when I lose the internet. If my wife did not mind, I would get rid of cable completely: no television and no internet at home. I find enough wi-fi opportunities without needing connectivity at home, and television hasn't been a factor in my life for years.

I generally read about five books at a time -- actually, I don't really read five books at a time -- I generally have about five books at arm's length at any given time and I read whatever interests me at the moment. The two classics I am reading right now are Fitzgerald's This Side of Paradise and Oscar Wilde's The Picture of Dorian Gray. It is simply a coincidence that I am reading them at the same time. I say that because I finished the first chapter of Dorian Gray last Friday, and then today, started the second chapter of Paradise. In the second chapter, Fitzgerald's character spends a couple of pages discussing Wilde's Dorian Gray. Had no idea. Amazing.

I don't recall reading any Fitzgerald in high school, nor in college. How I missed Fitzgerald, I don't know. Took too many science courses, I suppose. I would not have enjoyed Fitzgerald in my teens, early twenties. I needed life experiences to enjoy Fitzgerald. It was important to read the introduction by Sharon G. Carson to understand why this book was considered his best. I'm not sure I would have enjoyed the book as much had I not read her introduction.

I also just received the classic on the Indian tipi -- first edition written back in 1957 or thereabouts and the second edition published in 1989, I guess. It it incredibly good. I have just browsed through it, and am eager to start getting serious about it. When I find a book that I'm really going to enjoy, I don't like to start it until in exactly the right mood, and with the right munchies and right beverage.

A fourth book is a novel of Ernest Hemingway's first wife, Hadley, The Paris Wife: A Novel. I  have the soft cover edition; it looks wonderful, better than I ever expected.

And finally, a book that just came out this year, Oliver Sacks, On The Move, A Life. If one enjoys the best of Hunter S Thompson's writing (his letters -- first volume), and Hell's Angels, I think one will enjoy this Oliver Sacks book. I've also just read the first chapter of this book and don't think I've enjoyed a book this much in a long, long time.

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Minimum Wage

Speaking of minimum wage, which we weren't, this is a note from my journal, dated: 11:00 p.m. -- July 25, 1969, Friday, Williston, ND --

Worked 9 - 5. Pulled jeep home -- installed new voltage regulator but it still discharges sporadically. Not much new. Goodnight, diary. Got paycheck for $53.00 for 33 1/2 hours work last week. Only $42.12 left after taxes, etc. [Page 328] 
$53/33.5 hours = $1.58/hour -- don't even talk to me about $15/hour minimum wage.

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Wow, it's pouring rain right now, outside Starbucks. It is amazing. Must be "inches per hour." I'm hoping they extend the hours because of the rain. Of course, they won't do that, but if I were the manager, I would send the employees home at the regular closing time (if they wanted to leave) and then just kick back, enjoy coffee with any of the regulars that are still here. Perhaps even order pizza for the regulars. And maybe something other than coffee ...

Beer For My Horses, Willie Nelson and Toby Keith

This might be a good anthem for Baltimore, Milwaukee, and Cleveland.

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This is too technical to talk about but this is a very interesting development coming out of Apple: replacing the problematic "Discoveryd" process.

As long as we're talking about Apple --

Smart Watch: Android vs Apple in The Wall Street Journal -- Apple wins, hands wrists down. 

North Dakota's Exports Have Grown From $1 Billion In 2004 To Over $5 Billion In 2014 -- May 26, 2015

This is really, really cool. For the mainstream media this story might not be much more than a footnote to all that is going on in North Dakota, but for me this may be the biggest story of the month. It takes me back to "Pigs In Space -- Almost. But, It's Kows Over Kazakhstan" posted back in October, 2011.

The AP is reporting:
A group of government and business leaders from Belarus is touring North Dakota this week to talk about trade. This is the second visit by a Belarusian delegation within the last year.
The delegation is interested in the state’s beef, dairy and agriculture sector, including farm machinery.

Officials say North Dakota’s exports have grown from $1 billion in 2004 to nearly $5.3 billion in 2014. The state’s top exports include front-end shovel loaders, tractors, wheat and soybeans.
Farm machinery? I am unaware of any farm machinery manufacturing in the state of North Dakota except for "Bobcat." But see RDO Equipment below.

For those who have forgotten, Belarus separates Poland from Russia, and is almost the same latitude as North Dakota. (Minsk: 54 degrees north; Alamo: 49 degrees north.)

By the way, speaking of Kazakhstan, this is from an October, 2014, press release:
The North Dakota Trade Office (NDTO), along with North Dakota agriculture machinery and technology companies, are returning to the KazAgro Farm Show October 27-29, 2014, in Astana, Kazakhstan.  This year, the Ministry of Agriculture of the Republic of Kazakhstan – the main sponsor of the show – has invited NDTO to co-sponsor the program, because of North Dakota’s long-standing relationship with leaders in the Kazakh agriculture sector.
That link will take you to RDO Equipment:
Despite these impressive gains, RDO Equipment's true growth spurt did not begin until 1997, when Offutt opted to take the company public with the hope of generating capital with which to fuel future expansion. In its initial public offering, launched in January 1997, RDO Equipment sold about 42 million shares and raised $68.3 million, becoming the first corporation based in North Dakota to be listed on the New York Stock Exchange. The company immediately used $10 million of this total to retire debts and paid out another $15 million in dividends to existing shareholders. The remaining $34 million was intended 'to allow us to continue to grow the company, expand our dealership numbers,' Offutt explained to the Fargo Forum.
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Unwinding The Nation's Worst Nightmare Will Take Decades

This story was printed in The Washingon Post of all places. One would have expected to see this in the Orange County Register.

President Obama's second-term agenda, it seems, is in the hands of the courts. Same-sex marriage. Immigration. ObamaCare. Climate change.

It will take decades to unwind this. This is not to say that I'm in favor or not in favor of any of his initiatives, it's just what The Washington Post is saying.

And the article didn't even touch on what has already happened in the Mideast due to his policies.

Or the US energy industry.

Flooding The Market And Other Hyperbole -- May 26 ,2015

It took all the energy I had to link this story. Bloomberg is reporting:
Iraq is taking OPEC's strategy to defend its share of the global oil market to a new level.
The nation plans to boost crude exports by about 26 percent to a record 3.75 million barrels a day next month, according to shipping programs, signaling an escalation of OPEC strategy to undercut U.S. shale drillers in the current market rout.
The additional Iraqi oil is equal to about 800,000 barrels a day, or more than comes from OPEC member Qatar.
The rest of the Organization of Petroleum Exporting Countries is expected to rubber stamp its policy to maintain output levels at a meeting on June 5.
Talk about hyperbole ... taking things to "a new level."

I saw the article earlier today but was ambivalent about linking it. A reader sent the link later and I figured for archival reasons, I need to link it. 

The headline for this story: Iraq Is About To Flood The Oil Market.

That was a Bloomberg headline. A country at war, who has just lost its biggest province to a JV team, and simply announces it will increase production is hardly "about" to do anything. Then, when I saw the "800,000 bopd" increase -- ? That's hardly "flooding" the market. I have no idea what it even means to say this is equivalent to what "comes from OPEC member Qatar. 

I don't want to mix apples and oranges, production vs exports, but production figures are very, very hard to come by. Even import figures are several months old. But that statement suggesting the additional Iraqi oil is more than what comes from Qatar is almost laughable. In the most recent data available, and again note, this is imports NOT production, the US imports as much oil from the Bahamas as it does from Qatar

Bloomberg may link the Iraqi message to US fracking, but one can hardly deny that this is as much about OPEC members scrambling to save market share as it is about competing with US shale. 

From the attached graph, it certainly looks like Qatar is scrambling to find new markets for its oil. I assume Bahrain is also scrambling to find new markets for its oil. 


Source: EIA.

In a few months, we will get the data. US auto dealers report auto sales for any given month within 24 hours after the end of the month; on the other hand it takes the EIA three months or more to tally up how much oil is imported into the US. This is almost June and the latest data is for February. And as far as "production" goes, it's anybody's guess what foreign countries are actually producing.

Five (5) New Permits -- May 26, 2015

Active rigs:


5/26/201505/26/201405/26/201305/26/201205/26/2011
Active Rigs84191186214173

Wells coming off confidential list Tuesday:
  • 29057, drl/NC, XTO, Amundson 34X-22E, Siverston, no production data,
  • 29085, SI/NC, WPX, Helena Ruth Grant 33-34HC, Reunion Bay, no production data,
  • 29270, 948, Hess, EN-Cvancara-155-93-1522H-7, Alger, t4/15; cum 4K 3/15;
Five (5) new permits --
  • Operators: QEP (4), Luff
  • Fields: Heart Butte (Dunn), Corey Butte (Bowman)
  • Comments:
Five (5) producing wells completed:
  • 28375, 974, Hess, AN-Brenna-LE-153-94-3129H-2, Antelope, Sanish, 4 secs, t5/15; cum --
  • 28543, 1,107, Hess, BW-Arnegard State-151-100-3625H-6, Sandrocks, t5/15; cum --
  • 28871, 659, Hess, GO-Hodenfield-157-97-0607H-2, Ray, t5/15; cum ---
  • 29165, 739, Hess, SC-Norma-LE-154-98-0705H-2, Truax, t5/15; cum --
  • 29348, 927, Hess, SC-Ellingsberg-154-98-3239H-4, Truax, t5/15; cum --