Monday, January 16, 2017

IMF Slashes Saudi's GDP Estimate To 0.4% For 2017 -- January 16, 2017

Currently via Twitter:


I thought I had posted this before but apparently not. At least a quick look at previous posts and I did not see it.

But in that exercise I also found this gem I had forgotten about, posted back on August 14, 2016:
Posted today over at Breitbart.
With China’s economic crash driving U.S. oil prices down to $42 a barrel, Saudi Arabia is the oil-exporting nation suffering the worst economic decline.
The 15,000 members of the six branches of the Saudi royal family have been buying national support with massive social welfare spending. But with the oil price plunging by 60 percent, causing a massive budget deficit, the kingdom’s foreign exchange reserves could be wiped out in four years. [That's how long it takes some kids to finish high school.]
Most analysts have focused on Russia as suffering the worst impacts of the oil price crash. The value of Russia’s oil & gas production is approximately $350 billion per year; it accounts for 20 percent of Russia’s GDP, and equals two thirds of all exports. But even at current prices, Russia will still achieve a trade surplus of about three percent of GDP. As an oil exporter, Russia’s is uniquely self-sufficient and a military exporter.
I thought it was four years based on my calculations but did not want to post that; it sounded too crazy, but someone came up with that same number: four years. It fits the narrative that I was trying to articulate just a few days ago

"Everyone" is focusing on Russia; in fact, it's Saudi Arabia that is in dire straits.

By the way, no links, but it is being reported everywhere: the current OPEC deal to cut production runs for six months, through July, 2017. Saudi Arabia is now saying that it does not foresee the need to extend the deal past the original six months.

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He Missed It By That Much

President Obama will go down in history as the first US president in modern history (maybe in entire history) to have never presided over even one quarter of GDP growth that hit 3%.  But, wow, it looks like came really, really close (which only counts in horseshoes and nuclear weapons, they say). From GDPNow (a dynamic link):
Latest forecast: 2.8 percent — January 13, 2017.
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2016 is 2.8 percent on January 13, down from 2.9 percent on January 10. The forecast of fourth-quarter real personal consumption expenditures growth ticked down from 2.6 percent to 2.5 percent after this morning's retail sales report from the U.S. Census Bureau.
Something tells me his folks are going to be burning midnight oil to squeeze out every bit of GDP growth to hit the 3% threshold. To think it was once estimated to be 2.9%. 

Break-Even Costs For Chinese Oil Production -- January 16, 2017

Regular readers and anyone paying attention are aware that with regard to oil and natural gas, China is in a world of pain. From a December 12, 2016 post:
Peak oil? This may be the most important story all week. From Bloomberg, China is cutting about 300,000 bopd this year, more than the combined cuts announced over the weekend by non-OPEC countries excluding Russia. China's decline in production will continue into 2017 (next year) at about 200,000 bopd. By the way, this was reported by The WSJ back on August 25, 2016:
China’s struggling oil sector has entered a challenging new phase: long-term decline of its domestic production.
Oil production in China likely peaked last year at around 4.3 million barrels a day, according to new data and interviews with industry executives. The development has significant implications globally, including the potential for higher crude prices over time as China steps up imports to meet rising demand at home.
“The turning point that we’ve been searching for, for years, is happening now,” said Kang Wu, vice chairman for Asia at energy consultancy FGE. As an oil producer, he said, “China is entering long-term stagnation and decline.”
I think this is why some analysts suggest there could actually be a "deficit" in global oil production in 2017.
Now, tonight from Bloomberg:
  • China's crude oil production will drop as much as 7% this year
  • output is declining at aging fields amid capital spending cuts
  • that's despite automobile sales surging in China
  • the "cut" in Chinese production is about the same size as the output cut agreed to by Iraq
From the article:
While China consumes more oil than almost any other country, it’s also one of the world’s biggest producers, with fields stretching from offshore its southern coast to the far north east. The collapse in prices that began in 2014 is taking its toll, and the nation’s output suffered a record decline last year. That plays into the hands of OPEC as it seeks to prop up the global oil market, forcing China to depend more heavily on imports.
Brent crude, benchmark for half of the world’s oil, averaged about $45 a barrel last year, more than 50 percent below levels in 2014, the year OPEC decided to tackle a global glut by keeping the taps open. The crash in prices triggered a rethink by the group, which banded together with 11 non-member countries late last year and agreed to a collective cut of almost 1.8 million barrels a day. Prices have since rallied above $58 a barrel.
China’s output slumped in 2016 as state-owned firms shut wells at mature fields that had become too costly to operate after the crash. Crude production fell 6.9 percent in the first 11 months of 2016 to about 4 million barrels a day, the first decline since 2009 and the biggest in data going back to 1990.
We never talk about breakeven costs for oil production in China, do we?

Do you remember all the acquisitions China was making during the Bakken boom? That was tracked here. As recently as: October 26, 2015: Chinese company pays $1.3 billion for shale in the Permian.

CLR's Radermecher Wells

The original Radermecher well, a 1280-spaced, Three Forks well was drilled/completed back in 2009:
  • 17718, 575, CLR, Radermecher 1015H, Three Forks, open hole/cased; ~ 1.5 million lbs; t8/09; cum 168K 11/16;
That well is sited in section 15-151-96 and the horizontal runs north to south.

The three "new" Radermecher wells are now starting to come off the confidential list (January 16, 2017). These three Radermecher wells are sited in the section to the south, 22-151-96, and will no doubt the horizontals will run to the north.

It's possible they have not been fracked yet. The production profile of the original Radermecher well (#17718) has never been taken off-line which is customary when neighboring wells are fracked; but we will know more this week when the newer wells start coming off confidential:
  • 28990, conf, CLR, Radermecher 3-22H, Camel Butte, no production data,
  • 28991, conf, CLR, Radermecher 1-22H1, Camel Butte, no production data,
  • 28998, conf, CLR, Radermecher 4-22H2, Camel Butte, no production data,
I assume the "H" (#28990) is a middle Bakken; the H1 (#28991) is a Three Forks, first bench; and, the "H2" (#28998) is a Three Forks, second bench.

Production profile for #17718 is incredibly unremarkable. This was the production profile for the first year:


PoolDateDaysBBLS OilRunsBBLS WaterMCF ProPCF SoldFlared
BAKKEN6-201028242222823835162509270
BAKKEN5-20103130643321447581758170
BAKKEN4-20103030203413456599859980
BAKKEN3-20103132532882630748874880
BAKKEN2-20102833803273505741574150
BAKKEN1-20103141844327562675367530
BAKKEN12-20093145094555593676567650
BAKKEN11-20093057425797114610530105300
BAKKEN10-20092148054517923643264320
BAKKEN9-20093071147087102710912109120
BAKKEN8-200930144531423656472056817144

Since then this well has plateaued off to about 1,000 bbls/month.

The screenshot taken today:

Whiting, QEP, Oasis All Report Nice Wells Tuesday -- January 16, 2017

Active rigs:


1/16/201701/16/201601/16/201501/16/201401/16/2013
Active Rigs3649157187185

Seven (7) wells coming off confidential list -- 

Tuesday, January 17, 2017
28991, conf, CLR, Radermecher 2-22H1, Camel Butte, no production data,

Monday, January 16, 2017
31906, conf, BR, CCU Burner 1-1-26MBH, Corral Creek, no production data, 

Sunday, January 15, 2017
28990, conf, CLR, Radermecher 3-22H, Camel Butte, no production data,
32042, see below, Whiting, Gullikson 14-35H, Glass Bluff, producing,
32043, see below, Whiting, Gullikson 44-34HU, Glass Bluff, producing, 

Saturday, January 14, 2017
26364, see below, QEP, MHA 2-28-29H-148-92, Heart Butte, producing,
31334, see below, Oasis, Johnsrud 5198 14-18 15TX, Siverston, producing,

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31334, see above, Oasis, Johnsrud 5198 14-18 15TX, Siverston:

DateOil RunsMCF Sold
11-20162469634619
10-20162915151582
9-20162579927304
8-20162377027188
7-20161089617731

26364, see above, QEP, MHA 2-28-29H-148-92, Heart Butte:

 DateOil RunsMCF Sold
11-201697864785
10-2016139206183
9-201694943072
8-2016121864239
7-201680303859

 32043, see above, Whiting, Gullikson 44-34HU, Glass Bluff:

DateOil RunsMCF Sold
11-20161396016146
10-2016130018676
9-20161710016040
8-20161463690
7-201645243892

 32042, see above, Whiting, Gullikson 14-35H, Glass Bluff:

DateOil RunsMCF Sold
11-2016117949659
10-2016103296497
9-20161360010656
8-20160154
7-201638042880

How Can You Mend A Broken Heart -- January 16, 2017

More Trump jobs: Wal-Mart announces plan to create 10,000 jobs in nod to Trump -- WSJ. 
Retailer says latest job-creation effort will support 24,000 additional construction jobs.

More Trump jobs: General Motors plans at least $1 billion in fresh US investment; expected to create more than 1,000 jobs. Over at The Wall Street Journal:
General Motors Co. this week will announce plans to invest at least $1 billion across several U.S. factories, two people familiar with the plan said, a move aimed at underlining its commitment to U.S. manufacturing jobs in the wake of President-elect Donald Trump’s criticism of the auto maker’s imports from Mexico.

GM’s announcement could come as early as Tuesday, the people briefed on the plan said. The company will cite a number of new jobs in excess of 1,000 stemming from the investment but doesn’t plan to specify which of its factories are in line for more work, one person said.

The move comes days after Mr. Trump publicly ratcheted up pressure on the nation’s largest auto maker. During his press conference last week, the president-elect thanked Ford Motor Co. and Fiat Chrysler Automobiles for recently announced U.S. investment plans that are expected to create a combined 2,700 jobs. He then turned up the heat on GM to follow suit.

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Back To The Bakken

Active rigs:


1/16/201701/16/201601/16/201501/16/201401/16/2013
Active Rigs3649157187185

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In Other News

Skiing competition canceled: too much snow. Ski World Cup in Switzerland called off. I can't make this stuff up.

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How Can You Mend A Broken Heart?

Enquiring minds want to know.

#16 in the 20-song countdown.


How Can You Mend A Broken Heart, The Bee Gees

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When Depressed, Go Downtown!

Downtown, Petula Clark

And what a great week to go downtown:
  • IMF boosts estimates for USA GDP growth! Cites Trump impact!
    • President Obama: first president in modern history never to have 3% growth in even one year -- and he had eight years; more than some presidents
    • GDP growth in his last year: a paltry 1.6% (their words, not mine)
    • IMF US GDP projections: 
      • 2017: 2.3%
      • 2018: 2.5%
  • A record-busting inauguration forecast! Hundreds of thousands expected in DC!
  • MLK's niece voted for Trump
  • Downtown is getting safer! Chicago homicides already dropping significantly after Trump election. The 24 homicides over the year's first 15 days (a dynamic link) extrapolates to 584 Chicago homicides in 2017, compared with 797 in 2016. If that holds, that represents a decrease of 27% homicides in the Windy City, one year after the shocking Trump election
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No Match For "Hidden Figures"

From Yahoo!News headline: three new movies bomb at box office -- can't compete with black women! The bombs:
  • Ben Affleck's "Live by Night"
  • Martin Scorsese's "Silence"
  • "Monster Trucks" 
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The New Amazon Credit Card

Mine should be arriving in less than two weeks. Is the new card worth it? Let's see what MarketWatch had to say:

Gasoline purchases:
  • My current card gives me 5% back on gasoline purchases one quarter (three months) every year, which works out to 1.25% over the course of the year.  
  • Amazon: 2% back on gasoline throughout the year; as well as 2% throughout the year at restaurants and drugstores ("rewards" not cash)
Gift card:
  • new Amazon card "subscribers" received $70 gift card
Capital One "What's In Your Wallet?" may be the best competitor: 1.5% for all purchases and a $100 bonus when signing up.

MarketWatch says American Express's Blue Cash Preferred card offers 6% at US supermarkets; 3% at gas stations; and 1% on other purchases. Surprisingly, AMEX has no annual fee on this card. 

The big winner: Chase. The bank/card "will attract high-spending, low-risk customers who will use them responsibly."

The bigger winner: Amazon. It's a "rewards" card; not a cash-back card.

But money if fungible, and "rewards vs cash-back" won't matter. Amazon is more than just books.

Sunday, January 15, 2017

January 15, 2017

Active rigs:


1/15/201701/15/201601/15/201501/15/201401/15/2013
Active Rigs3649156187185
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California Drought
Lots of different data floating in (pun intended) regarding the snow pack in California and the state of the water reservoirs in California. On July 7, 2016, it was noted that Lake Mead was down to historic lows. The level of Lake Mead continues to fall. See this link (it's a dynamic link). Unless I'm missing something, Lake Mead dropped into Ration Region 1 -- hitting historic lows. [Later, a reader sent me the link to California snow pack water equivalent.]

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Before The Next Teardrop Falls

#15 in the 20-song countdown:

Before The Next Teardrop Falls, Freddy Fender

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The Literature Page

In The Celts, Gerhard Herm, has a full chapter on the Druids. Caesar noted that in Gaul, only two groups were important and enjoyed respect: the Druids and the knights.
The Druids would lay down what was right and what was not. They ruled over past and future, healing, the course of the seasons and the secrets of nature; they were university, church, and court of the realm all in one.
The author asks what gave them all that power?
What gave them such immunity from attack, other than their political skills? The Celts, Caesar says, 'were to a great extent religious.' from a political viewpoint, creeds, like ideologies, are the best way of ruling men.
If there is one recurring ideology espoused by President Barack Obama, it has been global warming. That will outlive him and will carry his legacy. Healthcare will not; foreign affairs will not; and, certainly his impact on the US economy will not be remembered. But the ideology -- should we say, religion, or cult -- of global warming will go on for quite some time.

Saturday, January 14, 2017

Atmospheric CO2 -- December, 2016



2015: 401.85
2014: 398.91
Source: CO2 Earth.

Staggering Decline In Saudi Arabia's Cash Reserves Continues -- January 14, 2017

Source: http://www.tradingeconomics.com/saudi-arabia/foreign-exchange-reserves.

Compare these two graphs, taking particular note of the size of the bars for May, 2016, and comparing most recent data.

First, the "old" graph:




Now, compare to the "new" graph with updated data.


There are several things to note:
  • the right hand (vertical) axis has changed
    cash reserves had a slight uptick in May compared to April (2016) 
  • from June, 2015, to November, 2015, one could argue the decrease in cash reserves was steep but somewhat "smooth"
  • in the "old" graph, there was a deep drop-off in January, 2016
  • although the decline seemed to flatten a bit in spring / early summer, 2016, it took another drop by autumn, 2016
  • but, look at that huge drop-off in November, 2016 -- in percentage terms, it looks like the biggest drop since June, 2015
I don't know what others might say, but to me this is quite staggering.

This is occurring at same time, Saudi's foreign policy (war in Yemen) costs are increasing, as wells as internal security (terrorism; subsidies to keep population content) are increasing.

By October - November, 2016, oil prices had started to recover, and yet Saudi's cash reserves were falling faster than ever.

At $50-oil, and a national budget based on $80-oil (wink-wink), I can't imagine this graph will turn around any time soon.

Projection from same source:

Why Prince Salman's "Vision 2030" Will Fail -- January 14, 2017

Track Prince Salman's plan here.

From Eurasia Review, Saudi Arabia's flawed "Vision 2030" -- analysis, December 26, 2016. Some data points:
  • after Saudi Arabia's cash reserves had dropped $150 billion, Crown Prince Muhammad bin Salman finally weighed in: with a 2030 plan -- developed by McKinsey
  • Saudi's annual GDP growth between 2003 and 2013 (that period included record crude oil prices): 0.8 
  • Saudi's annual GDP growth is less than most emerging economies
  • Prince Salman's plan seeks to reduce role of public sector; increase role of private sector
  • the plan calls for the creation of a huge sovereign wealth fun to be funded by an unprecedented IP of a 5% stake in Saudi Aramco
  • Riyadh has already wasted precious time: the country spent trillions of dollars 1970 - 2014 on 5-year development plans that left 90% of the annual Saudi budget dependent on oil revenues
  • Analysis: Prince Salman's plan will fail for four reasons
    • it is an overblown mega-project scheme
    • it focuses on economics and discards political development
    • it superficially approaches the challenge of instilling virtues of achievement
    • it takes the generation of non-oil revenues as it ultimate goal
  • The Mega-Project Scheme
    • a $2 trillion investment program; raising that much money is practically next to impossible unless oil prices see a significant appreciation ($50 oil isn't going to do it, folks) or unless Saudi plans to sell a higher proportion of Saudi Aramco
    • identifies eight sectors to generate 60% of Saudi economic growth
    • turns out that the petrochemical sector is already well developed and has little room to absorb more workers
    • same thing for mining
    • most sectors have low-paying jobs, which Saudis won't take
    • Saudi can't possible compete in health, banking and finance
    • tourism? LOL. It's growing; it is the second largest sector after oil, but Saudi resistant to issuing visas
    • focus on universities? LOL
  • Economic Development But No Political Reform
    • Salman glosses over fact that King Saud's modern Saudi state rests on the three pillars of religion, tribalism, and oil
    • Wahhabi religious doctrine is synonymous with radicalism
    • Salman is trying to deconstruct the pillars of the Saudi political system without replacing them with modern ones
    • the only thing political about Vision 2030: the kingdom will forgo its traditional role of a swig oil producer instead opting for a major role in the global energy industry that requires transformatino of Aramco into a "fully-fledged international oil company"
  • Saudi Cultural Values
    • Saudi's cultural values do not support Vision 2030. Does more need to be said?
  • All About Revenues
    • lots of taxes; end of subsidies
  • If The Plan Fails
    • could go the route of Syrian president Bashar al-Assad 
Countries that come to mind:
  • Mexico
  • Libya
  • Venezuela
  • Nigeria
  • Iraq

Someone Must Be Reading The Blog -- January 14, 2017

Over at "The Next Big Thing," I just posted a note about drones a few days ago:
Jobs: drones. Operators: law enforcement; weather channels; news agencies; logistics; marketing; advertising; tabloid; city planners; military; IRS, tax assessments; insurance adjusting (hail crop damage); farming.
Today a reader sent me this timely link: drone schools look to woo younger pilots for commercial jobs, from The Bismarck Tribune:
Leaders in the unmanned aircraft industry are trying to persuade young people who think drones are cool to consider flying them for a living.
Commercial pilots must obtain a Federal Aviation Administration drone license, and some companies that employ such pilots have started selling classes that help students prepare for the FAA test or just figure out whether they would be interested in such a career.
"I think a lot of people my age are interested in drones because it's cool technology that is really just starting to be available for everyone," said 17-year-old North Dakota high school student Ava Niemeier, who plans to attend new training being offered by a commercial drone company in her state. "There are a lot of kids at my school with smaller drones that they fly for fun."
Businesses use drones to take photos and video, for security and to conduct inspections or surveys, among other things. With the number of commercial drone operations outpacing the pool of certified drone pilots, experts say more training is needed to help young flyers operate the planes legally and safely.
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Reading The London Review Of Books

This was not a "staged" photograph. I had been in the living room when I went in to the bedroom to see if Sophia was taking a nap. She was not:


It should be noted that The London Review of Books, which she is reading, is more challenging to read than The New York Book Review which I generally prefer.