Monday, September 24, 2012

What We're Gonna Be Talking About Tuesday -- ONEOK: Foreshadowing Earnings From the Oil Patch?

From Yahoo!In-Play:
  • ONEOK announces its 2013 net income is expected to increase 19% compared with its current 2012 earnings guidance that was updated on July 31, 2012
  • Co announces its 2013 net income is expected to increase 19% compared with its current 2012 earnings guidance that was updated on July 31, 2012. 
  • The 2013 guidance also includes a projected dividend increase of 3 cents per share semiannually in 2013. 2013 earnings guidance reflects increased operating income in the ONEOK Partners segment due to higher anticipated earnings from increased natural gas gathering and processing volumes and higher natural gas liquids (NGL) volumes gathered and fractionated resulting from the completion of several internal growth projects; and higher margins from increases in rates and surcharges in the natural gas distribution segment. 
  • ONEOK expects to increase its net income by 20 to 25 percent annually between 2012 and 2015, compared with 2012 earnings guidance, driven primarily by incremental earnings to ONEOK from the growth at ONEOK Partners. 
  • ONEOK also expects to increase its total dividend by approximately 65 to 70 percent between 2012 and 2015, which includes the planned 2013 dividend increases. 
  • ONEOK's 2013 earnings guidance also includes a projected 2-cent-per-unit-per-quarter increase in unitholder distributions declared from ONEOK Partners.

Wells Coming Off the Confidential List Tuesday; KOG With Two Nice Wells; QE 3 Already a Failure?; The WSJ on Saudi's Spare Capacity

Bakken Operations

Price of oil rises as "speculators" fear last week's drop was overdone. -- Bloomberg

Active rigs: 187 (not bad; up from the low of 184)

Wells Coming Off the Confidential List
  • 20520, drl, XTO, Bang Federal 21X-19F, Lost Bridge,
  • 20774, 1,292, Whiting, Fladeland 11-12TFH, Sanish, t3/12; cum 26K 7/12; 
  • 20839, 905, Whiting, Pronghorn State Federal 21-16TFH, t3/12; cum 24K 7/12; 
  • 21575, 658, MRO, Strand 44-19H, Strandahl, t6/12; cum 11K 7/12; 
  • 22189, 2,350, KOG, P Vance 154-97-2-17-20-15H, Truax, t7/12; cum 8K 7/12;
  • 22190, 1,817, KOG, P Vance 154-97-2-17-5-5H, Truax, t7/12; cum 8K 7/12; 
  • 22516, 755, SM Energy, Adams 2-18H, Colgan, t7/12; cum 19K 7/12;
  • 22547, drl, CLR, Sibbern 1-27H, North Tioga, 
President Obama Not Serious About Natural Gas

Republicans are pointing to the Obama administration’s postponement of a natural-gas export study as evidence that the president’s support of natural gas is mostly talk with little action. 
The Department of Energy (DOE) last week delayed the release of a report on the economics of exporting natural gas until after the election, citing complexities in analyzing the fragmented global natural-gas markets. The report, which is being compiled by a third-party contractor, was originally scheduled for release in March. 
Is Saudi Bluffing?

I have always argued that Saudi's ability to bring more oil to market is exaggerated. I have a tag at the bottom of the blog, "Saudi Perspective" on just that contention. If interested, click on it, and then scroll down through the articles. So it was with great pleasure to see the Wall Street Journal report what I've been saying for years: Saudi doesn't have all that much spare capacity
Saudi Arabia's oil minister, Ali al-Naimi, has repeatedly dismissed fears that its spare capacity wouldn't be enough to cover a major disruption. 
But experts are skeptical about whether the so-called swing producer would have enough leeway to make up for a major disruption. According to the International Energy Agency, Saudi spare capacity—the sustainable cushion of available oil it could pump at short notice if needed—was just under two million barrels a day last month, 12% thinner than for the same period last year, when Libya's output was virtually shut down. 
In addition, Saudi Arabia uses more and more of its own oil. In July, the month when the European Union began enforcing a full embargo on Iranian oil, the kingdom actually cut exports of oil and condensates by 7% on a monthly basis, according to the Joint Organization Data Initiative, an oil-transparency effort that uses numbers supplied directly by governments. 
Part of the drop was due to record amounts of oil used by Saudi Arabia this summer, as economic growth spurs domestic consumption. [MDW linked a story on Saudi burning more oil to run air conditioners.]
Is QE3 Already a Failure? 

Riding a bike gives one a lot of time to think. Seeing the market swoon again today, and the price of oil drop again, suggests to me, at least, that QE3, announced just a week or so ago, is already a failure. When it was announced, I thought as much. I have no idea what the expectations were, and don't even know if I have the whole story, but apparently the Fed is just buying more mortgage-backed securities. With mortgages already about as low as they can go, and folks still not buying, suggests that mortgages are not the issue. So, I'm probably all confused on that, and my reasoning is probably all wrong, but the bottom line for me is that there was nothing in QE3 that excited me. And today, while riding around Belmont (a suburb of Boston), I simply thought that QE3 is already a failure.

So, tonight, looking at today's business news, that's the Yahoo!Finance headline: if QE3 doesn't do what it's supposed to, the Federal Reserve is ready to step in and buy other assets (with money it doesn't have):
The Federal Reserve could expand its stimulus package to include assets other than mortgage-backed securities if the U.S. economy fails to respond to its latest effort to jump-start the economy. 
The article says the Fed is limited by what it can buy, but those boundaries are not written in stone; they can be modified.

I'm hoping they considering buying "stuff" that makes it easier for me to finance the following: a) a new Honda Civic; b) a new Apple MacAir; and, c) a new, high-end bicycle. I wonder if there's a way they could throw in a pre-paid Starbucks card for military vets?

20 Stocks "With The Potential"To Pop

Someone posted a list of 20 stocks "with the potential" to pop. Disclaimer: this is not an investment site. #9 on the list was DNR.

A Little Bit More Regarding Development At 13-Mile Corner North Of Williston

For some reason, I couldn't get the site to download earlier, but it is opening now, albeit a bit slowly. This is the URL for information regarding the 13-mile corner north of Williston:!about-13-mc 
And taken from the google blurb:
13 Mile Center (13MC) is an approximately 80 acre commercial park offering a variety of ... 13MC is ideally located at the intersection of State Route 2 & 85 North in the hub of the Bakken Basin oil field activity zone. ... Williston, North Dakota ..
Meanwhile, this PDF will download. It's a press release. The same company building the Radisson Hotel and Country Inn & Suites in Williston is considering building hotels in Ray (northeast of Williston) and at the 13-mile corner north of Williston.

Faux-Environmentalists Point Out High Cost of Building Coal Plants

Link here Midwest Energy
Power costs from a controversial Illinois coal plant are soaring, creating a major financial burden for towns and utilities that invested in the project, according to a new report. 
Electricity from the Prairie State Energy Campus now costs between 40 and 100 percent more than Peabody Energy originally promised, raising electric bills for 2.5 million ratepayers and costing hundreds of Midwestern towns millions of dollars apiece, according to a detailed financial analysis released by the Institute for Energy Economics and Financial Analysis, a small organization that works to reduce the nation’s dependence on coal and other non-renewable energy resources
“What today’s report shows is that the Prairie State coal plant is turning out to be the financial nightmare that many of us feared when it was first proposed,” said Sandy Buchanan, executive director of Ohio Citizen Action, a ratepayer- and environmental-advocacy group. 
I wonder how much of the cost can be attributed back to faux-environmental regulations, delays, and a general desire to simply kill the coal industry. Does Sandy have a Plan B if the coal plant is not built?

Posted for archival purposes only. I don't follow coal; some MDW readers do.

More of the story:
The 1,600 MW Prairie State coal plant was planned and developed by Peabody, the world’s largest coal company, beginning in 2001. 
Peabody designed the plant, secured permits for it, and lined up a contractor, Bechtel, to build it in Marissa, Illinois, about 50 miles southeast of St. Louis. The company also began working aggressively with state power agencies to help persuade communities all over the Midwest to buy a stake in the project, promising them a stable source of low-cost electricity. 
In all, 217 towns and cities and 17 electric co-ops in eight states signed decades-long contracts to buy electricity from Prairie State. 
All risked losing money if power from the plant became more expensive than wholesale market prices. In addition, 82 of those communities signed take-or-pay contracts where they agreed to pay a proportion of the plant’s fixed costs, regardless of whether it is generating power. That happened between March and June of this year, when communities across the Midwest were paying for power they hadn’t received.
Can you spell lawsuits?

Chicago-Based Continental Resources Awards $14 Million to UND

Link to Prairie Magazine (regional links break early and break often).
UND's College of Engineering and Mines announced today it was awarded $14 million for a new geology school. 
Chicago-based Continental Resources Inc. and oil billionaire Harold Hamm, which will establish the Harold Hamm School of Geology and Geological Engineering at the College of Engineering and Mines at UND, donated $10 million toward the project, according to the Industrial Commission of North Dakota.
I was not aware that CLR was based in Chicago. I thought they were in Oklahoma City.

From another source:
This is the largest-ever gift to UND from someone who is not an alumnus of the University, and adds a significant dimension to North Dakota Spirit -- The Campaign for UND.
I believe this will require NDIC approval.

Taxpayers: $197 Million To Solyndra ...

... wanna-be.

Link here to NBC.
A tiny solar company named SoloPower will flip the switch on production at a U.S. factory Thursday, a major step toward allowing it to tap a $197 million government loan guarantee awarded under the same controversial program that supported failed panel maker Solyndra.
The CEOs and top level VPs are paid quite handsomely in these start-ups, and are often recent graduates of East Coast MBA programs looking for their first jobs.

They are expected to contribute to the election campaign of their choice.

Posted for archival purposes only. We can check on the company in two years.

The good news: it's only $197 million. About 20 Bakken wells.

"Airports" in Small North Dakota Towns Adjusting

  • Watford City and Stanley: adding more hangars
  • Killdeer: re-opening; expanding all facilities
  • New Town: to extend runway

See link at The Bismarck Tribune.

Twenty-Four (24) New Permits

Twenty-four (24) new permits:
  • Operators: XTO (5), Whiting (5), CLR (4), Hunt (3), BR (2), Slawson (2), Samson Resources (2), Fidelity 
  • Fields: Frazier Divide), Haystack Butte (McKenzie), Boxcar Butte (McKenzie), Dollar Joe (Williams), Ray (Williams), Ambrose (Divide), Sanish (Mountrail), Brooklyn (Williams), Heart River (Stark), Heart Butte (Dunn) 
  • Comments: Whiting has a permit for a wildcat in Golden Valley County
Wells released from confidential status reported earlier; see sidebar at the right.

Three producing wells were completed:
  • 19090, 471, CLR, Osmond 1-3H, 
  • 21845, 595, CLR, Bratlien 154-100-33-28-1H, 
  • 21966, 339, CLR, Fairbanks 1-20H, 

Race Tightens In Pennsylvania

Simple questions, after all:
  • to frack or not to frack
  • to grow or not to grow
  • natural gas royalties to help with the state budget or kill them by regulating fracking at the federal level
Simple questions. This is not rocket science.

Even New York state is looking at the natural gas royalties across the state line into Pennsylvania (no link; it's been posted earlier)

Slip, Sliding Away, Simon and Garfunkel

Toyota Pulls The Plug on the All-Electric Car; Admits To Having Misread the Market: EVs Do Not Meet Society's Needs (Cost, Charging Time, Distance)

Link here to the Reuters story:
Toyota Motor Corp has scrapped plans for widespread sales of a new all-electric minicar, saying it had misread the market and the ability of still-emerging battery technology to meet consumer demands. 
Toyota, which had already taken a more conservative view of the market for battery-powered cars than rivals General Motors Co and Nissan Motor Co, said it would only sell about 100 battery-powered eQ vehicles in the United States and Japan in an extremely limited release. [That's an understatement.]
The automaker had announced plans to sell several thousand of the vehicles per year when it unveiled the eQ as an pure-electric variant of its iQ minicar in 2010. 
"Two years later, there are many difficulties," Takeshi Uchiyamada, Toyota's vice chairman and the engineer who oversees vehicle development, told reporters on Monday. 
By dropping plans for a second electric vehicle in its line-up, Toyota cast more doubt on an alternative to the combustion engine that has been both lauded for its oil-saving potential and criticized for its heavy reliance on government subsidies in key markets like the United States. 
"The current capabilities of electric vehicles do not meet society's needs, whether it may be the distance the cars can run, or the costs, or how it takes a long time to charge," said, Uchiyamada, who spearheaded Toyota's development of the Prius hybrid in the 1990s.
This is a huge story on so many levels.

Let's see what A123 is doing this morning: down 10% (drops another 3 cents to 30 cents/share). Down to 30 cents/share. Remember: this sold for $25/share at one time. [A123 is now B456.]

I could be wrong, but I believe Toyota was A123's most important customer. I have more than a passing interest in A123 but cannot comment further. I do not invest or trade in A123.

This should be great news for Government Motors: one less competitor. All indications are that GM will continue to develop, market, and ship its all-electric vehicle, the Volt --- once it re-opens the assembly line.


Tesla's outlook dims. CEO sidesteps question --
“People that are buying this vehicle now are supporters of the company, so to some extent whether the volume is 5,000 or 4,000 or even 3,000 this year, it doesn’t really matter,” Baum said yesterday. “In the longer term, it’s more important that the product be thought of positively. The last thing the company needs is to disappoint buyers. They haven’t yet and they don’t intend to.” ["It really doesn't matter! Let the venture capitalists eat cake.]
Tax credits will have no impact on sales of electric vehicles; a waste of money. Some crackpot? Nope, the Congressional Budget Office.  

US Energy Acquires 400 Net Acres; $2.5 Million; Already in Production; Minor Working Interests

From Yahoo!In-Play:
U.S. Energy acquires Bakken/Three forks asset package for $2.5 million:
US Energy announced the acquisition of a producing Bakken and Three Forks asset package.  
Bakken Production and Acreage Acquisition: On September 21, 2012 the Co entered into a purchase and sale agreement with an undisclosed seller to acquire interests in producing Bakken and Three Forks formation wells and related acreage in McKenzie, Williams and Mountrail Counties, North Dakota.  
Under the agreement, USE acquired working interests in 23 drilling units for $2.5 mln with an estimated 307,000 BOE in proved reserves. USE's working interest in the drilling units averages 1.45% and ranges from less than 1% to ~5%.  
There are currently 27 gross producing wells in the acreage. Of these wells, 25 are producing from the Bakken formation and 2 are producing from the Three Forks formation. All acreage (~400 net acres) is currently held by production and produces ~47 BOE/D net to USE. 
On a going forward basis, there is the potential for USE to participate in an additional 135 gross wells from the Bakken and Three Forks formations combined and the Co will be heads up for its proportionate interests on all new wells drilled within the units. The effective date of the transaction is July 1, 2012.
Comment: the back-of-the-envelope is getting pretty full of doodling, but $2.5 million / 400 net acres --> $6,250/acre, which seems to be in line with going rate of acreage in the better Bakken.