Saturday, June 15, 2013

"This Too Shall Pass" -- Update On The Hamm Divorce

NBC News is reporting:
Despite efforts by the Hamms to keep their divorce proceedings secret, Reuters has learned that the couple never signed a prenuptial agreement when they were married 25 years ago.
Such an agreement, common when one or both spouses bring substantial wealth into a marriage, would have spelled out how to divide marital assets in the event of a divorce.
In its absence, the Hamm divorce has taken on dizzying financial complexity. Court documents indicate Harold Hamm, who owns more oil in the ground than any other American, already has turned over 50,000 pages of corporate information to his wife, a former attorney at Continental.
Much more at the linked article.

Knowing Me, Knowing You, ABBA


CBS Evening News anchor talks about the evening news:
You know, never in human history has there been so much information available to so many people. But never in human history has there been so much bad information available to so many people. And I think people are looking for brand names that they can trust and CBS News is one of those. The other half of this is that folks are busy. They’re going to work, they’re going to school they’re getting the kids off to school, and they care about the world; they want to know about the world but they don’t have a lot of time to spend on that. So what were offering at the evening news is, within 30 minutes we’re going to tell you about the 12 most important things that happened in the world. And you’re going to get that from the CBS News brand, which you already trust. And I think that’s why we’ve added a million viewers in the last 2 years and why we grew so much this last year in particular.
Right, wrong, or indifferent; whether Scott Pelley's CBS is a brand you can trust: the rest of his answer is entirely bogus: at least the last portion of every newscast, and often two segments, are clearly "fluff." With such little time, I am always amazed that one of the 12 segments, or sometimes two, is clearly unimportant to the "folks who are busy." One current segment, for example, is about the new school playground at Sandy Hook. Another current segment is how one teenager is trying to solve world hunger. Cute.

And, oh by the way. Not one of the evening newscasts has 30 minutes of "news." Commercials now account for 8 minutes of the 30 minutes, and there is only 22 minutes of "news." Twelve segments in 22 minutes works out to 1.8 minutes per segment. That's probably enough time to explain: O'Bama Care or Bernanke's quantitative easing or the Syrian Civil War. LOL.

More from the interview:
Pelley: We measure our audience in millions. They’re not big numbers. People talk about cable a lot and cable has a very high profile. Not a lot of people watch cable news, they just don’t. If you look at the Nielsen numbers, the cable channels have a few hundred thousand viewers at any given moment. The CBS Evening News again has 7 million viewers, ABC has 8 million viewers. Brian [NBC's Williams] has almost 9 million. Altogether we have about 25 million viewers on any given night. That’s a very different order of magnitude.
As TV Newser reported, the Evening News averaged 5.7 million viewers the week of June 3, ABC World News had 7 million and NBC Nightly News had 7.5 million [total = 20.2 million].
It's been years since any of these programs garnered 9 million viewers and they attracted a combined 25 million.
This guy's another teleprompter reader. 

For Investors Only With A Focus On Oasis; The IMF Appears To Be Concerned About Cancellation Of White House Tours

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or what you think you may have read here. 

This has been a challenging week for energy companies. It was interesting to see these stories on Oasis this week.

First, from Motley Fool, "are investors missing something?" The graph is particularly interesting.

Second, another Motley Fool story, "are these companies growing too aggressively?" Several companies were highlighted but much ink spent on Oasis and SandRidge:
For SandRidge, its robust capital spending has yielded a 105% year-over-year increase in its Mississippian Lime production. Meanwhile, Oasis' production has grown 71% year over year while its reserves in the Williston Basin have enjoyed a compound annual growth rate of 121% since 2009. While that production growth is great, its caused both companies to look externally for funding.
This has been more evident at SandRidge which has raised capital by every means necessary including selling assets and tapping the debt markets. Most recently, the company has used asset sales to improve its credit metrics; however, the company has come to the point where its hitting against the edge of its capacity to spend on growth. That's caused the company to cut $700 million from this year's capital budget. Despite that, SandRidge still expects to organically grow its production by 13% this year with its Mississippian production jumping 60%.
Oasis hit a new 52-week high this past week.


We Want White House Tours

It appears some European tourists coming to visit the United States are upset that White House tours are no longer available. They must have written the IMF: the managing director of the fund, Ms Christine Lagarde, is besieging the US to "scale back its automatic federal spending cuts, warning that they were "excessively rapid and ill-designed" and were hurting the nation's economic recovery.

Remember: a) 2%; b) at least a year in the planning.

Does anybody really believe Ms Lagarde is all that concerned about the US economy? It seems the PIIGS are in worse shape: Portugal, Ireland, Italy, Greece, and Spain. And before it's all over, it will be the PFIIGS, adding France to the mix.

I really doubt the Europeans even give the sequester a minute of thought. Unless they are elitist European tourists upset they can't visit the White House. 

Remember: three percent of the $500 million being given to the Palestinians leaders earlier this year would fund 5 years of White House tours. All $500 million would fund 150 years of tours. This $880,000 grant by the US government to study snail sex would fund almost five months of White House tours. And if lucky, one might even see some snail sex in the Lincoln bedroom. [The Secret Service said it cost about $74,000/week to fund security for White House tours. Has anyone, other than me, noted that this story never had any legs, something Michelle probably figured out.]

When they were being offered, White House tours cost about $300,000/month. The president's upcoming Africa trip will cost $100 million. The sequester is the least of our problems.

Ms Lagarde embarrasses herself when she talks about the sequester.

But it certainly is entertaining to read.

Something To Consider -- Leasing -- There's A Reason California Is Called Fantasyland


June 22, 2013: 93% of folks who obtained an electric car in 4Q12 leased, did not buy -- WSJ
The sticker price for most of the electric cars is north of $30,000 and even with a hefty $7,500 federal tax credit, the monthly payment is hundreds of dollars a month higher than for a lease. Tesla Motors Inc. earlier this year began offering a lease-like financing deal aimed at dropping the monthly payments for its $70,000 and up Model S sedans.
Leasing an electric car also insulates the customer from long-term costs associated with replacing tired batteries. A lease represents a bet that in three years, electric car batteries may offer longer driving range at a lower price.
There’s also another financial disincentive to owning an EV – that same tax credit for $7,500 degrades the residual value of a financed vehicle very quickly.
The National Automobile Dealers Association said earlier this week that the expected trade-in value this year for a model-year 2011 Chevrolet Volt was $21,235  or 49% of the original price and for the Nissan Leaf it was $14,792, or just 42%. Those figures are well below the 62-63%  residual of similarly-sized, gasoline-powered compact sedans over that period.
Consumers who lease electric cars don’t have to worry too much about the resale value. But auto makers and finance companies that are offering discounted lease deals do. The low residual values of the leased vehicles could result in losses when the vehicles come back and are resold at auction, depending on the size of the gap between the value estimated when the lease contract price was calculated and the actual value at auction.
This certainly looks like it will end badly for the manufacturer or the dealer, or the finance companies, I guess. I suspect consumers have figured this out. At the end of three or four years, a lot of batteries will need replacing. 
Original Post

Yesterday, while waiting to have "my" Honda Civic serviced, I noted that the dealer was leasing the Honda Civic for $139/month.

Compare that price with the rate quoted in The LA Times: $169.
Shoppers have pushed leasing to a record 25.6% share of new-vehicle sales in the first quarter of this year, up from just 16.3% in 2004, according to Edmunds.
Leasing attracts buyers such as Jerry Festa, a Pacific Palisades insurance agent who likes the "simplicity and convenience."
"I go down, pick out the car that I want. I drive it for a few years and give it back," said Festa, who leased two hybrids from Santa Monica Ford in the past month. "I don't have to worry about selling the car. I don't ever put a brake pad on a car, I don't ever put a tire on a car."
The drawback? Never getting rid of the car payment. But Festa figures that's a fair price for always having a new car under warranty.
Okay. Seriously. Has anyone with a family ever gone a month in his/her life after the age of 35 without having a car payment? 

I assume many, many, many folks have gone months and years without a car payment. I assume I might have, but I honestly cannot remember when. I would assume my average monthly payment when owning a car has been twice what the Honda Civic lease quotes are.

If I don't get "my" Honda Civic back when I move to Dallas (from San Antonio), I may just have to lease.  Imagine: $139/month. Never putting on a new brake pad.

What a great country.  For many folks, $139/month is less than what they pay for Starbucks and Apple iTunes each month. And for that, they get a new car every two or three years.

In fact, leasing opportunities will get even better in the out years when car companies will be forced to lease EVs to get them off the lot and meet California's law for number of EVs that must be sold in Fantasyland. Can hardly wait.

A Note To The Granddaughters

Writing about cars and California brings back fond memories. After college, I went to graduate school in southern California. It was my first extended stay outside of the Dakotas. From age 21 to 25 I was in southern California. The best years of my life. The freeways.

I never liked this song, but it's one I could never ignore.

LA is a great big freeway. Put a hundred down and buy a car...

Does Anyone Know The Way To San Jose, Dionne Warwick

Every line in that song speaks to me. Even more than this:

California dreaming:

California Dreamin', Mamas and Papas

Over those four years, lots of car stories.

I, the passenger, reading John Steinbeck's East Of Eden out loud to the "first" love of my life who was doing the driving from LA to San Francisco.

Four years later, meeting my wife-to-be, she driving a lemon yellow, convertible, MG, and living on Military Avenue (an omen). One year later we were starting our 30-year relationship with the US Air Force.

Hunter S Thompson's California doesn't exist any more. But the memories will last forever. Some more than others.

HST --> Jefferson Airplane, but this speaks to me on this bright, sunny day ... 

Born To Be Wild, Steppenwolf

It is incredible to think that was from 1969 [Warning: clicking on that link requires high-speed internet; anything less will result in disruption of your internet experience. Trust me.]
From wiki: The song, Born To Be Wild, was initially released in 1968, but it was subsequently included in many compilation albums and soundtracks. The first of these was the soundtrack for the movie Easy Rider, released in 1969. Unlike the album When the movie was in production, Born to Be Wild was used simply as a placeholder, since Peter Fonda had wanted Crosby, Stills and Nash to do the movie's soundtrack. Eventually, it became clear that the song was well suited for the movie.
Enough of this rambling; off to soccer.

Week 24: June 9, 2013 -- June 15, 2013

The Bakken is here to stay: NDSU Housing Study, 2012
Why we are not seeing much activity in the Tyler, the Madison, the Red River, the Spearfish

Bakken ops
The downspacing revolution in the Bakken -- Richard Zeits
North Dakota hits a new all-time high for daily oil production
Costs in the Bakken coming down -- Motley Fool

Human interest
Descendent of Epping homesteader visits the Bakken -- Dallas Morning News
One North Dakota man's success in the Bakken: best story of the day
Huge success story in Crosby
How North Dakota deals with mega loads: quietly, efficiently, effectively
Rugby, North Dakota -- byline in WSJ; North Dakota farmers switching to corn
Photos: a great photo of the Tioga CBR facility in USA Today
In the eye of the beholder

Economic development
$70 million, 5-year construction project, Minneapolis, MN, to support the Bakken -- biggest story of the week
Construction business booming for a Kalispell, MT, company

The geologic column in North Dakota above the Bakken
Random note on a Madison sweet spot in North Dakota

For investors only
Disclaimer: this is not an investment site; these are simply links to articles that interested me and helped me understand the Bakken. Do not assume anything else was intended. Certainly, whatever you you, don't make any investment decisions based on what you read here or what you think you might have read here. 
The KOG-Liberty Resources deal -- Mike Filloon (one of numerous stories on the deal)
TPLM's blowout quarter -- Mike Filloon
Oil keeps pouring out of the Bakken -- Motley Fool
Companies killing OPEC -- Motley Fool
Halcon snuck up on me: 135,000 net acres; 8 rigs in North Dakota

Reports that BLM is working with ND to speed up permit processing
48 wells/spacing unit in the better Bakken -- Lynn Helms
Every 1% increase in rate of recovery yields another 9 billion bbls of oil in the Bakken

Coolest Story Of The Day -- Great Story On One North Dakotan's Success In His Home State -- This Is Really A Great Read -- A Big "Thank You" To Brian

The Dickinson Press is reporting:
One of several native North Dakotans in leadership positions, Lagorin is one of the faces of Tulsa-based Spartan Engineering, which recently received recognition as the Rocky Mountain region’s Engineering Company of the Year for 2012 at the Oil & Gas Awards. Among many other projects, Lagorin said Spartan was the lead engineering firm for the near $500 million Bakken NGL Pipeline, which transports natural gas liquids from the Sidney, Mont., to Colorado.
Spartan is also working in partnership with energy giant ONEOK on a pipeline that will stretch from Oklahoma to Texas, Lagorin said.
This is how the story started:
Having grown up near Kenmare, Wayne Lagorin has always been a North Dakotan by heart.
From drilling oil wells as a young man to later becoming the president of one of the leading oil and gas industry engineering firms in the western U.S., Lagorin has watched the transformation of his home state into an energy powerhouse with keen interest.
“I’ve been following the Bakken for a long time,” Lagorin said. “I read Leigh Price’s paper detailing how many recoverable barrels he thought were there before anyone was really talking about the Bakken. I’ve been talking about and watching the Bakken for a long, long time.”
Forbes Magazine needs to pick up this story and run with it. Or maybe Oprah.

Tea Leaves Suggest We May See Some More LNG Export Licenses This Year

Do folks remember the results of this poll: will the US grant any more LNG export licenses this year? The results were:
  • Yes: 65%
  • No: 35%
Here's an update. Forbes is reporting:
U.S. Energy Secretary Ernest Moniz made his first official visit to Capitol Hill to, in part, reassure an improving manufacturing sector that domestic natural gas production would grow and that it would have access to affordable fuel. With that, he said that his agency would decide on more gas export applications by year end.
At issue, of course, is whether the nation’s natural gas producers will be able to sell their product to Asian and European countries where prices are much higher than in the United States. Currently, the glut of unconventional natural gas here, or shale gas, has dampened domestic prices — a dynamic that, conversely, has benefited energy-hungry U.S. manufacturers and one that has fed their commercial expansion.
But oil and gas companies ranging from Sempra Energy to Dominion Resources to ExxonMobil Corp. have mammoth investments in so-called Liquefied Natural Gas (LNG) import terminals. Those were built more than a decade ago and before the shale gas boom could have been anticipated. Now, those platforms must be converted from import to export facilities so that the natural gas can be super-cooled and shipped in the form of LNG.
My hunch: O'Bama sees $$$$. O'Bama sees train wreck. O'Bama sees how $$$$ might help prevent train wreck. He can use a lot of $$$$$ to fund O'BamaCare. Funny how things work out.

Investors take note.

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you might read here. 

US Rail Traffic Carrying Petroleum And Petroleum Products

Don just sent me this PDF link -- weekly summary of US rail traffic.

Take a quick look; look at the amount of petroleum products moved by rail:
  • cars, this week, vs one year ago: up almost 30%
  • cumulative, or average per week, vs one year ago: up an astounding 50%
It would be interesting to see any data point that has increased 50% over last year.

Now, go back, and compare that 50% with any of the other data points. Grain, surprisingly, dropped 20%. If it were not for oil, a) the railroads would be in huge trouble; b) the US would be in even worse economic shape. Based on this little bit of data, one could argue that it's the energy industry (i.e., the oil and gas industry) keeping this economy afloat. And BBBB (Ben Bernanke's bond buying or whatever he's buying) that's keeping the stock market going).

Train wreck, first used this past year, by Montana's Senator Baucus, may be a most apt term applied to much more than O'BamaCare this year. 

But I digress. A huge "thank you" to Don for the link.

Saturday Morning News And Links

Active rigs in North Dakota, the #2 oil producer in the United States: 185 (steady)

WSJ Links

Section D (Off Duty): perhaps later

Section C (Review): nothing of interest

Section B (Business & Finance):
The move affects only current salaried workers, not those who have already retired or who are hourly employees. Chrysler hasn't offered pensions to new white-collar hires for about a decade. These 8,000 workers will be able to keep pension benefits earned up until the end of the year, the company said
Section A:

Carl's Jr Sees A Train Wreck; Getting Out Of The Way

Founder of Carl's Jr, a West Coast icon, will not expand in California because of O'BamaCare -- WSJ.
The robust marketing has helped revive a company that a decade ago was still suffering a $700 million debt hangover after purchasing Hardee's in 1997. Since Mr. Puzder took charge in 2000, CKE has grown consistently. Revenues have increased by 3.6% over the past year to about $1.3 billion, and its international restaurant count has grown by more than 15% annually over the past three years. Mr. Puzder is quick to point out that many of his competitors aren't doing as well and the U.S. economy remains underpowered.
Government policies, he says, are stifling young, hungry entrepreneurs, and he doesn't mean tech hotshots. He means the kind of entrepreneurs who run fast-food joints, often immigrants and minorities without much education. In other words, the very people that liberals say they want to help.
The fast-food executive rattles off a list of market suppressants, including uncertainty over labor costs, commodity and food prices, and taxes. But his bete noire is ObamaCare.
Mr. Puzder says his health-care consultants have calculated that it's cheaper to offer his company's 21,000 U.S. employees more expensive health-insurance plans than to drop them into state exchanges and pay the penalty for not covering what ObamaCare regulators deem are "essential health benefits." Yet his consultants can't figure out how many people will sign up under the new plans because the Health and Human Services Department hasn't issued final regulations.
Only 63% of CKE's general managers are currently covered by the company's insurance plan, and a mere 6% of regular workers enroll in its "mini-med" plans, which are prohibited under ObamaCare because they include benefit caps.
"The ones who don't sign up are the young guys and gals who feel that they are healthy and if they get sick, they just go to the emergency room," Mr. Puzder says. Under ObamaCare, "people who were worried about getting stuck without insurance can still go to the emergency room for free and no longer have the incentive of catastrophic illness to sign up for insurance. . . . So the incentives to sign up for the plan just disappeared."
About 40% of Mr. Puzder's employees are part-time and therefore exempt from ObamaCare's coverage mandates. "That percentage of employees will probably go up.
Everybody is hiring more part-time employees," he says, though he is quick to add that "we're not firing anyone to hire" part-time workers. "Through attrition, three full-time employees go away and you hire four part-time employees who basically have the same hours."
This pretty much explains it. Cue up Connie Francis.