Monday, June 17, 2013

Chevron To Sell $6 Billion In Corporate Bonds -- Its Largest Deal Since At Least 1995 -- Among The Top Ten Deals This Year

Rigzone is reporting:
Taking advantage of a calmer market ahead of a key Federal Reserve meeting, Chevron Corp. is selling $6 billion in corporate bonds on Monday, its largest deal since at least 1995.
Chevron's four-part deal is coming in three-, five-, seven- and 10-year maturities. Underwriters lowered yields on the sale throughout the day, suggesting good demand from investors. The three-year debt was offered to yield 0.40 percentage point more than comparable Treasurys. The 10-year debt was offered to yield 1.00 percentage point more than comparable Treasurys.
Chevron last came to market in November, when it sold $4 billion, according to Dealogic, whose data go back to 1995. Chevron's deal Monday is among the biggest 10 for the year. It is tied with Bank of America Corp., Goldman Sachs Group Inc. and Vodafone Group PLC, which all had $6 billion deals earlier in the year. The biggest deal of the year is Apple Inc.'s $17 billion sale, which is also the largest U.S. corporate bond on record.

Random Note On Saudi's Oil Consumption ....

... yes, consumption, not production.

This was found via The Oil Drum.

The Daily Star is reporting:
According to a Chatham House report, Saudi Arabia’s surging domestic oil consumption – coupled with its inadequate supply growth – could turn the kingdom into a net oil importer by 2038. Guzzling more than a quarter of its 11.1 million barrel per day production in 2011, Saudi Arabia is the fifth-largest oil consumer in the world. The kingdom even recently surpassed Germany’s consumption level, despite having less than one-third of Germany’s population and one-fifth of its economic output. Continued consumption growth, if left unchecked, could devastate the country’s economy in the coming years.
Demography partly explains this growing use of oil. The population has doubled since 1985 and demand has risen accordingly, but the main culprit is the kingdom’s growing economic prosperity tied with its reliance on oil-fired power generation. Almost all of Saudi Arabia’s energy needs are met by oil and gas – and burning crude oil to overcome gas shortages has increasingly become the norm. Given that oil in particular accounts for nearly 90 percent of the country’s exports and state budget, it is no wonder that Saudi officials hope to rein in consumption as the kingdom continues to eat up more and more of its own export wares.
An interesting article. To say the least.

Wells Coming Off The Confidential List Tuesday; 5/9 To DRL Status; Whiting With A Nice Sanish Well

22691, 478, SM Energy, Anderson 14-20H, Sixmile, t4/13; cum 15K 4/13;
23565, 935, Whiting, McNamara 41-26XH, Sanish, t12/12; cum 51K 4/13;
23654, 88, Hunt, Frazier 1-1-12H, Frazier, t4/13; cum 20K 4/13;
24183, drl, Statoil, Folvag 5-8 4TFH, no data, Stony Creek,
24369, drl, Hess, EN-Weyrauch A-154-93-1720H-4, Robinson Lake, no data,
24371, drl, Hess, EN-Weyrauch A-154-93-1720H-6, Robinson Lake, no data,
24376, drl, KOG, P Wood 154-98-3-27-34-15H3M, Truax, no data,
24398, drl, QEP, MHA 1-04-33H-150-92, Heart Butte, no data,
24545, 101, MRO, Huber USA 41-2H, Wolf Bay, t2/13; cum 3K 4/13;


22691, see above, SM Energy, Anderson 14-20H:

DateOil RunsMCF Sold

23565, see above, Whiting, McNamara 41-26XH, Sanish:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

 23654, see above, Hunt, Frazier 1-1-12H:

DateOil RunsMCF Sold

 24545, see above, MRO, Huber USA 41-2H, Wolf Bay:

DateOil RunsMCF Sold

More Evidence That QEP Got A Helis-Of-A-Deal In The Grail

Flashback: QEP buys Helis.

This producing well was completed and reported in today's daily activity report.
  • 22371, 3,668, QEP, Hazel 13-34/27H, Grail, t5/13; cum --
Curious what is going on in that section and the section north of it?

This 4-well pad with a rig on site:
  • 22371, 3,668, QEP, Hazel 13-34/27H, Grail, t5/13; cum --
  • 24614, conf, QEP, Hemi 3-34-27TH, Grail,
  • 24615, conf, QEP, Hemi 3-34-27BH, Grail,
  • 24616, conf, QEP, Hemi 2-34-27TH, Grail,
Immediately south, across the section line, this 3-well pad, also with a rig on site:
  • 25192, conf, QEP, Poncho 4-3-10BH, Grail,
  • 19898, 2,421, QEP, Gabbert 3-3/10H, Grail, t10/11; cum 249K 4/13;
  • 25191, conf, QEP, Poncho 3-3-10BH, Grail,
To the east, this 3-well pad:
  • 24827, conf, QEP, Hemi 2-27-34BH, Grail,
  • 19104, 1,203, QEP, Henderson 16-34/27H, Grail, t5/11; cum 204K 4/13;
  • 24826, conf, QEP, Hemi 1-27-34BH, Grail, 

Some famous quotes. We've come a long way:
  • I cannot tell a lie. I chopped down that cherry tree.
  • I am not a crook.
  • I did not have sexual relations with that woman.
  • I'm the decider.
  • I am not Dick Cheney.  
For more, click here

Four (4) New Permits -- The Williston Basin, North Dakota, USA; OXY USA With Two Nice Wells; QEP With A Huge Well; QEP Got A Great Helis Deal; G3 Operating With A Nice Well -- June 17, 2013

Active rigs: 182 (trending down)

Four (4) new permits -- 
  • Operators: CLR (2), Corinthian, Legacy
  • Fields: Antelope (McKenzie), North Souris (Bottineau), Red Rock (Bottineau)
  • Comments:
Wells coming off the confidential list were reported/tweeted earlier today.

Seven (7) producing wells completed:
  • 22371, 3,668, QEP, Hazel 13-34/27H, Grail, t5/13; cum 309K 11/15;
  • 23027, 1,388, OXY USA, Dennis Kadrmas 3-9-4H-13-96, Fayette, t4/13; cum 218K 11/15;
  • 23028, 803, OXY USA, State 3-16-21H-143-96, Fayette, t4/13; cum 150K 11/15;
  • 23223, 1,210, G3 Operating, Fort Berthold 148-94-22A-27-2H, t3/13; cum 171K 11/15;
  • 23821, 1,034, Hess, HA-State 152-95-1621H-3, Hawkeye, t5/13; cum 159K 11/15;
  • 23954, 501, Hess, EN-D Cvancara S-154-93-0904H-2, Robinson Lake, t5/13; cum 88K 11/15;
  • 23955, 560, Hess, EN-D Cvancara S-154-93-0904H-3, Robinson Lake, t5/13; bcum 98K 11/15;

Random Update on MDU Refinery; Press Release

MDU Resources announces through a press release:
Construction of the Dakota Prairie Refinery project is on track with initial site grading substantially complete: Co announced that construction of the Dakota Prairie Refinery project is on track with initial site grading substantially complete. Dakota Prairie Refinery, when complete, will be the first greenfield refinery built in the U.S. since 1976. It is a joint project with Calumet Specialty Products Partners, L.P. to develop, build and operate a 20,000-barrel-per-day diesel topping plant in southwestern North Dakota. The project will process Bakken crude and the diesel produced will be marketed within the Bakken region. Total project costs are estimated to be approximately $300 million.
It continues:
Knife River Corporation, MDU Resources' construction materials and contracting subsidiary, has moved approximately 1 million cubic yards of material since construction commenced March 26, despite rain-related weather challenges. In addition, they began preparing the foundation for 16 storage tanks planned for the facility and the construction of a bridge that provides operational access within the site.
Dave Podratz has been named the refinery manager at the facility where he will lead the organizational development, start-up and commissioning process of the refinery. Podratz brings refinery management expertise and more than 30 years of industry-related experience to the project.
"We are focused on constructing the facility on time and on budget and continue to target an in-service date in late 2014," said David L. Goodin, president and chief executive officer of MDU Resources. "This project is a strong organic growth opportunity for us and based on our assumptions we expect it will generate EBITDA of $70 million to $90 million in year one, to be shared equally with Calumet."
In addition to Knife River, other MDU Resources' companies involved in the project include Fidelity Exploration & Production Company, which will supply crude oil to the facility; WBI Energy Inc., which will supply natural gas service to operate the facility; and Montana-Dakota Utilities, which will supply the facility's electricity needs. MDU Construction Services Group Inc. also is a potential subcontractor for the facility.

For Investors Only: Rail, Whiting

Forbes provides the following:
Citigroup raised its price target on shares of Union Pacific to $180 as free cash flow is improving and fundamentals remain strong. In the report, Citigroup increased its EPS estimates as well. 
And Motley Fool:
With oil pipelines from Canada filled to capacity, how do Gulf Coast refiners secure the heavy crude to produce the profitable diesel and jet fuel for investor rewards? The Keystone pipeline, if ever built, is years and billions of dollars away. Trucks can't possibly handle the entire demand. Saudi Arabian heavy crude arrives on ships but costs more than Canadian crude.
The answer? By rail.
Whiting Petroleum exercises right to mandatorily convert preferred stock into common stock: Co announces that it is exercising its right to convert all outstanding shares of its 6.25% convertible perpetual preferred stock into shares of the co's common stock effective as of 5:00 p.m. Eastern Time on June 27, 2013.
Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here. 

Time For A New Poll: Why The Sudden Run-Up In The Price Of Crude Oil?

Time for a new poll. Why the sudden run-up in the price of oil?
  • weakening dollar
  • tighter supplies
  • Mideast strife
The results of the most recent poll in which we asked why Wal-Mart was increasing the number of temporary workers it was hiring:
  • preparing for O'BamaCare: 64%
  • providing better customer service: 10%
  • both:  26% 
With regard to the sudden run-up in the price of oil, my crystal ball has fogged over

North Dakota Oil Production Hit New Record Despite Adverse Weather Conditions -- Rigzone

Rigzone report The new record was set despite:
North Dakota operators faced difficulties with weather this spring. April 2013 was the coldest month on record with over 80 percent of state highways blocked in mid-April by heavy snow, and May 2013 was the wettest on record, said NDIC Department of Mineral Resources Director Lynn Helms in a statement.
It looks like the "hangover" persists. Today, of 14 Bakken wells coming off the confidential list, eight (8) wells went to DRL status, waiting to be fracked.

Big Day On The Market; CNBC Crawler -- Among The Leaders: HP

HP is up almost 5%.

We wrote about HP just a few days ago when they announced a tripling of their dividend.  

Motley Fool took notice:
Although I can’t be certain, I don’t believe there is any other company in the market that has increased its dividend yield by 1,000% over the last five years, except for Helmerich & Payne. In my opinion, Helmerich & Payne is the quintessential dividend play in the energy space.
Helmerich & Payne has a massive fleet of rigs – most of which are U.S. based – and the company charges a hefty premium for its high-performance rigs. Over the last few years, the U.S. has placed an emphasis on domestic oil production, and is expected to increase oil production even more in upcoming years. Therefore, it is encouraging that Helmerich & Payne owns 330 land rigs with 296 being in the U.S. Thus, with demand increasing, and Helmerich & Payne having great supply and pricing power, I think it is a great investment moving forward.
MarketWatch took note also:
Helmerich & Payne Inc. shares came off of their intra-day high to close up 4.4%. The contract drilling company said earlier this month that it is raising its quarterly dividend to 50 cents a share from 15 cents, but the stock rose only 1.5% since the announcement. 
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 have read here. 

Active rigs in North Dakota today? 184 (steady, but down slightly) 

New Poll: Crude Oil Hits 9-Month High; Tightening Oil Supply Later This Summer?


Later, 9:10: Zacks is reporting:
The U.S. Energy Department's weekly inventory release showed that crude stockpiles went up, as imports jumped and refiners scaled down their utilization rates. The report further revealed that within the ‘refined products’ category, gasoline stocks rose, while distillate supplies were down from the week-ago level. [See linked article for analysis.]
Later, 8:46: Platts implies price is moving up due to tightening oil supplies (see earlier note), but Investor's Business Daily says it is due to Mideast tension.

Later, 4:36 pm: Platts is now tweeting that it expects oil supplies dropped one million bbls in US for week ending June 14, 2013.

So, time for a new poll. Why the sudden run-up in the price of oil?
  • weakening dollar
  • tighter supplies
  • Mideast strife
The results of the most recent poll in which we asked why Wal-Mart was increasing the number of temporary workers it was hiring:
  • preparing for O'BamaCare: 64%
  • providing better customer service: 10% (LOL)
  • both:  26%
Original Post 

Talking heads said the increase in the price of oil was due to the events in the Mideast last week and this week. That may be true.

Generally speaking when there are concerns about a "big" war in the Mideast we see a fall in the stock market. That did not happen today: all eyes on the Fed.

It is perplexing: is the price of oil rising because of events in the Mideast? Interestingly enough, the headline stories in the Wall Street Journal today did not even include a Mideast story and it's hard to find a new story on the Mideast anywhere today. I thought it was related to the weakening dollar. Now, moments ago, the talking head at CNBC suggests the rise in the price of oil is partly due a tightening supply of oil later this summer. Wow, that came out of nowhere. I was unaware of any talk about a tightening supply of oil later this summer.

It will be interesting to see if anyone else picks up on this story (that we are facing a tightening oil supply later this summer), and/or if it bears fruit over the next few months.

Even A Broken Clock Is Correct Twice A Day ...

... but I still love the note I posted back on March 21, 2013: among the "next big things will be Netflix."

Wow, how prescient.

At MarketWatch, Netflix led the market today.
Netflix Inc. rallied over 7% on Monday, closing out the session as the best stock in both the S&P 500 and the Nasdaq 100, on the back of a programming deal with DreamWorks Animation SKG Inc.
Reuters is reporting the story:
Video streaming service Netflix Inc is beefing up its original programming menu through a multi-year deal with DreamWorks Animation SKG Inc, the maker of movies such as Shrek, Madagascar and Kung Fu Panda.
Netflix shares rose 5 percent to $224.51 in premarket trading. DreamWorks shares were up marginally.
DreamWorks said the deal, which involves 300 hours of new programming, is a cornerstone of a major initiative to expand its television production and distribution.
The agreement is Netflix's largest for original programming, the companies said in a statement.
Share price:
  • Share price, NFLX, March 21, 2013: $182
  • Share price, NFLX, today: $227
It is also interesting that DreamWorks will become a TV company. Press release here:
This agreement, which marks the largest deal for original first-run content in Netflix history, is also the first time DreamWorks Animation's beloved characters will be introduced into the television market as a branded collection of shows.
My hunch: DreamWorks television will give Disney Channel a run for its money. And both DreamWorks TV and Disney Channel will "beat" Oprah and Al-Jazeera-Gore TV.

Steven Spielberg, a founder of DreamWorks that began back in 1994, was in the news the other day talking about the implosion of the Hollywood movie industry at which time we asked: are they nuts or are they onto something?

The dots continue to connect.

Quick: for those of you who watch movies on DVD or stream movies on the internet, which do you use: Netflix, Vudu, Hulu? Quick: do you know who owns Vudu? I thought so.

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 have read here.

For Investors Only: AXAS Activity Today; Sells Non-Operated Bakken Acreage To A Coal Company

Abraxas Petroleum Corp. announces signing of non-operated bakken definitive agreement; co also reports inclusive of the non-operated Bakken sale, Abraxas has divested ~502 boepd for gross proceeds of $47.3 mln: AXAS signed an agreement to sell the majority of the Company's non-operated Bakken properties to Natural Resource Partners (NRP) for $35.3 mln plus the assumption of an estimated $8.1 mln in AFEs from 22 wells that are producing, have recently been drilled or completed or Abraxas has elected to participate.

AP is also reporting:
Natural Resource Partners LP said Monday that it reached a deal to buy non-operated working interests in producing oil and gas properties in North Dakota and Montana from Abraxas Petroleum Corp. for about $35.3 million in cash. 
The acquisition consists of about 13,500 net acres with an estimated average working interest of 11 percent in the Bakken and Three Forks play. It includes about 120 producing wells, along with interests in 22 wells that are in various stages of development, NRP said.
$35 million / 13,500 acres = $2,500 / acre.

My data suggested that Abraxas had 21,000 net acres in the Bakken (ND and MT). If that is accruate, selling off 13,500 net acres certainly decreased its footprint in the Bakken.

One year ago, Abraxas CAPEX:
  • Bakken: 69%
  • Eagle Ford: 0%
  • Other (Powder River, Pekisko, Permian, other): 31%
Now, in 2013: Abraxas CAPEX:
  • Bakken: 68%
  • Eagle Ford: 27%
  • Permian: 1%
  • Other: 4%
Cost of wells for Abraxas ranged from $8.7 million (Jore Federal) to $13.0 million (Ravin) -- slide 19 of its May, 2013, presentation.

Meanwhile, this is the profile for NRP:
Natural Resource Partners L.P., through its subsidiaries, engages in the ownership, management, and leasing of mineral properties in the United States. It owns coal reserves in Appalachia, the Illinois Basin, and the Western United States, as well as lignite reserves in the Gulf Coast region. The company leases its reserves to mine operators in exchange for royalty payments. It also owns preparation plants and related material handling facilities; and handling and transportation infrastructure, as well as owns and manages aggregate reserves.

Another Reason To Visit North Dakota: Yacht Gambling


July 4, 2013: maiden voyage successful. The Minot Daily News is reporting:
The Three Affiliated Tribes' new 149-passenger yacht marks a first in North Dakota.

Tex Hall, tribal chairman, said the 4 Bears Casino, a facility west of New Town owned by the Three Affiliated Tribes, is the only casino in the state with a boat.
After a ceremony Wednesday afternoon at the 4 Bears Marina and dock, west of New Town, about 75 special guests boarded the yacht for its maiden voyage an excursion trip with dinner and entertainment on Lake Sakakawea. Calvin Grinnell provided the cultural interpretation for the trip and Jackie Bird entertained with her singing.
Original Post

The Nation with a bit of oil in the Bakken is getting ready to sail.

The Nation: the Three Affiliated Tribes, New Town, North Dakota.

The boat: a 96-foot yacht.

Why: because they can.

The Minot Daily News is reporting:
Earlier this year, the tribes' Class III Tribal-State Gaming Compact was amended. It expanded Class III gaming on tribal trust lands and waters within the exterior boundaries of the reservation and allow the tribes to conduct gaming on Lake Sakakawea.
Scott Wilson, of the 4 Bears Casino & Lodge, said the yacht, a 2002 model, is from Skipper Lines Corp. in Wisconsin. He said it is 96 feet in length and will accommodate 149 passengers.
He said a captain and crew from Wisconsin have been contracted for one year and they will also train people for the yacht while they are here.
Wilson said first, the yacht will be used for dinner and entertainment. The dinners will be catered by the Bison Room, a newly renovated restaurant in the 4 Bears Casino & Lodge. The entertainment on the yacht will be located on the upper level where there is a bar.
Just one more example of how the Bakken is affecting economies across the US. In this case: the yacht-building industry in Wisconson .

Another Story You Won't See On CNBC Or Morning Joe Today; Another One Bites The Dust; Can't Even Find A Buyer; A Dose Of Reality

Another one bites the dust. Reuters is reporting:
German industrial conglomerate Siemens (SIEGn.DE) is shutting down the last of its solar energy businesses after it failed to find a buyer, the company said on Monday.
Confirming a report in German newspaper Handelsblatt, a spokesman for Siemens said the group would close Solel by early next year.
The Israeli business has accumulated losses of around 1 billion euros ($1.33 billion) since Siemens bought it in 2009, including a write-off of the entire purchase price.
Siemens has spent seven months trying to sell Solel, which makes components used in solar-thermal power stations. Some 280 employees will be affected by the closure, most of them in Israel.
The cost will run into the mid-double digit millions of euros, according to Siemens.
In the same article, Bosch is looking to sell or close its photovoltaic solar operations; cites competition from US shale gas. Siemens blamed the Chinese flooding the market with cheaper solar panels.

This link has been posted a number of times. It is becoming one of my favorite views.

Another One Bites The Dust, Queen

Shale Drillers Squeezing Costs

Bloomberg is reporting.
The pioneers of America’s shale gas and oil revolution have done their work. Now it’s time for the factory crews to take over.
After spending $53 billion on a land binge to find hydrocarbons, the petroleum industry is counting on technological innovations -- better imaging data, speedier and longer horizontal drilling, among them -- to ramp up the flow of oil and gas from U.S. shale fields where they’re drilling more than 10,000 wells a year.
Old news for regular readers of the blog, but some nice data points.

Monday Morning Links And News

Active rigs: 185 (steady)

Wells coming off the confidential list have been posted

RBN Energy: outstanding new analysis of all the light, sweet crude hitting the market; a challenge for US refiners who switched to heavy oil refining some years ago in anticipation of Canadian oil sands oil (before the Bakken).

WSJ Links

Section D (Personal Journal): All on health today; topics have not changed much over the past decade. Must be a slow day for news.

Section C (Money & Investing):
Section B (Marketplace):
Section A: