Wednesday, July 3, 2013

The Williston Wire

Headlines only; it is easy to subscribe to The Williston Wire.

Crew camps will be a part of Williams County for at least the next two years. After months of behind-the-scenes work, the county commission considered 17 requests for conditional use permits for crew camps.

American State Bank & Trust Company is undergoing a renovation to add space and spruce up its exterior in Downtown Williston. The project began when ASB&T acquired the neighboring Pro Re Nata Gift Shop on Main Street in 2011. The building has since been torn down and construction is underway on a new state-of-the-art professional building. The addition will feature 18,000 square feet on three floors. The 6,600 square foot ground level will be completed first to provide more office and conference room space.

Money and workers are pouring into Williston, the capital of North Dakota's oil boom, but the only department store in town is a JCPenney, with a facade straight out of the 1950s. Many would-be financiers say the oil patch real estate market is too hot to handle right now; while others have decided to write their own checks. Private equity firm KKR, which broke ground last month on 330 apartments as part of a 164-acre housing development, has yet to convince a bank to fund a construction loan - but they are prepared to go all cash. -- A Reuters article.

Chevron To Build New Office Building In Houston; Company Says Headquarters To Remain In San Francisco Area

 Rigzone is reporting:
Chevron U.S.A. Inc. announced Wednesday plans to construct an office building in downtown Houston to accommodate its business growth and expanding workforce in the world’s energy capital.
The 50-story, 1.7 million-square-foot building will be located at 1600 Louisiana Street at Pease. Together with Chevron’s existing properties at 1500 Louisiana and 1400 Smith, the buildings will comprise an urban campus with indoor and outdoor common areas, enhanced dining facilities, a fitness center, training and conference facilities, and additional parking.
“This announcement underscores Chevron’s long-term commitment to Houston and its role as the epicenter of the global energy industry,” said Bereket Haregot, president of Chevron’s Business and Real Estate Services division. “Houston plays a vital and growing role in Chevron’s global business. The new building and expanded urban campus will provide a first-rate work environment for our employees and help us remain the employer of choice.”
The headquarters of Chevron Corporation, the parent company of Chevron U.S.A., will remain in California, where they have been located for more than 130 years.
Back in April, 2013, Chevron announced it was moving 400 jobs from San Ramon (California) to Houston. At the time I mentioned that this certainly looked like Chevron was getting tired of the way Californians were treating their company (this was about the time a Chevron refinery experienced a fire at the Richmond facility). If I recall correctly, the local community even balked when Chevron wanted to do some routine maintenance on their refinery. [Oh, yes, here it is: "Chevron has for years wanted to overhaul and upgrade the facility. But many Richmond residents and environmentalists have objected, saying the project would create more air pollution in a community that already has too much. Although Richmond's City Council approved the renovation project in 2008, a judge halted construction work the next year, ruling that Chevron had not answered key questions in the project's environmental impact report." -- SFGate is reporting.] Whether or not Jeff Foxworthy actually compiled the list, it is very, very accurate.

"The headquarters of Chevron Corporation, the parent company of Chevron U.S.A., will remain in California, where they have been located for more than 130 years." -- it sounds like the company protesteth too much.  But even if CVX headquarters is not moved any time soon, the writing is on the wall.

Chesapeake To Sell Eagle Ford and Haynesville Assets; Still No Mention Of Chesapeake's Williston Basin Acreage

Rigzone is reporting:
Chesapeake Energy Corporation unveiled plans Wednesday to sell assets in the Northern Eagle Ford shale and Haynesville shale to a subsidiary of EXCO Resources Inc. for approximately $1 billion.
The sale is the latest in Chesapeake's 2013 asset sales as the company seeks to reduce its long-term debt and enhance its financial liquidity.
EXCO subsidiary EXCO Operating Company LP will acquire approximately 55,000 net acres in Zavala, Dimmit, La Salle and Frio counties, Texas. The acreage includes 120 producing wells with average net daily production in May of approximately 6,100 barrels of oil equivalent.
In the Haynesville play, EXCO will buy Chesapeake's operated and non-operated interests in approximately 9,600 net acres in Desoto and Caddo parishes, Louisiana. Eleven Chesapeake-operated units and 42 units operated by EXCO are included. Average net daily production from these properties in May was approximately 114 million cubic feet of natural gas equivalent per day.
There is still no mention of Chesapeake's assets in the Williston Basin. 

This story came out during the trading day. CHK was up slightly today but not remarkably.

There are many, many other stories concerning this most recent development, including:
It sounds like Chesapeake is selling Eagle Ford assets where the break-even point approaches $70/bbl; but keeping Eagle Ford assets where the break-even point is close to $17 to $20 (if I heard that accurately on the video, that's incredible).

Reminder: Archived Presentations

This is just a reminder: there are some nice articles and presentations that are archived at the sidebar on the right, under "Archived Presentations."

Mike Filloon posted a very, very good article on Monday, July 1, 2013, with regard to three misconceptions about the Bakken. That article is archived at the sidebar.

RBN Energy continues to provide some of the best "Oil & Gas 101" articles available on the net. I am literally blown away that RBN provides so much good information, not only for free, but does not even require a subscription. There also appears to be no hidden agenda. That's why I single out RBN Energy for a spot of their own on the sidebar at the right.

I am also a big fan of Platts, which does a great job of tweeting. There is an art to tweeting. I am surprised that The Wall Street Journal does not do quite as good a job tweeting as Platts.

And, of course, I always appreciate articles that readers send me.

Musings On The Millennials

I just completed two long-distance road trips.

The first one was in a mini-van from Boston suburb of Belmont to Grapevine, Texas, north of Dallas, eighteen hundred miles.

The second was in the same mini-van from Grapevine to San Pedro, south of Los Angeles, fourteen hundred miles.

In both cases, I drove straight through, catching cat-naps along the way; drinking no coffee the entire way; and using McDonald's for wi-fi. [I visited Starbucks at each end of the trip but not during the trips themselves; it was always easy to find a McDonald's along the interstate; not true of Starbucks.]

After driving the mini-van from Boston to Dallas, I had the car inspected, and oil changed. It was deemed road-worthy, and I trusted it to San Pedro, where I will be for about three weeks before I return to Texas.

I appreciate everyone bearing with me during those periods of minimal blogging and erratic posting.

Thank goodness for McDonald's and Starbucks. As mentioned many times, both eateries have free wi-fi, but it is McDonald's policy, apparently, not to encourage laptop use; it is a very, very rare McDonald's to have even one electrical outlet.

Over the years it has been "fun" to see how companies define themselves, to develop strategies, and to watch them develop and execute a business plan, short term and long term.

Years ago when Starbucks announced they would provide unlimited wi-fi, I thought it would be a disaster. Folks would camp out in the restaurant but purchase very little. In fact, Starbucks has done very, very well, and goes out of their way to encourage folks to bring in their laptops.

Today, I returned to the Starbucks I frequent in San Pedro. In the past it was limited by the number of tables and limited even more so by the number of electrical outlets. Since I was last there a few months ago, Starbucks has put in a new table that easily seats eight people and installed outlets underneath the table for all users. I was quite impressed.

McDonald's, on the other hand, has even gone so far as covering the one electrical outlet in their restaurants with a plastic plate to keep anyone from plugging in their laptops, tablets, or other mobile devices.

McDonald's is struggling to define themselves with regard to millennials.
McDonald's may be the country's No. 1 fast-food chain and one of its most-beloved brands, but when it comes to millennials, the Golden Arches says it doesn't even rank among the demographic's top 10 restaurant chains.
It's enough of a concern that McDonald's is launching its biggest product of the year, McWrap, to court a huge and influential cohort that values choice and customization. According to NPD Group, there are 59 million people ages 23 to 36 in the U.S.—the range it defines as millennials.
McDonald's isn't the only major marketer trying to reach this group. Everyone from Coke and Gatorade to brewers and media companies are struggling to understand millennials. There's even some debate about just who they are in terms of age range — restaurant consultant Technomic Inc. in Chicago counts them as 19-to-34-year-olds while McDonald's Corp., in an internal memo obtained by Advertising Age, classifies them as ages 18 to 32. Size estimates for this demographic group range anywhere from 59 million to 80 million.
But on one thing most marketers agree: “They're 80 million [people] but they're influencing the next 80 million, both younger and older,” said Gary Stibel, CEO of New England Consulting Group in Norwalk, Conn.
Their answer: a new food item.

McDonald's is missing the point. Food is not the issue. The vast majority of folks visiting Starbucks go there, not for the food, but for the social interaction. Coffee is very, very important, but Starbucks is clearly about much more than just coffee. In fact, some times I think Starbucks stresses coffee so much just to keep their competitors off-balance.  Starbucks has it figured out. Starbucks is not in the coffee business; it is in the social networking business (think Facebook, Instagram, Yelp, etc).

From Outside The Beltway:
The Millennials (people born between 1983 and 2000) are now the largest generation in the United States. By 2030, Millennials will be far and away the largest group in the peak driving age 35-to-54 year old demographic, and will continue as such through 2040.
Twenty or thirty years ago, McDonald's rightly felt that getting youngsters into their restaurants was key, and thus Ronald McDonald and the Play Areas. But the largest demographic has outgrown play areas and is looking for something different, something along the lines of Starbucks.

Starbucks is still limited by its food selection (it's actually quite good, but one has to develop a "taste" for it over time) and a perception of hoity-toity-ness. Interestingly enough, the "illegal" immigrants find Starbucks just fine, as evidenced by the large presence of non-English speaking folks (at least as a first language) in the Starbucks I have frequented.

It really is interesting: something as simple as an electrical outlet can define the success of a coffee shop. 

Twelve (12) New Permits -- The Williston Basin, North Dakota, USA

Active rigs: 190 (no change)

Twelve (12) new permits --
  • Operators: BR (4), Zavanna (4), CLR (3), EOG,
  • Fields: Parshall (Mountrail), Crazy Man Creek (Williams), Corral Creek (Dunn), Stockyard Creek (Williams),
  • Comments:
Wells released from confidential list were posted earlier; see sidebar at the right.

Six (6) producing wells completed:
  • 24895, 771, Whiting, Ness 42-31TFH, Sanish, t6/13; cum --
  • 23495, 240, CLR, Simmental Federal 3-16H, Elm Tree, t6/13; cum --
  • 23494, 360, CLR, Angus Federal 5-9H, Elm Tree, t6/13; cum --
  • 24039, 639, SM, Broderson 2X-27HB, Siverston, t5/13; cum 8K 5/13;
  • 24043, 605, SM, Didrick 4X-27H, Siverston, t5/13; cum 8K 5/13;
  • 24044, 932, SM, Didrick 4-27HA,  Siverston, t5/13; cum 12K 5/13;
One permit canceled:
  • 20379, PNC, Whiting, Smith 44-30TFH,  

Speaking Of Delaying The Mandate....

Flashback: this was posted July 26, 2011 -- one of only a few states to be denied a waiver, and the first to be denied:
Another First for North Dakota: First State to Be Denied a Waiver for ObamaCare -- 733+ Waivers Granted Nationwide -- Including Every Union -- Eleven-Page Letter To Explain Reason for Denial
Full list of HHS waivers used to be listed here but HHS removed the file, but here's the Minnesota list.

From wiki:
On January 26, 2011, HHS said it had to date granted a total of 733 waivers for 2011, covering 2.1 million people, or about 1% of the privately insured population. 
In June 2011, the Obama Administration announced that all applications for new waivers and renewals of existing ones have to be filed by September 22 of that year, and no new waivers would be approved after this date.

South Dakota Sioux Look To Raise $3 Billion For Wind Farms -- Their Mentor: President Bill Clinton

Before reading the post below, refresh your memory regarding wind energy in North Dakota:
Now the main feature. PrairieBizMagazine is reporting:
A group of Sioux tribes in South Dakota are hoping to pump some much-needed revenue into their economies with an ambitious wind project, but some wind industry experts question whether the tribes understand the hurdles they face with such a large-scale development.
Leaders from six Sioux tribes announced plans at last month’s Clinton Global Initiative to develop a renewable energy project that would generate 1 to 2 gigawatts of power annually. Funding for the up to $3 billion project would come from the sale of bonds by a new multi-tribal power authority as well as donations to a website.
I'm not sure what the hurdles are. I see only one hurdle: a letter requesting $3 billion from DOE  as a pilot project. Approval should be almost automatic.  DOE has a super record of approving renewable energy projects under the O'Bama administration.

1 gigawatt - 1,000 megawatt

So, the math is correct: $1 to $1.5 billion/gigawatt of wind energy; corresponds to a $3 billion project to generate 1 to 2 gigawatts of power.
“When I see plans for a thousand megawatts, I have to give a chuckle,” said Steve Wegman, an analyst for the South Dakota Renewable Energy Association.

It's Really Not A War On Coal: It's A War On Those Least Able To Pay; Cost Of Electricity Hits All-Time Record

CNSNews is reporting:
The price of electricity in the United States for May was 13.1 cents per kilowatt hour (KWH), which is the highest it has been on record for that month, according to data from the Bureau of Labor Statistics (BLS), which tracks the price going all the way back to 1984.
Thirteen cents per KWH is the highest price for the month of May in 29 years, according to the BLS numbers.
Wait until the full cost of wind and solar starts coming in.  Wind and solar energy is three to six times more expensive than coal-generated electricity. And that is "direct costs" only. Considering all associated costs, it is much worse. One associated cost, for example: solar farms do not allow for dual-use of land.

On the high cost of renewable energy, then-Senator O'Bama has kept his promise to pass the cost on to the consumer. At the linked site:
Back in January 2008, in an interview with the San Francisco Chronicle, then-Sen. Barack Obama (D-Ill.) boasted about his cap and trade plan to combat global warming, saying, “You know, when I was asked earlier about the issue of coal, uh, you know — Under my plan of a cap and trade system, electricity rates would necessarily skyrocket. Even regardless of what I say about whether coal is good or bad. Because I’m capping greenhouse gases, coal power plants, you know, natural gas, you name it — whatever the plants were, whatever the industry was, uh, they would have to retrofit their operations. That will cost money. They will pass that money (sic) on to consumers.” -
A most regressive "tax." Rich folks won't notice; the lower middle class will be most severely hurt.

13.1 cents/kwh. One should be able to price coal-generated electricity at 6 cents/kwh. Cue up Connie Francis.

Peak Driving? Another Myth

Peak driving.

Peak oil.

Global warming.

A third term for President Obama.

Yahoo!Finance is reporting:
It’s true that cars seem to be falling out of favor with certain groups of Americans. But there could be other explanations for that besides the peak driving idea. Driving miles may be down simply because fewer people have jobs and more have moved closer to cities in the aftermath of the housing bust. The total amount of miles driven declined at least twice before, during recessions in the 1970s and early 1980s. It could be that drivers are just taking longer to get back to cruising speed this time, which would be in line with the nature (and severity) of the latest recession.
Millennials do say they’re less interested in driving, but young people have never bought many new cars, anyhow. Polk’s data show that buyers between the ages of 18 and 34 accounted for 14.6% of all new car purchases in 2008. Today that has fallen to 11.4%. That’s a significant but unsurprising drop, since young workers have been hurt the most by the weak recovery and grueling job market. Once they get on their feet and start to build families, they may suddenly become more interested in sedans, wagons and even minivans. It’s also possible more young people are driving their parents’ cars, especially if they’ve moved into Mom and Dad’s basement to save money.
Know what I loved best about that article? The five-letter word "China" is not mentioned. 

Peak Oil? Maybe For Saudi

Saudi exploring renewable energy.

Key Provision In ObamaCare Delayed One Year

Updates

July 12, 2013: "Oh, good, the employer-mandate is delayed a year." 

July 10, 2013: it's starting. If the employer-mandate is delayed, it is only fair that the individual mandate be also delayed. Some Senate Republicans want the individual mandate permanently delayed, sort of like a permitorium on drilling in the gulf.

Later, 9:16 pm: idle rambling. Remember all the complaints about the 60 pages of forms individuals had to fill out for ObamaCare? There were so many complaints, the government got it down to less then 6 pages, I believe. But it's still way too complicated. Now that that the vast majority of Americans who are covered by company health plans (from Wal-Mart to Red Lobster to Coca-Cola) are exempt (or at least their employers are), I can't imagine "individuals" (who are not exempt) feeling very happy about having to fill out the forms. I think the individual mandate will be blown off by the majority of Americans that would otherwise be required to enroll, and at some point, the whole thing becomes one big joke. The IRS will have its hands full going after a measly $95 from anybody who doesn't enroll. But before they can collect the $95, individuals will have a chance to show they have health insurance. Even the IRS will grow tired of this charade before it's all over. This may be the one chance that Americans who dislike the IRS can really create havoc with social disobedience, and at most it will cost them $95 or 1% of their taxable income, whichever is more, but way less than $5,000 for a health insurance policy. The stereotypical Wal-Mart shopper living on welfare, with an eighth-grade education at best, and there are millions of them, will have no interest in enrolling in ObamaCare. The biggest irony: the hundreds of thousands of liberal yuppies who support President O'Bama will also blow off the individual mandate.

Later, 7:46 pm: ObamaCare starting to unravel -- Carpe Diem.
Scott Grannis explains why he is now convinced more than ever that the defects of Obamacare are so “massive and pervasive” that the “Unaffordable Care Act” may never actually “see the light of day."
I asked the very same question in a personal note earlier today. Is the delay in the personal mandate a simple technicality, or is this the beginning of a much bigger story?
To me, there are two key parts to the bill (everything else is trivial):
  • employer mandates -- NOW DELAYED 
  • individual mandates -- will be ignored (social disobedience on a grand scale; the penalty is too small) and the individuals (18 - 35 who don't want to pay $5,000/year in health insurance premiums) will sue -- they can't be treated differently. 
The entire bill may simply be delayed a year. If so, it becomes a major issue for the 2016 presidential election (and we already know the poll numbers on O'BamaCare. If, on other hand, it completely unravels, this president has nothing for a legacy. Nothing. Except incompetence. But as Hillary says, "what does it matter."  
Later, 7:37 pm: huge, huge story by the WSJThe WSJ asks the same question I asked below: the legality of the president unilaterally delaying implementation of a portion of the law:
Which brings us to the dubious legality of this delay. The Affordable Care Act's Section 1513 states in black-letter law that "(d) Effective Date.—The amendments made by this section shall apply to months beginning after December 31, 2013." It does not say the Administration can impose the mandate whenever it feels it is politically convenient.
This selective enforcement of laws has become an Administration habit. From immigration (the Dream Act by fiat) to easing welfare reform's work requirements to selective waivers for No Child Left Behind, the Obama Administration routinely suspends enforcement of or unilaterally rewrites via regulation the laws it dislikes. Now it is doing it again on health care, without any consultation from, much less the approval of, Congress. President Obama probably figures business and Republicans won't object because they don't like the law anyway. 
I assume this will be brought to court by those who are required to sign up for ObamaCare (and don't want to) when large segments of the population are not required to do so. My hunch: the entire enrollment piece will be delayed by the White House. Whether or not Congress sues will make for interesting speculation.

However it turns out, even the most ill-informed can now see what a huge mess this bill will become. The Supreme Court ruled it is a tax, and that's why it was constitutional. But you can't delay taxes on some folks and not on others for arbitrary reasons without Congressional consent.

Original Post

The Daily Mail is reporting:
The official reason: the delay was intended to leave time to simplify reporting requirements and give companies time to adapt.
The real reason: Treasury source said the extra year will give the White House an extra year to persuade health insurers to participate in the exchanges that make up the backbone of the Affordable Care Act.
The revised timetable, the source added, will also push back the final implementation of Obamacare's penalties past the 2014 midterm elections, providing Republicans fewer chances to highlight the law's potentially harmful effects on businesses' bottom lines.
CNN is reporting:
The requirement that businesses provide their workers with health insurance or face fines – a key provision contained in President Barack Obama's sweeping health care law – will be delayed by one year, the Treasury Department said Tuesday. 
The postponement came after business owners expressed concerns about the complexity of the law’s reporting requirements, the agency said in its announcement. Under the Affordable Care Act, businesses employing 50 or more full-time workers that don't provide them health insurance will be penalized.
CNBC reports:
The administration plans to continue a dialogue with employers about the Affordable Care Act and publish proposed rules sometime this summer, the Treasury said in the statement. Real-world testing of the program will begin in 2014 with a full implementation in 2015, they said.
Bloomberg reports:
It’s the latest setback for a health-care law that has met resistance from Republicans, who have sought to make the plan a symbol of government overreach. Republican-controlled legislatures and governors in several states have refused funding to expand Medicaid coverage for the poor and declined to set up exchanges where individuals can buy insurance, leaving the job to the federal government.
The delay in the employer mandate addresses complaints from business groups to President Barack Obama’s administration about the burden of the law’s reporting requirements.
The best part of this delay: this will give everyone another year to figure out how best to "game" the requirements.

And Bloomberg raises the obvious question: will the individual mandate also be delayed? I would assume delaying the program for some and not others will not stand up in court. And even if it stands up in court, it won't stand up in the court of public opinion (or common sense).

The greatest fear the administration should have regarding O'BamaCare: individuals simply "blowing off" the individual mandate/requirement and paying the $95 penalty. This could end up being the greatest act of social disobedience in this country's history.

How I See ObamaCare
  
1. Despite thousands of pages in this law, the core content:
  • employer mandates -- delayed, as of July, 2013, until at least 2015
  • individual mandates -- still in effect as of July, 2013
2.  Much more broad than folks realize; will affect all areas of American commerce. For the first time ever, the US has defined the "official" work week: 30 hours. This will eventually affect "everybody": union negotiations; overtime; minimum wage; definition of fulltime vs parttime worker; benefits for fulltime vs parttime, etc.

3. The president is not lawfully allowed to change the law (delay the employer mandate) without Congressional approval. The "individual mandate" also has a good chance of being delayed. If the two core issues of the plan are delayed, it effectively guts the entire plan. Politicians will use the time to start overhauling the bill.

4. For the first time ever, the government has a method of obtaining detailed information (much more than the every-ten-year census) on every American. Unlike filing taxes, which is not required for a significant number of Americans (perhaps approaching 50% of the population), everyone has to enroll in some healthcare plan. If they have not enrolled previously, they will be enrolled at their first medical visit after January 1, 2014. The government now has a mailing list detailing everyone's address, income, job, financial status, health status.

5. At least part of the success of the program depends on healthy individuals, ages 18 - 45, who do not have any insurance, to sign up for individual health care at about $5,000 to $6,000/year. That will not happen. The initial penalty is a paltry $95 or 1% of one's taxable income, and will go up over time. As the Supreme Court rightly noted, this is a tax, and that's why the program was ruled constitutional.

6. The IRS, already widely unpopular, and coming under even more attack for its actions during the Obama administration, will become even more unpopular as it enforces a health law. Individuals will "blow off" the individual mandate: that was going to happen regardless, but with the official delay of the corporate mandate, individuals now have good cause to do the same. Individuals simply ignoring the individual mandate will turn out to be the nation's largest example of social disobedience in the history of the republic. The IRS will not have the resources to go after a measly $95 from every individual who does not complete the required paperwork. And even if they do, 1% of one's taxable income is a whole lot less than the estimated $5,000 to $6,000 in annual health care premiums.

2Q13 Earnings

All 2Q13 earnings will be reported at this page; link will be on sidebar at the right, under "Earnings Central." When we start to see earnings reports for any quarter, the "Earnings Central" link is moved to the top of the sidebar until the earning seasons is over.

I don't have time to check/update earnings on all companies listed below. If you see one that I have missed, feel free to send it in (anonymous comment or by e-mail) and I will post it.

Comment:

Miscellaneous articles:
  • If there were warnings out there, I did not see them for this quarter
General update (dates subject to change):

Alcoa: July 8


EPS estimates in parentheses following the ticker symbol (according to Yahoo!Finance)

American Railcar Industries: transcript

AXAS: Aug 5

BAX ($1.13 ): beats by 3 cents; shares higher; mixed report; transcript;

BCEI: May 9 (previously reported)

BEXP: see STO below

BHI ($0.65):  bad report for BHI; $0.61 but with certain items, $0.55;

BK ( ): profit surged; stock up 3%;

CHK ( ):  wow, up almost 8 percent today. Eight percent. Transcript. Despite a year of headlines, look at these results:
Chesapeake Energy Corporation (CHK) today reported financial and operational results for the 2013 second quarter. Key information related to the quarter is as follows:
  • adjusted net income per fully diluted share of $0.51, compared to $0.06 in the 2012 second quarter
  • adjusted ebitda of $1.424 billion increases 77% year over year 
  • daily oil production rises 44% year over year to 116,000 bbls per day 
  • full-year 2013 oil production outlook increases by 1 million barrels to 38 – 40 million barrels, a 22 to 28% increase year over year 
  • total daily production increases 7% year over year to 4.1 bcfe per day
CLNE: steady progress;

CLR (  ): beats by $0.08, beats on revs : Reports 2Q13earnings of $1.33 per share, excluding non-recurring items, $0.08 better than the estimate of $1.25; revenues rose 70.5% year/year to $892.19 mln vs the $855.05 mln consensus. 2Q13 net production totaled 12.3 million boe. Other highlights from the quarter. Transcript

CNP ( ):  beat by 4 cents; transcript;

COP ( ): blows XOM And COP away on cash margin improvement

Crescent Point:

CRR ( ): beats on both top and bottom lines; transcript;

CVX ( ): AP report; earnings decline a disappointment; not a good report:
Chevron's latest quarterly profit was huge — $5.37 billion — but down 26 percent from last year due to lower oil prices, less production, and maintenance work at some refineries.
The results mirrored lower profit at Exxon Mobil and Shell, and they also lagged Wall Street expectations. Chevron shares fell $1.49, or 1.2 percent, to $124.95 Friday.
DNR: Denbury reports: Denbury Resources Inc. today announced adjusted net income (a non-GAAP measure)(1) of $151 million for the second quarter of 2013, or $0.41 per diluted share. Second quarter of 2013 net income (the GAAP measure) was $130 million, or $0.35 per diluted share, on record high quarterly revenues of $645 million. Investors must be pleased: the stock is up almost 5% in pre-market trading. Earnings beat by 6 cents; beats by $0.06, reports revs in-line: Reports Q2 (Jun) earnings of $0.41 per share, excluding non-recurring items, $0.06 better than the estimate of $0.35; revenues rose 8.0% year/year to $645 mln vs the $641.41 mln consensus. Denbury's estimated 2013 production is unchanged from previous estimates. Denbury's full year 2013 capital expenditure budget is unchanged from the previously disclosed amount of $1.06 billion; transcript;

DVN: beats by a large margin; $1.21 vs 94 cents.

ECA: April 18 (previously reported)

EEP ( ): reports disappointing numbers;

ENB: May 6 (previously reported)

EOG: crude output up 35%; beats; shares surge after-hours almost 5%;

EOX (Emerald): Filloon; transcript; fly on the wall; sees exit rate of 2,850 boepd, December, 2013;

EPD ($0.68): books solid earnings even though missed analysts' expectations (60 cents vs 68 cents)

ERF: 

GEOI (bought by Halcon [HK], below)

GMXR:

HAL ($0.72 ): $0.73; beat forecasts:
For the quarter ended June 30, Halliburton's net income totaled $679 million, or 73 cents per share. Analysts expected 72 cents per share, according to FactSet. A year ago, earnings were $737 million, or 79 cents per share.
Overall revenue edged up 1 percent to $7.32 billion from $7.23 billion a year ago, also topping expectations despite an 8 percent revenue slide in North America. Total revenue, even with the decline in North America, was an all-time best for the second quarter, helped by international growth, especially in Asia.
HES (): huge earnings; $4.16 vs $1.61 for the quarter;

HP ( ): beats estimates; transcript;

HK (Halcon; previously GEOI): earnings; transcript;

Kinder Morgan - KMP ( ): 

KOG: posting the report; Filloon; press release;

Legacy/Bowood: huge loss due to acquisitions and CAPEX; market takes it in stride; share price up slightly; transcript;

LINE: Jul 22

MDU ( ): press release; beat by a penny;

MHR (Magnum Hunter): Filloon on Magnum Hunter; missed on expectations; high costs in the Bakken; divested itself of Eagle Ford property

MMR (McMoRan) ( ): 

MPC (Marathon Petroleum) ( ): earnings miss, 67 cents vs 71 cents, but better than year ago at 59 cents;

MRO (Marathon Oil): press release; 60 cents vs 54 cents 2Q12;

MUR ( ): Beat on earnings by 20 cents; missed on revenue; transcript

NBL (74 cents):  misses, 69 cents; Noble Energy Inc.'s second-quarter profit rose 29 percent, but earnings and revenue both failed to meet Wall Street expectations as its oil production was hurt by the idling of a rig in the deepwater Gulf of Mexico and late-winter storms in Colorado; transcript; Revenue rose 19 percent to $1.15 billion, also below analysts' estimate of $1.20 billion. Output at record high. Bottom line: outstanding report, but not as good as analysts forecast.

NBR: press release; CEO says this should be their low point going forward;

NFX:  beat, but folks not happy; expectations too high; 37 cents vs 61 cents last year; transcript;

NOG:  beats on revenue, but it was a lousy report;

NOV:  beats on revenue; matches expectations on earnings;

OAS: beats by $0.05, beats on revs : earnings of $0.65 per share, excluding non-recurring items, $0.05 better than the estimate of $0.60; revenues rose 70.8% year/year to $254.6 mln vs the $245.88 mln consensus; transcript;

OKE:  report here;

OKS: report here;

OTTR: press release; 21 cents vs 19 cents last year; transcript;

OXY ( ): misses; Chief Executive Steve Chazen indicated in April that Occidental's Middle East operations might be put up for sale , and analysts also expect the Californiadivision to be spun off.
PAA:  Aug 5

PSX ( ):  shrugs off slow quarter; press release here.

QEP: misses on top and bottom line; transcript;

RIG ( ): 

SD: Aug 6, after the close

SLB ($1.11 ): easy beat; $1.15; shares soar; increases dividend; transcript;

SM ( ): Jul 30

SRE ( ): Jul 29

SRGY:

SSN:

STO (BEXP):  

STR:  Jul 31

T (  ): Jul 23

TPLM: September 10, 2013; beat; huge story;

UNP ( ): beats by 2 cents; misses on revenue ($4.47 billion vs $4.50 billion); shares down;

USEG: 

VLO: Jul 23

VOG: 

WDFC: WD-40 popped $8, from $58 to $66 in after-hours trading after 3Q13 earnings were released/discussed: net income rose 12 percent in the fiscal third quarter on greater sales of multipurpose items like its namesake WD-40 spray lubricant.

WFT: earnings in-line; misses on revenue; transcript;

WHX:  

WHZ:

WLL:  beats by 12 cents; transcript;

WMB: Jul 31

WPX ( ): company's press release; misses by 4 cents but beat on revenues; transcript;

XOM: Aug 1

 XLNX (47cents): wow, beats by 9 cents (56 cents); beats on rev; stock up nicely; transcript;

Non-Operating Partner In North Dakota Eyeing An IPO; Look Who Is Interested

Reuters is reporting:
Breitling Oil & Gas, which manages oil and natural gas deposits in North Dakota and Oklahoma, is considering an initial public offering or other options for late 2013 or early 2014.
The Dallas-based company would hope to raise $200 million to $400 million through any IPO...
An analyst has traveled to Asia several times this year, and said interest in buying Breitling was strong across the continent.  
The company controls roughly 200,000 acres of mineral rights across North Dakota's Bakken and Three Forks shale fields, as well as in Oklahoma's Mississippian Lime shale field.
Breitling typically hires Devon Energy Corp, Oasis Petroleum Inc  or others to produce oil and natural gas on the land, preferring to be a non-operating partner.
Snapshot of Breitling:
  • Considering IPO; controls ~ 200,000 acres in Bakken/Three Forks; drills as non-operating partner with Devon, Oasis; July 3, 2013
  • Enters the Bakken, December 28, 2011
  • Acquires nonoperated acreage in Sand Creek field, McKenzie County
  • The operator will be Denbury Resources

Four-Part Series On The Major Players In The Permian

For newbies: again, there are three oil plays currently boom in the US: west Texas/Permian (primarily the Spraberry and the Wolfcamp); south Texas/West Gulf (the Eagle Ford); and, North Dakota/Williston Basin (Bakken).

The links are to the Market Realist:

Part I: The importance of the Permian
Part II: Geography of the Permian
Part III: Major Players: Concho Resources, Pioneer Natural Resources, Laredo Petroleum
Part IV: Major Players: Devon Energy, EOG, Approach Resources

For 2012: Eight North Dakota Counties In Top 100 US Counties in Home Building: Williams and Ward Counties, #1 and #2 Nationwide, Respectively

The Bismarck Tribune is reporting, these data points:
  • nationwide, North Dakota is #1 in rate of construction of new housing units: 2.3%; nationwide: 0.3%
  • of the top 100 counties in the entire US, Williams County (Williston) is ranked #1; Ward County (Minot) is ranked #2.
Six other North Dakota counties ranked among the top 100: Burleigh (Bismarck), Cass (Fargo), Grand Forks, Morton (Mandan), Stark (Dickinson) and Ramsey (Devils Lake).

North Dakota's new housing rate of construction: almost 14% with 1,525 new units. Ward County came in at almost 5% with 1,318 new units.

This is pretty impressive: the number 2 county in entire US (Ward County in North Dakota) came in with a rate of about 5 percent. Williams County came in more than twice at almost 13%.

And "we're" still way behind on housing.

Valero Adding More Hydrocracking Capacity Near Export Terminals

From RBN Energy today on Valero's plans to add more hydrocracker capacity down south:
We get the distinct feeling that there is not yet a sense of urgency among refiners to address the apparent inconsistencies between their refinery configurations, the available slate of crude and the product mix that the market requires. Given the level of activity and investment in drilling and infrastructure that we have seen in the past two years to get crude to market as well as the flurry of new terminal storage capacity and connections in refining centers, shouldn’t we be seeing more signs of activity behind refinery gates?
Nevertheless, all the evidence suggests that US refiners in general and Gulf Coast refiners in particular will have to make new investments in their refineries to take full advantage of the new crudes coming their way. If not in hydrocracker units - then in topping units that increase their capability to process very light crudes or condensates.
Valero has determined that increased hydrocracking capacity is the way to go and they have placed their bets accordingly. Now that the major pipeline investments to redirect new crude flows to market are under way, we believe the focus of industry investment will shift to addressing refinery infrastructure issues. Given the slow start so far on that investment we expect bottlenecks to shift from storage and distribution centers to refinery gates.

Wednesday Morning News & Views; Oil Up Over $2; Great RBN Essay

Active rigs: 190

Wells coming off the confidential list have been posted. QEP has another gusher in the "Helis Grail." Some mineral owners should be happy that the NDIC allowed BR to put in an overlapping unit -- it gave them the first of many great wells, but of course, we will hear from some that these overlapping units are a land grab. It all depends on one's perspective. I have no dog in that fight: I own no minerals. Newfield has two nice wells. One-half of wells coming off the confidential list went to DRL status. May was a horrendous month due to weather.

Wow! Another great essay from RBN Energy. This time on hydrocrackers. A must read.
Hydrocrackers are just one of the complex upgrading units in modern refineries. They process heavy gas oils that are yielded from  vacuum distillation units.  The hydrocracker uses a mixture of hydrogen and chemical catalysts to process the gas oils into jet fuel, diesel, and gasoline. A steam methane reformer is generally used to convert natural gas to produce the necessary hydrogen. Although hydrocrackers can be designed to produce a wide range of product yields, the output of the type of hydrocracker being built by Valero and others yields much more diesel than gasoline. The use of hydrogen in the process increases the volume of the feedstock. That means you get out 20 - 30 percent more liquids out than you put in.
Why are Valero investing in new and expanded hydrocracking units? For starters diesel has attained “most favored refined product” status of late due to increases in exports and higher prices than gasoline. The chart below shows US Gulf Coast ultra low sulfur diesel (ULSD - blue line) and gasoline prices (red line) over the past three years. Diesel prices were on average $8.50/Bbl higher than gasoline over the period. Last year diesel exports from the US averaged 1MMb/d up considerably from just 138 Mb/d in 2005. Most of those exports are to Latin America where growing regional demand is combined with a lack of local refining capacity. European refining capacity has also been shrinking – with over 1 MMb/d closed or expected to close since 2008. In the circumstances US refineries have a great opportunity to max out diesel production.
Many, many story lines, including my recent post on Power Africa. 

WSJ Links

Brief today due to time constraints. Skipping to Section C (Money & Investing): oil futures rise to a 14-month high. In Section B (Marketplace), the Koch brothers are getting some attention.

This will be a great article to read later: the headline suggests exactly what I posted a couple days ago -- the headline: US backing unlikely to tip balance toward 'clean coal.' This is not a war on coal; this is a war on US utilities. King Coal will come out of this very, very nicely. This "win" by the oil companies was reported briefly yesterday; here's a longer story. Lovely.  Also, along that line, a nice obit on former Mobil CEO -- very, very interesting story.

The big story: O'BamaCare delayed. When I get time, I have a long post prepared for this story. 

Also front page: rising US oil output gives US policy makers more options. And to think, President O'Bama could have had this in his first term; it's a bit too late for him to gain much from the oil boom (in fact for him, it remains a liability; his base won't accept the oil boom). His successor will be the big winner.

And this will be fun to read: solar groups seek tea-party support.

I apologize for abbreviated posts today.

I just completed the drive from Dallas, Texas, to San Pedro (south Los Angeles), driving straight through with cat naps along the road, arriving at the neighborhood Starbucks at 7:50 a.m. -- driving through LA rush hour (an oxymoron) this morning: I-40 to I-15 to I-210 to I-605 to I-105 to I-110.

I actually pulled off the I-210 for 20 minutes to take a quick cat nap. I was starting to feel a bit tired. I never push it. I find that as soon as I feel a bit tired, a 20-minute nap is all I need sometimes.

I drove through the California desert at night to beat the heat. When I got into the valley west of  Kingman, Arizona, at 1:00 a.m. it was only 104 degrees.  The lowest it got was 94 degrees before I got to the Los Angeles metropolitan area -- then it dropped to 74 degrees (in-car thermometer).

Trivia On Naming Burlington Resources Wells; Why I Love To Blog

Way back on February 27, 2011, I noted that BR named one of their wells "Midnight Horse." The well would sit among Midnight Run and Iron Horse wells. The combination name suggested that Midnight Horse wells would fill in along the section lines between the Midnight Run and the Iron Horse wells.

Here is what I wrote more than two years ago (note that I predicted 2560-acre spacing -- wahoo):
24537, 2,842, BR, Midnight Horse 11-1MBH-ULW, Union Center, this section now has eight (8) wells sites or permits; I think this is a well on an overlapping 2560-acre spacing unit, so it can run right down the section line; watch to see if it's a 4-section spacing well; the name is interesting: Midnight Horse, a combination of "Midnight Run" and "Iron Horse"; 4-section spacing; t5/13; cum 14K 5/13;
Exactly as predicted two years ago. That's how long ago operators were moving to 2560-acre spacing.