Wednesday, August 7, 2013

Last Rambling Note For The Evening

I've hit a wall; I'm exhausted.

There are just too many stories to post. It is difficult to keep up during earnings season. So, I'm going to stop for tonight and start again tomorrow.

But these are the things I'm thinking about right now:
  • EOG's incredible quarter
  • CLR's delineation of the lower Three Forks; based on queries I get, I honestly don't think most folks understand how big a deal this is; remember, the Three Forks doubled the "size of the Bakken" -- and that was just the upper Three Forks
  • the incredible Spearfish well just reported by Corinthian in the last week or so
  • the Oasis Cottonwood oil field -- a gift from MDU just a couple of years ago
  • this graph.
  • the fact that crude oil has stayed above $100 for as long as it has -- and the world is at relative peace
  • the fact that Brent, WTI, Bakken, LSS are close to parity
  • the real risk to the Bakken now that environmental activists may have found another way to severely impact the Bakken
  • the revelation by activist environmentalists that there are plans for 1,200 new coal plants worldwide
  • the fact that the US has become the "refiner to the world"
  • the US State Department's determination that no determination is required with regard to the Egyptian military coup (the same line that could be used to kill the Keystone once and for all)
  • the thirty wells one oil company wants to drill on a 1.3-acre pad in southern California, on-shore
  • the devastating quarter that First Solar had; and GE getting out of the solar panel business
  • GM finally "getting" the all-electric car market
  • the Antarctic ice mass growing to record size; Arctic melt was huge this summer, but it was shortest Arctic summer on record
  • Congress exempted from ObamaCare
  • the gap between the "haves" and "have-nots" widening; the number of companies increasing their dividends
I guess I'll stop there. I'll probably think of a few more things on the bicycle ride home but then I will have to wait until I again have wi-fi in the morning.

Wells coming off the confidential list tomorrow have been posted. The director, NDIC, Lynn Helms, said we were going to see some spectacular IPs this summer, and that has turned out to be very, very accurate (I'm talking 30-day, 60-day, and 90-day production, not the 24-hour production I report daily). I'm talking about wells like this one that will report tomorrow:
  • 23382, conf, HRC, Fort Berthold 147-94-1B-12-3H, McGregory Buttes:
DateOil RunsMCF Sold

That's 50,000 bbls in less than two months. That is a Halcon well. EOG says they now expect 100% rate of returns on all their wells (in the Bakken, Eagle Ford, and Leonard).

Wells Coming Off The Confidential List Thursday; HRC With Some Huge Wells; Well Of The Week? SM's Well in Colgan Field, Divide County

  • 20063, 1,504, HRC, State 157-100-32C-29-1H, Marmon, t4/13; cum 35K 6/13;
  • 22797, 2,574, Statoil, Esther Hynek 10-11 2TFH, Alger, t7/13; cum --,
  • 23124, 2,265, HRC, Fort Berthold 148-94-30A-31-3H, Eagle Nest, t6/13; cum 16K 6/13;
  • 23830, 168, Samson Resources, Bakke 3229-6TFH, Ambrose, t5/13; cum 7K 6/13;
  • 23382, drl, HRC/Petro-Hunt, Fort Berthold 147-94-1B-12-3H, McGregory Buttes, 30 stages, 4.5 million lbs, t5/13; cum 119K 9/13;
  • 24176, 798, SM Energy, Simonson 1-29HN, Colgan, t4/13; cum 23K 6/13;
  • 24449, drl, SM Energy, Legaard 2-25HNA, Colgan, no data,
  • 24605, drl, KOG, P Wood 154-98-4-27-34-13HA, Truax, no data,
  • 24626, drl, BR, Badlands 41-15MBH, Hawkeye, no data,

20063, see above, HRC, State 157-100-32C-29-1H, Marmon:

DateOil RunsMCF Sold

23124, see above, HRC, Fort Berthold 148-94-30A-31-3H, Eagle Nest:

DateOil RunsMCF Sold

23382, see above, HRC, Fort Berthold 147-94-1B-12-3H, McGregory Buttes:

DateOil RunsMCF Sold

24176, see above, SM Energy, Simonson 1-29HN,  Colgan:

DateOil RunsMCF Sold

CLR: New Corporate Presentation, Dated August 7, 2013


August 8, 2013: a reader suggests the delineation of the LOWER Three Forks by CLR could be the story of the year, 2013. I can't argue. It's a much bigger story than I think folks realize.
Original Post

Link here for the PDF file.

Some quick data points (most numbers rounded for easier recall):
  • one million acres in the Bakken, North Dakota
  • one million boe reserves
  • current production: 150,000 boepd
Leading the delineation of the lower Three Forks
  • CLR: 13 wells targeting the lower TF
  • EOG, COP, XTO, ZEN: 5 well total targeting the lower TF
Total lower Three Forks wells tested (all operators):
  • TF2: 10 wells
  • TF3: 6 wells
  • TF4: 2 wells
Key observation: the lower Three Forks has little faulting or structure; production interference can occur in areas with severe faulting and natural fracturing (think Monterey Shale in California)
Charlotte unit testing completed, McKenzie County, west of the Nesson anticline:
  • TF2 and TF3 proven productive
  • no evidence of production interference between wells in the Charlotte unit
Colter unit lower TF testing, Dunn County, east of the Nesson anticline
  • Colter TF3 producing at 1,750 boepd at 3,200 psi with no indication of pressure drawdown

Mike Filloon On PDC Energy
The Niobrara may be the top play of 2013. Operators in the DJ Basin have already had a very good start. Bonanza Creek and Synergy, which I own, look to have reasonable growth targets. 
Pad development is just beginning, and laterals continue to get longer. We are seeing increased stages and downspacing is going very well. PDC Energy also has good acreage in the Niobrara and upside going forward. It had a good quarter. 
Adjusted diluted net income was $.23/share. Net income was $.64/share. Production was up 34% from Q2 of 2012. It has improved liquids production to 54%. PDC Energy is now running 3 rigs in Wattenberg. Wattenberg production is up 40% from Q2 of last year. All of this was accomplished even with midstream issues. The average realized sales price was $47.10/Boe. This compares to $41.73/Boe from the second quarter of last year. Production costs decreased to $9.83/Boe from $10.06/Boe in Q2 of 2012. Lease operating expenses decreased 11% year over year. Adjusted cash flow from operations was up 57% from Q2 of 2012. 
PDC Energy has everything I look for in small cap oil and gas. It's increasing liquids production. PDC Energy is mainly working a basin that is misunderstood. It is just finishing it largest pad in the Niobrara and it hasn't even come close to optimizing its well design.

CLR 2Q13 Earnings

Continental Resources 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:

Press release.
  • record production totaling 135,700 boepdy for 2Q13, an increase of 12% sequentially and 43% compared to 2Q12 
  • adjusted net income for 2Q13 of $246 Million, or $1.33 per diluted share
  • record EBITDAX of $708 million, an increase of 14% compared to 1Q13 and 68% compared to 2Q12 
  • mid-year 2013 proved reserves total 922 million boe, an increase of 17% from year-nd 2012 
  • lower Three Forks activity delineates productive footprint of 3,800 square miles in Bakken 
  • 2013 production growth target range tightened upward to 38% to 40%
  • Bakken operated well cost target lowered to $8.0 million by year-end 2013

Fourteen (14) New Permits -- The Williston Basin, North Dakota, USA;

Active rigs: 181

Fourteen (14) new permits --
  • Operators: Hess (4), HRC (4), KOG (2), Oasis (2), CLR, Slawson
  • Fields: Cow Creek (Williams), Squaw Gap (McKenzie), Baskin (Mountrail), Marmon (Williams), Sanish (Mountrail), South Fork (Dunn)
  • Comments:
Wells coming off confidential list were reported earlier; see sidebar at the right.

One (1) producing well completed:
  • 22738, 207, Petro-Hunt, Blikre 158-93-6A-7-1H, East Tioga, t11/12; cum 29K 6/13;

"The Fix Is In" -- Drudge Acts Surprised -- LOL

We talked about this last week, the "$10,000 wrinkle, Tuesday, about how O'BamaCare was passed with understanding that Congress would have to play along. Of course, we knew that if Congress was not part of the deal, the bill never would have passed. And then later, a bill would be passed to exempt Congress.

So, today we read "the fix is in." Congress and staffers will be exempt from ObamaCare. The Daily Caller is reporting:
Members of Congress and Hill staffers will not lose their health-care subsidies from the government when Obamacare is implemented because of an exception proposed Wednesday by the Office of Personnel Management.
Under the current system, the government covers most of the cost of health-care premiums for members and their staffers. But an amendment to the Affordable Care Act — proposed by Iowa Republican Sen. Chuck Grassley — threw those subsidies into question saying that members and staff must enter into the exchanges or be covered by insurance “created” by law.
The potential for staff losing the subsidies led to concerns of “brain drain” from the Hill if staffers left as a result of the increased cost.
Apparently the president personally worked the issue. LOL. It was going to happen regardless.

The runaway train wreck continues to gain speed. It's just a matter of time before Congress is forced to delay the individual mandate, and again, we have almost a year before that needs to be done. Until then Wal-Mart and municipalities will continue with their plans to push their employees unto ObamaCare. 

Random Look At Two Of The Parcels From North Dakota State Oil And Gas Lease, August, 2013

Of interest: $14,700/acre, TDB Resources, 1-91-149, 6.71 acres, Dunn County.

I think I have this correct, but it is a bit confusing. There are two horizontals in this section, but the wells are sited in McLean County. The portion of this section in Dunn County is under the river according to the GIS map server.

Be that as it may, here are the two horizontals that are sited in 6-149-90, transit 1-149-91, and end in 2-149-91:
  • 20290, 553, QEP, MHA 1-01-02H-149-91, Deep Water Creek Bay, middle Bakken, t10/11; cum 167K 6/13; 40 stages; 4.5 million lbs;
  • 20291, 777, QEP, MHA 2-01-02H-149-91, Deep Water Creek Bay, middle Bakken, t6/11; cum 169K 6/13; 30 stages; 3.55 million lbs;

Of interest:  $19,100/acre, Banded Rock LLC, 31-93-152, 4.85 acres. Likewise, this is confusing.

This parcel was listed for Dunn County, but it seems it is in southeast corner of Mountrail County; the section is under the water on the county line of Mountrail/Dunn County.

Again, be that as it may, there are two horizontals in this spacing unit; both wells are sited in 30-93-152 and end in 31-93-152:
  • 22288, 1,466, MRO, Joanne Quale USA 21-30H, t1/13; cum 82K 6/13; 30 stages; 2.6 million lbs;
  • 22289, 1,444, MRO, Joanne Quale USA 21-30TFH, t12/12; cum 103K 6/13; 30 stages; 2.0 million lbs;

Musings On The Electric Vehicle Story


May 28, 2014: three news items --
First: GM with a 2-year supply of the new Cadillac ELR. The graphic at the site is quite incredible. And worrisome, I suppose for GM.

Second: Tesla's debt is now junk-bond status.
Third: In April, 2014: Nissan Leaf widens lead over Chevy Volt.

August 26, 2013: Tesla outselling Porsche, Jaguar, Buick, and Ford Lincoln in California.

August 9, 2013:  read the post below if you have not yet read it, and then go to the post on the Chinese luxury car market.
Original Post

Some random data points:
  • there are hybrids (Chevy Volt/Nissan Leaf/Toyota Prius/Honda Insight) and there are all-electric vehicles (Tesla Model S)
  • BWM says they will introduce an all-electric vehicle in 2014 (unveiled in 2013)
  • GM says they will introduce a Cadillac plug-in hybrid in early 2014 (unveiled in 2014)
  • hybrids Volt and Leaf are running $40,000, though manufacturers are bringing prices down, and tax incentives bring prices down
  • the Tesla is in the $80,000 range
  • BMW will be in the $40,000 range
  • GM's hybrid Cadillac: about $60,000
  • on a full electric charge, the Volt will get 38 miles, but with gasoline engine, range is 380 miles
  • BMW range: 80 - 100 miles; an additional 2-cylinder generator can increase the range to 180 miles
  • Tesla Model S range: 265 miles 
  • The Model S ranked as the top selling plug-in electric car in North America during the first quarter of 2013 with 4,900 cars sold, ahead of the Chevrolet Volt (4,421) and the Nissan Leaf  (3,695)
  • The Tesla, Volt, Cadillac, and BWM are (will be) all about the same size
  • These are not inexpensive cars. In fact, they are downright expensive, and studies have shown that even at $5.00/gallon, these cars are unlikely to save money vis-a-vis conventional, gasoline-powered automobiles. 
  • They are small cars, not particularly suited to a growing family with two toddlers, car seats, and all the accompanying paraphernalia toddlers require.
  • The range is ridiculous. A range of 265 miles is fine, except one needs to know where an electric "fueling" station is when going on a road trip. In reality: anyone who buys an all-electric vehicle in 2014 will be charging their automobile at home, overnight. Period. Dot. These are not for long-distance road trips. 
  • The hybrids are fine for long-distance road trips, but by switching to the gasoline engine after 38 miles, one has defeated the purpose of an electric car in the first place. By the way, the all-electric range for the Prius is 14 miles.
So, some predictions, perhaps:
  • I almost want to say the hybrids are dead, with one possible exception: the Toyota Prius. But there may be a niche for hybrids. I think one can safely assume the Chevy Volt and the Nissan Leaf will not be around much longer without major changes (more on that later).
  • The all-electric cars will surprise everyone and will become runaway success stories. Car manufacturers are going to make a ton of money on them (margins will surprise investors). 
  • Only the very, very well-to-do will be able to afford all-electric vehicles: a) they will be significantly more expensive than comparable conventional gasoline-powered vehicles; b) they will be the second, third, or fourth car for the buyer.
  • These will not be cars used for road trips or family vacations. These will become luxury cars driven by professionals to work and back, recharging at home in the evening, and pretty much in the larger metropolitan areas. I see the average owner of the Tesla or the Cadillac ELR to already own a luxury gasoline-powered automobile like a Mercedes, or BMW and a Toyota Prius. The Tesla/Cadillac ELR will be the third car and will be the car driven back and forth to work. The Mercedes or BMW will be driven on weekends and for the road trips; and the Prius will be driven by the soccer-mom/spouse.
  • I don't know what their pulling power will be but the other possible exception might be pick-up trucks at the high end. It is surprising the amount of money middle-income, young/middle-age men will spend on a pick-up truck and over time, pick-up trucks have started to resemble luxury vehicles on the inside. Do electric pick-up trucks even exist? I don't know but a google search will answer that question.
  • In hindsight, GM might have made a mistake marketing a high-priced Chevy Volt to a demographic that could not afford it in the first place. One wonders if Tesla had it right all along: targeting the high-end middle class and the very well-to-do. Everything I have heard is that folks who own a Volt love it. But they can't afford it and it doesn't make sense when a full charge has a maximum range of 38 miles and then it's a standard gasoline-powered car.
  • But an all-EV luxury automobile/pick-up that sells in the same range as a luxury gasoline-powered automobile/pick-up truck could be a surprising success. I think GM's mistake was going after the crowd that couldn't afford an EV in the first place.
By the way, what probably irritates the well-to-do more than anything about their cars? Maintenance. Gasoline-powered cars are taken in every 3,000 miles for an oil change (even though not required). My understanding is that all-electric EVs need almost no maintenance whatsoever. When a lawyer, a physician, or a wealthy business owner gets a few hours off on Saturday afternoon, he/she is not interested in getting the car's oil changed. Scheduling maintenance during the week is a hassle.  That alone might be an incentive enough to purchase an all-electric EV as a second, third, or fourth car to be used for the daily commute.

People will probably laugh at thoughts of a third or fourth car, but there is a surprising amount of money being accumulated in this country, and I'm seeing more and more McMansions with three-car garages.

Oh, I forgot. I mentioned that the Chevy Volt and Nissan Leaf may not be around much longer. Certainly not the Chevy Volt; possibly the Nissan Leaf will find a niche. But when it was announced that there were minimal changes to the 2014 Chevy Volt and that GM was introducing the Cadillac ELR, that told me that GM had moved its engineers from the Volt to the Cadillac. The Volt will gradually fade away, and the Cadillac will be GM's flagship EV.

EOG Earnings Conference Call On-The-Air

The CEO's takeaways at the conclusion of the conference call:
  • he is particularly proud of the western Eagle Ford 
  • EOG can not state that after-tax, they have a rate of return of 100% in three key plays: the Eagle Ford, the Bakken, and the Leonard

Press release
EOG today reported second quarter 2013 net income of $659.7 million, or $2.42 per share. This compares to second quarter 2012 net income of $395.8 million, or $1.47 per share.
Consistent with some analysts' practice of matching realizations to settlement months and making certain other adjustments in order to exclude one-time items, adjusted non-GAAP net income for the second quarter 2013 was $573.8 million, or $2.10 per share. Adjusted non-GAAP net income for the second quarter 2012 was $312.4 million, or $1.16 per share.
The results for the second quarter 2013 included net gains on asset dispositions of $9.4 million, net of tax ($0.04 per share), impairments of $2.0 million, net of tax ($0.01 per share) related to the sale of certain non-core North American assets and a previously disclosed non-cash net gain of $191.5 million ($122.6 million after tax, or $0.45 per share) on the mark-to-market of financial commodity contracts. During the quarter, the net cash inflow related to financial commodity contracts was $68.9 million ($44.1 million after tax, or $0.16 per share).
EOG reported strong, sustained financial growth for the second quarter 2013. Compared to the second quarter 2012, earnings per share increased 65 percent, discretionary cash flow increased 35 percent and adjusted EBITDAX rose 34 percent. (Please refer to the attached tables for the reconciliation of non-GAAP discretionary cash flow to net cash provided by operating activities (GAAP) and adjusted EBITDAX (non-GAAP) to income before interest expense and income taxes (GAAP).)

North Dakota State Oil And Gas Lease Results -- August, 2013

Source: North Dakota State link.

Billings County:
  • Nothing of interest. Bonus/acre about $15.
Bowman County:
  • Little of interest.
Dunn County:
  • Of interest: $14,700/acre, TDB Resources, 1-91-149, 6.71 acres.
  • Also of interest: $19,100/acre, Banded Rock LLC, 31-93-152, 4.85 acres.
  • One parcel: $5,100/acre; Norwegian American Oil Company, 11-91-149, 0.07 acres. Can that be correct? 0.07 acres?
Golden Valley:
  • Little of interest. Mostly in the $500/acre; some $950/acre. I didn't see any over $1,000/acre.
  • One parcel at $65/acre.
  • Two parcels, both $1,010, and 8 acres each; 24-145-99, Northern Energy Corporation.
  • A lot of parcels, lots of acres, but bonuses in the $12/acre range.
  • A lot of parcels, lots of acres, but bonuses in the $2/acre range, though some as high as $200/acre.
  • Wow. One could have picked up a lot of parcels for $1/acre and $3/acre.
  • Three parcels for $1,000/acre but everything else less than $400/acre or down to $1/acre, as noted.
  • Comments similar to Mercer.
  • Almost nothing.  

I would call this fairly lackluster. Let's see what The Bismarck Tribune had to say:
The North Dakota Department of Trust Lands' quarterly auction Tuesday brought in more than $4.8 million in bonuses on mineral acre leases.
State Land Commissioner Lance Gaebe said just more than 54,480 acres were up for lease at the auction in Medora, bringing in approximately $4.825 million. The average bonus per acre for the entire 54,000-plus acres was $88.56 per acre, he said.
"The strongest interest remained in the four main counties," Gaebe said. "All the rest was pretty speculative."
According to the North Dakota Industrial Commission's Oil and Gas Division website, 154 of the 183 drilling rigs operating in the state were in McKenzie, Mountrail, Dunn and Williams counties.

Well, This Is Disconcerting; Oceans Continue To Rise; Antarctica Grew To A New Record This Past Year, Slightly Higher Than Previous Record Set In 2006

The global surface temperature quit warming 15 years ago but ocean levels continue to rise -- headline story in The Wall Street Journal.

So even though, last year's temperatures were pretty much in line with the past decade, the ocean continued to rise:
Average global temperatures in 2012 were roughly in line with those of the past decade or so, but the year still ranked among the 10 warmest on record as melting arctic ice and warming oceans continued to boost sea levels, the National Oceanic and Atmospheric Administration said in a report Tuesday.
It is all so confusing.

The very small Arctic iceshelf continues to melt but the massive Antarctic iceshelf grew to new records:
The researchers reported sharp rises in carbon dioxide in the atmosphere during 2012 as well as increases in methane and nitrous oxide, but stopped short of attributing any climate changes to these three greenhouse gases, which help trap solar heat in the atmosphere.

"This report does not try to explain why we are seeing what we are seeing," said Thomas Karl, director of NOAA's National Climatic Data Center. "The report is focused only on what the observations are telling us."

Among their findings, the researchers reported that the annual sea ice in the Arctic reached its lowest ebb last September since satellite measurements of the region began, the researchers said.

At the same time in the Southern Hemisphere, the annual sea ice around Antarctica grew to a record, encompassing 7.51 million square miles at its maximum, slightly higher than the previous record set in 2006.
I'm glad they stopped short of attributing any climate changes to greenhouse gases. I guess it's okay to be fair and balanced occasionally.

EPA Revisits Ethanol Mandate As Fuel Use Slips

We talked about this in a blog a few weeks ago, the risk of ethanol usage slipping. Maybe I will look for the original post later.

But for now, The Wall Street Journal is reporting:
U.S. regulators said they would propose for the first time lowering the mandated consumption of corn ethanol used in motor fuel, a reversal in policy that puts a powerful industry on the defense.
One word: Wow.

Okay, two words: Wow and Wow.
The move could shrink demand for alternative fuels whose use is required by the U.S. mandate. It also could make it easier for oil refiners to meet the rules, depending on how the Environmental Protection Agency handles the change.
It will be interesting to see how this effects Tesoro, Valero, PSX, etc. (For newbies, "etc." is not a stock ticker symbol.)
Because Americans are continuing to drive more fuel-efficient cars, U.S. gasoline consumption is expected to fall this year. At the same time, a 2007 law calls for rising use of ethanol, which makes up about 10% of the U.S. gasoline supply, and other fuels defined as renewable. That means the U.S. is heading toward the "blend wall," the point at which fuel marketers can't absorb any more ethanol into the gasoline supply without using higher-percentage ethanol blends that aren't widely sold.
As a result, on Tuesday the agency said that next year it would take the unprecedented step of seeking to reduce the amount of renewable fuel that the oil industry must use, saying it "does not currently foresee a scenario in which the market could consume enough ethanol."
Oh, I don't know. Why don't they just store all that excess ethanol in a Strategic Ethanol Reserve, alongside the SPR. 

What's Killing The Dolphins?

I think it's the lack of off-shore drilling.

The Wall Street Journal is reporting:
Dolphins are washing up dead along the East Coast this summer, perplexing scientists who fear a recurrence of a large-scale die-off several decades ago.
A federal government group is scrambling to identify possible causes for the deaths seen from New York to the Chesapeake Bay. Among the suspects, depending on the location, are viruses, bacteria, biotoxins—poisons produced by algae—environmental changes, pollution and injuries from ships and fishnets. There is no indication the deaths in the various regions are related.
In July alone, teams in New York, New Jersey, Delaware, Maryland and Virginia recovered 91 dolphin bodies, according to the National Oceanic and Atmospheric Administration. In July 2012, teams in those states found only 10 dead dolphins.
Virginia found 49 dolphins in July—the norm for the month is seven. Maryland has had 15 dolphin deaths this year, about double the normal amount.
Marine mammal experts worry that the incidents may be the beginning of a widespread rise in dolphin mortality, similar to one of the late 1980s, when almost 800 dolphin bodies washed up on beaches from New Jersey to Florida. Scientists theorized that event was caused either by a biotoxin stemming from algae, or a virus similar to distemper.
Out in California where they still a lot of off-shore drilling, the dolphins are doing just fine. We saw schools of them during our last visit, and local folks talked about all the dolphins this year. My hunch is they do well around drilling rigs, for all kinds of reasons. 

Oil Boom Helps Cut US Trade Deficity By 22 Percent -- Huge Story

And the oil boom is singularly responsible for the resurgence in American railroads.

The Wall Street Journal is reporting:
America's trade deficit narrowed sharply in June, driven by record exports and a shrinking bill for oil imports, brightening the picture for domestic growth in the second quarter.
The trade gap fell more than 22% during the month, to $34.2 billion from $44.1 billion, the Commerce Department said Tuesday. Exports notched their sharpest rise since September 2012, hitting their highest level, adjusted for inflation, on record. Imports fell in part because Americans bought far fewer foreign-made cellphones and other consumer goods.
The improving trade situation spurred a number of economists to raise their estimates for second-quarter growth from the government's initial 1.7% estimate last week.
Tuesday's figures indicate that trade could exert less of a drag on gross domestic product growth than estimated—and possibly even contribute to expansion. Paul Ashworth, chief U.S. economist at Capital Economics, said GDP could be revised up to an annualized pace of more than 2.5%.

Wednesday Morning Links, News, And Views -- Part II

Active rigs: 183

WSJ Links

The new Motorola smart phone is getting good reviews in The Wall Street Journal, including this pretty-good review from Walt Mossberg Most interesting: Motorola is copying something Apple did many, many years ago: offering the phone in various colors and personal inscriptions. Although Apple does not (yet) offer its iPhone in different colors, Apple did pioneer color and inscriptions with its early iMac computers, the clamshell comes to mind. I remember Microsoft laughing at Apple computers coming in various colors.

A nice analysis of the Time Warner Cable and CBS dispute; the writer has it right.
The dispute is one that has become commonplace in pay TV, centering on how much more money Time Warner Cable should pay to carry CBS on its cable lineup. CBS says it wants to be "paid fairly" for its programming, while Time Warner Cable says it is trying to protect its customers. But at the core of it, the companies are squabbling over their share of pay-TV's spoils—money that, if the newspaper and music industries are any guide, could disappear much faster than anyone expects.
... these arrangements aren't sustainable. Younger people watch what they want online, making the idea of cable TV less appealing. The percentage of people age 13 to 33 subscribing to pay TV fell to 76% this June from 85% in June 2010, a new study by research firm GfK found.
"Cord cutting used to be an urban myth. It isn't any more," said cable analyst Craig Moffett in a report Tuesday.
Yet the entertainment companies seem blissfully unaware. Yes, most make their cable programming available online, but only to TV subscribers who remember passwords, itself a turnoff. Some shows are separately licensed to online outlets, like Inc., Hulu or Netflix Inc., but not every outlet has all seasons.
TV executives may feel insulated from the travails of newspapers. But if Messrs. Britt and Moonves don't stop fighting over money and think longer term, there won't be much money left to argue about.
And that story is followed by: pay-tv lost subscribers last quarter
Pay-TV providers lost video customers in the latest quarter, and tempers are flaring in the industry over who is most to blame for the rising costs that are driving some subscribers to "cut the cord."
The net video customers lost by cable, phone and satellite-TV providers in the second quarter totaled about 380,000, according to Moffett Research LLC. That is just slightly better than the 393,000 customers the industry lost in the year-earlier quarter. Craig Moffett, senior analyst at Moffett Research, in a research note Tuesday, pointed to evidence of cord-cutting by showing that new household formation has shown "at least tentative signs of recovery" while "pay TV subscribership has not."
I cut the cord several months ago.

Oil boom helps shrink US trade deficit by 22%. A stand-alone post later. 

On The Keystone: We Have Determined That No Determination Is Required

I don't know if readers are following the O'Bama dilemma about sending US financial aid to Egypt in light of the recent military coup. If the administration determines that it was a military coup, then by law, US financial aid cannot be sent to Egypt. On the other hand, if it was not a military coup, then the US can send financial aid to Egypt.

It was obviously a military coup, and for the past two weeks the administration has refused to make a determination.

But yesterday, the O'Bama administration announced that it has determined that a determination was not necessary.
State Department spokeswoman Jen Psaki told Matt Lee of the Associated Press Tuesday that the U.S. had “determined that we do not need to make a determination” over whether or not the ousting of Mohamed Morsi in Egypt was a coup.
Sen. John McCain (R., Ariz.) called it a coup Tuesday, but the Obama administration has deliberately avoided using the word:
LEE: In response to the first question about Senator McCain’s comments, you gave — you said, our position has not changed, as you just did with Morsi. On McCain’s comments, though, our position has not changed — then you said the U.S. government has stated what our position is. Could you remind us all of what your position actually is? Because as I recall, your position was that you don’t have a position, and that’s not quite — is that correct?
PSAKI: Matt, I think you know our position, which is that –
LEE: I — tell me.
PSAKI: There was a determination made that we need to — not need to make a designation.
LEE: So then — so your position is that you do not have a position, correct? 
PSAKI: Our position is that we do not need to make a designation. Mmm hmm — oh, go ahead, Nicolas (sp).
And that makes perfect sense. It was so obvious that there was a coup, that no determination is needed. And as long as no determination is needed, and as long as we don't use the phrase "military coup," then the US can continue sending financial aid.

This has to be a first in diplomatic double-speak.

By the way, my hunch is we will see the same thing with regard to the Keystone XL. The president will simply say that the US State Department (i.e., John Kerry) has simply decided that no determination is necessary, and with that the issue will die. No permit will be granted because the US State Department will simply determine there is no need to determine whether the Keystone XL is good or bad for the United States. The answer is obvious.


Next issue.

Putting Things Into Perspective; Early Wednesday Morning News, Links, And Views

EOG: it will be interesting to see where EOG's share price opens this morning. It closed at $153 yesterday, but then surged to $160 in after-hours trading. Futures for the DOW are down this morning, and oil is down slightly, pretty much flat at $105. [8:18 a.m. EDT: futures now put EOG at $160.] [EOG at the open hits a new 52-week high: $161.47; pulls back slightly.]

KOG: hit a new 52-week high today at $10.02, but then pulled back a bit. 

California oil: This will put things into perspective. Rigzone is reporting that a small company is looking at a 35-year, 30-well project onshore in California. So, what's so special about that, other than it's in an urban setting. This is what makes it special. The 30 wells will be sited on a1.3 acres. Repeat: 1.3 acres. Compare that to 8 wells in 1280-acre spacing in the Bakken. Just saying.

RBN Energy: from the Marcellus --
Natural gas from the Deep Panuke field off Nova Scotia will start flowing any day now. But it is arriving three years late, and a lot has changed since 2010. Most important for Repsol, the exclusive marketer of Deep Panuke gas, the New England market that was supposed to be the primary buyer is being courted by sellers of now-abundant Marcellus gas. And Spectra Energy, Kinder Morgan and others are building and planning the pipeline capacity needed to reliably deliver large volumes of gas to New England from the Marcellus. Today we conclude our two part  analysis of the impact that this new supply will have on the region.
A couple notes from The Wall Street Journal (no links -- this is from the print edition; since moving into our new apartment, the newspaper has been delivered twice in two weeks).

First headline: Tesla's stock is outrunning its superfast electric car. The company is expected to announce a loss of 17 cents; it delivered only 1,400 Model S electric sedans in July (or about 1% of Ford's sales for the same month); and it's share price has more than quadrupled in the past year. At least it has a product to sell.

Second headline: Disney says it will take a large loss on "The Lone Ranger," marking the second year in a row that a would-be blockbuster bit the dust, joining the dubious ranks of "John Carter." Disney expects to lose between $160 million and $190 million on the film in the current quarter.

And finally, the third headline, which is on page B3 (we've talked about page B3 in the past): GE ends solar-panel push; sells technology to First Solar. GE is abandoning plans to manufacture solar panels amid a market glut and sold the technology it has built up over the last half decade to First Solar. Meanwhile, as reported yesterday, First Solar reported a 70% drop in profit and cuts its forecast for the year as two large sales were delayed, sending its shares sharply loser in late trading yesterday. When I reported this yesterday, I mentioned there might be more to the story than was being reported by First Solar. Yesterday the blurb:
First Solar Inc on Tuesday reported quarterly earnings and revenue well short of expectations and slashed its outlook for the year due to construction delays for a large project and a decision to sell two projects only after they are finished.  
Today, the note said that two large sales were delayed. It's possible the writers were referring to different issues, but a delay in construction and a delay in the sale of a new project are two very different things.