Friday, January 9, 2015

MDU (Fidelity) To Delay Marketing Of Its Bakken Acreage; MDU Looking At Second Refinery In Minot, ND, Area -- January 9, 2015

It's cold out there. I just talked to my dad in Williston, North Dakota. He has lived a lot of winters in Williston -- ever since 1950 or thereabouts. He says this is a pretty tough winter ... but he wouldn't want to be living anywhere else. He celebrates his 93rd birthday this year and still goes into the office every day. He was in the office today even though the bus was not running because it was too cold -- yes, you read that correctly. It was too cold for the daily bus to run. Dad found a neighbor to drive him to work on the other side of town. I doubt my dad knows phone numbers of his neighbors, so he probably walked outside and walked up to the first person he saw who was warming their car. Dad says he is not bashful. LOL.

He has about a half dozen places to go each morning: the office, the bank, the post office, and then to lunch. He goes to the bank to check the market. The bus normally takes him but he says he can always find someone to take him where he needs to go.

I did not mention to him that it is actually warmer on Mars today than it is in much of the US. The Daily Mail is reporting: Temperatures on the red planet were warmer on Thursday than fourteen states from Washington to Maine.

Dad told me it's just as busy as ever in Williston, though he operates in a smaller world than most folks in the oil patch so he may not be aware of some changes in activity.

He is very, very happy with his investment portfolio (no bonds that I know of; he is fully invested in equities and has a long horizon, about 20 years, I believe. I wish I could provide some of his better holdings, but a) it would not be appropriate, and, b) most folks would not believe me what he has invested in. He is a better investor than I am and he doesn't use the "internets." 

Slump In Oil Prices 

Earlier posts comparing internal rates of return and "break-even" costs in the various oil plays around the nation appear to have been fairly accurate. See AP report on the Permian.

In addition from Rigzone: Tough Times Ahead for Offshore Norway in 2015.
In northern Europe, offshore Norway has in recent years been regarded as one of the more profitable, and even exciting, regions for oil and gas operators to be involved in.
Norway represents a rare combination in the world's oil and gas industry in that it offers energy companies the stability of a maturing basin with well-developed infrastructure along with frontier exploration opportunities.
Not only have companies like Statoil ASA led a technologically-driven approach to maximizing recovery of hydrocarbons from the Norwegian North Sea, squeezing ever more energy out of fields that are often decades old, but the promise of Arctic oil treasure has also seen exploration forays into the Norwegian zone of the Barents Sea.
However, the sudden rapid drop in the price of oil in recent months poses a question about how much new activity will be taking place on the Norwegian Continental Shelf over the next year or so.
For example, Statoil suspended more than a third of its fleet of exploration rigs in 2014 and in early December the firm took the decision to extend the suspension of three drilling rigs as part of its struggle to cut costs as its profit margins shrink.
It has also decided to postpone until October 2015 a decision that had been due in March about whether to go ahead with a new platform at the Snorre field in the Norwegian Sea.
Statoil believes the project could be used to extract an additional 240 million barrels of oil from the Snorre field, but it would also cost the partners in the field more than $5 billion.

Initial production numbers have been posted for wells coming off confidential status today

Active rigs in North Dakota:

Active Rigs166193182200163


MDU will delay marketing of its Bakken acreage:
The company also announced that it expects the Dakota Prairie Refining facility, which it is developing in conjunction with Calumet Specialty Products Partners, L.P., to begin commercial production of diesel fuel and other products in the second quarter of 2015.
Dakota Prairie Refining had expected to begin production by December 31, 2014, but experienced delays from severe winter weather in November and late revisions to electrical systems and controls.
The facility’s cost now is expected to be more than $400 million. Construction costs and returns are shared equally with Calumet.
“Although we are disappointed in the delay and cost increase at the refinery, we anticipate good returns from this facility,” Goodin said. “In the future, we expect there will be opportunities to improve financial performance of the refinery through debottlenecking and other strategies. We also will benefit from experience gained with this project to help develop future projects, such as a second plant presently being evaluated near Minot, North Dakota.”

US payrolls rise "solidly"; unemployment falls to 5.6 percent; participation rate continues to drop.
Nonfarm payrolls increased 252,000 last month after a revised 353,000 jump in November, the Labor Department said on Friday. The unemployment rate fell 0.2 percentage point to a 6-1/2 year low of 5.6 percent. However, some of the decline reflected people leaving the labor force. 
Some data points from Bloomberg:
  • Job growth last month was highlighted by the biggest gain in construction employment in almost a year. Factories, health care providers and business services also kept adding workers in December.
  • The median forecast in a Bloomberg survey of economists called for a 240,000 advance in payrolls. Estimates of 99 economists ranged from gains of 160,000 to 305,000 after a previously reported 321,000 November increase. 
  • The participation rate, which indicates the share of working-age people in the labor force, decreased to 62.7 percent from 62.9 percent. 
  • Wage gains have lagged behind the pace of employment growth. But that should improve with new minimum wages in almost every state of the union. 
This is the most interesting data regarding falling wages: wages fell by 5 cents, but more notable, hours are average 34.5 hours/week. Remember: with ObamaCare, employers are encouraged to keep "full-time" employees at less than 29 hours so as to be able to call them "part-time" and not provide health care.

And, of course, the market knows why the unemployment rate dropped -- folks dropping out of the labor force. The average American does not know how the unemployment rate is calculated.


Disclaimer: this is not an investment site. Do not make any investment, financial, or relationship decisions based on what you read here. See disclaimer.

NAT: raised its dividend from 14 cents to 22 cents.

EEP: raised its dividend.

US oil imports dip.

It appears the terrorists in Paris who killed 12 innocent people were first driven to terrorism after seeing the Abu Ghraib pictures posted in The New York Times.  I'm not saying I condone what happened in the prison, but it was the photos released by The Times that incited the terrorists to begin with. Yes, I know, the photos would have shown up anyway without The Times.

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