Tuesday, May 19, 2015

Not By A Long Shot; Look At These EURs In The Bakken -- No, The Bakken, Eagle Ford Are Not Past Their Prime -- Not By A Long Shot -- May 19, 2015

Rigzone is reporting:
Bakken production will keep growing, albeit at a slower pace, and the Eagle Ford still has running room within high-return portions of the play, according to a recent analysis by Wood Mackenzie.
The Bakken and Eagle Ford together produce just over 2.5 million barrels per day of oil, or nearly two-thirds of U.S. tight oil production.
Higher oil prices in the 2013-2014 time frame spurred operators to drill not only in the core of the Williston Basin, but in the fringe and speculative areas. This included areas along the Montana-North Dakota border, the northern most part of the play near the Canadian border, and the southern portion of the Williston Basin.
Operators have responded to the decline in global oil prices from over $100/bbl last year to around $60/bbl today by reducing rig counts and retrenching drilling activity to the core Bakken area.
In the early third quarter of 2014, the rig count in the Bakken was 185 to 190 rigs. Today, 86 rigs are operating in the Bakken. The rig count is down across U.S. Lower 48 plays, including the Bakken play. Early in last year’s third quarter, between 185 and 190 rigs were operating in the Bakken. As of May 15, that number had declined to 84.
However, the decline in drilling rig counts has not occurred evenly across the Bakken. In Divide County on the northern fringe of the Bakken – where the Bakken is thinner and pressure isn’t there versus deeper parts of the play – the rig count is down about 70 percent due to the play’s more challenging economics. But in McKenzie County in the play’s core – home to the more prospective subsplays, the West Nesson and the Nesson Anticline – the rig count has not dropped off as significantly as other areas.
The biggest Bakken wells in terms of production lie in the eastern fringe of the Bakken in the Parshall-Sanish, Fort Berthold and Nesson Anticline subplays.
Wood Mackenzie anticipates that estimated ultimate recovery (EUR) for these wells this year and in early 2016 will likely outperform EUR estimates due to the retrenchment to the core and operators attacking their best rocks first.
More:
An example of this shift is Continental Resources. Last year, the company said it would drill an average well in the Bakken of 600,000 barrels of oil equivalent. Due to low oil prices, Continental recently said that it would only drill 800,000 barrel wells or greater.
Despite calls that Bakken production will roll over, Wood Mackenzie believes that the Bakken will see a modest increase in production this year. In 2014, the play produced 1.1 million barrels per day of oil.
Wood Mackenzie now estimates the Bakken will produce just over 1.2 million bpd in 2015, a change from initial estimate made early last year.
Wood Mackenzie anticipates that EURs in 2015 and the first half of 2016 will likely outperform the EUR base case by 20 percent because of companies’ highgrading their activity.
Wood Mackenzie expects to see the biggest future production gains in the West Nesson subplay. By 2020, Wood Mackenzie anticipates the West Nesson subplay will be “head and shoulders” against other subplays in the Bakken. While other subplays like the Parshall-Sanish are dominated by a few players, West Nesson is unique in that 12 to 13 good-size operators are drilling fantastic wells there, which will lead development over the next five years.
Much, much more at the link.

Looks like I'll be blogging about the Bakken for a few more years. Big smile.

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A Note to the Granddaughters

To the granddaughters: thank you for another awesome evening of grilling. Our plan is to have a special evening of grilling every Tuesday. Tonight's steak and chicken was perfect. All the sides to accompany the Omaha Steaks and the Minyard chicken breasts were perfect. The ten-month-old was in charge of holding the meat thermometer when the thermometer was not being used. She performed her task quite well.

No matter how much you grill three lessons keep coming back:
  • it never hurts to read again on grilling
  • marinade
  • chicken is "unforgiving" when grilling
I think the chicken tonight might have been the best it's ever been. 

Ohhhhh, This Is Not Good On So Many Levels -- May 19, 2015

Updates

May 20, 2015: company now estimates 105,000 gallons "leaked." Rounds exactly to 2,500 bbls, but 105,000 gallons sounds a lot bigger.  Plains All American owns the pipeline.

Original Post

The LA Times is reporting that a ruptured pipeline "leaked" 21,000 gallons of oil off Santa Barbara. For newbies, there may be no other single place in California that could be a worse place for an oil spill. It's well known to be one of the most beautiful places in California and only the very, very rich are now able to afford to live there. I was surprised this was not the lead story in The LA Times today.

Oh, that 21,000 gallons? That works out to about 500 bbls. In fact it works out to exactly 500 bbls so I assume the oil companies provided the estimate in "barrels" but as is usual with smaller spills, the mainstream press reports the spill in gallons, 42 times larger-sounding.

I'm not downplaying the "awfulness" of this spill but I was surprised it was not the lead story -- until I saw the spill was reported in gallons.

The amount of the spill is still an estimate.

I love this line in the story: "It's unclear what type of oil had been flowing through the pipeline." Probably not whale oil; probably not Bakken -- there were no explosions or fires reported.

And regular readers know what video comes next:

Barbara Ann, The Who
 
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Etta James Janis Joplin

When I first heard Etta James on the Muscle Shoals album, I was shocked! That was Janis Joplin.

It turns out there is a connection:
The first time Janis Joplin ran away from home, the Texas teenager landed at Bob Will's old stomping grounds in Tulsa, OK.
Janis discovered Etta James singing rhythm and blues at the historic Caina's Ballroom on old Route 66 on the outskirts of [that] dusty oil town.
"I remember seeing a little white girl," James said. "At the time, this place didn't have any white people around."
"Well, when you had a black band, you had a black dance, when you had a white band, you had a white dance. This white teenage girl would come through the back door and sit in the corner while we were setting up. I thought she was the owner's daughter. That's why we never said anything about her being in the corner watching us rehearse."
"And when the show started, she would still be in the back. She would sit there and just look at me. I knew she was a fan."

James' stomp-down vocal style had profound effect on Joplin.
She was cognizant of the transition Joplin was making from blues singer to soul singer at the time of her death. James was a huge fan of Otis Redding. Her 1994 album, Live From San Francisco featured a growling Redding medley, and Redding had planned to produce James in early 1968.
Redding died in a December 1967 plane crash.
"I can relate because I always had a contralto (lowest female) voice," James said. "In school they said I was a girl that had a man's voice. The more I heard people like Johnny "guitar" Watson, Ray Charles and Otis Redding, the more I felt I could push and phrase it like a man. Hey, I love men's songs. I don't like wimpy girl songs. I like songs that have meat in them, that carry a lot of strength."
More at the link. 

The Greatest Hits Album, Etta James

Etta James: 1938 - 2012
Janis Joplin: 1943 - 1970, five years younger than Etta James

Active Section In Sand Creek -- May 19, 2015

A very busy section in the Bakken:

29850, 1,249, Newfield, Rolla Federal 15396-29-13H, t5/15; cum 57K 11/15;
29257, 1,418, Newfield, Rolla Federal 15396-29-4H, t5/15; cum 49K 11/15;
29258, 693, Newfield, Rolla Federal 15396-29-12H, t5/15; cum 32K 11/15;

28959, 1,090, Newfield, Skaar Federal 153-96-29-11H, t5/15; cum 43K 11/15;
28960, 1,289, Newfield, Skaar Federal 153-96-29-3H, t5/15; cum 47K 11/15;
28961, 807, Newfield, Skaar Federal 153-96-29-10H, t5/15; cum 35K 11/15;

20084, 1,742, Newfield, Garvey Federal 153-96-29-2H, t3/12; cum 144K 11/15;

30325, conf, BR, Sun Notch 41-32TFH, no production data,
30326, conf, BR, Old Hickory 41-32TFH, no production data,

30224, conf, BR, Old Hickory 42-32MBH, no production data,
30225, conf, BR, Sun Notch 42-32MBH, no production data,
30226, conf, BR, Old Hickory 42-32TFH, no production data,
30227, conf, BR, Sun Notch 42-32TFH, no production data,

30231, dry, BR, Old Hickory 43-32MBH, 8/15;
30232, 2,405, BR, Sun Notch 43-32MBH, t11/15; cum 14K 12 days;
30233, conf, BR, Old Hickory 43-32TFH, no production data,
30234, 1,844, BR, Sun Notch 43-32TFH, t11/15; cum 15K 14 days;

20336, 1,162, BR, Sun Notch 43-32H, t9/11; cum 39K 11/15; off-line a lot over the years;

22914, 2,954, BR, Sun Notch 44-32TFH, 30 stages (3 separate days), 3.3 million lbs, t5/13; cum 179K 11/15;


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Screen Shot Of Active Area Northeast Of Watford City

This is a screen shot of County Road 50 northeast of Watford City; the google satellite view is undated. This area is a bit east of the Sand Creek pads above.


The Oasis Permits For Seven (7) More Kjorstad Wells In Willow Creek -- May 19, 2015

The Oasis permits for seven more Kjorstad wells in Willow Creek.

A 3-well pad:
  • 31259, 415, Oasis, Kjorstad 5300 34-22 4T, 22-153-100, 2370 FSL, 223 FEL; t5/18; cum 102K 6/19;
  • 31260, 392, Oasis, Kjorstad 5300 34-22 5B, 22-153-100, 2337 FSL, 223 FEL; t2/19; cum 194K 6/19;
  • 31261, loc, Oasis, Kjorstad 5300 34-22 6T, 22-153-100, 2304 FSL, 223 FEL; t5/18; cum 142K 6/19;
A 4-well pad:
  • 31262, PNC, Oasis, Kjorstad 5300 34-22 7B, 22-153-100, 1652 FSL, 216 FEL
  • 31263, PNC, Oasis, Kjorstad 5300 34-22 8T, 22-153-100, 1619 FSL, 216 FEL
  • 31264, 915, Oasis, Kjorstad 5300 34-22 9B, 22-153-100, 1586 FSL, 216 FEL; t6/18; cum 158K 6/19;
  • 31265, 851, Oasis, Kjorstad 5300 34-22 10T, 22-153-100, 1553 FSL, 216 FEL; t6/18; cum 140K 6/19;
Previously completed in this drilling unit:
  • 22088, 2,530, Oasis, Dubuque 5300 14-22B, 36 stages, 4.4 million lbs sand/ceramic, t9/12; cum 214K 6/19;
  • 25339, 3,170, Oasis, Gene Zumhof 5300 11-23T, 36 stages; 3.8 million lbs sand/ceramic, t8/13; cum 197K 6/19; 19 days in March, 2015;
  • 19030, 2,707, Oasis, Kjorstad 5300 24-22H, cased hole, 3.5 million lbs sand/ceramic, t101/10; cum 295K 6/19;
 

Ten (10) New Permits -- May 19, 2015

Active rigs:


5/19/201505/19/201405/19/201305/19/201205/19/2011
Active Rigs82191189209176

Ten (10) new permits --
Ten (10) producing wells completed:
  • 27811, 2,879, Statoil, Maston 34-27 5TFH, Banks, t4/15 cum --
  • 29643, 717, XTO, Brian 21X-15F, Toga, ICO, t5/15; cum --
  • 29641, 528,  XTO, Brian 21X-15E, Tioga, ICO, t4/15; cum --
  • 29644, 797, XTO, Brian 21X-15B, Tioga, ICO, t5/15; cum --
  • 29642, 215, XTO, Brian 21X-15A, Tioga, ICO, t4/15; cum --
  • 29387, 481, SM Energy, Ralph 1-17HN, Colgan, t4/15; cum --
  • 28219, 1,747, Slawson, Sniper Federal 1 SLH, Big Bend, 4 sections, t12/14; cum --
  • 29151, 215, Slawson, Rainmaker Federal 10-36-25TF2H, Big Bend, t5/15; cum --
  • 28220, 495, Slawson, Stallion 6-1-12TFH, Big Bend, t12/14; cum --
  • 27809, 2,232, Statoil, Maston 34-27 6H, Banks, t4/15; cum --
Wells coming off the confidential list Wednesday:
  • 29027, 58, Enduro, GCMU 6-31-H2, Glenburn, a Madison well, t1/15; cum 3K 3/15;
  • 29747, drl, CLR, Helena 6-7H, Brooklyn, no production data,
  • 29850, drl, Newfield, Rolla Federal 153-96-20-13H, Sand Creek, no production data,

EV/Hybrid Car Owners Rethinking Their Loyalty To Saving The Environment -- May 19, 2015

Regular readers are aware of this story; it's been reported elsewhere. It is interesting that the New York Times has picked up the story that Americans are losing their "love affair" with coal-burning cars:
Affordable gasoline is making hybrid car owners rethink their loyalty.
With bargain gasoline prices putting more money in the pockets of Americans, owners of hybrids and electric vehicles are defecting to sport utility vehicles and other conventional models powered only by gasoline, according to Edmunds.com, an auto research firm.
There are limits, it appears, to how far consumers will go to own a car that became a rolling statement of environmental concern. In 2012, with gas prices soaring, an owner could expect a hybrid to pay back its higher upfront costs in as little as five years. Now, that oft-calculated payback period can extend to 10 years or more.
“We’d all like to save the environment, but maybe not when it costs hundreds of dollars per year,” said Jessica Caldwell, director of industry analysis for Edmunds.com.
Erik Tufteland of Las Vegas traded his trusty 2005 Honda Civic Hybrid for a 2014 Subaru Forester. He wanted an all-wheel-drive vehicle that could better handle ski and snowboard trips. Mr. Tufteland was also growing anxious over the possibility of one day needing to replace the Honda’s expensive hybrid battery.
Well, that was fast. The coal-burning car reached its apogee in 2014 in America.

More from the linked article:
In all, 55 percent of hybrid and electric vehicle owners are defecting to a gasoline-only model at trade-in time — the lowest level of hybrid loyalty since Edmunds.com began tracking such transactions in 2011. More than one in five are switching to a conventional sport utility vehicle, nearly double the rate of three years ago.
That one-and-done syndrome coincides with tumbling sales of electric and hybrid vehicles. Through April, sales of electrified models slid to 2.7 percent of the market, down from 3.4 percent over the same period last year, Edmunds.com said. At the same time, sport utility vehicles grabbed 34.4 percent of sales, up from 31.6 percent.
There is little mystery behind the shift in sentiment. To the delight of every fast-pumping American, a gallon of regular gasoline has fallen to $2.66 on average, from nearly $4 in 2012, according to the Oil Price Information Service. The federal Energy Department figures that the average household will save $750 on fuel bills this year. Those flush households can afford to expand their car-shopping horizons, with less anxiety over a model’s thirst for fuel.
If one does the math (which I've done many, many times on the blog) one knows that it is simply not the cost of gasoline driving drivers away from coal-burning cars.

12,000 miles = 1,000 miles / month = 1,000 / 30 mpg = 30 gallons per month. At $2.66 / gallon = $80 / month; at $4.00 / gallon = $120 / month. Forty dollars ($40) / month savings -- that's two dinners at McDonald's for a four-person family. Two dinners at McDonalds each month or one moderately-priced sushi dinner with drinks for a couple in NYC.

It's much more than the savings in gasoline that is driving folks back to SUVs and pick up trucks.

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Hypocrites Of The Nth Degree

First, the news story. USA Today is reporting:
SEATTLE — A huge offshore drilling rig docked in its temporary home here Thursday after a contested, 12-hour journey from Port Angeles, WA.
The 400-foot long Polar Pioneer began moving out of Port Angeles at about 1:40 a.m. PT and arrived in Elliott Bay at about 1:50 p.m. Pulled by tugs, it docked at Terminal 5 around 5 p.m. PT.
More than a dozen protesters in kayaks [made from petroleum products] paddled into Elliott Bay to meet the rig, holding a large sign that said "sHellNo.org Arctic Drilling = Climate Chaos." A dozen people on shore also joined the protest, holding signs that read "W. Seattle Says sHello No! Arctic Drilling" and "Chief Seattle Is Watching."
The Polar Pioneer is one of two drill rigs that Netherlands-based Royal Dutch Shell petroleum plans to use as it moves ahead with plans to use leased space at the Port of Seattle to load drilling rigs and other vessels with supplies and personnel. It is preparing to explore for oil this summer in the Chukchi Sea off Alaska's northwest coast. 
Now the fun. One can only assume those with kayaks are not the "norm" but rather the elitists. I could be wrong.

But I'm not wrong about this: the kayakers drove to the port in their SUVs fueled by crude oil; they were wearing clothes that required fossil fuel energy. But most interesting: the kayaks were made from petroleum products.

It was caught on Facebook.  These folks aren't trying to protect the environment. They are anti-industrialists. At best. Most likely, Luddites.

Tokyo Gas Investing In US Shale Natural Gas -- May 19, 2015

Reuters is reporting that Tokya Gas is targeting more investments in US shale:
Tokyo Gas Co Ltd, Japan's biggest gas utility, is looking to invest in more U.S. shale gas production as a hedge to liquefied natural gas (LNG) imports from the United States to start next year.
The company has inked contracts to buy 1.9 million tonnes per year of LNG from U.S. producers and aims to invest in an equal volume in the upstream sector.
The company has contracted to buy 1.4 million tpy of U.S. LNG from the Cove Point project, which will start shipments in the second or third quarter next year, and 0.5 million tpy from Mitsui & Co's Cameron project.
In 2013, Tokyo Gas bought a stake in a shale gas field in Texas' Barnett Basin from Quicksilver Resources that would give it 0.35 million to 0.5 million tpy of gas output. 
This is really cool. Another reminder of the Cove Point project. Cove Point was mentioned in a recently article a reader sent me but I did not post it. Probably should have.

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Modern Art

Our eight-year-old granddaughter did this in her ten minutes of spare time. The little "girl" sitting on the chair is hand made from rubber bands. The chair is made entirely from a champagne cork and wiring; some of the wiring was cut to provide the backing which she covered with scrap of cloth. The end table's stand is a cork stopper, the flowers on the table are also from rubber bands. The table top is a scrap of something I don't recognize. It looks like something that fell off a piece of furniture during their recent move.


Beautify America -- May 19, 2015; Remember, There Are More Bee Hives This Year Than Last Year

Don sent me this link; I probably would have missed it. The AP is reporting that President Obama will rush to rescue America's bees:
The Obama administration hopes to save the bees by feeding them better.
A new federal plan aims to reverse America's declining honeybee and monarch butterfly populations by making millions of acres of federal land more bee-friendly, spending millions of dollars more on research and considering the use of fewer pesticides.
While putting different type of landscapes along highways, federal housing projects and elsewhere may not sound like much in terms of action, several bee scientists told The Associated Press that this a huge move.
They say it may help pollinators that are starving because so much of the American landscape has been converted to lawns and corn that don't provide foraging areas for bees. 
It's a Rudyard Kipling "just so" story. Elementary school teachers will love sharing this with their young naive students.

I responded to Don:
Thank you, great story. This is one of those political feel-good stories -- there are multiple causes -- all that corn used for ethanol might be one reason, but bee keepers wouldn't put their bees where corn fields are.
So, in a sense there may be fewer acres for bee-friendly food, but I've never gotten the feeling there were too many bees, too little bee-friendly food. I could be wrong.
Bee keepers lost 40% of their hives due to bee deaths/hives (colonies) completely dying off. They did not die off for lack of food (if they did, their bee keepers are culpable). An entire colony dying off is probably due to mites, minimally due to pesticides. Almond growers depending on pollinators would work closely with beekeepers to make sure they use no pesticides or minimize use of pesticides when the bees are active or use pesticides safe for bees.
But as noted in the blog earlier from a linked article, there are more hives this year than last year. Now, that I understand the story better, I'm not concerned about the bees; they will do just fine. But I find the bee story and the bees very fascinating and will continue to follow the story and post notes on the story.
By the way, President Obama is taking a page from Lady Bird Johnson's playbook to beautify America, where bluebonnets and other wild flowers along Texas highways are legendary. From PBS:
"In a nutshell, her program is, 'masses of flowers where masses pass.' Water, lights and color -- mass of flowers -- those things spell beautification to her," Lady Bird wrote in her diary after a meeting.
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Prattville, AL, Waffle House

Our younger daughter sent me this story, from the Waffle House we used to go to when we lived in Prattville, AL:
The faith of a little boy was on full display at the Waffle House at the Prattville-Millbrook exit one night a few weeks ago. It's the story of 5-year-old Josiah Duncan and his mom, Ava Faulk.
"We saw a man who was dirty holding a bag with his bike outside," Faulk recalled.
Josiah was so troubled by the man's appearance, he started peppering his mom with questions.
"He's homeless," the little boy's mother explained. "What does that mean?" he responded. "And I said, ""Well, that means he doesn't have a home,"" Mom continued.
And apparently, the unnamed man didn't have any friends to lean on, either.
Faulk wrote an email to WSFA 12 News about her son's actions, and it included many of the questions the young child had. "Where is his house? Where is his family? Where does he keep his groceries?" But mom said one thing troubled him above all. 
"He didn't have any food," little Duncan explained. Josiah felt the urge to do something.
He insisted on his mom buying the stranger a good meal. She listened, and then obliged.
"He came in and sat down, and nobody really waited on him," Faulk explained. "So Josiah jumped up and asked him if he needed a menu because you can't order without one." 
The man insisted on a cheap hamburger to start, but he was assured he could have anything he wanted. He got the works.
"Can I have bacon?" Faulk remembers him asking, "And I told him get as much bacon you want."
No, we did not go to Waffle House often.

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Getting Ready for Grilling Later This Afternoon

Bloomberg is reporting:
At the supermarket, bacon has slumped 25 percent in the past year, to $4.12 a pound this week, according to U.S. Department of Agriculture data. Wholesale pork bellies, the cut of meat used to make bacon slices, touched a five-year low in April and now cost 45 percent less than a year ago.

Such discounts have brought out buyers in droves. Pre-cooked and raw bacon is flying off the slicers at Sugar Creek Packing Co., the Washington Court House, Ohio-based company that processes more than 2 billion rashers a year for grocery stores, restaurants and institutions like hospitals and schools.
No matter how hard it rains this afternoon, grilling will go on.

Reuters / Wal-Mart Analysis On Why Wal-Mart Missed Earnings Estimates -- May 19, 2015

I was not going to post anything on Wal-Mart's earnings today, but something caught my eye that is just too precious to ignore. There were several stories. This one is from Reuters.

Wal-Mart Stores Inc on Tuesday became the latest U.S. retailer to report weaker-than-expected quarterly sales, saying consumers were pocketing tax refunds and savings from cheaper gasoline rather than buying unnecessary items.

LOL.

Again, Wal-Mart says sales were down because their customers were pocketing tax refunds, and pocketing savings from cheaper gasoline than buying unnecessary items.

Repeat that again:
  • pocketing tax refunds
  • pocking savings from cheaper gasoline
  • buying unnecessary items
Let's think about that a minute. From all the news over the past few weeks and from historical data from over the years:

It's well-known that the average Wal-Mart customer is a huge believer in IRAs, Thrift Savings Programs, 401(k)s, investing in AAPL, and hedging, and thus were eager to add to their net worth rather than shop at Wal-Mart.

It has been reported over and over that a lot of folks expecting tax refunds were surprised when the IRS caught them cheating by reporting lower income to get those ObamaCare subsidies. Wal-Mart shoppers as a general rule over-estimate their income and remit quarterly tax estimates at a far higher rate than the rest of us.

12,000 miles / year = 1,000 mile / month = 1,000 / 20 mpg = 50 gallons of gasoline a month. A year ago, $3.20/gallon; this year, $2.80/gallon = 40 cents / gallon savings = $20 per month savings on cheaper gasoline.  That's barely one meal at McDonald's for a family of four.

"Buying unnecessary items" at Wal-Mart? Wal-Mart said that. Who would ever buy "unnecessary" items at Wal-Mart?

Anyway, that's the kind of analysis we're getting at Reuters these days. Parroting what Wal-Mart has to say why it missed estimates. The analysts should have know that Wal-Mart shoppers were pocketing tax refunds, and pocketing savings from cheaper gasoline than buying unnecessary items at Wal-Mart.

On the other hand, USA Today reports that Wal-Mart blames missed earnings because they were socially responsible (raising their minimum wage) and because of things out of their control (currency fluctuations). Remember, it's the analysts that forecast earnings (based on guidance, of course) but analysts should have taken currency fluctuations into account. We've had a full earnings season in which other retailers said the same thing.

With regard to wages, hasn't even had time to impact Wal-Mart's bottom line yet:
In February, Walmart announced that it would raise the minimum wage of its employees to at least $9 an hour this year and get to $10 by next year.
And, so there you have it.

I assume if I looked hard enough, I could find an article in which a reporter says Wal-Mart blamed the harsh winter in Tibet for missing earnings this most recent quarter. That would encompass weather, currency fluctuations, and the cost of heating yurts all in story.

For Wal-Mart shoppers and others who may be reading this, be advised this is not an investment site. Do not make any investment or financial decisions based on what you read here or what you think you may have read here. Do not make decisions on where you buy your "unnecessary items" based on what you read here. One can buy "unnecessary items" at a lot of places. I do it almost every day, and very seldom shop at Wal-Mart. Having said that, I usually go to Wal-Mart when I can't find what I need anywhere else. If you can't find it at Wal-Mart a) you did not look hard enough; and/or, b) you probably don't need it.

Tuesday; All Six Wells Coming Off Confidential List Went To DRL/SI/NC Status -- May 19, 2015

None of the wells coming off the confidential list reported an IP today. EOG with permits for a 12-well pad.

For definition of "NC": link here

Active rigs:


5/19/201505/19/201405/19/201305/19/201205/19/2011
Active Rigs82191189209176

RBN Energy: New England's ongoing natural gas supply dilemma.
Producers in the Marcellus and Utica shale plays could be moving a lot more natural gas into New England, if only there was enough pipeline capacity to get it there. An increasingly gas-hungry neighbor to the nation’s most prolific production area, New England has added precious little capacity to transport gas, and the fates of game-changing pipeline projects that have been proposed hang in the balance.

A generally argumentative lot (don’t get them started on politics or the Boston Red Sox’s pitching rotation), New Englanders are in full agreement on two things: 1) Patriots quarterback Tom Brady’s punishment in the “Deflategate” scandal (a four-game suspension without pay) was too harsh, and 2) energy prices in the six-state region are too high. “Tom Terrific” has appealed the NFL’s sanction to Commissioner Roger Goodell, but there’s no appealing the sky-high natural gas and electric bills utility customers in Boston, Providence and Hartford have been receiving.
The underlying problem is that there’s simply not enough gas pipeline capacity into and through New England to deliver the plentiful, low-cost Marcellus and Utica gas that the region’s growing fleet of gas-fired power plants needs to operate during high demand winter periods. Each winter, the resulting constraints cause price spikes at the Algonquin Citygate hub, and force New England’s electric grid to turn off gas-fired units (or run them on stockpiled fuel oil or liquefied natural gas - LNG) and power up older coal plants to avert blackouts or brownouts.
That pretty much says it all: environmentalists stop new pipelines in the northeast so that utility companies are forces to power up older coal plants to avert blackouts or brownouts.

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Housing Starts At Fastest Pace Since 2007

The AP is reporting:
U.S. homebuilders ramped up construction in April to the fastest pace in nearly seven-and-a-half years, hinting at newfound momentum for an economy that has struggled in recent months.
The Commerce Department said Tuesday that housing starts last month increased 20.2 percent to a seasonally adjusted annual rate of 1.14 million homes. That pace ranks as the fastest clip since November 2007.
The operative word was put in bold.

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This Is Not An Investment Site

This interests me not one iota, but because PSX was one of the seven, I decided to link the article over at The Street, seven "stocks" Warren Buffett bought as recorded in most recent filing. I was uninterested in the other six, except to note that Wells Fargo was #1 in a list that was ordered by position size.

The writer must have gotten tired of writing the column or the headline writer cannot write. The original headline said the writer would look at ten (10) stocks. The headline was later corrected to seven (7). However, the lede:
In his annual letter to shareholders, released on Feb. 28, Buffett wrote that a "motherlode of opportunities runs through America." Today we're taking a closer look at 10 of those opportunities, in the form of stocks that Buffett bought in the most recently reported quarter, based on Berkshire Hathaway's most recent quarterly 13F filing with the SEC, which reflects holdings as of March 31. They are ordered by position size. 
And then it starts with #7, Twenty-First Century Fox.

Of interest to me was that #6 was ... drum roll ... PSX. Phillips 66  comprises 0.6% of Berkshire Hathaway's portfolio. Buffett increased his stake in the stock by 14.2% in the most recently reported quarter to 7.5 million shares.

Four thoughts come to mind, all of which may be wrong:
  • Buffett is trying to make up for the energy gaffes he has made in the last decade to which he admits (COP)
  • he expects the refiners' raw product (crude oil) to remain at a lot price for the next twenty years
  • buying a refiner in this market is almost a no-brainer: low raw material; demand for finished product going up
  • at 0.6% of his total holdings, this is hardly all that exciting
Again, this is not an investment site. Do not make any investment decisions based on anything you read here or think you may have read here.

What surprises me is that IBM (#2 on his list) comprises almost 12% of his entire portfolio. Of course it's hindsight, but AAPL over the past five years has appreciated 255% vs IBM's 38%, and that was mostly due to a rise five years ago. Most recently it has been dropping.

#1 on his list is Wells Fargo, 24% of the firm's portfolio. I wonder if Jim Cramer or Motley Fool would call this portfolio well-diversified when one holding accounts for almost one-quarter of the portfolio. Whatever.

As noted above, it interests me not one iota, that's why I posted so much about the story. LOL.

Bottom line: when one holding represents 25% of your total portfolio, does it even matter if he increases his PSX holding -- which represents 0.6% of his total portfolio -- by 14%. No matter what PSX does, it will be dwarfed by even minor movements in Wells Fargo.

Has the oracle of Omaha fallen in love with IBM and Wells Fargo?