Update On Natural Gas CAPEX For 2017 -- RBN Energy -- October 19, 2016

Pretty cool: The Dickinson Press reporting from Theodore Roosevelt National Park North Unit -- this would be the unit near Watford City -- 100 bison are being removed from the park and will go to Native American tribes in South Dakota, Oklahoma, and Washington. 

"Let them eat cake." -- The Federal Reserve? "Let's raise raise." From Bloomberg: US housing starts unexpectedly drop on multi-family-units.

New-home construction in the U.S. unexpectedly fell in September on a plunge in multifamily building while permits rose more than forecast, in signs of fitful progress in residential real estate.

Residential starts declined 9 percent to a 1.05 million annualized rate, the lowest since March 2015, a Commerce Department report showed Wednesday in Washington. The median forecast of economists surveyed by Bloomberg called for a rise to 1.18 million. Permits, a proxy for future construction, jumped 6.3 percent to the fastest pace since November.

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Back to the Bakken

Oil futures up slightly: 7:03 a.m. Central Time -- up 71 cents at $51.06.


Active rigs:

	10/19/2016	10/19/2015	10/19/2014	10/19/2013	10/19/2012
Active Rigs	32	66	190	184	186

RBN Energy: some US producers stomp on the gas.

The past production profiles of the ten companies in RBN’s Gas-Weighted E&P peer group are dramatically different from the Oil-Weighted and Diversified U.S. E&Ps, boosting production by over 18% from 2014 to 2015, while the output of the other two peer groups was virtually flat. The group as a whole finally put on the brakes in early 2016 because of mounting debt and persistent low gas prices, cutting capital investment by 49% to dampen production growth to 4%. However, a small group of producers with solid balance sheets and strong hedging protection continue to target double-digit output growth. And with gas prices over $3.00/MMbtu, more growth is on the way.  In today’s blog we discuss 2016 capital spending and production for our representative group of E&Ps whose operations are primarily focused on natural gas.

Today we are taking a deep dive into the ten companies that comprise our third peer group, Gas-Weighted E&Ps, eight of which are primarily Appalachian producers. Figure 1 shows that the Gas-Weighted E&Ps are planning to slash spending by 49% in 2016 (red oval); after a 28% decline in 2015; they have reduced capex by 64% since 2014. These spending cuts, however, have not diminished the group’s production outlook. The production response lagged, as output increased by nearly 18% to 5.5 Tcfe in 2015. Overall, that forecast fell to just a 3.1% production increase in the second quarter 2016, and is about 2% lower than original 2016 production guidance.  However, four producers, Rice Energy, EQT, Antero Resources, and CONSOL Energy, are forecasting double-digit production growth (green ovals), while the remaining six expect an average 5% reduction in output.

Saudi Arabia to offer international investors $17.5 billion in bonds: Gulf countries are increasingly raising funds through international markets -- The Wall Street Journal. 

Saudi Arabia plans to raise up to $17.5 billion by selling bonds for the first time to international investors this week, two people aware of the transaction said Wednesday.

The kingdom also tightened its pricing guidance for the potential multi-tranche issue, which along with the estimated issue size reflects a strong appetite for the potential issue, bankers say.

For the five-year tranche, Saudi Arabia said it would pay around 1.4 percentage points above U.S. Treasurys, compared with an initial guidance of around 1.6 percentage points above U.S. Treasurys.

How one Goldman Sachs trader made more than $100 million: the gains from big trades on junk bonds are a throwback to an earlier era on Wall Street -- The Wall Street Journal.

The gains were the work of Tom Malafronte, a managing director on the bank’s high-yield-bond desk in New York. The 34-year-old trader bought billions of dollars in junk corporate debt on the cheap starting in January, then locked in profits as prices recovered.

From 24/7 Wall Street: How does this happen? Ford suffers badly as management misjudges sales.

Ford Motor Co. is temporarily halting one of two plants that builds the top-selling F-150 pickup as it idles four factories this month amid slowing U.S. auto sales.

This week, Ford is shutting its Louisville, Kentucky, factory building the Escape and Lincoln MKC sport utility vehicles, as well as two plants in Mexico that make the Fusion sedan and Fiesta subcompact, according to an e-mailed statement. Next week, the second-largest U.S. automaker said, it will close the F-150 factory near Kansas City for seven days. And starting Oct. 31, the Louisville plant will be idled for another week, Ford said.

Put another way, Ford's optimism about its business was misplaced.

CEO Mark Fields took over as the head of Ford on July 1, 2014. Since then, Ford's shares are down 30%. GM's are down 16% over the same period, and the S&P 500 is up 8%.

Ford has problems in each of the two huge markets outside the United States. Its sales in the European Union are a small fraction of the manufacturing leaders. In China, it trails market share leaders GM and Volkswagen.

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The Market

Late-day trading: Dow 30 up about 70 points. NYSE:

• new highs: 80 -- CNOOC; Encana; HAL (again); ONEOK Partners (OKS); SLB (a big whoop); US Silica Holdings (seems like an open book test);
• new lows: 9 (wow)

Open: Dow 30 up 30 points. Oil up 71 cents at $51.

HAL swings to profit. HAL eked out a surprise profit in the third quarter: reported a net income of $6 million (1 cent/share) vs a loss of $54 million (6 cents/share) one year ago. Profit was higher than the 6-cent average loss forecast.

UnitedHeatlh raises 2016 forecast, again. This is a pretty big story. UnitedHealth raised forecasts earlier this year (back in April, 2016) and now they are raising forecasts again, and not be a trivial amount.

UnitedHealth Group has hiked its 2016 earnings forecast again after its profit swelled 23 percent to nearly $2 billion in the third quarter, helped by gains both in and outside its core insurance business.

The nation's largest health insurer also voiced optimism about next year, when UnitedHealth will have a much smaller presence on the Affordable Care Act's public exchanges.

Shares of the insurer soared close to an all-time high Tuesday. UnitedHealth raised its earnings forecast for 2016 well above Wall Street expectations. It did the same in April. The company now expects adjusted earnings of about $8 per share, 7 cents better than Wall Street is expecting.

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A Note for the Granddaughters

May and I visited the Monet art exhibit currently showing at the Kimball Art Museum in Ft Worth, Texas. It was incredible.

I thought I was "monet'd-out' some years ago having seen Monet books, cards, stationery, prints, calendars, etc., everywhere. Most of these focus on Monet's "impression" works.

The Monet exhibit now at the Kimball is the first of its kind: it shows 60 works from museums and private collections from around the world of his early years, from age 17 to about age 31, before he started painting those now-ubiquitous works that made him so famous.

I was truly blown away. I thought I had seen all the Money I wanted to see some years ago, after touring museums throughout Europe, Boston, and Los Angeles. But yesterday I was really surprised.

This exhibit is a collaboration between the Ft Worth museum and the Museums of Fine Arts in San Francisco. Because the idea of launched here the exhibit is shown here first and then early next spring will move on to San Francisco.

My first impression (no pun intended): "Wow, oh my goodness, so many pieces." I could not believe it. Sixty paintings -- and most I had only seen in books. But I almost had tears in my eyes seeing a few that we saw when we visited "his" museums in Paris decades ago.

My second thought: "I wonder if Richard Dawkins ever goes to art museums?"

And my third thought was about Michelle Obama's comments when she attended the opening of the Whitney Museum in NYC (April 30, 2015).

During lunch -- the Kimball provides one of the best dining experiences in all of the DFW area with total luncheon costs ranging from $9.50 to $12.50 -- I asked May which painting she enjoyed the most. This was quite remarkable: of the sixty paintings, both of us favored a winter scene titled "Magpie."

Monet's very first work that was ever publicly shown was hung in Paris when he was 17 years old. That very first painting was on display at the exhibit yesterday. Fittingly, it's permanent home is a museum in Japan, and obviously a museum I would never have the chance to visit, so this was probably the "high point" of the exhibit from one standpoint. The painting, about 18 inches by 24 inches was hung opposite one of Monet's more famous paintings -- a picnic scene on the Seine -- that is bigger than life-size, vertically from the floorboards to the ceiling in a high-vaulted gallery.

My plans are to return at least three more times. I will go again next week, and then a visit in November/December to take Arianna and Olivia (the artist in the family). And finally a third visit when I take Sophia. The high point for her, no doubt, will be lunch.