Monday, April 25, 2016

BOE On Saudi Aramco IPO; The Washington Post On ObamaCare -- April 25, 2016

Updates

July 5, 2018: doubts grow that that the Aramco IPO will ever happen. -- The WSJ

June 21, 2018: update -- the IPO may be delayed "beyond 2019." 

April 27, 2016: oilprice.com take on the IPO

April 26, 2016: this is how the IPO will be worked. 3% of the two-trillion-dollar company = $60 billion. Of that $60 billion, $40 billion will be "A" stock and $20 billion will be "B" stock. At $1 million/share, 40,000 "A" shares will be offered. "B" shares will be offered to the masses for $1,000/share (20 million shares). If SAO offers only million-dollar A shares, hedge funds will buy the shares, slice and dice them, re-package them, and re-sell them to the masses.

The IPO will be oversubscribed and SAO will increase the offering from 40,000 "A" shares to 60,000, and from 20 million "B" shares to 50 million "B" shares. (It's possible SAO will offer "B" shares at $100 vs $1,000 but if SAO wants to maintain a certain cachet as a platinum company, it will hold at $1,000 for the "B" shares.) [60,000 * $1 million = $60 billion; 50 million * $1,000 = $50 billion; for a grand total of $110 billion +/- $10 billion.]

Note: this is not an investment site. So not make any investment, financial, travel, or relationship decisions based on what you read here or what you think you may have read here. The note above is purely fictional or conjecture or fantasy. 
 
Original Post
 
The shrinking IPO: with every story it seems the size of the Saudi Aramco IPO is getting smaller. Now it is said that it will be less than 5% of the "company." Reuters is reporting:
Saudi Arabia plans to sell less than 5 percent of its state oil company Saudi Aramco through an initial public offering (IPO), Deputy Crown Prince Mohammed bin Salman said on Monday.

He said in a television interview he expected Aramco, the world's biggest energy company, to be valued at more than $2 trillion and that he wanted it to be transformed into a holding company with an elected board.

Subsidiaries of the company would also be sold by IPO, as part of a privatisation drive and to bring more transparency to the oil giant, Prince Mohammed said.

"If one percent of Aramco is offered to the market just one percent it will be the biggest IPO on earth," he said.

Aramco was once run by Americans but has long been a Saudi state corporation. It dwarfs all in the industry, with crude reserves of 265 billion barrels, more than 15 percent of global oil deposits.

It produces more than 10 million barrels per day, three times as much as the world's largest listed oil company, ExxonMobil, while its reserves are more than 10 times bigger. If Aramco were ever to go public, it would probably become the first company to be valued at more than $1 trillion.
4% of $2 trillion = $80 billion.

It seems "they" have to raise a lot more cash than that considering how much they've lost this past year, but maybe I'm missing something ... maybe a bunch of zeroes.

BRK-A has about a million shares outstanding (800K according to Yahoo!Finance). If Saudi Aramco were to offer a million shares, each share would price about .... $80 billion / 1,000,000 ......... $80,000. I wonder if Saudi Aramco will offer "A" shares and "B" shares? My numbers may be way off. After awhile I lose track of all the zeroes. If this is important to you, go to the source. Or to your broker.

$2 trillion / 265 billion bbls = $8 / bbl in reserves. Again, my numbers may be way off, or maybe I'm misreading something.

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Global Shipping Routes

Incredible visualization of global shipping routes: http://www.vox.com/2016/4/25/11503152/shipping-routes-map. If you look closely, you can see the tanker that carried North Dakota crude oil to the Netherlands this past month.

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Texas Ranch For Sale

On the way to water polo this evening, granddaughter #1 asked me if I had heard of the "Waggoner" ranch. I had not. She told me it was for sale for $725 million. I was curious. At Bloomberg:
FOR SALE: Largest ranch in the U.S. within a single fence.
Texas fixer-upper with more than 1,000 oil wells; 6,800 head of cattle; 500 quarter horses; 30,000 acres of cropland; tombstones for legendary cowboys, long-dead dogs, and a horse buried standing up.
Favorite of Will Rogers and Teddy Roosevelt. Colorful history of drinking and divorce. Fifteen-minute drive to rib-eyes at the Rusty Spur in Vernon. Ideal for Saudi oil sheiks, billionaire hedge funders, and dot-commers who can tell a cow from a steer. Profitable. Zero debt. Property taxes only $800,000 a year. Price: $725 million.  
That was from a year ago, 2015.  From what I can tell, it still may be available.

Granddaughter #1 says that's what they talk about in school these days. I forget what we were talking about when we were in middle school, but I know it was not about billion-dollar ranches.

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RomneyCare -->ObamaCare-->HillaryCare

Had you asked me four years ago -- even two years ago -- if we would ever see a story like this in the Washington Post, I would have agreed: never see it. President Obama isn't even out the door yet and here we have the third most liberal newspaper with this critique of Michelle's husband's "legacy":
Historian David Maraniss notes, in Sunday’s Post, that President Obama came to office with the goal of changing “the trajectory of America” and leaving “a legacy as a president of consequence, the liberal counter to [Ronald] Reagan.”
On the foreign-policy front, he is the anti-Reagan for certain. Reagan defeated Soviet communism and left us a safer world; Obama presided over the rise and metastasis of the Islamic State and left us a far more dangerous one.
Domestically, Ronald Reagan told the American people: “The nine most terrifying words in the English language are ‘I’m from the government, and I’m here to help.’ ” Obama wanted to convince Americans that they were not terrifying. And the way he was going to do it was through the only great liberal legislative achievement of his presidency: Obamacare.
He failed. Even before he leaves office, Obamacare has begun unraveling.
The law was passed over the objections of a majority of Americans, it is still opposed by a majority of Americans — and their opposition has been vindicated. Last week, UnitedHealth Group announced that, after estimated losses of more than $1 billion for 2015 and 2016 under Obamacare, the company was pulling out of most of its ill-fated exchanges.
That was all from The Washington Post. I did not add a thing. Based on the comments, some folks still think the GOP is to blame for the failure of ObamaCare. Those who say that are half-right: ObamaCare has failed, but the GOP had nothing to do with it. In fact, for it to have passed, it required GOP votes, and a conservative Supreme Court to uphold the legality of the law. 

The GOP needs to stay away from this. Let ObamaCare run its course. 

Highly Explosive Bakken Crude Makes It To The Netherlands (Europe) Safely -- April 25, 2016

MRT is reporting (the original post was here):
A petroleum tanker laden with 175,000 barrels of North Dakota crude was being offloaded in Europe on Wednesday, the first such overseas shipment of the state’s oil since Congress lifted a 40-year ban on crude exports in December.
North Dakota’s congressional delegation and industry officials hailed Hess Corp.’s shipment as a milestone that could open more markets in faraway refineries where premium prices are typically fetched based on foreign prices.
“It’s a big deal,” said Ron Ness, president of the North Dakota Petroleum Council, a trade group that represents about 500 companies working in the oil patch in the western part of the state. “Once you get a barrel to sea, it will fetch a better price.”
The ban on crude exports was put in place in response to the energy crisis of the 1970s. It’s not immediately clear what impact exporting North Dakota oil will have on prices or production, which is currently pegged at about 1.1 million barrels daily.
And environmental groups have said they worry that increased supply by U.S. energy companies will lead to more pollution and higher global emissions. [Glad to see these environmental nuts get their two cents in edgewise -- gives me an excuse to buy another silver dollar.]
Hess spokesman John Roper said the crude originated from Tioga, North Dakota in early April. It was shipped by rail to St. James, Louisiana. There, it was loaded on a tanker with ExxonMobile Corp.’s offshore oil from the Gulf of Mexico.
The tanker arrived early this week in Rotterdam, Netherlands, where ExxonMobile (sic) has a refinery, Roper said. Workers were unloading the shipment Wednesday.
Don't you just love the way they spell "ExxonMobile"? LOL.

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The Sports Page

Wow, what a weekend!

Soccer: granddaughter #2 had three soccer games Saturday and Sunday. She was on the winning team in two lopsided games, and a hard-fought loss in the third game. In that third game, her team's goalie was taken out: she sustained a broken hand due to being kicked by an opposing player. Mind you, these are fourth graders. They take their sports seriously here in Texas.

Our granddaughter -- not a goalie -- agreed to be the goalie in that game. Despite some great saves, it was not to be. Be that as it may, she will be "signing" for a "Select" team this summer.

Water polo: granddaughter #1 -- age 12, plays on the 12-and-under mixed (boys/girls)water polo team and the 14-and-under (girls) water polo team for Southlake, Texas. This past weekend, state championships for these age groups were held outside of Houston. The 12-and-under team took 5th of eight teams. A nice showing. But then, incredibly, her team took 1st place in the 14-and-under girls. Pretty spectacular.

Soccer: granddaughter #3 -- she will be two years old this summer -- had soccer practice Sunday, but no games, yet. Except for one "meltdown" she did well; a kiss and she was as good as new, ready to practice. 
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The Grilling Page
A Note for the Granddaughters

Ten, maybe fifteen, years ago, I had no clue how to grill. Then I got a Weber grill. And Weber's Big Book of Grilling.

I assume everyone who grills "knows" how to do it: either family recipes or learned on their own, with or without books or mentors.

I'm just reminiscing. There must be a gazillion books on grilling out there; I see them all at Barnes and Noble. I assume everyone has their favorite or favorites (plural).

I assume there are books that are as good as WBBofG but I doubt there are any better.

I haven't looked at "the book" in a long time, but this is what it taught me:
  • how to carve a turkey
  • beer can chicken
  • rubs and marinades
  • how to cook lamb
  • direct and indirect grilling
  • how to grill tuna, salmon, steak
Ten, maybe fifteen, years ago, I had no idea what a rub was, nor how to make a great marinade. Now, I don't even look at the book any more (one exception: when I do lamb, I follow the marinade recipe religiously; and, when I need a rub for beer can chicken).

Tonight, in between dropping off granddaughter #3 at home and picking up granddaughter #1 for water polo, I had 2.5 hours free. I called wife #1 and asked her if she was up for artichoke and salmon. At home, if the artichoke is "right" and the salmon is "right" it's her favorite meal. Outside the home, sushi. One can't really ask which we like better; it would be comparing apples to oranges. The artichoke and salmon we do at home, better than we could ever get in a restaurant (it takes an hour to boil the artichokes); we can't match sushi at home with what they can do in a good sushi restaurant.

Tonight, in addition, to salmon, I brought home some sushi-grade tuna for grilling. At the last minute, my wife asked me if had marinaded it. I had completely forgotten but thanks to years with WBBoG I put together the marinade in minutes. One only needs a few minutes to marinade tuna.

Perfect meal.

Even For Statoil, This Is One To Write Home About -- An IP Of 5,010 (Crude Oil) -- April 25, 2016; Twelve (12) Permits Renewed Including The Enerplus "Kittens"

Active rigs:


4/25/201604/25/201504/25/201404/25/201304/25/2012
Active Rigs2684182186209

Wells coming off the confidential list Tuesday:
  • 30770, SI/NC, XTO, FBIR Grinnell 34X-33F, Heart Butte, no production data,
  • 31513, 371, SM Energy, Larson Federal 15-34H, West Ambrose, t3/16; cum --
Three (3) new permits --
  • Operator: WPX
  • Fields: Mandaree (Dunn), Reunion Bay (Dunn)
  • Comments:
Twelve (12) permit renewals:
  • Enerplus (6), six "cats" all in Dunn County (calico, bengal, manx, tabby, siamese, persian)
  • Petro-Hunt (2), a Dolezal permit in Dunn County; a CMNU well in McKenzie County
  • WPX (2), two Goodbird wells in Dunn County
  • MRO, a Dora USA well in Mountrail County
  • Fram Operating, a Danny Funke well in Renville County
One (1) producing well completed:
  • 25858, 5,010, Statoil, Skarston 1-12 5H, Banks, a middle Bakken well, 
I track the Skarston wells here; last time I checked most of the Skarston wells on the 8-well pad were SI/NC (DUCs).

For newbies, what is the record IP in the Bakken? See question #9 over at FAQs.
From the Whiting 1Q15 transcript: The Flatland Federal 11-4TFH well produced at an initial rate of 7,800 BOEs per day during a 24-hour test of the Three Forks formation, making this the very best well in the basin. The Flatland Federal 11-4HR well produced at an initial rate of 7,100 BOEs per day during a 24-hour test of the Middle Bakken formation.
From a November 11, 2014, post (see also the November 25, 2014, post, same subject); The first well, in the Middle Bakken formation, was completed with 94 stages and was flowing 7,120 BOE/d on October 10, 2014, according to the operator. When the well was completed, it established a world record for number of stages in a single well.
Soon after, an offset well in the Upper Three Forks formation was completed with 104 stages. This well was flowing 7,824 BOE/d on October 11, 2014. This was a hybrid completion comprising 97 NCS GripShift cemented casing sleeves, with seven NCS BallShift cemented ball-drop sleeves in the lower section of the well. In both wells, all stages were successfully fractured.
For newbies, a recent post on another great Flatland Federal well.

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Life Just Got Better

Back in the 1990's while serving in Turkey, I started collecting silver and gold coins. And then after a couple of years I quit. I remember carrying all those coins back from Turkey through "passport control" and customs.

The metal detector picked up on the coins. The customs folks were not concerned about the coins; their x-ray machine couldn't see between the coins and had to hand-check everything, thinking I might be hiding contraband behind the metal.

I bought coins on a regular basis every month for awhile and then I quit. I'm not sure why I quit. I regret it now, of course, that I quit.

But a few months ago I resolved to start again. It turns out there is a pretty good Texas coin show once a month here in Grapevine. This past weekend I finally starting buying a few coins again, and I plan to do so every month.

In addition to whatever else I might buy, I've decided that I will buy a one-ounce silver coin every time I come across some stupid state government or federal government decision to deny some fossil energy permit. Today, I'm committed to another silver dollar: New York state keystoned the Constitution natural gas pipeline.

I might buy one or two silver coins after reading that it will take "only" 27 months for the Canadian government to decide whether to approve crude oil pipelines out of landlocked Alberta.

You have no idea how good it makes me feel now to read about another "keystone" story. Another silver dollar.

Keystoned! Why I Love To Blog -- Reason # 84 -- April 25, 2016

Had I not been blogging for the past nine years, most likely I would not have paid attention to this story. Through RBN Energy I learned about the Constitution natural gas pipeline, and then on April 19, 2016, we learned that Bernie Sanders wanted this pipeline project keystoned. And today we learn he got his wish.
Keystoned! Bernie Sanders got his wish. New York state denies permit for the Constitution natural gas pipeline
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LNG Exports

This story has been told very, very well by RBN Energy over the past couple of years. Mark Perry now provides another nice summary. If the folks in New England and New York state don't want natural gas from the US, "we" can always ship it overseas. From Mark Perry:
Thanks to the shale revolution, the United States is now on its way to becoming a major exporter of liquefied natural gas (LNG). In February, two LNG cargoes left Cheniere’s Sabine Pass export terminal in Louisiana for Brazil and India.
And these are just the first LNG shipments. With five U.S. LNG terminals under construction with a combined export capacity of roughly 10 billion cubic feet per day, many more LNG shipments are on the horizon. After all the export facilities become operational, the United States will become the third largest liquefaction capacity holder in the world after Australia and Qatar.
No matter how you view a new era of LNG exports — whether looked at from its impact on the U.S. economy, our commitment to free trade, the energy security of our allies, or the potential for a significant reduction in carbon emissions as gas replaces coal in electricity production — the results will be positive and beneficial.
How times have changed. Less than a decade ago, energy analysts thought the U.S. was destined to become one of the world’s largest LNG importers. At the time, domestic gas production couldn’t keep up with demand.
The shale revolution, however, has been a game-changer. To be sure, there are those who have yet to grasp the consequences of this change. Studies from the U.S. Department of Energy as well as various think tanks show LNG exports as economically beneficial to the nation, not only providing thousands of construction jobs, but incentives for increased domestic gas production. All of this promises to be a boon to gas producers, rig hands, royalty owners and energy-rich states like Pennsylvania and Texas. Meanwhile, the notion that the price of natural gas might spiral upward as exports grow has been debunked.
By the way, ever wonder who is financing all those efforts to have fracking banned in the US? This doesn't take a degree in rocket science. 

Random Update Of The Wells That Came Off The Confidential List In January, 2016

As of April 25, 2016, the wells that came off the confidential list in January, 2016.

There were a total of 106 wells. Two were non-Bakken wells. One Bakken well was reported as "dry."

There were 50 Bakken wells that reported an IP. There were 53 DUCs.

For comparison: in January, 2015: a total of 228 wells came off the confidential. Eleven permits were canceled (but likely replaced later by new permits in the same general area). There were fifteen non-Bakken wells and one wildcat. Five wells were reported as dry. There were four (4) DUCs, though I could have missed some. 

Disclaimer: it is likely that my data will differ from that reported by NDIC for several reasons. I'm not concerned about 100% accuracy; my purpose is to get a "feel" for what is going on in the Bakken. If this information is important to you, go to the source. In addition, in a long list like this, there are likely to be factual and typographical errors, because I do them quickly and don't triple-check.


Date
Permit
IP
Comments
January 1
31306
388

January 1
30865
SI/NC

January 1
30742
1736

January 1
30269
1716

January 1
24117
2078

January 2
31167
SI/NC

January 2
30741
1085

January 2
30612
SI/NC

January 2
29221
407

January 3
31391
SI/NC

January 3
31322
SI/NC

January 3
31305
408

January 3
30864
SI/NC

January 3
30740
1019

January 3
30268
954

January 3
29671
754

January 3
29222
1182

January 4
31166
SI/NC

January 4
30739
1243

January 4
29869
2064

January 5
31390
SI/NC

January 5
31323
SI/NC

January 5
30927
756

January 5
30863
SI/NC

January 5
29865
2422

January 5
29864
2210

January 6
31373
SI/NC

January 6
30219
622

January 6
30203
SI/NC

January 6
28967
SI/NC

January 7
31372
SI/NC

January 7
31165
SI/NC

January 7
30291
2463

January 7
30290
1888

January 7
30289
2197

January 7
30288
2067

January 7
30287
951

January 7
28966
947

January 8
31371
SI/NC

January 8
27650
SI/NC

January 8
20468
SI/NC

January 9
31164
SI/NC

January 9
30220
745

January 9
29224
1890

January 9
28965
985

January 10
31163
SI/NC

January 12
29765
SI/NC

January 13
31162
SI/NC

January 13
29766
SI/NC

January 13
29261
914

January 14
31389
131
non-Bakken
January 14
29767
SI/NC

January 14
29668
1122

January 14
29196
559

January 14
24116
3746

January 15
29262
1488

January 16
30667
SI/NC

January 16
30409
SI/NC

January 16
30404
2396

January 16
30403
2398

January 16
29667
1109

January 16
29526
734

January 16
29263
1272

January 17
30408
SI/NC

January 17
29870
1379

January 17
29768
SI/NC

January 18
29863
2746

January 18
29812
1365

January 19
30407
SI/NC

January 19
29810
1650

January 20
31350
SI/NC

January 20
30406
SI/NC

January 20
29669
962

January 21
31351
SI/NC

January 21
31221
SI/NC

January 22
31220
SI/NC

January 22
30988
SI/NC

January 22
30405
SI/NC

January 23
31219
SI/NC

January 23
30989
SI/NC

January 23
30752
SI/NC

January 24
31304
53
non-Bakken
January 26
31218
SI/NC

January 26
30751
SI/NC

January 26
31207
dry

January 26
28298
2112

January 27
30511
SI/NC

January 27
30750
SI/NC

January 27
31308
SI/NC

January 27
31468
SI/NC

January 28
31402
1824

January 28
30749
SI/NC

January 28
30512
SI/NC

January 28
29455
439

January 28
24115
2277

January 28
22503
SI/NC

January 29
31467
SI/NC

January 29
31352
SI/NC

January 29
30513
SI/NC

January 29
29454
586

January 30
31401
1848

January 30
31309
SI/NC

January 30
31206
SI/NC

January 30
29670
1195

January 30
28297
2073

January 31
29453
219