Friday, April 29, 2016

Week 17: April 24, 2016 -- April 30, 2016

Miscellaneous/International
Saudi Arabia's reserve asset base falls only $6 billion in March
Why the Saudi Aramco  IPO will not be enough
Saudi unveils sustainable post-oil economic plan
Weekly energy tweets suggest things starting to improve
Bakken crude gets to Netherlands (Europe) 

Operations
Schlumberger, Halliburton consider pulling out of North America
Statoil's Skarston wells are quite remarkable -- even for Statoil
Statoil well reports a crude oil IP of over 5,000 bbls
Random example of managing production
Halliburton cust 6,000 jobs
Halo effect? You betcha 

Natural gas
North Dakota hits natural gas output milestone 

Three (3) New Permits -- April 29, 2016

Active rigs:


4/29/201604/29/201504/29/201404/29/201304/29/2012
Active Rigs2986189186209


Three (3) new permits --
  • Operator: Whiting
  • Field: Heart Butte (Dunn)
  • Comments: 
HRC renewed five (5) permits, an Ann H. Thome in Williams County; and four Fort Berthold permits in Dunn County

KOG canceled three permits, three Smokey permits in McKenzie County.

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Cancelled KOG Permits

See first comment below. Yes, the three canceled permits were listed as Kodiak Oil & Gas permits:
  • 26541, PNC, Kodiak Oil & Gas, Smokey 146-99-2-3-10-15H3, 
  • 26542, PNC, Kodiak Oil & Gas, Smokey 146-99-2-3-10-15H,
  • 26543, PNC, Kodiak Oil & Gas, Smokey 146-99-2-3-10-16H3, 
I only looked at one file report, #26541:
  • October 28, 2014: sundry form received by NDIC; KOG requested a permit renewal for this well.
  • November 13, 2014: standard form releasing this site back for restoration; "Location was never built. OK to release."
  • December 2, 2014: letter from NDIC to Kodiak Oil & Gas approved the sites to be released; the company was released from the bond.
  • September 28, 215: letter from NDIC to Kodiak Oil & Gas indicating that the "referenced permit will expire October 29, 2015."
Bottom line: it appears that this is simply paperwork catching up with activity in the real world. Exceptional attention to detail in a time of lots and lots of activity for the NDIC. Before any well can be transferred to a new operator, and before a permit/well can be released "back to site restoration" requires the NDIC to physically inspect the site and audit the entire file report.

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Tuna Steak - Salmon - Artichoke - Baby Peas - Deanston



The tuna steak for me; the salmon for my wife. The tuna is marinaded for about two hours with olive oil, Worcester sauce, soy sauce, and pepper. The tuna steak is grilled for not more than four minutes. Only buy the best artichokes (otherwise, don't) and they will take a full hour to prepare (boil) with lemon.

Off The Net For Awhile --

Updates

May 8, 2016: one multi-billionaire does his part to help New Jersey return to income equality. He left. 
 
Original Post
 
In The Wall Street Journal today or yesterday or recently (our issue did not arrive today which seems to happen fairly often): Atlantic City facing bankruptcy.
Atlantic City has so little money left that it could miss a $1.8 million bond payment due Sunday, a step that would make it the first New Jersey municipality to default on debt since the Great Depression.
The Jersey Shore gambling destination has endured years of strain as a third of its casinos shut down. But now its cash levels are low enough that bankruptcy is a possibility for the 39,000-population city.
Once prized as a vacation destination because of its giant casinos and boardwalk, Atlantic City is in this position because of a declining economy and mounting debt. Its predicament is more severe than most distressed U.S. municipalities because it has the worst credit rating of any American city.
I track this stuff at this post.  Atlantic City first made the list on December 21, 2013. It's been a long time since I've re-visited the "cities" page.

Camden and Newark made the list some time ago. I was curious how they turned out. This was as curious as I got -- NJspotlight.com reported back on July 22, 2013:
Detroit’s bankruptcy sent shock waves through political circles and intensified the debate over whether state and local pension systems are underfunded, but don’t look for Camden or other distressed New Jersey cities to follow Detroit into bankruptcy court, municipal finance experts said.
While more than 20 counties and municipalities and authorities in 10 states have filed bankruptcy since 2003 because of poor financial practices or unsustainable pension debt, New Jersey has not had a local government bankruptcy since the Great Depression.
“Camden in many ways is in worse shape than Detroit, but Camden isn’t in bankruptcy and isn’t going to go into bankruptcy,” said Marc Pfeiffer, assistant director of the Local Government Research Center at Rutgers University’s Bloustein School of Planning and Public Policy. 
“While New Jersey has a few municipalities that are severely distressed, we are considered one of the better states in oversight and managing funds, and it’s a system that continues to work. The states where municipalities have gone bankrupt were those with a lack of oversight and limited engagement by the state government until it’s too late,” said Pfeiffer, who spent more than 20 years tracking New Jersey municipal finances before retiring last year as deputy director of the state Department of Community Affairs’ Division of Local Government Finance.
Camden, Paterson, Trenton, Harrison, and Asbury Park are all under supervision by the state’s Local Government Finance Board and part of a special transition aid program “designed to keep municipalities afloat,” Pfeiffer said, and both Harrison and Salem City are under close fiscal supervision because of problems with development bonds.
A bankruptcy like Detroit just isn’t going to happen in New Jersey,” agreed Jon Moran, the New Jersey State League of Municipalities’ longtime legislative director.
“Here in New Jersey, for a community to declare bankruptcy, you have to get approval from the Local Government Finance Board, and before it gets to that point, the Board and the Director of the Division of Local Government Services will already have taken steps to fix the problem.”
It appears Atlantic City somehow slipped off their radar scope.

I really don't know.

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A Note for the Granddaughters

Speaking of New Jersey, one of my best summers (in retrospect) was in Westfield, NJ, a bedroom community of NYC, many years ago. I always have to check the journal to get the year correct ... let's see... give me a moment ... ah, yes, here it is ... the summer of 1971. 

I had a summer job there; it was the most difficult job I ever had, but I probably learned more about life / unit of time (time best measured in hours, perhaps -- it was that intense). I've blogged about it several times before so I won't repeat the story. A typical "Westfield" post is here, but it doesn't say much about the job. Whatever. But it does talk about mini Basque cheese, which is more interesting.

Our younger daughter is now in the cheese-making business, focusing on goat cheese.

The Scariest Chart On The US Economy? -- American Enterprise Institute -- April 29, 2016

Note: disregard this post. This is the "first half." This post has now been completed and can be found at this link

US productivity at this link. The first graph below is as it appears at the link. The second graph with some notes added so that I could put the first graph in historical context.


At the link, the author suggests three interpretations:
  • US innovation has come to an end; low-productivity workers first to lose jobs in recession; workers now returning to the work force are the lower-productivity workers
  • we are mismeasuring productivity; current productivity formulas/statistics were based on "steel-and-wheat" economy; those algorithms/assumptions/formulae don't work for an IT economy
  • current "lull" is to be expected; innovation off the radar scope drags productivity down; "seed corn" being planted for another cycle of productivity gains
I assume "productivity growth" is unrelated to global economy. That assumption may be terribly wrong. And it's important to differentiate between "global economy" and "globalization." This might be a good place to start when sorting that out

Let's say US innovation and entrepreneurism have not changed. Let's say IT has matured (it's been around since at least 1984).

If one takes out US innovation, entrepreneurism, and IT maturation, then is one left with policy? I don't know. But one wonders.


Legend:
  • RR: exact years of President Reagan's administration
  • Bill: exact years of President Clinton's administration
  • 1: first term for George W Bush (an overhang from Bill's presidency)
  • 2: second term for George W Bush and first term for Barack Obama (reflects the ship of state as it started turning in the first term of George W Bush)
  • BHO: the second term of President Obama and the overhang that Hillary will inherit
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National Productivity

As defined/discussed at wiki, about halfway down that webpage, under the subsection called "National Productivity."
There are different measures of productivity and the choice among them depends either on the purpose of the productivity measurement and/or data availability. One of the most widely used measures of productivity is Gross Domestic Product (GDP) per hour worked. 
This, of course, is fairly simplistic compared to an alternate method called or multi factor productivity or total factor productivity.
Based on the nature of the discussion at the AEI link at the very top of this post suggests that productivity in this case is being defined as GDP/hours worked.

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The Arguments

The first argument had two parts:
  • innovation has come to an end in the US
  • in a recession the less productive were "made redundant" first, and now with unemployment rate back to 5%, employers are hiring the less productive workers
Obviously, the argument that innovation and the spirit of entrepreneurism in the US has come to and end, is hogwash.  I won't even address that one. If accurate -- that innovation is dead in the US, Obama has done more to "destroy" the US than even I could imagine.

The second part of that argument: the less productive are now being re-hired. Not even worth discussing. One can come up with a dozen counter arguments, but the military has some of the most sophisticated technology in the universe, and the all-volunteer force, many of them high school graduates with no prior training do just fine with that state-of-the-art technology. It would be hard to argue that the best and brightest are volunteering in droves for the US military.

The second argument: we are mismeasuring productivity. We probably are, but that doesn't explain what has happened in the last four years. What surprises me is that the Obama administration did not re-define productivity to make things look a lot better.

The third argument: it's simply a "technology" lull. Of course that's just as crazy, but let's take a minute and explore that for a few minutes. I would opine that the folks who came up with this one might be on to something, but they are just a "off" a bit. Let's say the incredible drop in productivity is due to "technology." It's not a "technology lull." It's "technology misplaced." Countless billions of dollars have been spent on companies like Solyndra and SunEdison. Countless billions of dollars have likewise been spent on EVs with little to show for all that investment.

Having said that, I think those arguments are all a stretch.

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Can The Slump In Productivity Be Explained?

It comes down to this: the sharp drop in productivity in the graph above appears to be "cyclic." The question is whether the remarkable decline in US productivity is simply to be expected / inexplicable (sort of like the business cycle) or is the result of something specific. For purposes of this post, I will assume the severe slump in productivity is manmade.


*************************************
The Obama Legacy: Decreased Productivity

1. Tens of thousands of new pages of compliance rules and regulations across the entire federal bureaucracy. Without question, this is the #1 reason for decreased productivity. Simply google Obama legacy compliance regulations.

2. Idealism at any cost. "Fixing" health care was a noble effort, but in the end, the president let lobbyists write the bill. The result was a trainwreck, their word, not mine. ObamaCare is the 800-lb gorilla in every corporate boardroom. 

3. Bad science. Climate change is a given; assuming US taxpayers can make a difference is perhaps the best example of presidential hubris.

4. Balkanization / polarization of America. This is an interesting one. No less than McClatchy DC has identified politics of anger, fights, and division as Obama's defining legacy. Tens of thousands of new pages of compliance regulations might have happened under any president but it's hard to imagine any president more polarizing than President Obama. The polarization has simply put America in gridlock. Nothing gets done, but a lot of dollars and manpower are spent on either side fighting for their side. At its extreme, Balkanization has led to the growth of CAVE dwellers. Historians will begin the chapter on the Obama presidency with these words: No other presidency, since Abraham Lincoln, was marked by such divisiveness.

5. Legalized money laundering. Perhaps the best example of spending money that adds absolutely nothing to the economy is "cap and trade." It's not that the beneficiaries don't break even, they go spectacularly broke spending US taxpayer money. Solyndra is Exhibit A; SunEdison is Exhibit B.

6. Crime. I don't know how economists factor in law enforcemen when it comes to determining productivity. But releasing tens of thousands of felons over a short period of time certainly seems like it would be a drag on the economy. Permitting open borders does little for American productivity.

7. Inability to make a decision. President Obama's inability to make a decision may be best exemplified by his lack of a "Syrian strategy" for years. With regard to US productivity it was best reflected by his inability to make a decision on the Keystone for six years.

8. Anti-business. "Keeping the boot on the neck of BP" was excessive, inflammatory, overkill, but demonstrated well President Obama's attitude toward business in general. By 2012, Obama's anti-business, anti-job bias was already evident. [It might be of interest to see that ObamaCare let that list of "Top 10."]

Bottom line: Regulations, ObamaCare, and bad science account for 99% of the US decline in productivity. Many more causes exist but compared to the Big Three, the rest are simply ankle-biters.

Update In Saudi Arabia's Reserve Asset Base -- Courtesy Of John Kemp -- April 29, 2016

In 2015, Saudi Arabia set its 2016 budget based on $60 oil. Prior to that, as far as we know, Saudi's budget had been based on $100 oil for years. Running the numbers, suggests there is no way "we" will average $60-oil for calendar year 2016. To get there, oil will have to be at $80 this autumn.

For Saudi, $60 oil is not much better than $40 oil, and long-term, Saudi can't survive on $60 oil.


Some takeaways from the graph above:
  • 27 months of data are shown; Saudi's reserve assets decreased in all but six of those months
  • but even with $110 oil for eight months (2014), the kingdom showed outright losses in two of those months, and minimal increases in most of the other months; during this period Saudi consistently said it "liked" $100-oil but in fact they needed a higher price; in June, 2014, at prices > $110 (and trending upward), the kingdom showed a negative growth in reserve assets
  • in the past 14 months, the kingdom has lost almost $150 billion in reserve assets
  • there's more to reserve asset management than just the price of oil; in January, 2015, despite an average price of Brent lower than it was later in the year, the kingdom showed a slight increase; for the entire rest of the year, significant decreases
  • look where John Kemp has set the "x" axis: at $100 oil; in 2017, it will be interesting to see if the graph is re-set to reflect $60 oil
  • in February, 2015, when average price of Brent was $60, the kingdom lost $20 billion; based on most recent losses, it does suggest that the kingdom set $60/bbl as the basis for their 2016 budget
An IPO of 5% of a 2-trillion-dollar company will provide a one-time infusion of $100 billion cash. 

XOM And CVX Report Today -- April 29, 2016

From the AP:
Exxon Mobil Corp. (XOM) on Friday reported first-quarter earnings of $1.81 billion.
On a per-share basis, the Irving, Texas-based company said it had profit of 43 cents.
The results exceeded Wall Street expectations, but Exxon does not adjust its reported results based on one-time events such as asset sales. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of 31 cents per share.
Others reporting today:

CVX: forecast, a 20-cent/share loss;
TransCanada (TRP.TO): forecast, a 66 cent/share profit;

Data Points From RBN Energy's Update On US LPG Exports -- April 29, 2016

In a long note like this, there will be typographical and factual errors. Personal comments / opinion may be interspersed with "facts." If this information is important to you, go to the source. I do this simply for my benefit to insure that I really do read the article and not skim through it.

This is taken from "episode 2" of RBN Energy's update of US LPG exports from the Gulf coast. It really is quite an amazing story and suggests that one of the big stories of the 21st century will be the emergence of US as the global energy powerhouse.

Some of the data points follow.

First, the data points from "episode 1":
  • US domestic production of NGLs (like propane and butane is soaring
  • US liquified propane gas (LPG) exports in the past three years have rocketed to the top
  • US exports of LPG now surpasses exports by the old Big Three: UAE, Qatar ("cutter"), and Algeria
  • the rise in LPG exports may be ending
  • exports from the Gulf coast may be in for a decline
  • more propane and butane from the Marcellus and Utica will be re-routed to Marcus Hook, PA
  • demand for new propane dehydrogenation plans and flexible steam crackers will be climbing
This episode, episode 2, will focus on how the Panama expansion will affect LPG exports. The data points follow.
  • the Panama expansion will be operations within a few weeks
  • all but the world's very biggest LNG vessels will be able to transit the canal
  • huge times savings from the Gulf coast to Asia: from more than six weeks (around Cape of Good Hope) to three weeks (Panama Canal)
  • daily rates for these sea-going tankers have tanked
  • two "events" have changed LPG export dynamics: Marcus Hook and PDH
    • Mariner East 2 pipeline across Pennsylvania will re-route 275,000 bopd by 2017; to Marcus Hook, PA
    • once at Marcus Hook, LPG-BR (rail) across the US; propane at those terminals is at the expense of propane at Gulf coast terminals
    • more domestic processing through increased number of PDH plants
  • US LPG exports have been on a tear
    • January, 2013: 184,000 bopd LPG exports from Gulf coast
    • January, 2016: 1,047,000 bopd LPG exports from Gulf coast (nearly six-fold increase in three years)
  • destinations:
    • exports to China: 111,000 bopd (up from 17,000)
    • Japan 70,000 bopd (up from 55,000)
    • South Korea: 37,000 bopd (up from 11,000 bopd)
    • Singapore: 30,000 bopd (up from 4,000 bopd)
    • China is the biggest importer of US LPG, beating out Canada (87,000 bopd in 2015, more than half was ethane)
    • rounding out the top six: Mexico (91,000), Brazil (47,000), and the Netherlands (46,000), Dominican Republic (32,000)
  • the LPG export terminals along the Gulf coast
    • EPD/Houston Ship Channel: 
      • completed its 2015 expansion; can now load one VLGC every 24 hours (from 300,000 bopd to 533,000 bopd)
    • Targa Resources/Galena Park
      • 3Q14: completed its expansion, from 100,000 bopd to 233,000 bopd 
    • Sunoco Logistics/Nederland/Mariner South
      • anchor customer is Shell; 150,000 bopd, or almost 20% of Gulf coast exports
    • Occidental Petroleum/Ingleside
      • commissioned in 2015, but exports have been negligible
    • Phillips 66/Freeport
      • building the latest LPG export terminal, a 150,000 bopd facility at Freeport, TX; to be on-line 3Q16; completed; first shipment December 16, 2016
    • Buckeye Partners/Trafigure/Corpus Christi
      • accounts for about 2% of Gulf coast exports so far this year
  • Total LPG export capacity from Gulf coast: 1,200,000 bopd export capacity
Bottom line: Marcus Hook, PA, and PHD plants in the US have changed the dynamics of US LPG exports. 

Many, Many Story Lines In Today's RBN Energy Post On US LPG Exports From The Gulf Coast -- Friday, April 29, 2016; More Bad News For ObamaCare -- People Have Quit Signing Up; Dropping Out In Large Numbers

Updates

May 7, 2016: ObamaCare exchange in Idaho the most recent to look like to be in trouble.
An ObamaCare insurance exchange once viewed as a steady ship in a sea of glitch-plagued websites is now running into problems of its own – adding to a new mess of health industry complications under the Affordable Care Act, including premium hikes, jittery insurers and failing co-ops.
Your Health Idaho (YHI), the Idaho marketplace that was one of the better-run systems when the law went into effect, was late getting thousands of state residents critical tax forms this year. One recent report said the call center also has struggled to answer customer calls, directing them instead to send requests by email -- and the system has taken months to enroll some people after they signed up. 
“We saw this coming years ago. We were promised that by having a state exchange, the customer would have a far superior experience compared to the federal level, and that’s proven to be false,” said Wayne Hoffman, the CEO of the Idaho Freedom Foundation who has opposed the Idaho state exchange from the start. He said they were warned that under the federal exchange, customers might “have to wait months and months for forms to be returned to them, yet, that is exactly the same experience people in Idaho are having today.”
Your Health Idaho, meanwhile, is blaming Washington -- saying the reason for the delay in tax forms was faulty information they received from the federal government.
Later, 8:09 p.m. Central Time: for background to this update, see the original post below (obviously) but also this post from 2015. When I read the original earnings report from Aetna (see below) I thought there was much more to the story that was not being published. I was write. Forbes provides that additional information:
Bertolini praised U.S. Health and Human Services Secretary Sylvia Burwell and the Obama administration for changes they have made within the regulatory framework established under the law. In particular, Burwell’s team curtailed “special enrollment” periods, which allow Americans to sign up for coverage after the traditional and primary enrollment period that runs from November through January of each year.
Insurance executives from Aetna and Anthem to Cigna, Humana, and UnitedHealth complained special enrollment periods made it more difficult to manage costs. Actuaries need to know who is paying the premiums, their health issues, ages and other characteristics to manage premiums and expenses that are paid in claims from so-called risk pools. Allowing additional sign-up periods messes with their risk planning.
Bertolini said Aetna’s losses in the first two and a half years that subsidized coverage has been available on public exchanges have been “well, well below” the costs of buying that membership or building out the markets he mentioned. Thus, he sees a path for long-term success akin to private insurance industry administration of Medicare benefits for seniors under the Advantage program as well as Medicaid managed care.
“We see this as a good investment, hoping that we have an administration and a Congress that will allows us to change the product like we change Medicare every year and we change Medicaid every year,” Bertolini said. “But we haven’t been able to touch this product because of the politics. But if we get to that point, we are in a very good place to make this a sustainable program.”
Original Post
 
This is the kind of typographical error I used to make when I first started blogging. It's an error made by lack of attention to detail; or complete ignorance. See how long it takes you to spot the glaring error in the "cut and paste" taken from The Street: Real Money:
Inside the United States, [Hess has] pared back fracking operations in both the Bakken, where it currently operates only two wells and in the Utica shale, where it currently operates none.
Whatever. Time to move on.

One know things have really changed in the Bakken when one is relieved that the number of active rigs remains near 30.

Active rigs:


4/29/201604/29/201504/29/201404/29/201304/29/2012
Active Rigs2986189186209

RBN Energy: US LPG export terminals poised to serve the Pacific Basin.
Fueled by soaring domestic production of natural gas liquids (NGLs) like propane and butane, U.S. liquefied petroleum gas (LPG) export volumes the past three years have rocketed to the top, surpassing exports by the old Big Three of LPG: United Arab Emirates, Qatar and Algeria. But that rise in LPG exports may be ending, and the share of exports made from Gulf Coast docks may be in for a decline. More propane and butane will be pulled from the Marcellus and Utica to the docks at Marcus Hook, PA, and demand for propane on the Gulf Coast—from new propane dehydrogenation plants and flexible steam crackers—will be climbing. That suggests that less LPG may need to be exported from the Gulf Coast to keep the market in balance. In today’s blog we continue our look at the soon-to-open Panama Canal expansion with an updated examination of U.S. LPG export terminals along the Gulf Coast.
As we said in Episode 1, the wider, deeper locks being built along the Panama Canal will (finally) be in business within a few weeks, enabling the world’s growing fleet of Very Large Gas Carriers (VLGCs) that move most U.S. LPG exports to take that important short-cut between the Caribbean and the Pacific. (All but the world’s very biggest liquefied natural gas (LNG) vessels will be able to float through the expanded canal as well.) The time saved will be huge; a trip from the Gulf Coast to Asia around the Cape of Good Hope takes more than six weeks, compared with only three weeks-plus via the Panama Canal. And time, of course, is money. Cut the time it takes for a Houston-to-Tokyo round trip in half and (aside from the canal tolls) you’ve halved the LPG freight rates.
And that’s not the only way LPG shipping costs are coming down. According to a recent analysis by Fearnley Securities, average daily VLGC rates are now below $40,000 (in part because of all the new carriers being built—one a week in recent months) and daily rates may fall to $25,500 (at or below the representative break-even price) in 2017. That would of course be good news for those hoping to sell increasing volumes of U.S.-sourced LPG to Asian markets (including the India subcontinent), which use the propane/butane mix primarily for cooking and heating but also as a petrochemical feedstock.
As we discussed in yesterday’s blog, however, when the 275 Mb/d Mariner East 2 pipeline across Pennsylvania comes into service in 2017, it will pull significant volumes of propane/LPG to the Marcus Hook export terminal near Philadelphia, leaving less Marcellus/Utica-sourced propane and butane to be railed out of the region to distribution terminals across the U.S. Volumes at those terminals will be replaced by propane otherwise headed to the Gulf Coast. Also, flexible steam crackers (which we expect to turn to more propane as ethane supplies tighten and ethane prices rise) and new PDH plants will increase domestic (more specifically, Gulf Coast) consumption of propane, thereby leaving less propane available to export from Gulf Coast terminals—especially under RBN Energy’s Cutback Scenario, which is a pricing view similar to the current forward curves for crude oil and gas, and which would result in a lot less propane being produced over the next five years than most of the market had been figuring before the oil price collapse.
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The Other Page
 
Warning: this is not an investment site. Do not make any investment, financial, travel, or relationship decisions based on anything you read here or think you may have read here.

I say that because I'm going to post/link some financial stories. I post them not because I'm invested in them (in fact, I am not directly invested in any of them to the best of my knowledge); I'm posting them because they help put the Bakken in perspective; they have interesting story lines; and/or they simply caught my eye and I couldn't sleep earlier this morning, and I didn't want to read any more of Dorothy Parker right now and the Wall Street Journal has not yet arrived.

UPS says it may owe the Central States Pension Fund almost $4 billion. It's a complicated story (at least for me) but I "love" UPS so I thought I would read the article:
United Parcel Service Inc. warned it may have to take a charge of as much as $3.8 billion related to a potential pension-fund obligation.
The cost would be triggered if the U.S. Treasury Department approves benefit cuts to protect the solvency of the Central States Pension Fund, UPS executives said Thursday. UPS pulled out of the fund in 2007 but agreed to make up any losses its remaining members experienced.
The world’s largest package-delivery company may have to record a charge of $3.2 billion to $3.8 billion if the government approves the benefit cuts, executives said in an earnings conference call. UPS plans to oppose such a move by the Treasury. Even with the charge, earnings this year probably still will fall within the company’s forecast of $5.70 to $5.90 a share.
Call Bernie. Call Hillary. More evidence of income inequality. Pig-to-man pancreas cell transplant will make scientist highest-paid US executive of 2015. Patrick Soon-Shiong will soon be inshiongly rich:
Patrick Soon-Shiong performed the world’s first pig-to-man cell transplant to treat diabetes. He sold two drug companies, making enough to become a billionaire and buy a stake in the Los Angeles Lakers basketball team. Now Soon-Shiong can also add this distinction to his resume: the highest-paid U.S. executive of 2015.
The 63-year-old physician received a $329.7 million pay package last year as chief executive officer of NantKwest Inc., a cancer-research firm that went public last July and has a market value of $715.5 million. That sum vaults him to the No. 1 spot on the Bloomberg Pay Index, a ranking of the top-paid executives at companies that trade on U.S. exchanges.
Most of his pay stems from 19.4 million stock options granted before the initial public offering.
Hess. I am not interested in the discussion about investing per se, but I was curious on The Street's headline: "...based on the Hess strategy." So, what's the Hess strategy?
Two of the U.S. independents reporting this week, Hess and Pioneer Natural Resources, show vastly different approaches, with Pioneer continuing to increase production at all costs and Hess showing restraint on spending until oil markets recover.

Pioneer's CEO Scott Sheffield has been singular in his goals during this bust in oil prices. It's been about maintaining production growth throughout.
Indeed, in his latest quarterly report he broke his company record again, delivering 220,000 barrels of oil equivalent, an increase of 7,000 barrels of oil equivalent (BOE) over the fourth quarter of 2015. But revenues from this gain in production, with oil below $50 a barrel, have not translated to the kind of cash flow that PXD will need to continue to keep beating its own records.
With a projected $1.4 billion in cash flow for 2016, Sheffield will still come in $600 million short of his own guidance for covering capital expenditures for the year. With that kind of cash burn, it'll need a seriously large asset sale, or a much less likely secondary stock or bond capital infusion. That's not a strategy for an oil price that remains below $50 for very long.
Now, look at Hess.
CEO John Hess was quick to begin his quarterly comments by noting a lower-for-longer strategy. This corresponds to the $1.6 billion stock secondary it did in February, shoring up their balance sheet for the long haul.  Inside the United States, it's pared back fracking operations in both the Bakken, where it currently operates only two wells and in the Utica shale, where it currently operates none. It's assigned much of their capex for 2016, lowered 40% from 2015 levels, to offshore projects in the Gulf of Mexico and Guyana. These are growth projects that reflect a long-term investment return on capital that current shale assets onshore cannot deliver. But with revenues missing by $47 million for the quarter and down 36% from 2015, Hess shares were pummeled, dropping below $60 a share.
And, of course, more dismal news regarding ObamaCare. From Investor's Business Daily:
Aetna reported 911,000 ObamaCare exchange members as of March 31, down more than 4% from over 950,000 at the same time a year ago.

The news is somewhat of a surprise after Anthem said it saw a modest increase in customers largely thanks to nonprofit co-ops going out of business in some of its 14 markets like New York and Colorado.

Anthem ObamaCare enrollment rose 8.6% to 975,000, from 898,000 a year ago.

Centene, a Medicaid insurer specialist that’s rapidly expanding its ObamaCare exchange reach with low-premium, high-deductible plans, recently reported a 55% enrollment spike to 683,000. UnitedHealth (UNH) had 795,000 exchange customers at the end of Q1, but has said it will exit all but a “handful” of states in 2017.

Total exchange sign-ups rose 8.5% to 12.7 million, from 11.7 million a year ago, but it’s not yet clear how many people actually paid. Last year, 1.5 million had dropped out by the end of March.

Reports from six states show that ObamaCare enrollment has shrunk about 14% from the number reported in February, but it’s unclear if that trend will hold.

Aetna management expressed optimism that its exchange business will break even in 2016, though it’s still getting a feel for the medical costs of this year’s members, given the relatively large amount of customer churn from year to year.

Overall, Aetna’s ObamaCare-compliant enrollment, including off-exchange customers, fell to 1.2 million from 1.275 million a year ago.