Tuesday, August 16, 2016

The Tipping Point: ObamaCare Has Problems; Exposed By Aetna -- Washington Post -- August 16, 2016

Updates

September 3, 2017: fewer and fewer stories on ObamaCare. No longer matters. SF Chronicle, "frustration mounts over premiums for individual health plans." Data points:
  • premiums will rise by double-digits (on a percentage basis)
  • very small group actually affected -- not enough to get Congress to act
  • early retirees, skilled tradespeople, musicians, self-employed professionals, business owners, employees with small employers who don't provide health insurance
  • Delaware example: premiums will jump 35% from $740/month to $1,000/month this November
June 21, 2017: Anthem to depart Indiana and Wisconsin.

June 12, 2017: Iowa going down

June 6, 2017: Anthem exits Ohio.

May 24, 2017: BC/BS to pull out of Kansas City, MO. Not trivial and it's still not TrumpCare. It's ObamaCare.

April 9, 2017: ObamaCare premiums keep rising -- Bloomberg. Costs up more than 20% in three states that have posted rates.

April 6, 2017: Aetna "pulls out" of Iowa. From the Des Moines Register.

April 4, 2017: Knoxville could be first US city where ObamaCare fails. CNN reports that Humana, the only insurer left on the Affordable Care exchange in the Knoxville area, is set to exit the market in 2018. 

February 15, 2017: IRS will not reject tax filings submitted without healthcare insurance information

February 15, 2017: Humana will exit ObamaCare, 2018. FoxNews reports that Aetna was the first insurer to drop out of ObamaCare.

February 1, 2017: Aetna may pull out of ObamaCare next year. Apparently the decision has been made.

November 1, 2016; even the Washington Post seems to be saying -- let's take off our gloves on ObamaCare -- and report it "neutrally." 

October 31, 2016: the tipping point in Arizona -- sky-rocketing 2017 ObamaCaare premiums

October 23, 2016: Pittsburgh Tribune headline -- the 2017 ObamaCare premium increases raise suggestions that ObamaCare has begun a "death spiral."
The hefty increases Pennsylvania has approved for next year's individual health plans provide new fodder for Obamacare critics who say the federal law's insurance marketplace is bound to fail.
The state's Insurance Department last week approved increases averaging 32.5 percent for the 2017 plans, making Pennsylvania one of 14 states so far to increase individual rates by an average of more than 30 percent, according to data on ACAsignups.net, a site that tracks enrollment and pricing.
August 31, 2016: The Huffington Post weighs in. I have no idea why. 

August 25, 2016: from Carpe Diem
‘Keep your doctor’ and ‘keep your plan’ got a Pants on Fire rating and have been scrubbed from Obamacare website
August 21, 2016: ObamaCare has gone from the president's greatest achievement to a "slow-motion death spiral." -- Business Insider
It has not been a good week for the Affordable Care Act (ACA), better known as Obamacare.
A slew of news, from insurers dropping out to possible fraud among healthcare providers, has all accumulated in a deluge of negative headlines for one of President Obama's signature laws.
In fact, it's gotten so bad that it appears that the whole program itself may be in doubt.
August 19, 2016: why are health insurers dropping out? Expenses underestimated by huge amounts. Same with Medicaid. Cost of ObamaCare Medicaid expansion was almost 50% higher than previously estimated. Congress really, really hurt the US middle class. Sold a huge bill of goods. It appears everyone lost on ObamaCare. 

August 18, 2016: even CNBC admits -- ObamaCare is now in a death spiral.
In other words, the insurance "death spiral" has arrived. Obamacare's critics have long predicted that exchange plans' high premiums and deductibles would keep all but the sickest Americans from enrolling. These people would need so much medical care that insurers would lose money no matter how much they raised premiums. Eventually, insurers would have no choice but to pull out. 
President Obama and Democratic presidential nominee Hillary Clinton have proposed a novel solution to this government-created problem — more government. They're pushing for a government-run "public option" that would usher in de facto single-payer health care. That'd be a disaster for consumers and taxpayers alike.
August 18, 2016: as ObamaCare implodes, Democrats blame insurers. An op-ed at The WSJ.

August 18, 2016: the number of stories and the media posting those stories suggest that we may have reached a tipping point on the day Aetna announced that it was pulling out of ObamaCare except for a very few exchanges. The most recent story from US News:
Aetna's decision to partially withdraw from a major provision of President Barack Obama's health care law is leaving some Americans with only one or no health insurance options, threatening the law's promise to continue to reduce the number of people who have historically been too sick or too poor to access coverage.
Aetna, retaliating in part against a Department of Justice lawsuit, announced Monday that it was leaving exchanges in 11 states, following a string of similar announcements earlier this year that came from other large insurers like UnitedHealth and Humana.
The exchanges, or marketplaces, allow some Americans who don't get health insurance from an employer to compare different plans and buy them at a tax-subsidized rate, mostly in the form of reductions to the amount they pay for their policies each month. But with insurers choosing not to participate, in part because they are losing money by covering people who are sicker and seeking out immediate care after having insurance for the first time, people who shop for these plans are left with even fewer options to choose from.
Some will have only one plan to select, and at least one – Pinal County, Arizona – will have none.
The Obama administration's response is to point out that health insurance companies are still adapting to the law and that millions of people will continue to receive coverage. Officials also point out that health insurance companies can leave or join the marketplace each year. But for many customers, Aetna's pullout will be more than just an inconvenience.  
August 18, 2016: the number of stories and the media posting those stories suggest that we may have reached a tipping point on the day Aetna announced that it was pulling out of ObamaCare except for a very few exchanges. The most recent story from The Wall Street Journal:
Barack Obama’s signature health-care law is struggling for one overriding reason: Selling mispriced insurance is a precarious business model.
Aetna Inc. dealt the Affordable Care Act a severe setback by announcing Monday it would drastically reduce its participation in its insurance exchanges. Its reason: The company was attracting much sicker patients than expected. Indeed, all five of the largest national insurers say they are losing money on their ACA policies and three, including Aetna, are pulling back from the exchanges as a result.
The problem isn’t technical or temporary; it’s intrinsic to how the law was written. By incentivizing insurers to misprice risk, the law has created an unstable dynamic. Total enrollment this year will be barely half the 22 million the Congressional Budget Office projected just three years ago. Premiums, meanwhile, are set to skyrocket, which will further hamper enrollment. It isn’t clear how this can be fixed.
August 18, 2016: the number of stories and the media posting those stories suggest that we may have reached a tipping point on the day Aetna announced that it was pulling out of ObamaCare except for a very few exchanges. The most recent story from Forbes:
The Affordable Care Act (ACA) has produced massive consolidation among health care providers, largely the result of hospitals merging and large hospital systems taking over private doctor practices. In response and in an apparent attempt to improve their negotiating position with the consolidated providers, four of the five major for-profit health insurance companies have proposed mergers: Aetna with Humana and Cigna with Anthem. The Department of Justice (DOJ) has moved to block the mergers, citing a growing threat to health care market competition.
Before making that decision, the DOJ asked Aetna, and likely the other insurers as well, how DOJ action to challenge the merger would affect the insurer’s decision to participate in the ACA exchanges. Aetna CEO Mark Bertloni wrote in reply:
The President asked us to take a long-term view when this law went into effect, and, unlike many others, we have stayed the course and worked constructively to make the public exchange market work. The acquisition of Humana puts Aetna in a significantly better position to continue and expand its support.
Unfortunately, a challenge by the DOJ to that acquisition and/or the DOJ successfully blocking the transaction would have a negative financial impact on Aetna and would impair Aetna’s ability to continue its support, leaving Aetna with no choice but to take actions to steward its financial health. …
Although we remain supportive of the Administration’s efforts to expand coverage, we must also face market realities. … We have been operating on the public exchanges since the beginning of 2014 at a substantial loss. … Our ability to withstand these losses is dependent on our achieving anticipated synergies in the Humana acquisition. …
Our analysis to date makes clear that if the deal were challenged and/or blocked we would need to take immediate actions to mitigate public exchange and ACA small group losses. Specifically, if the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint.
In other words, Aetna’s position is that it would continue to participate in the exchanges, despite the fact that they were a money losing proposition, if a favorable decision on merging with Humana was forthcoming so the insurer would have extra synergies, i.e. profits, elsewhere. The inescapable and disturbing implication here is that due to the ACA, important decisions affecting health care markets, made both by government and by private companies, are now increasingly becoming a function of political negotiations and DOJ market concentration calculations.
August 17, 2016: the number of stories and the media posting those stories suggest that we may have reached a tipping point. The most recent one in The New York Times:
Facing high-profile withdrawals from online insurance exchanges and surging premiums, the Obama administration is preparing a major push to enroll new participants into public marketplaces under the Affordable Care Act.
The administration is eyeing an advertising campaign featuring testimonials from newly insured consumers, as well as direct appeals to young people hit by tax penalties this year for failing to enroll.
But as many insurers continue to lose money on the exchanges, they say the administration’s response is too late and too weak. The companies point to a fundamental dynamic in the marketplace in which too few healthy people are buying policies and too many sick people are filing costly claims.
And the uneasy truce between the government and insurers, which followed adoption of the health care law, appears to be fraying as some of the large companies say they are leaving or sharply scaling back. Aetna warned the Justice Department last month that the company would curtail its participation in the exchanges if the government sued to block its acquisition of Humana, a major competitor.
In a July 5 letter, disclosed by The Huffington Post, Mark T. Bertolini, the chairman and chief executive of Aetna, said that in the event of a lawsuit, “we will immediately take action to reduce our 2017 exchange footprint.” He argued that Aetna needed to form a combined insurance giant to mitigate its losses on the exchanges.
The Justice Department filed suit two weeks later, saying that the combination of Aetna and Humana would reduce competition in violation of federal antitrust law. On Monday, Aetna announced that it would sharply reduce its participation in the public marketplaces next year, offering individual insurance products in 242 of the 778 counties where it now provides such coverage.
An Aetna spokesman insisted on Wednesday that it was the growing financial losses in the exchanges — not the challenge to its acquisition of Humana — that ultimately “drove us to announce the narrowing of our public exchange presence for the 2017 plan year.”
August 17, 2016: Aetna telegraphed that it would exit ObamaCare if merger denied by Obama administration. 
 
Original Post 
 
When I first posted this story, I said the story "had legs."

Wow, was that correct. This story really has legs. Tonight at 8:02 p.m. Eastern Time, The Washington Post has a big story on Aetna saying sayonara to ObamaCare: Aetna decision exposes weaknesses in Obama's health-care law.

And another nominee for the 2016 Geico Rock Award: Carolyn Y. Johnson and Juliet Ellperin of The Washington Post.
Insurance giant Aetna’s decision to stop offering much of its individual coverage through the Affordable Care Act is exposing a problem in President Obama’s signature health-care law that could lead to another fraught political battle in Congress.
Aetna’s announcement Monday night was the latest sign that large insurers are losing money in the Affordable Care Act’s marketplaces, heightening concerns about the long-term stability of a key part of Obama’s domestic policy legacy. But addressing this issue could open the door to a nasty political fight, given that some Republicans have vowed to repeal the law outright.
I quit reading at that point. 

Making Mountains Out Of Molehills -- Mortgage Delinquency Rates In Fossil Energy-Heavy States -- August 16, 2016

Following the housing bubble bust, at its peak in the first quarter of 2010, the "nationwide"  delinquency rate for one-to-four-unit residential properties was 10.06 percent.

Currently, the nationwide delinquency rate is about 4.66% as of the end of the second quarter, a decrease of 11 basis points compared with the first quarter, and a decrease of 64 basis points compared with 2Q15.

The current delinquency rate, the delinquency rate for 2Q16, is the lowest quarterly rate since 2Q06, ten years ago.

So, to recap, for 30-day delinquencies:
  • at its peak, back in 2010, the nationwide mortgage delinquency rate was 10.06%
  • the current nationwide average rate is 4.66%, the lowest since the end of the second quarter. 
Those numbers come from mortgage.orb in a story published today.

For 60-day delinquencies, the nationwide rate is even lower, 2.82%, according to BusinessInsier.com.

It must have been a slow news day or the reporter was struggling to find a freudenschade story about the current state of the energy industry. That's the only way I can account for the story at the link.

After deep research, the author of that article was finally able to find only three states where the mortgage delinquency rate had increased from a year ago.

Surprisingly, Texas and Oklahoma were not mentioned.

He said the three states were all in the oil patch, which is sort of, but barely true: Wyoming, West Virginia, and North Dakota. Two of the three are better known for coal than for oil.

The war on coal is the long pole in the tent for West Virginia and Wyoming. Seriously, only North Dakota can be considered in the "oil patch." 

So, how is North Dakota doing?

The national rate, again, for 60-day mortgage delinquencies, is 2.82%

North Dakota: 1.05%

Less than half the national average.

And that generated the story at the link.

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I love the way writers obfuscate these stories. This was how the writer reported the North Dakota rate: "The delinquency rate in North Dakota is 1.05%, up 10.8% from the previous year."

I would have missed it, or could have missed it, had a reader not pointed it out to me, or if I had not re-read that sentence. The "10.8%" jumps out at you. In the big scheme of things, it's meaningless.

Doing the arithmetic, North Dakota's delinquency rate was 0.95% last month -- yes, less than 1%, compared with a nationwide rate of 10% (30-day delinquencies) following the housing bubble. Most folks who have been paying attention know the cause of that housing bubble. Some banks have only now gotten past this.

Ten percent of zero is still zero, and 10% of something less than 1% is still barely 1%. But apparently it was enough to make it worth writing the story.

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In the big scheme of things, this is truly making a mountain out of a molehill.

In the big scheme of things, this isn't even "North Dakota" the writer is writing about when he is writing about the state's energy sector. He's writing about four counties, and maybe three cities: Williston, Watford City, and Dickinson.

That's it.

******************************

The fact that Texas, Oklahoma, and Alaska have not seen an increase in mortgage delinquency rates, year over year -- all of which are clearly in the "oil patch"-- sort of takes the wind out of Matt's article.

In fact, at the source, in a map where the darker the blue, the higher the delinquency, North Dakota is the palest blue on the map; it appears only Colorado comes close to North Dakota's rate. The map, by the way, shows ND's delinquency rate to be 0.95%, not the 1.05% stated in the article. YoY change was 2.6%. Colorado: 1.04%, down 27% YoY. New York state where fracking is banned: 3.51%, well above the national average and 3x the ND rate, but also down a whopping 27% YoY. Texas, the oiliest state in the oil patch, has a delinquency rate of only 2.12%, and that rate is down almost 17% YoY.

And then this, the source clearly states that West Virginia's rate actually decreased almost 3% YoY, whereas Matt said it was one of three states where the rate had actually increased. Wyoming, too, the rate decreased almost 5% YoY, and Matt said it increased. Matt and I must be looking at different things. You can check it out yourself at the TransUnion site that Matt linked.

Based on this data, the oil patch, and the entire fossil fuel energy patch is not doing too badly.

***************************************

As much as folks complain about man-camps, advocates of man-camps should point out that delinquency rates could have been a whole lot worse had workers not had man-camps to turn to, but had to buy houses. As soon as they were out of a job, they would have left the state, resulting in more mortgage delinquencies. No one can say that for sure, but man-camps may have prevented any number of other problems.

*******************************

I'll take the 1% mortgage delinquency rate as a good news story. The bankers, the real estate industry, the roughnecks are doing a great job not letting things get out of hand. By the way, it would be interesting to see the rate broken down by county in North Dakota. Or maybe not. LOL. 

By the way, for the record, current 60-day delinquency rates according to the Matt Turner story in Business Insider:
  • nationwide: 2.3%
  • West Virginia (think war on coal): 2.54% 
  • Wyoming (think war on coal; lots of federal land): 1.57%
  • North Dakota, home of Boomtown USA: 1.05% (less than half the national average)

Statoil Reports A Very Nice Banks Field Well -- August 16, 2016

Active rigs:


8/16/201608/16/201508/16/201408/16/201308/16/2012
Active Rigs3274194182200

No wells coming off the confidential list Wednesday.

Three new permits:
  • Operator: Sinclair Oil & Gas
  • Field: Robinson Lake (Mountrail)
  • Comments:
One producing well completed:
  • 29683, 3,895, Statoil, Richard 8-5 7H, Banks, on a multi-well pad, t7/16, cum --
Zavanna has temporarily abandoned three Sigurd wells in Williams County.

The other wells on two pads in the immediate area of #29683:
  • 29685, 2,068, Statoil, Richard 8-5 XW 1TFH, Banks, 41 stages, 6 million lbs, t7/16, cum --
  • 29684, 2,052, Statoil, Cheryl 17-20 XW 1TFH, Banks, 40 stages, 5.8 million lbs, t7/16, cum --
  • 29683, see above,
  • 29612, SI/NC, Statoil, Cheryl 17-20 7H, Banks, no production data,
  • 29682, SI/NC, Statoil, Richard 8-5 3TFH, Banks, no production data,
  • 29681, SI/NC, Statoil, Richard 8-5 8TFH, Banks, no production data,
  • 29611, SI/NC, Statoil, Cheryl 17-20 8TFH, Banks, produced 5K over first 30 days, not fracked;
  • 29680, SI/NC, Statoil, Richard 8-5 5H, Banks, no production data,
  • 29610, SI/NC, Statoil, Cheryl 17-20 5H, Banks, no production data,
  • 32289, SI/NC, Statoil, Cheryl 17-20 1H-R, Banks, no production data,
  • 22322, 4,630, Statoil, Cheryl 17-20 2TFH, Banks, 39 stages, 4 million lbs, t4/13; cum 223K 6/16;
  • 21815, 4,680, Statoil, Richard 8-5 1H, Banks, 42 stages, 4 million lbs, t4/13; cum 283K 6/16;
  • 21814, dry, Statoil, Cheryl 17-20 1H, Banks, casing collapse


George Carlin On CAVE Dwellers; SeekingAlpha Contributor On The Eagle Ford -- August 16, 2016

For now, just this (strong language, it's George Carlin, after all):


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Would George Carlin Still Like The Eagle Ford?
Actually I'm Not Sure He Would Like Anything

From a SeekingAlpha contributor.
Summary:
  • New highs brought new found confidence to oil producers and a sense of relief that the oil market was headed towards recovery.
  • Producers in the condensate window of the Eagle Ford could still be facing differentials as high as $15/Bbl behind WTI.
  • The two main drivers of the lack of activity in the Eagle Ford are crude quality and capital scarcity. 
As one of the basins with premier acreage and economics, one would expect the Eagle Ford to see an increase in activity with the rise in prices. However, the Eagle Ford has fallen out of favor with the market despite improving well performance and declining costs. The two main drivers of the lack of activity are crude quality and capital scarcity.
Much more at the link, including a great "stratigraphic" of the Permian. 

Idle Chatter: Warren Buffett, BNSF, Apple, The iCloud, And All That Jazz -- August 16,2016

From February 6, 2014:
About the same time, literally, about the very same time the Legacy Fund was being put together, this news story from The Los Angeles Times:
Billionaire investor Warren Buffett's $34-billion acquisition of railroad giant Burlington Northern Santa Fe Corp. is the biggest bet yet on a U.S. economic recovery, one that could resonate from the international sea lanes to the railroads crisscrossing the country.
Burlington Northern is the nation's largest rail transporter of coal and grain and provides a vital link for consumer goods from Asia to the Midwest, many of them flowing through the ports of Long Beach and Los Angeles.
"It's an all-in wager on the economic future of the United States," Buffett said in a statement announcing the deal Tuesday. "I love these bets."
I have since read that "the all-in wager" was not an exaggeration. Apparently, the purchase of the Burlington Northern could have broken Berkshire Hathaway.

I remember that interview: 
"It's an all-in wager on the economic future of the United States," Buffett said in a statement announcing the deal Tuesday. "I love these bets."
I was reminded of that story, that interview, when I happened to note that Union Pacific Railroad announced today an increase in its dividend, payable in February. I didn't think much about it at the time; I just posted it. [It may be just me, but dividend announcements seem to be coming more frequently in energy-related companies lately. I'm thinking of Marathon, PSX, Apache, and now UNP, which I think of an energy-related company.]
So, how did Warren's "all-in wager" turn out?

From Bloomberg just a few months later, November 10, 2014:
Days after Warren Buffett announced his $26.5 billion buyout of railroad BNSF, he insisted that he’d paid a steep price to own a business that would benefit his company, Berkshire Hathaway Inc., over the next century.
“You don’t get bargains on things like that,” he said in a November 2009 interview with Charlie Rose that aired on PBS. “It’s not cheap.”
Five years later, that assessment rings a bit hollow. Buoyed by an onshore oil boom, BNSF has become a cash machine for Buffett. The railroad had sent more than $15 billion in dividends to Berkshire through September 30, 2014, according to quarterly regulatory filings, the latest of which was released last week.
More stunning: The business is on pace to return all the cash Buffett spent taking it private by the end of this year.
Annual revenue at the railroad has risen 57 percent, and earnings more than doubled to $3.8 billion since Buffett bought it. Sales have climbed even as BNSF faced increased public scrutiny over service delays and safety.
“He stole it,” said Jeff Matthews, a Berkshire shareholder and author of books about the company. “He’s got to feel really good that he bought it when he did, because it’s a wonderful asset, and it’s done nothing but get more valuable in the time that he’s owned it.”
The railroad’s profit continued its climb in the third quarter as revenue from agricultural and industrial shipments, including oil, rose. The business accounted for more than a fifth of Omaha, Nebraska-based Berkshire’s net income in the period, according to a November 7, 2014, regulatory filing.
Buffett is "fun to watch." He's unpredictable. For someone who says he doesn't understand technology and who says he tends to stay away from technology companies, recently we learn that he has increased his holdings in Apple. Significantly.

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Idle Chatter

The preceding all came about because of a sidebar e-mail conversation I've been having with an investor who is a whole lot smarter than I am. I told him that I am shifting my investment strategy a bit. That led to a discussion on Warren Buffett and NOV.

My reply to the reader's note to me:
Yes, but again, I think there are too many oil service companies that are great candidates -- with my luck I'd start investing in Weatherford, and BRK would buy NOV or vice versa. That's true in other sectors as well, but there are so many oil service companies. I could even see him buying BHI after it got so beat down after failed merger.

And with his interest in pipelines, WMB seems an incredibly interesting target.
  • NOV: $13 billion
  • Weatherford: $5 billion
  • BHI: $22 billion
  • WMB: $20 billion
BNSF cost Buffett $26 billion (or $34 billion -- see above) and at the time, I believe he said that was almost "betting the farm" on one company. I think he said it was a bigger deal than he felt comfortable with or something along that line.

So, BHI and WMB would be similar risks with less reward than BNSF.

NOV seems a bit less expensive in comparison and would still be big enough to get his name on the front page of business sections of newspapers. Which he likes.

Weatherford: if under consideration, he would have his secretary make the decision.

I did this quickly so hopefully the market caps are correct. But when I look at those four and look at Buffett's energy holdings, and recent WMB history, WMB looks very, very enticing. That TRANSCO pipeline from Texas to the Northeast or vice versa, alone, must get Buffett excited.
This is, of course, not ready for prime time. It is simply idle chatter, throwing some stuff around while drinking virtual coffee at the iCloud Cafe, 100 Heavenly Way, PSR J1302-6350.
Note: this is not an investment site. Do not make any investment, financial, travel, job, or relationship changes or decisions based on what you read here. Do not put down any money with Virgin or SpaceX for a trip to the iCloud Cafe. If any of this stuff is important to you, and I doubt that it is, go to the source. 

Midland Basin Data Points With New Acquisition -- August 16, 2016

Updates

January 10, 2017: update on Permian valuation, Midland, Southern Delaware = $26,000 / acre.

November 18, 2016: largest "continuous" oil discovery ever made in the United States.
Geologists say a new survey shows an oilfield in west Texas dwarfs others found so far in the United States, according to the US Geological Survey.
The Midland Basin of the Wolfcamp Shale area in the Permian Basin is now estimated to have 20 billion barrels of oil and 1.6 billion barrels of natural gas, according to a new assessment by the USGS.
That makes it three times larger than the assessment of the oil in the mammoth Bakken formation in North Dakota. The estimate would make the oilfield, which encompasses the cities of Lubbock and Midland -- 118 miles apart -- the largest "continuous oil" discovery in the United States, according to the USGS. [To put the 20 billion bbls of crude oil in perspective, it is estimated by some that the Bakken has 50 billion bbls of recoverable crude oil by primary production.]
Original Post
 
The Midland Basin is a "component" of the Permian Basin. I will add "Midland Basin" as a separate link at the sidebar at the right, which will link to this page in the future.

[By the way, a 3-part series on the Midland/Permian: http://themilliondollarway.blogspot.com/2014/12/the-permian-geologic-overview-december.html.]

Link here.
Parsley Energy Inc., Austin, has agreed to acquire undeveloped acreage and producing oil and gas properties in Glasscock County, TX, along with associated mineral and overriding royalty interests, for $400 million in cash.

The assets cover 9,140 net acres near existing Parsley leasehold, with estimated current net production of 270 boe/d from 67 gross (60 net) vertical wells.

The acreage features 215 net horizontal drilling locations in the Lower Spraberry, Wolfcamp A, and Wolfcamp B formations, based on 660-ft between-well spacing, with an estimated average lateral length of 7,500 ft. Average working interest from the identified drilling locations is 92%.

Separately, the firm says its first producing horizontal well on its Glasscock County acreage acquired in May has shown encouraging results. The Dwight Gooden 6-7-01AH well, 2.5 miles west of the acreage to be acquired, completed in the Wolfcamp A interval with a 5,890-ft stimulated lateral, registering a peak 30-day initial production rate of 1,161 boe/d, or 197 boe/d/1,000 stimulated ft.

Normalized to 7,000 lateral ft, the well is outperforming the firm’s 1 million boe EUR type curve for Midland basin Wolfcamp A/B wells by 10% after almost 90 days of production, generating 82% oil during that timeframe.
Note:
  • $400 million / 9,140 net acres = $44,000 / mineral acre
  • short laterals
  • 660-foot spacing
  • 82% oil 
  • outperforming the firm's 1 million boe EUR type curve

Norwegian Oil Production Highest In 5 Years; Consumer Prices Unchanged Month-Over-Month; Decline In Fuel Costs, Airlines, Etc., Offset Costs For Medical Care Which Showed Biggest Increase Since February; Chariots On Fire; 32 Active Rigs In North Dakota -- August 16, 2016

Active rigs:


8/16/201608/16/201508/16/201408/16/201308/16/2012
Active Rigs3274194182200

RBN Energy: Marcellus / Utica takeaway capacity to the southeast. The series continues.

Venezuela update. From Reuters / Rigzone:
Venezuela, which holds the world's largest crude reserves, is on track to suffer its steepest annual oil output drop in 14 years as it suffers the effects of an economic crisis and years of under investment and mismanagement, according to data seen by Reuters and interviews with company sources and workers.
The state-run oil company, Petroleos de Venezuela (PDVSA), is struggling to stem a production decline that has accelerated this year as a result of payment delays to suppliers, lack of investment in equipment, and poor planning in the country's vast oil fields.
In the 12 months to June, Venezuela's crude output fell 9 percent to 2.36 million barrels per day (bpd), while the Organization of Petroleum Exploration Countries (OPEC) has boosted its output by 4 percent, according to the group's official figures.
Venezuela's oil minister and PDVSA president, Eulogio Del Pino, last month confirmed a 220,000-barrel-per-day production decline -- around 8 percent -- so far this year compared with 2015.
Norway. July oil production highest level in five years. Why? Because many fields are producing "above prognosis." Oil output was 10% above July, 2015, and about 18% higher than the previous month. Norway produces about 1.7 million bopd, up 300,000 bopd in the past couple of months.


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The Market

Closing: market down 53 points. NYSE --
  • new highs: 86, Enerplus,
  • new lows: 3 (somewhat surprised)
Mid-day trading: Market down 65 points. Chariots on fire: Tesla cooperating with French authorities investigating car fire

Opening. Some profit taking. Market down 40 points.

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Health Costs Surge In July
And 2017 ObamaCare Premiums Are Yet To Be Set
 
US consumer prices unchanged in July as fuel costs ease. In the small print -- which could have been in the headline -- costs for medical care showed biggest increase since February.
It was the first time in five months the consumer-price index failed to advance and followed a 0.2 percent gain in June, Labor Department figures showed Tuesday in Washington. Excluding food and energy, prices rose 0.1 percent, less than projected. 
Inflation continues to tread below the Fed’s goal as U.S. companies remain challenged by frugal consumers and competition from cheaper goods made overseas. With price pressures elusive, central bankers will be less willing to raise borrowing costs.
This has nothing to do with "frugal" consumers. They are tapped out with rent increases, medical expenses and healthcare premiums. And monthly telecom bills.
The biggest slump in hotel room rates in eight years and the largest drop in airline fares since July 2015, offset continued rent increases, which had been propping up core consumer prices. Medical care costs rose 0.5 percent, the biggest gain since February.
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Aetna Pulling Out Of ObamaCare Has Legs

Now, over at USA Today: Aetna's exit deals blow to ObamaCare, patients.
The insurer blamed heavy losses for the move. In doing so, the company suggested that too many sick people are buying plans, not enough healthy people are paying premiums to make up for it and the government isn't making policy changes to fix it.
But the U.S. Department of Health and Human Services says that it has implemented new regulations to make the exchanges more appealing to insurers. For example, HHS says new rules make it more difficult for Americans to abuse the system by buying insurance when they need it and dropping it when they don't, which is illegal and extremely unprofitable for insurers.
"They did respond to some degree," but insurers are "not satisfied" with the moves, said Marianne Udow-Phillips, director of the Center for Healthcare Research & Transformation at the University of Michigan, in an interview.
One more step toward "the public option" (i.e., the USNHS).

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Racial Wealth Divide 

Yahoo!Finance is reporting:
The report finds that over the past 30 years, the average wealth of white families grew by 84%, which is 1.2 times faster than the average rate of growth for Latinos, and three times the rate of growth for blacks. By 2044, when America becomes a majority-minority country, the wealth gap between white families and black families will double.
By 2044, America will be a majority-minority country, meaning that whites will only make up 49.7% of the population. Current minorities like Latinos, African Americans, Native Americans and Asians will soon make up a majority of the American populace.
It will take black families around 228 years, and Latino families 84 years, the report estimates, to achieve the same average wealth white families have today.
What do the experts blame this on? The housing bubble.

I would add that burning down your own neighborhood doesn't exactly help.

I don't know about you, but "the housing bubble" wasn't the first thing I thought of when I saw the headline, racial wealth divide. And when you look at the graph, there is nothing to suggest that the "housing bubble" disproportionately affect non-whites.

Suggested solutions by the author or experts:
  • reforming the tax code
  • appointing a wealth tsar 
I'm thinking, maybe, reparations would work, also.

If you really want to see the "racial wealth divide" widen, ban fracking and watch what happens when Saudi Arabia / OPEC are back in the driver's seat.

Another incredibly superficial article based on a single graph, a single data point.