Tuesday, August 1, 2017

Random Update Of A Monster Well -- An EOG Austin Well In The Parshall -- August 1, 2017

Link here.

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The Monster Mash

The Monster Mash, Bobby "Boris" Pickett

Jump In Production: A Look At One Of QEP's Levang Wells In Blue Buttes -- August 1, 2017

The well:
  • 16652, no IP provided, QEP, Levang 3-22H, Blue Buttes, no test date; cum 239K 5/17; 
Graphic and production profile at this link.

Futures Mean Squat -- But, All The Same ... August 1, 2017

EV sales results for July, 2017, are just coming in. Highlights:
  • Musk Melon reminds folks to keep buying his high-end EVs to "help pay for the Model 3" -- yes, he really did say that, during the delivery of the first batch of 30 Tesla Model 3's)
    • Tesla Model S: dropped from 2,350 deliveries in June, to 1,425 in July (oh, oh)
    • Tesla Model X: dropped from 2,220 deliveries in June, to 1,650 in July (oh, oh)
  • Chevrolet Volt: dropped from 1,745 in June, to 1,518 in July
  • Chevrolet Bolt: a bright spot -- from 1,52 in June, to 1,971 in July
  • Nissan LEAF: another drop -- from 1,506 in June, to 1,283 in July
  • Toyota Prius Prime surged in sales from 1,619 in June to 1,645 in July
  • Bottom line: perhaps one of the most dismal EV sales report in years
But look at this: there were more EVs sold in every month in 2017 compared to the same month in 2016 -- from January to June. But then in July, a decline in sales year-over-year -- granted not all the sales numbers are in yet so it's likely July, 2017, will beat July, 2016, but it's going to be close.We'll check back in a few day when all the numbers are in.

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Futures

Futures mean squat, but it is interesting after two days of the Dow 30 hitting new records, Dow 30 futures tonight are well into the green again. My hunch is that Apple earnings will have a huge effect on the market.

WTI: with Venezuela imploding, the talk on the street was that WTI would spike, due to an impending loss of heavy oil. After extending its gains to slightly over $50, WTI is currently at $48.87. Oh, well. So much for the "Venezuela theory."

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Twenty Years Of Warning

Algore warned us back in 1994 it was going to get really, really hot by now. It then begs the question why Seattle residents did not prepare for the inevitable by simply buying an air conditioner, something that most Americans, even the "poor" in the Deep South, have.

According to The New York Times, Seattle is going through a severe heat wave, and OMG, only a third have air conditioning. And if truth be known, probably only those with "white privilege." The Times says the heat is "blistering" (really) and that "this week will be really dangerous."

I wonder what words The Times would use if one of those North Korean ICBM's hit Seattle? Blistering? Really dangerous?

What bugs me is that we've had more than 20 years of warning and all we've done is send money to a committee in South Korea to dole out to island nations in the South Pacific to shore up against a rising ocean. The tragedy of it all. The senselessness. The tragedy.

Three New Permits; Six Producing Wells (DUCs) Reported At Completed -- August 1, 2017

Active rigs:

$48.818/1/201708/01/201608/01/201508/01/201408/01/2013
Active Rigs603474193178

Three new permits:
  • Operator: Abraxas
  • Field: North Fork (McKenzie)
  • Comments:
One permit renewal:
  • ERF: Wallaby, in McKenzie County
Six producing wells completed:
  • 30870, 342, BR, Saddle Butte 21-16 TFH-2SH, North Fork, t7/17; cum --
  • 30978, 722, EOG, Van Hook 79-15H, Parshall, t6/17; cum 4K after 5 days - -
  • 30979, 604, EOG, Van Hook 78-15H, Parshall, t7/17; cum --
  • 30980, 669, EOG, Van Hook 76-15H, Parshall, t7/17; cum 3K after one month;
  • 30981, 217, EOG, Van Hook 75-1514H, Parshall, t7/17; cum 1K after 30 days;
  • 31979, 2,830, Statoil, Lougheed 2-11 5H, Todd, t6/17; cum --

EOG's, Apple's Earnings -- August 1, 2017 -- EOG Misses; AAPL -- Huge Beat; HAL Hiring

Tesla: breaking news -- Director, Battery Technology, Kurt Kelty has left the company; announcement today; not said when he left company. Timing of announcement interesting. CFO left earlier this year. Last man standing at Tesla: Musk Melon?

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HAL

Announcing job fair August 8 - 9, 2017; Arlington, TX.  Looking for those interested in working in Colorado. Local radio ad -- 3:49 p.m. Tuesday, August 1, 2017.


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EOG

EOG: big miss
  • reported second quarter 2017 net income of $23.1 million, or $0.04 per share (vs estimate of 11 cents); down almost 4% in after-hours;
  • this compares to a second quarter 2016 net loss of $292.6 million, or $0.53 per share
  • adjusted non-GAAP net income for the second quarter 2017 was $46.7 million, or $0.08 per share, compared to an adjusted non-GAAP net loss of $209.7 million, or $0.38 per share, for the same prior year period
From EOG press release, high points for the quarter:
  • exceeds crude oil, NGL and natural gas production targets 
  • delivers per-unit lease and well, transportation and DD&A rates below targets 
  • increases 2017 U.S. crude oil growth forecast to 20 percent from 18 percent 
  • maintains 2017 capital expenditure guidance 
  • reduces first-half 2017 completed well costs by an average of 7 percent
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AAPL

AAPL: up over 6% in after-hours -- huge beat APPL's 52-week high had been 156.65; after-hours as high as $159.23. First $4/share jump after hours was based on the beat; second $5/share after hours was a short squeeze. It will be worse tomorrow.  

After Hours Volume, 17:19:40 p.m. Eastern Time: 10,899,602 shares
    • After Hours High: $159.90
    • After Hours Low: $148.804 
AAPL surges. WSJ. Surges 12% on revived iPad, Mac sales. Reuters story here. Bloomberg's Shira Ovide apparently wrote the story before results were announced. What a doofus .. a "relatively pedestrian 7.2%" jump in Apple's revenue..." LOL. The story was posted at 5:09 p.m. Earnings were released about 4:45 p.m. She couldn't have written this article and gotten it on the Bloomberg site that quickly. Her report is completely wrong. Compare with Reuters story

Analysts forecast:
  • 3Q17 EPS: $1.57
  • 3Q17 revenue: $44.95 billion
  • gross margin: 38.2%
  • iPhone unit sales: 41.1 million
  • iPhone average sales price: $628
  • 4Q17 revenue guidance: $49.12 billion
Earnings:
  • 3Q17 EPS: $1.67
  • 3Q17 revenue: $45.4 billion
  • gross margin: 38.2%
  • iPhone unit sales: 41.0 million
  • iPad units sales: 11.42 million
  • Mac unit sales: 4.292 million
  • iPhone average sales price: n/d
  • 4Q17 revenue guidance: $49 billion $52 billion 
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MDU

Missed by 4 cents.

Press release:
A strong second quarter at its utility and construction services businesses partially offset a slow quarter at its construction materials business caused by weather-related delays and increased competition. 
Second quarter earnings from continuing operations were $43.8 million, or 22 cents per share, compared to second quarter 2016 earnings from continuing operations of $46.1 million, or 24 cents per share. 
Including discontinued operations, MDU Resources reported second quarter earnings of $40.6 million, or 21 cents per share, compared to a loss of $109.3 million, or 56 cents per share, in second quarter 2016. 
 Highlights from the second quarter include:
  • Electric and natural gas utility earns $5.0 million, up fro
  • m $200,000 in second quarter 2016 based on stronger natural gas utility results. Pipeline and midstream results consistent with second quarter 2016, absent results from Pronghorn assets sold in early 2017. Construction services earnings up $5.4 million, a 77 percent increase on 18 percent revenue growth. Construction materials earns $21.2 million. Combined construction backlog approximately $1.4 billion, up 4 percent from second quarter 2016. Company reaffirms earnings guidance range of $1.10 to $1.25.

Slawson's Torpedo Pad -- Van Hook -- August 1, 2017

Updates

August 24, 2018: see update here.

August 23, 2017: one thing native Americans are good at -- refusing to participate in planning meetings ,and then suing -- arguing they were not consulted. See Williston Herald. It gets a bit tedious.

Original Post
   
This is an interesting story on many levels. For me it was a reminder of Slawson's Torpedo pad near New Town, where it will drill ten wells under Lake Sakakawea. From The Bismarck Tribune:
This summer, Slawson is drilling two oil wells to the east of the recreation area, which visitors drive by as they enter the park.
After the company is finished drilling there, anticipated in the coming weeks, the rig will move to the opposite end of the park and remain for about a year as crews drill an additional 10 wells to access oil under Lake Sakakawea, said Eric Sundberg, environmental and regulatory manager.
The larger well site, known as the Torpedo pad, is about 800 feet from Lake Sakakawea and adjacent to a boat launch area, which Ritts said attracts as many as 150 to 200 boats on a busy weekend.
Slawson recently installed a 32-foot sound barrier wall around this site, the first time such a wall has been used in North Dakota, to muffle the noise from drilling and completion work, Sundberg said. The wall will be removed after the wells are completed.
I assume the current well under discussion being drilled is:
  • 29621, drl, Slawson, Lunker Federal 1 SLH, Big Bend, Latitude: 47.949970 Longitude: -102.345548
From the NDIC map:


 
One can go to  Google maps, plug in latitude/longitude and track progress (though Google satellite views will be greatly delayed. When using Google maps, this is how you put lat/long into Google search: 47.949970,  -102.345548.

The Political Page, Part II, T+193 -- August 1, 2017

This is the real reason why the market is hitting all-time highs. Wall Street finally realizes that "we" are still all here -- not wiped out or under water due to global warming, or freezing due to the new Ice Age.

From investorvillage, five global warming prognostications that were somewhat off the mark:
  • New York Times: polar explorer predicts end of ice at the North Pole, 1969
  • Algore: only ten years left to avoid total disaster (2006)
  • New York Times (again): new ice age on the way (1975)
  • UN: entire nations could be wiped off the face of the year (1989)
  • Algore: the final "snows of Kilimanjaro" (2006)
And the list is hardly getting started. 

The Energy And Market Page, Part II, T+193 -- August 1, 2017

Did you all see the problem (posted last night)? Link here. If you missed it, here is is again:





Now we get this headline from Reuters via Rigzone: OPEC oil output jumps to 2017 high on further Libya recovery. Data points:
  • OPEC production, July, 2017: rose by 90,000 bopd (trivial in relation to total global production; but certainly not an OPEC cut)
  • Libya: averaging North Dakota's output -- one million bopd
  • Iraq: this is where the real problem lies -- July production edged higher
  • Saudi Arabia: 50,000 bopd less; again trivial

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Car Sales Weak

Car sales weak. Details to follow. This was predicted some months ago, that auto manufacturers relied too much on fleet sales. Those fleet sales are now coming back to bite us. In early reporting, General Motors, Ford and Fiat Chrysler sales were down 15.4%, 7.5% and 10.5%, respectively.
  • GM: huge crash, both fleet sales and retail sales; 104-day supply much higher than expected (something tells me this is a buyer's market)
Earnings, early morning announcements:
  • Sprint: wow, earnings -- EPS, 5 cents vs a forecast of a loss of one cent. Pre-market: shares down 2.6%.
  • Pfizer: beats by a penny.
  • Under Armour: misses.

The Energy And Market Page, T+193 -- August 1, 2017

Updates

August 3, 2017: the US dollar has plunged on Trump's watch.

Original Post

Dow 30 futures: market could open above 22,000 -- completely uncharted territory. No analysis why the surge -- right now, after a triple-digit jump yesterday in the Dow 30 -- futures now show another triple-digit jump on opening.

What happened? So what happened in the past 12 hours that would lead to this surge?
  • weak dollar
Let's stop there and add two links:
Now that we know more about the DXY, let's post the graphic:



Okay, so where were we? what happened in the past 12 hours that would lead to this surge?
  • the dollar continues to weaken (no sign it will change; debt limit needs to be raised -- soon)
  • another retired general officer joins President Trump's inner circle
  • news that 73% of companies reporting so far in this earnings season have reported "beats" on both top and bottom lines
  • crude oil: cheaper for longer (or as Shell says, "cheaper forever")
  • more reports of overseas investment in the US -- including physical plants, not just financial investments
  • money remains cheap; 10-Treasury bonds dropped below 3%, a floor of sorts

The Political Page, T+193 -- August 1, 2017

First day under new WH Chief of Staff -- no presidential tweets as of 6:36 a.m.

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The Tesla Model 3 Myth

Musk Melon says the Model 3 is for the poor people. Actually, he didn't say that. He said something to the effect that the Model 3 is "mainstream."  For me, "mainstream" is the Chevrolet Bolt, and at $34,000, just barely.

But the guy that knows best, Phil LeBeau, says the Model 3 will compete with the BMW 3 series and the Mercedes C-class sedans. A little secret: neither the BMW (any series) or the Mercedes (any class) is considered "mainstream" in the US. On the way to work today, count the number of BMWs and Mercedes you see on the highway. Then count the number of Honda, Kia, and Toyota sedans. Those are mainstream.

The BMW EV, the Mercedes EV, and the "real" Model 3 all sell in the $44,000 range.

Now we have a "green site" that says the same thing:
A decade ago, Tesla CEO Elon Musk envisioned building an electric car that would be both thrilling to drive and affordable.
Does the Model 3 car that Musk handed off to Tesla’s first 30 customers last Friday meet that description? Almost. But Tesla still has more work to improve affordability.
The basic version of Tesla’s Model 3 car starts off at $35,000 (before incentives), which is the average transaction price of a car in the U.S. today. But the Model 3 can quickly run up into the $50,000 range if a customer adds on a few of the extra features. The fully loaded version will cost $57,000.
If a customer wants a paint color for the Model 3 that isn’t black, that’s an extra $1,000. A version with a longer battery range adds on an extra $9,000. Autopilot technology (Tesla’s self-driving car tech) will cost an extra $5,000 to $8,000, depending the level of sophistication. 
The other news that the "green site" failed to mention: Teslas around the world, and certainly in the US, run on coal.

A contributor over at SeekingAlpha says the same thing: the Tesla Model 3 is not a mass market car. 
The Tesla (TSLA) Model 3 launch on Friday was a big disappointment in Tesla fan circles as can be seen from fan sites such as Elekrek, TMC, and Inside EVs.
Much of the disappointment has to do with Tesla delivering a $50K car and not the $35K as it has been promising for years.
The production ramp and the delivery dates that are now being suggested by Tesla also are also causing considerable heartburn among reservation holders.
None of these and other Model 3 shortcomings should be news to our readers. We have consistently found CEO Elon Musk’s promises on Model 3 pricing and ramp to be not credible. Therefore, it should not be surprising to readers that the Model 3 launch landed with a thud.
On another note, the earnings, revenues, "surprise" history for Tesla over at Market Watch.

On another note, Bloomberg quotes a hedge fund billionaire who suggests Tesla could run out of cash making the Model 3.
“The company is expected to burn over $2 billion this year as it begins production of its Model 3,” Einhorn said Tuesday on a conference call discussing results at Greenlight Capital Re Ltd., the Cayman Islands-based insurer where he oversees investments.
“It’s currently only capitalized for the next three quarters. As Tesla attempts to achieve scale for the Model 3, it will depend on the capital markets’ willingness to fund it.” Tesla, which began production of its more affordable Model 3 in July and handed over the first 30 cars at an event Friday, expanded credit agreements and raised capital through equity and debt offerings ahead of the launch.
Tesla wants to make 500,000 cars in 2018, then a million in 2020. The company produced almost 84,000 vehicles last year.
With equities trading at record levels, Einhorn has endured losses on bets against stocks such as Amazon.com Inc., Athenahealth Inc. and Elon Musk’s Tesla. All have gained at least 30 percent this year.Einhorn did benefit from a bet on the decline of oil exploration company Continental Resources Inc., and his holding of pharmaceutical company Bayer AG. The hedge fund manager lamented that his strategy of favoring value over growth -- while historically a winning formula -- hasn’t worked as well in the recent rally.
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Noes To The Granddaughters

The 2028 Summer Olympics has (have) been awarded to Los Angeles.

Our oldest granddaughter, age 14, played for the Texas Thunder water polo team in the National Junior Olympics held in Huntington Beach, CA, last week. In 2028, she will be 25 years old.

Our middle-aged granddaughter, age 11, plays soccer for FC Dallas. She plays with the twelve-year-olds. In 2028, she will be 22 years old.

Sophia, age 14, will handle the family itinerary.

Assuming I have their correct ages and did the math correctly.

Texas-Mexico Buildout Of Natural Gas Pipeline System -- One Word -- Wow! -- RBN Energy -- August 1, 2017

Active rigs:


$50.158/1/201708/01/201608/01/201508/01/201408/01/2013
Active Rigs613474193178


RBN Energy: Update on Mexico's natural gas pipeline buildout.
The current phase of Mexico’s natural gas pipeline buildout, led by the country’s ComisiĆ³n Federal de Electricidad (CFE), is nearing completion. With 22 new pipelines built or under construction, the effort has dramatically reshaped Mexico’s natural gas supply portfolio.
The capacity of the pipeline network within Mexico has been tripled with the addition of 18 new pipelines, while four new pipelines on the U.S. side of the border will add almost 6 Bcf/d of export capacity by late 2018.
As part of the building spree, CFE also initiated development of two new gas headers to be built in Texas: a 6-Bcf/d header at Waha in West Texas that was recently completed by a consortium of Carso Energy, MasTec, and Energy Transfer and the 5-Bcf/d Nueces Header, now under construction by Enbridge at Agua Dulce in South Texas. Today, we discuss CFE’s Nueces Header and its role in moving more gas south.
Wow.