Wednesday, September 19, 2018

The Sky Is Falling, The Sky Is Falling -- Oh, Never Mind -- September 19, 2018

Countless contributors over at SeekingAlpha have highlighted all the debt global energy companies are accumulating. Those paying attention to the story are probably watching a different movie, especially if they have been reading corporate presentations.

Oilprice is reporting "oil companies slash debt to pre-crash levels." Data points:
  • global energy companies reduced their debt for seven consecutive quarters, through 2Q18
  • the energy companies have cut their long-term debt-to-equity ratio to the lowest ratio since 3Q14
  • data source: the EIA
  • free cash flow: $119 billion for the four quarters ending June 30, 2018
  • this was the largest sum in the 2013 to 2018 period
  • in addition, cash from operations was $118 billion, up by 27% compared to 2Q17 -- just one year earlier
  • free cash flow increased even as CAPEX increased year-on-year by $70 billion
  • the return on equity (ROE) was the highest since 3Q14

Wow, What A Bunch Of Crap -- September 19, 2018

CNBC posted a story earlier today reporting that Amazon plans as many as 3,000 cashierless stores by 2021. 

The story suggests that even though Amazon plans this, the likelihood of this happening is pretty remote. But regardless, CNBC presses on. A direct quote from the article:
Shares of retailers including CVS, Walgreens, Walmart, Target and Kroger moved sharply lower Wednesday afternoon following the report.
At the bottom of the article, CNBC posted the share prices of Kroger, Target, Walmart, CVS, Walgreens, and Amazon. Because I have holdings in one, two, some, many, all of the companies listed I was greatly concerned -- whether Sophia gets new shoes or not -- reading that "shares of these retailers moved sharply lower following the report."

See the table below -- this is a screenshot of the graphic posted by CNBC in the same article.

Note that two of the five (other than Amazon) actually increased in share price (CVS and Walgreens). Walmart, a $100-share company, lost 19 cents (sharply lower?). Target tanked well below $60 not long ago and is now trading near $90, despite a "sharply lower" price today -- a loss of 52 cents, again, on a $90-share stock.

This is incredibly embarrassing, one would think. It is certainly tedious.

Here's the chart.
Whether a 1.4% drop for KR is sharply lower or not is in the eye of the beholder. But after hours, based on criteria set by CNBC, Kroger was sharply higher:


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Trade War: More Crappy News Reporting

Here are the three cars that Americans might not be able to purchase if the trade war with China escalates, at least according to CNBC:
  • the Buick Envision
  • the Cadillac CT6 Plug-In (note: the article says the import was canceled earlier this year, and has nothing to do with tariffs or trade wars)
  • the Volvo S90: it turns out the company will manufacture the Volvo S90 in Sweden so it can still be shipped to the US
And actually, the article simply says these three makes/models are "most at risk." It doesn't say it's going to happen, and as noted, two of the three are .... well ... not even in the mix.

EOG Has Fracked Three More Parshall Wells -- September 18, 2018

Note: after posting this note, a reader noted that EOG has three more wells on confidential status soon to be fracked one mile to the southwest of the recently fracked EOG wells mentioned in this post; they will be followed at this post

The graphic: Eight wells in this graphic were recently taken offline and remain offline (although one may be coming back on-line). Remember, the data in the NDIC data base lags by about two months what is going on in the field. For newbies, in addition to everything else, look at the "chronologic" numbers in the legal names of these wells. The three wells still confidential were recently fracked. In the graphic below, every producing well that has a permit number in red next to it has been taken offline while three EOG wells were being fracked. I count eight wells, each of which were taken offline for a minimum of three months or thereabouts while new wells were being fracked:


The three wells recently fracked:
  • 33019, conf, EOG, Fertile 85-0701H, Parshall, API -- 33-061-03983; fracked 6/20/2018 - 7/9/2018; 8.4 million gallons of water; 82% water by mass;
  • 33020, conf, EOG, Fertile 84-0701H, Parshall, API -- 33-061-03984; fracked 6/20/2018 - 7/16/2018; 9.7 million gallons of water; 82% water by mass;
  • 33021, conf, EOG, Fertile 86-0701H, Parshall, API -- 33-061-03985; fracked 6/20/2018 - 7/14/2018; 9.9 million gallons of water, 82% water by mass;
These wells are all offline:
  • 18884, 625, EOG, Liberty 23-12H, t9/10; cum 203K 3/18;
  • 18066, 515, EOG, Liberty 101-12H, t9/10; cum 116K 6/18;
  • 20991, 1,053, EOG, Fertile 47-0712H, t7/12; cum 289K 4/18;
  • 18057, 1,654, EOG, Fertile 37-07H, t5/10; cum 331K 3/18;
Most surprising, these wells are also offline:
  • 22921, 60 (no typo), EOG, Liberty 106-0107H, t5/13; cum 507K 6/18;
  • 21406, 1,355, EOG, Liberty 25-0107H, t4/13; cum 402K 5/18;
  • 19122, 170, EOG, Liberty 102-01H, t11/10; cum 70K 3/17;
This well was recently offline but shows one day of production in 7/18:
  • 18365, 1,379, EOG, Liberty 8-01H, t7/10; cum 334K 4/18;
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Too Many Rivers

Too Many Rivers

WTI Spikes Above $71 On News Of US Crude Oil Drawdown; Increased Gasoline Demand -- September 19, 2018

Really? ultra light Texas oil could replace Iran's sales to Asia.  This is interesting. I was thinking crude oil. The headline didn't make sense but the story is interesting. Oilprice is suggesting ultra-light condensate, not crude oil, for Asia's expanding petrochemical capacity.

WTI: spikes above $71 today. US crude oil draw reported; gasoline demand improves.

Active rigs:

$71.449/19/201809/19/201709/19/201609/19/201509/19/2014
Active Rigs66553267196

Ten new permits:
  • Operators: QEP (8); WPX, Hess
  • Fields: Van Hook, Mountrail), Squaw Creek (McKenzie), Blue Buttes (McKenzie)
  • Comments: QEP has permits for an 8-well MHA pad in NENE 28-150-92;
Thirteen permits renewed:
  • Petro Harvester (6): five FLX3 permits in Burke County; one Tafelmeyer permit in Burke Cunty
  • MRO (3): an Erbe permit, an Archie permit; and, an Arnew permit, all in Dunn County
  • EOG (2): two Austin permits in Mountrail County
  • Oasis: a Jensen permit in Williams County
  • Murex: an EMU permit in Renville County 
Two producing wells (DUCs) reported as completed:
  • 33993, 1,424, Hess, BB-Burk-151-95-1807H-9, Blue Buttes, t9/18; cum --
  • 33992, 1,721, Hess, BB-Burk-LE-151-95-1807H-1, Blue Buttes, t9/18; cum --
    • wells of interest, running in opposite direction
      • 17060, IA -- taken offline as of 6/18;
      • 23499, IA -- taken offline as of 6/18;
      • 23500, IA -- taken offline as of 6/18;
      • 23501, farther west; not taken offline, no change in production;
      • 23502, farther west; not taken offline, no change in production;
      • 18218, to the east; struggling

WTI Spkes; Bakken Bellwether Operators Climb -- September 19, 2018

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on anything you read here or think you may have read here.

Weekly petroleum report:
  • oil price called the crude oil build yesterday, a massive build / a mammoth build which resulted in the price of oil ... drum roll ... staying flat -- see below
EIA data today?
  • a massive drawdown of crude oil inventories: dropped 2.1 million bbls -- on this news? WTI spikes to $71.44 -- Bakken bellwether stocks -- NOG up 0.85% and OAS up 1.7%
  • US crude oil inventories now well below the 400-million-bbl threshold, at 394.1 million bbls
  • US crude oil inventories now about 3% below the five-year average for this time of year
  • refineries are only operating at 95.4% of their capacity -- think about those two data points
  • gasoline production and distillate fuel production changes unremarkable
  • the remarkable data point regarding refined product produced? jet fuel produced was up 5% compared to same four-week period last year
  • gasoline inventories decreased by 1.7 million bbls 
But, wow, look at this, gasoline demand, nice but I can't explain it:


Re-posting: API data and comments from yesterday's data --
API weekly crude oil inventories. We'll start with two movies.
  • the movie I saw
  • price of oil did not move yesterday after the data was released
  • the gasoline "story" is driving the price of oil; not Libya, not Venezuela, not Iran; not China trade war
  • US crude oil inventories unexpectedly grew by 1.25 million bbls
    • the build was a yawner: up 1 million bbls following a week when there was an unprecedented (?) draw of over 8 million bbls
  • gasoline inventories decreased by 1.5 million bbls vs an expected draw of 104,000 bbls
  • headline: "oil prices up despite massive crude oil build"
  • US crude oil inventories: "mammoth build of 1.25 million bbls"
  • analyst (singular) expectations: a draw of 2.741 million bbls (2,741,000 bbls -- that false precision is stunning - estimated to the nearest thousand bbls -- wow; now I know we're counting the number of angels dancing on the head of a pin)
  • gasoline inventories: a draw of 1.485 million bbls (again, the false precision); vs analysts (plural) prediction of a small draw of 104,000 bbls
  • 1.485 is greater than 1.25 so if "1.25 million is mammoth", then "1.485 must be humongous"
  • "oil prices were up in afternoon trade by around 1/2% compared to last week's prices"
  • the writer did not note that comparing the price of oil immediately before and after the API data was released: no change
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The Dictionary Page

Metonym: one of my favorite words.

I don't recall when I first used that word.

I don't recall if I've ever seen the word "in the wild." Until today.

From buzzfeednews:
In the essay, Ghomeshi wrote about his name becoming a "metonym for everything from male privilege to the need for due process" and about being shamed and humiliated in the wake of the sexual assault allegations against him.

The Market, Energy, And Political Page, T+37 -- September 19, 2018

The Dow at its highest level since ... January, 2018. 

The market: Wow, I didn't see this coming! The Dow (irrelevant) was up as much as 250 points yesterday despite:
  • Trump signing an order to increase tariffs on Chinese goods
  • the 10-year bond breaking through the 3% ceiling -- now yielding 3.04%
And, today, the Dow (irrelevant) extends yesterday's gain by another 125 points in early morning trading.

What is the S&P 500 doing -- having just broken through 2,900 yesterday? The S&P 500 is up 4 points.

WTI: up 0.43%. Whoo-hoo!

Later: the market is now up points (10:09 a.m. CDT), on top of 185 points yesterday and the topic for the day over at CNBC: the China trade war escalates. Yawn.

Two most hated commercials: not only are they irritating, but they are practically the only ads on NBC these days.
  • Spectrum
  • TD Ameritrade
Actually, there is a third: Stephanie Kammerman

A Reader Connects The Dots: Bakken Ethane, Calgary, And Dubai -- September 19, 2018

Ethane: from a reader --
The last couple days you, along with RBN  have been discussing the issues associated with ethane production.

Here is a link to a June 2014 OGJ article announcing Nova Chemicals of Calgary, Alberta began processing the first barrels of Bakken ethane at their Joffre chemical complex near Red Deer.

After completing an upgrade to their Tioga NG processing plant in spring 2014, Hess began dropping ethane from the NGL's and shipping it in the 432-mile Vantage pipeline to Empress, Alberta where it was taken into the Alberta Ethane Gathering System for transportation to Joffre.

Nova uses the ethane as feedstock for their ethylene and polyethylene production.  Nova currently has three ethylene and two polyethylene facilities at its Joffre complex.

Now, note this: Nova Chemicals is a wholly owned subsidiary of International Petroleum Investment Company of Abu Dahbi, United Arab Emirates.

So what we have here is that Hess is in the fifth year of a ten year deal to supply Bakken ethane to UAE interests -- and it has kind of flown under the radar.

The Bakken never ceases to amaze!
With regard to the Bakken: so much is off the radar scope. A huge "thank you" for the update. The Bakken simply never quits.


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Bond yield: CNBC continues to talk the market down -- one day after a huge day on the market. I wrote this yesterday:

Market: while CNBC continues to talk the market down, no one has mentioned this. All things being equal, a rising bond market is deleterious for the stock market. For the past year, talking heads have set the 10-year bond as the metric to watch. The threshold was seen as 3% by most talking heads. As long as the10-year bond stayed below a 3% yield, the stock market would/should/could go higher; but if the 10-year bond yield went over 3% then one would expect the market to fall. So, what happened today? The 10-year bond yield is ... drum roll ... 3.04% at the very moment the Dow is flirting with an all-time intra-day high ... currently up an incredible 250 points.

Now, just moments ago, CNBC's market guru, Art Cashin -- CNBC's answer to Louis Rukeyser -- when asked about the bond market, when would be be worried. For the past year, the "worry" was set at a yield of 3.0% for the 10-year bond. Well, we hit 3.04% yesterday and the Dow (irrelevant) went up 250 points, to close up 180 point at the end of the day. So, how did Art Cashin answer the question, when the 10-year bond yield would worry him? His answer: 3.5%. LOL. At least they're reading the blog.

Trade wars? What trade wars: Asian markets were huge yesterday. The Shanghai put together two "one-percent" days. I think I heard them say the Japanese market -- FWIW -- hit a six-year high yesterday.

S&P 500: went over 2,900 yesterday. That's pretty amazing.

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Three-K, Free-K, and Pre-K

After showing this to my wife, she noted that I was the one who was wrong. I mis-heard Sophia. Sophia was talking about pre-K. Wow, I certainly hope I didn't mess up Sophia too much. I'll go over this with her tonight and make sure she understands it was pre-K, not "free-K."

I guess their civics lesson today was "not to talk about guns."


Slow Days In The Oil Patch -- September 19, 2018

Methane rules relaxed: finalized by Trump

API weekly crude oil inventories. We'll start with two movies.
  • the movie I saw
  • price of oil did not move yesterday after the data was released
  • the gasoline "story" is driving the price of oil; not Libya, not Venezuela, not Iran; not China trade war
  • US crude oil inventories unexpectedly increased by 1.25 million bbls
    • the build was a yawner: up 1 million bbls following a week when there was an unprecedented (?) draw of over 8 million bbls
  • gasoline inventories decreased by 1.5 million bbls vs an expected draw of 104,000 bbls
  • headline: "oil prices up despite massive crude oil build"
  • US crude oil inventories: "mammoth build of 1.25 million bbls"
  • analyst (singular) expectations: a draw of 2.741 million bbls (2,741,000 bbls -- that false precision is stunning - estimated to the nearest thousand bbls -- wow; now I know we're counting the number of angels dancing on the head of a pin)
  • gasoline inventories: a draw of 1.485 million bbls (again, the false precision); vs analysts (plural) prediction of a small draw of 104,000 bbls
  • 1.485 is greater than 1.25 so if "1.25 million is mammoth", then "1.485 must be humongous"
  • "oil prices were up in afternoon trade by around 1/2% compared to last week's prices"
  • the writer did not note that comparing the price of oil immediately before and after the API data was released: no change
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Back to the Bakken 
Where Exuberant Optimism Replaces False Precision 

Wells coming off the confidential list today -- Wednesday, September 19, 2018
  • 34561, SI/NC, Abraxas, Ravin 11H, North Fork, no production data, 
  • 34459, drl, Eagle Operating, Miller 2-29, Wildcat, no production data,
  • 31772, SI/NC, BR, Ivan 7-1-29MBH, Elidah,  no production data, 
  • 29711, 1,625, CLR, Cuskelly 4-7H1, Rattlesnake Point, 62 stages; 12.2 million lbs, a nice well; the Cuskelly wells are tracked here; t6/18; cum 43K after 43 days;
Active rigs:

$69.539/19/201809/19/201709/19/201609/19/201509/19/2014
Active Rigs66553267196

RBN Energy: Hurricane Harvey and the importance of Gulf Coast refined product infrastructure.
It’s been more than a year since Hurricane Harvey dumped 50 inches of rain on Houston and its environs, but memories from those fateful days remain remarkably fresh. Harvey is not only unforgettable, it put a spotlight on just how important Texas refineries — and the refined-products pipeline infrastructure connected to them — are to the rest of the U.S.
For several days, more than half of the Gulf Coast’s refining capacity was offline. Major pipelines transporting gasoline, diesel and jet fuel to the East Coast and the Midwest shut down too. But how do Harvey’s impacts on refining and refined products markets compare with the effects of other major hurricanes this century? Today, we conclude our series on Gulf Coast refining and pipeline infrastructure, and how a natural disaster along the coast can impact the rest of the country.
When one refinery along the U.S. Gulf Coast goes offline, as each does occasionally during a maintenance “turnaround,” the outage typically follows months of planning and supply-chain or storage adjustments designed to ensure supply agreements can be met and disruptions to fuel availability is averted. If the turnaround takes longer than expected, other refineries with processing availability can pick up the slack until the outage is over or imports increase. However, when large swaths of the refining infrastructure shut down in a short time as a result of a hurricane, the impacts can be far-reaching since stock levels may not be sufficient to offset the extended outage. Hurricane Harvey, which hit the epicenter of the Gulf Coast refining sector, serves as a prime example.
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Notes to the Granddaughters

Your mom is a doctor!


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The Book Page

From Sea of Dangers: Captain Cook and His Rivals in the South Pacific, Geoffrey Blainey, c. 2009. From page 291:
Another of our biases has to be recognized. In tracing the major discoveries in the southwest Pacific, we give too much weight to the finding of lands and not enough to the finding of narrow seas. The discovery of such vital shortcuts as Torres Strait (1606), Cook Strait (1770), and Bass Strait (1798) enhanced the value of the land discoveries.

Likewise, to detect a prevailing wind could be as important as discovering a land. The Dutch discovery of the power of the westerly winds in the middle latitudes of the Indian Ocean actually led them to the west coast of Australia as well as opening of the fastest sea route from Cape Town to Java.

The discovery by de Surville of the value of the westerly winds and the west-east route in the South Pacific was also crucial. 
Discovery:
Subsequent political events help determine who should be given the title of discoverer. The continent of Australia in 1901 became the territory of just one nation; but if a different course of events in Europe had divided Australia permanently into three separate nations, each nation might now be giving credit to a different discoverer -- names the navigator who found that particular part of the distinct nation. So the nation of Northern Australia might recognize a Dutch discoverer, and the nation of New South Wales might recognize Cook as its discoverer.
30-second elevator speech, regarding the European "discovery" of Australia: the Dutch have bragging rights but were unable to capitalize on what they found because they were already over-extended. The Dutch can be given credit for "discovering" the northwest coast of Australia. It follows that there had to be an eastern coast, and that was the coast Lieutenant Cook mapped and studied extensively. As important were his mapping of New Zealand, Tasmania, and the Great Barrier Reef.