Monday, December 23, 2019

What A Great Christmas Gift -- RBN Energy Focuses On The Bakken; Fifteen Wells Coming Off The Confidential List -- Christmas Eve, 2019

RBN Energy: how ONEOK's new Elk Creek NGL pipeline makes things better in the Bakken. Archived.
Much as production growth in the Permian required the development of new pipeline capacity to take away crude oil, natural gas and NGLs, increasing activity in the Williston Basin has spurred the need for incremental capacity to move all three of the energy commodities out of western North Dakota and eastern Montana.
For NGLs, the recent start-up of ONEOK’s Elk Creek Pipeline has been the answer to producers’ prayers — not just in the Williston Basin (home of the Bakken formation), but also in the Rockies’ Powder River and the Denver-Julesburg (D-J) basins, through which the new, 240-Mb/d pipeline passes on its way to Bushton, KS.
Elk Creek’s timing couldn’t have been better: it came online just as a number of new gas processing plants entered commercial service in the Williston Basin, and just in advance of possible BTU restrictions on the all-important Northern Border gas pipeline that may force cutbacks in ethane rejection. Today, we explain why the Elk Creek NGL Pipeline helps resolve a number of challenges Bakken producers have been facing.
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The Bakken: Active Rigs And Wells Coming Off Confidential List

Active rigs:

$60.7212/24/201912/24/201812/24/201712/24/201612/24/2015
Active Rigs5669534162


Wells coming off the confidential list, Tuesday, December 24, 2019:


Tuesday, December 24, 2019: 76 for the month; 281 for the quarter:
  • 35903, conf, Slawson, Orca Federal 1 SLH,
  • 35570, conf, Whiting, Anderson 11-7-2TFH
  • 35569, conf, Whiting, Anderson 11-2H, 
  • 35120, conf, Oasis, Nordeng 5298 13-25 9T
  • 34837, conf, Enerplus, Homer 149-93-33D-28H-TF,
  • 34774, conf, Enerplus, Ancho 148-94-11C-2H, 
Monday, December 23, 2019: 70 for the month; 275 for the quarter:
  • 36524, conf, Slawson, Challenger Federal 9-29-32H, 
  • 36173, conf, XTO, Lavern 42X-14H,
  • 35902, conf, Slawson, Tempest Federal 1 SLH,
Sunday, December 22, 2019: 67 for the month; 272 for the quarter:
  • 36172, conf, XTO, Lavern 42X-14CXD, 
  • 34838, conf, Enerplus, Hera 149-93-33D-28H,
  • 30178, conf, Slawson, Diamondback 1 SLH, 
Saturday, December 21, 2019: 64 for the month; 269 for the quarter:
  • 36171, conf, XTO, Lavern 42X-14BXC, 
  • 35901, conf, Slawson, Slasher Federal 722-27 MLH, 
  • 34746, conf, Oasis, Nordeng 5298 13-25 8B,

Recession Is Just Around The Corner -- December 23, 2019

Link here, Bloomberg / MSN.
Holiday shopping set records over the weekend, with Super Saturday sales reaching $34.4 billion, the biggest single day in U.S. retail history.
“Paced by the ‘Big Four’ mega-retailers -- Walmart, Amazon, Costco and Target -- Super Saturday was boosted by the best traffic our team has seen in year."

In response:
  • Buttigieg: change course!
  • Sanders: resist!
  • Pocahontas: wine, anyone?
  • Biden: what just happened?
Magic Moments, Perry Como

Notes From All Over, Part 2 -- December 23, 2019 -- String Of Market Records The Best In 21 Years

I missed the specifics but apparently the stock market records, after the three major indices hit all-time records again today, are the best in 21 years.

Unemployment rate at the lowest in 50 years.

And so it goes.

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

North Dakota Active Rig Count Up One; Now Back Above 55; MRO With Five New Permits -- December 23, 2019

Active rigs:

$60.6312/23/201912/23/201812/23/201712/23/201612/23/2015
Active Rigs5669534165

Five new permits today, #37282 - #37286, inclusive --
  • Operator: MRO
  • Field: Antelope (McKenzie)
  • Comments:
    • MRO has permits for a five well pad in section 15-151-94, Antelope oil field -- Dragswolf USA, Marion USE, Mandan USA, Jacobson USA, and Strand USA permits;
Seven permits renewed:
  • Enerplus (3): a Pintail, a Scaup, and a Widgeon permit, all in Dunn County
  • CLR (2): two Salem permits, both in Williams County
  • Equinor (2): two Olson permits in Williams County
One permit canceled: a White Butte Oil Operations Jore Federal permit in McKenzie County;

Legacy Fund Link

From the Legacy Fund folks:
The investment of the Legacy Fund is under the purview of the Retirement and Investment Office.  To view monthly financial statements for the fund, please visit RIO's website.
Note the website.

The Chinese Blinked -- December 23, 2019

Blinked: Chinese announce they will cut tariffs on 850 line items. Huge. This is huge. Will hardly be reported by the mainstream press.

Spike: AAPL jumped $5/share on news that China blinked. 

Spike: Cincinnati Bell (CBB) up 35%; to be acquired by a Toronto firm for $2.6 billion.
From wiki: In 2011, Cincinnati Bell became the first telecommunications company to also provide retail energy service. Through a partnership with Viridian Energy, Cincinnati Bell Energy competes with several other alternative electricity retailers for the power generation portion of customers' electricity bills. The subsidiary advertises that its service is entirely sourced from National Wind.
Spike: Apache Corp: up 16%; announces 50-50 joint venture with France's Total, offshore Suriname, northeastern South America. Pays 4.4%.

Spike: Boeing up about $10; up about 3%. CEO sacked. New CEO.

Spike: ITCI, up almost 200%. FDA approves new psycho-med. Trading at $37, up $24 today. And that's why I park my discretionary cash into these little pharmaceutical companies. No, I don't hold any ITCI.

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

January effect: a rise in stocks in early January that were sold in December for "tax loss." I am eager for January 15th to come around. I sold some "stuff" in early December for the tax loss but eager to buy it back. Need to wait 30 days. 

XTO's Lavern Wells In Capa Oil Field

This graphic tells me there is a lot of work left to be done in the Bakken, look at all that "white space":


The wells:
  • 36173, conf, XTO, Lavern 42X-14H, Capa,
  • 36172, conf, XTO, Lavern 42X-14CXD, Capa,
  • 36171, conf, XTO, Lavern 42X-14BXC, Capa,
  • 36170, drl, XTO, Lavern 42X-14AXB, Capa,
  • 36169, drl, XTO, Lavern 42X-14EXF, Capa,
  • 36168, drl, XTO, Lavern 42X-14AXD, Capa,

Notes From All Over, Part 1 -- Dow At 29,000? -- December 23, 2019

Markets: S&P 500 and the NASDAQ both hit all-time highs. Dow on track for third straight record high.

Dow crosses 29,000 threshold? Dow at 28,572 (12:06 p.m. CT, December 23, 2019). They say Boeing  took 641 points off the Dow. Add 641 to the Dow right now, 28570 and the Dow would be at 29,211 (possibly better, for obvious reasons).

Recession is right around the corner: 32% of fund managers say recession is not unlikely in 2020.

If the shirt fits, wear it. The shirt comes in six sizes, or thereabouts.


Taxes: when it comes to taxes, the US is the most progressive country in the world (at least among the countries Fee examined).

Funniest think I've seen in a long time:

 

Overhaul Of The American Retirement System -- 2019

I track this 2019 retirement overhaul at this post. The WSJ devoted a fair amount of space to the changes. Three of the changes that caught my eye:
Q: I turned 70½ in 2019 and am scheduled to take my first required distribution from my retirement account by April 1, 2020. Can I take advantage of the law’s increase in the age for starting required distributions to 72? A: No. Only account owners who turn 70½ after Dec. 31, 2019, can start mandatory distributions at 72 years old.

Q: The new law makes it easier for employers to offer annuities in 401(k)s. But annuities often have high fees. Should I avoid them? A: It depends.

Q: Who will be affected by the law’s repeal of the age cap, currently 70½, for making contributions to a traditional IRA? A: The growing number of Americans age 70½ or older with wages, commissions, self-employment earnings or other forms of income will be helped. Nearly 20% of 70- to 74-year-olds are working today, up from 11% in 1992, according to the Bureau of Labor Statistics.
Note that in my first note on this subject, I specifically brought up insurance companies as the big winner with the new retirement tax laws. The fact that annuities were brought up by The WSJ in this short article of "what you need to know" corroborated that I was very, very correct.

Kiplinger provided an example; this was published prior to the new law being passed, but it's probably fairly close to the final bill. Here's the example Kiplinger provided, spend some time studying this graphic, it's quite interesting, my comments below the graphic:


During the transition, during the next couple of years, if folks take advantage of a later withdrawal, the government will -- all things being equal -- take in less taxes from IRA withdrawals.

But within five years -- again, all things being equal -- it appears:
  • the government will take in more taxes from IRA withdrawals (because the withdrawals will be larger, for example, $25,809 vs $23,929 at age 75);
  • the individual will have a greater year-end balance, for example, $606,373 vs $562,196 at age 85.
At age 80, that discrepancy is even greater (albeit not by much), $622,572 vs $577,215.

Under the old rules, $500,000 grows to $562,196 at age 85, a 12.4% gain.

Under the new rules, $500,000 grows to $606,373 at age 85, a 21.3% gain.

Wow.

So, some bottom line takeaways regarding IRAs and the original owner:
  • understanding the aging of America, that Americans are living longer, the legislators wanted to ensure that seniors would have more money, not less money at age 85;
  • understanding that the government may take in less money during the transition (over the next 18 months), in the long run (starting in just a couple of years) the government would take in more money from IRA withdrawals (albeit an incredibly small amount in the big scheme of things;
With regard to IRAs being inherited, and the 10-year payout:
  • the government will bring in slightly more revenue, but it's such a small amount that this could not have been the impetus to change that part of the law;
  • powerful lobbyists convinced legislators IRAs were not meant to be estate-planning vehicles; that may or may not have been a hard sell; but this is where the reasoning came in:
    • expediting the payout to 10 years by the inheriting beneficiaries, could push upwards of one trillion dollars into the American economy (I'm still waiting for some economist to do this calculation; until I hear differently, I will use the "one-trillion-dollar" figure)
  • But still, if one is watching out for numero uno, i.e., the individual legislator being asked to vote on the bill, putting more money into the economy would not have sold the bill. So, here's the compromise the lobbyists (the insurance companies) offered:
    • expedite the payout required by the inheriting beneficiaries (bad news) but increase the amount of money that the average retiree will have in her IRA at age 85 (good news)

Notes From All Over, Part 1 -- December 23, 2019

Boeing: stock surges; CEO resigns; 737 MAX debacle and then the Boeing Starliner fails to reach correct orbit, due to inaccurate setting of a clock; Starliner will be the shuttle between Florida and the International Space Station;

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

Quick, fill in the blank: " ______________________ (the country) has the world's strongest manufacturing sector, based on indexes of manufacturing activity.  Link here -- WSJ, December 22, 2019. A free one-year subscription to "themilliondollarway" to the first three readers who get the answer correct without going to the link.
This country is reporting the highest manufacturing performance of all countries tracked by data firm IHS Markit. See chart at the link. This country is ranked #1, followed by Colombia, Brazil, Myanmar, and then the United States, #5. Rounding out the top ten: China, France, Canada, Philippines, and India. Germany is at the bottom of the list, #29 of 30, behind Russia at #28. Japan is #20. Quite an interesting list. Countries ranked #19 and above are expanding; those below are contracting (Japan, UK, Indonesia, Mexico, and most of western Europe). 
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The Book Page

The book the last couple of weeks, The Vikings: A History, Robert Ferguson. I had read it before; this was the second reading, and I'll probably read it again before the end of 2020. A great book.

This week I'm going to re-read Barnet Schecter's The Battle For New York: The City at the Heart of the American Revolution, c. 2002. Notes from my first reading are here. I read it to get a better feeling of the geography -- particularly the waterways -- of the New York / New Jersey area.

Last night for some reason I was looking at the map of the Chesapeake Bay / Delaware Bay area. We lived for several years in Hampton Roads. One of my many regrets: I never really explored this area as much as I wish I had. It was hard to explore on land; too built up. The best way to explore the area would be by boat, I assume. But I was never a sailor. LOL.

Interestingly, I will be getting a book for Christmas, The Anarchy: The East India Company, William Dalrymple, c. 2019, which coincidentally will add a small bit of the backstory to the "tea party" and the beginning of the Revolutionary War.

December 23, 2019 -- Pretty Much Down To The Last 36 Hours Of Shopping -- Nine Wells Coming Off The Confidential List -- RIg Count Back Up To 55

Peak demand? What peak demand? In 2018, the US consumed more energy than ever before.




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Back to the Bakken

Active rigs:

$60.4212/23/201912/23/201812/23/201712/23/201612/23/2015
Active Rigs5569534165

Wells coming off the confidential list today --

Monday, December 23, 2019: 70 for the month; 275 for the quarter:
36524, conf, Slawson, Challenger Federal 9-29-32H, 
36173, conf, XTO, Lavern 42X-14H,
35902, conf, Slawson, Tempest Federal 1 SLH, 

Sunday, December 22, 2019: 67 for the month; 272 for the quarter:
36172, conf, XTO, Lavern 42X-14CXD, 
34838, conf, Enerplus, Hera 149-93-33D-28H,
30178, conf, Slawson, Diamondback 1 SLH, 

Saturday, December 21, 2019: 64 for the month; 269 for the quarter:
36171, conf, XTO, Lavern 42X-14BXC, 
35901, conf, Slawson, Slasher Federal 722-27 MLH, 
34746, conf, Oasis, Nordeng 5298 13-25 8B,

RBN Energy: crude oil pipeline rate compression from the Permian and Cushing to the coast, part 2.
The battle for pipeline supremacy in the Permian is really heating up. From Cactus II, to EPIC, to Gray Oak, to a bevy of upcoming expansions and a couple of longer-term behemoth greenfield projects, there are multiple new takeaway options for Permian producers. But could it all be coming online at the wrong time? If there’s one thing we’ve learned from third-quarter earnings calls and recent conversations with producers, it’s that balance-sheet management and fiscal conservativism are top of mind right now. As a result, drilling plans and production growth expectations have been tamped down considerably for 2020 and beyond. Midstreamers and pipeline companies in the Permian are responding quickly. Tariffs are being slashed, margins are getting cut, and competition for West Texas barrels is fierce. Today, we look at recent developments and what they’ll mean for revenues and market differentials heading into the New Year.
Several Permian-focused exploration and production (E&P) companies' stocks took a hit after third-quarter investor calls revealed their previous production targets had been missed, or that upcoming goals would be lowered. While Permian wells are still highly productive, producers there are being pressured by Wall Street to focus less on absolute productivity, and more on profitability and financial sustainability. As a result, in their earnings calls, many producers announced lower capital budgets for 2020 and scaled-back drilling plans. Further, productivity improvements are having less of an impact than they did a couple of years ago when the basin was ramping up, meaning that lower producer activity will not be offset as much by increasing well results. The cumulative effect of initial decline rates on all of the recently drilled wells in the Permian is huge, so you need to keep completing more and more wells to keep production numbers increasing. The production treadmill that E&Ps are on is getting faster as the proportion of new wells (experiencing typically much higher decline rates) to legacy wells (whose decline rates have leveled off) has increased, and producers are having a harder time staying on it while keeping their investors happy.