Thursday, February 27, 2020

Coronavirus Update -- February 27, 2020

This was not a good day for those anxious about coronavirus. The four most important indicators did not improve, but again, the number of deaths are so small, it doesn't take many to skew the results.
  • growth factor turned up (bad, really bad news)
  • total deaths, change in total, still really, really low but went from 1% to 2% change, day-over-day (bad news)
  • change in number of daily deaths, day-over-day, went from 37 to 58 which is not particularly bad, considering that almost all of them were in China, this still represented a 57% increase -- really, really bad
  • the good news (few new deaths in countries outside of China) but that was offset by news of huge numbers of people now "of interest," as they say, in places like California and New York state
The statistics are linked at the link at the top of the sidebar at the right.

Idle Rambling; Not Ready For Prime Time -- All Politics -- February 27, 2020

When it comes to politics, the three polls I trust the least:
  • Fox News
  • The Economist
  • CNN
The other pollsters I don't trust much either, but those three have the least credibility with me.


Perhpas Quinnipiac is one of the better ones.

But this is very, very interesting.

The Economist is about as liberal one can get; Fox News is about as conservative as one can get.

But in the national 2020 Democrat presidential race, Fox News and the Economist are showing almost identical results:
  • Bernie: 30% (Economist); 31% (Fox News)
  • Biden: 18% (Economist); 20% (Fox News)
The Hill is similar: 28% for Bernie; 17% for Biden.

The other polls are showing the same thing.

Again, this is national so may not mean a thing with regard to delegates. Hillary (and others in the past) have won the popular vote but not the presidency.)

Good, bad, indifferent, those numbers do not excite me one way or the other. This is what caught my attention: since January, Bernie Sanders has jumped 8 points (31%) while Joe Biden has dropped 8 points (18%).


That's a huge shift.

On top of that, people like Nancy Pelosi are publicly warming up to Bernie Sanders. 

South Carolina: it looks like Biden could have a huge win. He would be doing even better if Tom Steyer and Buttigieg weren't taking votes from him. Everything suggests that Bernie will max out at 25% in South Carolina regardless of who else is running. Clyburn's endorsement was huge; herd mentality is strong in South Carolina (as it is in California and many [most] other states.

As I go through the rest of the states, it's a real toss-up: either Sanders gets the nomination in Milwaukee on the first vote, or he comes close, with no one having a majority on the first vote.

I'm not making light of this, but the Milwaukee brewery shooting today could very well ... how do I put this delicately ... let's do it from the other side of the coin: if Bernie doesn't get the nomination on the first vote and then loses on the second vote, all hell is going to break loose in that convention hall.

For the MAGA Trumpers, the question is this: who is worse for America. Not worse for Trump, but worse for America. I won't show my cards on that one, but like everything else on which I opine, I know I'm right. LOL. Sometimes I wonder how my wife can live with me. LOL.

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Bloomberg

Let's look at Bloomberg for a minute. Looking at momentum shifts and huge advertising campaign, the following is a real possibility. The following does not show up in the most recent polls, but if one looks at momentum and a huge advertising push, and no more debates, one could defend the following:
  • Texas: a three-way, maybe four-way tie -- Bernie, Biden, Bloomberg ... Pocahontas.
  • Virginia: much like Texas .... Bernie wins but Bloomberg, Biden hang in there. This may be the end for Buttigieg. Along with his showing in South Carolina.
So, Bloomberg could do well in a couple of states. Unfortunately for Bloomberg, the momentum in those few states won't help in the rest of Super Tuesday states -- they are all voting at the same time.
  • California: Bloomberg -- no chance at all, and no delegates. Sanders will take this one easily, but not decisively enough to take more than half the delegates.
  • Minnesota: Bloomberg --  no chance at all, and no delegates.
    • Minnesota: Klobuchar (huge win) but Sanders will do well (again, the delegate count favors a brokered convention)
  • Florida: could be another huge win for Biden
Every time I go through this list, pushing for one of the candidates to get enough delegates on the first vote, I can never get there. Bernie won't get any delegates in Florida. It's hard to win a majority of delegates on the first vote if you can't even get a single delegate in Florida. And Georgia will be just as tough.

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Money

With the implosion of the stock market, this is the end of huge donations for Klobuchar, Buttigieg, Biden, Pocahontas. No matter how rich one is, a 25% loss in net worth gets one's attention.

Money wins. That leaves Bernie, Bloomberg, and Steyer. 

Coronavirus -- Update -- February 27, 2020

We won't see the numbers until around midnight tonight, but right now there were 16 new deaths reported worldwide. Yesterday there were 38. If the "16" holds today, that will represent a change of minus 58%, the best in three days and continuing the downward trend.

In addition, the change in total number of deaths will be less than 1% -- the lowest it has been since the coronavirus outbreak was identified, and continuing the downward trend.

Of the 16 new deaths in the last 24 hours:
  • Iran: 7
  • Italy: 5
  • China: 2
  • South Korea: 1
  • Japan: 1
I find the coronavirus story fascinating on so many levels. Most fascinating: in countries millions and millions of people, we are able to "capture" single deaths. Fascinating.

With such small numbers, it only takes a few deaths in any one day to really affect the overall percentages. 

Diamond Princess. No new deaths reported in quite some time.

That "de novo" death in northern California is very, very interesting. More on that later, but I am on my way to picking up Sophia.

WTI Drops Below $47; Down Almost 5% -- February 27, 2020

Headline: Saudis slash March, 2020, crude oil exports to China as demand slumps.

Gasoline demand, link here




********************************************
Back to the Bakken 

Active rigs:

$46.432/27/202002/27/201902/27/201802/27/201702/27/2016
Active Rigs5066574138

Two new permits today, #37414, - #37415, inclusive:
  • Operator: Kraken
  • Field: Lone Tree Lake (Williams)
  • Comments: 
    • Kraken has permits for a two-well Redfield Central pad in NENW section 25-157-99, Lone Tree Lake oil field.
Ten wells approved for confidential status:
  • Whiting: Ogden (3), Fladeland (2), Sondrol (1), Rauser (3), Harvey, (1).
No permits canceled.


No permits renewed.

No producing wells (DUCs) reported as completed:

Notes From All Over, Part 3 -- February 27, 2020

Really? The presidential briefing on coronavirus included comment from several people in addition to the president. The most ridiculous comment came from one of the other speakers who recommended that schools "dust off" their "pandemic preparation" checklists. I kid you not. I was in the USAF for 30 years and if any agency has checklists for any and every eventuality, every contingency it would be the US military. Not once in those 30 years did I ever run across a "pandemic preparation" checklist. Today I received a note from the middle school which our middle granddaughter attends. The principal, bless his heart, sent out "the" checklist. LOL. It started with, "wash your hands frequently."

Love him or hate him: who would you rather have in charge with regard to coronavirus? Bush II, Barack Obama or Donald Trump? With the first, in over his head; with the second, a lot of speeches. With Trump, we will see heads roll after the first US coronavirus-related death if it could have been prevented. Those CDC folks may be forcing smile on the outside but inside they know their futures are in the hands of a demanding president up for re-election later this year. 

China and Apple: soon to part ways.

Pipelines: Putin is building a multi-billion-dollar Nordstream 2 pipeline to bring natural gas from Russia to Germany. Meanwhile, New York bans natural gas from neighboring Pennsylvania. Putin must thin we're nuts.

Campaign 2020 funding: drying up. The stock market implosion will put an end to frivolous campaign donations. Won't affect Bernie, Steyer, or Bloomberg. Buttigieg, Pocahontas, Biden, Klobuchar: last nail in their coffins. Earlier it was reported "Hollywood" has even said "enough is enough."

Coronavirus: the smartest thing the administration could do is post daily seasonal flu deaths in the US alongside coronavirus deaths in the US and remind people that the CDC-sanctioned "flu shot" is less than 45% effective. [My hunch: the "flu shot" is significantly less than 45% effective; the CDC would want best number possible, and would post results under optimum testing conditions.]

Hope springs eternal. Royal Dutch Shell (does Queen Elizabeth allow them to use the word "Royal"? -- just wondering, but I digress) says it will continue with plans for "massive" deep-water drilling plan in Mexico even though the company knows it is unlikely to see any production under the current Mexican government. Link here:
The global oil major plans to drill four wells this year, and a similar amount next year, said Alberto de La Fuente, Shell’s Mexico country chief. It’s part of a drilling campaign that will include 10 to 13 wells and cost from $800 million to $2.4 billion.
Shell has a major position in Mexico’s deep-waters at a time when access is hard to come by. Mexico’s new government under Andres Manuel Lopez Obrador, also known as AMLO, has promised to reverse the neoliberal policies of his predecessor and has canceled further auctions and joint-venture opportunities with state owned Petroleos Mexicanos.
“First oil, if we are successful, is unlikely to occur before the end of AMLO’s term, due to the complexity of deep-water fields, which can take anywhere from five years to a decade to start producing,” De La Fuente, who’s also president of AMEXHI, the national hydrocarbons association.
What's wrong with this list? See story at this link. Saudi Aramco signed 66 MOUs worth $21 billion for oil, gas, refining projects.

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Backyard Birding

I'm very new at this, and it won't get much better. So if you are into "birding" this is NOT the site to visit.



Notes From All Over, Part 2 -- February 27, 2020

Constitution Pipeline: canceled -- link here --
  • Williams and partners
  • the pipeline that has caused all the controversy
    • eight-year controversy
    • NYDEC denied the project a water quality permit in 2016
  • was to be a new 30-inch, 125-mile pipeline; 650,000 dekatherms of natural gas / day
    • natural gas source: the Marcellus
    • terminus: "New York"
    • some sources suggest one decatherm = 0.172414 boe, if so, this pipeline about 112,000 boepd
  • enough is enough: it cost Williams almost $400 million in full-year 2019 earnings
  • current infrastructure projects:
    • Regional Energy Access
    • Leidy South
    • Northeast Supply Enhancement
  • my only comment: why did it take  Williams so long?
  • my hunch: this will put pressure on fossil fuel companies to make final investment decisions more quickly (to cut projects if consumers don't want those projects); see link below;
Pennsylvania reaction: not happy
The nearly $1 billion pipeline project was designed to take natural gas from Pennsylvania’s shale gas fields to New York and New England.
It was initially proposed in 2013 at a projected cost of under $700 million. However, delays and legal challenges drove the costs up by nearly 40 percent. The statement to halt investment in the proposed Constitution Pipeline was released by the project’s four partners, The Williams Companies, Cabot Oil and Gas, Alta Gas, and Duke Energy.
Governor Cuomo to New Yorkers: let them eat cake. New York is closed to business. Now that Amazon won't be moving to Long Island, the area probably doesn't need all that cheap natural gas anyway.

Most likely to have ripple effects. Link here. As I opined above.

Costs, back-of-the envelope:
  • original estimate: $700 million / 125 miles = $5.6 million / mile
  • new estimates: $980 million / 125 miles =  $7.8 million / mile
  • wow, lots of jobs lost
Continued Balkanization of the US:
  • some regions, pro-business, cheap energy
  • some regions, anti-business, expensive energy
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Meanwhile, Back To Cuba



Notes From All Over, Part 1 -- February 27, 2020

First things first: I was surprised to know that it froze overnight here in north Texas. I've put out the birdseed. On days like this, I add bread to the birdseed. I put out "regular" birdseed for the songbirds and "more robust" birdseed for the larger birds (and the squirrels). Later: the first bird to arrive, a male bluejay. Immediately following, two cardinals, male / female pair. Then several dark-eyed juncos and other assorted sparrows. 

McDonald's: the "regulars" in McDonald's are complaining how cold it is in north Texas this week. Something tells me they are not concerned about "global warming."

Lamb: see photos here. Wow, it turned out well.
  • 24-hour marinade: rosemary, thyme, shallots, garlic, oil, balsamic vinegar, pepper (no salt)
  • very, very hot fire
    • on the grill: four minutes on one side; barely five minutes on the other side
    • directly on the coal (no grill): barely two minutes on each side
  • I may have to re-think the salt. From a "taste" point of view, salt is not necessary, but I understand salt does more than just flavor meat; we'll see
  • I used a bit more olive oil than usual because more lamb to marinade, but if I had to do it over again, I would use the same amount of olive oil as I've always used; too much oil makes the lamb too "liquidy" -- but wow, it's incredibly tender
  • err on the side of under-cooking; can always be cooked a bit more in the microwave (although that is anathema / sacrilegious in these here parts;
  • directly on the coal is so much better than on the grill; but directly on the coal -- barely two minutes each side;
  • do not use briquets if cooking directly on coal; research "cave-man" grilling before proceeding!
Later: a reader writes:
Kingsford briquets, very very very hot fire on Weber kettle.
Heavy salt on both sides of meat. Put salt on meat immediately before putting on grill.
Meat close to fire.
Fire will destroy salt flavor but help form a sealing crust on meat.
Turn meat as soon as crust is formed (before meat dissolves salt on top side.
Not true that you can only turn meat once on the grill. May have to try a few times to get the timing right.
I find this makes meat juicier and contributes to flavor in the meat without making it taste salty. Crust looks and tastes better.
In my opinion man has not invented a grilling machine equal to the Weber Grill when it comes to steak and chops. Steaks and chops are all about hot, hot, hot.
I replied: I knew there was something about salt -- just didn't know "what." And I agree 100% about the Weber grill. 

Record Natural Gas Exports To Mexico-- Sur De Texas ; US-Mexico Natural Gas Update -- MAGA -- February 27, 2020

Sur de Texas: record exports point to downstream testing in Mexico. Link here:
  • record-high volumes on the Sur de Texas-Tuxpan Pipeline this month (February, 2020)
  • suggestion: testing may have already begin on the Cempoala Phase II compressor station reversal 
  • Cempoala Phase II: a key downstream infrastructure project that has promised to significantly expand Mexico's demand for US gas by the end of this quarter (1Q20);
  • February 15, 2020: Sur de Texas receipts:
    • almost one billion cf/d 
    • highest volume to date
    • corresponds with deliveries to Monte Grande have backed off, averaging just 140 million cf/d
  • however, prior to this, from the beginning of the year (2020), there has been a steady increase in transmission volumes through Monte Grande 
  • this suggests that the grid operator Cenagas could be preparing for a significant increase in gas imports from the US
  • More on the Sur de Texas-Tuxpan pipeline
    • product moves to three sites deep inside Mexico
    • crosses at Agula Dulce Hub (US/Mexico border)
    • Valley Crossing pipeline
    • Sur de Texas-Tuxpan pipeline
    • three sources of demand
      • Altamira import facility: natural gas imports seem to have decreased this year as more US natural gas flow
      • Naranjos: second connection -- pushes natural gas west into the interior, toward Salamanca
      • Monte Grande: third connection -- pushes natural gas west to Mexico City, and south to southern Mexico (via Cempoala Phase II)
    • Cempoala Phase II, a fourth potential connection / demand site: the Cempoala Phase II compressor reversal -- a project currently under construction, downstream from the Monte Grande interconnect
      • that project: will provide as much as 1.3 billion f/d of total capacity -- pushing NG further south
      • the Cempoala compressor reversal could boost US exports by as much as 700 million cf/d
  • Other developments:
    • last segment of the Wahalajara pipeline will be completed March, 2020 (next month): will increase US pipeline exports by nearly 400 million cf/d, partially displacing other non-US foreign imports
  • US pipeline exports to Mexico:
    • currently averaging 5.2 billion cf/d
    • by April, 2020: 5.7 billion cf/d
    • by August, 2020, 6.3 billion cf/d (a 20% increase over current imports)
Great map at the linked story.  

I think there are two stories here:
  • Mexico's increase demand for natural gas; and,
  • what proportion of that demand will come from the US
The first story interests me much more; the second story will take care of itself. 

WTI Goes Below $48 -- February 27, 2020

Something to think about: with the stock market plummeting; concerns about a recession or worse, depression, do you really think those high rollers are going to send more political cash to Buttigieg, Pocahontas, Biden, et al?  The same goes for all those down-ballot candidates.


More politics than usual (sorry) but I find the coronavirus story absolutely fascinating on so many levels:
Trump is always thinking. I am sure he is thinking about this -- coronavirus, Mexico, and the border wall.

The last time I looked, Canada, Mexico, and the US all share something in common -- we're all in North America, fairly isolated from coronavirus ground zero.

If coronavirus is "inevitable" in the US, it's inevitable in Canada and Mexico.

Two things:
  • It will be interesting to see how coronavirus is managed in these three countries; and,
  • President Trump may get even more support to strengthen the southern border / wall "when" (because it's "inevitable") Mexico reports its first case of coronavirus.
The health care systems in these three countries could not be more different  (well, actually they could but you get the point). 
Mexico has no reported cases of coronavirus yet; will Mexico close its border to the US now that the US has 60 cases (and rising)? Same with Canada. With 60 cases, the US has five times the number of cases as Canada (12). Is it time for Canada to close its borders with the US? Compared to Canada, the US clearly doesn't not have the situation under control. 
Additional comment: my hunch is that Mexicans, in general, will react quickly to any news that there are coronavirus cases in their country. And I doubt they will head south to Guatemala for health care. Back to that earlier point: Trump is always thinking -- and now this: coronavirus, Mexico, and the border wall.
It will be interesting to see if Schumer / Pelosi pushback on immunization requirements for folks crossing the southern border. There are a lot of diseases much worse than coronavirus that can be prevented with immunizations. Never let a crisis go to waste.
Most surprising "factoid" from yesterday: the seasonal flu vaccine used in the US is, at best, 45% effective. That's less than 50%. Who knew.

Seasonal flu: in the US so far this year, and the season is not yet over --
  • 36.5 million illnesses
  • 34,200 death
  • at least 105 children have died
  • these are only US numbers
  • How good is the vaccine? Apparently not very effective. 50/50. In fact, worse than 50/50. Link here. From an interim report released by the CDC yesterday (at the halfway mark through the seasonal flu season).
COVID-19: overnight in the US --
  • no vaccine
  • cases:
    • three new cases, currently at 60 cases
      • one case, possibly three may be "de novo"
  • deaths
    • no deaths overnight
    • total number of deaths in US so far: 0 
Plagiarism: Buttigieg -- clearly channeling President Obama in his speeches, Buttigieg is now said to be ripping off others. Mainstream media is ignoring the story.


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Back to the Bakken

Active rigs:

$47.722/27/202002/27/201902/27/201802/27/201702/27/2016
Active Rigs5166574138

Permits coming off the confidential list today -- Thursday, February 27, 2020:
  • 36793, drl, Sinclair Oil, Harris Federal 2-32H, Lone Butte, t--; cum --;
  • 35424, SI/NC, MRO, Frances USA 11-15H, 33-061-04288, Reunion Bay, t--; cum --;
  • 34392, drl, White Butte Oil, Jore Federal 5-12H, Clark Creek, t--; cum --;
RBN Energy: sagging supply and rising demand for Jones Act ships to send rates higher.
Back in 2013-14, a run-up in demand for Jones Act tankers and large articulated tug barges –– and a spike in time charter rates — spurred orders for a flotilla of new vessels. By the time the new tankers and ATBs were built and launched, however, demand for them had fallen off. That decline was mostly due to the mid-decade slump in U.S. crude oil production and, with the lifting of the ban on most U.S. crude exports, the drop in crude shipments from one U.S. port to another. Term charter rates plummeted and ship owners stopped ordering new tankers and large ATBs. Now, for the first time in more than five years, there are barely enough Jones Act vessels to go around, and charter rates are on the rise. Today, we discuss recent trends and how they’re impacting crude oil and refined products transportation costs.
This year marks the 100th anniversary of the Merchant Marine Act of 1920, a federal law whose section 27 is better known as the Jones Act for its author, Senator Wesley Jones of Washington state. The Jones Act requires that all goods transported by water between U.S. ports be carried in U.S.-flagged ships constructed in the U.S., owned by U.S. citizens, crewed by U.S. citizens, and registered in the U.S. As it applies to the energy sector, the Jones Act fleet consists of five main categories of vessels: smaller inland barges that typically carry either 10 Mbbl or 30 Mbbl of crude or refined products and operate on inland waterways as well as coastal canals; regional offshore tank barges (e.g. New York Harbor) with capacities of 50 MMbbl to 135 Mbbl; coastal barges, including larger articulated tug barges (ATBs) with capacities of 142 Mbbl to over 320 Mbbl; tankers that operate in both coastal and international waters and generally carry ~330 Mbbl of crude oil or refined products; and large crude oil tankers in the Alaskan trade.

Wednesday, February 26, 2020

OMG -- Out Of Control -- Schumer, Pelosi -- February 26, 2020

Signing off for the night.


Link here. Coronavirus update.

Change in total deaths, day-over-day;


Growth factor:


Change in total deaths, day-over-day:


Change in daily deaths, percent change, day-over-day:


Global, link here:


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Eatin' Good In The Neighborhood
Cooking Lamb Directly On The Coals 





Coronavirus Update -- February 25, 2020 Data

Seasonal flu virus (not coronavirus) update. How good is the vaccine? Interim report released by the CDC earlier today. Apparently not very effective. 50/50. In fact, worse than 50/50. Link here.
The current influenza vaccine has been 45% effective overall against 2019-2020 seasonal influenza A and B viruses.
That means the vaccine is about as effective as it typically is in a season when it offers a decent match to circulating influenza antigens.
"The meaning of the effectiveness number gets misinterpreted frequently," he told AAFP News. "While we would all want an even more effective vaccine, it remains the best way we have to prevent flu and its complications."
Because 2019-2020 has been an early and relatively severe flu season and because flu activity continues, Epling said family physicians definitely should continue to offer vaccinations to all unvaccinated patients.
I believe I read (and posted) elsewhere that a record number of children in the US have died of seasonal flu this year (2019 - 2020) and the flu season is not yet over. At last count, 105 children have died of seasonal flu in the US this year (2019 - 2020).

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Corona Virus
The virus: SARS-CoV-2
The Disease: COVID-19
SARS: Severe Acute Respiratory Syndrome




One word: staycations.

Later, 7:06 p.m. Central Time, February 26, 2020: the daily coronavirus is delayed. It should have been posted by now.

Later, 7:26 p.m. Central Time, February 26, 2020, total deaths for February 25, 2020, had been updated. I expected full report any moment now. What I am looking for are data points for the four most important data points. 

No New Permits; WTI Drops Below $49 -- February 26, 2020

Active rigs:

$48.732/26/202002/26/201902/26/201802/26/201702/26/2016
Active Rigs5166574038

No new permits.

Eight permits renewed:
  • Hess (6): six BB-Federal permits in McKenzie County;
  • NP Resources (2): two Agate permits in Golden Valley County;

CLR Announces 4Q19 Results; Full Year 2019; And 2020 Guidance

I will clean this up later. Starting my evening of Uber-granddaughter driving. Good luck to all.

Forecast: 52 cents. Link here.

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Continental Resources Announces Full-Year 2019 And 4Q19 Results; 
2020 Capital Budget And Guidance

Note: this is NOT the full press release. See CLR website for the full release. If this is important to you, go to the source. Do not quote this source as CLR data.

PRESS RELEASE:

OKLAHOMA CITY, Feb. 26, 2020.

Full-Year 2019 Results
$775.6 Million (MM) in Net Income, or $2.08 per Diluted Share•     $838.7 MM Adjusted Net Income, or $2.25 per Diluted Share (Non-GAAP)
340,395 Boepd Average Daily Production, up 14% Year-over-Year (YoY) •     197,991 Bopd Average Daily Oil Production; up 18% YoY
$3.1 Billion (B) of Cash Flow from Operations; $608 MM of Free Cash Flow (non-GAAP)
$406 MM in Shareholder Capital Return   •     $190 MM Share Repurchases and $18 MM Quarterly Dividend
•     $442 MM Total Debt Reduction; $198 MM Net Debt Reduction (Non-GAAP)
No. 1 Oil Producer in Both the Bakken and Oklahoma•     Bakken: 148,416 Average Daily Oil Production up 14% YoY
•     South: 41,695 Average Daily Oil Production up 43% YoY 

4Q19 Results
 $193.9 MM in Net Income, or $0.53 per Diluted Share•     $203.6 MM Adjusted Net Income, or $0.55 per Diluted Share
365,341 Boepd Average Daily Production; up 13% YoY•     206,249 Bopd Average Daily Oil Production; up 10% over 4Q18
2020 Capital Budget & Guidance
$2.9 B to $3.0 B of Cash Flow from Operations; $350 MM to $400 MM of Free Cash Flow •     Budgeted at $55 WTI and $2.50 HH; $5 Change in WTI = Approx. $300 MM in Cash Flow  
Targeting 4% to 6% Production Growth YoY Delivers Average Approx. 10% CAGR for 2019-2020•     Large Projects in 2020 Projected to Drive Double Digit Growth from FY 2020 to 4Q21    
$2.65 B Capital Spend in 2020; Flat Capital Spend YoY  •     $2.2 B Drilling & Completions; $125 MM for Mineral Acquisitions ($100 MM Funded by FNV)
•     Approx. 20% Lower Capital Spend in 2020 than Original Five Year Vision Estimate
•     Approx. $700 MM Capital Spend in 2020 with First Production Expected in 2021


Expect to Continue Delivering Lowest Cost Operations Amongst Oil-Weighted Peers•     $3.50 to $4.00 LOE per Boe  |  $1.60 to $2.00 Total G&A per Boe
Continental Resources, Inc. (NYSE: CLR) (the "Company") today announced its full-year 2019 and fourth quarter 2019 operating and financial results, as well as its 2020 capital expenditures budget and operating plan.
 
The Company reported full-year 2019 net income of $775.6 million, or $2.08 per diluted share. The Company's net income includes certain items typically excluded by the investment community in published estimates, the result of which is referred to as "adjusted net income."

For full-year 2019, typically excluded items in aggregate represented $63.1 million, or $0.17 per diluted share. Adjusted net income for full-year 2019 was $838.7 million, or $2.25 per diluted share (non-GAAP). Net cash provided by operating activities for full-year 2019 was $3.12 billion and EBITDAX was $3.45 billion (non-GAAP).


The Company reported net income of $193.9 million, or $0.53 per diluted share, for the quarter ended December 31, 2019. In fourth quarter 2019, typically excluded items in aggregate represented $9.7 million, or $0.02 per diluted share, of Continental's reported net income. Adjusted net income for fourth quarter 2019 was $203.6 million, or $0.55 per diluted share (non-GAAP). Net cash provided by operating activities for fourth quarter 2019 was $803.8 million and EBITDAX was $905.5 million (non-GAAP).

2019 Production Update
Full-year 2019 production increased 14% over full-year 2018, averaging 340,395 barrels of oil equivalent per day (Boepd). 2019 oil production increased 18% over 2018, averaging 197,991 barrels of oil per day (Bopd). 2019 natural gas production increased 10% over 2018, averaging 854.4 million cubic feet per day (MMcfpd).
Fourth quarter 2019 total production increased 13% over fourth quarter 2018, averaging 365,341 Boepd. Fourth quarter 2019 oil production increased 10% over fourth quarter 2018, averaging 206,249 Bopd. Fourth quarter 2019 natural gas production increased 16% over fourth quarter 2018, averaging 954.6 MMcfpd.
The following table provides the Company's average daily production by region for the periods presented.


4Q

4Q

FY

FY
Boe per day

2019

2018

2019

2018
Bakken

194,156

183,836

194,691

167,800
South

163,552

131,088

137,579

121,265
All other

7,633

9,077

8,125

9,125
Total

365,341

324,001

340,395

298,190

2019 Operations Update
"Operationally, 2019 was an exceptional year. We met or exceeded all of our guidance and delivered 18% oil production growth year-over-year. We also consummated strategic trades, bolt-on acquisitions and leasing in Continental-dominated core areas for approximately $165 million, adding up to 370 gross operated locations to our deep inventory position," said Harold Hamm, Executive Chairman.

CLR Bakken: #1 Bakken Oil Producer; 148,416 Average Daily 2019 Oil Production up 14% over 2018
In 2019, Bakken oil production increased 14% over 2018, averaging 148,416 Bopd. Bakken total production increased 16% over 2018, averaging 194,691 Boepd. During the year, the Company completed 172 gross (119 net) operated wells with first production. These 2019 Bakken program wells are performing in line with wells completed in the Company's 2017 and 2018 Bakken programs, each of which paid out in approximately one year. The 2019 program wells are approximately 75% paid out, as of January 2020. The 2020 Bakken program is projected to continue this performance trend.

CLR South: #1 OK Oil Producer; 41,695 Average Daily 2019 Oil Production up 43% over 2018 
In 2019, South oil production increased 43% over 2018, averaging 41,695 Bopd. South total production increased 13% over 2018, averaging 137,579 Boepd. During the year, the Company completed 140 gross (98 net) operated wells with first production in the South. In SCOOP, Project SpringBoard produced an average 25,006 net Bopd, outperforming the Company's expectations announced in third quarter 2018 by 50%.    


Year-End 2019 Proved Reserves
The Company's year-end 2019 proved reserves grew 6% year-over-year to 1,619 MMBoe, as of December 31, 2019. These additions equate to a reserve replacement ratio of 178% for 2019 (defined as total change in proved reserves, excluding production, divided by production).

SEC prices used for calculating proved reserves were approximately $10.00 less per barrel WTI and $0.50 less per Mcf gas than the SEC prices used in the prior year. The Company's proved reserves have grown by 32% since December 31, 2015 and these additions equate to a four year reserve replacement ratio of 198%.
2019 Financial Update (due to formatting, some information is missing).
"In 2019, Continental maintained capital discipline and generated strong corporate returns with an 11% return on capital employed (ROCE). The Company also delivered $190 million in share repurchases, approximately $200 million in net debt reduction and the initiation of the Company's quarterly dividend," said John Hart, Chief Financial Officer.


Three Months Ended

Year Ended
2019 Financial Update

December 31, 2019
December 31, 2019
Cash and Cash Equivalents



$39.4 million
Total Debt



$5.33 billion
Net Debt (non-GAAP)(1) 



$5.29 billion
Average Net Sales Price (non-GAAP)(1)




Per Barrel of Oil

$51.33

$51.82
Per Mcf of Gas

$1.73

$1.77
Per Boe

$33.49

$34.56
Production Expense per Boe

$3.31

$3.58
Total G&A Expenses per Boe

$1.59

$1.57
Crude Oil Differential per Barrel

($5.52)

($5.15)
Natural Gas Differential per Mcf

($0.77)

($0.86)
Non-Acquisition Capital Expenditures 

$541.3 million

$2.66 billion
Exploration & Development Drilling & Completion

$467.8 million

$2.2 billion
Leasehold 

$18.1 million

$86.8 million
Minerals, of which 80% was Recouped from FNV 

$10.3 million

$130.0 million
Workovers, Recompletions and Other

$45.1 million

$198.3 million

(1) Net debt and net sales prices represent non-GAAP financial measures. Further information about these non-GAAP financial measures as well as reconciliations to the most directly comparable U.S. GAAP financial measures are provided subsequently under the header Non-GAAP Financial Measures.
2020 Capital Budget & Guidance
"In 2020, Continental will prioritize maximizing shareholder capital return in the form of share repurchases, debt reduction and dividends. With our strong portfolio and disciplined approach to value creation, we will continue to increase capital and corporate returns for our shareholders," said Bill Berry, Chief Executive Officer.
The 2020 capital budget is projected to generate $2.9 to $3.0 billion of cash flow from operations and $350 to $400 million of free cash flow for full-year 2020 at $55 per barrel WTI and $2.50 per Mcf Henry Hub. A $5 change per barrel WTI is estimated to impact annual cash flow by approximately $300 million.
Annual crude oil production is projected to range between 198,000 to 201,000 Bopd. Annual natural gas production is projected to range between 935,000 to 960,000 Mcfpd. The Company is targeting 4% to 6% annual production growth year-over-year, which is expected to average an approximately 10% CAGR for 2019 and 2020. The Company believes the projected growth range is appropriate given prevailing market conditions and outperformance in 2019. Cumulative volumes are projected to be on track with the Company's original Five Year Vision estimates for 2019 and 2020.
The Company's 2020 capital expenditures budget is flat year-over-year at $2.65 billion. Estimated Capex spend is approximately 20% lower than the Company's original Five Year Vision estimate for 2020. An estimated $700 million of capital to be spent in 2020 will not realize first production until 2021 as the Company prioritizes large scale multi-pad development projects in SCOOP and Bakken Long Creek.
Consequently, at year-end 2020, the Company expects to have a working backlog of approximately 242 gross operated wells in progress in various stages of completion, which is 12% higher than year-end 2019. This includes 188 gross operated wells in the Bakken, which is 42% higher than year-end 2019.
The Company is allocating approximately $2.2 billion to drilling and completion (D&C) activities, of which approximately 60% is allocated to the Bakken and approximately 40% to Oklahoma. The non-D&C capital is planned to be primarily focused on leasehold, mineral acquisitions, workovers and facilities.
The Company is allocating approximately $125 million to the previously announced mineral royalty agreement. With a carry structure in place, $100 million of capital costs will be funded by Franco-Nevada and the Company expects to earn 50% of total revenue generated from this strategic relationship in 2020.
In 2020, the Company plans to deliver approximately 8% ROCE at $55 WTI.
"Looking to 2020 and beyond, Continental expects to continue to be the low cost leader among our oil-weighted peers as we maximize performance and returns from our growing, high quality assets," said Jack Stark, President and Chief Operating Officer.
The Company's full 2020 guidance, capital expenditures budget and operating details can be found at the conclusion of this press release.
The following table provides the Company's production results, per-unit operating costs, results of operations and certain non-GAAP financial measures for the periods presented. Average net sales prices exclude any effect of derivative transactions. Per-unit expenses have been calculated using sales volumes.

Three months ended December 31,

Year ended December 31,

2019

2018

2019

2018
Average daily production:







Crude oil (Bbl per day)
206,249

186,934

197,991

168,177
Natural gas (Mcf per day)
954,556

822,402

854,424

780,083
Crude oil equivalents (Boe per day)
365,341

324,001

340,395

298,190
Average net sales prices (non-GAAP), excluding effect from derivatives: (1)







Crude oil ($/Bbl)
$    51.33

$    50.06

$       51.82

$       59.19
Natural gas ($/Mcf)
$      1.73

$      3.26

$         1.77

$         3.01
Crude oil equivalents ($/Boe)
$    33.49

$    37.13

$       34.56

$       41.25
Production expenses ($/Boe) 
$      3.31

$      3.50

$         3.58

$         3.59
Production taxes (% of net crude oil and gas sales)
8.1%

8.2%

8.3%

7.9%
DD&A ($/Boe)
$    16.45

$    16.41

$       16.25

$       17.09
Total general and administrative expenses ($/Boe) (2)
$      1.59

$      1.65

$         1.57

$         1.69
Net income attributable to Continental Resources (in thousands) 
$193,946

$197,738

$   775,641

$   988,317
Diluted net income per share attributable to Continental Resources
$      0.53

$      0.53

$         2.08

$         2.64
Adjusted net income (non-GAAP) (in thousands) (1) 
$203,589

$201,686

$   838,723

$1,066,237
Adjusted diluted net income per share (non-GAAP) (1)
$      0.55

$      0.54

$         2.25

$         2.84
Net cash provided by operating activities (in thousands)
$803,812

$955,267

$3,115,688

$3,456,008
EBITDAX (non-GAAP) (in thousands) (1)
$905,525

$850,640

$3,447,033

$3,623,373

(1) Net sales prices, adjusted net income, adjusted diluted net income per share, and EBITDAX represent non-GAAP financial measures. Further information about these non-GAAP financial measures as well as reconciliations to the most directly comparable U.S. GAAP financial measures are provided subsequently under the header Non-GAAP Financial Measures.

(2) Total general and administrative expense is comprised of cash general and administrative expense and non-cash equity compensation expense. Cash general and administrative expense per Boe was $1.15, $1.18, $1.15, and $1.25 for 4Q 2019, 4Q 2018, FY 2019 and FY 2018, respectively. Non-cash equity compensation expense per Boe was $0.44, $0.47, $0.42, and $0.44 for 4Q 2019, 4Q 2018, FY 2019 and FY 2018, respectively.


Fourth Quarter Earnings Conference Call
The Company plans to host a conference call to discuss full-year 2019 and 4Q19 results on Thursday, February 27, 2020 at 12:00 p.m. ET (11:00 a.m. CT). Those wishing to listen to the conference call may do so via the Company's website at www.CLR.com or by phone:
Time and date:
12 p.m. ET, Thursday, February 27, 2020
Dial-in:
1-888-317-6003
Intl. dial-in:
1-412-317-6061
Conference ID:
8554062
A replay of the call will be available for 14 days on the Company's website or by dialing:
Replay number:
1-877-344-7529
Intl. replay:
1-412-317-0088
Conference ID:
10138250


The Company plans to publish a full-year 2019 and 4Q19 summary presentation to its website at www.CLR.com prior to the start of its conference call on Thursday, February 27, 2020.