Tuesday, January 28, 2020

Climate Change And The Oil Industry -- January 28, 2020

Outgoing BP CEO has warnings for oil industry regarding climate change and getting too far ahead of one's headlights. I've had the very same thought, not with the oil and gas sector but with the automotive manufacturing sector. Glad to see I'm not alone in my thinking.

From the linked article:
BP Plc’s outgoing Chief Executive Officer Bob Dudley warned Big Oil of moving too fast on investing in new technologies to counter climate change, because their failure could lead to financial ruin.
“If you go too fast and you don’t get it right you can drive yourself out of business,” Dudley said in a Columbia Energy Exchange podcastwith Professor Jason Bordoff.
Oil companies must retain a strong financial footing to be able to invest when game-changing technologies are developed, he said. In the early 2000s, before his tenure as CEO, BP invested heavily in solar technology only to write off much of the spending.
Boeing: new nominee for Geico rock award? Javier E. David -- writes that Boeing posts shock Q4, annual loss as 737 MAX crisis grow. Are you kidding? This was a shock?
Boeing on Wednesday reported a surprise loss in the fourth quarter, as the company struggles to contain the fallout from the grounding of its flagship 737 MAX plane, which shows no signs of taking to the skies again anytime soon.
The grounded 737 MAX plane — which has idled on runways for nearly a year in the wake of two fatal crashes — is bleeding billions from the company’s bottom line, and gave Boeing its first annual loss in over 20 years. The controversy forced Boeing to oust Dennis Muilenberg as its CEO last month, and the company still has no concrete timetable for when the plane can fly again.
Here’s what Wall Street expected on key metrics:
  • revenue: $17.9 billion vs. $21.73 billion expected 
  • adjusted loss earnings per share: $2.33 vs $1.30 profit expected 
  • GAAP loss per share: $1.79
Politics: Senate impeachment trial. Suggestion for Mitch McConnell -- allow each senator to call two witnesses (two hundred separate and unique witnesses) and let's see how fast the US Senate votes to shut this charade down.

Happy 54th Birthday -- North Dakota C A 3 -- A Devonian Well Drilled Back in 1966 -- January 28, 2020

Happy Birthday:
  • 3983, 234, Cobra Oil & Gas/Enduro Operating, North Dakota C A 3, a Devonian well, vertical, 320-acre spacing, t1/66, cum 1.404564 million bbls; 11/19; celebrated its 54th anniversary, January, 2020; still producing about 500 bbls/month, 6/17; up to 700 bbs/month, 11/19;
Monterey, Eric Burdon & The Animals
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The Lego Page

I don't recall if I enjoyed Lego bricks and mini-figures prior to having our second daughter. I honestly don't recall if I enjoyed Lego sets while growing up. I don't think so. I think my introduction to Lego was when I was about thirty years old when we were transferred to Germany and our second daughter was six months old. We set aside one room in our house for Lego and Laura and I grew up together with Lego, from the time she was six months old. She's still a huge Lego fan, and I'm embarrassed to say I would rather "invest" in Lego than in silver bullion. LOL.

It's been awhile since I'm paid a lot of attention to Lego. But I've become interested again: Sophia, age five years old, absolutely loves the "Friends" line of Lego. I was completely unaware of this line of Lego.

I was introduced to Lego Friends this past week. When I went to pick up Sophia, age 5.5 years, from Tutor Time she was so excited to show me the Lego sets, "Friends." It turns out that a group of girls, ages 4 to 7 gather round the table every afternoon at Tutor Time and play with this line-up. I can see why they like the sets: think Polly Pocket meets bricks. 

I find it incredible I completely missed the "Friends" line. Lego introduced the line-up in 2011, and the sets were first available in Lego stores after Christmas, 2011. See this article in Wired.com back in early December, 2011. See also this article in adweek, February 25, 2013, "LEGO hits jackpot with 'controversial' line for girls." [It's interesting that the first article linked is in Wired, and the second article linked is in the "Digital" section of adweek.]

Apparently there's a lot of discussion over on social media whether "Friends" was needed. I don't know. But now that I know they exist, I'm eager to visit our local "Bricks & Minifigs" store to talk to the proprietor there to see what she thinks. I'm curious to find out whether "Friends" is a big hit among girls. By the way, if you are a Lego fan and haven't visited a "Bricks & Minifigs" store you are really missing a huge experience. I prefer "Bricks & Minifigs" to the company's Lego retail stores.

On another note, this is purely coincidental, a bit of serendipity. There are five main characters in the "Friends" line:
There are five main characters, most unfortunately following typical girlie stereotypes: animal-lover Mia, beautician Emma, pop star Andrea and "social-girl" Stephanie. Lego does toss a proto-geek in there with Olivia – her set (shown above) is an awesome she-garage complete with a microscope, a little robot, math equations and purple tools! Somebody please help me.
Our middle granddaughter -- some might describe her as a proto-geek -- just so happens to be named Olivia. From wiki, In 2019, Lego revamped the minidolls and gave them new looks.

I never knew. I have to get out more. LOL.

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The "Other" Frisco

Re-posting from the other day:
Wow, I'm in a good mood. Just dropped off Olivia at evening soccer practice. Pitch black outside, Texas starting to shut down for the night, but still see hard-working Americans working hard. Perhaps the best thing that ever happened to me ... the years I spent overseas, especially in Turkey and Africa to get a better perspective on America. America simply gets things done. No, one step forward, two steps back. Can-do attitude. On the way home, two new hotels have just opened up about a mile from where we live. So much construction, hard to believe. On the north side of DFW airport.
I was reminded of that earlier today after dropping off Sophia at Tutor Time and driving over to McDonald's for breakfast. The radio station I was listening to happened to have a special segment on Frisco, a "town" north of Dallas which is growing by leaps and bounds. Right, wrong, or indifferent, I think of three "cities" north of Dallas that are quite incredible: Plano, McKinney, and Frisco.

The comment was made that people are moving into Frisco, TX, from all over the country. Obviously hyperbole, but the real estate folks say more folks in NYC are talking about Frisco, than folks in Frisco talking about NYC. Or something like that. But apparently Frisco's a pretty big deal.

In 2018 -- that would be less than two years ago -- Money magazine ranked Frisco, TX, as the #1 city in the US in which to live.
But growth alone is not what makes Frisco the best place to live in America. Rather, it’s the way the city has translated its growth into a higher quality of life.
“The mentality here is, Let’s build the place we all want to have fun in and live in,” says Pitchford. While the company considered going as far as Quebec, “by every metric we had, Frisco came out on top,” Pitchford says.
One of those metrics: Frisco’s outstanding public schools. With more than 70 campuses, the Frisco Independent School District has the highest graduation rate of all the cities and towns MONEY evaluated this year.
“I can afford private, but the public school system here is so great,” Pitchford says, citing the district’s career training center, which offers high school students the opportunity to gain real-world experience in specialized programs from hospitality to health science.
Like many Frisco institutions, the schools have benefited from a city focus on public-private partnerships — arrangements that bring high-level sports, art and technology to the Texas town.
Take the Ford Center at The Star, an indoor athletic facility where the Dallas Cowboys have practiced since 2016. It was built as a partnership between the team, city government and the Frisco schools — so when the Cowboys aren’t using the indoor field, high school teams get it for practice and games. It’s a model that began in 2003, when the city partnered with two business groups to build Dr. Pepper Ballpark, now home to the Frisco RoughRiders baseball team.
Seventy campuses in one city. Wow.

Hess To Boost Spending In 2020 -- January 28, 2020

Link here.
  • Focus:
    • Guyana
    • Bakken ramp-up
  • Spend:
    • 11% more in 2020 compared with 2019
    • betting heavily on offshore Guyana and Bakken
  • production guidance:
    • 2019: 285,000 boepd
    • 2020: upwards of 335,000 boepd
  • economics:
    • drive breakeven price to below $40/bbl Brent by 2025
  • Will report 4Q19 earnings on Wednesday, tomorrow, January 29, 2020 
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Meanwhile, In Canada

37% of Canadians oppose the TransMountain oil pipeline. Link here

It looks like 37% of Canadians are happy to have their country closed to business.

Best Quarter Ever -- Apple -- January 28, 2020

Link here.

A day or so ago I said I would not be watching network news or blogging about non-Bakken news until the current craziness dissipates, perhaps going off the grid as it were for about ten days. Curiosity got the best of me; I was curious how Apple did this past quarter. I wasn't sure how to find the story without going to business news but I wanted to avoid that at all costs. And then I remembered: Macrumors.

Note: this is the first fiscal quarter of 2020 -- the holiday quarter, 2019, October - December, 2019.

This graphic pretty much says it all.




I can hardly wait to read the comments.

The dividend remains unchanged but will likely be increased by 10% in May, 2020.

Margins were great.

This quarter was the best in Apple's history in terms of revenue and profit, topping the first fiscal quarter of 2018. 

Conference call on-going:
  • Apple's Wearables, Home and Accessories hit $10.0 billion in revenue; surpassed the Mac ($7.2 billion) -- first time ever after coming very close in several previous quarters
  • iPhone revenue was just under $56 billion; up 8%; exceptional iPhone 11 demand; iPhone 11 was top selling model every week; Apple's second highest in history (best ever quarter was two years ago, $61.6 billion
  • shares surging
  • set records in most geographical areas and growth returned to China
  • active install base surpassed 1.5 billion
From the comments:
  • And analysts on CNBC are complaining because iPhone numbers were too good. So Apple is back to being just a hardware company and their PE is too high now. -- another reason I no longer watch CNBC

Third Consecutive Day With No New Permits? -- January 28, 2020

Active rigs:

$53.581/28/202001/28/201901/28/201801/28/201701/28/2016
Active Rigs5465573846

Third consecutive day with no new permits? Yup. No new permits.

Two permits renewed:
  • Slawson: two Armada Federal permits, Mountrail County
Two permits canceled:
  • Whiting: an Olson permit in Williams County; a Privratsky permit in Stark County

ArgusMedia Viewpoints -- Nice Re-Cap -- January 28, 2020

Link here got ArgusMedia viewpoints.

Most of this "stuff"  has been posted elsewhere, various sources, but this is a nice summary.

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Politics

The polls keep coming out, fast and furious, but nothing has really changed.

If three candidates manage to each poll at least 15%, those three will share the delegates. Three candidates sharing delegates: no one can win on the first ballot.

In 2016, only two  Democrat candidates were collecting delegates, Sanders and Hillary and it was a very, very close race; throw in a third "viable" candidate and neither would have won on the first ballot. How this plays out:
  • brokered convention; no one wins on first ballot; delegates free to vote on second vote;
  • Democratic party will be very, very divided when it goes to a second vote;
  • the convention will become chaotic between the first and second vote;
  • the media will love it; will encourage it; ratings will surge;
  • it may be difficult to maintain / restore order if it appears the nomination was denied Sanders on the first vote due to .... skullduggery...
  • someone needs to walk out stage to restore order;
And then:
  • Bill Clinton and Barack Obama will come out together, side-by-side, beaming
  • the two of them will restore order; the 80% that did not want Sanders will take control of the convention; the media will go nuts (in a positive way for the Democrats)
And, then, the moment of truth -- how will the convention receive the next person that walks on stage, Hillary Clinton?

There's a risk she could be booed off stage ... manage that risk ... walk out on stage accompanied by Michelle Obama ...

But how about this for really stirring things up: Hillary, Michelle, and Oprah; maybe add a fourth or fifth woman, Taylor Swift, Ellen DeGeneres, or Klobuchar, St Greta?

The conventioneers would go nuts.

Bill Clinton was on stage sometime in the past ten days -- I forget the particulars -- he looked as fit and ready as I've ever seen him.

Hillary's documentary just debuted at Sundance.

And now this:

It May Be A Dip, But It's A Very Small Dip -- January 28, 2020

From The Williston Herald:
  • The economy in Williston / Williams County took a slight dip in 2019 compared to 2018.
    • workforce, unemployment rate:: 
      • Williams County: 1.7%, unchanged from November, 2018
      • state: 2.1%, unchanged from November, 2018 
    • sales tax distributions:
      • Williston, 2019, year-to-date: $22,578,880
        • $1,165,907 higher than this time in 208
        • $703,030 lower than December, 2018
      • Williams County: $29326,060, 2019, year-to-date
        • an increase of $5,565,995 more than 2018
        • $450,420 lower in December, 2019, compared with December, 2018
    • taxable sales and purchases:
      • Williston: down 2.56%, 3Q19 over 3Q18
      • Williams County: down 1.96%, same time periods
    • average sale price of a single-family home in Williston, 2019: $280,672
      • $30,354 higher than same period in 2018
      • December, 2019, numbers also a bit higher 
Bottom line: too many numbers; in big scheme of things, not much change, 2019 over 2018. But that unemployment rate is incredible to say the least. 

Random Look At Some New Whiting Activity In The Sanish; Ness And Brown Wells -- January 28, 2020

The four-well pad of interest (note the "chronologic" number:
  • 18244, 3,014, Whiting, Ness 44-21H, Sanish, t1/10; cum 557K 11/19; an incredibly non-descript well that quietly goes over 500K cumulative oil;
  • 37090, loc, Whiting, Ness 44-21-2TFH, Sanish,
  • 37091, ros (January 2020), Whiting, Ness 44-21 2H, Sanish,
  • 37092, drl, Whiting, Ness 44-21-21HU, Sanish, 

  • 20505, 2,868, Whiting, Brown 41-28XH, Sanish, t3/12; cum 409K 11/19;
  • 25728, 892, Whiting, Brown 41-28-2XH, Sanish, t10/13; cum 237K 11/19;

  • 19250, 2,686, Whiting, Ness 43-21, Sanish, t10/10; cum 482K 11/19;
  • 20378, 225, Whiting, Ness 44-21TFH, Sanish, t8/11; cum 143K 11/19;

  • 21546, 537, Whiting, Lahti 12-22TFH, Sanish, t3/12; cum 195K 11/19;

  • 28035, 1,199, Whiting, Ness 41-21-3XH, Sanish, t8/14; cum 323K 11/19;
  • 28036, 713, Whiting, Ness 41-21-2XH, Sanish, t8/14; cum 250K 11/19;
  • 20826, 2.432, Whiting, Ness 41-21XH, Sanish, t10/11; cum 462K 11/19;

Graphics:



What's Going On Out In Eightmile? Nine Point Energy Active -- January 28, 2020

Updates

May 30, 2020: these wells have been updated here; at a later date this post will be updated but I want folks to see what this looked like back in November, and compare to that to the update at the link. Updated graphic:


Original Post

Eightmile oil field is southwest of Williston, heading out toward Montana, north of the river. I would consider this immediate area Tier 2, maybe Tier 3, based on historic activity. But all of a sudden, a bit of activity.

The wells:
  • 34783, 1,004, Nine Point Energy, Missouri 152-103-4-2-1H, Eightmile, t11/18; cum 190K 11/19; a 24K month;
  • 34784, 1,098, Nine Point Energy, Missouri 152-103-4-2-2H, Eightmile, t11/18; cum 207K 11/19; a 30K month;
  • 34785, 1,083, Nine Point Energy, Missouri 152-103-4-2-3H, Eightmile, t11/18; cum 242K 11/19; a 24K month;
  • 34786, drl, Nine Point Energy, Missouri 152-103-4-2-4H, Eightmile,
  • 34787, drl, Nine Point Energy, Missouri 152-103-4-2-5H, Eightmile,
  • 34788, drl, Nine Point Energy, Missouri 152-103-4-2-6H, Eightmile,


  • 36157, 895, Nine Point Energy, S Missouri 152-103-9-11-12H, Eightmile, t12/19; cum 105K 3/20;
  • 36156, conf, Nine Point Energy, S Missouri 152-103-9-11-11H, Eightmile, producing, 7K in first report; unknown number of days;
  • 36155, conf, Nine Point Energy, S Missouri 152-103-9-11-110H, Eightmile, producing, 17K in first report; unknown number of days;

  • 37259, drl, Nine Point Energy, S Missouri 152-103-9-11-9H, Eightmile,
  • 37258, rig-on-site (January, 2020), Nine Point Energy, S Missouri 152-103-9-11-8H, Eightmile,

Graphics:



New Mexico May Be Newest Member Of The One-Million-Bbl Club -- Rystad -- January 28, 2020

At another post, a reader commented:
NM nipping at your heels, ND. Rystad thinks they broke into the millionare (state bopd) club in NOV or DEC:

https://www.rystadenergy.com/newsevents/news/press-releases/new-mexico-flirts-with-1-million-bpd-oil-threshold/. 
This is the link: https://www.rystadenergy.com/newsevents/news/press-releases/new-mexico-flirts-with-1-million-bpd-oil-threshold/.

Notes From All Over, Part 1 -- January 28, 2020

XOM, Guyana: 16th Stabroek discovery. Ninety-four feet of high-quality oil -bearing sandstone.
XOM has now raised its recoverable resource estimate from this play by 2 billion boe to more than 8 million boe. Link here. Peak oil? What peak oil?
Selling out Putin? This and several other stories suggest huge developments for Russia.
Facing economic collapse and painful sanctions, the socialist government of Venezuelan President Nicolas Maduro has proposed giving majority shares and control of its oil industry to big international corporations, a move that would forsake decades of state monopoly.
Maduro’s representatives have held talks with Russia’s Rosneft PJSC, Repsol SA of Spain and Italy’s Eni SpA. The idea is to allow them to take over government-controlled oil properties and restructure some debt of state oil company Petroleos de Venezuela SA in exchange for assets, according to people with knowledge of the matter.
Brooge: link here.
Brooge Petroleum and Gas Investment Co. plans to expand its crude-storage capacity six-fold at the Middle Eastern port of Fujairah to meet “huge” demand at the busiest oil-trading hub in the region.
The United Arab Emirates-based business will sign contracts by the end of the first quarter, or soon after, to lease out the additional capacity, Chief Executive Officer Nicolaas Paardenkooper said in an interview. It will complete a study for the project over the same period and may start construction work by the end of 2020.
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Party Like It's 1999

I've talked about this before: I'm convinced the 2020's in the US will be one of the best decades for investing ever. And that comes after an incredible past four years. Re-posting:

2020: party like it's 1999. Americans to inherit almost $1 trillion this year ... tax-free. I've talked about this before. I might have to come up with a new tag. We'll see. Related, recently: pipelines; BlackRock; $13 trillion; SecureAct; mandatory distributions.

The EV revolution will happen around 2025. Re-posting:
A reader sent me a link to "GM to invest $2.2 billion in Detroit plant to produce electric cars." Google it.
My reply, not ready for prime time:
The auto manufacturers are all getting ready for the mandates that will be put in place in 2021, or 2025 at the latest, when Trump is out of office.

At some point, the auto manufacturers will have poured so much money into the EV scheme, that "too big to fail" will be "new" again; and the government will have no choice but to mandate EVs for all. If not, a lot of US manufacturers will fail, and a lot of stateside manufacturing plants will close regardless of whether they are Japanese, German, or Korean.

It will be a huge transition for everyone on such a huge scale. The infrastructure alone that is needed is huge: just the neighborhood transformers (GE) that will all need upgrading. The utilities will have to expand exponentially to handle the electricity / grid issues. Solar / wind won't keep up, and natural gas will be the bridge (a bridge that will last at least 50 years) before we transition to small, modular nuclear reactors.

A lot of mechanics, service station attendants, will be looking for new work. A whole ICE supply chain will disappear. NAPA Parts? How about NAPA Departs?

I don't see investing in automobile companies as particularly attractive: the margins won't be huge; batteries are simply too expensive, and no "moat" -- every auto manufacturer will be building them. Competition will be incredibly stiff. But infrastructure investing might be different: utilities, charging networks (copper wiring?), GE transformers, commodities such as lithium, cobalt
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.

Looks LIke Another "Natural" Advantage Of Bakken Crude Oil Over "Permian" Oil -- RBN Energy; Oil Touched Bottom, Reverses -- January 28, 2020

5-4: The Supreme Court ruled Monday that the Trump administration can block thousands of immigrants from receiving public assistance while legal challenges continue.
Under the Department of Homeland Security rule, legal immigrants receiving or deemed likely to need non-cash benefits for more than a year, such as food stamps, Medicaid or housing vouchers, can be denied residency or green cards.
XOM: oh-oh. Promised turnaround did not happen Share price lowest in decades.

2020: party like it's 1999. Americans to inherit almost $1 trillion this year ... tax-free. I've talked about this before. I might have to come up with a new tag. We'll see. Related, recently: pipelines; BlackRock; $13 trillion; SecureAct; mandatory distributions.

EVs: a reader sent me a link to "GM to invest $2.2 billion in Detroit plant to produce electric cars." Google it. My reply, not ready for prime time:
The auto manufacturers are all getting ready for the mandates that will be put in place in 2021, or 2025 at the latest, when Trump is out of office.

At some point, the auto manufacturers will have poured so much money into the EV scheme, that "too big to fail" will be "new" again; and the government will have no choice but to mandate EVs for all. If not, a lot of US manufacturers will fail, and a lot of stateside manufacturing plants will close regardless of whether they are Japanese, German, or Korean.

It will be a huge transition for everyone on such a huge scale. The infrastructure alone that is needed is huge: just the neighborhood transformers (GE) that will all need upgrading. The utilities will have to expand exponentially to handle the electricity / grid issues. Solar / wind won't keep up, and natural gas will be the bridge (a bridge that will last at least 50 years) before we transition to small, modular nuclear reactors.

A lot of mechanics, service station attendants, will be looking for new work. A whole ICE supply chain will disappear. NAPA Parts? How about NAPA Departs?

I don't see investing in automobile companies as particularly attractive: the margins won't be huge; batteries are simply too expensive, and no "moat" -- every auto manufacturer will be building them. Competition will be incredibly stiff. But infrastructure investing might be different: utilities, charging networks (copper wiring?), GE transformers, commodities such as lithium, cobalt.

As oil fields mature, they become more "gassy." Thus, the oil fields of the Permian, the Eagle Ford, the Bakken, the D-J, etc. will gradually transition from oil to gas -- competing with the Appalachian region.

I've been transitioning my portfolio from oil to utilities, mostly for the dividends, but also the "writing on the wall."
Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. 

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Back to the Bakken

Active rigs:

$53.561/28/202001/28/201901/28/201801/28/201701/28/2016
Active Rigs5565573846

Three wells coming off confidential list today -- Tuesday, January 28, 2020: 94 for the month; 94 for the quarter, 94 for the year:
  • 36466, conf, WPX, Skunk Creek 23-14HD,
  • 35886, conf, Liberty Resources Management, Morgen 158-93-20-17-2TFH,
  • 35619, conf, Whiting, Fladeland 44-9-3H, 
RBN Energy: how disparate Permian crude quality impacts new pipeline and export infrastructure.
To say that Permian crude oil quality varies is an understatement at best. In fact, there’s as much variety in the crude coming out of West Texas as there is in the arsenal of a major league pitching ace. Handling those varied crude qualities is the challenge of midstream operators, who, like batters facing down a Randy Johnson or Pedro Martinez in their prime, need to do the best they can with what they’re given. With the start of spring training only a month away, we begin a series detailing the current mix of Permian crude oil qualities, how pipelines are handling them, and what it means for exports, the end destination for much of today’s incremental Permian oil production. Today, we discuss Permian crude quality variations and the steps new pipelines are taking to deal with it.