Tuesday, September 1, 2020

How Severe Is The National Sales Tax Overseas? -- September 1, 2020

We were stationed overseas for fourteen years -- I say it was thirteen years, my wife says it was fourteen. In addition to that, I spent another half dozen years overseas on various "short" duty assignments. Our family literally grew up with a national sales tax, something we (fortunately) don't have in the US.

How severe is that national sales tax? It's called a value-added tax, and it's not just a tax at the final point of sale but at each point where value is added to the product. Whatever.

Consumers simply see the "bottom-line VAT":

  • Germany: 16%;
  • France: 22% plus a new digital services tax of 3% on top of that 22% for "digital" products;
  • Italy: 22% plus the new digital services tax of 3% on top of that 22% for "digital" products;
  • UK: 20% plus the new digital services tax of 2% on top of that 22% for "digital" products;
  • Chile: 19%
  • Mexico: 16%
  • Saudi Arabia: 15% (recently increased from 5%)
  • Turkey: 18% plus the new digital services tax of 7.5%;

There is nothing more regressive than a sales tax. The rich can complain about it but probably seldom notice it except when buying a new car or a new yacht, but the middle class face it every day. 

See comments at the linked article. It's "fun" to see how Europeans try to justify VAT -- call it what you want, I see it as a sales tax. And whatever it is called, it is a most regressive tax.

Saudi Oil Shipments To America Plunge To 35-Year Low -- September 1, 2020

Previously posted. This was from CNN Business. CNN had an interesting angle regarding this story:

Saudi Arabia drew the wrath of Republicans in Washington this spring by sending an armada of tankers to America to drown US oil makers with cheap crude. Now, the kingdom has reversed course, steering the fewest barrels here since the Reagan era.

The United States imported just 264,000 barrels per day of Saudi crude during August, according to estimates from ClipperData, a commodity research firm. That's down nearly 50% from 2019's average.

If confirmed by official government statistics, that would mark the lowest amount of Saudi oil exports to the United States since 1985.

There are so many story lines here but we've discussed them many times, so we'll move on. But add this story to the story that appeared about the same time that the world's biggest importer of crude oil (China) has recently bought less Saudi oil and more US and Brazilian oil. 

For Saudi Arabia: exporting less oil and still selling it in the $45-range does not bode well for the Kingdom.

US crude oil imported from Saudi Arabia, August, 2020, data not yet posted:
 

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.

AAPL: market cap just surpassed the entire Russell 2000. Some say it's "absolute insanity." AAPL's closing price closed over $25/share on the pre-split price.

Three New Permits; Two DUCs Reported -- September 1, 2020

CNBC: As I noted the other day, I am getting the opportunity to watch a bit more CNBC than I have had in the past.

US auto sales: pace of sales finally hits 15 million for the year, the first time the industry has hit 15 million since February, 2020, the last full month before the lock downs began. The 15-million-per-year rate is still down 11% year-over-year.

Ford: former CEO was on CNBC. Nice interview. When asked about Tesla, he said Tesla will be facing a lot of competition, including from Ford. The elephant in the room: Tesla now has literally billions of dollars to expand; I don't think the other auto manufacturers have that kind of cash -- I don't know, but it certainly seems Tesla has the momentum and access to a lot of cash. This has to be very disconcerting for a legacy auto manufacturer. 

Finally: listening to the CNBC panelists who are actively investing and trading, there almost seems to be a bit of resignation / frustration -- a feeling that the "at-home gamers" (as Jim Cramer calls them) with no experience, training, or education in investing are literally out-performing the traditional investors on CNBC. No one knows how to value these companies any more. There almost seems to be two markets: the legacy market (99% of publicly traded companies) and then the other one percent or less. If one is lucky enough to hold TSLA, AAPL, ZM, etc., one can hide a lot of losers. 

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. 

Best news for the president all day:

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Back to the Bakken

Active rigs:


9/1/202009/01/201909/01/201809/01/201709/01/2015
Active Rigs1064635676

Three new permits, #37816 - #37818, inclusive -- (one was previously reported) --

  • Operators: Crescent Point Energy (2), CLR
  • Fields: Rainbow (Williams); Truax (Williams)
  • Comments:
    • Crescent Point Energy has permits for two permits in NENE 30-158-98;
    • CLR has one permit for a Dallas well in Truax oil field, NWNE 25-145-95, 287' FNL and 1460' FEL

Two producing wells (DUCs) completed:

  • 34953, drl/A, Petro Harvester Operating, PTL4 10-15 163-92 B, Portal, a Madison well; t--; cum 51K 7/20;
  • 35571, SI/A, Whiting, Anderson 41-7TFH, Sanish, t--; cum 136K 7/20; best month, 24K;

Production Data For June, 2020, Released By EIA -- September 1, 2020

EIA production data has been posted, link here. Huge "thank you" to reader for alerting me to the "just-released" report. The report reveals that crude oil production in New Mexico surpassed that of North Dakota in both May and June. 

Note percentage change in month-over-month data for Texas, New Mexico, and North Dakota. 

Going through the North Dakota wells over the past few days revealed that for the most part, North Dakota operators did not return wells to production until July, 2020. Most wells that were off-line in May, were still off line in June, in North Dakota.

Updating The 19XXX Wells -- September 1, 2020

Production data for July, 2020, is now being posted over at the NDIC.

I've gone through the 19XXX wells and have highlighted a few that caught my eye:

Slawson well, coming back on life after being off line for two months, trending toward 600K:

  • 19996, 1,148, Slawson, Alamo 2-19-18H, Big Bend, t6/11; cum 547K 7/2;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-202022165217165482541238249
BAKKEN6-202085665591338157723
BAKKEN5-202042320464914710
BAKKEN4-20203019321862560428541350
BAKKEN3-20203119301895800427241170

Whiting well, having weathered the worse, is now being taken off line line; something going on?

  • 19994, 804, Whiting, Eric Nesheim 21-24TFH, Sanish, t8/11; cum 142K 6/20:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-202000003152307
BAKKEN6-2020305014853714763560
BAKKEN5-2020315165144424623380
BAKKEN4-2020308218405755724530
BAKKEN3-2020318057977074002760

Oasis well, coming back as good as ever, 6/20 (7/20 data not yet posted):

  • 19946, 1,474, Oasis, Spratley 5494 34-13H, Alkali Creek, t101/11; cum 667K 6/20;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN6-202030465744443589884185410
BAKKEN5-202010168711631225245323530
BAKKEN4-202097251150772157514850
BAKKEN3-202031300730992650585055400

EOG well, coming back on line, as good as ever; 7/20 data not yet posted:

  • 19919, 1,648, EOG, Liberty LR 21-36H, Van Hook, t7/11; cum 535K 6/20:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN6-20202622122349503211990570
BAKKEN5-202044092849334918917
BAKKEN4-20203019822186477218383425
BAKKEN3-202031199918324792598117753

XTO well, breaks through 600K, looking good in 7/20:

  • 19889, 1,678, XTO, Sand Creek 21-10SH, Sand Creek, t5/11; cum 606K 7/20:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-20203116101564142624959242260
BAKKEN6-20203016701624157725840251150
BAKKEN5-20203118032033144926795260560
BAKKEN4-20203017981832147525843251270
BAKKEN3-20203118991605149713052122230

Hunt well, breaks through 500K:

  • 19786, 843, Hunt Oil, Halliday 1-12-1H 1, Wolf Bay, t5/11; cum 506K 7/20;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN7-2020222177219450711056434497
BAKKEN6-20203027662773609878776588
BAKKEN5-2020313100305363456053505
BAKKEN4-20203034703524780051325401
BAKKEN3-20203140564088637931421245

MRO well, trending toward 500K, 7/20 production not yet posted:

  • 19299, 608, MRO, Luther USA 31-16H, Reunion Bay, t3/11; cum 483K 6/20;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN6-202030120712053985534798
BAKKEN5-202031153215434011185105744
BAKKEN4-20203017111690417187217780
BAKKEN3-20201810121036511988815117

Notes From All Over -- September 1, 2020

White House tours are back: begin September 12, 2020. Link here. I forget: why did President Obama end White House tours in the first place?

NYC waffles: NYC delays school openings by eleven days. Hello, ZM. Hello, AAPL. 

Saudi Arabia foreign exchange reserves: still waiting for the numbers. Link here when they are posted.

WMT: hits an all-time high.

The Next Big Thing -- For Investors -- September 1, 2020

At the sidebar at the right, I have a link to "The Next Big Thing." This post is a bit different than the usual post about "the next big thing." This is for investors.

For investors (and the US economy): the next big thing(s) -- this is what CNBC talking heads will be talking about and what investors will want to hear --

  • forward P/E's, example:
    • Home Depot: 30
    • AAPL: 10
  • where are the dividends? 
    • without selling my shares (which I have fallen in love with), how can I have something other than a "paper" return?
  • unemployment numbers no longer matter (don't take this out of context; I'm talking about the "next big thing" for investors; I'm not talking about the pain and suffering for those out of jobs)
    • jobs and "professions" worst hit by the pandemic have the least relevance to the American economy
    • by the way, have we seen any stories lately about streams of undocumented folks flowing across the southern border?
    • how could you lose 18 million jobs and have housing prices go up 30% -- CNBC's "Josh" -- bingo 
    • the Fed is now concerned with the unemployment problem, not the inflation target;

The Next Big Thing -- Flashback -- September 1, 2020

Today: Netflix leads the S&P 500.

  • currently: 200 million subscribers
  • 2030, projection: 500 million subscribers, link here;

At the sidebar at the right, I have a link to "The Next Big Thing."

The original post is dated March 21, 2013. The series began with my interest in Netflix.

Flashback

Original Post 
First Posted March 21, 2013 
 

I think everyone enjoys trying to predict the "next big thing." Or at least "a" next big thing.

I was reminded of that at your school's book fair earlier this afternoon. I happened to see "Lego Crazy Action Contraptions" by Klutz.

Thirty years ago I started a Lego collection that eventually took on a life of its own. Our older daughter, your mom, never enjoyed Legos. Our younger daughter loves them as much today as she did then. For awhile, it looked like Lego might not survive (maybe ten, fifteen years ago). And then, with some incredible marketing efforts the company has thrived. Klutz's "Lego Crazy Action Contraptions" was another reminder of folks thinking outside the box.

At the book fair, I saw that Skippyjon Jones has a new book, Cirque de Ole. I happened to run across Skippyjon Jones some years ago, when it first came out, and could tell it was going to be huge, and it appears that it has. Good for Judy Schachner.

Years ago, before it was available, I saw a story in some now-defunct news magazine and told my wife that the "PT Cruiser" would be a huge hit. And it was.

Likewise, before the first episode of "30 Rock" aired, I knew that Tina Fey would be big; I just never imagined that BIG. I didn't think the show would do all that well (I was wrong) but that Tina Fey would do well.

I knew the iPad was going to be huge; I don't recall thinking much about the iPhone, but I knew the iPad had more uses than skeptics realized. The iPad has yet to live up to its potential but that's just a matter of time.  (I knew the "netbook" was doomed the minute I saw it. I think the "Surface" is likewise doomed.)

Back in 2007, when I started the milliondollarway blog, I knew the Bakken was going to be big. I didn't think it would be that BIG, but for North Dakota, I thought it would rank right up there with the last boom. Wow, was I wrong. The Bakken is much bigger than I ever imagined.

By the way, I deleted that first blog in a fit of insanity one night, and then started all over. I think the current milliondollarway blog dates back to 2009. I could be wrong. Haven't checked lately.

With regard to the Bakken, the biggest surprise: multi-well pads and rail.

My son-in-law thinks Vudu will be the next big thing. Perhaps in time. But not for awhile. Our discussion began with Apple and iTV. I suggested that "it" was all about "content," and, of course, that brought us to Netflix, Vudu, and Hulu. Vudu and Hulu have access to new movies sooner than Netflix. Yet Netflix is still well ahead of anyone else in that sector.

That made me question my assumption that "it" was all about "content." I think I'm wrong. "Content" is important, but within a month of release, new movies are available everywhere, so "content" alone is not the discriminator. "Content" is quickly becoming a commodity (with notable exceptions: NFL network, "made-for-Netflix" movies, as prime examples). Once "content" is a commodity, then something else drives the sector.

So, if it's not "content," what is it? "Accessibility." Accessibility includes "ease" of accessibility. All demographics can reach Netflix. Even my parents, well into their 80's and 90's can use snail mail to order Netflix DVDs, but unless it has to do with fishing, my dad would have no idea what "streaming" is,  much less be able to access it.

So, we'll see. For $7.99/month I have unlimited and "easy" access to Netflix; for $5.99 I can stream one movie from Vudu or pay "Target-" or "Wal-Mart-price" for the DVD itself. 

US mail and $7.99 / month / unlimited still beats the alternative. So we'll see. Vudu might be the next big thing but I don't see that for a few years. At least.

Back packs will become "a" next big thing. They already are in urban settings, not so much in rural areas.

I think LNG corridors will be "a" next big thing.

I think Facebook will surprise us; it will be "a" next big thing but only after it evolves to the next level to include a) gaming; b) better search; c) a music module; d) a YouTube-like video module; and, e) easier "home page" development.

All-electric vehicles as family cars are "dead." Hybrids aren't dead but it will be a long, steady slog for them to become mainstream.

Free wi-fi everywhere is just a matter of time. I don't know if one would call "free wi-fi everywhere" "a next big thing" but within a few years coffee shops won't stay in business if they don't offer free wi-fi. I do think that someone could yet come up with with a Barnes and Noble bookstore-coffee shop-internet cafe business plan that would work.  Except for college-centric Starbucks, most Starbucks coffee shops are pretty quiet after 6:00 pm. Just the opposite for most retail when they are very, very quiet before 10:00 am.

That brings us to a "cashless" society. Cyprus may be a "cashless" society by next Monday. Apple stores are cashless [update, April 16, 2015: according to Apple employee this past week, Apple retail stores will take cash]. I do think someone big is going to go cashless and that will change everything. Could Wal-Mart go cashless?  For those who don't have a credit card, or some type of mobile payment (SmartPhone, for example), they pay for a company cash card at customer service when they come in the door. 

Back To The Inflation Story -- September 1, 2020

The Dow makeover: it will take a few weeks or months for the "new" Dow to find its footing, find its new "range." 

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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Inflation

Like the Covid story, I'm getting tired of the "inflation" story.

From last week:

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What Causes Inflation

See this article. See this post.

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More

Wall Street is looking for inflation in all the wrong places: from The WSJ


The last paragraph:

Investors can have legitimate concerns about the heady valuations of their Silicon Valley holdings. But if anything puts a dent in their portfolio, it won’t be Washington’s next stimulus package.

The penultimate paragraph:

The implications are powerful: Weak price growth doesn’t need to reflect a weak economy, nor does a pickup in activity necessarily trigger inflation. Even if activist fiscal policy is here to stay and fosters an economic revival, central banks may still have discretion to leave rates at today’s ultralow levels—as Fed Chairman Jerome Powell seemed to suggest Thursday—to the benefit of tech stocks and bonds.

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Price Of Gasoline - EV Headwinds

I absolutely do not believe gasoline prices or the cost of operating an EV drives EV sales. The Tesla, Mercedes, and BWM EVs, now getting the most buzz, are luxury vehicles. Cost of operating is not a consideration by buyers, but for the archives:

Link here to EIA data.


Link to GasBuddy. Gasoline is even less expensive in some markets:


No Way, Jose. Yes, Way. Way Overpaid -- September 1, 2020

I track the "WTI beatdown" at the sidebar at the right.

Re-posting:

They must be reading the blog: I talked about this from the very beginning and then mentioned it again, just last week. Now, over at Reuters, moving into the Permian was a fool's errand -- overpriced deals and unwanted assets. This will drive a stand-alone post:

Overall, Permian basin purchases accounted for nearly a third of the 2016-2019 deals, Ernst and Young said. In the Permian, over 80 deals were done in which exploration and production companies (E&Ps) paid over $10,000 an acre, according to industry information provider Enverus.

“The current price environment is in no way sufficient for a large number of E&Ps in the medium-term,” said Artem Abramov, Rystad Energy’s head of shale research.

Different formulas can be used to evaluate deals, but analysts said Concho Resources Inc’s March 2018 purchase of RSP Permian was one of the costliest. The $9.5 billion deal implied a $75,504 purchase price per acre.

Diamondback Energy Inc’s 2018 purchase of Energen came out to a $54,977 per-acre price, but from a price-per-barrel metric, it was the most expensive Permian deal, according to Wood MacKenzie, at an average Brent price of more than $77 a barrel.

The EIA dashboards are illuminating.

Saudi foreign exchange reserves data for July, 2020, should be posted this week, link here.  

The market: analysts are withdrawing their targets. Uncharted territory. Unlimited Fed liquidity. Global economy improving.

Residents Fleeing New Jersey -- United Van Lines -- September 1, 2020

Moving. They must be reading the blog. I posted a United Van Lines story just a week or so ago and now we have this over at ZeroHedge. Fascinating.

According to the latest data from United Van Lines, people have been flooding into Vermont, Idaho, Oregon and South Carolina, eager to flee such financially-challenged, high-tax, protest-swept, Democrat-controlled states as Connecticut, Illinois and New York. But no other state has seen a greater exodus than New Jersey, where out of every 10 moves, 7 have been households leaving the state, or nearly three times as many moved out than moved in.

EVs: still need to be bailed out and financially backed by "the state." Link here.

Tesla: will raise a lot of cash by selling company-owned shares.

AAPL: trending toward $150/share? Motley Fool. Link here.

AAPL: too pricey. Let's check the P/E's:

  • ZM: 2,514
  • TSLA: 1,256
  • SBUX: 75
  • AAPL: 40

Forward P/E's:

  • Home Depot: 30
  • AAPL: 10

Comment: a lot of talk that even when pandemic is an old story, CEOs are not going to fly five hours across the country (and five hours back) for a 2-hour meeting. It's interesting: when I was in the USAF -- and that was years ago -- we held video conferences on a daily basis, dialing in from around the world. Without question, like so many things in life, the US DOD was an early adopter and an early adapter.

Time for the disclaimer.

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. 

Records, records, and more records:

No Wells Coming Off Confidential List; Schlumberger In The News Today -- September 1, 2020

Schlumberger

Merger: often seen when one or both companies are in distress. In this case, it is likely that both companies are in distress. Schlumberger / Liberty Oilfield Services Inc, join forces. In pre-market trading, LBRT is up almost 9%, up 55 cents, trading at $7.00. Meanwhile, SLB is flat at $19.

New geothermal company: Schlumberger New Energy, a new Schlumberger business, and Thermal Energy Partners have agreed to create STEP Energy, a geothermal project development company. Link here.

First project: the 10 MW Nevis Geothermal Power Project on the Caribbean island of Nevis.

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They must be reading the blog: I talked about this from the very beginning and then mentioned it again, just last week. Now, over at Reuters, moving into the Permian was a fool's errand -- overpriced deals and unwanted assets. This will drive a stand-alone post:

Overall, Permian basin purchases accounted for nearly a third of the 2016-2019 deals, Ernst and Young said. In the Permian, over 80 deals were done in which exploration and production companies (E&Ps) paid over $10,000 an acre, according to industry information provider Enverus.

“The current price environment is in no way sufficient for a large number of E&Ps in the medium-term,” said Artem Abramov, Rystad Energy’s head of shale research.

Different formulas can be used to evaluate deals, but analysts said Concho Resources Inc’s March 2018 purchase of RSP Permian was one of the costliest. The $9.5 billion deal implied a $75,504 purchase price per acre.

Diamondback Energy Inc’s 2018 purchase of Energen came out to a $54,977 per-acre price, but from a price-per-barrel metric, it was the most expensive Permian deal, according to Wood MacKenzie, at an average Brent price of more than $77 a barrel.

Drones: Equinor makes drone news in the North Sea. Link here.

Equinor has completed the world’s first logistics operation with a drone to an offshore installation, the company announced late last week.

Under the operation, a drone flew a 3D printed part for the lifeboat system from the Mongstad base to the Troll A platform in the North Sea.

The flight spanned around 50 miles to the Troll field and took about one hour. An altitude of around 5,000 feet was reached by the drone, which is more than 13 feet long and weighs in excess of 220 lbs.

OPEC basket, link here: $46.27. This certainly appears to be the beginning of a breakout. See the graph at the link.

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. 

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

Active rigs:

$43.09
9/1/202009/01/201909/01/201809/01/201709/01/2015
Active Rigs1064635676

No wells coming off confidential list today.

RBN Energy: is propane production increasing or decreasing? Great article. I think the answer will surprise you. Archived.

Understanding whether propane production is up or down over the past few months is a bit more difficult than you might think, depending on which set of EIA numbers you choose to look at. 
The U.S. Energy Information Administration provides monthly numbers on the last day of the month lagged by about two months, and weekly numbers on Wednesdays, lagged by only five days. Both time series are closely watched by the propane market to assess the availability of supply for retail customers, petrochemical feedstock demand, and exports. 
Usually, these two sets of numbers move in tandem. But not always. The monthly numbers show production down by about 70 Mb/d from April to June, which is what you would expect given what was happening with crude and gas production at that point in time. Yet EIA weekly production numbers showed production increasing by about 90 Mb/d for the same period. So which way is propane production really trending? If you want to understand what’s going on, and you don’t mind delving into some deeply wonky NGL analytics, hang on for today’s blog.

Thank Goodness For Algore's Internet -- August 31, 2020

Before the internet, all I would have heard on the radio is this: "Futures are flat as investors look for August momentum." LOL. The graphic tells a different story. After a huge run today for the NASDAQ, to see even a bit of green is quite amazing.

Maybe the S&P 500 and the Dow 30 are flat, but the NASDAQ certainly looks pretty good:

By the way, on so many levels, this market is not good for anyone, but it's certainly not good for those new to investing. It's at times like these, I wish Louis Rukeyser (PBS) or Mark Haines (CNBC) were still with us. 

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And Thank Goodness For Juneau Whale Watch

Link here.

This is pretty cool:

  • if the toothed whales and the baleen whales are siblings ..
  • ... and hippos are their first cousins....
  • ... then the other artiodactyls (even-toed) ungulates are distant cousins of the hippo and the whale. 

I think I knew that at one time but had long forgotten. 

Both the whale and the hippo had a common ancestor, a terrestrial that lived during the age of dinosaurs, and lived on for a few more million years after the last dinosaurs died out 65 million years ago. The whale lineage and the hippo lineage ultimately split somewhere between 60 and 40 million years ago with the former returning to the sea and the later returning to fresh water. Evolution in a relatively "weightless" environment resulted in an animal that did not require legs for support, unlike the hippo. One can see the similarity between early whales (e.g., Maiacetus) and the modern hippo.

By the way, of the even-toed ungulates, the first (and thus the oldest) are the camels and the llamas.