Monday, July 26, 2021

Notes From All Over -- July 26, 2021

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

Inflation: a key gauge of future inflation is easing. Link to The WSJ.

Bidinflation: Breitbart --

Might as well break it to the kids now. Christmas may look a bit austere this year. Hasbro—the maker of Monopoly, Nerf, and Dungeons & Dragons—announced that it is implementing price increases that will "go into effect fully for the fourth quarter" in order to maintain profit margins in the face of skyrocketing costs. This was music to the ears of investors, sending the stock up better than 12 percent Monday. But whatever tune those investors were singing, it certainly wasn't a Christmas carol — because the fourth quarter price hikes will come in what is known to the rest of us as the Christmas season.

We do not mean to cast aspersions on Hasbro or its investors. As the toy maker's CEO pointed out in an interview with CNBC, ocean freight is on average four times as expensive as it was a year ago. They aren't waging a war on Christmas here. It's just that inflation is here, and it does not look like it is going anywhere. Shoppers are likely going to find that things are a lot more expensive come Christmas time.

As Greenlight Capital's David Einhorn detailed in a letter to investors sent out Monday, much of the capital investment made over the past decade has gone into digital media, unprofitable tech companies, and companies that profess the woke capital catechism trinity of environmental/equity, social, and governance. That has left the kind of companies that make the things that are rising in price starved of investment and unable to expand production to meet demand. Investors in Tesla—up 113 percent over the past 12-months—are no doubt happy, but nothing Tesla does is going to resolve the shortage of cars and trucks that has sent used auto prices up 10.5 percent in June and more than 45 percent since last year.

"The point is, we believe we have reached a structural change in inflation," Einhorn wrote. "Part of that is driven by public policy, but part of it has been driven by capital markets and ESG mandates.The enormous emphasis on investing in often money-losing businesses in disruptive areas like technology has left traditional industries starved for growth capital. The result is they haven’t grown capacity and now they cannot meet demand. The more these ‘value' stocks are starved of capital, the higher prices are likely to go and the longer the inflation is likely to last."

All the talk about inflation being "transitory" may actually be making things worse. Higher prices would ordinarily lure investment. But with Fed officials and the Biden administration insisting that prices will not keep rising—recall that Biden recently claimed that his $4.1 trillion spending package would reduce inflation—investors are likely deterred, according to Einhorn. That would explain, for example, why new home sales remain surprisingly low despite record high prices. Who wants to invest in building new homes—or in a home builder—if the Fed is promising to crush the price gains? Ironically, that underinvestment will likely mean supply constraints remain in place and prices do keep rising.

– Alex Marlow & John Carney
Breitbart News Network

Whether or not one agrees with Marlow & Carney, it's hard to blame Hasbro's price increases on President Biden.

************************************
Give It A Rest

US set to push global economy over recovery line: see The WSJ

  • US 2Q21 likely exceeded pre-pandemic GDP, if so, a landmark moment for the global recovery is likely:
  • again, the incumbent has bragging rights
  • from the linked article:

The U.S. economy likely returned to its late-2019 size during the three months through June, helping to lift global output above its pre-pandemic level for the first time.

Economists surveyed by The Wall Street Journal estimate that figures to be released Thursday will show that the U.S. gross domestic product rose at an 8.5% seasonally adjusted annual rate in the second quarter. That likely left U.S. GDP—the value of all goods and services produced across the economy, adjusted for seasonality and inflation—above the $19.2 trillion level reached in the final quarter of 2019, the last before the spread of Covid-19 pushed large parts of the global economy to shut down and contract, they say.

The combined economic output of the Group of 20 leading economies exceeded its pre-pandemic level in the first quarter,  according to estimates by the Organization for Economic Cooperation and Development. With the U.S. and a number of other large economies crossing that threshold in the second quarter, it is likely that global output is now higher than the level recorded in the final quarter before the coronavirus struck, the group says.

It will be interesting to see what Rick Santelli, CNBC, has to say if US GDP comes in at 8.5% for the 2Q21. I believe this will be the "first reading" as they say. If traveling, I may miss Santelli's comments.

One assumes the market has already "baked in" this 8.5% 2Q21 US GDP. Prediction: come Thursday, the Dow will go up, go down, remain unchanged.

Meanwhile, for the rest of the year, from Goldman Sachs:

Goldman Sachs trimmed its U.S. economic growth forecast for remainder of the year on Monday, citing a slower recovery in the services sector.

The Wall Street bank revised both Q3 and Q4 growth 1 percentage point lower, to 8.5% and 5.0% respectively. That left the 2021 growth forecast at 6.6% on a full-year basis.

"We have long expected growth to peak in a mid-year boom fueled by vaccination and fiscal support," Jan Hatzius said on a note to clients. "But the subsequent deceleration now looks likely to be a bit sharper because the goods-to-services rotation is likely to be less seamless."

Weren't we trying to get to 6% under a previous administration?

US equities: apparently major indices hit new records today. 

Roku: link here.

"They" say AAPL is expensive at 34x earnings. We will see tomorrow. If AAPL misses, shares will plummet. Think SAM from last week. 

TSLA, link here. Profits "soar" to record -- The WSJ.

  • sales and profit exceeded estimates:
  • record-setting deliveries for the June, 2021, quarter;
  • shares gained a paltry 2.5% after-hours:
  • revenue: $11.96 billion vs $11.3 billion; and $6.04 billion y/y (comparisons with 2020 irrelevant)
  • adjusted earnings: $1.45 vs 97 cents and 44 cents y/y/ (ditto)
  • record-setting deliveries: 201,250 vehicles

Intel (INTC) set plans go again become world's premier chip company: easier said than done. Link here. Apple, Inc., has huge lead. Huge. 

McKesson: increases quarterly dividend from 42 cents to 47 cents. Let's see, 5 / 42 = 12%. That seems a nice offset to "inflation." Again, the gap widens between the investor class and the non-investor class. 

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

SCCO: this one is very, very interested; previously posted; increases quarterly dividend from 70  cents  to 90 cents.

Each quarter for the past few quarters SCCO has been increasing its dividend. Starting on 5/12/20: 20 cents; 40 cents; 50 cents; 60 cents; 70 cents; and now 90 cents. From 20 cents to 90 cents has more than quadrupled in one year; let's see, --- this most recent increase, 20/70 = almost 30% increase. 
Again, ... well I don't need to repeat myself. Trading at $65; a P/E of 24; a dividend yield of 4.44% prior to this most recent dividend announcement. Record date: Auugst 12, 2021; pay date; August 26, 2021.

Automobile manufacturers: in deep doo-doo. Link here. 

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

Vaccine rollout, CDC data, Monday, July 26, 2021, link here:

  • delivered: 394,949,575
  • administered: 342,212, 051
  • at least one dose: 188,729, 282
  • fully vaccinated: 163,173,366

Covid-19:

  • will widen the gap among the West, the "East", the emerging markets, and the failing countries:
  • the gap might be most noticeable in the West, between the US and the EU;
  • free-market capitalism, entrepreneurial spirit, makes a huge difference

US to end combat operations in Iraq by year-end. -- President Biden.

  • if he pulls this off, he will go down in history as ending the last American wars; 
  • Trump was going down that road but never pulled it off;
  • good, bad, indifferent, that's how the history books will report it; "Biden ends last American wars." 

Semi-pro football: apparently Texas and Oklahoma leave the Big 12; join the SEC.

Russia banned from the Olympics over doping violations: Russian gymnasts take gold.

Seven Permits Renewed; No New Permits -- July 26, 2021

MDU: expanding natural gas services to Wahpeton, Kindred (eastern North Dakota). Press release

NDIC scout tickets have not been updated.

Active rigs:
 

$72.16
7/26/202107/26/202007/26/201907/26/201807/26/2017
Active Rigs2313596360

No new permits.

Seven permits renewed:

  • Equinor (5): two Lucy Hanson permits and three Larsen permits, all in section 15-154-100, Williams County;
  • Prima Exploration: one State permit, in Divide County
  • Sinclair Oil & Gas: one Olson Federal permit in Dunn County

Whiting; The other day it was reported that Whiting will be acquiring assets in the Sanish oil field. The seller was not identified which usually means the seller is not a publicly-traded company. My first thought, the seller might be Slawson, but I'm now leaning toward Kraken Oil & Gas, LLC.

NDIC Updates Not Showing Up Or Maybe I'm Doing Somethiing Wrong -- Perhaps Time To Take A Few Days Off -- ReGroup -- I Will Have To Talk To Sophia -- July 26, 2021

NDIC: it appears the NDIC has quit updating scout tickets. The last scout ticket is for permit/file #38429. I believe we should be up to #38443 -- on Friday, July 23, 2021, the daily activity report, for example, posted six new Hess permits, none of which have been posted as scout tickets. Whatever. 

Active rigs:

$71.94
7/26/202107/26/202007/26/201907/26/201807/26/2017
Active Rigs2313596360

Wells coming off confidential list --

Monday, July 26, 2021: 11 for the month, 11 for the quarter, 191 for the year:

  • None.

Sunday, July 25, 2021: 11 for the month, 11 for the quarter, 191 for the year:

  • None.
Saturday, July 24, 2021: 11 for the month, 11 for the quarter, 191 for the year:
  • 37888, conf, Petro-Hunt, State 158-91-16C--2H, Kittleson Slough, producing, NDIC has not posted information;
Friday, July 23, 2021: 10 for the month, 10 for the quarter, 190 for the year:
  • 37889, conf, Petro-Hunt, State 158-91-16C-9-3H, Kittleson Slough, producing, NDIC has not posted information;
  • 37259, conf, Nine Point Energy, S Missouri 152-103-4-2-9H, Eightmile, producing, NDIC has not posted information;
  • 35562, conf, Liberty Resources, McGinnity E 159-93-31-30-4TFH, Northwest McGregor, producing, NDIC has not posted information;

RBN Energy: OPEC+ adjusts as crude oil comes into view for 2022. Archived.

As the outlook for crude oil in 2022 came into three-dimensional view this month, the market’s steadying mechanism managed to right itself again after another wobble. 
The Organization of the Petroleum Exporting Countries took its first formal look at next year in its July Monthly Oil Market Report, becoming the third of three widely watched prognosticators to do so. 
Among the other two, the International Energy Agency began projecting 2022 oil-market data in its June Oil Market Report, and the intrepid U.S. Energy Information Administration took its first analytical shot at next year way back in January in its Short Term Energy Outlook. 
The important third dimension that OPEC gave to the 2022 oil-market picture arrived on July 15 after two weeks of worry about whether production restraint by most of the group’s members and cooperating countries would survive. On July 18, though, the internal squabble driving that concern ended in a compromise that will result in production quota increases for several OPEC+ members. 
The 2022 projections by OPEC, IEA, and EIA, not to mention worry-driven elevation of crude oil prices prior to the compromise, make clear that the market needs OPEC+ to continue the orderly unwinding of its production cuts. In today’s blog, we compare the three forecasts and look at how the latest adjustment to OPEC+ supply management will affect the market.

Sunday, July 25, 2021

Now, For The Damages -- July 25, 2021

This story was published some days ago, in The Williston Herald, but for some reason I never posted it.

Posted now.

Last year the North Dakota Supreme Court upheld a lower court decision in the Wilkinson’s disputed mineral rights case that the state no longer has any claim to any minerals under Lake Sakakawea that lie outside the historical Missouri River channel.

But it also sent the case back to the lower court in Williams County, to consider damages.

Judge Paul Jacobson did just that on Thursday and Friday, hearing testimony from Wilkinson family members about their struggle to regain minerals that official records show the family retained after Lake Sakakawea was flooded in 1958.

To catch up on the story, see the tag,  "high water mark" or "riparian," although the latter was seldom used.

I considered this story the most egregious story to have come out of the Bakken up to that time, and I'm not aware of any story that is more egregious to this day. This was a "land grab" by the state, pure and simple; fortunately the court agreed.

**********************************
Whistle Register

Something to share with the oldest granddaughter who knows so much about music. I don't know if she knows about this, the whistle register.

At wiki.

For Investors Only -- Nothing About The Bakken -- July 25, 2021

Global investors: $1 trillion invested in US funds in 1H21, a record amount. Link to The WSJ. Some numbers rounded. 

Investors world-wide have funneled more than $900 billion into U.S.-domiciled mutual and exchange-traded funds, on a net basis, during the first half of the year. 
That is a record in data going back to 1992 and is more than investors have put into funds elsewhere around the world combined during the first two quarters of 2021.

This is just "mutual funds and ETFs ." Doesn't include other equities. Much more at the link. When you look at the American indices and the German index, imagine you are a German investor and not an American. My hunch: American mom-and-pop retail investors are doing a lot better than professional Germany money managers.

Previously posted:

Amazing graphics:

Graphic above:

  • A: trajectory when folks thought we were coming out of the pandemic; extend line A and we're easily at 36,000 for the Dow;
  • B: trajectory when vaccinations slowed down; and delta variant emerged
  • C: trajectory not seen; when delta variant concerns dissipate, probably beginning in October, 2021;

The graphic that absolutely amazes me

Someone is reading the blog. From Bloomberg via Yahoo!Finance today:$17 trillion "on the sidelines.


In the stock market, the refusal of retail investors to back down from every macro threat has become the only story. When will it end? Judging by the size of all the pools of cash lying around, it could be a while.

Among all the economic stories of the pandemic, the one about money piling up in people’s accounts has been the most significant in the stock market, where the S&P 500 just notched its seventh gain in nine weeks. Money market accounts, viewed in some circles as a “dry powder” reserve for equity deployment, sit at just under $4.5 trillion. A more obscure balance, the Federal Reserve’s count of money on deposit with commercial banks, has risen 33% from 2019 to $17 trillion.

While none of the money is completely unencumbered and professionals tend to hate the concept of “cash on the sidelines,” something is arming the day-trader cadres who seem bent on letting no market selloff last more than 24 hours. Take Monday, for example, when fears the delta variant would upend progress sent the S&P 500 down as much as 2.2%. Dip buyers ran to the rescue then and the rest of the week, sending the S&P 500 higher by almost 2% through Friday, despite virus cases still spiking.

Whiting's S-Bar And Satterthwaite Wells In The Sanish

The wells:

  • 37083, conf/producing, Whiting, S-Bar 11-7HU, Sanish,
DateOil RunsMCF Sold
5-202143442510
  • 37082, conf/producing, Whiting, S-Bar 11-TFHU, Sanish,
DateOil RunsMCF Sold
5-202125491521
  • 24264, AB/1,253, Whiting, S-Bar 11-7H, Sanish, t3/13; cum 159K 12/19 
  • 24263 AB/503, Whiting, S-Bar 11-7-2TFH, Sanish, t3/13; cum 106K 12/19
  • 17964, 571, Whiting, Satterthwaite 11-7H, Sanish, t6/09; cum 190K 3/21;
  • 21252, 690, Whiting, S-Bar 11-7TFH, Sanish, t2/12; cum 113K 3/21;
  • 36862, conf/drilled/awaiting completion, Whiting, Satterthwaite 13-7-2H, Sanish, spud, December 16, 2019; TD, December 22, 2019;
  • 36863, conf/drilled/awaiting completion, Whiting, Satterthwaite 13-7XH, Sanish, spud, December 24, 2019; TD, December 30, 2019;
  • 18965, AB/1,264, Whiting, Satterthwaite 13-7H, Sanish, t9/10; cum 246K 12/19;
  • 21935, AB/812, Whiting, Satterthwaite 14-7TFX, Sanish, t5/12; cum 122K 2/20;
    21936, 1,443, WHiting, S-Bar 14-7XH, Sanish, t5/12; cum 188K 12/19; but back on line 5/21; for four days; 
  • 21937, AB/813, Whiting, S-Bar 14-7TFX, Sanish, t5/12; cum 112K 2/20;
  • 36895, conf/producing, Whiting, Satterthwaite 14-7HU, Sanish,
DateOil RunsMCF Sold
5-2021600
  • 36896, loc, Whiting, Satterthwaite 14-7TFHU, Sanish, 
  • 36897, conf/producing, Whiting, Satterthwaite 14-7XH, Sanish,
DateOil RunsMCF Sold
5-2021650

The Niemitalo Wells

The wells:

  • 18481, 2,672, Whiting, Niemitalo 12-35H, Sanish, t5/10; cum 637K 5/21;
  • 17575, 3,260, Whiting, Niemitalo 11-35H, Sanish, t3/09; cum 703K 5/21;
  • 19502, 2,720, Whiting, Niemitalo 31-15XH, Sanish, t2/11; cum 511K 5/21;
  • 32624, 891, Whiting, Niemitalo 11-35H-2H, Sanish, t11/19; cum 244K 5/21;
  • 22710, 615, Kraken, Niemitalo 24-13H, Sanish, t1/13; cum 421K 5/21;
  • 32124, loc, Kraken, Niemitalo 31-15-2XH, Sanish,
  • 32123 loc, Kraken, Niemitalo 31-15-3XH, Sanish,

Breaking On Twitter, Elsewhere -- July 25, 2021

Peak viewing hours, Sunday afternoon, 3:00 p.m. CT for the Olympics:

  • table tennis (ping pong); and,
  • men's basketball, France vs USA; we already know the outcome of this one; first Olympics basketball game since 2004 that the US has lost; 

Any question why viewership is down; a 33-year low.

Olympics:

  • US men's basketball: loses first game in Olympics since 2004; lost to France
  • tennis: world's #1 loses (and is out) to world's #48
  • US women's gymnasts: one point behind Russia in qualifying; team looks vulnerable; 
  • good for her: Naomi Osaka wins her opening match; moves on; earlier she had skipped the French Open and Wimbledon;

Schlumberger:

  • to drill thirteen exploratory wells of Libya; link here;

GasBuddy:

  • weekly US demand reaches new 2021 high; bests week ahead of July 4, 2021; link here;
  • weekly (Sunday - Saturday) US gasoline demand set a new 2021 record, rising 2.3% from the prior week and was up 3.1% vs the four-week average; weekly demand was 0.6% higher than the week ahead of July 4 (week of 6/27)

******************************
The Grandsons -- Portland, OR

This is Judah. 

Local church music director.


Canadian Shale -- EIA -- 2015

Link here.

***********************
Inflation? What Inflation?

Bananas at Target this morning: 49 cents/pound, and they have so many, they will have to be marked down unless they plan to throw out a lot.

I have four grocery stores to choose from, all within biking distance, the nearest two minutes away and the farthest ten minutes away.

Tom Thumb: local regional; low-rent; last choice for me of the four; only went when we lived at our previous apartment; would never go there again; expensive; shoddy; owned by Albertson's just down the street.

Albertson's: nationwide grocer. A bit more upscale. Somewhat competitive. Much better meat selection than any other in the area. Outstanding rotisserie chicken, and still priced at $6.99. It's the only place I can find the fruit and fresh vegetables that my wife wants.

Walmart: everyone knows Walmart. No need to discuss.

Target: wow, what can I say! This store is incredibly busy. Tom Thumb is generally devoid of customers; Albertson's doing better but parking lot is really quite empty, considering. Target: parking lot is always full. People arrive before the store opens and wait for doors to open. I can bike there in less than two minutes. No exaggeration. Probably slightly more expensive than Walmart but a better shopping experience. It seems about the right size. For just a handful of items, it's a real trek to go to Walmart. I don't think Target has hot rotisserie chicken but it does have "cold" rotisserie chicken in the deli section, or whatever it's called. The meat / fish selection does not compare at all to what we get at Albertson's. But wow, that store is incredibly busy. They seem to have the right mix of self-checkout and checkers. But sometimes the self-checkout line gets really long. 

************************
Playing In The Mud

In the photo below, Corky and Jilly Bean. Correct spelling.

Sophia was painting a picture of a fairy castle or some such thing.

Sophia's mom was about to move Corky and Jilly Bean closer so they could see the painting better. 

Sophia yelled out: "No! They're playing in the mud." 

Deals In The Oil Patch -- Reuters -- July 25, 2021

Link here to Reuters. Numbers rounded from original article.

Macro:

  • first five months of 2021: sales of land parcels worth $6.9 billion, almost eclpsing the $7 billion recorded in all of 2020;
  • 2020: last year was the worst for US acreage sales since at least 2006
  • more deals on the way: more than $12 billion either up for sale or being prepared to come to market in the US

Individual exhibits:

  • OXY:
    • marketing 250,000 net acres in Delaware portion of the Permian;
    • $550 million
    • the company has targeted more than $2 billion from divestments in the first hal fo f2021
  • Ovintiv:
    • completed in mid-May, $880 million sale of its Eagle Ford position
    • sold to Validus Energy
  • Laredo Petroleum:
    • will sell a 37.5% stake in two Texas counties
    • buyer: Sixth Street Partners
  • Exxon Mobil:
    • may divest parts of its shale gas business in North America
  • Pursuing acreage sales:
    • OXY
    • Chevron
    • Whiting
    • COP
    • Callon Petroleum
  • Advance Energy Partners, majority owned by EnCap
    • exploring a sale around $2 billion
  • NORTH DAKOTA RimRock Oil & Gas
    • private equity firm Warburg Pincus asked for indicative acquisition offers for a deal that could exceed $500 million
  • EnCap-backed Grayson Mill Energy:
    • bought the Bakken shale assets of Equinor for $900 million (previously posted)
  • Uinta (Utah), Denver-Julesburg (Colorado)
    • unattractive due to federal and state political issues

From the blog's "Bakken Operators":

RimRock Oil & Gas

******************************
Warburg Pincus - RimRock Oil & Gas

Link here

A portfolio company is a company (public or private) that a venture capital firm, buyout firm, or holding company owns equity. In other words, companies that private equity firms hold an interest in are considered portfolio companies. Investing in a portfolio company aims to increase its value and earn a return on investment through a sale. Link here. And here (wiki).

$500 million / 120,000 acres = $5,000 / acre
$500 million / 30,000 acres = $17,000 / acre