Wednesday, November 20, 2013

Wednesday: Something Big Was Going To Happen Today But I Forget -- Oh, Yes, AMZG Will Begin Trading On NYSE; Devon To Buy GeoSouthern Energy, Largest Oil And Gas Deal This Year; Supreme Court Upholds Texas Abortion Law; CBS -- Obama Support Slumps To 37%

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or anything you think you may have read here.

Shale play: Devon Energy is nearing a deal to buy GeoSouthern Energy for approximately $6 billion, which would be the largest U.S. oil and gas transaction of the year. -- WSJ
  • Devon was the first to drill horizontally and frack; quickly fell behind competitors
  • GeoSouthern: privately held; almost all acreage in the Eagle Ford; not public information, its acreage
The deal could mark a turning point in the shale sector. Private-equity firms started entering the market in a large way in 2008 and 2009, and many are looking for a way to sell their investments.
International oil companies, which in the past snapped up shale assets, have lost some of their appetite for such deals, especially in the wake of Royal Dutch Shell's decision earlier this year to write down the value of its U.S. shale stakes by $2 billion.
It has also been a weak year for oil and gas acquisition activity. Only 390 oil and gas deals have been announced in the U.S. this year, valued at a total of $71.6 billion, according to Dealogic. At this point last year, 520 deals had been announced for $96.2 billion.
Several public oil and gas explorers have hung for-sale signs in the past year without finding buyers, including Whiting Petroleum Corp. and Kodiak Oil & Gas Corp. KOG, both of which are focused on drilling North Dakota's Williston Basin.
"If you are private right now and you can sell yourself, you do," says David Tameron, an energy analyst at Wells Fargo. "If I'm a buyer and there are a lot of people who want out the door, it's a good time to be buying."

Active rigs: 184

RBN Energy: Marathon's plans for the Ohio Utica.
Finding a home for growing condensate range material being produced in the Ohio Utica shale play involves local refinery deliveries as well as new transport routes to markets outside the region as far away as Canada. Midstream companies are busy developing infrastructure plans to gather both wellhead condensate and output from natural gas processing plants in the region. Today we detail MPLX and its sponsor Marathon Petroleum Corporation’s (MPC) recently announced Utica shale plans.
Some Catching Up To Do

Regular readers might remember Washington, DC, community activists trying to stop Wal-Mart from moving in. Wal-Mart won that battle and is now open for business. It is harder to get a job at Wal-Mart than get admitted to Harvard University according to this story. For the 600 Wal-Mart jobs, there were 23,000 applications (most of which were successfully done on-line, I imagine): that's an acceptance rate of 2.6%. On the other hand, almost three times that many (on a percent basis) are accepted to Harvard, 6.1%. The minimum wage is $8.50. One wonders how many more applicants there would have been had the starting wage been $10.00?

ObamaCare enrollment site:
a) 40% still needs to "built." And there was a surge to "fix" it when it failed in early October. This means that this site was in much more trouble than was initially reported:
b) it was known throughout the administration that the site did not have the "pay" module up and running when it went live. Apparently Congress did not know; and,
c) hackers can access the "cloud" where personal information transits; Consumer Reports is on record advising folks to "avoid" the ObamaCare webite. 
But despite that, the President told his supporters, from prepared noted, that more than 100 million Americans across 57 states have successfully enrolled. The President was enjoying the success of the ObamaCare roll out so much he shelved plans to attend the 150th anniversary of Gettysburg, perhaps the most important battlefield engagement on US soil.


This may all account for Obama's approval rating slumping to 37%. I thought by definition, his approval rating could not drop below 47%, much less 40%.

The biggest Bakken story of the year might have been announced yesterday: ONEOK is going to invest close to $1 billion to gather, process, and transport natural gas. I might be going out on a limb here, but this suggests to me that ONEOK thinks the Bakken is going to be around for another year or so. The plant will be located where the following operators are working: XTO, Triangle Petroleum, KOG, Slawson, and Zenergy. I assume CLR is in the area as well as many others.

The Wall Street Journal

After his ObamaCare debacle, President Obama agrees to piecemeal immigration overhaul. Anything to get his mind, and our minds, off the health care trainwreck.


For those of you who want to know how bad the ObamaCare website really is, front page, front section, "New Tech Worries Loom for Health Law."
One particular challenge that remains is building a payment system to transfer those subsidies to insurance companies. Mr. Chao said those "financial management" parts of the system aren't needed right away, but officials acknowledged that they must be running by January, when insurers will be expecting the subsidies to start flowing in.
Kevin Lucia, a senior research fellow at Georgetown University's Center for Health Insurance Reforms, said that "if is functional on the front end, the next critical question is whether the back end functions are working, too. Are issuers getting paid? Are they getting enrollment info from Is it accurate?"
Mr. Obama, speaking Tuesday at The Wall Street Journal CEO Council, said of the website, "By the end of this month it will be functioning for the majority of people who are using it." Some insurers are worried that the website's troubles may be turning off healthy customers while older or sicker ones may persist to sign up for policies, since insurers no longer can turn away people with existing health issues.
And then this:
Joseph Swedish, chief executive of WellPoint Inc., said the insurer, the nation's second-largest, is backing away from advertising its new offerings that it makes via the federal marketplace. "We have pulled back from marketing, not knowing how to get people enrolled at the moment," he said on the sidelines of the Journal's gathering.
One big trainwreck.

This will be a stand-alone later: a huge update on the Permian:
 One of Texas' oldest oil fields, in decline for decades, has become one of the hottest places in the country to drill for crude, as energy companies create clusters of wells with layers of horizontal branches. The Permian Basin—86,000 square miles centered on Midland, Texas—has been pumping oil since the 1920s, though production peaked at about 2 million barrels a day in the early 1970s. For decades, geologists have known that oil could be found in different layers of rock piled up like a stack of geologic pancakes.
Because of the Permian's many thick layers—Wolfcamp, Cline and Spraberry are the names of just a few—a group of wells on one site can potentially tap into several different oil reservoirs, each wellbore going down just far enough to reach its targeted layer and then turning sideways.

The Los Angeles Times

Wow, wow, wow -- the US Supreme Court upholds Texas abortion law.
The Supreme Court, by a 5-4 decision, rejects a Planned Parenthood appeal to block a Texas law that places restrictions on clinics that perform abortions.The measure, adopted by Texas lawmakers in July, requires that abortion providers have a doctor on their staffs who has admitting privileges at a hospital within 30 miles of the clinic. By rejecting the request, the justices signaled they do not think the Texas law puts an unconstitutional barrier before women seeking an abortion. The Planned Parenthood Federation said the law had forced 12 of the state's 36 licensed abortion providers to stop offering abortions.
In my mind, the portion of the law seems like common sense, but I never thought the judges would have that much common sense. It's just not politically correct to put mother's safety ahead of an elective procedure. Very, very elective.


So, did they or didn't they? Did Desert Hot Springs vote to declare bankruptcy or not? I can't find it in the LA Times, but the Miami Herald has the news:
This financially troubled city declared a fiscal emergency Tuesday in an effort to avert a second federal bankruptcy filing.
The City Council voted unanimously to declare the emergency as the city grapples with a $6 million gap between revenues and spending.
Interim City Manager Bob Adams has said declaring a fiscal emergency would enable the city to negotiate with contractors and labor groups to cut expenses.
If no action is taken, the city of 27,000 people near Palm Springs will run out of money by March, officials said.
The city previously filed for bankruptcy in 2001 after a legal judgment.
The New York Times

Top story in today's NYT: the "gold plan" for our elected leaders in Washington, DC
While millions of Americans have been left to fend for themselves and go through the frustrating experience of trying to navigate the federal exchange, members of Congress and their aides have all sorts of assistance to help them sort through their options and enroll.
Lawmakers and the employees who work in their “official offices” will receive coverage next year through the small-business marketplace of the local insurance exchange, known as D.C. Health Link, which has staff members close at hand for guidance.
“D.C. Health Link set up shop right here in Congress,” said Eleanor Holmes Norton, the delegate to the House from the nation’s capital.
Insurers routinely offer “member services” to enrollees. But on Capitol Hill, the phrase has special meaning, indicating concierge-type services for members of Congress.
If lawmakers have questions about Aetna plan benefits and provider networks, they can call a special phone number that provides “member services for members of Congress and staff.” 

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