The Million Dollar Way (The Bakken Oil Blog): 06/19/13

Wednesday, June 19, 2013

Oil Stocks At Cushing Dropped For Third Consecutive Week; Lowest Level In 2013; Overall Imports Ticked Up Slightly

Commercial crude oil stocks in Cushing, Oklahoma, the delivery point for the New York Mercantile Exchange (NYMEX) crude oil contract, dropped for the third consecutive week, hitting their lowest level yet in 2013, U.S. Energy Information Administration (EIA) data showed Wednesday.

Stocks at Cushing fell 669,000 barrels to 48.596 million barrels during the reporting week ended June 14, the EIA's data showed, a level not seen since the week ended December 14, 2012.

The drop contrasted with a build in U.S. commercial crude oil stocks, which ticked up 313,000 barrels to 394.121 million barrels, amid a 586,000 barrels per day (b/d) increase in imports.

Data released by the American Petroleum Institute (API) late Tuesday showed a 4.286 million-barrel drop in crude oil stocks, coupled with a decline in imports.

The decrease at Cushing is a welcome sign for Bakken oil. I wonder if the increase in imports might have something to do with a) heavy oil needed by US refineries; and, b) Saudi oil for their large joint venture refinery along the coast.

Wells Coming Off The Confidential List Thursday; KOG And G3 Each Have A Huge Well

18987, 223, KOG, Two Shields Butte 14-21-16-2HS, Heart Butte,
21513, 23, KOG, Smokey 3-6-7-14HS, Bully,
22983, 1,464, G3 Operating, Fort Berthold 148-94-29B-32-2H, Eagle Nest,
23696, 612, Whiting, Evy June 18-19H, Wildcat, located on the Montana state line, about 10 miles south of the Missouri River; about a mile north of the Yellowstone River;
23946, drl, Statoil, Sanders 34-27 2H, Ragged Butte, no data,
24375, drl, KOG, P Wood 154-98-3-27-34-15H, Truax, no data,
24578, 565, CLR, Barney 2-29H-2, Brooklyn,

18987, see above, KOG, Two Shields Butte 14-21-16-2HS:

Date	Oil Runs	MCF Sold
4-2013	29870	6877
3-2013	39636	0
12-2012	75	0

21513, see above, KOG, Smokey 3-6-7-14HS, Bully:

Date	Oil Runs	MCF Sold
4-2013	11443	19911
3-2013	10894	0

22983, see above, G3 Operating, Fort Berthold 148-94-29B-32-2H, Eagle Nest:

Date	Oil Runs	MCF Sold
4-2013	22698	0
3-2013	16522	0

23696, see above, Whiting, Evy Juen 18-19H, Wildcat:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	Vent/Flare
BAKKEN	4-2013	30	4667	4202	4080	2800	2740
BAKKEN	3-2013	18	3931	3877	4733	2536	2500
BAKKEN	2-2013	19	3143	2694	3637	1763	1733
BAKKEN	1-2013	24	3859	4877	5200	2431	2389
BAKKEN	12-2012	13	3375	2198	11803	1987	1961

24578, see above, CLR, Barney 2-29H-2, Brooklyn:

Date	Oil Runs	MCF Sold
4-2013	8926	12816
3-2013	6733	10728

Eight (8) New Permits -- The Williston Basin, North Dakota, USA; Statoil With Another Huge Well;

Note: most links to other posts in my blog are "broken." The links, unfortunately, take you to spam; someone has "borrowed" my URL. I've changed the URL to this blog. Hopefully everyone will be able to find this site again. Over time, more and more of the internal links will be fixed.

Active rigs: 186 (nice, rising, once again)

Eight (8) new permits --

Operators: BR (4), Newfield (2), CLR (2)
Fields: Siverston (McKenzie), Banks (McKenzie), Clear Creek (McKenzie)
Comments: Nice to see Newfield active

Wells coming off the confidential list were posted earlier; see sidebar at the right.

Six (6) producing wells were completed:

23441, 1,115, XTO, Thompson 21-11SWH, Charlson, t5/13; cum -- [note: NDIC is reporting an IP of 11,115 which is an obvious error; the well file is not yet scanned; I am assuming it is 1,115 but that could be a wrong assumption;
23957, 707, Hess, En-D Cvancara S-154-93-0904H-5, Robinson Lake, t5/13; cum --
23822, 697, Hess, HA-State 152-95-1621H-2, Hawkeye, t5/13; cum --
23826, 540, Hess, EN-State D 154-93-2635H-5, Robinson Lake, t5/13; cum --
22606, 1,557, Statoil, Scha 33-34 4TFH, Alger, t5/13; cum --
22940, 4,295, Statoil, Banks State 16-21 3H, Banks, t5/13; cum --

Apple News: Los Angeles Unified School District -- $30 Million For iPads -- 47 Campuses

The LA Times is reporting:

Apple Inc. won a $30-million contract Tuesday from the Los Angeles Unified School District, paving the way for the company to provide every student with an iPad in the nation's second-largest school system.

On the tablets, the board voted 6 to 0 to authorize the purchase of the devices after senior staff lauded the iPad option as both the best in quality and the least expensive product that met the district's specifications.

Huge News! Though They Pulled Back By The Close, Could This be The Reason SandRidge, Triangle Petroleum, Halcon, EOG All Popped?

Updates

Later, 6:56 pm: SD gets new CEO; maybe that's part of the reason for its rise in price today.

Original Post

Disclaimer: this is not an investment sit. Do not make any investment decisions based on what you read here or what you think you read here.

Until they pulled back near the end of the session, TPLM, EOG, SD, and HK all had nice positive movements today; other oil and gas companies may have also had a good day; I don't know, I didn't look at any others. It really didn't make sense why they moved today; I wasn't able to find any news ... until.

Until Don sent me this article: The Bismarck Tribune is reporting that the federal study won't be completed until 2016.

A comprehensive government study of the effects of shale gas drilling on water quality and the environment won't be completed until 2016, a U.S. Environmental Protection Agency official said ... the agency could have a preliminary report ready late next year.

Briskin said the EPA has sampled water in two drilling counties in Pennsylvania, plus in Colorado, North Dakota and Texas. Nine energy companies and nine drilling-supply companies have cooperated with the EPA research, she said, and 1,000 chemicals have been identified as being used in the drilling process.

The event, organized in part because of Ohio's role in the Utica shale boom, continued Wednesday.

Isn't that convenient? No final report until well into the final months of the 2016 campaign, election. Maybe we'll get a decision on the Keystone XL by then. But I digress.

This certainly gives a boost to the fracking industry. Although there might be a preliminary report next year, the final report won't be ready until another two or three years. That gives folks a long time to develop the unconventional shale industry well beyond the "too big to stop."

Maybe there is no connection between this news (about the fracking report delay) and the little pop some small shale operators had, but one wonders.

For Investors Only: EOG

Markets have been relatively flat today; energy also pretty flat. One exception: EOG with a little bit more upside movement than the rest of the industry (or at least the ones I looked at).

Motley Fool has a nice essay.

First point: Argentina likely to be a better energy bet than Brazil.

A couple years ago I was enthusiastic with regard to Petrobras, but my enthusiasm quickly waned when I realized Brazil will not risk their beaches with an oil spill, especially with an Olympics around the corner.

A long, long time ago I remember blogging about Argentina and EOG because I made a huge mistake; I thought the "dead cow" was located in Texas. LOL. A reader tactfully informed me that the "dead cow" was in Argentina. I had not given Vaca Muerta much thought since that original posting. It's hard to believe but that posting on EOG and Vaca Muera was posted on November 13, 2011, when I was still learning about the Bakken. We've come a long, long way.

Between November 13, 2011, and today, I don't recall talking (much?) about the "dead cow."

So, it was rewarding to see Motley Fool bring it up again:

One of the most promising potential plays in the country is in the Neuquen Basin in what is called the Vaca Muerta formation, which actually means "Dead Cow" in Spanish. One of the first movers here is Chevron which drilled two exploratory wells into the formation last year. The company is drilling another exploratory well this year with plans to drill three more appraisal wells. It's looking to expand its presence in the country even as it evaluates the results from those wells.

In order to expand, Chevron has been working on a joint venture agreement with YPF, which is the national drilling company in the country and a key holder in the Vaca Muerta field. The $1.5 billion venture would help jump-start the development of that field and could be worth up to $15 billion in total future investments. Foreign investments like Chevron's will be important in developing the play; its estimated that about $3 billion would be required just to get the shale gas extraction started, with upwards of $25 billion needed to develop Vaca Muerta's shale oil and gas potential.

Another company to watch here is EOG Resources. The company is also focused on the Vaca Muerta formation after signing two exploration contracts and one farm-in agreement with YPF. Last year, the company participated in the drilling of a vertical well which is producing, and also drilled a monitor well and a horizontal well. EOG is currently evaluating the results of these wells so its still in the very early stages of the process.

Second point: This is one of the reasons I have always been more enthusiastic about EOG compared to other companies we generally think of when we think of the Bakken. Unlike the other Bakken operators, EOG (along with Hess, of course) stands out among the independents as being a bit more diverse in its holdings: the Bakken, the Eagle Ford, and now the Vaca Muerta.

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

I don't have a third point.

Tea Leaves: Regardless of What Ben Says Today, A Case Can Be Made For MORE Stimulus; A LOT More

Updates

Later, 3:52 pm: I was certainly in the minority, but one other talking head did agree: a case can be made for increased stimulus. Come next spring, when Janet Yellen is chairman, I wouldn't be surprised to hear "Krugman" talk.

Original Post

The president's polls are deteriorating.

Folks have to be frustrated that the unemployment/employment numbers are not moving faster.

Folks have noted that we are not getting closer to the Fed's inflation target. Inflation is not a short-term concern.

If inflation is not a worry, and unemployment/employment is still not improving, and one's polls are deteriorating, what does a president do with regard to the Fed chairman?

Appoint someone more hawkish or more dovish that Ben with regard to stimulus?

The campaign for 2016 is about to begin (some have said it has started, including Drudge).

Are there hints that the President is exasperated with the inertia of the employment/unemployment numbers? Lots of talk today that when the President said "Ben's time is up" was not the President's finest moment. Some suggested that he was tired. Maybe. It's been my impression/experience that someone who is physically or mentally exhausted is more likely to speak without the need for listeners to parse what was said. [In other words: the President said exactly what he felt -- it's time for Ben to go.]

Two trivial notes: one talking head said that the president likes to appoint women to important positions, but there have been "complaints" that he has few women in his cabinet. [I don't necessarily agree: two of the most important cabinet positions in 2013 -- O'BamaCare and Homeland Security -- are both held by women.]

Oh, one more thing: perhaps the most influential East Coast economist is Paul Krugman who has argued often that there was not enough stimulus.

Three things are likely to happen over the next six months:

1) Ben stays the course, and the economy goes nowhere
2) Ben talks tapering; the economy goes nowhere, and the market goes down
3) Ben actually tapers: the economy goes nowhere, and the market really goes down

I just don't see Ben increasing the stimulus between now and January, 2014

I know very little about Ms Yellen, but I doubt I am not too far off the mark when I picture her somewhere between Krugman and Bernanke with thoughts on stimulus. Pick the one data point that does not belong with the other three:

a) Janet Yellen
b) San Francisco
c) Berkeley
d) Republican

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

It's a given that Ms Yellen will be the next Fed chairman.

For Investors Only: SandRidge

Monday, June 17, 2013: avoid the stock -- SeekingAlpha.

Wednesday, June 19, 2013: SD is popping, jumping almost 4%. I didn't see much news.

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

Connecting The Dots --- Global Warming And The Disappearing Male In The Work Force

I don't know if folks caught this but apparently, according to CNBC, American men have been disappearing from the workforce since the 1950s. This is exactly when greenhouse gases started to soar.

Men have been steadily disappearing from the workforce for more than half a century.
In the 1950s, nearly every man in his prime working years was in the labor force, a category that includes both those who are employed and those actively applying for jobs.

The "participation rate" for men ages 25 to 54 stood at 97.7% in early 1956, but drifted downward to a post-war record low of 88.4% at the end of 2012. (It ticked up very slightly at the start of this year to 88.6%.)

So where have all the men workers gone?

Some went into prison. Others are on disability. And still others can't find jobs and have simply given up looking.

That's a pretty dismal way to start the conversation: "some went to prison."

Later in the article:

"The proportion of guys doing nothing has risen," said Gary Burtless, a senior fellow at the Brookings Institution.

But those guys, I assume are employed by the Federal government....

My hunch is that somehow global warming is responsible. "They" certainly can't blame President Bush ... or can they?

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Have you ever noticed that reporters report 97.7% instead of 98% -- it makes the reporting seem so much more credible. Having said that, it is incredible that the "participation" rate was 97.7% in early 1956. No one must have been in prison, or mentally unstable, or living at home with their parents, or physically disabled, or transgendered and confused about their sexual orientation ... whatever ... to have a participation rate of 97.7%. I think that is even higher than the participation rate in the Bakken, and that's saying a lot.

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Now, speaking of percentages. I wonder if anyone caught this? Motley Fool does the same thing with percentages. From a recent article some data points:

in May, gasoline station sales dwindled by 0.2% (month-over-month). Was the decline in sales related to the drop in gasoline prices? Dwindled by 0.2%? One SUV not stopping by would account for a decrease of 0.2%. Give me a break.
For every 1% gain in the cost of refineries, the price of gasoline, assuming all things equal, will rise by 0.13%. So, if there's a 10% gain in cost to the refinery, gasoline will go from $3.6900 to $3.6948/gallon. On forty gallons, from $147.60 to 147.79. Give me a break. If you are doing the math, remember, it is 0.13% -- not 1.3%. And a 10% increase in cost to the refinery would be huge.
Marathon Petroleum also experienced a rise in its profit margin as it rose from 7.4% in the first quarter of 2012 to 7.6%. A profit margin rising from 7.4% to 7.6%? Is that even reproducible? Statistically significant?

That's why I would make a lousy analyst, and probably why I am a lousy investor. I round too many of my numbers.

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Chris Matthews blames President O'Bama's poor speech on the sun. I can't make this stuff up. President O'Bama is struggling but not because of the sun.

Local Governments Doing What They Accused Private Sector Of Doing To Avoid O'BamaCare: Hiring More Temporary Workers Or Cutting Hours

Updates

Later, 5:38 pm: small businesses, also. CNBC is reporting:

Small business owners' fear of the effect of the new health-care reform law on their bottom line is prompting many to hold off on hiring and even to shed jobs in some cases, a recent poll found.

"We were startled because we know that employers were concerned about the Affordable Care Act and the effects it would have on their business, but we didn't realize the extent they were concerned, or that the businesses were being proactive to make sure the effects of the ACA actually were minimized," said attorney Steven Friedman of Littler Mendelson. His firm, which specializes in employment law, commissioned the Gallup poll.

"If the small businesses' fears are reasonable, then it could mean that the small business sector grows slower than what economic conditions otherwise would indicate. And small businesses have been a growth engine in the economy," Friedman told CNBC.

Cue up Connie Francis.

Original Post

An absolute train wreck on so many levels. Investor's Business Daily is reporting:

Yet while private companies are getting all this unwelcome and hostile attention, local governments across the country have been quietly doing exactly the same thing — cutting part-time hours specifically so they can skirt ObamaCare's costly employer mandate, while complaining about the law in some of the harshest terms anyone has uttered in public.

The result is that part-time government workers — many of them low-income — face pay cuts that can top $3,000 a year, and yet will still be left without employer-provided benefits.

The MDW was among the first to talk about this reality of O'BamaCare. What I have not seen addressed to my satisfaction is who will do the actual counting of temporary vs permanent workers in any organization. My hunch is that simply calling someone temporary because he/she works only 29 hours will not be the way the IRS interprets the law.

Also missing from much of this discussion is whether overtime will now be mandated after 29 hours/week of work.

A lot more folks are going to be underemployed after O'BamaCare kicks in. Maybe that's why the administration needs all those immigrants. Talk about exploitation.

Wednesday Morning Journal Links And Maybe Other News -- The Train Wreck Is The Central Story In Today's Journal; No Mention Of The Syrian Civil War (Except Tangentially)

A reminder: someone stole my "URL" so a lot of links inside the blog will be broken; it will take time to fix them; some will probably never be fixed.

ALERT ALERT ALERT ALERT

Tesla announces a recall: a defect in the mounting bracket of the back seat in their otherwise "perfect" Model S. The company estimates 20% of their 1,226 vehicles might be affected. At least we know how many Tesla Model S's are out there. About as many in the ONEOK natural gas processing plants parking lots in North Dakota. I assume there are a lot of Ford 150's in those parking lots. The workers, no doubt, leave their Porsches in their garages back home.

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Okay, that's over. Now for the rest of the news.

The Wall Street Journal has some incredible stories today.

Again, the most interesting news is the news that is not being reported: what happened to the proxy war in Syria between Mr Putin and Mr O'Bama. Someone blinked. We'll never know.

Section D (Personal Journal) has some incredible stories today. First of all, Walt Mossberg confirms that Apple's new battery/MacAir does indeed "last all day." The only competitor that comes close is a Sony laptop, and that's only when you attach a second battery to the underside of the Sony laptop. Also, this little bit of trivia in the article:

For my tests, I chose the latest MacBook Air, introduced last week. The Air is the leading slim and light laptop in the U.S. According to research firm NPD, it outsold all Windows Ultrabooks combined in U.S. retail sales for the first four months of this year. I also took a look at an entirely new Windows Ultrabook, the Sony Vaio Pro 13, a handsome, even lighter laptop with a touch screen to accommodate Microsoft's touch-centric Windows 8 operating system.

It's a great article; must-read for Apple fanboys. No one else will care.

Then this story: tweens say it with duct tape. Last night we were discussing the concept of "tweens" with our two granddaughters. So, the article was timely in that respect. In addition, our older granddaughter had made a "Father's Day Card" for her father earlier in the week with duct tape, using multiple colored tape. And Sharpies. This article is all about youngsters, creativity, Sharpies, and duct tape. Sharpies are not ubiquitous, and come in 31 colors; duct tape comes in 200 different colors, up from 11 in 1997. It's another great article for anyone with children between the ages of 6 and 60.

I did not read the article on working with Microsoft on the iPhone, but it should be of interest to many.

In Section C (Money & Investing), I didn't read this article either about the market continues to move higher. This certainly doesn't look like a market worried about a war in the Mideast: first the market is going higher (which is normally wouldn't in a shooting war); and, oil is not spiking, just moving up nicely. If there was any concern that there would be a disruption in OPEC oil, the price of oil would spike at least $25.

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

My hunch: the market will fall significantly this afternoon after Ben mentions the word taper and the phrase "later this year" in the same sentence. So, we'll see. Some folks will probably sell high this a.m. and buy back low this afternoon. Others will sell low, and buy back high.

In Section B (Marketplace), the best story of the day. I proposed this "solution" some years ago; I don't know if I posted it on the blog. Wal-Mart needs to use their thousands of stores as mini-distribution centers to compete with Amazon. And that's just what they are now doing. There is also a back-story to this development. Two great articles. Amazon, by the way, is vexed with strikes in Germany. Wal-Mart pulled out of Germany years ago when it couldn't adjust to German ways, like this big of trivia at the linked article:

Wal-Mart famously ran into difficulty in Germany after trying to impose American rules on its German employees. Wal-Mart forbids supervisors from dating employees and asks employees to smile. Germany employees fought this, saying it was an affront to their personal rights.

One sort of understands how an Adolf Hitler could take control of a country with that attitude: smiling is an affront to personal rights. Okay. I doubt Adolph smiled after the age of 12, assuming he ever smiled before then.

On a happier notes, pilots in the future will use iPads in the cockpit, instead of dials and buttons. Passengers are already using them in economy. Everyone will be smiling.

And, as noted above, the front page did not have anything about Mideast strife, or if it did, not worth taking time to read. But this was predictable: health-insurance exchanges are behind schedule. Train wreck.

Around two million people are projected to receive insurance through the small business exchanges and seven million people will be enrolling in the individual insurance exchanges in 2014, according to the Congressional Budget Office.

The small-business exchanges in particular have had some early setbacks. The federal government said in April that contrary to initial plans, it wouldn't allow workers in the first year to choose between a range of insurance options offered through employers. For the first year, companies will select one plan to offer to workers.

In some states, only one insurance carrier has expressed interest in the small-business exchange. In Washington state, officials have had to postpone the exchange altogether because they couldn't find a carrier willing to offer small-business plans for all parts of the state.

Seventeen states are running their own small-business exchanges, with the federal Centers for Medicare and Medicaid Services carrying out the task on behalf of the remaining 33 states.

One huge train wreck. Senator Baucus is getting out just in time.

For those wondering how the oil market is gamed, a great article with details on how you, too, can play the game. Assuming, of course, you can take delivery of 80,000 bbls of crude oil next Monday. The source is Platts, one of the few sites I follow on Twitter.

By the way, I continue to say that a Twitter account is imperative in this day and age.

Illinois continues to flirt with ... well, flirt with something. The Illinois legislature delayed a pension vote due to deadlock.

Gov. Pat Quinn, a Democrat, has called the legislature back into session for Wednesday after members failed last month to pass a plan to fix a $96.8 billion shortfall in the state retirement system after more than two years of debate. The lack of action on the shortfall has caused Illinois's credit rating to fall to the lowest among U.S. states.

The entire state government, legislative and executive, is on one side of the aisle. Cue up Connie Francis. I suppose this is the sudden interest if finding Jimmy Hoffa; maybe he has a plan. He's dead, but that doesn't stop politics in Illinois.

I really was correct: in the world news section, "nothing" on the Syrian Civil War, except as background to other stories.

In the op-ed section, one of my favorite writers, Holman W. Jenkins says the young won't buy O'BamaCare. Young adults spend, on average, about $800/year for health care. Under O'BamaCare they either have to buy health insurance at $6,000/year or pay a $95 fine or 1% of their salary. The truck drivers in the Bakken earning $100,000/year will have a thousand-dollar penalty for free medical care vs trying to figure out how to enroll on-line and then pay $6,000 for the exercise. This is not rocket science. This is not even math. It's simple arithmetic. As one Democratic Senator pointed out last week -- that's right, it was "Markey" in a "Markey vs Gomez" debate in Massachusetts. Train wreck.

For $5 I could have heard this author speak at a Harvard Book Store event last week, but I chose not to go: Niall Ferguson on "the regulated states of America."

Wednesday Morning News And Links

Active rigs: 184 (steady) -- that was at the opening; now, at 10:01, it's back up to 186.

RBN Energy: clean air regulations and how it will affect the US energy revolution.

Cheap feedstocks resulting from dramatic increases in US shale production of natural gas and natural gas liquids (NGLs) have led petrochemical companies to plan at least 7 new processing plants - known as olefin crackers - all but one on the Gulf Coast. These plants are expensive (think $billions) and take years to permit and build. They also produce significant quantities of emissions that are restricted by the Clean Air Act (CAA) – some of which trade in a market that has been skyrocketing for the past few months – threatening to delay or constrain the Gulf Coast cracker building spree before it gets started. Today we describe the regulations.

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Wednesday, June 19, 2013