Sunday, September 15, 2013

Summers Withdraws

At 6:32 CDT, Dow futures are up 179 points. 

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. 

The Wall Street Journal is reporting:
Lawrence Summers, a former U.S. Treasury secretary, called President Barack Obama Sunday to say he is pulling out of the contest to succeed Ben Bernanke as chairman of the Federal Reserve.
"I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation's ongoing economic recovery," Mr. Summers said in a letter to the president that followed the telephone call.
This is most interesting:
"The biggest chunk of the problem was Syria and leaving him out there that long," the former official added. "You just can't do that."
It will be interesting to learn which senator phoned Mr Summers before the latter's phone call to Mr Obama.

The Dickinson Press Is Reporting That The Sun Will Rise In The East Tomorrow

The Dickinson Press is reporting: on-time trains a rarity east of Fargo.


Is this news? Everyone in North Dakota knows this. During the winter Amtrak can be 24 to 36 hours late. Even during the summer, I always felt that the 11:00 a.m. train to Williston was on time if it arrived before sunset.

I was just surprised that TDP implied it was only east of Fargo. As far as I know, and I've ridden Amtrak a lot, it's never on time across the whole northern tier from Boston to Portland (Oregon), or south from Chicago to San Antonio.

But as long as it was posted, we might as well make something of it. Just think of Amtrak to passenger train service as ObamaCare to health care service. Getting care is going to be delayed and VERY expensive. Both Amtrak and ObamaCare are heavily subsidized. See recent post on same. Maybe I will link it later.

The Los Angeles Times Notes The Reality of ObamaCare And Has A New Name For It

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.

The Los Angeles Times is reporting:
The doctor can't see you now.
Consumers may hear that a lot more often after getting health insurance under President Obama's Affordable Care Act.
To hold down premiums, major insurers in California have sharply limited the number of doctors and hospitals available to patients in the state's new health insurance market opening Oct. 1.
New data reveal the extent of those cuts in California, a crucial test bed for the federal healthcare law.
These diminished medical networks are fueling growing concerns that many patients will still struggle to get care despite the nation's biggest healthcare expansion in half a century.
Consumers could see long wait times, a scarcity of specialists and loss of a longtime doctor.
"These narrow networks won't work because they cut off access for patients," said Dr. Richard Baker, executive director of the Urban Health Institute at Charles Drew University of Medicine and Science in Los Angeles. "We don't want this to become a roadblock."
Some think the LA Times is as liberal as The New Yorks and/or as supportive of the president. 

Notice how they call this the "Obama Affordable Care Act." This is not the full name of the act, and folks have criticized others for calling this "ObamaCare."

Be that as it may.

For agile investors, this is an opportunity of a lifetime -- one just needs to know where to go "short" with "ObamaCare" and where to go "long" with "ObamaCare."

Insurers have raised their premiums and are now limiting their services in anticipation of ObamaCare. They are preparing for the worse case scenario. Think of personal property insurers preparing for a new hurricane season.

Now, most of ObamaCare is delayed or exempt; the only major piece remaining is the "personal mandate." Some are betting that the "personal mandate" will be delayed a year. Maybe, maybe not. Agile traders are watching the tea leaves closely.

If the "personal mandate" is delayed, agile traders will be ready to pounce. Once insurers have raised their premiums, it is unlikely they will quickly bring them down. They may bring them down under pressure from state government regulators and free market competition (the latter, unlikely) but it will take time. Meanwhile, quarter by quarter, profits will drop directly to the bottom line.

Think of those same personal property insurers along the Gulf Coast who raised rates in anticipation of a horrendous hurricane season only to be blessed with no losses because there were no significant hurricanes. The insurers will bring down their premiums slowly, if at all. 

I've posted my philosophy on this before. In the emotional/political arena, I don't care for ObamaCare as it has been fashioned and I will continue to post comments showing my bias.

On the other hand, as an investor, it is another story. I am convinced that folks like Warren Buffett are looking at ObamaCare from an investor's point of view, and dispassionately from the political point of view. It is what it is.

But the gap will widen between the "haves" and the "have-nots" under ObamaCare and some folks on the margins will see their tax rates spike if their "health insurance benefit" carries them into the next tax bracket. 

[I compliment The Los Angeles Times for leaving off part of the official name of this act, "The Patient Protection" portion because it is now clear that Americans will not be guaranteed to keep their current physicians as previously promised. That part of "patient protection" is out the window.]

Hardscrabble Oil Field

Hardscrabble oil field has pretty much missed the Bakken boom. Until now. CLR will report a nice well in Hardscrabble tomorrow.

Every once in awhile one finds a little bit of the four-county area in the Bakken that is still relatively devoid of recent oil activity. Hardscrabble is one of those areas. It is an 8-section oil field, one of the smaller fields. It's an old field where multiple formations were targeted, located a few miles southwest of Williston, north of the river. It is just west of the Baker field where CLR is putting in that 14-well pad.

A bit of trivia sent in by a reader; I did not know this. President Grant's farm was called "Hardscrabble."

25017, conf, CLR, Patch 1-11H, 14K in first full month of production; first produced in June, 2013;



Some older permits/wells:
  • 19034, 2000, Statoil, Lippert 1-12 1H, t11/10; cum 160K 7/13;
  • 13428, Red River/Stonewall: 324/108 (IA), Rim Operating, Skurdal 6-24, t4/94/t10/97; cum 591K 7/13; cum 114K 7/13;
  • 11578, Duperow/Birdbear; 103/155/A, Proven Petroleum, Habermeyer 33-13 1, t12/85/t8/86; cum 161K 7/13; cum 61K 7/13;
  • 11459, Birdbear/Madison; 13/48/A, Proven Petroleum, Tofte Federal 1, t8/85/t9/85; cum 45K 7/13; 77K 7/13;
  • 11252, Duperow/Madison; 170/109/PA, SM Energy, Metzger 1-9, Indian Hill oil field, directional; t9/85; t1/86; cum 10K 7/13; cum 235K 7/13;
  • 11219, Duperow/Birdbear; 82/65/IA; Proven Petroleum, Patch Federal 1, t7/85/t5/93; cum 135K 7/13; cum 67K 7/13;
  • 11136, Madison/Birdbear/Duperow; 222/51/26/AB; SM Energy, Skurdal 3-24, t3/85/t10/93/t12/94; cum 146K 7/13; 4K 7/13; 30K 7/13;
  • 10681, directional, one section, 339/A, Madison, Rim Operating, Skurdal 2-24HR, t7/84; cum 286K 7/13;

Foreman Butte Has Been Updated; Grail Oil Field Has Been Updated

Link here for Foreman Butte.

Link here for the Helis Grail

Nice memories over at "Meanwhile, back at the ranch...."

My first "car" was a 1948 Willys jeep; wood enclosure. My dad got it for me around 1967. I drove it everywhere. Never rolled it. Up and down the gullies. This thing would climb out of a three-foot ditch, straight up. Great memories. My brother inherited it. After that I lost track of it. My memories are hit and miss.

Wells Coming Off The Confidential List Over The Weekend, Monday; Halcon With A Huge Well In Eagle Nest; CLR Reports A Nice Well In Hardscrabble

Monday, September 16, 2013
  • 22981, 2,396, HRC, Fort Berthold 148-94-9C-04-3H, Eagle Nest, t7/13; cum 25K 7/13;
  • 23296, 641, Petro-Hunt, Boss 154-99-18C-17-3H, Stockyard Creek, t6/13; cum 28K 7/13;
  • 24192, 318, Baytex, Pulvermacher 3-10-161-99H 1XN, Garnet, t5/13; cum 22K 7/13;
  • 24798, 1,532, MRO, Roehr USA 34-7H, Wolf Bay, t5/13; cum 61K 7/13;
  • 24807, drl, CLR, Wahpeton 14-16H2, Banks, no production data,
  • 25049, drl, Slawson, Alamo 6-19-18TFH, Big Bend, cum 30K 7/13;
Sunday, September 15, 2013
  • 24526, 1,729, Newfield, Loomer State 150-99-5-8-2H, Tobacco Garden, t6/13; cum 37K 7/13;
  • 24625, 2,854, BR, Badlands 41-15TFH, Hawkeye, t8/13; cum --
  • 24868, drl, Hess, EN-Fretheim A 155-93-3334H-9, Robinson Lake, no production data,
  • 24967, conf-->LOC, CLR, Tangsrud 9-1H, Hayland, no production data,
  • 25111, drl, XTO, Lundin 41X-14D, Siverston, no production data,
  • 23670, drl, KOG, Koala 8-5-6-5H3, Poe, no production data,
Saturday, September 14, 2013
  • 23712, 780, Fidelity, BMP 19-20H, Dutch Henry Butte, t4/13; cum 26K 7/13;
  • 23911, 256, Baytex, Leo 32-29-162-97H 1NC, Bluffton, t4/13; cum 17K 7/13;
  • 23929, 1,164, Fidelity, Nesson 31-30H, Stanley, t3/13; cum 48K 7/13;
  • 24189, 3,192, Zenergy, Link 10-3H, Foreman Butte, t7/13; cum 21K 7/13;
  • 24261, conf --> LOC, BR, Glacier 24-9MBH, Clear Creek, no production data,
  • 24635, 287, American Eagle, Frances 2-2-163-101, Colgan, t7/13; cum 5K 7/13;
  • 24784, drl, Hess, LK-Bice-147-97-1201H-3, Big Gulch, no production data,
  • 25017, 495, CLR, Patch 1-11H, Hardscrabble, t6/13; cum 28K 7/13;

23296, see above, Petro-Hunt, Boss 154-99-18C-17-3H, Stockyard Creek:

DateOil RunsMCF Sold

24798, see above, MRO, Roehr USA 34-7H, Wolf Bay:

DateOil RunsMCF Sold

25049, see above, Slawson, Alamo 6-19-18TFH, Big Bend:

DateOil RunsMCF Sold

24526, see above, Newfield, Loomer State 150-99-5-8-2H:

DateOil RunsMCF Sold

23929, see above, Fidelity, Nesson 31-30H, Stanley:

DateOil RunsMCF Sold

25017, see above, CLR, Patch 1-11H, Hardscrabble:

DateOil RunsMCF Sold

DOE Defends Its List Of 38

CNBC is reporting:
The Department of Energy's loan guarantee program for alternative energy companies has been hit by some high-profile failures. 
Yet the agency is sticking by its guns, even as the overall green sector comes under scrutiny, and critics insist the government should not play the role of green venture capitalists.
Last week, the DoE admitted a recipient of a $50 million green loan-Michigan-based Vehicle Production Group-would cost the government $42 million. VPG was forced to lay off hundreds in February, after paying back only $5 million of what the DoE lent it.
Since its creation in 2005, the $34 billion lending program has provided 33 companies with government financing for alternative energy projects. The program has had some high-profile successes. It's helped set up 13 solar energy firms that are actively selling power into the grid.
But failed start-ups -namely Solyndra, Fisker Automotive and First Solar, which all received funds from the green lending program-have left taxpayers in the red. 
For the "list of 38" click here

The interesting thing is that CNBC is missing the bigger story here. Incumbent party sends funds to start-ups -- > CEOs donate money to incumbent party. There's a term for this.

Here We Go Again: Rope-A-Dope

Syria moving chemical weapons BACK to Iraq.

Another One Bites The Dust

The Denver Post is reporting:
Aleo Solar AG, a German-based PV module manufacturer and developer, said Friday that it is withdrawing from the U.S. market and dissolving Aleo Solar North America, based in Denver.
In a short statement, the company said the move was triggered by the fact that despite a year-on-year increase in sales, the company's operations in the United States failed to meet recent sales targets.
It said its U.S. operations were not operating profitably.
Note: German.


Naysayers won't have time to read this, but this is probably the best first-person story ever written explaining why single home solar energy will never work. [Note: "never" = in my investing lifetime.]


If you want to have a bit of fun whiling away a leisurely Sunday, zoom in on the highway between Williston, North Dakota, and Watford City, North Dakota. Use the satellite view and drill down as much as you can just to see all the truck traffic. It really is quite remarkable.

Also, note the new complex at the 13-mile corner north of Williston.

Update On The Four-Lane Highway Being Built From Watford City To Williston

The Bismarck Tribune is reporting:
It's an upside-down world in the oil patch, when spending millions of dollars to acquire land to widen highways seems like chump change indeed.
The state Department of Transportation has embarked on a huge project, turning U.S. Highway 85, a notorious death trap, into a much safer four-lane corridor from Watford City to Williston. It's a distance of about 46 miles and about 7,000 semi trucks.
The cost of the project is estimated at $300 million, the single largest project in terms of dollars the department has undertaken in its history.
Included in that enormous price tag is the cost of buying land from adjacent landowners in a region where property values have absolutely skyrocketed.
It's a new situation for the DOT, which for decades has maintained highways, not built them.
"We haven't acquired this much right-of-way since the '50s," said Bob Fode, DOT's director of project development.
The DOT is paying an average $22,000 an acre, or roughly $140,000 a mile for what amounts to about 20 feet on either side of the existing highway. That buys enough room to expand from two to four lanes with an interior median.

Quick! Where's Bucyrus?

This is another incredible story coming out of North Dakota.

The Bismarck Tribune is reporting:
Last week the easternmost elevator in a grain-chain owned by a Japanese global conglomerate, Mitsui and Co., was filling a unit train with golden North Dakota spring wheat bound for export from terminals in Vancouver, WA.
Including that near brush with fire, it's been a big year and an important one for Mitsui's subsidiary, United Grain Corporation, making inroads into some of the country's premiere wheat fields.
Tony Flagg, who heads development for United Grain, said the Bucyrus facility is one of three the company built to secure export-bound grain and the most important for topnotch spring wheat quality. The other two are in Montana at Conrad and Culbertson.
The Bucyrus Elevator is still a bit raw around the edges, but it's been a success since opening its doors in early August, Flagg said.
If anything, the company wasn't prepared for the amount of grain that came in the door. Three unit trains, each filled with 440,000 bushels, weren't enough to handle the incoming wheat. Two more are scheduled this month.
Go to the linked story to see how much wheat they are shipping, how they are going to out-compete Montana. 

Bucyrus is about 60 miles due south of Dickinson.

Incredible story.

By the way, the Japanese must be amazed how fast "they" can get things done in North Dakota: this project was announced less than a year ago, back in September, 2012

Twenty Important Concepts Not Taught In Business School -- Nate Hagens, The Oil Drum

Another great article at The Oil Drum -- if you have the time. It's a long article, and only Part I.

One more reason it's sad to see The Oil Drum call it quits.

[Update, August 17, 2015: I could not find Part II of this article.]

Week 37: September 8, 2013 -- September 14, 2013

New production record
New record: production surges 6.43% month-over-month
One million bopd -- the next milestone
BNSF and Enbridge meet takeaway demand
The accolades will roll in all week
Record production is a bigger story than most folks realize

Packers Plus in the news

Another Bakken payzone? The Lower Bakken Silt

Some huge wells being reported
Halcon has a huge well in Eagle Nest
On track for 2,500 permits
Number of wells going to DRL status might be a record
Bakken as laboratory: 48 wells in a spacing unit

New Frontier to build rail/industrial yard in Williston

Natural Gas
45-MW natural gas plant comes on line near Williston; more coming

Halcon to sell non-core conventional assets
Steve Zachritz on the Oasis Big Buy

KOG at Barclay's CEO-Energy Conference
EOG at Barclay's CEO-Energy Conference
Whiting's Corporate August presentation

Random update of some Bakken highlights since June, 2013
A flurry of stories on Whiting
A nice story on Kathy Neset

Obama Administration Throws The Unions Under The Bus; Obama Double-Crosses AFL-CIO -- Forbes

The Hill is reporting:
The Obama administration on Friday denied a request from labor unions to have their healthcare plans receive tax subsidies under ObamaCare. 
A White House official said the Treasury Department has determined that the healthcare plans used by many union members — known as multi-employer or Taft-Hartley plans — cannot be made eligible for subsidies that are intended to help uninsured people afford coverage.
That's the lede, but I'm sure the Obama administration will find a way, deus ex machina, November 1, 2014, to figure out a way to help the unions.

Forbes is reporting: Obama to labor unions with multi-employer health plans -- drop dead!
Well played, Mr. President.
Last week, prior to the big AFL-CIO convention in Los Angeles, President Obama personally spoke to AFL-CIO chief Richard Trumka, asking him to water down several anti-Obamacare resolutions that union leaders were planning to pass there.
Trumka obliged, keeping calls to repeal Obamacare out of the official AFL-CIO resolution on the health law. Then, on Friday evening, after the convention was over, the Obama administration revealed that it would ignore unions’ demands to subsidize their members using Obamacare. As a result, some unions fear that they will wither away.
“I guarantee you by your next convention four years from now, you won’t meet a quarter of this room,” said Joseph Nigro, president of the Sheet Metal, Air, Rail and Transportation Union. “We won’t be here.”

Wall Street Helping North Dakota Farmers, Ethanol Refiners

North Dakota ethanol refiners, farmers helped by Wall Street.

The New York Times is reporting:
It was supposed to help clean the air, reduce dependence on foreign oil and bolster agriculture. But a little known market in ethanol credits has also become a hot new game on Wall Street.
he federal government created the market in special credits tied to ethanol eight years ago when it required refiners to mix ethanol into gasoline or buy credits from companies that do so. The idea was to push refiners to use the cleaner, renewable fuel, or force them to buy the credits.
A few worried that Wall Street would set out to exploit this young market, fears the government dismissed. But many people believe that is what happened this year when the price of the ethanol credits skyrocketed 20-fold in just six months, according to an analysis of regulatory documents and interviews with more than 40 people involved in the market, including industry executives, brokers, traders and analysts. 
A reminder of what we are talking about:
Every time they mix ethanol into gas, or import fuel already blended with ethanol, energy companies get a credit from the government, and that credit can be sold to other companies that don’t blend ethanol to help them meet federal requirements. If refiners fall short of their obligation, they can face fines of $32,500 a day. To monitor compliance, each gallon of ethanol is assigned a 38-digit Renewable Identification Number, or RIN. Six billion of them were generated in the first six months of this year.