Monday, September 16, 2013

MIlitary Base Shooting Kills Thirteen, Maybe More; President Stays On Talking Points -- Monday Night Links, News, And Views

President O'Bama stuck to his talking points on his economic successes over the past five years while mass killings were going on just across town on a Navy military installation.
While the president spoke, law enforcement officials just a few miles away took care of the wounded and dead, and attempted to track down two additional shooters suspected of being involved. 
I can't make this stuff up. 

He was just following the precedent that a former president set. Remain calm. Stick to script.

Motley Fool Comments On SandRidge

From Motley Fool:
For SandRidge Energy, that pay has come from the Mississippi Lime formation. However, the company has really only been scratching the surface of that play. It turns out the company is quite possibly sitting on more areas of pay than previously thought.
SandRidge is now exploring the other zones in and around the part of the Mississippian that it has primarily been targeting. The initial tests of those additional zones have produced some really encouraging results. This stacked pay potential actually encompasses up to five zones in total over much of SandRidge's acreage. That could materially increase the resource potential, meaning that the acreage the company holds could be much more valuable.
In the slide below from a recent investor presentation, SandRidge lays out the advantages of having these stacked pay zones as well as its current development plans. It also has a nice schematic to visually show what this looks like. (See linked article.)
And more:
There are a couple of items investors should take note of. First, the initial results of the Middle Mississippian wells are nearly double the company's current overall initial production rate average of 377 barrels of oil equivalent per day. Further, the real game changer is that SandRidge could drill these wells while utilizing its existing infrastructure, which would really improve overall returns.
That means that SandRidge's infrastructure is even more of a competitive advantage when adding in its stacked pay potential. It would yield an even greater rate of return for the $140 million invested in electrical infrastructure as well as the $530 million invested to drill salt water disposal wells. Bottom line here, if SandRidge can prove the potential of these additional zones it will add significant value to the company.
Much more information at the linked article. 

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. I follow SandRidge for a number of reasons, partly because it has a stacked play like the Bakken.

Active Rigs Hits New Post-Boom Low: 177; Fourteen (14) New Permits -- The Williston Basin, North Dakota, USA

Active rigs: 177 (new record; post-boom low)

Fourteen (14) new permits --
  • Operators: CLR (4), Statoil (3), Oasis (2), Whiting (2), Murex (2), KOG
  • Fields: Alexandria (Divide), North Tobacco Garden (McKenzie), Writing Rock (Divide), Crazy Man Creek (Williams), Cottonwood (Burke), Pleasant Hill (McKenzie), Todd (Williams), Truax (Williams)
  • Comments:
Wells coming off the confidential list were posted earlier; see sidebar at the right. 

Wells coming off the confidential list Tuesday:
  • 24783, drl, Hess, LK-Bice-147-97-1201H-4, Big Gulch, no production data;
  • 24966, drl, CLR, Tangsrud 10-1H2, Hayland, no production data;

Putting The Bakken Into Perspective -- Again

Do you remember that giant Kashagan oil project in the Caspian Sea that I've mentioned several times before? Just how expensive is it? The Motley Fool is reporting. Some data points:
  • largest oil discovery in 30 years (with some saying the Bakken is a trillion-bbl reservoir, that may be a factoid)
  • supposedly has just begin producing this week after seven years of delays
  • current bill: $48 billion; no cash flow
  • how much oil: 375,000 bopd divided among seven companies
  • Bakken: 875,000 bopd; still early in the development phase
Back in 2011, one headline: Kashagan is turning out to be a bust.

Wednesday Morning Links, News, And Views -- Part III

US industrial output up as manufacturing rebounds -- Reuters:
U.S. industrial production rose in August as a bounce back in motor vehicle assembly lifted manufacturing output, a hopeful sign for the economy after growth got off to a slow start in the third quarter.

Industrial output increased 0.4 percent last month after being flat in July, the Federal Reserve said on Monday. The rise was in line with economists' expectations.

How Chevron avoided a $20 billion bullet, Wall Street Cheat Sheet:
When an oil spill at Brazil’s Frade fields broke out in 2011, the Deepwater Horizon disaster was still fresh in the everyone’s minds. Brazilian officials, in a highly punitive mode, told Chevron the bill would be steep — $20 billion.
Less than two years later, Chevron is walking away from the spill with only $95.2 million paid, the Wall Street Journal reports. Brazilian authorities greatly overestimated the magnitude of the spill.
According to reports, approximately 3,000 barrels of crude oil went into the sea northeast of Rio de Janeiro. With the 4.9 million barrels spilled the year before in the Deepwater Horizon spill, it’s clear Brazil’s environmental regulators were expecting the worst. However, the spill at the Frade fields was contained, and Brazil’s enforcement team noted in the settlement it wasn’t bad enough to warrant anything close to the $20 billion it quoted in court.
Share price for CVX barely moved on this news, suggesting that no one really thought CVX would ever pay a $20 billion fine.


Dakota Growers Pasta, Headquarters In Carrington, ND, To Be Bought By Post

Post to Acquire Dakota Growers Pasta for $370 mln; expected to be immediately accretive to Post's results:
Co announces has signed a definitive agreement to acquire Dakota Growers Pasta Company from Viterra Inc., a wholly-owned subsidiary of Glencore Xstrata (XSRAY). Dakota Growers is a leader in the ~$5 bln North American pasta market, with leadership positions in the private label retail, foodservice and ingredient channels. 

Terms of the deal call for $370 mln in cash to be paid at the time of closing, on a cash-free, debt-free basis, subject to a working capital adjustment.  The acquisition will be funded by a combination of cash on hand and up to Co announces has signed a definitive agreement to acquire Dakota Growers Pasta Company from Viterra Inc., a wholly-owned subsidiary of Glencore Xstrata (XSRAY). Dakota Growers is a leader in the ~$5 bln North American pasta market, with leadership positions in the private label retail, foodservice and ingredient channels.
Dakota Growers Pasta Company, headquartered in Carrington, ND, is the third largest pasta manufacturer and marketer of dry pasta products in North America.  History at wiki.

Post, known for its "Post" cererals, has a market cap of $1.43 billion.


It's Official: The Gap Between The "Haves" and the "Have-Nots" The Widest On Record

The AP is reporting:
The gap in employment rates between America's highest- and lowest-income families has stretched to its widest levels since officials began tracking the data a decade ago, according to an analysis of government data conducted for The Associated Press.
Rates of unemployment for the lowest-income families - those earning less than $20,000 - have topped 21 percent, nearly matching the rate for all workers during the 1930s Great Depression.
U.S. households with income of more than $150,000 a year have an unemployment rate of 3.2 percent, a level traditionally defined as full employment. At the same time, middle-income workers are increasingly pushed into lower-wage jobs. Many of them in turn are displacing lower-skilled, low-income workers, who become unemployed or are forced to work fewer hours, the analysis shows.
I believe I've been saying this for the past two years. 

All things being equal, this will get worse under ObamaCare as employers move permanent workers to part-time status, and try to cut down on the number of employees overall. My understanding is that that the largest employer in the US is "small business," not "large business." If so, the "small business" companies will do what they can to keep their full-time employees under the 50-employee threshhold.

But at least more folks are eligible for the ObamaPhone. And, of course, that revenue goes to Verizon, ATT, and Sprint.

Who Wudda Thought? My, How Times Have Changed --

KOG passes US Steel in market cap. $2.93 billion vs. $2.90 billion.

Oasis, by the way, has a market cap of $4.03 billion. It was founded in 2007. I could be wrong, but I believe it's start was in the Cottonwood field that it picked up from Fidelity (MDU). KOG was incorporated in Denver in 1972. 

Around The Horn; Early Morning Trading; The Market Surges; Summers Withdraws

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. 

KOG trades at new high ($11.31) but has now dropped back a few pennies.

Oasis up nicely, about 1%.

CVX, COP, XOM: all up slightly. [Later: COP trades at a new high; still pays 4%.]

EOG up slightly.

CHK. Up half a percent.

SD: up 2%.

AMZG up 1%.

TPLM actually traded at a new high. Now back a bit. Up about a percent.

UNP up almost $2.00.

I don't follow BNSF (BRK) much any more; BRK follows the market in general.

ENB, EEP both up about a percent.

SRE up about a percent.

TransCanada up about a percent.

CLR: up slightly.

WLL: up slightly.

Bill Gates Back On Top; Harold Hamm, #33

Forbes 400 is published.
  • Bill Gates, age 57.
  • Warren Buffett, 83.
  • Larry Ellison, 69.
  • Charles Koch, 77 (CEO of the country's second largest private company).
  • David Koch, 73.
  • Christy Walton, 58, and family.
  • Jim Walton, 65.
  • Alice Walton, 63.
  • S. Robson Walton, 69.
  • Michael Bloomberg, 71, mayor of New York.
Other notables:
  • Jeff Bezos: #12
  • Mark Zuckerberg: #20
  • Stever Ballmer: #21
  • Harold Hamm: #33
  • Philip Anschutz: #38

5S, 5C Round-Up

This week will be filled with stories on Apple's new iPhones.  This is going to be a huge story -- the new iPhone.

To get started:

SeekingAlpha On Magnum Hunter

Link here.
Magnum Hunter is a mid-tier exploration and production company operating in three exciting unconventional domestic resource plays - the Marcellus, the Utica, and the Bakken. MHR represents a unique value investment with short-to-medium term catalysts via the divestiture of non-core assets, which currently receive little to no recognition in the market.
MHR's shares collapsed in early 2013 after the company fell into noncompliance with regard to financial reporting. This period of noncompliance followed a hasty bout of acquisitions in 2012 that undermined the company's internal accounting controls.
Although the company was forced to fire its auditor, MHR has once again returned to world of reporting timeliness. It has since completed a transformational divestiture of key assets and begun in a new strategic direction that is likely to realize a substantial amount of shareholder value within the next several months.

Could We See The Spanish In The Bakken?


Later, September 16, 2013: at SeekingAlpha, a writer takes up the issue of Repsol buying an American independent, KOG vs WLL faceoff
Original Post

A reader alerted me to this news story posted over at the MDU message board. It is a Wall Street Journal article:
Spanish oil major Repsol SA is shopping for a North American oil company as it seeks to increase its investments in politically stable countries and the U.S. energy boom, according to people familiar with the talks.

The Madrid-based company has told investment bankers in recent months that it is ready to spend $5 billion to $10 billion for a U.S. or Canadian exploration and production company, preferably one that produces much more oil than natural gas, these people said.

A spokesman for Repsol said he couldn't comment on the company's acquisition plans.

A North American acquisition would help Repsol bolster its presence in stable-market economies. The Spanish company is among the integrated European oil companies most heavily exposed to frontier oil-exploration areas such as Morocco and Sierra Leone, according to a recent Bernstein Research report. Working in those countries carries the promise of more-profitable oil production as well as risks.
I can name about four public companies and maybe one or two private operators in the Bakken that might fit this bill. 

Monday Morning News, Views, Links -- Part II

Wow: Chicago's unfunded liability for upcoming large pension programs has almost doubled. S&P cuts ratings; will make borrowing even more expensive. Chicago has less room to maneuver than California which seems to have turned things around. "Chicago's overall unfunded liability of the four plans is $19.4 billion as of 2012, up from $11.9 billion in 2009. The plans altogether are 35% funded, the ratings firm said." I track the financial health of US cities here.

Now that the "war on coal" has been won, the administration turns to "war on natural gas." Look at who President O'Bama wants to put in charge of FERC.
Naturally, Mr. Binz's alternatives to gas are green "renewables" like wind and solar. Or so he said at a November 2012 forum at the University of Denver, citing research from the federal National Renewable Energy Laboratory.
The 2012 study does show that the 80% scenario is theoretically possible, but only if the assumptions are wildly unrealistic. The lab assumes that gas as a share of the U.S. power mix could plunge to 3% by 2050 from 16% in 2010, and coal to 9% from 51%. Wind will climb to 39% from 2%, and solar from 0.01% to 7%.
Mr. Binz wants to make that happen, and don't worry about the costs of the transition. He said that this "renewable energy future was no more costly, or in the realm of the same cost, as any other clean technology. In other words, if you accept that we're going to have to make these reductions in carbon and in other criteria pollutants, renewables are not going to be more expensive as a total package than other proposals such as nuclear, such as carbon sequestration from coal and natural gas."
The cost? Look at the experiences of Germany and Spain. 

Monday Morning News, Views, And Links; Now It's Geithner; With Lake Tahoe, California Blinks, Environmentalists Call Foul

Active rigs: 178 (ties record low post-boom)

RBN Energy: continuing the series on rail vs pipeline for Canadian bitumen

Summers' withdrawal: if there is a market surge today, one can think of a number of reasons why Summer's withdrawal provided the impetus, but the overriding reason the market would like this: it ends the uncertainty. The market prefers to deal with "known" entities. The market still shows a surge of 165 points on opening.

WSJ Links

Apple does it again; by moving TouchID into mainstream, Apple has changed the conversation. This is from the lead story in the fourth section of today's paper: "Biometrics are just the beginning in efforts by tech companies to come up with new authentication systems that are more secure and more convenient than conventional passwords." Writers will make it sound like TouchID has been around forever, and this is nothing new that Apple did. If so, why do we not see TouchID on any other laptop or mobile device -- not HP, not IBM, not Samsung, not Nokia, not Sony. I think there's a reason, but will let it go for now.

Lead story, front page: Iran increasing its presence in Iran, training Shiite rebels. Someday someone may ask whether US involvement in Syria actually expanded, lengthened the civil war. But not yet.

And the lede from another story on Syria: "Through mixed messages, miscalculations and an 11th-hour break, the U.S. stumbled into an international crisis and then stumbled out of it."

I see that ObamaCare has moved from "Health" to "Politics" arena in the WSJ. Perhaps it was there all along; I just didn't notice it. Whatever. "New poll results show the depth of the Obama administration's challenge on the eve of the rollout of the federal health law's core provisions, as many Americans say they don't understand the law and don't think it will help them."

And quite far into the paper, old news by now: Summers withdraws. There are not less than eight associated stories. Stock futures soar.
Very surprising," said David Lutz, a managing director at Stifel, Nicolaus & Co. in Baltimore. "Eighty percent of the Street expected Summers as soon as this week." He added that the markets likely would see a period of "risk-on," in which investors bid up stocks and other assets sensitive to economic growth.
Mr. Summers's withdrawal shifts the spotlight to other potential candidates to succeed Mr. Bernanke. Mr. Obama has said he interviewed Donald Kohn, a former Fed vice chairman who now serves as a senior fellow at the Brookings Institution. Administration insiders say Timothy Geithner, the former Treasury secretary, also is a possibility, though he has said he doesn't want the job.
But based on the latest developments, Andrew Brenner, global head of international fixed income at National Alliance Securities, said he would expect Mr. Geithner to garner stronger consideration from the administration.
"I think Geithner will get a call from the president," he said.
Los Angeles Times

Top story: 1,200 missing in Colorado floods.

There we go: an article on exactly what I've been opining for quite some time. The gap between the "haves" and the have-nots" has increased, "surprising some researchers." That's what it said: surprising some researchers.
Chris Roquemore once thought of himself as working class. But it's hard to keep thinking that, he said, when you're not working.
The 28-year-old father said he sparred with his supervisors at a retail chain about taking time off after his mother died — and ended up unemployed. Since then, Roquemore has worked odd jobs and started studying nursing at Long Beach City College, trying to get "a career, not a job."
All those changes, in turn, changed the way he thought of himself.
Roquemore is among the small but surging share of Americans who identify themselves as "lower class." Last year, a record 8.4% of Americans put themselves in that category — more than at any other time in the four decades that the question has been asked on the General Social Survey, a project of the independent research organization Norc at the University of Chicago.
Pretty sad. The president will have quite a legacy. The silent majority. By the way, I've always felt the gap would be more noticeable in states the Hollywood crowd likes: California and Colorado.

Isn't this interesting: the state of California "blinks." Gives in to developers around pristine Lake Tahoe. "Fearful of Nevada's pullout from the compact governing building around the pristine lake — and loss of control of the bigger picture — California agrees to higher density and taller structures in the region."
The passage of the California bill was the final step that ended years of hard bargaining over future development in the region. A revised plan will allow higher density and taller structures — the sort of glitzy development that California sought to curtail when it entered into a joint planning compact with Nevada four decades ago and created the Tahoe planning agency.
After the regional plan was adopted late last year, Nevada's fiercely anti-regulation forces pushed for still more changes. They pressured California to submit by threatening — for the seventh time — to withdraw from the compact.
The maneuver was political brinkmanship, playing on California's fears about what would happen on the Nevada side of the lake without the planning compact. It worked.
"If we lost the compact, the permitting authority will go to the local jurisdictions," said Darcie Goodman Collins, executive director of the California-based League to Save Lake Tahoe. "I'm afraid that the end result is that decisions would be made without having that bigger picture regional puzzle in mind. There would be no limit."
Other environmental organizations have a different view.
"We got rolled," said Trent W. Orr, an attorney with Earthjustice, which is representing the Sierra Club in a lawsuit challenging the regional plan.
Music to my ears. Meanwhile, the environmental wackos can sit on the edge of the road watching megaloads go by.

When the Moon is in the 7th house, and Jupiter aligns with Mars, .... Jack is back, bigger than ever.
On Sunday evening, beginning at 10:30 p.m. PDT, the team at the online astronomy site will turn their telescope on Jupiter, the largest planet in our solar system, and stream the results for the world to see.
Over the course of the broadcast viewers should get to see Jupiter's four  largest moons -- Ganymede, Europa, Io and Callisto -- and watch them slowly dance around the planet.
Your host, Paul Cox, who works as Slooh's outreach coordinator, will look at how the planet's Great Red Spot has changed since April, when Slooh's telescope last imaged it.
He will also check in on Jupiter's other storm known as "Red Jr."
In October, Slooh's telescope caught an image of the Great Red Spot and Red Jr. as they passed each other. You can see it for yourself, on-line.
New York Times

The best part: the comments regarding Summers' withdrawal.