Monday, November 4, 2013

Germany Is Producing Way Too Much Electricity, Just As Three New Coal-Fired Power Plants Come On-Line

This is an incredible story .... except for the fact we've been blogging about this for about two years. Europe is simply in trouble with regard to energy. But I didn't expect this. I'm as surprised as Ms Merkel.

Actually, the entire European energy story is very confusing to me.

Having said that, it seems Europe is perfect for all-EVs:
  • Germany, Sweden producing excess electricity; exporting electricity
  • Europe could be only continent that imports oil, natural gas going forward
  • Europe is densely populated, with short commutes
Bloomberg is reporting:
Germany, Europe's biggest power market, is poised to open its first new coal-fired plants in eight years, just as prices slump because of a glut of electricity.
[Germany] will bring three new plants online by December, enough to supply more than 4.4 million homes. The nation is already producing so much electricity that exports will surpass last year’s record in 2013, ...
Power prices may slide 12 percent by 2016, according to UBS AG in Zurich. 
“Merkel’s government has put itself in a dilemma. On the one hand it is promoting green energy, on the other hand, we see all those hard coal plants coming online now. I don’t see anything bullish in the power market.”
German power for next-year delivery is headed for a third annual decline, its longest losing streak since trading began on the Leipzig, Germany-based European Energy Exchange AG in 2002.
Who wudda ever guessed twenty years ago that electricity was going to get less expensive?  Other stories suggest that renewable energy projects could actually make things worse for the European grid. But we'll see.

The irony is that the Germans pay some of the highest utility costs in Europe. And yet, not long ago, it was reported that Europe may be the only continent in the universe to depend on imported energy.

SRE Traded At A New High Today

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

SRE traded at a new high today. Hoo-ah!

At Investors Business Daily: SRE has doubled since its low in 2011, and pays a dividend.
Sempra Energy's stock has more than doubled since an August 2011 low and was resting Tuesday near an all-time high.
That's pretty good for a public utility that pays a dividend, too.
San Diego-based Sempra (SRE) provides electricity and natural gas to 31 million customers around the U.S. and in Latin America. It was formed in 1998 from the merger of San Diego Gas & Electric and Southern California Gas.
"That's pretty good for a public utility that pays a dividend, too."

I was unaware of any public utility not paying a dividend. [Please don't write to tell me about those that don't pay a dividend; I don't want to have my myth destroyed.]

In my little investing world, San Diego Gas & Electric was one of the first companies I ever bought stock in (BNI was one of my first, along with MDU). I bought SDGE through a full-service broker; discount brokers were not yet around. I remember asking the full-service broker which utility she recommended; she didn't have any advice, just told me, and I'm paraphrasing: "throw a dart." I wish my dart had hit AAPL. LOL. 

By the way, a 2.7% dividend does not look all that interesting for a utility, but one must remember that just a few years ago, back in 2009, SRE was paying 35 cents/share. It is now paying 63 cents/share with another dividend hike likely early next year, if not sooner.

Twelve (12) New Permits -- The Williston Basin, North Dakota, USA; Only Two Non-Descript Wells Coming Off Confidential List Tuesday

Active rigs: 181

New permits --
  • Operators: Hess (5), Samson Oil and Gas (2), BR (2), MRO (1), Fidelity (1), EOG (1)
  • Fields: Rainbow (Williams), Elm Tree (McKenzie), Murphy Creek (Dunn), Alger (Mountrail), Hawkeye (McKenzie), Parshall (Mountrail)
  • Comments:
New wells reporting over the last 72 hours were reported earlier; see sidebar at the right.

One producing well was completed: 
  • 25732, 3,046, Whiting, Eide 41-13-2H, Timber Creek, t10/13; cum --
Two BR wells were canceled:
  • 26143: Crater Lake 11-14MBH, Hawkeye
  • 26144: Craterlands 11-14TFH, Hawkeye
Statoil re-surveyed the six Melissa wells in Williams County, sited in East Fork oil field.

Wells coming off the confidential list Tuesday:
  • 24766, drl, CLR, Vatne 3-25H, Hamlet, producing, 
  • 25300, 1,949, XTO, Franchuk 24X-20E, Murphy Creek, t9/13; cum 11K 9/13;

How That's Renewable Energy Mandate Working Out?

Xcel Energy requests rate increase to support investment in carbon-free energy: Co asked the Minnesota Public Utilities Commission to authorize increases in base electricity rates over a two-year period. The company proposes prices for a two-year period, during which investments in carbon-free energy sources, a diverse supply mix and service reliability improvements are at their peak. Average customer rates would increase by 4.6% effective Jan. 3, 2014, when interim rates would take effect.

So, Minnesotans can expect to pay about 5% more in utility costs cut back on carbon emissions. Meanwhile, in other news, China just announced the completion of another coal-fired power plant. The country has several hundred coal-fired power plants on the drawing board and in various stages of construction/completion.

Catching Up --

.... and when I get caught up, this will all be moved to my "3Q13 earnings."

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

Marathon Oil beats by $0.10, reports revs in-line: Reports Q3 (Sep) earnings of $0.87 per share, excluding non-recurring items, $0.10 better than the Capital IQ Consensus Estimate of $0.77; revenues fell 5.9% year/year to $3.91 bln vs the $3.92 bln consensus.

Halcon Resources misses by $0.02, beats on revs: Reports Q3 (Sep) earnings of $0.04 per share, excluding non-recurring items, $0.02 worse than the Capital IQ Consensus Estimate of $0.06; revenues rose 317.2% year/year to $305 mln vs the $267.87 mln consensus.
  • Q3 net production for the period increased 237% year-over-year to an average of 37,707 barrels of oil equivalent per day (Boe/d). 
  • Third quarter 2013 production was comprised of 83% oil, 6% natural gas liquids (NGLs) and 11% natural gas. 
  • Co realized 95% of the average NYMEX oil price, 96% of the average NYMEX natural gas price and 34% of the average NYMEX oil price for NGLs during the third quarter of 2013, excluding the impact of derivatives. 
  • Co guiding to > 40% Pro Forma Production Growth in 2014 
  • Co Expects > 20% Reduction in Drilling & Completion Capex in 2014
McDermott misses by $0.23, misses on revs: Reports Q3 (Sep) loss of $0.27 per share, $0.23 worse than the Capital IQ Consensus Estimate of ($0.04); revenues fell 33.2% year/year to $686.86 mln vs the $737.85 mln consensus. The year-over-year decrease in revenue was primarily due to the completion of several significant projects that were active in the 2012 third quarter. The Company's operating loss in the 2013 third quarter was $52.7 million compared to operating income of $82.5 million in the 2012 third quarter.

Weatherford beats by $0.02, misses on revs: Reports Q3 (Sep) adj. earnings of $0.23 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.21; revenues were unchanged from the year-ago period at $3.82 bln.

Black Hills Corp beats by $0.04, misses on revs; raises lower end of its FY13 EPS guidance, in-line; guides FY14 EPS in-line: Reports Q3 (Sep) earnings of $0.47 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus Estimate of $0.43; revenues rose 5.3% year/year to $259.9 mln vs the $323.52 mln consensus.

Plains All Amer beats by $0.03, beats on revs: Reports Q3 (Sep) earnings of $0.53 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.50; revenues rose 14.4% year/year to $10.7 bln vs the $9.57 bln consensus.

Pioneer Natural Resources misses by $0.08, misses on revs: Reports Q3 (Sep) earnings of $1.26 per share, excluding non-recurring items, $0.08 worse than the Capital IQ Consensus Estimate of $1.34; revenues rose 34.4% year/year to $826.8 mln vs the $985.48 mln consensus.

Marathon Oil beats by $0.10, reports revs in-line: Reports Q3 (Sep) earnings of $0.87 per share, excluding non-recurring items, $0.10 better than the Capital IQ Consensus Estimate of $0.77; revenues fell 5.9% year/year to $3.91 bln vs the $3.92 bln consensus. 

Liar, Liar, Pants On Fire

This was from MacRumors over the weekend:
T-Mobile CEO John Legere tweeted today to clarify his company's 200 MB monthly plans for iPads on its network. He reiterated that "everyone" gets 200 MB of free data with no strings attached. 
That turned out not to be true. Or phrasing it a different way: that turned out to be not true. Or yet another way: it was a lie.

This is the policy: "Everyone" who signs up for 500 MB of data for $20 / month, will get an extra 200 MB for "free." MacRumors posted that earlier this morning, but only calling the CEO's statements "misleading."

It appears Mr Legere and Mr Obama went to the same school of public relations.

Needless to say, I won't be buying any new iPad through Verizon. I "never" use cellular any more but it would be nice to have in case of an emergency; a truly "free" 200 MB with no strings attached would be perfect. But 700 MB for $20+ is not the answer. Although it is much better than 250 MB for $15+ that ATT charges.

I'll wait. And I will stick with ATT.

Off The Net For Awhile

I think I will sign off for awhile.

I am overwhelmed with stuff coming out of the Bakken.

A reader just sent me a new CLR presentation; I might post some screen shots of it later. It's another incredible presentation.

It's a good time to stop blogging for the moment: the market is up and the price of crude is slightly "green."

Back on the bicycle. Overcast, cool day in north Texas.

For Investors Only; Lots Of Good Stuff Today

Down below I have a link to today's WSJ, but moved this particular WSJ article to the top because of its topic. "Heard on the Street" talks: Big Oil's tricky mix of shale and scale.
If you are going to be big, you have to make it work for you. The problem for Big Oil is that one of the world's biggest opportunities, shale, doesn't necessarily reward bigness.
Royal Dutch Shell's partial retreat from U.S. shale this year suggests it overreached as it scooped up assets there. Latecomers always risk getting the crumbs after first-movers have picked up the choice cuts. But there also is a structural problem confronting Big Oil.
Until recently, majors went anywhere but the onshore U.S., thinking it was tapped out. Instead, they hunted "elephant" fields with huge reserves in deep-water locations or far-flung countries.
So many story lines.

More from the link (pay attention to the decline rates):
In a presentation last year, consultant PFC Energy, acquired recently by IHS, highlighted the differences. An average well drilled in Angola produces almost 14,000 barrels a day in its first year of production and that output declines by about a fifth in the first four years of operation.
In contrast, a well drilled in the Eagle Ford shale, where Shell is selling assets now, might produce just a few hundred barrels a day in its first year, dropping by more than a third in the first four years.
Another way of considering efficiency is output per employee. This is a crude measure as oil companies use outside contractors. But it illustrates the performance range. Shell, for example, produced just under 46,000 barrels of oil equivalent, or BOE, per employee in its upstream division in 2012. For U.S. exploration-and-production companies, though, performance varies widely, based on data from IHS. At the top end of the range, EOG Resources wrings almost 65,000 BOE from each employee; Chesapeake Energy gets less than 20,000.
In part, this speaks to the variability of shale resources: Early movers do better than latecomers, as Shell has found.

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.

Having gotten that out of the way, investors may enjoy leaving this site and going to a "real" investment site, SeekingAlpha. A reader lists his six top blue-chip energy companies. I will thrilled to see him list COP and PSX at the very top. Others he mentioned included Hess, First Solar, and BTU, yes coal which you can pick up for a lark, as they say. Actually very few say that. I think the correct idiom is "pick up for a song."

This is the song, by the way, I play for my ten-year-old granddaughter when I need an example of just how beautiful Mama Cass' voice really was:

Sing For Your Supper, The Mamas and The Papas

More later. I have to update the wells coming off the confidential list today. Look at some of these incredible wells:
  • 23953, 2,022, KOG, Charging Eagle 16-21-16-1HA, Twin Buttes, t8/13; cum 27K 9/13;
  • 25187, 2,175, QEP, Bert 2-2-11BH, Grail, t10/13; cum -- 
  • 25101, 2,566, MRO, Martin 31-14H, Reunion Bay, t8/13; cum 36K 9/13
  • 25114, 2,417, MRO, Patrick 34-32H, Bailey, t8/13; cum 26K 9/13;
  • 20915, 3,363, HRC, Fort Berthold 150-94-3B-10-2H, Spotted Horn, t8/13; cum --
  • 25188, 2,132, QEP, Bert 2-2-11TH, Grail, t10/13; cum 9/13;
And, yes, they all made the "high IP" list.


Eleven companies announced they've increased dividends/distributions. 


This IS a funny story over at Yahoo!News: how 'smart' does a toaster really have to be? I recently received -- for free -- a brand new, 'smart,' Hamilton Beach toaster. Absolutely free. I couldn't believe it: digital settings. For a toaster. I thought I was the only one who saw the irony but this story which begins:
Do I really need my toaster to be automated or linked up to the Internet?
"I think technology for technologies sake is sort of silly," responds Johnson. "Do you want to turn your toaster into a computer? Well maybe.
Well, maybe not. That geek needs to get a life.

The Wall Street Journal

For my one reader in the great state of Florida: the USAF plans to build a bomber on a budget. LOL.
When a military contractor showed Col. Chad Stevenson a design for the Air Force's top secret plane of the future, he began to worry.
"They were showing this really nice fold out bed, this nice refrigerator and microwave, a kind of lounge-provision area," Col. Stevenson recalled of the recent design.
The contractor, Lockheed Martin,  didn't offer an estimate for such flying comforts. But Col. Stevenson imagined a publicity nightmare in the making: a $300,000 kitchenette as the latter-day symbol of Pentagon excess—the $600 toilet seat for the 21st century.
The kitchenette was killed.  [But not the microwave.]
Such financial considerations are vital to the Air Force's most important project today: building a new long-range bomber to replace the iconic and aging B-52s and B-1s that have come to represent America's domination of the sky.
It is the job of Col. Stevenson and a small group of Air Force colleagues to guard against improvidence and any untested technologies that could lead the grand project—expected to cost upwards of $55 billion—down the path the Pentagon often travels of cost-overruns and blown deadlines.
I think the B-1 bomber that recently crashed in Montana cost upwards of $280 million, but less if bought in bulk. LOL. I don't know how many times Congress tried to kill this program. There are only 60 of these Lancers left in the inventory.


The Obama administration ruled that drug makers can help pay prescription-drug costs for patients on health-care exchanges. Pharmacy-benefit managers object, preferring generic drugs.

I think this was posted previously. I forget. Think Red Queen. Chevron pumps far less oil and gas than industry giant Exxon Mobil, but the company is spending more to find energy and boost production.

Natural Gas And US Electricity -- An Analysis

Don sent me a link to a most interesting series on using natural gas in lieu of coal to convert fossil energy to electricity in the United States. He starts with part 4 of a five-part series. Something for the archives. Note the bottom line:
There was 315 GW of coal-fired capacity in the US in 2011. The IEA estimated that of the 315 GW, 16 GW would be unlikely to shut down in favor of natural gas power generation (as it was fueled by very cheap lignite coal located close to the mine) even at gas prices of $2.50 to $4.00 per MMBtu.
I wonder if the bulk of that cheap lignite coal is not coming from North Dakota?

The Bakken Shale Discussion Group; Staggering

Just a reminder: some folks are posting some nice information regarding the Bakken over at the discussion group. Right now, there is some excitement regarding Whiting's plans for 15 wells in a drilling unit.

For newbies: if you are unfamiliar with the number of wells operators are planning to place in drilling units, scroll through the most recent dockets. As a couple of examples from the November hearings:
  • 21370: CLR, Alkali Creek-Bakken, 30 wells on an existing 2560-acre unit, Mountrail, McKenzie
  • 21258: Hess, Little Knife-Bakken, 8 wells on one 640-acre unit
  • 21242: Oasis, Alger-Bakken, 21 horizontal wells on some or all of the 1280-acre units in this field; Mountrail
  • 21243: Oasis, Alkali Creek-Bakken, 21 horizontal wells on some or all of the 1280-acre units in this field; Mountrail, McKenzie, Williams
  • 21244: Oasis, Camp-Bakken, 15 horizontal wells on some or all of the 1280-acre units in this field; McKenzie, Williams
  • 21245: Oasis, Cottonwood-Bakken, 16 horizontal wells on some or all of the 1280-acre units in this field; Mountrail, Burke
  • 21246: Oasis, Crazy Man Creek-Bakken, 9 horizontal wells on some or all of the 1280-acre units in this field; McKenzie, Williams 
  • 21247: Oasis, Robinson Lake-Bakken,  21 horizontal wells on some or all of the 640-acre and 1280-acre units in this field; Mountrail
  • 21248: Oasis, Sanish-Bakken, 21 horizontal wells on some or all of the 640-acre and 1280-acre units in this field; Mountrail, McKenzie
In case anyone missed that, I will place it in red/bold: Oasis is looking to put 21 horizontal wells on some or all of its 640-acre units in some fields in the heart of the Bakken. When I first started blogging, the "word on the street" was one well/section would be the norm in the Bakken.

An aside: 21 wells x 640 acres x $4,000/acre lease upfront money: $54 million in lease money that it will not cost them because the acreage is held by production. $54 million is not trivial. And that's just one section. And $4,000/acre in the best of the Bakken is certainly on the low side.

First Post On The Brown Dense Play in Arkansas/Louisiana

I will add the "Brown Dense" oil play to the list of promising oil plays on the sidebar at the right.

SeekingAlpha is reporting:
Following two years of persistent exploration effort in the Lower Smackover Brown Dense formation in southern Arkansas and northern Louisiana, which has included seven challenging, expensive evaluation wells and an inordinate amount of "science" work, Southwestern Energy reported last Thursday its first well that the company considers commercial.

Look At All That Crude; Look At Verizon's Free iPad Data Plan

First, a reminder -- one of two nominees for the 2013 Geico Rock Award.

Second, a reminder -- for me the "Bakken" represents three things: a) the physical entity, the North Dakota oil patch; b) the fracking revolution laboratory for the world; and, c) a philosophy or rugged individualism of the midwest (which, by the way, is the subject of a new book, due out tomorrow: The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters).

But I digress.

Look at all the oil that will reach the Texas coast in the coming years, starting next year. RBN Energy reports that the Texas gulf coast will soon be flooded with crude oil:
If you add up the numbers since the start of 2012 just under 2 MMb/d of transport capacity has been added to bring crude into the Texas Gulf Coast refining region. In the next two years (2014 and 2015) we expect another 2.1 MMb/d of crude pipeline and rail transport capacity to be added. In total that is over 4.1 MMb/d of potential incoming crude – to a region with just under 3.7 MMb/d of nameplate refining capacity.
This is a huge, huge story. Can you imagine if the Keystone XL had been built! Where would all that oil have gone. Crude oil prices would have plummeted! Gasoline prices would be 65 cents/gallon. Saudi would be bankrupt. These are incredibly, incredibly exciting times.

Hey, speaking of oil and oil prices. Yesterday, I happened to talk with a BNSF executive who had been with the company for 25 years. I told him how excited I had been with BNSF all these years. BNI was the first individual stock I ever bought (maybe it was MDU; I forget, but BNI was one of the first) and loved it. And then Warren bought it. On the good side, Warren has saved me a lot of money. I used to pay a lot of federal taxes on BNI dividends. Not any more.

I never post anything I hear from the industry directly unless I can corroborate it independently in the "public" media, so no more about that conversation.

On another note. Back to the RBN Energy story. As regular readers know, I regularly feature YouTube music videos (I do that to get around iPad peculiarities). In the past week week or so, I've been adding "Underground Velvet" videos. Today I see RBN Energy has a short note on the Underground Velvet and Lou Reed. Very, very nice. There are many, many ways to thank folks. Thank you.

Oh, one last thing. Speaking of iPads, which I happened to mention above. I have the oldest version, iPad 1. I pay $15/month for a 250 MB of data which is about four webpages/day. I really don't need a new iPad, but I lust after a new version. But I don't want to pay more than $15/month for data. And then I see this: Verizon will provide 200 MB for free if one signs up with Verizon when buying any model of the iPad. That's exactly what I need. No strings attached. I plan to buy a new iPad by the end of the week and will cancel my existing ATT plan. Wow. I love free market capitalism.