Nocturnal Ramblings

I'm in an incredibly good mood. I must have forgotten to take my meds earlier today. It's almost 11:00 p.m. local time. I was up at 5:30 a.m. this morning so I could be in place at 6:15 a.m. to start the day with my granddaughters. I finally dropped them off with their mother (our daughter) at 9:00 p.m. local time. That's a long day; of course, they are in school from 7:15 a.m. to 2:45 p.m. but outside of those hours, they keep me very, very busy. Quality time only.

On days like these, I barely have time to keep up with business news. I'm glad I no longer watch television. I haven't watched television since July, 2013, except for a few sports events, and then the Golden Globe awards the other night, which I really enjoyed. (Fortunately, several readers watch the news for me, sending me stories and keeping me apprised what's going on in the real world.)

I own absolutely no mineral rights. I invest in several publicly traded Bakken operators, but those investments probably represent less than 1% of my total portfolio. If the Bakken went away tomorrow, I would be devastated but not for financial reasons. I think the Bakken is an incredible story on so many levels. When I started the blog I had no intention of including investment stories but I soon learned that one cannot understand the Bakken without understanding the "business" and thus all the investment posts. Now that I am retired I don't have as much money to invest but whenever I have any cash I invest it. I am an investor, in for the long haul. I seldom trade. I hate the cliche, but I've left a lot of money on the table because I don't buy and sell, but I can pretty much guarantee that I would not do too well if I tried to "time" buying and selling.

So, I pretty much just accumulate. I don't keep track of what I have and I don't keep track of what I've paid. I'm a pretty bad investor by those parameters, but 99% of my portfolio is managed by someone else, anyway (pensions, IRAs, social security, etc).

Having said that, the 1% that is related to the Bakken is a real hoot. I am absolutely convinced that, barring major geopolitical events (including Washington, DC-political events) we have only begun to see the Bakken potential. [One political comment: I am convinced that the administration would ban fracking in a New-York-minute if given the opening, but an outright ban would result in the end of the domestic oil industry. Oil would surge to prices we have not seen and OPEC would be in control once again. But that won't stop the administration; anti-fracking legislation is a given; to what extent it impacts the industry is yet to be seen. That "fact" doesn't impact the irrational exuberant mood that I am in regarding the Bakken. It is what it is.]

There is so much one could talk about when it comes to the Bakken but one thing that is never mentioned, it seems, is the cost of infrastructure. The operators are not idly sitting by, watching the "rail" story or the "pipeline" story play out. They are actively involved and they keep building out takeaway capacity. [The Denver conference at the end of the month on Bakken takeaway should be very, very interesting: see sidebar at the right for details on the conference.]

One of the things in the Bakken that I get the biggest kick out of is pad drilling. Apparently building a pad and building a road to that pad are inconsequential costs for the operators. No one ever talks about them. But let's suppose the cost of building pads and building roads to those pads is not inconsequential. Think about it. Three years ago, CLR was building a new pad for each well, and building a new road for each pad. Pundits talk about the cost of public roads in the oil patch; imagine the private roads to all those wells, all those pads.

But now, CLR has 90% of those roads built, I would argue, for the wells they will be drilling this year. Putting two, four, six, eight (who do we appreciate?) wells on each pad -- and the pads are built, the roads are built, and a walking rig is on the pad. Costs have had to come down over the past two years.

More later if the spirit moves me. All I can say is for investors, the recent pullback in the market is another buying opportunity. Disclaimer: that's just my personal opinion, coming from an investor with about the lousiest investment skills anyone could have. Don't take any advice from me regarding investments. Don't make any investment decisions based on anything you read here or anything you might have read here or thought you read here. 

So, unless the spirit moves me to write more later, I'm simply going to sit here and listen to the BeeGees through my geeky huge headphones, and move into my after-midnight music fugue. And forget about the Bakken.

For about thirty seconds.