Tuesday In The Bakken -- February 25, 2014; Global Warming; ObamaCare Notes

EOG discusses 4Q14 results -- earnings call transcript.

RBN Energy: crude pipeline wars in North Dakota.

Since the start of 2014 two competing pipeline projects designed to provide crude producers in North Dakota with additional takeaway capacity have met with very different fates. The first proposal – the Sandpiper project launched by Enbridge in late 2012 has completed a successful Open Season and petitioned federal regulators for approval of its tariff structure. Sponsor Koch Industries quietly canceled the second competing proposal – the Dakota Express pipeline first proposed in July 2013. Looking at rail and pipeline takeaway capacity versus crude production in North Dakota, both these pipelines are “nice to have” not “need to have”. Today we begin a two part analysis of these competing projects.

For Investors Only

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Fourteen (14) companies announce increased dividends or distributions, including EOG and Home Depot.

Weatherford reports EPS in-line, misses on revs; reaffirms FY14 EPS guidance: Reports Q4 (Dec) earnings of $0.07 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.07, in line with guidance for $0.05-0.08; revenues fell 7.8% year/year to $3.74 bln vs the $3.82 bln consensus.

QEP Midstream Partners misses by $0.01, beats on revs: Reports Q4 (Dec) earnings of $0.23 per share, $0.01 worse than the Capital IQ Consensus Estimate of $0.24; revenues fell 20.4% year/year to $31.7 mln vs the $30.4 mln consensus.

Newfield Expl reports year-end 2013 proved reserves; PV10 grows 44% as domestic proved reserves increase 8% to 576 MMBOE: Co announced that its proved reserves from continuing operations, Dec 31, 2013, were 576 MMBOE, an 8% increase over the prior year-end. Proved reserves at year-end 2013 associated with discontinued operations were 36 MMBOE, up 4% over year-end 2012.

Newport Exploration highlights from the co's year-end 2013 proved reserves report include:

• The pre-tax present value of domestic reserves (discounted at 10%) increased 44% y/y to $6.6 bln. 
• Domestic liquids reserves increased 26% y/y and represent 52% of domestic proved reserves. 
• Domestic proved developed reserves increased 15% y/y and 56% of domestic reserves are now proved developed. 
• Domestic reserves account for 94% of Newfield's total proved reserves. 
• The co's domestic proved reserve life index is ~ 14 years. 

Newfield invested ~ $1.6 bln in continuing operations in 2013, excluding $176 mln in asset retirement obligations and capitalized interest and overhead. ~ $178 mln was invested in acquisitions, land and seismic. The invested capital generated 87 MMBOE of "new" proved developed reserves. The full-year 2013 investments also generated 96 MMBOE of reserves associated with new proved undeveloped locations. Future development capital associated with the new undeveloped locations is ~ $1.6 bln.

Some companies trading at new highs: BP, ERF, NFLX.

Global Warming

Chicago might get record-breaking lows
Rough weather to lag into March
Cold weather delays start of Connecticut's maple syrup season
Snow pack in Wyoming, 2013 - 2014
Snow precipitation / snow water equivalent, Montana rivers flowing into the Bakken
Winter misery index: in beleaguered Detroit, it's the worst

ObamaCare

Health care premiums will soar for small- and medium-size businesses -- Forbes:

Yesterday, the Obama Administration’s Centers for Medicare and Medicaid Services released a six-page report predicting that Obamacare could cause premiums to increase for nearly two-thirds of small- to medium-sized businesses. “This results in roughly 11 million individuals whose premiums are estimated to be higher as a result of the ACA and about 6 million individuals who are estimated to have lower premiums,” CMS writes. But CMS’ projections almost certainly understate the problem, one that will begin to affect millions of workers in the second half of 2014.

Forbes lists the factors and then notes:

These were among the factors that led Delta Air Lines to estimate that it will spend $100 million more on health coverage in 2014 than it did in 2013. And Delta is a large employer, not a small employer; large employers should face relatively lower rate hikes than small ones.

Companies are simply going to cost-shift the health care expenses.