Busy, Busy, Busy Day But I Will Be On The Net For Only An Hour Or So This Morning -- October 31, 2014

Busy, busy, busy day. Not much yet in the Bakken but a lot in the market.

Reminder: this is not an investment site. Do not make any investment, financial, or relationship decisions based on what you read here or what you think you may have read here. Also, do not make any changes to your travel plans based on what you read here.

CVX and XOM numbers are out. I will get back to them later.

The Dow was up almost 200 points in pre-market trading, has dropped back to 140 on the upside, and has hit new highs. Who wudda thought?

Here in the Bakken:

Active rigs:

	10/31/2014	10/31/2013	10/31/2012	10/31/2011	10/31/2010
Active Rigs	191	180	186	199	152

I'm looking for 175 rigs before the end of 2015 if the movers and shakers on Wall Street think the  price of oil will remain low for the foreseeable future.

RBN Energy has a great story -- second in a series -- on Japan and LNG which dovetails with the story out of Japan today, the latter driving the market higher. From RBN Energy:

Japan is the world’s leading importer of liquefied natural gas, and its dependence on LNG has only increased since the March 2011 Fukushima nuclear disaster, which led to the shutdown of Japan’s 48 nuclear units. Some of those nukes are expected to return to service starting in 2015, but it’s possible—some would say likely—that a quarter or maybe even half of Japan’s nuclear fleet will never be restarted. While coal is cheap and oil is cheaper than it was a few months ago, natural gas-fired generation is seen as the best short-, mid- and long-term substitute for nuclear power. As a result, Japan utilities are working to increase and geographically diversify their LNG purchases, and to break what for decades has been a link between the pricing of LNG and oil. Today, we continue our look at how Japan’s response to the Fukushima disaster affects U.S. and Canadian natural gas producers and LNG exporters.

US and Canadian natural gas producers and prospective LNG exporters should read all that as good news. After all, the Japanese government and its big LNG importers (including its electric utilities) have indicated that they see US suppliers in particularly as their next go-to source for LNG. (So do India, China and South Korea.) Why? While Qatar and most other traditional LNG suppliers to big Asian buyers have remained adamant in linking their LNG prices to the price of oil, US exporters have been very willing to link their LNG prices to Henry Hub natural gas prices—typically 115% of Henry Hub plus a capacity charge of $3 or so per MMBTU (shipping and handling not included).

Canadians have been less willing to jettison the LNG/oil linkage, to their detriment. Oil prices, as we know too well, have been sagging as of late, so an LNG price indexed to oil isn’t as onerous now as it was just a few months ago.

Still, three primary aims of Japanese and other Asia LNG buyers are hedging, hedging and hedging—namely, to mitigate the price premium long associated with LNG prices linked to oil to minimize long-term price risk. No one wants to overpay, whether they are buying a new car or cable service or LNG.

Next time, we will take a deeper look at LNG pricing in Asia, what Japanese LNG buyers have already committed to purchase from North American suppliers, and how much of the incremental LNG Japan will need in the next 10 to 30 years is likely to come from US and Canadian sources.

Much, much more at the linked article. 

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On a more depressing note it looks like the Enbridge Sandpiper is the new Keystone XL. I think I will take the poll down and then bring it back up in a couple days to see if sentiment changes with the updates coming out of Minnesota. But that will have to wait. Not sure if I want to go through all that bother.

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So, what's the market doing?

CVX: quarterly profit jumps 13%. From Reuters:

The company posted net income of $5.59 billion, or $2.95 per share, compared with $4.95 billion, or $2.57 per share, in the year-ago period.

Production fell nearly 1 percent to 2.57 million barrels of oil equivalent per day as new wells failed to offset declines at old wells.

XOM: quarterly profit rises 3%. From Reuters:

Profit in the third quarter rose to $8.07 billion, or $1.89 per share, from $7.87 billion, or $1.79 per share in the year-ago period.

Analysts, on average, expected a profit of $1.71 per share.

Oil and gas production fell 4.7 percent. Exxon said it remained on track for full-year output of 4 million barrels oil equivalent per day (boed).

MMP: beats by a nickel; shares rise nicely. Press release. 

Genesee and Wyoming had a great quarter. The AP is reporting:

On a per-share basis, the Darien, Connecticut-based company said it had net income of $1.27. Earnings, adjusted for non-recurring gains, were $1.21 per share.

The results beat Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of $1.17 per share.

The railroad operator posted revenue of $432.5 million in the period, also surpassing Street forecasts. Analysts expected $424.5 million, according to Zacks.