Monday, June 16, 2014

For Investors Only; How WMB / Access Mistream Will Benefit Investors


June 18, 2014: Tulsa World has this to say about the merger -- it's a big, big, big deal!
The approximately $6 billion purchase not only positions Williams as a major pipeline player in nearly all of the American shale plays, but could make Williams-controlled Williams Partners LP into the nation’s second largest energy infrastructure partnership after Kinder Morgan. The proposed merger of Oklahoma City-based Access and Williams Partners will need federal regulatory approval.
It cements Williams’ top stake as a pipeline and processing option in the gas-rich Marcellus Shale of the eastern U.S. Access also is strong in the Bakken, Haynesville, Eagle Ford and Oklahoma energy formations where producers are combining hydraulic fracturing and horizontal drilling to tap major reserves.
“It pushes Williams to the forefront of the competitors in the fracking business,” said Fred Russell, financial analyst and principal of Tulsa-based Fredric E. Russell Investment Management Co. “They (already) control 14 percent of the natural gas transmission through pipelines (nationally). This should increase their market position.” 
Original Post

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 am surprised by two things:
  • the very orderly melt-up of crude oil prices, and now seeming to hold steady
  • the market eked out a positive story to end the day; futures are up
The big story of the day: WMB (up almost 20%) and WPZ (up 6%). It will be interesting to read an analyst's analysis later this week. I have some thoughts, but I'm not going to touch this one.

SRE hit another high. It should be noted that it was just announced today that Texas LNG was given a license to export up to 2 million tons of LNG annually.

HK was up almost 5% during regular trading hours, and held that gain going into after-hours trading. HK reported a huge gusher in the Bakken today.

But I think I'm going to call it a day. Go biking. It's starting to cool off. Have a great evening everyone. "See you" in the a.m.

More Background On the WMB Deal

From Motley Fool:
Under the terms of the deal, Williams will pay nearly $6 billion in cash to acquire a 50% general partner, or GP, interest in Access, along with 55.1 million limited partner, or LP, units in the company. That means it will own 100% of the GP and 50% of the LP interests in the company, following a 2012 transaction in which it acquired a 50% GP interest and 23% LP interest in Access.
By acquiring full control of Access Midstream, Williams will further cement its leading position in the Marcellus shale, where it owns one of the largest and most important U.S. gas pipelines -- the Transco pipeline -- and gain greater exposure to a number of fast-growing plays in which Access operates, including the Barnett, Eagle Ford, Haynesville, Niobrara, and Utica shales.
It also means that Williams is entitled to an increasing share of Access' cash flow through GP/IDR (incentive distribution rights) and LP cash distributions. As a result, Williams' cash flow per share is expected to grow sharply over the next few years, allowing the company to deliver much stronger dividend growth to its shareholders.
Once the acquisition closes, expected in the third quarter of this year, Williams plans to boost its third-quarter dividend by 32% to $0.56 per share. The company expects to deliver 15% annual dividend growth through 2017, with planned annual dividends of approximately $1.96 per share this year, $2.46 in 2015, $2.82 in 2016, and $3.25 in 2017.

Open The Floodgates! Texas LNG Given License To Export LNG; Sixteen (16) New Permits -- Williston Basin, North Dakota; Halcon Has A Bakken Gusher; KOG With Two "High-IP" Wells; BR With Two Nice Wells

Houston Bz Journal is reporting -- open the floodgates --- Texas LNG given license to export LNG.
The U.S. Department of Energy has given the go ahead to Texas LNG to start exporting to Free Trade Agreement countries.
Texas LNG can now export up to two million tones per year of liquified natural gas to any current and future FTA countries for the next 25 years, the company said in a press release. Chandra said in Jan. 2014 that the company would export to countries in the Asia-Pacific region.
The venture is building a $1 billion terminal at the Port of Brownsville in South Texas on the U.S.-Mexico border.
When it's completed, the terminal will export 275 million cubic feet of natural gas per day. Texas LNG said it expects its first LNG deliveries to begin in late 2018.

Back to the Bakken

Wells coming off the confidential list Tuesday:
  • 25190, 832, CLR, Patterson Federal 3-13H, Camp, Three Forks, 30 stages; 7.8 million lbs sand/ceramic;  lateral to 18,816 feet; side-track to 20,878 feet; t5/14; cum -- 
  • 25318, 854, Petro-Hunt, Glovatsky 145-98-24D-13-1H, Little Knife, t4/14; cum 3K 4/14;
  • 25989, drl, HRC, Fort Berthold 148-94-20C-21-4H, Eagle Nest, middle Bakken; no production data,
  • 26421, drl, KOG, P Manning 154-99-2-2-11-15H3A, Stockyard Creek, Three Forks B1, no production data,
  • 26546, 1,622, Newfield, Skaar 150-99-15-22-3H, South Tobacco Garden, 29 stages; 3.2 million lbs; 1,500 to 4,000+ gas units;  t3/14; cum 27K 4/14;
  • 26692, conf, CLR, Marlene 3-3H, Stoneview, middle Bakken, 4 sections; no production data,
Active rigs:

Active Rigs188185214171129

Sixteen (16) new permits --
  • Operators: Oasis (5), CLR (4), EOG (3), HRC (2), Hunt (2)
  • Fields: Baker (McKenzie), Brooklyn (Williams), Parshall (Mountrail), McGregory Buttes (Dunn), Smoky Butte (Divide)
    Comments: Nice to see Brooklyn again with some new permits; this may be one of the early four-well pads in Brooklyn
Wells coming off the confidential list this weekend, and today, were posted earlier; see sidebar at the right.

Twelve (12) producing wells completed:
  • 24806, 1,031, CLR, Wahpeton 12-16H3, Banks, t5/14; cum --
  • 24809, n/d, CLR, Wahpeton 9-16H, no production yet, said to be flowing,
  • 25536, 2,042, KOG, P Thomas 154-98-14-33-4H3, Truax, t5/14; cum --
  • 25537, 2,200, KOG, P Thomas 154-98-14-33-4HA, Truax, t5/14; cum --
  • 25538, 1,705, KOG, P Thomas 154-98-14-33-3H3, Truax, t5/14; cum --
  • 25830, 1,488, BR, Rising Sun 21-1TFH-4NH, Clear Creek, 4 sections, t5/14; cum --
  • 25832, 160, American Eagle, Blackwatch 2-2N-163-101, Colgan, t4/14; cum 4K 4/14;
  • 26089, 1,844, BR, Big Bend 41-2TFH, Camel Butte, t6/14; cum --
  • 26322, 3,317, Fort Berthold 48-95-27B-34-8H, Eagle Nest, t4/14; cum --
  • 26426, 300, Murex, Brayden Alexander 20-17H, Writing Rock, t6/14; cum --
  • 27670, 897, Whiting, Brehm 11-4TFH, Sanish, t5/14; cum --
  • 27676, 1,070, Whting, Brehm 11-4-2H, Sanish, t5/14; cum --

Random Update Of A Silurian Well Hitting The One-Million Mark


November 7, 2014: hits the one-million-bbl milestone
Original Post

I've added the following "monster" well to my list of items that need to be followed up on later next year.
  • 7571, 482/IA, Hess, Reitsch NCT-2 4, Blue Buttes, a Silurian well, t4/81; cum 998 12/13;
Note: this is a Silurian well, not a Bakken well; it was spud in 1981 and produced as recently as December 2013 (about 32 years).

It looks like this well might have some life in it yet. A sundry form was recently filed transferring this well from Hess to Hess Bakken Investments, the "new" Hess operator in the Bakken. Less than 2,000 bbls from a million-bbl well. 

This is the recent production profile:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Bakken Economy -- Buffalo Wild Wings Coming To Dickinson; San Antonio Spurs Own The NBA

Buffalo Wild Wings coming to Dickinson.


The nonsense never quits. The Daily Ticker is asking whether fracking is over-hyped? The talking head calls it a bubble. Helloooo... they've been fracking since the 1940's or 1950's. Forget about the Bakken. This talking head needs to look at the Permian (given up for dead just a few years ago until fracking infused new life in this old field, and it may end up being the best basin of them all); the Eagle Ford; the SCOOP, the Mississippi Lime, the Tuscaloosa Marine Shale, the Utica, the Marcellus.
It may be a bubble but it's one long-lasting, huge bubble.

A Note to the Granddaughters

If I have any emotional tie to any US city outside of Williston, it has to be San Antonio, where we lived for about twelve years. I have fond memories and much nostalgia for several other cities in the US and overseas, but right now, if someone asked, San Antonio is/was my second home. Our first house there was on Diamond Canyon Drive, and then during the transition to "life after the Air Force," we moved into a wonderful apartment complex nearer downtown San Antonio.

It was wonderful to see the Spurs win the NBA championship, and it was even more wonderful to see how Spurs fans celebrated. The San Antonio Express News is reporting:
Moments after the Spurs captured the franchise's fifth NBA title, fans began to spill into downtown streets to celebrate.
“For us, it's a family tradition,” said Destiny Sanchez, who was hanging out the window of the family van, waving a giant Spurs flag in support of their team's accomplishments.
Joseph Gonzales, 23, has been a Spurs fan his whole life. But it was only this year that he got a chance to root his team on.
“I've actually never been downtown for a championship game,” said Gonzales, who was watching the final game at The Ticket sports bar. “I was 17 in '07 (the last time the Spurs won the championship), and that's why I came downtown to experience it. I see it on TV every year — when we won, they park on the highway and go crazy. And I just want to experience that.”
No cars were turned over; there were no stores set on fire; there was no looting.

Elsewhere in The San Antonio Express-News it was reported: The Silver & Black cap the most dominant triumph in Finals history, earning their fourth victory of at least 15 points to crush the Heat.

The newspaper also provided these five interesting factoids:
  • The Spurs’ average margin of victory in the series was 14 points per game. It was the largest point differential in NBA Finals history.  The previous record was 12.6 points per game by the 1965 Boston Celtics over the Lakers.
  • Kawhi Leonard scored 22 points and recorded 10 rebounds as he claimed the NBA Finals MVP. At 22 years and 351 days old, Leonard is the third-youngest recipient of that award since the NBA began awarding them in 1969.
  • Leonard also became the fifth-youngest player to notch at least 20 points and 10 rebounds in a series-clinching Finals game and the youngest to do that since Kobe Bryant in 2001, according to ESPN Stats and Information
  • The Spurs finished the series shooting .5276 percent from the field in the Finals. It was the highest shooting percentage for a Finals of any length. The Bulls shot .5272 in five games against the Lakers in 1991 and Detroit shot .5268 against the Lakers in 1989.
  • The Game 5 victory was the 12th time the Spurs have won by 15 or more points in the 2014 playoffs. The Lakers won 10 games by 15 or more points during the 1985 playoffs, according to the Elias Sports Bureau.

For Investors Only


Later, 11:54 p.m. CDT: mid-day here in the mid-west. I assume this is the story that brought the market down while I was out biking: IMF cuts US growth forecast; sees greater scope for zero rates. Remember: the definition, unless changed by the Obama administration, of a recession: two consecutive quarters of negative growth. A negative GDP was reported for 1Q14. Shares trading at 52-week highs (so far) today include: APC, APA, Baytex, BCEI, CVX (finally), COP, Crescent Point Energy, DVN, EOG, ECA, GBX, HK, NFX, OKE, OXY, SD, SRE, STO, WLL, WMB, WPZ. But not XOM. 

At the linked IMF article:
The International Monetary Fund cut its growth forecast for the U.S. economy this year and said the Federal Reserve may have scope to keep interest rates at zero for longer than investors expect. 
The Washington-based IMF now sees the world's largest economy growing 2 percent this year, down from an April estimate of 2.8 percent. The IMF left a 2015 prediction unchanged at 3 percent, and said it doesn't expect the U.S. to see full employment until the end of 2017, amid low inflation.
I just can't get too "excited" about that report in a "negative" way. I actually see more "positive" in that than "negative." I assume most folks will disagree with me.

Later, 9:25 a.m. CDT: it seemed to take forever, but CVX finally reached its 52-week high. SRE is at a new 52-week high. COP is trading at a new 52-week high. WLL opened at its 52-week high; pulled back a bit, but Yahoo!Finance still shows it "green" for the day.

Later, 9:12 a.m. CDT: in all my years of investing, I don't think I've ever seen anything like this. A mature company in the manufacturing/oil and gas sector surges 20% based on the news of one deal. WMB is now up more than 20%. This is simply incredible. I wish I had access to cable television to see if CNBC is even following this incredible story.

Just as incredible: the US stock market has just turned positive despite the war in Iraq. WTI oil is sitting right at $107. It is quite remarkable how stable WTI oil really is considering what is going on in Iraq. I think one can safely say things would be a lot different if it weren't for the "Bakken experiment."
Original Post

I see Yahoo!Finance has the wrong WTI oil future posted: $98.70 is the current quote showing. Bloomberg is current: $106.99.

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.
  • WMB is up almost 12% in pre-market trading. Steve alerted me to this story two days ago and I finally got around to posting it yesterday.
  • TPLM is up over 2% in pre-market tradking.
  • SLB is moving up slightly, as is HAL.
"Recent" quotes from Yahoo!Finance snapshot (some are pre-market trading this morning; others are closing quotes from last Friday):

I'm sure the list will go on and on.

Why is CEO pay so high? Because of Dodd-Frank. Reuters is reporting:
When the Dodd-Frank Act passed in 2010, its Wall Street reforms included a "say on pay" provision that gave shareholders the right to vote on an executive's pay package every three years.
Companies' boards have responded to this regulation, and there has been a trend toward basing CEO compensation on how well a company is doing in the market relative to its competition.
"They've learned to avoid investor pay irritants and red flags, such as compensation that is not linked to performance and pay perks to cover taxes executives owed," the Wall Street Journal reported in April.
U.S. stocks are at all-time highs, and so it follows that many CEOs of the nation's biggest corporations are making more money than they were a few years ago.
Active rigs in North Dakota today:

Active Rigs187185214171129

RBN Energy Updates The Enbridge System From Western Canada To The Gulf Of Mexico; Russia Cuts Off Natural Gas To The Ukraine; ISIS Takes Tal Afar; President Obama Teeing Off -- NY Times

This is really, really, really cool.

Last week a reader sent me an important link regarding Enbridge Alberta Clipper. I tried to sort out the various segments from western Canada to the Gulf of Mexico.

Today, of all things, RBN Energy has a comprehensive look at this pipeline. It's another must-read, must-save article.

The link is here. I believe this is the first of at least two installments.

Anyone interesting in the Bakken, and/or interested in the Keystone, need to read this article.

In addition, in case you missed it, this StarTribune article showcasing Enbridge's efforts to better understand underground oil spills is another must-read, must-save article.

Russia Cuts Off Natural Gas To Ukraine; Russian Tanks Roll Into The Ukraine

Russia on Monday cut gas supplies to Ukraine as a payment deadline passed and negotiators failed to reach a deal on gas prices and unpaid bills amid continued fighting in eastern Ukraine.
The decision does not immediately affect the gas flow to Europe, but could disrupt the long-term energy supply to the region if the issue is not resolved, analysts said.
Gazprom spokesman Sergei Kupriyanov said that since Ukraine had paid nothing for the gas by Monday, from now on the company would demand that Ukraine pay in advance for any future deliveries.
BBC has a background article on this story and a great map of Eurasia pipelines.

 It was reported earlier that Russian tanks had rolled into the Ukraine.

Solving The Flaring Problem in North Dakota -- SeattlePI

This story was also sent to me by a reader over the weekend. SeattlePI is reporting:  
Currently ~30% of North Dakota's natural gas production is being flared, but by 2020, the state government wants to reduce that to just 10% of natural gas output. While legislative action is under way, Oneok Partners L.P. has already embarked on a comprehensive plan that will cut gas flaring substantially. 
By the end of 2014, Oneok Partners L.P. will have fully built out its Divide County Gathering System in the Bakken, which currently is operational. By expanding its gas gathering capacity, Oneok Partners L.P. will also be able to boost its natural gas processing capacity. Through the end of 2015, Oneok Partners L.P. wants to bring three new gas processing facilities online in the Bakken. 
The article has a comprehensive look at natural gas gathering and processing in North Dakota. It's a shame these articles are eventually "lost," either removed completely from the internet or archived for subscribers only. This is really a nice summary.

The Wall Street Journal

Iraq militants claim soldier massacre; US and Iran nearing talks (both are direct headlines from the WSJ; because I did not provide the link and some folks do not read the WSJ, let me clarify: the "Iraq militants were those of the Islamist State of Iraq and Syria, a Sunni sect (the peaceful ones); Hillary got out just in time

Medtronic to "move" to Ireland; part of "Tax Inversion" wave; would  have happened anyway, but ObamaCare necessitated move;

Outlook improves for PCs

Exxon's Tillerson to appear with Rosneft's Sechin despite US efforts to isolate Russia

Williams $6 billion deal to acquire Access Midstream (previously reported)

Spurs win NBA championship; a dynasty few have heard of; the Spurs win in a brisk 5-game series; LeBron fades

$154 billion: the value of US acquisitions by foreign buyers so far this year, the highest in 15 years;

The Wall Street Journal

Remember: ISIS = Islamic State of Iraq and Syria. Comment: This is really quite incredible and the Obama reaction: to take a vacation and to go golfing. There are signs that Mr Obama is more removed from reality than Ronald Reagan was in his last days of his presidency.

ISIS militants in Iraq take more ground with capture of Tal Afar:
The latest ISIS onslaught sent hundreds of families fleeing, Anatolia reported. The radical Sunni Muslim group is known for its barbaric treatment of foes, especially Shiite Muslims. The fall of Tal Afar, about 260 miles northwest of the capital, Baghdad, came a day after the group posted online images depicting the gruesome executions of dozens of captive Iraqi troops. [Tal Afar is about 30 miles west of "oil-rich Mosul."]

Over the last week, ISIS fighters have captured oil-rich Mosul, Iraq's second-largest city, and seized Tikrit, Saddam Hussein’s hometown. Better equipped and numerically superior Iraqi army and police units abandoned their posts and fled. Other areas fell with a similar lack of resistance as ISIS fighters swept to within 50 miles of Baghdad.
US condemns militants' claim of executing 1,700 Iraqi soldiers. President Obama, taking a page from Rodney King's playbook: "Can't we all just get along?"

The New York Times

Taken directly from story:
The deepening crisis in Iraq shadowed a getaway weekend for Mr. Obama, his wife, Michelle, and their daughter Malia in the desert near Palm Springs, Calif. Before teeing off Sunday morning at a golf course owned by the technology billionaire Larry Ellison, Mr. Obama was briefed by his national security adviser, Susan E. Rice, on Iraq and on the evacuation of embassy personnel in Baghdad, the White House said.
This should reassure Mr Maliki:
While the United States and Iran have both backed Mr. Maliki — and American officials said they were still standing by him now, while not endorsing a third term for him as prime minister — they have had sharply different goals: The United States has urged him to lead a cross-sectarian government; Iran has wanted him at the head of a Shiite-dominated government.
Obama's plan:
The White House believes it has a brief window to pursue diplomacy, this official said, because after a week of surprising advances across Iraq’s Sunni-dominated north and west, the militant group, the Islamic State in Iraq and Syria, now faces more motivated Iraqi troops and fiercely motivated Shiite militias, defending the gates of Baghdad.
Something tells me the Sunnis (the peaceful ones) are not interested in sitting down to talk based on the photographs of the massacre of Iraqi soldiers. But call me naive.