Wednesday, July 30, 2014

Jobless Report, This Is Not Good -- July 31, 2014; MPC Beats By $0.78; Other Energy Companies Blowing Away Expectation

A reminder: when posts are this long, there will be typographical and factual errors. This blog  is for my personal use only but I post it publicly for anyone to read, but there is no guarantee of any implied accuracy. Read at your own risk.  If I am alerted to factual errors, I fix them as quickly as possible. It is often hard to separate facts from opinions on this site when I post in paragraphs. That's why I try to link all sources. Go to the sources. 

 JOBS REPORT
Well, This Isn't Good

Claims are in-line with expectations, but expectations would not have earned a smiley face emoticon.

Data points:
  • expectations: 300,000 (after last week's "stellar" report -- only 284,000, revised downward to 279,000)
  • actual: 302,000
  • market reaction: the Dow tanks immediately after news; had been trending higher in pre-market futures; down "triple-digits"
Comments: this takes us back to the reported GDP of 4%, yesterday. The media reaction was muted, and the market was not impressed. It makes one wonder to what degree the GDP might have been massaged. Except for a few respondents to my poll, "no one" thought 2Q14 GDP was going to be above 3%; in fact, big-name analysts had lowered expectations from 3.1% to 3.0% the day before the report. And now, the jobs report today. Something feels fishy. Very fishy.

Now, the jobs report. I can understand the number of jobless claims being revised UPWARD but I don't understand (and have never seen [which doesn't mean it hasn't happened] jobless claims revised DOWNWARD. Jobless claims are simply counting the applications that come in. The number should be revised upward because a) some applications will be in the mail; b) some states are slow in reporting data; c) sometimes "they" conveniently miss a stack of applications [which often happens the week before important elections]. But I can't think of a reason why the numbers should be revised DOWNWARD. Did some states double-count applications last week for some reason, and then go back and re-count them? We know that the government has manipulated the jobless numbers [previously posted, citing an impeccable source] before. Something feels fishy. Very fishy.

But let's assume the numbers are right. Back up to 300,000 first time claims. Five years into the recovery and workers are getting nowhere.

For the record:
  • four-week moving average, 297,250. Down 3,500
  • continuing claims climb: 2,539,000, up from last week's revised 2,508,000.
UC Irvine? Really?

Los Angeles Trade-Technical College? Really?

 **************************************

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.

Reporting today: COP, EEP, HP (flex rigs), KOG, MPC, OXY -- according to Yahoo!Finance.
  • APA: beats by 1 cent, misses on revs
  • American Railcar: beats by 30 cents; nice
  • COP: profit rises 1.5%; profit in-line
  • XOM: beats by 19 cents; huge; revenues rise almost 5%; production declined y/y
  • EEP: after market close
  • HP: beats by 12 cents; wow! revs up 13%
  • KOG: after market close
  • MPC: beats by 78 cents; wow, what happened here; maybe more later; revs also rose almost 5%
  • OXY: beats by 6 cents; profit rises 8%; on a triple-digit down day for the Dow, OXY is up very, very nicely
Enterprise Products executes additional agreement for ethane export terminal; evaluating expansion options: Co announced that it has executed an additional long-term contract to provide ethane storage, transportation, refrigeration and loading services from its new ethane export terminal that is currently under construction on the Houston Ship Channel.
  • With this new agreement, the co now has long-term commitments for approximately 85 percent of the capacity of the ethane terminal

The Wall Street Journal

How GDP of 4% affects the Fed's thinking.

Current sanctions against Russia won't be enough.

Argentina ... going ... going ... gone....

Some US states, such as Colorado and Illinois, are overwhelmed by number of undocumented immigrants seeking licenses. At least in Colorado, they can smoke while waiting.

Biggest casualty of the Ukraine: Russian-German ties. Russia is Germany's #1 trading partner. Oh-oh.

Huge story: US oil exports ready to sail. Tanker of Texas oil heading to South Kore in first sale since 1970s embargo.
How that $40 million shipment avoided the nearly four-decade ban on exporting U.S. crude is a tale involving two determined energy companies, loophole-seeking lawyers, and an unprecedented boom in American drilling that could create a glut of ultralight oil.
The Singapore-flagged BW Zambesi is the first of many ships likely to carry U.S. oil abroad under a new interpretation of the federal law that bars most sales of American oil overseas.
Analysts say future exports appear wide open: as much as 800,000 barrels a day come from just one of the many U.S. oil fields pumping light oil. Though U.S. policy on oil exports hasn't changed, production of this kind of oil, known as condensate, is surging.
This early shipment "is the wedge that's pushing the door open" for more ultralight oil exports, said Daniel Yergin, vice chairman of consulting firm IHS. 
Cash-poor Venezuela weighs sale of Citgo. Warren Buffett is burning the midnight oil, as they say.

Boeing plans to build its flagship, the 787 Dreamliner jet, exclusively at its non-union factory in South Carolina.

XOM starts to sputter.

The Fed's latest statement raises the possibility that a rate increase will come sooner than many expect.

For The Archives, Let's See If They Make It -- July 30, 2014

For background to this story, go to this link: http://www.investorvillage.com/smbd.asp?mb=4288&mn=144363&pt=msg&mid=14041343.

Even if they reach their goal/projection for October, they will be below the average AND the range for the past five years. Even if everything goes right, they will be short. If it's a cold winter, it's gonna be a big story.

If it's a mild winter, no one will know how close they came.

Texas Is Now #8 In The World For Oil Production At 3 Million BOPD -- July 30, 2014

The Dallas Business Journal is reporting:
Texas oil production topped 3 million barrels per day in May, putting the Lone Star state on par with the world’s biggest oil producing countries, according to the Energy Information Administration.
Only Russia, Saudi Arabia, United States, China, Canada, Iran and Iraq produce more oil than Texas, according to international oil production numbers from the EIA. Unlike the national production totals that are from May, the international numbers are from March and include condensate.
This is most interesting:
Texas produced as much oil as the entire continent of Europe, according to the EIA. 
Over at "Big Stories," I have a page, "Europe at a Tipping Point." At that page, the energy news regarding Europe is dismal, and it begins: Europe may be the only continent in the world to depend on imported energy -- EU Council President. When one reads that Texas produces as much oil as the entire continent of Europe that provides a glimpse of how bad things are over there. Remember: France has the huge Paris oil basin; there is all kinds of fossil fuel in eastern Europe; I assume if they wanted, Europe could at least challenge Texas in production. Perhaps, perhaps not.

But Europe has some big decisions to make. The Russian natural gas supply is only one of them.

Wisconson Coal Plant Could Close -- Lack Of Coal -- BNSF Unable To Supply Contracted Coal Due To Rail Backlog; Wasn't Wind Supposed To Take Up The Slack? -- July 30, 2014

Updates

August 3, 2014: The coal-rail supply story is affecting the entire midwest, not just the La Crosse power plant. is reporting that the issue is getting federal attention (these are folks from the political party trying to kill the coal industry in the US and slow down BNSF trains to a 5 mph crawl):
U.S. Sen. Tammy Baldwin, D-Wis., released a statement saying: “Following last winter’s devastating propane shortage, I am committed to ensuring that Wisconsinites do not face another energy crisis as temperatures drop. My staff and I will continue to work with BNSF, the Surface Transportation Board, and Dairyland Power to find a solution to this looming fuel shortage.” [Perhaps he needs to also work with POTUS.]
State Sen. Bob Jauch, D-Poplar, and Democratic state Reps. Janet Bewley of Ashland, Nick Milroy of South Range and Stephen Smith of Shell Lake also sent a letter to the National Surface Transportation Board in Washington D.C. The state lawmakers urged the federal agency to take immediate steps to increase coal shipments to Midwest utilities to avert an energy crisis similar to the propane shortage last winter. [Perhaps they need to write POTUS or meet him on the golf course; the three state reps and POTUS could make a foursome.]
Back to the story:
Midwest Energy Terminal in Superior is experiencing similar issues. The facility which provides coal to several power plants along the Great Lakes and St. Lawrence River, including Minnesota Power, is struggling to get supply.
With supplies down by about 1½ million tons, President Fred Shusterich said this is the time of year his customers are stockpiling coal to prepare for the January-March shutdown of the Soo Locks, which brings most shipping to a halt on Lake Superior. This year, difficult ice conditions persisted into May. Yet the trains that typically bring coal from the west to the Superior waterfront facility are coming only half as often as usual. He said that while a typical 123-car rail shipment has a five-day turnaround, it now takes about 10 days to get the shipment.
Minnesota Power spokeswoman Amy Rutledge said the utility also is dealing with coal shipments that have slowed, but the situation is not critical and their supplies are fine now. They also are working with BNSF railroad.
 My recommendation: Minnesota loves wind power. They need to turn on the turbines.


Original Post

LaCrosse Tribune is reporting:
An ongoing rail backlog that has stranded grain shipments across the Great Plains is now threatening to shut down a La Crosse-area power plant.
Dairyland Power Cooperative says it could run out of coal at its Genoa generating plant by January if the BNSF railroad doesn’t rapidly accelerate deliveries.
Halfway through the summer shipping season, the coal supply has dwindled to “perilous levels” and is falling further behind each week, according to a memo sent last week to lawmakers.
The La Crosse-based utility, which serves about 250,000 mostly rural customers, relies on coal to generate power at plants in Alma and Genoa. Alma is served directly by a BNSF rail line, while coal is shipped to Genoa on barges loaded at a terminal in southeast Iowa.
I assume President Obama is not concerned. It's all part of the plan.

A big thank-you to Steve, tonight; he has sent me a number of stories I never would have seen otherwise. The ONEOK story was particularly interesting. Thank you.

Update On World's Largest Gas-To-Liquid (GTL) Plant In The World -- July 30, 2014

Rigzone is reporting:
In 2008, Shell announced it would partner with Qatar Petroleum and build Pearl GTL in order to produce cleaner-burning diesel and kerosene, base oils for top-tier lubricants, a chemical feedstock called naphtha (used to make plastics) and normal paraffin, which is used to produce detergents.
Today, the plant in Ras Laffan Industrial City, 80km north of Doha, Qatar, is the largest gas-to-liquids plant in the world.
At the peak of construction 52,000 workers from 65 countries were deployed on the site and overall it took the team 500 million man-hours to design and build.
As well as being the biggest, Pearl GTL is also one of the most complex and challenging energy projects in the world – the GTL technology alone has 3,500 patents.
The statistics are staggering: to build Pearl GTL a total of 750,000 cubic metres of concrete was poured. That’s enough to construct two Burj Khalifas (the world’s tallest building).
Pearl GTL draws on gas from Qatar’s North Field, estimated to hold 900 trillion cubic feet of gas. That’s an estimated 13% of the world’s total.

ONEOK: Another Natural Gas Facility (Demicks Lake); Will Expand Two Other Plants; Ahead Of Schedule On Garden Creek III; And May Announce More Projects By End Of 2014

Updates

February 20, 2018: ONEOK recently asked to expand its Bear Creek facility from 80 million cf/d to 175 million cf/d. 

August 12, 2015: small ONEOK pipeline approved

February 25, 2015: ONEOK will temporarily halt work on three natural gas processing plants in the mid-continent due to the slump in oil and gas prices; of the three, only the recently announced Demicks Lake plant in McKenzie County.

October 6, 2014: Targa announces a new 200 mmcfpd natural gas processing plant in McKenzie County. 
 
September 2, 2014: ONEOK may increase capacity at Garden Creek II.  

Original Post
This is a huge story. If you don't read anything else at the blog today, be sure to read this one.

Note: there is a lot of information in this post. I recommend the reader go to the linked ONEOK press release for details (and to make sure I did not make mistakes in summary below).

This is the list of ONEOK natural gas plants in my database for North Dakota:
  • Lignite, Burke County, 6 million cubic feet/day
  • Marmath, Slope County, 7.5 MMcf/d
  • Grasslands, Williams, 100 MMcf/d
  • Stateline I, Williams, 100 MMcf/d
  • Stateline II, Williams, 100 MMcf/d
  • Garden Creek I, McKenzie, 100 MMcf/d
  • Garden Creek II, McKenzie, 100 MMcf/d; completed; announced August 26, 2014;
  • Garden Creek III, McKenzie, 120 MMcf/d -- to be completed in 2015* (ahead of schedule)
  • Lonesome Creek, McKenzie, 200 MMcf/d -- announced July 14, 2014; to be completed in 2015
  • Demicks Lake, McKenzie, 200 MMcf/d -- announced July 30, 2014; to be completed in 2016; in this press release Oneok said more projects might be announced before the end of 2014; appears to have been revised upward to 400 MMcf/d in an article dated December 18, 2014.
  • Bear Creek, northwest Dunn County, 80 MMcf/d -- announced Sept 22, 2014; $300 million; to be completed 2Q16; asked in late 2017/early 2018 to expand this plant from 80 million cf/d to 175 million cf/d;
******************************************

On July 14, 2014, The Bismarck Tribune ran the story announcing the Lonesome Creek facility had been approved by the PSC, with 200 MCF capacity, at a cost of $280 million. The article said this would be ONEOK's 6th plant since 2007 and its 7th plant in the state. (If one doesn't count the very small plants at Lignite and Marmath, the numbers "add up.")

Today, ONEOK announces yet another facility: the Demicks Lake facility. Data points:
  • Demicks Lake facility, $605 - $785 million, 200-million cubic per day facility
  • Demicks Lake facility, northeast McKenzie County; to be completed in 2016
  • brings ONEOK's CAPEX to more than $7.0 billion through 2016 in state of North Dakota
  • Williston Basin natural gas processing capacity to reach 1.1 billion cubic feet/day with new plant
  • *Garden Creek III plant ahead of schedule; to be completed in 4Q14
This announcement: $605 to $785 million between now and end of 3Q16:
  • Build a new 200-million cubic feet per day (MMcf/d) natural gas processing facility – the Demicks Lake plant – and related infrastructure in northeast McKenzie County, North Dakota,
  • Construct additional natural gas compression at the partnership's existing and planned Garden Creek and Stateline natural gas processing plants in the Williston Basin by a total of 100 MMcf/d; and
  • Build approximately 12 miles of natural gas liquids (NGL) gathering pipeline from the Demicks Lake plant to the partnership's existing Bakken NGL pipeline.
ONEOK spokesman:  "The additional 300 MMcf/d in the Williston Basin will increase our natural gas processing capacity to approximately 1.1 billion cubic feet per day (Bcf/d) in the region. Pending board approval, we expect to announce additional Williston Basin natural gas processing capacity by the end of this year."

In addition, the Garden Creek III natural gas processing plant, originally scheduled for completion in the first quarter 2015, is now ahead of schedule and slated for completion in the fourth quarter 2014.
"The completion of this plant, now a 120-MMcf/d natural gas processing facility with the additional capital investment in compression, combined with other ongoing investments in the Williston Basin, will provide the partnership with additional natural gas and NGL volumes while also creating long-term value for our unitholders," said Spencer.
For comparison, with its recent expansion, the Hess plant at Tioga has a capacity of 250 MCF.

Fifteen (15) New Permits -- North Dakota - July 30, 2014; MRO With A "High-IP" Well

Wells coming off the confidential list Thursday:
  • 26762, 99, Corinthian, Corinthian Bowers 9-3 1H, North Souris, a nice Spearfish well, t3/14; cum 8K 51/4;
  • 27136, 1,200, BR, Denali 21-4TFH, Johnson Corner, 4 sections, no production data,
  • 27366, 2,395, MRO, Grover 11-3TFH, Reunion Bay, t5/14; cum 40K 6/14;
  • 27603, drl, BR, Bullrush 34-10MBH-A, Elidah, no production data,
Active rigs:


7/30/201407/30/201307/30/201207/30/201107/30/2010
Active Rigs191181206183143

Fifteen (15) new permits --
  • Operators: Newfield (4), CLR (4), Zavanna (3), Newfield (2), MRO (2),
  • Fields: Briar Creek (Williams), North Tobacco Garden (McKenzie), South Tobacco Garden (McKenzie), Bluffton (Divide), Lost Bridge (Dunn),
  • Comments:
Wells coming off the confidential list today were posted earlier; see sidebar at the right.

Does Whiting Have A New Record IP In The Bakken? -- July 30, 2014

Updates

July 23, 2018: another Tarpon Federal permit, #35183; see below;

January 28, 2017: huge jump in production after neighboring well fracked;

June 15, 2015: random update of the locations of Whiting's fourteen (14) Tarpon Federal wells (Sand Creek and Twin Valley), with graphics.

March 18, 2015: random update of five (5) Tarpon Federal wells still on the confidential list but producing
 
Original Post

More to follow; will clean this up later; from the FAQ page: What is the record IP to date in the Williston Basin? 
More to follow: in 2Q14 earnings report, WLL: Tarpon Well Completed in 2nd Bench of Three Forks Flowing 6,071 BOE/d. Not a record in the Bakken -- see Statoil's #23992. But still, this is huge for the second bench.
Statoil reported an IP of 5,417 on September 26, 2013: #23992, Beaux 18-19 7H, Banks oil field. Based on its IP for natural gas (9,663), this well had an IP of 7,083 boepd. 
Statoil reported an IP of 5,387 on July 19, 2013: #23387, Beaux 18-19 4H, Banks oil field. This might be a new record (this is the IP for crude oil only).  A reader wrote: "I'm not a big fan of IP numbers, but the Statoil Beaux wells are noteworthy. The 4H with the IP of 5,387 barrels of oil also had a gas volume of 9484 MCF. If you value the gas (methane and NGLs) at $6 per MCF and oil at $90 per barrel, the BOE would be 632 making the BOEPD for this well just over 6,000. These wells are just east of the Continental Resources high-density multi-zone drilling units."
The initial production of any well, self-reported by the producer, is becoming less meaningful over time. Having said that, it looks like the record IP for a Bakken well is now 5,200a Newfield well (July, 2011): 18691, 5,200, NFX, Wisness Federal 152-96-4-2H, Westberg, Bakken.
Statoil reported on July 10, 2013: 23385, 5,070, Beaux 18-19 6H, Banks, t6/13; cum -- ; 7 days to drill the lateral; I did not see completion data; 31 swell packers planned; 
Two earlier wells: a Whiting well which had an IP of 4,761 boepd: file #17612, 4,761 boepd IP, Whiting, Maki 11-27H, Mountrail County, Sanish field.  This is still current as of February 20, 2010. Since then, BEXP claims to have set a record with the Sorenson 29-32 1-H, #18654, with a 24-hour flowback of 5,133 bopd. However, the NDIC reported an IP of 2,944. BEXP also reported the Jack Cvancara 19-18 #1H (this site is down) in the Ross project area with a 24-hour flowback of 5,035.
New record in the Bakken, November 3, 2011The Tarpon Federal 21-4H is a Whiting  Petroleum operated well and had a 24-hour initial production (IP) rate of 7,009 barrels of oil equivalent (BOE), setting a new Williston Basin record for a Bakken well.
Whiting said this was a record TFS well at the time, early 2012, file #20526, Smith 34-12TFH, 2,446, 102K in first 4.5 months.

*******************************************
IPs and production updates for Whiting's Tarpon Federal wells in Sand Creek and Twin Valley oil fields in the Bakken:
  • 35773, loc, Whiting, Tarpon Federal 44-19-2TFHU,
  • 35772, loc, Whiting, Tarpon Federal 44-19-3H
  • 35771, loc, Whiting, Tarpon Federal 44-19-3TFH,
  • 35770, loc, Whiting, Tarpon Federal 44-19-4H,
  • 35769, loc, Whiting, Tarpon Federal 44-19-4TFH
  • 35768, loc, Whiting, Tarpon Federal 44-19-5H
  • 35193, conf--> loc, Whiting, Tarpon Federal 34-20-3H, Sand Creek, 
  • 29200, 2,468, Whiting, Tarpon Federal 44-19-3RTF, Sand Creek, t2/15; cum 133K 5/18;
  • 29199, 3,238, Whiting, Tarpon Federal 44-19-1RH, Sand Creek, 30 stages, 3.7 million lbs, t2/15; cum 181K 5/18;
  • 28496, 2,959, Whiting, Tarpon Federal 24-20-3RTF, Sand Creek, 62 stages, 2.5 million lbs, t1/15; cum 167K 5/18;
  • 28495, 3,606, Whiting, Tarpon Federal 24-20-2RH, Sand Creek, 90 stages, 3.5 million lbs, t1/15; cum 171K 5/18;
  • 28494, 3,125, Tarpon Federal 24-20-2RTF, Sand Creek, sundry form says "Middle Bakken," 30-stage, NOS, producing, strange production profile; 32K first month (12/14); 285 bbls second month; t12/14 cum 143K 5/18;
  • 28493, 3,444, Tarpon Federal 24-20-1RTF, Sand Creek, Three Forks B1, a strange production profile; 32K first month (12/14); 285 bbls second month; t12/14; cum 167K 5/18;
  • 28492, 4,371, Tarpon Federal 24-20-1H, Sand Creek, a strange profile, 42K first month (12/14); 378 bbls second month; t12/14; cum 233K 5/18;
  • 27413, 3,131, Whiting, Tarpon Federal 44-19TFHU, Sand Creek, Three Forks B1, 37 stages, 3.9 million lbs, t2/15 cum 176K 5/18;
  • 22554, 2,274, Whiting, Tarpon Federal 44-19-1RTF, Sand Creek, "R" for revised, not re-entry; sundry form says target is "Bakken," NOS; 30 stages, 3.2 million lbs, t2/15; cum 195K 5/18; off-line much of the time; 
  • 22555, 3,259, Whiting, Tarpon Federal 44-199-2RTF, Sand Creek, one sundry form had Three Forks typed in, but it was inked out and replaced with Bakken, the original permit also showed "Bakken"; 30 stages, 3.5 million lbs, t2/15; cum 151K 5/18; off-line much of the time; 
  • 22556, 2,967, Whiting, Tarpon Federal 44-19-2RH, Sand Creek, 30 stages, 3.9 million lbs, t2/15; cum 328K 5/18; 
  • 27126, 2,894, HRC, Fort Berthold 148-95-23D-14-7, Eagle Nest, 48 stages, 4.9 million lbs; a nice well, choked back?; t2/15; cum 240K 10/16;
  • 22361, 4,971, Tarpon Federal 21-4-3H, t12/12, Twin Valley;
  •  cum 567K 5/18;
  • 22360, 1,394, Tarpon Federal 21-4-1H, t12/12, Twin Valley; t12/12; cum 255K 5/18;
  • 20589, 4,815, Tarpon Federal 21-4H, t10/11, Twin Valley, t10/11; cum 623K 5/18;
These wells are located on two pads about half a mile away from each other; the 5-well pad (28492 - 28496) is located in 20-153-96; the four-well pad is located to the west in 19-153-96. 

Whiting Might Have Another IP Record In The Bakken -- July 30, 2014

Supposedly reporting today (some have already reported):
  • Halcon (HK) -- see below
  • Hess (HES) -- results posted
  • Murphy Oil (MUR) - after market close
  • Phillips 66 (PSX) -- results posted
  • Questar (STR) -- beats by 1 cent; beats on revenue;
  • Southern Company (SO) -- beats by 2 cents; beats on revenues
  • Sprint (S) -- topped estimates
  • Tenaris (TEN.MI)
  • Valero (VLO) -- beats by 2 cents; revenues in-line
  • Whiting (WLL) -- see below
  • Williams Cos (WMB)-- see below
Whiting:
  • Record production reaches 109,760 boepd in 2Q14, up 9.7% over 1Q14, exceeds high end of guidance 
  • Record Bakken/Three Forks production of 80,195 boepd inn 2Q14, up 33% over 2Q13
  • Redtail Niobrara production of 7,235 boepd in 2Q14, up 59% over 1Q14
  • Tarpon well completed in 2nd bench of Three Forks flowing 6,071 boepd
  • Raising mid-point of 2014 production guidance to 20% over 2013 
  • 2Q14 net income available to common shareholders of $151.4 million or $1.26 per diluted share and adjusted net income of $167.9 million or $1.40 per diluted share [Consensus was $1.17]
  •  2Q14 discretionary cash flow totals a record $556.2 million 
Whiting, from Reuters:
Whiting Petroleum Corp posted a better-than-expected quarterly profit on Wednesday as oil and natural gas production jumped across the company's wells in North Dakota and Colorado's shale formations.
Whiting, which is about to become the largest oil producer in North Dakota's Bakken shale with the buyout of a smaller rival, boosted its capital budget by $100 million to $2.8 billion and said 2014 production should beat 2013 levels by 20 percent, citing in part better-than-expected well results.
"We believe we have plenty of running room in the Williston Basin" of North Dakota, Whiting Chief Executive James Volker said in a statement.

Halcon:
Company delivers 44% year-over-year production growth
Full year 2014 production guidance raised
HOUSTON, July 30, 2014  -- Halcon Resources Corporation today announced its second quarter 2014 results.
Revenues for the three months ended June 30, 2014 totaled $327.1 million, an increase of 53% compared to the three months ended June 30, 2013. Production for the quarter came in above guidance and increased 44% year-over-year to an average of 42,055 boepd. Second quarter 2014 production was 85% oil, 7% natural gas liquids (NGLs) and 8% natural gas.
Total operating costs per unit (including lease operating expense, workover and other expense, taxes other than income, gathering and other expense, and general and administrative expense) decreased by 21% to $24.45 per boe in the second quarter of 2014, compared to the second quarter of 2013.
After adjusting for selected items primarily related to the non-cash impact of derivatives, net income was $32.5 million, or $0.07 per diluted share, for the three months ended June 30, 2014. Halcon reported a net loss available to common stockholders of $73.3 million, or $0.18 per diluted share for the quarter. [Consensus was four cents.]
WMB:
  • Expected 2Q14 cash distributions from Williams Partners and Access Midstream Partners totals $509 Million, up 29% vs. 2Q13
  • Adjusted segment profit + DD&A is $742 Million, up 15% vs. 2Q13
  • Adjusted income is $158 million or $0.23 per share, up 22% vs. 2Q13 [Consensus: 23 cents]
  • 2Q 2014 Net Income Is $103 Million or $0.15 per Share 
  • Updating financial guidance primarily to reflect acquisition of additional interests in Access Midstream Partners 
  • Affirming planned dividend guidance: 3Q14 up 32% to $0.56, or $2.24 on an annualized basis; $2.46 in 2015, with follow-on annual dividend growth of approximately 15% through 2017 
  • Williams Partners and Access Midstream Partners evaluating merger as proposed by Williams 
PSX:
  • Phillips 66's Q2 EPS rose 0.7% to $1.51, falling short of views by 19 cents. Revenue climbed 7.2% to $46.3 billion, under estimates for $47.5 billion.
************************************
Two New Human Interest Articles On The Bakken
Sent in by two readers, thank you

First, the Huffington Post:
BELFIELD, N.D. -- Byron Richard's pickup bounces up and down over the washboard gravel road. He clutches the wheel with one hand and points with the other as he passes dozens of oil wells on land where once crops grew and cattle grazed.
A few of the wells are decades old; most are new or under construction. Oil field vehicles of assorted shapes and sizes clog the road in places and kick up thick clouds of dust.
Richard's way of life is changing. He knows that. He accepts that.
But the Belfield, N.D., farmer and rancher says too many of the changes favor the oil industry at the expense of him and other agriculturalists.
"We're not anti-oil. We can co-exist with oil," he says. "But there needs to be more focus on surface rights owners." 
My reply to the reader who sent me this:
Another great article. Thank you. Again, these articles make it sound like the entire state of North Dakota is being take over the oil and gas industry. We're talking about the western third, maybe western fourth of the state, and even so, very little of four or five counties. Cattle are hardly affected. Most ranchers in oil country now have the cash to actually keep farming/ranching. You notice that Willie Nelson is not doing any Farm Aid concerts in North Dakota any more. It's a nice human interest story but that's about it. 
The second article, also from the Huffinton Post:
North Dakota’s Heritage Center makes for a jarring sight in this Midwestern prairie capital. The newly-expanded museum consists of four interlocking cubes of stone, steel and glass, a gleaming architectural statement poking out of the otherwise drab Capitol grounds. Each cube features a gallery devoted to an era of North Dakota’s history, but the state’s present is everywhere.
The legislature approved the dramatic $52 million expansion in 2009, but required the museum to come up with $12 million of that to supplement state money, and more than half has come from energy companies — including a $1.8 million gift from Continental Resources Inc. that put its name on one of the galleries. The gifts have “given us a chance to do some things that we’ve never really had a chance to do,” said Merl Paaverud, director of the State Historical Society.
Oil development has transformed this state to the point where it’s hard to find a place or person that hasn’t been touched by the boom. Energy companies have drilled more than 8,000 wells into western North Dakota’s rugged prairie since the beginning of 2010, quadrupling the state’s oil production. From July 2011 through June 2013, the state collected $4 billion in oil taxes, and is expecting a $1 billion surplus for the current biennium, not including an oil-funded sovereign wealth fund that will approach a balance of $3 billion. North Dakota is in the uncommon position of facing a labor shortage, spurring a state-run campaign to attract workers, paid for in part by Hess Corp.
My reply to the reader who sent me this:
Got it,thanks. These articles make it sound like the entire state of ND is being taken over (geographically) by the oil and gas industry. As you know, it is pretty much confined to three, maybe four counties. The counties along the Canadian border and the counties in the southwestern part of the state have activity but I drive those areas every year, and not much as changed in Stark County or Belfield.
Williams, parts of McKenzie (Watford City area), and parts of Mountrail are really affected but in the big scheme of things that's about it.

Weekly US Petroleum Report -- EIA; Gasoline Production Decreased But Inventories Up Slightly; Crude Oil Imports Increased; Total US Crude Oil Inventories Continue To Decrease -- July 30, 2014

For week ending July 25, 2014.

Some data points:
  • crude oil inputs averaged 47,000 bopd less than previous week (a bigger decline than the previous week, which was 28,000 bopd)
  • refineries operating at 94% capacity -- high capacity (same as last week)
  • gasoline production decreased  (last week increased)
  • crude oil imports up a huge 337,000 bopd (last week down 20,000 bopd)
  • US crude oil inventories decreased by 3.7 million bbls (also decreased last week; decreased by 4 million bbls the previous week)
  • total motor gasoline inventories increased by 0.4 million bbls last week
This is what jumped out at me: The US enters its highest driving month (August) and already gasoline production is dropping (preparing for autumn/winter, already? I don't know but it is interesting).

The other big item: look at the huge increase in crude oil imports -- compared to the previous week (337,000 bopd vs 20,000 the previous week). There is a glut of US oil coming out of the Permian, Bakken, and Eagle Ford, so why would imports increase? Just background variability, no doubt, no big deal, but remember, the US refineries along the Gulf coast need imported heavy oil to mix with all that light oil; the US refineries along the Gulf coast are configured for heavy oil, and with the Keystone XL killed (thank you, Mr Obama), the US needs to import heavy oil from our close, stable, democratic ally, the country formerly led by Hugo Chavez. Disclaimer: I go through the report very quickly and may make typographical errors. That's why I include the link. Also, I may misinterpret what I read. 

*****************************
Exactly What Is The UN Doing Storing Rockets In Gaza Schools?

The United Nations Relief & Works Agency For Palestine Refugees (UNRWA) announced Tuesday that another rocket stockpile has been found at one of its schools in Gaza. This instance marks the third time since the beginning of Operation Protective Edge that a weapons arsenal has been found at an UNRWA school in Gaza.
Once: shame on you. Twice: same on me. Thrice: phoning it in.

Once found, the UN returns the rockets to Hamas:
UNRWA has yet to place blame on any individuals or organizations for placing the weapons stockpile within a children’s school. The UN body refused to do so on the past two previous occasions as well.
The UN body, after both previous findings, has handed the rockets it had found back into the possession of “the local police," otherwise known as the terrorist group Hamas.
This week, UNRWA supplies and building materials had been found in Hamas’s tunnel infrastructure, which has been used to smuggle weapons and carry out attacks on the State of Israel.

I Was Off By A Day: I Thought Yesterday Was Going To Be A Big Day -- Posted July 30, 2014; Bloomberg Still Refers To The Bakken As Booming Regardless Of What The Atlantic Monthly Says

... but it looks like today is going to be the big day.

The "big day" actually started just after the market closed yesterday: the SM Energy-Baytex story; the Menard's story; a new AAPL story; and so forth.

The "big day" continues into today.

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

HES (Hess) soars! Hess soars on quarterly results and Bakken MLP formation.
Hess soared after reporting better-than-expected quarterly earnings and saying it will form a tax-advantaged master-limited partnership to hold railcars, trucking, storage and processing facilities in North Dakota’s booming Bakken Shale region.
Shares of the New York-based oil producer rose 4.2 percent to $103.62 at 9:09 a.m. before the start of regular trading in New York. Excluding one-time items, per-share profit for the second quarter was $1.38, exceeding the average of 24 analysts’ estimates by 20 cents.
Creating a partnership for the Bakken assets would reduce the tax burden, since master-limited partnerships don’t pay federal income tax. Hess is the latest to propose forming such a partnership, known as an MLP, as companies seek ways to cut the 35 percent corporate U.S. tax rate.
With regard to Hess, here's the BIG story, from the linked article:
The new partnership will include a natural gas processing plant in Tioga, North Dakota, as well as railcars and a loading facility for transporting oil from the region. It will also have a propane facility in Mentor, Minnesota. 
Don picked up on this. Does this mean that Hess will have a pipeline from the Bakken to Mentor, MN? Or is it something entirely different. I missed this until today, and Reuters just posted it last month:
As politicians debate the dangers of a massive increase in oil carried by rail in North America, railroads and energy producers are considering the same for natural gas.
Buoyed by the unexpected success of crude by rail, companies are beginning to consider transporting natural gas as remote drilling frontiers emerge beyond the reach of pipelines, executives said. 
Natural gas by rail is years away and likely to face strong public resistance after a series of explosive crude-by-rail accidents. But the potentially multibillion-dollar development could connect gas-rich regions like North Dakota with urban centers, presenting an opportunity for railroads, drillers and tank car makers already cashing in from hauling oil on trains. 
It could also be a cure for environmentally unfriendly flaring, a growing problem in far-flung areas where more than $1 billion of natural gas produced alongside oil is burned off each year for lack of processing plants or pipelines that can take years to build. 
Everything, they said, is years away, in this business.  Mentor, MN, is about 45 miles southeast of Grand Forks, and is on the main BNSF rail line across the northern tier. I don't think this has anything to do with diluent for Canadian heavy oil. Hess ships diluent from its Tioga facility directly north to Canada.

*******************************
President Obama Needs to Work on Foreign Policy, Not His Golf Game -- The LA Times
Near Total Collapse of America's Foreign Policy -- Their Words, Not Mine

An LA Times op-ed:
Nero fiddled while Rome burned. On Saturday, President Obama played golf while his foreign policy, and that of the nation he leads, was going up in smoke.
Literally.
Saturday was the day the State Department ordered the evacuation of the U.S. Embassy in Libya. Only three years ago, Obama helped NATO allies overthrow Moammar Kadafi as part of his “lead from behind” doctrine, but he has done little to help the resulting democratic government secure its authority.
Not only did the U.S. not support sending international peacekeepers, it didn't mount a serious program to train a new Libyan army. The predictable result has been utter chaos. In September 2012, U.S. Ambassador J. Christopher Stevens and three other Americans were killed in Benghazi. In recent days, much of Tripoli's main airport has been destroyed in militia fighting. The embassy staff had to be evacuated overland as thick black smoke from the fighting hung over the Tripoli skyline.
In any other circumstances — and especially if the chief executive were a Republican — this would have been a scandal blared across the media. But at a time when we are witnessing the near-total collapse of American foreign policy, it barely registers.
****************************
Another Fine Observation

On July 24, 2014, I wrote:
The next big thing: mobile payments -- and it will be head-to-head, Apple vs Facebook. Apple has the eco-niche: hardware, integrated operating system, a cult-following, a handshake with IBM. But the killer technology Apple has: iBeacon. One won't even have to take one's credit card out or mobile device out to pay for one's purchase. iBeacon's range is measured in meters, and is scalable/flexible/personal. Apple doesn't talk much about iBeacon; it's just there. iBeacon even has its own wiki entry. I talk about "the next big thing" here.   
It took them a bit longer, but Yahoo!Finance noticed the same thing and posted a great story yesterday:
The expected iPhone 6 and iWatch may not be the only big things down the pike for Apple.
The tech giant is reportedly looking at getting into the mobile payment business. According to published reports, Apple is said to be in talks with credit card companies to create a service that would allow users to pay for items with the iPhones acting as credit cards.
But other than that little snippet, it's actually a pretty superficial article. I did not watch the video.

Wednesday: Weekly Petroleum Report Due Shortly -- July 30, 2014; Is This Correct? GDP Surges To 4%? Jobs Numbers Disappointing

GDP: is this correct? Surging to 4.0%. Whatever it is, it will be revised next month, but if this 4% is accurate, it's incredible.

The economy in 1Q14 collapsed (their word, not mine), with GDP collapsing somewhere between 2.1% and 3% -- the numbers vary depending which one you believe. From that post:
And then this, from the CNN business analyst: "don't freak out about a minus 3% GDP (rounded)." The CNN business analyst's summary:
The same old story remains: "This recovery is underway, but it's choppy and still very slow."
But here we are, one quarter later and surging to 4%. A lot of oil is going to be needed to sustain that growth.

************************************

Active rigs:


7/30/201407/30/201307/30/201207/30/201107/30/2010
Active Rigs192181206183143


RBN Energy: takeaway capacity and disappointing "basis" for natural gas in the Marcellus.

****************************
Bloomberg On The Economy (Today)

Bloomberg is reporting:
U.S. stocks rallied and the dollar strengthened to a four-month high as data showed faster-than-expected economic growth and better earnings from Twitter Inc. to Amgen Inc. Treasuries fell, while commodities rose.
The Standard & Poor’s 500 Index climbed 0.3 percent to 1,976.85 at 9:32 a.m. in New York, with Twitter shares surging 23 percent
Oil and copper rallied more than 0.3 percent. Russian stocks and the ruble advanced as some investors saw U.S. and European Union sanctions as milder than anticipated.
Gross domestic product rose at a 4 percent annualized rate after shrinking 2.1 percent from January through March, Commerce Department figures showed.
“If we look at the data around the earnings season, we think it’s very robust. It’s a very favorable environment for stocks.” 
The big story here: that wasn't even a headline, that 2Q14 GDP surged to 4%. The big story was Twitter.

Twitter? Really?

UC Irvine? Really?

LA Trade Tech School? Really?

**********************************

Hey, what were the results of the poll regarding the 2Q14 GDP?
  • 2.0% or less: 45%
  • 2.1% to 2.5% (inclusive): 31%
  • 2.6% to 2.9% (inclusive): 10%
  • 3.0%: 7%
  • 3.1% or greater: 7%
I had guess about 2.9%. Way off. We'll see what the revision shows next month.

*************************
Reuters Take On The Economy

Reuters is reporting:
U.S. economic growth accelerated more than expected in the second quarter and the decline in output in the prior period was less steep than previously reported, bolstering views for a stronger performance in the last six months of the year.

Gross domestic product expanded at a 4.0 percent annual rate as activity picked up broadly after shrinking at a revised 2.1 percent pace in the first quarter, the Commerce Department said on Wednesday.
That pushed GDP above the economy's potential growth trend, which analysts put somewhere between a 2 percent and 2.5 percent pace. Economists had forecast the economy growing at a 3.0 percent rate in the second quarter after a previously reported 2.9 percent contraction.
A separate report showing private employers added 218,000 jobs to their payrolls last month, a decline from June's hefty gain of 281,000, did little to change perceptions the economy was strengthening.

A View Of The Bakken From Across The Ocean, And Across The US -- July 29, 2014

The link is at The (London) Guardian. I believe long captions to each of the photographs IS the story.  I don't think any of the photographs are dated. I believe all the photographs have been previously published and most of them, if not all of them, are quite dated.

Having said that, the photographs of "humanity" are absolutely outstanding and the photographer Valery Lyman deserves a huge note of appreciation for sharing. Compare and contrast these photographs with those coming out of the Ukraine, Syria, Detroit, Chicago, the US-Mexico border, and Los Angeles (just for starters). Also, note the ages of most of the folks in the photographs; note their expressions. Note the ethnicity of those photographed. Note: Amtrak. Note no signs of winter. Many of the people in the photographs will simply pass through Williston, just one stop among many in their lives; others will end up staying. Some will become fabulously rich; some will end up homeless, broken physically and mentally. But all will have a story to tell.

It is well worth your time to spend some time getting to know Valery Lyman. Some links:
Much, much more.

In one of Valery's articles she mentioned the dangerous life of the "roughneck."

*****************************

The Rapid City Journal recently had an excellent article on roughnecks in the Bakken. The headline: roughneck oil workers are the princes of the fields. 
After a week spent back home in Hot Springs, Kenneth Kiser packed his pickup with groceries, kissed his wife, Sarah, and baby daughter Klayton, and headed seven hours north to Williston, where he'll spend the next three weeks at work on the front lines of America's latest gold rush.
Around the same time, Jo Ji John waved goodbye to his family in Sacramento, Calif., and headed off on a 20-hour drive back to the Bakken. Last year, John was away from his family for 315 out of 365 days.
Both men have worked the Bakken oil fields for three years, where staying busy helps keep their minds off the significant time they spend away from family.
But while on the job, Kiser and John are members of an elite fraternity of skilled workers in the oil fields: they are "roughnecks."
“Roughneck” is a term of endearment worn exclusively by those who work directly on or in an oil rig, very close to the action. Kiser’s forte is the drilling side of roughnecking — making the hole, so to speak. John’s specialty is lining the hole with its final pipe in a process called casing.
And that's just the beginning of a great article. Strong recommendation to read.