Thursday, September 18, 2014

News We Will Be Reading Friday -- September 18, 2014

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. All evening / night long, DOW futures have continued to move up, and move up quite strongly. At the market close, DOW futures were up about 40 points; a bit later, up 50 and then 60 points; now DOW futures are up 71 points. I assume this is all directly related to the Scottish vote. Of course, futures mean squat but it is what it is. WTI futures are flat, around $93.

North Dakota Oil Production To "Dip"

Some of North Dakota's oil companies likely will experience a production dip starting next month as they try to meet aggressive new flaring standards, Governor Jack Dalrymple said on Thursday.
Flaring, the wasteful burning of natural gas that is extracted alongside crude, has become a widespread problem in the state, the nation's second-largest oil producer. In an effort to curb the problem, which harms quality of life and reduces tax revenue, state regulators will require companies to flare no more than 26 percent of produced gas starting Oct. 1, with standards tightening in the future.
If producers fail to meet the standards, they will have to curb production. "A lot of people were surprised we took that step because there are going to be some operators impacted by this," Dalrymple, a Republican, said in a speech to the North Dakota Association of Oil and Gas Producing Counties.
Regular readers know my position on this issue. There are several story lines. Six months from now, I doubt crude oil production will be much affected, and flaring will be much reduced. I hope someone provides a "before" and "after" satellite photo of the Bakken.

Chevron has become the first energy company to meet a new set of voluntary shale gas drilling standards that aim to go beyond existing state laws in Pennsylvania, Ohio and West Virginia, the Pittsburgh-based Center for Sustainable Shale announced Thursday.

The center is a partnership between major energy companies, environmental groups and charitable foundations. Its certification process consisted of an independent review of Chevron documents and 22 of its production sites in the three states.

The program is meant to work much like Underwriters Laboratories, which puts its familiar UL seal on electrical appliances. The review was conducted by Bureau Veritas, an international testing company that also handles the LEED review process for the U.S. Green Building Council. Nigel Hearne, president of Chevron's Appalachia operations, said that the 15 Sustainable Shale standards "will produce meaningful results" in reducing pollution and freshwater use, and that he hopes other energy companies join in the process. Chevron Corp. is based in San Ramon, California.

The Sierra Club and other some environmental groups have harshly criticized the Sustainable Shale program, saying voluntary efforts are no substitute for tougher state and federal regulations. But one environmental group that worked on the project welcomed Chevron's announcement. 
No good deed goes unpunished.
The Wall Street Journal
Larry Ellison abruptly steps aside as Oracle CEO

Scotland stays

Household wealth hits record, previously reported

ObamaCare: 7.3 million paid their premiums -- suggesting almost a million dropped out; another million may be in hot water

Home Depot breach bigger than Target

It appears Boeing will cede manned fighters to Lockheed; that sounds like a "negative" lede; in fact, one has to ask, is there a future for manned fighter jets in the US Air Force?

LightSquared, blowing through $80 billion in August, has now lost $1.6 billion since it filed for bankruptcy protection in May, 2012

Most interesting, previously posted: big oil companies and traders are stashing milllions of barrels of crude on massive tankers bobbing in the ocean, in a bid to profit from a quirk in oil markets (by the way, just for the fun of it, do a google search of "china storing oil in supertankers")

Links To The Presentations Of The Recent Williston Economic Summit -- September 18, 2014


September 19, 2014: comments on the "Port of Vancouver" presentation.

September 18, 2014: early comments on the proposed new airport, see comments below.

Original Post

 A reader sent me this link to the recent Williston Economic Summit, with links to the presentations. There are too many to go through at any one sitting, so over time, I will go through the presentations, and, perhaps, post some high points for the archives.

This is really quite impressive; a big "thank you" to the reader who sent me this link.

Those Who Forget The Past Are Condemned ...

This is quite incredible. The other day a reader sent me a comment suggesting that we are back to where Lyndon was several decades ago with regard to Vietnam ... personally picking targets for the Air Force.

So, it was quite incredible to note this headline in the Los Angeles Times this evening:  airstrike list awaits Obama after Congress OKs Syria plan. That's the headline.

Whether he does or doesn't is not the issue. It's all about perception.

Poll On Scotland Closes; Pretty Much 50/50 -- September 18, 2014

Will Scotland vote to go it alone?
  • Yes: 49%
  • No: 51%
Early returns suggest Scotland will not go it alone; i.e., Scotland will stick with England.

I Don't Want To Talk About It, Rod Stewart and Amy Belle
Replacing that poll, here is another short, easy, subjective poll where neither answer is "right" nor "wrong." The question: With the announcement of perhaps yet another crude-by-rail terminal -- this one near Powers Lake, North Dakota -- does it surprise you that CBR terminals are still be proposed for North Dakota? Simply, yes or no.

Petro-Hunt To Report A Nice Syverson Well Friday -- September 18, 2014; 5 Of 7 Bakken Wells Go To DRL Status

Apple: this is pretty cool.
If you pre-ordered a new Apple iPhone, there is a website/app that allows you to track the aircraft that is carrying your iPhone. Yes, "your" iPhone -- the one that has your name on it (if you had it engraved); otherwise just the serial number. By the way, reportedly, the iPhone 6 Plus is in very short supply at Apple retail stores and other vendors. Many pundits thought the iPhone 6 Plus would never sell.
Active rigs:

Active Rigs199180194199146

Oasis really reported some huge wells today. Link here. Wells coming off confidential list today were posted earlier; see sidebar at the right or the link.

Wells coming off the confidential list Friday:
  • 23482, 1,503,WPX, Ruby 31-30HW, Antelope, Sanish, t8/14; cum --
  • 25534, drl, HRC, Fort Berthold 148-94-33C-28-3H, Eagle Nest, no production data,
  • 26101, 1,528, Petro-Hunt, Syverson 156-99-30B-31-7H, East Fork, t6/14; cum 30K 7/14;
  • 26686, drl, Zavanna, Angus 34-27 4TFH, Stockyard Creek, no production data,
  • 26829, drl, XTO, Rolfson 14X-34E, Siverston, no production data,
  • 27494, drl, Hess, EN-L Cvancara-155-93-2627H-2, Robinson Lake, no production data,
  • 27664, drl, CRL, Sumner 1-12H, Ellisville, no production data,
  • 27851, 77, Enduro, MMU 31-42-H1, Mohall, a Madison well, t4/14; cum 8K 7/14;
Eight (8) new permits --
  • Operators: Triangle (3), Enduro (2), QEP (2), Resonance Exploration
  • Fields: Williston (Williams), Newburg (Bottineau), Bear Den (McKenzie)
  • Comments: Resonance Exploration has a permit for a wildcat well in Bottineau County, 20-163-80, this is the first permit in North Dakota for Resonance Exploration
Five (5) producing wells now completed:
  • 26766, 1,931, KOG, P Irgens 155-99-2-4-9-15H, Epping, t8/14; cum --
  • 26408, 1,283, BR, CCU Corral Creek 21-28TFH, Corral Creek, t8/14; cum --
  • 27130, 1,964, BR, CCU Four Aces 34-21MBH, Corral Creek, t8/14; cum --
  • 27129, 1,362, BR, CCU Four Aces 34-21TFH,  Corral Creek, t8/14; cum --
  • 27554, 2,787, XTO, Walton Federal 41X-19D, Bear Den, t9/14; cum --
Every month the Director's Cut says there is adequate takeaway capacity with rail and pipeline, but yet, every day more pipeline is laid locally and at least three new pipelines with almost one million bopd capacity are being proposed, as well as new pipeline construction is ready to go if approved by Iowa and Minnesota farmers. And yet, in the last few months, there are indications that two more CBR terminals may be / will be built in North Dakota. That seems to speak volumes with many story lines.

Reminder: new CBR terminal southwest of Williston
Today: possibly a new CBR terminal near Powers Lake, ND

Why Analysts Don't "Get" Apple

Macrumors is reporting:
With every iteration of the iPhone, Apple aims to bring significant improvements to the device's camera. The iPhone 6 and 6 Plus are no exception, packing in several new features like Focus Pixels, Exposure Control, Panorama improvements, Slo-Mo video enhancements, and Optical Image Stabilization for the iPhone 6 Plus. 
The enhanced "Slo-Mo" feature had many in the audience standing up and cheering (or at least hollering and clapping) when they saw the video. It was quite stunning. David Lynch must have loved it.

New CBR Terminal In The Powers Lake, ND, Area -- September 18, 2014

A reader sends me this link suggesting that a CBR terminal is being proposed in the Powers Lake, ND, area by Oasis. The link:

I can't reach the link -- it appears to require a subscription (I could be wrong), and I wasn't able to find another source. The reader is very, very reliable and I suspect this is legitimate.

I don't find anything else at the Oasis website; no hints of this at the September, 2014, corporate presentation.

This is an interesting location. Powers Lake is just a few miles west of the Cottonwood oil field, "owned" by Oasis. One can make the case that it was the Cottonwood field that "made" Oasis.

Also, from the same reader:
Groundbreaking for new OASIS Petroleum field office 1 mile northwest of Powers Lake. From what I have heard, there will be 45 offices located here, a large parking lot and possibly a maintenance shop. Looking southwest from Highway 50 - Enget Lake in background.

The Oil & Gas Journal is reporting:
The US Senate approved Tom Udall (D-NM) and John Barrasso’s (R-Wyo.) bill permanently extending a US Bureau of Land Management drilling permit processing improvement pilot program that was established under the 2005 Energy Policy Act. It was scheduled to expire in 2015.
S. 2440, which passed the Senate by unanimous consent, would extend the program that was designed to help the US Department of the Interior agency deal with a drilling permit application backlog while balancing other duties, the senators said following the measure’s adoption on Sept. 16.
The program, which also established a dedicated fund, has helped streamline operations in BLM field offices in Farmington and Carlsbad, NM, and Rawlins and Buffalo, Wyo., as well as other Rocky Mountain states, they noted. Six more Democrats and six additional Republicans from the region cosponsored the bill.
Cognitive Dissonance?

OPEN BORDERS/OPEN ARMS -- cheap labor.

Minimum wage movement.

The two "policy" movements seem completely at odds with each other. 

Minimum wage policies will help legitimate fast food restaurants, but the "day laborers" in southern California and the "undocumented" nannies in New York City will also be affected by the OPEN BORDERS/OPEN ARMS policies.

No comment; just trying to sort it out.

Americans' Net Worth Reaches Record High -- September 18, 2014

The AP is reporting:
Strong stock market gains and higher home prices boosted Americans' net worth in the April-June quarter to a record high, a trend that could encourage more spending.
U.S. households also took on the most new debt in five years, driven mostly by student and auto loans. More borrowing can be a sign of confidence, although greater student debt can pose a burden for younger households.
Link here.

Warren Buffett defends the Burger King - Tim Horton deal.

Tim Horton is the much bigger company. It just happens to be located in Canada.

"Buffett’s involvement in the Burger King deal provided complications for the White House, given its increased attention to clamping down on corporate inversions."

Any doubts whether the Obama administration will stand in the way of approving this merger? LOL.

From wiki:
Burger King is a global chain of hamburger fast food restaurants headquartered in unincorporated Miami-Dade County, Florida, United States. 
The company began in 1953 as Insta-Burger King, a Jacksonville, Florida-based restaurant chain. After Insta-Burger King ran into financial difficulties in 1954, its two Miami-based franchisees, David Edgerton and James McLamore [both Americans], purchased the company and renamed it Burger King. 
Over the next half century, the company would change hands four times, with its third set of owners, a partnership of TPG Capital [Texas, California], Bain Capital [Boston], and Goldman Sachs Capital Partners, taking it public in 2002. 
In late 2010, 3G Capital [New York, Brazil] of Brazil acquired a majority stake in BK in a deal valued at $3.26 billion. 
The new owners promptly initiated a restructuring of the company to reverse its fortunes. 3G, along with partner Berkshire Hathaway, eventually merged the company with Canadian-based donut chain Tim Hortons.

Apple Fans Already Lining Up Outside Apple Stores For iPhone 6/6+ -- September 18, 2014


Later, 12:26 p.m. CDT: there are now about 30 lawn chairs, some occupied, lined up outside the Southlake, TX, Apple retail store. The first chair is occupied by a young-20-something Asian. The last two chairs are occupied, it appears, by a 50-ish-year-old white married couple. It's a very, very hot morning, and it's going to get hotter.
Original Post

The new Apple iPhone 6 and the new Apple iPhone 6+ will be available at Apple retail stores on Friday, September 19, 2014.

Riding my bicycle into Southlake, Texas, this morning, I passed the local Apple retail store. It was 9:20 a.m., Thursday, September 18, 2014. There were eight of those inexpensive Wal-Mart "lawn chairs" already lined up along the store's window, to the right of the door as you face the store. Two of the chairs were occupied, #3 and #5. The others were empty. One person standing, but probably not in line; all of them young, I think all three appeared to be Hispanic; could be wrong. One elderly woman was talking to one of the young men sitting in line.

I don't know if the stores open at midnight tonight, or as regularly scheduled, 10:00 a.m. tomorrow morning. Detroit.cbslocal says this:
[In the Detroit area], the Apple Store, AT&T, Best Buy and Verizon are all planning to open at 8 a.m. Friday, and Apple is encouraging customers “to arrive early or order online” to pickup their iPhone in-store or receive an estimated delivery date.
Let's see if has anything to say. Nope, not yet. Expect to see a photo or two, later today, of folks lined up outside Apple retail stores later.

What's the market doing?

Up almost 100 points. Interesting. Who would have thought? First time unemployment claims plummet and housing starts plummet. EEP is up another 4% (almost); and I think that's on top of a similar gain yesterday, but I forget.

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

Has the president's fund-raising and golfing schedule been released for the weekend yet?

Trading at new highs today: BK, BRK.B, CP, CSX, EEP, EEQ, ETP, EW, LNG, RAIL, UNP. 

CLR, Anadarko-Springer, And Zeits -- September 18, 2014; Platts Update


Springer shale: presentation. A pdf may download automatically.


August 15, 2017: EIA adds the Anadarko in its weekly production report

February 19, 2016: still attracting new investors.

October 6, 2014: Wood Mackenzie on the Springer

September 21, 2014: more on the Springer and CLR at OilandGas360.

September 21, 2014: the AP reports on CLR and the Springer

September 18, 2014: Platts reports:
Continental Resources unveiled results of the Springer Shale on Thursday, a new Oklahoma oil play that could help boost the state's already growing production to levels not seen in decades.

The Springer, chiefly sited in Grady and parts of Garvin counties at 12,500-foot depths, is yielding top-notch initial output rates and economic returns, company managers said Thursday in webcast remarks during Continental's 2014 Analyst Day in Oklahoma City.

The company's results in the Springer, combined with its own and the industry's mounting production at the South Central Oklahoma Oil Play and output from other formations in the state's subsoil, is adding to Oklahoma's already mounting production of 345,000 b/d in June, according to US Energy Information Administration data.

"Oklahoma could potentially become the nation's [third-highest] oil-producing state," Continental CEO Harold Hamm said in opening the 2014 event, its first such investor gathering in two years. 
Original Post

Zeits, Seeking Alpha:

 Springer Shale in the Anadarko
  • Continental substantially increased resource estimates for its Anadarko Basin asset.
  • The announcement of the Springer Shale discovery is important, given that the play will add to the “core of the core” drilling inventory.
  • The positive read-across is to Newfield, Cimarex, Marathon and Devon.
One of the most important takeaways from Continental Resources' Analyst Day presentation - which will begin in a few hours in Oklahoma City -- is that the company's opportunity set associated with the Anadarko Basin plays may prove to be comparable to CLR's position in the Bakken. As shown on the following graph, the company estimates that its SCOOP's unrisked resource potential is approximately equal to the resource potential in its Bakken asset.

This 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.

Zeits continues:
Continental has significantly increased its leasehold in the deep Anadarko Basin since the company announced the play in 2012. Continental disclosed that as of September 18, 2014, it has 471,000 net acres under lease in the basin. Adding together the 451,000 net acres that are prospective for the Woodford Shale and 195,000 net acres that are prospective for the Springer, the combined "single-play" resource leasehold is ~646,000 net acres, which compares to ~893,000 net acres that the company controls in the Bakken play in North Dakota and ~305,000 net acres in Montana.

Most importantly, the identified sweet spots in Continental's Anadarko Basin resource plays compare favorably in terms of drilling returns to the most productive areas in the Bakken. The following slide shows that Continental sees exceptionally strong returns in the SCOOP Condensate window and in the just announced Springer Shale play.

Idle Rambling -- A Note To The Granddaughters

Earlier today, a reader sent me a comment about that story of a Californian company suggesting they've found an economical method of converting natural gas to liquid fuel (gasoline / diesel). The California company said they had $30 million in seed money / venture capital. The reader suggested this was all hogwash, and explained why. I really appreciated that. I don't follow the industry so his/her comment was much appreciated. But this was the key point he/she made: $30 million is a pittance, or something to that effect. $30 million? That represents three (3) slickwater wells in the Bakken, and today there are about 200 active rigs drilling in the Bakken (200 x $10 million = $200 billion).

His/her comment certainly put things into perspective. [I suggested Elon Musk might be a silent partner in this scheme. LOL.]

A Note to the Granddaughters

What a morning!

Miserable, miserable five-mile bike ride to Starbucks this morning. The ride was beautiful. The hayfever was miserable. The trees have started pollinating in this part of the world, and my allergies are miserable. Couldn't stop sneezing for half-an-hour once I reached Starbucks. Coffee really helps. I don't take any medication for my severe hayfever allergies. I would not take any medication while in the US Air Force with one exception: over in Germany when we had 3-day exercises in our chemical warfare gear. If it was "hayfever season" I would take Benadryl; it's hard to wear a gas mask when sneezing. Ha. But that was it. Benadryl also made it easier to fall asleep while wearing my gas mask.

I remember as a 6 y/o out in fields northwest of Williston, about two blocks from where I grew up, the weeds were taller than I was, and the hayfever was incredible. As incredibly bad. We didn't have ObamaCare or health insurance that I know of. I never thought much about it. My eyes were swollen, I was sneezing up a storm, and yet I played in the weeds, loving the outdoors. I would come home, and I know it bothered my mom but life went on.

Sometime in middle school, maybe earlier, I started taking sub-cutaneous injections, immunotherapy for allergies. Without a doubt, it helped. Without that, my allergies would be worse, no doubt. To save money, our physician (was it Dr Koch at Craven-Hagen?) taught my mother how to give the "hypodermic" injections and she injected the medicine every week or so during the summer. At home. Medically-legally this would not be allowed in this day and age. An anaphylactic reaction at home would not have been a pretty sight. But that's the way it was. To save money, mom sterilized and re-sterilized the needle until the needles became so dull they were almost impossible to pierce the skin. I remember some of those jabs; they didn't really hurt. I just felt bad that mom had to go through this experience; didn't really bother me all that much, though I never looked forward to the injections.

Looking back, I feel bad for my mom having to save money that way, but she's never talked about it. I wonder if she ever thought about it. Probably not. Raising six kids, she had more than just my allergies and me on my mind. It was just one of those things. My favorite line growing up, "This, too, shall pass." And, invariably, it did. Even middle school with Mr Privratsky as our gym "instructor." Using the term loosely.

But I digress.

At Starbucks, to compound the miserable hayfever, I couldn't get connected to wi-fi at Starbucks. That happens occasionally. My hayfever cleared. I left Starbucks to go to Barnes and Noble where they also have wi-fi. And my hayfever started up all over again as soon as I stepped outside.

But it's clear now.

I dread the bicycle ride home. Well, not really. I enjoy the ride. The hayfever will be miserable. It will be interesting to see if it maxes out somewhere along the 5-mile trip. I've always maintained that at some point, the allergens so overwhelm the system that the body can't react much more. Of course, there's no scientific basis for that, but I'm ever-hopeful.

Our newest granddaughter:

Thursday -- September 18, 2014; Natural Gas Fill Rate At 90; First Time Unemployment Claims Plummet; Housing Starts Plummet

We've since dropped back to 199, but this was the first thing I saw this morning when checking rig counts:

Active rigs:

Active Rigs200180194199146

This is not an investment site. Do not make any investment decisions based on anything you read here or anything you think you might have read here. Yesterday I mentioned that if the Fed announced that is would not raise interest rates through 2016, that could mean 200 points on the Dow. Yesterday, just after the announcement that the Fed won't raise rates "for a considerable time," the Dow was up 80 points (and then dropped back to close up 25 points and a new all-time high); today it's up about 90 points. 170 points is not all that far off from 200. Just saying. LOL.


RBN Energy: Goldilocks and the three winters -- how natural gas storage recovered from the vortex.
From a high of $6.14/MMBtu in February 2014 natural gas prices have fallen to $4.013/MMBtu yesterday (September 17, 2014). In large part the price decline reflects the recovery of gas storage levels from record lows in March at the end of a freezing winter. Booming production and a milder summer have provided the surplus supplies needed for injections to replenish inventories reasonably close to normal levels (the latest storage numbers are released by the Energy Information Administration (EIA) this morning (September 18, 2014). Today we describe the impact of supply and weather driven demand on storage levels.
So, what was the fill rate this past week: 90.  RBN Energy says things are on track; not to worry. That suggests RBN Energy looks for an "80 - 90" fill rate. For round numbers, I suggested a fill rate of at least 100 was needed, so a drop to 90 (from the previous week of 92) was not particularly reassuring. But the market seems satisfied: natural gas is down about 3 cents to just under $4.00.


Jobs and Housing Starts

It's hard for me to reconcile these to data points. First time claims for unemployment benefits plunged by 38,000 while new housing starts plunged more than 14% in August. On jobs and housing, Bloomberg is reporting:
The number of Americans filing applications for unemployment benefits plunged last week to a two-month low, a sign the labor market continues to strengthen.
Jobless claims decreased by 36,000 to 280,000 in the period ended Sept. 13, the Labor Department said today in Washington. The median forecast of 52 economists surveyed by Bloomberg called for a decline to 305,000. Those already collecting unemployment benefits fell to a more than seven-year low. 
obless claims last week were the lowest since 279,000 in mid-July and the second-lowest since 2000. Estimates in the Bloomberg survey ranged from 290,000 to 320,000. The prior week’s claims were revised from an initial reading of 315,000.
Another report today showed beginning home construction slumped 14.4 percent in August, the most since April 2013, indicating the recovery in housing remains uneven.
Housing starts dropped to a 956,000 annualized rate, according to the Commerce Department. Building permits were also down last month
With a number that plunged that much, of course one expects the four-week moving average to have also dropped and it did:
The four-week average of initial claims, a less-volatile measure than the weekly figure, decreased to 299,500 from 304,250 the week before. 
When I see that analysts expected a decline to 305,000, but instead the number plunged to 280,000, all I can say is: it is what it is. The market will react appropriately.

But when I see new housing starts in August plummet more than 14%, ....

I can't reconcile the unemployment claims and new housing data. It doesn't sound like Bloomberg can either, except to say "the recovery in housing remains uneven." Well, yes.

Any early news coming out of Scotland? Not yet.

Another journalist captured by ISIL. Another videotaped beheading in the offing, no doubt. Pun intended.