Monday, Monday -- January 26, 2015

Fun to watch the n'easter.  Winds.

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

Had Enough?

OPEC secretary general "calls" bottom to market. He must have received a phone call from the New Saudi King HRH Salman. Reuters is reporting. One can only assume the plummeting oil prices "killed" his 90-year-old brother; doesn't want the same thing to happen to him.

Reporting today:

• Norfolk Southern Corp (NSC), expectation $1.63; profit flat as coal revenue falls 15%; The railroad reported it earned $511 million, or $1.64 per share, slightly below last year's earnings of $513 million, or $1.64 per share.
• Microsoft (MSFT), expectation 71 cents; revenue: $26.5 billion versus  $26.33 billion expected by analysts. That's up 8% from last year; GAAP EPS: $0.71 versus  $0.71 EPS expected, which is down 9% from a year ago. It's still early, but the stock is down more than 2% on a weak performance by Windows and lower-than-expected sales of software to companies. It was a hard quarter for Windows, as OEM revenue -- the amount of money Microsoft got from selling Windows on new PCs, as opposed to corporations — was down 13% from last year.

• Plum Creek Timber Company (PCL), expectation 34 cents; net income of 39 cents per share. Earnings, adjusted for non-recurring gains, came to 38 cents per share.
  The results surpassed Wall Street expectations.

Active rigs:

	1/26/2015	01/26/2014	01/26/2013	01/26/2012	01/26/2011
Active Rigs	156	187	190	203	163

RBN Energy: pricing, break-even points, part 3.

Cuba to US: Holding out for more money. 

The start of talks on repairing 50 years of broken relations appears to have left President Raul Castro's government focused on winning additional concessions without giving in to U.S. demands for greater freedoms, despite the seeming benefits that warmer ties could have for the country's struggling economy.

Following the highest-level open talks in three decades between the two nations, Cuban officials remained firm in rejecting significant reforms pushed by the United States as part of President Barack Obama's surprise move to re-establish ties and rebuild economic relations with the Communist-led country.

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

Only 26%

I would have expected worse. In the Bakken we have already dropped from 185 to 155 = a 16% drop from 185. And it's just begun. Rigzone is reporting:

The U.S. onshore well count will decline by 26 percent, from more than 37,000 in 2014 to an estimated 27,000 in 2015, as the decline in oil prices prompted many operators to cut their 2015 spending plans, according to a recent estimate by Wood Mackenzie.

North American drilling and completion expenditures exceeded $140 billion in 2014, but Wood Mackenzie expects operators to commit less than $90 billion to upstream development over the next 12 months.

“Such sizeable cuts will have serious implications across the oilfield services sector,” said Wood Mackenzie in a statement.

Using its North America Supply Chain Analysis Tool, Wood Mackenzie forecasts that rig day rates will decline by 30 percent, while the rig count will drop from an annual average of nearly 1,800 in 2014 to under 1,300 in 2015. This decline will curtail demand in other services sector markets, including tubulars, drilling services, frac proppant and pressure pumping.

****************************************** 
A Steal

This is old news. I'm finally getting to it. Allete "steals" a wind farm -- pays less than $140,000 MW. Bloomberg is reporting:

Allete Inc. (ALE), a Minnesota energy company, will acquire the first, 108-megawatt phase of an NRG Energy Inc. (NRG) wind farm in Iowa after buying the second phase in January.

Allete’s clean energy unit paid $15 million for the Storm Lake 1 project, the Duluth, Minnesota-based company said today in a statement. Storm Lake 1 was completed in 1999 and is adjacent to its 78-megawatt sister project, both of which have contracts to sell their power for five years.

$15,000,000 / 108 = $139,000/MW. See what wind normally costs here. 

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

See disclaimer.

Oasis in Seeking Alpha. Summary:

• Oasis is looking at a $150 million cash deficit in 2015 with $50 per barrel WTI oil.
• Longer term, it should be able to maintain production and reach breakeven cash flow with $66 per barrel WTI oil.
• Liquidity is sufficient to handle lower oil prices for a while.
• However, if Oasis wants to maintain 2015 production levels going forward, it faces a $230 million cash deficit at $50 per barrel WTI oil.
• $90 per barrel WTI oil would result in positive cash flow of $344 million though.