Wells Coming Off Confidential List Over The Weekend, Monday -- Janaury 11, 2015

On January 8, 2015, just a few days ago, I had a long note on Barnes and Noble. It turns out I had a similar note on Barnes and Noble almost exactly one year ago; I had forgotten about that one. I suggested that for Barnes and Noble to "survive," it needed to look at the Costco model. It was then quite surprising to see the cover story on this week's issue of BloombergBusinessweek features a new start-up that will do just that -- use the Costco model for it's on-line retail store. Very interesting.

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Oil continues to fall. Bloomberg is reporting:

The oil industry was listening as OPEC talked down crude prices to a more than five-year low.

Drillers, refiners and other merchants increased bets on lower prices to the most in three years in the week ended January 6, 2015, government data show. Producers idled the most rigs since 1991, with some paying to break leases on drilling equipment.

Producers are hedging more and drilling less on concern that the biggest plunge in prices since 2008 will continue. Oil fell for a seventh week after officials from Saudi Arabia, the United Arab Emirates and Kuwait reiterated they won’t curb output to halt the decline.

“Producers are desperately hedging their production in a drastically falling market,” Phil Flynn, a senior market analyst at the Price Futures Group in Chicago, said by phone Jan. 9. “They are trying to lock in prices because they are convinced that the market will stay down for a while.”

WTI fell $6.19, or 11 percent, to $47.93 a barrel on the New York Mercantile Exchange on Jan. 6, settling below $50 for the first time since April 2009. Prices ended at $48.36 Jan. 9.

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Tomorrow

Oh, well, time to look at the wells coming off the confidential list tomorrow and the weekend:

Monday, January 12, 2015

• 26413, 669, Whiting, Kubas 44-7PH, North Creek, t7/14; cum 21K 11/14;
• 28021, conf, QEP, Moberg 3-20-21BH, Grail, producing,
• 28043, dry, BR, Bullrush 21-10PH, Elidah, a Birdbear well,

Sunday, January 11, 2015 

• 27068, 502, WPX, Good Voice 34-27HD, Spotted Horn, t11/14; cum 8K 11/14;
• 27657, drl, QEP, Johnson 3-9-4BH, Grail, no production data,
• 27828, conf, CLR, Jersey 25-6H, Alkali Creek, 4 sections, s7/14; no production data,
• 27978, 637, Emerald, Billy Ray Vlentine 2-8-5H, Boxcar Butte, t7/14; cum 21K 11/14;
• 28349, 75, Enduro, MMU 31-31-H1, Mohall, a Madison well, t9/14; cum 6K 11/14;
• 28626, drl, CLR, Rennerfeldt 4-30H, Brooklyn, no production data,

Saturday, January 10, 2015

• 23697, 211, Petro-Hunt, Maruskie 159-94-3B-10-1H, North Tioga, t11/14; cum 6K 11/14;
• 27441, 446, EOG, Parshall 65-14H, Parshall, short lateral, gas up to 3,000 units, 25 stages; 7.6 million lbs; t7/14; cum 64K 11/14;
• 27482, 735, Newfield, Gariety 150-99-36-25-4H,  Siverston, t10/14; cum 28K 11/14;
• 28020, 2,325, QEP, Moberg 3-20-21TH, Grail, t11/14; cum 21K 11/14;
• 28151, 642, Hess, BW-Sorenson-149-99-1324H-5, Cherry Creek, t12/14; cum --
• 28322, drl, Abraxas, Stenehjem 27-34-3H, North Fork, no production data,
• 28665, conf, QEP, Johnson 3-9-4TH, Grail, no production data,
• 28746, drl, EOG, Wayzetta 53-3334HX, Parshall, no production data,
• 28747, 2,592, Slawson, Jore federal 2-12H, Clarks Creek, t9/14, cum 63K 11/14;
• 29008, conf, XTO, David Federal 21X-20F, Lost Bridge, no production data,

Active rigs:

	1/11/2015	01/11/2014	01/11/2013	01/11/2012	01/11/2011
Active Rigs	167	192	182	197	167

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Surging Job Growth

When I read this headline -- "Why US inflation Stays Ultra-Low While Job Growth Is Surging" -- I couldn't wait to read the story. Not about inflation, but about the "surging" job growth. The AP is reporting:

This isn't explained in Econ 101.

Month after month, U.S. hiring keeps rising, and unemployment keeps falling.

Eventually, pay and inflation are supposed to start surging in response.

They're not happening.

Last month, employers added a healthy 252,000 jobs — ending the best year of hiring since 1999 — and the unemployment rate sank to 5.6 percent from 5.8 percent. Yet inflation isn't managing to reach even the Federal Reserve's 2 percent target rate. And paychecks are barely budging. In December, average hourly pay actually fell.

Okay, now let's see if the writer explains why.

"I can't find a plausible empirical or theoretical explanation for why hourly wages would drop when for nine months we've been adding jobs at a robust pace," said Patrick O'Keefe, chief economist at consulting firm CohnReznick.

First of all, the premise of the article is wrong, all wrong. There has not been a surge in hiring. Using the unemployment rate to argue that there has been a surge in hiring is disingenuous: the US Bureau of Labor Statistics reported this week that a record number of folks have dropped out of the labor market, artificially dropping the unemployment rate. 

But let's say, just for argument's sake, that hiring has improved. Why are wages not following?

One word: ObamaCare.

Second word: uncertainty.

With regard to ObamaCare, it is a fact that:

• the 29-hour work week is the new normal
• employers see each new employee as an additional ObamaCare expense

Other reasons wages are being held down:

• the safety net is much bigger (employment benefits, food stamps) (it's a counter-intuitive dot to connect)
• with groceries so cheap (except in California), employers don't have to pay as much
• with gasoline so cheap, employers don't have to pay as much

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Food Stamps

http://www.fns.usda.gov/sites/default/files/pd/29SNAPcurrPP.pdf

This is an interesting spreadsheet. Year-over-year, October, 2013, to October, 2014, the percentage of folks on fold stamps decreased in almost every state .... with two huge exceptions. Not only did the number of folks on food stamps decrease year-over-year in California and Nevada, the increase approached 10%. That is not trivial. We are, what? eight years into the recovery?

After decreasing last year, the number of folks on food stamps is again increasing: