Thursday, April 30, 2015

Breaking News: President Obama Finds Another Reason To Delay Action On Keystone XL North -- April 30, 2015

Why not? Reuters, the president's private news outlet said this was the prudent thing to do, going back to JFK:
There is historic precedent for Washington to be cautious. In 1963, when relations between President John F. Kennedy and Conservative Prime Minister John Diefenbaker were poisonous, the United States accused Ottawa of not meeting its commitments to NATO.

And, of course, he can't act on the Keystone XL once the US presidential campaign gets into full swing which will begin later this fall -- just about the time the Canadian election is over. 

And with that, I'm back on the road again.

NIne (9) New Permits; Fourteen Wells Coming Off Confidential List Friday -- April 30, 2015

Active rigs:

Active Rigs86187185210173

Nine (9) new permits --
  • Operators: Abraxas (6), Whiting (2), Slawson
  • Fields: North Fork (McKenzie), Zenith (Stark), Heart Butte (Dunn)
  • Comments:
Wells coming off confidential list Friday:
  • 28471, 533, Triangle, State 152-102-36-25-8H, Elk, t11/14; cum 58K 3/15;
  • 28566, drl, CLR, Wiley 5-25H, Pershing, no production data,
  • 28792, drl, Abraxas, Jore Federal 2-11-7H, North Fork, no production data,
  • 28980, 947, Slawson, Ironbank 7-14-13TFH, Stockyard Creek, t2/15; cum 2K 2/15;
  • 28982, SI/NC, WPX, Mandaree 24-13 HZ2, Spotted Horn, no production data,
  • 29107, drl, Hess, EN-Uran A-154-93-2215H-12, Robinson Lake, no production data,
  • 29439, drl, Murex, Sherry Ann 13-24H, Temple, no production data,
  • 29484, drl, Statoil, Charlie Sorenson 17-8 5TFH, Alger, no production data,
  • 29495, 2,442, Whiting, Koala 13-31-25-1H, Poe, t3/15; cum --
  • 29589, SI/NC, EOG, Fertile 58-0333H, Parshall, no production data,
  • 29607, 123, Enduro, NSCU M-7-8-H1, Newburg, a Spearfish/Charles well, t12/14; cum 6K 3/15;
  • 29646, SI/NC, SM Energy, Virgil 2B-16HN, West Ambrose, no production data,
  • 29753, drl, SHD, Avalanche 36-16-TF1, Big Bend, no production data,
  • 29755, conf, SHD, Avalanche 36-14-MB2, Clarks Creek, no production data, 
NOTE: "NC" = not completed (drilled to TD, awaiting completion). 

Five (5) permits canceled:
  • XTO cancels five permits for wells in McKenzie County (Arlene Federal, Cross Federal, Johnson Federal)
  • Hess cancels a permit for a GO-Dahl well in McKenze County
  • Whiting cancels a permit for a Skunk Creek well in Dunn County
One (1) producing well completed:
  • 28469, 458, Hess, EN-Rehak-155-93-0718H-8, Alger, t4/15; cum--
It appears Zavanna converted the Brushy Bill 1-19H well (#16723) to a SWD.

Oil And Gas Bills -- North Dakota State -- April 30, 2015 -- NOTE DISCLAIMER


January 12, 2016: current North Dakota oil and gas tax structure

For The Archives
No Longer Current
Current As Of Date Originally Posted
I received the following from a reader (and a huge thank-you to the reader). I posted his note as I received it (with some editing of verbs in the "not passed section).

I did not post the links (I will post those later -- for some reason the PDF links were not downloading -- probably a slow server where I am right now). You can probably find the bills by starting here:

As usual, I post these things quickly and there will be typographical/factual errors. If this is important to you, go to the source (and I will get the links as soon as I can, but it might not be today).

It will take me awhile to "digest" all of this. I'm sure some of this language -- as clear as it is -- will still result in quite a few questions. My hunch is The Bismarck Tribune and The Dickinson Press will write about these bills. Stay tuned.

HB1476: With only a few days left in the session HB1476 was proposed and passed out of the House. Several amendments were then passed by the Senate and the House concurred with the amendments. The Governor has signed the bill.
Some of the major provisions of the bill are (please read the bill to ensure you understand all the changes):
a) It does not matter if the big trigger takes effect or not, the extraction tax will go to 5% on January 1, 2016;
b) The triggers will be eliminated. Any well completed prior to December 1, 2015 that is eligible for any exemption will only be able to take advantage of the reduced rate until November 30, 2015;
c) If the average price of a barrel of oil is above $90 (indexed for inflation) for three consecutive months, the extraction tax will increase to 6%;
d) The rate will trigger back down to 5% following three consecutive months below $90; e) Removes the tertiary recovery project using CO2 exemption for wells in the Bakken or Three Forks formations, and for those wells outside of the Bakken, the exemption would be for a period of five years; SB2069 includes housecleaning and clarification language on the rate of withholding for oil and gas royalties.
The bill passed and was signed by the Governor.

SB2069 includes housecleaning and clarification language on the rate of withholding for oil and gas royalties. The bill passed and was signed by the Governor.

SB2318 - This bill creates a tax exemption for materials used in compressing, gathering, collecting, storing, transporting or injecting carbon dioxide for use in enhanced recovery of oil or natural gas. The bill was heard in committee and amended to include a study on the CO2 exemption during the 2015-16 interim. It passed the Senate, was amended and passed by the House, and the House amendment was concurred with by the Senate. The bill was signed by the Governor.

SB2343 would have initially required an operator to pay royalties and taxes on any gas flared after 14 days from the initial production, was amended twice to require any orders proposed by the NDIC that could potentially have a fiscal impact on the state of $20 million or more be approved either by the Legislature or the Budget Section. It no longer includes any restrictions on flaring. The bill passed the Senate, was heard in the House, amended and received a “Do Not Pass” vote from the committee.” It was then amended by the House to make it retroactive back to 7/1/2013 and then passed. The House amendment was concurred with by the Senate. The Governor then signed the bill.


HB1187 - This bill would have voided any rules enacted by the NDIC that did not undergo the administrative rulemaking process, which would include the recent flaring and conditioning issues. The bill was amended to change the effective date from July 31, 2014 to July 31, 2015 (thus making it prospective only), and it passed the House but was unanimously voted down in the Senate.

HB1437 - would have extended the little trigger 4 more years to July 1, 2019. The bill was amended to extend the incentive only 2 years and it passed the House. The bill was then amended in the Senate to extend the trigger back to 4 years (to June 30, 2019), and a provision was added to prevent the small trigger from taking effect until 12 months after the large trigger exemption comes off – which allows the state to collect some tax revenue between triggers. The bill then passed the Senate and went to conference committee. With the passing of HB1476, this bill was voted down by the House 89-1.

SB2287 would have reduced the initial period of flaring allowed after first production to 90 days. It also prohibits exemptions unless the volumes of flared gas are less than or equal to 50,000 cubic feet per day. The bill was heard in committee and voted down by the Senate.

SB2319 - would have required an operator to notify each force pooled royalty owner of associated costs of drilling and completing a well before certifying a horizontal, horizontal reentry or two-year inactive well for a tax incentive. It would also have extended the eligibility for cost-free royalty interest to unleased interests pooled after December 31, 2014 and gives nonparticipating owners the option to become a paying owner and adjusts the royalties based on their decision. It was voted down by the full Senate.

SB2337 would have created a permanent extraction tax exemption for 18 months for Non-Bakken wells completed after June 30, 2015. It passed the full Senate, was amended in the House and then voted down 88-3.

SB2342 - would have required a vote by the NDIC to accept a settlement on penalties imposed on the oil industry. The bill was heard in committee but failed to pass.

SB2373 would have provided for payment of 50% share of property taxes on land if a producing oil or gas well is generating royalty payments to those owners. The bill was unanimously voted down.


Again, if this is important to you, go to the source. I am traveling and did not get a chance to proofread as much as I should have. I'm not concerned about the content sent by the reader; it's my additional comments that might have errors.

Feel free to leave comments if you have questions. I will get to the comments before midnight tonight if I find a cooperative McDonald's or Starbucks farther souther.


Last legislator getting "out of Dodge."

Photograph taken west of Williston on April 28, 2015.

Reader Sends Link Regarding Crude Oil's Recent Sawtooth Price Pattern -- April 30, 2015

A reader over at the Discussion Group sent this link; nice article. An excerpt:
On a go forward basis, the reason for price excursions will be real changes in shale oil production together with speculative beliefs in this regard. I have asserted in previous posts that the US has unwittingly become the swing producer, meaning when it sneezes world oil catches a cold. The Saudis used to have this status together with OPEC determinism of oil supply.
Recently Boone Pickens shared a stage with former EPA head Carol Browner and ex-secretary of energy, Steve Chu, discussing the environmental safety of shale oil and gas production; no doubt the debate was entertaining. Associated with this occasion Pickens stated to the press that the US was responsible for the oil price crash, not the Saudis. While this is not exactly news to at least readers of my posts, I cannot recollect a causal link being suggested by any person vested with expertise.
Most of the press has been on why the Saudis did it, rather than whether they did it. Damaging US shale oil production and hurting the economy of Iran and weakening Syria’s Assad (the latter through impoverishing financier Russia) were the principal theories advanced. Assuming the validity of Pickens’ assertion, one can conclude that if US production brought the price of oil down, then reduction in the same would send it back up. One theory of Saudi motivation would be supported.

Paddlefishing In North Dakota -- April 30, 2015

The Dickinson Press is reporting:
Snagging is legal in all areas of the Yellowstone River in North Dakota, and in the area of the Missouri River lying west of the U.S. Highway 85 bridge to the Montana border, excluding that portion from the pipeline crossing (river mile 1,577) downstream to the upper end of the Lewis and Clark Wildlife Management Area (river mile 1,565).
Snaggers should be aware that mandatory harvest of all snagged paddlefish is required on Tuesdays, Wednesdays, Fridays and Saturdays. On these days, all paddlefish caught must be tagged immediately.
Legal snagging hours are from 8 a.m. to 9 p.m. daily. Snaggers are allowed only one tag per season.
Snag-and-release of all paddlefish is required on Sundays, Mondays and Thursdays.
Those planning to participate during snag-and-release-only days need to have in their possession a current season, unused paddlefish snagging tag. Use or possession of gaffs is prohibited on snag-and-release-only days, and, if it occurs, during the snag-and-release extension period.
All paddlefish snagged and tagged must be removed from the river by 9 p.m. of each snagging day. The use or possession of a gaff hook within one-half mile in either direction of the Highway 200 bridge on the Yellowstone River is illegal at any time during the snagging season.
If the season closes early because the harvest cap is reached, an extended snag-and-release-only period will be allowed for up to four days.
Much, much more at the link. 

For newbies: paddlefishing is NOT the same as paddleboat fishing. 

Apparently Someone Missed The Memo: The Bakken Boom Is Over -- April 30, 2015

The Bismarck Tribune is reporting:
The North Dakota Public Service Commission approved Wednesday permits for three electrical power infrastructure projects in western North Dakota being planned by Basin Electric Power Cooperative.
The projects, costing about $445 million, involve expansions of two natural gas powered generating stations and a new electric transmission line in the Oil Patch.

The first permit is for a $161.2 million expansion of the Pioneer Generating Station in Williams County, about 15 miles northwest of Williston. Basin Electric plans to add 111 megawatts of electric generation capacity to the station consisting of 12 engines running on natural gas supplied to the site by an existing pipeline. The new engines will be constructed adjacent to three existing turbines at the location, bringing the total capacity at the site to 246 megawatts. [$161.2 million / 111 MW = $1.5 million / MW]
The second permit is for a $149 million expansion of the Lonesome Creek Station in McKenzie County, about 14 miles west of Watford City. Basin Electric plans to add 135 megawatts of electric generation capacity to the station by adding three 45-megawatt, natural gas-fired combustion turbines. The turbines would be adjacent to three similar turbines at the location, bringing the total capacity at the site to 270 megawatts. [$149 million / 135 MW = $1.1 million /MW]
The third permit issued is for a $135 million North Killdeer Loop Phase I project in McKenzie County, which involves 28 miles of a new 345 kilovolt electric transmission line. The project will also include the construction of two substations. The line would start from the proposed Patent Gate Substation north of Arnegard and would extend generally eastward to the proposed Kummer Ridge substation east of Watford City.
The locations are very, very interesting. Maybe more on that later, when I get caught up, after traveling. 

California Reality -- April 30, 2015; Dickinson Refinery To Be On-Line By May?

The Dickinson Press is reporting:
Progress [of the MDU-Calumet topping plant west of Dickinson] toward operation, which began with a March 2013 groundbreaking, has been slower than expected. Rasmussen said the goal of having the facility fully operational by the end of May looks certain.
Interim plant manager replaced; new manager named.  

IIRC, this plant was supposed to be on-line last November/December time frame, then slipped to 1Q15, and now is near the end of 2Q15. 


The Los Angeles Times is reporting:
Gov. Jerry Brown is expected to announce Thursday that the state is substantially trimming the amount of fish and wildlife habitat it plans to restore in connection with a controversial project to replumb the heart of California's water system.
This month, state water officials said they were overhauling a proposal to construct two massive water tunnels under the Sacramento-San Joaquin River Delta and restore more than 100,000 acres of delta habitat.
Among the changes that Brown is expected to detail at an Oakland news conference is the decision to move ahead with just 30,000 acres of habitat work in the next 3.5 years.
Years in the making, the plan is designed to lessen the environmental harm of delta water exports by building a new diversion point on the Sacramento River that would feed two 30-mile tunnels connected to existing pumping facilities that send supplies south to San Joaquin Valley growers and Southland cities.
The project also called for restoring 100,000 acres or more of habitat over five decades at a cost of $8 billion in federal and state funds.
A major goal of the plan was to gain a 50-year environmental permit for delta exports that would ease the endangered species restrictions that have cut delta deliveries.
But state water resources Director Mark Cowin this month said it had become apparent that the project couldn't meet the tough federal requirements for such long-term approvals.

Earnings -- This Is Not An Investment Site -- April 30, 2015

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.

XOM earned $4.9 billion in the first quarter, down 46 percent from the same period in 2014, the company announced Thursday. That breaks down to $1.17 per share vs forecast of 83 cents/share. Huge beat.
Meanwhile, Exxon increased its dividend by 6% on Wednesday to 73 cents a quarter up from 69 cents. That implied a $12.2 billion payout to investors, but it wasn’t certain the payout would be that big until the company said Thursday how many shares are outstanding. But, yes, that’s the right projection
Business Insider says XOM "smashes" expectations

COP tops forecast.  COP reported an 18 cent per-share loss on Thursday for Q1, but beat analysts estimates for a 19-cent loss.

Calfrack earnings press release here. 29 cents vs loss of 14 cents forecast?

CARBO Ceramics press release here. $1.24 loss vs a loss of 49 cents forecast?

Cardinal Health beats by 3 cents; profit rises by 16%; proxy for ObamaCare.

Marathon Petroleum Corporation beats by 38 cents.

Phillips 66 profit falls 37%. $1.79/share vs forecast of $1.43.

Ultra Petroleum beats by 9 cents.

Abraxas sinks after hours; declares a 10% increase in quarterly dividend. Reported 17 cents/share vs forecast of 27 cents/share.

Cheniere with a big beat; forecast a loss of 37 cents; came in at a lost of 23 cents.

Enbridge Energy Partners (EEP) beats by 3 cents.

EPD: barely misses; forecast, 33 cents; reported 32 cents; increased distribution to $1.50/unit on an annualized basis;

"Hot-Dam" As We Used To Say: Spending Up, Unemployent Down -- April 30, 2015

Initial claims for state unemployment benefits fell 34,000 to a seasonally adjusted 262,000 for the week ended April 25, the lowest reading since April 2000.
It was the eighth straight week that claims remained below 300,000, which is usually associated with a strengthening labor market, suggesting March's moderation in job growth was likely an aberration. 

Economists polled by Reuters had forecast claims falling to 290,000 last week. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 1,250 last week to 283,750.
Active rigs:

Active Rigs86187185210173

RBN Energy: this is a keeper -- an update on the Monterey tight oil play.
RBN Energy takes a closer look at the Monterey tight oil play, which sits beneath parts of central and south-coastal California.
As recently as 2011, the EIA was saying the Monterey play had about 15 Billion Bbls of technically recoverable oil, more than all the other tight-oil/shale plays in the Lower 48 combined. (In that same estimate, the Bakken was estimated to have about 4 Billion Bbl of technically recoverable oil, and the Eagle Ford about 3 Billion Bbl.)
By 2014, however, EIA had dramatically honed back the Monterey estimate to only 600 Million Bbl—a 96% drop. (That’s like hearing, “No sir, your gas tank’s not full. You’re actually running on fumes.”)
EIA said the big downgrading of the Monterey play’s potential—at least given current technology—was tied to new geological information and the lack of production growth like that seen in the Bakken and Eagle Ford shales.
Subsequent industry reports have  indicated that the Monterey play’s geology and that of the Bakken and Eagle Ford are like night and day, with the Monterey play’s being much more complex—and less predictable.
As noted, this is a keeper. It will be archived by the source, at the source.

Wednesday, April 29, 2015

Traveling -- April 29, 2015

I am driving back to Texas; less blogging and I won't get to all e-mail for awhile, but I will eventually get caught up. Same with discussion group.

Apple could be in a bit of trouble: google apple watch issues and tax issues (EU). 

Bakken Video

Video from truck bypass northwest of Williston. 

Whiting, Williams, Questar; QEP Earnings -- April 29, 2015

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

Whiting Petroleum beats by $0.09, misses on revs; Record Q1 2015 production of 166,930 BOE/d exceeds high end of guidance: Reports Q1 (Mar) loss of $0.23 per share, excluding non-recurring items, $0.09 better than the Capital IQ Consensus Estimate of ($0.32); revenues fell 28.5% year/year to $529.2 mln vs the $557.47 mln consensus.
  • The co's borrowing base was reaffirmed at $4.5 billion, zero drawn at March 31, 2015.
  • Production in the first quarter 2015 totaled 15.0 million barrels of oil equivalent (:MMBOE), 88% crude oil/natural gas liquids (NGLs). First quarter 2015 production averaged 166,930 barrels of oil equivalent per day (BOE/d). This represents a 3% pro forma increase over the full fourth quarter 2014.
  • Redtail Niobrara field production of 13,000 BOE/d in Q1 2015, up 28% over Q4 2014
  • Co sees Q2 production at 14.8-15.2 MMBOE
  • Co sees 2015 production at 58.8-59.4 MMBOE
  • Whiting's full-year 2015 capital budget is at $2.0 billion
Williams Cos beats by $0.04: Reports Q1 (Mar) earnings of $0.16 per share, $0.04 better than the Capital IQ Consensus Estimate of $0.12.
  • Williams is reaffirming its guidance for the years 2015 through 2017 provided on Feb. 18, 2015. We expect Williams Partners' 2015 adjusted EBITDA and distributable cash flow to be near the low end of the range due to the extended Geismar ramp-up and the effects of low commodity prices on volumes and margins.
  • Co sees 2015 adj. EBITDA guidance at $4.3-4.7 bln, sees 2016 adj. EBITDA guidance at $5.2-5.6 bln, sees 2017 adj. EBITDA guidance at $5.8-6.3 bln.
  • Reaffirming Williams Partners adjusted EBITDA guidance for 2015-2017 with 2015 expected to be near low end of range on extended Geismar ramp-up and effects of low commodity prices
  • Reaffirming Williams dividend guidance of $2.38 per share in 2015 with 10% to 15% annual dividend growth through 2017 with growing coverage
Questar reports EPS in-line, misses on revs; reaffirms FY15 EPS guidance: Reports Q1 (Mar) earnings of $0.48 per share, in-line with the Capital IQ Consensus Estimate of $0.48; revenues fell 6.2% year/year to $428.6 mln vs the $457.99 mln consensus.
  • Co issues reaffirms guidance for FY15, sees EPS of $1.20-1.30 vs. $1.29 Capital IQ Consensus Estimate. 
  • Adjusted EBITDA for the quarter were down 1% to $203.6 million compared to $206.3 million in the year-ago period. 
  • Co increased its quarterly dividend by 11% to $0.21, and raised its target payout ratio to 65%. 
QEP Resources reports Q1 (Mar) results, misses on revs: Reports Q1 (Mar) loss of $0.05 per share, may not be comparable to the Capital IQ Consensus Estimate of ($0.30); revenues fell 39.9% year/year to $491.6 mln vs the $663.2 mln consensus.
  • The Company reported a net loss from continuing operations of $55.6 million, or $0.32 per diluted share, for the first quarter 2015 compared with net income from continuing operations of $12.7 million, or $0.07 per diluted share, in the first quarter 2014. Net income or loss includes non-cash gains and losses associated with the change in the fair value of derivative instruments, gains and losses from asset sales, and impairment charges. Excluding these items, the Company's first quarter 2015 Adjusted Net Loss (a non-GAAP measure) was $8.7 million, or $0.05 per diluted share, compared with Adjusted Net Income from continuing operations of $41.1 million, or $0.23 per diluted share, for the comparable 2014 period.
  • Adjusted EBITDA (a non-GAAP measure) for the first quarter 2015 was $222.8 million, compared with $333.1 million on a continuing operations basis in the first quarter 2014, a 33% decrease.

6/8 Bakken Wells To DRL Status Thursday -- April 29, 2015; "NC" Now Being Used For Bakken Wells

Active rigs:

Active Rigs86189186209173

Nine (9) new permits--
  • Operators: Whiting (5), HRC (4)
  • Fields: Bell (Stark), Eagle Nest (Dunn), McGregory Buttes (Dunn)
  • Comments:
Wells coming off the confidential list Thursday:
  • 28472, 435, Triangle, State 152-102-36-25-7H, Elk, t11/14; cum 62K 3/15;
  • 28793, drl, Abraxas, Jore Federal 2-11-6H, North Fork, no production data,
  • 28979, 272, Slawson, Ironbank 6-14-13TFH, Stockyard Creek, t2/15; cum 2K 2/15;
  • 29108, drl, Hess, EN-Uran A-154-93-2215H-5, Robinson Lake, no production data,
  • 29438, drl, XTO, Sorenson 14X-33F, Siverston, no production data,
  • 29489, drl, Statoil, Bures 20-29 7H, Alger, no production data,
  • 29588, SI/NC, EOG, Fertile 59-033H, Parshall, no production data,
  • 29645, SI/NC, SM Energy, Riley 2B-16HS, West Ambrose, no production data, 
NOTE: "NC" = not completed (drilled to TD, awaiting completion). 

Two (2) producing wells completed:
  • 29993, 888, Triangle, Lee 151-101-8-5-10TFH, Ragged Butte, t4/15; cum --
  • 27970, 168, Emerald Oil, Cameron Frye 2-36-25H, Pierre Creek, t2/15; cum 1K 3/15;

100% Better Than Forecast -- April 29, 2015; Today's EIA "Energy Cookie"; Video Of Truck Bypass Northwest Of Williston

GDP came in at 0.2%.
Gross domestic product expanded at an only 0.2 percent annual rate, the Commerce Department said on Wednesday. That was a big step down from the fourth quarter's 2.2 percent pace and marked the weakest reading in a year.
GDPNow forecast 0.1% so 0.2% is twice what was forecast. Incredible that "they" could be off by that much. 100%. LOL. 

The market was not impressed; down over a hundred points as soon as the number was announced. I won't even bother with posting the "excuses" that pundits have already come up with to explain this.

What are we? Six years into the recovery? After a gazillion dollars in stimulus. 750 new jobs created by the stimulus? If President Obama can get the Iranian deal he wants, he will have single-handedly been responsible for more new oil and gas jobs in Iran than all the jobs he has created directly or indirectly in the US oil and gas industry. I don't have the data to back up that statement. I'm probably wrong.

The Daily "Energy Cookie"

Today's EIA energy note:
U.S. energy consumption has slowed recently and is not anticipated to return to growth levels seen in the second half of the 20th century. E
IA's Reference case projections in the Annual Energy Outlook 2015 (AEO2015) show that domestic consumption is expected to grow at a modest 0.3% per year through 2040, less than half the rate of population growth.
Energy used in homes is essentially flat, and transportation consumption will decline slightly, meaning that energy consumption growth will be concentrated in U.S. businesses and industries. --- EIA

Truck Bypass Northwest of Williston

Video taken about 7:30 p.m. Tuesday evening.

Market -- April 29, 2015 -- This Is NOT An Investment Site

Hess: beats by 9 cents; shares up in pre-market trading. The AP is reporting:
Hess Corp. on Wednesday reported a first-quarter loss of $389 million, after reporting a profit in the same period a year earlier.
The New York-based company said it had a loss of $1.37 per share. Losses, adjusted for non-recurring costs and to account for discontinued operations, came to 98 cents per share.
The results surpassed Wall Street expectations.
The average estimate of 11 analysts surveyed by Zacks Investment Research was for a loss of $1.09 per share.
The oil and gas producer posted revenue of $1.55 billion in the period, also beating Street forecasts. Three analysts surveyed by Zacks expected $1.44 billion.
Linn Energy misses by 85 cents:
Linn Energy misses by $0.85: Reports Q1 (Mar) loss of $1.03 per share, $0.85 worse than the Capital IQ Consensus Estimate of ($0.18).
  • Grew average daily production by two percent to approximately 1,201 MMcfe/d for the first quarter 2015, compared to the estimated year-end 2014 exit rate of approximately 1,180 MMcfe/d, while decreasing the budget for total oil and natural gas capital expenditures by approximately 65 percent for 2015 compared to 2014.
Anthem shares surging (ObamaCare proxy): 
Anthem beats by $0.45, misses on revs; guides FY15 EPS above consensus: Reports Q1 (Mar) earnings of $3.14 per share, excluding non-recurring items, $0.45 better than the Capital IQ Consensus Estimate of $2.69; revenues rose 6.8% year/year to $18.85 bln vs the $19.28 bln consensus.
  • Co issues upside guidance for FY15, sees EPS of more than $9.90, excluding non-recurring items, vs. $9.85 Capital IQ Consensus Estimate. Medical membership is now expected to be in the range of 38,200,000 -- 38,400,000. Fully insured membership is expected to be in the range of 14,750,000 -- 14,850,000 and self-funded membership is now expected to be in the range of 23,450,000 -- 23,550,000.
  • Medical membership is now expected to be in the range of 38,200,000 -- 38,400,000. Fully insured membership is expected to be in the range of 14,750,000 -- 14,850,000 and self-funded membership is now expected to be in the range of 23,450,000 -- 23,550,000. The benefit expense ratio was 80.2 percent in the first quarter of 2015, a decrease of 250 basis points from 82.7 percent in the prior year quarter.
Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on what you read here or think you may have read here. Do not make any travel plans based on what you read here. Do not make any relationship changes based on what you think you may have read here. And most importantly, don't choose your ObamaCare health plan based on what you read here or think you may have read. 

Book Corner

I picked up another incredible book from Books on Broadway in Williston.

Terrible Injustice: Sioux Chiefs and US Soldiers On The Upper Missouri, 1854 - 1868, Doreen Chaky, University of Oklahoma Press, c. 2012; has just come out in soft cover.

This is an incredibly good scholarly work -- I think I can say that after having only read the first 37 pages including the preface and introduction.

Ironically (is that the right word?) there are lessons to be drawn from the Indian wars and what is going on in Baltimore, Maryland, this week.

Chapter 1 begins:
When one culture infringes on another's perceived rights and traditions, conflict is inevitable. When each party's sense of justice differs from the other's and they find no common ground, escalation ensues.
Wow -- does that not describe what is going on in Baltimore and Ferguson these days?

Besides the really, really good content, I already love the book for the following reasons:
  • the font and feel of the book
  • the author's use of grammar and punctuation mirrors what I was taught 
  • really, really good writing
As soon as I thumbed through it, I knew I was going to buy it. And then I saw that the author makes Williston her home. Wow. Who wudda thought?

Notes to the Granddaughters

Books on Broadway is still the best bookstore around. In a sense, it's better than Powell's in Portland. Chuck Wilder somehow manages to bring the best books to market. Take all the books in Powell's and then select the top 1% of those books and you might have the inventory at Books on Broadway. But the intimacy and relaxing atmosphere in the coffee bar really, really cements the deal.

You know, it's funny. I think the #1 reason I like coming back to Williston is to visit Books on Broadway. After a while, one kind of knows what to expect in the oil fields, but it never ceases to amaze me what I find at Wilder's bookstore.

By the way, while I'm rambling, a bit more. I had planned to leave Williston at 6:00 a.m. this morning but yesterday I realized I had not yet had coffee at the donut shop two doors down from Books on Broadway. The donut shop next to Books on Broadway may have the best donuts in the world. Their story is a long story, and perhaps a personal story, so I won't go into it here, but that little donut shop encompasses all that is "right" with Williston.

So, yesterday, when I realized that I had not visited the donut shop yet (there was a reason for that) I had to delay my departure. They are open early enough in the morning that I could have stopped there on the way out of town, to leave shortly after my planned departure of 6:00 a.m.

But I wanted to take my dad. If Books on Broadway is the #1 reason for coming back to Williston, my dad is the #1 reason why it's hard to leave.

His day starts about 6:00 a.m. also, but he's generally not ready to go into the office until 10:30, so I did not want to hurry him just for a donut.

My dad might have retired about the time he reached his 83rd birthday. I doubt anyone knows when/if he retired; the problem is the definition of "retired." He had long turned over "official" responsibilities of his agency to others by the time he reached his 83rd birthday but he was still going into the office every day at 9:30 a.m. He was still responsible for going down to the US Post Office every day to pick up the mail for the office. I have long forgotten his salary for that job but it was probably worth about  ($20/day x 6 days x 4 weeks) $480/month but he was probably paid closer to $250/month after various government taxes and deductions. I honestly don't recall.

Somewhere around his 90th birthday, someone else got the "mail job." It may have been due to a "transportation issue." Somewhere around his 90th birthday, the state of North Dakota and Dad came to some sort of an agreement. If he no longer drove his Ford F-150 (or whatever it was) they would quit making him go to "driver's class" every year if he wanted his driver's license renewed. Driver's class had something to do with the various state and city law enforcement agencies issuing him tickets every time he drove through a stop sign. Before the boom, stop signs in Williston were sort of there for folks who had never lived on a farm.

Actually, I'm exaggerating. The state did not get involved. There was a notable incident about three years ago which led my sister to permanently change my dad's transportation routine. But that's a story for another time.

So where was I? Oh, yes, why I'm not leaving until after 11:00 this morning. As I was saying, after his 83rd birthday, or thereabouts, he was coming in to the office every day at 9:30. Finally, sometime this past year, my sister suggested to dad he did not have to come in so early. Dad now comes in at 10:30 every day.

My plans are to meet him at the office at 10:30 and take him over for coffee and donuts on Broadway next to Books on Broadway. And then head south about noon.


One last note: while touring the Bakken last evening, Dad said his goal was to reach his 100th birthday. I suggested that at 93, he should aim for 103. I told him anyone can get to 100 but it's a real accomplishment to get to 103. He wasn't so sure. I told him the hard part was over. Think about it. On a percentage basis. Take all the folks that reach their 63rd birthday; what percent will go on to hit their 103rd birthday? Then take all the folks that reach their 93rd birthday; what percent of those will go on to reach their 100th birthday?

He thought about it. We didn't know the answer. I said the life insurance companies probably know.

He laughed. And then started talking about the new office building he was going to build.

Put A Fork In It And Call It Done -- The Missus Loses Her Appeal -- April 29, 2015

USA Today  reports:
Harold Hamm's ex-wife Tuesday lost her appeal for even more than the nearly $1 billion she won in a divorce battle with the wealthy CEO and founder of oil giant Continental Resources.
Sue Ann Arnall waived her legal bid to reopen the case when she cashed the nine-figure check Hamm was ordered to give her in a November decision that capped a nearly two-month divorce trial, the Oklahoma Supreme Court ruled.
She "took possession or title of the real property and deposited the check for property-division alimony," the court's majority opinion concluded. "The judgment is now satisfied."
Tuesday's ruling, however, allowed Hamm to continue his own appeal of the decision that had appeared to bring a legal end to the former couple's 26-year marriage.
Never should have cashed that check.

Disclaimer: this is not a "legal advice" website. Do not make any decisions regarding your own relationships based on anything you read here or think you might have read here. However, if someone gives you a billion-dollar check, think twice before cashing it. 

The Bakken Bust -- April 29, 2015

Over the course of the next few days, I will post video taken in the Williston area, April 26, 2015 - April 29, 2015, to record for posterity evidence of the Bakken bust. Below is the first random photo taken while waiting to head south at the "new" four-mile corner west of Williston.

The most noticeable thing: no water trucks. Fracking has come to a standstill and more and more fracking water is being delivered by pipe. In addition, much of the truck traffic should no longer be heading through Williston. The truck bypasses have been operational for quite some time now.

A Real Bust

Back on April 22, 2015, the Daily Caller noted the dismal demise of the EV. Today The Detroit News confirms
It's a buyer's market for drivers interested in new or used electrics and hybrids.
Sales of new electric cars and hybrids, according to automotive research and shopping site, are at their lowest level since 2011 — the first full year of sales for the groundbreaking Chevrolet Volt plug-in hybrid and Nissan's all-electric Leaf. So carmakers are paring prices in an effort to get them moving.
Furthermore, motorists who leased those first-generation cars, and have decided not to buy them, are turning them in. They're on dealer lots with still relatively low mileage, and at prices considerably cheaper than the new ones.
Even with $7,500 federal tax credits and other incentives, automakers such as General Motors Co., Ford Motor Co. and Nissan have dropped prices in an attempt to move their new hybrids and electrics. Cadillac became the most recent to reduce the sticker on an electric car, when it whacked $9,000 off its ELR plug-in hybrid last week.
Rent Increases In Williston

The other day I was told a young Williston resident received a notice that her apartment rent was increasing. Yes, increasing.

What's going on? The Dickinson Press has been reporting the end of the opportunity in the Bakken. Everything's shutting down; oil service companies laying off folks. Doom and gloom.

My hunch: man-camps are closing. I'll talk about this later; some counter-intuitive story lines and some observations others aren't making.

But, for now, I have to move on.

In Case You Missed It

From Zap2it:
Miss North Dakota will be taking home the Miss Congeniality award from the Miss America 2015 scholarship pageant. Jacky Arness was voted a winner by her fellow contestants and was given the award during the "Countdown to Miss America" presentation.  
Pretty cool. But it gets better:
Though Miss North Dakota did not make it into the initial 15 semi-finalists, Miss America 2015 host Chris Harrison announced that if the judges could vote unanimously they could add one more contestant to the semi-finals. The judges voted Miss North Dakota into the bonus spot so she is allowed to continue on in competition. 

Incredible Natural Gas Story -- RBN Energy -- April 29, 2015; Vacancy At The El Rancho Hotel In "Old Williston

Active rigs:

Active Rigs87189186209173

RBN Energy: How natural gas production trumped storage withdrawal this past winter. Regular readers have followed the weekly "NG fill rate." RBN Energy discusses it as length today, at the link.
As a result of the record cold winter last year, stockpiles began this winter at a five-year low and at a deficit of about 240 Bcf compared to the previous year.
However, by December, a year-over-year (yoy) surplus in storage began to emerge and continued to grow through the course of the winter. By the time the traditional gas winter withdrawal season ended March 31, inventories were more than 600 Bcf above the previous year, and the yoy surplus has continued to grow since then. Stockpiles as of EIA’s April 17 weekly gas storage update are 1,629 Bcf, which is about 100 Bcf below the five-year average, but a whopping 737 Bcf above year-ago inventory levels.
This is startling given that demand this winter was the second highest in gas market history, 0.8 Bcf/d shy of the record-high demand set last year. How did we get to this point?
Figure 2 [at the link] begins to answer that question. The chart illustrates how supply and demand fundamentals shaped up in the U.S. Lower 48 over the past couple of winters.
Another excellent post by RBN Energy. Again, the post will be archived by the source, at the source.


1Q15 GDP will be released today. I believe this is the "initial estimate." It will be revised at least twice more before "it" becomes official. I could be wrong on that, but it seems like I've read that somewhere else before.

Be that as it may, "GDPNow" forecast 0.1% growth. It will be interesting to see how accurate their new tool is.

I got a kick out of early morning talk shows, talking about the 1Q15 GDP.  For newbies, a growth of 0.1% in a nation which should be in the middle of a gangbuster economy is pathetic. Already the spin is beginning. They are going to blame the poor growth on a) winter; and, b) work stoppage at west coast ports. Winter, huh? I thought global warming would have tempered things by now. Whatever.

So, we will wait for the report and the spin.

The following is no spin. I think it's been five years since I've seen this, "vacancy" at the El Rancho on the north side of "old Williston."

The photo was taken about 8:30 p.m., Tuesday, April 28, 2015.

Tuesday, April 28, 2015

Apple Page -- April 28, 2015

AP is reporting:
Samsung Electronics Co. said its first-quarter net income has plunged 39 percent as the smartphone business saw its profit shrink to less than half from a year earlier.
The company reported Wednesday that its January-March income was 4.63 trillion won ($4.35 billion), compared with 7.49 trillion won one year earlier.
That was lower than analysts' consensus of 4.97 trillion won.
Sales fell 12 percent from a year earlier to 47.12 trillion won while operating income dropped 30 percent to 5.98 trillion won, in line with Samsung's earnings preview earlier this month.
The wider-than-expected drop in net profit was due to a big profit plunge in Samsung's mobile business. The maker of Galaxy smartphones said its mobile division generated 2.74 trillion won in quarterly profit, compared with 6.43 trillion won a year earlier.
Analysts estimate Samsung sold more smartphones than Apple during the quarter but the Korean firm lost its share in the high-end market to Apple after the maker of the iPhone began offering models with bigger screens last fall.
Compare to Apple which had a blowout quarter and stunning results. 

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

Random Update Of Iraqi Production

For the archives. Bloomberg Business is reporting:
Iraq, OPEC’s second-biggest producer, will start exporting Basrah Heavy crude next month after offering discounts for the new grade in Europe, Asia and the Americas.
Iraq is offering Basrah Heavy after facing pressure from customers to split its main Basrah Light crude into two grades to preserve quality. The country, home to the world’s fifth-largest proven reserves, is rebuilding its energy industry after decades of conflict and sanctions. Iraq pumped 3.34 million barrels a day in March, state-run Oil Marketing Co. known as SOMO said April 16.
Crude exports from northern Iraq via SOMO will rise to 550,000 barrels a day in early May, 600,000 barrels a day in June and 625,000 barrels a day by August. Iraq pumped about 2.4 million barrels daily at the end of 2010 and plans to boost capacity to 6 million barrels by 2019
I'm probably misreading this but the delta between 3.34 million bopd production and 600,000 bopd in exports suggests most of Iraq's oil is necessary for internal consumption. I don't know.

Five (5) New Permits -- April 28, 2015; Seventeen (17) Producing Wells Completed; Thirteen (13) WIth High Initial Production

Active rigs:

Active Rigs86185187209174

Five (5) new permits --
  • Operator: Whiting
  • Fields: Poe (McKenzie), Banks (McKenzie)
  • Comments:
Seventeen (17) producing wells completed:
  • 29071, 740, Whiting, Tiisto 43-7-2H, Sanish, t3/15; cum --
  • 30121, 542, Whiting, Bartleson 11-19-2H, Sanish, t4/15; cum --
  • 29435, 1,288, Slawson,  Vixen Federal 1 SLH, Big Bend t3/15; cum --
  • 27899, 1,446, XTO, Van Dyke Federal 44X-19A, Bear Den, t3/15; cum --
  • 26390, 1,272, BR, CCU North Coast 41-25TFH, Corral Creek, t3/15; cum --
  • 28367, 2,886, BR, CCU Pullman 7-8-7MBH, Corral Creek, t3/15; cum --
  • 21788, 1,593, Enerplus, BMX 148-93-23B-24H TF, South Fork, t4/15; cum --
  • 28093, 504, Hess, GN-Earecen-159-98-2734H-1, Big Stone, t4/15; cum --
  • 25079, 1,737, Statoil, Field Trust 7-6-5TFH, Todd, t3/15; cum --
  • 25080, 2,593, Statoil, Field Trust 7-6-4H, Todd, t3/15; cum --
  • 24451, 128, Crescent Point, CPEUSC Ruby 17-20-158N-100W, Winner, t3/15; cum 8K 3/15;
  • 27915, 1,288, Slawson, Bootleg 7-14-15TFH, Stockyard Creek, t21/5; cum --
  • 30510, 1,798, Whiting, Cherry State 31-16HU, Pleasant Hill, 2 sections, t4/15; cum --
  • 30466, 1,889, Whiting, Cherry State 31-16-3H, Pleasant Hill, t4/15; cum --
  • 28368, 2,004, BR, CCU Pullman 7-8-7TFH, Corral Creek, t3/15; cum --
  • 28345, 2,880, BR, Copper Draw 41-27MBH-ULW, Croff, 4 sections, t4/15; cum --
  • 28366, 1,403, BR, CCU Pullman 8-8-7TFH, Corral Creek, t3/15; cum --
Wells coming off the confidential list Wednesday:
  • 27661, dry, XTO, Stara Federal 21X-14E2, Grinnell, this was a Three Forks B well according to the permit application; nothing in the file yet to explain when/why drilling stopped; I assume it happened early probably during casing;
  • 28331, drl, CLR, Salers Federal 5-27H, Antelope, no production data,
  • 28439, 1,191, Liberty Resources, Gohrick 158-95-17-8-4MBH, McGregor, t11/14; cum 25K 2/15;
  • 28440, 1,061, Liberty Resources, Gohrick 158-95-17-8-5TFH, McGregor, t11/14; cum 13K 2/15;
  • 28565, conf, CLR, Wiley 4-25H2, Pershing, no production data,
  • 29109, conf, Hess, EN-URan A-154-93-2215H-6, Robinson Lake, no production data,

28439, see above, Liberty Resources, Gohrick 158-95-17-8-4MBH, McGregor :

DateOil RunsMCF Sold

 28440, see below, Liberty Resources, Gohrick 158-95-17-8-5TFH, McGregor:

DateOil RunsMCF Sold

Quick look at a baby pad in the Bakken:

The Moose Will Be Happy -- April 28, 2015

Heading north on US Highway 85 toward the Lewis and Clark Bridge across the Missouri River south of Williston.

This was a 2-lane highway for as long as I can remember, but then back in 2011 or thereabouts they widened the road to three or four lanes.

Now the road is back under construction, back to two lanes, and will be make a four-lane divided (I think) highway leading to the new bridge.

I didn't think they were going to start the new bridge until 2015 or 2016 based on earlier stories, but that recently changed. Local residents noted that one day there was no evidence of the new bridge being built, and then overnight, it seemed they were halfway across the river.

The moose will be happy. The Bismarck Tribune is reporting:
When Meriwether Lewis and William Clark crossed the Missouri River back in the day, they didn’t have to contend with the nearly 13,000 vehicles that cross it these days via the bridge named for the famed explorers.
But moose, deer and other wildlife do.
Part of the $300 million the North Dakota Department of Transportation has committed to upgrade U.S. Highway 85 between Williston and Watford City will include a first-of-its-kind wildlife underpass, or crossing. At least it’s the first of its kind in North Dakota.
Work on a portion of the project between Watford City and Alexander is already underway, but the bridge part of the job won’t be bid until sometime this spring.
An underpass is a better idea than simply putting up a moose sign inviting moose to cross the highway at designated points.

Solyndra Back In The News -- April 28, 2015

Fox News is reporting:
It’s official, the Energy Department’s green energy loan program is actually expected to lose money despite media reports that such loans would net the government a profit.
The Government Accountability Office says the DOE’s oft-touted $28 billion loan program will cost taxpayers $2.21 billion over the lifetime of the loans. Not only that, the costs to taxpayers for green loans has risen about $500 million as “the result of loan guarantee defaults” from companies like Solyndra and Abound Solar.
The “credit subsidy cost of the loans and loan guarantees in its portfolio” is expected “to be $2.21 billion, including $807 million for loans that have defaulted,” GAO reports. “The fees DOE has collected have not been sufficient to cover all of its administrative expenses for the program” because the “fees on the current loan guarantees were too low to cover ongoing monitoring costs.”
This stands in sharp contrast to media reports from last year suggesting the DOE’s green loan program would net taxpayers $5 billion. Last year, the Washington Post’s Wonkblog ran with the headline, “Remember Solyndra? Those loans are making money.”
The liberal news watchdog Media Matters exclaimed that “Solyndra Scandal-Mongering Hasn’t Stopped The Energy Dept’s Loan Program From Turning A Profit”
Such news stories came after a November 2014 DOE progress report saying it was on track to earn more than $5 billion in total interest payments. The DOE said it had earned $810 million in interest payments — outweighing the $780 million in estimated losses the loan program was expected to incur.
But for Obama, Solyndra accomplished what it was set up to do.

Small Country Road In The Bakken -- April 28, 2015

This is a short clip of the new bypass to the west of Alexander, North Dakota.

We Gave Those Who Wished To Destroy, The Space To Do That As Well" -- Baltimore Mayor -- Apirl 28, 2015


July 11, 2015: NYC -- giving them "space to destroy." If the link is broken, it's simply about NYC council considering decriminalizing public urination, public drunkeness, jumping over subway turnstiles, being in a park after dark, and failure to obey park signs. Photograph of male urinating in middle of downtown street, NYC. Giving them space to destroy.

May 3, 2015: liar, liar, pants on fire. At least three Pinocchios. From The Daily Caller:
Baltimore Mayor Stephanie Rawlings-Blake offered up regrets on “Meet The Press” Sunday for saying space was given to protesters in Baltimore who “wished to destroy.”
Rawlings-Blake told host Chuck Todd that she “certainly used the wrong phrase,” of which she received roundabout criticism as the riots escalated Monday.
“Do you regret using the phrase ‘space to destroy?'” host Chuck Todd asked.
“You know, I certainly think that it was taken out of context,” Rawlings-Blake started.
“Let me say this: I’m from Baltimore, my parents are from here, I’m raising my daughter here. I’m a public defender. As city council person, as mayor, I’ve always worked to strengthen my city. We fought to get those stores in our community. I would never condone rioting. Just period. I would never condone it.”
It was not taken out of context; I heard (and watched) the entire press conference. She was very clear in what she said; her police officers confirmed that she told them to "stand down." It was very clear that the police had been ordered to stand down that first night of rioting.

"... it was taken out of context [but I don't regret saying it]....."

"I would never condone rioting. I would never condone it [except this time]...."

By the way, President Obama said we should have been concerned about "Baltimore" way before now -- and he has never mentioned "Baltimore" in seven State of the Union addresses
If I were president and thought I knew an obvious way to bring peace and prosperity to troubled cities -- and felt pretty strongly about it -- I'd maybe mention it before my seventh year in office. Drop it into a State of the Union address, for example.
But it just isn't the case that we're a new federal program away from fixing the problems Obama identified. It isn't the case that conservatives are standing in the way of what everyone knows would work because we just don't share Obama's compassion.

Original Post
It was interesting that Fox News was the only one of the four to follow this story live all through the night (Fox News, CNN, HLN, MSNBC). After 10:00 p.m. or thereabouts, it was only Fox News covering this story, perhaps the biggest story right now.

From the Baltimore mayor, earlier in the week:
“It's a very delicate balancing act because while we tried to make sure they were protected from the cars and the other things that were going on, we gave those who wished to destroy space to do that, as well,” she said in the wake of Saturday's protests in Baltimore.
Last night:
However on Monday night, as rioters engaged in outbreaks of violence, Rawlings-Blake gave this statement. “I'm going to protect people's right to protest,” she said. “The fact that people exploited that does not mean that I do not have an obligation to protect people's right to protest. I never said, nor would I ever say, that we are giving people space to destroy our city. So my words should not be twisted.”
Video hurts.

The businesses destroyed were most likely ...

144 cars torched.

15 buildings burned ... including a brand new apartment building for seniors nearing the end of construction.

Yup, "we gave those who wished to destroy the space to do that as well." -- Baltimore mayor. Way in over her head.

Comment: say what you want, that has to be a most bizarre statement -- "We gave those who wished to destroy [other people's property] the space [and the right] to do that as well." That is way beyond my comprehension. It certainly suggests Baltimore is much more lawless than anything I've experienced in the wild, wild west.


Oh, yeah!

Well Pad North Of Alexander, North Dakota -- April 28, 2015


10:21 a.m. CT: I guess I'm wrong.  A reader wrote:
I believe from the lightening bolt that the red boxes are just generators.
If you want to see well sight infrastructure check out the tarpon federal wells at 22554 there are two well pads in the middle of the federal grass lands south of tobacco gardens lots of extra gas compressing equipment.  Just getting started producing and trying to stay in federal guidelines.

To see how to get out to this site, go to Google maps or Google Earth and cut/paste: "48.054316, -103.066444."(not the quotes or the period, obviously)
Original Post
This is a well pad north of Alexander. I saw something I had not seen before on this pad; the "red trailers" show up at the beginning of the video and probably again later in the video. I think I know what this is all about but not for sure. If others want to confirm what the "red trailers" are all about, I will comment further:

Again, one of the smaller pads in the Bakken.

This Is Not Good -- April 28, 2015

From The Telegraph, breaking news:
An Iranian force has seized a US cargo ship with 34 crew onboard and directed it to an Iranian port, the Saudi-owned broadcaster Al Arabiya has reported.
Glut Of Oil In The Permian

Daily Shale News is reporting:
Four-hundred miles from the near overflowing tanks at the U.S. oil hub in Cushing, Oklahoma, a second glut in the Permian Basin of West Texas is pressuring oil prices once again as pipeline disruptions strand millions of barrels in the region.
The Permian, the fastest-growing shale play, accounts for about a fifth of the country’s total oil production, and is expected to produce about 2 million barrels of crude a day in May. The region houses over 20 million barrels of crude storage.
Stockpiles in the Permian have hit several records in the last four weeks.
Investors have zeroed in on storage, waiting for declines in weekly inventory data to signal demand is rising or production is beginning to taper off. Stockpiles in Cushing, the delivery point for the U.S. futures contract, hit a record in the week to March 13, and Gulf Coast supply has been robust.
Now a Permian backlog shows signs of an even bigger supply glut. Pipeline interruptions next month will compound already high inventories in the region that have grown because production has outpaced takeaway capacity.
Crude from the Permian that gets stored in Midland, Texas, awaiting transport to the Gulf Coast, will be diverted to Cushing, where it will add to burgeoning supplies, possibly putting even more downward pressure on crude prices, traders said.

It Just Keeps Getting Better In North Dakota -- April 28, 2015


August 26, 2015: reports of this carinata harvest coming in nicely in the Bakken area, of all places. 
Original Post

CBSLocal is reporting:
Western North Dakota farmers this year have agreed to plant 6,000 acres of a crop that can be made into jet fuel.
The farmers will be seeding carinata, a variety of mustard seed. Canadian seed producer Agrisoma Biosciences over the winter sought farmers to plant the crop. Spokesman Garret Groves said producers were quick to sign up and exceeded the 4,000-acre goal.
“We’ve had pretty good success,” he told The Bismarck Tribune.
Carinata looks similar to the oilseed canola, only a little bushier. It will be grown in fields near Mott, Carson, Tioga, Ray, Williston, Noonan and Flasher.
One potential customer for the crop is the U.S Navy, which is targeting carinata to help reach its goal of serving half of its energy needs with non-oil sources by 2020.
From wiki:
The flowers are very attractive to honey bees which collect both pollen and nectar.
This plant is also part of a research to develop an avation biofuel for jet engines. On October 29 of 2012, the first flight of a jet aircraft powered with 100 percent biofuel, made from brassica carinata, was completed.
From RD Magazine:
This new “kid” on the biofuel block taking root is the carinata seed. Carinata is a leafy plant originating in Ethiopia, also referred to as Ethiopian mustard and Abyssinian mustard, and produces oil seeds being used as a biofuel which mimics the attributes of its petroleum-derived counterpart.
To date, carinata has demonstrated agronomic success across sixty commercial sites and farms in the Canadian and U.S. prairies. Carinata is a non-food, energy feedstock crop which yields oil that can be refined into fuels that meet the specifications of petroleum-based fuels and work in ground and air transportation engines without engine modifications or blending.
Glad to see the US Navy has money to burn. Taxpayers won't mind. Certainly North Dakota farmers won't mind.

Just A Matter Of Time -- April 28, 2015

Regular readers know my thoughts on this issue. Interesting to see mainstream media like Forbes writing about it: will Iran grab Saudi oilfields?
Iran doesn’t possess a passel of Panzer divisions and have a murderous Luftwaffe at its disposal. But it now has the means to make a play for control of the immense oilfields of Saudi Arabia, Kuwait and, all too obviously, Iraq, where its proxy militias are gaining strength. Militias under Iranian control can achieve Teheran’s imperial goals almost as well as WWII-style armed forces.
We've talked about it before:
It doesn’t take a great military theorist to see that Iran is applying a pincer movement against Saudi Arabia. While the world focuses on U.S./Iran nuclear negotiations, the mullahs–and Putin–have their eyes on more immediate and immensely more juicy prey. They believe, despite the deployment of U.S. Navy vessels leading Iran to turn back an Iranian naval convoy last week, that Obama will do nothing effective.

It's Just A Matter of Time, Randy Travis

Earnings Being Reported
Valero (largest independent refiner) and NOV have both reported earnings this morning; both beating estimates by a large margin. Range Resources (RRC) will report after market close today.  
Disclaimer: this is not an investment site, yada, yada, yada. 

Fracking Water By Pipeline -- The Bakken -- April 28, 2015

Yesterday, we drove out east of Williston, driving about 23 miles east to Lund's Landing. Several miles before we got to Lund's Landing we noted a pipeline running from a water source -- probably the river -- along the road for several miles. The pipeline is flexible -- some kind of heavy plastic, obviously -- and perhaps 12 inches in diameter (but I am a very, very poor judge of estimating pipe diameters). It appeared to be taking water to wells for fracking.

On the way back we saw a pump and just as we were leaving an individual drove up to the pump. We drove back and chatted. Apparently there are two companies in the local area doing this: pumping water through temporary pipelines laid on the surface; water to be used for fracking. He estimated that the farthest they have gone with this is a well sited seventeen (17) miles as the pipeline runs from the water source.

From a 2013 Reuters article:
Energy companies get most of their water in the state by trucking it from depots to oil and natural gas wells. Some wells require more than 650 truckloads to frack. Companies such as EOG Resources Inc and Halliburton Co are experimenting with ways to reduce their dependence on water.
Fracking water depots, which cost roughly $200,000 to build and can gross more than $700,000 per year, are typically small metal buildings on concrete slabs filled with pumps and small tanks connected to the Missouri River or local aquifers. They can have two to six hookups and fill water trucks with as much as 7,800 gallons of water per visit.
[A] government-backed co-op has nine water depots to hold the fresh water that is piped from the treatment plant in Williston, about 45 miles north of Watford. It plans to build four more depots throughout the Bakken and hugely expand its pipeline system to bring fresh water to more homes. Small lines from the new pipelines will connect directly to some oil wells.
On the other side, Independent Water Providers member JMAC Resources will build more water depots in the region and a massive pipeline just south of the Missouri River to supply oil wells. Other members of the group have also applied for depot permits.
North Dakota water suppliers do not pay for water, and the state legislature rejected a proposed water tax earlier this year. Each side's plans will rapidly increase the options that energy companies have to access water, further depressing prices.
The operation in the video above was JMAC. The individual who I spoke to drove up in a pickup truck with the WDW logo on the cab doors. From an April, 2014, Roundup article:
Williston: West Dakota Water (WDW) is saving the state, counties and townships millions of dollars in road maintenance and construction costs through private investment in water pipeline infrastructure.
WDW Principal Engineer Drew Poeckes states, "The most economical way to transport water is through a pipeline. We currently pipe water upwards of 30 miles to well sites by utilizing permanent underground infrastructure to transport the water. West Dakota Water takes away much truck traffic to and from well sites thus saving the state, counties and townships money on the maintenance of their road systems. We are a private company putting in infrastructure (pipelines) that takes the burden off of the public infrastructure (roads)."
WDW is a subsidiary company to JMAC Resources, Inc., and has worked closely with their engineering and technical partner Bartlett & West, to plan, design, construct and provide operational services for fresh water delivery.
This is a video of one of the smaller pads to which water is being brought by surface pipeline to the wells; this is about 20 miles east of Williston on 1804:

From the linked article:
WDW was granted an industrial permit by the ND State Water Commission in 2012 to withdraw 10,000 ac-ft. annually from the Missouri River. In addition to this permit, WDW was also permitted to construct permanent submerged intakes into the Missouri River for withdrawing this water. The installed intakes allow for year round access to the water even in the harshest weather conditions. 
I'm not going to go through the math again, but a long time ago I mentioned how many wells could be fracked with an acre-foot of water.

Oh, I might as well re-do some of the math just for the fun of it. 

For newbies: Garrison Dam is currently releasing about 22,000 cubic feet / second.

One acre-foot: the amount of water that would cover one acre of land, one foot deep. One acre-foot = 43,560 cubic feet.

One cubic foot of water = 7.5 gallons.

So, 22,000 cubic feet / second = 7.5 gallons = 165,000 gallons of water/second.

2,000 wells x  5 million gallons of water to frack a well = 10,000 million gallons of water.

10,000 million / 165,000 gallons of water per second = 60,000 seconds = 1,000 minutes = 17 hours of water released from the Garrison Reservoir.

My math may be way off. I often make simple arithmetic errors.

Other posts on water, fracking, and the Bakken:
Again, this is an old, old subject; talked about it at length years ago; a non-issue but I suppose it helped me to go through it again.

Apple Earnings Surge 33% On iPhone Sales -- April 28, 2015; Apple Announces Significant Increase In Dividend

Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on what you read here or what you think you may have read here. Do not make any decisions about what type of computers to buy or whether to buy a new watch based on anything you read here. Do not make any travel plans based on what you read here. Don't change your views on water fluoridation based on what you read here or elsewhere. Memo to self: stay out of west Baltimore for a day or two.

Spoiler alert: the rest of this page will be devoted to Apple earnings 2Q15; there will be nothing about the Bakken. If you came here for the Bakken, leave now. If you hate Apple, definitely leave now.

Links to some stories that were posted yesterday regarding Apple's 2Q15 earnings:
The numbers:
  • With strong iPhone sales (and perhaps also lower memory prices) providing a lift, Apple had an FQ2 gross margin of 40.8%, up 150 bps Y/Y and above guidance of 38.5%-39.5%. FQ3 GM guidance is at 38.5%-39.5%.
  • Product line performance: iPhone revenue (69% of total revenue) +55% Y/Y to $40.3B; iPhone units +40%. iPad -29% to $5.4B; units -23%. Mac +2% to $5.6B; units +10%. Services (iTunes, App Store, AppleCare, Apple Pay, etc.) +9% to $5B. Other products (iPod, Apple TV, Beats) -10% to $1.7B.
  • Regional performance: Americas revenue +19% to $21.3B. Europe +12% to $12.2B. Greater China +71% to $16.8B. Japan -15% to $3.5B. Rest of Asia-Pac +48% to $4.2B. International sales were 69% of revenue, up from FQ1's 65%.
  • iPhone ASP was $659, down from FQ1's $687 but up from FQ4's $603 (iPhone 6 Plus boost). iPad ASP was $430 vs. $419 in FQ1 and $432 in FQ4. Mac ASP was $1,231 vs. $1,258 in FQ1 and $1,200 in FQ4.
  • GAAP SG&A spend rose 18% Y/Y to $3.46B. R&D spend rose 35% to $1.92B.
  • $7B was spent on buybacks, up from FQ1's $5B. Apple ended FQ2 with over $193B in cash/investments (much of it offshore), and nearly $44B in debt.
  • Apple's increased quarterly dividend of $0.52/share is good for a yield of 1.5% at current levels. The next dividend is payable on May 14 to shareholders on record as of the May 11 close.
The most interesting data point to watch next quarter: the margins on the Apple Watch.

The data points that jump out at me:
  • this was not the Christmas quarter, nor the beginning of the school year, and yet Mac computer sales increased 10%; one will find that PCs overall are decreasing in sales; Apple continues to increase
  • Apple sales in China, at $17 billion (just getting started) almost equal to US sales at $21 billion (mature)
  • average selling price for an iPad has increased
  • margins at 40% are huge (though down from some quarters; IIRC, Apple has had margins as high as 45%
Other data points from one of the linked articles above:
  • for its fiscal 2015 Q2 earnings, Apple posted a 27.5% y/y increase in revenue and a 30% y/y increase in operating income
  • Apple's growth has been fueled by the continuing success of the iPhone 6 and the company's rapid expansion in emerging markets, especially China
30% increase year-over-year! This is a mature company, in a very, very competitive space, been around since only about 1984.
Companies the size of Apple aren't supposed to grow by roughly 30% y/y. The reason Apple shouldn't be growing so fast has something to do with the Law of Large Numbers. Apple has now violated that "law" for the past two quarters. Perhaps that's why the analysts on the conference call seemed so subdued. They were still getting over their shock. 
  • During the company's earnings call, CEO Tim Cook said sales in Greater China rose about 100 percent year over year. 
100% year-over-year in the world's biggest economy.

As predicted:
As many expected, Apple announced an expansion of its capital return program. The program will be increased 50% to $200 billion through March 2017. Apple increased the quarterly dividend to $.52/share, and increased the share repurchase program to $140 billion. Share repurchase funds were about to run out, with $80 billion of the $90 billion allocated already spent. 
More from that fanboy:
According to Cook, the rapid expansion of the middle class in China is what's fueling Apple iPhone sales. As people become more affluent, they are tossing their white-box Android phones for something more upscale. Apple has intelligently positioned itself as that upscale alternative. Apple's retail presence in China, the beauty and elegance of its stores, serve to reinforce the upscale perception.

Most ridiculous column I've seen in the past 24 hours regarding Apple was in Forbes:
With Apple’s billions sitting in the bank, I’m constantly surprised that it hasn’t taken big steps to invest some of this cash into battery technology. If it could increase the power density of its batteries even by 10-15%, it could tempt many users away from  Android and other mobile platforms because the fact of the matter is, every smartphone currently suffers from this issue to some degree.
The writer needs to look at the battery technology used in the new Apple MacBook. 

Memo to self: avoid articles by Antony Leather in the future.