Tuesday; All Six Wells Coming Off Confidential List Went To DRL/SI/NC Status -- May 19, 2015

None of the wells coming off the confidential list reported an IP today. EOG with permits for a 12-well pad.

For definition of "NC": link here. 

Active rigs:

	5/19/2015	05/19/2014	05/19/2013	05/19/2012	05/19/2011
Active Rigs	82	191	189	209	176

RBN Energy: New England's ongoing natural gas supply dilemma.

Producers in the Marcellus and Utica shale plays could be moving a lot more natural gas into New England, if only there was enough pipeline capacity to get it there. An increasingly gas-hungry neighbor to the nation’s most prolific production area, New England has added precious little capacity to transport gas, and the fates of game-changing pipeline projects that have been proposed hang in the balance.

A generally argumentative lot (don’t get them started on politics or the Boston Red Sox’s pitching rotation), New Englanders are in full agreement on two things: 1) Patriots quarterback Tom Brady’s punishment in the “Deflategate” scandal (a four-game suspension without pay) was too harsh, and 2) energy prices in the six-state region are too high. “Tom Terrific” has appealed the NFL’s sanction to Commissioner Roger Goodell, but there’s no appealing the sky-high natural gas and electric bills utility customers in Boston, Providence and Hartford have been receiving.

The underlying problem is that there’s simply not enough gas pipeline capacity into and through New England to deliver the plentiful, low-cost Marcellus and Utica gas that the region’s growing fleet of gas-fired power plants needs to operate during high demand winter periods. Each winter, the resulting constraints cause price spikes at the Algonquin Citygate hub, and force New England’s electric grid to turn off gas-fired units (or run them on stockpiled fuel oil or liquefied natural gas - LNG) and power up older coal plants to avert blackouts or brownouts.

That pretty much says it all: environmentalists stop new pipelines in the northeast so that utility companies are forces to power up older coal plants to avert blackouts or brownouts.

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Housing Starts At Fastest Pace Since 2007

The AP is reporting:

U.S. homebuilders ramped up construction in April to the fastest pace in nearly seven-and-a-half years, hinting at newfound momentum for an economy that has struggled in recent months.

The Commerce Department said Tuesday that housing starts last month increased 20.2 percent to a seasonally adjusted annual rate of 1.14 million homes. That pace ranks as the fastest clip since November 2007.

The operative word was put in bold.

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This Is Not An Investment Site

This interests me not one iota, but because PSX was one of the seven, I decided to link the article over at The Street, seven "stocks" Warren Buffett bought as recorded in most recent filing. I was uninterested in the other six, except to note that Wells Fargo was #1 in a list that was ordered by position size.

The writer must have gotten tired of writing the column or the headline writer cannot write. The original headline said the writer would look at ten (10) stocks. The headline was later corrected to seven (7). However, the lede:

In his annual letter to shareholders, released on Feb. 28, Buffett wrote that a "motherlode of opportunities runs through America." Today we're taking a closer look at 10 of those opportunities, in the form of stocks that Buffett bought in the most recently reported quarter, based on Berkshire Hathaway's most recent quarterly 13F filing with the SEC, which reflects holdings as of March 31. They are ordered by position size. 

And then it starts with #7, Twenty-First Century Fox.

Of interest to me was that #6 was ... drum roll ... PSX. Phillips 66  comprises 0.6% of Berkshire Hathaway's portfolio. Buffett increased his stake in the stock by 14.2% in the most recently reported quarter to 7.5 million shares.

Four thoughts come to mind, all of which may be wrong:

• Buffett is trying to make up for the energy gaffes he has made in the last decade to which he admits (COP)
• he expects the refiners' raw product (crude oil) to remain at a lot price for the next twenty years
• buying a refiner in this market is almost a no-brainer: low raw material; demand for finished product going up
• at 0.6% of his total holdings, this is hardly all that exciting

Again, 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.

What surprises me is that IBM (#2 on his list) comprises almost 12% of his entire portfolio. Of course it's hindsight, but AAPL over the past five years has appreciated 255% vs IBM's 38%, and that was mostly due to a rise five years ago. Most recently it has been dropping.

#1 on his list is Wells Fargo, 24% of the firm's portfolio. I wonder if Jim Cramer or Motley Fool would call this portfolio well-diversified when one holding accounts for almost one-quarter of the portfolio. Whatever.

As noted above, it interests me not one iota, that's why I posted so much about the story. LOL.

Bottom line: when one holding represents 25% of your total portfolio, does it even matter if he increases his PSX holding -- which represents 0.6% of his total portfolio -- by 14%. No matter what PSX does, it will be dwarfed by even minor movements in Wells Fargo.

Has the oracle of Omaha fallen in love with IBM and Wells Fargo?