Tuesday, September 29, 2015

Active rigs:

	9/29/2015	09/29/2014	09/29/2013	09/29/2012	09/29/2011
Active Rigs	70	186	184	190	196

RBN Energy: When did US crude oil production start to decline?

A question we get asked all the time these days is whether or not U.S. crude output has begun to decline yet and if so by how much? We don’t actually think the answer makes a lot of difference to the market - especially when you consider changing imports and inventory. But ever since the OPEC meeting last November (2014) failed to take action to reduce  output to support oil prices - market watchers have placed a lot of emphasis on when U.S. shale producers would respond by cutting production. So regardless of the merits of the question we are all living in a marketplace where knowing the “real” state of U.S. production – and whether it is up or down – has become a big deal. To that end today we look at crude production data from the Energy Information Administration (EIA).

The EIA makes a number of estimates of crude oil production for its various weekly, monthly, quarterly and annual publications. We will take a look at three of them today. The first of these is likely the most reliable – namely the EIA monthly crude balance production data. That monthly data is reliable in part because it is published at least three months in arrears (the latest report is for June 2015). And the monthly data just got a little more reliable this summer when EIA changed their collection approach to gather more data direct from producers rather than relying on data published by State agencies and to include more individual states into their data breakdown.  The better quality of data in the monthly numbers will certainly help EIA improve their reporting of crude oil production.   The big disadvantage of the monthly EIA data for the market is that 3-month lag – which no one used to care about when production just went up every month - but is now a big deal with the eyes of the market looking for turning points. For the record EIA monthly data shows total U.S. crude domestic production topping out in April 2015 at 9.6 MMb/d and then declining by 200 Mb/d in May and a further 100 Mb/d in June 2015.

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

Adult Leadership In The War On Terror

Putin's UN speech yesterday was perhaps the most accurate, succinct assessment regarding Syria, Iraq, Iran and ISIS. The most interesting thing about the link: it comes from CNBC. (At the link, scroll to the September 29, 2015, entry.) It is very concerning how often President Obama is cited in the wiki post on Arab Spring. A google search (Arab Spring Obama) is much more enlightening.

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

Not So Fast

I was wrong. I stated earlier that the workers would accept the tentative Fiat Chrysler four-year contract. Apparently not. Early voting suggests the workers are unhappy with 10% raises, bringing their hourly pay to almost $55/hour.

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

Tesla Ready To Launch

From The Wall Street Journal:

Kenneth Adelman has had to learn to be patient. An electric-car enthusiast and retired “computer geek,” in February 2012 he was the first person to plunk down a $40,000 deposit for Tesla Motors Inc. ’s Model X sport-utility vehicle. At the time, Mr. Adelman didn’t know the Model X’s total price, but Chief Executive Elon Musk said the vehicle would be in his hands by the end of 2013.

He is still waiting. After nearly two years’ worth of delays, Tesla kicks off Model X deliveries Tuesday. Although first on the order list, Mr. Adelman, 52 years old, doesn’t know when he will get his vehicle and he is showing little concern.

“I’m happy to have waited for the X to be all that it could be,” Mr. Adelman, who also owns a Tesla Roadster and Model S sedan, said in a recent interview. He is confident the vehicle is a “home run.”

Topping out at $132,000, the Model X will test the Silicon Valley electric-vehicle company’s ability to preserve momentum that has been largely unaffected by low gasoline prices and turbulence in emerging markets. Tesla is banking on the new vehicle to help it to achieve sales of at least 50,000 vehicle in 2015 and 500,000 by 2020.

Initial demand looks strong. Tesla has booked roughly 30,000 reservations for the vehicle, according to reservation data shared by buyers and on Tesla fan forums. A small number of those have been cancelled, but the order book can be considered hefty when compared with the 21,537 Model S sedans the company sold globally in the first six months of 2015.

It would have been interesting to know Kenneth's net worth.

It appears the "space issue" might be the most interesting aspect of the launch.

But there is still potential for a letdown.

A big selling feature for the Model X is its large storage area and family-friendly size. When Mr. Musk first showed the prototype, he touted the option to fold the second and third rows of seats down to make room. Free of an engine or transmission, it has more interior space than a standard SUV.

But Mr. Musk has talked about the difficulty of designing the second-row seats on several occasions and has hinted that the seats were one reason why the Model X was delayed, leading to speculation the second row may not fold flat based on images the company has shown.

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

Have The Regulators Signed Off On This Deal? 

ETE-WMB creates a $150 billion global player.

Energy Transfer's pro forma enterprise value will be $149 billion, behind Chevron's of $193 billion and above BP Plc's at $139 billion.

The company is walking among the majors, in practically one year's time, as a top five global energy company. Kinder Morgan'svalue is $108 billion - its next midstream competitor.

The transaction is valued at nearly $38 billion. The merged entity will trade as Energy Transfer Corp. - ETC, a new NYSE listing. ETC is likened to an ETE twin structure-wise, except it's a C-corp structure versus the MLP version of Energy Transfer Equity.

Full details at Street Insider.
 
I think Warren Buffett paid about $45 billion for BNSF.

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

Taking Things Out Of Context

Wow, talk about taking things out of context.