Now, Five Earthquakes Hit Connecticut -- January 12, 2015

Updates

Later, 4:52 p.m. Central Time: now it's being reported a 3.3-magnitude earthquake hit Rhode Island's western border. I doubt there's much fracking there, either, but a lot of yachts hitting the shoreline.

Original Post

You have to love the spin. When a 3.6 earthquake hits the Dallas area, it's a "big" earthquake. And a "big" deal.

In Connecticut, five earthquakes, including one measuring 3.1: " Scientists Record 5 Small Earthquakes in Connecticut"-- AP:

Five small earthquakes were recorded within a 5 1/2-hour span in eastern Connecticut on Monday, including a 3.1-magnitude quake that was felt in parts of Rhode Island and Massachusetts, according to the Weston Observatory at Boston College and the U.S. Geological Survey.

I have to laugh. There are no wells in Dallas County, much less any fracking where the cluster of earthquakes hit Irvington last week and it was a big deal, including a "big" earthquake measuring 3.6.

Now, in Connecticut, a cluster of earthquakes -- five so far -- and pretty much blown off by the media I guess.

Two were recorded in the same area last week, so now seven (7) earthquakes in past few days. But small ones. Unlike the "big" earthquakes in Texas.

Memo to self: file under "What a bunch of malarkey." Key word: malarkey.

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Not Malarkey

Macrumors is reporting:

Apple saw an increase in its U.S. PC shipments during the recent holiday quarter, according to PC shipping estimates from Gartner. Apple shipped over 2.1 million Macs in 4Q14, up from 1.9 million Macs in 4Q13, marking an 11.5 percent increase. Though the company's shipments were up, its growth rate slightly trailed the overall market, resulting in a share of 11.7 percent down from 11.9 percent in the year ago quarter.

Also, from Macrumors:

GM today at Detroit's North American International Auto Show showcased the upcoming 2016 Chevrolet Volt plug-in hybrid, and as spotted by The Verge, the latest Volt model includes an option for Apple CarPlay as well as MirrorLink in the vehicle's entertainment system settings.

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2014: CONUS Weather Wrap-Up

Hardly alarming. 

Since 1895, when national temperature records began, the CONUS has observed an average temperature increase of 0.13°F per decade.

Or 0.01 degree/year for CONUS. At this rate, a hundred years from now, in 2115, CONUS will average one degree warmer. And, of course, it depends where one places the thermometers.

Enhanced Bakken Supply Chain Initiative -- First Annual Manufacturing And Logistics Conference, Williston, ND, March 25 - 26, 2015

From The Williston Wire:

Williston Economic Development announces the Enhanced Bakken Supply Chain Initiative. The initiative aims to reduce costs and increase efficiencies for Bakken operators while expanding manufacturing and logistics business development in the Bakken region.

"The oil and gas operators in the Williston Basin face a higher break-even crude price due to higher costs and inefficiencies in the Bakken supply chain," stated Shawn Wenko, Executive Director of Williston Economic Development.

"On the other hand, we have regional manufacturers and logistics companies that can serve the oil and gas industry in a way that reduces costs and turn-around times as this market begins to mature."

See website for announcement of conference. 

Three (3) New Permits -- January 12, 2015

From Reuters:  

WILLISTON, N.D., Jan 12 (Reuters) - The number of drilling rigs operating in North Dakota's oil fields fell to 159 on Monday, the lowest level since November 2010 and the latest reaction to falling crude oil prices, according to state data. Overnight the state lost eight rigs, a steep one-day drop not seen for years in the No. 2 U.S. oil producer. 

Rigs are typically contracted by oil producers to bore through the earth and create horizontal wells. 

The rigs then move on, and the wells are hydraulically fractured, or "fracked." 

The number, which is tracked closely throughout North Dakota, comes after Continental Resources Inc, Oasis Petroleum Inc and other companies slashed planned spending for 2015, openly admitting they planned to use few rigs this year. 

The rig count is widely seen as a key barometer of an oil field's health and longevity. More rigs means more wells are being drilled and more oil can be produced. A slip in the number implies flat or falling production. 

To be sure, technological and drilling efficiencies have led oil producers to use fewer rigs, though analysts attribute this latest drop in rig usage to falling oil prices.

	1/12/2015	01/12/2014	01/12/2013	01/12/2012	01/12/2011
Active Rigs	156	192	182	200	167

Wells coming off the confidential list over the weekend, Monday have been posted. See sidebar at the right.

Three (3) new permits --

• Operators: EOG (2), Whiting
  Fields: Parshall (Mountrail), Sanish (Mountrail)
• Comments: Circling the wagons?

Four (4) producing wells completed:

• 28312, 1,743, XTO, Hoffmann 14X-12E, Siverston, t12/14; cum --
• 28311, 1,429, XTO, Hoffmann 14X-12B, Siverston, t12/14; cum --
• 28313, 2,012, XTO, Hoffmann 14X-12A, Siverston, t12/14; cum --
• 27679, 1,678, XTO, Thompson Federal 41X-17-TF2, t12/14; cum --

Wells coming off the confidential list Tuesday:

• 27069, 1,808, WPX, Good Voice 34-27HZ, Spotted Horn, t11/14; cum 14K 11/14;
  27383, drl, XTO, Berquist 31X-2G, Garden, no production data,
  28022, conf, QEP, Moberg 2-20-21TH, Grail, a nice well,
  28323, drl, Abraxas, Stenehjem 27-34-4H, North Fork, no production data,
  28459, 2,350, MRO, Otto 14-23H, Bailey, t11/14; cum 17K 11/14;
  28537, drl, Hess, BW-Norgard-149-100-1102H-2, Ellsworth, no production data,
  28627, drl, CLR, Rennerfeldt 5-30H1, Brooklyn, no production data,
  28650, drl, XTO, HM Hove 34X-33H, West Capa, no production data,

Pressure builds to end ban on US oil exports. Politico is reporting:

Oil companies are pleading with Washington to jettison the ban on exporting U.S. crude oil, but many of the industry’s allies in the Republican Party aren’t sold on the idea.

Advocates of scrapping the ban hope that rock-bottom gasoline prices and a glut of oil will help convince fence-sitters in Congress to support ending the decades-old restrictions. But a new poll shows it may not be that simple.

 I've always said a blanket law allowing US exports of oil is unlikely in my investing lifetime.

3.3 Earthquake Rattles Connecticut -- Governor Bans All Fracking In Connecticut Immediately -- January 12, 2015

Link here.

That last part about the governor banning fracking in Connecticut may not be accurate. Perhaps just in eastern Connecticut. Meanwhile, one can assume Rhode Island has set up a commission to study the risk of earthquakes caused by fracking in their state.

As The Price Of OIl Drops, How Low Does It Need To Go? -- CNBC; The JV Team Hacks The Varsity Team In CENTCOM; Barrons On EOG, Hess, Devon, COP

From CNBC:

Even if the Brent price index falls another 20 percent from Friday's closing price—to $40 a barrel—just 1.6 percent of the world's oil supply would represent unprofitable production.

Energy consultant Wood Mackenzie analyzed production data from 2,222 oil fields around the world to see just how much further oil prices would have to fall to make them "cash negative"—costing more to operate than the oil is worth. That price can act like a brake on production, according to Wood Mackenzie analyst Robert Plummer. 

Among the first, in order:

• stripper wells: cost $20 to $50/bbl to maintain
• Canadian tar sands fields, below $40; when Brent hits the high $30 range; but not easy to stop/start Canadian oil sands
• UK North Sea start to lose money below $50/bbl; but stopping production at some of the older fields could end them forever; also better to lose a little money on production than lots of money shutting down rigs

Overall:

The impact of $40 oil on global production would be very small, based on data covering some 75 million barrels a day of production. At $50-a-barrel Brent, only 190,000 barrels a day is unprofitable, representing just 0.2 percent of global supply. Seventeen countries supply oil that is cash negative at $50, with the main contributors being the United Kingdom and the United States. 

At $45 a barrel, only 400,000 barrels per day, or just 0.4 percent of global supply, are unprofitable. Half of that is from conventional onshore production in the U.S. And at $40 a barrel, just 1.5 million barrels per day represents unprofitable production, or just 1.6 percent of global supply. Most of that production comes from several oil sands projects in Canada.

Even when a field becomes cash negative, it doesn't necessarily prompt producers to shut down right away.

"The first response is usually to store oil produced in the hope that the oil can be sold when the price recovers. Operators may prefer to continue producing oil at a loss rather than stop production, especially for large projects such as oil sands and mature fields in the North Sea."

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The JV's Hack CENTCOM Social Media Accounts

__ Like  __ Not Like

Link here. I'm listening to radio news with President Obama addressing cybersecurity.

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EOG, DVN

This is not an investment site. Do not make any investment, financial, or relationship decisions based on what you read here. I am posting this because it helps me better understand the Bakken. I don't plan on making changes to my investment portfolio in the next 72 hours, perhaps not even in the next 30 days.

The opening statement is exactly correct, and I just wrote that same thing yesterday or the day before, and it's on the blog. 

From Barrons;

[The] new swing producer in global oil is US unconventional, not Saudi Arabia….we assume that with Saudi and OPEC now effectively abandoning their role as swing producer, the oil market will be balanced by rises and falls in US activity and production growth…

There is an upside risk that Saudi and OPEC do cut production over the coming year, as fiscal balances get more and more scary.

However, most observers now recognize our view that the short time cycle of US unconventional means that any sustained cartel action to artificially raise prices will simply be met by greater growth from US unconventional.

Many long term oil investment themes, such as ultra-deepwater, frontier exploration and development, Canadian oil sands developments, and geopolitically challenged investments such as Russia, UK (fiscal risk) and Venezuela, are now stymied by a price planning cycle that will not allow their development.

For new investment in those themes, that require greater than $80/bbl long term planning assumption, we will likely need a sustained period, certainly longer than five years depending on the length of the current down cycle of below break-even prices for those themes, before companies will re-commit to that growth.

Rather, the cycle will shorten and be set by rises and falls in US activity.

This is positive for well exposed US unconventional players that have the balance sheet to survive the volatility. We prefer EOG – the key play on the “Eagle Ford Call”. Hess has balance sheet, better management, and is a higher risk play on the “Bakken Call."

ConocoPhillips is our play on the end of the oil age. It has terrific unconventional exposure but enforced capital discipline that effectively forces the company to return cash to shareholders and shrink its size in an orderly manner. Devon has outstanding exposure to US unconventional. If EOG is the new Saudi Arabia of global oil, then Devon is its Kuwait.

All Outperform.

Active Rigs Down To 157 -- January 12, 2015

Active rigs:

	1/12/2015	01/12/2014	01/12/2013	01/12/2012	01/12/2011
Active Rigs	157	192	182	200	167

RBN Energy: a new series, break-even points, economics.

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Yet Another Apple Update

I mentioned the other day with regard to Apple it was no longer about the "coolness" factor. I was wrong: in Hong Kong, apparently, it's all about the "coolness" factor. Forbes is reporting:

[In Hong Kong] the Apple stores have become some kind of Apple afinado Mecca where people meet, talk and share laughs together. All under the gaze of a half eaten piece of fruit. Even if the store is closed and there’s something of cultural significance happening elsewhere, you’ll still find the die-hard loiterers lingering outside.

So what’s driving this all-engrossing love affair with iPhone 6 in Hong Kong? – Apple products have become synonymous with a particular lifestyle. Everyone wants to look young, wealthy and carefree. Flicking through selfies on the MTR says that – even if it’s far from the truth.

The other comes from mainland China. The iPhone 6 went on sale in the mainland about a month after Hong Kong on the 17th October, which drove the initial shortage as tourists crossed the border to join a very long queue. But there’s also the fact that it’s also $100 cheaper in HK – making the relatively cheap trip across the border worth it.

This data point is most interesting:

Analysts say that the launch of the iPhone 6 arrested at 9 month decline in retail sales and actually boosted them by 4.8%.

And it isn't going to end any time soon:

The manic hunger for the iPhone 6 is still very real in Hong Kong. An Apple store clerk I spoke to told me that it’s common for people to try and buy one through the reserve system for two months. Two months. That’s 60 days of getting up at 7.45 am, turning on your laptop, and hoping today is your lucky day.

That’s extreme by any metric. Especially when you consider the abundance of other, cheaper, smartphones available at one of Hong Kong’s many gadget shops.

What’s become clear is that this will be a perpetual problem for Hong Kongers. A resident tells me it’s been like this since the iPhone first arrived, and it’s getting worse. The more exclusive the iPhone 6 becomes purely because of a lack of stock, the deeper the need for one is entrenched.

In the US, iPhone 6 supply has finally caught up with demand, if you believe J.P. Morgan.

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AppleWatch

By the way, anticipation for the Apple Watch is starting to build. Several stories are coming out today.

Over at Macrumors:

Marsh Supermarkets and inMarket today are announcing the launch of a new iBeacon platform throughout Marsh's 75 supermarket locations that will enable Apple Watch users to receive interactive alerts and other content on their devices based on their proximity to Marsh's beacons. The program is the first integration of iBeacon technology with Apple's wearable product, which is expected to launch to the public in the next several months.

Over at Yahoo!Finance, Apple Watch could be most successful Apple product ever:

So, does Apple Inc. have what it takes to change the smartwatch industry? Thus far, Motorola, Samsung and other smartwatch manufacturers have failed to build a mainstream product. 

Global Equities Research analyst Trip Chowdhry referred to these products as "launch and forget" devices. They receive a ton of hype at launch, but people quickly forget about them and move on.

"Apple doesn't have the mindset of 'launch and forget,'" Chowdhry told Benzinga. "[The] iPhone 6 was launched in September -- four months later we still talk about it." 

Chowdhry estimated that the Apple Watch will be Apple's "most successful product. "[It] will break all the previous records," Chowdhry said confidently. "Why are we so convinced?

We have attended numerous WatchKit hackathons. We have seen the potential of WatchKit and the Apple Watch platform. We have seen where the competition got it completely wrong."

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Apple: A Camera Company

Apple passes Nikon to become second most popular camera brand on Flickr.

Flickr over the weekend released data detailing the most popular camera rankings of 2014 for the online photo sharing service. With 100 million users uploading 10 billion photos last year, the usual standouts of Canon and Nikon edged out most of the competition, but most interesting was Apple moving past Nikon to take second place in the rankings.

Flickr also looked at the top mobile device cameras used on Flickr, where Apple unsurprisingly dominated the top ten list. In first through fourth were the iPhone 5 (10.6 percent), iPhone 4s (7.0 percent), iPhone 4 (4.3 percent), and the iPhone 5c (2.0 percent). The iPhone 6, iPad, and iPad mini also placed in the top ten. It is unclear why the iPhone 5s is not included on Flickr's year-end lists, as it has been registering as the most popular camera overall for a number of months now.

Based on the percentages, it looks like the top five camera companies took market share from camera companies not in the top five.

Disclaimer: I post links to articles on Apple for several reasons. First, I grew up with Apple. I am officially Apple Fanboy #3. Or maybe unofficially. I don't invest in Apple directly; I have never owned shares of Apple in my name, but I can no longer say I never will. I love the technology; I love the story (coming from out of nowhere in 1984); I love the vision Steve Jobs had. 

Second, I need to follow some technology company to sort of keep up with technology. Right now I'm listening to my own personal "radio station" on iTunes through the "new" UE Boom. No advertising. No interruptions. Just non-stop, free music. 

Third, I'm doing this for a reader of the blog who happened to mention some time ago he/she owns shares in Apple.

And there was a fourth reason, but I forgot. Be that as it may, this is not an investment site. Do not make any investment, financial, or relationship decisions based on what you read here.  

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Slick, Useful Apps Put the Wow in Apple Watch

The Wall Street Journal is reporting:

I’ve seen some of the applications that will launch for the Apple Watch when it makes its debut as early as March, albeit in simulation, and some are extraordinary. Along with the details Apple has already released about how the watch will work, it’s convinced me Apple Watch will be a launching pad for the next wave of billion-dollar consumer-tech startups.

Contrast that with the predictions of many pundits that the watch will flop, or sell only modestly. Others, like the analysts behind a Morgan Stanley note from November, are so optimistic they project the watch will sell 30 million units in its first year, increasing Apple’s value by more than 10% and adding more than $50 billion to its market cap.

Apple has already revealed the sleek, customizable watch itself, and this being Apple, it’s safe to assume the company is going to release hardware that’s best in class.