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Wednesday, January 21, 2015

Starting To Feel The Strain, Mr Putin? -- Reuters, January 21, 2015

Reuters at Rigzone is reporting:
Russia may see a natural decline in oil output by around 1 million barrels per day (bpd) at most but has no plans to cut production in coordination with OPEC, Deputy Prime Minister Arkady Dvorkovich said on Wednesday.
Russia is the world's biggest oil producer and output hit a post-Soviet high at an average 10.58 million bpd last year, but Western sanctions over Ukraine and low prices pose a threat to the development of what is the country's key source of revenue.
Dvorkovich ruled out the cut in tandem with OPEC despite oil prices sinking to five-year lows. OPEC, an oil producing group of which Moscow is not a member, decided to keep output levels stable last year.
"If the oil (price) stays at $50 for a long time, of course some projects will become less attractive and a small output decline may start. But we will not cut production on purpose," Dvorkovich told Reuters. "We could lose at maximum a 10th of output but more likely 300,000-400,000 bpd. There are no grounds for a bigger decline," he said on the sidelines of the World Economic Forum in Davos.
Dvorkovich also said that Russia could balance its budget at any oil price, which he expected to stay low for a long time
There are so many "holes" in this story.

I love this bravado: "... Russia could balance its budget at any oil price..." LOL.

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Total Will Also Cut

Reuters via Rigzone is reporting:
French oil and gas company Total will cut spending on ageing North Sea fields and on U.S. shale production after the recent plunge in oil prices.
Speaking at a panel session at the World Economic Forum in Davos, Switzerland, Patrick Pouyanne said he expected oil prices to remain low in the first half of 2015 after falling almost 60 percent since June to below $50 a barrel.
Pouyanne told the Financial Times on Tuesday that Total planned to reduce capital spending by 10 percent this year from 2014's $26 billion and was also looking at imposing a hiring freeze for 2015. Total's spending in the North Sea, home to the benchmark Brent crude oil, will be reduced as profitability from fields there has worsened, Pouyanne said on Wednesday.
A Total spokeswoman later said that the group's UK unit will reduce contractor costs by 10 percent in 2015 and this will translate into an unspecified cut in contracted staff in the region. U.S. shale oil and gas production, which has surged in recent years, causing a large build in global oil supplies, will also be curtailed. "We have fields on the U.S. East Coast and my instructions have been pretty clear -- we will limit investments," Pouyanne told the panel. "I can come back in one year when prices come back."
More at the link.

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Oh, Man, Oh, Man

Reuters at Rigzone also reporting:
Oman oil minister Mohammad bin Hamad al-Rumhy sharply criticised OPEC's production policy on Wednesday, saying it was creating volatility in the market without benefiting oil producers and that his country was suffering.
In November, OPEC decided to keep its output unchanged despite sliding prices. Analysts believe the policy is being engineered by Saudi Arabia and other top Gulf producers to protect their market share against higher-cost suppliers outside OPEC, such as U.S. shale oil producers.
Oman is a significant oil producer but it lacks the huge oil and financial reserves of its Gulf neighbours, and it is not an OPEC member.

Bloomberg Subscribers Say OPEC Will Blink First -- January 21, 2015

For the archives. Bloomberg is reporting:
U.S. shale drillers won’t scale back output quickly enough for OPEC to avoid production cuts this year, according to a quarterly poll of Bloomberg subscribers.  
Forty-nine percent of analysts, traders and investors surveyed said the Organization of Petroleum Exporting Countries will have to lower its production target this year, while 34 percent said shale drillers will lower output in time. Seventeen percent weren’t sure.
My thoughts on the subject are driven by two sets of data points. The first data set:
  • Saudi Arabia can have an immediate effect on price of oil (short term, immediate); if Saudi says they will cut their production in half tomorrow, the price of oil would move up very, very quickly; and vice versa
  • shale, Canadian sands can effect price of the medium term (six months); fairly "easy" to modulate drilling in these plays
  • deep-sea drilling, off-short drilling, major projects can effect price over long term (2 - 3 years); these projects take years to come to fruition
The second set of data has to do with the two cartels:
  • There are two cartels -- the OPEC cartel and the US cartel. 
  • The OPEC cartel is organized but members all cheat. 
  • The US cartel is "by accident" due to the law banning oil exports. 
It's a conundrum. Not corundum. The latter is a mineral.

Too Much Rail News To Report -- January 21, 2015

Will start here, perhaps add more later.

CSX ($0.49): CSX reported fourth quarter earnings per share of $0.49, up 17% from $0.42 in the same period last year. This represents a new fourth quarter record for the Company. Revenue grew 5% in the quarter, to $3.2 billion, also a fourth quarter record, with broad based growth across nearly all of our markets, reflecting continued economic momentum.

MarketWatch: oil tankers may leave the trains, but it won't stop the railroad boom
Shale-oil tankers may be leaving the train, but that won’t dent a bull case for railroads as the best way to play industrials stocks amid plunging crude prices.
That’s what analysts at Credit Suisse wrote in a note Thursday, in which they also argued that for all the buzz around shipping crude by rail, railroads can still rely on other lines of business, such as transporting general merchandise. Moreover, capacity is tight, with or without oil.
The analysts had three top picks: Canadian Pacific Railway Ltd,  CSX Corp., and Union Pacific Corp. On average, there’s 20% upside for their stock prices in the next 12 months, they said.
Railroads have been a critical link for the boom in U.S. and Canadian oil production, getting to and from shale fields that are far beyond the reach of existing pipelines, and helping ease pipeline constraints in other areas. Railroads also transport sand used in hydraulic fracturing and carry natural-gas liquids.
In North Dakota, a top-producing oil state, rail accounts for more than half of crude transportation. Earlier this week, state officials said North Dakota’s oil production rose to 1.19 million barrels a day in November, a record, even as energy companies drilled fewer wells and operated fewer rigs in the state due to the lower oil prices.
See disclaimer

Harold Hamm Selling Shale Assets To Kinder Morgan -- January 21, 2015 -- This Will Take A Day And A Half For Analysts To Sort Out

Business Insider is reporting:
On Wednesday, pipeline operator Kinder Morgan announced a deal to acquire $3 billion worth of Bakken shale assets from Harold Hamm's Hiland Partners. 
Kinder Morgan said it expects to retain "nearly all" of Hiland's 430 employees.
The announcement of the deal said that Kinder Morgan will acquire Hiland from  Hamm, who founded the company, and "certain Hamm family trusts."
On Wednesday, Kinder Morgan also announced fourth quarter earnings, announcing an increase in its dividend, though the company said it, " experienced some headwinds in the fourth quarter due primarily to commodity pricing."
The press release:
KMI will acquire Hiland Partners (Hiland) from its founder, Harold Hamm, and certain Hamm family trusts, for a total purchase price of approximately $3 billion, including the assumption of debt. Hiland’s assets, which are mostly fee based, consist of crude oil gathering and transportation pipelines and gas gathering and processing systems, primarily serving production from the Bakken Formation in North Dakota and Montana.
The transaction creates a premier midstream platform for KMI in the Bakken with a significant amount of acreage dedicated under long-term gathering agreements. These acreage dedications are with some of the Bakken’s largest and most successful producers, covering some of the most attractive and economically viable areas in the basin. Hiland’s customers include Continental Resources, Inc. (Continental), Oasis Petroleum Inc., XTO Energy Inc., Whiting Petroleum Corporation and Hess Corporation, among others.
Hiland’s crude oil gathering systems, located in North Dakota and Montana, consist of approximately 1,225 miles of gathering pipelines that deliver crude oil to the basin’s major takeaway pipelines and rail terminals. At closing, the crude oil gathering systems will have more than 1.8 million acres dedicated under long-term, fee-based agreements with major Bakken oil producers. At closing, Hiland’s largest oil gathering dedication will be with Continental, which has dedicated the majority of its Bakken acreage to Hiland’s gathering systems under a long-term agreement, including substantial acreage in McKenzie, Mountrail and Williams counties in North Dakota.
Hiland’s crude oil transportation pipeline, the Double H Pipeline, is a 485-mile pipeline that will transport crude oil from Hiland’s Dore Terminal in North Dakota to Guernsey, Wyoming, where Double H interconnects with Pony Express Pipeline for further transportation to Cushing, Oklahoma. Double H Pipeline is in the final stages of construction and is expected to begin service by the end of the month. Double H Pipeline will have an initial capacity of approximately 84,000 barrels per day, with an expansion to approximately 108,000 barrels per day in 2016. The pipeline has firm take-or-pay contracts for approximately 60,000 barrels per day and is currently conducting an open season for additional commitments.
Hiland’s gas gathering and processing systems in North Dakota and Montana consist of approximately 1,800 miles of gathering pipelines and, upon completion of a plant expansion in 2015, 240 million cubic feet per day of gas processing capacity and 30,000 barrels per day of fractionation capacity. These systems process associated gas from oil production and have approximately 3.7 million acres dedicated under long-term agreements with major Bakken oil producers. Additionally, Hiland’s Midcontinent systems gather and process gas in the Woodford shale and other areas of Oklahoma.
From Yahoo!In-Play:
Kinder Morgan to acquire Premier Midstream Position in Bakken for ~$3 bln; acquisition is expected to be modestly accretive to KMI's cash available to pay dividends in 2015 and 2016 and approx six to seven cents accretive beginning in 2017 (KMI) : KMI will acquire Hiland Partners (Hiland) from its founder, Harold Hamm, and certain Hamm family trusts, for a total purchase price of approx $3 bln, including the assumption of debt. Hiland's assets, which are mostly fee based, consist of crude oil gathering and transportation pipelines and gas gathering and processing systems, primarily serving production from the Bakken Formation in North Dakota and Montana. The transaction creates a premier midstream platform for KMI in the Bakken with a significant amount of acreage dedicated under long-term gathering agreements. Hiland's customers include Continental Resources, Oasis Petroleum, XTO Energy, Whiting Petroleum, and Hess Corp, among others.
Forbes: story here.
Plummeting commodity prices have started to take a bite out of the U.S. oil patch, but even with no imminent end to the pain in sight, the value hunters are emerging.
Companies like Schlumberger , Halliburton and Baker Hughes  have announced thousands of layoffs and many more companies are mulling production cuts. A landscape of battered players is ripe for dealmakers though, and helped bring together billionaires Richard Kinder and Harold Hamm, who cut a $3 billion deal for the latter’s transportation business Hiland Partners.
As oil prices have plunged, Kinder and Hamm have seen the path of their fortunes diverge in the past several months, and not just because Hamm had to cut his ex-wife a billion-dollar divorce check.
Hamm’s wealth, closely tied to shares of his publicly-traded vehicle Continental Resources , has plummeted from $18.7 billion at the time of September’s Forbes 400, to $9.8 billion at the close of trading Wednesday, as crude oil prices have tumbled to less than $50 a barrel. Kinder, meanwhile, has seen his fortune grow over the same span, to $11.8 billion from $10.7 billion, thanks in part to his November consolidation of the various segments of his empire that were previously spun out into master limited partnerships. (That $70 billion transaction marked the second-biggest energy deal in U.S. history, behind only the 1999 merger of Exxon and Mobil.)
The pair were in the same orbit Wednesday, as Kinder Morgan announced it will buy Hiland Partners from Hamm and his family trusts that control the business, for $3 billion including debt. Hiland, focused on systems and infrastructure for the transportation of oil and gas, primarily in the Bakken formation of North Dakota and Montana, has customers like Oasis Petroleum, Whiting Petroleum, Hess and Exxon Mobil's XTO Energy, in addition to Hamm’s Continental.
On Hamm’s side of the table, raising a few billion dollars gives him ammunition should he decide to snatch up any oil businesses that blow up in the face of $50 a barrel U.S. crude. In December, Hamm told Forbes’ Christopher Helman that production cuts are a necessary part of the cycle, but that came after his bullish bet months earlier to unwind hedges that would have lessened his exposure to crude’s swoon.
“A commodity producer should be comfortable being exposed to prices,” Hamm said. With that mindset, it would come as no surprise if he’s out looking for assets on the cheap that offer big potential upside, and willing to let go of a safer, but probably less lucrative, pipeline business to help fund any acquisitions.

Twelve (12) New Permits, North Dakota -- January 21, 2015

Active rigs:


1/21/201501/21/201401/21/201301/21/201201/21/2011
Active Rigs160190186203165

Wells coming off the confidential list today were posted earlier; see sidebar at the right.

Twelve (12) new permits --
  • Operators: CLR (9), Whiting (3)
  • Fields: Sanish (Mountrail), Twin Buttes (McKenzie)
  • Comments: Clearly "circling the wagons"
Two (2) recent permits canceled: both WPX permits for Owl Comes Out and Stink Gun in McLean County.

Wells coming off the confidential list Thursday:
  • 26317, 1,443, Whiting, Ridl Federal 14-12PH, Zenith, t8/14; cum 43K 11/14;
  • 27376, drl, Petro-Hunt, Charlson, no production data,
  • 28155, 1,784, XTO, Gilbertson 34X-26G, Charlson, t11/14; cum 8K 11/14;
  • 28287, drl, BR, Shenandoah 24-36MBH, Keene, no production data,
Ten (10) producing wells completed:
  • 26272, 1,307, CLR, Rehak Federa 7-25H, Alkali Creek, t12/14; no production data,
  • 26448, 58, Newfield, Hovland 150-99-26-35-2H, South Tobacco Garden, t5/14; cum 3K 11/14;
  • 27504, 1,314, Hess, BB-Budahn A-150-95-0403H-7, Blue Buttes, t12/14; no production data,
  • 27682, 1,183, Hess, EN-Pederson-LW-154-94-0408H-3, Alkali Creek, t1/15; no production data,
  • 27697, 2,325, BR, Haymaker 31-15MBH-B, Elidah, t12/14; cum --
  • 27708, 1,272, BR, Haymaker 44-22MBH-B, Elidah, t12/14; cum --
  • 27797, 1,044, Hess, AN-Evenson-152-95-1003H-8, Antelope, t12/14; cum --
  • 28096, 524, Hess, EN-Dobrovolny A-155-94-2413H-4, Manitou, t12/14; cum --
  • 28202, A, CLR, Jamestown Federal 2-17H, Banks, no IP, s5/14;
  • 28272, 2,685, BR, Copper Draw 11-27TFH ULW, Pershing, t11/14; cum 5K 11/14;
Transfer of two fairly recent wells from Samson Resources to CLR:
  • 22084, EXP, CLR/Samson Resources, Tanager 17-20-163-95H, Kimberly,
  • 22085, EXP, CLR/Samson Resources, Nuthatch 8-5-163-95H, Kimberly,
Transfer of another fairly recent well from North Plains Energy to CLR:
  • 24465, loc, CLR/North Plains, Stewart 160-100-28-33-3B-1H, Smoky Butte

Microsoft To Give Away Windows 10 For Free -- To Try To Hold Unto Its Customers -- January 21, 2015

Reuters is reporting:
Microsoft Corp will give away its upcoming Windows 10 operating system as a free upgrade to users of the most recent versions of Windows and Windows Phone, as the world's largest software company tries to hold onto customers in the new mobile era that has largely bypassed it.
The announcement by Terry Myerson, who runs Microsoft's operating systems group, is a marked change for Microsoft, which has charged for new versions of Windows, one of its main profit drivers.
Windows 10, expected on the market this autumn, will be available for one year as a free upgrade to users of Windows 7, Windows 8.1 and Windows Phone 8.1, Myerson said.
The shift shows Microsoft is moving toward a frequently updated, subscription model for its flagship operating system, rather than major, paid-for upgrades every few years.
It is also recognition that in the last decade Windows, featured on roughly 15 percent of computing devices including phones and tablets, has become largely irrelevant for many consumers. Microsoft hopes that by making the software free, it will attract the more than 1 billion personal computer users of Windows to run Windows on other devices.
Can you say "Apple"?  I can't wait to read the comments over at Macrumors.

SM Energy, 3Q14 Earnings and Operational Update

This is old information; this is 3Q14; we should be getting 4Q14 data soon. 

See disclaimer

SM Energy: 3Q14 Earnings Call and Operational Update

Slide 3: SM Energy added to its acreage positions in the Bakken/Three Forks and Powder River Basin programs.

Slide 4 is interesting: cash return on average capital employed
  • of 17 companies listed, SM Energy is listed first, at 23%
  • then comes the other peer group members: CLR, COG, CXO, DNR, EGN, NFX, OAS, PXD, QEP, ROSE, RRC, UPL, WLL, WPX, XCO, and XEC, ranging from 19% to 6%
Slide 12: Bakken/Three Forks
  • added approx 12,500 net acres in Gooseneck, October, 2014
  • Gooseneck is in central Divide County, north to south county lines
  • total Williston Basin net acreage: 238,000 net acres

Reporting Today -- January 21, 2015

See disclaimer.

Reporting today:
  • KMI, expectation 34 cents; Kinder Morgan misses by $0.24, misses on revs; announces Steve Kean will become CEO, 10% increase in dividend (KMI) : Reports Q4 (Dec) earnings of $0.08 per share, $0.24 worse than the Capital IQ Consensus Estimate of $0.32; revenues rose 2.0% year/year to $3.95 bln vs the $4.3 bln consensus. Co announced that its board of directors approved a 10% increase in its quarterly cash dividend to $0.45 ($1.80 annualized) payable on Feb. 17, 2015.
  • XLNX, expectation 61 cents;Xilinx beats by $0.01, misses on revs; guides Q4 revs below consensus : Reports Q3 (Dec) earnings of $0.62 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.61; revenues rose 1.2% year/year to $594 mln vs the $616.59 mln consensus. Co issues downside guidance for Q4, sees Q4 revs of approx $558-582 mln vs. $635.48 mln Capital IQ Consensus Estimate. Gross margin is expected to be approximately 68% to 69%. Xilinx sees Mar qtr sales are expected to be down 2% to down 6% sequentially; expectation was for 3% increase (consensus revenue equates to 7% increase off Dec. qtr actual)
Reporting tomorrow:
  • CP.TO (Canadian Pacific Railway), expectation $2.56, 8:30 ET; 
  • SBUX, expectation 80 cents; after market close;
  • Union Pacific (UNP), expectation $1.51, before market open;
  • Verizon (VZ) expectation, 73 cents; time not supplied.
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Job Watch

Regular readers know my skepticism with the weekly jobs report. I guess now that the media's president is a lame duck and looking for their new candidate, they can start reporting the job story from a different angle. Reuters is reporting:
U.S. cities will see strong job growth this year, but only about half will return to the employment peaks reached before the recession began more than seven years ago, according to an economic report released by the U.S. Conference of Mayors on Wednesday.
The president declared economic victory last night.

The article goes on:
At the beginning of 2015, only 164 areas had returned to their pre-recession, peak employment levels, or 45 percent of metropolitan areas that frequently encompass at least one city and surrounding suburbs.
At their annual meeting in the U.S. capital, mayors expressed concerns that the types of jobs being created were entry-level and part-time, and that the level of pay was low.
And government data supports the view that these are low-paying jobs that are being "created."

President Proposes To Do Away With "529 College Savings Program" -- CNBC, January 21, 2015

The headline over at the Wall Street Journal, in his SOTU, President Obama makes "middle-class pitch" and then says he wants to scuttle the "529 college savings program." 

Of course this isn't going to happen, but of all the things he has proposed in the last 24 hours, this is perhaps the most typical of the president's tone deafness. Seen as the champion of US higher education, he now proposes to dismantle the "529 college savings program." The reason the program is so successful is because the gains used for college expenses are tax-free. Take away that benefit and the "529 program" goes away. It's that simple. CNN Money is reporting:
The most compelling reason to save for college in a 529 plan is the tax savings.
You can put away $14,000 each year for a child, pay no tax on the money while it's growing, and no tax when you withdraw it to pay for education costs.
President Obama is proposing to roll back the second part of that equation.
Savings would still grow tax-deferred, but withdrawals would be taxed as income to the beneficiary, typically the child in school. That means the money would be taxed at a lesser rate than if it were taxed as the parent's income.
Why would he do this? He thinks the rich are getting too rich doing this. In fact, it's the middle class and the upper middle class. The rich, the super-rich, hyper-rich don't need this break. It's the middle class that needs this break. 

Fortunately the proposal is DOA in the House and the Senate. I assume the president was simply trolling again.

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Is The JV Using Under-Inflated Footballs?

The JV continues to make advances in the Mideast. Now it's Yemen, and yesterday there was a story that ISIS was moving to fill the vacuum left by Americans in Afghanistan.

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Back To Wall Street Journal Headlines

Over-reach:
Idaho lawmakers on Monday quashed a bill pushed by an 8th-grader who wanted the Idaho Giant Salamander to be named the official state amphibian.
State lawmakers voiced concerns that such a move could lead to federal protections for the salamander.
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Back To The Bakken

Active rigs:


1/21/201501/21/201401/21/201301/21/201201/21/2011
Active Rigs162190186203165

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A Note to the Granddaughters

I wish I had brought my camera.

I have commented a number of times how much development is going on in the Southlake/Grapevine area on the northwest side of the DFW airport. One would have thought the area quite "mature" by now, but the completion of the 121-114-360 interchange has now allowed a renewed growth in residential and commercial projects.

It is nothing short of astounding.

Just outside the Starbucks window here at the Target store on Texas Highway 121 south of downtown Grapevine is another huge retail development going up. It is all cement/concrete. The big box stores are being built with pre-fab cement walls that are then raised and put in place by sky hooks.

But what amazes me most is how fast they can lay the cement parking lots, the foundations, the roads. I think they can put in the equivalent of a standard cement driveway in about 30 seconds. Yes, a standard cement driveway appears to be laid in about 30 seconds. They have seven cement truck-mixers (and the eighth truck just drove off) all lined up, and a sky-crane delivers the cement to the precise location and not less than fourteen men (probably all Hispanic) in high rubber boots rush into the cement, level it, and smooth it, all in about 30 seconds, before the next section is poured. It is amazing how fast they do this.

The men (and it appears to be all men) remind me of the crews on aircraft carriers in their various outfits which designate their particular jobs. The men that rush in to spread the cement and smooth it out are all in hard hats and yellow vests; they number about 14. They are the ones rushing in and burning 2,000 calories every couple of hours. Then there are the supervisors, about four of them, hands in pockets, hardhats on heads, and now yellow vests, but in dark, heavy jackets to stay warm. And then there is the super-supervisor in his heated F-350 listening to music or talk radio and occasionally putting his truck in gear to move about 45 feet to the next area of interest.

A similar commercial development project is near completion a bit farther to the northwest. The new Fresh Market (like a Whole Foods market but much smaller), a new REI, a new Michaels, and several other smaller stores are already open while the building continues. I think the REI is the first REI in the area. Our younger granddaughter loves REI; it has a great reputation for quality and customer loyalty.

Down the road from the new Fresh Market is a new Trader Joe's which is slated to open sometime in February. I think the building was completed before the end of the year (2014) and was originally scheduled to open sometime in 4Q14 but then for some reason it was delayed. I know the local city fathers put a lot of restrictions on the new Trader Joe's to minimize traffic congestion.

My roommate introduced me to my first Trader Joe's back in South Pasadena, California, in September, 1973. It was an eye-opener for me. Under the radar, Trader Joe's continues to expand. The first Trade Joe's I saw in Texas was down the street from where we lived when we lived in San Antonio (2001 - 2011, or thereabouts). And now, a Trader Joe's near the DFW airport.

The Next Big Thing (Back To The Future) -- January 21, 2015

See disclaimer.

I get a kick out of Netflix. Over at "The Big Stories," I have a link to "The Next Big Thing." The original "next big thing" post was dated March 21, 2013. This was part of that post:
With regard to the Bakken, the biggest surprise: multi-well pads and rail.

My son-in-law thinks Vudu will be the next big thing. Perhaps in time. But not for awhile. Our discussion began with Apple and iTV. I suggested that "it" was all about "content," and, of course, that brought us to Netflix, Vudu, and Hulu. Vudu and Hulu have access to new movies sooner than Netflix. Yet Netflix is still well ahead of anyone else in that sector.

That made me question my assumption that "it" was all about "content." I think I'm wrong. "Content" is important, but within a month of release, new movies are available everywhere, so "content" alone is not the discriminator. "Content" is quickly becoming a commodity (with notable exceptions: NFL network, "made-for-Netflix" movies, as prime examples). Once "content" is a commodity, then something else drives the sector.

So, if it's not "content," what is it? "Accessibility." Accessibility includes "ease" of accessibility. All demographics can reach Netflix. Even my parents, well into their 80's and 90's can use snail mail to order Netflix DVDs, but unless it has to do with fishing, my dad would have no idea what "streaming" is,  much less be able to access it.

So, we'll see. For $7.99/month I have unlimited and "easy" access to Netflix; for $5.99 I can stream one movie from Vudu or pay "Target-" or "Wal-Mart-price" for the DVD itself. US mail and $7.99 / month / unlimited still beats the alternative. So we'll see. Vudu might be the next big thing but I don't see that for a few years. At least. 
The news today on Netflix subscriber growth and then the stock surging almost 20% is quite interesting. 

Wednesday, January 21, 2015

RBN Energy: Pricing during the oil price slump, part 3:
CME NYMEX crude oil prices were down again yesterday – with the West Texas Intermediate (WTI) contract closing at $46.39 down $2.30 over the holiday weekend and over 55% lower than its high 7 months ago in June 2014. Some are billing the free fall in crude prices as a showdown between U.S. shale producers and OPEC. That is because OPEC has apparently decided not to cut production to prop up prices in an over supplied market in hopes that lower prices would squeeze out U.S. shale producers. If that was the strategy then it isn’t working so far. Today we review crude producer plans for 2015 and find lower capital expenditure budgets and cuts in rig deployment contrast with expanded production.
Yesterday we posted Part 2 in our series on producer breakevens and drilling economics in which we explained that despite the price crash, we expect production to continue increasing in the short term and provided four reasons why. The first of those reasons is the theme of today’s blog, namely that producers are cutting back drilling, but the rigs that are left are focused on their highest yield “sweet spots”, the best, largest producing opportunities. Producers are cutting their budgets and reducing rig counts but still hope to maximize production to increase cash flow to pay down debt and finance new production.