Thursday, February 12, 2015

From Earlier Today -- February 12, 2015

Dakota Plains announces strategic and corporate updates: Co to form strategy committee and review strategic alternatives to enhance stockholder value: Co announced strategic and corporate changes to further grow stockholder value. These updates follow the previously announced successful unwinding of the Company's joint ventures and the refinancing of the Company's debt.

WPX Energy announces a 2015 capital investment plan of ~725 mln, in-line with co's projected operating cash flow: Co announced a 2015 capital investment plan of approximately $725 million (midpoint), in line with the company's projected operating cash flow.
  • As part of its long-term strategy, WPX will continue to diversify its historically gas-weighted portfolio.
  • The company's 2015 capital plan is roughly half the amount of its capital plan last year, excluding acquisition capital.
  • WPX expects its oil production to climb again in 2015. The company is targeting 15 to 20 percent oil growth this year even as it decreases capital spending and builds an inventory of wells awaiting completion for when commodity prices are more favorable.
  • The company's 2015 capital program includes $275 million to $300 million for San Juan Basin development, $200 million to $225 million for Williston Basin activity, $200 million to $225 million for Piceance Basin development and $25 million for land and exploration. 
See disclaimer

Reason #56,892 Why I Love To Blog -- February 12, 2015

I feel somewhat remiss in not following up on Eckman. When a reader mentioned it the other day, I had planned to look up Eckman but never got around to it. I was pleasantly surprised when I opened an e-mail this evening with a bit of nostalgia regarding Eckman.

The reader linked Eckman with this "postcard / photograph."

For readers new to the blog, I was in high school, editor of the high school newspaper during my senior year, when I met Bill Shemorry. This photograph/post card was part of his collection.

When you get to the link, note that you can see both the front side of the postcard and the reverse.

It appears the photograph was taken in 1909 -- suggesting that "they" were drilling for natural gas in North Dakota as early as 1909. This as taken near Eckman, North Dakota.

The narrative that accompanies the photograph is fascinating: the derrick, the automobile, the men in derby hats (probably banks, not EPA or OSHA inspectors).

I find this particularly poignant, the message on the post card:
'Just to let you know that I am okay. Find farming kind of hard. Came here by team from Westhope. Your friend, Stenehjem.' 
Anyone who has read Giants in the Earth by Ole Edvart Rølvaag will know where I'm coming from. Giants in the Earth was one of the most "emotionally-laden" books I have ever read. I must have read it in middle school; not sure who would have recommended it to me to read. I think I did my "best" reading in middle school. By the time I got to high school, I was too busy to do much serious reading outside of class assignments. 

Remember, It's Summer In The Antarctic

Ice Age Now is reporting:
The Australian 207-foot ship, the Antarctic Chieftain, has become trapped in thick Antarctic ice.
The US Coast Guard said the icebreaker Polar Star has been diverted to break through the ice and rescue the fishing vessel. Starting some 300 nautical miles away, the ice breaker was due to reach the stranded vessel by Friday or Saturday. In order to get there, it will need to cut through thick ice floes, heavy snow, and winds up to 35 miles per hour.

6/9 Wells To DRL Status; Ten (10) New Permits -- February 12, 2015

EPA reaffirms North Dakota's "haze-reduction" program. Link here:
North Dakota’s congressional delegation says the federal Environmental Protection Agency has reaffirmed its earlier approval of North Dakota’s plan to address haze caused by coal-fired power plants.
The EPA in 2012 agreed with the position of the North Dakota Health Department that power plants at Center and Stanton could use less-expensive technology to reduce haze that could affect Theodore Roosevelt National Park in western North Dakota.
UNP: stock hits new high. Judge dismisses lawsuit against UNP / fatal collision:
A Texas judge has dismissed a lawsuit against Union Pacific Corp brought in connection with a 2012 collision between a freight train and a parade float that killed four veterans in Texas. At least 14 people were also injured when the Union Pacific train slammed into a parade float pulled by a truck in Midland, Texas, in November 2012. The plaintiffs showed no evidence the train's crew could have avoided the collision as the parade float crossed the railroad tracks while the warning lights were flashing.
Reporting tomorrow:
Targa Resources Partners (TRGP); forecast 64 cents; before market open;
TransCanada (TRP.TO); forecast 61 cents; before market open;

See disclaimer. And yes, tomorrow is "Friday the thirteenth."


Triangle cancels six wells:
  • #24885, $24886, #24880, #24882, #24877, #24879; Larsen and Kittleson wells, all in Williams County.
Active rigs:

Active Rigs137189183203165

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

Ten (10) new permits --
  • Operators: QEP (6), XTO (3), Whiting
  • Fields: Spotted Horn (McKenzie), Charlson (McKenzie), Ray (Williams)
  • Comments:
One (1) producing well completed:
  • 28818, 605, Triangle, Simpson 151-102-5-8-2H, Elk, no production data,
Wells coming off confidential list Friday:
  • 21538, drl, Enerplus, TAT 150-94-32D-29H, Spotted Horn, no production data,
  • 26485, drl, Statoil, Hawkeye 16-21 3H, Todd, t6/14; no production data,
  • 27044, 931, EOG, Parshall 44-1004H, Parshall, t8/14; cum 159K 12/14;
  • 27518, drl, XTO, Guy Federal 24X-35F2, Grinnell, no production data,
  • 27947, 2,076, Whiting, Bock Federal 44-7PH, Bell, t8/14; cum 58K 12/14;
  • 28346, IA, BR, Lillibridge 41-27TFH-ULW, Blue Buttes, 4 sections, producing,
  • 28643, drl, CLR, Boston 2-25H, Brooklyn, no production data,
  • 28705, drl, MRO, Castner 34-20H, Bailey, no production data,
  • 28871, drl, Hess, GO-Hodenfield-157-97-3130H-2, Ray, no production data,

27044, see above, EOG, Parshall 44-1004H, Parshall:

DateOil RunsMCF Sold

Wall Map Of The Bakken -- February 12, 2015

A huge thank you to a reader for this "bigger-than-life" wall map of the Bakken. I hung the map while my wife was out of the apartment for the day. LOL.

"So, is this where the spill was?"
The first thing that jumped out at me looking at this "life-size" map was how much work still needs to be done. Even the most active areas are just barely touched considering that these areas will eventually have as many as 24 wells per 1280-acre spacing units (or more).

Random Update On Oasis -- Location Of Wells, Historically, And New Permits -- February 12, 2015

Disclaimer: some of this information comes from my database which may be different than that of the NDIC database. I often make mistakes. I often post quickly and don't get back to proofreading for typographical and factual errors until later. I'm less concerned about the specifics than about the trends. So whether there are 45 Oasis permits/wells in Willow Creek or 42 doesn't matter a whole lot to me. But it helps put it in perspective to know there are about 100 Oasis permits/wells in the Cottonwood oil field, for example. If this information is important to you, go to the source, generally the NDIC.

So far in 2015, Oasis has two new permits. Both of them were for wells in Willow Creek. Willow Creek is in/near one of the best spots in the North Dakota Bakken, north and east of the river, just a few miles east of Indian Hill and a few miles north and northwest of Camp and Banks oil fields.

Active Oasis drilling sites, according to the NDIC, the date of the original post:
  • 29502, Camp, Noble 2, McKenzie, Brier 5200 42-22 9T,
  • 29345, Sanish, Patterson 308, Mountrail, Helix 5393 41-4 6T3, 
  • 27079, Willow Creek, Patterson 330, Williams, Hanover Federal 5300 44-11 5T,
  • 29267, Todd, H & P 457, Williams, Harrier 5401 44-23 5B,
  • 29518, Missouri Ridge, Ensign 158, Williams, Twobins 5501 41-20 8T, 
  • 30169, Willow Creek, Extreme 21, Williams, Cook 5300 41-12 11T, 
  • 30392, Willow Creek, Extreme 25, Williams, Hanover federal 5300 13-14 7T,
  • 28856, Alkali Creek, Patterson 488, McKenzie, Wade Federal 5300 41-30 5T2,
  • 28637, Baker, Nabors B22, McKenzie, Chalmers 5300 21-19 10T,
  • 28655, Baker, Nabors 486, McKenzie, Kline Federal 5300 41-18 14BX,
  • 29316, Baker, Nabors B27, McKenzie, Gramma Federal 5300 41-31 12T,
Where Oasis wells are located:
  • Alger oil field: 50
  • Alkali Creek: 20
  • Assiniboine: 4
  • Baker: 69
  • Banks: 21
  • Black Slough: 7
  • Bonetrail: 8
  • Bull Butte: 39
  • Bull Moose: 1
  • Camp: 64
  • Cartwright: 1
  • Church: 1
  • Cottonwood: 110
  • Cow Creek: 26
  • Crazy Man Creek: 6
  • Dore: 8
  • Dublin: 3
  • East Fork: 5
  • East Goos Lake: 1
  • Eightmile: 12
  • Elidah: 2
  • Elk: 2
  • Enget Lake:  5
  • Epping: 1
  • Foothills: 11
  • Foreman Butte: 56
  • Ft Buford: 3
  • Garden: 1
  • Glass Bluff: 7
  • Grand River: 1
  • Gros Ventre: 41
  • Harding: 13
  • Indian Hill: 5
  • Kittleson Slough: 1
  • Lake Trenton: 5
  • Last Chance: 2
  • Leaf Mountain: 2
  • Lucy: 2
  • Marmon: 2
  • Missouri Ridge: 45
  • Mondak: 7
  • Nameless: 2
  • Nohly Lake: 2
  • North Tioga: 1
  • North Tobacco Garden: 2
  • Painted Woods: 10
  • Pronghorn: 4
  • Randolph: 2
  • Rawson: 1
  • Robinson Lake: 17
  • Rosebud: 10
  • Sand Creek: 1
  • Sanish: 29
  • Siverston: 14
  • Sorkness: 5
  • Squires: 20
  • Strandahl: 1
  • Todd: 11
  • Trenton: 2
  • Tyrone: 51
  • Viking: 1
  • Wildcat: 3
  • Willow Creek: 45
  • Winter Butte: 2

US Crude Oil Inventories At Highest Level In At Least 80 Years -- February 12, 2015

Note: wells coming off confidential list today have been posted

Natural gas fill rate (a dynamic link): -160.

At the link, scroll down to the graph. Fill rate is holding steady at the mid-5-year range, but just barely.

Weekly petroleum report (a dynamic link): a PDF report, some data points (released yesterday):
  • US crude oil inventories (does not include the SPR): increased by almost 5 million bbls
  • currently, almost 420 million bbls -- highest level for this time of the year in at least the last 80 years
  • gasoline inventories at the upper limit of average range
  • propane/propylene are well above the upper limit of the average range
Oil inventories at highest level for this time of the year in at least the last 80 years and we not importing more, which suggests that contrary to Jane Nielson and Snopes, there just might be some oil in the Bakken.

Retail Sales In January -- February 12, 2015

Regardless of how you look at it, this is really quite impressive -- see graph at the link:
For the first time ever, real federal tax revenues topped $1 trillion in the first four months of the fiscal year--October through January--according to data released Wednesday by the U.S Treasury.
 One wonders how much low interest rates contribute to these incredible tax receipts?

 Retail Sales

I've always thought the "retail sales" data number was "crazy" to include gasoline receipts. Perhaps that made sense when the price of gasoline stayed relatively stable over months and/or years, but look how that one data point, gasoline receipts, affects the headline:
U.S. retail sales fell sharply last month as gas prices plummeted and auto sales slowed. But excluding those volatile categories, Americans stepped up their spending a bit.
Retail sales dropped 0.8 percent in January, the Commerce Department said Thursday, following a 0.9 percent decline in December. The dollar value of gas station sales plunged 9.3 percent, the largest drop in six years. Auto dealer sales also fell for the second straight month.
To me, that's all good news for Joe Six-Pack. Gasoline cost him 9.3% less -- the largest drop in six years. And if Joe Six-Pack didn't buy a new car, it looks like he had more money to spend elsewhere, or his girlfriend Connie Cooler was spending his money elsewhere.

What's He Smoking?

And I thought Brian Williams talked a good story. Here's Elon:
Tesla Motors Inc missed fourth-quarter sales targets and analysts' profit expectations, but Chief Executive Officer Elon Musk on Wednesday said by 2025 Tesla's growth trajectory could take its market value to $700 billion, matching that of Apple Inc.  
"Missed fourth-quarter sales"? That's an understatement. A lot of $108 million. Elon was so upset he threatened to fire his executives in China.

Tesla's market cap today? About $25 billion. EOG's market cap is twice that at $50 billion. And EOG's number one product is facing a price slump seldom seen.

Update, later today: how is Tesla doing today? The headline, "Tesla hits the skids." After slumping yesterday when earnings came out, Tesla is down another $11 (over 5%) today. This does not look like a trajectory that will take Tesla to Apple's market cap by 2025. Possibly RadioShack's.

Update, February 14, 2015: just how crazy were Elon Musk's comments? Pretty crazy. 

Other News

Expedia to buy Orbitz, for $1.4 billion.

US becomes hot sport for aerospace industry. Link here

Costco and AmEx will part ways in the US, April, 2015. They have already parted ways in Canada. That's too bad. I cannot remember the last time I was in a Costco -- at least two or three years ago -- but I liked the AmEx card and a second family member, our younger daughter loved Costco because that's where she bought in bulk the stuff she needed for church dinners. I don't need "another M/C." Whatever.

Speaking of parting ways:

Jobs -- Uh-Oh -- February 12, 2015; Claims Surge 25,000; Back Over 300,000

  • Expected:  288K
  • Actual: 304K
  • Prior (revised up 1K): 279
  • Change: first time claims surged 25,000
Can't wait to read the spin.

Here's Reuters: claims rise more than expected --
The number of Americans filing new claims for unemployment rose more than expected last week, but the underlying trend remained consistent with a strengthening labour market.
Initial claims for state unemployment benefits increased 25,000 to a seasonally adjusted 304,000 for the week.
Economists polled by Reuters had forecast claims rising to 285,000 last week.
The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, fell 3,250 to 289,750 last week.
The four-week decrease is, of course, spurious due to an anomaly in the unemployment numbers a couple of weeks ago. The four-week average will be back up next week. 

Economists forecast claims of 285,000 but in fact -- 304,000.

But yet, Reuters says this is all consistent with a strengthening labour market.

There are rumors Brian Williams is writing for Reuters.

It is interesting that Yahoo!Finance did not even mention the jobs story -- the Reuters headline was "below the fold." Had the news been good, it would have been a headline story ABOVE the fold. 

BNSF To Invest Another $326 Million In North Dakota; Is Greece Europe's New Cuba? Thursday -- February 12, 2015

Starting off the day with an incredible video: the far side of the moon. Look at the angular momentum of the earth.

End of the boom in the Bakken? Not for some. BNSF will invest another $326 million in North Dakota. For 2015:
  • Construction of 37 miles of double track between Minot and Williston
  • Centralized traffic control signaling in Devils Lake, Dickinson, Hillsboro and Jamestown to increase capacity and improve train flow
  • Connection track upgrades between Hillsboro and Devils Lake
  • Extending siding between Mandan and Glendive, Mont., enabling trains on the same line to pass
  • Expanding capacity of the Dickinson Yard to accommodate expected growth in single car volumes
Still think the Fed will raise rates? Not if they pay attention to this data:
Sales at U.S. retailers fell more than forecast in January, reflecting smaller receipts at gasoline stations and declines at clothing and sporting goods stores. The 0.8 percent drop followed a 0.9 percent decrease in the prior month.
How strong is the global economy? Readers know that the EU has negative interest rates. Now, in a surprise move, Sweden announces stimulus package: Sweden's Riksbank to introduce negative interest rates and launch bond purchases, while saying it could take further steps to fight falling prices. 

How "broke" is Russia? Apparently not all that broke. Russia offers to help bail out Greece. Sort of reminds me of Cuba during the Cold War: 
Both Russia and China have made offers of financial assistance. Russia has also moved to strengthen political and economic ties with Athens. Russian President Vladimir Putin’s government has, on multiple occasions, held out the offer of financing to Greece. In late January, Russian Finance Minister Anton Siluanov said the Kremlin was open to considering a financial aid package for Greece.
Reporting today:
  • Apache (APA): 76 cents; a fourth-quarter 2014 net loss of $4.8 billion or $12.78 per diluted common share, primarily as a result of after-tax, non-cash charges totaling $5.2 billion. Adjusted earnings, which exclude certain items that impact the comparability of results, totaled $404 million or $1.07 per share. Net cash provided by operating activities was approximately $1.9 billion in the fourth quarter of 2014, with cash from operations, before changes in operating assets and liabilities, totaling $2.1 billion.
  • Cabela's (CAB): $1.35; adjusted for certain items, net income decreased 16.4% to $79.3 million compared to $94.7 million in the year ago quarter, and earnings per diluted share were $1.11 compared to $1.32 in the year ago quarter.
  • Kellogg (K): 93 cents; The reported fourth quarter 2014 net earnings loss was $293 million, or a loss of $0.82 per diluted share; comparable earnings* were $0.84 per share; this represented a decrease of 1.2 percent from the fourth quarter of 2013's comparable earnings per share. 

California ports in San Pedro Harbor shutting down for four days -- Los Angeles Port and Long Beach Port will stop unloading cargo for four days, Friday (tomorrow) through Monday (next week). Something tells me the truck drivers have had enough of the dockworkers. 

Active rigs:

Active Rigs137189183203165

RBN Energy: LNG export update.
The First Four projects now under construction share an important trait: they are, in fact, conversions of existing LNG import facilities that already have docks that can receive LNG ships and solid pipeline connections. The same is true for most of what we’re calling the Second Wave of projects awaiting FIDs: two more trains at Cheniere’s Sabine Pass, one more train at Freeport LNG, and three trains at Energy Transfer’s Lake Charles LNG the plant that is under threat because of BG’s decision to wait until 2016 before confirming its contract for all 2 Bcf/d of the output because of concerns about the low price environment.
(Taken together, the nine trains would require nearly 6 Bcf/d, assuming they ran at full capacity.) That baked-in infrastructure has held down capital costs, and enabled developers to offer liquefaction rates of $3.50/MMBTU and, for Sabine Pass (the pioneer in all this), rates of only $2.25 to $3/MMBTU. For several reasons (including the fact that the facility will be identical in many ways to Sabine Pass), Cheniere’s planned three-train Corpus Christi LNG project—the first greenfield project approved by all federal regulators—has managed to match the so-far-dominant $3.50/MMBTU rate.
That competitive liquefaction fee surely helped the Corpus project line up the SPAs to lock up all of trains 1 and 2 and part of the third train.
The other Second Wave projects also have all—or at least some—of their liquefaction capacity under contract (excepting Lake Charles now because of BG’s decision yesterday) and their engineering, procurement and construction contracts booked.
Some other greenfield LNG projects waiting in the wings may face higher capital costs, not just because of their start-from-scratch nature, but because they require new or beefed-up pipelines to connect them to gas sources—costs that need to be factored in somehow. Take two projects in Oregon: Jordan Cove LNG and Oregon LNG. Jordan Cove includes the 282-mile Pacific Connector pipeline from the Malin (Oregon) gas trading hub to the terminal; and Oregon LNG needs an 85-mile connector.
And, unlike Cheniere’s Corpus Christi LNG (a near-duplicate of Sabine Pass), the Oregon projects can’t benefit from off-the-shelf plans from an earlier plant. (The two Oregon projects do have one real plus though: both offer straight-shot delivery across the Pacific to Asia buyers, avoiding the tolls of--and possible congestion in--the expanded Panama Canal.)