Friday, April 10, 2015

Week 14: April 5, 2015 -- April 11, 2015

Top story of the week is clearly taxable sales and purchases for 4Q14 -- continue to set records in North Dakota. The slump in oil prices continues; no relief in sight, though there appear to be some cracks in OPEC's strategy to keep producing at current levels.
Williston keeps bragging rights

Bakken economy
County approves $500 million shopping hub for Williston
US Postal Service can't keep up in Williston  -- eighth year into the boom

New low: 91 active rigs 
Three huge Whiting Flatland Federal wells; record fracks
Whiting looks to increase amount of Bakken oil to northeast US
Valuation of the better Bakken -- a random update

Update on conditioning oil before it's shipped by rail

Whiting, Re-Fracks -- Filloon

Update on Zavanna natural gas processing plant northeast of Williston (Springbrook)

Backlog of wells in the Bakken -- RBN Energy
Tax benefits for operators in the Bakken -- RBN Energy
North Dakota has not less than 22 oil fields on the top 100 oil fields in the US

Bookkeping: PCS approves two small pipelines in western North Dakota

For investors
COP on the Bakken
American Eagle Energy 4Q14 financial results and liquidity statement

Williston's Taxable Sales And Purchases: 4Q14 -- $1 Billion

That was posted earlier; in fact it was posted twice before, but it's really cool to see it in bold:

Williston's Taxable Sales And Purchases: 4Q14 -- $1 Billion 

I may post it again. Just for the fun of it.

$1 billion.

Nine (9) New Permits -- April 10, 2015

Active rigs:

Active Rigs93190190209173

Nine (9) new permits --
  • Operators: XTO (4), Thunderbird (3), EOG, OXY USA
  • Fields: Grinnell (Williams), Ranch Creek (McKenzie), Parshall (Mountrail), Manning (Dunn
  • Comments:

Netflix Streams Higher -- April 10, 2015

One of my "next big things."

Netflix streams higher.
Shares of the Internet media titan gained a little over two percent at the open with the stock up 9% this week.
The latest advance was likely triggered by analysts at Citi, who upgraded Netflix to "buy" from "neutral," saying it doesn't share competition concerns that are currently reflected in the stock's price. Also, they noted Netflix has become disruptive in the industry – altering viewing habits. Citi’s price target for Netflix is now $525 -- about 16.5% above current levels.
I don't update "next big things" very often. But it's one of my favorite topics. It started with Netflix, so it's always fun to see Netflix in the news.

I first posted the Netflix as the next big thing on March 21, 2013. Shares were selling for $181. Today, shares are selling for $475, and Citi has raised its target to $525.

Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on anything you read here or think you may have read here. 

Apple Watch

By the way, all models of the Apple Watch sold out the first day. The earliest any of the models are shipping now is four weeks; some models won't ship for two months.

My only complaint about the Apple Watch: they are too luxurious for the Apple Store.

By the way, it was interesting to see 20-somethings in blue jeans showcasing $17,000 watches. In the old days, showcasing $17,000 watches only occurred in high-end jewelry stores on Rodeo Drive or Rue de Richelieu or Fifth Avenue or Newbury Street. And the sales people were middle-aged men and women (mostly men, it seemed) in very, very expensive bespoke suits.

At previous new product launches, Apple might have had uniformed security. I didn't always see it. Yesterday at the Southlake, TX, store there were two uniformed city policemen. I didn't think about it at the time, but now, twelve hours later, thinking about 20-somethings showing $17,000 watches in a packed store, yes, two uniformed policemen might have been a smart idea.

White Ear Buds

Is it just me or are others also seeing more white ear buds. It appears there is another "wave" of new white ear buds making its way through society. 

Muddling Through -- To Avoid Being Eaten By The Grizzly Bear, One Only Has To Run Faster Than One's Fellow Traveler -- April 10, 2015

Disclaimer: this is not an investment site. Do not make any investment or financial decision based on anything you read here or think you may have read here.

The Dow is finally back over 18,000. I still maintain, that starting back in late 2014, this is a most remarkable time for young investors (I define "young investors" as those with a 20-year investment horizon; my dad at 73 was a "young investor"; he continues to invest today, at age 93). I don't understand the market and with all the headwinds, for the market to be back up over 18,000 before "sell in May, go away" (which by the way, apparently is now, "sell in June, before the swoon") is very interesting.

The world keeps muddling through "predicted disasters."

April 9, yesterday, was the day Greece was going to run out of cash. April 9th came and went. No headlines today regarding Greece, at least none that I could find.

The Ukraine? Apparently there is a cease-fire; no doubt giving the parties time to re-load, re-arm, and re-organize.

Putin's big problem: the ruble is getting stronger. Too strong; it's impacting his balance of trade payments.

The ObamaIran deal? The Ayatollah says it's DOA but we know otherwise.

Yemen will implode, but is that news?

So, we got through another week. Psychologically we may be through the worse -- at least for the next 90 days.

By the way, if you have 36 hours of free time, and looking for something to speed-read, I can't think of a better book to recommend, if interested in this sort of stuff: David Letterman's Stockman's 2013 The Great Deformation: The Corruption of Capitalism in America. It tells us how we got where we were. It starts with Goldman Sachs. GE enters the picture early on. GM even earlier, but not by much. Wal-Mart is mentioned early on. The Obama Green Machine gets its own chapter (remember Solyndra?). Tesla gets its own sub-chapter: explains a lot. Confirms my thoughts about Elon Musk.

I was hoping for some good news at the end of the book, or at least a chapter on how David Stockman sees the demise of the US economy play out -- but it ends with this two-sentence paragraph:
The interim winners from this ordeal will be the gangs of crony capitalism and the opulent 1 percent who thrive off the central bank's money printing. But in the end sundown will descend upon the entire nation -- even on the 1 percent.
He does have a concluding chapter, "Another Road That Could Be Taken" in which he lists thirteen (13) "crucial steps" to correct course, but he admits that these steps "would never be adopted in today's regime of money politics, fast money speculation, and Keynesian economics, but they can be listed. They are compelling."

The "crucial steps" include:
  • abolish deposit insurance
  • no incumbent of federal office could stand for re-election 
  • require each two-year congress to balance the budget
  • abolish social insurance, bailouts, and economic subsidies
  • eliminate ten major federal agencies and departments 
  • erect a sturdy cash-based means-tested safety net and abolish the minimum wage
  • impose a 30-percent wealth tax
  • repeal the 16th amendment; replace it with a uniform tax on domestic consumption at the point of sale
By the way, I think he's wrong on this:
The interim winners from this ordeal will be the gangs of crony capitalism and the opulent 1 percent who thrive off the central bank's money printing. But in the end sundown will descend upon the entire nation -- even on the 1 percent.
Based on what I see in the DFW metroplex, it appears the excesses of the 1 percent are trickling down to at least the top 15%. "Trickle-down economics" does not appear in the index. Incredibly, "supply-side economics" is also not mentioned in the index.

There seems to be a chapter missing from the book. Stockman runs through US economic history from FDR to Nixon pretty good, and some on Jimmy Carter, but then fast forwards to Barack Obama. The index has half a dozen pages but no "section" on Ronald Reagan/David Stockman whereas one can find full chapter-equivalents on any of the other presidents/economic advisers.

Does Stockman's Book Square With What Others Are Thinking

According to the US Department of Agriculture, the top 20 economics in 2030 will be (as printed by Bloomberg):

  • European growth comes to a standstill for all practical purposes
  • though small, India's economy surges
  • US and China's economies surge
  • for all that talk about China's economy, US remains #1
  • other than the US, China, and India, there is essentially no growth

Strong Interest In Apple's New Watch -- April 10, 2015


Later, 10:21 p.m. CT: early this morning I walked by the local Apple Store (Southlake, TX); there was a short line and I had an "appointment" to be with the youngest granddaughter at 10:30, so I didn't go in. This evening my wife and I stopped by the Apple Store. Not busy at all. Lots of people there but one could things were winding down. We saw the Apple Watch for the first time, both in the display case -- about 24 different models -- mostly different bands -- and then several in various places around the store where one could test them out at one's leisure. In addition, it appeared that at this particular store at about 8:00 p.m. this evening, two or three employees were, probably by reservation, showing an assortment of 12 models to prospective buyers. I assume that if the individual decided to buy, they placed an on-line order. No one was walking out of the store with an Apple Watch as far as I could tell.

My impression of the watch: incredible. Absolutely incredible. Like all Apple products, exquisite; a feeling of a very solid watch; gravitas and heft. It was incredibly easy to switch among the various apps. Easy to read e-mail. Easy to read maps. I was very, very impressed. If I had an iPhone, I would have ordered the least expensive and then gone on from there.

I think folks will be surprised who actually buys the watch. This is a pretty big deal. It won't move the needle with regard to Apple's bottom line but that's not the point.

The Apple Watch is another Apple item that defines the "new" Apple. I think there will be an initial surge in Apple Watch sales, but they will quickly taper off; over time, the Apple Watch will simply become a steady performer. It's kind of interesting: the Apple Watch was so elegant, it looked out of place in the Apple store. It really needs to be seen and sold in the upscale jewelry stores. It almost looks out of place in the Apple store.

By the way, the foot traffic that is brought in by the interest in the Apple was also incredible. My wife and I walked to the back of the store to look at all the new accessories. Apple has really broadened what they sell -- they also sell drones now -- they had but one Parrot Bebop drone, at $499, left on the shelf. There were also some mini-drones. A lot of non-Apple products.

And, of course, we saw the new MacBook -- that, too, is incredible. It is what the Google Chromebook should have been. There are a lot of "negatives" to say about the MacBook but that's because folks are comparing it to a "full" laptop. It's not. I think the MacBook is a direct competitor to the Apple tablet, the iPad, or to the Microsoft Surface. For reading in bed, I love the iPad, but in almost all other situations I would prefer the new MacBook to an iPad.

Later, 5:07 p.m. CT: Reuters is reporting --
Customers preordering Apple Inc's smartwatch on Friday will have to wait at least a month for delivery, an early sign of strong demand for company chief Tim Cook's first new major product.
People flocked to Apple's stores around the world to get a close-up look at the Apple Watch, the tech company's first foray into the personal luxury goods market.

The device was available for preorder online and to try out in stores by appointment, but not to take home. Cook, interviewed on cable television channel CNBC, said initial orders were "great."
Apple predicted on Thursday that demand would exceed supply at product launch.
Without knowing how many watches consumers have ordered, Wall Street analysts said it was too early to adjust their estimates for sales of the gadget. Another key factor in the watch's success will be demand once an initial wave of interest from Apple enthusiasts subsides.
The watch goes on sale officially on April 24, online and through appointments in shops, including trendy fashion boutiques in Paris, London and Tokyo, part of Apple's strategy of positioning the wearable computer as a must-have accessory.
But soon after online preorders opened on Friday, Apple's website listed shipping times in June for some models of the watch and four to six weeks for others.
June? Two months from now.
Original Post
Reuters is reporting:
Consumers in Australia flocked to Apple Inc's store in Sydney on Friday to get the world's first up-close look at the tech giant's smartwatch, which the company expects will be its next runaway hit.
The Apple Watch, CEO Tim Cook's first new major product, was available for pre-order online and to try out in stores - but not take home.
On April 24, consumers will be able to buy it online or by reservation at retail locations including high-end fashion boutiques in Paris, London and Tokyo, part of Apple's strategy of positioning the wearable computer as a must-have accessory.
About four weeks ago, when Tag Heuer reiterated that they would not develop a smart watch and had no concern over the Apple Watch, I visited the Tag Heuer site to see the prices of watches that do only two things: a) provide the time; b) provide the date (and sometimes the day of the week).
Ever since, I've been getting Tag Heuer advertisements on various sites (Yahoo, Drudge).

And now, Tag Heuer has announced it will market a smart watch. 

The Apple Watch has nothing to do with short term profits for Apple. It's all about widening the moat.

Since I don't have the iPhone, I won't be getting an Apple Watch. By this time next year, I assume my wife, who has an iPhone 6, will also have an Apple Watch. We'll let the dust settle before we start looking for an Apple Watch. But I might walk by the Apple store here in South Lake in a few minutes.

I'm more interested in the new MacBook.

The Great Gatsby Turns 90 This Month

Link here.

Jobs Program

The WSJ reports:
China will build a pipeline to bring natural gas from Iran to Pakistan to help address Pakistan’s acute energy shortage, under a deal to be signed during the Chinese president’s visit to Islamabad this month, Pakistani officials said.

The arrival of President Xi Jinping is expected to showcase China’s commitment to infrastructure development in ally Pakistan, at a time when few other countries are willing to make major investments in the cash-strapped, terrorism-plagued country.
The pipeline would amount to an early benefit for both Pakistan and Iran from the framework agreement reached earlier this month between Tehran and the U.S. and other world powers to prevent Iran from developing nuclear weapons. The U.S. had previously threatened Pakistan with sanctions if it went ahead with the project.
It's ironic that a non-free-market country like China is all in favor of free market capitalism and helping its neighbors and allies, and then we have an ObamAmerica that no longer believes in free-market capitalism and certainly won't build a pipeline that helps it neighbor and ally.

It Wasn't The Koch Brothers

Why Cape Wind failed -- the Boston Globe is reporting:
In the end it was about money and politics, as are so many things in Massachusetts. But it was not Koch cash or Kennedy pique that may have killed a commercial offshore wind plant in Nantucket Sound. It was the hubris of Cape Wind’s developers themselves.
Almost 14 years after Cape Wind Associates unveiled plans to erect 130 wind turbines across 24 square miles of pristine Horseshoe Shoal, Jim Gordon and his investors seem to have run out of time, money, and political capital. The decision by NStar and National Grid to walk away after Cape Wind missed a December 31 contract deadline appears to leave Cape Wind “dead in the water,” as Gordon’s nemesis, Audra Parker of the Alliance to Protect Nantucket Sound, so poetically put it.
Gordon blamed the collapse of what would have been the first offshore wind facility in the United States on litigious obstructionists financed by Bill Koch, the conservative scion of his family’s oil refining fortune, and other wealthy property owners protective of their ocean views. Then, without apparent irony, he promptly lashed out at the utilities that abandoned him, essentially claiming the relentless legal battle he has been whining about for more than a decade was an unanticipated disaster akin to an act of God.
I agree completely. I heard Jim Gordon speak to a small Harvard University MBA class a few years back. His presentation was well-balanced, calm, but when a student called him on the economics of the program, it was clear he was an emperor with no clothes.

The article continues:
The truth is, Gordon simply could not deliver. He never won the lasting support of the people of the Cape and Islands whose homes bear no resemblance to Koch’s Oyster Harbors manse or the Kennedys’ Hyannis Port compound. The Town of Barnstable opposed him. So did a Wampanoag tribe. Among the legal challenges the project has faced was a suit by struggling fishermen from Martha’s Vineyard who argued that the massive wind plant threatened their livelihood. (The fishermen withdrew their lawsuit only when they found themselves unable to pay their lawyers and Cape Wind offered them an undisclosed settlement.)
Fifty-nine percent of respondents to a Cape Cod Times online poll in January pronounced themselves “happy” that Cape Wind looks doomed.
Yet, from the outset, Gordon has cloaked himself in environmental virtue and cast any and all critics as defenders of “dirty energy.” To doubt the merits of this particular project was to oppose renewable energy itself. To object to this specific site was to reject offshore wind power entirely.
To express safety concerns — as regional airports and ferry operators who serve the mainland and the Islands did — was to brand yourself a dupe of the fossil-fuel lobby. To want to protect the aesthetic beauty of Nantucket Sound was to cast your lot with climate change deniers. 
Good article; excellent writing. The Boston Globe has the best writing of all daily newspapers; New York Times also has great writing. 

North Dakota Wells Must Be Drilled/Completed Within A Year -- RBN Energy -- April 10, 2015; Also, Reason For Backlog Of Wells Waiting To Be Fracked


November 24, 2015: a reminder -- the NDIC relaxed the one-year rule on well completions. Back on October 22, 2015, it was announced that the NDIC had given operators an extra year to complete wells. 
Original Post
From RBN Energy:
The prospect of the large trigger tax incentive kicking in on June 1, 2015 is one factor that might explain a recent increase in the number of wells that have been drilled and are awaiting completion in North Dakota (the State defines completion to mean when the first oil is produced through wellhead equipment into tanks).
[At the linked article] the chart in Figure #2 shows well completion data from the NDIC. The red line shows that the number of wells waiting on completion increased from just over 400 in January 2013 to more than 800 in January 2015.  
No doubt that some of these wells have been held up because producers are waiting to complete their wells when the large trigger tax incentive kicks in during June.  
But there is more to it than that. 
Wells can be waiting on completion for a number of other reasons.  These include the absence of infrastructure – as could be the case for North Dakota producers trying to comply with regulations to reduce flaring or needing to set up equipment to condition their crude for rail loading. In a low price environment, producers can also delay well completions as a form of storage – waiting for crude prices to recover. In North Dakota winter weather can also be reason enough to delay completions. The blue line in Figure #2 is the number of completions each month since January 2013 and although there were just 47 completions in January 2015 compared to 183 in December 2014, the numbers do not appear to be outside the normal range so some portion of the lower number of completions in January is likely just usual impact of the North Dakota winter.  
Generally speaking, smaller producers are incented to complete wells sooner rather than later in order to generate cash to repay finance costs so that lengthy completion delays are not common.
In any case, North Dakota drilling permits only last for a year – by which time producers have to drill and complete their wells - meaning that any backlog will only last for a limited time.

Glut To Worsen? -- April 10, 2015

The WSJ is reporting: Iran's strategic petroleum reversal for oil markets -- global oil glut could swell if a deal is reached.
The Strategic Petroleum Reserve is America’s insurance against war with adversaries such as Iran. Now a potential deal between the two countries could end up creating an SPR-sized problem for oil bulls.
If sanctions on Iran are lifted quickly, the extra oil that could find its way to market by the end of 2016 could add up to an amount similar to the SPR’s roughly 691 million barrels.
There may yet be no deal with Iran come the end of June. But if there is, and sanctions are lifted, a big tap will open up in the global oil market. Iran’s output in 2008 was almost 3.9 million barrels a day; last year it was 2.8 million. This week, the U.S. Department of Energy speculated that, with a deal in place, Iran might start selling a stockpile of 30 million barrels or more later this year and raise its output by perhaps 700,000 barrels a day by the end of 2016.
Like ObamaCare, a deal will be reached. Good, bad, or indifferent, President Obama will get the deal done. 

Something tells me Saudi Arabia is watching this very, very closely.

Nation's Largest Refinery Proposal

Reuters is reporting:
Sources have told Reuters Exxon wants a longer pact to avoid work stoppages if it expands the 344,600-barrel-per-day-capacity Beaumont refinery into the nation's largest, possibly reaching 850,000 bpd by the end of the decade.
End of the decade? Only five years from now. Hillary Clinton will just be starting her second term as president. 

Friday -- April 10, 2015; The New MacBook Available Today -- An iPad On Steroids?

Masters: after the first round --
  • Spieth, -8
  • Ernie Els (wow), -6
  • Hoffman, -5
  • Justin Rose, -5
  • Jason Day, -5
  • Russell Henley, -4
  • Sergio Garcia, -4
  • Bill Hass, -3
  • Phil Mickelson, -2
  • Zach Johnson, -1
  • Tom Watson, -1
  • Bubba Watson, -1
  • Rory McIlroy, -1
You have to get to T41 before you find Tiger Woods, +2 (8 behind the leader)
Behind Tiger
  • Jim Furyk
  • Vijay Singh
  • Fred Couples
Dead last, Ben Crenshaw, +19


Active rigs:

Active Rigs93190190209173

UND loses 5 - 3 to Boston University in Frozen Four.

Apple Watch pre-orders begin today.

Qualcomm announces healthy dividend increase.

Ayatollah casts doubt on nuclear accord.
LNG Exports

Shell - BG will create giant operator of LNG ships
Royal Dutch Shell PLC’s planned $70 billion acquisition of BG Group PLC would create a giant operator of liquefied-natural-gas vessels, offering owners that charter the ships more opportunities for lucrative, long-term contracts in an otherwise-depressed shipping industry. 
Shipping is still trying to emerge from the lengthy down cycle that began in 2008, when the economic collapse dealt a blow to world trade. But now, the fall in oil prices and a shift by governments and energy producers to cleaner fuels like LNG is spurring demand for vessels moving such petroleum products. Meanwhile, freight rates for dry-bulk carriers, moving commodities like coal and iron ore, hover at 30-year lows due to excessive tonnage in the water and falling demand from major importers like China and India.

At around $200 million apiece, LNG carriers cost at least three times as much as other types of vessels of similar size. But while the market for ships such as container vessels, tankers and dry-bulk carriers is marred by overcapacity reaching up to 25% above demand, leading to unsustainable freight rates, LNG carriers are usually linked to lucrative contracts that range from five years to more than 10, raking in substantial earnings for their owners.
Energy producers like Shell and BG lease rather than own most of the ships moving their products, avoiding the risk of being stuck with nonperforming assets when the market goes sour. The two partners own a combined 12 LNG carriers and charter about 60. The leases go to a handful of trusted owners, generating around $75,000 a day for a ship that carries 160,000 cubic meters of LNG. The break-even point for such a ship is $50,000 at most.
From Seeking Alpha today:
  • Australia Pacific LNG, the joint venture between ConocoPhillips, Sinopec, and local player Origin Energy, expects to begin loading tankers late in Q3 for sale to market participants as it seeks to place its first six months of production into already oversupplied spot markets.
  • Within that commissioning phase of the project, exports are estimated at two to three cargoes per month, with seven to 10 cargoes planned by the end of the year.
  • Attempting to get ahead of the coming surge from the start-up of Chevron's 15.6M metric tons/year Gorgon LNG plant in Australia in mid-2015 followed by Santos' 7.8M tons/year Gladstone facility, Australia Pacific LNG is said to be gauging interest from various buyers, particularly from India and China.

Global PC shipments fall in first quarter (previously reported; different source). Apple finished third in the U.S. on Gartner’s list and fourth on IDC’s U.S. list.

Apple MacBook review in the WSJ: laptop of the future not ready for the present.
With this machine, available starting Friday, Apple has imagined a laptop reduced to its essentials—a sharp, insanely thin screen, a flattened keyboard panel and a magical new glass trackpad.
Removed from the wire-dependent past, all that remains on its edge are a jack for headphones and a single USB Type-C port.
But as ahead of its time as the MacBook is, there’s a slight problem: You have to use it right now.
Here in 2015, the majority of us still require two or three ports for connecting our hard drives, displays, phones and other devices to our computer—not to mention a dedicated power plug.
But even if you opt for the space gray or silver finishes, you’ll still get the most beautiful computer ever created. Much of that beauty has to do with just how insanely thin and light it is. At two pounds, and measuring just over a half-inch at its thickest, the MacBook feels more like an iPad with a crazy svelte keyboard. The all-metal machine feels quite sturdy, a good thing since you’ll be porting it around a lot... along with its 0.2-pound charging brick.
The MacBook’s real annoyances begin with that single USB Type-C port. Don’t get me wrong, this port itself is amazing. A new type of connector, it has bi-directional power, which means the same port is used to charge the laptop and to charge or connect to other peripherals like monitors or phones. It is also reversible, like the iPhone’s Lightning jack, so no more having to flip around the cord to make sure it plugs in. But living with just one port— especially one that doesn’t work with much yet—is painful.
For all the negative reviews the new MacBook is getting, it's already in short supply -- and it launches today

RBN Energy On North Dakota Bakken -- April 10, 2015

What a treat!

North Dakota Bakken -- RBN Energy.
Data from the North Dakota Industrial Commission (NDIC) indicate that production in January 2015 slowed by 37 Mb/d from record levels over 1.2 MMb/d in December. The number of new well completions also slowed in January – leading to a large backlog of wells drilled and waiting to start producing. Lower production and completions are in part due to producer caution following the crude price crash last year but producers waiting for a North Dakota state tax break and the usual impact of winter weather could also be responsible. Today we describe how new state tax incentives could boost summer output back to record levels.
Even at recent lower crude prices, oil production generates huge economic benefits for those states like North Dakota that are lucky enough to sit on top of prolific shale formations. States generally impose various taxes on oil and gas production at the wellhead and vigorously regulate drilling and production activity. As we described recently, North Dakota has been pro-active in trying to reduce the quantity of gas that is flared at the wellhead. Among many other regulatory requirements, they also require monthly reporting of well production and are involved in downstream regulations such as the rules for the conditioning of crude for rail transportation that came into effect this month (April 2015).
On the revenue side, North Dakota applies two taxes to most of the State’s oil production. The first is a 5% Gross Production Tax (GPT) applied to the gross value of all oil produced except for certain publically held or American Indian holdings. The second is a 6.5% Extraction Tax that is also applied to the gross value of oil produced at the well. Over time, the GPT has been applied consistently but the North Dakota legislature has implemented a couple of incentive schemes to encourage oil production by waiving or reducing the 6.5% extraction tax when crude prices are low. Low crude prices since last Summer led to the first of these incentives – known as the Small Trigger – coming into effect on February 1, 2015 and the second – known as the Large Trigger – looking increasingly likely to be tripped should average crude prices stay below $55/Bbl during April and May of this year.
For newbies: this article will be archived for subscribers only at the source in the not-too-distant future.