Health Care Costs In California -- A Random Update -- May 4, 2015

For the archives. 

Health care of undocumented Californians could cost state taxpayers almost $1 billion annually -- LA Times. But when you read the story, one gets the feeling that a) no one really knows; b) no one really cares -- after all, it's other people's money; and, c) it's the right thing to do.

I thought I had blogged about California's Proposition 65 some time ago, but I can't find the post, so maybe I have not blogged about that proposition. Out in California the proposition has become a joke: everyone now posts the label warning "this establishment" or "this product" contains a cancer-causing agent. Any product made for sale in California now carries that warning label (there may be some exceptions but they are few and far between). I was reminded of that proposition today when I went to have new brake pads placed on my bicycle. Mind you, the brake pads are all of two inches long and about one-half wide, appear to be solid "rubber" or some such thing and are about as likely to promote cancer as the broccoli in my refrigerator. Be that as it may, the Proposition 65 cancer-warning label was on the brake pads. LOL. If Texas legislators had any sense of humor they would pass a law forbidding California Proposition 65 cancer-warning labels to be placed on any product sold in Texas.

Meanwhile another day with no news out of Greece and barely any news out of the Mideast except for this from The Wall Street Journal:

 A surge in car bombings renewed security concerns in the Iraqi capital on Sunday, after Islamic State claimed seven attacks in the past week.

The bombers struck locations across Baghdad, including an open-air market Saturday night in the commercial district of Karrada, where some people had gathered to distribute sweets for a Shiite holy celebration.

At least 20 people were killed and 79 were injured in the string of bombings, according to a security official. Eleven died in Saturday night’s attack alone.

Car-bombings, which were a hallmark of life in Baghdad nearly a decade ago when Islamic State’s predecessor, al Qaeda in Iraq, was ascendant, had become more sporadic in recent years, even as Islamic State took power in parts of the country.

Intensified fighting last week in Ramadi, capital of Anbar Province to the west of Baghdad, led to the flight of 90,000 residents from the area. Officials said that at least 50,000 of those people had come to Baghdad.

Officials and Baghdad residents said they feared the influx of Sunnis fleeing the fighting in Anbar, the current front line in the fight against Islamic State, had provided cover to the bombers to slip past checkpoints.

For those who might have forgotten, ISIS is the JV team -- one we can take out any time we want, at least according to the president (of the United States).

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New Bedford

One of the places we enjoyed while visiting Boston over the past four years was New Bedford. At one time it was the whaling capital of the world. Whale oil was to New Bedford what light sweet crude oil is to Tioga. Down on the riverfront I always had the impression the city had seen much, much better days. From the linked article article:

In the opening chapters of Moby Dick, Herman Melville illustrates what was once the wealthiest city on earth. But the end of the whaling age, and later the city’s massive textile industry, brought depression to New Bedford. The city that lit the world now has one of the highest unemployment rates in the state.

Cape Wind might have changed that. WBUR.org is reporting:

New Bedford was supposed to stage the assembly of Cape Wind turbines, the country’s first large-scale offshore wind farm. To make it happen, the state built a marine commercial terminal in the city. But Cape Wind recently ended its lease contract with New Bedford, leaving the terminal without a tenant.

So far the New Bedford Marine Commerce Terminal has cost taxpayers $113 million. It doesn’t look like much yet, but the ground is fortified to support the heaviest components of a wind turbine.

The "worst" two words in the preceding paragraph: "so far." Does this mean they have spent $113 million just for foundation preparation and pylon formation? Does this mean they plan to continue to go forward with this terminal?

Even without Cape Wind, the terminal will bring new cargo capacity to the port of New Bedford. A study commissioned by the clean energy center estimates in each of its first three years, the terminal will take in a net $622,000 in non-wind revenue.

At that rate it would take nearly two centuries for the terminal to pay for itself. Still, officials in New Bedford insist that offshore wind is not a matter of if, but when.

Much, much more at the linked article.

Five (5) New Permits; Some Incredible IPs -- May 4, 2015

Active rigs:

	5/4/2015	05/04/2014	05/04/2013	05/04/2012	05/04/2011
Active Rigs	84	185	192	211	177

Five (5) new permits --

• Operators: BR (3), OXY USA (2)
• Fields: Corral Creek (Dunn), Manning (Dunn)
• Comments:

Wells coming off confidential list Tuesday:

• 27342, A, CLR, Polk Federal 2-33H, Banks, no test date; cum 3K 3/15;
• 28013, 462, EOG, Parshall 79-21H, Parshall, t11/14; cum 44K 3/15;
• 28688, 2,602, QEP, State 4-16-21BH, Grail, t3/15; cum 39K 3/15;
• 28689, 2,712, QEP, State 3-16-21TH, Grail, t3/15; cum 29K 3/15;
• 28690, 2,725, QEP, State 16-21-17-20LL, Blue Buttes, 4 sections, t3/15; cum 40K 3/15;
• 28922, drl, Slawson, Howo 4-33-4TFH, Big Bend, no production data,
• 29165, drl, Hess, SC-Norma-LE-154-98-0705H-2, Truax, no production data,
• 29339, 1,390, Whiting, Koala 13-31-39-3H3, Poe, t3/15; cum 13K 3/15;
• 29436, drl, XTO, Sorenson 14X-33EXH, Siverston, no production data,
• 29533, 1,964, BR, CCU Main Streeter 24-24TFH, Corral Creek, t3/15; cum 14K 3/15;

For newbies: "LL" is shorthand for "lease line." These wells are being drilled along the lease lines in overlapping units.

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28013, see above, EOG, Parshall 79-21H, Parshall:

Date	Oil Runs	MCF Sold
3-2015	23189	8357
2-2015	1959	849
1-2015	46	0
12-2014	3144	1969
11-2014	14071	6385

 28688, see above, QEP, State 4-16-21BH, Grail:

Date	Oil Runs	MCF Sold
3-2015	37614	37986

 28689, see above, QEP, State 3-16-21TH, Grail:

Date	Oil Runs	MCF Sold
3-2015	28192	29806

 28690, see above, QEP, State 16-21-17-20LL, Blue Buttes:

Date	Oil Runs	MCF Sold
3-2015	39792	43649

29339, see above, Whiting, Koala 13-31-39-3H3, Poe:

Date	Oil Runs	MCF Sold
3-2015	13090	3707

 29533, see above, BR, CCU Main Streeter 24-24TFH, Corral Creek:

Date	Oil Runs	MCF Sold
3-2015	13769	0

MDU Refinery News Hits Seeking Alpha -- May 4, 2015; EOG Earnings Triple Analysts' Forecasts! Building Still Going Up In The Bakken; Emerald's Production Up An Astounding 88%

First greenfield fuels refinery built in U.S. in 40 years begins producing diesel

• MDU Resources and Calumet Specialty Products Partners  have started commercial production of diesel fuel and other products at its 20K bbl/day diesel refinery in North Dakota, the first greenfield fuels refinery built in the U.S. in nearly 40 years.
• Designed to process locally sourced Bakken crude, the refinery is now producing diesel and scheduled to begin commercial fuel sales this month to local customers as the plant ramps up to its full diesel production capacity of up to 7K bbl/day; the refinery also will produce up to 6.5K bbl/day of naphtha for use as a diluent to transport heavy oil by pipeline or as a feedstock in gasoline production.
• MDU says the cost of the plant, initially pegged at $300M, now has been revised to $425M-$435M.

Posted earlier from the press release.

From the 1Q15 earnings transcript regarding the refinery:

With more than two-thirds of North Dakota's diesel fuel currently imported into the state, the refinery is well positioned to meet strong regional demand and additionally local produce supplies of diesel fuel. We expect to begin sales of diesel fuel as the plant ramps up during the month of May.

Construction of the facility began just back in March 26 of 2013 and it is located 4 miles west of Dickinson, North Dakota.

We had more than 800 workers that were on site at peak construction and the plant was constructed with zero loss time accidents over the 2.1 million man hours worked to build the facility. The facility is designed to process some 20,000 barrels per day of locally sourced Bakken crude and the production slate includes up to 7,000 barrels per day of diesel, approximately 6,500 barrels per day of naphtha and about 6,000 barrels per day of atmospheric tower bottoms or ATBs. Naphtha will be used as a diluent to transport heavy oil by pipeline or as a feedstock in natural gas production and ATBs can be used as feedstock for lubricating oils and other refined products as well.

At least in this section, no mention that the project came in a) delayed; and, b) greatly over budget.

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Triple

Regular readers know that this site is not an investment site. Regular readers would never make financial or investment decisions based on what they read here or what they think they might have read here. 

EOG earnings slam analysts' forecasts. The AP is reporting:

EOG on Monday reported a first-quarter loss of $169.7 million, after reporting a profit in the same period a year earlier.

On a per-share basis, the Houston-based company said it had a loss of 31 cents. Earnings, adjusted for non-recurring costs, were 3 cents per share.

The results exceeded Wall Street expectations. The average estimate of 16 analysts surveyed by Zacks Investment Research was for earnings of 1 cent per share.

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MDU

From the press release:

MDU today reported first quarter consolidated adjusted earnings of $22.8 million, or 12 cents per share, compared to $35.6 million, or 19 cents per share for the first quarter of 2014.

On a GAAP basis the company reported a loss of $306.1 million, or $1.57 per share, compared to first quarter 2014 earnings of $56.5 million, or 30 cents per share. GAAP results reflect a $315.3 million after-tax noncash write-down of oil and natural gas properties pertaining to a quarterly ceiling test.

Apparently misses by 7 cents, but I'm not sure about this.

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Emerald Oil

From the press release:

• First quarter production of 424,318 BOE increased 88% as compared to 225,905 BOE in the first quarter of 2014. Daily production averaged 4,715 BOEPD, 14% above the midpoint and 10% above the high end of Emerald's first quarter 2015 guidance range;
• Completed semi-annual borrowing base redetermination resulting in an elected commitment of $200 million;
• Semi-annual redetermination includes an expanded total debt to EBITDA covenant of 5.0x and a new senior secured debt to EBITDA covenant of 2.5x;
• Hedging update: Recently initiated 2015 crude oil floors at $55.00 for 4,000 Bbl/d and 2016 crude oil floors at $60.00 for 3,000 Bbl/d while retaining all upside to future crude oil price increases;

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Building In The Bakken

For the archives. The Dickinson Press is reporting that there is still building going on in the Bakken. Who wudda thought?

Monday, May 4, 2015

We're nearing the last of the video I took while in Williston. I should have taken much more, of course, but there's only so much time, I suppose.

This is a throw-away video, driving past the Baker Hughes complex west of Williston. Baker Hughes has two large buildings on either side of the road.

Off The Radar Scope: America -- Foodbasket To The World -- May 4, 2015

The Billings Gazette is reporting:

The past seven years of high grain prices have been transformative for Montana agriculture. The annual value of Montana’s wheat crop in 2008 crossed $1 billion for just the second time in state history and has only dipped below that high mark once since then, according USDA statistics.

Strong wheat prices were a major contributor to higher sales value, but so was an increase in wheat acres planted. The number of million-bushel grain elevators in Montana has multiplied since 2007 with foreign companies, mostly with Asian-Pacific ties, accounting for much of the construction.

As elevators began to pop up in farm communities like Chester and Kintyre along the Montana Hi-Line, towns’ cooperatives buzzed with speculation about where the wheat would come from to satisfy these new facilities, particularly in Chester, which suddenly had two.

Farmer Gordon Stoner, of Outlook, looked at the high concentration of CRP acres in the counties neighboring the new elevators and concluded that’s where the grain would come from.

“It was very much the impression that the merchants were betting on the come of CRP,” Stoner said. “Quite honestly, they bet correctly.”

Count Stoner among the farmers who took acres out of CRP when grain prices were hot. Now with prices on decline, he’s not sure whether he’s ready to re-enroll, but he’s sure farmers will be thinking about it. Winter wheat prices are in the $4-a-bushel range after being valued twice that just a couple years ago. At $4 or $5 a bushel, some farmers won’t turn a profit, he said. For those who can make a buck, CRP may be attractive again.

But wheat isn’t the only crop Montana farmers plant anymore, as it once was, said Charlie Bumgarner, who farms in Central Montana. Farming practices have improved to the point that it’s possible to manage erosion and still farm, which is what Bumgarner plans to do. 

Much, much more at the link, but from a different perspective.

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Flute Competition

Monday, May 4, 2015

Updates

May 5, 2015: see note regarding Einhorn below. Now this update from Seeking Alpha:

Analyst pokes holes in Einhorn's critique of Pioneer Natural, frackers

• David Einhorn's critical presentation pushed Pioneer Natural Resources 5% lower over the past two days, but Wolfe Research's Paul Sankey is out in defense of PXD and fracking companies generally, in large part because of their “takeover attractiveness."
• "Pioneer is the single most attractive takeover target to Exxon Mobil, and the entire group Einhorn listed as short candidates based on a value-destructive business model, has takeover merits," Sankey writes, adding the potential for a takeout is at least part of why the market is overvaluing PXD.
• Einhorn said investors in PXD and fracking companies overall - he also mentioned CXO, EOG, WLL, and CLR - have been willing to largely ignore their high capital expenditures, but Sankey believes the U.S. energy revolution "is in its every early stages, and efficiency and operational performance continues to grow at high pace,” making long-term projections for both expenditures and production challenging.
• Previous: Pioneer Natural sinks 2.5% as Einhorn slams PXD, other frackers

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Original Post

Active rigs:

	5/4/2015	05/04/2014	05/04/2013	05/04/2012	05/04/2011
Active Rigs	84	185	192	211	177

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This is hyperbole, of course, but if Whiting is a Bakken survivor, one can argue that its purchase of KOG was the reason. See the IPs of wells coming off confidential list today.

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.

Whiting Petroleum Corp. was raised to Overweight from Equal Weight with a price target of $48 (versus a $37.68 close) at Morgan Stanley. Whiting also received positive coverage from other analysts late last week as well.

PXD rom Seeking Alpha:

Pioneer Natural sinks 2.5% as Einhorn slams PXD, other frackers

• Pioneer Natural Resources plunges following negative comments on PXD and other fracker by Greenlight Capital's David Einhorn
• Einhorn calls for shoritng PXD, which he dubs "the motherfracker" of the sector; says fracking companies offer an "almost infinite supply of negative return investment opportunities"

$3 Million / Baltimore Job Through The Stimulus Program -- May 4, 2015

Reuters is reporting:

New orders for U.S. factory goods recorded their biggest increase in eight months in March, boosted by demand for transportation equipment, but the underlying trend remained weak against the backdrop of a strong dollar.

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

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Remember Baltimore?

The teachers are very, very well paid in Baltimore and most of it comes from the Federal government. 

21% of jobs in Baltimore: government. 

A "white Republican" problem?

Fox News is reporting that Baltimore received a "massive" amount of stimulus money:

The city of Baltimore received over $1.8 billion from President Obama's stimulus law, including $467.1 million to invest in education and $26.5 million for crime prevention.

One of Baltimore's central ZIP codes, 21201, received the most stimulus funding in the city, a total of $837,955,866. The amount included funding for 276 awards, and the [government's own] website reports that the spending had created 290 jobs in the fourth quarter in 2013.

For the record, $900 million / 290 jobs works out to ... $3 million / job. I assume most of the jobs were high-paying jobs, like, oh, neurosurgery, nuclear engineering, and US postal carry.

By the way, we now have a name for this new movement: Black Spring. Just as Arab Spring began in Cairo (and ended very badly), Black Spring began in Baltimore, April, 2015 (and will end just as badly). Do not confuse the Baltimore Black Spring with the Cuban Black Spring (2003). In 2003, the Cuban military stomped on Cuban dissidents. In 2015, the Baltimore law enforcement were told to stand down so that the dissidents could destroy 250 businesses, and at last count, almost 150 stolen late-model SUVs.

By the way, don't confuse this with Henry Miller's second novel, Black Spring, published by Obelisk Press in Paris. A history of the Obelisk Press is in my Amazon.com shopping care; it has been there for quite some time -- back when I was in my Anais Nin phase. Can't decide if I want to buy it; maybe the starts have aligned and time to buy.

It's a hard book to buy: the hardcover is $39 and ships in "one to three months." The Apple Watch will ship faster than that.

Favorite Headline So Far Today -- May 4, 2015

"McDonald's to simplify structure, focus on customers.

Yup, that's the AP headline. Isn't that "Business 101"? Focus on the customers. But maybe I'm missing something.

But it gets better. The story continues:

McDonald's is restructuring its units into four groups based on the maturity of its presence in the market:

• the flagship U.S. market, 
• established international markets such as Australia and the United Kingdom, 
• high-growth markets such as China and Russia, and, 
• the rest of the world.

Previously, the business was segmented by geography.

Sounds pretty close to geography. 

It's Monday.

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Active rigs: 

	5/4/2015	05/04/2014	05/04/2013	05/04/2012	05/04/2011
Active Rigs	86	185	192	211	177

RBN Energy: how Gulf Coast infrastructure responding to Bakken crude.

The Phillips/Energy Transfer Nederland to St. James project plans a 30-inch diameter pipeline that should be able to carry over 700 Mb/d of light crude. That would be enough capacity to handle DAPL and ETCOP barrels coming out of the Bakken as well as additional crude coming into Nederland from the Permian and from Cushing via the TransCanada Cushing Marketlink pipeline. But more importantly, the pipeline will offer Bakken producers their first opportunity to ship crude direct from North Dakota to refineries in the Louisiana and Mississippi Gulf Coast region by pipeline. As such the new route should offer shippers lower freight costs than existing rail alternatives. The result will likely be the displacement of significant Bakken volumes being shipped to St. James each day by rail.  

This is a very important article. It will be archived at the source, by the source.

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Post Office News From The Bakken

The Washington Post updates postal service in Williston, North Dakota, the heart of the Bakken. Not a pretty picture. They blame poor pay and yet any number of Williston fast food restaurants are thriving. This has little to do with pay and lots to do with bureaucracy.

By the way, while in Williston last week, I saw a residential postal carrier on her regular route delivering mail at 7:30 p.m.