Thursday, July 30, 2015

Saudi Arabia Begins Buying New Patriot Missiles From The US -- July 30, 2015

This is where  I track Mideast geo-politics in light of the slump in oil prices which I date from October, 2014.

The Weekly Standard reports that Saudi Arabia is requesting more missiles from the US:
Just two weeks after Western nations and Tehran struck a deal to limit Iran’s nuclear program, the Pentagon says Saudi Arabia wants to buy 600 new Patriot missile interceptors.
This “$5 billion-plus purchase is likely just the first of many more as America’s Middle Eastern allies arm themselves in response to the nuclear deal, which would lift Iran’s conventional-arms embargo sanctions in five years and sanctions on long-range missile projects in eight.”
Turkey, meanwhile, is shopping for its antimissile defenses in China.
So one immediate consequence of the deal is … an arms race.
Prior to all this, Saudi's budget was based on "$100-oil." Now that the US is no longer responsible for Saudi's security (the Obama Doctrine), something tells me that Saudi is about ready to quit giving away its oil for $50/bbl. 

XTO Donates $5 Million For Affordable Housing For Teachers, Police, In Three Bakken Communities

The Dickinson Press is reporting:
XTO Energy announced Monday a $5 million donation that will help provide affordable housing for teachers, police and other essential personnel in three of the state’s busiest oil communities.  

The oil company’s contribution to North Dakota’s Housing Incentive Fund will support four housing projects in Williston, Watford City and Killdeer. Half of the 287 multi-family units are targeted for low-income residents or employees of cities, counties, medical facilities, school districts or law enforcement.
XTO, a subsidiary of ExxonMobil with more than 100 employees in North Dakota, selected which housing projects would receive the funds.
XTO is now the largest contributor to the Housing Incentive Fund, a program created in the 2011 legislative session that provides low-cost financing to developers of affordable multi-family housing. Individuals and businesses who contribute to the fund receive a dollar-for-dollar state income tax credit.
Some readers are waiting for the FPL, one of the largest renewable energy providers in the state, to make a contribution. 

He's Back

Brian Williams will join MSNBC as a breaking news anchor. He will, no doubt, add some credibility to the network.

Two (2) New Permits -- North Dakota -- July 30, 2015

Wells coming off the confidential list Friday:
  • 24158, 954, Whiting, Pronghorn Federal 11-15PH, Park, Three Forks, 40 stages, 5.5 million lbs all sand, t2/15; cum 40K 5/15;
  • 24159, 1,195 Whiting, Pronghorn Federal 14-10PH, Park, Three Forks, 40 stages, 5.3 million lbs all sand, t2/15; cum 42K 5/15;
  • 28524, 315, EOG, Parshall 151-1608H, Parshall, 40 stages, 8 million lbs sand, t2/15; cum 66K 5/15;
  • 29492, drl, XTO, Rita 44X-34G, Tobacco Garden, no production data,
  • 29613, drl, WPX,Olive Mae 7-8-9HX, Van Hook, no production data,
  • 29972, drl/NC, Enerplus, Quilt 149-93-04D-03H, Mandaree, no production data,
  • 30340, drl, XTO, Lundin 14X-33EXF, Siverston, no production data,  
Active rigs:

Active Rigs73191181206183

The number of active rigs has held at exactly "73" for several days now. I wonder if the individual who inputs this data is on vacation?

Two (2) new permits --
  • Operator: SM Energy
  • Fields: Skabo (Divide), Frazier (Divide)
  • Comments:
Seven (7) producing wells completed:
  • 26221, 2,446, BR, Harley 41-2MBH, Blue Buttes, ICO, t6/15; cum --
  • 27518, 1,117, XTO, Guy Federal 24X-35F2, Grinnell, t7/15; cum --
  • 28664, 1,921, MRO, Kerkhoff 14-8H, Murphy Creek, 4 sections, t7/15; cum --
  • 28694, 1,799, MRO, Wehrung 150-99-13-23-5H, South Tobacco Garden, t7/14; cum 91K 5/15;
  • 28695, 1,639, MRO, Hazel 14-8H, Murphy Creek, t7/15; cum --
  • 28711, 2,124, BR, Harley 31-2TFH-R, Blue Buttes, ICO, t7/15; cum --
  • 29210, 2,900, MRO, Tony Lun USA 12-14TH, Reunion Bay, ICO, t6/15; cum -

Natural Gas Fill Rate -- July 30, 2015; "Grid Alert" In Texas Because Wind Energy Not Reaching Nameplate Capacity

NG fill rate (dynamic link): the numbers are wrong, the fill rate adds up to 51, not 52. There are a couple of addition / subtraction errors in the "Producing / Salt / Nonsalt" part of the table - at least two simple arithmetic errors.

In the East Region, stocks were 60 Bcf below the 5-year average following net injections of 42 Bcf.

I assume a lot of natural gas is being used to replace coal, and that there is a lot of demand for air conditioning today.

Note the arithmetic errors in this very simple spreadsheet -- maintained by the same government that predicts dire consequences of global warming 100 years from now. (It's possible these numbers are rounded from raw data resulting in the errors.)

Grid Alert In Texas

By the way, there's a "grid alert" in north Texas today. Folks are being asked to minimize use of electricity today; the grid is having trouble keeping up .... and part of the problem --- the wind is not blowing hard enough to for turbines to reach nameplate capacity. By the time the backup natural gas / coal power plants are ramped up, the "grid alert" will be over.

Thursday, July 20, 2015 -- Part IV

This is not an investment site.

Yet to report:
EEP: some time today
HK: press release here

I'm Confused

COP beats by 3 cents.

This is a screenshot of a Bloomberg headline, but the link is broken is Bloomberg writing their stories before the story is known?):
So, that Bloomberg headline says very clearly that COP reports better-than-expected profit, but then the AP reports that COP reported a loss in 2Q15. 

But it is confusing. The AP says ConocoPhillips lost $179 million in the second quarter, but reported that earnings came to 7 cents/share. Whatever.

From a Seeking Alpha contributor:
ConocoPhillips is among the first of the big oil companies to release second quarter earnings. ConocoPhillips said today it had second quarter revenues of $8.7 billion, which was 41% less than the $14.7 billion the company reported in the second quarter of fiscal 2014.
ConocoPhillips had a 2Q15 net loss of $179 million after squeezing out a profit of $272 million in 1Q15 and $2.1 billion in the year ago quarter. On a per share basis, ConocoPhillips reported a net loss of $0.15 per share, which compares against a profit of $0.22 per share in the previous quarter and a profit of $1.67 per share in 2Q14.
On an adjusted basis, ConocoPhillips pulled in $0.07 per share, which was significantly lower than last year's $1.61 per share, but the company beat the analyst consensus estimate of $0.05 per share.
There Must Be A Story Here

Zacks is reporting:
Anadarko Petroleum Corporation reported a second-quarter 2015 adjusted earnings of 1 cent per share. The Zacks Consensus Estimate was at a loss of 54 cents. This amounted to a positive earnings surprise of 101.9%. In the second quarter of 2014, the company had reported earnings of $1.32 per share.
Okay, Not So Bad

Carbo Ceramics: reports Q2 (Jun) loss of $0.41 per share, excluding $7.6 million, or $0.33 per share, of after-tax costs primarily associated with slowing and idling production, $0.27 better than the Capital IQ Consensus Estimate of ($0.68); revenues fell 58.5% year/year to $73.3 mln vs the $70.37 mln consensus.


Helmerich & Payne beats by $0.13, beats on revs: Reports Q3 (Jun) earnings of $0.27 per share, excluding non-recurring items, $0.13 better than the Capital IQ Consensus Estimate of $0.14; revenues fell 30.7% year/year to $659.7 mln vs the $607.25 mln consensus.


Occidental Petro misses by $0.01, misses on revs : Reports Q2 (Jun) adj. earnings of $0.21 per share, $0.01 worse than the Capital IQ Consensus Estimate of $0.22; revenues fell 32.4% year/year to $3.47 bln vs the $3.59 bln consensus. From the press release:
"Our second quarter production increased to 658,000 BOE per day from last year's 580,000 BOE per day, an increase of 13 percent with 78 percent of the increase from oil. The increase was led by Permian Resources, which delivered a 51 percent increase to 109,000 BOE per day, of which oil production grew by 31,000 barrels a day. Operating costs in the U.S. were down to $13 per BOE from $14.50 in 2014. Our second quarter capital was about $250 million lower than the first quarter and over 25 percent lower than the same period last year. Higher production volumes, improved well performance in the Permian, and higher product prices resulted in an increase of about $400 million in operating cash flow before working capital compared to the first quarter.

Valero beats on earnings. Earnings per share from continuing operations came in at $2.66, above the Zacks Consensus Estimate of $2.41

Wow, Natural Gas Kills Nukes -- July 30, 2015, Part III

In addition to the war on coal, there is also the war on nukes. And in both cases, natural gas seems to be winning. Crain's is reporting:
Looks like Exelon's Quad Cities nuclear plant is a goner come September.
Chris Crane, CEO of the Chicago-based utility giant, which also is the largest nuclear plant operator in the country, made clear on a conference call with analysts today that he doesn't see a way to keep money-losing Quad Cities open in the absence of a state law to charge ratepayers throughout Illinois more to bolster revenues at Exelon's nukes. Exelon says that three of its six Illinois plants are losing money as wholesale power prices remain historically low due in large part to the low cost of natural gas.
Exelon has established September as the time it must decide the future of Quad Cities, and an anticipated revenue windfall for Exelon's nukes courtesy of a regional power-plant auction set for next month almost certainly won't be enough, Crane said.
That auction, conducted by regional grid operator PJM Interconnection to set the price of “capacity” paid by all utility customers to qualifying power plants, is expected to materially hike electricity rates beginning in June 2018, as well as revenues for big power generators like Exelon.
PJM has changed the rules of the auction to virtually ensure that companies will get paid more and energy prices for customers will rise. Exelon's Illinois nukes are in line to see hundreds of millions in additional revenue beginning in mid-2018 from the changes.
There are so many story lines in that article. Much, much more at the link. Times are a'changing. 

A Passing Fad -- July 30, 2015

 From The Los Angeles Times today, a passing fad?

Tesla sold 8,950 cars in the US during the first six months of this year -- holy hot car, Batman -- the goal was to deliver 55,000 cars this year, wasn't it? -- down 1.6% from the same period a year earlier.
Tesla deliveries are falling during a year when auto industry sales have risen 4.4% and are on track to have their best showing since 2001.

Analysts say the Tesla rebate program is basically a cash-back incentive meant to boost business at a time when Tesla could be reaching its saturation point in the luxury car market.

"It signals that the first segment of consumers, the early adopters willing to pay a premium for an electric vehicl, may be coming to an end, or is slwoing down at least."

With regard to the rebate: "Money isn't that big a deal to [the ultra rich]. All the people who really wanted a Tesla have one, and no one else is really interested in buying one."
That is pretty much the definition of a fad.

And that was in The Los Angeles Times.

Tesla is now offering rebates. Previously reported.

In addition, some folks in California wonder why the state gives rebates back to the ultra-rich who buy the luxury cars. Bloomberg is reporting:
California’s incentives to purchase electric vehicles are under attack, as data shows most of the money goes to consumers who earn twice the national average yet collect cash rebates on Tesla Motors Inc.’s luxury models.
“It’s hard for the average Californian to understand why someone buying a $100,000 car should get a (state) rebate,” said California state Senator Ted Gaines, a Republican who has proposed eliminating rebates on cars that cost more than $40,000.
With almost a fifth of California payments applied to Tesla vehicles priced higher than $71,000, its regulators also are drafting rules to ration incentives based on income.
While the state accounts for 40 percent of the U.S. plug-in market and has doled out more incentive cash than any other, such rebates are being scrutinized from Washington to Georgia.
The incentives are intended to rid the roads of gas-guzzling vehicles that spew carbon pollution by making electric cars more more affordable to a broad range of consumers. Surveys indicate that 77 percent of buyers in California earn more than $100,000 a year.
Like the government (GDP) and NOAA (global warming), could Tesla be fudging their data or is it simply analysts misreading the numbers? International Business Times is reporting that Tesla's 2015 "delivery number" included deliveries made in 2014. 
In the few days since Tesla Motors Inc. (TSLA) said it delivered a record number of Model S luxury electric cars in the first three months of the year, investors have added 6.41 percent to the company’s share price. But the record first quarter deliveries includes 1,400 cars that were delayed in December due to unforeseen circumstances.
On Friday, Tesla said it delivered 10,030 cars to its customers in the first three months of the year, a 55 percent increase from the same period last year. But 1,400 of those deliveries could have taken place in December, according to a Feb. 11 letter to shareholders.
“Delivering those cars was physically impossible due to a combination of customers being on vacation, severe winter weather and shipping problems (with actual ships),” the letter signed by CEO Elon Musk and Chief Financial Officer Deepak Ahuja said.
Rolling Over

A great example of a magazine unafraid to take on any subject ... except itself. Rolling Stone declined to be interviewed for this story.

Thursday, July 30, 2015 -- Part I


July 31, 2015: from Reuters --
Next Friday's jobs data is expected to show the U.S. economy created 225,000 new jobs in July, just a tad more than in June, what was deemed a fairly disappointing report, according to economists polled by Reuters. The unemployment rate is expected to hold steady at 5.3 percent.
Later, 12:47 p.m. Central time: remember, the US changed the formula for calculating the GDP because of persistently "low numbers." I can't make this stuff up. 
The way some parts of U.S. gross domestic product are calculated are about to change in the wake of the debate over persistently depressed first-quarter growth.
In a blog post published Friday, the Bureau of Economic Analysis listed a series of alterations it will make in seasonally adjusting data used to calculate economic growth. The changes will be implemented with the release of the initial second-quarter GDP estimate on July 30, the BEA said.
Although the agency adjusts its figures for seasonal variations, growth in any given first quarter still tends to be weaker than in the remaining three, economists have found, a sign there may be some bias in the data. It’s a phenomenon economists call “residual seasonality.”
The Obama administration will give the mainstream media any number they want. Apparently it didn't work as planned: the 1Q15 GDP when revised revealed a slight contraction in the economy. Maybe the revision of the revision hasn't been completed.
Original Post

Yesterday, I wrote: Second, the rush to EVs seems to have peaked, another passing fad. Today, The Los Angeles Times confirms: EVs seem to have peaked, another passing fad. Tesla offering $2.000 credit. Hope to lure luxury car buyers. Really? With a $2,000 credit for a $160,000 car? Okay. The Times notes that Tesla "deliveries" have decreased this past year while overall car sales have increased. Tesla sold 8,950 cars in the US during the first six months of this year -- holy hot car, Batman -- the goal was to deliver 55,000 cars this year, wasn't it? -- down 1.6% from the same period a year earlier.

24/7 Wall Street headline: SolarCity posts big loss, forecasts bigger loss next quarter. Wow.

GDP: 2.4%. The Fed can now increase "the interest rate" to keep the economy from overheating.

But now the AP is reporting that the US economy grew more slowly over the past three years than the Obama administration had previously reported. Anyone surprised? Coming from the Obama administration? LOL.The economy expanded at just a 2 percent annual rate from 2012 through 2014, down from a previous estimate of 2.3 percent. Nearly all the weaker-than-expected growth occurred in 2013, when the government now says the economy expanded just 1.5 percent, much less than its previous 2.2 percent estimate. I guess now that the Obama administration is coming to an end, it's safe to start reporting "the truth." But only some of the truth, I suppose. The worse expansion since WWII was even worse than originally reported.

Reuters reports that jobless claims increase, but "still near" cycle lows. Actually, the number surges, up 12,000. The four-week average fell 3,750 (due to last week's anomalous report) to 274,750. 

Active rigs in North Dakota:

Active Rigs73191181206183

The number of active rigs in North Dakota has remained at 73 for quite some time now; one wonders if the person in charge of updating active rigs is on vacation.

RBN Energy: the physical-financial relationship behind the US natural gas benchmark.
The set up of the physical delivery mechanism at Henry Hub has successfully met all of these criteria. With its many interconnects, ample receipt and delivery capacity, proximity to gas production, access to long-haul takeaway pipes that reach demand markets and trading structures, Henry has stood the test of time over the past 25 years.
Given the importance of the link between the physical and futures market, the challenge for Henry Hub today and going forward is the drastic changes now underway in the physical market. Offshore gas production volumes coming into Henry from the Gulf of Mexico have declined, in turn reducing physical flows at the Hub.
And, Henry is fast turning from a supply point to a demand-driven hub that will redistribute Marcellus/Utica supply to Gulf Coast LNG export terminals and other new demand facilities in the region. To understand these changes and how they could impact the futures contract, we need to understand what truly goes on in the physical market at Henry Hub and how it maintains its liquidity. Next time, we’ll dive into interconnect capacities and pipeline flows through Henry.