Thursday, August 27, 2015

Press Release From Halcon Regarding Financial Status -- August 27, 2015

Link here.

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

For The Granddaughters

It is to some degree pure coincidence that I am reading two science books at the same time. One is biology, the other is chemistry.
  • Vital Question: Energy, Evolution, and the Origins of Complex Life, Nick Lane, c. 2015
  • The Disappearing Spoon: The History of the World From the Periodic Table of the Elements, Sam Kean, c. 2010
Today, while reading Sam Kean, the chemistry book, the author notes that Friedrich Miescher discovered DNA in 1869 and
"self-servingly declared that deoxyribonucleic acid (DNA) would prove improve important in biology. Unfortunately, chemical analysis showed high levels of phosphorous in it. Back then (1869), proteins were considered the only interesting part of biochemistry, and since proteins contain zero phosphorous, DNA was judged a vestige, a molecular appendix."
Then, in a most extraordinary endnote, the author writes:
Interestingly, biologists are slowly coming back around to their original view from Miescher's day that proteins are the be-all and end-all of genetic biology. Genes occupied scientists for decades, and [the interest in genes] will never really go away. But scientists now realize that genes cannot account for the amazing complexity of living beings and that far more is going on. Genomics was important fundamental work, but proteomics is where where there's real money to be made.
That was written (or at least published/copyrighted) back in 2010.

Quick, fast forward to 2015 and we have Nick Lane's book which is  all about the "energy trail" involving proteins and membranes and the complexity of life.

Two books that should be read by high school juniors/seniors planning on majoring in biochemistry or a related field going on to university.

Winds -- Hurrican Erika -- August 27, 2015

Reminder: watch Hurricane Erika winds here (obviously a dynamic link; Hurrican Erika won't be here one month from now.)

I think that's tropical storm Jimena off the west coast of Mexico (Pacific storm).

Break-Even Costs In The Bakken, July 27, 2015, Data -- Posted August 27,2 015

Presentation here.

Go to slide #19.

Note: "P50" = Probable.

In case link breaks:

A Spanish song sung in German by a French singer:

La Paloma Ade, Mireille Mathieu

CLR's Corsican Federal Permits

The Corsican Federal permits; section NENE 15-153-93:
  • 31874, 1,561, CLR Corsican Federal 1-15H, t8/16; cum 62K 12/16;
  • 31875, SI/NC, Corsican Federal 2-15H1,
  • 31876, SI/NC, Corsican Federal 3-15H,
  • 31877, SI/NC, Corsican Federal 4-15H2,
  • 31878, SI/NC, Corsican Federal 5-15H,
  • 31879, SI/NC, Corsican Federal 6-15H1,
  • 31880, SI/NC, Corsican Federal 7-15H,
  • 31881, SI/NC, Corsican Federal 8-15H2,
Earlier Posts
See also this earlier post on the Corsican Federal permits. 

From today's daily activity report, August 27, 2015, CLR has eight Corsican Federal permits:
  • the eight CLR permits are Corsican Federal permits; this corrects the error noted earlier when there were duplicate permit numbers (scout ticket permit numbers and duplicated on the GIS map server with different wells)
This is where the pad is likely to be placed (if I read the daily activity report correctly).

My hunch is the eight wells will run to the west under the river, based on:
  • the name of the wells ("Federal")
  • the north-south configuration of the 8-well pad
  • the fact that Oasis "owns" the section to the north, and Whiting "owns" the section to the east

Twelve (12) New Permits -- North Dakota

Active rigs:

Active Rigs76194186190200

Twelve (12) new permits --
  • Operators: CLR (8), Hess (2), Whiting (2)
  • Fields: Sanish (Mountrail), Robinson Lake (Mountrail), Bell (Stark)
  • Comment: the eight CLR permits are Corsican Federal permits; this corrects the error noted earlier when there were duplicate permit numbers (scout ticket permit numbers and duplicated on the GIS map server with different wells)
Three (3) wells coming off the confidential list Friday:
  • 29448, conf, WPX, Emma Owner 23-14HC, Spotted Horn, no production data,
  • 30535, conf, XTO, Dakota Federal 41X-16D, Haystack Butte, no production data,
  • 30940, SI/NC, BR, CCU Bison Point 34-34MBH, Corral Creek, no production data,
Two (2) producing wells completed:
  • 29161, 1,051, Hess, BB-Chapin A-151-95-0403H-9, Blue Buttes, t8/15; cum 6K 7/15; (3 days)
  • 29162, 1,001, Hess, BB-Chapin A-151-95-0403H-10, Blue Buttes, t8/15; cum --
Statoil renewed three (3) permits: a Michael Owan permit and two Reiten permits, all in Williams County

Nigeria's Bonny Terminal Shut Down -- August 27, 2015

Tweeting now: Shell declares FM on crude oil exports from Bonny terminal in Nigeria's Niger Delta, following shutdown of lines supplying crude to site.

Link here
The SPDC JV on Thursday declared a force majeure on Bonny Light exports effective August 27, 2015 following the shutdown of both the Trans Niger Pipeline (TNP) and Nembe Creek Trunkline (NCTL).
The SPDC spokesman, Precious Okolobo, in a statement, said “A leak was reported on the TNP at Oloma in Rivers State, while the NCTL is shut down for the removal of crude theft points.
“SPDC is working to repair and reopen the two lines as quickly as possible,” he added.
When one does a google search, it appears this is not particularly unusual for this terminal to be shut down. 

To some extent, for Nigeria, this may simply be "business as usual." It may be a force majeure for Shell, but will have little to no effect on the rest of the world. But just in case, I'm going to fill up my car with gasoline later this afternoon.

Stop The Presses -- Best Story Of The Day -- August 27, 2015

I replied immediately after reading this article to the reader who sent me the link:
I'm sitting here in the Soutlake, TX, library and literally laughing out loud. Thank you.
Here's the link.  Here's the story:
Last September (2014), a couple in southern California installed 36 solar panels on their private residence.
But, the local utility company did not allow the couple to turn the panels "on." The panels would have generated 128 percent of what the couple needed -- 28 percent over what SolarCity estimated they needed.

SoCal Edison did not allow the Halls to activate their system because it exceeded state standards for residential energy production.

A rep for SoCal Edison says producing more solar energy than you can use makes you a potential energy retailer, with that title, you become subject to commercial business regulations and you’re eliminated from any homeowner rebates that come with going solar.

So after 11 months, the Halls don’t have a dime’s worth of savings for going solar. The couple cut ties with Solar City, who promised to remove the panels and restore the Hall’s home to its prior condition.
Remember when you were a kid and you took out your magnifying glass and tried to "burn" ants? That's the image I got when reading this story: these folks had a solar panel magnifying glass on their roof; turning it on, and the house heats up to 128% of what is needed.

Do I see a future Homer Simpson episode?

But apparently that wouldn't happen. According to the president of Sol Reliable, a solar energy company, when asked whether extra energy generated by solar panels could be a safety risk, this reply:
"It [the panel] will be generating electricity which most probably will just be wasted," Shetzen said.

August 27, 2015, Part III -- Gasoline Demand Unexpectedly Declines; Up 5.5% Year-Over-Year

Tweeting now: OPEC crude oil exports fall by 470,000 b/d in 4 weeks to Sep 12 to average 23.71 mil b/d, says UK-based analyst Oil Movements.
It would be interesting to know which OPEC countries accounted for the half-million bopd decline. The OPEC crude oil exports is global. I don't know how much OPEC exports globally. However, the US imports about 4 million bopd from OPEC. Let's round that to 4.7 million bopd. 470K / 4,700K = 10%.
Tweeting now: WTI soars almost 6% ($2.20) on short covering.

Natural gas fill rate (dynamic link): 69.
In the East Region, stocks were 59 Bcf below the 5-year average following net injections of 53 Bcf. 
Gasoline demand (dynamic link): down to 9.189 million bopd from last week's 9.705 million bopd. Quite a surprise. I did not expect that. Did the high prices in California ruin the chance for a new record? Quite possibly. The four-week average was down slightly, from 9.604 million bopd to 9.567 million bopd. One year ago, gasoline demand was running around 9.1 million bopd. 500,000 bbls/9.1 million bbls = 5.5% increase year-over-year.

August 27, 2015, Part II


Later, 12:37 p.m. Central Time: more on the 2Q15 GDP from Market Watch:
  • initial government estimate: 2.3%
  • economists expected it would be revised to 3.3%
  • current 2Q15 estimate: 3.7%
  • business investment stronger than expected: 3.2% vs an expected decline of 0.6%
  • business investment: office buildings rose 3.1%, instead of an expected decline of 1.6%
  • consumer spending (major US driver of GDP) revised very slightly upward
  • corporate profits rose 2.4% in 2Q15 after declining almost 6% in 1Q15
  • inflation up slightly
Whether this is "inflated," or Commerce Department massaging the numbers, guys like Warren Buffett can probably confirm / dispute the business investment numbers which seem to be the big reason for the upward GDP. With interest rates where they are now, and talk about future hikes, it's very possible, businesses are building now.

Earlier this week it was announced that US durable orders surged unexpectedly to 2% month-over-month, and that "investment demand was up sharply." The July data is in 3Q15 and did not affect 2Q15 GDP data, but it certainly suggests the trend in 2Q15 was real (unless, of course, one doesn't believe the data at the linked article). From the linked article:
The Commerce Department said Wednesday orders for durable goods — items expected to last at least three years like refrigerators and cars — increased 2 percent in July after a 4.1 percent gain in June.
Although I have trouble imagining a lot of refrigerators moving this time of year, the reports over the past few months of automobile sales have been stellar.

I can't speak for the rest of the country, but development in north Texas is quite incredible. I see it every day. Earlier this week it was reported that house prices are skyrocketing in north Texas, #3 in price acceleration, only superseded by Denver and San Francisco.

This was earlier this year:
Dallas  had the fourth highest price gain the country in February. The largest increases were in Denver, 10 percent, and San Francisco, 9.8 percent.
“Home prices continue to rise and outpace both inflation and wage gains,” S&P’s David M. Blitzer said in the report. “While prices are certainly rebounding, only two cities – Denver and Dallas – have surpassed their housing boom peaks.”
Then, remember this: they say Texas economy, especially Dallas and Houston are oil-economy-dependent. This is all happening when oil industry seems to be at the wrong side of the boom-bust cycle.

With regard to office buildings, besides all the usual stuff, there appears to be an upsurge in medical buildings. My hunch is that ObamaCare is driving urgent care facilities and clinics that can provide same day appointments.

Yesterday on the radio, newscaster -- not advertiser -- said he saw local mortgage rate of the almost-unheard of 2.98%.

Original Post
Jobs, by Bloomberg:
Filings for U.S. jobless benefits declined to a three-week low, indicating persistent demand is encouraging employers to maintain headcounts.Unemployment applications dropped by 6,000 to 271,000.
The four-week average of claims, a less-volatile measure than the weekly figure, rose to 272,500 from 271,500 in the prior week.
The number of people continuing to receive jobless benefits increased by 13,000 to 2.27 million.
So, to recap:
  • today, August 27, 2015: a decline of 6,000
  • last week, August 20, 2015: an increase of 4,000
  • August 13, 2015: an increase of 5,000
  • August 6, 2015: an increase of 3,000
  • July 30, 2015: surges, up 12,000; this "surge," by the way, was glibly reported and glibly blown off by Reuters
2Q15 GPD Surges 3.7%

Economy, by Bloomberg:
The economy grew more than previously estimated in the second quarter (2Q15) on bigger gains in consumer and business spending that show the U.S. expansion got back on track. A surge in inventories also signals such strong growth will be difficult to sustain in the short run. 
Gross domestic product, the value of all goods and services produced, rose at a 3.7 percent annualized rate, exceeding all estimates of economists surveyed by Bloomberg and up from the 2.3 percent the Commerce Department reported last month.
This is very, very interesting. Very interesting. Combine this with the China story and one might be able to connect the dots.

So, how's 3Q15 doing? From August 26, 2015: The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2015 was 1.4 percent on August 26, up from 1.3 percent on August 18. The forecast for real GDP growth increased 0.1 percentage point to 1.4 percent after this morning's advance report on durable goods from the Census Bureau. The report boosted the model's forecast for equipment spending in the third quarter from 7.7 percent to 8.9 percent, and led to a slight improvement in the contribution of real inventory investment to third-quarter GDP growth.

Oil Prices Surge 4.5%

Oil prices, by Reuters:
Oil prices jumped more than 4.5 percent on Thursday after a rally in equity markets and an unexpected fall in U.S. crude inventories, but worries over the Chinese economy and a global oil glut kept the outlook uncertain.

Tesla Model S Sets Distance Record: 453 Miles On A Single Charge

Forbes is reporting:
Beginning their video with the boast that they “aim to set the world record” for the most distance traveled on a single charge, two Norwegians claimed to have pulled it off in a Model S from Tesla. 
They racked up 728.7 kilometers, or 452.8 miles, during the trip that began and ended at a Supercharger in Rødekro, Denmark.
The P85D that they drove has an EPA estimated range of 253 miles.
It wasn’t a cinch.  At one point the driver says “I’m sweating like a pig” because air conditioning is a no-no when you’re trying to set a world record. And at another point, a driver exclaims that they had been “overtaken by a truck again.” That’s because driving fast is another no-no.
Commonly referred to as hypermiling, the average speed was a snail-like 39 kph or about 24 mph. And the fact that during most of the trip they had “almost no elevation” helped a lot too.  The total driving time was 18 hours and 40 minutes.
Okay, so let's re-cap:
  • flat terrain (they would have gone further had they started at the top of the Alps and coasted to the Mediterranean Sea)
  • no air conditioning (that works great for Californians, about the only folks in the US who buy the Tesla)
  • 253 miles in 20 hours. It doesn't say whether they stopped for breaks or not, so we will simply round the 18.70 hours to 20 hours. At that speed, it would take all day (9 hours) to get from Williston to Bismarck; slightly longer with a break in Minot to visit the zoo)
  • at 24 mph on 35E north of Dallas, I would end up in the ditch, getting run off the road by 18-wheelers
  • at 24 mph on I-10 in west Texas, I would be picked up for obstructing traffic
This is a non-story. Leave it to two Norwegians to even think up this crazy stunt.

Consumer Reports gives the Tesla a perfect rating. They actually gave the car a score of 103 on a scale of 0 - 100, but had to dial it back to 100, to make it a "perfect" score, rather than a super-perfect score, I guess.

Slicers And Dicers Not Welcome Everywhere In Iowa

THOnLine/AP is reporting:
Black Hawk County will retain its status of having no industrial wind turbines after county officials rejected a plan to erect three of the structures.
The Board of Adjustment declined a request Tuesday for a special permit and setback variance for Optimum Renewables to install the tall structures in the county.
Opponents of the project said it could possibly harm residents' health, reduce property values and potentially endanger eagles and other wildlife.
Attorney Adam Van Dike for Optimum Renewables says there isn't any evidence to support any negative health issues for humans or livestock. He says the threat to eagles and birds was overstated.
No, the threat to eagles and birds is not overstated. The risk is so bad that the President of the United States actually had to step in and "give" blanket immunity to the wind industry for slicing and dicing migratory birds, otherwise protected by federal law.

Are Americans Finally Tired of Milquetoast Politicians, 
Presidents Apologizing For America's Strengths?

Pollsters dumbfounded by Trump's popularity. Even Biden speaks more favorably of America than Obama, Hillary, Jeb, Bush I, Carter, and all the rest.  I would vote for Biden before Bush III just to see some humor back in the White House. I doubt Biden would bow to any Saudi prince or Japanese shogun. I know he would still be enamored with the folks who don't speak English taking your money at 7-11 convenience stores.

Milquetoast? Speaks softly and gets hit with a big stick.

Huge Blind Spot


August 31, 2015: National Geographic, over the years, has had any number of articles on the butchering of elephants by poaches for ivory. National Geographic has never had a photo-essay on Planned Parenthood collecting baby-parts for medical research. Continuing that remarkable lineage, the cover story for this month's issue of National Geographic is on ... guess what ... butchering elephants for ivory. But no mention of Planned Parenthood's poaching human baby-parts. This is the NPR link to the National Geographic cover story, September, 2015. 

Original Post
From today's Los Angeles Times, this headline story:

In all the years I've been reading the Los Angeles Times, not once have I seen a headline story about the non-grief associated with government-supported agencies selling baby parts.

Same with National Geographic. I think the National Geographic has had a photo-essay on almost every subject, including the holocaust, and the magazine, to the best of my knowledge, has never had a photo essay on sorting through baby parts for medical research. The photos would be very, very colorful and incredibly thought-provoking. And real, unlike the cover photo of the Statue of Liberty up to her waist in ocean water.

Excess Crude Oil Storage Along The Gulf Coast? -- RBN Energy, August 27, 2015

Active rigs:

Active Rigs76194186190200

RBN Energy: Houston area crude oil storage under-utilized despite regional record levels. Archived.
Close analysis of Houston area crude storage indicates it is only 52% utilized today even as regional crude inventories have reached record levels. Meeting refinery operational needs appears to be the main use of area storage – rather than speculative gains from buying today’s cheap oil to store and sell later. Today we continue our analysis of Houston area refinery infrastructure.

Very Long-Term Readers Know My Feelings On Flaring

The Bismarck Tribune reports that a proposed delay of the flaring rules in North Dakota spurs debate. Well, duh.
A decision to push back a Jan. 1 benchmark for the reduction of natural gas flaring was delayed Wednesday by the North Dakota Industrial Commission.
Lynn Helms, director of the North Dakota Department of Mineral Resources, cited industry concerns over being able to meet the 15 percent target as part of regulations put in place by the commission just over a year ago. His recommendation called for extending the benchmark to Oct. 1, 2016. A flaring task force that includes industry officials had asked for a delay of two years.
The three-member commission will consider the matter at its Sept. 17 meeting, with NDIC chairman Gov. Jack Dalrymple saying they need to see documentation from industry laying out a clear case for the need to delay.
My suggestion: just ban drilling in North Dakota until we sort this all out. A lot of operators are probably "walking dead" anyway. Years ago, when breaking up with a close friend, she said we could either pull the band-aid off quickly or pull it off very, very slowly.  Seems like North Dakota is about at that same point in its relationship with the oil and gas industry. It's been real, it's been fun, but it's not been real fun.


Not a bit unexpected as more pipelines come on-line: CBB declining:
The inland US crude-by-barge market was a promising one at the start of 2014. Kirby, the leading operator in the field, announced it would add 29 barges to its inland fleet by the end of 2014, and Kirby CEO David Grzebinski said as late as July of that year that the waterborne transportation markets had “strong fundamentals,” and a “good long-term outlook,” with inland contract pricing on the rise.
But the rapid crude price decline has caused long-term inland crude-by-barge contract prices to stall and renewals to wane.
A second price dive earlier this year pummeled market confidence in an early-2016 crude recovery and sent the contracts into a slide.
On top of all that, barged crude volumes have faced deep cuts since their 2013 peak after a slew of pipeline projects eased midstream congestion.
Obama's Clean Power Plan. This is a heck of a good story; great news. I'm not sure if I will do a stand-alone post on this one or not but this is filled with positive story lines. Put me a good mood all evening. Obama's Clean Power Plan will mean huge opportunities for North Dakota.


Quick! What's the most interesting thing about this graph?

From the EIA:
The domestic market for distributed wind turbines has weakened since the record capacity additions in 2012. Last year's installations of mid-size and small wind turbines were the lowest in a decade. Relatively low electricity prices, competition from other distributed energy sources, and relatively high permitting and other nonmaterial costs have presented challenges to the distributed wind market in the United States.
And for the intermittent energy advocates, wind blows away solar in terms of acceptability across the US.