Wednesday, October 28, 2015

Nearly Half Of All Non-Profit Insurance Plans Created Under ObamaCare In 2011 Will Close -- Loss? $2.4 Billion -- Whatever -- October 28, 2015; Will This Story Have Legs?


July 13, 2016: add Land of Lincoln Health to this list of failed co-ops

November 5, 2015: Health Co-Ops' Failures Spur Finger-Pointing; nonprofits' financial squeeze causes consumers to lose coverage -- WSJ:
From the beginning, the co-ops faced opposition from commercial insurers, while some Republicans opposed programs set up under the law to help offset financial losses by insurers such as co-ops, saying that amounted to a bailout. Actuaries said the co-ops would need $10 billion in funding, but they received $2.4 billion in loans.
That seed money also came with strings. The co-ops couldn’t use federal funds on marketing: One in Colorado drummed up business by having scantily clad people walk around with signs saying “Get Covered.”
Another concern were programs aimed at offsetting insurers’ financial losses on the exchanges. The Obama administration sought to spread out risks through special cost-sharing programs. The first, known as risk adjustment, distributed money from plans with healthier and younger enrollees to plans with older and sicker customers. Here, co-op officials said the formula used to determine payments left the co-ops at a disadvantage compared with larger insurers, in part due to their small market share and scarce data on enrollees’ health status from prior years.
The second setback came from a program known as risk corridors where insurers pay money into a sort of joint savings account based on their estimates of how much they would lose or make. If claims were a lot more than projected, the fund would cover much of the gap.
The hitch: Insurers sought more than they paid in, requesting $2.87 billion to cover losses but receiving only $362 million. All insurers got a fraction of what they requested, but unlike the larger companies, the co-ops and smaller insurers have little cushion to close the gap.
November 5, 2015: "Collapsing ObamaCare Co-OPs Signal Big Trouble to Come," -- The Fiscal Times:
A key piece of the Obama administration’s plan to control the health insurance market is in a state of collapse. With it will go the philosophical underpinning of big government solutions to private-sector problems--and that will pose a core question for voters in the upcoming national elections.

In the original plan for the Affordable Care Act (ACA), better known as Obamacare, Democrats wanted to include a “public option” in the health insurance exchanges – a government-run plan that advocates claimed would guarantee affordable access. To critics and consumers, it looked like an end run to a single-payer health care system.
When it became clear that the public option would be a non-starter, Barack Obama and Democrats in Congress settled on a compromise: health insurance co-ops. These non-profit entities would operate under consumer control, providing an option outside of for-profit insurer plans that would focus entirely on patient care. The ACA provided for a significant amount of backing from the federal government, both in loans and in the so-called “risk corridor” funding that gave the Obama administration the option of covering losses for insurers in the first few years of Obamacare.
That backstop was necessary, advocates insisted, as insurers and especially the co-ops needed time to adjust for unknown utilization patterns, premium pricing, and the proper level of deductibles. The co-ops remained an important component for advocates of the government-controlled system, both as a check on for-profit insurers and as a proof of concept for excluding profit-based coverage entirely at some point.
Eventually, the Obama administration managed to get 23 co-ops in operation by the time of the October 2013 rollout of the Obamacare exchanges. Thanks to the risk corridor and reinsurance provisions within the ACA, those co-ops survived the first two full years of the program, albeit with the same premium pricing issues that other insurers experienced. However, the so-called “cromnibus” bill that resolved the FY2015 budget restricted HHS’ risk-corridor funding only to monies collected for that purpose, rather than through the agency’s budget or other revenue source.
As it turns out, the non-profit co-op model for health insurance turns out to be unsustainable without government subsidies. More than half of the co-ops have been shut down this year, and nine of the 12 have shut down since October 1, either by HHS or by the states in which they operate. Over a billion dollars in loans and and backstop payments have been lost.
The latest failure to be announced was in Michigan, where Consumers Mutual Insurance announced Tuesday that it would not sell insurance for 2016. The failure of these dozen co-ops has left nearly 750,000 consumers in the cold, looking for a plan from a traditional insurer at a higher price.
What happened? Predictably, the financial model that critics warned would lead to a death spiral for insurers hit the co-ops first. “They were low-cost alternatives,” Kaiser Health’s Mary Agnes Carey told PBS anchor Judy Woodruff. “If they were the lower price point, that tended to attract sicker beneficiaries. That would drive up their costs.”
More at the link.
Original Post
Fiscal Times is reporting:
Nearly half of the 23 non-profit insurance plans created under Obamacare in 2011 at a cost of $2.4 billion have announced they will close by the end of the year.
Utah’s Arches Health Plan on Tuesday became the 10th health insurance co-op to announce that it was closing its doors.
The move comes soon after the Obama administration’s decision on Oct. 1 to provide just 12.6 percent of the $2.87 billion that insurers were seeking to offset losses caused by unexpectedly high coverage costs.
That decision -- to decimate funding of a “risk corridor” program designed to reimburse insurers hammered by excessive losses due to a disproportionate share of very sick or elderly enrollees -- is triggering a mass exit of these co-ops from the market.
With a new Affordable Care Act enrollment period beginning on Sunday, many of the co-ops on shaky financial ground must decide before then whether to remain in business or shut their doors.
At least thus far, the Republican-controlled Congress has proven indifferent to their plight and officials in the Department of Health and Human Services have been unwilling to intervene. As a result it is likely that other co-ops will announce they are going out of business by the end of this week. GOP lawmakers say the only solution to the problem is to scrap Obamacare and start over.
Does anybody even care any more? The third paragraph above suggests that even the White House no longer cares.

There seems to be a bit of irony in this story. The GOP, who wanted to defund ObamaCare couldn't do it. But, here, now we have the architect of the eponymous plan, President Barack Obama himself defunding the ObamaCare co-ops. 

Random Update Of A BR Hammerhead Well In Sand Creek -- October 28, 2015


May 25, 2017: production profile is erratic, but nothing of note to report. 

Original Post

Random update of this well:
  • 28779, 1,443, BR, Hammerhead 11-26TFH, Sand Creek, a Weatherford operation, 1280-acre spacing, Three Forks B1, very low gas units, 35 stages, 7.3 million lbs, t6/15; cum 125K 5/17;
Production profile:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

This is not particularly out of the norm for BR wells early on in this area of the Bakken (Sand Creek) but it is interesting enough to follow. The file report noted that "a last minute change in the proposed completion optimization, the 4 1/2" 13.5# liner which we ran to 20915' MD was cemented in place with 590 sxs Class G cmt. This would modify the proposed stimulation to a plug and perf with 35 stages."

Because of limited time, I'm only going to post this much and then come back to this one later if I remember.

But note the production profile.

Note the amount of proppant: over 7 million lbs with fairly typical number of stages for Bakken wells in 2015.

BR Permitted For Re-Entry Of A Sun Notch Well In Sand Creek, The Bakken, North Dakota -- New Poll


October 8, 2016: this is really cool. The well was re-entered, re-fracked (May, 2016), and a new IP provided:
  • ORIGINAL: 20336, re-entry/1,162, BR, Sun Notch 43-32H, Sand Creek, McKenzie County, 20 stages, 2.1 million lbs; target zone, 20-feet; ; t9/11; cum 37K 8/15;
  • UPDATE: 20336, re-entry/2,204, BR, Sun Notch 43-32H-R, Sand Creek, McKenzie County, 32 stages, 4.4 million lbs; target zone, 20-feet; ; t5/16; cum 314K 3/19; a really nice well, though production is now falling off again, 3/19;
Production profile:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Original Post 

A Burlington Resources well was permitted for re-entry:
  • 20336, re-entry/1,162, BR, Sun Notch 43-32H, Sand Creek, McKenzie County, 20 stages, 2.1 million lbs; target zone, 20-feet; ; t9/11; cum 37K 8/15;
  • I track the Sand Creek oil field here;  
  • of interest, this well, #20336, was the very first permit I posted following the original post, back in 2011
  • note: this well is still listed as having no pump; on "F" status 
  • note: this well's status is now LOC;
  • there is nothing in the file report that suggests there was any specific problem with drilling or fracking and yet this is a very, very poor well
  • it was originally fracked with 20 stages; 2.1 million lbs proppant
  • I assume they are going back into re-frack, possibly target a different zone, but I don't think a permit is needed for simple "re-working" (although I don't know)
  • I will track this well at "things to follow up on" 
  • this is getting way in the weeds, but maybe an interesting poll question to come out of this one 
NDIC File No: 20336    
Well Type: OG     Well Status: A     Status Date: 9/18/2011     Wellbore type: Horizontal
Location: NESE 32-153-96     Footages: 1320 FSL 275 FEL
Latitude: 48.027371     Longitude: -103.044524
Current Well Name: SUN NOTCH 43-32H
Elevation(s): 2378 KB   2352 GR   2352 GL     Total Depth: 20457     Field: SAND CREEK
Spud Date(s):  3/13/2011
Completion Data
   Pool: BAKKEN     Perfs: 10889-20457     Comp: 9/18/2011     Status: F     Date: 9/20/2011     Spacing: 2SEC
   Pool: BAKKEN     Status: LOC     Date: 10/28/2015
Cumulative Production Data
   Pool: BAKKEN     Cum Oil: 36676     Cum MCF Gas: 50940     Cum Water: 23839
Production Test Data
   IP Test Date: 9/20/2011     Pool: BAKKEN     IP Oil: 1162     IP MCF: 393     IP Water: 451

Monthly Production Data for past year:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

First six months production:

Fourteen (14) New Permits -- October 28, 2015; EOG With A Proposal For Another 10-Well Megapad

Active rigs:

Active Rigs69191180186200

Wells coming off the confidential list Thursday:
  • 29803, SI/NC, BR, Morgan 14-21MBH, Pershing, no production data,
  • 30435, SI/NC, SM Energy, Anne 13B-19HS, Ambrose, no production data,
A Burlington Resources well was permitted for re-entry:
  • 20336, re-entry/1,162, BR, Sun Notch 43-32H, Sand Creek, McKenzie; t9/11; cum 37K 8/15;
Fourteen (14) new permits --
  • Operators: EOG (10), QEP (4)
  • Fields: Clarks Creek (McKenzie), Grail (McKenzie)
  • Comments: the QEP permits are for a 4-well pad; it looks like the EOG permits are for two neighboring pads -- one with 6 wells, one with 4 wells; close enough to be one large 10-well megapad; see this post for explanation of the graphic below which was posted earlier; all I've added in the graphic is the "new stuff" in green -- the new 10-well megapad proposed by EOG (disclaimer: I could be very, very wrong on all this. There's a lot going on and I don't always get things right the first time, and I can be wrong on even the second or third time. If this stuff is important to you, go to the source):

If a single well is equivalent to a small mom-and-pop convenience store, a 4-well pad is equivalent to the Little America Super Station on I-80 in Wyoming, and a 10-well pad is a small industrial park. A ten-well pad sitting next to another 10-well pad is ... well ... humongous.

How Irrelevant Is The Rig Count? Platts Tells You -- October 28, 2015

Tweeting now, from Platts:
Hess to halve Bakken Shale rig count in 2016 compared with 2015 levels, but oil and gas production to remain relatively flat.
In the Bakken, operators have gone from 240 rigs to 68 rigs and daily production is up slightly from a year ago.

Update On Four CLR Pasadena/Monroe Wells

A reader wrote moments ago that CLR has now completed these wells; the reader expects royalty checks from these four wells soon. Right now, they all show up as DUCs (SI/NC) or on DRL status.

Operators have 30 days after the last day of the month in which the wells were completed to report production or same period after first sales (something like that; I've forgotten the specifics). Bottom line: if the wells were completed sometime in October, the file reports over at the NDIC might not be updated until December.

The wells under discussion, first pad:
  • 23790, SI/NC, CLR, Pasadena 2-2H, Banks, no production data,
  • 23791, SI/NC, CLR, Pasadena 3-2H1,Banks, no production data,
  • 23792, SI/NC, CLR, Monroe 2-2H1, Banks, no production data,
  • 23793, SI/NC, CLR, Monroe 3-2H, Banks, no production data, 
Second pad:
  • 30251, drl, CLR, Monroe 7-2H, Banks, no production data,
  • 30252, drl, CLR, Monroe 9-2H, Banks, no production data,
  • 30253, drl, CLR, Monroe 6-2H, Banks, no production data,
  • 30254, drl, CLR, Monroe 8-2H, Banks,   no production data,
A Note To The Granddaughters

How about this? Can you imagine this?

One of your long-time neighbors visits another neighbor in your neighborhood for the first time. Your long-term neighbor is a meek, mild insurance agent. He just goes next door to meet his neighbor just to be social. The other neighbor is a bachelor, is very friendly; invites him in. The bachelor seems moderately well off, and it appears, based on the conversation, he apparently inherits money on a fairly predictable schedule.

While talking with his bachelor neighbor, your meek, mild insurance agent finds the the other man so creepy and the conversation becomes so strange, that he abruptly leaves, goes home, finds a shotgun he got from his father and has used only once for hunting, and then goes over to shoot and kill that bachelor neighbor.

The insurance agent subsequently disappears, last known to be holed up somewhere on the West Coast.

That's the story line for Edmund Wilson's "The Man Who Shot Snapping Turtles," the first short story in Memoirs of Hecate County. The story is so well written, it seems to be about a man who shot snapping turtles.

Another great ghost story writer was Henry James. 

Poll Results; New Poll -- October 28, 2015

New poll is up: what accounts for the surge in oil prices today? Same choices as before plus two more based on reader feedback from this poll some weeks ago. After several days of falling a percent or two each day, the TV crawler for WTI shows a 6% surge in the price of oil today. [October 31, 2015: Reuters says it is due to another decline in the number of rig counts.]

This poll is closed: will Congress raise the debt limit by November 5, 2015?
  • Yes: 79%
  • No: 21%
It looks like the deal has been done; just a matter of some votes and a signature. But it appears a two-year budget has been agreed to and an agreement to raid the debt ceiling.

A Note to the Granddaughters

The other day I mentioned that this month's issue of Texas Monthly published the top 25 BBQ joints in Texas. One is actually located here in Grapevine: Meat You Anywhere. Today, while dropping my bicycle off at Grapevine Bike Center on Northwest Highway to have the brakes replaced, I saw Meat You Anywhere right across the street. Timing was perfect.

I drove across the road, asked the complimentary valet parking person if I could park myself, he said, "Sure, it's not like I'm going to drag you out of your car." Big smile. Parking was very, very limited. About eight (8) spots for park-your-own and about six (6) spots for valet. But an Atmos Energy crew cab was just pulling out and motioned me to slide into "their" spot.

I expected an "older" feeling to the BBQ even though it was only a year old. It looked new, sort of felt new, but mostly it felt real Texas-genuine. The entire area is about the size of our apartment; in other words, really small, which makes it very intimate. You give your order to the "chef" who is about three feet from the counter. By the time you get up to the cashier to tell him what you ordered, your order is ready.

The one two three words I would use to describe the ambiance: casual. And friendly. And relaxed.  When telling the "chef" what you want, it sort of feels like you are talking to your brother-in-law. Assuming you have a brother-in-law who likes to grill and likes you.

I don't recall if beer was sold, but almost every size and type of soft drink and tea, of course. While paying, I asked when they quit serving breakfast; they serve breakfast all day which means I can get a chorizo and egg taco for $2.50 tomorrow. Today I had a brisket sandwich and a side of cowboy pinto beans. And a Dr Pepper. And a side of jalapeno peppers. Sauces, if necessary, were at the table, along with the requisite roll of Brawny.

Their must have been a dozen men working at Meat You Anywhere -- and again, this is a very small establishment. The "chef" and the cashier were both incredibly friendly: when I ordered my BBQ they probably guessed I was a neophyte, but they never let on. 

The brisket sandwich was generous; more then I -- a senior citizen -- needed. It was incredible. I don't have BBQ often but this may be the best I've had in a long time. Or ever.

On Friday and Saturday nights, the various cuts of meat are sold only by the pound. You cannot order less than a pound of brisket, for example, on Friday or Saturday. A pound of brisket is probably too much for four seniors, but probably not enough for two Texas high school football players and certainly not enough for one Texas college lineman. My wife was not with me today, but I will ask her to join me next time she wants BBQ. I will recommend we share one sandwich -- several meat choices available.

The seating was limited but ample for lunch. Don't go with a 16-member office group. Four is the most I would recommend. There were about 12 tables down the east side of the building (all inside seating). By the time I was leaving, the line stretched out the front door, about eight people. I can't even imagine how busy this place is in the evening, especially on the weekend. Plan on take-out and you won't be disappointed.

I am blown away by the fact that the Texas Monthly folks even found this restaurant. My hunch is they already knew the owner, his reputation, and have been following his movements across the state.

Price? Somewhere between inexpensive and moderate.

Meat You Anywhere will obviously be "my-go-to-place-for-BBQ" in the metrolplex. For sushi, Kobeya in Southlake.

Idle Rambling On Dividends In The Energy Sector -- October 28, 2015

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

I generally don't follow the energy market very closely when it's mostly "bad news." I check in on it for specific reasons and/or if I plan to buy or sell something. But I pretty much ignore the energy market when it turns bearish.

Several weeks ago I started checking the daily dividend announcements compiled by The Wall Street Journal. I was surprised. For all the gloom and doom, certain sub-sectors in the energy sector were actually increasing dividends, and some quite nicely. Today is an example.

Dividend increases for both ETE and ETP were noted. ETE/ETP is a special case perhaps with the recent acquisition of Williams Companies (I don't know where that merger stands, approved, not approved, holding pattern, whatever) but over the past few weeks, there were many other energy companies increasing their dividends. A lot of them were, it seemed, involved in the movement of oil and natural gas, and/or refining crude oil, not necessarily involved in exploration and/or producing.

Just a random note for the archives. And to keep me in a happy mood.


Disclaimer: this is not an investment site. Do not make any investment decisions or financial decisions based on what you read here or think you may have read here. 
When I do the "earnings stuff" I always do it quickly and probably make many errors. Forecasts come from multiple sources and change frequently.  
If this is important to you, go to the source, probably someone like Donald Trump or Paul Krugman for better investment advice.

This from the earnings post 4Q14 (the number in parentheses was the EPS forecast)
  • TSO ($0.31):  $1.13 per share. Earnings, adjusted to account for discontinued operations and non-recurring costs, came to $1.46 per share; increased its quarterly dividend by 40% to 42.5 cents a share.
  • VLO ($1.32):  beats by $0.51, reports revs in-line : Reports Q4 (Dec) earnings of $1.83 per share, $0.51 better than the Capital IQ Consensus Estimate of $1.32; revenues fell 19.1% year/year to $27.86 bln vs the $27.64 bln consensus. 
Fast forward to 3Q15 (this week):
The San Antonio-based company said it had profit of $2.79 per share.
The results surpassed Wall Street expectations. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of $2.60 per share.

Price Of Oil Surges Almost 6% -- I'm Sure The Reason Is The Fundamentals -- But ...

Yup, fundamentals. "Neutral crude oil build":
  • Oil was $2 a barrel higher on Wednesday after the U.S. government reported a crude inventory build squarely within market expectations, extending gains after an earlier rally triggered by what the market described as a big algorithmic trade.
  • The U.S. Energy Information Administration (EIA) said crude stockpiles rose 3.4 million barrels last week, matching analysts' expectations in a Reuters poll.
  • The EIA also reported an inventory drop of 785,000 barrels at the Cushing, Oklahoma, delivery hub for U.S. crude futures.
Does that really convince anyone. The price of crude oil surges almost 6% when crude oil inventories come in exactly as predicted. Something more is going on, folks. Those "algorithmic trades" will get you every time. Sort of like the government's "seasonally adjusted data."


Speaking of pensions, BizJournal is reporting:
Some 8,737 United Parcel Service Inc. retirees could soon see their pension checks cut. The reason – some UPS retirees receive their pensions from the cash-strapped Central States Pension Fund, which covers hundreds of thousands of workers from different companies. 
The fund says it needs to make cuts in order to keep from running out of money.
A former UPS truck driver who retired in 2007 after more than 30 years on the job told CNN his monthly pension check of $2,903 will be cut to $1,452 as soon as July, if the Treasury Department approves the plan.
Altanta-based UPS left the Central States fund in 2008 as a way to save money and provide retirees with better benefits, but took only current workers with it.
UPS says it does not have a contractual agreement to cover UPS employees who had retired and were in the Central States fund prior to 2008.
Summertime sadness:

Summertime Sadness, Lana Del Rey

Jack Kemp's Weekly Fossil Fuel Tweets Coming Up, I Suppose. Stay Tuned -- October 28, 2015

North Dakota farmers happy. Bloomberg is reporting:
Last year, grain handlers like Roger Krueger had no kind words for Warren Buffett’s BNSF Railway Co. After record U.S. harvests, crops piled up all across the Midwest, with few rail cars available to get them to buyers because they were being used to ship more oil and coal.
It’s different now. While farmers are harvesting almost as much this year, the logjams are long gone, said Krueger, a vice president at the South Dakota Wheat Growers Association, a cooperative with 20 loading depots served by BNSF that are used to market all sorts of crops including corn and soybeans.
U.S. rail shipments of grain are the highest in five years, and costs are down from 2014, when delays could last more than two months and compounded the slumping value of crops that had nowhere to go, he said.
The really, really neat thing about this story? Free market capitalism. Can you imagine if the US government had been put in charge to "fix the railroad"? Three letters would say it all. O.M.G. 
Practically none of BNSF’s grain-hauling is behind schedule this year, after the company laid a second set of tracks alongside a single rail line for a total of 90 miles (144 kilometers) west of Minot, North Dakota, and spent more on sidings and new signals to speed trains, said John Miller, chief of the railroad operator’s agriculture unit.
Vintage Santa Fe TV Commercials

Wabash Cannonball, Johnny Cash

Petticoat Junction Theme Song

OXY With Huge Beat; Hess Does Better Than Expected; Hess Will Slash 2016 Spending, Production Plans -- October 28, 2015

OXY adjusted profit beats expectations on cost cuts; swings to quarterly loss on $2.6 billion in charges;
The company, which has operations in Oman, Texas and North Dakota, posted a net loss of $2.61 billion, or $3.42 per share.
Occidental reported a profit of $1.21 billion, or $1.55 per share, in the year-ago quarter.
From The WSJ, on OXY:
Still, Occidental continued to add to its production. In the latest quarter, production climbed 16% to 689,000 barrels of oil equivalent a day.
Overall, Occidental reported a loss of $2.61 billion, or $3.42 a share, compared with a profit of $1.21 billion, or $1.55 a share, a year earlier.
The latest quarter’s results included about $3.4 billion in asset impairment charges.
Core earnings were 3 cents a share, while analysts polled by Thomson Reuters had forecast a loss of a penny a share.
Hess does better than expected; still reports a loss:
The New York-based company said it had a loss of 98 cents per share. Losses, adjusted for non-recurring gains, were $1.03 per share.
The results beat Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for a loss of $1.22 per share.
Other headlines for Hess:  
Valero earnings rise 40% on cheap crude oil; profit rises 30 percent; tops forecast
The San Antonio-based company said it had profit of $2.79 per share.
The results surpassed Wall Street expectations. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of $2.60 per share.
National Oilwell: better than expected: sees weaker 4Q15;
Earnings per share (excluding one-time items) came in at 61 cents, surpassing the Zacks Consensus Estimate of 56 cents.
Norfolk Southern Corp beats expectations; profit falls 19% on weak coal;
Norfolk Southern's third-quarter profit fell 19 percent as the railroad hauled 3 percent less freight and restructured some of its operations in response to slowing traffic.
The Norfolk, Virginia, railroad earned $452 million, or $1.49 per share, in the quarter. That's down from $559 million, or $1.79 per share.
Statoil, state-controlled; posted a net loss of $330 million compared with a loss of
$550 million same quarter one year earlier.

Whiting Petroleum, forecast a loss of 25 cents; press release here; a loss of 17 cents; prior to adjustment, a loss of $9.14 vs a gain of $1.32 same quarter last year; Whiting writes off $2.57 billion in assets, including its KOG assets;

Williams Companies, forecast 22 cents; press release here; meets at 22 cents, vs 21 cents same quarter one year ago;

QEP, forecast a loss of 10 cents; press release here; beats; continuing operations, 12 cents; EPS adjusted one cent;

MUR: beats by 20 cents; press release here

TSO: beats by 8 cents; press release here;

Disclaimer: the usual disclaimer applies. 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. I invest in only two or three of all the companies listed on this post today and have no plans to do any trading in any of the companies listed in the near future. As if it would matter anyway. But there you have it.

Shell Makes Second Major Strategic Change In As Many Months

Bloomberg/Rigzone is reporting:
Royal Dutch Shell Plc made its second major strategic change in as many months, announcing it will take a $2 billion charge as it shelves an oil-sands project in Alberta after walking away from an Arctic drilling program.
Shell is halting work on the 80,000 barrel-a-day Carmon Creek drilling development after deciding the project couldn’t compete in its portfolio. The charge will be recorded in third-quarter earnings results.
The company last month abandoned drilling offshore Alaska indefinitely after it failed to find enough oil or gas in the Chukchi Sea. Earlier this year, Shell withdrew an application to develop the Pierre River oil-sands mine in northern Alberta.
Carmon Creek, announced October 31, 2013: Royal Dutch Shell (Shell) announced its decision to proceed with its Carmon Creek project in Alberta, Canada, expected to produce up to 80,000 barrels of oil per day (bpd). Carmon Creek is a thermal in situ project that is 100 per cent Shell owned and will be part of the company’s broader production, refining and marketing business across the full value chain in North America.

The other day there was a Seeking Alpha contribution suggesting Big Oil was in cahoots with Saudi Arabia to destroy the frackers. I always maintained that western Canadian oil sands would go first.

Co-Generation: CA, TX, LA, And ND Lead The Way -- October 28, 2015

FuelFix is reporting:
The nation’s power grid is changing more rapidly than ever and municipalities, communities and businesses are turning more to greener sources of distributed power with electricity produced where it is consumed.
The Pew Charitable Trusts’ “Distributed Generation: Cleaner, Cheaper, Stronger” highlights the growth of wind and solar power, but also makes the case for lesser-known power sources like combined heat and power and waste heat to power
California and Texas are primed to lead the way.
Combined heat and power, or cogeneration, involves generating electricity while recovering otherwise wasted thermal energy to produce additional power. Waste heat to power, or WHP, is the process of capturing discarded heat from an existing industrial process and using that heat to generate power.
Total cogeneration and WHP power capacity in the United States is currently projected to grow by 18.3 gigawatts through 2030, rising from 83.3 gigawatts to 101.6 gigawatts, the report states. California could add 5.4 gigawatts and account for almost one-third of the new capacity, while Texas would add 2.1 gigawatts.
California and Texas are currently the only states with more than 10 gigawatts of cogeneration and WHP power. Louisiana and North Dakota are the only other states with at least 5 gigawatts.
This is all well and good but it seems a lot of this "stuff" was dreamt up when it looked like we were at "Peak Oil" and destined to be dependent on foreign natural gas. Now, they're practically giving natural gas away.

On the other hand, if one looks at cogeneration as one way to get rid of waste, it has one redeeming feature -- something wind does not have.

Air Conditioning For The Indians As More Join The Middle Class

There's a great graphic at the link below.

The EIA reports:
Energy demand for space cooling is growing rapidly in India and around the world, driven by rising incomes and a natural preference for certain ambient air temperatures.
Cooling degree days (CDD) measure temperatures compared with a specific temperature or comfort level and are often used to measure potential weather-related energy consumption.
Four large cities in India are much larger than Los Angeles, California, and they also have more cooling degree days than Miami, Florida, one of the hottest metropolitan areas in the United States.
Currently, India has a relatively low penetration of air conditioning, while the United States is a much more saturated market. The latest data show that 87% of U.S. households have air-conditioning equipment. [320 million x 0.87 = 280 million.]
Similar data for India show just 2% of Indian households have air conditioning. [1.3 billion x 0.02 = 26 million.]
However, air conditioners are among the most prevalent purchases for the growing Indian middle class, with air conditioner sales increasing by 20% annually in recent years. About 3.3 million air conditioners were sold in India during the 2013-14 fiscal year, adding to the 25 million total units in the country.
Greater adoption of air conditioning has implications for electricity demand and reliability. During the summer of 2012, India's power generation was insufficient to meet electricity demand, leading to residential electricity service being cut off for 16 hours a day in some areas of the country and to a large-scale blackout affecting nearly 600 million people
In 2015, India experienced an intense and sustained heat wave, setting records in many parts of the country. For two weeks at the end of May, average temperatures for the country registered nearly 10 degrees Fahrenheit above historical norms, with heat indexes in Mumbai barely falling below 100 degrees Fahrenheit at night.
Got coal?

Wednesday, October 28, 2015

Active rigs:

Active Rigs68191180186200

RBN Energy: Opening Up Mexico’s LPG Market.
U.S.-based companies soon may have expanded opportunities in Mexico’s liquefied petroleum gas market—not just in supplying LPG from U.S. natural gas processing complexes and oil refineries but in storing and delivering the propane/butane mix to customers. The emerging opportunities are tied largely to Mexico’s efforts to open up and deregulate its energy sector, whose LPG sub-sector has long been dominated by the government-owned Petroleos Mexicanos and hamstrung by LPG price controls. Today, we conclude our series on propane/butane supply, demand and infrastructure South of the Border.
LPG (mostly propane but including some butane, two members of the natural gas liquids – NGL – family) is relatively inexpensive—at least it is right now—but delivering it to market isn’t easy. LPG has a low boiling point (somewhere between 30 degrees Fahrenheit and -43 degrees F, depending on the propane/butane mix), and it has to be kept under pressure to remain a liquid for cost-effective transportation. That means delivering LPG in pressurized pipelines, ships, railcars and/or trucks, and ultimately (when delivered to residential and small commercial customers) by truck-mounted hoses into mounted or buried tanks or by hand in small, pressurized tanks similar to those attached to millions of U.S. barbecue grills. Delivering LPG in Mexico can be particularly challenging; LPG pipeline infrastructure there is modest (at best), and the common use of LPG for cooking and heating--even in many major metropolitan areas—means the retail truck supply chain is extensive.

First Titan Corp -- the ticker symbol gives you some idea of the company -- OTCBB: FTTN released a press release in which it mentioned the Bakken:
LAS VEGAS--(BUSINESS WIRE)--First Titan Corp. (OTCBB: FTTN), fresh off signing a letter of intent (LOI) for a West Texas property, has indicated it may be interested in pursuing additional oil and gas leases in North Dakota’s famous Bakken Shale region in the wake of Occidental Petroleum’s fire sale there earlier this month.

FTTN continues to identify promising acquisition targets and, as mentioned above, recently signed an LOI for a property in the Cline Shale region of Texas. The company has also attended industry conventions to build its network of contacts and lay the groundwork for potential future deals and partnerships.

FTTN is also currently pursuing opportunities in Mexico and in enhanced oil recovery.
The by-line (Las Vegas) says it all.