Liberty Resources To Report Three Nice Bakken Wells Friday -- February 4, 2016

No new permits.

Whiting canceled two (2) permits, both were Kummer permits in McKenzie County.

CLR renewed six permits: they were all Sorenson permits in Mountrail County.
Whiting renewed on permit: an Obrigewitch permit in Stark County.

No producing wells were reported as completed.

Wells coming off the confidential list Friday:

• 29511, 863, Liberty Resources, ND State 158-95-16-9-4MBH, McGregor, t8/15; cum 52K 12/15;
• 29512, 901, Liberty Resources, ND State 158-95-16-9-3TFH, McGregor, t9/15; cum 51K 12/15;
• 29513, 953, Liberty Resources, ND State 158-95-16-9-3MBH, McGregor, t8/15; cum 58K 12/15;
• 29537, SI/NC, Hess, EN-Sorenson B-155-94-3526H-6, Alkali Creek, no production data,
• 29761, SI/NC, XTO, Homer 14X-32E, Grinnel, no production data,
• 31142, SI/NC, XTO, Nordeng 34X-23E, Siverston, no production data,
• 31524, SI/NC, XTO, Stenehjem 31X-28DXA, North Fork, no production data,
• 31573, SI/NC, Statoil, Samson 29-32 XE 1TFH, Banks, no production data,
• 31582, 6 (no typo), Resonance Exploration (ND) LLC, Resonance Ballantyne 13-20D, Westhhope, a Spearfish/Madison well, t9/15; cum 817 bbls 12/15;
• 31668, SI/NC, EOG, Austin 435-3402H, Parshall, no production data,

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31582, see above, Resonance Exploration (ND) LLC, Resonance Ballantyne 13-20D, Westhhope:

Date	Oil Runs	MCF Sold
12-2015	197	0
11-2015	222	0
10-2015	385	0

29513, see above, Liberty Resources, ND State 158-95-16-9-3MBH, McGregor, producing:

Date	Oil Runs	MCF Sold
12-2015	12644	15382
11-2015	10360	849
10-2015	12223	9375
9-2015	9601	5817
8-2015	11970	1677

 29512, see above, Liberty Resources, ND State 158-95-16-9-3TFH, McGregor:

Date	Oil Runs	MCF Sold
12-2015	9933	9004
11-2015	9013	1007
10-2015	13317	8429
9-2015	11558	6746
8-2015	6358	476

 29511, see above, Liberty Resources, ND State 158-95-16-9-4MBH, McGregor:

Date	Oil Runs	MCF Sold
12-2015	6541	4831
11-2015	7963	798
10-2015	16251	9039
9-2015	14407	9165
8-2015	5984	1029

Jobs -- February 4, 2016; John Kemp's Weekly Energy Tweets

Link here.

• last week revised down by 1,000 to 278,000
• most recent week, an increase of 8,000, to 285,000
• four-week moving average increased by 2,000 to 284,750

Analysts' expectations: only to 280,000; in fact, well past that, surges to 285,000 -- coupled with layoffs -- see below -- it's hard not to be concerned about GDP in 2016. 

Meanwhile, CNBC reports "US layoffs surge to 6-month high. I don't know you spin that. But I'm sure Reuters and Bloomberg will find a way.

Layoffs surged in January to the highest levels since July as employers in the retail and energy sectors pulled out the pink slips, according to a private survey out Thursday.

U.S.-based companies announced 75,114 planned job cuts last month, up more than 200 percent from a 15-year low in December, according to global outplacement firm Challenger, Gray & Christmas. That figure was also 42 percent higher from a year ago.

From GDPNow, latest February 1, 2016:

The initial GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 1.2 percent on February 1. The final model nowcast for fourth-quarter real GDP growth was 1.0 percent, 0.3 percentage points above the advance estimate of 0.7 percent released last Friday by the U.S. Bureau of Economic Analysis.

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John Kemp's weekly energy tweets:

• employment in US oil and gas extraction and support activitiesindustry fell by 87,000 between October, 2014, and November, 2015
• US oil and gas industry shed 100,000 jobs in slump
• oil market will remain oversupplied this year, making price recovery unlikely
• COP cuts dividend; OXY holds firm
• difference in inventory levels for crude oil 

• US: 36% higher than 5-year average
• Cushing: 58% higher
• total distillate fuel oil: 16% higher
• total motor gasoline: 8% higher 

• essential reading: the one thing that Saudi Arabia does well is under threat

COP Cuts Dividend -- February 4, 2016

COP cuts dividend by 60%.

The company announced that its board of directors approved a reduction in the company’s quarterly dividend to 25 cents per share, compared with the previous quarterly dividend of 74 cents per share. The dividend is payable on March 1, 2016 to stockholders of record at the close of business on Feb. 16, 2016. 

Other data points:

1. revised 2016 operating plan; CAPEX lowered from $7.7 billion to $6.4 billion
2. production in 2016 flat compared to 2015
3. 4Q15 net loss of $2.78/share vs 4Q14 net loss of 3 cents/share
4. excluding special items, 4Q15 adjusted earnings were 90 cents/share vs 4Q14's 60 cents/share
5. 2015 full year: net loss of $4.4 billion, $3.58 loss for full year 2015
6. 2014 full year: net gain of $6.9 bilion, $5.51 gain for full year 2014

Thursday, February 4, 2016

Active rigs:

	2/4/2016	02/04/2015	02/04/2014	02/04/2013	02/04/2012
Active Rigs	44	140	190	184	202

RBN Energy: highlighting trends in natural gas markets.

CME/NYMEX Henry Hub gas futures prices are currently struggling to stay above $2.00/MMBtu in the face of milder weather and record high production (closing up slightly at $2.038/MMBtu yesterday February 3, 2016).

The market is on edge and at the mercy of daily weather forecast revisions that may signal further downside for prices. At the same time gas demand from power generation could increase in response to lower prices. To help navigate these volatile market conditions, we’ve teamed up with Criterion Research to develop the daily NATGAS Billboard: Natural Gas Outlook report. In today’s blog, we highlight specific features of the report and what they tell us about the market.

Wal-Mart To Pump Its Own Gasoline -- February 4, 2016

From WSJ, the lede:

For most of the past 20 years, Wal-Mart has let another company build and operate gas stations in the parking lots of its stores. But last week, Wal-Mart told Murphy USA that going forward it will run its own filling stations.

Retailer’s shift is effort to eke out more profit; decision is blow for Murphy USA.

More:

For most of the past 20 years, Wal-Mart Stores Inc. has let another company build and operate gas stations in the parking lots of its stores. Now, the retailer has decided it wants to pump its own gasoline.

Last week, Wal-Mart executives told Murphy USA Inc. that going forward it will build and operate its own gas stations. Murphy will continue to run the more than 1,000 locations it has already built near Wal-Mart stores.

Although oil prices have tumbled in the past year, forcing companies like BP PLC to slash thousands of jobs and Exxon Mobil Corp. to halt stock buybacks, falling prices at the pump haven’t hurt gas-station owners. While revenue from fuel sales has fallen, so have fuel expenses. Plus, cheaper gasoline leaves more cash in drivers’ pockets to buy cigarettes, snacks and other high-margin merchandise.

Much, much more at the link. 

Weatherford To Cut 6,000 Jobs -- February 4, 2016

From Reuters/Rigzone, data points:

• to cut 6,000 jobs in 1H16
• had about 56,000 employees at the end of 2014; cut about 14,000 jobs in 2015
• CAPEX for 2016: $300 million; about 56% lower than its 2015 spending

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Venezuela -- Tick, Tick, Tick

Inflation-wrought Venezuela orders bank notes by the planeload. Government relies on massive imports of bills from foreign printing companies to keep economy going. We're watching a country with world's greatest oil reserves collapse in slow motion. Bernie Sanders should take note. Ayn Rand smiles.
 
Article at WSJ. 

Millions of pounds of provisions, stuffed into three-dozen 747 cargo planes, arrived here from countries around the world in recent months to service Venezuela’s crippled economy.

But instead of food and medicine, the planes carried another resource that often runs scarce here: bills of Venezuela’s currency, the bolivar.

The shipments were part of the import of at least five billion bank notes that President Nicolás Maduro’s administration authorized over the latter half of 2015 as the government boosts the supply of the country’s increasingly worthless currency, according to seven people familiar with the deals. 

And the Venezuelan government isn’t finished. In December, the central bank began secret negotiations to order 10 billion more bills, five of these people said, which would effectively double the amount of cash in circulation. That order alone is well above the eight billion notes the U.S. Federal Reserve and the European Central Bank each print annually—dollars and euros that unlike bolivars are used world-wide.

Economists say the purchases could exacerbate Venezuela’s economic meltdown: injecting large numbers of freshly printed notes is likely to stoke inflation, which the International Monetary Fund estimates will this year hit 720%, the world’s highest rate.
Central-bank data show Venezuela in 2015 more than doubled monetary liquidity, a measure used to gauge all money in the economy, including bank deposits.

Printing more bolivars is weakening the currency further. This week, the bolivar broke the psychologically important level of 1,000 per dollar for the first time on the country’s thriving black market.

The country has several official exchange rates, including 6.3 bolivars to the dollar. On Wednesday the country’s trade and investment minister, Jesús Faría, called for an overhaul of currency controls. “It’s evident that the current currency regime has exhausted itself,” he said in an interview.

Venezuela’s 30 million people can’t seem to get cash fast enough, said Steve H. Hanke, an expert on troubled currencies at Johns Hopkins University. “People want cash because they want to get rid of it as fast as they can,” he said.

Much, much more at the link.  

Global Oil Demand Growth Is Slowing Going Into 2016 -- Reason #3 Why I Love To Blog -- February 4, 2016

Over at Rigzone, this article by John Kemp: Global oil demand growth is slowing, going into 2016. A close reading of this article will dovetail nicely with three observations noted on the blog starting last summer, 2015, and maybe even earlier:

• price of diesel compared to gasoline
• gasoline demand in US
• sudden drop in gasoline demand in autumn of 2015

Regular readers who have been following the blog closely will connect the dots. I would love to write more but I can't. The above linked Rigzone article is archived.

Also this article: freight truck orders plummet 48% in January. Orders reach second-lowest level since 2012 as truck companies wary of weak industrial shipping demand.

Orders for new big rigs plunged in January, as trucking companies eyeing weak shipping demand held back from investing in fleets.

Just 18,200 new trucks were ordered last month, down 48% from a year earlier and marking the second-lowest monthly total since 2012. The data dashed equipment makers’ hopes that relatively strong December orders would carry over into the new year.

Instead, trucking companies are canceling expansion plans and postponing trade-ins for their older vehicles. They fear that new trucks will sit idle if lower-than-expected retail sales over the holidays and signs of contraction in the manufacturing sector translate into a sluggish freight market this year.

See also this article on Daimler-Benz, a huge truck manufacturer.

Shares in Daimler AG fell 5% in early trade after the German auto maker that owns the Mercedes-Benz luxury car brand said Thursday growth in earnings and sales this year is likely to be slower than in 2015.

The share fall came despite Daimler posting record sales and strong earnings last year.

The Stuttgart-based automotive company said Mercedes-Benz sold more than two million cars for the first time last year, driven by strong sales of its new C-Class models, luxury compact cars and sport-utility vehicles.

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Cheap Gas Not Turning Into More Discretionary Cash For Americans 

Barron's. 

This has to be particularly disheartening to economists who believed that cheap gasoline was going to spur consumers to consume more. After all, money saved on gasoline is money that can be spent elsewhere. One look at the stock market and we have to conclude that did not happen as consumer stocks fell.

Blindspot: healthcare, ObamaCare not mentioned in the article. 

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Texas, Mexico, And Eagle Ford Shale

An excerpt from a Rigzone article (archived):

Mexico energy agencies currently are defining contractual terms for an upcoming auction of contracts related to shale resources to the private sector, the Texas Railroad Commission said in the press statement.

The sale is expected to include Mexico’s unconventional assets, just south of the Texas-Mexico border. The portion of the Eagle Ford shale that extends into Mexico is part of the Burgos Basin, where technically recoverable shale gas is projected at 343 trillion cubic feet (Tcf), or two-thirds of Mexico’s technically recoverable shale gas resources.

SENER is reviewing key factors that have contributed to the regulatory success of the Texas shale industry. Mexico is estimated to have 545 Tcf of shale natural gas reserves, and unconventional oil reserves of 13 billion barrels, according to a 2015 report by the University of Texas at San Antonio, Universidad Autonoma de Nuevo Leon, Asociacion de Empresarios Mexicanos, and the Mexico Institute of the Woodrow Wilson International Center for Scholars.

While the initial focus on exploration will likely be on conventional onshore, offshore and deepwater, he three centers of learning conclude that Mexico’s shale resources will play an integral role in the success of Mexico’s energy reform. vHowever, significant challenges such as oil prices, contract terms offered by Mexico’s government, social license issues and infrastructure must be addressed before shale development can move forward.

The unprecedented expansion of the Eagle Ford not only helped boost U.S. oil production, but transformed South Texas, creating jobs and economic activity in the region. In November 2014, Eagle Ford production crossed the one billion barrel mark for crude and condensate production.

The current low oil price environment has prompted cutbacks in activity in the Eagle Ford and other shale plays. Reuters reported last month that February production from the Eagle Ford shale was expected to fall 72,000 barrels of oil per day.