Thursday, April 14, 2016

Trinity Containers In West Fargo To Permanently Close; Completed Long Term Order For Intermittent, Unreliable Energy Towers - April 14, 2016

Earlier today I mentioned that it appeared that intermittent, unreliable energy projects were pretty much coming to an end. The Dickinson Press is reporting one of the early casualties: Trinity Containers in West Fargo.
Trinity Containers in West Fargo plans to permanently close its manufacturing plant, laying off about 91 employees.
In an email to Mayor Rich Mattern, a company official said the company, Trinity Tank Car Inc. would shut down starting June 12 and the closing would be complete by July 22.
In January 2015, the company announced that it was reducing its workforce by 37 employees to about 84. The company said it took the step because it recently completed a long-term order for wind tower structures.

You Decide, Unfair And Unbalanced -- April 14, 2016

Yahoo!Finance says: America wasn’t quite as great as Donald Trump thinks it was.

The market says:

Not as great as The Donald thinks it was? It was even better than "great." It was "indescribably great" partly because of music like this, the #1 song in 1983, the year I first started investing:

Every Breath You Take, The Police

Oasis To Report Four (4) Nice Wells Friday; Whiting Has Another Huge Flatland Federal Well; Two More DUCs -- April 14, 2016

Active rigs:

Active Rigs3091188186206

Six (6) new permits:
  • Operator: Sinclair
  • Field: Lone Butte (McKenzie)
  • Comments:
Two permits renewed:
  • Hess (2), two SC-Mari permits in Williams County
Eight (8) wells coming off the confidential list Friday:
  • 29499, 1,081, Oasis, Brier 5200 43-22 12T, Camp, ICO, 46 stages, 11.8 million lbs, t12/15; cum 55K 2/16;
  • 29500, 1,618, Oasis, Brier 5200 42-22 11T2, Camp, ICO, 1600 acres, second bench, 46 stages, 4.8 million lbs, t12/15; cum 63K 2/16; only 23 days in February;
  • 29501, 2,158, Oasis, Brier 5200, 42-22 10B, Camp, ICO, t11/15, 46 stages, 5.1 million lbs; cum 92k 2/16; only 20 days in 2/16;
  • 29502, 1,644, Oasis, Brier 5200, 42-22 9T, Camp, ICO, first bench, t11/15; cum 83K 2/16; only 26 days in 2/16;
  • 30226, SI/NC, BR, Old Hickory 42-32TFH, Sand Creek, no production data,
  • 30687, 1,841, Whiting, Flatland Federal 11-4-2H, Twin Valley, 31 stages, 4.2 million lbs, t10/15; cum 103K 2/16; only 24 days in 2/16;
  • 30950, drl, EOG, Van Hook 71-1411H, Parshall, no production data,
  • 32032, SI/NC, Hess, EN-Pederson-LW-154-94-0408H-8, Alkali Creek, no production data,

30687, see above, Whiting, Flatland Federal 11-4-2H, Twin Valley:

DateOil RunsMCF Sold

29502, see above, Oasis, Brier 5200, 42-22 9T,  Camp,:

DateOil RunsMCF Sold

 29501, see above, Oasis, Brier 5200, 42-22 10B, Camp:

DateOil RunsMCF Sold

29500, see above, Oasis, Brier 5200 42-22 11T2, Camp:

DateOil RunsMCF Sold

29499, see above, Oasis, Brier 5200 43-22 12T, Camp:

DateOil RunsMCF Sold

Reason #287 Why I Love To Blog - April 14, 2016

This is just so incredibly cool and why I love to blog. Just a few hours ago in a meandering note, I noted that it will be hard for Congress to end ObamaCare. I wrote:
ObamaCare has now become a central part of the US healthcare industry; it's like six years old. People are finally starting to get the hang of it. Businesses are finally learning to cope with it (changing hiring practices, changing hours of employment). The healthcare industry is coping with it (United Health, the nation's largest insurer, is "pulling out"). To abruptly end ObamaCare would completely disrupt the status quo. I assume a lot of members of Congress are benefiting from the program.
I could have added that corporations are moving their retirees off their health-care programs; I've talked about that before.

Now Reuters writes, just five hours ago, employer health benefits for US retirees keep declining. Corporations are moving retirees off their company-sponsored plans, giving them some cash instead and moving them to the ObamaCare exchanges. GE, who just announced they are moving from Connecticut to Boston is doing just that:
The latest poster child for this type of change is General Electric Co, which disclosed in its annual report for 2015 that it is saving $3.3 billion by sending many of its retirees into insurance exchanges with a subsidy to purchase coverage. The changes were effective on January 1, 2016.
GE's move has prompted two lawsuits. One was by salaried workers claiming that the company broke promises it made to continue coverage and that it violated the Employee Retirement Income Security Act. The second suit was filed by a coalition of unions representing GE workers, and it claims that the change violates collective bargaining agreements. In the first case, a judge already has denied a GE motion for dismissal, but the company is also seeking dismissal of the case brought by the unions.
My hunch is GE will lose this particular battle, but will eventually win the war. 

More from the article:
A growing number of U.S. employers are capping their risk of rising health insurance costs by sending retirees into private exchanges to buy coverage - often with little advance warning.
Two-thirds (67%) of employers provided retiree health coverage as recently as 1988, according to the Kaiser Family Foundation. This was usually supplemental coverage to pay for prescription drugs, cap out-of-pocket expenses or to cover Medicare's deductibles and co-pays.
By last year, that number had dwindled to just 23 percent.

US Corn Imports Surge -- April 14, 2016

This is pretty cool. What are the US railroads doing with all that excess capacity now that CBR is declining? The answer: apparently not shipping corn. The Wall Street Journal is reporting: corn imports surge in the US, despite record harvests at home. Moves in currencies, shipping fees, and railroad rates mean bringing in animal feed can be cheaper than getting it from the Midwest.
There is something unusual going on in the U.S. corn market.
Even as record harvests have left the U.S. awash in corn, imports of the crucial animal feed are surging. It is happening because moves in currencies, ocean shipping fees and railroad rates have combined to produce an unexpected result: Bringing in corn from places like Brazil and Argentina can be cheaper for poultry and livestock producers in the U.S. Southeast than buying it from the Midwest.
Wade Byrd sees the phenomenon in his own backyard. Increasingly, the truckloads of grain that rumble past his Clarkton, N.C., farm to nearby hog producers are carrying corn from thousands of miles away in South America rather than U.S. operations like his.
Imports remain a very small part of the market in the U.S., the world’s largest exporter of corn. Still, the notable surge is a telling indicator of how the commodity bust and strong dollar have distorted prevailing patterns of commerce.
The U.S. Agriculture Department projected Tuesday that buyers would import 50 million bushels of the grain this season, up 56% from last season, even as U.S. bins swell with grain. U.S. buyers haven’t imported that much corn since 2012-2013, when a severe drought slashed domestic production, sending futures prices to all-time highs.
The rise in imports follows a multiyear boom in American agriculture during which Midwestern farmers ramped up production to satisfy burgeoning demand from a growing biofuels industry at home and increasingly wealthy populations in emerging markets.
The rest of the world followed suit. Brazil, the second-largest corn exporter behind the U.S., is on track this season to harvest its second-largest corn crop on record, as is Argentina. Exporters in Argentina were offering corn at a roughly 6% discount to U.S. supplies for a period earlier this year, and Brazilian corn was cheaper than its U.S. counterpart for much of last year.
In April, it could cost about $0.80 to $1.50 a bushel to ship corn from west to east in the U.S. by rail, while per-bushel costs to ship corn from South America to the U.S. recently have ranged from about $0.35 to $0.50. 

North Dakota Acreage Still Going For $10,000 / Acre -- April 14, 2016

From a press release:
Forestar Group Inc. today announced that it has entered into two separate agreements with the same buyer to sell the Company’s oil and gas assets in the Bakken/Three Forks formation in North Dakota for nearly $60 million.
In first quarter 2016, Forestar sold 9 producing wells and over 900 net acres in North Dakota for $9.5 million.
The second transaction, expected to close in second quarter 2016 and subject to customary closing conditions, includes over 130 producing wells and nearly 8,100 net acres of leasehold interests for $50 million.
Upon closing the transaction announced today, the Company will have completely exited its oil and gas working interest assets in North Dakota. 
Over at the "NDIC well search" site I see no mention of Forestar as an operator in North Dakota.

  • $9.5 million / 900 net acres: $11,000 / acre
  • $50 million / 8,100 net acres: $6,000 / acre
From the press release:
Forestar is a residential and mixed-use real estate development company. We own directly or through ventures interests in 58 residential and mixed-use projects comprised of approximately 7,000 acres of real estate located in 11 states and 15 markets. We also own approximately 590,000 net acres of oil and gas fee minerals located in Texas, Louisiana, Georgia and Alabama.
In addition, we own interests in various other assets that have been identified as non-core that the company will exit opportunistically over time. Our non-core assets include our investment in oil and gas working interests, about 89,000 acres of undeveloped land, and commercial and income producing properties which consist of one hotel, seven multifamily projects and two multifamily sites. Forestar operates in three business segments: real estate, oil and gas and other natural resources. 

Weekly Energy Tweets And News -- April 14, 2016; Intermittent, Unreliable Energy Pretty Much Comes To A Standstill


Later, 9:31 p.m. Central Time: early casualty of the end of intermittent, unreliable energy projects.
Original Post
It looks like intermittent energy pretty much comes to a standstill going forward -- except for niche plays:


Earlier today it was reported that OPEC forcast non-OPEC production falling faster than predicted, from 700,000 bopd to 730,000 bopd or about a 0.03 percent change. LOL. As soon as I read that, I knew that the price of oil rests on the Chinese and the Indian economy. Right on cue, Bloomberg/Rigzone report: China’s crude imports climbed to a record in the first quarter as higher refining margin encouraged refiners to boost purchases.
The world’s biggest energy user increased inbound shipments to 91.1 million metric tons in the first three months of the year, data from the Beijing-based General Administration of Customs showed on Wednesday. That’s equivalent to about 7.34 million barrels a day, 6 percent higher than the previous quarter and 13 percent up from the same period last year, according to Bloomberg calculations. Imports last month fell about 4 percent from February’s record to 7.71 million barrels a day, the third-highest ever.

The nation’s net oil-product exports jumped to 1.3 million tons in March, the highest in three months, Wednesday’s data show. Refiners are importing more oil to take advantage of local retail fuel prices that are frozen when oil trades below $40 a barrel. The margin for major Chinese refineries to process Oman crude was about $16 a barrel in the first quarter, 68 percent higher than last year’s average, according to ICIS China, a Shanghai-based commodity researcher.

“Low oil prices and healthy margins are supporting imports,” Virendra Chauhan, a Singapore-based analyst at industry consultant Energy Aspects Ltd., said in an e-mail. “The strong imports also reflect demand from the teapot refiners.”

China’s total exports in March jumped the most in a year and declines in imports narrowed, adding to evidence of stabilization in the world’s second-biggest economy. The export rebound may suggest China’s economy fared better than expected in the first quarter, with data due Friday expected to show a 6.7 percent expansion for the period.

A total of 27 independent refiners, known as teapots, have obtained or applied for crude-import quotas, totaling 89.5 million tons as of the end of February, Zhang Liucheng, chairman of China Teapot Alliance, said on March 31.
By the way, let's look at the OPEC forecast for non-OPEC crude oil production -- see if you can spot the decline:

The other weekly energy tweets:
  • US crude oil inventories rose 6.6 million bbls last week to an estimated 537 bbls. It should be noted that storage capacity has been increasing this year, and we are in a state of contango.
  • US crude imports rebounded to 7.9 million b/d last week after slumping to 7.3 million the week before
  • US gasoline stocks adjusted for implied consumption at 25.5 days demand, same as in 2015
  • implied US gasoline consumption remains high averaging 9.4 million b/d over last 4 weeks (+500,000 b/d over 2015)
Compare and Contrast

Compare the top graph with the second graph below:

Shocked! We're Totally Shocked! -- Williston Strip Club -- April 14, 2016

The Williston Herald is reporting:
In a response to a request by Williston’s one remaining strip club, city officials have agreed to review recordings of a January hearing to clear up confusion over whether public discussion on ordinances aimed at shutting down or relocating adult entertainment gave the impression that downtown clubs have a year to decide how to move forward.
Greg Hennessy, a lawyer for Heartbreakers, said employees left the meeting with the understanding that the Main Street club could continue to offer both topless dancing and alcohol for a full year while its owners draft new business plans.
But a February 19 letter from the city announcing that the club had 90 days to either relinquish its liquor license or end exotic dancing came as a shock, Hennessy told commissioners Tuesday night, claiming that the deadline was not mentioned during public discussion of the ordinances.

West Coast Ports On A Roll -- WSJ -- April 14, 2016; Money Laundering

The Wall Street Journal is reporting:
Cargo volumes at the nation’s West Coast ports appear to be making a comeback from a lackluster year in 2015, reporting gains in the first quarter of 2016 and a hopeful improvement on the export side.
At the nation’s largest container port, the Port of Los Angeles, loaded export containers increased 7.6% to 432,092 20-foot equivalent units, a standard measure for container cargo, during the first three months of the year. Loaded import containers were up 8.8% to 1,027,184 TEUs. Empty containers on the export side, which ballooned in 2015, continued the trend, rising 19.4% for January through March in Los Angeles.
Year over year, the month of March saw steep declines compared with March 2015—the result of an unusual surge in container traffic immediately after the West Coast dockworkers’ union and port employers agreed to contract terms in late February of that year after months of protracted negotiations and delays at the ports.
January and February of 2015 were uncommonly slow as the negotiations dragged on, but in the first two months of 2016 much of that traffic recovered.
Another "money laundering" story. PJ Media is reporting:
The Treasury Department is dragging its feet on releasing its findings from an investigation into fraud allegations by solar companies that received cash grants from the government to invest in solar power as part of the president's stimulus bill.
The probe centers on companies and individuals that inflated the value of their investments in order to receive larger grants from the government. Investigators believe the amount of fraud exceeds $1.3 billion -- approximately 2 1/2 times the amount of taxpayer money lost in the Solyndra scandal.
The Treasury Department was supposed to turn over a report on its findings in June of 2015 but has so far failed to inform Congress of the extent of the fraud.
The company? The man? The scam?
In November, Republicans specifically called out SolarCity, a company chaired by billionaire Elon Musk, for being investigated by Treasury and Justice Department officials over allegedly abusing solar subsidies. SolarCity is being investigated for “possible misrepresentations concerned the fair market value of the solar energy systems,” according to an October Securities and Exchange Commission filing.

April 14, 2016 -- Update and IRRs For Eagle Ford Provided By RBN Energy; First Time Jobless Claims Plummet -- The Worse Must Be Behind Us

From the print edition of The Wall Street Journal, page C1: OPEC trims view for oil production:
OPEC forecast yesterday (Wednesday) that a long-expected contraction in non-OPEC oil suply was shaping up to be steeper than expected. In March, it forecast non-OPEC output would fall by 700,000 bopd this year; it now estimates the drop will be 730,000 bopd.
Who are they trying to kid. World production is about 96 million bopd. 30,000 / 96 million = 0.03%. That's not even a rounding error, and yet the story is at the top of the fold, front page, section C.

Earlier this year it was reported that the IEA lost track of 800,000 bopd

Active rigs:

Active Rigs3091188186206

RBN Energy: how the economics of the Eagle Ford vary by location.
IRRs aren’t inputs to an equation, they are the end result of a production economics model. 
Inputs that determine  IRRs include well initial production (IP) rates, decline curves, drilling and completion costs, commodity prices (netbacks), operating costs, royalty rates and other key factors. Usually , producers only drill and complete wells if they believe they can make money—that is, earn a positive IRR (the higher the better).
As you might expect, IRRs for crude oil wells are highly dependent on oil prices. When crude was selling for $100/Bbl, producers could achieve acceptable rates of return across most of the Eagle Ford. As we explain in the Drill Down Report, though, oil prices in the $30-$40/bbl range means that many of these wells—especially wells with IP rates of 400 Bbl/d or less—are unprofitable to drill and complete.
Wells with IP rates of 400 to 600 Bbl/d are most likely either marginally unprofitable or break-even at current prices, and wells with IP rates of 600 to 800 Bbl/d are more likely to be profitable--even at today’s low prices--because of the sheer volume of oil and gas produced during the first year or two of well operation. Wells producing more than 800 Bbl/d, finally, are almost sure to be profitable.
Figure 1 at the link shows the IRRs for each of the 16 Eagle Ford counties in our analysis based on representative input variables (IP rate, decline curve, etc.) for each county and what we call our “Cutback” crude oil price scenario.  This is one of several price scenarios that we used in our analysis of energy markets.  The Cutback Scenario assumes a WTI price at Cushing of $37.50/Bbl in 2016, rising to about $42.50/Bbl in 2017, and to $50/Bbl by 2021.  This is pretty close to where the current CME/NYMEX forward curve gets to in 2021.
Based on those inputs, our model indicates that only three Eagle Ford counties (DeWitt, Karnes and Webb) show positive IRRs and therefore qualify as Good based on our criteria, while six counties show IRRs of between breakeven (0%) and -6%  and fall into the Bad category.
Jobless claims:
The number of Americans filing for unemployment benefits was 253,000 in the week ended April 9th, a decrease of 13,000 from the previous week's revised level of 266,000, and matching March 3rd level, which was the lowest since November 1973. Figures came below market expectations of 270,000, marking the 58th straight week claims are below 300,000, the level associated with a healthy jobs market. Initial Jobless Claims in the United States averaged 359.73 Thousand from 1967 until 2016, reaching an all time high of 695 Thousand in October of 1982 and a record low of 162 Thousand in November of 1968. 
Reuters reports analysts had forecast a rise to 270,000. The four-week moving average of claims fell 1,500 to 265,000 last week.

Meandering On A Thursday Morning -- April 14, 2016

I remain inappropriately optimistic about .... well, about everything .... especially the economy.

Having said that, there certainly seems to be a disconnect between the data and the market. The stock market continues to have incredibly good days. I think the market was up 187 points yesterday, nearing the 18,000 mark. Is that correct?

Note: this is not an investment site. Do not make any investment, financial, travel or relationship plans based on anything you read here or think you may have read here. 

As I mentioned earlier, the market seems completely disconnected from reality. The most recent GDP Now forecast continues to suggest a very, very poor 1Q16 economy:

Latest forecast: 0.3 percent — April 13, 2016

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 0.3 percent on April 13, up from 0.1 percent on April 8. After this morning's retail sales report from the U.S. Bureau of the Census, the forecast for first-quarter real consumer spending growth increased from 1.6 percent to 1.8 percent.

Speaking of disconnects, later today, we'll see the weekly jobs report. That's always a hoot.

From the headlines:
  • JPMorgan's Dimon: "the economy is going strong."
  • Russia's Putin: "Russian economy is on the road to recovery"
I assume one of the reasons for the market's recent moves is because oil companies and oil services companies beaten down so much this past year are recovering based on better oil prices. I don't know; I haven't looked at individual stocks in the last several weeks, except for ATT out of curiosity.

Speaking of which, it would be hard to beat ATT for someone who simply wanted something with little volatility in their portfolio and paying 5%.

The NPR Moment

Some years ago, the NPR folks referred to that "NPR moment" when you are listening to NPR on the car radio but have arrived at your destination just as the segment you were listening to was too interesting to leave. So you stopped your car but instead of getting out, you continue to listen to NPR until the story is finished. That's an "NPR moment." Unlike a "Rush Limbaugh" moment when yu finally turn him off when he repeats himself for the umpteenth time in less than 30 minutes.

I almost had an "NPR moment" yesterday -- but I was still driving so it was not a classic "NPR moment." I caught the end of a story on ObamaCare. I thought I was mishearing something -- this was NPR and it seemed "they" were completely dissing ObamaCare.

But my ears were not deceiving me, as they say. Here's the story, first the screen shot:

The bad news: I honestly don't know what the Federal government can do about ObamaCare.

There are two problems for those folks who want to dismantle ObamaCare.

First, ObamaCare has now become a central part of the US healthcare industry; it's like six years old. People are finally starting to get the hang of it. Businesses are finally learning to cope with it (changing hiring practices, changing hours of employment). The healthcare industry is coping with it (United Health, the nation's largest insurer, is "pulling out"). To abruptly end ObamaCare would completely disrupt the status quo. I assume a lot of members of Congress are benefiting from the program.

Second, Americans won't give up the best parts of the program:
  • entitled after only 35 hours/week employment
  • no pre-existing clause -- which allows for healthy folks (mostly younger folks) to "game the system" and those with significant health care issues not go bankrupt or without care
  • children up to age 26 remain on their parents' health care plan (children between the ages of 18 and 26 are getting a "free ride")
  • no cap on medical expenses (hospitals and doctors must love this as much as the patients; it's the right thing to do for patients, but hospitals and doctors have no incentive to work with patients to bring bills down)
There are probably other pieces of the program that no one wants to give up but those are the ones that stand out in my mind. I reserve the right to add more if I think of more. Thank you.

Now, back to that screenshot. That conclusion / that study was not commissioned by Fox News / Rush Limbaugh or Ted Cruz / Koch Bros or Bill Maher / Rachel Maddow. This study was a joint effort by NPR and Harvard University's School of Public Health. The latter may be simply the most respected school of public health in the galaxy if not the universe. Okay, I'm wrong. It's ranked #2 by the most respected news outlet in the universe, US News & World Report:

And their conclusion, or at least the conclusion of someone who has actually read the report: NPR and Harvard Say: Obamacare Is a Complete Failure.

For Amazon Competitors

I have an old, old iPad -- version 2. Actually it's my wife's but she no longer uses it. I turned my version 1 iPad back to Target with their $100 promotion for old iPads a couple of years ago. I keep the old iPad on my bed stand and check the  news just before going to bed, and check the news again when getting up. The software has never been updated, so it doesn't do a lot, but it does what I need.

This morning, I remembered something I wanted to order from Amazon. I had never ordered from using the iPad, so I was curious. It worked seamlessly. Incredibly seamlessly. It worked as well as my MacBook Air. It was incredible. So, I have an iPad that's ancient; the software has never been updated, and the site works perfectly.

Talk about easy to use: one or two clicks and I was on my way.

And that's why is blowing away the competition.

Notes for the Granddaughters

I continue to read JRR Tolkien, Author of the Century (Tom Shippey), but am gradually coming to an end on Beowulf.

I am just starting to re-read Dan Jones' The War of the Roses: The Fall of the Plantagenets and the Rise of the Tudors. It could be re-sub-titled: how the pool man gave birth to a royal dynasty.

That was a sequel to his book on the Plantagenets which I read a long time ago and probably will re-read after I finish The War of The Roses.

I also am just starting the 2014 anthology -- I guess it's an anthology -- of the sixty columns of NYC Broadway play reviews between 1918 and 1923 by Dorothy Parker. She dropped out of school at age 14 to tend to her dying father (her mother died when Dorothy was 5 years old) before becoming the first (and at the time) the only female drama critic in New York. I bought the book after reading the review at The New York Review of Books and am completely blown away by this incredible book. I will provide some of her quips over the next few weeks. To say the least, she was brilliant.