Before getting started today, perhaps this is
the most important story for the traders on Wall Street: Scotland's court will rule soon on whether the "state" can set a floor on the price of alcohol. There is a push to increase the price of alcohol in Scotland to decrease the amount of alcohol being drunk. I assume Scotch in Scotland could be as cheap as water. I don't know. All I know is that some day I hope to taste test a $19.95 bottle of Speyside scotch vs a $600 bottle of Scotch. If it happens, it may be when our younger daughter finally decides to "put me" in a nursing home.
By the way -- continuing to procrastinate -- for those who missed it -- the Cleveland Cavaliers (James LeBron's team) was/were "schooled" in the "new" NBA way of playing basketball by the Golden State Warriors. For the moment, the only team playing the "new" NBA style of basketball is/are ... the Golden State Warriors. It would have been a huge shame had they faltered against OKC Thunder. I'm not taking anything away from OKC -- they almost did it -- but it's fun to see the Warriors play. Their starters are incredible; their bench may be better? Probably not, but I don't think they have have player that isn't astounding.
In the past 72 hours there have either been a number of stories on India's growth / energy demand, or I'm much more cognizant of the story based on
Al Troner's articles.
I mention "STACK" in one of the notes below. I
track the "STACK" here (at the sidebar at the right).
Devon will sell oil and gas assets for almost $1 billion.
The oil fields are in Texas and Oklahoma and a royalty interest in northern Midland Basin, to undisclosed buyers. The largest transaction was for reserves in East Texas for $525 million. It will also sell its position in the Anadarko Basin's Granite Wash are for $310 million. Devon is also apparently ready to sell its half stake in the Access Pipeline. East Texas assets: producing 22,000
boepd, but only 5% of that was crude; sales generated $10 billion in cash. Proved reserves are about 87 million boe. Even with that the compnay ays it would need to make progress on asset sales before
considering an increase in production.
From
Finance!Yahoo:
- the Dow up almost 100 points, slightly over 17,900; "energy leads as oil rises"
- crude oil up 1.8%, at $49.50
- top story: US stock market is getting closer to a "melt up" -- HSBC
- global governments boosting spending at fastest rate since 2009
- after a story last week that Saudi Aramco lowered prices in Europe, today the report is that SA raised prices in Asia
From
Google Finance: incredible -- nothing of interest
Yahoo!Finance In-Play:
- WPX Energy upsizes & prices 49.5 mln shares of its common stock for total gross proceeds of ~$485 mln (WPX)
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Now, The Bakken
Active rigs:
| 6/6/2016 | 06/06/2015 | 06/06/2014 | 06/06/2013 | 06/06/2012 |
|---|
| Active Rigs | 26 | 82 | 194 | 189 | 215 |
RBN Energy: worth reading today. This is
how the economics work for US crude oil exports on VLCCs to Asia. Archived. From the article:
A number of European refiners, like their U.S. counterparts, have
invested in using heavier, sour (higher-sulfur) grades because these
tend to be cheaper. These refineries are not interested in paying a
premium for the light, sweet barrels coming from the U.S. Where there
is an appetite for the lighter, sweeter crude is in Asia. India is a
big importer of Nigerian grades, which are similar to the U.S. ones. In
China, the government is facing rising social pressure to do something
about heavy pollution in the big cities.
Cleaner transportation fuels
are a priority, but producing those at many of the unsophisticated local
refineries is difficult - unless you are using light, sweet crude.
Taking U.S. crude to these markets is a good fit, except for one
problem: distance.
The fact that it takes two months to sail around
South Africa's Cape of Good Hope and on to China, in itself, is not an
impediment. After all, it takes five weeks to get from the Middle East
Gulf to the Gulf of Mexico, and there is about one Very Large Crude
Carrier (VLCC)--a ship that can carry 2,000,000 barrels (2 MMbbl)--
completing that journey every 18 hours or so. The problem is that such
long journeys make economic sense only when the shipper is using a VLCC
or the even larger Ultra Large Crude Carrier (ULCC).
The larger the ship, the lower the cost per barrel. VLCCs are around
1,500 feet long. When fully loaded, the bottom of the ship is about 66
feet below the waterline. There is no port on the U.S. Gulf Coast that
can handle ships this size, except for the Louisiana Oil Offshore Port.
This port, called LOOP for short, was specifically built to offload
VLCCs, and that is all it can do: offload.
The RBN article also helps explain
how Harold Hamm can make money on $45 oil -- remember, he has suggested he may have a deal with South Korea.
America’s oil and gas producers are still finding places where they can prosper even at today’s lower prices.
Companies
are refocusing their drilling efforts on the Permian Basin in Texas and
New Mexico and rushing into a part of Oklahoma known as the Stack where
they can claim solid returns. While small in terms of overall
production, the move is gathering steam, even as drilling in places like
North Dakota and Pennsylvania remains sluggish.
Wells in the
Permian and the STACK—which stands for Sooner Trend, Anadarko basin, and
Canadian and Kingfisher counties—are racking up between 10% and 30%
returns based on oil priced at $45 a barrel, operators say; premium
wells are generating greater profit.
In part, returns benefit
from access to established pipeline, storage and other infrastructure.
Drillers in both areas have been able to find energy stacked in layers
underground. Some producers also are tapping holdings that were acquired
long ago, when acquisition costs were lower.
Continental Resources Inc.,
which helped spark the North Dakota boom, says its best wells today
are in the Stack—a well-trod part of Oklahoma near Cushing, OK, a
major oil storage and trading hub. The company says its drilling there
can yield a 75% return with oil at $45 a barrel. The company recently
announced a gusher of a well in the field.
The graph at this site is incredible -- it shows just how inefficient "Cadillac" is at selling cars. It may take a page from MuskMelon's playbook. If the link is broken it has to do with Cadillac considering "carless" dealerships.
