Tuesday, July 26, 2016

New Home Sales -- June Sales Highest In Eight Years -- July 26, 2016

I'm too tired to post much more tonight, but the news has been quite incredible after close of business today. It started with Apple reporting. And now this, from The Los Angeles Times:
Americans bought new homes in June at the fastest pace in more than eight years, a sign that a solid job market and low mortgage rates are bolstering the broader U.S. economy.
The Commerce Department said Tuesday that new-home sales rose 3.5% last month to a seasonally adjusted rate of 592,000, the best level since February 2008. Purchases of new homes have climbed 10.1% year-to-date, despite volatile sales on a monthly basis.

Apple Beats Expectations -- July 26, 2016

Wow, wow, wow. I don't know if folks have been paying attention but the talk on "the street" was that a) Apple was in trouble; and b) that Apple was going to miss expectations. In fact ... drum roll ... Apple third quarter tops reduced expectations:
Apple (AAPL) shares popped after reporting a better-than-expected third quarter after the market close on Tuesday.

Revenues declined 15% to $42.4 billion but beat estimates of $42.1 billion. The 13% year-over-year revenue decline last quarter marked the first quarterly revenue decline since 2003.

EPS of $1.42 also beat expectations for $1.38, marking a decline from $1.85 a year ago.

iPhones, which represent two-thirds of the company’s revenues, beat expectations this quarter, with the company selling 40.4 million iPhones versus expectations for 40.2 million units.

“We are pleased to report third quarter results that reflect stronger customer demand and business performance than we anticipated at the start of the quarter,” said CEO Tim Cook in the company’s press release. “We had a very successful launch of iPhone SE and we’re thrilled by customers’ and developers’ response to software and services we previewed at WWDC in June.”

Gross margin came in at 38%, down from 39.7% last year, but ahead of consensus estimates of 37.96%.
I can't wait to read the comments at the story.

This is the best comment: "Congratulations, longs! Up 7% in after-hours trading. Short covering tomorrow. Enjoy the ride."

Note: this is not an investment site. Do not make any investment, financial, travel, job, or relationship decisions based on what you read here. If this is important to you, go to the sourse. I talk about Apple because a) I love the company; b) I love the products; and, c) since 1984, have been known as Fanboy #3.

Financial Equation For Residential Solar Is Changing -- July 26, 2016

From The New York Times:
It was only two years ago that Elroy Holtmann spent about $20,000 on a home solar array to help cover the costs of charging his new electric car. With the savings on his monthly electric bills, he figured the investment would pay for itself in about a dozen years.
But then the utilities regulators changed the equation.
As a result, Pacific Gas & Electric recently did away with the rate schedule chosen by Mr. Holtmann, a retired electrical engineer, and many other solar customers in this part of California. The new schedule will make them pay much more for the electricity they draw from the grid in the evening, while paying those customers less for the excess power their solar panels send back to the grid on sunny summer days.
As a result, Mr. Holtmann’s solar setup may never pay for itself.
“They’ve taken any possibility for payback away,” he said with resignation, looking up at the roof of his 1970s ranch-style house in this suburb a short drive east of Berkeley.
The paradox is playing out around the country. Even as policy makers at the federal and state levels promote clean energy to fight global warming, the economics of electricity can often be at odds with those goals.
Thrust in the middle are utility regulators. Even if they support greening the grid through technology adopters like Mr. Holtmann, the regulators are also responsible for ensuring that the utilities can afford to supply power to the largest number of customers at the most equitable rates. That includes people without the money or inclination to install solar collectors.
Much more at the link.

Model X, Model S, Model 3, Now Model K (for Kennedy)

From Bloomberg: the fatal Tesla crash on autopilot? Speeding.

The article does not say why the vehicle was speeding (unless I missed it). I would assume self-driving cars "read/interpret" road signs.  [A reader reminds me that Tesla on autopilot "are not allowed" to speed.]

We do know that the truck that the car hit was carrying a load of blueberries to a local farm but we don't know why the car was speeding. We don't even know if the reporter posting the story asked the question. We don't even know if the reporter was aware of safeguards in the Tesla against speeding. But we do know the truck was carrying blueberries. To a farm.

Which, of course, raises another question. Why was the truck carrying blueberries TO a farm. One would think the blueberries would be going to a farmer's market or maybe to a city market. But TO a farm. Enquiring minds want to know.

Nine New Permits -- July 26 2016

Active rigs:

Active Rigs3373193207180

Wells coming off confidential list Wednesday:
  • 32012, TASC, MRO, Ranger USA 24-34TFH, Reunion Bay, no production data,
Nine new permits:
  • Operators: Liberty Resources (5), Newfield (4)
    Fields: McGregor (Williams), Sand Creek (McKenzie)
Two permit renewals:
  • Thunderbird: a Frank permit in Stark County
  • Oasis: a O M Erickson permit in Williams County
One producing well completed:
  • 29856, 1,000, Newfield, Jorgenson Federal 148-96-10-15-3H, Lost Bridge, 87.9% drilled in 15-foot target; t6/16; cum --

A Reader Comments On The Hartman Wells In Chimney Butte, Dunn County -- July 26, 2016

See first comment at this post. A reader reminds us of the activity at the Hartman wells in Chimney Butte, Dunn County. I will add his comments at that post.

I haven't updated the production numbers at that site yet, but if I get time, I will.

Lake Metigoshe

Last night while driving our older granddaughter to water polo practice, I reminisced out loud about my days as a Boy Scout and camping out at Lake Metigoshe along the Canadian border. I forget exactly how we got on that subject.

I told her how we would canoe to the Canadian side of the border and then find a small "mom and pop" convenience store to visit. The favorite "find" at that convenience store: Mackintosh toffee in its trademark plaid wrapping. As far as I know, it's not (readily) available (even today) in the US. I have never understood why.

Out of curiosity I looked for Mackintosh toffee on Amazon, found it, and ordered some. It will be here tomorrow.

I was not into "philology" when I was a Boy Scout, and was never curious to look up the meaning of "Metigoshe." Of course, without the internet, it would have been a major ordeal: a trek -- a three-mile bicycle ride down to Williston's James Memorial Library -- and then to search out Metigoshe. And I doubt I would have found anything. Hard to say. Maybe. [I do remember spending countless hours there.]

Anyway, it's easy on the internet. From wiki:
The name Lake Metigoshe is derived from the Ojibwe phrase mitigoshi-waashegami-zaaga'igan meaning "clearwater lake of scrub-oaks."
Breaking that down, "zaaga'igan" means "body of water" or lake, loch, or mere. I was unable to find the rest, whether "waashegami" meant "clear" and "mitigoshi" meant "scrub-oaks" or vice versa. One would think, based on word order, "waashegami" describes "zaaga'igan."

More from wiki:
The area was also once home to the Blackfoot, Hidatsa, and Assiniboine peoples. The park was constructed in the 1930s as a part of President Roosevelt's "New Deal" programs during the Great Depression. It was formally established and approved on February 17, 1937.
And a last bit of little trivia, only because I have such fond memories of Yorkshire, England, from the link above:
Mackintosh's Toffee is over 100 years old. John Mackintosh first opened shop in Halifax, Yorkshire England in 1890. He decided he needed a line of sweets that would be unique to his shop. At that time there was very little in the way of toffee as we know it today.
English toffee was mostly hard and brittle. American toffee was very soft, and thus came the idea to blend the two to form a unique toffee. Mackintosh's Toffee was born.
Rosemary: The Hidden Kennedy Daughter
Kate Clifford Larson
c. 2015 

It's funny how things work out. The last book I thought I would ever read would be a book on the Kennedys. And here I am, thoroughly enjoying Rosemary: The Hidden Kennedy Daughter, Kate Clifford Larson, c. 2015.

The first chapter opens with the birth of "Rosemary" on Friday the Thirteenth, 1918, but is predominantly about the coming-of-age years of her mother Rose Fitzgerald and to some extent, the same coming-of-age years of her father, Joseph "Joe" P. Kennedy Sr.
The 1914 marriage of Rose, the beautiful and intelligent eldest daughter of Boston's mayor, John "Honey Fitz" Fitzgerald, and his wife, Mary Josephine "Josie" Hannon, to Joe [Kennedy], the scion of a politically powerful East Boston family, had signified a strong political and economic union. It was a foundation from which the couple rapidly ascended to the pinnacle of Boston's newly established Irish social, political, and economic elite.
Side-by-side with this book I am reading portions of Siddhartha Mukherjee's The Gene: An Intimate History. In Part One, he has a chapter on eugenics. His chapter begins in the spring of 1920 when Emmett "Emma" Adaline  Buck was brought to the Virginia State Colony for Epileptics and Feebleminded in Lynchburg, Virginia. Mukherjee notes that:
"Feeblemindedness," in 1924, came in three distinct flavors: idiot, moron, and imbecile. Of these, an idiot was the easiest to classify: the US Bureau of the Census defined the term as a "mentally defective person with a mental age of not more than 35 months" - but imbecile and moron were more porous categories ...
Feebleminded women were sent to the Virginia State Colony for confinement to ensure that they would not continue breeding ... 
The word colony gave its purpose away: the place was never meant to be a hospital or an asylum. Rather, from its inception, it was designed to be a containment zone.

Jumping The Gun On Bringing Rigs Back On-Line? McDonalds; The Market; And Genes -- July 26, 2016

I will leave you with this before going biking. I should be back on the net by noon.


Have operators "jumped the gun"?

Sounds like a great question for a poll.

The Market

At midday, the NYSE with 157 new 52-week highs, including:
  • Exelon
  • Murphy USA
  • Sprint
Only one issue hitting a new 52-week low.

It appears the "buzz" on Wall Street has to do with fast food restaurants in the US. With McDonald's missing estimates, at least one analyst apparently is warning that US restaurants are headed into recession. One quote from Bloomberg: other chains such as Red Robin fumble as pessimism grows.
Analysts such as Stifel Financial Corp.’s Paul Westra have raised concerns that the restaurant sector is hitting a downturn, a harbinger for a broader economic slump in the U.S. next year. Fast-food rivals such as Wendy’s Co. also are piling on discounts and promotions, putting pressure on McDonald’s to keep prices low. That’s undercut the benefit of adding all-day breakfast in the U.S. last year.
Regarding McDonald's:
Same-store sales grew 3.1 percent globally. Analysts projected a 3.6 percent increase on average.
The article did not say much about this but I think a big story line is this:
McDonald’s also is coping with about $230 million in refranchising and moving expenses. The company is selling off about 4,000 of its company-owned restaurants to independent owners, part of a push to limit its risks and expenses. The goal is to have 95 percent of restaurants in the hands of independent owners.
ObamaCare, minimum wages, sexual harassment and discrimination lawsuits.

Speaking of McDonald's, Business Insider has an interesting note: franchisees are complaining that customers are now "trading down to cheaper menu items":
"Average transaction values for lunch and dinner have fallen as a consequence, something that has put a dampener on overall sales growth, even if it has been helpful to volumes," according to one analyst. 
"In most markets the pricing differential between breakfast items and lunch and dinner items is fairly pronounced, and this may be something McDonald's needs to assess over the next six months to see if there is any way to remedy the down-trading trend without losing customers."
Franchisees have warned that customers are trading down to cheaper breakfast menu items during lunch and dinner now that breakfast is available all day.
"The solution to all of this [is] in more automation — something that McDonald's has started but is still a long way off perfecting," Saunders wrote. "If McDonald's is to deliver its changes profitably, it needs to forge ahead with this model so that it can simultaneously keep a cap on labor costs at its restaurants while delivering superior products, service, and growth."
I don't go to McDonald's much any more, but I have visited two different McDonald's on two different occasions in the past two weeks. I generally don't go at peak times, but I'm not visiting at the least busy times either.

In one case, it seemed the number of employees was about the right number, perhaps slightly a bit light but very efficient. This particular McDonald's was operated by middle-age Hispanics and it was predominantly Hispanic on both sides of the counter. At the second location, in a very white, upscale neighborhood, the McDonald's seemed to be way overstaffed. It was about 7:00 p.m. and perhaps the staff was augmented during the peak evening business and now things had slowed down.

Having said that, this McDonald's was made-up of an entirely different type of employee: as far as I could tell, all inner city/urban youth, non-Hispanic white and African-American. They were highly inefficient and more interested in socializing than in working. I was the only one at the counter, and it was an awkward 60 - 120 seconds before one of the younger kids thought maybe I was there to order something. Without question, this operation was overstaffed by at least one, and possibly two people.

The white teen-ager taking my order seemed to have difficulty making change. But that's another story.

But you can't beat the price. I needed to pick up a quick post-swimming snack for our granddaughter: for 84 cents I got two raisin oatmeal cookies which she said were delicious.
The Gene: An Intimate History
Siddhartha Mukherjee
c. 2016
Author of The Emperor of All Maladies: A Biography Of Cancer

The author divides the story into six parts, each covering a particular theme in chronological order. For example, Part Two is "the sum of the parts, there are only the parts" which covers the period from 1930 to 1970.

I am most interested in his recounting the events in the 1950's and then the current research into epigenetics, which he covers in Part Five, "through the looking glass," 2001 - 2015.

[Oh, wow, I haven't seen this before. Among the glossy photographs, three of the eight pages are terribly awful -- whole portions of the glossy photographs are missing. It appears the librarian did not notice; should have asked for a better copy.]

The photos are stock photos from other sources; they do not add much to the book.

I do have to say the author writes very well. What little I have read, I really enjoy. I would recommend it to our older granddaughter to read.

The CLR Charlotte Wells

The Charlotte Wells In Banks Oil Field
  • 32168, conf, CLR, Charlotte 8-22HSL, no production data,
  • 32167, conf, CLR, Charlotte 9-22H1SL, no production data,
  • 31838, 1,267, CLR, Charlotte 7X-22H, t1/17; cum 342K 8/18;
  • 31507, dry, CLR, Charlotte 7-22H, drilling ceased in the vertical section at 9,977 feet due to hydrogen sulfide gas presence at shakers; due to an inability to run the cement required to begin a sidetrack, the well was sealed and temporarily abandoned.
  • 26142, 544, CLR, Charlotte 1-12-1H, t11/13; cum 119K 8/18;
  • 24908, 397, CLR, Charlotte 6-22H2, t7/13; cum 120K 8/18;
  • 23664, 657, Charlotte 3-22H, Banks, Target = TF3 (hard to say if that was where they ended up from the report), SESE 22-152N-99W; 30 stages; 2.9 million lbs;  t11/12; TD, 21,325; cum 169K 8/18;
  • 23612, 673, Charlotte 4-22H, TF3, Banks, [see press release, December 3, 2012]; 4 sections; TD, 21,814 ft; t7/13; cum 152K 8/18;
  • 23608, 1,303, CLR, Charlotte 5-22H, Banks, 4 sections,12 - 26 feet under the top of the middle Bakken; 2' to 10' flare; trip gas over 9,000 units; TD, 21,622 feet; t6/13; cum 229K 8/18;
  • 21128, 692, Charlotte 2-22H, Banks, TF2, SWSW 22-152-99; Three Forks geologic marker: 11,273 feet; 30 stages; 2.3 million lbs; total depth: 21,358 feet; t10/11; cum 231K 8/18;
  • 19918, 496, Charlotte 1-22H, middle Bakken, middle Bakken geologic marker: 11,276 feet; TD, 21,090 feet; SWSE 22-152-99; Banks, 30 stages; 2.5 million lbs; t6/11; cum 334K 8/18;
Note: #19912 and #21401 are also Charlotte wells but they are in the Siverston oil field and not part of the Charlotte wells noted above.

This is the story / press release linked above from the Oil & Gas Journal:
The Bakken-Three Forks play in the Williston basin contained an estimated 903 billion bbl of original oil in place or 57% more than in 2010 when Continental Resources Inc. estimated that the entire field would eventually yield 20 billion bbl of oil and 4 billion boe of natural gas.
The company raised its estimate of OOIP based on results of its own completions in benches of the Three Forks formation just below the Bakken.
In 2010 it assumed 577 billion bbl of OOIP in the Bakken and TF1 formations in North Dakota and Montana.
Continental floated the new estimate after testing its Charlotte 3-22H well in McKenzie County, ND, the first horizontal well to test the Three Forks third bench (TF3).
The company was first to demonstrate incremental reserves from TF1 in 2008 and first to establish commercial production from TF2 in 2011 (OGJ Online, May 22, 2008).
The 1,280-acre Charlotte unit is the first unit in the play to have wells producing from three separate horizons, the Middle Bakken, TF2, and TF3.
Charlotte 3-22H is the first well in a 14-well program that Continental plans to complete by the end of 2013 to test productivity of the second, third, and fourth benches of the Three Forks over a broad area of the play.
Much more at the link. 

We Start The Day With 33 Active Rigs In North Dakota -- July 26, 2016

Active rigs:

Active Rigs3373193207180

RBN Energy: great update on RINS. Archived.
For most U.S. refineries, RIN costs may soon become the single largest operating cost category, even higher than labor, natural gas or electricity expenses.

Notes For The Granddaughters

Arianna departs tomorrow for San Jose, CA, to participate in the national Junior Olympics Water Polo tournament. Seven hundred (700) teams will participate:
The USA Water Polo Junior Olympic Championships is the largest age group water polo tournament in the Nation. Athletes and teams come from across the country to compete on the national stage. The Junior Olympics Tournament consists of two divisions, the Championship Division and the Classic Division. Teams compete over a 4-day period within their respective age category.
Southlake, TX, will send seven teams: four boys and three girls. This will be Arianna's first trip to participate in this tournament.