Tuesday, August 9, 2016

SolarCity Losses Widen On Higher Expenses -- WSJ -- August 9, 2016


August 10, 2016: SolarCity was not the only MuskMelon company losing money. From CNNMoney today:

Likewise, Tesla revealed last week that its losses for the second quarter ballooned to $150 million, more than twice what Wall Street had expected, as it invests heavily in building a battery factory and the cheaper, mainstream Model 3 vehicle.
Original Post
Link here.
SolarCity Corp. , which is in the process of being acquired by fellow Elon Musk company Tesla Motors Inc., reported a wider quarterly loss Tuesday as operating expenses climbed sharply.

For the current quarter, the home solar company forecast an adjusted loss between $2.55 a share and $2.65 a share, worse than estimated by analysts surveyed by Thomson Reuters, who forecast a loss of $2.26.

For the latest quarter, SolarCity reported a loss of $250.3 million, or 56 cents a share, compared with $155.7 million, or 23 cents a share, a year earlier. The quarter’s adjusted loss was $2.32 a share, better than analysts’ predictions of $2.44 a share.
Revenue rose 81% to $185.8 million, far above analysts' expectations of $146 million.

Saudi Losses In Yemen war Exposed By US Tank Deal

Link here.
The U.S. State Department and Pentagon Tuesday OKed a $1.2 billion sale of 153 Abrams tanks to Saudi Arabia Tuesday. But that’s not the real news.

Turns out: 20 of those tanks, made in America by General Dynamics Land Systems, are “battle damage replacements” for Saudi tanks lost in combat.

Even though the formal announcement of the sales does not say where the tanks were fighting, the Saudi military is believed to have lost some of its 400-plus Abrams tanks in Yemen, where it is fighting Iranian-backed Houthi separatists.

In addition to this Abrams tank deal, the State Department has approved two other sales to Saudi Arabia, $200 million for training, and $155 million for Gatling guns that defend ships from missiles — sending the week’s total value past $1.5 billion. Still, Riyadh’s 2016 shopping bill has a ways to go to match last year’s total, when State approved more than $20 billion in sales of ships, helicopters, missiles defenses, bombs and ammunition.
There may be a reason that Saudi Arabia is spending less on arms this year. 

The Ledecky Page -- The Saga Continues -- She Has Never Lost A Race On The Big Stage -- August 9, 2016

My wife tells me Katie Ledecky won the gold in the 200 meter freestyle.

From a reader, this link, apparently shown this morning on NBC: http://www.today.com/video/see-katie-ledecky-as-a-tot-meeting-al-roker-on-today-in-1998-740702275505.

This is truly amazing!

The Next Big Thing

Google data centers and power consumption. A lot of dots will connect. The Eric Schmidt - Hillary Clinton connection is starting to make sense.

From The [London] Independent, January 23, 2016:  Global warming: Data centres to consume three times as much energy in next decade, experts warn.

And that's just the start. Go ahead. Google it. 

For The Granddaughters

When biologists talk about genomes, they use shorthand. Chromosome nomenclature is now composed of three letters followed by a number. The number is the chromosome number of the species being considered.

The three letters are all capitalized. The first letter is the first letter of the genus; the second two letters are the first two letters of the species.

For example, human chromosome #11 is known as HSA 11 (Homo sapiens 11). For the Capuchin monkey, its chromosome #2 is CCA 2 (Cebus capucinus 2).

  • chimpanzee, PTR: Pan troglodytes
  • mouse, MMU: Mus musculus domesticus)
  • and the link provides about a dozen examples
I don't when they started using this shorthand, it certainly wasn't mentioned when I was in college many decades ago, and I only recently came across it while looking up something else.

QEP Reports Six Nice Bakken Grail Wells; About 50 Stages; About 9.5 Million Lbs Sand -- August 9, 2016

Active rigs:

Active Rigs3373193183199

Seven wells coming off confidential list Wednesday:
  • 31691, 1,052, QEP Ernie 7-2-11BHD, Grail, t3/16; cum 40K 6/16;
  • 31692, 1,756, QEP, Ernie 6-2-11TDH, Grail, Three Forks 1st bench, 49 stages, 9..5 million lbs, t3/16; cum 21K 6/16;
  • 31693, 324, QEP, Ernie 3-2-11T2HD, Grail, Three Forks 2nd bench, 51 stages, 9.5 million lbs, t3/16; cum 35K 6/16; only 8 days in 5/16;
  • 31694, 204, QEP, Ernie 8-2-11BHD, Grail, 51 stages, 9.5 million lbs, t3/16; cum 33K 6/16; only 16 days in 6/16;
  • 31695, 1,067, QEP, Ernie 4-2-11T2HD, Grail, TF 2nd bench, 49 stages, 9.6 million lbs, t3/16; cum 5K after 1.6 months;
  • 31696, 1,042, QEP, Ernie 3-10-2-11BHD, Grail, 49 stages, 9.5 million lbs, t4/16; cum 37K 6/16; only 16 days in 6/16;
  • 32304, SI/NC, XTO, Lund 41X-17C, Siverston, no production data,
One new permit:
  • Operator: Statoil
  • Field: Alger (Mountrail)
Five permits canceled:
  • Hess (5): five EN-Vachal permits in Mountrail County

31692, see above, QEP, Ernie 6-2-11TDH, Grail:

DateOil RunsMCF Sold

31693, see above, QEP, Ernie 3-2-11T2HD, Grail:

DateOil RunsMCF Sold

31694, see above, QEP, Ernie 8-2-11BHD, Grail:

DateOil RunsMCF Sold
31695, see above, QEP, Ernie 4-2-11T2HD, Grail: 

DateOil RunsMCF Sold

31696, see above, QEP, Ernie 3-10-2-11BHD, Grail: 

DateOil RunsMCF Sold

31691, see above, QEP Ernie 7-2-11BHD, Grail:

DateOil RunsMCF Sold

Off The Net For Awhile -- Going Biking

I have not biked in the past three days due to family commitments. Eager to get back on the road.

What Are The Odds 
Of Any Single American 
On Stage Behind Mrs Clinton?

 I know I wasn't there, and I can bet you weren't there. I assume those who got on stage were vetted very, very closely. If not, the campaign manager has a lot to answer for. So, what are the odds that this one individual, the father of the man who was behind the biggest mass murder in the history of the US, ends up, not just on stage with Mrs Clinton, but right in her "camera shot."

From NY Post with video:
The father of Orlando shooter Omar Mateen was spotted sitting behind Hillary Clinton at a campaign rally in Florida.
Seddique Mateen, whose son carried out the deadliest mass shooting in US history in June at the Pulse nightclub, looked on as Clinton began her speech on Monday in Kissimmee recalling the terror attack.
Nothing in politics at this level is coincidental. Dirty tricks, yes, but not coincidental.

The Williston - Ledecky Connection -- August 9, 2016

From comment at this post, comes this link: http://www.kfyrtv.com/content/news/As-Katie-Ledecky-swims-for-gold-her-grandmother-watches-from-Williston-389557862.html.
WILLISTON, N.D. - As America's swimming sweetheart Katie Ledecky competes in Rio, a member of her family is watching on from Williston.
A flag with the Olympic Rings waves proudly outside the home of Kathleen Hagan, grandmother to Katie Ledecky.
"I know her as a little girl growing up, and now, she's still a little girl as far as I'm concerned," says Hagan.
The 90-year old is cheering on her granddaughter. Even thousands of miles away from the competition, she gets nervous.
"Well I get nervous for Katie. I was really worried yesterday, I didn't think she could win that one yesterday," says Hagan.
Much more at the link including a great video.

Unless I have my "generations" wrong, Mrs Hagan would have been married to Dr Hagan of the Craven-Hagan Clinic, which, when I was growing up in Williston, was on Main Street, near the center of town, on the second floor. That's where I got a few of my "hay-fever" shots; most of them I received at home from my mother. The clinic fascinated me: an elevator, fairly uncommon in Williston; and, a real tropical fish tank. I believe my doctor was Dr Craven, not Dr Hagan, but I recognized both of them when out and about. True pioneers in every sense of the word.

The Human Genome
From Siddhartha Mukherjee's The Gene: An Intimate History
Some data points:
  • it has 3,088,286,401 letters of DNA (GTC&A) -- give or take a few.
  • published as a book with standard-size font would be 66x the size of the Encylopedia Britannica and consist of only four letters (GTC&A)
  • 23 pair of chromosomes, 46 in all
  • genes: 30,687 in total. Compare with 1,796 in worms, but 12,000 fewer than corn and a whopping 25,000 fewer than rice or wheat
  • parts of it are surprisingly beautiful: on chromosome 11, there is a causeway dedicated entirely to the sensation of smell; a cluster of 155 closely related genes to encode a series of protein receptors that are professional small sensors
  • a bewildering 98% of the entire genetic genome DOES NOT code for genes
  • it has repeated elements that appear frequently. A pesky, mysterious three-hundred-base-pair sequence called Alu appears and reappears tens of thousands of times; its origin, function, or significance is unknown
  • it contains thousands of "pseudogenes"; fossils of previously active genes
  • gene #1, on chromosome #1: encodes a protein that senses smell (again, those ubiquitous olfactory genes)
  • last gene, on chromosome X: encodes a protein that modulates the interaction between cells of the immune system ["Last and first" are arbitrary: the longest gene on any chromosome is considered the "first" gene on that chromosome.] 
Order In Chaos: The Memoirs of General Hermann Balck
Panzer Troops
University Press of Kentucky
c. 2015 
DD: 355 BAL

The foreword by Carlo D'Este, author of Patton: A Genius for War
Preface by the editors and translators, Major General David T. Zabecki, USA (Ret.) and Lieutenant Colonel Dieter J. Biedekarken, USA (Ret.)

Of all things, Freeman Dyson is mentioned in the foreword as praising this forgotten general.

Balck spent most of WWII on the eastern front, fighting the Russians. He spent only seven months, spread over four different periods, fighting against the western Allies.
  • as the commander of an infantry regiment, he led one of the key attacks that resulted in the decisive German breakthrough against France at Sedan on the Meuse River in 1940
  • commanding a Panzer regiment in April 1941, he fought against the British and New Zealanders in Greece
  • as an acting Panzer corps commander in Italy he fought against the Americans during the initial stages of the Salerno landings in September, 1943
  • for a three-month period at the end of 1944, he commanded Army Grup G in the Lorraine campaign
His military strategy was much like Patton's: they both preferred offense to defense. Both noted that contrary to what was being taught at the time, nothing incurs higher casualties than an unsuccessful defense; therefore, attack whenever it is possible.

  • Balck was never a member of the Nazi Pary
  • he was not close to being a Nazi sympathizer
  • he was not an ardent Hitler worshiper
  • following the war, unlike many captured German officers, Balck refused to talk
  • near the end of his life, he had a change of heart and started to open up to his former enemies
  • helped the US Army develop a tactical and operational doctrine for fighting outnumbered and winning against the overwhelming numerically superior tank forces of the Soviet Union and the Warsaw Pact
  • German tactical doctrine, strongly influenced by Balck, had a clear influence on the development of the new American doctrine, called AirLand Battle (this was a major subject during my two years at Air War College; I was unaware of its origin) 
Order In Chaos
  • published in German, in 1981, at age 84
  • from his detailed journal, kept from his earliest days as an officer candidate (1913) to his final surrender to US Army forces (May, 2945)
Freeman Dyson
  • I was unaware of Freeman Dyson's research into this one question: perhaps the single overriding moral question about the Germany Army in WWII is how so many of its soldiers and officers could have fought so well for such a bad cause?
  • soldiering: the distinction between soldiering as a trade and soldiering as a cult. Dyson says Balck was of the former
  • Dyson noted that Balck was accused of no war crimes (in the strictest sense not accurate, but Dyson is correct in the context)
  • very different background than Balck
  • Hitler was very impressed with Rommel's book published in 1937 and accounts for his meteoric rise during WWII
  • Rommel's record of battlefield performance during WWII rests on:
    • six weeks in May and June 1940 during the invasion of France as a Panzer division commander
    • 25 months as a corps, army, and army group commander in North Africa from February, 1941, to March, 1943
    • six weeks as the commander of Army Group B in June and July, 1944, during the Allied Normandy invasion
    • the Battle of Gazala and the capture of Tobruk in May and June, 1942, were the peak of Rommel's career 

Huge Natural Gas Draw In July; Last Time This Happened: 2006 -- Eleven Years Ago -- Tuesday Market News -- Nothing About The Bakken -- Yet -- August 9, 2016

Is something going on? We have the data but not the analysis. From PennEnergy: high natural gas-fired generation leads to rare summer net national weekly storage draw.

This is really cool. When I started the blog back in 2007, deleted it, and then started again in 2009, I knew nothing about natural gas and did not plan to blog about it. But a reader kept pestering me with natural gas data and I finally got the message: natural gas is important. Well, duh.

So, now I know a bit more about natural gas. Not much more, but a bit more. I do know something about natural gas storage and weekly "draw" data. So that's interesting.

I'm glad the reader kept at it. Otherwise I might have blown past this story, but it seems to be a biggie. We have the data but not the analysis. Go to the link for the graphic. From the linked article:
Working natural gas storage inventories posted a rare summer net withdrawal of 6 billion cubic feet (Bcf) for the week ending July 29, 2016, according to EIA's Weekly Natural Gas Storage Report.
Record-high consumption of natural gas for electric power generation drove this withdrawal.
Although withdrawals in the summer are not unprecedented, and happen regularly in the South Central storage region, the last time a net withdrawal in July occurred on a national basis was in summer 2006.
This net withdrawal brings total inventories to 3,288 Bcf, or about 16% higher than the previous five-year average (2011–15).
During the current injection season, net injections had already been much lower than the previous five-year average for almost every week. This trend reflects an unusually high inventory level at the start of the injection season, high power burn, and slightly lower natural gas production, which has recently fallen below year-ago levels. Following a warm 2015–16 winter, inventories headed into the injection season were at record high levels. Despite lower injections, and a net withdrawal this week, inventories are still substantially higher than the five-year average and year-ago levels.
Some data points:
  • US economy not particularly robust, so that is probably a "wash" when trying to explain the drop; although the contributor said natural gas demand was due to increase in electricity demand, no numbers were provided for this year or for 2006. [In fact, the EIA has not posted the numbers for June or July, 2016 - a dynamic link.]
  • US natural gas production is surging. Hmmmm....
  • US natural gas delivery systems, infrastructure vastly improved over past couple of years. Hmmmm....
  • coal plants closing faster than ever. Hmmmmmm.......
  • wind and solar energy increasing. Hmmmmm....
  • wind and solar energy require dispatchable natural gas "back-up" --- a big "hmmmmm......"
  • atmospheric CO2 decreased month-over-month, July-over-June. Hmmm....
  • I couldn't possibly run the numbers but everything I've read suggests General Electric and Warren Buffett's Berkshire are heavily weighted toward a) natural gas; and, b) a growing US economy.
California Natural Gas

This is a most interesting graphic from the Obama administration. This is a graph that could be easily overlooked, and the data points are even more interesting:

Add these data points to the graphic above:
  • the state mandates more non-dispatchable energy which requires more natural gas 
  • the state is closing (or has closed) all nuclear reactor sites 
  • the hottest part of the year is yet to come
  • the tea leaves suggest demand for energy will increase in California
  • the state is politically not particularly eager to produce more natural gas
  • assuming natural gas operators are at least somewhat efficient, either the past five years were way out of whack, or this year, something else is going on (yes, I am aware of SoCal leak)
  • California, like Hawaii, is an "energy island" but for different reasons
The Market

Mid-day, the Dow 30 is flirting with new highs. On the NYSE, 230 new highs.
  • BRK is nearing a new high
  • MDU is inexplicably down a bit
  • GE is flat
  • SRE is down a bit
  • T is very close to a new closing high
Early morning trading gets off to a good start: the S & P near record highs. NYSE:
  • new highs: 188 -- none of which interest me, except perhaps PBR
  • new lows: 5

Atmospheric CO2 Decreases Month-Over-Month -- August 9, 2016

Yes, I know -- it's a seasonal thing, but just the same.

July atmospheric CO2 from CO2 Now:

For June, 2016, it was 406.81. 

Is It Live Or Is It Memorex?

 The halo is interesting, isn't it?

Obama Legacy Continues; Longest Stretch Of Productivity Declines Since The 1970s -- August 9, 2016

US productivity fell for third straight quarter. Stalling labor productivity could curb worker pay and economic growth. From The Wall Street Journal:
The longest stretch of productivity declines since the end of the 1970s is threatening to restrain U.S. worker pay and broader economic growth in the years ahead.
Nonfarm business productivity, measured as the output of goods and services produced by American workers per hour worked, decreased at a 0.5% seasonally adjusted annual rate in the second quarter as hours increased faster than output.
It was the third consecutive quarter of falling productivity, the longest streak since 1979. Productivity in the second quarter was down 0.4% from a year earlier, the first annual decline in three years and just the sixth year-over-year drop recorded since 1982.
And then my wife wonders why her IRA has performed so badly in the past twelve months. But she supports Hillary. What can I say?

I track the Obama Legacy here

Home ownership: at record low, since when? I forget.

Economic recovery: worst in 49 years, was it?

US healthcare: in unprecedented turmoil.

First US president ever to have been at war the entire eight years of his presidency.

President Obama is the first American president in history who did not have one single year of 3.0% economic growth.

One More Agenda Item For The OPEC Meeting In September -- August 9, 2016

This is really quite incredible. Despite huge cutbacks in current spending and in CAPEX going forward, oil companies are squeezing out ever-better production (previously reported).

From Rigzone / Bloomberg:
For Norway, the collapse in crude prices has a silver lining: output has exceeded expectations every month for the past two years.

That’s likely to continue as oil companies boost efficiency and pump at full pace amid dwindling revenue, according to the head of Petoro AS, the state-owned oil company that owns more than a quarter of the petroleum output in Western Europe’s biggest producer.

“Improvement efforts and the focus on profitability have led to very high regularity,” Chief Executive Officer Grethe Moen said in a phone interview on Friday from Stavanger, Norway’s oil hub. “There’s no sign this won’t last, at least thus far.”

Companies, led by state-controlled Statoil ASA, which operates about 70 percent of the fields, have slashed investments and sought to increase efficiency to combat a rout that has left oil prices 60 percent lower than two years ago. But even as spending on future production dwindles, current output has risen thanks to more efficient operations and past investments that have just started delivering barrels.
That time-frame of "the past two years" is the important phrase in the story above. It was in October, 2014, when Saudi Arabia said it would not cut production but, instead, would "protect its market share." We are about two months from "celebrating" the two-year anniversary of the SaudiSurge. Or trillion-dollar mistake. 

Dispatachable Energy -- The Demand Is Growing -- August 9, 2016

This is incredibly cool. For years I was talking about the downside of wind and solar energy. I kept missing one big story line and a reader kept hitting me over the head -- reminding me of the story line. I finally got the "clue bug" some months ago.

The story line: dispatchable. That "word" is seldom (never?) used by wind and solar advocates; and, I doubt most Americans even understand the concept. I understand it but missed the importance of the issue until recently.

It appears that the authors of the article at Rigzone realized that, also. Look at that article. Except for the opening line, there is only one word put in bold.


And then get this. Just as the central planners at federal governments around the world are mandating increased wind and solar energy, "demand for dispatchable electricity generation is growing."

In an environment where demand for dispatchable electricity generation is growing, the last thing one wants is more solar and wind energy, neither of which solve the problem. Ironically, investors in natural gas should embrace this new-found interest in wind and energy.

Every time another wind or solar energy project comes on line, another natural gas back-up plant needs to be in place to back up the non-dispatchable energy project.

I've long given up on voicing irritation with wind and solar -- I'm preaching to the choir, and I can't do anything about it anyway. The public has spoken: they want more wind and solar -- or at least their elected representatives do.

But, for investors, a win-win on so many levels.

From the linked article:
Thanks to shifting demand patterns, suppliers of liquefied natural gas (LNG) from producing countries such as the U.S. and Australia increasingly will need to look for new homes for LNG beyond traditional major destinations such as Japan and South Korea.

The expansion of the global LNG trade, coupled with growing demand for dispatchable electricity generation, translates into increased opportunities for natural gas storage operators. Gas storage players will need to develop an increasingly customized slate of products and services for existing and future customers, who are demanding more flexibility and becoming more cost-sensitive.

The [natural gas storage] sector was built over decades to serve a very predictable and entrenched market condition: moving gas from North American production zones (south and west) to consuming areas in the eastern markets that generally have strong winter peak demand.

The nature of the new production [in the northeast US] is high initial deliverability with long, flat production.

The new production profile facilitates "an almost instantaneous deliverability. Consequently, it helps offset and reduces seasonal supply variations from production, making the market slightly less volatile to supply shortfalls.

The near-instantaneous deliverability of natural gas upsets the decades-old structure of the storage market and makes some assets more valuable than others.

Tuesday, August 9, 2016 -- We Start The Day With 33 Active Rigs In North Dakota -- August 9, 2016

Active rigs:

Active Rigs3373193183199

RBN Energy: update on the huge Canadian complex at Sarnia, Ontario, part 2.

From the NDIC Monday's daily activity report: no new permits and no producing wells completed, but 23 permits renewed, which might be a record for number of renewed permits, although it comes after a weekend:
  • BR (7): six Ivan permits and one Sanvan permit, all in McKenzie County
  • HRC (5): five Fort Berthold permits in McKenzie County
  • Whiting (3): three Pronghorn Federal permits in Billings County
  • Statoil (3): three Martin permits in Williams County
  • Petro-Hunt (2): two USA permits in McKenzie County 
  • WPX (2): two Lucy Evans permits in McKenzie County
  • Zavanna: a Raven permit in McKenzie County
  • Denbury: a CHSU permit in Bowman County
Negative Interest Rates? 
Okay, Let's Put More Money Into Our Savings Accounts

The WSJ has an interesting article linking increased savings with negative interest rates, an unintended consequence. I agree with some analysts: too early to tell. The graph below with a quick glance suggests the trend is up, but in fact it's pretty much in only three countries, all part of the EU where folks have reason to be very concerned following Brexit, immigration, and terrorism (and Islamic takeover of Turkey).
  • Denmark shows huge jump in savings rate
  • Switzerland with steady increase since before 2000, well before negative interest rates
  • Sweden with big jump ten years ago, well before negative interest rates, and steady increase since
  • Japan's trend caught me by surprise; I've always been told the Japanese are "great" savers, but looks at the fall since before 2000, and Japan turns out not to be the nation of savers we have been told it is (or least that's my myth); Japan is at 2%, well below half of the rate for the US; and, in fact, Japan's savings rate went negative just a few years ago
  • Germany: flat, where all the negative interest rate stories are now focused
  • US: flat
Bottom line: the jury is still out. But for now, it seems like a non-story.