Monday, December 12, 2016

How's That Again? -- Predicting The Price Of Oil Is A Fool's Errand -- December 12, 2016

Screenshot today:

Screenshot today:

Brent is even higher by several dollars.

Screenshot today:

Screenshot today. CVX was trading at a recent low when Gartman suggested ... well, whatever he suggested --- see above:

Bakken 2.0: Eighteen (18) Permits Renewed; No New Permits -- December 12, 2016

Active rigs:

Active Rigs4065181191184

Two wells coming off confidential list Tuesday:
  • 31283, 1,421, Hess, EN-VP and R-154-94-2536H-8, Alkali Creek, t11/16; cum --
  • 32591, 1,567, Sinclair, Lizzie Rae 8-17-1H, Lone Butte, producing, t9/16 cum 18K 10/16;
Eighteen (18) permits renewed:
  • CLR (7): four Antelope Federal permits and three Bohmbach Federal permits, all in McKenzie County
  • BR (3): two Hawkeye permits and one Hawkail permit, all in Dunn County
  • QEP (2): two MHA permits in Dunn County
  • Slawson (2): one Diamondback and one Chalelnger Federal permit, both in Mountrail County
  • Oasis (2): two Lewis Federal permits in McKenzie County
  • XTO: one FBIR Lawrence permit in Dunn County
  • Thunderbird Resources: one Franks Creek Federal permit in Billings County
No new permits.

Four producing wells (DUCs) reported as completed:
  • 31071, 2,200, Enerplus, Bait 149-95-36C-25H, Eagle Nest, t10/16; cum 22K after first 16 days;
  • 31072, 1,582, Enerplus, Tackle 149-95-36C-25H TF, Eagle Nest, t10/16; cum 19K after first 14 days;
  • 32341, 998, Enerplus, Quillfish 149-95-36C-25H-TF-LLW, Eagle Nest, t10/16; cum 20K after first 20 days;
  • 32768, SI/NC,  Oasis, Oyloe 5199 42-34 2B,

ND Active Rigs Up To 41; GDP Estimate: 2.6%, Unchanged -- 4Q16 -- December 12, 2016

Active rigs:

Active Rigs4165181191184

Track active rigs at this post.

EOG's EUR Guidance In The Delaware Basin

From a contributor over at SeekingAlpha:
  • new guidance pushes many of EOG's Delaware locations into Tier 1
  • the November update was the first quarterly update since the Yates Petroleum acuquisition
  • EOG's resource potential in the Delaware had grown by about 150%, even though net acreage only up by about 75%; to 6 billion boe; 416,000 net acres (back of envelope: 6 billion / 416K net acres = 15,000 boe/acre
  • contributor says EOG may have sold off about 8,000 net acres since original acquisition  
  • EOG now sees almost 3 billion boe across its holdings in the Delaware Wolfcamp position
  • 1,275 drilling positions in the Wolfcamp; four months earlier (August, 2016), EOG only had 775 net locations)
  • EOG also announced that in the Wolfcamp: the longer horizontal will be the "new normal"
  • Second Bone Spring: EOG added 620 net drilling locations; total now at 1,870 net; 1.4 bilion boe
  • third and final play for EOG in the Delaware: Leonard Shale (aka Avalon); EUR assumptions in this play jumped by 135%, roughly 3-fold; now a resource base of 1.7 billion boe; EOG added 200 net locations in the Leonard; now 1,800 net with 1,035 in the premium portfolio 
US Economy

From GDPNow:

Latest forecast: 2.6 percent — December 9, 2016.
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2016 is 2.6 percent on December 9, unchanged from December 6.
The forecast of the contribution of inventory investment to fourth-quarter growth decreased from 0.46 percentage points to 0.42 percentage points after this morning's wholesale trade report from the U.S. Census Bureau.

Non-Bakken News -- December 12, 2016

For the granddaughters. Nothing on this page about the Bakken. If you came here for the Bakken, scroll down or to the sidebar at the right.

Art. One of the unexpected pleasures in north Texas -- the fine art museums in DFW. In The Wall Street Journal today, the Kimbell is mentioned. The Kimbell is our favorite. In addition to a very nice structure (two buildings, in fact), it has one of the best restaurants in town for lunch. The lunch is very inexpensive. The museum has a number of important and wonderful pieces but their expertise is in temporary exhibits. The generally have several temporary exhibits each year, partnering with one other American fine art museum. I am always impressed by the huge turnout these exhibits enjoy.
“The Brothers Le Nain : Painters of Seventeenth-Century France,” at the Kimbell Art Museum in Fort Worth, Texas, anatomized three other favorites of 17th-century specialists: Antoine, Louis and Mathieu—“the first artists’ collective”—who signed everything simply “Le Nain.” We discovered that, though best known for eerie images of peasants, they also painted ambitious religious scenes, portraits, charming children and Caravaggio-inspired ne’er-do-wells. We even learned to see what distinguished each brother’s manner, despite their collaboration.
And then again, another call-out to the Kimbell, currently showing and which we have seen three times (I plan to go one more time, taking Sophia with me):
At the Kimbell, “ Monet : The Early Years” offers testimony to this celebrated painter’s prodigious gifts, from the start. An impeccable selection of broadly brushed landscapes, seascapes, still-lifes and figure paintings, made mainly when he was in his 20s, attests to his faultless eye for tone and matchless ability to suggest light and atmosphere.

It begins. Elizabeth Warren's constituents say "no" to a Muslim cemetery. In The WSJ.

Geography. Today's there's a headline article over at Yahoo!Finance about Nanking, China, a "second-tier" city in that country with a population of over 8 million, similar to that of NYC. The best thing I ever did with regard to geography on the blog was "fix" a picture in my mind of what China "looks like." Nanking? Where is it? If it were on the US map, it would be a suburb northwest of Charleston, SC, (Shanghai) up the Yangtze River. Maybe similar to Summerville, SC, where we lived for several years. 

Autos. Was there ever any doubt? Over at Bloomberg - Mercedes-Benz poised to topple BMW as world's luxury-car king.
Mercedes-Benz has built an all-but insurmountable lead over rival BMW in the race for the title of the world’s biggest luxury-car brand, and that sales momentum looks set to continue through at least 2018.
Surging demand for sport utility vehicles including the GLC helped Mercedes deliveries jump 12 percent in the 11 months through November, more than double the pace of growth for BMW AG’s namesake brand. That left Mercedes more than 69,100 cars ahead of BMW for the period, making it all but certain of regaining the sales crown this year.
Relegating once-dominant BMW to the No. 2 rank for the first time in more than a decade, Mercedes is likely to sustain its strong delivery pace in 2017 thanks to a new version of the E-Class sedan rolled out last March. BMW will be held back by the changeover to a revamped 5-Series, which competes with the E-Class, while a new X3 SUV will come out too late next year to make much of an impact, said Commerzbank AG analyst Sascha Gommel.
I've owned one Mercedes in my life, back when we were stationed in Germany. A utilitarian sedan, "a heavy Chevy." At the end of my tour there, we drove it up to England, where we drove it for another three years. After that, after six years I gave it away to a Cambridge mechanic, for free. I bet it's running better than ever.  Which reminds me, I gave away my 10-year-old Chevy Nova to a mechanic in North Dakota when I received orders to Germany some years earlier. And years later, I gave away a "land rover" of some sort, when we were in Alabama, I forget the make/model. Our older daughter learned how to drive with that five-on-the-floor stick shift. Many stories could be told. And several years ago I donated a Chysler minivan to some charity. And, no, I did not claim the deduction; just gave it away after ten years, 198,000 miles of faithful service. I could never sell a car that is "old" and with a lot of miles; I would feel guilty if it broke down just after someone bought it. And there were a lot of young airmen who needed the car more than I did.

When I first saw a convertible, Mercedes sports car in Vienna, Austria, many decades ago, that was my dream car. It still is and always will be. But we did have two Saabs when stationed in Germany the second time; the dollar was incredibly strong; Saab catered to US military. I know I sold one in Germany before leaving for Turkey; I sold the second one in Turkey. Wow, that was a challenge, with Turkish beyanami laws.

California: Bovine Fart Backpacks -- December 12, 2016

Futures? WTI up over 4.4% overnight -- $53.77 right now. Dow futures up 20 points; S&P down 0.02%. At  opening: CVX surges; EOG surges; SRE, not so much; COP surges; even BRK-B is up a bit. 

Peak oil? This may be the most important story all week. From Bloomberg, China is cutting about 300,000 bopd this year, more than the combined cuts announced over the weekend by non-OPEC countries excluding Russia. China's decline in production will continue into 2017 (next year) at about 200,000 bopd. By the way, this was reported by The WSJ back on August 25, 2016:
China’s struggling oil sector has entered a challenging new phase: long-term decline of its domestic production.
Oil production in China likely peaked last year at around 4.3 million barrels a day, according to new data and interviews with industry executives. The development has significant implications globally, including the potential for higher crude prices over time as China steps up imports to meet rising demand at home.
“The turning point that we’ve been searching for, for years, is happening now,” said Kang Wu, vice chairman for Asia at energy consultancy FGE. As an oil producer, he said, “China is entering long-term stagnation and decline.”
I think this is why some analysts suggest there could actually be a "deficit" in global oil production in 2017.

All that cash: judge rejects Pennsylvania recount

The JV Team update. ISIS re-takes Palmyra, Syria.

Filloon's oil update: the OPEC/non-OPEC deal and 2017 investment opportunities in the oil patch.  This was posted earlier; note the comments.

Saudi cutting more than expected: another contributor at SeekingAlpha

For those who like graphs: natural gas short sellers left in the cold. The headline is all you need to know. I can't imagine 1 out of 100 reading this. Seriously. From Richard Zeits over at SeekingAlpa.


Climate change reality in California. From The Los Angeles Times, the state may have not thought this through very well (or not at all). The "state" has mandated a 40% cut in CO2 emissions from 1990 basis. No one really knows what that means. It will require the state to "go back" to sometime in the 1960s with regard to transportation and industry.

California will be the only state with such an ambitious agenda. They will go it alone. The 40% cut in emissions will have a 1% effect on global emissions. 

With regard to the dairy industry and cow farting:
At a heated meeting in June, dairy officials pleaded with the Air Resources Board that they already reduced methane emissions. Air board scientist Ryan McCarthy suggested that new technology could help, and the discussion turned to an experimental system from Argentina that would capture gas in a backpack on each cow through a hose inserted into their digestive system.
They will use space-suit technology from the US moon landings in the 1970s. Bovine fart backpacks.

I can't make this stuff up.

The article suggests that this was a shot across the bow, a warning shot, that the legislature's top priority this year and next: re-do their plan.


Active rigs:

Active Rigs4065181191184

RBN Energy: Mexico's increasing reliance on US motor gasoline and diesel.
Mexico’s consumption of motor fuels is rising, its production of gasoline and diesel continues to fall, and U.S. refineries and midstream companies are racing to fill the widening gap. The export volumes are impressive: deliveries of finished motor gasoline from the U.S. to Mexico averaged 328 Mb/d in the third quarter of 2016, up 41% from the same period last year, and exports of low-sulfur diesel were up 29% to 194 Mb/d. And there’s good reason to believe that U.S.-to-Mexico volumes will keep growing. Today we look at recent trends in gasoline and diesel production and consumption south of the border, and at ongoing efforts to enable more U.S.-sourced gasoline and diesel to reach key Mexican markets by rail and pipeline.
Mexico is still among the world’s largest energy producers, but its output of crude oil, natural gas and natural gas liquids (NGLs) has been falling for several years, as has the country’s ability to meet its own, internal need for key fuels: natural gas, liquefied petroleum gas (LPG), gasoline and diesel among them. This has caused a lot of angst for the Mexican government and for PetrĂ³leos Mexicanos (Pemex), the state-owned energy company, to the point that the country’s entire energy sector is being reformed, starting with a constitutional amendment in December 2013 to allow more foreign and private sector investment, and more competition. 
Most relevant to our discussion today is the fact that Pemex until April 2016 was the only entity that could import gasoline and diesel to Mexico, and that until early 2017 independent/third-party importers still cannot use Pemex’s existing pipeline distribution network (more on this in a bit). In other words, the Mexican motor fuels market is gradually opening up.
The Market

Now that Trump has been elected president (well, maybe), the Fed is now free to "hike" the Fed rate.

Boeing seals $17 billion Iran deal; 80 jetliners. No link; story everywhere.

For the archives: a very, very bullish sign