The Market And Energy Page, T+216 -- August 24, 2017 -- $45 WTI Incentivizes E&P

OPEC cut (wink, wink) update: via Twitter, Libya and Nigeria (both exempt from the cut) reached 18-month and 4-year (respectively) highs for light sweet oil. WTI futures are down this morning.

Texas is back! From Oil & Gas Journal, the Texas upstream oil and gas economy grew in July for an eighth consecutive month after contracting during the previous 24 straight months. The July expansion reflected sizable year-over-year improvements in the rig count, drilling permits, and the value of Texas-produced crude oil and natural gas, along with renewed industry employment growth. All that hand-wringing over "breakevens" of $65 --

“Oil supplies remain plentiful because domestic producers are becoming increasingly efficient at producing crude oil at lower costs, so a $45/bbl oil market provides more incentive than in the past,” he said.

Estimated crude production in Texas during July totaled 103.5 million bbl, up 5.7% from July 2016. With oil prices in July averaging $43.10/bbl, the value of Texas-produced crude amounted to $4.46 billion, up 9.6% year-over-year.

From: https://postimg.org/image/nwaj8ai5v/ (see comments).

Dow futures: up 52 almost 70 points. Trump? Jobless claims? WTI? Jackson Hole? Hillary not president? First Muslim governor in Michigan?

Sears: to close 28 more stores. Despite huge beat! Expected to lose $2.48/share, only lost $1.16/share. Wow. Revenue also beat forecasts, $4.37 billion vs an estimate of $4.21 billion. But same-store sales fell 11.5 percent, worse than the expected 7.1 percent decline.

Trending: coal. From Argus Media via Twitter -- Indonesia, Vietnam to enchance coal co-operation.  But look at this: NY Times reporting that US government study hints at future support for coal -- again reported everywhere -- no links -- apparently increasing alarm over stability of the grid.

Trending: Mexico in a world of hurt. Mexican crude production continues to slide; federal revenue dropping at a frightening rate. Stories easily found; no links. Platts is reporting, of course.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.

For energy investors, the question for the day: is it time to start investing in oil again? Has we turned the corner with regard to the price of oil? If so, where should one invest? Upstream, midstream, downstream? Big Oil? Shale producers? Just idle chatter. I'm posting this so I have something to look back on five years from now.

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Taking A Bath

I don't recall whether the figure was $7 billion or $9 billion. If I had to wager on it, I would say it was $9 billion.

I'm referring to a note by a BHP analyst the other day. The analyst suggested that if the BHP shale portfolio came in at less than $9 billion, the company was going to take a "huge bath." Above $9 billion, perhaps not so bad. It is being reported that BHP spent $20 billion to enter US shale (the Eagle Ford and the Permian) in 2011 -- at the height of the boom -- and is now in the process of exiting US shale where it has not been able to succeed.

So, $9 billion.

Today, Rystad reports that it values BHP's shale portfolio at $7.5 billion at $60 oil (wink, wink) and at $5.1 billion at $50 oil (which we still haven't returned to in quite some time):

• BHP Billiton's U.S. onshore portfolio is valued at $7.5B at $60/bbl WTI oil, and $5.1B at $50 oil, energy consultant Rystad Energy calculates
• In a $60/bbl scenario, Rystad says BHP's Eagle Ford acreage has a value of $4.2B, with the Black Hawk field - the "sweet spot" in the Eagle Ford Shale - is valued at $2.8B and the Hawkville field in the condensate area of Eagle Ford at $1.3B
• Rystad says BHP’s Permian Delaware acreage is valued at $2.3B, and the consultant sees companies such as Anadarko Petroleum, Occidental Petroleum, Chevron, Exxon Mobil, ConocoPhillips, and Royal Dutch Shell as potential suitors that could find synergies with their existing positions in those areas

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Convergence:
The Idea At The Heart Of Science

Peter Watson

c. 2016

DDS: 509WAT

The author argues that the decade of the 1850s is the "crucial decade" -- the decade when convergence began.

Convergence is a history of modern science but with a distinctive twist. The twist has been there for all to see, but so far it has not been st out as clearly as it deserves. The argument is that the various disciplines -- despite their very different beginnings, and apparent areas of interest -- have in fact been gradually coming together over the past 150 years ... one interlocking coherent story: the history of the universe.

The story of Mary Somerville, first half of 19th century. Self-trained mathematician. If she were not a woman, she would have been elected to the Royal Society. Wrote five books on science (cosmology, geography, physical sciences, molecular and microscopic science.

Her most important work: On the Connexion of the Physical Sciences (1834). Its aim was to reveal the common bonds -- the links, the convergence -- between the physical sciences at a time when they were otherwise being carved up into separate disciplines.

The author references an ancient concern of Aristotle, called the Ionian Enchantment. Then, in the Middle Ages, Thomas Aquinas attempts to reconcile Aristotle's science and Christianity  in Summa Theologica. Then Newton brings order to the heavens 400 years later. Then, Descartes, Condorcet, and Schelling. The author argues that Mary Sommerville's approach was much more modern in writing about "convergence."

William Whewell: generally credited with coining such words as "scientist," "physicist," "ion," "anode," and "cathode." The latter three he supposedly proposed to Michael Faraday.

Somerville died at age 92 in 1872. Two years after her death a new all-women college at Oxford was named in her honor, producing its share of no less remarkable figures -- Indira Gandhi, Dorothy Hodgkin, and Margaret Thatcher among them.

For Mary Somerville, the fundamental lesson of Connexion was religious...her own most powerful experiences were with nature and, above all, with mathematics. This was where God showed himself, she believed -- in the purity of mathematics and in the way a few equations united the manifest diversity of the observable world.

And this takes us to just page 13. A most fascinating book.