Monday, January 16, 2017

IMF Slashes Saudi's GDP Estimate To 0.4% For 2017 -- January 16, 2017

Currently via Twitter:

I thought I had posted this before but apparently not. At least a quick look at previous posts and I did not see it.

But in that exercise I also found this gem I had forgotten about, posted back on August 14, 2016:
Posted today over at Breitbart.
With China’s economic crash driving U.S. oil prices down to $42 a barrel, Saudi Arabia is the oil-exporting nation suffering the worst economic decline.
The 15,000 members of the six branches of the Saudi royal family have been buying national support with massive social welfare spending. But with the oil price plunging by 60 percent, causing a massive budget deficit, the kingdom’s foreign exchange reserves could be wiped out in four years. [That's how long it takes some kids to finish high school.]
Most analysts have focused on Russia as suffering the worst impacts of the oil price crash. The value of Russia’s oil & gas production is approximately $350 billion per year; it accounts for 20 percent of Russia’s GDP, and equals two thirds of all exports. But even at current prices, Russia will still achieve a trade surplus of about three percent of GDP. As an oil exporter, Russia’s is uniquely self-sufficient and a military exporter.
I thought it was four years based on my calculations but did not want to post that; it sounded too crazy, but someone came up with that same number: four years. It fits the narrative that I was trying to articulate just a few days ago

"Everyone" is focusing on Russia; in fact, it's Saudi Arabia that is in dire straits.

By the way, no links, but it is being reported everywhere: the current OPEC deal to cut production runs for six months, through July, 2017. Saudi Arabia is now saying that it does not foresee the need to extend the deal past the original six months.

He Missed It By That Much

President Obama will go down in history as the first US president in modern history (maybe in entire history) to have never presided over even one quarter of GDP growth that hit 3%.  But, wow, it looks like came really, really close (which only counts in horseshoes and nuclear weapons, they say). From GDPNow (a dynamic link):
Latest forecast: 2.8 percent — January 13, 2017.
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2016 is 2.8 percent on January 13, down from 2.9 percent on January 10. The forecast of fourth-quarter real personal consumption expenditures growth ticked down from 2.6 percent to 2.5 percent after this morning's retail sales report from the U.S. Census Bureau.
Something tells me his folks are going to be burning midnight oil to squeeze out every bit of GDP growth to hit the 3% threshold. To think it was once estimated to be 2.9%. 

American Apparel Begins Laying Off 2,400 Workers In Southern California -- January 16, 2017

The California Page

From The Los Angeles Times:
  • final chapter as America's largest garment maker
  • the company has about 3,500 factor works in southern California
  • Canadian clothing maker Gildan Activewear, at auction, won the right to buy the American Apparel brand and some manufacturing equipment; it will not assume AA's leases on its factories
  • AA's 110 stores and website will remain open until at least April
  • Gildan Activewear has yet to decide where it will make AA goods; most of its hubs are in Central America and the Caribbean
Let's see if Trump tweets.

This goes all the way back to Ross Perot, doesn't it? 1992. Pretty prescient.

And all this time we have been focused on global warming.

California's Deficit Is Back

From The Los Angeles Times:
Less than four years after declaring California’s budget balanced for the foreseeable future, Gov. Jerry Brown on Tuesday said the state is projected to run a $1.6-billion deficit by next summer — a noticeable shift in the state’s fiscal stability that could worsen under federal spending cuts championed by President-elect Donald Trump.

“The trajectory of revenue growth is declining,” Brown said in unveiling his $179.5-billion plan for the fiscal year that begins in July.
The bullet train will still be funded; not sure about K-12 education.

California Dreamin', Mamas and Papas

Not To Worry

California governor proposes 42% gasoline tax hike to bail out CALPERS.  No major mainstream media outlet reported this; it was reported over a 3-day weekeknd.
Gov. Brown’s willingness to try raising gasoline taxes by 17 cents a gallon, and on vehicle registration fees by $65, is a sign of the insolvency risk from the exploding cost of California Public Employees’ Retirement System (CalPERS) public  pensions.
Brown’s draft 2017-2018 budget already includes a $524 million increase for the public pension contribution. That amounts to an 11 percent increase over this year’s $5.3 billion cost.
The CalPERS contribution increase would have actually been another $516 million more next year, but the world’s biggest pubic pension is allowing the State of California to “smooth” the higher pension funding cost by reducing its projected investment return expectation from 7.5 percent to 7 percent. But that smoothing will lock California into about a $524 million CalPERS contribution increase for each of the next four years.
And all this time we've been focused on the "never-ending" drought (it's over) and global warming.

By the way, much more at the link. Much more than David Muir over at ABC News would ever tell you.

31 States Bought Into This Including California

Medicaid provides health insurance for lower income folks. Cost is shared between US government and the states.

States historically have been given great latitude in determining who is eligible for Medicaid. However, under ObamaCare, the federal government determined eligibility. States, through a court decision, are not required to accept Medicaid expansion under ObamaCare.

Thirty-one states did accept this expansion and have greatly expanded Medicaid enrollment under ObamaCare.

If ObamaCare is repealed, the states are left holding the bag with the greatly increased enrollment. At least that's how I understand it. But it's probably more complicated than that. From NBC:
States such as California, New Jersey, Kentucky and Arkansas, which have expanded their Medicaid programs, have seen sharp decreases in their uninsured rates. States that didn't expand Medicaid, such as Texas, Florida and Virginia, did not experience as much of a drop in the number of people without health insurance. So far, 31 states and the District of Columbia have expanded their Medicaid programs under the ACA to cover adults who earn up to 138 percent of the federal poverty level — or $16,394 per year. 
By the way, remember that vote in the Senate that was the first step in repealing ObamaCare? I never understood it, but this is what it was all about. From Michale Hiltzik in The Los Angeles Times before the  vote:
More than political risk stands in the way. Numerous provisions of the Affordable Care Act are subject to filibuster in the Senate, which the GOP doesn’t have 60 votes to avoid. According to healthcare expert Timothy Jost, an emeritus law professor at Washington and Lee University, those may be safe from repeal. As it happens, they include many consumer-protection reforms that are very popular, including the ban on exclusions or higher premiums for preexisting conditions, and caps on annual and lifetime benefits.
The Senate voted to end filibusters on any part of ObamaCare -- at least, again, that's how I  understand it. Could be wrong.

Later: see first comment. A reader explains it in less than a paragraph. Much appreciated.

Break-Even Costs For Chinese Oil Production -- January 16, 2017

Regular readers and anyone paying attention are aware that with regard to oil and natural gas, China is in a world of pain. From a December 12, 2016 post:
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.
Now, tonight from Bloomberg:
  • China's crude oil production will drop as much as 7% this year
  • output is declining at aging fields amid capital spending cuts
  • that's despite automobile sales surging in China
  • the "cut" in Chinese production is about the same size as the output cut agreed to by Iraq
From the article:
While China consumes more oil than almost any other country, it’s also one of the world’s biggest producers, with fields stretching from offshore its southern coast to the far north east. The collapse in prices that began in 2014 is taking its toll, and the nation’s output suffered a record decline last year. That plays into the hands of OPEC as it seeks to prop up the global oil market, forcing China to depend more heavily on imports.
Brent crude, benchmark for half of the world’s oil, averaged about $45 a barrel last year, more than 50 percent below levels in 2014, the year OPEC decided to tackle a global glut by keeping the taps open. The crash in prices triggered a rethink by the group, which banded together with 11 non-member countries late last year and agreed to a collective cut of almost 1.8 million barrels a day. Prices have since rallied above $58 a barrel.
China’s output slumped in 2016 as state-owned firms shut wells at mature fields that had become too costly to operate after the crash. Crude production fell 6.9 percent in the first 11 months of 2016 to about 4 million barrels a day, the first decline since 2009 and the biggest in data going back to 1990.
We never talk about breakeven costs for oil production in China, do we?

Do you remember all the acquisitions China was making during the Bakken boom? That was tracked here. As recently as: October 26, 2015: Chinese company pays $1.3 billion for shale in the Permian.

Just Go Away -- January 16, 2017

One of the folks commenting on this story in  The Washington Post had it exactly right: "don't go away mad, just go away." Enjoy your chicken salad. 

Just Go Away, Blondie

Wow, and then Blondie has so many great songs. She puts me in a great mood.

The best news all day (actually I saw this yesterday):

This was from The Los Angeles Times over the past few days. It pretty sums up his entire presidency:

CLR's Radermecher Wells

July 11, 2020: production data updated. 
  • 34194, 1,933, CLR, Radermecher 12-22H, Camel Butte. 52 stages; 12.8 million lbs, t9/18; cum 368K 11/20; cum 409K 5/21;
  • 34010, 1,661, CLR, ...10-22HSL1, Camel Butte, t10/18; cum 407K 11/20; off line 5/20; back on line 7/20; cum 422K 5/21;
  • 34193, 2,324, CLR, ...11-22H2, Camel Butte, t9/18; cum 378K 11/20; off line 5/20; back on line 8/20; cum 395K 5/21;
  • 17718, 575, CLR, ...1-15H, Camel Butte, t9/09; cum 222K 11/20; cum 234K 5/21;
  • 34195, 2,294, CLR, ...13-22H, Camel Butte, t9/18; cum 331K 11/20; bac on line 8/20; cum 354K 5/21;
  • 34196, 1,729, CLR, ...114-22H2, Camel Butte, t10/18; cum 318K 11/20; off line 5/20; back online 8/20; cum 326K 5/21;
  • 28991, 2,120, CLR, ...2-22H1, Camel Butte, t2/17; cum 396K 11/20; off line 5/20; back on line 8/20; cum 401K 5/21;
  • 28990, 1,572, CLR, ...3-22H, Camel Butte, t2/17; cum 2274K 11/20; off line 5/20; back on line 8/20; cum 384K 5/21;
  • 28998, 1,880, CLR, ...4-22H2, Camel Butte, t2/17; cum 502K 11/20; off line 5/20; back on line 8/20; cum 509K 5/21;
  • 34005, 2,212, CLR, ...5-22H, Camel Butte, t9/18; cum 299K 11/20; off line 5/20; back on line 7/20; cum 305K 5/21;
  • 34006, 2,161, CLR, ...6-22H1, Camel Butte, t9/18; cum 279K 11/20; cum 395K 5/21;
  • 34007, 1,945, CLR, ...7-22H2, Camel Butte, t9/18; cum 358K 11/20; off line 5/20; back on line 7/20; cum 371K 5/21;
  • 34008, 854, CLR, ...8-22H, Camel Butte, t10/18; cum 222K 11/20; off line 5/20; back on line 7/20; cum 237K 5/21;
  • 34009, 1,990, CLR, ...9-22HSL, Camel Butte, t9/18; cum 289K 11/20; cum 308K 5/21;
January 10, 2019:
  • 34194, 1,933, CLR, Radermecher 12-22H, Camel Butte. 52 stages; 12.8 million lbs, t9/18; cum 87K 11/18
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

January 6, 2019: #34194, #34195 will be reported later this week.

January 6, 2019: updated graphic of the area --

September 30, 2018:

  • 17718, production update, August, 2018, extrapolates to 7,400 bbls in a 30-day month, a jump from less than a 1,000 bbls prior to the three-month shut-in, 575, CLR, Radermecher 1-15H, Camel Butte, t8/09; cum 220K 5/20;

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Original Post

Note: original post is left unchanged (unless there is a major factual error or typographical error) but the production data is updated.

The original Radermecher well, a 1280-spaced, Three Forks well was drilled/completed back in 2009:
  • 17718, 575, CLR, Radermecher 1015H, Three Forks, open hole/cased; ~ 1.5 million lbs; t8/09; cum 200K 5/20;
That well is sited in section 15-151-96 and the horizontal runs north to south.

The three "new" Radermecher wells are now starting to come off the confidential list (January 16, 2017). These three Radermecher wells are sited in the section to the south, 22-151-96, and will no doubt the horizontals will run to the north.

It's possible they have not been fracked yet. The production profile of the original Radermecher well (#17718) has never been taken off-line. It is customary to shut in wells when neighboring wells are fracked; but we will know more this week when the newer wells start coming off confidential:
  • 28990, 1,572, CLR, Radermecher 3-22H, Camel Butte, t2/17; cum 265K 4/20; off line 5/20;
  • 28991, 2,120, CLR, Radermecher 1-22H1, Camel Butte, t2/17; 391K 4/20; off line 5/20;
  • 28998, 1,880, CLR, Radermecher 4-22H2, Camel Butte, 8 days to drill, Three Forks 2nd bench, 39 stages; 10.9 million lbs; this is becoming so routine for CLR, the entire geologist's summary was less than a page, and did not include drilling to vertical depth; lateral drilling synopsis in one short paragraph; t2/17; cum 496K 4/20; off line 5/20;
I assume the "H" (#28990) is a middle Bakken; the H1 (#28991) is a Three Forks, first bench; and, the "H2" (#28998) is a Three Forks, second bench.

Production profile for #17718 is incredibly unremarkable. This was the production profile for the first year:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProPCF SoldFlared

Since then this well has plateaued off to about 1,000 bbls/month.

The screenshot taken today:

Whiting, QEP, Oasis All Report Nice Wells Tuesday -- January 16, 2017

Active rigs:

Active Rigs3649157187185

Seven (7) wells coming off confidential list -- 

Tuesday, January 17, 2017
  • 28991, SI/NC, CLR, Radermecher 2-22H1, Camel Butte, no production data,
Monday, January 16, 2017
  • 31906, SI/NC, BR, CCU Burner 1-1-26MBH, Corral Creek, no production data, 
Sunday, January 15, 2017
  • 28990, SI/NC, CLR, Radermecher 3-22H, Camel Butte, no production data,
  • 32042, 1,212, Whiting, Gullikson 14-35H, Glass Bluff, t7/16; cum 40K 11/16;
  • 32043, 1,286, Whiting, Gullikson 44-34HU, Glass Bluff, 35 stages, 9.9 million lbs, t7/16; cum 50K 11/16; 
Saturday, January 14, 2017
  • 26364, 1,645, QEP, MHA 2-28-29H-148-92, Heart Butte, t7/16; cum 54K 11/16;
  • 31334, 895, Oasis, Johnsrud 5198 14-18 15TX, Siverston, 4 sections, 36 stages, 4.1 million lbs, t7/16; cum 114K 11/16;

31334, see above, Oasis, Johnsrud 5198 14-18 15TX, Siverston:

DateOil RunsMCF Sold

26364, see above, QEP, MHA 2-28-29H-148-92, Heart Butte:

 DateOil RunsMCF Sold

 32043, see above, Whiting, Gullikson 44-34HU, Glass Bluff:

DateOil RunsMCF Sold

 32042, see above, Whiting, Gullikson 14-35H, Glass Bluff:

DateOil RunsMCF Sold

How Can You Mend A Broken Heart -- January 16, 2017

More Trump jobs: Wal-Mart announces plan to create 10,000 jobs in nod to Trump -- WSJ. 
Retailer says latest job-creation effort will support 24,000 additional construction jobs.

More Trump jobs: General Motors plans at least $1 billion in fresh US investment; expected to create more than 1,000 jobs. Over at The Wall Street Journal:
General Motors Co. this week will announce plans to invest at least $1 billion across several U.S. factories, two people familiar with the plan said, a move aimed at underlining its commitment to U.S. manufacturing jobs in the wake of President-elect Donald Trump’s criticism of the auto maker’s imports from Mexico.

GM’s announcement could come as early as Tuesday, the people briefed on the plan said. The company will cite a number of new jobs in excess of 1,000 stemming from the investment but doesn’t plan to specify which of its factories are in line for more work, one person said.

The move comes days after Mr. Trump publicly ratcheted up pressure on the nation’s largest auto maker. During his press conference last week, the president-elect thanked Ford Motor Co. and Fiat Chrysler Automobiles for recently announced U.S. investment plans that are expected to create a combined 2,700 jobs. He then turned up the heat on GM to follow suit.

Back To The Bakken

Active rigs:

Active Rigs3649157187185

In Other News

Skiing competition canceled: too much snow. Ski World Cup in Switzerland called off. I can't make this stuff up.

How Can You Mend A Broken Heart?

Enquiring minds want to know.

#16 in the 20-song countdown.

How Can You Mend A Broken Heart, The Bee Gees

When Depressed, Go Downtown!

Downtown, Petula Clark

And what a great week to go downtown:
  • IMF boosts estimates for USA GDP growth! Cites Trump impact!
    • President Obama: first president in modern history never to have 3% growth in even one year -- and he had eight years; more than some presidents
    • GDP growth in his last year: a paltry 1.6% (their words, not mine)
    • IMF US GDP projections: 
      • 2017: 2.3%
      • 2018: 2.5%
  • A record-busting inauguration forecast! Hundreds of thousands expected in DC!
  • MLK's niece voted for Trump
  • Downtown is getting safer! Chicago homicides already dropping significantly after Trump election. The 24 homicides over the year's first 15 days (a dynamic link) extrapolates to 584 Chicago homicides in 2017, compared with 797 in 2016. If that holds, that represents a decrease of 27% homicides in the Windy City, one year after the shocking Trump election. [Later, over the MLK weekend, ten homicides. Now, 26 homicides over 16 days extrapolates to 593.]
No Match For "Hidden Figures"

From Yahoo!News headline: three new movies bomb at box office -- can't compete with black women! The bombs:
  • Ben Affleck's "Live by Night"
  • Martin Scorsese's "Silence"
  • "Monster Trucks" 
The New Amazon Credit Card

Mine should be arriving in less than two weeks. Is the new card worth it? Let's see what MarketWatch had to say:

Gasoline purchases:
  • My current card gives me 5% back on gasoline purchases one quarter (three months) every year, which works out to 1.25% over the course of the year.  
  • Amazon: 2% back on gasoline throughout the year; as well as 2% throughout the year at restaurants and drugstores ("rewards" not cash)
Gift card:
  • new Amazon card "subscribers" received $70 gift card
Capital One "What's In Your Wallet?" may be the best competitor: 1.5% for all purchases and a $100 bonus when signing up.

MarketWatch says American Express's Blue Cash Preferred card offers 6% at US supermarkets; 3% at gas stations; and 1% on other purchases. Surprisingly, AMEX has no annual fee on this card. 

The big winner: Chase. The bank/card "will attract high-spending, low-risk customers who will use them responsibly."

The bigger winner: Amazon. It's a "rewards" card; not a cash-back card.

But money if fungible, and "rewards vs cash-back" won't matter. Amazon is more than just books.