Thursday, April 27, 2017

Marathon Petroleum Crushes Earnings Forecast -- Zachs -- April 27, 2017

Disclaimer: this is not an investment site. This helps me put the Bakken into perspective.

Link here.

Zachs forecast a lost of one cent / share. In fact, Marathon Petroleum EPS came in at 6 cents per share. Wow.

Revenues: $16,393 million missing Zachs estimate of $19,030.9 million. However, revenues rose 28% on a year-over-year basis.

Makes me eager to see how XOM, CVX, and COP fared.

Nothing About The Bakken; Nothing About Energy -- April 27, 2017

The Amazon Page

Source: AEI
Amazon Prime 
Yahoo!Finance posted this story a few hours before Amazon announced quarterly earnings: why it doesn't matter that Amazon's most popular service costs it billions. Data points:
  • most popular service: Amazon Prime
  • 80 million users (apparently US users)
  • up 38% from a year ago
  • if accurate, that suggests that nearly two-thirds of American households have Prime subscriptions
  • (wow, wouldn't the political parties love to have those address lists; maybe they do)
  • Prime members spend an average of $1,300 annually; vs $700 for typical non-Prime member
  • much, much more than just fast delivery
More at the link.

Amazon Earnings

Amazon extends growth streak, unfazed by lavish spending -- Bloomberg. Data points:
  • unbroken 20-year streak of double-digit revenue growth
  • no signs of slowing this year
  • topped profit and revenue estimates in 1Q17
  • projected sales that may beat projections in the current period
  • shares surged as much as 5% in extending trading
  • closed during the regular session at a record $918.76; has jumped 23% this year
Bezos is just $5 billion away from being the world's richest person -- Bloomberg.
would surpass Bill Gates, the world's #1 billionaire since May, 2013

Google Earnings

Smash estimates -- CNBC.
  • EPS: $7.73 vs $7.39 forecast
  • revenue: $24.75 billion vs $24.22 billion forecast
Microsoft Earnings


Global Warming

Not just droughts, but all extreme weather is at declining, at, or near record lows. And it all happened within the first 100 days of President Trump's presidency.

US drought in the US fell to a record low this week -- USA Today. Happened on President Trump's watch -- in his first 100 days. Only 6.1% of the lower 48 states is currently experiencing dry enough conditions to be called a drought. This is the lowest percentage in the 17-year history of the weekly US Drought Monitor report. The previous record low occurred in July, 2010, when 7.7% of the continuous US was not in drought. Hmmm, that's funny. President Obama did not mention that (as far
as I recall).

Socialists' Math

From story regarding FBI investigation of failed college in New Hampshire:
Jane Sanders, wife of Sen. Bernie Sanders, I-Vt., overstated donation amounts in a bank application for a $6.7 million loan the college used to purchase a prime 33-acre property on Lake Champlain in 2010.
She told People’s United Bank in 2010 that the college had $2.6 million in pledged donations to support the purchase of the former Roman Catholic Diocese of Burlington property.
The college, however, received only $676,000 in actual donations from 2010 through 2014, according to figures provided by Burlington College.
I could care less, but look how far down in that very, very long story for Bernie Sanders name to show up. Had this been a story on Flynn's wife, let's say, completely unrelated to the POTUS, one can bet Trump's name would have been in the first paragraph.

It will be interesting to see where the FBI investigation leads. Something tells me the US Attorney General wants no brick left unturned in this one.

Meager, Meager Daily Activitiy Report -- April 27, 2017

Active rigs:

Active Rigs482785182187

No new permits.

Two wells that came off the confidential list were previously posted.

And that was it; nothing more of interest.

Wow -- One Of Those Days -- No End Of Surprises -- April 27, 2017

Outrun Change has a great post with a look at the historical number of active rigs in North Dakota. What always amazes me is that with more than 200 active rigs during the height of the boom, getting to one million bopd was "a big deal." With only 50 active rigs in North Dakota, the state is still producing a million bopd and has a thousand inactive wells (completed, but not producing) and another 900 DUCs (wells drilled to depth, but not completed/fracked).

A huge "thank you" to Outrun Change for linking the MillionDollarWay; very much appreciated. Again, the disclaimer: I often make mistakes and my data may differ from that of the NDIC for various reasons. To the best of my knowledge my data is accurate or very near accurate when it comes to rig counts as posted by the NDIC.

Some years from now, whoever writes the history of the Bakken should have no end of data from which to work.

A Graph Is Worth A Thousand Bbls -- April 27, 2017


Later 7:47 p.m. Central Time: after weeks of not much being said about the price of oil, there were a flurry of stories today on this subject. I find it fascinating. There are experts on both sides of the coin. I find it fascinating that despite an "OPEC cut in production," the price of oil is trending lower, although tonight futures have WTI back to just over $49 after flirting with $48. It's a fool's errand to predict the price of oil, but I will say again, that once the price of oil starts to move, it can move quickly.

Later, 7:43 p.m. Central Time: Saudi Aramco CEO says peak oil demand is a misleading theory -- Bloomberg. Data points:
  • Saudi says those who think crude oil demand will peak by 2030 are wrong
  • Saudi says crude oil demand will continue to grow well into the middle of the century
  • this is what Saudi is worried about:
Rather than being concerned about peak demand, the world should focus on the “grave threat” to oil supplies resulting from the cancellation or deferral of about $1 trillion of energy projects amid the slump in crude prices, he said.
It would be interesting to know what Saudi's timeline is: when will the cancellation or deferral of about $1 trillion in energy projects begin to affect the actual daily supply of oil and the actual price of oil? This year? Next year? Ten years from now. I still say it's going to take a long time to burn off the discoveries made in 2009, 2012, and 2014.

Later, 7:31 p.m. Central Time: CNBC has the same story and says "it will get worse."
While conventional oil activity is in freefall, U.S. shale drilling is on an upswing, thanks to American companies halving the cost of production, IEA notes. U.S. crude production has recovered to more than 9.2 million barrels a day, the highest level since late 2015.
Producers in the U.S. shale patch rely on an expensive method called hydraulic fraction in which they inject water, minerals and chemicals at high pressure into wellbores to break up shale rock and release oil and gas. More efficient "fracking" will help these producers grow output by 2.3 million barrels a day by 2022, IEA projects.
But shale cannot make up the shortfall in conventional oil development: Conventional sources account for 69 million barrels a day of the current global output of 85 million barrels a day.
I think this is a fascinating story. There are so many permutations. One must remember, crude oil reserves are a function of the price of oil. Recoverable reserves change considerably when oil moves from $40/bbl to $100/bbl.

The real question is how much shale could be produced in the US with WTI at $80/bbl? or $100/bbl? At the sidebar at the right is a long, long list of shale plays in the US. For all practical purposes there are only three crude oil shale plays that matter right now: the Permian, the Bakken, and the Eagle Ford, and some might argue only two really matter.

Original Post

This story has been told several times in several places over the past few days. I have not posted the story nor linked the story until now. There were several reasons why I did not post/link it.

But now, with this graph, perfect for posting:

I think the graph would have been even more "effective" had they drawn the x-axis to 75 billion bbls to accurately capture the 60-billion-bar for 2009. Folks are concerned that low discovery rate in past two years will mean severe supply/demand imbalance sooner (2018) than later (?).

Maybe, maybe not. But when I see the graph above, and note the 2009 bar, as well as the 2012 and 2014 bars, my hunch is it will take a few years to work that off, as well as the three billion bbls of crude oil now being stored globally.

Reason Why I Love To Blog -- Reason #2 -- I Can't Make This Stuff Up -- Top Story Of The Month? -- April 27, 2017

Just a couple of days ago I posted photos of a Chinese ship in Portland, Oregon, on the Willamette River being loaded with North Dakota wheat, and once loaded will sail to Peru (South America) to offload that wheat.

Today, of all things, over at Twitter, a photo of a tanker carrying Bakken crude oil to Asia was posted:

The photo is linked to this Downstream Today story. Data points:
  • first ever reported export of North Dakota's crude oil to Asia left port last month
  • it is expected to be the first of numerous cargoes once the key DAPL starts moving oil in May
  • Swiss-banked Mercuria Energy Trading S.A. loaded more than 600,000 bbls of Bakken crude, as well as some Mars Sour crude, in late March off the coast of Louisiana
  • very large crude carrier (VLCC)
And then this from the linked story:
The burgeoning appetite for U.S. crude among Asian refiners could be a boon for Bakken crude, especially when the Dakota pipeline starts up.
That line can carry 470,000 barrels per day of oil from North Dakota's Bakken play to the Gulf, the starting point for the lion's share of U.S. oil exports. At least two Asian refiners told Reuters that they are interested in Bakken light crude because of the products it can yield through refining.
With the start of Dakota Access (DAPL), Bakken producers such as Hess Corp and Continental Resources for the first time will have a direct route to export terminals on the Gulf Coast, better connecting them to international markets.
"There seems to be increasing demand for light quality crude in Asia," said Michael Cohen, head of energy commodities research at Barclays. "I think with Dakota Access coming online, it makes the pipeline route from the Bakken to the Gulf Coast more economical."
Memo to self: I need to send a note to Jane Nielson.

There are several story lines here. One has to do with the reason Asia might be preferring Bakken light. Long-time readers know this story. 

Random Update Of A CLR Antelope Well In Elm Tree Oil Field -- April 27, 2017

This well has been added to the "monster well" page and to the "wells of interest" blog.
  • 21488, 1,357, CLR, Antelope 3-23H, Elm Tree, Three Forks, 29 stages, 2.8 million lbs, t8/12; cum 532K 2/17;
Note to newbies: I have no specific criteria for "monster wells." I started the "monster well" page early in the boom when EURs for middle Bakken wells were expected to be around 350,000 bbls of oil. I thought, at the time, then, any well that was on its way to 500,000 bbls in three or four years could be considered a monster well.

Now, just a few years later, some operators won't drill a Bakken well if the likely EUR is not at least 750,000 bbls of crude oil.

Some (probably most) readers will feel that many of the wells on the "monster well" page (linked above) are not really "monster wells." That's fine. I follow them there for other reasons also.

Maybe some day I will add a page for super-monster wells -- wells that go over 1 million bbls, and then the super-duper monster wells, those that go over 2 million bbls.

It is my expectation that any given Bakken well is likely to be producing for 30 years. During that time, primary production from any given Bakken well will be affected by re-working the well; re-fracking the well; re-entering the well for additional side-tracks; activity from neighboring wells; as well as other factors. The general consensus is that 50 - 70% of a Bakken well's EUR will be produced in the first couple of years after being completed. I'm not convinced. I think the Bakken still has many surprises.

Why I Love To Blog -- Reason #46 -- April 27, 2017


April 29, 2017: from Rigzone, gasoline demand concerns pressure oil prices. I beat the drum regularly on this one; seldom do I see stories about the decline in gasoline demand. Finally Rigzone has a story. Data points:
  • for the second week in a row, EIA reported a substantial build in US gasoline inventories
  • inventories rose by 3.4 million bbls
  • demand for gasoline fell slightly
  • 4-week average was down about 2% versus same period last year
  • in anticipation of US driving season, refiners have been ramping up
  • refining: 17.3 million bbls per day; seasonally high utilization rate of 94.1%
  • at the same time, imports of gasoline have been unusually high over the last two weeks: almost one million bbls/day
Original Post
I have said many, many times that the best way to track inflation and compare the economies among the 50 US states, and to compare the US economy with the global economy is to track the price of a MacDonald's quarter-pounder.

Likewise, I have often said that the best indicator of jobs / job growth is gasoline demand. I have explained the reasoning elsewhere but I doubt I could find it now. If I do, I will post the link.

Today, the number of first time unemployment claims surged unexpectedly; the number of claims jumped 14,000 without any explanation (as far as I know; mainstream media will probably say it had something to do with the weather). Whatever.

So, the number of first time unemployment claims surged unexpectedly. Let's see what gasoline demand did. Wow! Gasoline demand has been absolutely flat for the past four reporting periods and below last year's demand (prior to the most recent report today) going into the busy US driving season. Until I saw the jobs report today, I had expected the gasoline demand to rise, perhaps even going up enough to overtake the gasoline demand one year ago.

But wow! Completely unexpected (until the jobs report came out): gasoline demand decreased and remains below the demand one year ago. Gasoline prices continue to remain very, very low. Crude oil was trading in a narrow range around the $50-line but in the past 24 hours dropped 2% to $48 and change. Right now it's down 2.5% for the day, and trading at $48.38.

Gasoline demand:

Something Happening At A Hess HA-Mogen Multi-Well Pad? -- April 27, 2017

April 27, 2017: #20738 and #16694 have been off-line since 12/16. See this post where I track the HA -Mogen wells.

Random Update Of An Incredible SHD Oil & Gas Well In Deep Water Creek Bay -- April 27, 2017

I've posted on this well several times. Once can search the blog. This post includes the graphic

The well:
  • 19296, 2,388, SHD Oil & Gas, Golden 22-31H, Deep Water Creek Bay, t3/15; cum 505K 2/17
One-half million bbls of oil in about two years.

Natural gas: 346,733 MCF = another 60K of boe.

A reminder: this is an extended long lateral (three sections long, under the river).

It looks like not much has changed. The other wells on this pad are still waiting to be completed.

Monthly production:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

The other three wells on this pad:
  • 31109, conf, SHD, Charging Wildcat 22-31H, API: 33-055-00182, not fracked acc. to FracFocus;
  • 31110, conf, SHD, War Eagle 22-31H, API: 33-055-00183, not fracked acc. to FracFocus;
  • 31111, conf, SHD, Luke Neset 22-31H, API: 33-055-00184, not fracked acc. to FracFocus
The graphic:

Great Article Over At Rigzone On Solving The "Marcellus / Utica" Problem -- April 27, 2017


Later, 8:33 a.m. Central Time: see first comment --
As impressive as the Dragon ship story is (they use ethane to power the ship, also), there are even larger ships - almost triple the size - to transport ethane from the Gulf to India.
Reliance Industries operates the complex in India, I believe.
The amount of gas coming from the Appalachian Basin, by this time next year, will be stunning as many pipelines will be in service by then.
Original Post

 Link here. Data points:
  • March 9, 2016
  • 27,000 cubic meters of ethane
  • loaded on the Ineos Intrepid
    • new class of LNG vessel
  • 4,000-mile voyage from US to Rafnes, Norway
  • first time US shale gas transported to Europe
  • made possibly by using new class of LNG carrier
  • the Ineos Intrepid
    • ship designer: Evergas
    • one of eight "Dragon-class" vessels
    • world's largest multigas LNG-ethan carriers
    • these eight vessels will be the "seaborne pipeline" linking US and Europe
  • in addition to Rafnes, the Dragon-class carriers deliver ethane cargoes to Ineos' cracker at Grangemouth, UK
Much, much more at the link.

April 27, 2017

WTI futures drop 2% overnight: now trading below $49.

Active rigs:

Active Rigs482785182187

RBN Energy: E&P companies doubling down on Marcellus / Utica in 2017 CAPEX plans.

Scott Adams: President Trump's first 100 days.

The Energy And The Market Page, T+96 -- April 27, 2017

Disclaimer: this is not an investment site. Financial news is posted to help me put the Bakken into perspective. 
Market Day

  • Nasdaq: up 13
  • Dow 30: up 17
  • WTI: $48.60 
UNP: Warren Buffett must be thrilled. Personally, with everything I'm reading, I never would have expected this. UNP trading near all-time highs (I believe) and UNP popped overnight -- up over 3% this morning with a dividend that will most likely be increased. I guess its 52-week high is $115, so UNP has a little way to go to beat its all-time high.

XLNX: wow, wow, wow. Beats on earnings, revenues.

Before The Market Opens

Futures. Up 28 points.

Exuberance. still suggesting that OPEC could hit its target, $60 oil with extension of cuts. Right now, WTI before market opens: drops 2% overnight, now trading below $49. This has to be very worrying for Saudi Arabia and those US operators that bought Permian for $40,000/acre.

Exuberance. oil supermajors dig out of doldrums as cash poised to surge -- Bloomberg. We'll see when XOM, COP, CVX report.

What, Me Worry? US E&Ps can turn a profit on $50 to $60 oil -- Barclays. That's not the quesiton: can they make money on $30 to $40 oil?

Saudi losing share. To Iran, Iraq on oil cuts -- Bloomberg. Tea leaves suggest to me the OPEC (wink, wink, Saudi Arabia) won't extend the cuts; if the cuts are extended, won't amount to much. At $100-oil the Armaco IPO is worth $2 trillion, some say. At $50-oil, not so much.

Not quite right. Headline from last night -- "oil prices stable after big draw in US crude inventories." -- Reuters. Less than 12 hours later, WTI tumbles 2%, now below $49.

Completely missed this one: UNP trading at its 52-week high. Who wudda thought? Up almost 2% overnight. 

The Political Page, T+96 -- April 27, 2017

Global warming hits North Dakota (again): Grand Forks, ND, overnight --

Schumer economy. First time unemployment claims jump way more than expected.
  • forecast: a small tick up to 245,000 from a revised reading of 243,000
  • actual: an unexpected jump -- first time claims jumped 14,000 to 257,000
  • four-week average: dropped 500 to 242,250
  • it will be interesting to hear the analysis of this surprise surge; most likely:
    • weather
    • weather
    • weather
  • how did market react: futures steady, still showing the Dow 30 up 31 points
Go, Portland, Go: cancels 82nd Avenue annual Rose Parade over intimidation by alt-left group. At some point, I would imagine Portland retailers are getting tired of activists negatively impacting their business. 82nd Avenue is a long way from downtown Portland and I imagine downtown Portland events are even worse. I was in Portland all last week. Our daughter no longer likes to go into Portland due to concern for her personal safety. We went downtown one day to visit Powell's bookstore and do the chocolate candy store tour (her tour) but that was it. The Max (light rail) was fairly empty compared to the subways in Boston, but I can imagine many middle-aged and older riders were a bit uncomfortable with many of the riders: 9:00 a.m. and at least three in our car alone, drunk, high, or hung-over, and under the age of 25. Biggest concern is the unpredictability of some of these folks. I was surprised to see not one "transit authority" employee or policeman along the entire trip. My hunch is that less than a third of riders on the Max actually have a ticket. By the way, even Powell's was very empty. My daughter told me that the coffee shop was usually quite busy and we might not find a place to sit; in fact, it was almost empty. 

As noted, we went into downtown Portland one day. Had we been in Boston, we would have been downtown every day.

Go, Senate, Go: with just a day or so until President Trump's 100th day in office, the US senate confirmed his last cabinet nomination, the new Secretary of Labor.