Tuesday, May 16, 2017

SM Energy Postpones Bakken Assets Sale; Exxon Mobil: Growing Dividends Mask A Shrinking Business -- Zeits -- May 16, 2017

Drawdown forecast: EIA forecasts a crude inventory drawdown of 2.2 million bbls -- Platts. At that rate, 2.2 million bbls/week, it will take 77 weeks for US crude oil inventory to get back to historical average: 350 million bbls in storage.

Exxon Mobil: One Big Declining Utility

Link here over at Seeking Alpha:
  • Historically, Exxon Mobil reinvested capital in its business at a much faster pace than in 2016 or 2017
  • Still, historically, Exxon Mobil’s production volumes continued to decline
  • Given the deep cuts in the current capex, few years from now the company will have even greater challenges stabilizing its production
  • In this context, the recent dividend increase appears to take credit for accomplishments that are yet to happen
SM Energy Postpones Divide County Asset Sales

Link here over at Bizjournals.
A Denver energy company has canceled plans to sell its assets in North Dakota, blaming the "uncertainty" of oil prices.
SM Energy Company earlier this year said it wanted to sell its Divide County area assets in the Williston Basin in northern North Dakota, and retained an investment bank to help make the sale.
But on Tuesday, SM Energy called off the sale.
Process Vs Substance

With all the "stuff" coming out of Washington (DC) the last couple of days, one must remember to separate "process" from "substance." A quick scroll of the on-line edition of The Wall Street Journal will show readers what I mean. There were a couple of articles on Trump, Comey, secrets, and the Russians but then I was stunned to see this one: Moves to ease gun-carrying restrictions expand. A combination of federal and state legislation could free up limits on carrying concealed firearms. 
More states are giving their residents the right to carry a concealed handgun without permission from authorities—including two this year, bringing the total to 12—while Congress is considering legislation to make that right portable across state lines.
New Hampshire, for example, eliminated the need for permits this year, allowing anyone who can legally own a gun to carry it concealed in public.
If bills introduced by Rep. Richard Hudson (R., N.C.) and Sen. John Cornyn (R., Texas) become law, a New Hampshire resident could bring his or her concealed handgun to any other state, even those such as New York that require their own residents to undergo vetting and obtain approval from law-enforcement officials for the same right.
The Literature Page

I just finished the biography of Bram Stoker, author of Dracula, by David J. Skal. At the end of the day, this biography becomes a reference book, perhaps important enough to be on one's bookshelf.

This review may be helpful

Four DUCs Reported As Completed; Nine New Permits -- May 16, 2017

Active rigs:

Active Rigs502883190190

Nine new permits:
  • Operators: CLR (6), BR (3)
  • Fields: Rattlesnake Point (Dunn); Sand Creek (McKenzie)
  • Comments: the six CLR Mountain Gap permits are for six wells in NWNE 10-146-96; the three BR Gladstone permits are for wells in NENE 26-153-97 (see this post)
One permit was canceled:
  • an SM Energy Melby permit in Divide County
Four producing wells (DUCs) were reported as completed, these four wells are the same pad as #19072, #19073:
  • 30533, 1,308, XTO, Dakota Federal 41X-16C, Haystack Butte, t4/17; cum --
  • 30534, 1,795, XTO, Dakota Federal 41X-16H, Haystack Butte, t5/17; cum --
  • 30760, 1,844, XTO, Big Gulch 41X-16EXH, Haystack Butte, 4 sections, t5/17; cum --
  • 30798, 1,398, XTO, Big Gulch 41X-16E, Haystack Butte, t4/17; cum --

Haynesville Experiencing A Resurgence As Takeaway Is Bottled Up In The Northeast -- Bloomberg -- May 16, 2017

Recent USGS assessment of the Haynesville.

The Haynesville is tracked here.

Today, Bloomberg with this headline story: shale play 'left for dead' gets some love as US gas rises. Data points:
  • the Haynesville helped kickstart the shale boom a decade ago
  • is in the midst of a resurgence as new well designs bring natural gas gushers to life
  • production in the Haynesville will climb for the seventh straight month in July
  • will reach its highest production number since October, 2014
  • Haynesville coming back into play because pipeline bottlenecks are stranding natural gas supplies in the eastern US
  • drillers mentioned: Exco Resources, Chesapeake Energy
  • Chesapeake using "massive amounts" of sand

DAPL Pipeline Oil Flowing? -- May 16, 2017


Wednesday, May 17, 2017: DAPL flowing: from KFYRTV -- Energy Transfer Partners informed regulators they planned to start flowing the DAPL Sunday; Monday, the operator said they were able to stick to their schedule.

Original Post

Reports last week suggested that oil would begin flowing through the DAPL pipeline over the weekend, specifically, perhaps flowing as of Mother Day's. A regular reader sent me a note today suggesting there are reports that yes, indeed, oil has started flowing.

Wow! 4.1% -- Latest GDP Now Forecast; Industrial Production Surges, Surprises Analysts -- May 16, 2017

From GDPNow:
Latest forecast: 4.1 percent — May 16, 2017
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 4.1 percent on May 16, up from 3.6 percent on May 12.
The forecast of second-quarter real residential investment growth increased from 6.0 percent to 8.3 percent after this morning's housing starts release from the U.S. Census Bureau.
The forecast of second-quarter real final sales to private domestic purchasers growth increased from 3.3 percent to 3.6 percent after this morning's industrial production (IP) report from the Federal Reserve Board of Governors.
The model’s estimate of the dynamic factor for April—normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data—increased from 0.32 to 0.59 after the report.
The forecast of the contribution of inventory investment to second-quarter real GDP growth increased from 1.00 percentage points to 1.20 percentage points after the IP report. Much of the increase was concentrated in motor vehicle and parts dealer inventories as motor vehicle assemblies increased 6.4 percent in April, according to the IP report.
Meanwhile, as noted earlier, US industrial production surged. From The Wall Street Journal:
  • measure of output at factories, mines, and utilities -- largest gain in three years
  • production surged 1%; forecast of 0.4%
  • manufacturing, the biggest component: up 1% month-over-month; up a whopping 1.7% over same period last year

Atmospheric CO2 Update -- April, 2017 Data

One year ago, April, 2016: 407.57.

1.44 / 407.57 = 0.35%

1.44 part per million  = 0.000144% increase over the past year.

Watching paint dry.

OPEC Cuts? Another View -- May 16, 2017


May 21, 2017: see this post, also.

Original Post

 From the newsletter that was released two days ago over at Focus on Fracking:
... from this table of official production data, we can see that OPEC oil output was down by a statistically insignificant 18,200 barrels per day in April, to 31,732,000 barrels per day, from a March oil production total of 31,750,000 barrels per day, a figure that was revised 178,000 barrels per day lower than what was reported last month...
... recall that OPEC committed to reducing their production by 1.2 million barrels per day from their October levels (shown here, with Indonesia, who is no longer a member), so these figures show that the total production of the remaining 13 members is within a half percent of the level they agreed to cut back to....
... but note that over 60 thousand barrels of this month's reduction came from Libya, a country that was exempt from the cuts, because their production had been disrupted by domestic unrest....
... news over the past few weeks indicates that Libya has restored over 180,000 barrels per day of production from two oil fields in the western part of the country, and a report just a few days ago indicated that Libya’s oil production is now running above 800,000 barrels per day (bpd) for the first time since 2014, so we can thus expect that May OPEC production will be that much higher...
The IEA report released in the past 24 hours suggests things are not as rosy as the IEA headline. Another story of the same here.

The Energy And Market Page, T+116 -- May 16, 2017; Peak Oil? What Peak Oil? USGS Releases Sprayberry Assessment

Observation: the narrative that OPEC and IEA are now pressing -- "re-balancing was almost achieved" in 1Q17 and OPEC and IEA are now suggesting re-balancing will accelerate in 2Q17 leading to supply constraints by the end of the year (2017). WTI is down at the moment (12:20 Central Time), again below $49.

Futures: looking good. Dow 30 futures up 40 points.

$60: in 2017? -- Rigzone. Wood Mackenzie -- based on survey of 170 industry professionals --
  • $50 - $60 in 2017
  • $60 - $80 in 2020 
  • the article does not specify, but it appears Wood Mackenzie is talking about Brent; WTI has been trending $$3 - $5 less
Sprayberry: USGS releases assessment. At this link, click on the graphic. A pdf will load. In light of "WannaCry" ransomware, proceed at your own risk.

Balanced? IEA suggests that "rebalancing" will accelerate now that "we"  have achieved "almost balanced" in 1Q17.

The Political Page, T+116 -- May 16, 2017; Housing Starts Fall Unexpectedly For Second Straight Month

Ransomware: round up the usual suspects (NOKO).

DNC staffer / wikileaks source murdered: round up the usual suspects (for hints, see first season of House of Cards).

April housing starts: horrendous. Down 2.6% vs 3.7% increase forecast. Does market care?  No. Huge, huge decline in the northeast. Hmmmm. See "Hyperdrive" tag. Everything's moving to Texas. From realtynews:
  • Dallas, #1 in housing starts
  • Houston, #2 in housing starts
    • April: strongest April in the history of Houston real estate for single-family home sales
    • March: record-setting March
More on April housing starts, from multiple sources:
  • April, housing starts: fell 2.6%
  • March, housing starts: fell 6.6%
  • Steve Liesman (CNBC): could be due to stricter lending laws in Dodd-Frank (it's been my impression that Liesman loves Dodd-Frank) 
  • this may not be good for GDPNow forecast 
April industrial production: huge number!
  • 1% increase vs 0.4% forecast
  • this may be good forGDPNow forecast 

Update On Moving Bakken Crude To Asia -- May 16, 2017

Active rigs:

Active Rigs512883190190

RBN Energy: update on moving Bakken crude oil on VLCCs from the gulf to Asia.

US crude oil exports: at this link