Thursday, December 14, 2017

Thursday Night Notes -- December 14, 2017

Williston Minerals:
Williston residents will know more about this than I do but Oasis is drilling inside city limits. Today, I got a note from a reader who said he received his first royalty check from the Osprey 5401 44-23H well (#33499). His division orders said he owned slightly less than 0.00013 mineral acres. His first check for two months' production (September and October) was slightly less than $225.
I remember taking my dad out to see that Oasis pad some years ago; the pad is on the south side of the railroad tracks, a bit west of downtown Williston, south of Midway Junction (if that still exists); the pad is not easily seen from the road. At that time, the horizontals were running to the south.
The Osprey 5401 44-23H runs straight north from the pad; it appears the horizontal runs about two miles north from the pad equidistant from Sakura Japanese Steakhouse to the west, and Buffalo Wild Wings to the east (I could be way wrong on that; trying to overlay several maps to find where the horizontal runs). This would be a 1280-acre unit so it would include a lot of Willistonites.
  • 33499, 593, Oasis, Osprey 5401 44-23H, Todd, 50 stages 10 million lbs with ceramic, t10/17; cum 40K first full month;

Mony, Mony, Tommy James & The Shondells

SRE: very, very close to closing the Oncor deal. From SeekingAlpha:
  • Sempra Energy has reached a settlement with several stakeholders to its acquisition of Energy Future Holding (and thus its takeover of Oncor Electric Delivery)
  • the acquisition of EFH includes EFH's indirect ownership of Oncor (about 80%)
  • parties to the agreement are Staff of the Public Utility Commission of Texas (PUCT), the Office of Public Utility Counsel, Steering Committee of Cities Served by Oncor, and Texas Industrial Energy Consumers
  • those parties agree the acquisition is in the public interest, meets statutory standards and will bring "substantial benefits." They'll ask the PUCT to OK the deal
  • talks with other stakeholders are ongoing, Sempra said
Debbie Downer

Market: the "market" (Dow 30, et al) seems to be in a holding pattern, waiting for the tax bill to be voted on; "everybody" remains positive that the US Senate will vote/pass it next week, but it's not a slam dunk. President Trump lost a lot of political capital supporting candidate Moore in the Alabama election; he may have lost the edge he needed to put the tax bill through. 

Top story in the WSJ tonight: several Republican senators (many of them appear to be "never Trumpers") press for changes in tax bill. If I were President Trump, I would call their bluff. I have said on numerous occasions there are at least ten Democratic US senators that want this bill passed but won't support the GOP and/or President Trump. If Mitch McConnell does not have the votes, the tax bill will have to be shelved until the new year, and the GOP will be forced to work with the Democrats. I don't think the Democrats would be willing to work with the GOP on a new tax bill in 2018; they would prefer to wait until after the 2018 election. 

On another note, I think the GOP is getting nervous about the tax bill; they're watching the polls: 28% of Americans are in favor of the bill; that means 72% are against it -- according to some polls. I assume some GOP senators are starting to ask if "we" would be better off if the tax bill is passed, and except for those directly invested in the stock market, some aren't so sure. At the end of the day, Democratic supporters like Tim Cook at Apple are going to be the real losers if the tax bill is not passed.


Economy: from The WSJ tonight -- Americans are spending more than expected as holiday season heats up. 

Hess Corp (think Tioga, ND) shares popped 5% after hours today; outsider pushing for ouster of John B. Hess as chief executive or push him to consider selling all or part of the energy company. No link. Story everywhere.

Quiz For The Day -- Truck Drivers Not Allowed To Take This Quiz -- December 14, 2017

Don pointed out a huge -- at least I consider it a huge -- error in this story, because:
  • it makes a huge difference;
  • Elon Musk always brags about it with regard to his trucks; and,
  • any truck driver worth his salt would see the error
Can you spot the error in these two paragraphs below? From this article in Bloomberg Businessweek, "this electric truck will probably beat Tesla's to market." Here are the paragraphs; see if  you can spot the error:
As [Dakota] Semler drives the ET1 [his all-electric semi truck] around Hollywood, gawkers whip out their phones to take photos.
The heavy-duty semi, which has a 22-inch touchscreen on its dashboard and a winged black logo splashed across its grille, uses a beach-ball-size electric motor and a couple of large battery packs to carry as much as 80,000 pounds of cargo, the industry standard for the highest class of truck. When it starts shipping in 2019, the ET1 will have a $150,000 starting price tag and a 300-mile range, meaning it’ll compete with medium-duty delivery trucks. 
The error: no truck in the US is allowed to carry 80,000 pounds of cargo (exceptions, of course, with special permits for very, very rare and specific reasons). From wiki, the entire tractor, trailer, fuel, cargo, passengers, etc. cannot weight more than 80,000 pounds. Obviously the cargo is going to be around half that amount, maximum.

From wiki, the "highest class truck is a Class 8 or a Class 9, which is a special duty Class 8 truck. But in this case, both Dakota Semler and Elon Musk are talking about the 18-wheelers we see everyday on the highway, which are Class 8 trucks.  

See wiki:
The practical gross vehicle weight limit in the USA for Class 8 trucks is determined by per-axle weight limits set by the Federal Bridge Gross Weight Formula on interstate highways. Longer 18-wheelers can weigh up to 80,000 lbs. In most states, exceptions to these limits can be made for an Oversize load but they require special permits and handling on a designated route.
So, next time you hear anyone talking about a Class 8 truck hauling 80,000 pounds of cargo down the interstate, you now know more than the guy talking to you. But it explains why Elon Musk and others keep talking about "80,000 pounds of cargo." Because 80,000 pounds is the most allowed by the US -- but that's for the entire enchilada (the tractor; the fuel; the passenger(s); the trailer; and, the cargo.

Eighteen Permits Cancelled Including Thirteen EOG Bear Den Permits; Nine New Permits -- December 14, 2017

Active rigs:

Active Rigs524064181191

Nine new permits:
  • Operators: WPX (6); EOG (3)
  • Fields: Mandaree (Dunn); Painted Wood (Williams)
    Comments: WPX has permits for a 6-well Lion pad, in section 7-149-93; EOG has permits for three Round Prairie permits
Two permits renewed:
  • Lime Rock: two Schneider permits in Dunn County
Eighteen permits cancelled (see first comment):
  • EOG (13): thirteen Bear Den permits in McKenzie County; they are all "3130H-150-94" permits;
  • Petro-Hunt (5): one Slugger permit and one Talon permit, both in McKenzie County; three Harry Dunne permits in Stark County
No DUCs reported as completed.

Whiting Update At Seeking Alpha -- Filloon -- December 14, 2017

Link here.
  • the Bakken is seeing productive results from well design improvements
  • Whiting improved oil production per horizontal by 56 KBO and doubled natural gas production from 2015 compared to completions after 2016 over 16 months of well life
  • lateral lengths have remained constant as enhanced completions have improved production per foot.
  • further upside is possible, as sand volumes could be increased
  • WLL's Twin Valley Three Forks location has produced 356 KBO in 13 months

Update On North Dakota Drought -- State Deactivating The Drought Map -- Says "It's Over" -- December 14, 2017

Something tells me I'm going to get a lot of angry responses from farmers in North Dakota, especially those in the southwest part of the state, after posting this. From what I hear, the drought is not over in the minds of many. But, something also tells me a map is hardly necessary any more. The farmers know their land a lot better than bureaucrats in Bismarck. [Now, I will get an equal amount of angry mail from bureaucrats in Bismack (BIB).]

From The Williston Herald:
While the western half of the state remains in moderate drought and the eastern side is abnormally dry, the state is deactivating its drought monitor map at the end of the month.
North Dakota Agriculture Commissioner Doug Goehring said the map was an invaluable tool for farmers throughout the state during the growing season, and was viewed nearly 11,000 times.
The Drought Hotline interactive map was launched in June, when much of the state was experiencing extreme and exceptional drought conditions. By August, all but two of North Dakota’s counties were listed at some level of drought by the U.S. Drought Monitor, and many producers said it was the worst since the 1980s.
Only 5 percent of the state is now listed in severe drought, and no areas are extreme any more. Western North Dakota is still in moderate drought, and the east is still abnormally dry, because of unseasonably warm temperatures and below-normal precipitation the past 30 to 60 days.
The National Oceanic and Atmospheric Administration says this is the fourth driest October-through-November period on record.
My dad could really relate to this. I can imagine the conversation now if I were to visit him in Williston. He's 95 years old.
Me: This was the worst drought since the 1980s.
Him: Yeah, tell me about it. I remember the drought in 1933, the one in 1934, and the one in 1935. But the one in 1936 was really bad. Hey, do you think AAPL is going to split again? How's President Thump (sic) doing? Can we go to the bank? And then to Gramma Sharon's. But that drought in 1936; now that was bad. Even worse than the one in 1932. I don't know about  the drought during the war? I was in the Pacific. Did I ever tell you about the time we took 5,000 marines to China? What did they say about the drought this year? I forget what you said. Are we still going to the bank? Do I need to put on a jacket?
My dad was raised just outside of Newell, South Dakota, just a few miles from Rapid City, SD, and he often mentions how dry that part of the country was. He says they talked about seven-year cycles: seven years of drought followed by seven years of "less drought." He always thought his dad could not have found a drier piece of land on which to homestead in the entire United States had he tried. He never said that in a bad way: he always said that when bragging about how his dad could support a family with such meager resources; raised five kids and all did well. I didn't know how dry North and South Dakota were until I took North Dakota "history" in eighth grade from a Mr. H. I believe his last name started with "H" -- a great teacher, but I have lousy memory for names. One of my many shortcomings.  

It Never Rains In Southern California, Albert Hammond

The Market And Energy Page, T+326; Saudi Shenanigans -- Reason #45 Why I Love To Blog; BLM Estimates Wyoming Wind Farm Will Kill Upwards Of 64 Eagles Per Year -- December 14, 2017 -- This Page Is Complete But Details May Yet Be Added

Disclaimer: in a long note like this, there will be factual and typographical errors. It is often difficult to separate fact from opinion in a post like this. Read it at your own risk.

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

Some days there is just too much to post. Amazing how fast things seem to be moving.

Economy: the economic news this morning was simply stunning. I will fill this in later when I get caught up, but the retail sales simply blew the socks off anyone really paying attention. Steven Liesman was one of those paying attention and he said he was unable to find such a huge month-over-month increase in retail sales as far back as he could look. I think he said he went as far back as 2004. CNBC has this story on retail sales: the increase in US retail sales for the month of October was almost triple what experts expected. The jobs data was reported elsewhere; it, too, was stunning and nothing was mentioned about Trump's campaign promises.

Trump gets no credit: after those numbers were released and comments about the great economy made, President Trump was not mentioned. Instead, CNBC immediately switch to Europe and went on to suggest that all of this was a global phenomenon, having nothing to do with the US president. It never quits. One can be sure had this happened under the Obama administration we would hear no end of his great policies.

Yellen: by the way, Steve Liesman, again CNBC, noted that with regard to the stock market, she said it was neither "red nor orange." As Liesman noted, there's only one color left and that's green. The stock market at this level does not scare "the Fed" (red), nor the stock market at this level lead "the Fed" to be cautious (orange), but rather, Liesman suggests that "the Fed" is suggesting US equities are enticing (green). [This, by the way, is/was in great contrast to what a former Fed chairperson said about the frothiness of the stock market.]

Gasoline demand. I posted the weekly petroleum report and the "gasoline demand" graph yesterday. Gasoline demand actually exceeded that for the same time period a year ago. But this was the headline story over at Reuters: oil slips as US gasoline stock build overshadows crude draw

Saudi Shenanigans

I talked about "Saudi shenanigans" and/or "Saudi smoke and mirrors" all through 2015 and 2016 when Saudi was talking about their surge, and then their "cuts" in production. In the big picture, the surge was a $1 trillion mistake and the cuts in production simply brought them back to where they were before the surge. I probably won't provide all the links but  google search of the site will lead one to those posts.

Now, today, a reader sent me an article that said the very same thing about "Saudi cuts." That article was full of interesting data, which I will come back to later, but for now this paragraph from the article:
More important than demand, however, was the November supply of OPEC oil, which declined by 133.5K to below 32.5 million bbl, a fresh six month low if only 195K bbl lower than last year's output, confirming that ahead of last year's production cut agreement, OPEC furiously ramped up production effectively offsetting the subsequent output limit.
Saudi Shenanigans link. The graph at this post is one of my favorite graphs; as is this one; and this one. I hope the latter is updated a year from now.

Huge WTI-Brent Spread Boosts US Crude Oil Exports

Also at, an update on US crude oil exports. One word: wow! But it's been previously posted on the blog: U.S. crude grades into China climbed to a record in November.

The White Butte Jore Federal Permits

This is just a reminder to myself to post my thoughts regarding the White Butte Jore Federal permits. This is a huge story, especially in light of the announcement this week that Oasis is selling its "non-core assets" in the Bakken to buy acreage in the Permian. The most recent post on these permits is at this post

GE Hitachi Nuclear Confirms North Carolina Layoffs

Incredible. I just pointed this out a couple of days ago. The Washington Post link is here. I talked about this at this post, "Reality of Renewables," December 12, 2017.

The reader who sent me that story asked if I thought there might be a capacity surplus of electricity in the US right now and that we might see a cutback in some of that capacity next year (2018). This was my reply:
The decommissioning of a nuclear plant, if this is what this is, is a huge bullish story for natural gas.

In my "Reality of Renewables" post, December 12, 2017, linked above , I mentioned that there is no way solar/wind will be able to replace all the electricity provided by nuclear plants being decommissioned.

On top of that, I get the feeling that tax credits for wind/solar are going to be eliminated/significantly reduced under the new tax bill. Of course that could change. But every time I see a nuclear plant being decommissioned, I know that natural gas will benefit; even if they add a bit of wind/solar it won't be enough and natural gas peaking units will be needed.

With regard to your question: I don't think there is a surplus of electricity as much as there is a mismatch between when/where electricity is needed and how it is supplied.
I could have added that renewables will simply increase the cost of electricity to all consumers, all else being equal.

By the way, for those faux environmentalists who love wind farms, note that the largest wind farm in the US (yet to get started), the Chokecherry and Sierra Madre Wind Energy Project in Wyoming has been give carte blanche with regard to killing eagles and other migratory birds. Perhaps not carte blanche but awful darn close:
A team researches golden eagles, as an "eagle take" permit is necessary. The research is to be continued during construction and operation of the wind farm so as to be compared with the condition prior to construction. The $3 million research project is paid by PCW. The Bureau of Land Management estimated 40-64 eagles per year for 1.000 turbines, whereas the Fish and Wildlife Service estimates 10-16 for 500 turbines
It's amazing how they can get such a great estimate: an upper limit of 64. Why now 66 or 61 or 73for 1,000 turbines; and, for 500 turbines, why not 14 or 21 or 17 for the upper limit. Of course anything over the limit will result in an inconsequential fine, which will be passed on to consumers, regardless.

Huge Decline In First Time Unemployment Claims -- Claims Drop 11,000; Retail Sales Huge; Trump Rally Continues -- December 14, 2017

Linn Energy: to split into three stand-alone companies in 2018.

Weekly jobs report: link here -- again, economists expected first time claims to rise; in fact, they dropped, and they dropped significantly.
  • consensus: 238,999
  • prior:  236K
  • actual: 225K
Magic numbers (link here): Changed with Trump administration -- see earlier pages at the link for previous "magic numbers"
First time claims, unemployment benefits: 275,000 (> 250,000: economic stagnation)
Connecticut, Illinois

Connecticut comes up short .... again. WSJ. Halfway into the budget year, sales and income tax revenues have come in over $200 million under projections.

Illinois drives people away --- WSJ. The taxpayer migration continues from the Land of Ever Higher Taxes. 

North Texas, DFW area: I don't think I've ever seen so much growth, so much constructions in an area already pretty mature. 

China -- Coal
Huge story this week: China suffers natural gas shortage as coal ban backfires. Chinese authorities have commandeered supplies of natural gas to heat homes, forcing chemical plants and factories to shut down, after efforts to clear smog-choked air by banning coal use backfired by causing energy shortages in frigid weather. Huge story: gets very little play in the US.

Back to the Bakken

Active rigs:

Active Rigs514064181191

RBN Energy: natural gas market balance, prices hinge on cold weather.