Friday, January 19, 2018

Kraken Reports Three Completed DUCs; EOG With Six New Austin Permits; Four Permits Renewed -- January 19, 2018

Active rigs:

Active Rigs583749161187

Eight new permits:
  • Operators: EOG (6); WPX (2)
  • Fields: Parshall (Mountrail); Wolf Bay (Dunn)
  • Comments: EOG has permits for a 6-well Austin pad new NENW 19-154-90 (see graphic below)
Four permits renewed:
  • CLR: two Salem permits in Williams County; two Entzel permits in Dunn County
Two permits canceled:
  • Resource Energy: a Strom permit and a Coronet permit, both in Divide County
Three producing wells (DUCs) reported as completed:
  • 33216, 1,349, Kraken Operating, Feller 22-15 3H, Lone Tree Lake, t11/17; cum 7K after 10 days;
  • 33218, 1,041, Kraken Operating, Feller 22-15 5H, Lone Tree Lake, t12/17; cum --
  • 33219, 1,095, Kraken Operating, Feller 22-15 6H, API: 33-105-04344, frack data not yet available at FracFocus, Lone Tree Lake, t12/17; cum --
Location For 6-Well Austin Pad Proposed By EOG

Existing wells:
  • 16795, 1,519, EOG, Austin 4-09H, Parshall, t12/07; cum 686K 11/17; (and, yes, this well had a bump in production when neighboring wells were fracked); a short lateral;
  • 31546, 458, EOG, Austin 59-1509H, Parshall, t4/16; cum 273K 11/17;
  • 31828, 563, EOG, Austin 463-1509H, Parshall, t4/16; cum 261K 11/17;

Sanctions? What Sanctions? Boston Still Importing LNG From Russia -- January 19, 2108

Refresh your memory regarding this story at this post.

Now this article: Boston, MA, still importing LNG from Russia -- Bloomberg --
The vessel named Gaselys was set to land at a terminal outside Boston on Saturday and changed its course to delay the date of its arrival, according Engie SA, the French utility that owns the cargo. 
The ship turned east last night and listed its destination as Algeciras near Gibraltar, and that entry still remains on a ship-tracking database compiled by Bloomberg.
“The final destination of the cargo did not change,” Damien de Gaulejac, a spokesman for Engie, said by email. “It is still Everett, but the date of delivery has been adjusted, in particular for weather reasons.”
The route seems a bit convoluted. This graphic helps explain it:

Disclaimer: The article refers to a "u-turn" -- obviously the tanker did not make a "u-turn"; it made a full 360-degree turn to get back on course back to the US. The route shown is for demonstration purposes only. The exact location of the "turn" and the exact route could be significantly different. If this is important to you, go to the source.

Don alerted me to the article. My reply:
I find this whole thing ridiculous. 
Sanctions against our "arch" enemy and we import their natural gas even though we have such a glut of natural gas, we are exporting it. 
For all one knows, natural gas being fungible (a commodity), that LNG in the Russian tanker originated in the US. 
Even if it "technically" did not originate in the US, for all "practical reasons" it did. So instead of a short pipeline from the natural gas fields in the Marcellus, Boston is getting their natural gas via this route:
  • Pennsylvania Marcellus natural gas to Dominion Energy Cove Point
  • tanker from DE Cove Point to Rotterdam (the Netherlands)
  • tanker from Rotterdam (the Netherlands) to Novatek PAO's Yamal facility, Russia's second LNG export terminal
  • from Yamal, Russia, back to the US, specifically Everett, MA (Boston)
Putin, the Russians, and the French must all be laughing all the way to the bank.

Sanctions? What sanctions?

The Energy And Market Page, T+363 -- Late Afternoon, The Market Turns Positive; Wow, Look What The US Tax Code Did For Canadian Pacific

Dow: after being minimally negative all day -- down about 50 points -- the Dow has now (2:22 p.m. CT) turned positive. Interesting.

For Canadian Railroad, Better To Be Lucky Than Good

Canadian CBR: only a few days ago, January 8, 2018, to be exact, we posted that Canadian CBR is alive and well. Did 4Q17 Canadian Pacific earnings bear that out? You be the judge. From Motley Fool, Canadian Pacific Railway nets a big one-time gain in the fourth quarter.
Earnings for the fourth quarter of 2017 were monstrous, jumping 159% compared to this time last year. For anyone that follows the railroad business at all, that should sound a little suspicious. Sure, railroad companies can be excellent wealth building machines, but doubling earnings in a year is extremely rare.

So let's dig into Canadian Pacific's bottom line this past quarter to see what was up and what management expects for the rest of 2018.
Whenever a number jumps out like Canadian Pacific's net income for the quarter, you have to see what is behind it. According to management, net income benefited from an income tax recovery of 527 million Canadian dollars related to changes to the U.S. tax code. Canadian Pacific brought forward several hundred million in deferred tax assets, which was the reason for the sweeping gain. If we were to adjust earnings for this one-time benefit, earnings per share would have been CA$3.22.

The numbers:
  • three quarters: revenue relatively flat
  • operating income: relatively flat, but a nice bump in 4Q17
  • but look at this, net income jumped from CA$150 million in 3Q17 compared to CA$984 million in 4Q17. Wow. A year earlier, 4Q16, net income was CA$384 million
  • those numbers are reflect in the EPS; look at this:
    • 4Q16: CA$2.61
    • 3Q17: CA$3.50
    • 4Q17: CA$6.77
Shares of CP are up significantly today on a down day for the market.

Memo to CP: send a "thank you" letter to President Trump. Send a "hey, what are you doing for Canada?" note to Mr Trudeau. 

So back to the numbers:
  • 4Q16, net income: CA$384 million
  • 4Q17, net income: CA$984 million
  • Now, subtract out the CA$527 million related to income tax recovery:
    • CA$984 - CA$527 = CA$457
    • year-over-year, 457 - 384 = 73; 73/384 = 19% year-over-year
Yes, I would say that Canadian CBR is doing just fine.

The change in the price of CP shares today seem to reflect the 19% (real) improvement and not the one-time gain.

The Bakken Shows Continued Signs Of Improvement -- January 19, 2018

From The Williston Wire.

Willston's December enplanements up in 2017 compared to 2016. Year-over-year little change, but December emplanements up almost 10%.

STAR fund board reviews record number of community enhancement applications. Key word: record.

Natural gas. And here it is -- something I posted a few days ago, and to the best of my knowledge, the first to post the story -- North Dakota natural gas production reaches all-time high. 

Water: growth in oil patch drives water sales for the Western Area Water Supply Authority -- sales are still far below their record highs in 2014, but sales are turning around.

Watford City: Women's Boutique, McKenzie Minerals Management open in Watford City.

Chart Of TheWeek

I haven't visited Mark Perry's website in a long time (my bad). Don alerted me to one of Mark's recent postings.

So How's The Blog Doing?

I'm glad you asked. A google search, of over 4 million returns, two of the top three hits, plus a twitter hit (yes, I know):

The Schumer Shutdown, T+363. "People Die In Government Shutdowns ... I Don't Know How I'm Going To Vote" -- Diane Feinstein

The Schumer Shutdown.

"People die in government shutdowns -- I don't know which way I'll vote." -- Diane Feinstein. During one of the worse US flu epidemics in modern history the US Senate looks to shut down the government. What am I missing?

The road to New England: current fuel trends put New England at risk for rolling blackouts. Look at where that story was reported. Wow. New Hampshire public radio.
The study accounts for the coming closure of fossil fuel-fired and nuclear power plants and the expected addition of more renewable energy to the grid. But George says they did not assume any new natural gas pipelines would be built by the year in question.
"We thought, it doesn't make sense for us to necessarily include anything because we don't really see any activity on that front right now,” she says.
ISO New England: spot prices to $250/MWh continue despite a warming trend. But note that almost all electricity being generated is coming from nuclear plants (to be closed; see previous story above); and, natural gas. Coal is maxed out (and will be less in the future (based on story above). Renewables, solar and wind are contributing about 4% to the overall electricity mix. Wow.

More Fake News

The Obama rally was better and bigger than the Trump rally. Really? Maybe, maybe not. I don't know. It depends from where you begin your  measurements, to where you end your measurements. Trump's first year rally began on November 9, 2017. Trump's rally came after an incredible previous year on the stock market (as Obama folks will tell you). Obama's first year rally came after the greatest recession in modern US history. Comparing first year rallies in this case is comparing apples to oranges.

Finally, I don't recall anyone, certainly not CNBC, practically falling all over themselves telling us how great the Obama rally was. In fact, I don't recall anyone talking about an Obama rally. I guess that was because Obama's first year was marked by a) largest tax increase in history; and, b) huge disappointment in jobs recovery.

But everyone, especially CNBC, has been absolutely flummoxed by the Trump rally.
Amazon - Whole Foods

Yesterday there was a WSJ story about the irritations/frustrations Whole Foods customers are expressing with the availability of fresh produce in their stores, now that Amazon has taken over, and has instituted new "time-to-shelf" deliveries or whatever it was called.

On the way home from an early morning school function today, I passed our local Whole Foods store. I was curious. Observations:
  • one checkout line open; one customer checking out
  • approximately five customers in the store
  • aisles stacked up with unopened boxes of new product; there must have been no less than ten individuals re-stocking the shelves; I've never seen anything like that before in any grocery store
  • fresh produce: not empty, but certainly not as robust as one would expect, but then again, very little foot traffic, so it appeared that the amount of produce available seemed appropriate for the foot traffic 
  • one customer buying coffee at the coffee shop

Friday, January 19, 2017 -- Fairly Quiet; Active Rigs Hold Steady At 58 -- January 19, 2018

Active rigs:

Active Rigs583749161187

RBN Energy: a look at peak oil demand and factors affecting long-range oil prices.

Wow! Was I Wrong? I Sure Was -- January 19, 2019 -- Well, Maybe Not

I would have bet my entire holdings in **** that the government would shutdown over the weekend. Boy, was I wrong.

I was so sure of that I had no plans to watch CNBC all day (I have not yet turned on the television set and now that I am over at Sophia's house getting ready to take granddaughters to school, I won't; they are cord cutters and don't have network television).

But driving over, on the local radio station I hear a temporary budget bill was passed. It will expire in four weeks.

My only comment: Chuck Schumer is no Harry Reid. Reid would have shut down the government.

That makes the poll at the sidebar at the right regarding a possible shutdown moot, so it will be removed, and votes won't be recorded here.

So, "up, on to infinity and beyond."

A minute later: now I'm checking the internet. I don't see any headline anywhere that says the Senate passed the bill. I'm wondering if local talk radio got this one wrong. They said "Congress passed the bill to avert the shutdown" but the headlines have not changed overnight. I think local talk radio got it wrong. But right now, we are still where we were when I went to bed last night. Interesting. And, if the government does shut down, I will have to put the poll back up. LOL.

By the way, Dow futures are up slightly. "Everyone" says that if the government does shutdown, it will not affect the market. I disagree. The market is driven by fear and greed. And a government shutdown leads to uncertainty which leads to fear.

But Dow futures are slightly positive suggesting:
  • a) the market doesn't care;
  • b) the market heard the same story on the radio I did. LOL. 
For the record, I disagree. I do think the talk of a government shutdown will "bother" the market. Again, those not paying attention will fail to take advantage of the buying opportunity.

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

Full list of how military pay and benefits would be affected with a government shutdown at this link.

Troop Pay 
  • active duty troops, as well as Guard and Reserve members, would not get paid during a shutdown unless Congress passes a separate piece of legislation to do so [let's see if Schumer/Pelosi have the backbone to protect Dreamers but not pay the troops]
  • that means if a shutdown starts January 19 and stretches into the next several weeks, troops' February 1 pay will be delayed [the wording is unclear; exactly what is meant by "several"?
Retiree Pay and SBP Payments
  • military retirees would still receive their regular pension checks in the event of a shutdown, as would those receiving a Survivor's Benefit Plan (SBP) payment [just like social security]
  • that's because those funds are paid from a different account that is not impacted by the annual funding bill Congress has yet to pass
Troops Killed in Action
  • newly bereaved family members would not receive the Pentagon's $100,000 death gratuity during a shutdown or military-funded travel to Dover Air Force Base, Delaware, or elsewhere for the dignified transfer or military funeral or memorial [wow, what a travesty]
  • Servicemembers Group Life Insurance (SGLI) payments, however, would not be affected