Thursday, April 26, 2018

Wow! Is This Historic Or What! -- Sixteen Months Into Trump's Presidency -- Six Months Ago Pundits Worried About Trump Taking Us To War On The Korean Peninsula -- April 26, 2018

Add Xi.

Next year, Time magazine cover -- "men of the year."

Nobel peace prize: Kim-Xi Moon. Pies.


Enerplus With Permits For A 9-Well "Greek" Pad; Twelve Permits Renewed; Two DUCs Reported As Completed -- April 26, 2018

Active rigs:

Active Rigs62482684182

Nine new permits:
  • Operator: Enerplus
  • Field: Mandaree (Dunn)
  • Comments: Enerplus has permits for a 9-well "Greek" pad in SWSE 33-149-93 (Eos, Nyx, Homer, Hera, Apollo, Zeus, Athena, Metis, Boreas); see graphic below;
Twelve permits renewed:
  • Sinclair (4): two Yauch permits and two Forest USA permits, all in McKenzie County
  • XTO (3): three Kenneth permits in Williams County
  • Petro-Hunt: a CMNU permit in McKenzie County
  • White Rock: one BSMU permit in Billings County -- a Madison well, most likely
  • WPX: one Edward Goodbird permit in Dunn County
  • EOG: one LIberty LR permit in Mountrail County
One permit canceled: Fram Operating canceled a Danny Funke permit in Renville County

Two producing wells completed:
  • 33627, 1,636, Hess, BB-State-LW-151-96-3625H-1, Blue Buttes, 4 sections, t4/18; cum --
  • 33632, 1,194, Hess, BB-State-151-96-3625H-7, Blue Buttes, t4/18; cum --
Proposed Enerplus Pad In Mandaree Oil Field

Let The Rumors Begin -- The Timing Is Very, Very Suspicious -- April 26, 2018

Link here. Explosion rocks Wisconsin refinery.
A tank containing crude oil or asphalt exploded at a large refinery in Wisconsin on Thursday, injuring several people and causing a blast that one worker described as sounding like a sonic boom.

No fatalities have been reported, but at least five people have been taken to hospitals in Duluth, Minnesota, following the explosion at the Husky Energy oil refinery at about 10 a.m., Superior Fire Chief Steve Panger said in a statement.

Panger didn't have details about the extent of their injuries. Others were walking wounded.

A contractor who was inside the building told WDIO television that the explosion sounded like "a sonic boom" and that it happened when crews were working on shutting the plant down for repairs.

Panger said the fire was out by 11:20 a.m., although smoke could be seen rising from the plant. Panger said a small tank exploded containing either crude oil or asphalt.
A reader tells me that Enbridge "feeds" this refinery. On Monday of this week, a Minnesota administrative judge ruled that Enbridge's plan to expand its Line 3 pipeline could go forward.

Holy Mackerel! Amazon, Huge Beat -- No Wonder It's Called "Amazon" -- Trading At All-Time High -- April 26, 2018

Disclaimer: this is not an investment site.

Starbucks meets/exceeds and yet shares are down significantly -- giving back its entire recent gain. But look at Amazon! Delivers huge profit surprise. "We've never seen companies of this size grow at this rate." Shares up 4% at the market close, and after results released after hours, Amazon up almost 7%.
  • EPS of $3.27 versus ... are you sitting down? ... $1.27
  • revenues: $51 billion; vs expectations of $49.96
  • but look at that -- revenues beat expectations -- okay -- but look at EPS -- huge jump -- much greater than revenues would suggest -- this tells me that Bezos has "huge" control of costs
A snarky note: Expedia, among the "travel" sites, did very, very badly. Shares are up, but the story is quite bad. If there's one television ad that I dislike the most: Trivago.

Amazon HQ2

CNBC poll for Amazon HQ2 site:
  • Pittsburgh: 44%
  • Dallas: 42%
  • Denver: 4%
  • Toronto: 2% 
I can't argue with Pittsburgh -- a good choice. For fulfillment centers -- yes, Pittsburgh seems high on the list -- location, location, location. But for a headquarters -- need to be near a) the nation's movers and shakers (Washington, DC - northern Virginia area); and, b) the nation's bankers, Boston. So as much as I  would like to Amazon HQ2 in north Texas, my bet is somewhere along the northern I-95 corridor

Natural Gas Fill Has Not Yet "Turned The Corner" -- April 26, 2018

So, from yesterday (Wednesday, April 25, 2018):
The next natural gas fill/withdrawal data will be released by the EIA tomorrow (Thursday, April 26, 2018).
This is what is/was forecast.
  • this Thursday (tomorrow), we expect EIA to report 1,287 bcf of working gas in storage for the week ending April 20.
  • 2e anticipate to see a draw of 12 bcf, which is 83 bcf larger than a year ago and 72 bcf larger vs. 5-year average.
How did that forecast work out? Actual results:
  • working gas in storage: 1,281 bcf (net change: - 18 bcf)
  • a draw of 18 bcf (vs 12 bcf predicted)
  • the forecast: almost spot on
As predicted by Platts, it looks like this will be the "longest stretch" for natural gas before "turning the corner."

Thoughts On BP's Comments That It Underestimated Renewable Energy -- April 26, 2018

I posted this about an hour ago, but it's worth re-posting.
Don't get fooled by the headline: BP admits it underestimated renewable energy growth. Near the end of the story --
China’s solar race could start sputtering some time in the future. This should be a safe enough prediction: sooner or later the local energy market will become saturated with solar power capacity.
When I think of shale oil, about the last company I think of is BP. I very, very seldom see BP involved with shale oil.

My hunch with regard to the the BP/CEO stating unequivocally that "BP underestimated renewable energy growth" is this: this is his attempt to get investors to look at what BP really, really underestimated -- how fast US shale oil would grow.

It's an old media trick.

BP's expertise? Oil and gas. Not renewable energy. They can be excused for underestimating how fast renewable energy grew. But BP's expertise is in oil and gas exploration and production. There is no excuse for underestimating US crude oil shale.

Two stories side-by-side. First, this Financial Times story less than six months ago: "BP chief says shale will have limited effect on global market. Bob Dudley says technical challenges reduce ability to rival conventional output. On December 20, 2017 --
There is a limit to how big a role US shale can play in the global oil market, according to the chief executive of BP, who said traditional producers such as Saudi Arabia would continue to exert more influence over crude prices. 
Bob Dudley said he had become less worried about the extent to which US shale resources could hold down prices as more was learned about their geology. “There are cracks appearing in the model of the Permian being one single, perfect oilfield,” he told the Financial Times, referring to the region of Texas and New Mexico at the centre of the shale revolution.
Yes, both Mark Papa (former CEO/EOG) and Bob Dudley talk about the challenges in the Permian -- but they are all logistical (mostly takeaway capacity) and those challenges will be addressed. Successfully.

Now, the second story, the Permian is projected to be the largest oil patch in the universe. Data points from Bloomberg:
  • growing into the largest oil patch in the world
  • will hit record production in May, 2018 (3.2 million bopd)
  • will produce more than 5 million bopd by 2020 (previously reported; another source)
  • Saudi Arabia, Iran, Iraq, the Permian now
  • Saudi Arabia, the Permian, Iran, Iraq by the end of the year
  • Iran and Iraq each produce less than 5 million bopd
  • Iran: produced about 3.81 million bopd in March, 2018
What was not said, about the Permian:
  • terror-free
  • once built, infrastructure tends not to be blown-up the next day
  • located in an oil-friendly state 
It looks like BP underestimated renewable energy and the US shale oil revolution. 

The Market, Energy, And Political Page, Part 2, T+57 -- April 26, 2018 -- COP Crushes Expectatioins

Wow! "ConocoPhillips crushes earnings views ahead of Exxon, Chevron results." Link here. Wow, wow, wow ... this will please Warren -- transcript here --
  • COP easily beat 1Q18 profit forecasts
  • estimates:
    • estimates: earnings of 76 cents vs a loss of 2 cents/share a year ago
    • estimates: revenue up 11% to $8.6 billion
  • actual:
  • production:
    • from the Eagle Ford, Bakken, and the Delaware (Permian) jumped 20%
    • but total output dropped to 1.22 million boe (1Q18)
    • forecast: slightly less in 2Q18 )1.17 million to 1.21 million boepd
    • full-year production at 1.2 million bopd is higher than previous estimate of 1.95 million boepd
  • pricing:
    • boe jumped to $50.49 vs $36.18/bbl year-over-year
Disclaimer: this is not an investment site. See disclaimer. Do not make any investment, financial, travel, job, or relationship decisions based on what you read here or what you think you may have read here.

Don't get fooled by the headline: BP admits it underestimated renewable energy growth. Near the end of the story --
China’s solar race could start sputtering some time in the future. This should be a safe enough prediction: sooner or later the local energy market will become saturated with solar power capacity.
TSLA: continues to fall (even on an "up" day for the market). Now trading at $280. 52-week high -- $390. TSLA has fallen almost 30% off it's 52-week high.

The Opium Wars

I've finished The Opium Wars, Hanes, c. 2002.

Truly amazing what our high school history textbooks left out. It would be hard to find a period in British history that would be worse than what the Brits did to China in the first half of the 19th century. Not to be taken out of context, but the Holocaust comes to mind.

Kodachrome, Paul Simon

The Market, Energy, And Political Page, T+57 -- April 26, 2018 -- Unemployment Claims At Near 50-Year Low; Trade Deficit Drops First Time In Seven Months

Making America great again: and the tariffs have not even been imposed yet -- the bully pulpit ...

The US trade deficit: drops in March for first time in seven months. The trade gap sinks to $68 billion in March, 2018, down 10% from almost $76 billion in prior month.

Jobs: unemployment claims lowest since 1969 -- almost 50 years ago -- a half-century -- only took President Trump 16 months.
The Labor Department said initial claims for state unemployment benefits dropped 24,000 to a seasonally adjusted 209,000 for the week ended April 21, the lowest level since December 1969. Economists polled by Reuters had forecast claims falling to 230,000 in the latest week.
The best news: I was not at home, so I did not have to listen to Steve Liesman explain how the numbers are really not as good as they seem once you peel back the layers of the onion.

From econoday, unemployment claims:
  • prior revised: 232,000
  • forecast: a drop of 2,000 to 230,000
  • actual: unemployment claims actually dropped to 209,000 -- that's a drop of 24,000 claims, week-over-week -- well beyond the 2,000 that the experts forecast
  • this is really quite incredible
The market? Ho-hum. Up a paltry 120 points after a huge "correction" earlier this week. I'm using the word "correction" very, very loosely.

TransCanada: We're Baaack!

Report: TransCanada buying up Nebraska land for ... yes, you guessed it ... the Keystone XL. The pipeline lives. A lot of story lines in this Platts report:
TransCanada is now acquiring land in Nebraska for its planned Keystone XL oil pipeline, aimed at shipping incremental volumes of Western Canadian barrels to the US Gulf Coast for local refining and also providing options for exports ...

"The process [of land acquisition] just started last week," ...

The need to acquire new "easements" -- handing over long-term access to land without transfer of ownership -- came after the Nebraska Public Service Commission decision, which approved an alternate route ...

In November (2017), the NPSC upheld its decision to allow TransCanada to build the 830,000 b/d Keystone XL pipeline system on an alternate route.

The Nebraska regulators approved the 'mainline alternative,' which heads east sooner towards the existing Keystone pipeline and parallels it for 96 miles.

A final investment decision is widely due for the Keystone XL system that will ship crude from Hardisty, Alberta, to Steele City, Nebraska, and link up with the Keystone pipeline that runs through Cushing, Oklahoma, to the USGC.

... TransCanada said in January it has sufficient customer support to go ahead with construction of the pipeline in 2019.

... the Keystone XL pipeline system drew 500,000 b/d in firm 20-year commitments from shippers ...
We're Outta Here

Ford: is getting out of the North American auto market. Repeat: Ford appears to be getting out of the North American auto market. Will refocus only on SUVs and trucks.
... the company announced Thursday that it's shuttering the last of its US sedan brands as it shifts its focus to international markets, trucks and SUVs. It is a drastic move, as the company will be phasing out sedan models that have a long history with the company, including models like the recently revamped Ford Taurus.

Salt Creek Acquisition -- NOG To Acquire 1,319 Net Acres In The Core Bakken; Nearly $40K/Acre -- April 26, 2018


Later, 4:12 p.m. CDT: think about this. NOG's market cap is $200 million. It just spent $50 million on 1,319 acres in the Bakken. 

Later, 3:49 p.m. CDT: I was looking for this data earlier. Couldn't find it easily. Forgot I had a "tag" for it. The "tag": boe/acre

Original Post

NOG, press release:
  • will acquire 1,319 net acres in the core Bakken
  • acquired from Salt Creek Oil and Gas, LLC; a subsidiary of Deutsche Rohstoff AG
  • 86 gross wells; 6.5 net wells (current operators: Hess, Whiting, COP, Statoil)
  • McKenzie County, southeast of Williston; right along the south side of the river
  • 100% held by production
  • acquiring 8.2 net future drilling locations; EURs of 1 million bbls
  • acquisition to yield almost $20 million of cash from operations for 2018 (this year)
  • $40 million + 6 million shrs NOG ($1.60/share)
  • $50 million / 1,319 acres = $38,000 / acre
  • the acreage is in some of the best acreage in the Bakken -- probably better than the Sanish, the Parshall, and as good as / better than the Grail (see graphic below) 
  • what do investors think of this news? in early morning trading, just after the announcement, NOG shares are up 2.5%
  • some idle calculations (mine, not from the NOG press release)
    • 1,319 acres = ~ 2 sections
    • 2 sections = 1280 acres
    • minimum: 12 wells on 1280-acre spacing
    • 12 wells x 1 million EURs = 12 million bbls
    • from an old post, 2014: 1,875 boe / acre - 2014; EURs of 500,00 bbls
    • 1,875 boe x 1280 acres = 2.4 million bbls
    • 12 million bbls crude oil / 1280 acres = 9,375 bbls oil / acre in the core Bakken 
    • 12 million bbls crude oil x $40/bbl = $480 million  
The graphic: note, the NOG press release did not have the text that I've put on this graphic. I could be way off, but I think this is fairly accurate:

Other News Affecting The Bakken

Active rigs:

Active Rigs63482684182

RBN Energy: costly logistical headaches for Permian crude E&Ps, part 4. I do not know, but I have not heard much about crude-by-rail yet in the Permian. While driving through a very, very small part of the Permian recently, I saw no CBR.
Large-scale and well-funded producers in the Permian have built dedicated gathering systems and signed up for pipeline-takeaway options to keep their barrels moving to markets at the Gulf Coast and Cushing.
For the most part, smaller producers don’t have the same options, for a variety of reasons. More and more, barrels from outside the core areas of the Permian are competing for the last bits of pipeline space and producers are being forced to rely more heavily on Permian trucking companies to help keep their crude flowing. Truckers are being asked to make less desirable, less economical and longer hauls, and are passing those costs back to the producer. With pipeline takeaway capacity maxed out, trucking capacity is being pushed to the limit too, with several potential upstream impacts. Today, we look at trucking options for smaller producers in second-tier production areas, the impact of boom-bust cycles on trucking companies and what tight trucking capacity means for the basin as a whole.