Sunday, May 6, 2018

Another "Take" On The Recent Unemployment Numbers -- May 6, 2018


May 8, 2018: CNS News has more on this. But nothing more than what the reader said below. From the link:
Last month, a record 95,745,000 Americans were counted as "not in the labor force," meaning they are not employed and are not seeking a job, according to the Labor Department's Bureau of Labor Statics. "This category includes retired persons, students, those taking care of children or other family members, and others who are neither working nor seeking work," BLS said.
In a March 2018 report, the Congressional Budget Office noted that a lower labor force participation rate is associated with lower gross domestic product and lower tax revenues. It is also associated with larger federal outlays, because people who are not in the labor force are more likely to enroll in federal benefit programs, including Social Security.
Lower tax revenues? April, 2018, tax revenue -- sets all-time record.

Original Post 

From a reader who has consistently provided great analyses of some of my overly-exuberant posts on the blog, regarding the recent unemployment numbers:
I can't answer all your questions about the jobs report, but I can tell you why I was not impressed with this month's drop in the unemployment rate (although I'm generally impressed with it at this level).

Simply put, the reason the unemployment rate went down in April was because 239,000 people who were counted as unemployed in March quit looking for work in April and hence were not counted as unemployed ... the unemployment rate comes from the household survey, or should I say extrapolated from the household survey, because only 60,000 households are queried each month, and the main data page for survey that is here: [And, yes, there is no "l" at the end of that link.]
  • At the link you will see the number of unemployed went down while the count of the employed barely budged. 
  • Meanwhile, that "not in the labor force" went up, to account for the drop in the unemployed.
Here's how I described what the numbers showed for my synopsis of economic reports, which will give you an idea how those numbers tie together:
  • the April household survey indicated that the seasonally adjusted extrapolation of those who reported being employed inched up by an estimated 3,000 to 155,181,000, while the similarly estimated number of those who reported being unemployed fell by 239,000 to 6,346,000; 
  • which thus meant a net 236,000 decrease in the total labor force... 
  • since the working age population had grown by 175,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by 410,000 to a record 95,745,000.... 
  • with the number of those in the labor force decreasing while the civilian noninstitutional population was increasing, the labor force participation rate fell 0.1% to 62.8%.... 
  • at the same time, since number employed was virtually unchanged, the employment to population ratio, which we could think of as an employment rate, fell 0.1% to 60.3%... 
  • in addition, the decrease in the number unemployed was also large enough to lower the unemployment rate from 4.1% to 3.9%, the lowest in 18 years... 
  • meanwhile, the number who reported they were involuntarily working part time fell by 34,000 to 4,985,000 in April, which was also enough to lower the alternative measure of unemployment, U-6, which includes those "employed part time for economic reasons", from 8.0% in March to 7.8% in April, the lowest since May 2001....
Moreover, since they only survey 60,000 households, this report has a margin of error of +/- 0.2%.
My reply at the original post, linked above. I find this incredibly fascinating. A huge "thank you" for the reader to provide such a lengthy rationale for the unemployment numbers.

I am clearly out of my league. LOL. I may have to add a new "disclaimer" to the blog. But at the end of the day, I certainly learn a lot.

I would love to see an in-depth statistical analysis from The New York Times or Bloomberg "why" folks drop out of looking for work. One can think of a gazillion reasons, but it would still be interesting.

A Day At The Mall

Random Update Of Flipping In The Bakken -- Old Story -- May 6, 2018

Update, just two months later, May 23, 2017:
DW Partners, LP is marketing 9,488 net acres of non-op assets targeting the Bakken and Three Forks plays in the Williston Basin with average 12.2% WI and production of 1,966 boe/d. The assets hold total net reserves of 91 MMboe (77% oil) with PV10 of ~$540 million at strip pricing. Evercore has been retained to assist in the sale, which DW Partners is conducting on behalf of its affiliate DW Slate, LLC. 
One month later, from the NDIC hearing dockets back in March, 2017, supplement to Thursday, March 23, 2017, docket:
Mar 23, 2017 - Case No. 25708: Application of DW Slate LLC for an order amending the field rules for the. Eagle Nest-Bakken Pool, Dunn County, ND, to create and establish the following: (i) a 320-acre spacing unit comprised of the E/2E/2 of Sections. 16 and 21, T.148N., R.95W., authorizing the drilling of a total not to exceed two wells on said proposed 320-acre spacing unit, and (ii) an overlappiogn 1600-acre spacing unit comprised of all of Sections 15 and 22 and the E/2E/2 of Sections 16 and 21, T.148N., R95W., authorizing the drilling of a total not to exceed two horizontal wells on or near the section line ... 
The original post, back on February 25, 2017:
New "name" in the Bakken. In the March, 2017, NDIC hearing dockets, a new name was noted, DW Slate. The company is not yet found on the NDIC "well search" site. From a pay site:
Austin real estate developer Forestar Group is selling its oil and gas assets targeting the Bakken and Three Forks in North Dakota for $59.5 million. Buyer DW Slate, an affiliate of New York alternative asset manager DW Partners, is getting 9,000 net acres (56% HBP) and an average 8% WI in ~140 producing wells primarily located on the Fort Berthold Indian Reservation near Parshall field. DW Partners was spun off from European hedge fund...
$60 million / 9,000 net acres = $7,000

Forestar was also not found at the NDIC "well search" site. So, I don't see either of these as operators; they hold "interests" in mineral acres in North Dakota. 

A DW Slate, LLC, has this address: 590 Madison Avenue, NY, NY 10022.

The Form 8-K, April 7, 2016:
  • seller: Forestar Petroleum Company, subsidiary of Forestar Group
  • buyer: DW Slate, LLC
  • $50 million
  • assets located in Divide, Dunn, McKenzie, McLean, and Mountrail Counties
If You Can't Give Me Love, Suzi Quatroa
If I had all the money in the world, I would be drinking "rums and Coke" at a bar in Provincetown, Cape Cod.

Oil And Gas Projects Endorsed By The ND Oil And Gas Research Council This Past Week -- May 6, 2018

The ND Oil and Gas Research Council endorsed four project this past week:
  • a $3 million-matching-grant to investigate waterflood optimization as a precursor for CO2-enhanced oil recovery to revitalize CONVENTIONAL oil fields in the TYLER and MADISON formations in Billings County; the proposal was submitted by Eagle Energy Partners working in close collaboration with the Energy & Environmental Research Center. Documents at this link (a pdf should automatically load). I have not yet looked at the presentation.
  • a $1.6 million-grant for a program dubbed iPIPE (intelligent Pipeline Integrity Program which will explore a variety of proprietary leak detection methods; the proposal was submitted jointly by Hess, Oasis, and Statoil. PDF here.
  • funding $149,960 for a project that proposes to use electrokinetics to clean up sites contaminated by brine spills; the project will use solar-powered arrays. Proposal from Terran Corporation and Oasis. PDF here.
  • funding $110,000 for a project to investigate the recovery of rare earth minerals from brine; proposed by Triple 8, LLC. PDF here
I have not checked to see if the links work. I have not read any of the PDFs yet.

The information and links come from Geoff Simon via his weekly "top North Dakota energy stories."

I don't know if I've mentioned "Eagle Energy Partners" on the blog yet. From their website:
Eagle Energy Partners is a private exploration and production company based in Minot, ND and is led by a team of experienced and successful oil and gas professionals.
Our management team is best in class with over four decades of deep domain expertise in our targeted areas.
EEP is currently acquiring North Dakota based assets and developing them, often through employing proven enhanced oil recovery methods and new technologies in an environmentally responsible manner
At the link, an incredible photograph of the beauty of North Dakota -- yes, even with the drilling pad.

Things To Note Regarding List Of Wells Coming Off Confidential List This Next Week -- May 6, 2018

Things to note regarding this week's list of wells coming off the confidential list.
  • the number of MRO wells coming off the confidential list (unfortunately, it looks like many of them will be SI/NC. Hopefully, I'm wrong. Right now, MRO tops the list for "operator of the year" when it comes to top stories for 2018; Mike Filloon says Newfield may be the best producer in the Bakken right now; MRO is doing very well, also, to say the least
  • the increased activity in the reservation
  • this number of operators now drilling -- that's how the number of active rigs will increase; the well-known operators have pretty much established their stable of rigs; "newer" operators (or operators that haven't drilled in a long time) will now bring in a rig with improved oil prices and better takeaway capacity
  • a corollary of the previous data point, and perhaps a stretch, are we starting to see increased activity in tier 2 areas?
When the MRO wells above come off  SI/NC it will be interesting to see what these wells do; they run parallel to and in the vicinity of these new MRO wells:
  • 32975, SI/NC, MRO, Jerome USA 12-23TFH, Reunion Bay, no production data,
  • 32974, SI/NC, MRO, Jorgenson USA 12-23H, Reunion Bay, no production data,
  • 32973, SI/NC, MRO, Joshua USA 12-23TFH-2B, Reunion Bay, no production data,
  • 19446, IA/24 (no typo), MRO, TAT USA 13-23H, Reunion Bay, 22 stages, 3.2 million lbs, t2/11; cum 90K 3/18; it went off-line 11/17;
Tell me again why you don't like disco. LOL.
Indian Reservation, Orlando Riva Sound

Put the earphones on. Go loud. Wow, I love to blog.

A "Peregrine" Well Comes Off Confidential List This Week -- May 6, 2018

A "Peregrine" well comes off the confidential list this week. See this post.

"Peregrine," briefing, at the "Bakken operators" page.

Peregrine Petroleum Partners, LTD: website

  • acquiring royalty property in Divide County, press release, March 3,  2018
  • May 6, 2016: a permit for a well in Hay Draw field, McKenize County
  • April 16, 2015: Peregrine Petroleum: has six permits in North Dakota; the previous five were back in the early 1990's; this is the first new permit in North Dakota in two decades for Peregrine:
    • 23920, Peregrine Petroleum, Covered Bridge-Bakken, establish a 1280-acre unit; 4 wells, McKenzie; Covered Bridge is a 3-section field in south central McKenzie County, far from the sweet spots in McKenzie; Peregrine did have some Bakken wells back in the 1990's; there is a huge Birdbear well in this little section that has produced almost 500,000 bbls since 1983; a stripper well now
  • March 13, 2015: Peregrine drilled five (5) Bakken wells many years ago; all very short horizontal wells in the far south-central/west McKenzie County (currently not much activity); they are all still active and producing, albeit very, very little; this is the company's first permit in North Dakota since 1993

Wells Coming Off Confidential This Next Week -- May 6, 2018

Friday, May 11, 2018:
33981, SI/NC, MRO, Phyllis USA 11-23H, Reunion Bay, no production data, 
33442, 801, Oasis, Spratley 5494 14-13 15T, Alkali Creek, 4 sections, 50 stages; 19.9 million lbs; mesh, medium, medium ceramic, t11/17; cum 135K 3/18;

Thursday, May 10, 2018:
 33982, SI/NC, MRO, Clara USA 11-23TFH-2B, Reunion Bay, no production data,

Wednesday, May 9, 2018:
33816, 615, Petroshale, Horse Camp 104-11H, Mandaree, no frack data at the file report yet, t2/18; cum 33K after 46 days;
33759, drl, Crescent Point Energy, CPEUSC Njos 3-26-35-157N-100W TFH, Marmon, no production data, 
33429, 940, Enerplus, Hidatsa Hills 26-21H, Mandaree, t11/17; cum 58K 3/18;
32314, SI/NC, XTO, Sonya 11X-18F, Hofflund, no production data, 

Tuesday, May 8, 2018:
32313, SI/NC, XTO, Sonya Federal 11X-18B, Hofflund, no production data
21172, SI/NC, MRO, TAT USA 12-23H, Reunion Bay, no production data,

Monday, May 7, 2018:
32312, SI/NC, XTO, Sonya Federal 11X-18A, Hofflund, no production data

Sunday, May 6, 2018:

Saturday, May 5, 2018:
33460, 1,687, Enerplus, Gully 152-94-16A-21H-TF1, Antelope, Sanish pool, 39 stages; 9.4 million lbs, mesh, small, t11/17; cum 87K 3/18;
33459, 1,192, Enerplus, Canyon 152-94-16A-21H-TF2, Antelope, Sanish pool, 39 stages; 9.5 million lbs, mesh, small t11/17; cum 125K 3/18;
33458, 1,115, Enerplus, Ravine 152-94-16A-21H, Antelope, Sanish pool, 39 stages; 8.2 millioin lbs; mesh, small, t11/17; cum 112K 3/18;
32311, SI/NC, XTO, Sonya Federal 11X-18E, Hofflund, no production data,

How The Oil Rally Took Forecasters By Surprise -- WSJ -- May 6, 2018

"A sensitivity to geopolitics and the opaque workings of OPEC make it difficult to predict oil prices." -- WSJ. Well, that was profound.

Link here.

Let's do the comments first. There are eight comments, suggesting this story is not a particularly compelling story for most WSJ readers. The general theme: analysts are clueless. This comment is probably the most accurate: "The reason oil prices are impossible to predict is that they aren't rational.  Period.  Our oil pricing mechanism -- the future's market -- does not reflect real supply and demand.  It's a financial game"

The comment I liked best (the reader knows what he is talking about): "The number of "drilled but not completed" well inventory is good in the US but likely lags in other parts of the world. This puts the US in a strong position to ramp up completions and take advantage of surging prices. Fracking sand prices will continue to go up and local water supply will remain key issues that are solvable at a cost. The Oil Majors will be rocking and rolling in the profits. Dividends will go up!"

I'm not sure I agree that all the "oil majors" will do all that well.

Now, back to the linked article. The lede:
No one is more surprised by $75 oil prices than Wall Street’s oil experts.
The price of crude has climbed nearly 12% this year and has reached its highest levels since 2014—a rally that has caught most big banks flat-footed. Last December, analysts surveyed by The Wall Street Journal predicted that Brent crude, the international benchmark, would average around $57 a barrel in the first quarter. Instead, prices averaged $67. On Friday, Brent prices rose to $74.87 a barrel.
Analysts often get it wrong across financial markets. Last year, they wildly underestimated gains on the S&P 500. Gold hasn’t followed the script of the almost yearly predictions for higher prices. And U.S. bond yields have persistently undershot the estimates of many large firms for years.
But oil is seen as particularly tricky given its sensitivity to hard-to-gauge geopolitics and the opaque workings of the Organization of Petroleum Exporting Countries.
Recent years have been particularly challenging. The rise of the U.S. shale industry confounded all expectations, OPEC has shocked the market with its policy decisions, and the rapid collapse of Venezuela and other geopolitical shifts have jolted prices higher faster than many expected.
“Predicting oil prices is a mug’s game,” said Craig Pirrong, a professor of finance at the University of Houston. “The inelasticity of supply and demand mean that the price is very sensitive to random shocks that are themselves hard to predict.”
I agree completely, and I've said it many, many times on the blog: predicting oil prices is a fool's errand. 

To me, the fundamentals or the technical aspects or the supply/demand story don't justify current prices. I simply do not understand it. When oil goes above a certain level,  probably about $100 or so, folks suggest "conspiracy theories" and opine that speculators are behind the price rise. And yet, when crude oil drops below $40, we don't hear those arguments.

The WSJ article had a great headline, but it didn't say much. It certainly did not add anything to my understanding of the oil sector.

Difficulty Predicting Oil Prices? Same Could Be Said For iPhone Sales

"A sensitivity to competitions and the opaque workings of Steve Jobs/Tim Cook make it difficult to predict iPhone sales."

From Macrumors: iPhone X remained the world's most popular smartphone last quarter despite concerns about poor sales.
iPhone X was the world's most popular smartphone for the second consecutive quarter.
Strategy Analytics estimates that iPhone X shipments totaled 16 million units in the first three months of 2018, making it the best-selling smartphone model during that period, as it was during the final three months of 2017. 

Four Generations Have Now Seen Les Miz

My wife took the two older granddaughters to see Les Miz last night. They all loved it. Preceded by a Les Mix-themed buffet which the younger of the two granddaughters described as "sublime."

They both knew the story line and in fact, the older one expanded on what others knew about the story while they were waiting to go inside the theater.

I think my wife has now seen this play nine times, or thereabouts. When we were stationed in England decades ago, she took her Japanese mother and our two daughters.

Last night, the fourth generation of the family saw Les Miz -- our granddaughters. 

The link, of course, will disappear in the next day or two; its last performance in Dallas is tonight.

As Time Goes By