Friday, May 11, 2018

Sixty Active Rigs; Four New Permits; Six Permits Renewed -- May 11, 2018

Active rigs:

Active Rigs60512785192

Four new permits:
  • Operators: Kraken (3); MRO
  • Fields: Oliver(Williams); Jim Creek (Dunn)
  • Comments:
Six permits renewed:
  • XTO (3): three Lawlar permits in McKenzie County
  • Whiting (2): two Carscallen permits in Williams County
  • Newfield: one Moberg Federal permit in McKenzie County

Update On Enbridge -- Mike Fitzsimmons -- May 11, 2018

Link here over at SeekingAlpha.
  • Back in March, with its NYSE shares trading at $33.50, I suggested that ENB was 40% undervalued.
  • Shares probed under $30 in April, looking for a bottom. I think that got management's attention.
  • As expected, due to natural gas seasonality and a full quarter of Spectra contributions, the Q1 EPS yoy comparison was a breeze.
  • But the recent strength in the stock is due more to announced and potential asset sales to address the market's big concern: Debt.
As I suggested in my March article on Enbridge, Q1 year-over-year comparisons would be easy considering it would be the first full Q1 worth of Spectra contributions, as well as a seasonally strong quarter for the natural gas businesses.
That said, I was pleasantly surprised with the Liquids Pipelines Mainline System Segment - which delivered its highest ever quarterly volume. But it was the announcement of ~$3 billion in asset sales, as well as reported strong bidding for additional midstream assets, that put a bid in the languishing stock. It is clear investors want management to regain investor confidence by selling non-core assets and addressing the big concern: The debt load needed to fund the Spectra merger.
The Q1 EPS report was generally bullish with adjusted EPS of $0.82 exceeding average analyst expectations by $0.18/share. As shown in the graphic below, while yoy EBITDA and net earnings were lower, cash from operations ("CFO") was up 80%, while distributable cash flow ("DCF") was up a whopping 90%.
Management has certainly gotten the message with respect to investor concern over the high debt level and the significant interest expense. And it should have - the ~25% sell-off in the shares after the Spectra merger left some to wash off egg on their faces.
However, it would appear the low is in, the 6.3% yield is safe and secure, and the prospect of further asset sale announcement this year could propel ENB closer to the $40 level than the $30 level it has been hovering around for most of this year.
ENB is a buy for income-oriented investors who also want to take a flyer on additional asset sale announcements that could easily add another $4-5/share in capital appreciation.
Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on what you read here or what you think you may have read here.

US Gasoline Demand -- Nice Little Bump -- May 11, 2018

Link here.

US days of supply of crude oil.

Friday, May 11, 2018 -- After A Busy, Busy Week, Friday Starting Off A Bit Slowly

NY Times op-ed: I had no idea where this op-ed was headed, but I certainly did not expect this:
The first piece of evidence is North Korea. When Trump was trading crude, back-alley swipes with “Little Rocket Man,” Kim Jong-un, about whose nuclear button was bigger, it sounded as if we were heading for a nuclear holocaust led by a pair of overgrown prepubescents.
In fact, Trump’s bellicosity seems to have worked. It’s impossible to know how things will pan out, but the situation with North Korea today is a lot better than it was six months ago. Hostages are being released, talks are being held. There seems to be a chance for progress unfelt in years.
Maybe Trump intuited something about the sorts of people who run the North Korean regime that others missed.
Comment: well, duh.
Comment: "bellicosity" or "persuasion"? LOL.
Back to the Bakken

Active rigs:

Active Rigs60512785192

RBN Energy: E&P's return to profitability in 2017 tied largely to post-crash discipline and focus.

The Martket, Energy, And Political Page -- T+2, May 10, 2018

Tesla bond rate. Link here.

Back down to $87.33 today.

This link: Tesla, 2025 bond; coupon rate, 5.3%; 7 years to maturity; quarterly payment interval:
  • yield to maturity: 7.65%
  • current yield, annual: 6.03%
From a reader:
Almost every single time a company's stock price had a total collapse, it was preceded by a crush in the same company's bond prices up to a year before.
Ford and GM in 2009, American Airlines, Blockbuster, Enron, Boeing in 2001, you name it.
It's extremely rare for a company's bond to crash while its stock price keeps going up for much longer. I can't even think of a single example where this happened before.  

Disclaimer: I make a lot of simple arithmetic errors. I often see things that do not exist; I read quickly and miss important points. Sometimes it takes me days (maybe even weeks) to see where I was wrong.

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


Seven New Permits; Six Permits Reinstated -- May 10, 2018

Active rigs (I'm somewhat surprised to see the number plateau like this at this point in "the cycle" -- but it is what it is):

Active Rigs60512785192

Seven new permits:
  • Operators: Bruin (4): XTO (2); BR
  • Fields: McGregory Buttes (Dunn); Heart Butte (Dunn): Bailey (Dunn)
  • Comments: quite a coincidence all these new permits in Dunn County; Bruin has permits for a 4-well Fort Berthold pad in SWSE 35-148-94
Two permits canceled:
  • Petro-Hunt (2): two Hot Rod permits in McKenzie County
Six permits reinstated:
  • XTO (6): three FBIR Yellowwolf permits; three FBIR Ironwoman permits, Dunn County