Tuesday, June 12, 2018

Idle Chatter About The Singapore Summit -- Nothing About The Bakken -- Not Ready For The Prime Time -- For The Archives -- June 12, 108

A reminder: a good time to catch up with Victor Davis Hanson

I had the "day off." I spent much of the day watching Fox Business News. Overall, it was a pleasant change from CNBC.

What little I saw on CNBC there was minimal coverage of the Singapore Summit.

Fox Business News devoted much of the day to the summit.

Unfortunately, most of the analysis was "political" and absolutely worthless. As usual, Trump supporters were watching one movie, while the Obama-Clinton supporters were watching another movie.

My thoughts.


Several decades ago, following the end of the "Cold War," the Pentagon had to move from a one-major-regional-war strategy to a two-major-regional war strategy. There was much debate over the two-major regional war strategy and what it was costing the US.

Over time, it became clear that the US strategy might need a three-major-regional-war strategy: a) Mideast; b) Korean peninsula; and, c) the South China Sea.

It now becomes clear that the China loved the fact that the US military was tied up on the Korean peninsula, leaving China free to expand in the South China Sea.

The Singapore Summit changes this. My hunch is that the three senior service schools (US Army War College; US Navy War College; and the US Air Force War College) are changing their curriculum as we speak.


This chart was posted yesterday:

Two "things" come to mind: a) coal; and, b) US natural gas exports.


Someone sent me one of their favorite "election night" YouTube videos. Two "new" ones that I had not seen until tonight.

But since then, another good one has popped up.

It is interesting to look at all the talking heads on this video and note how many were completely wrong, how many of them lost their credibility, and thankfully, how many of them are no longer politically active.

Two Articles On The Permian After A Very, Very Busy Day-- June 12, 2018 -- Reading Between The Lines, The Permian Could Be A Disaster For Some Operators In The Short Term (One To Two Years) Including Apache

The Permian is turning out to be a bigger challenge than operators acknowledged two years ago. All good news for the Bakken.

The first article is a "keeper." It has been archived. Lots of incredible data. 

From Michael Fitzsimmons over at SeekingAlpha: an update on Apache's Alpine oil field.
  • the Alpine discovery, announced two years ago, is a world-class field
  • but it is predominately a wet-gas field which will require substantial midstream infrastructure to gather, transport, and process
  • meantime, the pricing outlook for dry-gas and NGLs is anything but certain
  • investors looking for a large independent oil and gas E&P firm might consider the largest of them all instead: ConocoPhillips
  • it appears as though the Alpine High field is primarily a wet-gas play, and overwhelmingly so
  • specifically, note the very low oil split of 15% (or less...) of a typical well's production. And while NGLs contribute ~50% of the production, that still leaves 35% (or more) of the split to dry gas. That's one thing we don't need a whole lot more of - especially in the Permian Basin where dry gas prices already are below NYMEX
  • Mike cites an RBN Energy blog today: What about all those NGLs? A blog on RBN Energy today (see Magical Mystery Tour - Soaring NGL Supplies May Soon Overwhelm Mont Belvieu Fractionation Capacity) points out that NGLs "don't do anyone much good until they are fractionated into "purity products" like ethane, propane, normal butane..." and that the existing fractionation plants in Mont Belvieu are running flat-out to keep up with already burgeoning production
  • In the case of Phillips 66, it is probably getting much of its feedstock from its mother company ConocoPhillips, which is pumping the heck out of the Eagle Ford shale these days
From SeekingAlpha news editor:
  • a worsening pipeline bottleneck in the Permian Basin is seeing investors favor more diversified independents with a smaller footprint in the area
  • EOG Resources CEO Billy Thomas says Permian constraints likely will weigh on U.S. production growth next year so much that it will be "much slower next year than it is this year," with inadequate infrastructure in place to take away gas and oil until late 2019 or 2020
  • "Allocating away from the basin or into a Permian name protected by either firm transport agreements or meaningful basis swaps is likely a necessary move," Seaport Global says, listing APC, DVN, PXD, PE, AREX and WPX as among the least exposed to the Permian's "differential blowout" while APA, FANG, CDEV, XEC and AXAS are the most exposed
  • Argus says money managers are targeting firms that have minimum exposure to the widening differentials, both with Permian crude and Brent, but also are low-cost operators with presence across a range of basins, such as COP, MRO and APC
 Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.

Whiting Has The 35,000th Oil And Gas Permit In North Dakota -- June 12, 2018

Active rigs;

Active Rigs62532876185

Six new permits:
  • Operator: Whiting
  • Fields: Glass Bluff (Mckenzie); Corinth (Williams)
  • Comments: Whiting has 4 new permits in Corinth oil field (not what most folks would consider core Bakken); and two new permits in Glass Bluff. Whiting has the 35,000th oil and gas permit issued by North Dakota. Permit #35000: Lassey 44-33H, SESW 34-152-103, Glass Bluff. There were Bakken wells before 16000 (the first 16000 series Bakken well was #16011, Hess, H. Juma 1-9H, Baskin oil field), but one can say the first two Bakken wells that started it all were:
    • 16164, EOG, Parshall 1-36H, t6/6; cum 228K 4/18;
    • 16324, EOG, Parshall 2-36H, t9/6; cum 376K 4/18;
Five permits renewed:
  • MRO: a Bears Arm, a Wilkinson, a Deserly, a Dutton, and a Fannie (all USA) wells in Mountrail County.

ATT Wins -- June 12, 2018 -- No Conditions


Later, 8:15 p.m.:

Original Post

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

ATT didn't just win, ATT hit a grand slam according to analysts. The judge set no conditions and effectively told the government to not even thing about appealing. Information from Fox News; no link.
  • T after-hours: down 2%. [Later, quickly recovers.]
  • TWX after-hours: up 4.5%
Who owns CNN? Turner Broadcasting. Who owns Turner Broadcasting? Time Warner. ATT.


Tesla to cut 9% of work force across the board. Shares surge.

But I think this is the bigger story: Business Insider is reporting that Tesla will stop selling its solar panels and battery packs at Home Depot.
  • Tesla will not renew its agreement with Home Depot to sell solar panels and battery packs at the retailer's stores
  • most Tesla employees who had worked at the company's Home Depot displays will be allowed to work at Tesla's stores
  • in February, Tesla announced that it would begin selling its solar panels and home battery packs at over 800 Home Depot store
  • the company will now focus on selling its energy products in its stores and on its website

Is The Market Telegraphing The Government's Decision On The ATT / Time Warner Merger? -- June 12, 2018

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.

Later, 4:36 p.m. EDT: NASDAQ closes at 7,703. All-time high. 

Later, 10:52 a.m. CDT: NASDAQ hit an all-time high. Hit 7,700.

Original Post

8:30 a.m. EDT, June 12, 2018: S&P down 0.75 (much improved); another site suggests S&P has actually turned green (time delay explains the difference); T is now up more than 1%; TWX is now up 0.26% pre-market; has the word gotten out?
  • 9:22 a.m. EDT: T up almost exactly 1%; TWX up slightly, almost flat, but not red 
  • 1:20 p.m. EDT: T turned negative -- ever so slightly, but red just the same; TWX now almost down 1%; tea leaves suggest the deal will not be approved or terms set by the judge will be onerous 
  • 4:27 p.m. EDT: after being negative most of the day, T and TWX are now both green; T up about 1/2 percent; TWX up about 3/4 percent; unless the judge has decided not to release his decision today, my hunch is the decision comes immediately after the market closes -- in about two minutes; with both T and TWX turning positive in the last half hour, the tea leaves suggest the decision has been "leaked" at least to some; phones are probably ringing all over Wall Street right now; 
  • 4:36 p.m. EDT: analysts across the board are suggesting that ATT will win; we'll see; T up 1.75% and TWX up 1.23% -- the best so far today;
  • ATT wins
    • T after-hours: down 2%.
    • TWX after-hours: up 4.5%
Poll: closing out the poll -- will the government approve the ATT - Time Warner merger?
  • yes: 53%
  • no: 47%
  • that's about how I feel -- absolutely no idea what the outcome will be
Futures: it looks like S&P 500 futures -- has just turned green -- up 1.25 points.

A Lot Of Folks Have Asked For This Video

It's over on YouTube, now. At YouTube, search: Trump Kim movie trailer.

It will be interesting to follow the number of views.
  • 9:30 a.m. CDT, June 12, 2018: 450 views
  • 9:45 a.m. CDT, June 12, 2018: 750 views

The Chart Of The Day -- June 12, 2018 -- The Market, Energy, And Poltical Page, T+12; The Day Everything Changed, The Day Nothing Changed

June 12, 2018: the day everything changed (North Korea agrees to de-nuclearize); the day nothing changed (North Korea agrees to de-nuclearize). 

Seattle: Seattle will rescind that "head tax" on Amazon. Wow, wow, wow.

2 cents: the G7 is completely irrelevant. If one measures the health / wealth / economic activity by the amount of energy it consumes .... this is the graph of the day.

If you knew nothing about Planet Earth and just dropped in to see what condition that condition was in, you would leave wondering what in the world is going on in Europe and Japan (G7 minus the US) and the US, China, and "Asia-minus China." Do we need to replace the G7 with the G3 (US, China, South Korea)? There was a reason the European nations EU'd. Individually, going into the 21st century, they were irrelevant in the big picture. In the graphic below, note which areas of the world are not even broken out (enveloped by non-OECD): the entire Mideast region (minus Israel) and the entire continent of Africa). Incredible.

Even Canada is about 50% of Europe. Wow.


Just Dropped In, Kenny Rogers

WTI In A Narrow Trading Range; Direction Not Seen; Active Rigs At 63 In North Dakota -- June 12, 2018; The Big Story Of The Day -- Fractionation And Mont Belvieu -- RBN Energy


Later, 8:10 a.m.: I just listened to Stuart Varney over on Fox News. Color me impressed. Trump and Kim accomplished quite a bit considering where they came from; their first meeting; how long they met; etc. Some big things came out of that short meeting.

Original Post

My 2 cents: early morning Fox News  vs CNBC. Huge difference in reporting. During the 6:00 a.m. CDT hour, CNBC round-table on the Korean summit focused on the Fed and whether there will be four rate increases. Meanwhile, Fox News had substantive reporting on the Korean summit. Pretty amazing, the difference. I was underwhelmed by CNBC; amazed how incredibly shallow their round table was. Overall, it appeared news outlets were looking for something on which to report (disclaimer: I only spent a few minutes on CNBC, and about 20 minutes on Fox News). So far, no "nothing-burger" comment from anti-Trumpers but I expect that to happen before the day is over. This is a lot like the Kardashians: being famous for being famous. The summit: newsworthy for being newsworthy. Bottom line: this is a make or break moment for North Korea.

Active rigs:

Active Rigs63532876185

RBN Energy: soaring NGL supplies may soon overwhelm Mont Belvieu fractionation capaacity.
The NGL sector is firing on all cylinders.
Natural gas liquids production in the Permian, the SCOOP/STACK and other key basins is up, up, up.
A number of new, ethane-consuming steam crackers are coming online along the Texas and Louisiana coast, most conveniently close to the NGL storage and fractionation hub in Mont Belvieu, TX.
The export market for liquefied petroleum gases — propane and normal butane — is through the roof, averaging more than 1 MMb/d in the first five months of 2018 (almost all of it being shipped out of Gulf Coast ports), and ethane exports are strong, too.
What’s not to like?
Well, NGLs don’t do anyone much good until they are fractionated into “purity products” like ethane, propane, normal butane etc., and the rapid run-up in U.S. NGL production — combined with the reluctance of producers to commit to new fractionation capacity — has the existing fractionation plants in Mont Belvieu running flat-out to keep up. Today, we begin a review of the NGL Capital of the Western World and considers why Mont Belvieu — as big as it is — is getting bigger.
Comment: this is a huge story; will archive.