Wednesday, July 25, 2018

Saudi Arabia Suspends Red Sea Oil Shipments -- July 25, 2018; Katie Ledecky On NBC, NBCSN

Saudi Arabia suspends Red Sea oil shipments following attack on two of its VLCCs. Link here. OPEC basket crude oil rises ... 16 cents/bbl. Update, July 26, 2018, here.

The Katie Ledecky Page

Meanwhile, out in Irvine, CA, Katie Ledecky adds another national title.

From Swimming World:
Stanford’s Katie Ledecky added another national title in the women’s 800 free to kick off her first finals swim of Nationals, hitting the wall in 8:11.98.
Ledecky pushed the pace early (as she often does), leading the race from start to finish and sitting under world record and U.S. Open record pace at different points throughout the race.
While she was flipped under world record pace at the 200 mark (1:58.24) she had fallen off to just under U.S. Open record pace at the 400 (4:02.29) at the halfway point before fading in the second half of the race. While she was able to keep her splits under 31 seconds through about the 300, she crept up gradually to 31-mids in the second half of the race.
Her season best stands at 8:07.27 from the TYR Pro Series meet from Indianapolis.
On NBCSC generally "late" at night, tonight through Sunday. On the weekend, it will be on during the afternoon, 3 p.m. ET, both days on NBC.

Who Got To Governor Jerry Brown? -- July 25, 2018; Saipem With Almost $1 Billion In Pipeline Contracts On Four Continents

From SeekingAlpha:
  • PG&E, Edison International, and Sempra Energy  are higher after California Gov. Gov. Brown proposed legislation that could dramatically ease the potential wildfire-related financial burdens on large utilities by potentially shoveling more costs onto ratepayers’ shoulders
  • in a letter to state legislators, Brown said the current legal framework which confronts utilities with liabilities they claim threatens them with bankruptcy is unsustainable
  • Brown’s plan would not free PG&E of its financial responsibilities related to last fall’s northern California wildfires but would deliver a victory for PG&E and other utilities by shifting the future cost burden of strict liabilities that power companies now face under inverse condemnation, which holds utilities liable if their equipment was a factor in causing a wildfire or other disaster, even if the utility properly conducted maintenance and facilities upgrades
Who Is Saipem?

Saipem: an Italian oil and gas industry contractor. It was a subsidiary of Italian energy company Eni, which owned approximately 30% of Saipem's shares until 2016.[2] Saipem has been contracted for designing and constructing several pipelines, including Blue Stream, Greenstream, Nord Stream and South Stream

Saipem wins huge contracts -- pipelines on four continents that will total almost a billion dollars. Link here.  
Saipem has won onshore engineering and construction (E&C) contracts in Asia, Europe, North America and Africa totaling approximately $800 million.
Saudi Aramco has awarded Saipem a procurement and construction contract for its South Gas Compression Plant Pipelines project tied to the development of the Haradh gas plant (HdGP) in eastern Saudi Arabia. Saudi Aramco stated that the program as an initiative for “improving and sustaining gas production from Haradh and Hawiyah fields by reducing choke pressure at the wellhead to 300 pounds per square inch gauge.” The company added that the program will extend plateau life of both fields by two decades while maintaining production rates.

Also on Wednesday, Saipem stated that it received a contract from ExxonMobil Iraq Limited for the DS6 project in the West Qurna field in southeastern Iraq. The 23-month project calls on Saipem to optimize a plant to boost its overall capacity and will be executed primarily from Saipem’s Rumahila fabrication yard.
Outside of Asia, Saipem – through its Saimexicana unit – secured a contract from Pemex for work on its Miguel Hidalgo refinery, which is located in Tula de Hallende north of Mexico City.
Saipem also announced that it obtained contracts for the following projects in Africa and Europe:
  • Front end engineering design – in conjunction with joint venture partners Chiyoda and Daewoo – from Nigeria LNG Limited (NLNG) that also entails preparing the engineering, procurement and construction proposal for adding a seventh liquefaction train at the NLNG facility in Finima on Bonny Island, Nigeria.
  • Engineering services and permit acquisition for construction work related to laying pipes for transporting gas to Serbia.
Last Night's Dinner

Trying something new while my wife is out of town for a couple of weeks. Salmon filet on the right. Huge artichoke (boiled first, and then grilled). Same with potatoes.

Note: the Wall Street Journals are stacking up, being saved for my wife. I no longer read the hard copy. I only read the digital copy and not much of that either.

Fourteen New Permits -- July 25, 2018; FB Crashes -- Down 24% After Earnings Miss And Really, Really Disturbing Guidance

A couple of random comments before we get started:
  • for the archives, this was an incredible day for the market following President Trump and EU Jean-Claude Juncker joint presser regarding tariffs
  • WTI took a small but significant jump after that presser
  • I may be getting ahead of my headlights, but the problem in the Permian may be reflected in the Bakken -- look at the number of XTO permits today -- see below -- one could argue permit action in the Bakken could be directly related to bottlenecks in the Permian
WTI: late day surge after the president's press briefing on tariffs.  Futures are now soaring after-market.

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 think you may have read here.

FB: down 24% after earnings miss. Comment: think TSLA. I think the FB correction will pale in comparison to what we could see with TSLA. The real question being asked of FB: how were analysts mislead, or were analysts guilty of "group think"? Same questions for TSLA.

Gasoline demand, link here:

Back to the Bakken

Active rigs:

Active Rigs64603273192

Fourteen new permits:
  • Operators: XTO (10): Whiting (4)
  • Fields: North Fork (Dunn), Haystack Butte (Dunn), Tyrone (Williams)
  • Comments: XTO has permits for a 10-well Teddy Federal pad in North Fork/Haystack Butte in SWNW 5-148-97; Whiting has permits for a 4-well Moline pad in NENW 14-156-101;
Two permits renewed:
  • Whiting: two P Bibler permits in Williams County
Operator transfer:
  • another 27 Divide County wells transferred from SM Energy to Petro-Hunt

Notes On Trade War Between US And EU -- July 25, 2018


Later, 7:08 p.m. CDT:

Original Post 

Notes from July 25, 2018, to draft status.


July 25, 2018: now the press conference with President Trump on trade with Europe -- comments or paraphrased comments from the president and EU Mr Jean-Claude Juncker -- and my comments
  • CNBC actually televising the press conference; after the press conference -- very, very short conference -- CNBC already trying to minimize it
  • back to FBN;
  • Trump has achieved his goal to bring the EU to the negotiating table
  • both sides will work toward zero tariffs -- which would be called "free trade" -- unlike the 275% Canadian tariffs on US dairy products which most pundits currently consider "free trade"
  • obviously the EU had to save face; Trump had no such concerns; something tells me it's even more tense (for the EU) behind the scenes
  • direct swipe again Russia/Putin on energy -- a big, big deal but anti-Trumper pundits respond that "the devil is in the details" -- well, duh, of course 
  • but this is a huge deal -- maybe; we'll see tomorrow; one talking head predicts a big sell-off tomorrow when the excitement wears off
July 25, 2018: starting at 3:01 p.m. CDT; comments from FBN -- these are not my comments -- these are comments or paraphrased comments from Fox Business News --
  • one talking head suggests there could be sell-off tomorrow if this story turns out to be smaller than it really is
  • what an exciting day to be watching the market; waiting for the press briefing in the Rose Garden
  • FBN says it was seemingly summoned to the Rose Garden "out of nowhere": open press event
  • [momentary switch to CNBC -- still minimizing the story; same talking heads trying to talk this market down]
  • many tech stocks at an all-time high
  • wow, wow, wow -- one of my largest portfolio holdings was in the "red" all day; at the close it was still showing "red," but now, minutes after the close the account has turned "green" -- and it's a significant "green"
  • can't wait to catch Jim Cramer tonight
July 25, 2018: my hunch is that the Rose Garden press briefing was "delayed" until the close of the market.

July 25, 2018: comments from FBN -- these are not my comments -- these are comments or paraphrased comments from Fox Business News --last note, 3:01 p.m CDT
  • a huge victory for Trump
  • could be a summer to remember
  • FBN analysts are "going nuts"
  • if you feel this is momentum, it may be time to "play" the China market
  • everything who sold off and went into cash, or treasuries --
  • this market is going to go a lot higher
  • snap back rally
  • one of the most significant trades we've seen in generations
  • more breaking news: auto tariffs -- fine tuning language specifically on auto tariffs
    • GM coming back
    • European auto makers moving higher
    • Ford is reducing its sessions losses; F is literally straddling the "flat" line
July 25, 2018: the Dow was down slightly all day; it will close almost 200 points up on breaking news from the White House -- on auto tariffs

July 25, 2018: even more incredible -- CNBC is avoiding the story. Has gone to commercial. Fox Business News has the news -- S&P 500 now out of "correction" territory. Spikes in all indices. This is absolutely incredible. Anybody who listened to Trump's speech yesterday, again, Trump pegged it exactly right. He intimated that we would see something today.

July 25, 2018: holy mackerel. If you are not watching the market today -- in the last 30 minutes, you are missing a historic event.

If I Ever Thought Of Buying A Tesla, Never Again -- For Some Reason NDIC Did Not Scan In Wells Coming Off Confidential List Today As of Noon -- July 25, 2018

Wells coming off confidential list today (July 25, 2018) are still listed at the "confidential well site."

The Apple Page

Link here. Huge story.

The Katie Ledecky Page

Featured on front cover of this month's issue of The National Geographic.

The Hypocrisy Page
Is It Paranoia?

Five links, he stepped over the red line -- I will never, never, ever have a kind word to say about Tesla or Elon Musk again:

The Market, Energy, And Political Page, T+55 -- July 25, 2018

Original Post

Hunch: for the time-date stamp bragging rights, my hunch is that the best-selling book in 2019, possibly 2020, will be The Rise and Fall of Donald J Trump. Just saying. [I posted that on July 25, 2018. Four days later, July 29, 2018, this op-ed in The NY Times the day after President Trump meets with the publisher of The New York Times: "How Trump Lost Re-Election in 2020." And the publisher of the NY Times had the gall to ask Trump to quit tweeting about the mainstream media.]

T+55. Link here.

Great moments in presidential politics, in no particular order: ObamaCare. Bay of Pigs. Trade war. Iran hostage crisis. Katrina. 18 and 1/2 minutes. Read my lips. Iran-Contra. 

$12 billion bailout (which, by the way, I support, but wish it had not been necessary.)

Dow: down 40. White noise.

Disclaimer: this is not an investment site.

Non-Dow indices: all up; many hitting new records.

What does the Dow have in common with Libya: both are irrelevant. The Dow is made up of 30 components, any of which can be removed and substituted at any time, at the whim of the puppeteer. Witness GE. Gone. Replaced by a "high flyer."

S & P 500: five hundred vs 30.

NASDAQ: more than 3,300 listings.

Russell 2000: quick! How many companies are "listed" in the Russell 2000?

The Dow: 30. Mostly the bluest of the blue chip stocks most suitable for widow and orphans. Does the Dow puppeteer require that a component pay a dividend?

BRK: could easily replace the Dow as one index to put up there on the crawler along with the NASDAQ, Russell 2000, the S&P. In fact, one could argue, BRK is a better "index" than the Dow.

New Contest: Name That 'Dozer'

Link here.

"Name that 'dozer." Submissions:
  • heavy metal
  • Luddite loader
  • Burnaby bull
  • long story short
  • pipeline express
  • make my day
  • this runs on diesel
  • Trudeau's folly
  • Trudeau takes charge
  • no country for old men
  • ball is in your court
  • dozer is in your court
  • elvis has left the building
  • takes two to tango
  • last straw 
  • take no prisoners
  • Yellow war
  • "see-ya" club 
  • standing rock, falling tents
Thirteen Minutes Of Fun

Pipeline: The New Reality In The US -- Americans Don't Like Pipelines -- July 25, 2018


August 9, 2018: Buffett missed a huge opportunity. OXY found a buyer.
  • two asset sales to EnCap Flatrock Midstream portfolio companies for about $2.6 billion.
  • liquids terminaling and logistics provider Moda Midstream LLC entered into a definitive agreement to acquire the Oxy Ingleside Energy Center and certain crude oil and LPG infrastructure. 
  • Lotus Midstream LLC agreed to acquire Oxy’s Centurion pipeline system and a Southeast New Mexico crude oil gathering system. Both transactions are expected to close in third-quarter 2018. 
See my original post. I think OXY was looking for $5 billion. I suggested that Centurion alone was worth $2.9 billion. Buyers got the whole enchilada for $2.6 billion. Wow.

Original Post 

Reuters via Yahoo!Finance has this story: OXY -- Occidental Petroleum may be looking to sell its pipeline assets -- ostensibly to raise cash for E & P but reading between the lines, operators are simply getting tired of the whole business. I've been blogging about the Keystone XL since at least 2012 when it became clear that President Obama intended to kill the project. Since then, update after update after update. Today, we get news that the Nebraska Supreme Court says it will "expedite" oral arguments. Charles Dickens wrote about the British legal quagmire where court cases dragged on for generations. As Pogo said, we've met the enemy and the enemy is us. Whether Pogo was the first to note that is debatable; probably not.

But I digress.

From the linked article:
Occidental's decision to shed the assets is the latest example of an oil company balking at the capital expenditure required to maintain U.S. pipelines, which have been plagued by bottlenecks and require construction of new networks.
Hess Corp and Oasis Petroleum Inc are among the companies that have sold or spun off pipelines in the past year, looking to take advantage of high valuations for these assets, which have been buoyed by the capacity constrains.
Occidental's midstream assets include a major U.S. crude pipeline, a stake in a gas pipeline in the Middle East, a crude export terminal in Texas, and the Centurion Pipeline, a 2,900 mile line carrying crude from the Permian Basin of West Texas and New Mexico to Cushing, Oklahoma.
A year ago, Occidental tried to find a buyer for its 50 percent stake in its Ingleside Energy Center, a crude oil storage and export terminal in Corpus Christi, Texas. That sale process was not completed, and Occidental is including the facility in its package of midstream assets.
Much more at the link. 

Warren Buffett likes:
  • energy
  • sectors that require huge CAPEX -- huge tax advantages
  • industries with huge moats
  • to wait for the right moment to buy
Berkshire Hathaway:
  • market cap: almost $500 billion
  • income from continuing operations: $45 billion
  • total cash: $102 billion
  • total debt: $99 billion
  • how much does OXY want for its premier pipeline assets? $5 billion
  • shoot -- the Centurion Pipeline -- 30-second elevator speech -- at a million dollars a mile, that pipeline alone is worth $2.9 billion; LOL
  • perspective: Trudeau bought the current Trans Mountain Pipeline assets for $4.7 billion; it will cost an estimated $7.4 billion more to complete the expansion project
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 think you may have read here.

Disclaimer: in a long note like this, there are bound to be factual and typographical errors. If this is important to you, go to the source. Also, I make a lot of simple arithmetic errors.

The Book Page

I've often wondered why the Brits (for the most part the English and the Scots) had such an incredible effect/impact on the world.

Something I've never seen discussed in this context is the English system of inheritance: primogeniture.

I'm currently reading A. N. Wilson's landmark opus The Victorians, c. 2003. I said the other day I have no more shelf space and won't be buying any more books. I have made my first exception. This is an incredibly good book, but wow, I have to read it slowly. After four days of reading it, I've finally gotten into the book's rhythm.

It was while reading this book -- and I've read a lot of books about Great Britain, England, and Scotland, and have spent many years in England and along the Scottish border -- that it finally dawned on me what is likely the main reason for England's impact on the world.

The unique Lamarckian trait among the Turks: traders and multilingualism. The English and Scots: explorers.

[Hungarians, by the way, are probably descendants of an extra-terrestrial alien society far more advanced than any on earth. But I digress.]

To me, it's simply incredible, the concept of primogeniture. For most of history, XY primogeniture -- women were not even "considered." With primogeniture, the title, the estate, the family name, everything goes to the first born (and even that isn't quite correct, but it will due for now).

Taken to its extreme, and apparently it was until recent times, the first born English male inherited everything. His brothers and sisters got nothing, or were at a minimum dependent on the largess of their oldest brother.

Essentially, under primogeniture, everyone is disinherited except for the first-born male. The females would survive only by marrying "well." The disinherited brothers had two options. The first option: marry "well" but since they had nothing with which to begin, they were not, as a rule, highly sought-after bachelors. The second option: leave home, and seek their own fortunes.

It's simply incredible to read the family histories in British history like that presented by A. N. Wilson where a multi-million-dollar estate and title (in many cases) was inherited by the oldest brother, and the rest of the siblings received nothing.

It certainly explains a lot.

The China Concerts. Jean Michel Jarre

Reuters Analyst Reads The Blog -- July 25, 2018; US Crude Oil Inventories Drop By A Whopping 6.1 Million Bbls; Nearing The "Magic Number"

Definition: "swing producer." In the past, "swing producer simply referred to production of crude oil. That definition is useful, perhaps, for traders and speculators in crude oil, but the definition is clearly lacking. Oil in its raw form at the well site is not particularly useful. A truck of Bakken oil sitting out on a pad west of Tioga, ND, doesn't mean a whole lot to the consumer in Rome, Italy. What matters, when it comes to "swing producer" and the "real world," is how fast a refined product can be delivered to the consumer. Using that definition, without question, the US is the world's swing producer when it comes to "crude oil." See more at the link in the next item.

Reuters is reading the blog! Last week, this post: The US is the swing producer -- i.e., the shale producers are the world's swing producers. (By the way, Rusty Braziel seems to be suggesting the same; see the RBN Energy link today.) Within days after posting that "fact," this, over at twitter, from the Reuters analyst:

So, are US shale producers now the global swing producer? Machts nichts in this context. The point is that it's great to see Reuters reading the blog. 

Keystone XL: apparently even the Nebraska folks are getting tired of this story. The headline and link: Nebraska Supreme Court agrees to speed up oral arguments in Keystone XL pipeline case.  I've not read the article yet, and probably won't. I find it amazing: the smartest guys in the world -- supreme court judges -- are still not up to speed on the Keystone XL. How long has this been dragging out? That's a rhetorical question; don't reply.

Pending: I believe COP reports earnings tomorrow, and CVX and XOM will report earnings the following day, all before the market opens for the day. Not sure.

Weekly petroleum report, link here:
  • most important data point today, refinery operating capacity: at 93.8%, a bit on the low side
  • gasoline production at 10.3 million bbls (threshold: 10 million bbls)
  • distillate production at 5.2 million bbls (threshold: 5 million bbls)
  • US crude oil inventories: yesterday, the API reported that inventories dropped 3.16 million bbls; the EIA reports that US crude oil inventories decreased by a whopping 6.1 million bbls; now down to 404.9 million bbls. For the longest time, I opined that "350" was the magic number; I now feel comfortable that the new "magic number" is "400." WTI? flat!
  • days of supply, US crude oil: that will be reported later
  • gasoline supplied, four week average: 9.7 million bbls
  • distillate supplies, four week average: 4.1 million bbls
Back to the Bakken

CLR: pretty funny.  UPI headline is click bait -- yes, CLR production came in below guidance but it was due to "wet weather and voluntary restrictions." Once I read the "sub-headline" I read no further. Again, machts nichts. But it certainly unnerved investors: CLR is down almost 5% today. Buying opportunity?

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 think you may have read here.

Wells coming off confidential list today:
  • 34290, SI/NC, XTO, FBIR Walker 31X-36G, Heart Butte, no production data, 
  • 33956, SI/NC, Crescent Point Energy, CPEUSC David 8-29-32-157N-99W TFH, Lone Tree Lake, no production data, 
  • 33712, 861,  Liberty Resources, Storsul C 158-93-8-5-3MBH, East Tioga, t2/18; cum 62K 5/18;
  • 31954, A, Hess, EN-Vachal-155-93-0532H-7, Alger, t6/18; cum --
Active rigs:

Active Rigs64603273192

RBN Energy: US producers' new, critically important role in global crude oil markets.
U.S. crude oil production has doubled in the past eight years, from 5.5 MMb/d in 2010 to a record 11.0 MMb/d this month — an astonishing 9% compound annual growth rate. But there’s more to the Shale Revolution than higher production. Its most noteworthy characteristic may be a newfound market responsiveness that U.S. production volumes have to price, in which U.S. producers flex their “sweet spots” and an at-the-ready inventory of drilled-but-uncompleted wells (DUCs) that can be ramped up when prices warrant and pulled back when they don’t. This newfound flexibility has profoundly changed the role of the U.S. in global markets. In today’s blog, we take a big-picture look at crude oil production growth, the special ability of U.S. producers to respond to shifts in crude pricing, and the potential for the U.S. to have a stabilizing role in global markets.