Wednesday, July 31, 2019

Gasoline Demand Portends The Next Great Recession -- July 31, 2019

Yes, it (the next great recession) is right around the corner.

Link here. Previously posted:

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

Connecting The Dots
James Joyce

Nainsook fabric. Hindi. Pleasant to the eye.

From wiki:
The pre-decimal penny (1d) was a coin worth 1/240 of a pound sterling. Its symbol was d, from the Roman denarius. It was a continuation of the earlier English penny, and in Scotland it had the same monetary value as one pre-1707 Scottish shilling. The penny was originally minted in silver, but from the late 18th century it was minted in copper, and then after 1860 in bronze.

The plural of "penny" is "pence" when referring to a quantity of money and "pennies" when referring to a number of coins. Thus 8d is eight pence, but "eight pennies" means specifically eight individual penny coins.

Before Decimal Day in 1971 twelve pence made a shilling, and twenty shillings made a pound, hence 240 pence in one pound. Values less than a pound were usually written in terms of shillings and pence, e.g. 42 pence would be three shillings and sixpence (3/6), pronounced "three and six". Values of less than a shilling were simply written in terms of pence, e.g. eight pence would be 8d.
 So, "four and eleven" refers to the price of these undergarments, four shillings and eleven pence.

The Most Dangerous Book: The Battle For James Joyce's Ulysses, Kevin Birmingham, c. 2014, p. 160.

Even more interesting, note how US retailers advertise / sell items for $5.99 vs $6.00 -- one penny less than $6.00, for example, but psychologically ....

So, here we have in Dublin, Ireland, back at fin de siecle, we have knickers going on sale for one pence short of a full five shillings, advertised for "four and eleven."

See this site for more; comes close with explanation but doesn't quite complete the task. 

Road To Mexico -- US Gasoline -- July 31, 2019

Most of the gasoline exported from the US goes to Mexico. By now, Mexico should have been self-sufficient in gasoline production, natural gas production, and oil production. Won't happen. 

From twitter:

Biggest Story Of The Month Coming Out Of The Bakken? -- July 31, 2019

ICYMI. Also at The Bismarck Tribune.

Link here. Banks are probably now "driving" the company.

Screenshot says it all:

If one is inappropriately exuberant about the Bakken, this has to be very, very concerning.

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

First question: how did this happen? 

Gasoline Demand Data Has Been Posted -- Recession "Just Around The Corner" -- July 31, 2019

Link here.

Funniest video all week: liberal Baltimore reporter telling Trump to come to Baltimore to look for himself ... and this is what they saw ... link here with video.

Rats: from wiki: it would be nice to see a similar chart for the rat population in Baltimore; my hunch? They correlate.

Population: from wiki, history of Baltimore's population. Never did hit a million. Close in 1960. Now trending toward 500,000. Stopped growing in the 60s; plummets in the 80s:

Huge "thank you" to Don who sends me some wonderful links, including these two on Baltimore.

By the way, the population data for Baltimore looks a lot like that of New Orleans

Shanghaied: from zerohedge:
For a company that has already racked up a tab of over $1 billion in losses this year, what's another $323 million amongst friends?

This was quite possibly the attitude the company took when agreeing to pay China 2.23 billion yuan - about $323 million - in taxes every single year as part of their deal with local authorities to build their factory on the outside of Shangha.

Tesla has also committed to drop about 14.08 billion yuan - or about $2 billion - in capex on the plant over the next five years, according to its lease. While the point of the Shanghai Gigafactory was to avoid tariffs and keep prices down, we're not sure how an annual tax requirement of well over a quarter of a billion dollars is going to make things easier for Musk.
Tesla solar: a very, very dim future? But doesn't his cousin own it?

Update On Hess' Middle Lodgepole Unconventional Well -- July 31, 2019

Scallion -- not yet complete: the MDW posts that have mentioned "Scallion" at least once.

Really, really cool: several articles of interest in the July, 2019, issue of the North Dakota Geological Survey magazine. Link here.

This is the first article that caught my eye: Review of the TI-WAO-157-95-14H-1: The First Middle Lodgepole Unconventional Test Well In The Williston Basin. It may download as a pdf on your desktop from the link above.

On July 4, 2018, I posted this:

I posted this back on August 17, 2014:
  • 26738, IA, Hess, TI-WAO-157-95-14H-1, Tioga, this is a Lodgepole well; Hess will come back to this well on/about May 7, 2014, to drill this well to TD of 13,693 feet; and then complete it with a multi-stage acid frack; the company will core the upper and the middle Lodgepole; the company will also core the upper, middle, and lower Bakken; the company will core the 1st and 2nd benches of the Three Forks, and the upper 30' of the Three Forks third bench; 640-acre spacing for a Lodgepole well. [Updates: 12/14: no production since early September, 2014; Update: actually produced 60 bbls in one day in April, 2015; also noted that well is now IA (previously TA)]
Now, we'll get the rest of the story. I will read it later. Time for lunch, Uber-driving the granddaughters, and swimming.

News From All Over, Part 4 -- July 31, 2019

Burned: For those millennials worried about plastic straws, this is the real problem: the plastic in the #1 litter problem in the world. From The WSJ: the world's most littered item comes under fire -- the cigarette butt / the filter contains non-biodegradable plastic. Yup. Non-biodegraable. Yup. Plastic.

Fed cuts rate for the first since 2008! Wow, I think that's what I read -- or maybe first time in eight years -- yes, I think that was it -- I was right the first time -- first time since 2008:
  • the markets tank after the announcement 
  • social media blames Trump for the Fed cutting rates
Fed cuts rates: now the post-mortem. No, I won't be watching CNBC.

GE cash flow: hit by 737 MAX groundings. Link here. The debacle is tracked here 'cause I think this ends badly for Boeing.

Khashoggied: looks like Saudi Arabia took out Osama bin Laden's son and heir. Link here.

Going, going, gone OR Mueller Report. Mueller Lite. Mueller Gone. According to one source, the following words were not even mentioned at the debate last night: "Mueller," "report," "Russian," "collusion," either separately or as a phrase. The CNN anchors and the Democratic dwarfs running for their party's nomination have seen the polls: not only do Americans not "rank" this as an issue with which to deal," they are getting tired of hearing about it and are tuning it out, as in switching networks when any combination of the words "Mueller report Russian collusion" are mentioned.

Speaking of which: any bets we never see Bob Mueller again speaking in public? And with Congress on a 6-week sabbatical, we won't even hear Needler or Pencil-Neck talk about it from the Capitol steps for awhile.

Only One New Permit Today -- July 31, 2019

Whiting: apparently Whiting cuts one-third of its work force. From twitter:

WTI: for those not watching -- WTI rose by ... drum roll -- one shiny copper penny today.

Hunch: after the Fed cut rates and WTI rose ... drum roll ... one cent, my hunch is that we will see this headline over at oilprice: WTI Surges After Fed Cuts Rates. 

Active rigs:

Active Rigs5863613574

One new permit, #36804:
  • Operator: MRO
  • Field: Reunion Bay (Mountrail)
  • Comments:  MRO has a permit for a new Floyd USA well in lot 2 / section 4-151-93, Reunion Bay
And that was all.

Notes From All Over, Part 3 -- July 31, 2019


Later, 2:24 p.m. CT: this is pretty funny. After several posts about the grids in the northeast (ISO-NY and ISO-NE), zerohedge now takes the baton. See zerohedge at this link; a reader sent met he link; saw the headline; did not read the story.

Original Post

ISO NE, take a look at this and see if you can see what catches my attention today? Link here:

Time to run through twitter:
  • First Squawk: OPEC July oil output falls to lowest level since June, 2011 -- that would be almost ten years ago; wow [memo to First Squawk: need to quit with the ALL CAPS ALREADY]
  • OOTT: "almost no growth in US crude oil production since December, 2018"
  • OOTT: data for crude oil production in five plays including Colorado, and fails to mention the Bakken
  • OOTT: US oil product exports up 1.125 million b/d; compare with 5.827 million b/d last week;
  • OOTT: US crude inventories have declined by nearly 49 million bbls in the last seven weeks; doesn't mention when/whether EIA changed its method of calculating inventories
  • Williston Herald: after delays, construction begins again on Williston's new Pizza Hut; it's been a year since ground was broken; apparently now near completion;
  • Tom Steyer: still advertising; I didn't see his name on the list of those debating on stage; talk about tilting at windmills -- wants Nancy Pelosi to cancel Congressional 6-week summer break; yeah, like that will happen
US crude oil inventories? Let's fact-check:
Week 29
June 12, 2019
Week 30
June 19, 2019
Week 31
June 26, 2019
Week 32
July 3, 2019
Week 33
July 10, 2019
Week 34
July 17, 2019
Week 35
July 24, 2019
Week 36
July 31, 2019


Nearly? I get 49.0 million bbls exactly.

Calendar, another non-sequitur. Impeachment is still on the table, but ...
  • six week Congressional recess
  • Democrat base mixed
  • autumn session: budget
  • Christmas / year-end holidays / recess
  • spring: smack dab in the middle of the US presidential campaign
  • interest wanes
  • Pelosi knows that if the US House moves to impeachment, nothing else gets done
  • was it mentioned in the debates last night
  • haven't heard anything from the junior senator from Utah in, like, months (I almost said, "years")
The ISO-NE graphic above:
  • throw out nuclear -- barely changes from day-to-day, and natural gas makes up about 99% of fuel; it's the marginal fuel, regardless; wind/solar non-dispatchable
  • coal, almost nonexistent, is still on the graph
  • but look at this: so is heating oil, still on the graph and heating oil is at 3%; renewables at 5%
  • natural gas can't keep up with demand
  • after decades of grants, tax breaks, government mandates, Tom Steyer ads, faux environmental protests, etc, etc., renewables account for 5% -- which equals oil & hydro combined
Okay, this page is done. Stick a fork in it.

Break, Break -- 10:35 A.M. CT -- July 31, 2019

This has been an incredible day for news and the market. And to the best of my knowledge, the Fed has not even announced its decision.

From Drudge, could be fake news. I did not read the story:

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

If millennial non-investors are buying into the "gloom and doom" stories by the mainstream media, they are missing huge opportunities. Having said that, a recession is just around the corner. 

Typographical and factual errors: again, a huge "thank you" to all readers for not bringing to my attention "unimportant" typographical and factual errors. I correct them as I find them. If I make an error that could affect world peace, please let me know ASAP. That's medical speak for "as soon as possible."

A reminder: I'm inappropriately exuberant about the Bakken, and I love Big Oil. I especially love BP --- talking up green energy, global warming, and then reporting record profits from ... drum roll ... oil. At least that's my worldview of BP. I do not own any shares in BP, at least not directly. 

Sand: so how much sand did Enerplus use to frack its newest huge well in the Bakken? 12 million pounds of small/medium sand; no ceramics; the well:
  • 34582, 309 (no typo), Enerplus, Komodo 151-94-17A-20H-TF, 41 stages (modest), 12 million lbs (a lot), Sanish, t1/19; cum 121K 5/19;
Sand: and what about CLR? How much sand did CLR use to frack its newest well in the three Forks Bench 2? 11.3 million lbs in 41 stages; I assume all sand; the well:
  • 35273, IA/2,405, CLR Carson Peak 5-35H2, 4 sections, 41 stages (modest), 11.3 million lbs (a lot), Oakdale, t6/19; cum 2K after 4 days; inactive right now;
Sand: what does this tell me? Sand is available and it's cheap. Or at least economical to use a lot. With the cost of drilling going down, operators can afford to use more sand, although that's not to say that they are using more sand overall. 

Okay, we're done with this page.

EPD - CVX To Develop Crude Oil Port; ONEOK Free Cash Soars -- July 31, 2019

Link here to Reuters via Yahoo!Finance:
  • SPOT: Enterprise's Sea Port Oil Terminal, about 40 miles off the coast of Houston
  • up to two VLCCs could moor at the site; could load up to 2 million bopd
  • at least one of eight similar projects off the Texas and Louisiana coasts proposed to export oil
  • would compete with projects under development:
  • Trafigura Ltd, a commodities trader
  • Magellan Midstream Partners, Tallgrass Energy LP, and Phillips 66: pipeline operators
  • export terminal will serve as terminal for EPD's Midland-to-ECHO 3 (I have not seen that pipeline mentioned in most recent update by RBN Energy]
Thins about these two data points:
  • up to 2 million bopd could be loaded
  • this is just one of eight projects being proposed
Some of this has previously been posted.

EPD: to report earnings today. And here they are, from Zacks:
  • beats
  • 55 cents/share
  • revenue miss: $8.2763 billion vs $8.795 billion forecast
  • adjusted distributable cash flow was at a record level of $1.7 billion, up 21.3% year-over-year
  • EPD shares up 3% today
  • EPD "pays" almost 6%
Disclaimer: this is not an investment site. Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.

BHGE, link here:
  • revenue of $6.0 billion up 9% year-over-year
  • EPS, adjusted: 20 cents
  • free cash flow: almost $600 million for the quarter
  • Zacks: beats; link here;
  • shares up 5% today; "pays" about 3%
ONEOK (OKE): wow this is nice; OKE is up over 4% today; up $2.80; trading at $70; wow
pays over 5% but I thought I saw that it recently cut its dividend; will have to sort this out later, maybe, not really interested; it is what it is, but this is what I like to see in the same sentence: "cash flow" "soars." From The Motley Fool: ONEOK's cash flow soars in 2Q19:
  • continues to benefit from its strategic focus on capturing the natural gas produced as a byproduct of oil-focused wells. Drillers had been burning off this gas due to the lack of infrastructure. However, they're now able to cash in on an increasing amount of it as ONEOK completes its expansion projects.  [Comment: I might come back to this if I find time.]
  • distributable cash flow:
  • 2Q18: $454 million
  • 2Q19: $632 million
  • changes: up almost 20%
  • dividend coverage ratio: up almost 10% year-over-year
  • generated $183 million in excess cash after paying its dividend during the quarter
  • excess cash was nearly 45% higher year-over-year even though ONEOK raised its divided 8% over the past year
The Bakken connection:
CEO Terry Spencer previously called 2019 "a year of project execution" for the company. That's exactly what ONEOK did during the second quarter. Spencer said that "our capital-growth program remains on schedule and on budget, including multiple projects that will add critical natural gas and NGL infrastructure to significantly reduce flaring in the Williston Basin." He noted that "the southern section of our Elk Creek NGL Pipeline is now complete," which puts that project ahead of schedule. This leads the company to believe that it will experience a "significant earnings uplift in the second half of 2019," according to Spencer.

Notes From All Over, Part 2; Cold Weather In Minnesota Breaks 121-Year Record -- July 31, 2019

Bullet train, California: governor quietly moves money obligated for the "bullet train" to other existing light rail operations along the coast. LA Times. Paywall, unfortunately. Southern California Public Radio carries story -- which by the way -- suggests the futility of paywalls:
California is considering [trial balloon] diverting funds from the Central Valley bullet train to other local rail projects. Many Democratic lawmakers have spoken out in favor of the move arguing the shift in funds would have more public value. That shift could include moving funds toward San Francisco commuter rail and improving rail from Burbank to Anaheim, which is thought to ease traffic congestion on the Interstate 5 corridor. Gov. Gavin Newsom drew back from a plan that would finish the 500-mile high-speed rail system, saying the project didn’t have the funding to succeed. But Newsom said earlier this year in his State of the State speech that doesn’t mean the project will come to an end.
The SCPR story links to the LA Times story. 
Comment: I can hardly wait for the Trump tweets. LOL. With or without tweets, this pretty much kills any talk of the bullet train remaining on life support.
Comment, "considering": looking at legal ramifications; looking at Federal impact grants; looking at political blowback.
Comment, my two cents worth: this is where they should have put the money in the first place; not that it would have made any different in the big scheme of things, but it would have made more sense to many.

Global warming: the fact that otherwise reasonable and otherwise "smart" folks are still worried about global warming tells me that these folks are not paying attention. Another example, from CBS Minnesota:

CLR Sells Water Gathering And Recyling System In Blaine County, Oklahoma; COP To Add Rig In Eagle Ford; Japan Bets Big On US Shale Revolution -- July 31, 2019

From a CLR press release:
Continental Resources, Inc. today announced the sale of its eastern STACK water gathering and recycling system in Blaine County, Oklahoma for $85 million to Lagoon Water Solutions.
Along with the divestiture, Continental has entered into a long-term arrangement with Lagoon to provide water sourcing, gathering and disposal services for Continental's future development in the area.
From shale to offshore: Rigzone article here

Japan bets big on US shale boom: Bloomberg via Rigzone. Data points:
  • Osaka Gas Co
  • first purchase of a US shale gas driller by a Japanese company
  • will acquire: Sabine Oil & Gs Corp, a unit of Sabine Oil & Gas Holdings
  • price; $160 million
  • 175,000 net acres; east Texas in the Haynesville and Cotton Valley formations
  • about $900/acre
  • Osaka's biggest purchase; surpassed its $532 million purchase back in 2008 -- APA GasNet Australia Investment Ltd
COP earnings: from Rigzone --
  • "earnings fall flat" for 2Q19
  • EPS: $1.40
  • generated free cash flow of $1.7 billion
  • seventh consecutive quarter of generating free cash flow
  • raised CAPEX from $6.1 billion to $6.3 billion
  • to add another rig in the Eagle Ford [a week ago, Z4 Research declared the Eagle Ford to be "in permanent decline" -- I guess that's why COP felt compelled to add another rig]
  • more exploration and appraisal drilling in Alaska

US Crude Oil Inventories Drop 8.5 Million Bbls -- EIA -- July 31, 2019

Link here. From EIA:
  • weekly US crude oil inventories: decreased by a whopping 8.5 million bbls; corroborates API's data from yesterday
  • weekly US crude oil inventory: at 436.5 million bbls, at the five-year average for this time of year; [I don't know, but I believe the EIA recently changed the way it calculated US crude oil inventory -- by removing crude oil in pipelines from the storage number -- could be wrong]
  • refineries operating at 93.0% capacity; near high end; unchanged from last week
  • crude oil imports, four-week average: about 13% less than same four-week period one year ago
  • total product supplied: 21.1 million bbls; up 1.2% from same period last year
  • gasoline supplied, four-week-average: less than 10 million bbls per day (9.6 million b/d) 
  • distillate fuel product supplied average: less than 4 million bbls per day (3.8 million b/d)
  • jet fuel production supplied average: up 3.3% over same four-week period last year
Week Ending
Million Bbls Storage
Week 0
November 21, 2018
Week 1
November 28, 2018
Week 2
December 6, 2018
Week 3
December 12, 2018
Week 4
December 19, 2018
Week 5
December 28, 2018
Week 6
January 4, 2019
Week 7
January 9, 2019
Week 8
January 16, 2019
Week 9
January 24, 2019
Week 10
January 31, 2019
Week 11
February 6, 2019
Week 12
February 13, 2019
Week 13
February 21, 2019
Week 14
February 27, 2019
Week 15
March 6, 2019
Week 16
March 13, 2019
Week 17
March 20, 2019
Week 18
March 27, 2019
Week 19
April 3, 2019
Week 20
April 10, 2019
Week 21
April 17, 2019
Week 22
April 24, 2019
Week 23
May 1, 2019
Week 24
May 8, 2019
Week 25
May 15, 2019
Week 26
May 22, 2019
Week 27
May 30, 2019
Week 28
June 5, 2019
Week 29
June 12, 2019
Week 30
June 19, 2019
Week 31
June 26, 2019
Week 32
July 3, 2019
Week 33
July 10, 2019
Week 34
July 17, 2019
Week 35
July 24, 2019
Week 36
July 31, 2019

Gasoline demand: pending.