Friday, April 5, 2019

When Mexico Implodes: PEMEX Oil Production, March, 2019 -- Analyst Suggests 1.7 Million BOPD


May 25, 2019:

Original Post

See this note. At that post:
April 5, 2019: no link; from analyst over at twitter today; company estimates PEMEX produced 1.7 million bopd in March, 2019. Note recent production history below. "Current production" said to be 1.8 million bopd so if the 1.7 million bopd is correct, Mexico's oil production is going in the wrong direction.
From Platts/oilprice:

For OPEC: 570,000 bbls / 30.8 million bbls = 1.85% decline

Global production: 570,000 bbls / 100 million bbls = 0.57%.

I think the world will manage.

The US has 450 million bbls of oil in storage (commercial; does not include SPR); historically the US got along just fine with about 300 million bbls in storage; re-balancing: can't even get back to 350 million bbls. The bad news: OPEC generally has the "right" kind of oil -- the oil that is needed to blend light oil for refiners. But of the three, WTI, Brent, and OPEC basket, only OPEC basket was "down" today in trading. The other two were up. WTI and Brent were both up about 1.5%; OPEC basket was down about a third of a percent.

"New" Operator In North Dakota: Freedom Energy Operating, LLC -- April 5, 2019

Not really "new" but I had forgotten about this company. It turns out it had a dry well back in 2017. 

From "well search," NDIC, North Dakota Department of Mineral Resources. Freedom Energy has two permits.

  • 33997, dry, Freedom Energy Operating, LLC, Freedom Energy ND 1-15, Heart River, target: Lodgepole, t10/17; this was an Oasis Petroleum well, about 6 miles west of Dickinson; a vertical hole targeting the porous reef of the Lodgepole formation; drilled to a depth of 10,275 feet; targeting the "mound" of the Lodgepole Formation that is located along the base of the Lodgepole to the top of the Bakken formation; spud on October 2, 2017; TD on October 14, 2017; "inconclusive evidence indicating the presence of the reef structure of interest; plugged back and abandon." See this post.
  • #36308 is already on confidential status. This well is a mile or so south SSW of Dickinson. The nearest well is 22365.
  • #22365, dry, Chimney Sweep Oil & Gas Company, Hondl 21-1, wildcat, Lodgepole, 4/5/12.
This information from my "Bakken operators" page:
Freedom Energy Operating, LLC

WTI Closes Above $63; Seven New Permits -- April 5, 2019

Active rigs:

Active Rigs6258492994

Eight new permits:
  • Operators: Bruin E&P Operating (6); BR; Freedom Energy Operating
  • Fields: Eagle Nest (Dunn); Sand Creek (McKenzie); Wildcat -- Oltmans Ocelot, Stark County
  • Comments:
    • Bruin has permits for a 6-well Fort Berthold pad in section 27-148-95 in Eagle Nest oil field
    • BR has a permit for a Renegade well in section 10-153-97 in Sand Creek oil field 
    • Freedom Energy has a permit for a wildcat in Stark County, Oltmans Ocelot 1-21, NENW 21-139-96;
Two permits reinstated:
  • Slawson: two Snakeeyes permits in Big Bend; Mountrail County
Thirteen permits renewed:
  • XTO (9): five Bud permits; four Kenneth permits, all in Williams County;
  • MRO (3): a Ruth permit; a Snider permit;, and a Higgins permit, all in Dunn County;
  • BR: a Saddle Butte permit in McKenzie County
One producing well (a DUC) reported as completed:
  • 32233, 2,324, Bruin E&P, Fort Berthold 152-94-15B-22-8H, Antelope-Sanish, t1/19; cum 51K after 35 days; (#24731; #25494; #32232; #24739; 24738; #24737; #18402; #20567)
    • 20567, a huge well; off line
    • 18402, ditto
    • 24737, back on line; huge jump in production;
    • 24738, back on line; looks like a jump in production;
    • 24739, huge, huge jump in production; must have been re-fracked; check later;
    • 32232, SI/NC but huge production to date; 50K in 33 days;
    • 25494, back on line; no jump in production?
    • 24731, huge well, never take off line; producing about 5,000 bbls/month; t10/13; cum 592K 2/19;

See new permits above:

It Gets Tedious -- April 5, 2019

But look at that: WTI finally over $63 -- on a Friday afternoon -- going into a weekend. OPEC basket? Red.

Not tedious:


I've worked in one of the world's largest bureaucracies all my life. Why bureaucracies are so inefficient? Because no one is able to make a decision; decisions are made by glacially-moving committees.

This is the reason the chaotic, out-of-control White House has been so effective. The person-in-charge makes decisions quickly, and is able to communicate his intent very, very clearly.

The Real Definition Of March Madness -- April 5, 2019

For those who are concerned that if we don't do something now, we have less than twelve years to save the world, or however Occasional-Cortex put it.

It looks like things just went from bad to worse.

From a reader:
Today at noon, [a Minnesota television station] reported that approximately 300 private jets would be flying into Minneapolis today for the Final Four NCAA basketball championship (March Madness).

The MPLS airport only has room to park 162 aircraft so the others will be parked at nearby terminals, including St Paul, Flying Cloud, and perhaps Crystal airport.
Think about all the unnecessary CO2 emissions.

And, no, the planes don't just magically appear at Crystal airport. They will drop off their four passengers, and then take off again for Crystal, and then later, return to the Minneapolis airport.

Who wants to bet the majority of those private jets are NetJets, owned by Warren Buffett?

And a reminder that these same folks are telling me to live with less, shrink my carbon footprint. It gets tedious.

And I bet the croissants / bagels at the airports cost $11 apiece.

One more reason I can't take the global warming scam seriously. Not the croissants. The fact that we are being told that we can't "afford" to fly any more if we want to save the world, and yet 300 planes carrying an average of four passengers each will be flying in (and out) for a college football tournament.

March Madness? This occurs like clockwork every year, and will continue for the next twelve years. Wanna bet?

The good news? It will continue to occur for the next 50 years. At least.

Good, Bad, Or Indifferent: MDU Was Lucky To Shed Denver When It Did -- April 5, 2019

Link here to MDU and Denver, November 5, 2015.

The end of the shale "boom" in Colorado, April 5, 2019.

It will be interesting to see how fast the SEC requires operators in Colorado to start writing off their investments.

My dad always said it was better to be lucky than to be smart.

The Book Page

My son-in-law is fascinated by artificial intelligence. Me? Not so much.

Today's buzzword is transhumanism.

There is a lot of talk about how engineers have now figured out how to "wire" computers the "same way" that human brains are wired.

I'll believe it when I see it.

I can't even get Alexa to understand me some days, and my relationship with Alexa is incredibly superficial, pretty much limited to finding music to play and occasionally, for the fun of it, generating grocery lists (to which I never refer anyway).

Alexa's "pre-programmed" phrases are finite, and the order in which she can put those phrases are even more finite. In other words, the number of sentences Alexa can come up with "on her own," is incredibly finite.

The human brain can come up with an infinite number of sentences (source: The Language Instinct: How the Mind Creates Language, Steven Pinker, c. 1994, pages 85 - 86). Example:
  • first sentence: I am eating a hot dog.
  • second sentence: Bruce said I am eating a hot dog.
  • third sentence: why does it matter that Bruce said I am eating a hot dog?
  • fourth sentence: who asked why does it matter that Bruce said I am eating a hot dog 
  • fifth sentence: Jim asked who asked why does it matter that Bruce said I am eating a hot dog
In other words, give me any sentence, a human can make it longer. One can program a computer do do that, of course, but that's not what Alexa does, nor does any other commonly used AI language. Human language is vast (infinitely vast); Alexa's language incredibly finite.

Something tells me Chomsky will be willing to work with AI but knows that AI will never  be able to match the human brain when it comes to "human language."

This book was first copyright in 1994. It is interesting to read it in light of current articles on AI. Also, having just read about the code talkers in WWII it is even more interesting.

It is also incredibly fun to read just at the time Sophia is learning to read, and having watched her closely while learning to speak English. I still love to hear her use new words, and her ability to improve her grammar literally overnight. It is amazing.

Marathon Petroleum Keeping America Great; Berkshire Hathaway Making America Great -- April 5, 2019

This is so incredibly cool. Some months ago, I said that US refiners would finally realize that they need to optimize their operations for light oil, and since then we have had several stories that they are doing just that, slowly but surely.

Don sent me this link yesterday, or maybe the day before. I'm only now getting caught up.

Making America great again.

Marathon Petroleum will upgrade its Galveston Bay refinery. Link here. Data points:
  • $1.2 billion upgrade
  • its Galveston Bay refinery: the second biggest refinery in the US
  • upgrade over three years (can you say lots of jobs?)
  • will add 40,000 bopd throughput
  • will generate $525 million in earnings/year

Berkshire Hathaway's Annual Report

Delivered to your mailboxes over the weekend, I do believe.

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.

Big takeaways from the Berkshire Hathaway annual report:
  • the company will no longer report annual change in book value (or something like; when I get home, I will check exact verbiage); with new SEC regulations, it no longer makes sense; has to do with mark-to-market stuff; I understand it completely (seriously); there were probably better ways for the SEC to handle this problem but it is what it is; by the way, the "mark-to-market" issue was responsible for the summer, 2009, stock market crash;
  • Berkshire Hathaway will now replace the annual change in book value with share price (at least I thought that's what I read; I'll check it when I get home); if so, that makes lots of sense; will drive the SEC nuts [it is explained in the note below the photo below; from the annual report]
  • Berkshire Hathaway is desperate for a "big purchase" but cannot find any company out there worth buying at current prices; Warren says he refuses to overpay, though he admits that he has
  • instead of buying any company outright in the near future, Berkshire will go back to what it used to do: buy equity but not the entire companies
  • if one didn't know the "whole" story about Heinz, one would hardly be enlightened by the annual report
I give a fair amount of grief to Warren Buffett and Berkshire Hathaway for what they report and what they don't report and how they report it but in the big scheme of things, one has to admit, reading their annual report, especially the introductory letter by Warren is incredibly interesting and educational.

The one-page history of Geico and Berkshire Hathaway is worth the price of the annual report.

Sophia has been reading her "Bob" books to me, and I've been reading "Peppa the Pig" to her, but starting tonight, I'm going to start reading Berkshire's annual report to her. But first, she told me, driving to Tutor Time this morning, she wants to stop for gas on the way home.

Berkshire Hathaway Inc

Letter to the shareholders, page 3, starting near the bottom of that page:
Long-time readers of our annual reports will have spotted the different way in which I opened this letter. For nearly three decades, the initial paragraph featured the percentage change in Berkshire's per-share book value. It's now time to abandon that practice.

The fact is that the annual change in Berkshire's book value -- which makes its farewell appearance on page 2 -- is a metric that has lost the relevance it once had. Three circumstances have mad that so.....
  • Berkshire has morphed from a company whose assets are concentrated in marketable stocks into one whose major value resides in operating businesses ... that is expected to continue ..
  • while our equity holdings are valued at market prices, accounting rules require our collection of operating companies to be included in book value at an amount far below their current value, a mismark that has grown in recent years
  • it is likely that -- over time -- Berkshire will be a significant repurchaser of its shares, transactions that will take place at prices above book value but below our estimate of intrinsic value. The math of such purchases is simple: each transaction makes per-share intrinsic value go up, while per-share book value goes down. That combination causes the book-value scorecard to become increasingly out of touch with economic reality.
In future tabulations of our financial results, we expect to focus on Berkshire's market price. Markets can be extremely capricious: just look at the 54-year history laid out on page 2. Over time, however, Berkshire's stock price will provide the best measure of business performance.

Another Myth? Wages Keep Growing In A Tight Labor Market? -- April 5, 2019

I keep hearing that "the Fed" is worried about "wage inflation" due to tight labor market. Hey, Mr Powell, have you been watching the southern border? Thousands of new workers flooding into the US.

California corporate farms will have endless supply of workers. Boston's pizza parlors, likewise. Hotel/motel services, no problem. We haven't heard any complaints from US unions mostly because there are "no" unions any more except in the public sector (government) and it's unlikely any of these new "undocumented citizens" will be applying for government jobs except perhaps as CIA agents and/or linguists for the State Department. 


Today's links over at the Drudge Report:

Link here.

Yesterday: first-time-unemployment claims at 49-year low.

This is April. Three months, and it's July.

In July, 2019, the headline: longest expansion in US history. Note: the mainstream media may not carry that headline. For sure it won't be repeated on ABC Evening News with David Muir.

Let's see what the linked article has to say:
U.S. hiring rebounded more than forecast in March and the prior month was stronger than first reported, potentially relieving some concerns about a cooling economy.
Wage gains eased and the unemployment rate held near a 49-year low.
Payrolls rose 196,000 after a 33,000 advance.
The median estimate in a Bloomberg survey saw an increase of 177,000 after an initially reported 20,000 gain in February.
The jobless rate was unchanged at 3.8 percent, while average hourly earnings increased ..... below all estimates and down from the best pace of the expansion.
The data signal the labor market is solid enough to support economic growth in coming months even if job gains are moderating from last year’s pace.
Unemployment near historic lows bodes well for consumer spending, though weaker wage gains suggest inflation will be even more muted as Fed policy makers wait to see how the U.S. economy weathers a global slowdown.
That's a Bloomberg story. I'm sure "it" pained them to have to write all that, although the writer did throw in  "potentially" for some odd reason. And, of course, "global slowdown" has been the buzzword for about a year now.

Yesterday CNN headlined that India slashed interest rates due to their slowing economy. That concerned me, that India would slash rates. I couldn't get the browser to load fast enough. It was breaking news, headline news, scary news, all in one headline. And then the story appeared. India's GDP growth went from over 8% to around 6.6% -- not particularly alarming. If only the EU and and the US would do so well. As far as slashing their interest rates, it turned out to be a quarter-percent cut (0.25%) -- something our own "Fed" does off and on every two months -- and I don't recall a similar headline that the US slashed rates. Wow, what a digression. 

Let's see:
  • the US is involved in no new wars anywhere
  • any "wars" that the US is involved in are pretty much invisible, or forgotten, or not controversial, or not worth mentioning -- sort of peaceful right now in the big scheme of things; we don't even hear much coming out of Ferguson, MO, any more (or Baltimore for that matter)
  • no new wars on the horizon any time soon
  • peace on the Korean peninsula (though Kim did play Trump; Trump was snookered with regard to NK)
  • the US labor shortage is mitigated by the thousands of new workers streaming across the southern border
  • unemployment rate at 3.8% qualifies for "full employment" tag
  • unemployment rate at a 49-year low -- at least that's what the article above says
  • first-time-unemployment claims at a 49-year low (yesterday's news)
  • no sign of wage inflation (today's news)
  • glut of oil (in the old days, we would be talking about OPEC being in control)
  • China can now get on with serious trade negotiations with Trump now that the Mueller report has been released
And the anti-Trumpers continue to resist. Resist what? 

Hey, by the way, in that Bloomberg article linked above, did you notice that they referenced that the job picture in February was better than originally reported, but the article did not provide the details until deep into the article and then it was a bit of obfuscation, or a bit confusing. I did not see the actual February revision.

More from the article:
“This a perfect report for the Fed because it actually corroborates what they’ve been saying all along, which is there are no wage pressures,” Subadra Rajappa, head of U.S. rates strategy at Societe Generale SA, said in a Bloomberg Television interview. “There’s very little risk of wage inflation.” [For those unfamiliar with Societe Generale SA , see this wiki entry. Societe Generale SA is my go-to source when I need to understand something about the US economy. LOL.]
The data come as investors expect an interest-rate cut this year after four hikes in 2018. The Fed early in 2019 removed projections for rate rises in the near term while flagging increasing economic risks amid slowing global growth.
I had forgotten it was four hikes in 2018; for some reason I thought it was three. Wow, Jerome Powell really did blow it. Bernancke / Yellen never did that for Obama. Thank you, Mr Powell.

But look at this, the participation rate:
The participation rate, or share of working-age people in the labor force, decreased to 63 percent from 63.2 percent the prior month. The rate, which faces continued downward pressure as older workers retire, had ticked up in recent months as increased employer demand has pulled in more Americans.
Bloomberg sees the cup as half-empty. I see it as half-full. If the participation rate decreased that means if employers need to they can entice folks back to work. 

But, again, the "false precision" is stunning -- "... decreased to 63 percent from 63.2 percent." Really? Anything to get "decreased" into a jobs report as long as Trump is president. 

Bakken Update At ND-DMR -- April 5, 2019

A reader alerted me that ND-DMR / NDIC has a new presentation, dated April 2, 2019, "Williston API Oil and Gas Update." Link here for all "recent presentations." This link will take you directly to the new presentation.

Slide 11: statewide oil performance -- huge increase in EURs / initial production / production type curves over the years.

Trump Approval 


I don't think I've ever seen his approval over 50% in "recent" history. Usually runs about 48%. To get to 50% is quite remarkable in this mainstream media environment, but to get to 51% -- wow.

The Market

Yesterday or whenever it was, I forget, the Dow was up about 130 points, and my "watchlist" was pretty much "in the red" from the previous day.  Today, the Dow in early morning trading, barely 50 points up, and the "watchlist" is "bright green."

Ah, the craziness of the market.

EOG: up almost 3% today in early trading. Up $2.72

Note: the watchlist is simply a very short list of companies that I enjoy watching. It does not mean I am invested in any of them. For example: I follow TSLA but have never invested in TSLA. I don't have any OAS in my portfolio but I do watch it. I had OAS at one time, but sold it some time ago.

Speaking of Tesla: despite its worst quarter ever, TSLA is actually up about 3/4ths of a percent today, but still trading below $270. This is an incredibly great stock for trading, not necessarily investing.

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.

Ready for summer:

Only One Well Coming Off The Confidential List; WTI Struggling -- April 5, 2019

Only one well coming off confidential list today -- Friday, April 5, 2019: 20 wells for the month; 20 wells for the quarter
  • 35211, SI/NC, XTO, Teddy Federal 12X-5H, North Fork, no production data,
Active rigs:

Active Rigs6258492994

RBN Energy: new plans to bring more gas to New England and the Maritimes, part 3. This should be interesting.
The shutdown of natural gas production from the Sable Offshore Energy Project on Canada’s East Coast as of January 1, 2019, increased the Canadian Maritimes’ reliance on gas exports from New England this winter as consumers worked to link up with fresh supply to replace SOEP. The tightening supply in the region has prompted expansion plans from TransCanada to move more Western Canadian and Marcellus/Utica gas to New England utilizing its Mainline and other eastern systems. Today, we conclude our series examining the potential impacts of SOEP’s demise by examining new plans to bring more gas to the region. 
These plans involve increasing capacity on existing pipelines that link the New England market to Canada from the north, whereas pipeline expansions that have been attempting to bring Marcellus/Utica gas more directly from the south and west continue to face strong environmental and regulatory resistance. Before explaining these incremental developments from the north, let’s review the first two blogs in this series.
Previously,  we reviewed the shutdown of SOEP on New Year’s Day 2019. Originally intended as a stepping stone to a much larger offshore gas supply presence, SOEP and its little brother, Deep Panuke, eventually went into terminal decline, and with no further commercial discoveries of natural gas reserves in the region, water encroachment, economics and declines sealed their fates. The end of this supply has had two major implications. The first is that the provinces of Nova Scotia and New Brunswick, which were already fairly isolated in terms of gas supply, now only have two remaining supply options: piped imports from the U.S. and LNG imports. The second implication is that New England, which itself lacks sufficient pipeline connectivity, will increasingly be competing with Eastern Canada for supply, particularly in the winter months, when demand is highest.