Monday, April 22, 2019

Reason #1 Why I Love To Blog -- Notes From Readers -- April 22, 2019


April 23, 2019: The Williston Herald says Williams County was #1, not McKenzie County. Fight is on!

Original Post 

This has to be one of the most remarkable things I've seen in twelve years of blogging. There are 3,142 counties and county-equivalents in the US. Hold that thought: 3,142 counties.
As of 2016, there were 3,007 counties, 64 parishes, 19 organized boroughs, 10 census areas, 41 independent cities, and the District of Columbia for a total of 3,142 counties and county-equivalents in the 50 states and District of Columbia.
From ZeroHedge, a site once banned by Facebook:
The U.S. Census Bureau has just released their annual report on how the U.S. population is shifting, and there are some very clear patterns in the data.
At the linked site, a great map showing, by county, where  Americans are leaving and going.

Then in the article itself, Michael Snyder lists the ten counties with the largest percentage increase in population. Seven of the ten counties were in Florida or Texas.

An eighth county was in North Carolina.

That leaves two counties.

Drum roll.

McKenzie County, North Dakota.

Williams County, North Dakota.

Not only did those two counties make the top ten list for counties with the largest percentage increase in population between July 1, 2017, and July 1, 2018, they were ranked ... drum roll ... #1 and #2, respectively. And respectfully.


Here's the screenshot:

From the article: 
The top two counties on the list are both in North Dakota, and a lot of people are being drawn up there for energy industry jobs. McKenzie County produces more oil than any other county in the state, and even though it can get bitterly cold, many workers find the very high wages paid by the industry very alluring.
Bitterly cold? Not any more. Global warming has changed everything.

By the way, by 2017 - 2018, the boom was well over; many pundits and media outlets (including The Atlantic) had written the Bakken off - saying the boom was over; the shale revolution was over. Whatever.

A Two-Fer: One Map With Two Stories -- April 22, 2019; Paddlefish Snagging Season Opens May 1, 2019

The map:

The first story, a re-posting:

Road closure: you are on your own --
 "There will be no signed detours posted, and drivers will have to find an alternate route."
The main highway south of Trenton will be closed as of tomorrow morning and will remain closed several days. Routine maintenance on a BNSF railroad crossing south of Trenton -- the Marley railroad crossing -- will take a couple of days. Again,
"There will be no signed detours posted, and drivers will have to find an alternate route."
I think the only alternate is County Road 5 south of State Highway 2. Unless you are riding a horse.
The second story:
North Dakota’s 2019 paddlefish snagging season opens May 1 and is scheduled to continue through May 21. However, depending on the overall harvest, an early in-season closure may occur with a 24-hour notice issued by the state Game and Fish Department.
Legal snagging hours are from 7 a.m. to 7 p.m. daily.
One tag per snagger will be issued.
Snagging is legal in all areas of the Yellowstone River in North Dakota, and in the area of the Missouri River lying west of the U.S. Highway 85 bridge to the Montana border, excluding that portion from the pipeline crossing (river mile 1,577) downstream to the upper end of the Lewis and Clark Wildlife Management Area (river mile 1,565).
The current range of American paddlefish has been reduced to the Mississippi and Missouri River tributaries and Mobile Bay drainage basin. Since American paddlefish are filter-feeders, they will not take bait or lures, and must be caught by snagging.

For more on ND paddlefish snagging at the blog, click on "paddlefish."

Main Highway South Of Trenton, ND, To Be Closed For Several Days -- April 22, 2019 -- Earth Day? -- T+10, Part 2 -- Chariots On Fire

Road closure: you are on your own --
 "There will be no signed detours posted, and drivers will have to find an alternate route."
The main highway south of Trenton will be closed as of tomorrow morning and will remain closed several days. Routine maintenance on a BNSF railroad crossing south of Trenton -- the Marley railroad crossing -- will take a couple of days. Again,
"There will be no signed detours posted, and drivers will have to find an alternate route."
I think the only alternate is County Road 5 south of State Highway 2. Unless you are riding a horse.
Shore Notes

Social security: it's hard to follow the numbers, but apparently by the time I'm in a nursing home, SSA will only be able to pay 80% of benefits. Okay. No link. I'm sure the story is easy to find almost anywhere. SSA puts out an annual report. Will you still love me when I'm 94?

When I'm Sixty-Four, Beatles

Earth Day: I must have missed it. Didn't see a thing. Normally it's a big deal, but apparently not this year -- didn't see the usual folks out picking up trash along the Texas highways. Still using plastic straws at McDonald's and Starbucks.

Chariots on fire. Wow, I haven't used "chariots on fire" in a long time, but apparently Tesla is investigating after a Model appears to catch on fire. Video on the net. No link. I'm sure it's easy to find the story. Model S parked in a covered garage. SpaceX had an anomaly over the weekend also; resulted in a fire with smoke seen from miles around. 

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.

TSLA: down $10.51 (-3.85%) at the close; lost another ... drum roll .. twenty cents in after-hour trading.

Oil (over at oilprice):
  • WTI: $65.77
  • OPEC basket: $70.81
  • Brent crude: $74.04
  • Fitzsimmons says much of COP's oil is priced at Brent crude
  • Texas Gulf Coast Light: $60.65
  • South Texas Light:$55.50
  • West Texas Light: not yet trading?
  • Williston sweet (four days delay): $53
  • Oklahoma sweet (19 hours delay): $61.75

EOG Over-Valued; COP Under-Valued -- Fitzsimmons -- April 22, 2019

From SeekingAlpha:
  • Continuing my potential M&A analysis of domestic O&G producers, today, I compare two of America's best: EOG and ConocoPhillips
  • From a high-level perspective, it is clear that EOG is valued at a significant premium as compared to COP
  • Yet COP realizes ~$8/boe higher pricing due to its conventional assets in places like Alaska and Australia (to name just two)
  • Meantime, COP generated more than 3x the FCF as compared to EOG, and production is only 1.7x higher
  • In my opinion, EOG is overvalued, and COP significantly undervalued - especially when compared to EOG
Obviously, much more at the link.


For the record: I am unaware of anyone who knows the oil sector better than Mike Fitzsimmons. 

NOG Announces Acquisition -- VEN Bakken -- April 22, 2019


July 2, 2019: NOG -- acquisition closed; VEN Bakken; outperforming prior expectations; highlights:
  • Production from the acquired assets is now expected to average approximately 6,650 barrels of oil equivalent (“Boe”) per day in the third quarter of 2019 and approximately 7,000 Boe per day in the fourth quarter of 2019, an increase from Northern’s prior estimate of 6,600 Boe per day (2-stream). 
  • The acquired assets now consist of 87.8 net producing wells, an increase of 0.9 net wells, and 4.1 net wells in process, an increase of 1.4 net wells. In addition, Northern now estimates that the acquired assets include an additional 45.6 net undrilled locations of future drilling inventory. 
Original Post
Note: prior to acquisition, NOG said to be producing about 36K boepd; this acquisition should add about 7,000 boepd (about 20%).

  • NOG market cap prior to acquisition: $1.027 billion
  • acquisition may have cost about $300 million  
  • debt prior to acquisition: $850 million
Press report, link here.
  • 18,000 net acres ($310 million / 18,000 = $17,000/acre; on cash flow, perhaps $15,500/acre)
  • 86.9 net producing wells
  • 2.7 net wells in process
  • 47.5 net undrilled locations
  • should average 6,600 boepd (2-stream) during 2H19
  • seller: Williston Basin properties of VEN Bakken, a wholly-owned subsidiary of Flywhell Bakken, LLC, a portfolio company of the Kayne Private Energy Income Funds
  • assets should generate $44.9 million in cash flow during 2H19; with an estimated 2H19 CAPEX of $15.6 million
  • buyer: NOG; $165 million in cash; a $130 million 6% three-year senior unsecured note due 2022 and approximately 5.6 million shares of NOG common stock ($15 million +$165 million + $130 million = $310 million)
On that news, NOG went from slightly "positive" to jumping almost 5% before market close and adding another 3/4 percent after hours.
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.

Slawson Has Permits For A 10-Well Gunslinger Pad In Sand Creek -- April 22, 2019

Active rigs:

Active Rigs6259492988

Ten new permits:
  • Operator: Slawson
  • Field: Sand Creek (McKenzie)
  • Comments: Slawson has permits for a 10-well Gunslinger pad in Sand Creek oil field, in section 12-153-97; see graphic below;
The Slawson Gunslinger Federal Wells

The graphic:

The wells (to be completed later):
  • 33625, 1,433, Slawson, Gunslinger Federal 4-1-12H, 42 stages; 8.1 million lbs, Sand Creek, t2/18; cum 245K 2/19; F; spud date, November 28, 2017; cease drilling, December 18, 2017; the vertical was drilled in 53 hours in 3 runs; the curve was drilled in 24 hours in one run; the lateral was drilled in 118 hours in three runs. Middle Bakken top at 10,346 feet, 2 feet low to prognosis. Wellbore was 96% in zone.

Occasional-Cortex-Mini-Me -- Posted April 22, 2019 -- But Priceless And Timeless

A huge "thank you" to Don for sending me the link. I had been looking for it but had not found it.


The Book Page 

Gene Machine: The Race to Decipher the Secrets of the Ribosome, Venki Ramakirishna, winner of the Nobel Prize in Chemistry, c. 2018

One might call this the "adult" sequel to Watson's The Double Helix. For my generation, which grew up on WatsonandCrickandDNA this is what we were waiting for. I haven't read it closely but I have page through all of it and and based on what little I've read, I would recommend it.

Again, for high school students planning on majoring in biology (or maybe physics or chemistry), this is another book that should be read before going to college. High school students today know "everything" about DNA and might do well skipping WatsonandCrick and moving directly to Venki's Ribosome.

It would take quite a story to "beat" / out-do the DNA-discovery story, but if any organelle could do it, it would be the ribosome.

p. 53:
With their efforts frustrated, some of the key people in the Russian effort dispersed all over the world. Some years later, in the mid-1990s, Yusupov wrote to Harry Noller, a leading ribosome biocmeist at UC Santa Cruz, asking to work on the structure of the ribosome in his lab, but that is a story best told later.

p. 130:
Marat and Gulnara were thrilled, and the couple went off to Santa Cruz (UC Santa Cruz, CA) to start working on the entire ribosome.

p. 173:
... just a few days after her colleague Francois Franceschi had spoken in Santa Cruz ..

LMB: Laboratory of Molecular Biology, Cambridge, England

The Medical Research Council (MRC) Laboratory of Molecular Biology (LMB), a research institute in Cambridge, England.

For fun / light reading, a thick book, Texas Ranger: The Epic Life of Frank Hamer, The Man Who Killed Bonnie and Clyde, John Boessenecker, c. 2016. Thick? 528 pages. A #1 Best Seller.

April 22, 2019, T+10

T+10: 110th day of the 115th US Congress. Its successes to date:

And we move on.

Polling: for the longest time, pollsters have included Biden even though he has yet to announce. It would be interesting if pollsters would include Hillary and Michelle. Deus ex machina. Or should we say diva ex machina?

Polling: link here. The smartest adult in the room polls no better than the dumbest politician ever. What does that say about the respondents? (Rhetorical. Please don't reply.) Both are polling 9% through April 14, 2019.

Corn: the blog's best post last week: North Dakota and corn.

Wind: no links, but a quick "surf" today suggests that win projects in the US are no longer the fad they once were. Some proceeding; some taken off the table. All controversial.

When Lana Del Rey is good, she is very, very good. I'm glad I was alive when she was hitting the charts.

Top Ten, Lana Del Rey

April 22, 2019 -- Monday Morning 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.

Bakken: reporting some nice wells this morning.

WatchList: looks great.

JAG: see disclaimer above. One of my favorite to watch on the watchlist. [Again, as stated earlier, the watch list is simply that -- equities I enjoy watching, but do not invest in many of them.]

Measles: continues to surge. Was once eradicated in the US. Does public health matter any more? Last time the numbers were this high? Twenty-five years ago.

Something To Think About

I never thought I would say this after its performance in the Bakken, but Occidental Petroleum (OXY) looks exciting. I thought about that last week -- was a little late in acting -- but this morning's news suggests those [investors and traders, in this case] who bought OXY last week might have done well.

From its website:

For investors: what's the most interesting thing about the chart above? Hint: look at the arrow. Despite a huge -- and, I mean, huge -- drop in net income in 2015, the company raised its dividend.

What I'm most interested in with regard to OXY is "heavy oil."

So, let's check.

OXY says it has operations in three areas: the US, the Mideast, and Latin America. In fact, its production from Latin America is so small one can ignore LA. OXY gets two-thirds of its production from the US and one-third from the Mideast. A nice mix.

Now, the US --

Permian unconventional:
  • 1.4 million net acres
  • 17-yr inventory with less than a $50 WTI breakeven
  • 20 of top 50 wells in the Permian
  • drilled less than 5% of hz wells in the Permian but has 40% of the top 50 wells
  • unconventional EOR a commercial success
Permian conventional:
  • 1.1 million net acres
Vicki Hollub (born 1960) is an American businesswoman and mineral engineer. She has been the president and CEO of Occidental Petroleum since April 2016, when she became the first woman heading a major American oil company.
In 2005, Hollub became involved in leading Occidental's expansion in the Permian Basin  in West Texas and southeastern New Mexico. She was manager of operations for Occidental's Permian business from 2009 until 2011, before being promoted to president and general manager from 2011 until 2012.
Under Hollub, Occidental cut production costs in response to falling crude prices but decided not to lay off employees.
The company focused on existing core operations in the Middle East, the United States, and Colombia in Latin America, while continuing to sell low-yield fields in Iraq, Libya, Yemen, North Dakota, Colorado, Kansas, and Oklahoma.
Hollub placed "particular emphasis" on developing the Permian Basin in the southern United States, which had been a consistent driver of profits.
Half of Occidental's output was coming from the Permian Basin by July 2017, while the other half came from Qatar, Oman, the United Arab Emirates and Colombia.
At that time, Forbes wrote that Hollub's focus on high-producing oil fields had made Occidental "leaner" and "poised to gusher cash for the next half-century."

April 22, 2019 -- Ship-To-Ship Oil Transfer Makes Headlines

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.

Chevron: getting a hidden gem in the Anadarko deal. Western Midstream.

Curious and Curiouser

From Bloomberg:
A supertanker filling up with crude in the Gulf of Mexico is routine these days. Less so is a supertanker loading American oil without coming within a thousand miles of the Texas or Louisiana coast.

The Alsace is steaming for China laden with about 2 million barrels of West Texas Intermediate crude after spending three weeks in the Caribbean, according to ship-tracking data and a document seen by Bloomberg. It received its cargo via two ship-to-ship transfers and one terminal visit in the U.S. Virgin Islands.
For reasons that aren’t entirely clear, the Alsace didn’t go to the U.S. coast to get the oil. Instead, two ships -- the Almi Galaxy and Ionic Aspis -- traveled some 2,000 miles from Beaumont, Texas, and arrived in late March at Limetree Bay oil terminal at St. Croix.
The Almi Galaxy offloaded its contents via ship-to-ship transfer to the Alsace. The Ionic Aspis, which had arrived earlier, offloaded its cargo into a tank at the terminal where the supertanker later picked it up, according to a person familiar with the matter who asked not to be identified because the purchases aren’t public.
After loading at St. Croix, Alsace set course for Aruba. Off its coast, the supertanker received more oil from the Serenea, which had also loaded in Beaumont, according to the person familiar and ship-tracking data.
Alsace was chartered by Unipec, the trading arm of China’s largest refiner China Petroleum and Chemical Corp., known as Sinopec, the person said. Unipec has been using tanks leased by Sinopec at Limetree Bay’s oil terminal at St. Croix. But the Asian trader has previously loaded VLCCs in the Gulf of Mexico to send American oil overseas.
Alsace is now signaling that it’s heading to China, expected to reach Zhoushan around May 19.
Short takes:
For those paying attention, Saudi Arabia is quickly transitioning from oil producing/exporting to oil refining.

The Question No One Is Asking

What happened to Intel? How did this once near monopoly (remember Win-Tel) cede control of the chip market to Qualcomm? Intel dropping out of the 5G chip race.

Makes me think of the Kroger story in the WSJ.


Long runway. Link here. EV sales in the US accounted for 2% of all auto sales in the US in 2018.

Something to think about: the US ranks #7 in the world in terms of EV sales.

Tesla accounts for a third of these sales.

Tesla will lose its federal credits completely by the end of the year. Already being phased out. 

Tesla trading at $265 this morning; down over $7 in anticipation of earnings release two days from now. 

April 22, 2019 -- The Big Story Today -- Trump Finally Says "No"

The big oil story today: Trump has finally said, "no." No more Iran sanction waivers. Countries seeking those waivers a year ago said they needed more time to find alternate sources to their Iran oil. I would assume Trump, as I do, feels a year is long enough for India, et al, to get their alternate sources in play.

The big oil story tomorrow: Iranian Navy closes Hormuz Strait. If Iran can't use it, no one will use it. (For newbies: an opinion only; and "tomorrow" is being used in the broader sense.)

California: largest provider of oil for California? Saudi Arabia. WTI sells for $65. OPEC basket (Saudi Arabia?) is trading for $70.81 this morning, up 1% overnight; up about 70 cents/bbl. By the end of the week, one should expect another 25 cent increase on price of gasoline in California. And, then, of course, down the road, an increase in the federal excise tax on gasoline at the pump, a most regressive tax.

India: it says it has "enough" alternatives to replace Iranian oil. Obviously India was "playing" Trump these past three months when it said it "needed" Iranian oil.

Iraq: needs Iranian natural gas for electricity. No decision has been yet made regarding Iranian natural gas to Iraq.

Japan: still needs Iranian oil; will talk to "Washington" about the waivers.

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.

Early market / pre-market trading:
  • Dow: down about 60 points
  • majors should be doing well 
    • CVX: up 0.5%; not as much as one might expect;
    • COP: a bit better than CVX, up 1.2%;
    • XOM: up 0.83%;
    • RDS-B: up 0.4%;
    • OXY:  up almost 1%
  • the minors?
    • Anadarko: up 1.2%
    • Apache: up over 2%
    • NOG: up slightly; up 0.4%
    • JAG: n/d
Early Morning News

China, Saudi Arabia have same problem: India struggles to employ an exploding population. India's challenge: how to find well-paying jobs for hundreds of millions of young people.

Finally: the adult in the room is willing to talk about socialism.

Singing the blues? Samsung suddenly cancels two Galaxy Fold prelaunch events. Cancellations come as the company looks into why tech reviewers experienced malfunctions with the $2,000 phones. And folks complained about anomalies in $1,000 iPhones.

Big story mid-week? Tesla to report a quarterly loss. Musk Melon? He will change the narrative.

TSLA: down 1.6%, down over $4 in pre-market trading.

Mexico: US energy exports/imports.

She made it by herself: