NIne New Permits In The Bakken -- April 26, 2019

Active rigs:

$63.30*	4/26/2019	04/26/2018	04/26/2017	04/26/2016	04/26/2015
Active Rigs	64	63	48	26	84

*WTI drops $3/bbl after President Trump calls Prince Salman about opening the spigots to keep the price of gasoline down this summer.

Nine new permits:

• Operators: Whiting (6); CLR (3)
• Fields:Sanish (Mountrail County); Jim Creek (Dunn County)
• Comments:
• Whiting has permits for a 3-well Ogden pad in section 3-154-92, Sanish oil field,
• Whiting has permits for a 2-well Ogden pad in lot 4/section3-154-92, one in Sanish oil field, the section line well in Alger oil field;
• Whiting has a permit for a single Stenseth Trust well in lot 4/section 5-152-91, Sanish oil field
• CLR has permits for a 3-well Nadia pad in Lot 3/section 18-146-96, Jim Creek oil field

Daily Activity Report, Thursday, April 25, 2019

Seven new permits:

• Operator: Hess
• Field: Big Butte (Mountrail County)
• Comments: Hess has permits for a 7-well EN-Enger / EN-Person pad in section 14-156-94; Big Butte oil field

Six permits canceled:

• Zavana: four Mastiff permits and two Rover permits; all in Williams County

Seven producing wells (DUCs) reported as completed:

• 34455, 2,137, Hess, CA-E Burdick-155-95-2017H-3, Capa, t3/19; cum 21K 14 days;
• 34454, 1,722, Hess, CA-E Burdick-155-95-2017H-2, Capa, t3/19; cum 17K 14 days;
• 32148, 2,211, Hess, CA-Anderson Smith-LE-155-96-2635H-1, Capa, t3/19; cum21K 17 days;
• 32150, 2,199, Hess, CA-Anderson Smith-155-96-2635H-3, Capa, t3/19; cum 28K 20 days;
• 32149, 1,763, Hess, CA-Anderson Smith-155-96-2635H-2, Capa, t3/19; cum 15K 15 days;
• 34457, 3,076, Hess, CA-E Burdick-155-95-2017H-5, Capa, t3/19; cum 20K 18 days;
• 34456, 1,584, Hess, CA-E Burdick-155-95-2017H-4,  Capa,t3/19; cum 20K 18 days;

No More Blogging For Awhile; More Records On Wall Street? -- April 26, 2019

I am in such a great mood, I am overwhelmed by all the economic news and earnings reports. The problem: so much stuff happening, I honestly don't have the energy to blog. Seriously.

The eye-popping 1Q19 GDP (first reading which will be revised). Amazon. Hess. Ford. Xilinx, OXY-CVX-APC. And the 3:00 a.m. presidential phone call to Prince Salman which caused WTI to drop well below $64. There was so much more but that's what sticks in my mind. And I see I have a note about Tesla in my in-box -- we'll post that later.

In addition, I have family commitments tonight which will / would interrupt blogging, so for now, I'm just going to re-post this:

By the way, what did "the market" feel about the GDP, headed into a weekend? All three indices closed higher and the gains were not trivial. The S&P 500 rose almost 14 points. If the S&P 500 didn't close at a new high, it came very, very close. It's intra-day high was 2,939.88 was very, very close to the all-time intra-day high of 2,940.91.

Idle Rambling On Today's GDP Number -- April 26, 2019

Updates

April 28, 2019: see first comment. A reader provides this approach to calculating / validating GDP --

http://marketwatch666.blogspot.com/2019/04/1st-quarter-gdp-march-durable-goods-new.html.

April 27, 2019: a very, very credible reader responded to the note below with a single "word": "bs." I don't know if he was calling my "essay" "bs" or if he was calling out Warren Buffett 'sand Paul Krugman's suggestion that "debt did not matter" was "bs." I hope the latter. LOL. Whatever. I can't disagree. I think most folks would argue, like the reader, did that "debt doesn't matter until it does."

But we learn things along the way. It seems that Krugman and Buffett are distinguishing between debt that is "owed to others" and debt that is "owed to ourselves." That may be something to explore later on.

Original Post

Disclaimer: this whole issue is well beyond my expertise. There may be a lot of crazy talk below but keeping in the spirit of the blog as noted in the "welcome/disclaimer" for the entire blog, I will post it, let the buffalo chips fall where they may, an essay probably not ready for prime time, and probably full of holes. 

A reader suggests that the GDP report today was the result of a bit of smoke-and-mirrors, arguing that the debt is a big concern. [The reader did not use the "smoke-and-mirrors" analogy; that was my paraphrase.]

I used to agree 1,000% that "debt is a big concern." I don't know any more, not since two prominent Democrats have suggested otherwise.

A Nobel laureate in economics and one of the most successful businessmen/investors ever both said, "debt doesn't matter."

This article is dated April 26th, and although I don't see the year anywhere on the page, the URL suggests it was posted today, April 26, 2019.

The writer at the linked Washington Post article feels very strongly that debt does matter, in an essay titled: five myths about federal debt. From "myth no.1" to get us started:

In 2015, Nobel laureate Paul Krugman wrote that “because [public] debt is money we owe to ourselves, it does not directly make the economy poorer (and paying it off doesn’t make us richer).”

Stephanie Kelton, a prominent advocate of modern monetary theory, says that “we should think of the government’s spending as self-financing since it pays its bills by sending new money into the economy.” In 2011, Warren Buffett said, “The United States is not going to have a debt crisis as long as we keep issuing our debts in our own currency.”

2011, 2015: Barack Obama was president. 

It would be interesting if Krugman and Buffett would say the same thing now, in 2019, that debt doesn't matter.

Anyway, back to the "smoke and mirrors." This is the link to which a reader referred regarding today's GDP number, from MIsh Mash, "explaining the first-quarter GDP 3.2% surprise."

Mish says that "GDPNow, as volatile as it is, seems to have a far better model."

I followed and posted "GDPNow' data regularly for about a year or so, and then noted that "GDPNow" seldom correlated with the final GDP figures and quit following it.

I started to get the feeling that one could get almost GDP reading one wanted. That's hyperbole, of course, because there are so many folks that follow this, the final GDP reading has to correlate, at least to some degree, with reality.

Having said that, the "GDPNow" model would have given us 2.7% vs the 3.2% which would have been a great number also, just not the eye-popping, headline number of 3% that was not expected (and in line with what the president thought the US could achieve).

Or as Hillary would say: "2.7%. 3.2%. What does it matter?" On that I agree with Hillary.

So, where are we? Or perhaps better, "where am I?"

I read the entire Mish Mash article quickly, but nothing really popped out as remarkable. I focused on what the writer said near the end. A good writer would want to conclude with a zinger to support his/her case. Mish's ending remarks focused on the core price index (CPI). The Fed, it seems, in a 30-second, elevator speech, appears to follow the CPI when arguing its two mandates (inflation and jobs).

The GDP core price index was 1.3% vs 2.0% in the fourth quarter. That is what blew me away.

The debt? Back to where I started. One of the best known economic Nobel laureates and one of the most successful businessmen/investors of all time are both on record saying debt doesn't matter. 

By the way, what did "the market" feel about the GDP, headed into a weekend? All three indices closed higher and the gains were not trivial. The S&P 500 rose almost 14 points. If the S&P 500 didn't close at a new high, it came very, very close. It's intra-day high of 2,939.88 was very, very close to the all-time intra-day high of 2,940.91. (Those numbers may be subject to change.)

Oh-Oh! Trump Made THE Call. WTI Down Almost 4% -- Down $2.28 -- Trading At $62.93

Updates

Later, 10:27 a.m. Central Time: Z-Man tweets rumor that Trump will grant China waiver for Iranian oil. 

Later, 10:23 a.m. Central Time: wow, I just checked the twitter-sphere -- pundits are going nuts over Trump's call to OPEC.  Even Z-Man fails to note that this all goes back to Obama killing the heavy oil pipeline, called the Keystone XL. But twitter is afire following Trump's phone call to Prince Salman.

By the way, I used to follow Trump on twitter but quit following him after the Mueller report was released. It was just too much to follow.

Original Post 

Posted at 10:05 a.m. Central Time, April 26, 2019.

Wasn't it just two days ago pundits were talking $85 oil this summer?

WTI is plummeting. Gasoline prices this weekend should plummet. LOL. Let me know how that works out.

Trump gives Russia/OPEC carte blanche to open the spigots, kill US shale.

Barack Obama would have given a speech.

I think I read somewhere Saudi tracks Brent. I can't remember. I don't know. But Brent is also down. Down over 3%. Trading at $71.25.

OPEC basket, on the other hand, up slightly, at $74.04. Why would OPEC basket be rising (slightly) when WTI is crashing? The US needs heavy oil. The US is swamped with light oil.

Fortunately, Australia is starting to import US light oil. Link here.

Two cargoes of U.S. crude oil have been booked to sail to Australia, highlighting the increasing global reach of exports from the United States.

Aframax tanker Esther Spirit loaded U.S. oil in early April at Enterprise Houston Terminal and is scheduled to discharge at Kwinana in Western Australia on May 20.

BP Plc chartered the Silver Sun, an Aframax, to load from the U.S. Gulf Coast this week to Kwinana for $2.35 million. BP operates a refinery at Kwinana producing fuels for Western Australia.

And look at this, just the opposite of the US:

 “Australia’s aging refineries were designed to run regional crude that is typically light and sweet. U.S. crude is a good substitute for typical Australian refinery feedstock,”[somebody said.]

And to think the US would have a "goldilocks" oil situation had Obama not killed the Keystone XL. And folks on talk radio here in north Texas still get upset with Trump tweets. Get a grip. 

US crude oil exports:

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Word of the Day: Holometabolous

Link here, wiki.

Holometabolous, adjective for the noun, holometabolism.

Holometabolism, also called complete metamorphosis, is a form of insect development which includes four life stages: egg, larva, pupa, and imago or adult.

Holometabolism is a synapomorphic trait of all insects in the superorder Endopterygota.

Immature stages of holometabolous insects are very different from the mature stage.

In some species the holometabolous life cycle prevents larvae from competing with adults because they inhabit different ecological niches. The morphology and behavior of each stage are adapted for different activities. For example, larval traits maximize feeding, growth, and development, while adult traits enable dispersal, mating, and egg laying. Some species of holometabolous insects protect and feed their offspring. Other insect developmental strategies include ametabolism and hemimetabolism.

There are nine extant orders that contain holometabolous organisms, including butterflies and moths, beetles, and flies. There are two extinct orders.

If one wants an up-to-date look at insects, consider Natural Histories Innumberable Insects: The Story of the Most Diverse and Myriad Animals on Earth, Michael S. Engel, c. 2018.

No More Blogging For Thirty Minutes -- I Have To Catch My Breath -- The Economic News Is Breath-Taking

Pardon the interruption.

Good luck to all.

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For That Cocktail Party Tonight

From The Language Instinct: How The Mind Creates Language, Steven Pinker, c. 1994, page 167:

When you get a brand-new graphic equalizer for your stereo and aimlessly slide the knobs up and down to hear the effects, that is frobbing.

When you move the knobs by medium-sized amounts to get the sound to your general liking, that is twiddling.

When you make the final small adjustments to get it perfect, that is tweaking.

Not to be confused with twerking, which is something completely different. 

Not Too Shabby -- Best Start Since 2015 -- GDP Exceeds Expectations -- 1Q19

Why I love to blog. An hour ago I posted my thoughts about 1Q19 earnings: I thought reported earnings so far for the "March" quarter, 2019, have been spectacular. Now we see why (chicken or the egg?):

Link here.

Natual Gas Fill Coming Along Just Fine -- April 26, 2019

Updates

 
April 27, 2019: see first comment -- we begin a "new year."

I hadn't even noticed that the sign had already changed on the year-over-year relationship. We now have 55 bcf MORE in storage than a year ago; 4 weeks ago we had 285 bcf LESS YoY. Last year was cool & withdrawals continued for the first three weeks of April.

Later, 10:00 p.m. Central Time: it appears that "steep" slope is real. See first comment:

I haven't looked at the data this week yet, but last week I had the 92 billion cubic feet injection as the largest April injection ever, especially notable coming so early in the month, before the warmer late April weeks when the fill rate usually picks up. This week repeats that 92 bcf, so I would imagine we now may have topped the most ever added to storage in any April, and that's only as of the 19th, with 11 more days to go...

That is truly amazing -- a huge shout-out to the engineers, geologists, and roughnecks. Be sure to follow "focus on fracking" for weekly updates.

Original Post

Link here.

New Yorkers Still Talking About The "Financially Illiterate" -- April 26, 2019

Generally speaking, one would assume that when talking heads talk on television, they are talking about what others are talking about in their world. I don't know. I've only been a talking head on television one time -- during the anthrax scare some years ago -- but it just seems like common sense that one would talk about what seems to be of interest at the time.

I was reminded of that when I saw this story.

It's been, like, forever since we saw this story. The story seemed to have no legs, and just quietly died.

But the fact that a frequent guest on CNBC brought the subject up this week suggests that the subject is still the talk of the town. I don't read The New Yorker any more -- haven't read it in six months, maybe a year -- but my hunch is that The New Yorker has avoided the subject.

Here is the link: the "financially illiterates" screwed up the Amazon-NYC deal. My hunch is that the poster child for the financially illiterate(s) won't tweet a response. LOL.

From the linked article:

The decision by Amazon to pull out of a deal to build a New York City hub in Long Island City sparked controversy across the board. [Well, duh.]

Opponents of the deal, most notably Rep. Alexandria Ocasio-Cortez (D-NY), celebrated the reversal, while politicians like Governor Andrew Cuomo and New York City Mayor Bill de Blasio voiced their displeasure.

Bronx-born billionaire investor Mario Gabelli, who serves as chairman and CEO of GAMCO Investors, didn’t call out fellow Bronx resident Ocasio-Cortez by name but did refer to the “financially illiterates” as the reason why the Amazon deal fell through.

“The screw up in New York City was the financially illiterates [who] didn’t understand that you have to bring Amazon in,” Gabelli said on Yahoo Finance’s The Final Round (video above).

“You need to create scale. You need to create vibrancy. You need to create that kind of a feeling, so that next time New York has an air pocket, they’ve got a whole new wave of talent.”

There's probably more at the linked article but I did not read any farther. I had read enough. But any journalist who doesn't bring up this in any interview with Occasional-Cortex is missing the big story.

By the way, we'll talk about Amazon later. Crushed their earnings. Wow.

Earnings Season, 1Q19 -- Making America Great

I don't know if folks are paying attention, but the earnings season has been incredible. A few companies have had some poor results but for the most part, not only have earnings been good, but they have been very, very, very good.

And some of the commentary -- I love it.

For example, Ford. Link here.

People have driven a Ford truck lately.

And that — along with progress on a deep cost-cutting initiative by Ford CEO Jim Hackett — will likely leave investors encouraged on Ford’s outlook, finally.

The maker of the popular F-Series line of trucks said Tuesday it gained market share and grew revenue in its pickup truck category in the first quarter.

With F-Series pickups being some of the highest margin products rolling off Ford’s assembly lines, it helped power profits in North America $300 million higher from a year ago. Strength in the equally high margin SUV category also supported Ford’s North American profits.

Ford benefited in the quarter from the introduction of the newly redesigned mid-size Ranger pickup. The momentum for Ford is a kick to the gut of rivals General Motors and Fiat, both of which released new designs for their full-size pickups last year in an effort to dethrone the F-Series. Ford plans to release a new Super Duty pickup truck before year end. An all-new F-150 will debut in 2020 along with a hybrid option.

Much more at the link.  

By the way, we've discussed this before: the importance of Ford getting back into other pickup niches. Not everyone can afford a $75,000 pickup. Nissan has every niche covered.  

By the way, wasn't the tax depreciation benefit accelerated under Trump? I really don't know. I've long forgotten but I seem to recall that the F-150 bought for work could be expensed (for tax purposes) in one year. I could be very, very wrong on that, but I do know that a mom-and-pop roofer working out of their residential home just down the street have as many as five brightly-colored F-150s in front of their house, in their driveway, and in their garage every so often. Must be holding a business meeting.

Folks may want to compare Ford's execution of their business strategy with that of Musk Melon.

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.

Two CLR Peterson Wells Coming Off Confidential List Today; Active Rigs Jump To 64 -- April 26, 2019; Anyone Think Gasoline Isn't Going To Be A Whole Most Expensive In Two Months?

Highlight of my day: summarizing the agenda for the May, 2019, NDIC hearing dockets. But that will have to wait. Sophia is driving me to school -- LOL. 

Gasoline demand: going back to this post, a reader notes:

Gasoline supplies have been sliding, probably in conjunction with the low refinery throughput you've been noting. But even with this week's big increase in the amount of oil being refined, gasoline output still fell by 136,000 barrels per day, after falling by 252,000 barrels per day the prior week.

So gasoline inventories fell for the 10th week in a row, and they're now down to 225,826,000 barrels, from 258,301,000 barrels on February 8th. Ok, that's only 2% below that "5 year average for this time of year", but heading in the wrong direction only a month before Memorial Day.

Gasoline demand, link here. Two words, okay, three: "strong Trump economy."

Jobless claims: we've talked about this before. Almost everyone that has a job needs some kind of transportation to get to work. All things being equal, one would assume gasoline demand would increase when unemployment / jobless claims go down. Work trumps vacation time when it comes to gasoline demand (if for no other reason, work = 50 weeks/year; vacations = 2 weeks/year), but with a better economy expect more people to take vacations this year.

Price: anyone want to suggest gasoline prices will be significantly lower in July, 2019? LOL. 

***********************************
Back to the Bakken

Wells coming off the confidential list today -- Friday, April 26, 2019: 79 wells for the month; 79 wells for the quarter

• 34463, 1,431, CLR, Peterson 5-29H1, 60 stages; 6.1 million lbs; East Fork, t1/19; cum 39K 43 days;
• 34462, 1,806, CLR, Peterson 4-29H, 60 stages; 9.1 million lbs,East Fork, t1/19; cum 43K 40 days;

The CLR Peterson wells are temporarily tracked here.

Active rigs:

$62.93	4/26/2019	04/26/2018	04/26/2017	04/26/2016	04/26/2015
Active Rigs	64	63	48	26	84

RBN Energy: E&P transformations drive strong 2018 results and 2019 outlook, part 2. Archived.

Wednesday’s blockbuster announcement that Occidental Petroleum is challenging Chevron’s definitive agreement to acquire Anadarko Petroleum with a considerably higher offer sent another shock wave across what had been mostly somnolent energy M&A and equity markets.

Oxy’s $76/share bid — $11/share more than Chevron’s — valued Anadarko at a whopping 65% premium to its closing price the day before Chevron’s deal to acquire the company was unveiled on April 12. The prospective Oxy/Chevron bidding war provided some of the strongest evidence yet that investors overreacted to the fourth-quarter decline in oil prices when they drove down E&P stock prices by some 40%, as measured by the S&P’s E&P Stock Index.

Why the lack of market love? Many U.S. E&Ps are doing very well, actually. In today’s blog, Nick Cacchione identifies and discusses the outstanding performers among the 44 U.S. E&Ps we track, and considers the factors that could drive profit improvement in 2019.