Tuesday, September 17, 2019

Idle Rambling On A Tuesday Night -- September 17, 2019

Remember how quaint this article seemed when it first appeared?

Link here. From Investor's Business Daily:
The U.S. topped Saudi Arabia in oil exports in June as Riyadh complied with OPEC's production cut deal and shale production surged.
Crude oil prices fell.
Already the No. 1 producer of oil, the U.S. exported nearly 9 million barrels per day of crude and oil products in June, beating Saudi Arabia and Russiat.
Saudi Arabia then retook the U.S. as top producer in July and August as hurricanes forced halts to production and shipments. But the U.S. could reclaim the title of top oil exporter later this year. The IEA said crude exports alone could rise 33% from June levels to as much as 4 million barrels a day as new export infrastructure comes online in Q4.
LOL.

When was that? September 12, 2019.

LOL.

I remember making a big deal out of the US "briefly" being the #1 global exporter of oil and petroleum products. I don't want to forget that second part, "... and petroleum products."

I got a lot of push back / blow back for being so inappropriately exuberant about the US "briefly" being ...

That was September 12, 2019.

Then, September 13, 2019. Force majeure declared by Sempra ...

And, then September 14, 2019, 4:00 a.m. local time, 10 - 20 Iranian drones and/or cruise missiles knock out of half of Saudi's production, or something like that ...

So, even before Iran took out 5.7 million Saudi Arabian bopd, the US was #1. It will be interesting to see what the next few months be.

By the way, WTI spiked but never got anywhere close to where some thought it might go, and now it's dropping back to pre-attack levels.

Underlying theme: has Saudi Arabia become irrelevant?

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LGBT

It's funny how things happen.

We haven't been to McDonald's in a long, long time, but Sophia wanted to go today. We went.

PlayPlace was empty except for a four-year named Laura. She was sitting alone in a booth; we assumed correctly that her adult was ordering at the counter.

We sat down in the booth with her; Sophia had a fast friend.

Moments later, Ron joined us. He was of my generation, maybe ten years older. The girls played.

He, like me, was the Uber-driver for his grandchildren.

But within minutes Ron was telling me about Laura's sibling, her 17-year-old transgender grandson, Jim.

Jim was born anatomically a female and raised as a girl. Sometime in late elementary school she said she felt like a boy. Since then it's been "hell" for the family but things are getting better, and now that Jim has turned 17 he is starting male hormone therapy. Such therapy is not allowed, apparently in Texas, even with parental consent until age 17.

I mentioned to Ron that I was a retired pediatrician and one of the first patients I ever saw in training was an eight-year-old who came to me because her mother thought something was wrong. Same story. Eight-year born anatomically as a female, raised as a girl, but something didn't seem right. We requested chromosome studies and it turns out "she" was actually XY -- genetically a boy.

Ron and I had a long, very interesting conversation. On top of all this, Ron is probably one of the richest, most successful men in the local area, but now he's an Uber-driver for his grandchildren and sharing French fries with his four-year-old granddaughter in PlayPlace.

[Note: names have been changed.]

Another Staggering Deal In The Oil Patch -- September 17, 2019

I simply cannot keep up.

It staggers the imagination that the Democrats running for president -- all of them except Biden and I doubt he remembers his talking points anyway -- all of them except for Biden want to shut down the US oil and gas industry. It staggers the imagination on so many levels.

So, here we go again. Another $5 billion deal. And this one is huge.

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.

Did you all see this? Energy Transfer -- the DAPL folks -- bought SemGroup and paid an eye-popping 65% premium to its closing price last Friday, September 13, 2019. A 65% premium! Wow, I can buy new shoes for Sophia. LOL. It turns out that Energy Transfer got SemGroup "cheap." See what Motley Fool has to say:
Energy Transfer announced this week that it would acquire SemGroup for $17 per share, an eye-popping 65% premium to its closing price last Friday. The cash-and-stock deal valued the midstream company at $5 billion, including the assumption of debt.

While the acquisition of SemGroup will do several things for Energy Transfer, the main driver of this deal is how it will bolster the company's oil transportation business. Here's a look at why Energy Transfer is making a $5 billion bet on crude oil.At the heart of the deal is SemGroup's Houston Fuel Oil Terminal Company (HFOTCO), which is a world-class crude oil terminal on the Houston Ship Channel. That facility can store 18.2 million barrels of oil and has five deepwater ship docks from which it can export oil to global markets. Supporting the terminal are stable take-or-pay contracts that provide predictable cash flow.

In addition to HFOTCO, Energy Transfer will pick up crude oil and NGL gathering assets in the DJ Basin of Colorado and Anadarko Basin in Oklahoma and Kansas. The company will also get some crude oil and NGL pipelines that connect those two regions to oil terminals in Cushing, Oklahoma, which is a major oil hub. Finally, Energy Transfer will gain a significant oil gathering and transportation business in western Canada.

Although Energy Transfer is paying a substantial premium for SemGroup, it's getting all these assets at a good value. The company is paying only nine times EBITDA after adjusting for the expected $170 million in annual cost savings. For comparison's sake, Kinder Morgan recently sold its Canadian subsidiary and a related pipeline for 13 times EBITDA. The low price Energy Transfer is paying despite the significant premium is a result of the slump in SemGroup's stock over the past few years. The current offer price, for example, is still 28% below where shares traded a year ago and more than 50% below where they were three years ago.
So much more at the link. If anyone is paying attention: this is simply incredible.

I would imagine ET thought it easier to buy a pipeline company rather than tring to build another one after their DAPL experience.

MRO Reports Eight Incredible Completed DUCs -- September 17, 2019

This page won't be updated. These wells will be followed elsewhere.

This is simply incredible. Nothing sexy about this, just simply great work by the roughnecks, and the geologists. These wells were reported today:
Nine producing wells (DUCs) reported as completed:
  • 36267, 4,301, MRO, Blanche 14-36H, Killdeer, t7/19; cum 35K over 14 days; extrapolates to 74K over a 30-day month;
  • 34765, 2,467, MRO, Kinney24-36TFH, Killdeer, t7/19; cum 27K over 19 days; extrapolates to 42K over a 30-day month;
  • 34764, 3,888, MRO, Jocelyn 14-36TFH, Killdeer, t7/19; cum 30K over 25 days;
  • 35177, 3,848, MRO, State Elias34-34-36TFH, Killdeer, t7/19; cum 41K over 29 days;
  • 35176, 3,452, MRO, State Eileen 34-36TFH, Killdeer, t7/19; cum 27K over 25 days;
  • 35175, 5,020, MRO, State Eggert 24-36H, Killdeer, t7/19; cum 41K over 23 days; extrapolates to 54K over a 30-day month;
  • 35526, 4,466, MRO, Gwen 44-36TFH, Killdeer, t7/19; cum 33K over 30 days; extrapolates to 33K over a 30-day month;
  • 35524, 4,253, MRO, Mason 14-31TFH, Killdeer, t7/19; cum 29K over 29 days; extrapolates to 30K over a 30-day month; in the first 12 days, 25K, extrapolates to 62K over 30 days;
The graphics: these wells were in this general area --




So, for newbies, spend some on these wells:
  • these are huge wells, but nothing special about these wells
  • MRO wells
  • note the number of TFH wells; this is why I'm eager to see the new USGS Bakken survey
  • look how relatively "empty" this area has been (how little drilling activity)
  • Tier 1 getting bigger?
  • Any idea what I'm most interested in?
  • Yup, you guessed it:
  • 16761, off line; we will have to check later;
  • 17375, off line; we will have to check later;

MRO Reports A String Of Incredible Completed DUCs -- September 17, 2019

WTI: returning to pre-attack levels. Very, very interesting. One begins to wonder if Saudi Arabia is irrelevant -- don't take that out of context; we'll come back to that theme.

Come on, Eileen Dexy's Midnight Runners

And yes, there was a reason to post that song. LOL.

Active rigs:

$58.939/17/201909/17/201809/17/201709/17/201609/17/2015
Active Rigs6266563267

Four new permits, #36969 - 36972, inclusive:
  • Operators: Hess (3): Slawson
  • Fields: Tioga (MNT); Big Bend (MNT)
  • Comments: 
    • Hess has permits for a 3-well TI-Nelson pad in section 30-157-94, Tioga oil field, the granddaddy of them all;
    • Slawson has a single permit for a Whirlwind permit in lot 2, section 16-151-92
One permit was renewed:
  • Kaiser-Francis: a Hushka permit in Stark County
Nine producing wells (DUCs) reported as completed (see this post for graphics):
  • 36267, 4,301, MRO, Blanche 14-36H, Killdeer, t7/19; cum 35K over 14 days; extrapolates to 74K over a 30-day month;
  • 34765, 2,467, MRO, Kinney24-36TFH, Killdeer, t7/19; cum 27K over 19 days; extrapolates to 42K over a 30-day month;
  • 34764, 3,888, MRO, Jocelyn 14-36TFH, Killdeer, t7/19; cum 30K over 25 days;
  • 35177, 3,848, MRO, State Elias34-34-36TFH, Killdeer, t7/19; cum 41K over 29 days;
  • 35176, 3,452, MRO, State Eileen 34-36TFH, Killdeer, t7/19; cum 27K over 25 days;
  • 35175, 5,020, MRO, State Eggert 24-36H, Killdeer, t7/19; cum 41K over 23 days; extrapolates to 54K over a 30-day month;
  • 35526, 4,466, MRO, Gwen 44-36TFH, Killdeer, t7/19; cum 33K over 30 days; extrapolates to 33K over a 30-day month;
  • 35524, 4,253, MRO, Mason 14-31TFH, Killdeer, t7/19; cum 29K over 29 days; extrapolates to 30K over a 30-day month; in the first 12 days, 25K, extrapolates to 62K over 30 days;

One Gets The Feeling That No One Really Knows What's Going On In Saudi Arabia -- September 17, 2019

By the way, before getting started, let's say "nothing [you know what I'm talking about] happens" following the Iranian drone/cruise missile attack on Saudi Arabia. What does happen next? Let's say there is no retaliation; Saudi Arabia "re-tools" and gets back to full production/full exports and life returns to normal. Does Iran try it again? Does Iran say, "well, that was interesting, but I don't think we should try it again." Or does Iran say, "well, that was interesting. Here. hold my yogurt."

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One Gets The Feeling That No One Really Knows 
What Is Going On

Things are moving way too fast. I know a lot of folks don't like twitter but one can customize it to one's own preferences. It's probably the best way to get breaking news these days. I only follow about six accounts on a regular basis. I follow no political accounts except for President Trump. For those oil and gas sector accounts I don't follow, it it was important enough for me to see, others folks that I do follow will re-tweet it.

It's a very clever social media platform. By the way, speaking of "platforms," my hunch is that "LinkedIn" may be one of the best sites for serious investors. I had a "LinkedIn" account years ago but no long visit the site. I assume folks can still find notes from me during the days when I did actively link in.

From twitter today (see below) which suggests that no one really knows what's going on in Saudi Arabia. But, for sure, official reports and public statements coming out of Saudi Arabia are very, suspect. And that was before the attack. Now, even more so.




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Is There A Difference Between Pre-Senile Demential And Alzheimer's? 
What The Heck Is "Senile" By The Way? And What Is Pre-Senile?

Nancy Pelosi is 79 years old.

Joe Biden on January 20, 2021, will be in his 79th year, also? He turns 77 on November 20, 2019; 78 on November 20, 2020.

I assume we are all pre-senile.

But I digress.

If this video clip has not already gone viral, it certainly will by the end of the week.

https://www.youtube.com/watch?v=Uj0ccJgJsPA&feature=youtu.be

It is very interesting how folks are dancing around the word "Alzheimer's" and/or the phrase, "pre-senile dementia."

But clearly ... sorry, I lost my train of thought ... covfefe .... what's the frequency kenneth ...

The Numbers Don't Add Up -- September 17, 2019

WTI:
  • pre-attack: $55
  • post-attack, once futures started trading: $59, possibly more
  • yesterday: $62
  • today, 10:53 a.m., plunged 5%; down $3.16; trading at $59.74;
Earlier this morning I posted this:
Post attack: there are two stories percolating under the surface -- now that WTI is "sort of" back where it started and still way, way below what some thought would happen, there are two stories to follow. The two stories:
  • the numbers don't add up; all this hysteria over 5% of the world's total production?
  • US shale is is the swing producer
Now, less than three hours later, it appears my thoughts were right on target.

The numbers don't add up. I'm not talking "numbers," per se, but rather the sentiment/emotion associated with the numbers.

First of all, 5% of anything does not cause panic in the street like it did yesterday, Monday.

The weekly government-provided global supply / demand numbers suggest a deficit of oil production / supply has been on-going for the past several months, if not longer. And yet the US has 24 days of supply in inventory. That's way down from 35 days not long ago, but it's still above the long-term historical norm I like to see: 18 days, maybe 20 days max.

Twenty-four days of supply is a week longer than the US needs. I'm not going to look for it now but I believe I saw elsewhere that the EU has aan much longer supply requirement -- it was just posted a few days with regard to BREXIT. In other words, there's a lot of oil sloshing around. The US figure does not include the SPR.

OPEC+ has a self-imposed quota limiting production / export. Some are cheating. If push comes to shove, there's always Venezuela. And Iran. Bottom line, if there's any "shortage" it's pretty much politically/economically/administratively inflicted. The global industry can ramp up easily. Am I sure? I don't know. How much is OPEC holding back? My hunch OPEC+ alone could ratchet up a significant portion of the 5-million-bbl shortfall.

Enough of that.

Now the second part. Had WTI stayed above $60 and continued to trend upwards to $70, we would get a chance to see if the US shale sector was the new swing producer. In my mind, there is no question that had WTI trended toward $70 and the tea leaves suggested the new floor would be $75 in the not-too-distant future, the US shale producers could ramp up significantly.

We haven't had a chance to see how fast the US shale sector can respond. How fast can Bakken operators bring on 2,500 wells that are currently off-line for operational reasons (DUCs, and inactive but completed-and-previously-producing wells [ICPPW])? By the way, 2,500 wells is about the number of wells drilled every three years in North Dakota.

Disclaimer: I am inappropriately exuberant about the Bakken. Comments above are of a general nature, not to be taken out of context. I may not articulate it well, but it is what it is.

And apparently the market is seeing the same thing.

***************************************
The Political Page

September 17, 2019, T+9a: most recent polling data; the first data released after the third debate, Thursday, September 12, 2019. It's important to note that only one new poll has been added (Politico). This is the average of five polls; only one poll (the Politico poll) was taken during and after the debate. Data from RealClearlPolitics:
  • Biden: before the debate, 26.8%; now 26.2%; Reuters before the debate had Biden at 22%;
  • Bernie: 16.8%, unchanged, third, behind Pocahontas
  • Pocahontas: 17%, up from 16.8% -- surging ... LOL
  • Harris: falls a bit, from 6.5% to 6.2%
  • Buttigieg: up from 4.8% to 5%
  • Beto: up to 3% from 2.8% (but probably lost Texas for the Democrats)
  • Yang: unchanged at 3%
  • interestingly, the outlier is the most recent poll (Politico) which has Biden at 32%; everyone else has Biden in the mid-20s. Will the rest follow suit once they show their polls taken after the third debate?
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Taking A Break

Sophia and I used to go to McDonald's once a week or thereabouts; she really enjoys/enjoyed PlayPlace.

But then, starting about two weeks ago, she said she was never going to go to McDonald's again because it did not have healthy food. I think she has said that almost every day for the past two weeks.

Yesterday, Sophia said she wanted a treat. She said she wanted to go to McDonald's but she said she would have no Dr Pepper (her catch-all for soda drinks) but only a few French fries.

We went and true to her word, she only had water. She said she would have only a few French fries. It was really Corky, she says, who wanted to go to McDonald's.


Sophia also had a vanilla ice cream cone -- but only a small portion.

That WTI Surge In Price? Already Pulling Back? -- September 17, 2019

Failure to communicate: during the "rough days" of the Bakken (2014 - 2016) and early in the boom, it's my recollection that oilprice and other peak oil sites were quick to print any story casting doubt on the Bakken. Last month, North Dakota hit an all-time production record. Quick to report any oil story, no matter how obscure, oilprice completely ignored that story. To date, oilprice has never mentioned it. Now, North Dakota sets an all-time production record for the second consecutive month. And oilprice again completely ignores the story.

Post attack: there are two stories percolating under the surface -- now that WTI is "sort of" back where it started and still way, way below what some thought would happen. The two stories:
  • the numbers don't add up; all this hysteria over 5% of the world's total production?
  • US shale is is the swing producer
LOL: I suggested this tongue-in-cheek (and as a complete joke) that Saudi Arabia orchestrated this whole thing ("false flag"; "make it look like suicide") to move the price of oil. Well, it turns out, some of those commenting elsewhere are actually suggesting that Saudi Arabia was behind this as a "real" possibility. And we move on.

WTI: surges yesterday. Barely reaches $60, and now this a.m. dropping back. See above.

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Back to the Bakken

Only one well coming off confidential list today - Tuesday, September 17, 2019: 44 for the month; 176 for the quarter:
35523, conf, Hess, EN-Davenport-156-94-1003H-4, 
Active rigs:

$61.789/17/201909/17/201809/17/201709/17/201609/17/2015
Active Rigs6266563267

RBN Energy: Low Alerta gas storage is not spooking the AECO winter market, yet.
Alberta natural gas storage, one of the largest regional storage hubs in North America, is experiencing one of its slowest cumulative storage injection rates in years and could be headed to a 13-year low for storage levels by the end of the current injection season. That may seem ominous for the chilly Alberta and Canadian winter heating season, not to mention gas exports to the U.S. So far, though, winter gas forward prices for the Western Canadian gas price benchmark of AECO have registered a relatively modest market response, staying in line with last winter’s average spot price. Today, we take a closer look at the market’s apparent lack of concern over low Alberta gas storage.
Canadian natural gas storage is not often a topic in the RBN blogosphere, but with Alberta — the province with more gas storage capacity than any other — showing remarkably low storage levels for late summer, and the U.S. still a steady gas taker of Western Canadian gas during the winter, the storage deficit there is likely to factor into how the North American gas market balances this winter. Alberta’s gas storage capacity is estimated at 499 Bcf by the Alberta Energy Regulator (AER) and easily dwarfs that of any other province in Canada. The next-closest competitor would be Ontario at 279 Bcf of storage capacity. Among the U.S. states, Alberta’s storage capacity would rank third, behind only Michigan (686 Bcf) and Texas (549 Bcf), based on capacity data compiled by the U.S. Energy Information Administration (EIA). On that basis, it’s safe to say that Alberta is a major player in the North American gas storage business.