Tuesday, August 11, 2020

Notes From All Over -- Saudi Aramco Update -- August 11, 2020

Before we get started. The price of gasoline in north Texas is about $1.85 / gallon, unleaded, least expensive. At our neighborhood service station, $1.64/gallon. 
Now back to the Saudi Aramco story.
I linked this article last week but it was behind a paywall, though, for some reason, it showed up on my iPad. Whatever. I tried to get to it this evening, but was stopped by the paywall. Then I googled the headline ("Saudi Aramco sticks to dividend pledge despite plunge in earnings") and it popped up on both the laptop and the iPad.

I find Saudi Arabia and the Saudi Aramco story fascinating. 

Saudi Aramco will pay $75 billion in demands this year despite the fact that their earnings probably don't cover the payout. But, to get the IPO approved by the king, the prince had to promise that the $75 billion dividend would be paid regardless of how well the oil company did. 

Look at this: in the most recent quarter, Saudi Aramco reported a net income of $6.6 billion, a 73% fall from the same period a year ago. So, three data points:
  • $6.6 billion net income in 2Q20;
  • a 73% fall in net income compared to a year earlier;
  • dividend payout: $75/4 = almost $20 billion -- well beyond the $7 billion in net income
And there's nothing to suggest the oil company will do any better in the next four quarters. Everyone says it is so incredibly cheap to drill for oil in Saudi Arabia as it is, which suggests to me that the company can't cut much more in expenses to improve their bottom line. 

It is true that the price of Brent has increased from $20 earlier this year to $40 and China is importing a lot more oil. But again: $7 billion in income in 2Q20, and the company needs almost $20 million to simply cover the dividend. From the article: 
Despite the uncertainty surrounding the global economy, Saudi Aramco said it would maintain the world's biggest quarterly dividend at $18.75 billion, most of it intended for the government in Riyadh, in line with its pledge for an annual $75 billion payout. 
The shareholder handout is far bigger than free cash flow for the period of $6.1 billion, which is down from $20.6 billion a year ago. 
But then this strange statement:
Mr Nasser told reporters that "our intention is to pay $75 billion, subject to board approval and depending on market conditions." Minority (i.e., non-government stockholders) shareholders, who own 1.5 percent of the company, will be "protected" for the next five years and given priority payments.
A new term for me: gearing ratio:
The company's gearing ratio -- a measure of financial leverage -- has already jumped to 20.1 percent, from minus 4.9 percent in the previous quarter. Saudi Aramco said this was related to the June acquisition of a majority stake in chemicals company Sabic from the Public Investment Fund, Saudi Arabia's sovereign wealth fund, for $69 billion. 
Saudi Aramco had expected the gearing to go up because of the deal, but the level far exceeded the company's longer-term target of 5 percent to 15 percent. 
Further, the government has already been forced to raise the kingdom's debt ceiling from 30 per cent of gross domestic product to 50 per cent, and Riyadh has borrowed more than $20 billlion on local and international markets this year.
I will quit there.

The article is worth a read. 

It's very possible that within my lifetime I will see the end of the House of Saud.
That's the number one reason I remain bullish on oil; the House of Saud will do what it takes to survive. 

And if you don't understand "gearing ratio," this is a great time to learn. Start here: Investopedia.
A higher gearing ratio indicate that a company has a higher degree of financial leverage and is more susceptible to downturns in the economy and the business cycle. This is because companies that have higher leverage have higher amounts of debt compared to shareholders' equity. Entities with a high gearing ratio have higher amounts of debt to service, while companies with lower gearing ratio calculations have more equity to rely on for financing.
The Recipe Page

I'm not sure if this beats salmon grilled on the Weber, but since I did not have a Weber but wanted salmon for dinner, I decided to give it a try. My notes to my wife in Portland, OR, who loves salmon:
On the drive home from Montana/Portland, I happened to catch a very, very interesting program on talk radio about bees and honey.

As part of the program, they talked about baking/grilling salmon with honey.

I tried this recipe.

I don't know if I would recommend it or not, but I found the crispiness very delicious and will do it again.

But warning: be sure not to over cook the salmon.

It does not say how long to cook on stove top. I was watching it very, very closely and made sure I kept spooning the butter/honey on the salmon and limited stove top to about five minutes.

Then the directions said 5 - 6 minutes in oven/broiler. I probably had it in the broiler/oven for four minutes and that was almost too long.

Anyway, I loved it and will do it again. Incredibly simple. It seems like it was done before I even started.
And, of course, you have to have a skillet that can go directly from stove top to oven.

Clean-up was very, very easy. I used a non-stick oven-ready skillet. By the time I got back to the skillet, the honey/butter residue was almost impossible to remove from the skillet. I put it back on the oven top, heated it up very carefully, and then, with a wooden spatula, the honey/butter residue was removed without any trouble.

A Closer Look At An XTO FBIR Ironwoman Well In Heart Butte -- August 11, 2020

The well:

  • 34472, SI/A, XTO, FBIR Ironwoman 31X-10C, Heart Butte, t--; cum 169K 6/20; off line 5/20; a 20K month; 9.74 million gallons of water (moderately large frack); 90.7% water by mass;

File report:

  • middle Bakken well;
  • expands the Heart Butte field:
  • background gases, 300 units to 3,000 units;
  • highest gas value was 3,932 units at 15,527' MD
Full production profile:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

A Closer Look At A Rimrock Skunk Creek Well In South Fork --August 11, 2020

FracFocus has frack data for this well:

  • 36031, SI/A, Rimrock, Skunk Creek 12-10-11-16H, South Fork, t--; cum 95K 6/20; off line 5/20; a 16K month; 8.2 million gallons of water (a moderate-size frack); 82.5% water by mass; friction reducer, 0.04002;

Skunk Creek:

From the file report:
  1. target: Mississippian-Devonian middle Bakken
  2. twelve miles southeast of Mandaree in Dunn County
  3. the second of six wells on this pad; second of six east-drilling wells in the Skunk Creek DSU;
  4. middle Bakken entered at 10,340' TVD
  5. the most significant gas show within the middle Bakken was 3054 units
  6. ideal drilling zone: 29' thick, beginning 15' into the middle Bakken, and ending at the lower Bakken;
Full production profile:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

A Closer Look At A Rimrock Skunk Creek Well -- August 11, 2020

Interesting that FracFocus does not have frack data for this well:

  • 36034, SI/A, Rimrock, Skunk Creek 12-10-11-16H3U, South Fork, t--; cum 130K 6/20; off line 5/20; a 25K month;

Skunk Creek:

From the file report:

  • twelve miles southeast of Mandaree in Dunn County
  • the fifth of six wells planned on this pad; the fifth of six east-drilling wells in the Skunk Creek DSU;
  • target: Three Forks 1st bench
  • Three Forks formation (Devonian) entered at 10,047' TVD
  • background gases ranged from 150 to 2,807 units;
  • ideal drilling zone is 26' thick, beginning 8' into the Three Forks formation and ending 9' above the Three Forks Aquitard, between the Upper Dolomite and Lower Dolomite markers;
  • the "D" hard streak, in the center of the target zone, was used as the most consistent marker;

Full production profile to date:

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

It's Kamala Harris -- August 11, 2020

The Biden team chooses Kamala Harris.

Five DUCs Reported; Six Permits Renewed, But No New Permits -- August 11, 2020

 Active rigs:

Active Rigs1261605733

No new permits:

Six permit renewals:

  • BR (5): four Three Rivers and one ThreeWashers, all in NWNE 34-153-95, McKenzie County;
  • Enerplus: one Octave permit in Dunn County.

Five producing wells (DUCs) reported as completed:

  • 36031, SI/A, Rimrock, Skunk Creek 12-10-11-16H, South Fork, t--; cum 95K 6/20; off line 5/20; a 16K month;
  • 36034, SI/A, Rimrock, Skunk Creek 12-10-11-16H3U, South Fork, t--; cum 130K 6/20; off line 5/20; a 25K month;
  • 35448, drl/A, Hess, BB-Federal B-151-05-2122H-11, Blue Buttes, t--; cum 47K 43 days; a 30K month;
  • 34727, drl/A, Hess, BB-Federal B-151-05-2122H-5, Blue Buttes, t--; cum 81K 63 days; a 45K month;
  • 34472, SI/A, XTO, FBIR Ironwoman 31X-10C, Heart Butte, t--; cum 169K 6/20; off line 5/20; a 20K month; see this note;

I Normally Don't Watch Antifa / BLM Videos, But When I Do, It's Videos Like This -- August 11, 2020

 Adult language at the video.

Also a few horses. 

Link here.

Kash-&-Kari's Plan To Lock Down The US For Six Weeks -- August 11, 2020

I will be updating my thoughts on this as we go along. I will post the original and then provide updates, as we usually do.

I track the coronavirus story here but I don't update it very much any more. I lost interest in this story when:

  • I realized they were tracking the wrong metric;
  • I learned the CDC's "definition of a case" which may or may not be the same definition that all states are using;
  • the issue moved from the science/medical arena to the political arena
  • I realized the whole reporting / analysis was a bunch of nonsense

August 11, 2020, source:

  • Fact 1: The overwhelming majority of people do not have any significant risk of dying from COVID-19. 
  • Fact 2: Protecting older, at-risk people eliminates hospital overcrowding. 
  • Fact 3: Vital herd immunity is actually PREVENTED by total isolation policies, prolonging the problem. 
  • Fact 4: People are dying from being denied other medical care due to hypothetical COVID-19 fatality projections that turned out to be garbage. 
  • Fact 5: We have a clearly defined population at risk who can be protected with targeted measures.

Later, 6:05 p.m. CDT, lock downs? Folks cheat. See this link. It's pretty obvious what happened here. 

An Argentine fishing boat that had been at sea for 35 days returned to land when some of its 61 crew showed symptoms of the new coronavirus, Tierra del Fuego Province's Health Ministry reported on Monday. 
Reports later that evening from local outlets said that 57 of the crew members had tested positive for Covid-19. The Ushuaia 24 news portal said that all of them remain isolated on the ship, the Etchizen Maru, and that they would not be allowed to disembark. Only medical personnel would be allowed to board, it added. 
The incident has attracted attention since prior to setting sail the 60 crew members had completed 14 days of mandatory quarantine in a hotel in Ushuaia, and before that they had been swabbed with a negative result, according to a statement from the Tierra del Fuego health portfolio, in the southern tip.

Later, 12:18 p.m. CDT, first some questions, quick:

  • first, how many people are there in the United States?
  • second, how man cases of Covid-19 have been diagnose in the United States?
  • third: when did Covid first appear in the US?
  • fourth: the first "lock down" -- when did it begin and how long did it last? What were the statistics coming out of that lock down?
  • are there any cases of Covid-19 outside of the US?

Original Post

Posted August 10, 2020.

This story got a bit of attention on talk radio Sunday: Fed's Kashkari calls for 6-week economic shutdown to control coronavirus spread. Google key words.

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, called for a nationwide economic shutdown for up to six weeks to get the coronavirus pandemic under control on Friday, warning that the rest of 2020 could be much worse than what America has experienced so far.

"The next six months could make what we have experienced so far seem like just a warm-up to a greater catastrophe. With many schools and colleges starting, stores and businesses reopening, and the beginning of the indoor heating season, new case numbers will grow quickly," Kashkari wrote in a New York Times op-ed with Dr. Michael T. Osterholm, the director of the Center for Infectious Disease Research and Policy at the University of Minnesota.

Kashkari echoed comments he made a week ago on CBS's "Face the Nation," when he argued that "if we were to lock down hard for a month or six weeks, we could get the case count down so that our testing and our contact tracing was actually enough to control" the spread of coronavirus.

President Trump has insisted that states resist the urge to roll back reopening. He said earlier this week when asked about Kashkari’s comments that the country is “not going back to shutdowns.”

I will come back to this later, but for now:

Kashkari obviously does not understand this virus nor viruses in general.

Notes From All Over -- Late Afternoon Edition -- Big 10 Says "No" -- Rally Turned Into Rout -- August 11, 2020

Big 10: everything canceled for the fall. Now that the Big 10 has made the announcement, one would assume the rest of the Power 5 would follow. 

"Rally losing steam." CNBC crawler immediately after Big 10 announcement. NASDAQ, which had climbed its way back to "flat" immediately lost 140 points after the Big 10 announcement. The Dow which had been up as much as 300 points may go negative. The S&P which was approaching an all-time high is now negative -- right after the Big 10 announcement.

Robinhood: the trading platform --

  • for most recent reporting period, Robinhood was #1 in daily average trades
    • Robinhood: 4.3 million daily average revenue trades (DARTs)
    • TD Ameritrade: 3.84 million DARTs
    • Interactive Brokers: 1.8 million DARTs
    • Schwab: 1.8 million DARTs
    • E*Trade: 1.1 million DARTs
  • Robinhood expanding: perhaps to Southlake, TX, and/or Tempe, AZ
    • both Schwab and TD Ameritrade have huge new centers in Southlake, TX
    • not sure what will happen to the recently-completed and still-vacant TD Ameritrade building
    • the new Schwab building is still under construction
  • as a reminder: currently the population center of the DFW area is just north of Dallas, perhaps in the Plano area;
    • Texas is anticipating that the population center of the DFW area will be west of the current population center, probably Roanoke, TX;
    • Southlake, TX, is very, very close to Roanoke

Grocery stores: this is quite interesting. All along, during the endemic, I've said that anything that considered itself a grocery store was in great shape. Grocery stores were one of the few retail centers allowed to remain open during the pandemic. So, guess what? The malls are now looking to put grocery stores in their malls. LOL. 

"The vaccine": way too much enthusiasm for "the vaccine." The way folks are talking (investing?) suggests we'll have a vaccine tomorrow.

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.

Nor Was A Pony -- August 11, 2020


For The Archives
Overview: Grapevine, TX to Portland, OR to Flathead Lake, MT
July 28, 2020 - August 10, 2020

So, two weeks ago I began my two-week trip to the Pacific northwest to see my wife, daughter/son-in-law, and the two new twins, now four months old.

On Tuesday, July 28, 2020, at 9:00 p.m. (late evening), I departed Grapevine, TX, in the Dallas-Ft Worth area, I drove northwest to Albuquerque, NM, via Amarillo, TX.

Somewhere between Amarillo and Albuquerque I caught a couple of hours of sleep. Until this trip I did not know that I have been mis-pronouncing Amarillo and armadillo all these years. They are pronounced as if they end in an "a" rather than an "o." 

It takes about twelve hours to get from our home in Grapevine, TX, to Albuquerque.

Traveling northwest from Albuquerque, I arrived in the four corners area around noon, I suppose. I drove through Farmington, west to Shiprock, and then north towards Aztec, Colorado. There was road construction south of Aztec, and after waiting about 30 minutes in a line that was getting longer and longer, I turned around, drove south back towards Shiprock and then took back roads west into Arizona, and turned north into Utah: Blanding, Monticello, and then Moab before passing Arches National Park. 

Up to I-70 which I took for a few miles west before turning north at Green River, taking a state highway, to catch I-15 in the Salt Lake City area, which was smooth sailing all the way to I-84, near Tremonton, Utah, and then west to Boise, Idaho, and then, all the way to my destination, Portland, OR.

The following Tuesday, August 4, 2020, I departed Portland, OR, at 4:00 a.m. (early in the morning), driving east on I-84. About two-thirds across the state of Oregon, I turned north toward Kennewick, Washington, where I caught I- 82 (for a short few miles) and then I-90, toward Spokane.

Of the entire two-week cross-country trip, the only somewhat-boring segment was from Kennewick to Spokane. Even that, however, was a nice drive. But then after Spokane, incredibly beautiful all the way to Lakeside, Montana, on Flathead Lake.

From Spokane, I drove to St Regis, on I-90, where I turned north, taking some Montana back toads north and east to Flathead Lake, hitting MT highway 93 and then turning north to Lakeside, MT. I arrived at Lakeside, at 3:00 p.m., Tuesday, the same day I departed Portland, earlier that morning.

I arrived in Portland, OR, early in the afternoon on Thursday, July 30, 2020.

Car Rental

I always rent from a neighborhood Enterprise, if possible, We have an Enterprise about five minutes from where we live in Grapevine. I had reserved my car some days earlier and would be picking it up at the end of the day for a late evening departure. They had had a busy day and the only two options I had was a Ford Fiesta and a pick-up truck. Needless to say, I wasn't going to take the pick-up truck. I had reserved a bigger car and was somewhat disappointed being offered the Ford Fiesta.

Wow, was I pleasantly surprised. I loved it. It feels smaller than a Honda Civic but for me the Fiesta was perfect. It seemed to get great gas mileage (which one would expect) -- I will do the calculations later. Speed was not a problem. It cruised at 80 mph with no difficulty. At 80 mph, 3,000 rpm. In my Honda Civic, I generally run at 2,000 rpm but generally drive my car a bit slower. 

In the future, I would not select a Ford Fiesta as my first choice, but would have no problem if that was what I was offered.

Atmospheric CO2 -- July, 2020, Data

Link here.

414.38 parts per million vs 411.74 parts per million one year ago.

Change: 2.64 parts per million = 0.0264%. Okay.

Notes From All Over -- Mid-Morning Edition -- Augut 11, 2020

 From SeekingAlpha:

  • Energy shares (XLE +1.7%) are rallying in early trading as crude oil prices rise for a second straight day, underpinned by expectations of U.S. economic stimulus as well as a rebound in Asian demand as economies reopen. 
  • September WTI +1.2% to $42.46/bbl; 
  • October Brent +0.8% to $45.35/bbl. 
  • Early energy gainers include XOM +3.3%, BP +2.2%, COP +2.2%, SLB +2.3%, HAL +4.1%, MRO +2.3%, OAS +7.6%, RIG +4.2%. 
  • Meanwhile, Occidental Petroleum (OXY -2.1%) falls sharply after posting a $6.6B writedown.

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. 

PSX, over at Zacks: beats estimates:

  • huge beat: $1.05 vs 75 cents forecast
  • still below last year's $1.15, but yet, an incredible beat
  • revenues of $430 million
  • increased from $401 million a year ago -- wow
  • and beat estimate of $367 million
  • PSX: up 2%; trading around $66; pays almsot 6%

The market: wow, I cannot believe this market. The S&P will likely close at an all-time high. Deere, the tractor company, hit an all-time, as did Best Buy and Lowe's. I find it incredible. The Dow crosses 28,000 for the first time since February, 2020. The Dow has the best 2-day gain since ... drum roll .... last month. The Dow is headed for the longest win-streak since last September, 2019, and the S&P since April, 2019. UNP is up over $5 and now trading above $192, nearing its one-year high. The big talk on CNBC is how well banks are doing and well they will be doing. Think Warren Buffett. Wow. Brilliant.

QCOM: nice jump today. Court throws out long-running suit against QCOM.

Notes From All Over -- Pre-Market Edition-- August 11, 2020

First things first: several weeks ago, while visiting my bicycle dealer, I noticed not many bikes for sale; Mike said he couldn't get inventory; bike shortage; I did not know what to make of that; it turns out there is a bike shortage caused by pandemic; shortage will probably last through 2021: see Daily Herald Business Ledger (suburban Chicago, posted August 10, 2020).

Vaccine: this won't make Trump happy. Russia beats the US to a coronavirus vaccine.

Connecticut: apparently post-Isaias electric grid response not so great; lawmakers call for Eversource CEO to resign;


Fast and furious:


  • Seattle's top cop resigns after 28 years; Seattle votes to defund police;


Four Wells Coming Off Confidential List -- August 11, 2020

OPEC bssket, link here: $45.01

Back to the Bakken

Active rigs:

Active Rigs1261605733

Four wells coming off the confidential list -- Tuesday, August 11, 2020: 31 for the month; 102 for the quarter, 548 for the year:

  • 36727, drl/A, CLR, Marshall 8-24H, Little Knife, t--; cum 51K 5/20; off line 6/20; 1 20K month (22 days);
  • 35859, conf-->loc,  Newfield, Kummer 149-98-2A-11-3H, Pembroke,
  • 35894, SI/A,  Whiting, Rauser 11-29-2H, Pembroke, t--; cum 107K 6/20; a 25K month;
  • 33930, SI/IA, CLR, Holstein Federal 14-24H2, Elm Tree, t--; cum 31K 2 months; the CLR Holstein Federal wells are tracked here;

RBN Energy: ethane recovery must increase to meet demand.

In their second-quarter earnings presentation last week, Energy Transfer said that they and their joint venture (JV) partners, Satellite Petrochemical, expect the first commissioning cargoes from their new 180-Mb/d ethane export facility in Nederland, TX — formally known as Orbit Gulf Coast NGL Exports LLC — to begin in November, only three months from now. This new outlet for U.S.-sourced ethane comes at a time when production of oil, gas, and NGLs faces near-term declines due to reduced drilling activity resulting from low crude prices. With those declines, will there be enough ethane supply to meet the capacity of the new Orbit export dock and other upcoming ethane-related projects? The short answer is, yes … for the right price. Today, we examine the latest supply and demand dynamics shaping the U.S. ethane market.