Monday, April 5, 2021

Notes From All Over -- Mid-Morning Edition -- Easter Monday -- Part 2 -- Clearing Out The In-Box -- April 5, 2021

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

The cube: somewhere along the line I missed this "concept." I guess it's a "thing" in the Permian. We've been doing this for quite some time in the Bakken, perhaps for the past ten years. The "cube" popped up on twitter yesterday as if it were something new. It isn't:

  • from WoodMackenzie, Permian operators cash in ... by thinking inside the box; August 21, 2019:
  • from Oil & Gas Journal, Permian basin operators improve cube development well planning, October 7, 2019;
  • from Energy in Depth, WSJ misses the mark in Permian "cube" analysis, July 4, 2019;
  • from Hart Energy, will cube development square with producers? October 1, 2019;
  • from EneryHQ: is cube development the future of shale production? undated, but appears to have been posted in August, 2018;
  • for more, google; cube Permian oil

Warren Buffett, link here;

  • 71% of Warren Buffett's portfolio is in five stocks:
  • pop quiz: which is the fifth; here are four:
    • Bank of America, $40 billion
    • American Express, $22 billion
    • Coca-Cola, $21 billion
    • Kraft Heinz, $13 billion
  • the fifth: $110 billion, fill in the blank ________________
  • by the way, this "portfolio" analysis is a bit of a factoid:
    • Buffett outright owns companies that have market value much in excess of the value of the portfolio holdings noted above
    • in other words, he is much more diversified than this analysis would suggest;

Quick look:

  • QCOM: up 1.6%; up over $2/share; trading at $140, well below its 52-week high;
  • XLNX: flat, slightly red; profit-taking after huge day last Friday;
  • AMGN: up1%; up over $2.50/share; trading at $251, well below its 52-week high;
  • JNJ: up about 3/4th of a percent; up $1.50/share; trading at $164, well below its 52-week high;
  • UNP:up 1.4$; up over $3/share; trading at $223.27, slightly below its 52-week high;

FAANG, link here:

  • one to buy: Netflix
  • one to avoid: Facebook

Pending, any day now: atmospheric CO2 data for March, 2021.

Sempra Energy, link here:

  • offloads non-controlling interest in Sempra Infrastructure Partners to KKR
  • summary:
  • Sempra Energy entered into a definitive agreement to sell a non-controlling, 20% interest in Sempra Energy's new business platform, Sempra Infrastructure Partners, to KKR for $3.37B in cash.
  • This transaction, expected to close in mid-2021, values Sempra Infrastructure Partners at ~$25.2B, including expected asset-related debt at closing of $8.37B.
  • "Over the next decade, we expect the energy markets in North America to continue to grow and become increasingly integrated. Combining our resources with KKR improves our ability to capture new investment opportunities in cleaner forms of energy and the critical infrastructure that stores and transports it," SRE chairman and CEO Jeffrey W. Martin commented.
  • As per agreement terms, KKR will be acquiring its indirect interest in IEnova at $4.13/share; KKR will have certain minority rights with respect to Sempra Infrastructure Partners correlated with investment size.

Update, from a reader, April 6, 2021:

A reader who follows this a lot more closely than I do provided this "head's up" regarding Sempra Energy (SRE):

I want to pass on to you an analyst's take on the recent KKR-Sempra deal involving the $3 +  bilion that KKR is giving to Sempra for partial ownership of Sempra's LNG infrastructure.
Sempra is poised to announce - supposedly by the end of June  - an expansion of its Cameron facility from 12 to 25 million tonnes per year. (That is a lot). 
The funds to help in the buildout will partially come from KKR.

Any of the brownfield/expansion projects from existing US LNG plants are apt to be exceptionally profitable as so much of the existing infrastructure is already in place. This includes shipping berths, feed pipelines, onsite power plants, storage tanks, etc.

From a more macro view, the production costs of natgas  from US shale plays - whether associated like in the Bakken, Permian, at al, or dry gas plays like the Marcellus and Haynesville - have become so low as to continue to crowd out potential global competitors.
(Argentina, despite having amongst the largest shale gas resources on the planet, is embarking upon its second round of bidding to IMPORT more LNG this winter ... much of which will come from the US).


  1. What are your thoughts regarding FANG/Diamondback in the Bakken?

    1. I don't follow any of the drillers in the Permian close enough to say anything. Having said that, based on the Permian deals in 2020 and 2021, FANG's market cap is small enough that it offers an attractive target for takeover. Is it about the last well-known independent still left in the Permian? If it was worth looking at last week, it's certainly worth looking at this week, down 7% today. My hunch: it's a trading stock for those who are nimble, willing to take a loss, and "hoping" for lightning to strike (a takeover bid).

  2. FANG said they were going to sell the QEP Bakken properties when they got a good price. No strategic interest in the Bakken--prefer to stay single basin. This was in the initial deal press release.

    1. Yes, I do recall that now that you mention it. Not surprising. Several Bakken producers have moved hook, line, and sinker to the Permian.

  3. I was wondering about the N.D. assets. Do you think they will sell them off?

    1. I would be quite surprised if these "stranded" assets aren't sold. Often they are sold to private (non-publicly traded companies) and we may not hear about the sales until well after the fact, especially if they are no longer material to the publicly traded company.