Tuesday, January 19, 2021

Notes From All Over -- The Panhandle Edition -- January 19, 2021

Flying into Texas, over the panhandle, Wichita Falls in sight. Hard to believe. Only 20 minutes or so until we touchdown. 

Clearing off the desktop:

As websites / users ditch "cookies," advertisers need something else. It looks like Google and Apple have found that something else

P3: a year of poor planning led to carmakers' massive chip shortage. Link here. We've talked about it more than once on the blog. 

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. 

Hot in Louisiana: big pension bought up Tesla, Apple, Microsoft, and GE. Link here

Apple: Apple supplier Foxconn to build $270 million plant in Vietnam, not the US. Likely for MacBook and iPad. Link here

Empty malls to warehouses: not going to be easy. Link to WSJ

ET: call home. Energy Transfer dropped 2.28% today, losing 16 cents and closing at $6.85. Pays 15.23% -- yeah, how long will that last?

Notes From All Over -- Somewhere Over The Rocky Mountains -- 9:12 P.M. CT -- January 19, 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. 

Earlier today we mentioned that there were three companies of interest that would report today. Let's see how they did. From the note this morning:

  • NFLX: earnings out today after market close;
    • forecast: $1.45/share on revenue of $6.63 billion
  • Schwab (SCHW): forecast -- 70 cents/share on revenue of $4.12 billion; 
  • BofA: forecast 55 cents/share (adjusted) on revenue of $20.51 billion;

So, let's see how they did. Saving the best for last.

  • BofA (BAC): link here
    • beat estimates on earnings, but fell short on revenue
    • shares were mostly flat throughout the day, losing 0.73% to close at $32.77
    • diluted EPS of 59 cents; forecast 55 cents
    • revenue came in at $20.2 billion, falling short of $22.7 billion forecast, and last year's $22.3 billion;
  • Schwab (SCHW): link here.
    • shares rise on strong 4Q20 earnings
    • EPS of 74 cents vs consensus of 71 cents (barely)
    • revenue of $4.18 billion grew 60% from the prior year and also surpassed expectations of $4.01
    • now operates nearly 30 million brokerage accounts
    • total client assets grew 66% year-over-year to a record $6.69 trillion as a result of gaining TD Ameritrade's assets
    • 4Q20: Schwab added 15.77 million new clients, 14.5 million of which were created from the merger:
    • trading revenue grew 88% to $1.4 billion
    • Due to unprecedented market volatility and Covid-19 lockdowns creating a unique opportunity for individual investors, the company also saw a record number of daily average trades during the quarter at 5.8 million. 
    • share prices up about one percent today, closing at $59.23
  • But look at this: NFLX!
    • shares absolutely soared: up $3.79 before the close but after the close, after the report, shares surged over 12%, gaining almost $62, trading at $563.50 in after-hours trading;
    • Netflix added 8.5 million user in 4Q20, blowing away estimates (can anyone guess why? locked up at home and "no one" watching sports)
    • revenue: $6.64 billion vs $6.63 billion expected;
    • EPS: $1.19 vs $1.36 expected
    • global paid subscriber additions: 8.51 million vs 6.02 million expected
    • added 37 million paid memberships in 2020 and achieved $25 billion in annual revenue, a 24% increase y/y

Despite the NFLX surge in share price when I look at the whole story among the three above (BAC, SCHW, and NFLX) I am most impressed with SCHW.


The headline may be correct; one can always pick starting points and ending points when following the market, but the story itself is full of malarkey as the new president is fond of saying. Be that as it may, it's not how you start a race, it's how you finish it, so let's see how things are going four years from now. If the market shows 10% growth per annum over the next four years and "everyone" is pleased how the country is doing then we'll call it a success story. Until then, the jury is out. 

Having said that, I'm lovin' it and thrilled to see the writer appreciate free market capitalism and a surging US economy. I had not expected that. LOL.

La Vaca Muerta Esta Muerta -- January 19, 2021

Link here.  

I couldn't resist. Three months ago I knew no Spanish. I'm now taking Spanish with Sophia on Duolingo. 



In response to the linked post above, a reader wrote:

Although I now seldom keep up with the goings on in the Argentinian shale, a few years back I followed it very closely.

Ultra summary ... a productive area the size of North Dakota and South Dakota combined, estimated to contain recoverable oil more than twice the Bakken/Three Forks (>16 Billion bbl), Marcellus-sized recoverable gas.
 Long history of conventional hydrocarbon production ...  ~100 years.

Essentially, the components exist for a multi generational development by which virtually all Argentinians would benefit.

The production profiles of the 2017 gas wells exceeded the Ohio Utica wells which were the best American gas wells at that time.

Tragically, in an orgy of "what's in it for me?" atmosphere, players ranging from national and local governments, labor unions, powerful, near-oligarchal agrarian interests all conspired to hobble this burgeoning unconventional industry.

The high integrity Argentinian industry operatives never stood a chance.

Foreign unconventional players - this includes the WIDE expanse of American Oil Field Services companies - will probably shun this region for decades as the risk is simply too high.

Somewhat similar circumstances have hobbled the Sichuan Basin development in China, arguably the world's largest shale gas resource.

If the "Story" of the Shale Revolution is ever adequately recounted, the political machinations of players worldwide should rank as at LEAST in importance as the gritty, remamarkable tenacity and incredible technological advances embraced by American companies.

At the end of the day, the capitalist, free enterprise system - so powerfully displayed by North Dakota decision makers - has provided the world with abundant energy resources for decades  to come.
I replied with the following, not-ready-for-prime-time with minimal editing:
A long time ago, when I first started blogging about the Bakken, I said that "the Bakken" was made up of three components:
a) the geography, the geology, the science;
b) the relationship between mineral owners, land owners, the industry;
c) the political arena, particularly local politics, and the regulators;

One needed all three.

1. It goes without saying that the oil had to be there and it had to be recoverable. The operators did a great job cracking the fracking component.

2. Fortunately, the land owners -- who probably had it the toughest -- agreed to let the industry do what was needed -- build roads, build pipelines, use a huge amount of fresh water, work with industry to dispose of the produced water, etc. One of the largest obstacles was the "DAPL protest" and that was mostly facilitated by outside agitators. Had that been the "norm" in North Dakota, the Bakken revolution would not have occurred.

3. And finally, the politicians and regulators had to work with the industry -- regulations on flaring, taxes, etc., had to be reasonable. 
I find it astonishing that from Mexico, to Venezuela, to Argentina, it seems, the politicians simply can't get it right. I don't know enough about Ecuador but it's possible the oil industry did not treat Ecuador fairly. I don't know. Brazil seems to have come the closest but the tourist industry -- and I don't blame that industry -- is very concerned about their shores. But again, it seems there's a lot of offshore drilling and states like Florida and Texas and California have adjusted.

But, Argentina losing the Vaca Muerta is truly astonishing. I didn't follow it closely but for as "big" as it was said to be, one never heard any really good stories coming out of Argentina over the years. 

The EIA "Dashboards" For January, 2021

EIA dashboards:

For the December, 2020, "dashboards," see this post

These are the new "dashboards," released today.

The EIA Monthly Petroleum Drilling Productivity Report -- The "Dashboards" -- January, 2021, Data

From a reader who follows this much more closely than I do and understands it better than both Art Berman and me, had this to say:  base production in North Dakota has fully recovered after a significant reduction (as in managing assets). Link here (note, a PDF will download):

See this post: http://themilliondollarway.blogspot.com/2021/01/rigs-ducs-and-managing-assets-bakken.html.

The same reader also made a comment at the most recent site regarding the Art Berman article addressing the same subject:

So today's report indicated DUCs were down by 145 to 7,298....902 of those were in Appalachia or the Haynesville, so most of the rest were oil wells...
But here's the kicker: there were 518 completions in December; 118 gas and 400 oil...so that article's benchmark to hold oil production steady is already being met...

So, "Op-Ed  Or Fact" is already a moot question... 

EIA dashboards:

For the December, 2020, "dashboards," see this post.

This was the December, 2020, dashboard for the Bakken:

Rigs, DUCs, and Managing Assets

This is the most current "dashboard" for the Bakken.  I will post the Permian and Eagle Ford dashboards later and at a stand-alone post. 

I'm traveling; and,  limited resources (battery and time).

The EIA monthly drilling productivity report for the Bakken:

It should be noted that February is the worst month for drilling and fracking in the Bakken. Actually, it's the worst month for doing anything in the Bakken, although First Lutheran Church hosts its annual Lutefisk dinner every February. The church will probably do it differently this year but my hunch is that lutefisk pretty much neutralizes "cold" viruses.

Traveling -- Blogging Will Be Delayed -- 6:20 p.m. CT -- January 19, 2021

 En route from Portland, OR, to Dallas, TX. Will eventually get caught up.

No New Permits; One Permit Renewed -- January 19, 2021

The day following a holiday: not much to report from Bismarck, ND.

Active rigs:

Active Rigs1256685837

No new permits.

Only one permit renewed:

  • Ballard Petroleum Holdings, LLC: a Borstad permit in Bottineau county.

Notes From All Over -- The Market Edition -- Early Afternoon Trading -- January 19, 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 market:

  • legacy industries:
    • value (JNJ): 
      • JNJ: up $2.07; up 1.28%
    • growth (QDEL)
      • QDEL: down $2.49; down 1.22%
  • millennial industries:
    • hyper-growth (AMZN)
      • AMZN: up $36; up 1.2%
    • ludicrous (TSLA)
      • TSLA: up $14; up 1.7%
    • beyond ludicrous (Bitcoin)
  • Pipelines:
    • KMI: up 11 cents; up 0.7%
    • ENB: down 8 cents; down 0.24%
    • EPD: up 44 cents; up almost 2%
    • OKE: flat
  • Tech:
    • AAPL: up 80 cents; up 0.6%
    • GOOG: up $68; up 4%
  • Oil:
    • COP: up 77 cents; up 1.75%
    • CVX: up $2.59; up 2.8%
    • XOM: up $1.15; up 2.4%
  • Utilities:
    • SRE: at $122, flat;
    • D: down $1; down 1.4%
    • MDU: at $27.85, flat
    • BKH: at $61.43, down 54 cents; down 0.87%
  • Misc:
    • BRK-B: at $236, up $2.53, up 1%

Pipelines: one would think that if the Keystone XL is canceled (almost a given), all investors will benefit. Kind of funny how that works out. Warren Buffet will certainly be happy. LOL.

Coal -- For The Archives -- January 19, 2021

For the archives. I've pretty much lost interest in this story. As one individual wrote: "This train left the station 35 years ago." Those thinking that China and India (and many other countries) will give up coal aren't watching the same movie as the rest of us.

Link here.

For The Grandchildren -- Nothing About The Bakken -- The Nursing Home In The Bakken -- January 19, 2021

From The Bismarck Tribune: legislative bill addresses visitation at North Dakota nursing homes. It varies from nursing home to nursing home but bottom line is that the elderly have been pretty much cut off from the outside world due to Covid-19. A ND legislator has introduced a bill to turn this around:

At the 2021 Legislature, Sen. Kristin Roers, R-Fargo, has introduced Senate Bill 2145 which would allow residents to assign “designated caregivers.” If passed, these caregivers would be able to freely visit the resident to offer physical, spiritual or emotional support. Administrators said their residents need this support.

I would not have posted this except for one thing. This is from The Bismarck Tribune. The story concerns all nursing homes in North Dakota but the lede goes to the "Bethel Lutheran Home" -- in quotes because the full name is much longer -- but "we" all still call it the "Bethel Lutheran Home."

That's the home my dad helped build decades ago, the home to which he donated a lot of money over the years, the home he said he would never move into, and the home which was his last home. 

For the "Bethel Lutheran Home" to get the lede in this all-state article speaks volumes about the quality of this home. It really is quite amazing. My dad loved it. He might have lived there a decade; I've long forgotten; my sister would know; it doesn't matter.

When I first went to visit him in the "home," he was always eager to go for a drive around Williston, to see what was new. It was during the boom, probably around 2009 that was most amazing, all the activity. When I was in Williston for a week or two, we would go out at least once a day, maybe twice a day.

As the years wore on, however, he had less and less interest in leaving the home. In the last two years he did not want to take a drive around Williston at all. He had no interest in leaving the "home." All his friends were there and that's where he wanted to stay. That spoke volumes about the quality of "Bethel."

Musical History

Several interesting links to follow.

Will You Still Love Me Tomorrow? Carole King and Willie Nelson

Will You Love Me Tomorrow? wiki.

Scepter Records. Wiki.

Florence Greenberg. Wiki.

Obituary. NYT.

And this is how it all began. America. What a great country.

Florence Greenberg (September 16, 1913 – November 2, 1995) was an American record label owner, music executive and a record producer. 
Greenberg was the founder and owner of Tiara Records, Scepter Records, Hob Records, and Wand Records. 
She is most known for her work as a record producer and music executive for several popular singers in the 60s including Dionne Warwick, the Shirelles, Tammi Terrell, Chuck Jackson, B.J. Thomas and many others. 
Greenberg—a former Republican campaign worker—lived as a housewife in Passaic, New Jersey. 
In the mid-1950s she was in her mid-forties with two children, Mary Jane and Stanley, who were both in school, so she had nothing to do at home during the day. 
By 1956, a 43-year-old Greenberg was desperately searching for an escape from the suburban lifestyle that accompanied her being a housewife. 
The rest is history as they say.

YPF Restructure Fails After Argentina Runs Out Of Dollars -- Bloomberg -- January 19, 2021

Bloomberg headline: shale driller stuns bondholders as Argentina runs out of dollars.

Previously posted. Deserves a stand-alone post. Huge story.

  • Argentina shale driller runs out of money; biggest story of the day? YPF; writer at the link seems surprised; I always thought Argentina shale potential was exaggerated; I had forgotten about the nationalization in 2012;

From the article:

In the 99 years since it was founded to pump the oil fields of Patagonia, Argentine energy driller YPF SA has been whipsawed by countless booms and busts. If global oil markets weren’t collapsing, it seemed, then Argentina was mired in a debt crisis that was wreaking havoc on the whole nation’s finances.

Never, though, had the company been pushed into a large-scale default of any kind. Until, it would appear, now. Word of this came in an odd way: Officials at state-run YPF sent a press release in the dead of night laying out a plan to saddle creditors with losses in a debt exchange.

Implicit in its statement was a threat that traders immediately understood -- failure to reach a restructuring deal could lead to a flat-out suspension of debt payments -- and they began frantically unloading the shale driller’s bonds the next morning. Today, some two weeks later, the securities trade as low as 56 cents on the dollar.

Creditors, including BlackRock Inc. and Howard Marks’s Oaktree Capital Group, are gearing up for bare-knuckled negotiations just four months after ironing out a restructuring deal with the government that marked the country’s third sovereign default this century alone.

YPF’s downfall underscores just how hard the pandemic has hammered both the global oil industry and the perennially hobbled Argentine economy. Dollars are now so scarce in Buenos Aires that the central bank refused to let YPF buy the full amount it needed to pay notes coming due in March. That was the immediate cause of the restructuring announcement.

A longer view reveals a steady decline in the company’s finances since the government re-nationalized it in 2012 and forced it to swell payrolls, artificially hold down domestic fuel prices and skimp on investments, leading to four straight years of oil-and-gas output declines.

Keystone XL Doesn't Matter -- Western Canada's Crude Oil Supplies To Reach Record Highs In 2021 -- January 18, 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.

Quote of the day
, from Janet Yellen, paraphrasing: "federal budget must be put on sustainable path ... after this next $10 trillion."

The market:

  • GM jumps almost 10%: GM, Microsoft partnership
  • Rivian: announces $2.65 billion investment round; connections: Ford, Amazon;
  • NFLX: earnings out today after market close;
  • forecast: $1.45/share on revenue of $6.63 billion
  • Schwab (SCHW): forecast -- 70 cents/share on revenue of $4.12 billion; 
  • BofA: forecast 55 cents/share (adjusted) on revenue of $20.51 billion;
  • GS: profit more than doubles, powered by trading;
    • revenue of almost $12 billion was almost 20% more than 2019's fourth-quarter level; 
    • weren't the banks supposed to report lousy earnings in 1Q21? 
    • $12.08/share or more than double its level one year ago
    • shares fall almost $4; down 1.3% in mid-morning trading


Back to the Bakken

Active rigs:

Active Rigs1256685837

One well coming off the confidential list --Tuesday, January 19, 2021: 26 for the month, 26 for the quarter, 26 for the year.

  • 37225, loc/drl, XTO, Kulczyk 43X-17AXB, Alkali Creek, no production data,

RBN Energy: western Canada's crude oil supplies to reach record highs in 2021 (despite no Keystone XL).

Western Canada’s crude oil production, like in many other regions of the world during the spring of 2020, had to pull back sharply in response to the price and demand chaos brought about by COVID-19. By the end of 2020, oil production almost everywhere remained much lower or was being carefully managed to avoid creating another supply glut. In contrast, production in Western Canada has almost fully rebounded, and is being primed to increase to what could be all-time highs this year. With Alberta’s oil sands producers renewing their role as the long-standing driver of oil supply growth and the recent suspension of production limits in the province, the stage is set for us to review the most recent oil supply developments and future growth prospects.