This is spectacular on a 75-inch high definition screen.
I'm disappointed Phil Jackson never did anything like this. Kudos to Bill Walton.
Wednesday, February 17, 2021
Sophia And I Enjoyed This Movie While Waiting Out The Texas Storm -- February 17, 2021
Buffett -- February 17, 2021
This is so incredibly cool. Yesterday, over at "Warren Buffett" I asked this question:
- what was he thinking?
- why did he choose VZ and not T-Mobile or ATT?
- why did he choose CVX from among the seven major international integrated oils? That will be an interesting question to explore.
Today, over at CNN Business: what does Warren Buffett see in Chevron? The lede:
Many investors are increasingly hesitant to hold shares of oil and gas companies as a global energy transition gathers steam.
Not Warren Buffett.What's happening: Buffett's Berkshire Hathaway just disclosed a new stake in Chevron (CVX), the second largest oil firm in the United States.
The $4.1 billion investment could have been spearheaded by Berkshire investment managers Ted Weschler and Todd Combs. But Buffett still runs the show, and it's a sign that the world's most famous investor sees long-term value in a sector that's taking plenty of heat.
Chevron shares plunged to their lowest level since 2006 when the pandemic destroyed oil prices last March, and they've failed to fully recover. The company posted a net loss of $5.5 billion for 2020, and its stock is now trading at $93.13, 15% lower than one year ago.
I think Warren still drives himself to work. If not, he has a driver that drives him but he's on the road every day. He sees things others are missing.
European oil majors have been racing to jump on the bandwagon before it's too late. Last week, Shell (RDSA) announced that its oil production has peaked and will now fall every year as it weans itself off fossil fuels. Meanwhile, Wall Street is raising its climate standards.
On Wednesday, BlackRock — the world's biggest asset manager — told companies that said it would seek to remove directors of companies that don't provide "a credible plan to transition its business model to a low-carbon economy."
Chevron is not moving as quickly as some of its rivals. The company continues to expand its oil footprint, cutting deals like its $5 billion purchase of Noble Energy last year.
It has not made major investments in solar and wind beyond supporting its own power needs — and CEO Michael Wirth recently indicated to my CNN Business colleague Matt Egan that is unlikely to change.
That means a bet on Chevron is a bet that oil demand will fully recover from Covid-19 and remain elevated for decades to come, despite growing public pressure. That's possible, but no longer seen as a given.
I'm 1,000% in Buffett's camp. The EVs I see coming into production are luxury sedans.
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They Had To Catch A Plane
Random Notes On A Wednesday Night -- February 17, 2021
Wow, I'm in a great mood. It appears Texas has survived the worst. One more night, one more day and it should be all behind us. Two weeks from now the whole thing will be forgotten and a month from now it will all be back to normal.
Be that as it may, I'm absolutely impressed how great folks are when these things happen.
So, enough of that.
Sherwin Williams announced an increase in its quarterly dividend; up from $1.34 to $1.65. Shares jump 2%. Unless Tim Cook really doesn't care about the share price of AAPL, he needs to do something about that paltry AAPL dividend. Someone said yesterday that CLR's chart wasn't very encouraging; one could say the same thing AAPL. Watching paint dry. LOL. No pun intended.
I wonder how many Americans would test positive for Covid-19 if tested five times a week, week in, week out?
The biggest problem for McDonald's with the Covid-19 lockdowns: not much impulse buying.
I'm staying one more night in the hotel only because I can. Peace and quiet. And watching the Australian Open. What more do I need? Later: wow, Osaka schooled Serena Williams.
I don't know how many times I've said this on the blog but I'll say it again: this whole EV thing -- I don't think folks have really thought this though.
I'm glad we had the "freeze" to wake folks up.
Two of the most interesting graphics I have ever seen in fourteen years of blogging:
I see futures are negative. That's okay: the Dow closed at another all-time high.
Biggest story developing: the rift between Biden and Prince MBS. In the big scheme of things this should have happened decades ago. But good, bad, or indifferent, this will be interesting to watch. Get out the popcorn.
I saw the headline, didn't read the story, but apparently Biden was unaware that "the vaccine" had been approved and distributed and injected well before he was president. I can understand that. There's a lot of things for a president to keep track of. Or maybe he's just tired of the whole thing. LOL. I certainly am. I'm no longer paying attention to the pandemic but will post vaccination stats on Tuesdays and Fridays.
Operating styles: it appears Trump operated as a very-hands-on CEO; Biden seems to be operating as an executive chairman. He has breakfast with the First Lady, Doctor Jill; makes a few speeches; takes a few phone calls; but most importantly, ignores swarthy, bearded men wearing ghutras.
But the big news for me is "damn the torpedoes, full speed ahead" attitude of Harold Hamm and Continental Resources. I agree with the CEO: we'll talk about a dividend, but it's not gonna happen any time soon. So many things could be said. I'm excited. This should be fun to watch. The amount of time given to the Long Creek project in the Q&A portion of the conference call was most interesting. This is a huge project: 56 wells, two rigs, 20%, 50%, 30% over three years. Let's see 20% of 56 = 11 wells. That would be two pads, two months. Then 28 in 2022; and, finally the last 17 in 2023.
And looking at the recent permitting by CLR in North Dakota suggests this is not the last huge such project for Harold Hamm, et al. I can think of at least two more such projects.
By the way, after two score of new permits, today the only operator with new permits reported in North Dakota: CLR.
The Powder Basin acquisition is most interesting. It was nice to see the history of Samson Resources. I wouldn't be a bit surprised to these "96 federal permits in-hand" to be "pulled" by the Biden administration for further review.
Natural gas: $3.30.
CLR -- 4Q20 --Transcript -- Q & A -- SeekingAlpha
Other links before we get to the transcript:
Link here to the transcript.
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.
First, Q&A:
- further bolt-ons? Not targeting anything currently.
- monetization of the water "division? Not done simply because it made more sense to keep it;
- current CAPEX based on $52 oil; would you move into 2022 strat plan if WTI appreciates significantly more? Probably not; use extra cash to pay off debt; bringing the dividend back;
- oil / gas mix? Mentions the Long Creek project -- a big project we've got up in Bakken. And that's a more long life type of project from the development side of things. And you'll see a lot of the production coming on in '22 from the '21 CapEx spend; 56 wells; 85% interest in the projects; two rigs committed to this one project; 20% of the wells will be brought on in 2021; 50% in 2022; and 30% in 2023; so it's a big, big project; a lot of logistics being orchestrated there, but it's going to be extremely efficient operation, given the concentrated position that we have and the plans we have to handle all the water, oil, gas, all it takes a while for all this oil to get on when you have these projects that are at this scale; there is also some of the best rock in the basin; great to get back to drilling this one;
- dividend question again? CRL focused on debt first, before dividend;
- Powder River, what did your competitors not see? CLR already familiar with this geology;
- sustainability? before the Powder River acquisitioin, CLR had enough inventory to sustain a 5% compounded annual growth for the next ten years; inventory not an issue; CLR's only problem: deciding at what pace to grow;
- permits in Powder River Basin? reiterates, 96 permits in hand, federal permits;
Production:
- delivered better-than-expected production;
- captured 98.3% of produced gas
- guidance one year ago: 155,000 to 165,000 bbls per day; produced 160,500
- guidance one year ago: 800 to 820 million cubic feet per day; in fact, produced 837.5 million cfpd
Takeaway
- DAPL: only 3,500 bopd on DAPL contracted
- if DAPL is shut down, corporate-wide differentials would see an impact of $1 to $2 a bbl
Financials:
- free cash flow, 2020: $275 million (compare that to United Airlines)
- remember: crude oil went negative during 2020
- huge impact of Covid-19
- exceeded free cash flow guidance for full year 2020
- does anyone notice how often they talk about free cash flow, just saying
- fifth straight year of free cash flow
- guidance a year ago: $200 million;
- in fact, 40% better: $275 million
- all in wells were reduced by 13% in the Bakken; 6% in Oklahoma
- guidance: CAPEX at $1.2; in fact, came in at $1.16 billion
- production expense: $3.27 vs guidance of $3.50 to $3.75
Guidance:
- projecting sixth consecutive year of positive cash flow
- projecting $1 billion FCT with $52 WTI
- targeting $1 billion of debt reduction to about $4.5 billion at end of 2021
- ultimate long-term total debt target is $2 billion to $3 billion
- expect to deliver 3% to 4% total production growth in 2021
Powder River Basin:
- 130,000 net acres and approx 9,000 boepd; 80% oil
- multiple stacked reservoirs
- adds over 400 million boe of net un-risked resource potential to CLR's portfolio
- basin is in early stage of development;
Drilling guidance:
- $1.1 billion for drilling and completion;
- Bakken: 60%
- Oklahoma: 35%
- Powder River Basin: 5%
- eleven rigs
- Bakken: 5 - 6
- Oklahoma: 4
- Powder River Basin: 1 - 2
- goal
- complete 139 net operated and 12 net non-operated wells in 2021; exit the year with 135 wells in progress
Miscellaneous:
- mentioned American Gulf Coast Select (AGCS or AGS)
- phase 1 of AGS completed last year, establishing the benchmark
- phase 2: established a Houston-based area centric delivery point for Gulf Coast bbls
The DAPL:
Our strategic marketing effort continues to deliver positive momentum in 2021. To date, approximately 360 million cubic feet of our 2021 natural gas is hedged with the midpoint of swaps and collars at about $2.97. With respect to oil, an additional 10,000 barrels per day of firm takeaway capacity has been added from the Bakken to Cushing, with no dilution of our differentials under any DAPL scenario.
Even though, we only have about 3,500 barrels a day of firm transportation on DAPL, it is a critical piece of American energy infrastructure, supported by numerous states that has aided in our nation's energy independence and security. The line has been operating safely for the last four years, and once fully adjudicated, we expect DAPL to be a long-term transportation option out of the basin, but we have prepared for multiple scenarios.
If, in fact, it does shut down, we'd expect our corporate-wide differentials to be adversely impacted by $1 to $2 a barrel. If DAPL does not shut down, we'd expect our differentials to be on the more favorable side of our guidance. Lastly, we are committed to our strong ESG stewardship and will publish 2020 ESG report around midyear 2021.
WTI Goes Over $61; Four New Permits -- February 17, 2021
Dow: another record close.
Walmsrt: earnings on tap for tomorrow. WMT had a nice day today. Up over 1%.
DVN: up 4% today.
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.
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Back to the Bakken
Active rigs:
| $61.72 | 2/17/2021 | 02/17/2020 | 02/17/2019 | 02/17/2018 | 02/17/2017 |
|---|---|---|---|---|---|
| Active Rigs | 15 | 56 | 64 | 56 | 40 |
Four new permits, #38153 - #38156, inclusive:
- Operator: CLR
- Field: Chimney Butte (Dunn)
- Comments:
- CLR has permits for two Candee wells and two Kukla wells;
- 38153, conf, CLR, Candee 13-9HS, Chimney Butte, SESE 09-146-95W, 975' FSL 1143' FEL,
- 38154, conf, CLR, Candee 12-9HS1, Chimney Butte, SESE 09-146-95W, 975' FSL 1188' FEL,
- 38155, conf, CLR, Kukla 11-16HSL, Chimney Butte, SESE 09-146-95W, 975' FSL 1233' FEL,
- 38156, conf, CLR, Kukla 10-16HSL1, Chimney Butte, SESE 09-146-95W, 975' FSL 1278 FEL,
Three permits renewed:
- NP Resource (2): two Agate permits in Golden Valley;
- Resource Energy Can-AM: Adeline permit in Divide County
Producers abandoned: TNTC -- old stripper wells across western North Dakota; all very old wells;
Warren Buffett
Locator: 10010BUFFFETT.
Links
Portfolio watch: link here.
A timeline: link here.
Updates
April 4, 2024: closing the loop on Warren Buffett.
December 13, 2023: can't sell his HP position fast enough. Quietly began selling in early 2023; now pretty much completely out of that HP position.
March 4, 2023: UNP vs BNSF.
March 4, 2023: a buffet of links.
March 2, 2023: Berkshire Hathaway's cash horde.
February 28, 2023: annual letter a disappointment.
February 27, 2023: New England Asset Management.
February 25, 2023: 2022 results.
February 15, 2023: Apple and Buffett.
February 14, 2023: oil and Buffett.
February 14, 2023: TSM and Buffett (later sold it). Includes his equity portfolio.
January 13, 2023: Buffett is full of crap.
January 8, 2023: buybacks.
August 15, 2022: 2Q22, update here.
May 2, 2022: 1Q22 update here.
May 1, 2022: Buffett -- CVX.
March 17, 2022: Buffett taking huge position in oil, notably CVX and OXY.
March 13, 2022: Buffett is "in the money." An OXY update.
January 22, 2022: I remember a year ago, all the grief Warren Buffett received because he was not buying technology .... or cryptocurrency.
March 11, 2021: idle thoughts.
March 1, 2021: Scorecard. I was right the first time. One of the worst graphics ever for those still arguing that BRK is a great investment.
- BRK has been "awful" for the past ten years, if not longer;
- AAPL saved "Berkshire Hathaway"
February 28, 2021: I was wrong.
February 27, 2021: impressed. Not impressed.
February 17, 2021: more on Buffett initiating a position in Chevron.
August 16, 2016: Buffett, BNSF, apple, the iCloud, and all that jazz.
Original Post
February 17, 2021
Warren Buffett: there are only a few things that fascinate me right now, e.g. Apple, semiconductors, Amazon. The list changes from time to time, but a pretty comprehensive list is over at the "Investors" page, tabbed at the top of the blog.
I'll have to add Warren Buffett to that list. That was a huge
oversight. I don't have time or the interest to read his SEC filings so I
am at the mercy of the media reports. Some thoughts:
- timing?
- his "13F filings" are purposely delayed, so by the time we see them, things have changed
- we don't know exactly when he bought something; and we certainly don't know when he started looking;
- he could have been following CVX and/or VZ for years before finally "pulling the trigger"
- what was he thinking?
- why did he choose VZ and not T-Mobile or ATT?
- why did he choose CVX from among the seven major international integrated oils? That will be an interesting question to explore.
- value vs growth?
- wow,
this is a story in itself; I think if one were to ask, most would
consider Buffett a value investor; not a growth investor and not a
trader;
- did anyone note that both VZ and CVX pay hefty dividends? almost 5% for VZ; and, almost 6% for CVX (and perhaps more, depending when he actually bought them)
- back in October, CVX was trading at $66; today, it is trading above $90; the dividend has remained the same; you can do the math ($5.16 / $66 = 7.8%)
- VZ has been in a very narrow trading range for the past six months
- why would he "sell" AAPL?
- I think he would have trimmed his holdings regardless, but had AAPL paid a few special dividends along the way or raised its quarterly dividend, Buffett might have stuck around; but indications are Tim Cook as other ideas;
- expensive foray into EVs; Buffett likes wide moats; it is obvious there are no moats at all when it comes to EVs;
- connecting the dots:
- did you all know that Verizon owns Yahoo!Finance? Actually, Verizon owns all of Yahoo!
- is Google under scrutiny around the world? Does Apple have an interesting relationship with Google? Is there a special relationship between Warren Buffett and Tim Cook? This is not rocket science; one can connect the dots; I'm not suggesting anything will happen, just suggesting things that could happen.
- gold?
- what was that all about?
Notes From All Over -- Midday Edition -- February 17, 2021
Future of banking: your iPhone.
Agree completely. In addition, "banking" will be re-defined. For various reasons I still maintain two checking accounts at two regional banks. I keep the accounts for legacy automatic deposits and occasional e-payments. But 99% of all my daily financial activities are done through my discount broker on line. And interestingly enough, even if I have the laptop, the iPad and the iPhone in front of me, it is the iPhone, I use because it is so incredibly simple.
Warren Buffett: there are only a few things that fascinate me, e.g. Apple, semiconductors, Amazon. The list changes from time to time, but a pretty comprehensive list is over at the "Investors" page, tabbed at the top of the blog.
I'll have to add Warren Buffett to that list. That was a huge oversight. I don't have time or the interest to read his SEC filings so I am at the mercy of the media reports. Some thoughts:- timing?
- his "13-F filings" were purposely delayed, so by the time we saw them, things had changed
- we don't know exactly when he bought something; and we certainly don't know when he started looking;
- he could have been following CVX and/or VZ for years before finally "pulling the trigger"
- what was he thinking?
- why did he choose VZ and not T-Mobile or ATT?
- why did he choose CVX from among the seven major international integrated oils? That will be an interesting question to explore.
- value vs growth?
- wow, this is a story in itself; I think if one were to ask, most would consider Buffett a value investor; not a growth investor and not a trader
- did anyone note that both VZ and CVX pay hefty dividends? almost 5% for VZ; and, almost 6% for CVX (and perhaps more, depending when he actually bought CVX)
- back in October, CVX was trading at $66; today, it is trading above $90; the dividend has remained the same; you can do the math ($5.16 / $66 = 7.8%)
- VZ has been in a very narrow trading range for the past six months
- why would he "sell" AAPL?
- I think he would have trimmed his holdings regardless, but had AAPL paid a few special dividends along the way or raised its quarterly dividend, Buffett might have stuck around; but indications are Tim Cook as other ideas;
- s4ees Apple’s expensive foray into EVs; Buffett likes wide moats; it is obvious there are no moats at all when it comes to EVs;
- connecting the dots:
- did you all know that Verizon owns Yahoo!Finance? Actually, Verizon owns all of Yahoo!
- is Google under scrutiny around the world? Does Apple have an interesting relationship with Google? Is there a special relationship between Warren Buffett and Tim Cook? This is not rocket science; one can connect the dots; I'm not suggesting anything will happen, just suggesting things that could happen.
So, enough of this, I will add "Warren Buffett" to the “Investors" page,
A short list of things that no longer interest me:
- the Biden presidency, except to see how long it lasts.
- the Texas deep freeze. I get it.
- the Covid-19 pandemic. I get it. I'll still track it on Tuesdays and Fridays.
- European politics
**********************************
Remote Learning
Here in north Texas, in the DFW area, public schools are closed for the entire week. Whoo-hoo!
Because not all students are remote learners, the teachers cannot assign new homework. Whoo-hoo!
I feel strongly that in-school education is the better route to take, but for a minority of students, remote learning is clearly the better way to go.
As one example: Sophia, a first grader, has access to a virtual library of books. She can search books based on her age and on her DRA level. Even if our public library were open and/or her school library were open, it would in no way be able to compete with her virtual library. When searching for books, fiction or non-fiction, we sort by "age" and by "DRA." The DRA goes from A-1 to Z-80, kindergarten to eighth grade. I do not know what level her mom has her reading nor how she has been assessed by her teachers. Out of curiosity I had her read a book for students age 10 years old (Sophia is six years old) and a DRA of 40 (fourth grade). With the exception of some very big words, she was able to read the book.
Most remarkable, her "virtual library" automatically tracks everything she has read. There is often a quiz at the end of each book which is also tracked. It tracks how long it took her to read a book, etc., etc.
"At school" (either physically or remotely) with her class, the books that are read are at a level well below where Sophia is. Sophia loves having books read to her, and never seems to get bored when read to, but she loves it when she gets the chance to read. That does not happen often in a class of 30 students. But at home with her adult "teacher," she can read as much as she wants, and at the level that stretches her mind.
In addition to reading she has an unlimited library for arithmetic, music, and art. In addition, not part of her public school curriculum, she and I are learning Spanish together on Duolingo. We have not missed one day of Duolingo instruction since we started. I downloaded the app once, and miraculously, the app ended up on all my Apple devices including my iPhone which really surprised me. We have about 147 consecutive days of studying Duolingo.
And in addition to music "at school," she is learning to play the piano using an app.
Rush Limbaugh Dead At Age 70 -- February 17, 2021
Talk radio will never be the same. Whether you liked him or hated him, could take him or leave him, without question he had the best political mind of any talk radio host.
Notes From All Over; Dividend Play, Consider Black Hills Corporation -- Motley Fool -- February 17, 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.
First group:
- 10-Year Treasury: link here. At 1.277%, down slightly.
- DXY: link here. At 90.99, up slightly.
- Silver: link here. At $27.265, down slightly.
- CBOE volatility index: link here. At 22.76, up 6%.
Second group:
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Markets
Markets:
- Dow and S&P down slightly; NASDAQ down 185 points
- profit taking
- money moving from tech to industrial?
Headline: stocks retreat from record highs even after retail sales surge past estimates.
Retail sales rose strongly in January, 2021: link here.
- rose by a seasonally adjusted 5.4% in January from a month earlier
- the increase followed three months of decline during the holiday season
- strongest gain since last June when the economy was in the process of reopening after pandemic-related closures
- recall: $600-a-recipient stimulus checks distributed in early January
- consumer spending is the main driver of the US economy, accounting for more than two-thirds of economic output
Dividend plays:
- Three suggestions from Motley Foot: J&J, Emerson Electric, and Black Hills Corporation.
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ERCOT and ISOs: Texas / New England / New York
I have quit following the New York ISO and the New England ISO.
After this debacle in the Lone Star State, those of us living here can no longer cast stones at New England ISO or New York ISO.
The good news: one less distraction for me.
What happened (and continues to play out) in Texas is beyond embarrassing. It's criminal but two weeks from now it will be forgotten, and a month from now things will be back to normal, with movers and shakers advocating for more wind farms.
Texas Freeze: A Reader Provides Links, Narrative -- February 17, 2021
Note: I've not yet checked the links below. Let me know if any are broken.
From a reader, overnight, edited:
Charging a Tesla in TX hit 900$ according to oilprice.com. 🤯😳🤪😂
Links:
- Texas Freeze Raises Cost Of Charging A Tesla To $900
- The Single Biggest Threat To The Electric Vehicle Boom - IMHO the CEO of Toyota Mr. Akio Toyoda is no lunkhead.
- Texas Winter Storm Highlights The Importance Of Fossil Fuels
Supercycles, two articles:
- $100 Oil: Big Banks Believe A New Oil Supercycle Is Beginning
- Is This Oil Rally The Start Of Something Much Bigger?
Narrative:
I love watching the far left mainstream writing about facts learned with regard to EVs, wind, solar energy now that we've seen the Texas experience.If there are energy shortages in North Dakota it is because the state is on the Western States Power (WSP) grid and cannot control when power is sold to other states. Texas, on the other hand, is on its own with ERCOT, a choice made by the state. They are not allowed to buy energy from other states.
ND State Mineral Lease Sales -- February, 2021
February, 2021, online auction results.
Burke County:
- three parcels
- each parcel 80 acres
- bonus:
- low: $103/acre
- high: $130/acre
McKenzie County:
- three parcels
- each parcel 160 acres
- bonus:
- low $19/acre
- high: $7/acre
Two Wells Coming Off Confidential List -- No Production Data -- February 17, 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.
Fast and furious:
- Covid-19: South Africa rolls out J&J vaccine to healthcare workers; the vaccine has not yet been approved anywhere; link here.
- Buffett: back to oil; bets billion on Chevron. Link here.
- Buffett: buys into E. W. Scripps; trims Apple holdings. Story easily found.
- Buffett: maintains 36.1 million shares DaVita, a 31.7% stake; BRK remains Da Vita's largest shareholder; link here. Boosts stake in Da Vita to 33%; link here.
- Apple: extends lead over Samsung with semiconductor purchases. Link here.
Apple: from the link above --
Apple was easily the largest buyer of semiconductor chips in 2020. Apple spent $53.6 billion and took 11.9% of the global market share, representing 24% growth year-on-year, while Samsung was the second biggest buyer, spending $36.4 billion and taking 8.1% of the market, representing 20.4% growth year-on-year.
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Back to the Bakken
Active rigs:
| $60.35 | 2/17/2021 | 02/17/2020 | 02/17/2019 | 02/17/2018 | 02/17/2017 |
|---|---|---|---|---|---|
| Active Rigs | 15 | 56 | 64 | 56 | 40 |
Wednesday, February 17, 2021: 13 for the month, 46 for the quarter, 46 for the year.
- 37557, loc/NC, CLR, Norway 13-5H, Fancy Buttes, first production, --; t--; cum --;
- 36242, loc/NC, BR, Maverick 1E MBH, Dimmick Lake, first production, --; t--; cum --;
RBN Energy: Extreme cold wreaks havoc with natural gas producers, power generators, and everybody in between.
f you’re reading this, it means you’ve got access to power and internet. Count yourself among the fortunate today. Rolling blackouts and brownouts across the middle of the country and in Texas, have disrupted businesses and lives. It’s been particularly brutal in the Lone Star State. Electricity and natural gas are commodities that are so basic to our way of living that it’s easy to take for granted the efforts designed to make them reliable, available, and affordable. But, boy, does it make things difficult when they don’t show up as anticipated. In today’s blog, we discuss the factors behind the supply disruptions that are wreaking havoc in these commodity markets.
CLR, February, 2021, Corporate Presentation
CLR February, 2021, presentation, link here.
2021 guidance.
- CAPEX: $1.4 billion non-acquisition CAPEX budget
- back of the envelope:
- $1.4 billion / $8 million = 175 new wells
- total production growth y/y: 3 - 4%
- production expense per boe: $3.50
- cash G&A per boe: $1.30
Peer groups
- XEC
- PXD
- FANG
- EOG
- MRO
- DVN
- OVV
2020 Results:
- $275 million in free cash flow
- $1.16 billion CAPEX (compare with $1.4 billion for CY2021
- production:
- 160,500 bopd
- 838 million cfpd
- production expense per boe: $3.27
- cash G&A per boe: $1.20
- gas capture: 98.3%
- debt: $1.5 billion of near-term maturities extended to 2031 with new bond offering
Completed well costs (North Dakota)
- Bakken:
- $690 all-in cost per lateral foot per well in 2002
- 10,000' average lateral length
- $4.9 million D&C per well;
- Southern:
- $1,070 all-in cost per lateral foot per well in 2002
- 8,200' average lateral length
- $7.6 million D&C per well;
Southern step-out unit:
- northwest corner of Stark County; southeast corner of Billings County
- five unit wells outperforming legacy well
- economics exceeding 30% ROR at $50 WTI
- $6.4 million average CWC per well
- Whiting's southern play
- area "owned" by Whiting
- CLR has acres are in this area
CLR Acquisition In The Power River Basin, Wyoming -- February 17, 2021
CLR February, 2021, presentation, link here.
CLR may refer to this as the "Samson deal," or the "Samson acquisition" or the "Samson leasehold."
History of Samson Resources, from the blog's "operators page":
- 2017, January: transfers 130 wells to Resource Energy CAN-AM, LLC
- 2016, August: files new Chapter 11 exit plan;
- 2015: files for bankruptcy; that plan ultimately failed as oil prices continued to plummet
- November, 2014: Samson Resources Bakken assets up for sale? Samson Resources Bakken assets said to be worth less than $500 million
- sells 20,000 acres for $30 million to Magnum Hunter; Divide County, along Canadian border
- sells 120,000 acres in Divide County and northern Williams County to CLR
- previously private, bought by a consortium led by KKR in 2011 (?) for $7.2 billion; Bakken assets worth $650 million (?)
Note the "relationship" of Samson Resources with CLR.
For background by the company go to this site first: undated, but it appears to have been posted late 2019, or early 2020, with strategic overview/plans for calendar year 2020:
- headquartered in Tulsa, OK
- March 1, 2017: Samson Resources emerged from bankruptcy as Samson Resources II, LLC
- 85 new equity investors
- assets in
- East Texas / North Louisiana
- Wyoming: Greater Green River and Powder River basins
- September, 2017:
- the company sold its assets in East Texas/North Louisiana for $525 million
- company paid off existing debt and make a large cash distribution to its sharebholders
- In September, 2019:
- the company sold its assets in the Greater Green River Basin
- declared another special distribution to its sharesholders
- 2020: pure play Powder River Basisn
- 132,000 net acres
- 2,400 state permits
- 10,000 bopd (73% liquid)
Then this site, January 4, 2021:
- to sell all of its Powder River Basin to an undisclosed buyer for $215 million in an all-cash transaction;
- the company exited 2020 producing 8,500 boepd (75% oil) from the Powder River Basin
- the sale is expected to close on/about March 4, 2021
- effective date: January 1, 2021
- following the closing, the company will have divested substantially all of its upstream assets
- the company's only remaining upstream oil and gas assets will consist of approx 24,000 net leasehold acres, 23,000 net mineral acres and 40 non-operated wells, all located in East Texas, Oklahoma and Louisiana which the company anticipates divesting in early 2021
- using proceeds fro that sale, the company will pay off approx $13 million in debt and make a cash distribution to its unitholders
- CEO: Joseph A. Mills
- founded in 1971 by Charles Schusterman
- following the closing of the Powder River Basin sale, the company will begin the process of winding down its affairs and moving toward final dissolution
Now, the February, 2021, CLR corporate presentation, linked above, slide #11:
- straddles Campbell and Converse counties in Wyoming
- net resource potential:
- 400 million boe
- 75% oil
- net acres: 130,000 (80% held-by-production)
- current net production: 9,000 boepd, 80% oil
- federal permits: 96 in-hand (6 rig years)
- purchase price: $215 million
- close: March 4, 2021
- three of the top five wells in the Powder River Basin in the leasehold position
- average IP30: 2,670 boepd (88% oil); 2,670 x 30 days = 80,000 boe per 30-day month
- CLR 2-rig program starting in 2Q21
- initial targets: Shannon, Frontier, and Niobrara
- future targets: Sussex; Mowry, Muddy
- the six formations: 4,800' stacked play
Back-of-the-envelope:
- $215 million / 130,000 net acres = $1600/acre
- one primary target
- two secondary targets
- three future targets, in a stacked play
- last time I checked, May, 2018, 796,000 net acres in the Bakken
- 130,000 / 796,000 = 16%
Monthly Drilled, Completed Wells And DUCs In The Bakken And Permian -- Most Recent Data, January, 2021
A reader provides me the number of wells drilled, completed, and drilled/not completed (DUCs) each month. I've abbreviated the chart. I've only provided the data from the Bakken and the Permian, and I've only included certain months going back to January, 2014.
No conclusions drawn, simply presenting the data.
I've always been impressed with how little the number of t6DUCs really changes over time in the Bakken, running between 700 and 850. Back in December, 2014, there were 732 DUCs in the Bakken. Fast forward to January, 2021, and there were 745 DUCs in the Bakken.
During that same period, from December, 2014, to January, 2021, the number of DUCs in the Permian increased from 1,036 to 3,468.
In the Bakken the number of drilled wells (around 20) and the number of completed wells (around 40) have remained fairly steady.
In the Permian, the number of drilled wells dropped from over 600 in December, 2014, to 187 in January, 2021. Likewise, the number of completed wells in the Permian dropped from 577 in December, 2014, to 225 in January, 2021.
The "187" drilled wells in January, 2021 in the Permian is the most since April, 2020. Likewise, the "225" completed wells in January, 2021, is the most completed since April, 2020.
No conclusions drawn, simply presenting the data.