A Reminder: CLR Is Getting Active In Cedar Coulee -- June 16, 2021

See this link from February 27, 2021. 

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Life Is Just Too Short

And So It Goes -- June 16, 2021

I'm living in north Texas through some of this hot weather and we're doing just fine. In the big scheme of things, this is a minor irritation at best.

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Autonomous Cars

On the way to the swimming pool tonight, Sophia told me -- she brought this up on her own; I have no idea what precipitated the conversation -- Sophia told me there were cars in Montana that you could program to drive to the nearest pizza "place" and pick up a pizza. You just "honked on the horn" and the car drove you there. You “didn't have to do a thing,” she said. 

I asked her if it was a Tesla. She said, "No it was a Volkswagen." 

I asked her how she knew these things. She said she saw it on an advertisement on YouTube. 

She said "they" must want you to buy one.

MRO's Little Owl Pad, The L-M-O-2P Pad

Parent well:

• 18880, 129, MRO, Everett Fisher USA 41-6H, Reunion Bay, t7/10; cum 396K 3/21; off line 4/21;

Newer wells:

• 37774, drl/NC, MRO, Odell USA 41-6H, Reunion Bay, no production data, 
• 37773, drl/NC, MRO, Perry USA 41-6TFH, Reunion Bay, no production data,
  
• 37772, drl/NC, MRO, Little Owl USA 31-6TFH, Reunion Bay, no production data,
  
• 37771, drl/NC, MRO, Plenty Horns USA 31-6H, Reunion Bay, no production data,
• 37770, drl/NC, MRO, Mabel USA US 21-6TFH, Reunion Bay, no production data,

Notes From All Over -- The Evening Edition -- June 16, 2021

"We" either need to improve "auto-correct" in text messages OR some of us need new reading glasses.

My wife was asked by a friend if she could pick up her daughter from an after-school program. My wife read the message to say that her friend's sister had died. 

Pretty sad. 

But really, really wrong.

When my wife offered condolences to her friend, she learned that her friend's sister had not died. 

Her sitter had quit. 

And we move on. 

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"Fed" Analysis

Best "lesson" I learned all day: forecasting inflation is the most difficult task an economist has. It is impossible to predict inflation, and some entities are particularly bad at predicting inflation, e.g., "the Fed." 

Predicting inflation, like predicting the price of oil, is a fool's errand. 

On another note, good, bad, or indifferent, whether you like Jim Cramer or hate him or somewhere in between, Jim Cramer is very, very supportive of Jay Powell. I've been listening to Jim Cramer almost daily for the past month, and on this one, jobs, minimum wages, inflation, perhaps even UBI, etc., Jim Cramer has been consistent and agrees with Jay Powell. "If a little inflation is necessary to help improve the job market, then a little inflation is fine."

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New Federal Holiday

By this time next year, we will have a new federal holiday: Juneteenth, which will only be two weeks or so earlier than another independence day.

Thank you, Texas. 

From wiki:

Originating in Galveston, Texas, it is now celebrated annually on June 19 throughout the United States, with increasing official recognition. 

It is commemorated on the anniversary date of the June 19, 1865, announcement of General Order No. 3 by Union Army general Gordon Granger, proclaiming freedom from slavery in Texas.

President Abraham Lincoln's Emancipation Proclamation of 1862 had officially outlawed slavery in Texas and the other states that had rebelled against the Union almost two and a half years earlier.

 Enforcement of the Proclamation generally relied on the advance of Union troops.

Texas, as the most remote of the slave states had seen an expansion of slavery, and had a low presence of Union troops as the American Civil War ended; thus enforcement there had been slow and inconsistent prior to Granger's announcement.

Although the Emancipation Proclamation declared an end to slavery in the Confederate States, slavery was still legal and practiced in two Union border states – Delaware and Kentucky – until December 6, 1865, when ratification of the Thirteenth Amendment to the Constitution abolished chattel slavery nationwide.

Additionally, Indian Territories that had sided with the Confederacy, namely the Choctaw, were the last to release those enslaved, in 1866.

Celebrations date to 1866, at first involving church-centered community gatherings in Texas.

Five New Permits -- Kraken Is Spacing Wellheads Only 33 Feet Apart -- June 16, 2021

NOG

• acquisition:
• will acquire 2,900 core Permian acres in Reeves, Lea and Eddy counties
• $102.2 million 
• bolt-on acquisition
• center of Reeves County, TX, as well as New Mexico counties of Lea and Eddy 
• EOG, Mewbourned Oil Company, COP, and Colgate Energy are the primary operators of the acquired assets; link here;
  
• back-of-the-envelope: $102.2 million / 2,900 acres = $35,000 / acre 
• in line with past deals by other operators 
• link here

• dilution:
• 5 million shares
• option to add an additional 750,000 shares
• to pay for the Permian acquisition story noted above
• today's closing price, $20 x 5 million shares = $100 millioin
  
• link here;
• later: NOG announces pricing -- $17.50/share. Hmmm.....nice discount.
• 5.75 million x 17.50 = $100.625 million
• after hours, dropped 4.45; dropped 85 cents/share; trading at $18.50 share.
  

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Back to the Bakken

Active rigs:

$72.23	6/16/2021	06/16/2020	06/16/2019	06/16/2018	06/16/2017
Active Rigs	20	13	61	62	57

Six new permits, #38374 - 38378, inclusive:

• Operators: Kraken (4), Eagle Operating, Rampart Energy
  
• Fields: Sanish (Mountrail), Robinson Lake (Mountrail), Foreman Butte (McKenzie), Wildcat;
  
• Comments:
• Rampart's wildcat, Coteau 1, will be sited in SWSW 1-145-99, Mercer County, 555 FSL and 460 FWL; the oil field is also a wildcat; 
• Rampart has about 50 permits in North Dakota; it has been active in North Dakota since 1959; 
• Rampart's previous well in North Dakota, #27081, Craig Allen 10-3H, Stanley oil field; SESW 11-155-91; a Bakken well that was drilled in 2015 and has reported a respectable 228K bbls crude oil cumulative;
  
• Eagle Operating has a permit for a Willy Miranda 7-8 week, to be sided in Foreman Butte, SENE 7-150-102, 2130 FNL 550 FEL:
• Kraken has permits for four KCH Murphy wells, three of them in the Sanish oil field, and a section line well in Robinson Lake;
• the four wells will be sited in lot 3 section 6-153-92
• the four will be sited 405 FNL and between 1903 FNL and 2002 FWL
• note the FWL siting for the four Kraken wells:
• 1903 ... 1936 ... 1969 ... and, 2002 -- the well heads will be spaced 33 feet from the neighboring wellhead; the typical in the Bakken has been fifty feet;

Notes From All Over -- The Mid-Day Edition, Part 3 -- June 16, 2021

Biden's suspension of new oil and gas leases on US land and water: federal judge says "no." This is an old story -- now twenty-four hours old -- I was late posting it simply because Sophia and I were enjoying the pool. Links easily found; one link here. 

Wall Street: workers want to move from NYC to Florida, maybe Texas. Links and stories everywhere. Here's one link: https://www.foxbusiness.com/money/wall-street-workers-want-florida-transfers-as-job-waiting-lists-grow. Not a bit surprising.

EV and "green" infrastructure: can we get to net zero without copper? Link here. 

When I was in middle school / early high school, those little electric slot/race cars were all the rage. There was even a huge race track north of Williston, near the outdoor movie theater. I remember kids (mostly XY humans) taking their cars apart and re-wiring their little electric motors: wiring them tighter and adding more copper, to make their little cars go faster. From Walmart.com, $133.34. Over at Amazon.com, only "used sets" available for $98.90.

It's now the same with EVs, but bigger toys for bigger boys, or bigger X cars for XY humans.

How much copper in those big toys for big boys?  

Remember the Anaconda Copper Mine in Montana? Yeah, that mine.

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The EV Boom Coming Sooner Than Expected

Link here. 

EV sales to surpass those of traditional vehicles by 2033:

• Europe: by 2028
• China: by 2033
• US: by 2036

non-EV sales could plummet to as low as 1 percent of total vehicle sales by 2045
Very little mention of infrastructure.

No mention of copper.

No mention of rare earth metals.

No mention of strip mining.

Notes From All Over -- "The Fed" Edition -- Bloomsday -- June 16, 2021

Updates

Later, 3:57 p.m. CT: Jay Powell is being seen as very, very dovish. He himself said the Fed will be very accommodating until the economy fully recovers, or something to that effect. 

Later, 3:56 p.m. CT: from social medial (and I agree completely) --

This is wildly bullish for stocks. No asset purchase taper. No head in the sand over inflation. Two hikes by the end of 2023? No blood, folks. And won't ever happen anyway. Game on.

Original Post

The fed, prior to Jay Powell's comments:

• prior to the press conference, at least one talking head suggests first rate increase will be in 2023;
• 10-year Treasury: 1.489%
• slow labor market today means slow change in the 10-year Treasury
• talking heads

Fed announcement:

• unanimous with regard to rates
  
• unemployment:
  
• the Fed sees unemployment at 4.5% in 2021
• the Fed see unemployment at 3.85 in 2022
  
• raises 2021 GDP to 7% from 6.5%; 
• seven official see rates rising in 2022 vs 13 officials see rates rising in 2023
  
• two rate hikes in 2023, versus one rate hike (last quarter, 2022?)
• 3 to 5; 1 to 2
• five members expect one rate hike in 2023
  
• two members expect two rate hikes in 2023
  
• significant increase in short-term inflation
  
• no change in rates (0.00 to 0.25%) or assets purchases
• no change in wording regarding asset purchases
• market drops significantly

Santelli reaction:

• 1.521%
• this is crazy
• Dow drops 300 points simply because 10-year Treasury goes to 1.52 after the Fed meeting

Talking head: "pop" in 10-year Treasury.

• cooler heads: yawn

Me? buying opportunity.

Me?

• the 10-year Treasury: the number to watch -- 1.6%;
  
• most economists consider 4% unemployment as full employment

Me?

• if this "scared" the market this much -- on an incredibly great Fed report -- it just tells me a lot of folks need to get a life.
  

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. 

Taper tantrum: self-fulfilling prophecy. This is really hilarious. All week talking heads have been talking about and writing about a "taper tantrum." The Fed didn't change a thing but yet the media doesn't want to change the "taper tantrum" story -- they love the alliteration and the "shock" headlines. Watch for "taper tantrum" to become the meme for the next week.

Powell: more concerned about jobs than about inflation.

Me? the employment issue will go away by Christmas, 2021.

The Fed, posted during Jay Powell's comments:

• reassuring;
• Covid-19 vaccination rates have slowed;
• will provide advance notice when asset purchases change
  
• questions via Zoom 
• unemployment barriers
• on path to a very, very strong labor market (I strongly agree)
• significant number of folks have retired
• overall a very, very strong labor market
• an interesting wrinkle I had not heard before: 
• the nature of many jobs has changed
• companies did not stop innovating during the 2020 lockdown; the smart companies used the one-year opportunity to their advantage
• how many job openings are in the "delivery business" (DoorDash, HubGrub, etc); how many folks were employed in such jobs prior to the pandemic? 
• how many jobs related to robots have come open?
• how many folks are qualified to work in this sector, per-lockdown vs post-lockdown? 
• you won't get a laid off flight attendant become a jet mechanic;
• you won't get a laid off waiter become a GM battery technician
  

Notes From All Over -- Mid-Day Edition, Part 2 -- Bloomsday -- June 16, 2021

GM: with regard to my earlier note regarding GM, a reader wrote:

We use GM pickups for our shop truck. Plain, simple 2 door , 8 ft bed.

Found out today GM has stopped producing them.

They won’t say it’s permanent. They want to build and sell only high-end (high-margin) trucks since there is a “shortage” of components. Makes sense to maximize profit but we are not buying Denalis to go get parts.

My reply:

One gets the impression that GM is using high-margin vehicle sales (like Hummers) to pay for their pivot to EVs, particularly batteries. 

Canadian pipelines: this unsolicited note (with minor editing) from a reader --

The Trans Mountain expansion will increase the capacity of the pipeline from 300,000 barrels per day to 890,000 bpd, nearly tripling it.

The driving force behind it is that Alaska oil is running out and production is only 1/4 of what it was at its peak (Biden is going to make it worse by banning Alaska oil leases), and California oil is doing a similar thing because of state policies. 

California used to be the 2nd largest producing state, and now it is about 6th.

This leaves refineries in Washington state and California dependent on expensive imported oil from OPEC+ since the only pipeline bringing cheap domestic oil from the interior of North America to the West Coast is the Trans Mountain through BC. 

The US has no similar pipelines. New shale oil from North Dakota and Texas has to go to refineries in Washington and California by railroad.

The US West Coast is cut off from the big shale oil producing fields and refineries in Texas and other states, for those Californians who are wondering why their gasoline is so expensive. Don’t blame the domestic oil companies, blame OPEC and the California government’s environmental policies for the cost of fuel there.

The Trans Mountain also is a mixed crude oil and refined products pipeline that brings 70–80% of the gasoline, diesel fuel, and jet fuel to BC from Alberta’s big refineries, since BC basically has no oil refineries left except for a little teakettle thing in Vancouver that produces only premium gasoline and jet fuel. And people in BC are wondering why their fuel is even more expensive than California.

Note: I don't know about protocol for sharing this, but I've had a hard time getting info. about Trans Mountain. I was of the mind that Canada wouldn't do it unless they could export to Asia via a port in BC, now I'm doubtful.

My thoughts:

• in almost complete agreement with the reader's analysis
• California oil: holds my interest as much as the Libyan oil story, in other words, not at all; when New Mexico and North are running neck and neck at #2 and #3, for California to be #6 tells me all I need to know about the oil industry in California; good, bad, or indifferent, the state has learned to live with this fact;
• Biden's action on Alaskan leases will have no short-term impact on gasoline prices in California;
• gasoline prices in California are determined by policies set in place over the past decades; nothing will change this overnight;
• no mention of Canadian oil coming to the US east of California but it's very, very clear, that's the really big story -- and "Canada" must like what they see;

Notes From All Over -- Mid-Day Edition, Part 1 -- Bloomsday -- June 16, 2021

Didn't go well: Putin-Biden meeting was shorter than the White House expected (or at least announced). No chemistry. Biden will, of course, put positive spin on this. Prepared statement. The big question: will President Biden take questions, and if he does, how many? Press conference has just begun (12:25 p.m. CT; it must be about 7:25 p.m. local time -- Geneva time).

• I was wrong. the meeting went long, just shorter than the White House scheduled. Yawn. Media trying to make its own story;
• Biden did very, very, very well, in the post-"summit" press conference
  
• I quit listening to presidential speeches and press conferences after Ronald Reagan, but started again with Biden;
• I am pleasantly surprised; one may disagree with Biden's policies, but he held his own with the press very, very well;
• he showed his feisty nature without going ballistic at the end of the press conference;
• if folks can read between the lines, one now knows how the US will respond to ransomware attacks in the future

Ten-year Treasury: 1.485%. Prior to the Fed's Jay Powell's press conference 48 minutes from now.

Shell: Chevron, ConocoPhillips -- among most likely candidates. Link here.

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.

Oil:

• WTI: up slightly; trading at $72.20
• obviously analysts' forecast in line with actual data (see below)
  
• Brent: about a $2 premium to WTI; trading at $74.39

Weekly EIA petroleum report, link here.

• US crude oil in storage decreased by a whopping 7.4 million bbls;
• US crude oil in storage now stands at 466.7 million bbls; 5% below the fat-five-year average;
• US refiners operating at 92.6% of their operable capacity;
• US gasoline production increased last week, averaging just under 10 million bpd (9.9)
• distillate fuel inventories decreased by 1.0 million bbls; inventories now 6% below five-year average;
• US crude oil imports, at 6.3 million bpd, are about 6% below last year's numbers
• jet fuel product was up 87% compared with same period one year ago

US crude oil production:

• North Dakota likely to drop to #3 among the lower 48;
• New Mexico likely to move up to #2;
• both states running neck-and-neck;
• North Dakota "doing it" with 16 rigs vs 72 rigs for New Mexico

The big story: Alaska. The "Alaska" story has been THE upstream North American story since January 20, 2021; derivative story lines:

• Canada -- competes directly with Alaska;
• Saudi Arabia -- some overlap with Alaska;
• Latin America -- no overlap with Alaska
• those suggesting Biden's ban on drilling in "the refuge" was a huge story are either not following the story; misunderstanding the story; or, have an agenda (talking their own book)

Pipelines: 

The "Alaska" story has been THE upstream North American story since January 20, 2021, but the "overall North American energy story" for past several years has been the pipeline story. That remains true today and will remain true for the next four years.

The international energy story: 

• since January 20, 2021, the international energy story has been ESG with certain oil companies (particularly foreign oil companies) pivoting to renewable energy;
• the next story: the previous story was a head fake; some of these foreign oil companies are now backtracking;
• exhibit A: Equinor (previously reported)
  

Notes From All Over -- Morning Edition -- June 16, 2021

Bloomsday, June 16: link here. 

Blogging will be interrupted this morning due to scheduled events this morning. I will be back after 1:00 p.m.

EIA weekly petroleum report: link here. 

• US crude oil in storage decreased by a whopping 7.4 million bbls;
• US crude oil in storage now stands at 466.7 million bbls; 5% below the fat-five-year average;
• US refiners operating at 92.6% of their operable capacity;
• US gasoline production increased last week, averaging just under 10 million bpd (9.9)
• distillate fuel inventories decreased by 1.0 million bbls; inventories now 6% below five-year average;
• US crude oil imports, at 6.3 million bpd, are about 6% below last year's numbers
• jet fuel product was up 87% compared with same period one year ago

Dashboards: reminder -- the June dashboards have been released --

• EIA pdf, Bakken: https://www.eia.gov/petroleum/drilling/pdf/bakken.pdf
• EIA, pdf, Permian: https://www.eia.gov/petroleum/drilling/pdf/permian.pdf
• EIA, pdf, Eagle Ford: https://www.eia.gov/petroleum/drilling/pdf/eagleford.pdf

Aluminum siding: the most interesting story I'm not seeing -- EV home charging installation companies. Until I see huge move in this direction, I'm still not convinced EVs are being widely accepted. People want to charge their EVs at home, overnight. If so, folks should be clamoring for installation of EV charging stations in their garages. Maybe that's happening and I'm simply missing the story. 

Two Wells Being Reported Today; Both DUCs; Active Rigs Unchanged; Discipline In The Bakken; Keystone XL By Another Name? -- June 16, 2021

GM:

• still no dividend;
• to boost spending on electric vehicles by 30%; link here;
• on news, GM is up almost 2% in pre-market trading: up $1.14; trading pre-market at $62
• P/E: 9.82
• trending near 52-week high
  

Chip shortage: more and more talk that the semi shortage is being managed; some suggest there is more to this story than we are being told. If GM's CEO's optimism is well placed it suggests GM has its act together with regard to chips. Ford? I don't know. 

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.

Clothing sales are soaring. Link here. Intuitively that makes sense. Was anyone buying clothes in 2020?

Missed this one: BBVA USA is now part of PNC. 

Keystone XL? See RBN Energy blog today. Linked below. 

Brent: $74.33

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Back to the Bakken

Active rigs:

$72.31	6/16/2021	06/16/2020	06/16/2019	06/16/2018	06/16/2017
Active Rigs	19	13	61	62	57

Two wells coming off confidential list -- Wednesday, June 16, 2021: 66 for the month, 90 for the quarter, 168 for the year:

• 37774, drl/NC, MRO, Odell USA 41-6H, Reunion Bay, no production data,
• 37396, drl/NC, CLR, Rodney 11-29H1, Cedar Coulee, no production data; see graphics at this post, from February 27, 2021;

RBN Energy: St James hub preps to receive Canadian crude via southbound Capline, part 2. Archived.

It’s been a mantra in the energy industry for a few years now: more Canadian and Lower-48 crude oil needs to move to the Gulf Coast, with its bounty of refineries and export docks. And that’s been happening, thanks to a slew of new and expanded pipelines and new tankage.

Similarly, new export capacity has been developed, and a number of refineries in Texas and Louisiana revised their crude slates to take advantage of what looked like an ever-rising supply of North American crude.

Yet another piece of the puzzle will slide into place in January 2022, when crude oil — most of it heavy Western Canadian — will start flowing south on the newly reversed, large-bore Capline pipeline from the Patoka hub in Illinois to the impressive collection of terminals in St. James, LA. Today, we continue our series on the market impacts of Capline’s upcoming reversal on St. James, Louisiana refineries and crude exports.

Good Morning! ROYGBIV Over Flathead Lake -- June 16, 2021