Wednesday, July 14, 2021

Gasoline Demand -- Fourth Of July Weekend -- July 14, 2021

Gasoline demand: link here 


I'll continue to follow this metric, but I am no longer interested:

  • we're getting back to "normal"; and,
  • we've proven we can get to 10 million bbls per day.

So, just another metric.

DUCs Reported As Being Completed Are Not "Created" Equal -- July 14, 2021

Not ready for prime time.

A lot of analysts continue to talk about the inventory of DUCs decreasing. 

A random observation: the vast majority -- approaching 90% -- of DUCs coming off the "DUC list," being reported as completed are not yet producing oil in the Bakken. I don't think analysts realize this. This is an anecdotal observation on my part in the Bakken. I have no idea what is happening in the Permian. But in the Bakken, just because a DUC comes off the "DUC list" does not mean it's producing any oil. By regulation, DUCs must be reported within two years of the well being spud. So, at the end of two years, these wells are being said to be "completed" by the operator but the "devil is in the detail."

It looks like most DUCs being reported as completed, take another six months before going into full production, which makes sense. 

I was writing the above while watching Jim Cramer's Mad Money and then who should show up, of all people? Rusty of RBN Energy. So, the note above about DUCs had nothing to do with Rusty's comments on DUCs -- which were minimal.

Note: Rusty from RBN Energy on Jim Cramer's Mad Money tonight. What did he have to say?

  • oil companies: huge free cash flow
  • DUCs: being completed
  • natural gas has gotten so expensive overseas, countries are turning to coal in some cases;
  • takeaway: supply / demand pretty much in equilibrium
  • for Jim Cramer, that means buying "the rails," specifically mentioning UNP and Southern Norfolk.

The HA-Dahl Wells

Updates

July 14, 2021: Hess adding three more HA-Dahl wells but still a lot of drilling locations in the HA-Dahl drilling unit. The well heads of the three newest wells (#38425 - #38427, inclusive) are spaced 33 feet apart from each other.

******************************
The HA-Dahl Wells

The wells:

  • 23072, -0706H-3, t12/12; cum 451K 5/21; still doing well;
  • 28483, -0706H-4, t3/15; cum 339K 5/21; still doing well;
  • 28484, -0706H-5, t3/15; cum 247K 5/21; still doing okay;
  • 28485, -0706H-6, t3/15; cum 307K 5/21; still doing well;
  • 28486, IA/1.241, Hess, -0706H-7, t3/15; cum 198K 2/19; intermittent, but essentially off line;
  • 28487, -LW---0706H-1, t3/15; cum 354K 5/21; still doing well;
  • 16825, -0706H-1, t1/08; cum 306K 5/21; hanging in there;
  • 20755, -0706H-2, t3/12; cum 400K 5/21; still doing okay;
  • 38425, loc, Hess, HA-Dahl-LE-152-95-0706H-1, Hawkeye, SWSE 7-152-95, 475 FSL 2546 FEL,
  • 38426, loc, Hess, HA-Dahl-LE-152-95-0706H-9, Hawkeye, SWSE 7-152-95, 475 FSL 2579 FEL,
  • 38427, loc, Hess, HA-Dahl-LE-152-95-0706H-8, Hawkeye, SWSE 7-152-95, 475 FSL 2612FEL,




Wednesday Daily Activity Report Has Not Been Posted -- July 14, 2021

Active rigs:

$73.13
7/14/202107/14/202007/14/201907/14/201807/14/2017
Active Rigs2211566758

Released from confidential status:

  • 31473,
  • 32271,
  • 36249,
  • 36254,
  • 36951,

Six permits renewed:

  • Sinclair (5): two Diamond permits; one Porcupine permit, one Forest USA permit, and one Bighorn permit, all in Dunn County;
  • EOG: a Wayzetta permit in Mountrail County

Ten permits canceled:

  • Slawson (9): three Wolverine permits, McKenzie County; two Gunslinger Federal permits, McKenzie County; two Osprey Federal permits, Mountrail County; one Minx Federal permit, Mountrail County;
  • CLR: one Dolezal FIU permit in Dunn County;

Three producing wells (DUCs) reported as completed:

  • 32473, drl/A, CLR, Alpha 8-14H, Camp, no production data,
  • 32476, drl/A, CLR, Florida Federal 7-11H1, Camp, 3,751 bbls over 9 days;
  • 35809, loc/A, Petro-Hunt, Sabrosky 144-97-7C-6-3H, Little Knife, no production data,

 

Five new permits, #38425 - #38429, inclusive:

  • Operators: Hess (3); Whiting (2)
  • Fields: Hawkeye (McKenzie), Sanish (Mountrail)
  • Comments, these are the permits:
    • 38425, loc, Hess, HA-Dahl-LE-152-95-0706H-1, Hawkeye, SWSE 7-152-95, 475 FSL 2546 FEL,
    • 38426, loc, Hess, HA-Dahl-LE-152-95-0706H-9, Hawkeye, SWSE 7-152-95, 475 FSL 2579 FEL,
    • 38427, loc, Hess, HA-Dahl-LE-152-95-0706H-8, Hawkeye, SWSE 7-152-95, 475 FSL 2612FEL,
    • 38428, loc, Whiting, Nesheim 11-24HU, Sanish, NWNW 24-153-91, 460 FNL 263 FWL,
    • 38429, loc, Whiting, Nesheim 11-24HU, Sanish, NWNW 24-153-91, 460 FNL 293 FWL,

************************
HA-Dahl

The Hess HA-Dahl wells will be tracked here

Hess adding three more HA-Dahl wells but still a lot of drilling locations in the HA-Dahl drilling unit.

The wells:

  • 23072, -0706H-3, t12/12; cum 451K 5/21; still doing well;
  • 28483, -0706H-4, t3/15; cum 339K 5/21; still doing well;
  • 28484, -0706H-5, t3/15; cum 247K 5/21; still doing okay;
  • 28485, -0706H-6, t3/15; cum 307K 5/21; still doing well;
  • 28486, IA/1.241, Hess, -0706H-7, t3/15; cum 198K 2/19; intermittent, but essentially off line;
  • 28487, -LW---0706H-1, t3/15; cum 354K 5/21; still doing well;
  • 16825, -0706H-1, t1/08; cum 306K 5/21; hanging in there;
  • 20755, -0706H-2, t3/12; cum 400K 5/21; still doing okay;
  • 38425, loc, Hess, HA-Dahl-LE-152-95-0706H-1, Hawkeye, SWSE 7-152-95, 475 FSL 2546 FEL,
  • 38426, loc, Hess, HA-Dahl-LE-152-95-0706H-9, Hawkeye, SWSE 7-152-95, 475 FSL 2579 FEL,
  • 38427, loc, Hess, HA-Dahl-LE-152-95-0706H-8, Hawkeye, SWSE 7-152-95, 475 FSL 2612FEL,

Graph Of The Day -- Virgin Galactic (SPCE) -- July 14, 2021



From ZeroHedge
:

But, on the other hand, billionaire Richard Branson says he and Virgin Galactic are opening space for *everyone*: 
“Imagine a world where people of all ages, all backgrounds, from anywhere, of any gender, or any ethnicity have equal access to space. And they will in turn, I think inspire us back here on Earth." 
All ages, all backgrounds, from anywhere, of any gender, or any ethnicity who happen to have $250,000 to waste on a day-trip that is.

Anyone who caught the video of Virgin Galactic know that the five-minute ride near the "edge of space" is a complete waste of money. And a complete waste of time. 

A limosine takes you out to the "plane." You walk on in street clothes. You take off, fly to altitude, launch from altitude, mach 2 to near 50,000 feet, experience weightlessness and then return to the airport.

US Crude Oil, Days Supply -- Drops Again; Is Lake Mead At Record Low? -- July 14, 2021

What I'm watching on TCM via Hulu: The Lusty Men, 1952. Well worth it. Critical reception:

This film currently holds 100% approval rating at Rotten Tomatoes, with the average 8.2/10. Dave Kehr of Chicago Reader calls it "A masterpiece by Nicholas Ray—perhaps the most melancholy and reflective of his films (1952)." [I very, very seldom see a movie with 100% approval rating at Rotten Tomatoes.]
Gary Tooze of DVDbeaver also highly praises the film: "This is one of the best westerns - period. Mitchum is at his very best. It carries a documentary-style presence at times but is steeped in emotion. Absolute masterpiece." [I concur.]

US crude oil, days supply: drops again. Now, down to 27.1 days. Link here. This is about eighteen consecutive weeks of decreasing supply, with some minor exceptions. But we haven't seen this little supply since January, 2020, or thereabouts. There may have been exceptions.

Lake Mead water level: dropping like a rock. Link here. It appears Lake Mead has never been lower (except while it was being filled). Lowest level since the 1930s, says the Smithsonian Magazine.

  • at 1068 feet today;
  • historical level, only through June, 2017;
  • max and min:   
    • 1983, the lake reached its highest ... recorded water level at 1,225 feet. 
    • since 2000, the water level has dropped 140 feet. 
    • the previous record its low water level was 1,071.6 feet in 2016. Now, the lake has ducked just below that level at 1,071.56 feet. -- Jun 18, 2021.

**********************************
Intellectual Froglegs

I came for the music. I stayed for the message.

LOL.

White hats.

The Muppets In Congress -- July 14, 2021

Okay, link here. There is nothing inconsistent here if one parses the quotes very, very closely. Sort of. Well, maybe not.



*************
Texas Politics

Those Texas Democrat congressmemandwomen who fled the state rather than show up for work?

Not gonna stay out of state forever. 

Texas is in the process of "re-districting."

State legislature generally does that but if no quorum, then reverts to 5-person committee: it just so happens that all five members are Republican -- LOL: the lieutenant governor, the speaker of the house, the attorney general, the comptroller, and the commissioner of the general land office.

A number of senior Democrat members of the Texas legislature could find their district lines re-drawn.

Matt Damon Movie Review -- Stillwater -- July 14, 2021

Matt Damon movie review. Reader alerted me to it. Link here.

American GulfCoast Select -- Happy One-Year Anniversary -- July 14, 2021

Oil: America's new benchmark. Link here. Previously reported but now a bit of the back story and Harold Hamm is center stage. Thank you to a reader. Great story!

American shale oil has a new benchmark, and a driving force behind it is one of the Bakken’s own.

The new benchmark is called American GulfCoast Select (AGS) and Continental’s Harold Hamm is among its architects.

The new benchmark was designed to rival the landlocked U.S. West Texas Intermediate futures contract, which is based on delivery to Cushing, Oklahoma, and which has typically been used to reflect the value of a barrel of Bakken crude oil.

The delivery location for WTI, however, is 500 miles from water, and that has led to market distortions in the past. Most notably, it led to negative $38-dollar futures contracts last year during the pandemic.

Brent, meanwhile, is priced on an island in the North Sea, with immediate access to tanker storage. That insulates Brent from market distortion like that caused by the supply glut caused by the Saudi-Russian price war during the pandemic.

The new benchmark is based on Gulf Coast delivery instead of a land-locked location, essentially giving shale a Brent of its own. That will better reflect shale oil’s value in the world market, and should prevent market distortions due to lack of storage infrastructure.

Hamm, in a recent editorial circulated by the Montana Petroleum Association, said the negative future contracts for WTI were a wake-up that the situation at Cushing, Oklahoma, through which a lot of Bakken crude oil still travels, was no longer tenable.

From Platts:

Platts AGS reflects the value of light sweet crude oil loading 15-45 days forward on an FOB basis from locations along the US Gulf Coast including Houston, Corpus Christi, Beaumont, Nederland, Texas City, and Port Arthur, with the most competitive location on a cargo-size normalized basis setting the price assessment.

This crude oil assessment reflects a typical cargo size of 700,000 barrels, with bids, offers and trades between 550,000 and 800,000 barrels eligible for use in the assessment but normalized to reflect the freight economics of the typical cargo size. The assessment reflects the Platts WTI Midland grade supplied directly from the Permian Basin on the BridgeTex, Longhorn, Midland-to-Echo I/II, Cactus I/II, EPIC, Gray Oak, and Permian Express pipelines with API between 40 and 44 and .2% sulfur limit, among other specifications.

Platts FAQs.  

Also at ArgusMedia

And here, with graphic.

And here, if I'm reading the story correctly, AGS runs about $1.00 to $2.00 over Brent.

See original blog post here.

Anticipating November 1, 2021 -- July 14, 2021

Next fed chair: back to Yellen? Or will Jay Powell keep his job? Tenure is four years. Appointed by President Trump on November 2, 2017 -- four years: November 1, 2021. This is July. 

Stephanie Link: sounds almost as if she's in panic mode. Makes Steve Liesman look like a statesman. 

Market: still looking at first increase in fed rate -- fourth quarter 2022. I assume that will be the first, last and only question Yellen and Jay Powell get when Biden starts his search for next fed chairman. I can't imagine Biden keeping a Trump appointee. 

Off the net. Time to go swimming.

Don't You Just Love Stories, Headlines Written Before Actual Data Is Released? -- July 14, 2021

WTI: following today's EIA weekly petroleum report --

  • 10:36 a.m. CT: $74.62, down about 63 cents;
  • 10:49 a.m. CT: $74.23, down $1.02; down 1.36%
  • 10:54 a.m. CT: $74.12, down $1.13, down 1.50%
  • 11:05 a.m. CT: $73.78, down $1.47, down 1.95%
  • 11:17 a.m. CT: $73.50, down $1.75, down 2.33%
  • 12:45 p.m. CT: $73.12, down $2.13, down 2.83% -- don't you just love these stories/headlines written in anticipation of the release of expected data? See below.

Headline, story written before data released:

EIA's Weekly Petroleum Report -- Released -- About One Hour Late -- July 14, 2021

Weekly EIA petroleum report. Link here. Delayed. Let the conspiracy theories begin. Now delayed by almost a full 45 minutes. EIA just tweeted: report to be released at 11:00 a.m. EDT. They've already missed that "deadline." Apparently EIA servers are down. Resorting to twitter to convey information?  Are the EIA servers in the cloud? If so, whose? AWS, Microsoft, Alphabet? My hunch: Microsoft. If so, explains a lot. [Later: wow! I was correct. It was related to cloud issues. See this link.]

The report, released about an hour late:

  • US crude oil in storage decreased by 7.9 bbls;
  • US crude oil in storage now stands at 437.6million bbls, 8% below the five-year average;
  • US crude oil imports averaged 6.2 million bbls; up by 347,000 bbls from the previous week (yawn)
  • refiners are operating at 91.8% of their operable capacity (yawn)
  • distillate fuel inventories increased by 3.7 million bbls; 4% below their five-year average;
  • jet fuel supplied was up 65.9% compared with same four-week period last year.
  • comment: we need to quit comparing this year's data with last year's date. We need to start comparing this year's data with same period in 2019. But that won't happen.

WTI: following report --

  • 10:36 a.m. CT: $74.62, down about 63 cents;
  • 10:49 a.m. CT: $74.23, down $1.02; down 1.36%
  • 10:54 a.m. CT: $74.12, down $1.13, down 1.50%
  • 11:05 a.m. CT: $73.78, down $1.47, down 1.95% -- don't you just love these stories/headlines written in anticipation of the release of expected data? See below.

Headline, story written before data released:

Breaking -- Apparently EIA Servers Are Down -- July 14, 2021

AAPL:

  • August 21, 2020, about a year ago: P/E, 37; $124/share
  • today, July 14, 2021: P/E, 33.59; $149/share
    • would AAPL be at $164 today if it commanded a "37" P/E? 
    • all I know, is that Apple is trading at a lower multiple today than a year ago
    • other P/Es:
      • MSFT: 38
      • AMZN: 70
      • FB: 30
      • NFLX: 67
      • GOOG: 35

Streamers:

  • Netflix: up 2.09%
  • ATT: down 0.14%
  • Disneyk: down 0.1%
  • AAPL: up 2.46%
  • Amazon: up 0.48%
Cathy Wood: CNBC exclusive -- interview at 3:00 p.m. CT. Let's see, 4:00 p.m. eastern -- right at the top of Melissa's show. 

Breaking: AAPL hits all-time high. Company now hits market cap of $2.5 trillion. CNBC seems not to get it -- except for Jim Cramer. 

India: Apple does not exist in India. There is not even one Apple store in India. Let that sink in. 

AAPL: at $149 and trending higher. Could AAPL hit $150 today? Nope, by the end of the day, significant profit taking could take AAPL back to $145.

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

Airlines: when one sees all the financial support the US government provided the airlines during the 2020 lockdown, and then all the airline CEOs that tell us the airlines are critical for the US, and then the US Congress quibbling on supporting USPS and Amtrak. Money for Amtrak: Biden is correct on this one.

Weekly EIA petroleum report. Link here. Delayed. Let the conspiracy theories begin. Now delayed by almost a full 45 minutes. EIA just tweeted: report to be released at 11:00 a.m. EDT. They've already missed that "deadline." Apparently EIA servers are down. Resorting to twitter to convey information? Are the EIA servers in the cloud? If so, whose? AWS, Microsoft, Alphabet. My hunch: Microsoft. If so, explains a lot. 

The report, released about an hour late:

  • US crude oil in storage decreased by 7.9 bbls;
  • US crude oil in storage now stands at 437.6million bbls, 8% below the five-year average;
  • US crude oil imports averaged 6.2 million bbls; up by 347,000 bbls from the previous week (yawn)
  • refiners are operating at 91.8% of their operable capacity (yawn)
  • distillate fuel inventories increased by 3.7 million bbls; 4% below their five-year average;
  • jet fuel supplied was up 65.9% compared with same four-week period last year.
  • comment: we need to quit comparing this year's data with last year's date. We need to start comparing this year's data with same period in 2019. But that won't happen.

Notes From All Over -- Market Edition -- July 14, 2021

Delta CEO: with outstanding quarterly results, says "cash is king." Always has been and still is. That, by the way, explains what is going on in the oil patch: "Cash is king." 

Quick: name the source of the reference to "double secret probation" and, no, it does not refer to Hunter Biden or Kamala Harris -- though the latter is likely already in double secret probation. See below.

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

S&P 500: minutes after market opens, S&P 500 hits another record. Dow lagging ... because of ... Boeing. Lagging but still up today. That inflation report yesterday? Already forgotten.

Inflation: simply another meme.

  • ten-year treasury: 1.379%, trending down (slightly)
  • banks doing great;
  • like the Covid-19 pandemic: those companies that can deal with inflation, will do very, very well; 
    • those companies that adapted quickly to Covid-19, did very, very well; and will be even stronger as we come out of the various lockdowns;
  • Blackrock's CEO:  
    • more enduring; more systematic over time
    • impact on equities: with caveats, will be good for equities

Banks: blow-out earnings.

Under management:

  • Blackrock: $9.5 trillion
  • Vanguard: $7 trillion
  • Schwab: $3.8 trillion
  • Robinhood: a measly, $80 billion

Oil equities: the only reason to hold "oil" these days is for the dividends. Share prices are going nowhere. 

Covid-19: how bad could it get? Wuhan flu now comes in a variety pack.  We've got Delta, Lambda, and Epsilon....

From a reader --

"The Greek alphabet is trying to kill us all" 
"I can only recite the Greek alphabet if I'm chugging beer" 
That sort of thing.

Well, then somebody mentions Delta Tau Chi and double secret probation... and I laughed so hard my ribs hurt just a little.

One fellow mentioned that he was glad there were only twenty-four letters in the Greek alphabet, but then he was scared they wouldd start with Roman numerals. 
[Comment: they can also add "+" to things like Delta which makes it sound even worse.] 
[Comment: but never any variant named after the original country from which the original Covid-19 came.]
Big story here: folks are now joking about all the variants. If the vaccine manufacturers can't keep up with this variety pack of Covid variants, why even get the current vaccines? And if one starts with getting one vaccine, does that not start the slippery slope of another Fauci vaccination every month?

Another Great Day Ahead Of Us -- July 14, 2021

Lithium shortage? Oh, give me a break. Compass Minerals finds the mother lode ... this reminds me .. why did Willie Sutton rob banks .... because that's where the money was ... think about this ... you know all about shale, you know all about brine, you know all about lithium in brine ... knowing that, why would you not look at the biggest brine source in the US for lithium? And we move on. Link here

Apple: headline story over at CNBC this morning, once one gets past all the other fluff being reported. LOL. The amount of time Squawk has spent on Apple the past two days is quite incredible. 

Warren: what's wrong with BRK? Apple makes up forty-two percent of BRK's equity portfolio. Apple is surging, and up huge today. BRK? Down, again, today. Very concerning. For someone.

US oil consumption surging with industry firing at full blast. Bloomberg. Link here 

Powell: will maintain!!

Delta? So, yesterday. Now Delta+ or Lambda. And US vaccination rollout  has hit a wall. Posted yesterday. 

Constant theme for past several weeks: supply crunch. Link here

GasBuddy: US air traffic jumped almost 30% in May 2021 vs May 2020; comparisons with 2020 are ridiculous; GasBuddy loses a bit of street cred. But here it is: year-to-date is down almost 7% vs 2019. Okay, GasBuddy gets it street cred back. Link here

Billionaires: are you really a billionaire if you didn't fly your own private jet to Sun Valley, ID, last week? Or are you just a poser. The real question: how many private jets does a billionaire need? I think Warren owns NetJets.

Apple:

  • Apple will boost iPhone 13 production 20%; from 75 million to 90 million; link here.
  • JetBlue pilots will each be given an M1 iPad Pro; link here. And, here.
  • California State University: a new iPad Air, Apple Pencil, and keyboard to 35,000 incoming students; link here;
  • will manufacture its own EV batteries in the US; link here.
  • expecting high demand; asking additional suppliers for additional mini-LED displays; link here.
  • 5G stocks to buy; I was looking for a specific name; did not see it; bought it anyway; link here. New iPhones will set stage for T-Mobile 5G wireless marketing push; link here.

Investing:

Oil: America's new benchmark. Link here. Previously reported but now a bit of the back story and Harold Hamm is center stage. Thank you to a reader. Great story! See more at  this link.

Another incredible day ahead of us.

Pre-market:

  • all three major indices should open at all-time highs?
  • oil companies not moving; if anything, moving to the downside

**************************************
Back to the Bakken

Active rigs:

$75.01
7/14/202107/14/202007/14/201907/14/201807/14/2017
Active Rigs2311566758

No wells coming off the confidential list.

RBN Energy: E&Ps' credit metrics improve as US emerges from the pandemic

Credit is the lifeblood for most individuals and corporations, especially capital-intensive entities like oil and gas producers. The credit score that so strongly impacts our ability to finance a house or car, get approved for an apartment, or qualify for our dream job, is not simply based on how much we own, but several other factors, including metrics that compare our debt load with our net worth and the assets being financed, and consider the percentage of our income needed to service that debt. For E&Ps, similar metrics involving the value of their oil and gas reserves and the relationship between their income and interest payments determine the size of their revolving credit facilities, their ability to access debt capital markets, and the cost of capital they pay. Today, we analyze COVID’s impact on the credit metrics of oil and gas producers and discuss the pace and scope of the ongoing recovery.