Thursday, August 12, 2021

Can You Say Louisiana? Chesapeake And Vine Is Not A Hollywood Intersection -- August 12, 2021

Updates

August 13, 2021: US gas acquisitions signal Gulf coast strategy shift. Link here.

Chesapeake Energy's $2.2bn bid for Vine Energy is the latest bet by large US natural gas producers on the future of the US Gulf coast market, signaling a shift away from the pipeline-constrained northeast. 
Chesapeake's planned acquisition of Vine will nearly triple the company's output from the Haynesville shale, a prolific gas-bearing formation underlying east Texas and northern Louisiana. The combined company will have 1.6 Bcf/d (45mn m³) of Haynesville production, all of which may eventually find a home on the nearby Gulf coast, Chesapeake said this week. Those supplies can feed industrial demand and US LNG export terminals. 
The deal, which should close in the fourth quarter of this year, follows Southwestern Energy's $2.7bn bid for privately held Haynesville producer Indigo Natural Resources. Southwestern, an Appalachian producer, would gain a foothold in the Haynesville, diversifying its assets and increasing its access to Gulf coast markets. That deal was expected to close later this month. 
Those transactions underscore a renewed interest in the Haynesville as Nymex prompt-month gas prices rebounded from last year's lows and exports of US LNG surged. It also highlights the long-running frustration with regulators in the northeastern US — home to the Marcellus shale, the largest US gas field by volume.
 Much more at the link.

Original Post 

Chesapeake doubles down on US shale gas with Vine Energy buy. Link here to Reuters.

Chesapeake Energy Corp agreed to buy Louisiana natural gas rival Vine Energy Inc  for $615 million, betting on the shale field's proximity to the U.S. Gulf Coast export hub.

Dealmaking in the oil and gas sector has jumped this year as prices rebounded due to the vaccine-driven economic recovery. U.S. oil futures were up about 1.44% on Wednesday at $69.27 a barrel, an increase of about 63% from year-ago levels.

Shale operators have been pitching scale as a way to cut costs, with top gas producer EQT Corp recently agreeing to buy Appalachian rival Alta Resources for $2.93 billion and Southwestern Energy Co purchasing privately held Indigo Natural Resources for about $2.7 billion.

Chesapeake has offered 0.2486 share and $1.20 in cash for each stock of Vine, implying a per-share value of $15. That represents a less than 1% premium to Vine's last close of $14.88.

This is absolutely fascinating. This just doesn't quit. I didn't know anything about Louisiana until the Continental Resources story surfaced. 

Absolutely amazing. 

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Coal

Coal prices soar as Europe grapples with supply squeeze. Link here.

Director's Cut Scheduled To Be Released Tomorrow, Friday, August 13, 2021

Link here

Meanwhile, in New Mexico, the local press is reporting that the oil and gas industry in New Mexico could drill for almost two decades with no federal leases. 

A study from the Conservation Economics Institute, commissioned by the Natural Resources Defense Council found that while New Mexico had the least unused federal acreage leased by the industry compared with other states analyzed in the study, it still has decades until oil companies run out of public land to drill upon.

In its research, the institute compared major oil-producing five states in the inter-mountain west region – New Mexico, Wyoming, Utah, Colorado and Montana – which hold 86 percent of federal leases in the U.S. 

About 426,266 acres of federal land in New Mexico is leased but unused, per the study, compared with 4.9 million acres in Wyoming, 1.8 million in Utah and about a million each in Colorado and Montana.

Feds Deny North Dakota Request For Early Haying Of CRP Land -- August 12, 2021

This was published some time ago. At the time I did not post it. But at risk the story disappears completely -- it appears the story has no legs ... from AP News, July 24, 2021:

BISMARCK, N.D. (AP) — The federal government has denied a request by North Dakota leaders to allow ranchers struggling with drought to hay idled grassland while it’s still of good quality.

The Bismarck Tribune reports the state Agriculture Department is looking into the reasons why the request was denied.

The federal government is allowing limited emergency grazing of Conservation Reserve Program land, which typically is idled under a government program that pays farmers to protect erodible land and create wildlife habitat. North Dakota ranchers all summer have been seeking federal government permission to also hay that land.

CRP typically doesn’t open until after nesting season ends, to protect wildlife populations. The season in North Dakota ends August 1, 2021. Ranchers say that after that day, grass might not be of good enough quality to make it worthwhile to hay.

State officials and members of North Dakota’s congressional delegation this summer have pushed the U.S. Department of Agriculture for earlier CRP haying. State Agriculture Commissioner Doug Goehring earlier this week made another plea. His department has received hundreds of calls from ranchers in recent weeks about the issue.

The MRO Treasure-Shell Pad -- A-C-D-J-S-T

#38471 - #38476, inclusive:

  • Operator: MRO
  • Field: McGregory Buttes (Dunn County)
  • Comments: MRO has six permits in McGregory Buttes, NWNW 14-147-94,
    • Treasure USA: 793 FNL and 1125 FWL
    • Shell USA: 801 FNL and 966 FWL
    • Judith USA: 797 FNL and 1046 FWL
    • Elva USA; 803 FNL and 926 FWL
    • Carolyn USA 799 FNL and 1006 FWL
    • Anita USA: 795 FNL and 1086 FWL

US Sending 3,000 Troops Back Into Kabul To "Evacuate" 650 US Embassy Staffers -- Pentagon: Not An Evacuation Or A Combat Mission -- August 12, 2021

Updates

August 13, 2021: UN "demands" that the Taliban stop military action and return to the negotiating table. LOL. 

Later, 8:35 p.m. CT: President Biden has departed the building. On vacation, to Wilmington, DE.

Later, 8:32 p.m. CT: the executions begin. From The WSJ; above-the-fold, front page story. 

Later, 8:09 p.m. CT: going through this list again, there are three top stories that have to have the administration terrified:

  • videos of executions coming out of Afghanistan as the Taliban takes control;
  • $6.00 gasoline before Labor Day; and a reminder the president killed the Keystone XL the first full day of his administration;
  • lock down ... again... Covid-19

Original Post

Baghdad Bob is reporting from Kabul -- ABC News special correspondent, ABC Evening News. Wow, when you see see this live on television, one gets the feeling that this is the tipping point for the Biden administration. If we start seeing executions in the US Embassy ...

I think the bad news is hitting the Biden Administration much faster than they feared; I think it's caught them completely off-guard.

Surfing through the mainstream news today, these are the headlines and/or the top stories:

Kamala Harris is inching towards running for president in 2024 -- the mainstream Dems are terrified -- this tells me one thing -- the person closest to Biden politically, as far as official titles go -- recognizes that Biden won't be running in 2024

The fall of Cuomo is a bigger story than the mainstream media is willing to admit;

Speaking of falling: Kabul is going to fall by September -- the Biden administration knew that there was a 50-50 chance that Kabul would fall but not this fast -- the optics will get worse over the weekend as the USAF rushes to fly Afghani allies out of Kabul starting as early as tomorrow -- it's being wide reported that the US trained 300,000 Afghani troops to fight the Taliban and it appears that has come to nought

Lebanon is next. Link here.


That "transitory" inflation is looking less transitory every day, and even if it is transitory it's coming at exactly the wrong time (now) and impacting most what Americans buy everyday: food and gasoline

US crop harvests are going to be horrible this year; the numbers are now starting to come out; will impact that "transitory" food inflation

As Covid-19 cases skyrocket folks are finally reporting the true super-spreader: the southern surge

The United States is now at the very beginning of the fourth wave of Covid-19; some states only the third wave, but overall, the US is in its fourth wave -- just as schools are about to re-open; mainstream America at some point is going to figure out it was the southern surge that was the super-spreader

Not asked yet, but it soon will be: what is worse? During the depression, ten million folks wanting a job, and no jobs available; or when Wall Street is setting new records day after day, there are ten million job openings and no one wants them; unemployment claims holding steady (in a bad way)

A reader used to joke with me that when beer prices become unbearable, the silent majority won't be silent any more; one week ago, $7.99 for a six-pack was easily found; today, $9.99 was the best I could do, and not many brand available at that price; in fact, it was quite clear Target was doing what it could to stem the $10-handle for beer

The trucker shortage may be worse than a truck shortage

Yes, I'm saving the best for last

Credibility? What credibility? When the CDC falsely reports a more-than doubling of Covid-19 cases in Florida and then admits, well after the fact, after the damage has been done, they made a "mistake"; credibility has already been lost; this just makes it worse

Census numbers are now starting to turn blue states red in terms of representation (this one needs to be fact-checked); the states may still be blue in some respects, but redistricting is favoring the GOP more often than not -- New York Magazine

In the past, when gasoline prices got high, it was not unusual for presidents to jawbone OPEC / Saudi Arabia to produce more oil, but at the same time offer domestic initiatives to help solve the problem; this time, the current administration offers no solutions; has no arrows in its quiver to do so; killed the Keystone XL the very first day in office; has banned drilling on federal land; had slow-rolled the permitting process where the courts ruled against the bans; and, is simply unable to come up with any solutions

[By the way: the fact that the present administration is asking for OPEC and admits the US has no solutions of it's own, this will make the situation worse; folks will start hoarding, driving prices higher; drillers will minimize bringing oil to the market in the near term when expectations of even higher prices going forward]. Link here.
 


There is an outside chance that the slowing of the economy due to Covid-19 will slow the rise in the price of gasoline or reverse it altogether, but slowing the economy is not what any sane administration wants; if the price of gasoline falls because the economy falters, that's not good -- can anyone say "recession"? No one is talking about recession, but ...

How bad is all this? I don't know. All I know is that the Sturgis Rally is not generating a lot of headlines as we go into the second week of the rally

Iowa State Fair opens today; a million visitors expected -- not just Harley riders but kids of all ages -- and no masks, no vaccinations required

When things "get bad" in the United States, Americans often turn to "sports." It's not gonna happen this year. No "heroes" came out of the Tokyo Olympics; lowest television ratings ever; will be remembered as the "Woke Show." Is anyone even following baseball this year? I've lost the bubble. It shows up nowhere in my news feed. NFL: the season can't get here fast enough but in 100-degree weather across the nation, most folks aren't thinking about football. 

But there is one piece of good news: all previous Covid-19 waves peaked and finally came to an end over the space of four to eight weeks; talking heads are suggesting the worst will be over -- at least for this fourth wave -- in three weeks.

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Portland Rally

Indoor -- no masks -- not yet vaccinated (too young).

Seven New Permits -- WPX With Four; Enerplus With Three -- August 12, 2021

Disconnect: in the big scheme of things, crude oil is not all that "costly." But gasoline prices are soaring. There is a perception that gasoline prices are currently as high as (or higher than) when crude oil was over $100/bbl. If there is any truth to that, imagine what gasoline prices will be if crude oil goes to $100/bbl. The fact that the US is even seen by some as "begging" Saudi Arabia to pump more oil suggests analysts know what is coming before Labor Day. It is of note that Saudi Arabia appears not to be listening. 

Covid-credibility problem: CDC "always" posts weekday data by 4:00 p.m. ET, usually by 2:00 p.m. ET. It is now 6:32 p.m. ET and Thursday's data has not been posted. Coming just after the "Florida mistake" raises questions. Later: the data was noted at 7:05 p.m. ET to have been posted; data appears "accurate."

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Back to the Bakken

From S&P Global Platts: US oil rig count jumps fourteen to 617 w/w as companies sound upbeat note; link here

  • the Bakken showed the biggest weekly change, up 3 to twenty-five
  • geographically, the basin with the biggest weekly change was the Bakken Shale of North Dakota/Montana, which gained three rigs for a total 25.
    • that is the highest activity level in that play, where the rig count has been fairly rangebound in recent weeks, since late April 2020.

Active rigs from NDIC data:

$68.90
8/12/202108/12/202008/12/201908/12/201808/12/2017
Active Rigs23*11616057

*From the daily activity report: 22 active rigs. Continental shows seven rigs vs eight the other day.

Seven new permits, #38477 - #38483, inclusive --

  • Operators: WPX (4); Enerplus (3)
  • Fields: McGregory Buttes (Dunn); Eagle Nest (Dunn)
  • Comments:
    • WPX has permits for four Hall wells in McGregory Buttes, NENE 14-148-94;
      • the wells will be sited between 503 FNL and 567 FNL and between 1087 FEL and 1150 FEL;
    • Enerplus has permits for three Fort Berthold wells in SESE 19-148-94;
      • the wells will be sited between 751 FSL and 804 FSL and between 806 FEL and 859 FEL

Five permits renewedb:

  • XTO (4): two Roberta permits and two Lyla permits, all in Williams County;
  • Bruin: one Christine Joe permit in Williams County

One permit canceled:

  • 37995, MRO, Frederick permit in Dunn County

The Market -- August 12, 2021

The US markets: wow, wow, wow! Are all three major indices going to end up in the green? Interestingly, of the tickers I follow, BRK-B had the worse day but at the end of the day had clawed its "losses" back to only a negative 0.36% and then was up ever so slightly in after-hours trading.

Ten-year treasury yield: 1.361%.

WTI clawing its way back to $70; WTI closed at $69. Most blends traded in the red at the end of the day, but Louisiana Light was up 1.4%, up almost a buck, and trading over $70.

Yes, there it is, it looks like all three major US indices closed in the green; NASDAQ was the last to turn green and it was up 51 points at the close.

DIS: beats estimates and is up almost 6% after-hours. This is pretty amazing: up over $10 on a $190-stock.

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Family Reunion

Every day during the family reunion -- 28 folks on the lake -- we worked hard at having a stress-free / work-free "main" meal each day. 

The first day, the old standby: five large pizzas delivered. We had left-over slices three days later. Great snacks for some of the teenagers.

A catered pulled pork dinner on the second day was clearly the highlight of the week. It's hard to believe, but there we were, on the shore along a huge lake, and an in-town restaurant truck pulls up with a fully catered dinner.

But the best buy? Without question, five Costco rotisserie chickens. Costco continues to sell these chickens for $4.99 each. That's hard to believe: $25 for the main course to serve 28 people. Sides were from the previous day from the catered dinner: mac & cheese; baked beans; etc.


Photo: Costco, Kalispell, MT.

Louisiana Legal Stuff And The Legacy Of Trump -- August 12, 2021

Big Oil wins again. Which I applaud, by the way, in case there was any doubt.

From a reader:

Bottom line: Trump got some fairly young lawyers in place and three of them seemed to do the right thing.

The crux of the matter is that lawyers love to sue oil companies.  There are legacy lawsuits in Louisiana claiming that wetlands were eroded back to WWII by big, bad oil companies.  The recent appellate court decision says that many of those suits have to be tried in federal court.  The parishes wanted them tried in state court, since state judges have to stand for reelection.




So, now I want to see the bios on judges Ho, Engelhardt and Oldham

Ho was born in Taipai in 1973, graduated from Stanford, then law school in Chicago, clerked for the Supreme Clarence Thomas, appointed to this position by the magnificent Trump.  So, Ho is only 48 years old and has conservative stamped all over him.  He was in private practice for nine years, so he's done something besides government work - hooray!

Engelhardt is 61 years old - a homegrown and educated Louisiana boy.  He was appointed by W Bush to a lesser judgeship and bumped up by Trump. Fourteen years in private practice.  Hooray again!

Oldham was born in Virginia in 1978,  UVA, Cambridge, Harvard law.  Clerked for Alito (;>) Worked for Abbot in Texas - state attorney stuff.  Nominated by Trump. Three years of private practice, eight years with Texas state government.  Hooray y'all!

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Louisiana

By the way, speaking of Louisiana.

You may recall, CLR appears to be ready to do some exploratory drilling in Louisiana.

Oil prices (not all of these are spot/current; some could be a day old):

  • WTI: $69.14 -- down 11 cents;
  • Louisiana Sweet: $69.18 -- up $2.02
  • Canadian blends:
    • sweet crude: $65.35
    • US high sweet Clearbrook: $69.55

Notes From All Over -- August 12, 2021

US crude oil supply "in days." Link here.

27.4 days, first week, August, 2021.

Down from 27.5 the week before. 

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Other Stuff

Louisiana legal stuff: this gets way into the weeds, but my hunch -- there are some readers interested. The reader who sent me this, says this was the result of Trump-appointed judges. See this post.

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

Twenty-year high: PFE. And no, I'm not going to post  Rocky Mountain High; I have to draw the line somewhere. LOL.

Lumber: drops to nine-month low, extending retreat from record. Link here.

AMD: Zacks, August 11, 2021.

Jobless claims: yawn. Exactly what is being tracked? Why is it worth following? It's one thing to track jobless numbers during a recession when there is a shortage of jobs, but jobless claims when there are 10 million job openings across the US. If there's one metric that doesn't matter today, it's the jobless metric. 

Big oil, big dividends: link to Irina Slav.

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.

Rig Counts Don't Matter -- August 12, 2021

Rig counts don't matter (don't take that out of context). From Trading Economics:

Do folks remember this post, posted a few days ago?

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Saudi Aramco

CNBC

  • Aramco’s net income of $25.5 billion for the quarter compares to $6.6 billion in the same quarter of 2020.
  • The result beat expectations, with analysts expecting a median net income of $24.7 billion for the quarter. 
  • Saudi state oil giant Aramco reported a stunning 288% increase in net income to $25.5 billion for the second quarter, while maintaining its dividend of $18.8 billion, as big oil benefits from higher prices and a recovery in worldwide demand.

Rigs don't matter, following worst timing ever, January - March, 2020, graphic below, note the ever-so-subtle jump in rig count. Saudi records an incredible quarter after slashing rigs from fifty to less than thirty.



Again, A Reader Is Ahead Of The Buzz -- Propane -- August 12, 2021

This is pretty cool. This from RBN Energy today:

RBN Energy: propane exports continue to pull US inventories lower.

The EIA report on propane inventories that came out yesterday was a shocker. This time of year, stocks are supposed to be building toward the levels needed to get U.S. propane markets through the winter season. But the numbers released on Wednesday showed an inventory decline, resulting in inventory balances now below the five-year minimum.

The culprit, of course, is exports, with 1.4 MMb/d of them reported last week, a 17% gain over the year-to-date average. And these cargoes to overseas markets are happening even with propane prices in the stratosphere: more than double where they stood this time last year.

Propane marketers were hoping that higher prices would slow down exports, but so far that is not happening. In today’s blog, we examine U.S. exports of LPG — propane plus butane — and discuss what may be ahead for these markets.

From a reader a few days ago:

There has been SO much hydrocarbon info coming out these past several days, one has a difficult time keeping up.

One of the odder data points came from Energy Transfer's conference call when the CEO said a Memorandum Of Understanding has been reached with the government of Panama to study the feasibility of building propane terminals on either coast of Panama and a pipeline to connect them.
To say I was taken aback would be an understatement, but the more I pondered the current and future scenarios, it actually may make a lot of sense.

Condensed 'story' ...
There are now small fleets of HUGE ships csrrying propane (LPG) non stop to new, HUGE petchem  plants in China and India. 
This is in addition to the robust push for  expanded heating/cooking applications to propane from wood, coal, etc. 
These big ships (using onboard propane for fuel) can 'zip' back and forth reliably from a west coast terminal. 
The LPG can, somewhat, be economically ferried down to the  east coast of Panama from Texas terminals using older, smaller ships that are  increasingly becoming obsolete for longer voyages.
Amazing example of global ripple effect that has its origins in the free market economy and adventurous risk takers like Harold, et al.

For Tomorrow -- August 13, 2021

Link here

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Back to the Bakken

Active rigs: this data may not be current. Active rig data is reported by the NDIC at close of business every non-holiday weekday.

$69.00
8/12/202108/12/202008/12/201908/12/201808/12/2017
Active Rigs2311616057P

No wells coming off confidential list.

RBN Energy: propane exports continue to pull US inventories lower.

The EIA report on propane inventories that came out yesterday was a shocker. This time of year, stocks are supposed to be building toward the levels needed to get U.S. propane markets through the winter season. But the numbers released on Wednesday showed an inventory decline, resulting in inventory balances now below the five-year minimum.

The culprit, of course, is exports, with 1.4 MMb/d of them reported last week, a 17% gain over the year-to-date average. And these cargoes to overseas markets are happening even with propane prices in the stratosphere: more than double where they stood this time last year.

Propane marketers were hoping that higher prices would slow down exports, but so far that is not happening. In today’s blog, we examine U.S. exports of LPG — propane plus butane — and discuss what may be ahead for these markets.

What A Great Country -- August 11, 2021

While traveling for the past two weeks or so, I didn't keep up with the news, but it seemed like every time I checked in the Dow and S&P 500 were hitting new highs. And I think I saw a headline today that the Dow and S&P 500 hit new highs again today.

The ten-year treasury fell a bit today but is trending higher, now at 1.349 percent. I guess talking heads say it will trend toward 2%. OMG. That could derail this market.

US dollar (DXY): 92.88 -- about where it's been since November, 2020.

WTI: after falling to $65 over the weekend WTI has recovered and is now back to $69 and change. I was hoping to sell shares in EOG and buy shares in a different Permian operator but may have missed my opportunity. I don't put new money into oil, but will trade within the sector. New money is being invested with Cathie Wood. 

Dividends payable August 12, 2021: AAPL and EPD. 

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

For gardeners only: this is a pretty good story. When I was growing up in Williston, ND, my mother made the best rhubarb pie in the world. Period. Dot. 

When my mom moved out to Flathead Lake (Lakeside, MT), to the family summer home that became her retirement home, she took a few "stalks" (is that what they are called?) of rhubarb from her garden in Williston, ND, and transplanted them to a little plot in the corner of her yard on Flathead Lake.

I'm using the term "garden" loosely. The only garden plant mom ever planted that survived was rhubarb, and it was only three or four plants, but I digress.

My mom was sure the rhubarb plant she planted in Montana was inside her lot lines. [In literature, that's called foreshadowing.]

Well, apparently some years ago, some temporary renters living in the house behind her were "stealing" her rhubarb. LOL. That became a thing for a few summers. No gunfights at the "OK Corral" but words were spoken. 

My mom has passed on to the big rhubarb garden in the sky and a sister has bought the house. During the family reunion, the rhubarb story came up again, and we decided to sort this out once and for all. [No, we had not been drinking.]

We got out the "original" deed, checked the legal description which included the latitude and longitude of the lot lines. 

We then went out with someone's brand new iPhone and brand new "map" app and set the phone in the middle of the rhubarb plant.

The plant is one foot outside Mom's lot lines. It's possible some of the rhubarb stalks lean into mom's lot (it's a huge plant), but the law, I'm sure, states that where the main body of stalks enter the topsoil marks the "official location." If so, that's not good news for my mom's heirs who like homemade rhubarb pie.

This summer our sister who now owns the house says her goal this summer is to transplant the rhubarb plant three feet to the southeast, putting the plant clearly inside her lot lines. 

She will do it under cover of darkness. 

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The Making Of ....

Link to Lana Del Rey, Young and Beautiful --