Monday, September 27, 2021

Notes From All Over -- Part 5 -- The Surging Price Of Oil -- September 27, 2021

$76.12. After the close, WTI traded up almost another one percent, almost another 70 cents. This evening, WTI is trading at over $76. 

Price of WTI: I posted Cathie Wood's tweet when she first tweeted it. The tweet being re-tweeted at this link. What a doofus. I said so at the time. I can't remember my exact words, but surely my sentiments. Here's the post, back on June 4, 2021.

I remember Jim Cramer also suggesting the price of oil had peaked. It's interesting. I suggested in a post that the price of oil can take wild swings.  I posted a screenshot of the historical price of oil to prove my point. I've long forgotten but I think I thought there was a chance that the price of WTI could surge. Whatever.

But what in the world drove WTI from $50 to $75 in such a short time this time around?

Notes From All Over -- The Ford EV Edition -- Part 4 -- September 27, 2021

Tennessee, Kentucky: EV valley? See below. Right-to-work states? Lower taxes? Nicer weather?

Roth IRA: Yahoo!Finance. Spousal Roth IRA

So what is it? String instruments or stringed instruments? And then we also have chordophones.

Ford: to build $11.4 billion mega campuses for EVs. Also, WSJ.

  • Ford's portion: $7 billion
    • partner: SK Innovation (South Korean)
    • 11,000 new jobs
  • Kentucky, Tennessee; not Detroit
  • Tennessee: battery factory alongside a new truck factory
    • Blue Oval City 
    • the truck site
    • 6,000 jobs
    • to begin producing electric F-series pickups by 2025
  • Kentucky: two battery factories
    • BlueOvalSk Battery Park
    • the battery site 
    • 5,000 jobs
    • opening date: 2025
  • largest manufacturing investment in the company's 118-year-old history
  • few new automobile plants have been opened in the US in the last few decades
  • Volvo: South Carolina
  • Detroit: Jeep

Ford, statistics from Yahoo!Finance, numbers rounded:

  • mega-EV project: $7 billion
  • market cap: $50 billion
  • enterprise value: $160 billion
  • revenue (ttm): $140 billion
  • gross profit (ttm): $6 billion
  • total cash: $25 billion
  • total debt: $150 billion

Comments: many numbers rounded; back-of-envelope figures

  • all this talk about auto manufacturers with supply chain problems? Ford is looking past them
  • $7 billion / $150 billion or $7 billion / $160 billion = 4 to 6 percent spread out over several years
  • $7 billion / $140 billion = 5 percent spread out over several years no dividend since January, 2020; had been 15 cents = 60 cents/share annually
  • outstanding shares: 4 billion shares * 60 cents = $2.4 billion / year
  • $7 billion / $2.4 billion = three years
  • 12,000 employees x $60K / year = $1 billion / year

Disclaimer: I know absolutely nothing about these kinds of things. This is simply my own figuring. If this is important to you, go to the source, and your get your own used envelope.


  • GM: Nashville, a $2.3 billion battery factory to support a nearby assembly plant which itself is getting a $2 billion makeover to make EVs
  • Volkswagen AG: Chattanooga, $800 million to expand its EV production


  • Harvard University / MBA business school
  • smartest guys on earth
  • but, in addition, access to smartest epidemiologists and virologists in the world
  • MBA students: 100% vaccinated
  • apparently some type of Covid outbreak on the Harvard School of Business campus (separate from the main Harvard campus)
  • whatever the outbreak was, Harvard School of Business elected to move all MBA classes online:
  • does Harvard know something the CDC doesn't -- like, perhaps the effectiveness of the vaccine?

Random Update Of An Enerplus "Stringed Instrument" Well -- September 27, 2021

This post won't be updated


October 24, 2021: new production data available -- 

  • 37029, conf, Enerplus, Fiddle 149-94-02C-01H-TF, McKenzie County, Mandaree, incredibly good well; scout ticket not updated; first production, 3/21; t--; cum 227K 8/21 (less than six months)
    DateOil RunsMCF Sold

Original Post 

The "string instrument" pad is tracked here. In addition, early production is reported here.

The well came off confidential list today:

  • 37029, conf, Enerplus, Fiddle 149-94-02C-01H-TF, McKenzie County, Mandaree, incredibly good well; scout ticket not updated;
DateOil RunsMCF Sold

Over 200,000 bbls crude oil sold in less than five months.

Bbls oil sold

Gas MCF sold













First Day Of The Last Week Of The Third Quarter -- September 27, 2021

The Fed: Jay Powell says the labor market continues to improve. This includes the two new jobs that just opened up at the fed. [For the archives: two Fed governors resign over personal investing practices.]

Apple, Tesla: have suspended some production in China. Everything is being impacted; not limited to technology. Think NIKE. Not good. 

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.

SRE: takes a $1.1 billion charge related to Aliso Canyon. 

Natural gas: prices in Europe hit an all-time high. Both UK NBP and Dutch TFF natural gas benchmarks have closed the day at their highest-ever settlement, up eleven percent on the day, to a closing price equal to more than $26 per mBtu. 

$75: to put things in perspective, a lot of energy stocks have only returned to pre-Covid. The market is not valuing these stocks at $65 / bbl WTI let alone $75. -- HFI Research

One reader will like this, from twitter: PBT started drilling in March, 2020, right when everything shut down. My favorite stock, a royalty trust, that's spending $86 million to create 91 new wells and 24 recompletions budgeted for 2021 on top of 1400 wells. Cash distribution in 1Q22 is gonna be wild after suppressed due to spend. -- a social media comment from the linked thread above.

Back to the Bakken

Active rigs, best guess*: NDIC is no longer reporting active rigs --

Active Rigs26*11576557

Three new permits, #38584 - #38586, inclusive:

  • Operator: Rimrock Oil & Gas
  • Field: Moccasin Creek (Dunn County)
  • Comments:
    • Rimrock has permits for three more wells to be sited in SWSE 33-148-93; 
    • between 691 FSL and 706 FSL and between 2531 FEL and 2484 FEL;

Four wells released from confidential list:

  • 37245, conf, MRO, Armstrong 14-34H, Dunn County, Bailey, no data provided; scout ticket not updated;
  • 38181, conf, Petro-Hunt, Hurinenko 144-98-2B-11-1HS, Billings County, Little Knife; early, minimal production, scout ticket not updated;
  • 37028, conf, Enerplus, Mandolin 149-94-02C-01H, McKenzie County, Mandaree, early, nice production, scout ticket not updated;
  • 37029, conf, Enerplus, Fiddle 149-94-02C-01H-TF, McKenzie County, Mandaree, incredibly good well; scout ticket not updated;

Notes From All Over -- Part 3 -- September 27, 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

Goldman Sachs: their advice. Make a lot of money.

Hess: massive underinvestment in new production is a major wildcard for oil. Link to Tsvetana Paraskova. Let's look at some energy companies:

  • HES: up 5%; up $3.70; trading at $79; pays 1.33%;
  • CLR: up 7%; up $3.06; trading at $47.28; pays 1.35%;
  • DVN: up 6%; up $1.90; trading at $35; pays1.33%;
  • EOG: up 5%; up $3.76; trading at $81.85; pays 2.11%;
  • CVX: up 2.4%; up $2.40; trading at $103; pays 5.33% -- whoo-hoo!
  • EPD: up 2%; up 45 cents; trading at $21.90; pays 8.4%;

Russia: wow, wow, wow. Exactly what I said earlier today or yesterday.

US: Covid-19 is so behind us.

  • from twitter: according to Pay with GasBuddy data, weekly US gasoline demand last week (Sunday through Saturday) rose 1.1%, ending the five-week streak of falling demand. Weekly demand was the highest since the week of 8/29
  • I mentioned yesterday, on my bike ride, I had never seen such heavy automobile and pick-up traffic as OI saw yesterday;
  • and if there is any question of whether Covid-19 is behind us, one is not tuning into Saturday college football and Sunday NFL; stadiums of 100s of thousands of unmasked folks; drinking beer, yelling, coughing; 

Another pipeline killed:

  • from twitter: PennEast pipeline axed ... good job greenies .. have fun paying sky-high energy prices and freezing your butts off this winter ... and winters to follow ...
  • the burggraben widens: $500 million+ went into the development of this project ... to date ..

A Triple Whammy For Apple? -- September 27, 2021

Reason #4 why I love to blog: connecting the dots. 

Three readers sent me different links this morning; individually they were "just more of the same," but putting them together, the dots painted an interesting picture. 

The story.

Earlier today I suggested there was sector rotation. I suggested folks were selling small amounts of AAPL to buy positions in energy.

On a day when the Dow surged at mid-morning, some energy plays were up as much as five percent, even after a big run last week. 

But, on a day when the Dow surged, AAPL was down, and not just a bit, but significantly.

I erroneously attributed it to sector rotation because I was considering doing exactly that: sell a bit of AAPL and buy a lot more energy. But I held off. Went for a bicycle ride.

And then it hit me. 

The readers explained it to me.

Apple, Inc., is in trouble. Possibly deep trouble. Apple's biggest quarter is this quarter, October - December.

If Apple, Inc., misses on either the top line or the bottom line, or heaven forbid, both lines, in its best quarter, AAPL will crater. 

And it's very possible AAPL could miss. 

Tim Cook can manage logistics, and he has a steady supply of chips out of Taiwan, but Tim Cook can't manage China's energy policy.

And China has run out of energy. Literally.

China is shutting down factories because they don't have the electricity.

The irony is that Apple is known for two things:

  • renewable energy; and,
  • going it alone, being self-sufficient.

It looks like Apple (and all manufacturers in China) could have huge problems exactly for those reasons.


On a day the market surges, and early reports that Apple's new product line was doing well, why would AAPL be slumping today? It cannot possibly be sector rotation. I was wrong on that one. 

It's all about energy. 

Now for the links to support the thesis:

  • top Apple, Tesla supplies suspend production amid China power crunch. ZeroHedge.  China wouldn't shut these factories down if they still had coal heading into another very cold winter. 
  • from twitter: Europe, China, and India seem to me rather short of energy. The biggest shortage in China and India is coal. They are really, really short. In Europe, it's natural gas (and wind and emissiosn rights, but that's another matter.

Bottom line: this could very well be the "I told you so winter," for energy bulls to the faux environmentalists. There's every indication that while "they" spent the last ten years on wind and solar energy and "green" policy, they should have been paying attention to the facts of life. 

For Apple, this is almost a triple whammy:

  • going green; not paying attention to what was going on in the real world;
  • relied too much on China, not seeing the energy crisis coming; and, of course,
  • sector rotation, from technology to energy.

Notes From All Over -- Part 2 -- The September Swoon -- That Was It? September 27, 2021

September, 2021, is, of course, not over.

But if the trend continues, it looks like all that hand-wringing by Jim Cramer and the entire CNBC crew was just that -- hand-wringing. 

That incredible drop in the Dow -- yes, that 1% drop coming after a thirty-percent jump in the Dow over the past year, or whatever it's been -- was a whole week ago, and is now completely forgotten. That story disappeared as fast the US Army left Afghanistan. 

By the end of last week, the markets returned to the pre-Monday sell-off. 

Nothing more than a September swoon. 

Today the market opens mixed, and now, even before mid-morning, the Dow is up an incredible 240 points. Who wudda thought?

One gets the feeling investors don't like to put new money into:

  • bonds;
  • money market accounts;
  • cash.

Last Monday: a buying opportunity. Period. Dot. 

The numbers:

  • WTI: $75.40
  • DXY: $93.32. Flat.
  • Ten year Treasury: 1.475%

 Hurricane Ida: was that this year?

Notes From All Over -- Part 1 -- The Pre-Market Edition -- Quiet -- Nothing About The Bakken -- September 27, 2021

Covid is so over: everything suggests "we" came out of the Delta variant much more quickly than anticipated.

  • energy demand;
  • supply chain shortages continue;
  • choke points at ports, especially the west coast ports, getting worse, not better
  • US equity markets: re-opening trade all the buzz

Covid is so not over: I thought I had posted this, but maybe I haven't. I'm not worried about shortages but I do have to admit -- now that I have a bit of storage space that I never had before, I'm starting to stock up with non-perishable items: paper products, bottled water, etc. I've noticed the shelves in Target looking a bit empty in some areas; a reader said he's noticed that bottled water always seems to be low in Walmart; and, of course, everyone knows about the Costco policy on restricting sales of some items. 

Oil: Goldman Sachs -- we moving from a cyclical to a structural bull market in oil.

Crisis: Tea leaves suggest the JoBid administration is behind the eight ball on the impending global energy "crisis. As some folks call it. If it is a crisis, it was:

  • predicted; and,
  • preventable.

Wow, wow, wow. WTI; up almost 2%; up $1.42; blasts through $75. To infinity and beyond. And this is well beyond the driving season. Natural gas pulling crude oil forward.

Ten year Treasury: surges. Now over 1.510%. Banks are loving it.

Intel: bringing it on home. Intel starts construction of two Arizona computer chip factories. Part of a $20-billion project. This gets exciting quickly. Silicon Valley; Austin; Arizona -- the US really has depth when it comes to almost any sector. 

Re-posting: McDonald's, COP, Lockheed Martin, Accenture, JPMorgan Chase -- all reported dividend increases last week. Previously posted. Link at Barron's. 

Durable goods sales for August: just released. Much, much better than expected. Market was trending toward zero, red -- will be interesting if this provides "reassurance" for the market.

  • Yup, there it is. Dow jumps. Implied open: 65 points in the green. Maybe 75 points.
  • Nasdaq futures: down 117 points.
  • S&P 500: down a bit.

Amazing maps: the most oddly named town in each US state. Guess the town in North Dakota. Link here

Landfills: it will be interesting to see if we see any stories where GM plans to bury all those Chevy Bolt batteries. My hunch? They will be recycled and will show up in Africa in some form or another. 

Transition: Warren Buffett's point man on energy passed away over the weekend at the age of 90.

About to go global: link to Irina Slav. The European energy crisis is about to go global. 

Enerplus "Stringed Instrument" Pad Will Be Huge -- Monday, September 27, 2021

WTI: will it hit $75 today; pre-market up 1.3%; up almost a dollar; trading just below $75 at $74.93.

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

A quick look at the news this morning suggests:

  • ten year treasury: moving higher and really, really helping the market (especially the banks)
  • re-opening trade -- WTI flirting with $75; oil and oil services surging; Goldman Sachs has lifted substantially its Brent crude forecasts to $90/bbl by year-end; will continue into 2022, 2023 and what it calls the mid-cycle price; link here.
  • some mainstream media starting to link renewable energy policies with current energy crisis
  • one respected pundit calls for a "natural gas reserve" for Europe, the UK
    • hush: isn't this a bit late?
    • hush: they had one until faux environmentalists shut it down; it was called Groningen
  • the UK gasoline crisis is not getting better;
  • China's sudden thirst for energy seems to have surprised analysts; link here or direct link to a Bloomberg paywall
  • the Chinese winter has not started yet, but China's thirst for more energy right now is a big, big deal; all of this in context with the Winter Olympics in China in February 2022; link here;
  • Equinor has quietly increased significant amounts of oil to Asia; link here;
  • India: may need additional two-million bpd refining capacity by 2030; link here to Reuters;
  • many years of underinvestment; discussed often on the blog; I never bought into them; looks like it may happen: Hess sees tight oil market in near term; underinvestment risk ahead; link to Reuters; reminder: Reuters is London-based; has great world view, but at same time, sees things through European socialist spectacles. [The Economist is so much worse; explains why it never shows up on my twitter feed];
  • one begins to wonder what might happen if gasoline prices spike here in the US, from current average of around $3.10 / gallon to $5.00 / gallon
    • indications some folks are again hoarding basic non-perishables
    • Costco in some regions limiting volume purchases of some paper items
  • in the US equity markets; there appears to be a sector rotation; folks are selling small amounts of AAPL to buy moderately into oil sector
  • overnight futures starting to drop back; those who thought the market might close "green" today may be surprised; watch for day's lows to occur at 10:30 a.m. CT

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

Asymptomatic Covid: is it just me or are we seeing an increasing number of television presenters with a hacking cough; JoBid had a hacking cough there for awhile; folks commented on it; seems to have resolved; hosts on The View were said to have been coughing at the time two tested positive for Covid-19;

CNBC: because I generally don't watch the network at dawn but wait until later, I had not noticed but isn't Becky Quick looking a bit older; Joe seems not to have aged; Andrew Ross Sorkin's hair looks incredibly black -- incredibly black, but most noticeable, not one grey hair along the temples where one would expect it; I watch the screen; no volume or captions; way too political and nonsensical; video now airing highlights of the Ryder Cup (numbers to recall, all in yards: 345 71 47). I did turn on the volume for that; well-worth hearing the conversation; these guys knew what they were talking about;

Back to the Bakken

Enerplus: the Enerplus "String Instrument" pad is going to be huge. See below. Tracked here

Active rigs: no one knows. My best guess*:

Active Rigs24*11576557

Wells coming off confidential list today; ditto, but NDIC says these will report today:

Monday, September 27, 2021: 31 for the month, 42 for the quarter, 222 for the year:

  • 37029, conf, Enerplus, Fiddle 149-94-02C-01H-TF,
  • 37028, conf, Enerplus, Mandolin 149-94-02-01H,

Sunday, September 26, 2021: 29 for the month, 40 for the quarter, 220 for the year:

  • 38181, conf, Petro-Hutnt, Hurinenko 144-98-2B-11-1HS,
  • 37245, conf, MRO, Armstrong 14-34H,

Saturday, September 25, 2021: 27 for the month, 38 for the quarter, 218 for the year:

  • None.

RBN Energy: OPEC's giants claiming ground despite uncertain crude oil market.

Producers of crude oil face historic insecurity about their market. Not only is there still uncertainty stemming from COVID, oil demand is also under pressure as governments and international organizations push to replace fossil fuels with energy forms free of hydrocarbons. Members of the Organization of the Petroleum Exporting Countries (OPEC) face special challenges from measures taking shape to discourage oil use. Their economies, more than most others, depend on oil sales and many members of the exporters’ group have limited sources of replacement income. Yet OPEC producers do not lack leverage in a market expected to grow at diminishing rates and eventually shrink. Many of them can produce crude oil much less expensively than counterparts elsewhere and some of them plan to profit from that advantage by increasing output, even as the market flattens, and are investing to raise production capacity to ‘get while the getting is good.’ In today’s RBN blog, we look at capacity-boosting plans within OPEC, explain why most members cannot take part in the effort, and describe how this developing priority might intensify market competition.

A bit of "Oil-101":

In fact, analysis of undeveloped reserves suggests that six OPEC members face trouble clearing even the geologic hurdle, the one we’ll examine most closely. To assess this requirement for raising production capacity, we look at reserves-to-production (R/P) ratios. Because dividing reserves by annual production yields a quotient measured in years, R/P ratios are sometimes called reserves lives indexes and are taken to mean time remaining before resource exhaustion. But that can be misleading because oil fields don’t follow formulas. Reserves estimates change as knowledge grows about productive reservoirs and production doesn’t decline in a straight line as oil-bearing rock — the reservoir — depletes. Typically, a field peaks relatively soon after production starts then falls rapidly before flattening later in its life and beginning a slow decline that can last for a long time. Also, output can jump during a field’s life in response to techniques such as water or gas injection and enhanced recovery. For these and other reasons, a mature oil field — or a long-producing country with many such fields — can have an R/P ratio of 9-10 for much longer than 9-10 years. Regardless, an R/P ratio in that low range usually indicates that there has already been extensive field development and so there is limited potential to increase capacity by drilling more or installing surface equipment. Conversely, much higher R/P ratios imply room for further development of existing reserves and, therefore, potential for net capacity hikes to the extent that new production offsets declines from existing wells.

In Figure 1, we calculate R/P ratios for all 13 OPEC members with reserves and production data from the 2021 BP Statistical Review of Energy published in July. We use data for 2019 instead of 2020 because last year’s production suffered from oil-demand losses related to the coronavirus pandemic, making the prior year more reflective of long-term trends. The table shows reserves estimates (A) divided by the product of daily production (B) multiplied by 365 which yields annual production (C) to derive R/P ratios. The R/P ratio range among OPEC members is huge, from Angola’s and Equatorial Guinea’s 15 (blue ovals) to Venezuela’s whopping 925. We should point out that Venezuela’s R/P ratio is distorted by production suppressed by the economically beleaguered country’s inability to invest in its oil fields and by inclusion in its reserves number of heavy oil in the mostly undeveloped Orinoco Belt. Subtracting Orinoco reserves of 262,000 MMbbl leaves conventional reserves of 41,800 MMbbl and lowers Venezuela’s R/P ratio to a still high 127. That happens also to be the R/P ratio of Iran, another country with high reserves and suppressed production — in Iran’s case by international sanctions limiting exports and oilfield investment. Venezuela and Iran are the two countries mentioned earlier that, because of investment restrictions, are unlikely to raise production capacity soon despite their high R/P ratios. For countries with low R/P ratios, raising capacity is not impossible, but the resulting production increments probably would not be large. An alternative, not practicable on a large scale for many of the low-R/P countries, is to find new fields or extend existing fields through costly and risky exploration and development.

OPEC Reserves, Production, and R/P Ratios in 2019

Figure 1. OPEC Reserves, Production, and R/P Ratios in 2019. Source: BP

 Much, much more at the link.