Notes From All Over -- October 26, 2021

Dow, S&P 500: log new all-time highs ... amid earnings. Remember, the talking heads have been telling us for six months earnings are "baked in" ahead of the earnings reports.

• Dow: up 102 points
• S&P 500: up 20 points
• NASDAQ: up 30 points
• selected tickers:
• SRE: well, that's nice; up 1.23%; up $1.60; trading at $132;
• UNP: very, very nice; up 1.1%; up $2.62; trading at $243; another new high;
• ENB: flat, maybe up 2 cents; trading at $42.68
• AAPL: up about 82 cents; had been higher; trading at $149.51. I guess the resistance is $150.

iPhone camera: Macrumors has a comparison with Pixel 6 Pro. For the archives only. Folks are not going to decide which smart phone to get based on cameras. Just saying. The review: it's a wash. Is "clickbait" one word or two?

Labor shortage? What labor shortage: Costco says it is "fully employed."

My Condolences To The Folks In NE Charging Their Teslas Overnight; Waking Up Early To Start Baking Bread And Deep-Frying Doughnuts -- October 26, 2021

Link here.

This happens routinely, like clockwork, every morning about 5:00 a.m. in New England with electricity rates surging. 

Today, over $100 / MWh and, again, never recovered.

Here's the graphic. One reader attributes this to "equipment malfunction." If so, the equipment malfunctions daily starting at 5:00 a.m. It's possible that's when Homer Simpson reports to work:

COP26 Organizers Have Asked Greta To Discuss This Slide -- October 26, 2021

Link here.

Big stories are tracked here. 

Adding this to the 2022 big stories:

• unprecedented economic breakout in the US; will drag global economy along;
• surge in fossil fuel energy that began in 2021 will continue into 2022 and could last another five years
• led by natural gas

What I would most like Greta to explain/discuss:

• what happened at the "line" where natural gas decreases; coal increases (over time) -- 2021?
• why did hydro drop?
• what's going on with solar? and,
• whether wind/solar is capacity or actual generation? I assume generation. If generation, what is the ratio generation / capacity
• and, could we get a cost per Btu of each source of energy?
• and why is "coal" always represented by a black line?
• and whether 22% is trivial?
  

This Graphic Speaks Volumes -- October 26, 2021

Link here.

Now we need to overlay this graphic with free cash flow / active rig.

Oasis Is On A Roll; Preliminary 3Q21 Results; Midstream Announces Merger With Crestwood Equity Partners -- Reader -- October 26, 2021

Sorry for the delay in posting. Traveling today.

Disclaimer: there will more content and typographical errors than usual while traveling. This will remain in force for one week. 

Updates

Later, 1:10 p.m. CT: source.

Original Post

Oasis shares surge: up 5%; up $5.62; trading at $120.03.

Source.;

• Oasis Midstream Partners to merge with Crestwood Equity Partners:
• Oasis to receive $160 million in cash
• 21 million units of CEQP in exchange for 33.85 million OMP common units
• public OMP unitholders will receive 0.87 units of Crestwood common units for each unit of OMP owned.

• Preliminary 3Q21 results:
• production:
• boepd: 1,800 boepd
• oil: 31,000 bopd
• CAPEX:
• >20% below guidance
• FY201 CAPEX reduced by 9%
• financial
• increased its first dividend 33% to 50 cents/share/quarter
• OMP announced a 56-cent / unit distribution in 3Q2

Oasis is tracked here.

Price Action Re: UNP Past Few Days Has Been Incredible -- October 26, 2021

A reader sent me a random note regarding ports on the US eastern seaboard.

My not-ready-for-prime-time reply:

This is quite coincidental. I can't recall but I think I posted a note on the blog (if I didn't post it there, I sent the note to [a reader]; I honestly don't remember) ... regarding the beneficiary of any opening of the ports with the choke points.

Historically, there is always huge competition between "trucking" and "railroads."

I never knew how intense that competition was until I started the blog some years ago.

Right now, the trucking industry is in a world of pain -- no drivers. [As soon as that was noted in the press, one should have looked at railroads for investment considerations; I'm somewhat surprised the CNBC talking heads never noted this. Huge miss on their part. Shame, shame.]

When the trucking industry is unable to meet demand, the trains benefit.

UNP has had a huge, huge run-up over the past few days, despite the high cost of diesel.

Investors are betting that the choke points at the ports will be resolved sooner or later; and if the auto industry takes off in CY2022, the railroads will be a huge beneficiary.

In addition, crude-by-rail, and there's a possibility, though remote, that the US will again become a huge exporter of coal if China / Asia ends up in dire energy straits.

I will be curious if Florida can open its ports. We'll see.

Folks will immediately opine that the sailing time  through the Panama Canal will be intolerable. Give me a break. They are spending two months anchored off-shore Californa, and it will only be an extra month -- if that long -- to get to Florida.

All those containers headed to California will be railroaded from East Coast to California. There are only two RRs that go into California: UNP and Burlington Northern (owned by Warren Buffett).

Did I forget anything?

Oh, yes, Resident Biden is a huge fan of railroads. Probably won't sign off on anything that hurts the trains.

Christmas Shopping Suggestion -- October 26, 2021

If this doesn't become the best-selling camiseta this year, I will lose all faith in the American entrepreneurial spirit.

George Soros needs to distribute these to the 75,000 Haitians now on their way to Texas.

"Vamos, Brandon" on the reverse.

Made in China, of course.

Let's See What Sticks -- October 26, 2021

The two biggest investing mistakes I've made in the past few years:

• listening to Jamie Dimon opine on Bitcoin; and,
• listening to the Montana Skeptic re: Tesla.

Is anyone paying attention? Source.

The twitter links and source articles from those links.

Coal:

• Arch: last dividend was paid 3/13/20 = 50 cents. Now announces a 25-cent dividend payable 12/15/21; record date, 11/30/21. Link and link.
  

Inflation:

• countries where central banks have raised rates: highest inflation rates.
  
• US: nowhere near raising rates
• Spain: 23% increase in producer prices "overnight"; Europe's inflation pressures are formidable and show no sign of abating; they remember Germany's hyperinflation; source.
  

Janet Yellen:

• will impose taxes on coins earned by Mario. Source.
  
• "won't be a coin tax, but rather a tax on those little gold things that Mario jumps for"

Elon Musk:

• really, really rich
• now worth more than XOM;
  

Tesla:

• really, really ... amazing
• "everyone" says they missed but still won't buy;
  
• market value exceeds the entire global auto industry PLUS Uber, Lyft, Progressive, Geico (if public), Allstate, Duke Energy and Dominion energy
• shares, TSLA:
  
• traded at $900 yesterday
• today trading at $1,000
• target: $1200
  
• Hertz deal: analyst has it all wrong; using "old textbook" to analyze deal; 
• TSLA trades above $1,000: announces cure for cancer and HIV at the same time from its auto driving system. Source.
  

US equity markets:

• futures suggest another good day for those "long" and fully invested
• Big Oil about to post highest cash flow in 13+ years; source.
  

Rally on:

• US natural gas prices extend rally; back above $6 / MMbtu; highest level in three weeks;
• US natural gas prices: a hair away from a 13-year high; source.
• "a hair"? how many transistors could Apple fit on the width of a human hair?

Medicare and "open season":

• does anyone really understand any of this

Obamacare and "open season":

• no one understands this

US oil in storage:

• whatever is reported today / tomorrow, 1.1 million of those bbls came directly from the SPR. Source.

Hedging:

• oil companies who hedged were "clever by half"; will take huge losses;  
• a lot of bean counters behind closed doors need to be fired;
• a lot of risk averse CEOs need to be fired;
  
• CLR schools PXD
• PXD: huge loss -- mostly due to hedging; bit off more than it could chew?
• $501 million hedging loss. Also, here over at Hart Energy;
  

Permian:

• small, private operators take center stage; source.

EVs:

• winner: Ford
• if I were to invest in EVs, my first choice? Ford
• I wasn't alive then, but when the Model A and Model T were released, other than Ford was there any other competitor to Ford; is Tesla in the same spot as Ford when it was releasing the Model A and Model T? I don't know. Asking for 9,465 readers.
  

Natural gas:

• it's just beginning;
• benchmark Henry Hub prices are up 15% in the last two days; not even winter yet;
• back above $6 / MMbtu; source. 
• Javier Blas swims upstream: prefers mBTU rather than MMbtu -- used to confuse me; no more;
  
• let's go Brandon

Blue hydrogen:

• Saudi to use $110 gas field for blue hydrogen. Also, here, at a more trusted source: Yahoo!Finance. 
• reader says Saudi gas not "true blue." It will be the same as "Dakota Gas" after Mitsubishi conversion. And that reader knows what he's talking about. Trust me.
  

Unions:

• Teamsters kicked out of XTO Logistics facility in California; breaking point?
• Let's go, Brandon

Recession:

• yeah, likely, but different this time

Coal:

• China and Australia talking

Cotton:

• China importing US cotton
• US cotton + shipping < cost of producing cotton in own country (China)
• think about it: all those container ships sailing back empty to China

Bitcoin:

• "everyone" says they missed it but still won't buy;

Saudi Arabia:

• if one doesn't consider the very likely possibility that KSA has no swing capacity, is not reading the tea leaves;
  
• more and more hints from Saudi Arabia they are at their max when it comes to crude oil, at least in short term;
• people's exhibit #1; 
• people's exhibit #2; if Bloomberg reports it, it must be true;
• people's exhibit #3: Saudi-Kuwait Neutral Zone facing technical issues; maximum output still far off. Source. An amazing story. Full story at Platts.
  
• huge demand for fresh water
• needs fresh water to frack -- they wouldn't be going their route if they didn't have to
• Red Sea drilling
• pivots to natural gas

XOM, source, 2020:

• headcount: 72,000
• look at this: average length of service -- 30 years
• estimated workforce savings: $1 billion to $2 billion per year
• "strange way to make money"
  

Green salad choice?

• green cabbage beats iceberg lettuce; no contest;

North By Northwest:

• would the ending have been different had this been Mount Rushmore? Asking for Cary Grant, Eva Marie Saint. and Leo G. Carroll.

Opening Gambit -- Throwing Jello At The Wall -- Let's See What Sticks -- October 26, 2021

Inflation:

• countries where central banks have raised rates: highest inflation
• US: nowhere near raising rates
• Spain: 23% increase in food prices "overnight"

Janet Yellen:

• will impose taxes on coins earned by Mario
• "won't be a coin tax, but rather a tax on those little gold things that Mario jumps for"

Elon Musk:

• really, really rich

Tesla:

• really, really ... amazing
• Hertz deal: analyst has it all wrong; using "old textbook" to analyze deal;
  

US equity markets:

• futures suggest another good day for those "long" and fully invested

Medicare and "open season":

• does anyone really understand any of this

Obamacare and "open season":

• no one understands this

Hedging:

• CLR schools PXD
• PXD: huge loss -- mostly due to hedging; bit off more than it could chew?

EVs:

• winner: Ford
• if I were to invest in EVs, my first choice? Ford

Unions:

• Teamsters kicked out of XTO Logistics facility in California; breaking point?
• Let's go, Brandon

Recession:

• yeah, likely, but different this time

Coal:

• China and Australia talking

Cotton:

• China importing US cotton
• US cotton + shipping < cost of producing cotton in own country (China)
• think about it: all those container ships sailing back empty to China

Saudi Arabia:

• if one doesn't consider the very likely possibility that KSA has no swing capacity, is not reading the tea leaves;
• more and more hints from Saudi Arabia they are at their max when it comes to crude oil, at least in short term;
• huge demand for fresh water
• needs fresh water to frack -- they wouldn't be going their route if they didn't have to
• Red Sea drilling
• pivots to natural gas

Green salad choice?

• green cabbage beats iceberg lettuce; no contest;

Yup, Pretty Much Says It All -- October 26, 2021

 

Let's go, Brandon.

Source.

One Well Coming Off Confidential List -- October 26, 2021

Active rigs:

$83.59	10/26/2021	10/26/2020	10/26/2019	10/26/2018	10/26/2017
Active Rigs	23	13	57	67	53

One well coming off confidential list:

Tuesday, October 26, 2021: 22 for the month, 22 for the quarter, 245 for the year:

• 36929, conf, Rimrock Oil & Gas, FBIR Guyblackhawk 24X-27H, another huge well, first production, 7/21; t--; cum 51K 8/21;

RBN Energy: Permian natural gas markets singing a familiar tune as constraints loom. 

Some things you can pretty much count on this time of year, like the end of 100-degree days in Houston, Aggies rooting against Longhorns, and the Astros in the World Series. Permian natural gas production has also been consistently higher the last few years. It’s usually on its way to new highs as we approach the holidays and 2021 is another fine example. After a bang-up 2020, this year has been one of continuously solid gas production growth in the Permian, with gas volumes currently sitting near 14 Bcf/d, up around 1.5 Bcf/d versus this time last year. What’s more, at today’s crude oil prices, which encourage increasing production of oil and associated gas, there is no end in sight for Permian gas growth. Which means, as many gas traders already know, that the Permian’s primary gas market, the Waha Hub, may soon be headed back into the familiar territory of deep basis discounts. In today’s RBN blog, we look at the latest developments in Permian gas markets.