Thursday, October 28, 2021

Notes From All Over -- October 28, 2021

WKRP in Cincinnati, "The Consultant":

Weeknd, "Save Your Tears":

Notes From All Over -- The Barbecue Edition -- October 28, 2021

The price of gasoline: I'm pretty glib about the price of gasoline, which is very inappropriate -- it's inappropriate for me to be glib about the price of gasoline. I don't drive much and retired, my wife and I don't need much. 

But a lot of folks are really going to start "hurting" with $4.00 gasoline across the country and trending toward $5.00 / gallon in some metropolitan areas on the east coast and west coast. 
Every time one fills up with gasoline, or every time one simply drives past a station and sees the prices they must be reminded of who is in the White House and that resident's attitude toward the oil companies and the pipeline companies. 
It's amazing to think we went from $1.79-gasoline to $3.79 gasoline in less than a year. I wonder how that happened?
I don't think it's going to be a pretty picture for any incumbent next autumn if the price of gasoline remains unchanged, or worse, trends higher.

Utility bills: this, the high price of gasoline, of course, comes on top of high utility bills we will see this winter. I think the "betting" is that utility bills, in general, will be upwards of thirty percent higher than they were last year, regardless of the severity of the winter. 

I don't notice any of that when I'm home in north Texas. I get around almost everywhere on bicycle and my utility costs will be quite minimal in the big scheme of things, But it's very noticeable when I'm visiting my grandsons in Portland, OR. Lots of traffic, and gasoline is trending toward $4.00 / gallon, and, in general, the cars look older and in worse condition than what I'm used to in north Texas. The folks in these older, battered cars don't look like the kind of folks that can handle $4.00 gasoline for very long.

On a more positive note, I just love Hulu. Here I am, well away from home, and I can tune into Hulu and watch the Thursday night NFL football game. Before Hulu, I couldn't receive Thursday night football -- "owned" by some network to which I did not subscribe.

Earlier today, we had brisket, and pulled pork, and barbecued chicken -- on a residential street less than a city block from where we live, a gentleman has a huge smoker and Thursday through Sunday has the smoker going and sells barbecue. Amazing. And excellent.

What Happens If Cushing Crude Oil Inventories Drop To Zero -- October 28, 2021

Link to Tsvetana Paraskova, and archived here:

  • stocks at Cushing have halved since April 2020 market rout
  • storage at Cushing alone has the potential to really rally the market to the moon
  • the WTI-Brent spread is now at the narrowest it has been in just over a year

RBN Energy has also addressed the storage issue at Cushing recently, but it raises the question: if Cushing's stocks are so low, a) why is WTI still only at $82 (went down today); and, b) why is number of days of crude oil in US storage still at a relative robust 28 days?

Where is all that oil?

By the way, at the other end of the spectrum, apparently the bottom has fallen out of western heavy Canadian oil -- no one wants heavy, sour (high sulfur) oil. Even as the WTI-Brent spread narrows, the WTI-western Canadian oil spread is about as wide as it's been in a very long time.

So, folks prefer WTI and Cushing is run out of WTI. Pretty amazing.

Apple, Inc -- Earnings -- 4Q21 -- September, 2021, Quarter

Original post: Apple

  • meets EPS
  • misses on revenue
  • shares will plunge ... and they did ... could fall as much as $8.00 after hours; trading at $145.00. Comment: anything over $145 is fine.
  • demand robust; supply chain issues
  • if Apple can't get chips, no one can get chips;
  • Tim Cook, guidance: still expects a record 4th quarter 
  • more at Macrumors.

But as the numbers come in and more information is released, a completely different picture.

Revenue: a lot was being made of missed revenue forecast, but spend some time on this graph:

For the quarter:

  • revenue: $83.4 billion vs $64.7 billion, same quarter one year ago;
  • new quarterly profit: $1.24 / share; vs 73 cents same quarter one year ago.
  • September quarter:
  • a record
  • Mac and Services both set all-time records
  • but look at this, gross margin was 42.2% vs 38.2% same quarter one year earlier
  • dividend unchanged, to be paid November 11; record date, November 8, 2021

For the full fiscal year, 2021: shattered company records with $365.8 billion in sales; $94.7 billion in net income, up from $274.5 billion in sales and $57.4 billion in net income for fiscal 2020.

  • $366 vs 275 ..... billion ... wow.

A Closer Look At The DUC Reported Completed Today -- October 28, 2021

One producing well (a DUC) was reported as completed:

  • 37801, 2,530, MRO, Brusseau USA 11-3TFH, Reunion Bay, first production, 4/21; t--; cum 130K 8/21; see this post;
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

One New Permit; One DUC Completed; Five Permits Renewed -- October 28, 2021

Southern surge: separated families will get up to $500,000 in reparations. What a great country. 

Covid-19: holy mackerel. It's only a two-day snapshot, but it appears number of vaccines given per day is surging by almost 50%. Of course, a lot of these will be boosters, and a lot more to those who prefer not to lose their jobs over mandates. 

ISO NE: $85, with spikes throughout the day. Link here. For the most recent quarter:
lower natural gas volumes

Back to the Bakken

Hess: link here. Most recent quarter --

  • adjusted net income: 486 million vs a loss of $216 million a year earlier
  • CAPEX: $498 million vs $331 million a year earlier (that's interesting: spent a whole lot more but less drilling, and less production)
  • 148,000 boepd vs 198,000 boepd prior-year quarter
  • primarily due to lower drilling activity; reduction in rigs, and maintenance

Active rigs:

Active Rigs2915596753

One new permit, #38630:

  • Operator: Eagle Operating, Inc
  • Field: Foreman Butte (McKenzie)
  • Comments:
  • Eagle Operating has a permit for a Willy Miranda-State well, to be located in Foremen Butte oil field; sited in NWNW 16-150-102, 705 FNL and 505 FWL.

Five permits renewed:

  • Liberty Resources (4): four Albertson E permits in Mountrail County;
  • BR: an Abercrombie permit in McKenzie County

One producing well (a DUC) was reported as completed:

  • 37801, 2,530, MRO, Brusseau USA 11-3TFH, Reunion Bay, first production, 4/21; t--; cum 130K 8/21;

Notes From All Over -- October 28, 2021

Detroit 442:

Detroit 442, Blondie

442: Confusingly, the 442 (pronounced "four four two") did not have a 442-cubic-inch engine. Instead, the numerals indicated that the car had a four-barrel carburetor (atop a 330-cubic-inch V-8), a four-speed manual, and dual exhausts.

Earnings -- Apple -- October 28, 2021

NASDAQ and S&P 500 both close at record highs.

  • Dow: +240, 35,730
  • S&P 500: +45; 4,597
  • NASDAQ: +212, 15,448

WTI: up 0.54%. 

F: jumps 8% based on strong earnings.

Amazon misses. Someone is going to get fired. "

Amazon badly misses on earnings and revenue, gives disappointing fourth-quarter guidance." Link here. Weakness on line surprised me but it suggests that vaccinated folks moving back to the malls and other brick-and-mortar stores.

Starbucks: EPS beats (barely) but misses on 4Q21 earnings (July - Sept, 2021). China was the big story. Starbucks projected sales qtr/qtr would be flat, but in fact China sales shrunk by seven percent. Link here.

  • meets EPS
  • misses on revenue
  • shares will plunge ... and they did ... could fall as much as $8.00 after hours; trading at $145.00. Comment: anything over $145 is fine.
  • demand robust; supply chain issues
  • if Apple can't get chips, no one can get chips;
  • Tim Cook, guidance: still expects a record 4th quarter 
  • more at Macrumors.

Facebook: rebrands as Meta (as in metaverse).

UNP: up almost $3.00 during normal trading hours, but then gave almost of it back after hours. 

US Supreme Court: gives "okay" for Oklahoma to go ahead with capital punishment.

Cuomo: charged with misdemeanor sex crime.

Notes From All Over -- The Big Stories Today: Suncor, Shell, US Housing Sales, US GDP -- October 28, 2021

Devil's advocate: I'm beginning to think all the prognostications that "we" desperately need more oil and more natural gas production is a very, very false narrative.

Cash! Shell (RDS) has recorded the highest ever cash flow from operations.

OPEC: no longer the swing producer. Sees tighter 4Q21 oil market ... hey, aren't we already in the fourth quarter, and the definition of "swing producer" is 30/90.

US natural gas storage: in fine shape coming into winter. EIA stats from yesterday.

Renewable investments: US investors shunning solar, wind; most fund managers now say they prefer traditional energy companies.

Oh, oh: Tesla is setting the bar for EVs --- VW CEO admits. Link here. VW is the "people's car."

Tesla: is anyone paying attention. From today:

Even after Tesla raised its prices this past weekend, the automaker’s Model 3 four-door sedan still costs $45,190, roughly comparable with competitors like 2021 Nissan Leaf and the 2022 Chevrolet Bolt EUV. Tesla’s Model Y car, a crossover SUV, now costs $58,190 — similar in price to a 2021 Ford Mustang Mach-E SUV. 
Comment: the writer is low-balling the Tesla -- saying that Musk's bold prediction thirteen years was right, but having said that, the writer suggests that the Tesla is in the same ballpark as the Chevy Bolt. Bolt. Tesla. Bolt. Tesla. Decisions, decisions. And even worse: Nissan Leaf. Tesla. Nissan Leaf. Tesla. Decisions, decisions. 
If this has come down to a decision between Tesla and the Bolt or Tesla and the Nissan Leaf ... I'll take that bet.

San Francisco: sets all-time high ... for gasoline -- $4.75 / gallon.  But it could be worse -- London: 143 pence per liter. 

  • one liter = 0.264172 gallons
  • 143 pence = $1.96 (today's rate)
  • $1.96 / 0.264172 = $7.42 / US gallon

YUM: like Chipotle, McDonald's -- earnings beat; shares up; earnings fueled by strong demand for KFC. Link here. 

CMCSA: beats expectations for revenue, earnings and customers, in 3Q21. Link here.

RDS (Shell): cuts 2021 CAPEX guidance to $20 billion from $22 billion, despite high oil prices. 

Solyndra redux: link here. Good, bad, or indifferent, won't break the bank. Over ten years?

Crossing The Line

When I visit the twins I stay in the family's guest bedroom. The twins, Levi and Judah, nineteen months old, know that they are not to come into the bedroom under any circumstances. That's their dad's rule. I don't care one way or the other.

This morning, I was curious what they would do if given the opportunity. 

Notice that Levi knows exactly where the line is. He puts his big toe right on the line and points to the line. 

But just before putting his toe on the line, he takes one last look down the hallway toward the bedroom where his dad and mom sleeps, and then a shorter glance toward the living room to make sure the coast is clear. 

He then turns his foot sideways to parallel the line to see if I notice or if the edge is safe enough to bear his weight.

Meanwhile, his brother Judah, in the background, eggs him on.

Finally, he crosses the line, but note the very tiny, cautious baby steps -- he wants to make sure he won't fall off the edge of the earth into the great unknown abyss.

Whiting Will Report Two Wells Today, Including One In The Prolific Sanish -- October 28, 2021

China: ramping up coal imports from Russia, not Australia. CNBC

US GDP, 3Q21:

  • well below expectations of 2.6%; drops to 2.0%
  • market takes off --
    • pundits: on back of strong earnings from Ford, Mastercard
    • nope: with GDP well below expectations, the Fed will slow tapering talk
    • in addition, pending home sales fell unexpectedly; will also get the Fed's attention
    • and, oh, by they way, in the final stretch to decide whether Jay Powell is let go by BIden
    • Congress closer to passing a $1.75 trillion infrastructure bill; get rid of the renewable energy crap and it passes quickly;

Unemployment: weekly first-time claims set a "marginal" new pandemic-era low; labor market slowly recovers; 281,000 filings.

  • Starbucks: $15 minimum next summer; $17 will be new average; range, $15 - $23;
  • McDonald's: $11 to $17 for entry level
  • Chipotle, average in California, $16 or 33% above the national average

WTI: $82.37. 

US equity markets: it appears more records will be set today; selected tickers:

  • AAPL: up an astounding $3.18/ up over 2%; trading at $152.02 (warning: AAPL reports earnings after market close tonght; historically AAPL retreats significantly after earnings releases0 -- this I absolutely did not expcct
    • forecast:
      • Barron's says trades worried about earnings release tonight; I guess that's why APPL is surging in early morning trading;
      • revenue: $84.9 billion; let's call it $85
  • EPS: 73 cents / share; let's cal it 75 cents
  • UNP: up another $1.16; new 52-week highs;
  • EPD: down 0.6%
  • EOG: up 0.2%
  • DVN: up o.5%
  • OKE: up 0.3%
  • SWX: up 0.6%; see RBN Energy  below;

Back to the Bakken

Active rigs:

Active Rigs2915596753

Two wells coming off the confidential list:

Thursday, October 28, 2021: 27 for the month, 27 for the quarter, 250 for the year:

  • 36817, conf, Whiting, S-Bar 12-2-2H, Sanish, first production, 5/21; t--; cum 38K 8/21;
  • 37478, conf, Whiting, Sorenson 21-6-2HR, Bully, first production, 4/21; t--; cum 76K 8/21;

RBN Energy: perceived value at heart of dispute over Questar pipeline sale.

The recently announced acquisition of Questar Pipeline LLC by Southwest Gas has stirred up a hornet’s nest. Southwest sees it as a milestone moment that will allow it an increased role in the energy transition, but activist investor Carl Icahn sees it as a serious blunder that would make all previous management missteps pale in comparison. As Dave Mason sang in “We Just Disagree,” a dispute over value is at the heart of the matter, one which has led to a proxy fight, a tender offer for Southwest Gas, and a lot of harsh words. In today’s RBN blog, we take a closer look at Questar’s natural gas pipelines and other assets, the roles they play in relation to the Rockies’ other pipelines, and how it all factors into Questar’s perceived value.

As we noted recently in We Just Disagree, Part 1, the planned acquisition of Questar Pipeline LLC by Southwest Gas has brought with it a lot of conflict. The story began with Dominion Energy’s decision to sell a broad set of its gas transmission and storage assets to Warren Buffett’s Berkshire Hathaway Energy for $9.7 billion in July 2020, but it turned more complicated when Dominion and Berkshire decided to terminate the Questar part of the sale in July 2021 over lingering concerns it would be held up by the Federal Trade Commission.

That put Questar back on the market, and Southwest Gas quickly moved in, announcing a deal for Questar on October 5. The price tag — $1.975 billion, which included the assumption of $430 million in debt — brought with it a lot of attention, and questions. For starters, it’s significantly more than the $1.3 billion that Berkshire had committed to pay for the same assets a year earlier. But the price tag did more than just raise a few skeptics’ eyebrows — it got Icahn involved as well. On October 4, as reports of the planned Southwest Gas-Dominion deal for Questar came to light, Icahn revealed that he held a 4.9% stake in Southwest and would fight to block the transaction. The price tag was one of the primary objections he raised in a letter to investors.