Monday, November 1, 2021

The New Montana "Let's Go, Brandon" Surcharge -- Monday, November 1, 2021

My younger sister is doing some renovating in her home in Montana.

This is the sales receipt for a five-gallon can of white primer paint. There is no sales tax in Montana. 

Note the new charge, something neither of us had ever seen in Montana (or anywhere else for that matter) -- a "supply chain charge" of four percent. 

Perhaps the charge would be more accurate to call it the "Let's go, Brandon" surcharge.

Breaking -- November 1, 2021

Texas canines: owners can no longer chain dogs outside. Wow. 

McDonald's McRib: is back. 


  • Black Stone Minerals: earnings, 3Q21.
    • 33,000 boepd
    • net income and adjusted EBITDA: $16.2 million and $76.5 million
    • distributable cash: $70.2 million; a decrease of 3% relative to 2Q21
    • a distribution of 25 cents per unit
  • WMB: beats 23.4% on EPS; beats 18.55% on revenue. TipRanks. Whisper numbers. Results here
    • EPS: 34 cents / share vs 28 cents and the whisper number was 30 cents per share
    • revenue: $2.5 billion; grew 28% y/y
    • raises full-year guidance to $5.50 - $5.55 billion from $5.20 - $5.40 billion at the high end;
  • FANG: raises dividend to 50 cents.

Here it comes, transitory surcharges:

  • FedEx to raise rates an average of 6% after January 1, 2022

No New Permits; WTI Holds Just Above $84 -- November 1, 2021

Note: in a long note like this, there will be typographical and content errors. If this is important for you, go to the source. In addition, much of this was done on the fly, watching various streaming sources, and my data may have errors. Some companies have similar sounding names and their may be errors in names listed below. This is done for my benefit and is not designed to be used by others. 

US equities: all three major US indices closed at record highs today. Jim Cramer:

  • sell in May, go away - bad, bad advice; summer: time to being building positions
  • September: scary; very volatile; sell off may begin
  • October, up until just before the last week in October, generally sells off: very scary; bearish
  • last week of October and through the end of November: "the promised land."
  • Cramer's anointed list -- when you go through this list, note which companies are not listed (hint: Jim Cramer "invented" the FAANG or FANG acronym)
    • automobiles of the present and future
      • omnisem
      • Ford
      • Rivian
      • Tesla
      • NXP
    • metaverse
      • nvidia
      • meta (Facebook)
      • unity
    • the environment
      • Plug Power
      • ENPHASE
    • the cloud
      • nvidia
      • AMD
      • Microsoft
      • Adobe
      • salesforce
      • snowflake
    • energy
      • Chevron
      • Pioneer
      • Devon

Wheat: over $8/bushel, first time since 2012. 

Football, from social media: It's November 1, which means there's going to be an NFL or college football game available on your TV tonight, tomorrow night, the day after that, the day after that, and every single day or night for the next twenty-four days. The next empty night is three Wednesdays from now.

Tesla: opens charging network to other EVs for the first time. It's a pilot program / test in the Netherlands only. Link here. TSLA was up 8.5% during normal trading hours and another 1.17% after hours.

Oil: Bank of America suggests Brent at $120 a barrel by June, 2022.

Europe's energy crisis: Russia's Gazprom cut its daily natural gas exports to key markets in October to the lowest for this time of the year since 2014: 419 mcm/day, about thirteen percent less than September's average, as Gazprom concentrates on replenishing its own inventories at home. Link here. Russia looks to capitalize on the global energy crisis; while others attending meaningless meetings in Rome and Glasgow, Russia playing "natural gas" chess with Europe. Link to Haley Zaremba

Zillow: "The more you dig into this Zillow thing, it's just unbelievable incompetence" -- social media

  • Zillow is public; ticker symbol, Z. 
    • February 8, 2021: $198 / share
    • today, November 1, 2021: $79.15 / share
  • Zillow offloading homes now -- story posted "four minutes ago" -- raising red flags about the real-estate market, says the headline. What little I know? The red flags are being raised over Zillow, not over the housing market. 
  • From the linked article:

Zillow’s unexpected announcement in October that it was temporarily pausing its home-buying activities raised many analysts’ eyebrows. Now, the company is reportedly offloading thousands of homes at a discount.

Some argue that more concerning trends could be on the way.

The company’s Zillow Offers division is what’s known as an “iBuyer” — it purchases and sells homes directly to consumers, typically renovating them in between.

Following a report in mid-October from Bloomberg, Zillow confirmed that its Zillow Offers division would not be signing any additional new contracts to purchase homes through the end of 2021.

In explaining the move, Zillow said the company was facing a backlog of renovations and dealing with operational-capacity issues.

Now, though, Bloomberg is reporting that the company is selling off roughly 7,000 homes, looking to claw back $2.8 billion in the process.

A separate report from KeyBanc analyst Edward Yruma found that two-thirds of the homes Zillow has listed for sale feature an asking price below what Zillow paid for the property, with the average discount being 4.5%.

Back to the Bakken

Active rigs:

Active Rigs3114576853

No new permits.

One permit renewed:

  • 37942, n/d, Bowline (Nine Point Energy), Missouri W 152-103-4-9-7H, Eightmile, NDIC has not updated the scout ticket; still shows as loc/loc;

NDIC did not update the "active rig" list.

Something Tells Me OPEC+ Really Doesn't Care -- Remember The Stated Price Target For OPEC -- November 1, 2021

 COLA, military: there it is, it's official -- a 5.9% COLA for military retirees. Whoo-hoo. Apparently announced on / about October 28, 2021.

Biden on climate change: I'm not listening to any COP26 speeches, so I am very, very happy readers are doing that for me. From a reader moments ago: 

I just listened to Biden talk about climate. For some reason it made me remember what an old cowboy said, "Pepper corns and rat turds look a lot alike but its good to know the difference."

From the man who shut-out affordable, accessible, dependable crude oil from the nation's largest trading partner and one of only two nations that shares a long border with the US, Biden is begging for help from Russia and OPEC. Headline from at the G20 meeting in Rome, Italy:

Why Big Oil or the GOP is not making this a huge "marketing" campaign is beyond me. Is anyone seeing any ads on television wondering why the president killed the Keystone XL, is denying drilling on federal land, and will require new environmental statements on BLM land?

Brandon, MN:

New Records; Dow Hits 36,000 For First Time Ever; All Three Major Indices Hit New All-Time Intra-Day Highs -- November 1, 2021

Note: done quickly. There will be content and typographical errors.


Reporting today/tomorrow:

  • FANG: closed up 4.12% for the day; down 1.17% after hours; earnings here;
  • WMB closed up 1.60% for the day; up another 1.96% after hours; reporting tomorrow?
  • Otter Tail Power: closed up 1.10% for the day; flat after hours; reporting tomorrow?
  • RIG (Transocean): closed up 6.52% for the day; down 5.59% after hours; reporting tomorrow?
  • Viper Energy (VNOM):: closed up 1.77% for the day; up another 3.74% after hours; reporting tomorrow?

Last Thursday, October 29, 2020:

  • PSX: EPS, $3.18 vs $1.95 cents estimated; revenues of $31.47 billion;
  • XOM: biggest profit in seven years;
    • earned an adjusted $1.58/share just above the estimate of $1.56
    • net income: $6.8 billion, the most since 2014

October 20, 2021:

  • SLB:
    • estimates: earnings to jump 125% to 36 cents / share; with revenue up 13% to $5.94 billion.
    • actual: EPS of 36 cents (in-line); revenue missed, at $5.85 billion

Later, 11:08 a.m. CT: wow, look at this, DVN up almost 5%, up $1.88, now trading just four cents below $42.00. Other oils:

  • EOG: up 1.1%
  • CVX: up a bit
  • CLR: up almost 3%
  • OAS: up almost 3%
  • PSX: up 3%
  • it should be noted the WTI is pretty much flat for the day, although it did go over $84 again; the movement in the prices of oil stocks suggests:
    • weaker dollar;
    • more inflation; though ten-year Treasury was flat to down today;
    • investors starting to look at demand / supply projects; not hearing "good" things from OPEC today; or,
    • simply background noise, but the 5% in Devon certainly caught my attention. There is likely other Devon-specific news of which I am unaware (haven't looked). I believe Devon reports earnings tomorrow -- if so, that may be the reason for the sudden interest.

Original Post

Ten-year treasury goes below 1.6%: 1.593%.

A few US equity notes:

  • Deere, up 5%;
  • Starbucks: up 3.5%;
  • Southwest Gas: up a bit
  • BKH: up a bit
  • both MSFT and AAPL down about a percent or more;
  • oils, oil services, pipelines, in general, up, of course, following price of WTI, trading just under $85; up $1.05 today, so far;

Cheesecake-to-go: how it saved the Cheesecake Factory. Link to The WSJ. This is such a cool story. This is exactly what I've said before. Some folks used the lockdown to their advantage, using the year to re-think strategy.

With its massive menu offering everything from crispy chicken sandwiches to coconut cream cakes, Cheesecake Factory Inc. already ran among the most complicated operations in the restaurant industry. It’s emerging from the pandemic with a model that’s even more sprawling and complex.

When Covid-driven closures cut deeply into sit-down business in Cheesecake Factory’s cavernous, lavish dining rooms, the 208-restaurant chain emphasized to-go orders to help buttress sales. It worked: The chain is averaging more than $3 million in to-go orders per location this year, more than double its typical amount before the crisis.

Cheesecake, in particular, travels well, and people order it at all hours. The company said it sold more cheesecake as a percent of sales last year than it did before the pandemic. “You have a few more people who are just getting slices at nine o’clock at night delivered to their house,” said David Gordon, the chain’s president.

Now more customers are returning to Cheesecake Factory’s 10,000-square-foot dining rooms too. And the combination has stretched the company and its workers, some of whom say they are at a breaking point.

Personal interest in the Cheesecake Factory: pending.

Nominee For 2021 Geico Rock Award; Churn, Churn, Churn Or Buy-And-Hold? November 1, 2021, the New Hampshire Center for Public Interest Journalism, as reported by Garry Rayno, October 26, 2021: natural gas issues could impact New England this winter. 

Federal energy regulators predict natural gas may be in short supply for New England this winter.

New England electric generators are more dependent on natural gas than any other fuel, with about 52 percent of generation produced by natural gas facilities.

According to the Federal Energy Regulatory Commission’s annual assessment of winter energy markets and reliability, in extreme winter conditions the region’s commercial and industrial sectors may have to curtail activities and there may be outages in the natural gas and electric sectors.

But the report notes there should be ample fuel supplies to produce enough power to meet demand under expected conditions.

ISO NE: spiked again to nearly $90 earlier this morning. Expensive hydro spiked at 0600 hours, or 6:00 a.m. Renewable energy doing very well contributing 15% of demand, more than the 12% provided by nuclear.

Mom-and-pop retail investors, take heart.

  • Harvard University made 9.2% over the last decade
  • the Nevada pension, which uses passive investment vehicles -- made 10.1% over the last decade
  • the manager, Steve Edmundson, makes $127,000 / year
  • the manager of the Harvard endowment makes $8.6 million / year

Bob Pisani, over at CNBC just reported the same thing last week:  

It may seem like a stock picker’s market, but long-term data still backs the buy-and-hold crowd. A majority of active managers failed to beat their passive benchmarks in the last year and only 11% of large-cap fund managers outperformed over a 10-year period, Morningstar said in a report last week.

Much, much more at the link. 

Without question, the biggest investing mistakes I've made over the years? Selling shares of stock in great companies.

Russia, Germany, Gazprom, Natural Gas, And All That Jazz -- November 1, 2021

I'm going to re-post, in its entirety, an earlier post on Russia, Germany, and natural gas.

For the next ten days, every world leader except the leaders of Russia and China are going to tell "us" that "we" can no longer afford to depend on fossil fuels. It will be interesting to see if Mr Putin might want to call "our" collective bluff, cut off natural gas to Germany and ask them if Ms Merkel really believes fossil fuels are no longer needed. 

Remember: Nord Stream 2 has not yet been "approved," as far as I know. Fact check me on this.

I doubt that will happen, that Putin would cut off natural gas to Germany, but it's an interesting story, and for that reason, am re-posting an earlier post in its entirety.



November 1, 2021: Europe's gas prices soar again on lower Russian supply. This seems to confirm an earlier tweet: flows of natural gas at the Mallnow entry point in Germany of the Yamal-Europe pipeline dropped to zero on Saturday. Link to Tsvetana Paraskova.

November 1, 2021: Is Russia actually moving gas east out of Germany? "EU demand met in full." Gazprom says EU demand met in full after Mallnow flows reversed. Link here.  

Original Post

Link here.

Russian pipeline changes direction: energy politics come to the fore. Link to DNYUZ.

A weapon? From Reuters, "Russia is close to using natural gas as a weapon in Europe's gas crunch" -- a Biden administration energy advisor. The advisor may be a nominee for the 2021 Geico Rock Award. Don Trump saw this coming two years ago.

Notes From All Over -- Early Morning Edition -- November 1, 2021

Tesla: will open higher again today, setting new records. 

Coca-Cola: $8 billion deal; will buy BODYARMOR Sports Drink. 

US equity markets: if the market opens where the futures are now, we could see new records set

WTI: flirting with $84; most oil stocks up slightly. There still seems to be a disconnect between price of crude oil in the US and what the fundamentals are showing (inventories).

US oil: demand was at 20.5 million bopd in August, up almost 2 million bopd or 10.5% y/y and only down a half million bopd of 3% compared to August, 2019, pre-covid. Link here
days supply, crude oil, last week of the following months:

  • August, 2018: 22.6 days
  • August, 2019: 24.2 days
  • August, 2020: 34.5 days -- the year of the plague
  • August, 2021: 26.5 days

So, tell me again, with 26.5 days of crude oil supply, why does OPEC need to pump more oil; why is there talk that we have to release more oil from the SPR?  

  • And, oh, by the way, the number of days of supply continues to increase. The number of days of supply -- in the most recent data released -- is now over 28 days, identical to same period in 2019 (year before Covid) and three days more than 2018.

AAPL, AMZN: huge silver linings with regard to recent quarterly earnings reports. Link to The Motley Fool. My thoughts exactly. 

Contagion? LUV winds hit AA. A thousand-plus flights canceled over weekend due to "staff displacement" and high winds. Link to The WSJ. Tea leaves suggest the holidays will be even worse. CNBC reporting 1,700+ flights canceled.

  • today: 300+ AA flights scheduled so far today
  • this represents about 10% of all its flights
  • about 1,800 flight attendants who were on leave; they are gradually coming back
  • about 90% of these cancellations are due to crew shortages
  • Phil LeBeau: says it will get worse over the holidays
  • remember: a large number of pilots took early retirement when offered during the pandemic
  • I remember this phenomenon when I was in the USAF: the ups and downs of commercial pilot hiring and how USAF pilots followed the monthly numbers closely; those years were nothing compared to what we're seeing now
  • finally, LeBeau picked up on the reason for the problem
  • Jim Cramer says United Airlines in best shape.

Covid-19 and Australia:

  • Australia lifts quarantine restrictions after 590 days. That's about 4.5 months short of two years. It's a strange time to be lifting restrictions.  
  • Australia is in the middle of a huge surge of cases and deaths related to Covid.
    • active cases higher than ever and continuing to climb;
    • daily new cases may have peaked, but hard to tell;
    • total deaths continue to climb at a faster pace than ever before;
    • new daily deaths may have peaked, but if os, very, very subtle
  • comment: either Australia sees something not seen in the current data, or they realize the futility of such restrictions;

Covid-19 and the US:

  • Meanwhile, in the US, huge uptick in the number of vaccines being administered with new mandates that go into effect today. 
  • Prior to the mandate, vaccines being administered were trending toward 600,000, though spikes to 750,000, per day were still being seen, but now, four days in a row, including the generally slow weekends, the numbers are trending toward 1.5 million doses being given each twenty-four hours. 
  • Weekly averages will be posted later today.

Oil analysts:

  • earlier I mentioned that one analyst found it impressive when he found out this past weekend that drillers in the Permian could drill a shale well in ten days;
  • there is another analyst that doesn't understand / didn't understand the importance of the Keystone XL pipeline or at least the purpose of the pipeline. Truly amazing. 

US LNG feedgas:

  • demand hit the highest level in more than six months on October 29, 2021, at almost 12 billion cubic feed / day, translating to nearly 100% liquefaction terminal utilization amid commissioning of a sixth train at Cheniere Energy's Sabine Pass in Louisiana; link here or direct to Platts
  • US LNG export terminals are followed here. I remember when I first started blogging about these terminals, several years ago, at least one reader pushed back, suggesting I was inappropriately exuberant. It appears I may not have been exuberant enough. LOL.

Sabine Pass Train 6 commissioned. Same link as above.

Three Wells Coming Off Confidential List; Yes, Virginia, They Can Drill A Shale Well In Ten Days -- November 1, 2021

This guy follows energy? Tells me all I need to know about his understanding of US shale: Randy Brown at SpotMonthEnergy said

"I was at a party Saturday night in Dallas and an engineer was telling me that one of the major drilling in the Permian can drill 10,000 feet down and two miles horizontally in ten days, "spud to TD." Randy commented: "That seems impressive." 

This is scary that someone who follows US oil did not know this. Oil companies have been doing that for several years in the Bakken and I've been reporting it all that time; in fact, now I'm beginning to think I was among the first outside the industry that spotted it.

And, oh, by the way, the gold standard is now five to seven days, spud to TD: one day for the vertical; one day for the curve; and three days for the lateral. Randy is definitely a nominee for the 2021 Geico Rock Award.

How low can you go? China's oil stockpile is as "low as it can go" ahead of OPEC+ meeting. Giovanni. Direct to Bloomberg. From Alexander Stahel, "we covered this last week. China's low crude stock will require substantial buying in the coming weeks and months. Link here.

Focus on Fracking, Halloween edition: posted. Lede:

  • gasoline supplies fall to a 47-month low;
  • distillate supplies to an 18-month low;

WTI: flirting with $84, again.

Back to the Bakken

Active rigs:

Active Rigs3114576853

Three wells coming off confidential list --

Monday, November 1, 2021: 3 for the month, 3 for the quarter, 254 for the year:

  • 36772, conf, Hess, BL-A Iverson-155-96-1312H-10, Beaver Lodge,
DateOil RunsMCF Sold
  • 36069, conf, Enerplus, Gabbro 147-93-16B-21H, Moccasin Creek,
DateOil RunsMCF Sold
  • 36066, conf, Enerplus, Pumice 147-93-16B-21H, Moccasin Creek,
DateOil RunsMCF Sold

Sunday, October 31, 2021: 28 for the month, 28 for the quarter, 251 for the year:

  • None.

Saturday, October 30, 2021: 28 for the month, 28 for the quarter, 251 for the year:

  • None.

RBN Energy: midstream conundrum threatens gas production growth long term. 

The U.S. natural gas market is primed for supply growth. The Lower 48 supply-demand balance is the most bullish it has been in years. Exports are at record levels and poised to increase with additional terminal expansions on the horizon, while international prices have recently notched record highs. Henry Hub gas futures prices are at the highest in over a decade. So, producers will unleash a torrent of natural gas, triggering a midstream build-out like we’ve seen in the past, right? Not so fast. The world has changed. For additional capacity to be built, you need producers or utilities to commit to use it. But Wall Street has drawn a hard line when it comes to capital and environmental discipline in the energy industry and regulatory approvals can also be an uphill battle. Therein lies the conundrum. More midstream capacity is needed for production to grow, but it’s harder than ever for that infrastructure to get built, which means constraints for some period of time are all but a certainty. Natural gas may not be as constrained as crude oil, but it is already butting up against capacity in parts of the Permian and Marcellus/Utica. And in the crude-focused Permian, those gas constraints will also cascade to crude production. In today’s RBN blog, we consider the implications of the new world order.

It used to be that higher prices meant higher production. If production outgrew transportation capacity and constraints trapped supply in the basin, then supply prices cratered and price spreads to downstream markets blew out, providing the economic incentives for midstream developers to swoop in and expand or build pipeline capacity to increase connectivity and balance the market again. Unable to grow volumes, producers were resigned to pay up for firm, long-term capacity to get the pipelines built. We saw this play out again and again over the past several decades, and during the Shale Revolution, midstream expansions were one of the stars of the show. During this time, the master limited partnership (MLP) model, in particular, became the mainstay of midstream infrastructure development for its ability to provide access to lower-cost capital and a great acquisition vehicle, primarily due to its tax benefits.

As shale drilling and production activity ramped up, it called for dramatic changes in the natural gas infrastructure. MLPs mushroomed and accelerated midstream development across the shale landscape, including the Haynesville and later the Marcellus/Utica shales, which, in the latter case, drove the Great Flow Reversal — a mid-decade phenomenon that flipped gas flow patterns across just about every legacy long-haul pipeline in the eastern U.S. Without this midstream renaissance, Lower 48 gas production volumes would be nowhere near where they are today.