Saturday, March 12, 2022

Notes From All Over -- March 12, 2022

Oil: At $120 / bbl, a lot of Tier 3 locations in the Bakken are now Tier 1. LOL. This would be a good time to take a re-look at the "reserves" in the Bakken.

Memo to self: Discover (credit card) offers 5% cash back on all purchases at "gas stations" and at Target (retail) from April 1, 2022, to June 30, 2022. The "cash back" is capped at $1,500 in purchases, or $75. Hardly seems worth it, does it, when $75 won't pay for the cost of filling up the SUV. It would interest me if the cap was a bit higher, say, $500. My biggest problem with Discover cash back is ease of use. There are a couple of issues but I won't go into them. The cash back is less at Amazon Chase, but wow, talk about ease of use. On every purchase everywhere, one gets cash back, somewhere between 1% and 5% and the cash back is immediate and can be used for making that next purchase on Amazon. Idle rambling. It's all good.

Worst title ever: The End of History and the Last Man, by Francis Fukuyama, c. 1992. Wiki entry here.  He never saw Vladimir Putin coming. This week he has a very, very short essay -- really a number of "statements" regarding the Ukraine-Russian war. It's titled "Preparing For Defeat," March 10, 2022. Fukuyama's biography.

Venezuela, 400,000 bopd. Link here. Tells me all I need to know about Amir Richani as an energy analyst. I talked about this yesterday. Let me re-post this so I can save time by not re-writing:

For oil bulls: the day-to-day white noise can be distressing, but think about this -- the big picture, except for Russian oil going to China, upwards of seven million bbls of oil has been taken off the global market. Just like that.

Having said that, the price of oil suggests that traders know Russia will be able to sell their oil. This will be fascinating to watch. Russia also needs significant western "help" (think Schlumberger) to produce at max capacity. 

But something doesn't add up: the price of oil can surge when "we" lose 400,000 bbls of Libyan oil but hardly moves when we lose seven million bbls of Russian oil.

Bottom line: analysts get excited about a couple of thousand of bbls  of "new-found" oil in Libya, Iran, or Ecuador, but seem to be blind to the elephant in the room: sanctions on seven million bbls of oil coming out of Russia, just like that. The sanctions take effect in May, 2022. 

Venezuela, 400,000 bopd. Just think how much oil would be flowing through Keystone XL by now. Woulda, coulda, shoulda. 

Agriculture will be the BIG story of 2022. Link here. Or more directly, here. Now, today:
Egypt, the world's biggest wheat buyer, boosts stockpiles, blames greedy traders while [elitists] tell [us] to be more frugal. Egypt gets most of its wheat from Russia and Ukraine. Wheat is more expensive than in 2008 when world saw food riots.

By the way, Egypt has had decades, actually millennia, to increase their own agriculture sector. Folks might recall that the reason Alexander the Great and the Roman leaders later wanted Egypt was for their wheat. I'm a bit rusty on the Alexander story, but Rome desperately needed the wheat that Egypt grew to feed its people and its huge army. 
I'm also tired of folks talking about "greedy" traders. Some of the best traders are in the Mideast. Egypt, at one time, was really, really good at trading. 
It's interesting: whether you are a capitalist or a Marxist, it seems to always come back to trading.
Pat on the back: my figures were correct. LOL. Link here.

Rivian: if my memory serves me correctly, analysts forecast a $2.08/share loss for Rivian. The actual number: on an adjusted basis, Rivian last $2.43/share in 4Q21. Some suggest that the consensus was that Rivian would "come close to breaking-even." [Either very poor writing or I'm misreading it.] I don't recall ever reading that, but maybe I missed it. But if that's accurate, that the consensus was that Rivian would break even ... well, someone must have been misreading previous financial statements. 

From the same linked article, 

Yahoo!Finance reported in advance that the company was expected to lose $2.05 per share on an adjusted basis against $63.99 million in total revenue for the period. More simply, Rivian posted smaller revenues than the street expected, and lost more money.

Apple: I'm simply blown away by Apple. It is amazing what they are doing. See lead story for today. Two more stories:

  • M1 Ultra: Apple just unveiled its most power Mac Chip yet, CNET, March 8, 2022. 

  • The M1 Ultra: Apple unveils M1 Ultra, the world's most powerful chip for a personal computer.

Not only that, the new computers are very, very affordable. Incredibly affordable. A couple of years ago I bought a 27-inch Apple desktop. I did not need it, I had nowhere to put it. But at the price point it was too good a deal to pass up. It sort of sat around for several months, not being used. But, then, I found the perfect location for it, and if it's still not my most used Apple device, it is my favorite for watching movies and sports. It's incredible. But there are rumors that Apple will not upgrade the 27-inch desktop. The new emphasis: 24-inch. That's too bad, but I'll get used to that, too, in about five years, when this 27-inch needs replacing. A thousand bucks over seven years works out to about 39 cents/day. It's hard to beat that. I wish I needed the new Mac Studio and Studio Display. LOL. 

Energy: I couldn't end this post without a another story about energy. I have no idea why folks still write articles about China and coal, much less why I keep re-posting them and/or linking them. LOL. But, here we go again. Link to Tsvetana Paraskova: China to expand coal use as it prioritizes energy security.

*****************************
Free Cash Flow

In case you missed it, re-posting:

Free Cash Flow

This was perhaps the most interesting item I read all day.

Wall Street's 2022 free cash flow estimate for AAPL is the same as the combined free cash flow for the following:

  • XOM
  • CVX
  • COP
  • PXD
  • FANG
  • DVN
  • MRO
  • OVV
  • OXY
  • HES
  • APA

Holy mackerel. AAPL's net cash is $80 billion vs the other eleven companies with new debt of 177 billion.

What wasn't said:

  • the list of eleven oil companies are trading at/near their 52-week highs due to a most peculiar set of events that most feel is not sustainable;
  • AAPL is well off its 52-week high, as folks rotate out of tech and into energy, particularly oil. 

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

7 comments:

  1. The Tyler Formation, Will this ND formation be leased ad drilled in the next 24 Months?? don

    ReplyDelete
    Replies
    1. Great poll question. My hunch: no. It makes sense to drill it, but to date there have been no new permits targeting the Tyler. In the old days, a new permit meant the well would be drilled within six months, but now it seems even a new permit won't result in that location being drilled until into the next year.

      You can be sure that if I see a Tyler formation "case" appear in the monthly hearing dockets it will get "headline" treatment.

      Delete
  2. I have been researching the Tyler formation in SW ND, and I just don’t see the evidence of this formation to believe it is a viable formation. There are a large number of old wells that were drilled to and through the Tyler formation that had little if any shows in the Tyler. I also have a friend that talked to the driller who worked on the Marathon rig that drilled the wells in the Tyler. He said that he thought Marathon was wasting their time trying to produce the second (southern) well, as there were very little shows throughout that entire well.
    What I don’t understand is that there is evidence of other formations in areas that may be viable, but there has been nothing about exploring those.

    ReplyDelete
  3. I have been researching the Tyler formation in sw ND, and I just don’t see the evidence for major exploration. There were numerous wells drilled to, and through, the Tyler years ago, and there are very few wells that had any shows to prove that the Tyler is a viable formation in these areas. And the Marathon wells prove it out. A friend of mine talked to the driller on the Marathon rig, and the driller said he thought Marathon was wasting its time trying to produce the second(south) well, as there were very little shows at all throughout that well.
    There is evidence of other formations in areas that I believe would warrant more exploration over the Tyler.

    ReplyDelete
    Replies
    1. There are some huge Tyler / Heath wells:

      https://themilliondollarway.blogspot.com/2009/11/monster-wells.html.

      But I have to agree, there does not seem to be much interest now.

      Delete
  4. Not sure how I posted that twice. I know there have been some very productive Tyler wells, but as far as drilling more, I just don’t see any viable possibilities. A lot of the Tyler wells that were productive, have slowed or stopped producing anything. And a fair amount have already been plugged.
    As far as what I researched, I was specifically talking about the area that Marathon drilled in, that was very exploratory. I just don’t see any reason to explore more. A company would be better served to explore other formations

    ReplyDelete
    Replies
    1. Agree. A couple of thoughts. It depends how long high price of oil is likely to last; and, there's always some small wildcatter that wants to try something. But yes, right now, the Tyler would not move the needle / excite a big company like MRO.

      I would never, however, want to second guess Harold Hamm.

      Delete

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