No Wells Coming Off Confidential List -- July 14, 2022

For the blog:

• a new "2022 Themes": "not the future" -- things we're not going to see despite "group think"
  
• nothing on main blog but for now a spaceholder

Bullish:

• the way WTI has performed in past thirty days has been absolutely perfect for investors
• will explain later
• Buffett has it figured out
• see RBN Energy below
  

Gasoline demand: wow!

• stand-alone post here.
• possible explanation? I don't buy it (no pun intended) 
• to be clear, I don't "accept" the possible explanation
  

Dire:

• before twitter went down this a.m., everything pointed to deteriorating conditions:
• energy situation in Europe;
• war in Ukraine;
• US economy;
• Tesla: Karpathy departs; gives no reason; amicable separation apparently;
• Tesla's head of AI is out; at The Verge;
• Karpathy is Tesla's AI
  
• Tesla without AI is just another car company -- Elon Musk
  
• PEMEX: link at twitter;
  

Wages:

• inflation: 9.1%
• real hourly wages: down 4.1%

Wages? What inflationary pressure. Link here:  real hourly earnings hit a new all-time low.

Crypto:

• third miner files for bankruptcy: Celsius
• big question: how does this affect two miners coming to MonDak?
• minor (pun intended): three bankruptcies; is this the end for crypto, or is this simply good miners pushing out bad miners? 
• worse news: depositors will lose their entire holdings.
  

LNG:

• COP to take 30% stake in Sempra's Port Arthur LNG project; link here; and, press release here;

Aluminum cans:

• as if we didn't have enough to worry about -- California's recycling program crumbles
• beer industry will struggle without aluminum cans
• affects small brewers
• almost reads like a press release from glass bottle suppliers;
• I don't see a problem
• I won't drink from a can if given a choice, and I never buy beer in a can; always bottles;
• more on this later

OXY: Buffett is nearing the "magic" 20% mark

• at 20%, everything changes
• OXY's net income expected to exceed $10 billion this year
• link here.
• at 20%, the threshold that would let it record its proportionate share of Occidental's earnings with its own results, known as the equity method of accounting.
• also owns $10 billion of Occidental preferred stock that throws off $800 million of annual dividends, and has warrants to buy another 83.9 million common shares for $5 billion.
• Berkshire uses the equity method for its 26.6% stake in Kraft Heinz Co
• OXY's share price has doubled this year
• in 2010, Berkshire bought the BNSF railroad for $26.5 billion after earlier accumulating a 22.6% stake.

Climate:

• link here at twitter;
• if accurate, it changes everything;
• stand-alone here.
  

*******************************
Back to the Bakken

Far Side: link here.

WTI: $92.50.

Natural gas: $$6.839.

NDIC GIS map: remains in-op.

Active rigs: 45 or thereabouts.

An incredibly tough North Dakota win six months ago:

• Saturday, July 16, 2022: 13 for the month, 13 for the quarter, 352 for the year
• None.
• Friday, July 15, 2022: 13 for the month, 13 for the quarter, 352 for the year
  
  None.
  
• Thursday, July 14, 2022: 13 for the month, 13 for the quarter, 352 for the year 
• None.

RBN Energy yesterday: E&Ps shower cash on shareholders as cash flows rise with soaring oil and gas prices.

Just two years ago, the onset of the pandemic slashed the share prices of many oil and gas producers and the idea of parking cash in a U.S. E&P seemed to make as much sense as leaving your Porsche on a midtown street with the keys in it and the motor running. But times — and commodity prices — have changed, and hydrocarbon producers have transformed themselves into cash-flow-generating machines that attract the sagest investors. Want proof? Warren Buffett’s Berkshire Hathaway recently purchased another 10.4 million shares of Occidental Petroleum (Oxy) for over $500 million, bringing its stake in the company to a substantial 16.4%. In today's RBN blog, we detail how the major U.S. E&Ps are allocating their cash flow to keep investors happy.

What a difference two years makes! In our July 2020 blog Stayin’ Alive, we discussed Oxy’s chances of recovering from the massive $36.5 billion debt it had accumulated in its ill-timed $58 billion acquisition of Anadarko Petroleum just before oil prices started to plummet in mid-2019. With its investment rating reduced from investment grade to junk, the company slashed its quarterly dividend from $0.79/share to a token $0.01, cut capital spending, and launched a major divestiture program. But soaring commodity prices have subsequently bailed out Oxy and the industry. Embracing fiscal discipline and eschewing production growth in favor of cash generation, E&Ps are transforming into significant yield vehicles — a turnaround that's led to a fivefold increase in the S&P E&P stock index. Producers who survived the pandemic with strong balance sheets, such as Pioneer Natural Resources, Diamondback Energy, Devon Energy, and EOG Resources, are already providing 10%-plus annual returns through a combination of regular and variable dividends and share repurchases. Others, like Oxy, have channeled growing cash flows to meet debt-reduction targets as they transition to significant shareholder returns.

RBN Energy today: refinery shutdowns around the world, part 2.

We often tend to focus on the U.S. refining picture, but, just like crude oil, refined products trade globally, and international closures ultimately have the same effect as domestic ones on the worldwide products market. Recent international closures have been distributed throughout the world — concentrated in developed countries, including several in Europe, as well as Japan, Singapore, Australia and New Zealand, but also in some developing economies like South Africa and Sri Lanka. Most of these capacity reductions were driven by the same forces as in the U.S., namely, poor economics as a result of the pandemic-lockdown-driven demand plunge in 2020 and 2021, as well as expectations that margins would take a long time to recover post-COVID. Of course, worries that the energy transition and policies to that end would suppress demand in the long-term also played a key role, as did some fundamental competitiveness issues at individual facilities. In today’s RBN blog, we take a closer look at the more than 2 MMb/d of international capacity closures since 2019.