Natural Gas Has Melted Up To $5.02 -- February 3, 2022

EQT announced it has raised its dividend to 12.5 cents. Link here. EQT is the largest natural gas producer in the Appalachian Basin. EQT has not raised its dividend since at least 2013; as far back as records are kept at this post. Unless I'm missing something or misreading something or unless there are two different "EQT"s -- this is absolutely amazing.

• From SeekingAlpha one week ago: EQT poised for massive free cash flow. 
• From SeekingAlpha three weeks ago: EQT becomes largest US producer of certified natural gas.
  

At the close today, natural gas "closed" at just under $5.00.

Tonight, natural gas went above $5.00. This is an orderly melt-up, not a flash-in-the-pan spike.

Also note the narrow WTI / Brent crude spread: only 74 cents.

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Heavy Oil

This goes a long way explaining why US crude oil imports are increasing, or at least staying flat in light of huge amount of oil being produced in America, and something we've talked about for a decade. And why "we" needed the Keystone XL. 

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Just Asking

 

Kraken

Locator: 10010KRAKEN.

Kraken will now be tracked here.

Updates

October 16, 2023: Kraken acquires Crescent Point Energy assets in North Dakota, 23,500 boepd in 2Q23. See this post. $500 million.

February 3, 2022: Kraken exits Mountrail County; will focus on Williams County.

Original Post

From the "Operators" page up until now;

Kraken Development III, LLC

• acquires four more permits in Sanish oil field
• first mentioned on the blog when it acquired 70+ Sanish wells from Kaiser-Francis 

Kraken Oil & Gas

• website

Kraken Operating, LLC

• CLR transfers 67 wells to Kraken Operating, October 27, 2016
• a very, very small operator in the Bakken
• three permits on file in North Dakota as of October 25, 2016

Whiting Exits The DJ Basin -- February 3, 2022

Whiting is tracked here.

In an earlier post, I referenced this article in offshore-technology: Whiting to sell all of its assets in the Denver-Julesberg Basin (DJ Basin) of Colorado:

• buyer: an undisclosed private entity for $187 million
• 67,278 net acres
• includes associated midstream assets
• Weld County
• 7,100 boepd, 51% oil
• back-of-the-envelope:
• $187 million / 67,278 acres = $2800 / acre
• $187 million / 7,100 boepd = $26,000 / boepd

Answering A Reader's Question Regarding Kraken Exiting Mountrail County -- February 3, 2022

Kraken is tracked here.  

Whiting is tracked here. 

This post refers only to Kraken's operations in North Dakota. For Kraken's operations in Montana, see this post.

From today's daily activity report, previously posted:

Approximately 80 wells transferred from Kraken to Whiting; these are all in T152N-92W; T153N-92W; T154N-92W;  T154N-91W; some in abutting areas; familiar family names include but not limited to:

• Fladeland;
• Domaskin:
• Bigfoot;
• Double Eagle;
• Kokomo;

See comment at that post:

• So Kraken is exiting Mountrail completely or just partially? Where's your guess on their area of focus?

My reply:

Wow, wow, wow. That's an interesting question. That will take me down a rabbit hole that will take some time to sort out. I will come back to this. It's going to be made more difficult by the fact that the NDIC database is still not current. But give me a day or two and I will post something on this. This should be fun.

The short answer: without doing any work on this, my hunch: Kraken is going to focus on Williams County. 

Here's that rabbit hole.

1. All of those wells are in the Sanish oil field, and can be found here: oil search / NDIC.  

Kraken has 94 locations in the Sanish. Subtract out the "PNC" locations and six IA/AB/EXP locations and one ends up with 76 wells, incredibly close to the "approximate 80" wells I suggested.

2. Whiting, offshore-technology.com, July 22, 2021, just seven months ago:

• Whiting announces acquisition deal
• $271 million
• to acquire from an undisclosed company (which almost always means privately held)
• Whiting to acquire:
• 8,752 net acres
• net daily production: 4,200 boepd
• includes five gross / 2.3 net drilled and uncompleted wells;
• includes 61 gross / 395 undrilled locations in Mountrail County
• key to this rabbit hole: "Whiting Petroleum said that these assets adjoin and complement its existing operations in the Sanish field.”

3. So, we have the first part of the rabbit hole. The Kraken wells in the Sanish were acquired by Whiting.

4. Now, the second part: to answer the question asked by the reader:

So Kraken is exiting Mountrail completely or just partially? Where's your guess on their area of focus?

5. This answer is slightly difficult because it's always possible Kraken is preparing to exit the Bakken entirely. But I seriously doubt that for several reasons, which are irrelevant for purpose of this discussion.

6. Let's assume, and I'm sure this is 99.99999% likely, that Kraken is staying in the Bakken. The question from the reader is where will Kraken focus? This would be relatively easy to answer if the NDIC data was current, but it is not. But we have an even better source: the daily activity reports which lists all newly issued permits.

7. The NDIC data base only has the Kraken wells in the Sanish oil field. NDIC is still updating their database as they migrate to a new service provider. This has been going on since last July, but I digress.

8. I went through every permit issued from full calendar year 2018 through today: four full years and the first six weeks of 2022, and every one of those permits is in Williams County, almost all of them northeast and east of Williston. I will provide a list of the specific oil fields later, but I'm burned out for the moment on this one.

9. That answers the question: Kraken will be focused on Bakken assets in Williams County. 

10. And, oh by the way, Kraken is reporting some incredible wells. 

11. One last question: how much did Whiting pay for these mineral acres on a "per acre" and/or "per boepd" basis? Back-of-the-envelope:

• $271 million / 8,752 net acres = $31,000 / acre
• $271 million / 4,200 boepd = $64,000 / boepd
• I do believe this sets an all-time record for both metrics
• Note: I often make simple arithmetic errors. 
  

The Future Of Fracking -- The WSJ -- February 3, 2022

Shortly after I started the blog back in 2009 or thereabouts, I did the math and it looked like "they" would drill the last Bakken well in 2030 and that production would dwindle away, but still be producing oil out to about 2100, albeit, perhaps, not much production. 

More likely, this dwindling production would be uneconomical well before 2100 and all production would cease well before that. But that's fine. The key point is that back in 2009 when I did the math (as did others), it appeared that active drilling in the Bakken would continue until 2030.

Hold that thought. 

I'm going to come back to this later. 

Something of more interest has interrupted me and I will come back to this story later.  

Until then, the two sources I will be citing:

First, from earlier today:

Fracking future: doesn't look good. According to Collin Eaton at The Wall Street Journal.

Link here first to Yahoo!Finance. Not sure if that will get you past the WSJ paywall.

My first thought: this article, or variations thereof, have been re-posted every year for the past fifty years. LOL. I wonder if Collin Eaton saw the Facebook story yesterday? Just saying.

And second, the original Leigh Price paper.

Concepts, memo to self:

• drilling vs fracking
• MRO re-fracking program
• not understanding tight oil
• premise: future of oil demand 
• consolidation
• what is Collin Eaton's point? No one really worries about workers. 
  

Examples:

• July 24, 2021: Whiting to acquire 8,752 net acres in the Sanish for $271 million; works out to about $31K / net acre. Whiting now with about 480,000 net acres. 
• six years of drilling activity in the Bakken with a 2-rig program

Notes From All Over -- February 3, 2022

Enerplus is tracked here.

• Enerplus: big story --
• announces a change in its reporting currency; from loonies to US dollars;
• will divest its Canadian assets;
• will change its presentation of production volumes, to a "net," after deduction of royalty basis;

• Enerplus 4Q21 operations update:
• 128,000 boepd (all but 9,100 boepd from the Bakken)
• at the high end of the company's guidance
• liquids: 81,000 bopd
• capital spending: C$102 million

• Enerplus full year, 2021 operations update:
• 114,700 boepd
• at the high end of the company's guidance
• liquids: 70,200 bopd
• capital spending in 2021: C$ 378 million compare to guidance of C$380 million

• Enerplus focus:
• the Bakken:
• will divest Canadian assets
• averaged 9,100 boepd in 4Q21

• Enerplus change in "net" volumes:
• production volumes will be lower than volumes presented historically, all things being equal;
  

• Enerplus 2022 guidance:
• CAPEX of C$500 million

• Enerplus:
• more at the link
• earnings to be reported February 24, 2022

Whoo-hoo!

Amazon earnings: link here. 

Enerplus

Enerplus:

• Enerplus: big story --
• announces a change in its reporting currency; from loonies to US dollars;
• will divest its Canadian assets;
• will change its presentation of production volumes, to a "net," after deduction of royalty basis;

• Enerplus 4Q21 operations update:
• 128,000 boepd (all but 9,100 boepd from the Bakken)
• at the high end of the company's guidance
• liquids: 81,000 bopd
• capital spending: C$102 million = USD $80 million
• back-of-envelope
• 128,000 boepd x 90 days = 15 million boe
• $80 million / 15 million boe = $5.33 / boe
• disclaimer: I often make simple arithmetic errors
  

• Enerplus full year, 2021 operations update:
• 114,700 boepd
• at the high end of the company's guidance
• liquids: 70,200 bopd
• capital spending in 2021: C$ 378 million compare to guidance of C$380 million

• Enerplus focus:
• the Bakken:
• will divest Canadian assets
• averaged 9,100 boepd in 4Q21

• Enerplus change in "net" volumes:
• production volumes will be lower than volumes presented historically, all things being equal;
  

• Enerplus 2022 guidance:
• CAPEX of C$500 million

• Enerplus:
• more at the link
• earnings to be reported February 24, 2022

$90-WTI Was Not On My Bingo Card Today; Oasis With Four New Permits; Whiting Acquires 80 Wells From Kraken -- February 3, 2022 -- Thursday, February 3, 2022

Gulf of Tonkin: "Russia ready to fabricate a pretext for invasion" -- Pentagon. I'm shocked. Shocked.

Amazon: the bad news. As "predicted" just a day or so ago. Amazon Prime will cost me more. Amazon is raising its annual rate from $119 to $139 or $15/monthly. For $15 monthly I'm getting:

• free shipping;
• competitive prices on almost everything;
• no-questions-asked returns;
• NFL TNF;
• Amazon Prime Video
• when I ship one package by USPS, it costs me $15 and the USPS throws in no Prime Video.

Texas ERCOT: the good news. To the best of my knowledge, the grid held. Any reports of outages are due to trees / tree branches falling on utility lines. Apparently, the utility is getting these problems fixed quickly. It's more than manageable. One cold night tonight. We have not had to turn on our heat in the past 24 hours -- it's about 22°F just a mile west of DFW airport. 

ISO NE: dinner our and demand is a manageable at 16,500 WM. Pricing, at 8th decile (highest it will reach). Renewables at a typical (and miserable) 8%, and unreliable, and not dispatchable, but the elites love it for some reason. Hydro at 7%.

Doomberg: link here. 

WTI: $90.27.

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Back to the Bakken

Active rigs: data based on NDIC daily report, subject to error -- 

$90.27	2/3/2022	02/03/2021	02/03/2020	02/03/2019	02/03/2018
Active Rigs	34	14	54	64	58

Five new permits, #38769 - #38773, inclusive:

• Operators: Oasis (4); Koda Resources
• Fields: Baker (McKenzie); Bar Butte (Williams)
• Comments:
• Koda is a water disposal well, doesn't count in my book, LOL
• Oasis has permits for four Dahl E Federal wells, Baker oil field, 
• two to be sited in SWSE 11-153-101; and two to be sited in NWNE 14-153-101; 
• the ones to the north, 36 FSL and 2519 FEL; and, 8 FSL and 2459 FEL; the two to the south to be sited 6 FNL and 2429 FEL and 20 FNL and 2300 FEL;

Petroshale renews fifteen permits:

• the following in McKenzie County (13): Tahu (10), Sacagawea Federal, La Verendrye Federal, and Thompson Federal;
• the following in Dunn County (2): two Helen permits;

Approximately 80 wells transferred from Kraken to Whiting; these are all in T152N-92W; T153N-92W; T154N-92W;  T154N-91W; some in abutting areas; familiar family names include but not limited to:

• Fladeland;
• Domaskin:
• Bigfoot;
• Double Eagle;
• Kokomo;

Ford

4Q21, CNBC:

DETROIT — Ford Motor’s shares slid after it reported fourth-quarter earnings Thursday that significantly missed Wall Street’s earnings expectations and slightly missed on revenue. 

The company’s shares tumbled by more than 6% in after-hours trading. 

Here’s how Ford performed, compared with analysts’ estimates::

• adjusted EPS: 26 cents vs 45 cents a share expected
• automotive revenue: $35.3 billion vs $35.5 billion expected

While the automaker hit its annual earnings guidance for 2021, it missed production targets analysts were expecting due to supply chain problems, including an ongoing shortage of semiconductor chips, Ford CFO John Lawler told media during a call Thursday.

For the fourth quarter, Ford’s North American operations, as they have been, contributed the most to the automaker’s earnings, up by 68% to $1.8 billion compared to a year earlier. International losses included $150 million in China, down 130%, and $159 million, a 139% decline, in Europe.

For 2022, Ford estimates it will earn between $11.5 billion and $12.5 billion in adjusted pretax profits, up 15% to 25% over 2021, and generate between $5.5 billion to $6.5 billion in adjusted free cash flow.

“We’re bullish on 2022,” Lawler said, “even with persistent supply chain uncertainties that again illustrates the growing strength of our underlying business.”

COP

After the call, February 3, 2022, SeekingAlpha:

Conoco underperformed at the margin following an earnings beat, as a relatively conservative call paired with strong relative performance saw shares down ~1.5%. It would likely be healthy for the industry for all shale companies adopt Conoco's prudent outlook:

• Macro - CEO Lance sees 800-900kb/d of supply growth from the US this year, a slight increase from the 800kb/d increase he discussed at a conference in late January; he went on to address US supply growth's impact on the macro by referencing 2014 growth levels, saying "if we're getting back to the level of growth in the U.S. that if you're not worried about it, you should be."
• M&A - further consolidation makes sense as more assets need to be in the hands of "responsible" operators like COP; that said, following Concho and Shell, the bar is high for new acquisitions.
• Rigs - Conoco is running 20 rigs in the lower 48 and plans to add 4 more throughout the year; 1 rig will go into the Bakken and COP will continue to run 4 rigs on the newly acquired Shell acres.

Like Chevron, Conoco appears to be running the business for "mid-cycle" oil prices.

Payouts are manageable, as the company continues to pay down debt. The production profile is unchanged, as Management high-grades the portfolio. And the CEO is keeping an eye towards the macro, in hopes the industry doesn't return to a "growth for growth's sake" mentality. A responsible way to run a business for the long term, but perhaps not likely to drive outperformance when oil prices hit new highs daily. 

Previously posted:

COP, earnings beat: whoo-hoo! Link here. I've accumulated shares in COP longer than almost any other holding. 

The first company I ever invested in? BNI -- Burlington Northern -- which ended up being bought by Berkshire Hathaway. Another early stock, began accumulating forty years ago, SRE -- although it was called something else then: San Diego Gas & Electric. Texaco was an early investment; long story; I've told it before, but truly amazing through thick and thin. Now a dilemma, but we'll talk about that later. Right now COP:

• adjusted earnings per share of $2.27 beat estimates of $2.19 for Q4.
• additional $1b to be allocated to shareholder returns in 2022 for a total of $8b (~7% of current market cap).
• includes a $0.46 base dividend (unchanged) and a Q2 special dividend of $0.30.
• bumped the capex plan to $7.2b versus 2021 spend of $5.3b.
• expects to produce 1.8mb/d in 2022 versus 2021 production of 1.6mb/d, and Q4 production of ~1.8mb/d (pro-forma).

COP, more here:

• ConocoPhillips press release: Q4 Non-GAAP EPS of $2.27 beats by $0.08.

• Outlook: The company’s 2022 operating plan capital budget is $7.2 billion; production guidance is 1.8 million barrels of oil equivalent per day.

• First-quarter 2022 production is expected to be 1.75 MMBOED to 1.79 MMBOED, essentially flat to fourth-quarter 2021 on a pro forma basis.

• Guidance for 2022 includes adjusted operating cost of $7.3 billion and some anticipated inflation; adjusted corporate segment net loss of $1.0 billion; and depreciation, depletion and amortization of $7.9 billion. Guidance excludes potential special items.

Transcript, COP: link here.

Analysts: one of my favorite contributors over at SeekingAlpha was also a long-term investor in COP. 

He grew disillusioned when COP announced it would cut its dividend starting in late 2021 / early 2022. That contributor, who I thought really knew his/her stuff, completely missed what COP was going to do. The good news: his cost basis in COP was so low, he "couldn't afford" to sell it.

Flashback: COP -- well design provides narrative for the Bakken, 2018 - 2019. Michael Filloon.  

One of the best posts ever: Michael Fitzsimmons, December 6, 2021. The comments are well worth reading. Hopefully this article does not disappear into the cloud.

Coterra

"Coterra" has crossed my in-box twice in the past 24 hours.

Jim Cramer is sold on "Coterra," from his program last night, February 2, 2022, or maybe the night before. I forget.

Whatever.

The strategic merger, October 1, 2021, Cabot Oil + Cimarex Energy = Coterra Energy.

Cimarex?

Cimarex was founded in 2002. The company was a corporate spin-off of Helmerich & Payne, which sought to separate its exploration and production business from its drilling business. In September 2002, shareholders of Helmerich & Payne received shares in Cimarex.

Cimarex, over at SeekingAlpha, Michael Filloon:

• XEC has value after a significant sell off.
• it has leasehold in some of the best acreage in the country, and its NM acreage continues to improve.
• XEC has the ability to increase liquids production, and much of its current issues are already priced in. 

Cimarex (XEC) has seen its share price decrease significantly from its high of $130.16 earlier this year. There are several reasons for the decline which includes logistical issues in the Permian. Its valuation is also hampered as a natural gas heavy name. That said, its has excellent acreage and has value at its current share price. We believe XEC will continue to increase liquids production, and improve Delaware well design. The sell off seems overdone, and has been compounded by world economic fears.

The Permian continues to be a favorite play for analysts centered on unconventional oil production. This makes sense, as multiple intervals in concert better average oil production is pushing cap ex to West Texas. The Permian covers a large area. Geology changes from section to section, and it is important to focus on results to identify the best economics. The Permian has three parts. This includes the Central Basin Platform, Midland and Delaware basins.

Trivia: name two main channels in the broader Permian Basin.

• San Simon channel: Separated the Central basin Platform from the Northwestern shelf during Leonardian and early Guadalupian times.
• Hovey channel: Situated in the southern edge of the Delaware Basin, providing access to open sea during Guadalupian times. 

Coterra:

• Permian (Delaware): 234,000 acres; 184,000 boepd
• Anadarko: 189,000 acres; 68,000 boepd
• Marcellus: 175,000 acres; 2,344 million cfe/d (400,000 boepd?)

Permian, back-of-the-envelope:

• 40,000 x 1 boepd = 40,000 x 184,000 = $7.4 billion
• 20,000 x 1 boepd = 20,000 x 184,000 = $3.7 billion
• 20,000 x 234,000 acres = $4.7 billion
• Market cap, Coterra: $420 million

There It Is: $90 -- February 3, 2022

But, don't take my word for it. Another day, another rally:

For Californians: ANS (Alaska North Slope) West Coast was trading at $91.08 (a three-day delay) suggesting that ANS West Coast could easily be flirting with $95. 

The White House is already preparing today's announcement: "President Biden is monitoring the situation closely."

The spread: between WTI and Brent continues to narrow.

Three things:

• some shale operators have breakeven prices in some areas below $40; some as low as $30, possibly lower;
• some shale operators are unhedged
• shale operators are already reporting blow-out earnings, free cash flow at prices well below $70

The bad news:

• about the only thing Jim Cramer is recommending any more: shale oil companies.

This inflation does not affect me, link here:

Ferrari NV announced that soaring commodity prices would begin affecting the prices of its new supercars. The average cost for an Italian supercar, made by Ferrari, is between $200k-$400k, making it one of the most expensive production automobiles globally (besides French supercar maker Bugatti). 

During a 60-minute earnings call with investors on Wednesday, Ferrari discussed better-than-expected fourth-quarter earnings as shipments jumped during the pandemic. However, the company explained that rising commodity costs would result in continued supercar inflation this year.

Susy Tibaldi, a luxury analyst at Swiss bank UBS, asked Antonio Picca Piccon, the CFO of Ferrari NV, since inflation remains persistent and 2021 was the first time the company increased prices by 2% due to inflation, "should we expect something similar in 2022?" 

Piccon responded, there "is some pressure on the energy on the aluminum cost and we will apply this price increase to consider for that, but we will also leverage."

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Crossing The Line

Things To Do When Snowed In -- February 3, 2022

BREAK, BREAK: holy mackerel -- WTI could hit $90 today. It is now trading at $89.90, up 1.75%; $1.54. I will have to go back to that article on frackers in The WSJ linked earlier today. 

The list:

• stay in bed as long as possible
• read a book
• shop online (this is my favorite)
• listen to Taylor Swift on Amazon Music ("Alexa, play Taylor Swift") -- that was Sophia's suggestion.
• re-read the original paper on the Bakken by Leigh Price
  

So, let's start. First Amazon search? A K-cup holder / drawer that sits underneath the Keurig. Ordered. That was easy. Price: "free." Cash back account. Also got a book for Sophia. Also "free." And no shipping charges. Will arrive Monday.

Wow, this is a great snow day. Sophia is off from school today and tomorrow.

It is truly amazing the information Alexa appears to be collecting from me. LOL. It's amazing how fast Amazon finds the item I am interested in before even providing full search request. Truly amazing. LOL. 

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At The Pool 

Notes From All Over -- Part 2 -- February 3, 2022

EVs: yesterday we reported that GM would spend $35 billion on EVs and autonomous driving. 

Later, not to be one-upped, Ford announced it would spend $20 billion on same. Link here. With regard to how little I read on EVs, and how much I know about auto manufacturers, and it's not much, my better is on F of the two major US manufacturers. Globally, I have no idea.

Fracking future: doesn't look good. According to Collin Eaton at The Wall Street Journal.

Link here first to Yahoo!Finance. Not sure if that will get you past the WSJ paywall.

My first thought: this article, or variations thereof, have been re-posted every year for the past fifty years. LOL. I wonder if Collin Eaton saw the Facebook story yesterday? Just saying.

Bad way to start the day: oil production vessel explodes (and sinks) offshore Nigeria overnight. Links everywhere. Not interested.

Police state? Russia? North Korea? China? Nope, Canada. Ready to call in Canadian Armed Forces to end the Ottawa drive-in. Links everywhere. Not interested.

FB: traded at 6.5 times the normal volume. Folks can't dump their FB shares fast enough. Shorts must be loving this. Down 26%. Not 26 points, but 26%. 

Can you imagine that. One of the most-owned companies in the world, and in minutes (yesterday afternoon) it dropped 25%? Wow. The really, really bad news: even those who don't own FB directly will pay:

• "every" mutual fund in the world holds a lot of FB; and,
• FB will drag down every other tech stock.

HODL.

FB is in deep doo-doo. Three reasons:

• TikTok.
• Apple.
• metaverse

None of these will go away in the next three years.  

Add to this list: subscriber growth has maxed out. When you have more than a billion users how can you grow much more? It seems like analysts might have noticed that a bit sooner. Add to this list (which is a subset of TikTok): running out of ways to monetize the platform and, oh by the way, it's very difficult to monetize video (they say -- which I doubt -- YouTube does a great job monetizing their site). It was also noted by the CEO that FB users were finding less expensive ways to access certain apps / features provided by FB. Apparently FB is missing the "price point." 

By the way, folks are so addicted to FB, I wonder why they haven't begun charging a nominal subscription fee with twelve months free and first million subscribers get it for free. Off an easy to monetize your FB page and folks would rush to subscribe and pay a nominal subscription fee.

Notes From All Over -- Part 1 -- February 3, 2022

Texas freeze: we're located just a mile or so west of the DFW airport. It looks like we're going to get more snow than forecast. 

At one time, the forecast was for now snow, then gradually increased to one to three inches. Well, it's snowing pretty hard right now, and pretty much straight down, and it appears we already have bout two inches on the parking lot. At this rate we could have ten to twelve feet by midnight. But I do believe this rate is not expected to last. We'll probably end up with four inches of snow -- officially -- in some local areas. DFW is shut down; expected to open after noon, or thereabouts.

Price of oil: I was blown away by WTI this morning. 

It had been trending down yesterday and I thought with all the other bad news (read, FB) WTI would also plummet. Everybody says EVs are the wave of the future. Whatever. So, here it is: flirting with $89. 

MPC: workers ready to go on strike. Upset with 9% increase in wages over three years. No comment. The link is to Charles Kennedy, one of the four best contributors over at Oilprice.

Shell: whoo-hoo! Link here.

• reports sharp upswing in full-year profit; 
• Royal Dutch Shell Q4 21 Earnings: - 
• Adj EPS: $0.83 (est $0.66) 
• Adj Profit $6.39B (est $5.3B) 
• Sees Share Buybacks Of $8.5B For H1 2022
• I used to hold/accumulate RDS but sold it when they went "green." Replaced it with US oil companies. Plural.
• announced an $8.5 billion share buyback program for 1H22
• expects to increase dividend by 4% to 25 cents/share
• history here; that dividend cut from 75 cents to 25 cents was the deal breaker for me; RDS-B here;
  

COP, earnings beat: whoo-hoo! Link here. I've accumulated shares in COP longer than almost any other holding. 

The first company I ever invested in? BNI -- Burlington Northern -- which ended up being bought by Berkshire Hathaway. Another early stock, began accumulating forty years ago, SRE -- although it was called something else then: San Diego Gas & Electric. Texaco was an early investment; long story; I've told it before, but truly amazing through thick and thin. Now a dilemma, but we'll talk about that later. Right now COP:

• adjusted earnings per share of $2.27 beat estimates of $2.19 for Q4.
• additional $1b to be allocated to shareholder returns in 2022 for a total of $8b (~7% of current market cap).
• includes a $0.46 base dividend (unchanged) and a Q2 special dividend of $0.30.
• bumped the capex plan to $7.2b versus 2021 spend of $5.3b.
• expects to produce 1.8mb/d in 2022 versus 2021 production of 1.6mb/d, and Q4 production of ~1.8mb/d (pro-forma).

COP, more here:

• ConocoPhillips press release: Q4 Non-GAAP EPS of $2.27 beats by $0.08.

• Outlook: The company’s 2022 operating plan capital budget is $7.2 billion; production guidance is 1.8 million barrels of oil equivalent per day.

• First-quarter 2022 production is expected to be 1.75 MMBOED to 1.79 MMBOED, essentially flat to fourth-quarter 2021 on a pro forma basis.

• Guidance for 2022 includes adjusted operating cost of $7.3 billion and some anticipated inflation; adjusted corporate segment net loss of $1.0 billion; and depreciation, depletion and amortization of $7.9 billion. Guidance excludes potential special items.

Transcript, COP: link here.

Analysts: one of my favorite contributors over at SeekingAlpha was also a long-term investor in COP. 

He grew disillusioned when COP announced it would cut its dividend starting in late 2021 / early 2022. That contributor, who I thought really knew his/her stuff, completely missed what COP was going to do. The good news: his cost basis in COP was so low, he "couldn't afford" to sell it.

Flashback: COP -- well design provides narrative for the Bakken, 2018 - 2019. Michael Filloon. 

Really? I can't wait to see video of the box seats. Super Bowl fans will be required to wear masks. We'll see. LOL. 

Will that include the announcers? LOL. Can't wait to see this. I assume the players will be maskless when on the field, but wearing masks on the sidelines. LOL.

Saskatchewan: fictional home of Dog River, where fictional "Corner Gas" takes place. My favorite comedic re-run.  

Why did I bring that up? Oh, that's right. The premier says its time to get rid of the mandates.

Other Covid headlines:

• Olympic athletes coping with intense anxiety; a positive test and they're out. There is at least a 10% false positive rate.
  
• San Francisco -- this is bizarre -- "will allow" people who originally got the JNJ vaccine to get a second booster shot -- "will allow" --- wow, talk about a police state -- though the "allowance" of a potential third dose goes beyond the guidance outlined by the federal government. If only.
• The US Army will immediately begin discharging soldiers who have refused to get mandatory vaccinations. Why is this news? That's the way it should be. Let's see: next from the US Army: soldiers will be immediately discharged who refuse to wear their uniforms.
• New Zealand will end its quarantine requirements for incoming travelers and re-open its borders; my hunch: their tourism industry had said, "enough is enough."

Masks: with regard to the Super Bowl and masks, I think we are so beyond this. If folks want to wear masks, fine, but mandates? We are so beyond this. The tipping point was reached in December, 2021, if not earlier. Two years of wearing masks. Someday we will look back on all this and wonder in disbelief.

Earthquakes, Texas Freeze, SABIC Missing Expectatiions. Good Morning. Four Wells Coming Off Confiidential List -- Febriuary 3, 2022

Texas grid faltering? Link to Irina Slav. Anything's possible I suppose but the "local investigative reporter" is confusing the website with the grid.   

Apparently 60,000 people have lost power in Texas and Arkansas, based on a national reporting agency much earlier this morning so that number will grow over the next 24 hours. 

Population of Texas and Arkansas: 35 million. 60,000 / 35,000,000 = 0.17%. For AOC folks, that means out of 100 people, 0.2 have lost power. Rounding to nearest whole number = 0. Having said that, I would not want to be one of the 60,000.

So far this has nothing to do with ERCOT or the grid, per se, it's the ice on trees falling on power lines. A neighborhood down the road from us is without power, but we are still fine. Our local utility, by the way, spent the summer clearing trees from power lines, which they do every summer but it's truly the "luck of the draw," as they say in Texas. All it takes is one tree.

We have not yet turned on the heat to our apartment. It's a toasty 65°F inside and 22°F outside. My wife will decide when we turn on the heat.

Forecast: generally it will get colder, down to a low of 18°F at 4:00 a.m. and then warm up to 44°F by Friday afternoon. By the weekend, it's all back to normal. 

SABIC: profits may fall in 2022 on tight supply chains. Inshallah. Link here. SABIC missed forecasts for 4Q21. This would have been my lead story today had it not been for Facebook and the Texas Freeze.

Saudi Basic Industries Corp., the world’s biggest chemicals maker by market value, said profit would probably fall this year as the global supply-chain squeeze pushes up costs.

The Riyadh-based company, known as Sabic, made net income of $1.3 billion in the fourth quarter, down 12% from the previous three-month period and below analysts’ estimates.

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Back to the Bakken

Active rigs:

$88.68	2/3/2022	02/03/2021	02/03/2020	02/03/2019	02/03/2018
Active Rigs	32e	14	54	64	58

Thursday, February 3, 2022: 11 for the month, 66 for the quarter, 66 for the year

• 38424, conf,  Crescent Point Energy, CPEUSC Reed 6-10-03-158N-100W-MBH-LL, Winner, no production reported;
• 38386, conf, Hunt, Blue Ridge 159-100-6-7H3, Green Lake, some production reported;
• 37980, conf,  CLR, Clear Creek Federal 2-26HSL2, Elidah, no production reported;
• 37913, conf, CLR, Charolais South Federal 15-10H, Elm Tree, no production reported;

RBN Energy:  is seismic activity a threat to Permian crude production growth? The short answer: no.

Even through the market turmoil of the past couple of years, the Permian has been a production powerhouse, lately churning out an average of nearly 5 MMb/d of crude oil and 14 Bcf/d of natural gas. But is the Permian on shaky ground? Well, sort of. Distinct areas within both the Midland and Delaware basins in West Texas have experienced an increasing number of higher-magnitude earthquakes that have been linked to the saltwater disposal (SWD) wells that E&Ps use to get rid of the massive volumes of “produced water” their oil and gas operations generate. As a result, regulators have been ordering some of these disposal wells to be shut down and directing producers and midstreamers to develop “seismic response action plans” aimed at reducing the frequency and severity of quakes. In today’s RBN blog, we look at what has been happening on the earthquake front in West Texas and how E&Ps can deal with it.

We’ve seen this movie before, right? Through the first half of the 2010s, Oklahoma, home of the SCOOP/STACK production area, experienced a sharp increase in the frequency and magnitude of earthquakes — there were 585 tremors with a magnitude of 3.0 or greater in 2014 and 887 in 2015, compared to an average of only three per year in the 2000-09 period (see Figure 1). The trend was soon attributed to the injection of massive volumes of produced water from oil and gas production into deep SWD wells in specific geologic formations, especially the Arbuckle, the deepest sedimentary layer in the Sooner State. Oklahoma regulators stepped in, shutting down a number of SWD wells and establishing (and later updating) protocols for the use of existing and planned wells. The frequency of earthquakes has plummeted — fewer than 30 tremors of 3.0 or higher magnitude were recorded in 2021, and the state’s first quake of 2022 happened on January 31 (a 4.5!). The seismicity problem, while not fully resolved, is being carefully monitored and managed with only limited impact on oil and gas operations.