Copper: link here.
SCCO: clears benchmark, IBD, March 4, 2022.
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.
Holy mackerel: here we go -- Whiting and Oasis close to merger. Link here. Being reported as an exclusive, The Wall Street Journal, at a paywall, I have subscription, if you want any information from the site.
I would find it absolutely amazing if Biden would actually go to Saudi Arabia -- it's a lose-lose for him.
If he gets rebuffed by Saudi Arabia, a huge loss. A loss of epic proportions. Of course, he will only go if the agreement is made beforehand.
If Saudis agree to help him out, they really can't add much.
Saudi Arabia has almost become a marginal player in all of this.
The real players:
- Canada (had we had the Keystone XL)
- Venezuela (which looks like sanctions will be lifted).
Everyone else remains marginal:
- even Iran, even if all sanctions lifted; they are more natural gas than oil;
- Libya; more marginal than ever;
- Mexico: hardly even marginal; slowly becoming a failed nation;
Russia: definitely marginal
The real question is whether Britain will re-think its position. France won't even though it has shale oil. This, too, will pass. That's the French motto.
Tonight's edition of "Focus on Fracking" should be quite interesting.
Updates
Later, 6:13 p.m. CT: I posted this at 1:42 p.m. CT earlier today -- now we know --
At 6:00 p.m. E.T. tonight, when the oil trading markets open, we will get an idea of how scary the US State Department message is.
Later, 5:27 p.m. CT: a reader just sent me an e-mail; fact-checked the original post. Provided another source. Says this is correct.
I won't watch CNBC in the a.m. but clearly Joe Kernen will win any debate he might have with Andrew Ross Sorkin over energy tomorrow morning. And, just last week Jim Cramer said "oil is a perma-bear." That doesn't make sense, of course, but the "sentiment" is obvious. What a doofus.
Of course, the big story last week was the huge position Warren Buffett had taken in OXY, following his other big build in CVX.
Time to see if PXD CEO is correct when he said even $200-oil would not encourage US shale to drill.
Original Post
Sunday markets have just opened.
Can someone fact-check this? Can this possibly be true?
The trading price, $122, doesn't seem to match the percent change, dollar change (5.7%; $6.58).
From Robert Rapier over at SeekingAlpha:
A grim reminder:
The U.S. imports more than half a million barrels per day of oil from Russia. They are our 3rd largest supplier.
The on-again, off-again Keystone XL pipeline — ultimately canceled by the Biden Administration — would have had a capacity of up to 830,000 BPD. It would have transported oil from Canada and from the Bakken Formation in the U.S. It would have moved more oil than we get from either Russia or Saudi Arabia — and nearly as much oil as we get from OPEC.
**************************************************
Not Saying
I wasn't going to post this story but the STEO data is nice to have. Although Irina Slav says private firms are opening the tap even if publicly-traded companies are not, she did not name any private firms. If she did, I missed them. I have trouble believing any of this. If it's true, I have trouble believing it will make much difference.
Irina says:
Rystad Energy this week forecast that the latest price surge could see an additional 300,000 bpd boost to already rising U.S. shale production, Reuters reported.
This, the Norwegian energy consultancy said, could bring the total production increase in the U.S. shale patch to 1.2 and 1.3 million bpd.
To compare, the EIA had forecast a production increase this year of less than 1 million bpd, and IHS Markit's Daniel Yergin had predicted U.S. oil production growth at some 900,000 bpd. But all that was before the Ukraine war.
Adding an "additional 300,000 bopd" almost sounds like efficiency gains by the publicly-traded companies. To suggest the 300,000 bopd is coming from privately-traded companies, "show me the money."
Headline: US State Dept urges Americans to leave Russia immediately.
Less scary and typical US State Dept language: "US urges Americans to not travel to Russia."
But "to leave immediately." Scary. Very scary. Both locally and globally.
It's a race against time. Putin has ten days.
Remember: Kamala Harris, America's VP, is now in charge of this war for the US. She was formally appointed by the president last week.
At 6:00 p.m. E.T. tonight, when the oil trading markets open, we will get an idea of how scary the US State Department message is.
This is what they look light right now:
Updates
March 8, 2022: So, Cathie Wood thinks autonomous trucks (which don't exist today) and carry one container each will be a cheaper form of freight transportation than trains (which could be fully autonomous today) that can carry hundreds of containers. OMG, she's ignorant. Link here.
Original Post
This post will be rushed and not-ready-for-prime-time but one has to do what one has to do.
I haven't watched CNBC in the last four or five weeks and have no intention of going back any time soon.
For several months, I did watch CNBC religiously (three particular shows, only), and not once did anyone mention UNP or any of the rails for that matter. They hardly mentioned oil. But that's another story.
As noted, I don't recall UNP ever being mentioned on the three CNBC shows I (used to) watch.
In the past two or three days, UNP has absolutely gone ballastic. Maybe a bit of hyperbole but UNP has been incredible.
There are two story lines here
First.
The "stock market" is usually looking three to six months out.
So, what's going to be shipping in three to six months? I don't follow rail loadings at all but let's guess:
So, more could be written and perhaps I will write more but I have to move on: movies and NASCAR coming up.
But I said there were two story lines here.
Here's the second story line.
Most of this stuff was "known" well before the Russian-Ukraine invasion. What changed? Why now. Why Thursday? Why Friday? Why last week? Why not one month ago? Why not two months from now.
It had to do with Warren Buffett's annual letter.
Warren Buffett devoted a fair amount of space in that letter to his railroad, BNSF.
BNSF, our third Giant, continues to be the number one artery of American commerce, which makes it an indispensable asset for America as well as for Berkshire. If the many essential products BNSF carries were instead hauled by truck, America’s carbon emissions would soar.
Your railroad had record earnings of $6 billion in 2021. Here, it should be noted, we are talking about the old-fashioned sort of earnings that we favor: a figure calculated after interest, taxes, depreciation, amortization and all forms of compensation. (Our definition suggests a warning: Deceptive “adjustments” to earnings – to use a polite description – have become both more frequent and more fanciful as stocks have risen. Speaking less politely, I would say that bull markets breed bloviated bull . . ..)
BNSF trains traveled 143 million miles last year and carried 535 million tons of cargo. Both accomplishments far exceed those of any other American carrier. You can be proud of your railroad.
Mr Buffett has only so much room in his letter, and to devote three paragraphs to BNSF speaks volumes.
This is what happened. His letter came out. Analysts pored over it. They read the BNSF paragraph but they had to do their own "due diligence. That took three or four days. The letter came out Saturday. Due diligence and recommendations on PowerPoint were put together by Wednesday for the analysts to present to their hedge fund CEOs. The "deciders" heard the presentations on Wednesday or Thursday. They began buying Thursday, When there was no pull back / profit taking Friday, they bought some more.
Time for small mom-and-pop gamers to jump in. I don't know. Read the disclaimer.
The bigger question: what can investors learn from this? Certainly UNP and BNSF aren't going to be the only winners coming out of this war.
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.
With regard to UNP:
Oh, by the way, with regard to UNP, check out its dividend history.
One last thing regarding railroads. There really isn't much choice out there. I won't buy Canadian companies any more. Ever. Okay, maybe some exceptions. The only rail I would consider is too iffy right now, but one may want to watch it very, very closely. The Biden administration might make for a great opportunity.
First things first: wow, I really missed this. The other day, yesterday, actually, I wondered out loud why Jeff Bezos would spend so much money on a big budget movie. After watching the movie a second time and sleeping on it overnight, it now all makes sense.
Ukraine: when this is all said and done, there will be huge "repercussions" -- I think the one that bothers me the most, even more than energy (and there's a reason for that) is agriculture.
This might be the time for President Biden to worry more about US farmers planting more than US shale drilling more. Unfortunately, Biden will lead from behind, and we will realize this autumn that the US should have been pulling out all stops to encourage farmers to plant more. There are so many things the US government could do to encourage so much more planting of wheat, corn, soybeans. We have two months, tops, to get things going.
Link here, leading from behind:
Ukraine: it will be impossible to quantify, I suppose, to what extent Russian money flowing into US economy will impact the US surging economy, but my hunch it will not be trivial. This is just the beginning, link here:
From Zillow, parameters: only those homes selling in the $500,000 to $1 million range, 253 results. We can compare this using same parameters in one year:
Europe will have to deal with the humanitarian crisis. The moneyed and elite will find their way to England and America, probably not Germany, and probably not France. And they won't be going to Florida only. New York City will be high on their list.
Some of those oligarchs will moor their yachts next to John Kerry's in Rhode Island.
One more reason I'm not worried about stagflation. We're gonna have inflation but not 'stag.
From wiki:
In economics, stagflation or recession-inflation is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high.
It presents a dilemma for economic policy, since actions intended to lower inflation may exacerbate unemployment. The term, a portmanteau of stagnation and inflation, is generally attributed to Iain Macleod, a British Conservative Party politician who became Chancellor of the Exchequer in 1970.
Macleod used the word in a 1965 speech to Parliament during a period of simultaneously high inflation and unemployment in the United Kingdom.
Warning the House of Commons of the gravity of the situation, he said: "We now have the worst of both worlds—not just inflation on the one side or stagnation on the other, but both of them together. We have a sort of 'stagflation' situation. And history, in modern terms, is indeed being made."
With surging economy coming out of the Covid-19 lock downs, growth has got to slow down, but growth quarter-over-quarter coming out of a world war or a Covid-19 lock down is less important than comparing historical growth, year-over-year or "four-year periods-over-four-year periods."
According to the definition of stagflation above, Iain Macleod was concerned about three things: inflation, a slowing growth rate; and unemployment that remains steadily high. Two of those three bother me, and one much more than the other.
I don't know anything about macro-economics but I would rather track these three with regard to stagflation: inflation, labor productivity, and unemployment.
From trading economics, historical, labor productivity:
From the White House Bureau of Labor Statistics:
*******************
The Art Page
Wow, wow, wow, just arrived. An anniversary present for my wife (wink, wink -- really for me). There's actually a "connection" (for me) between US shale and this book. LOL. More on that later. I'm getting ready to watch Carl Reiner's Fatal Instinct.
Updates
March 11, 2022: there are operators that are trucking frack sand to the Permian from Oklahoma right now due to sand shortages ... link here.
March 8, 2022: this is not 2017 / 2018. Taps are tapped. Labor, pipe, sand, tools, etc., all harder and harder to come by every week. Covid wrecked supply chains; government stimulus made it worse. Link here.
Original Post
Fracking sand:
Background:
Rail:
Pet peeve: whining, and no analysis. Three problems with Javier Blas' tweet:
I may or may not provide an essay / commentary with regard to my thoughts, but it seems most folks should be able to connect the dots.
The most difficult "dot" to connect / analyze is this week's list of wells coming off the confidential list and the initial production for those wells.
But my guess is that some folks won't be able to connect the dots. So, if I get the time (and haven't lost interest) I'll post the commentary.
By the way, part of the commentary, and don't take this out of context: rigs don't matter; fracking is what matters. It used to be fracking spreads, but now it's fracking sand.
| Date | Oil Runs | MCF Sold |
|---|---|---|
| 1-2022 | 20106 | 0 |
| 12-2021 | 17478 | 24499 |
| 11-2021 | 25822 | 35466 |
| 10-2021 | 28916 | 27432 |
| 9-2021 | 30430 | 24453 |
| Date | Oil Runs | MCF Sold |
|---|---|---|
| 1-2022 | 1320 | 0 |
| 12-2021 | 1351 | 0 |
| 11-2021 | 1690 | 0 |
| Pool | Date | Days | BBLS Oil | Runs | BBLS Water | MCF Prod | MCF Sold | Vent/Flare |
|---|---|---|---|---|---|---|---|---|
| BAKKEN | 1-2022 | 29 | 19584 | 19413 | 42154 | 34256 | 34256 | 0 |
| BAKKEN | 12-2021 | 31 | 20451 | 20634 | 59082 | 34197 | 33967 | 230 |
| BAKKEN | 11-2021 | 3 | 918 | 581 | 802 | 1084 | 1073 | 0 |
Monday, March 14, 2022: 18 for the month, 127 for the quarter, 127 for the year
38510, conf, Kraken, Jenna LE 4-33-28 1TFH,
38509, conf, Kraken, Jenna 4-33-28 3H,
37708, conf, Hess, EN-Johnson A-155-94-2932H-6,
Sunday, March 13, 2022: 15 for the month, 124 for the quarter, 124 for the year
38511, conf, Kraken, Alamo 3-34-27,
38495, conf, CLR, Whitman FIU 8-34H,
Saturday, March 12, 2022: 13 for the month, 122 for the quarter, 122 for the year
38364, conf, Petro-Hunt, Boss 154-99-18C_21-1HS,
Friday, March 11, 2022: 12 for the month, 121 for the quarter, 121 for the year
38494, conf, CLR, Whitman FIU 7-34H1,
38437, conf, Denbury Onshore, CHSU 11-35NHR 15,
Thursday, March 10, 2022: 10 for the month, 119 for the quarter, 119 for the year
38128, conf, CLR, Dennis FIU 6-8H,
Wednesday, March 9, 2022: 10 for the month, 118 for the quarter, 118 for the year
None.
Tuesday, March 8, 2022: 10 for the month, 118 for the quarter, 118 for the year
38127, conf, CLR, Flint Chips FIU 6-5H,
Monday, March 7, 2022: 9 for the month, 117 for the quarter, 117 for the year
38126, conf, CLR, Dennis FIU 5-8H1,
Sunday, March 6, 2022: 8 for the month, 116 for the quarter, 116 for the year
None.
Saturday, March 5, 2022: 8 for the month, 116 for the quarter, 116 for the year
38125, conf, CLR, Flint Chips Federal 5-5H1,
