The Million Dollar Way (The Bakken Oil Blog): 03/11/22

Friday, March 11, 2022

Didi -- The Stock Jim Cramer Highly Recommended Last Year -- March 11, 2022

Fascinating story.

For the archives.

Then, Jim Cramer's recommendation: get as many Didi shares as you can after the Chinese ride-hailing giant goes public -- Jim Cramer, June 28, 2021.

Then, social media.

And, finally, Didi today. Or direct to CNBC: Didi's 44% stock plunge leaves SoftBank and Uber with diminishing returns. Didi shares are now 87% below the IPO price last year. Two largest shareholders:

SoftBank
Uber

From the linked CNBC article:

The shares were already in freefall amid a crackdown by the Chinese government on domestic companies listed in the U.S. Didi said in December that it would delist from the New York Stock Exchange and instead list in Hong Kong. On Friday, Bloomberg reported that Didi hadn’t complied with data-security requirements necessary to proceed with a share sale in Hong Kong.

I haven't watched CNBC in over four weeks, and each day, it seems, I'm missing it less.

Softbank owns about 20% of Didi. The Japanese conglomerate’s stake is now worth around $1.8 billion, down from close to $14 billion at the time of the IPO. Uber’s roughly 12% stake has fallen from more than $8 billion in June to just over $1 billion today.

Uber was up slightly at the close today, and slightly lower after hours.

Replacing Russian Oil -- March 11, 2022

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.

Canada: considers ramping up oil exports to US. And just think: the long pole in the tent: lack of adequate pipeline. Rail merger between KSU an CP may or may not be on track (no pun intended); everything depends on regulators who are not particularly supportive of "bigger is better" philosophy. Link to Charles Kennedy.

Russian oil shortfall: it will take five years, could take ten years to "build back better" -- the amount of time needed to replace all ten million bopd Russia is producing. -- Former Texas regulator. Link here. Charles Kennedy. March 11, 2022. [

You know, that's an interesting observation. The former Texas regulator is suggesting that Russia will have trouble even producing enough oil for its own consumption when foreign companies, foreign technology departs. He may be on to something; I had not thought of that. Look what happened to Venezuela with sanctions. And those Russian tankers heading to China? How many does the US Navy have to take out before Putin gets the message?]

Agriculture: 2022

March 12, 2022: Ukraine bans fertilizer exports. Reuters.

March 11, 2022, from social media:

meat processors out a year because elites/wealthy stockpiling beef in freezers;
farmers in South can't get fertilizer for crops now;
farmers in Midwest are switching crops, cannot get either nitrogen or fertilizer;

Week 10: March 6, 2022 -- March 12, 2022

Top story of the week:

Joe Biden is still president.
XOM to sell Bakken assets?
US CPI at 7.9%; highest in more than 40 years.
Russia on brink of insolvency.
Cheniere has sold out of natural gas through 2040.

Top international non-energy story:

Ukraine-Russia war; second week.
Norway's wealth fund Russian investments are worthless.
Saudi Arabia foreign exchange reserves fall again.

Top international energy story:

Just like that: upwards of seven million bopd will be off the global market by May, 2022.
China: winner. Will get all the oil it needs at the price it wants from Russia.
Diesel will be a top five story for 2022. And, here.

Top national non-energy story:

Top national energy story:

Top North Dakota non-energy story:

Top North Dakota energy story:

Geoff Simon's top North Dakota energy stories:

Quick connects.

Operators:

Operations:

Wells:

Another CLR Whitman well goes over one million bbls crude oil cumulative.

Fracking:

Natural gas:

Pipelines:

Bakken economy:

Commentary:

CLR Renews Twelve Jersey FIU / Federal Permits -- March 11, 2022

Footnote: Schlumberger expands its Innovation Vactori network.

Oilfield services provider and the world’s largest drilling company, Schlumberger, has expanded its Innovation Factori network with a center in Houston, Texas, the company’s first such center in North America.

The network is enabling customers to accelerate the development and deployment of enterprise-scale AI and digital solutions, in the context of their unique business challenges, spanning exploration to production and new energy systems.

Soccer: granddaughter Olivia's soccer team wins final game of the season, 4 - 0. Takes District Championship. Olivia scored two of the four goals. Last night she was inducted into the Spanish Honor Society.

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Back to the Bakken

Active rigs:

$109.30	3/11/2022	03/11/2021	03/11/2020	03/11/2019	03/11/2018
Active Rigs	31	15	56	65	59

Two new permits, #38826 - #38827, inclusive, all in support of a CO2 sequestration proogram:

Operator: Minnkota Power Cooperative, Inc
Field: wildcat, Oliver County
Comments:

Minnkota has permits for two wildcat wells, Unity 1 and McCall 1, in SWNW 4-141-83,
to be sited 1979 FNL and 373 FWL and the other 1978 FNL and 257 FEL
a vertical well;
the application for permit for re-entry says the "dirt work date is 12/01/2024."

In addition, Minnkota has a re-entry permit, #37672, a vertical well; J-ROC1, Oliver County, 1959 FNL and 333 FWL, another wildcat; original well:

wildcat / stratigraphic teest (precambrian)
supporting a CO2 sequestration project for the Minnkota Milton R Young coal-fired power plant;
well pad was built in close proximity to Minnkota's power plant making the location and operations unusual compared to most oil an gas wells; will drill into the Inyan Kara, Broom Creek and Deadwood formations; it will be P&A's after successfully reaching TD
considered a geologic success

Note: the scout tickets are wrong, or the map is wrong. J-ROC1, #37672, is not 1959 FNL or 333 FWL. It appears the well is more likely 333 FNL and 1959 from FWL. Let's look at the permit: the permit application showed 1927 N 339 W; clearly either the application is wrong or the map is wrong.

Twelve permits renewed, all CLR:

CLR: the Jersey FIIU and Jersey Federal permits, in Mountrail County

One permit canceled:

#38724, Whiting, Mariah Olson, Williams County

While You Were Out To Lunch, Part 2, March 11, 2022

DuckDuckGo: so much for all those folks who thought DuckDuckGo didn't track searches. Link here.

Apparently DDG’s anti-Russian, pro-Ukrainian fact checkers will now "down-rank" Russian disinformation.

Agriculture: this is going to be the biggest story of 2022 -- agricultural crises of epic proportions.

Egypt will be ground zero for reporting on story by Aljazeera, BBC, NPR, and ABC Nightly News.
I don't know if they will be able to connect the dots. Here's a start:

traders are considering using rail to ship grain out of Ukraine; link here.

Uranium: may make the top 5 energy stories for 2022. From "Uranium Corgi":

While You Were Out At Lunch -- Part 1 -- March 11, 2022

Spare capacity: for those who believe in the tooth fairy, the Easter bunny, and spare capacity, Reuters is very optimistic that OPEC can make up the difference with spare capacity. For the archives. Linked here.

European energy crisis: Norway - Poland natural gas pipeline should be ready in time for next winter. Link here.

Diesel: this is going to be one of the big energy stories of 2022.

remember, Saudi just put in an order for multi-million bbls of diesel;
now this: global diesel shortage raises risk of oil price spike, a repeat of conditions that led to record price in 2008; Reuters.
pat on my back: I track the weekly EIA report and noticed the distillate fuel issue several weeks ago; pretty cool coming from someone who knew nothing about oil until the blog and input from readers;
from Reuters:

in 2008, similar situation helped propel oil prices to a record high;
US: inventories are 21% below the pre-pandemic five-year average, and lowest level since 2005
Europe: inventories are 8% below ... and lowest level since 2008;
Singapore: inventories are 32% below ... and also lowest since 2008

first question I would ask: why is Europe a relative outlier; this tells me the German economy is struggling;

Diesel, cont'd: loss of Russian crude will force European refiners to cut diesel output.

reduction in output would coincide with tight diesel market
Europe will need to pull crude supplies form further afield
one-third of UK diesel imports come from Russia; no others come close

Diesel Will Be A Top Energy Story in 2022 -- March 11, 2022

Updates

April 30, 2022: update.

March 14, 2022: update.

Original Post

Diesel: this is going to be one of the big energy stories of 2022.

remember, Saudi just put in an order for multi-million bbls of diesel;
now this: global diesel shortage raises risk of oil price spike, a repeat of conditions that led to record price in 2008; Reuters.
pat on my back: I track the weekly EIA report and noticed the distillate fuel issue several weeks ago; pretty cool coming from someone who nothing about oil until the blog and input from readers;
from Reuters:

in 2008, similar situation helped propel oil prices to a record high;
US: inventories are 21% below the pre-pandemic five-year average, and lowest level since 2005
Europe: inventories are 8% below ... and lowest level since 2008;
Singapore: inventories are 32% below ... and also lowest since 2008

first question I would ask: why is Europe a relative outlier; this tells me the German economy is struggling;

Diesel, cont'd: loss of Russian crude will force European refiners to cut diesel output.

reduction in output would coincide with tight diesel market
Europe will need to pull crude supplies form further afield
one-third of UK diesel imports come from Russia; no others come close.

Note: it could be worse. I have tags for both $16-diesel and $26-diesel.

Whiting + Oasis Exceeds Threshold For Windfall Profits Tax — March 11, 2022

Fact check me on this:

Whiting: 260,000 boepd;
Oasis: 70,000 boepd;

Merger still doable but Whiting may need to cut production a bit.

Both WLL and OAS are trading down more than most other oils today.

And then Jen Psaki wonders why US shale is not drilling.

Windfall profits tax bullish for oil overall. Not so much for some investors. CLR is “safe.” DVN is not safe unless they break their company into Devon East and Devon West. Or maybe Devon Joe and Devon Kamala. I would go with Devon J (DJ) and Devon K (DK).

My hunch: Warren Buffett, a democrat, is probably talking to the folks sponsoring this bill. I’m lovin’ it. It’s an open book test for oil investors.

To keep this simple, any policy coming out of Washington (DC), think of it as:

incentivizing or not incentivizing the SUPPLY SIDE
incentivizing or not incentivizing the DEMAND SIDE

A windfall profits tax is dis-incentivizing the SUPPLY side.

Global Warming Hits The Bakken -- Noted By Reader -- Dozens Of Degrees Below Freezing -- Mid-March -- March 11, 2022

Link here.

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The Sports Page

NFL: it was said just a few months ago that Russell Wilson would never leave the Seahawks (or was that vice versa? Whatever). Well, it's being reported that Russell Wilson is headed to the Broncos.

NBA: Gregg Popovich one victory from setting all-time coaching wins record.

Windfall Profits Tax -- Uncomfortable Truths -- Unintended Consequences -- March 11, 2022

Wow, wow, wow.

Earlier today, or was it last night, I suggested that any windfall profits tax will be followed by higher oil prices.

Now, that thought has been corroborated. At the linked article, go to the last paragraph.

Perhaps most important for policy makers, companies and consumers will be the reaction from industry. The reason oil markets were oversupplied and prices were low from 2015 to 2019 is because US oil companies spent all their income (and then some) to invest in the oil patch and grow production. The bill hopes to provide consumers with $120 per year in stimulus. If levying a windfall tax reduces industry's willingness to invest, consumers around the world could bear the consequences of sustained high oil prices.

Interestingly, those operators at the margin will definitely keep this production below the rate at which the 50% windfall profits tax kicks in. If an operator is producing 290,000 bopd, that operator will make sure not to produce more than 300,000 bopd.

Devon at 600,000 boepd needs to split itself into two companies, Devon East and Devon West, get each company down below 300,000 boepd.

CVX needs to exit California ASAP; offsetting California state tax will help pay the windfall profits tax.

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Death By A Thousand Cuts

I track Russia's implosion here.

Today, the US joins allies in revoking Russia's "most favored nation" trade status.

Putin, earlier this week, had already banned most imports from Russia. Between what Putin is doing to his economy and what the West is doing to his economy, Russia will become the most isolated country in the world, with the exception of North Korea. Russia has become more isolated than Iran.

Starting To See Fault Lines Among EVs -- March 11, 2022

RIVN: down 11% in pre-market trading; says it will cut production in half this year. Mid-morning:

RIVN: down 7%; trading at $38.
LUCID: down 6%; trading at $23.
RIDE: down 6%; trading at $2.
TSLA: down 4%; trading at $808.
F: down 1%; trading at $16. This foray into EV's may be incredibly painful in the short term.

Earnings: speaking of which, how did RIVN's earnings go last night? Link here:

wider than expected;
slashed; its 2022 production guidance by half amid growing concerns about supply-chain issues
to 25,000 vehicles in 2022
confirmed that Rivian produced only 1,410 vehicles so far in 2022, barely more than they did in 2021;

Rivian: finally the numbers:

revenue:

4Q21: $54 million
FY21: $55 million

profit:

4Q21: a loss of $383 million
FY21: a loss of $465 million

overall net loss:

4Q21: a loss of $2.5 billion
FY21: a loss of $4.7 billion (compared to a loss of moore than $1 billion in 2020)

Rivian: new batteries --

lithium iron phosphate (LFP) for standard-level vehicles;
high-nickel for longer-range vehicles (NCA)
LFP: no nickel, no cobalt; more stable, less energy-dense
do not deliver same range as NCA
Tesla also uses LFP for standard battery packs;

More and more it looks like US government needs to send windfall profits tax money only to those individuals who will use the check/money to buy EVs.

Ford and PG&E: partners on electric F-150 powering homes, grid. Huge. This is startling. Link to CNBC. For folks like me who thought the concept was a niche concept -- we need to re-think this.

Ford will collaborate with Pacific Gas and Electric Co. in California to evaluate the capabilities of the electric F-150 Lightning to power homes and return energy to the power grid.
Ford CEO Jim Farley and PG&E Corp. CEO Patti Poppe announced the plans Thursday night at the CERAWeek energy conference in Texas.
The F-150 Lightning — due out this spring — already has the capability to power a home in the event of a power outage, according to the company. Ford calls it “Intelligent Backup Power.”
Three days full power for a home; ten days power for major event; and could probably last longer if absolutely necessary.
And, then, of course, taking the F-150 Lightning on the job on a regular basis. No more looking for an outlet at a green-site base.
my hunch: the military is going to love this; spin-offs:

huge diesel generators on trucks to re-charge all these electric vehicles.

Crazy prices in Los Angeles, from yesterday:

For investors, opportunities in oil, an, no, I am not worried about demand destruction:

Opportunities in oil: all the news coming out of Washington (DC) suggests that the price of oil will keep melting up, interrupted by spikes in both directions. These actions are almost guaranteed to keep oil melting up:

"transitory" inflation
the Fed raising rates
safe haven
windfall profits tax
releasing oil from the SPR
US Energy Secretary's complete misunderstanding of energy

Demand destruction: readers know my thoughts on "demand destruction."

The big question: who is fixated (other than me) on "demand destruction?" I don't know. That's a tricky one. I'm very cynical with regard to memes, metonyms, and nabobs of negativity (LOL -- I have no idea what that means but Spiro Agnew was never given enough credit -- LOL -- but I digress).
"Demand destruction." This reminds me of a reader who suggested that in the end Russia will do just fine: sure, Russia won't sell as much oil and Russia will have more difficulty selling that oil but at much higher prices, Russia doesn't have to sell as much. [That turned out to be so very, very wrong. But again I digress.]
But when it comes to "demand destruction," this is coming from Wall Street types who don't own cars, work from home, take the subway, have limousines, take Uber, etc., but have so many options. Hellooooo. The rest of America does not have options. Sure, people in Los Angeles will do what they can to save money on gasoline but it's not going to be as much as Wall Street people think. But I do think "demand destruction" is a dog whistle among the Greens to reassure themselves that they're correct and people will need to move away from expensive gasoline to EVs. I don't know; it's complicated, but fascinating.

Too good not to post again. Link here.

I would assume most folks buying gasoline from this station have very few options.

Here We Go -- Ten-Year Treasury Yield Over 2% -- March 11, 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.

One year ago, while sitting on my sister's deck overlooking Flathead Lake, I started taking investing seriously, at age 70. LOL. I actually re-vamped the blog to make it easier for me to track things.

The Apple Page

Items:

all that new hardware announced Tuesday this past week:

can start ordering today
available for in-store pick up March 18, 2022
iPhone SE will be huge

MacBook Air and MacBook: with M2 chips later this year. Link here.
The new iPhone SE: Yahoo!Finance technology editor. Nice review but got the target audience wrong. I don't know how "technology editors" can miss the simple things. But, yes, this, the iPhone SE, is going to be huge.
TSMC 4-nm chips: Apple has booked the initial production capacity of 4nm chips with long-time supplier TSMC for its next-generation Apple silicon. Link here.

Chips: link here. Chips, semiconductor: link here.

TSMC 3nm chip: TSMC beings pilot production of 3nm chips, could be used in 2023 iPhones and Macs. Link here, December 2, 2021.

TSMC 4nm chip:

almost two years ago: TSMC confirms evolutionary 4nm process node as it marches towards 3nm chip production;
just a few months ago: Intel to adopt TSMC's 4nm node in 2022 as AMD shifts to 5nm by 4Q22;

in the second half of 2023, TSMC’s 3nm node will reach production volume of 50-60K wafers per month. Consequently, the cutting-edge process will only start generating revenue for the Taiwanese foundry in the first quarter of 2023 (mass production begins in Q4 2022).
in addition to Intel, Apple will also adopt the 4nm (N4) process in 2022 for its next generation of Bionic and M2 processors. All of TSMC’s other customers including AMD, Qualcomm, MediaTek, and NVIDIA will rely on the 5nm node till the end of 2023/early 2024. To keep clients happy, TSMC plans to introduce enhanced variant of its 3nm node “N3E” as it works to perfect its 2nm GAA process.

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The Comic Page

"transitory" inflation
the Fed raising rates
safe haven
windfall profits tax
releasing oil from the SPR
US Energy Secretary's complete misunderstanding of energy

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First Things First At The End Of The Page

First group "financial / economic" indicators:

10-Year Treasury: link here. Yield hits 2.013%.
DXY: link here. Flat at 98.51.
Silver: link here. Down 1.5% at $25.86.
Gold: link here. Down 1.6% at $1,965. Apparently peace is breaking out.
CBOE volatility index: link here. Explained at Investopedia. Drops below 30, drops 2%. Now at 29.61.

Starting To See Some Semblance Of Order -- Friday, March 11, 2022

Ally: I don't know if there was any one link, or if I have the link, or whether the story will gain traction, but Saudi says it can't cut its ties with the US, but the US, unlike Russia, seems to be quite untrustworthy. Or something to that effect. Thinking out loud. Probably because of the next bullet.

Mideast on edge: yup, the drones and missiles are starting to fire again. Link here.

Yup: they're reading the blog. The only thing really moving the market right now. I'm shocked. Shocked. Link here. I'm sure you can guess.

Russian tankers: as long as they can get out of the Black Sea. Link here to Rigzone -- Russian oil tanker fleet coming to a standstill.

RIVN: cuts planned production in half. Pre-market, RIVN down 11%. Link here.

Why aren't US producers responding to high prices? Windfall profits tax.

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Back to the Bakken

Active rigs:

$106.70	3/11/2022	03/11/2021	03/11/2020	03/11/2019	03/11/2018
Active Rigs	32	15	56	65	59

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,

RBN Energy: prices popping, crude oil tank tops keep dropping down in Cushing.

Russia’s war on Ukraine turbocharged global crude oil prices and spurred price volatility the likes of which we haven’t seen since COVID hit two years ago. The price of WTI at the Cushing hub in Oklahoma — the delivery point for CME/NYMEX futures contracts — has gone nuts, and the forward curve is indicating the steepest backwardation ever. In other words, the market is telling traders in all-caps, “SELL, SELL, SELL! Sell any crude you can get your hands on. It’s going to be worth far less in the future.” So anyone with barrels in storage there for non-operational reasons is pulling them out, and fast! In today’s RBN blog, we look at the recent spike in global crude oil prices and what it means for inventories at the U.S.’s most liquid oil hub.

The Million Dollar Way (The Bakken Oil Blog)

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