The Million Dollar Way (The Bakken Oil Blog): 03/12/22

Saturday, March 12, 2022

Cost Of Going Around Russia -- March 12, 2022

Inflation -- March 12, 2022

"Good" And "Bad" Oil -- March 12, 2022

There are really some great blogs out there. These great blogs -- providing analyses of current events -- combined with a good twitter feed that provides breaking news are causing great havoc for traditional new sources.

Such outlets as ABC Evening News may have the story as quickly as the rest of us, but it won't show up for two nights: many of these stories have to be vetted, fact-checked, edited for the intended audience and the political narrative, and that takes time, about two days. By that time, many of these stories are old news.

It's too bad Hunter S Thompson is not still with us. He would have been phenomenal on Twitter.

Rush Limbaugh never "grew" into twitter. He had a great radio show and perhaps that's all he needed. Twitter does not allow one to develop much of a story or an analysis, something in which Rush excelled.

It's all water under the bridge now, as they say, with regard to the Keystone XL, but Americans should be fuming that the Biden administration continues to look for more oil from Iran and Venezuela rather than from Canada.

A nice essay on "good" and "bad" oil is over at one of the nice blogs I alluded to earlier.

What bugs me: why do folks still write essays on this subject, and why do folks like me still link them. As noted it's all water under the bridge, now.

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That Time Of The Year

From social media today, not my photo, not my backyard, not my crawdads:

Update On Ovintiv's Bernice Wells In South Tobacco Garden -- March 12, 2022

These wells came off confidential list this past week. Some very nice wells in this area and lots of activity.

The well:

38419, drl/drl, Ovintiv, Bernice 150-99-20-17-7H, South Tobacco Garden, first production, 12/21; t--; cum 41K 1/22;
38418, conf, Ovintiv, Bernice 150-99-20-17-6H, South Tobacco Garden, nice well, first production, 12/21; t--; cum 56K 1/22;

Three wells in the area:

36298, F/A, Ovintiv, Schneiderman 150-99-32-5H, South Tobacco Garden, t10/19; cum 302K 1/22;
36299, F/A, Ovintiv, Schneiderman 150-99-32-6H, South Tobacco Garden, t10/19; cum 324K 1/22;
36508, SI/NC, Ovintiv, Schneiderman 150-99-29-32-4H, South Tobacco Garden, first production, 12/19; t--; cum 245K 1/22;

Update On A Couple Of Cedar Hills Red River Wells -- March 12, 2022

This well came off confidential list this last week:

38437, AL/A, Denbury Onshore, CHSU 11-35NHR 15, Cedar Hills, a South Red River well, first production, 11/21; t--; cum 4K 1/22;

How are other wells in this area doing?

37900, rig on site, CLR, JDT Federal 24-10RH, Cedar Hills, North Red River B, first production, 8/21; t--; cum 16K 1.2;

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	Vent/Flare
NORTH RED RIVER B	1-2022	31	4773	4738	7781	3	3
NORTH RED RIVER B	12-2021	13	1335	1337	3192	46	46
NORTH RED RIVER B	11-2021	30	1191	1206	8658	265	265
NORTH RED RIVER B	10-2021	31	2033	2063	8840	431	431
NORTH RED RIVER B	9-2021	30	2339	2409	7697	566	566
NORTH RED RIVER B	8-2021	26	3908	3738	8909	582	582

17520, PA,
17482, 216, CLR, JDT 24-10NH, Cedar Hills, North Red River B, t11/08; cum 518K 1/22;
15521, A, Denbury, CHSU 43-26SH15, Cedar Hills, unitized, injection, production data unavailable;
27243, AB, Denbury, CHSU 11-35NH 15, Cedar Hills, South Red River B, t4/14, cum 334K 8/19;

Lots Of Work Left To Be Done In The Bakken -- This CLR Well Has Just Gone Over One Million Bbls -- Started Off In Life As A Less-Than-Mediocre Well -- March 12, 2022

Updates

July 24, 2022: upwards of a dozen CLR Whitman wells are being fracked.

Original Post

The CLR Whitman wells are tracked here.

This CLR Whitman well came off confidential list this last week:

38494, drl, CLR, Whitman FIU 7-34H1, Oakdale, no production data,

Other wells yet to be completed / updated:

38495, conf, permitted 8/18/21, CLR, Whitman FIU-8-34H, Oakdale,
38496, conf, permitted 8/18/21, CLR, Whitman FIU 9-34H2, Oakdale,
38497, conf, permitted 8/18/21, CLR, Whitman FIU 10-34H, Oakdale,
38613, conf, permitted 10/13/21, CLR, Whitman FIU 10-34H1, Oakdale, NWNW 34-147-96; 543 FNL and 301 FWL;

This Whitman well on that pad has just gone over one million bbls, full production at this post:

20212, 482 (1,008 reported on the sundry form), CLR, Whitman 3-34H, Oakdale, Three Forks first bench, API - 33-025-01261; t9/11; cum 181K 5/18; see production profile below; well, isn't this interesting -- yup, this well was fracked 9/23/17 - 10/5/17; 9.8 million gallons of water; 84% water; 15% sand; sundry form in file report: 61 stages; 14.5 million lbs sand; [Update: this well went off line 4/18 and came back on line 8/18; in 8/18 produced 4,731 bbls over 4 days which extrapolates to 35,000 bbls in one month]; interesting profile; see this post; cum 948K 6/21; cum 1,037,348 bbls 1/22.

Another well, of course, that disproves Hubbert's "peak oil" theory.

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.

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Free Cash Flow

For Investors -- March 12, 2022

Updates

March 21, 2022: a great example of what I'm talking about -- activist investor Engine No. 1.

Original Post

I've been having a friendly discussion with a reader with regard to the importance of reading and understanding financial statements when investing.

The reader suggests those who invest without reading and understanding financial statements are gamblers, not investors.

At one time I would have agreed.

My best example why reading and understanding financial statements are fairly worthless these days:

Years ago I made my first significant investment in Exxon for our older daughter's portfolio. At the time she was in middle school or thereabouts, I suppose, and I was quite excited about my investment. The next day, the Exxon Valdez ran aground off the coast of Alaska and the rest is history.

Second example:

OXY: anyone reading OXY's financial statement at the time Vicki Hollub flew to Omaha to meet with Warren Buffett would have sold OXY. The rest is history.

Third example:

In 1984, once could have bought AAPL for pennies, okay, maybe a few dollars, but looking at its financial statement would have never predicted where Apple, Inc, is today.

Today, while looking for something else, I ran across an old, old story with regard to one of my best mentors ever in the US military.

He retired and went on to be a CEO of at least one, if not two more healthcare companies after he left the USAF. He has since "completely" retired as far as I know, although he probably still sits on at least one, if not several boards. I was curios how his the last company for which he was CEO was doing. I had never heard of the company. It does not look like it is doing particularly well, except maybe for the CEO and the board of directors. I did not go to the financial statements; I went to the "About Us" to see who the composition of the board of directors and read their bios. There were about twenty folks on the board. Not one of the bios impressed me. But this really, really stood out: this was a healthcare company and not one person on the board was a physician. I believer there may have been two individuals that had degrees in nursing.

I am absolutely convinced that knowing the makeup of the board of directors is much more important than than reading and understanding the financial statements.

Short term, geopolitical events and the economic environment will play a much bigger role than either financial statements and the board composition, but long term, the business model, the business plan, and the board are most important when deciding when and where to invest.

Final example: if anyone has read and understood Berkshire Hathaway's financial statements for the past twenty years, that person is a much better person than I. As far as being a better investor, I do not know.

My bet is that the individual who has never read the BRK financial statement but has consistently invested, in good times and in bad, in BRK for the past twenty years has done much better than the individual who did would not invest in BRK unless having read the financial statement first.

How Many Transistors Can Apple Put On One Chip? Moore's Law Broken? March 12, 2022

Wow, this is exciting.

Moore's law: Definition. Moore's law is a term used to refer to the observation made by Gordon Moore in 1965 that the number of transistors in a dense integrated circuit (IC) doubles about every two years.

I follow chips, integrated circuits, semi-conductor "stuff" here:

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

On October 20, 2021, this graphic was updated over at wiki:

October 20, 2021: this graphic was updated over at wiki overnight --

On March 8, 2022, wiki had to update graphic once again. Here's the wiki entry for "transistor count," or how many transistors can Apple put on one chip:

Note the M1 Max at 57 billion transistors on one chip. The M1 Ultra, introduced and available now, has exactly double that: 114 billion transistors on one chip. Apple literally put two "M1 Maxes" on one chip.

5nm.

My understanding is that Apple has already ordered 4nm chips from TSMC, and TSMC is working on its 3nm chip which should be available in 2024. It has just been announced Intel has also gone with the TSMC chip.

Go back to Moore's Law, "doubles every two years."

Apple's Law: "double every year." LOL.

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Saturday, March 12, 2022