The Junior Varsity Comes Through Again -- March 16, 2022

When I started writing this post of March 8, 2022, I was quite shaken. But by the time I had finished I was in a pretty good mood. The surging price of oil coupled with events in Ukraine had me very concerned. 

The tipping point? I think the tipping point was the story of the day: international leaders no longer taking phone calls from Washington, DC.

At the time, I said that's pretty pessimistic.

What got me out of that funk? Anxiety or depression? It was this:

The good news? Right now I don't see any of the adults leading in Washington. If the likes of Biden, Kamala, Pelosi, Schumer, Elizabeth Warren are the varsity team by virtue of where they stand (or sit), the junior varsity team looks pretty darn good: the likes of Warren Buffett, Tim Cook, Elon Musk, Harold Hamm, Jeff Bezos, Mark Zuckerberg, Bill Gates ad infinitum. The junior varsity team won't let things collapse. And these guys are backed up by the best military and intelligence agencies in the world. 

Not to worry. At some point, our junior varsity team, like the oligarchs in Russia, will say enough is enough. And then the adults in Washington, DC, will take over. 

So, what made me think of that tonight?  

A couple days ago, China (President Xi) shut down Shenzeng, akin to the US (Biden) shutting down (if he could) Silicon Valley, Detroit, and Houston. 

Foxconn was shut down when Shenzeng was shut down. Of course AAPL slumped. I was not worried. I saw it as a great buying opportunity. Because I knew Tim Cook was on the junior varsity team. 

Lo and behold, now being reported, by Reuters and others: "China lets Foxconn, some construction sites resume work in COVID bubbles." 

Well, isn't that interesting? The junior varsity team came through. LOL.

I hope y'all bought a lot of AAPL two days ago. 

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. 

Later, 7:43 p.m. CT: six hours ago, it's being reported that Tesla production is being shut down due to Covid. So, we'll see. Also, the buzz on the street is that TSLA could announce a split in its shares. TSLA was up nicely today. TSLA closed at $840.

Meanwhile, earlier today, Greg Wester: "I don't say this often, but Tesla permabulls are in full panic mode. Kia is lowering prices. One platform, two cars so far. Two more are coming.

Hallelujah! Murex Reports The Amber Renee; Active Rigs Jump To 35 In North Dakota -- March 16, 2022

Gasoline demand, link here:

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

Active rigs:

$95.32	3/16/2022	03/16/2021	03/16/2020	03/16/2019	03/16/2018
Active Rigs	35	17	57	65	58

Five new permits, #38828 - #38832, inclusive:

• Operator: MRO
• Field: Bailey (Dunn County)
• Comments:
• MRO has permits for five wells on lot 4, section 4-145-93; 
• to be sited between 450FNL and 455 FNL and between 306 FWL and 466 FWL
• the wells: Breuer 44-32TFH, Prudence 44-32H, Nyle 14-33TFH, Loralyn 14-33H, and Remsing 14-33TFH:

Three producing wells (DUCs) reported as completed:

• 36887, 448, Murex, Amber Renee 25-36H-R, see this post for background.
  
• 38422, 58, Crescent Point Energy, CPEUSC Reed 4-10-03-158N-100W-MBH,
• 31465, 1,966, Grayson Mill Operating, Topaz 20-17 7H, more on this one later. A nice locatioon.
  

EIA Weekly Petroleum Report -- March 16, 2022

Link here.

• US crude oil in storage increased by a pretty significant 4.3 million bopd.
• US crude oil in storage now stands at 415.9 million bbls, about twice what is really necessary; 12% below the five-year average;
• US crude oil imports averaged 6.4 million bbls (yawn), up by 76,000 bopd day (really; that accurate?); crude oil imports aveerage 6.3 million bopd, almost 16% more than the same four-week period last years;
• refiners operating at 90.4% operable capacity; finally breached 90% after years (?) below 90%;
• distillate fuel inventories actually increased slightly; remain 16% below the five-year average;
• total products supplied over the last four-week period averaged exactly 21.0 million bpd, up by 12% from same period last year
• jet fuel supplied was up 39.3% compared with same four-week period last year
• gasoline demand graph will be posted later today

Notes From All Over -- Part 1 -- March 16, 2022

Investors: I sure hope folks took advantage of that recent one-week sell-off. Wow.

• BRK-B will hit new 52-week highs, back-to-back. Perhaps a three-peat. Even others noted that. 
• holy mackerel: I'm not following the market but I do check in on certain companies that interest me for the day; today BRK interests me ... BRK is now up $4.42, down a bit after hitting, yes, a new 52-week high. 
• one of his big holdings is BNSF: the proxy, UNP: up $3.02 right now; closing in on a 52-week high; I think that 52-week high is a intra-day high; it's likely UNP will close at a 52-week high, but I don't know.
  
• BRK doesn't pay a dividend, but wow, there's a lot of talk about the value of dividends, these days. 
• just wait until oil stocks catch up to oil prices.
  

Ukraine-Russia war continues to drag out. It's much bullets as economic. I assume that's why this essay showed up today over at my "literary hub": how the north beat the south -- the dueling economies behind the US civil 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. Cheap oil may be short-lived.  

Rigzone. Okay, first the "joke" no one caught. Rigzone calling $100 WTI "cheap." LOL. But I digress: here's the link to Rigzone. My hunch: not one reader of this blog will even read that article. Anyone who can't figure this out is not paying attention.

Oil: three million bbls of Russian oil, products could be shut in next month -- IEA.

My reply to the reader who sent me the link above:

Yes, folks will quibble over whether the sanctions will work and whether it's a million bbls or seven million bbls, but the fact remains, a "lot" of Russian oil has been taken off the global market, regardless of the amount.

And now Progressives in Washington (DC) want to ban all drilling on federal land. The Bakken is going to do just fine -- except for the reservation.

And just think, gasoline is trending toward $7 / gallon in California. 

Speaking of which, quick, that 3-million-bopd loss from Russia -- let's take a look at another "location" where the US took 3 million bopd off the global market, link here. 

Horizontal drilling takes a turn in direction: LOL. I've seen this before. Can't recall if I posted this. Link here. 

DoorDash:

• link here;
• it's going to be interesting to see how well these companies fare (no pun intended):
• right now, it's most likely regional
• I can't imagine how bad it must be on the west coast: long distances; and $6-gasoline
• here in Texas, very, very short commutes in urban areas for UberEats, DoorDash, etc, and gasoline, at least compared to California, are manageable
• our favorite breakfast cafe -- we walk to it -- appears to be doing more "DoorDash" deliveries than in-restaurant seating
• at breakfast / lunch there is a 15-minute to 30-minute wait even on slow days; brunch is better, but the number of DoorDash deliveries is quite remarkable
• it's amazing what folks will pay for convenience; of course, many folks are unable to get out of the house, so this is a huge deal for those folks.
  

So much more, but family commitments....good luck to all.

There Are Several Story Lines In This Very, Very Long Note From A Reader -- March 16, 2022

In reply to another reader's comments, a reader tried posting this comment yesterday, but for some reason it did not post. Maybe there's a limit on length of comments by the "blogger app." I don't know.

But here's the comment. So many story lines I can't even begin to comment. But I will do that later. By the way, that spike to $139-Brent (or was it WTI) has all the earmarks of a short squeeze. Things are starting to make sense. Anyway, whatever, here's one reader's take:

i tried and failed to post a long comment on this thread yesterday, and apparently got put on the list for email replies as a result...this is a copy of the comment that blogger had repeatedly rejected:

Here's a copy of the comment I posted after Monday's close:

WTI closed at $103.01 today, down another $6.32 from Friday, and it had briefly traded under $100. 

You should all be able to tell from this oil price graph that it was priced just over $90 two weeks ago, ran up a record $24.09 in one week to $115.68, then hit $130.50 last Sunday before tumbling back to below $100 earlier today.

In comments at Angry Bear last week i pointed out that the oil companies have no control over the price of oil, that they have to take the price set by speculators

John Kemp, senior energy analyst at Reuters, keeps track of trading in oil by hedge funds each week...here's what they were doing before the price run-up began:

Hedge funds anticipate oil price spike, possible recession: Kemp - (Reuters) - Oil traders are anticipating a sharp spike in prices that will likely bring on a business cycle slowdown after Russia’s invasion of Ukraine was met by severe sanctions that are disrupting the country’s petroleum exports.Hedge funds and other money managers purchased the equivalent of 16 million barrels in the six most important petroleum futures and options contracts in the week to March 1, according to exchange and regulatory data.Portfolio managers remain strongly bullish towards petroleum, with a net long position of 731 million barrels, which lies in the 65th percentile for all weeks since 2013 (https://tmsnrt.rs/3hH1BJv). Bullish long positions outnumber bearish short ones by a ratio of almost 7:1, in the 84th percentile, but the overall position has not changed much since the middle of January.Last week’s position changes were driven primarily by the reduction of previous bearish short positions (-20 million barrels) rather than creation of new bullish long ones (-4 million barrels).

Their "net long" position of 731 million barrels is interesting, because as i've previously reported, our commercial supplies of crude oil in storage fell to 411,562,000 barrels on March 4th which means that hedge funds were holding 178% of all of the oil that was available.

So what happened after that? As John Kemp documented earlier today:

Hedge funds slash oil positions amid extreme volatility: Kemp -- Investors slashed bullish bets on oil last week as prices surged to multi-year highs, the economic outlook deteriorated, and extreme volatility made derivatives positions more expensive to maintain. Hedge funds and other money managers sold the equivalent of 142 million barrels in the six most important petroleum-related futures and options contracts in the week to March 8. Last week’s sales were the 11th largest out of 469 weeks since March 2013, according to records published by ICE Futures Europe and the U.S. Commodity Futures Trading Commission. Portfolio managers sold Brent (-97 million barrels), European gas oil (-23 million), U.S. gasoline (-13 million) and U.S. diesel (-11 million) and were buyers only of NYMEX and ICE WTI (+2 million). The selling was dominated by closure of existing bullish long positions (-114 million barrels) rather than initiation of new bearish short ones (+28 million), consistent with a risk-reducing strategy. Funds ended up with a net position in the six contracts of just 588 million barrels (45th percentile for all weeks since 2013) down from a recent peak of 761 million barrels (70th percentile) on Jan. 18. Bullish long positions outnumbered bearish short ones by a ratio of 4.76:1 (61st percentile) down from 6.24 (80th percentile) in mid-January (https://tmsnrt.rs/3tXSCsU). In recent weeks, the record backwardation in futures prices, accelerating rise in spot prices, and increasing day-to-day volatility have been signs of a market under extreme stress and likely to reverse course. Soaring oil prices have been part of a broader increase in the price of raw materials, manufactured items and freight charges which has raised the probability of a recession within the next 12 months. Reflecting the deteriorating economic outlook and volatility costs, distillate positions were cut to 85 million barrels (67th percentile) last week down from a recent peak of 144 million barrels (85th percentile) five weeks earlier.

So it appears the hedge funds have been on the winning side of both the price runup and its recent drop but it's important to recall that futures market trading is a zero sum game, and oil companies trying to set their own positions in the middle of all that trading were most likely losers.

And now here's the comment I posted yesterday morning:

April WTI is now trading at $94.30, so it has now risen from $91.30 to $130.50 back to $94.30 in a little over 2 weeks.

I don’t know, but my best guess would be that the hedge funds that drove the price up are now short, forcing those who are long in this heavily margined market to sell, driving prices even lower, and hence increase the profits of the shorts who initiated the recent price action.

This would be analogous to, but the opposite of, a short squeeze.

Or perhaps things are getting back to a bit more "normal."

The Frustration Of Lack Of Fracking Spreads -- March 16, 2022

CEOs and COOs must be going nuts that frack crews couldn't be found in anticipation of $120-WTI.

Wednesday, March 16, 2022: 26 for the month, 135 for the quarter, 135 for the year;

• 38497, conf, CLR, Whitman FIU 10-34H, Oakdale, no production data,
  
• 38452, conf,  Slawson, Howitzer 3-25H, Big Bend, no production data,
  
• 37709, conf,  Hess, EN-Johnson A-155-94-2932H-7, Alkali Creek, first production, 9/21; t--; cum 143K 1/22;
  
• 36869, conf, CLR, LCU Truman 13-23HSL, Long Creek, first production, 12/21; t--; cum 59K 1/22;
  

Compare initial production data with wells that were completed with wells that were not completed.

***********************************
Initial Production Data For Wells
Coming Off Confidential List
Yesterday/Today 

At $100-WTI, Bakken wells are being paid for, at the well head, in three to five months. I'm using $70-Bakken for back-of-the-envelope calculations. 

Wells that were completed:

• 37709, conf,  Hess, EN-Johnson A-155-94-2932H-7, Alkali Creek, first production, 9/21; t--; cum 143K 1/22;
  

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2022	30	25195	25198	15197	40113	37367	2746
BAKKEN	12-2021	26	22613	22639	15016	35224	33417	1807
BAKKEN	11-2021	30	32558	32550	22751	49275	47308	1967
BAKKEN	10-2021	31	34315	34490	71890	51738	50114	1624
BAKKEN	9-2021	12	28232	27972	17988	36174	34704	1470

• 36869, conf, CLR, LCU Truman 13-23HSL, Long Creek, first production, 12/21; t--; cum 59K 1/22;

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2022	31	37792	37857	27180	73458	69929	3529
BAKKEN	12-2021	19	20630	20452	13761	40677	38603	2074
BAKKEN	11-2021	0	0	0	0	0	0	0
BAKKEN	10-2021	0	0	0	0	0	0	0
BAKKEN	9-2021	5	591	591	944	0	0	0

• 37709, Hess, EN-Johnson, Alkali Creek:
  

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2022	30	25195	25198	15197	40113	37367	2746
BAKKEN	12-2021	26	22613	22639	15016	35224	33417	1807
BAKKEN	11-2021	30	32558	32550	22751	49275	47308	1967
BAKKEN	10-2021	31	34315	34490	71890	51738	50114	1624
BAKKEN	9-2021	12	28232	27972	17988	36174	34704	1470

• 36869: CLR, LCU Truman, Long Creek:
  

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2022	31	37792	37857	27180	73458	69929	3529
BAKKEN	12-2021	19	20630	20452	13761	40677	38603	2074
BAKKEN	11-2021	0	0	0	0	0	0	0
BAKKEN	10-2021	0	0	0	0	0	0	0
BAKKEN	9-2021	5	591	591	944	0	0	0

WTI Moving Up Quickly; US Equity Marking Moving Up; BRK Hitting New 52-Week Highs Two Days In A Row; Four Wells Coming Off Confidential LIst; And It's Going To 80°F In North Texas Today -- March 16, 2022

Panic:

• renewable energy legislation held up in Congress;
• gasoline trending toward $7 / gallon in California;
• and, progressives are calling for a ban on all federal land;
• would this be bullish for oil? Asking for a friend.
  
• there goes New Mexico
• again, president Biden blaming oil companies;
  

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

Active rigs:

$98.89	3/16/2022	03/16/2021	03/16/2020	03/16/2019	03/16/2018
Active Rigs	33	17	57	65	58

Wednesday, March 16, 2022: 26 for the month, 135 for the quarter, 135 for the year; CEOs and COOs must be going nuts that frack crews couldn't be found in anticipation of $120-WTI.

• 38497, conf, CLR, Whitman FIU 10-34H, Oakdale, no production data,
  
• 38452, conf,  Slawson, Howitzer 3-25H, Big Bend, no production data,
  
• 37709, conf,  Hess, EN-Johnson A-155-94-2932H-7, Alkali Creek, first production, 9/21; t--; cum 143K 1/22;
  
• 36869, conf, CLR, LCU Truman 13-23HSL, Long Creek, first production, 12/21; t--; cum 59K 1/22;
  

RBN Energy: co-firing coal plants with ammonia to reduce CO2 emissions, part 2. Archived. And where does ammonia come from? Is ammonia used in fertilizer production?

For many, coal has become a hydrocarbon non grata in recent years, mostly due to the considerable amount of carbon dioxide (CO₂) generated when it is burned to produce electric power or heat. But what if, instead of combusting coal on its own, coal plants were co-fired by a combination of environmentally friendly versions of ammonia and the volumes of CO₂ generated were way less? And what if, through the 2030s and ’40s, the ratio of fuels used in these coal-and-ammonia-fired power plants shifted away from coal and toward ammonia, and by mid-century the plants were fueled only by “green” or “blue” ammonia, which generates little or no CO₂? It may sound too good to be true — heck, it may well turn out to be! But there is a lot of interest in the idea, especially in Japan, where coal still retains a big share of the power generation mix. In today’s RBN blog, we continue to look at the prospects for environmentally friendly hydrogen (H₂) — and ammonia, an H₂ carrier — in the power generation sector.

***********************************
Initial Production Data For Wells
Coming Off Confidential List
Yesterday/Today 

• 37709, conf,  Hess, EN-Johnson A-155-94-2932H-7, Alkali Creek, first production, 9/21; t--; cum 143K 1/22;
  

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2022	30	25195	25198	15197	40113	37367	2746
BAKKEN	12-2021	26	22613	22639	15016	35224	33417	1807
BAKKEN	11-2021	30	32558	32550	22751	49275	47308	1967
BAKKEN	10-2021	31	34315	34490	71890	51738	50114	1624
BAKKEN	9-2021	12	28232	27972	17988	36174	34704	1470

• 36869, conf, CLR, LCU Truman 13-23HSL, Long Creek, first production, 12/21; t--; cum 59K 1/22;

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2022	31	37792	37857	27180	73458	69929	3529
BAKKEN	12-2021	19	20630	20452	13761	40677	38603	2074
BAKKEN	11-2021	0	0	0	0	0	0	0
BAKKEN	10-2021	0	0	0	0	0	0	0
BAKKEN	9-2021	5	591	591	944	0	0	0

• 37709, Hess, EN-Johnson, Alkali Creek:
  

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2022	30	25195	25198	15197	40113	37367	2746
BAKKEN	12-2021	26	22613	22639	15016	35224	33417	1807
BAKKEN	11-2021	30	32558	32550	22751	49275	47308	1967
BAKKEN	10-2021	31	34315	34490	71890	51738	50114	1624
BAKKEN	9-2021	12	28232	27972	17988	36174	34704	1470

• 36869: CLR, LCU Truman, Long Creek:
  

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2022	31	37792	37857	27180	73458	69929	3529
BAKKEN	12-2021	19	20630	20452	13761	40677	38603	2074
BAKKEN	11-2021	0	0	0	0	0	0	0
BAKKEN	10-2021	0	0	0	0	0	0	0
BAKKEN	9-2021	5	591	591	944	0	0	0