"Focus On Fracking" -- Coming Up Next -- March 20, 2022

WTI:

• up over 3% now; 10:17 p.m. CT
• up $3.30 / bbl
• now at $108.00 / bbl
• it feels real this time

Gasoline in our neighborhood tonight:

• regular unleaded: $3.99 / gallon
• diesel: $4.89 / gallon

EVs: we've talked about this so many times, and have been talking about it for years, I have no sympathy. None whatsoever. 

*******************************
Good Night

I'm absolutely exhausted -- mentally. I can't do any more tonight.

I must have twenty-three more data points, articles that need to be linked, replies to readers, but I just can't do it. 

So, I'm going to sign off for the night. E-mail and comments will have to wait until tomorrow. Sorry.

But there is just too much happening. To see the price of oil rising like it is tonight is simply too much, overwhelming, too many story lines. I don't think folks in Washington (DC) know how to deal with this. 

If that's accurate -- that folks in Washington (DC) don't know to deal with this -- this is very, very scary.

The mainstream media is not helping. I think most egregious reporting / analysis this week was ABC News telling us that US Congress did not vote themselves a 21% pay raise in the middle of the night. In fact, they did, and I posted my reason a couple of days ago. Even The Bismarck Tribune tried to tell us that US Congress did not vote themselves a 21% pay raise this past week.

 It is amazing that Saudi Arabia won't take telephone calls from President Biden and that the UAE and Saudi Arabia would not meet with the US Secretary of State. Amazing. 

So, I'm beat. But I'll be back tomorrow. 

Meanwhile, watch for this week's edition of "Focus on Fracking" later tonight. Just to make sure folks know: I have nothing to do with "Focus on Fracking." It's posted by someone completely unrelated to my blog, but must have started blogging about the same time I did. He knows so much more about the oil sector than I do, and follows it much more closely than I do -- way more than I could ever do. His weekly notes are incredible, for all the detail.

Oil Is Surging Again -- March 20, 2022

Not ready for prime time. This is really poorly written; I am unable to articulate what I'm thinking. I couldn't do it under best of circumstances but I'm distracted by:

• March Madness
• NIT: granddaughter's college team -- Vanderbilt, #4 -- beat #1 Dayton in overtime and advances;
  
• granddaughter's soccer tournament in Phoenix this weekend;
• they lost this evening's game
• Olivia got a yellow card but coach was proud of her; she prevented a breakaway goal
  
• NASCAR;
• beautiful, beautiful weather
• I'm watching women's basketball: #1 Stanford is destroying #8 Kansas, absolutely destroying Kansas; with five minutes to play in regulation time, Stanford is winning 80 to 48;
• books I want to read;
• too many great movies to watch: the new MacBeth on Apple TV; the old Midnight in Paris on Hulu;
• this MacBeth is incredibly interesting;
• Joel Coen movie; Frances McDormand as Lady MacBeth; Denzel Washington as Macbeth.
  
• and all the blogging that needs to be done.

A week ago -- or whenever it was -- when WTI surged almost $10 overnight -- on a Sunday night -- it didn't feel real; it felt very, very surreal. I don't think anyone thought it was "good."

Tonight I see WTI is up almost 3%; up $3.15; and trading at $107.80. Likewise, Brent is up almost 3% and trading at $111.10.

But this time, it feels very, very real.  

Several immediate thoughts:

• the Ukraine-Russian war is not driving the price of oil, except for the sanctions; there is a distinction; I'm too tired to explain what I'm trying to say;
• "inflation" is not driving the price of oil at this point; again, I'm too tired to explain, expand; some folks get it; in the big scheme of things, the price of gasoline is "disconnected" from inflation, either the price of oil causing inflation or inflation driving the price of oil higher.
  
• the "myth" of spare capacity is not a myth
• if this is true, and I think it is, it is the greatest of ironies that just as "we" hit "peak production" in the Mideast, is the exact time that the current administration decided to cut production in the US, as did the Canadians (one word: pipelines)
  
• Saudi Arabia is not taking phone calls from Joe Biden; UAE and Saudi Arabia refused to meet with the US Secretary of State; mainstream media is missing the tectonic changes in the world order
• it seems that a lot of folks are still underestimating the global economy following the pandemic lock down;
• there's a lot of talk about "demand destruction" and a lot of talk about how the price of airline tickets will stymie travel. I don't think so. The high price of Disney theme parks seems not to be cutting down on park attendance. If there's enough money for Disney theme parks, there's more than enough money for gasoline and airline tickets. If a $500 plane ticket now costs $650, folks will find a way of saving $150 somewhere else, or saving less or investing less; it will be interesting to see which industries or sectors are hit hardest by inflation.

Disney Theme Park Prices -- Outrageously Expensive? March 20, 2022

Earlier today I said I was going to write three essays today, the third being an essay on the price of visiting Disney theme parks. 

This came up when a reader sent me a link to an article how expensive it would be for a family to visit a Disney theme park this year. 

I no longer have a dog in that fight. I have visited Disneyland not less than a dozen times over the years. I was never disappointed. 

Whether it's expensive or not is in the eye of the beholder. 

I know I could not afford to go this year if I had a family of four or six (spouse plus three or four children).

However, having said that, when Disney can price the experience at the rate they do, and yet the parks are still filled shoulder-to-shoulder, it tells me one thing: there's a lot of money out there. A lot of money.

Many Folks Have No Idea How Much Money Will Be Pulled Out Of Traditional IRAs Over The Next Quarter Century And Beyond -- March 20, 2022

From The WSJ over the weekend: 

Older Americans, flush with housing and stock portfolio wealth, poised to revive spending this year. Consumers are 65 and older are boosting their spending as Omicron fades.

If you link to this article, two things:

• age 65 is an important milestone, an important demographic, but 72 is a much more important milestone, a much more important demographic than 65 when it comes to personal finances; and,
• the majority of folks responding to this article do not buy the thesis of this article. 

Why 72?

This article targets the very wealthy, based on the comments the article received.

But there's a subset just below the very wealthy: the new wealthy or new wealthy with a FOMO, a YOLO, and a nothing-to-lose attitude. 

Two things not mentioned in the article:

• by age 72, everyone who is eligible for social security will be taking it; the wealthy generally wait until social security benefits max out and that's at age 70 for most, not age 65; and,
• RMDs: this is the "killer." I don't think the "new wealthy" or "near wealthy" really understand how much money they will be withdrawing from their traditional IRAs every year once they reach age 72; 
• most interesting and I think this is a bigger story than most folks realize: inherited IRAs after 2020 have no annual RMDs but the traditional IRAs must be completely depleted within ten years. 
• many beneficiaries will not withdraw any of that money until the last moment
  

Yes, much of that money that is withdrawn will be re-invested, but a lot of folks are going to spend a bit of that money on traveling or hobbies. 

Berkshire Hathaway: This Isn't Supposed To Happen -- A Closer Look -- March 20, 2022

Note: Op-ed. How I see things. If this is important to you, go to the source.

I'm not sure if BRK-B hit new all-time 52-week highs three consecutive days last week or not. 

If I'm reading the Yahoo!Finance site correctly, BRK-B hit new all-time 52-week highs last week, Wednesday, Thursday, and Friday. BRK-B closed at 52-week all-time highs on Wednesday and Thursday, but on Friday, after hitting a 52-week all-time high for the third consecutive day dropped back at the end of the day to close at $342.41, down from the intra-day high of $346.87. 

BRK-B is a value stock; it's not supposed to be moving this high this quickly. 

So, what's going on.

Most folks are focused on:

• Charlie Munger: killing it! And,
• Warren Buffett: killing it!

Prior to the weekend, the big stories that were moving BRK-B:

• China, reversing course, said it would support the market and re-opened Shenzeng, which made Charlie Munger's bet on Alibaba look brilliant.

• Meanwhile, excitement in the oil patch, especially OXY, made Buffett look like a genius.

But there's a third story It broke over the weekend.

Although the stories are conflicting, it sounds like Canadian Pacific has locked out the union. If not, the union sounds like it's not having its workers report to work on Monday.

West of the Mississippi, or thereabouts, there are three -- and only three major railroads:

• BNSF: wholly owned by Warren Buffett's Berkshire Hathaway
• UNP; and,
• CP with its partnership with KSU (more on that later). 

It's worth repeating: Rail transport comprised only 9% of Berkshire's total revenue, but it generated over 25% of total EBT.

From an earlier post:

Buffett:

• BNSF? Best buy ever? How Berkshire Hathaway makes money, Investopedia; 
• BNSF Railway Berkshire's freight rail transportation business operates one of the largest systems in North America. BNSF Railway ships coal as well as consumer, industrial, and agricultural products.
• BNSF Railway's revenue fell 11.3% in 2020 to $20.9 billion as EBT fell 6.3% to $6.8 billion. Rail transport comprised only 9% of Berkshire's total revenue, but it generated over 25% of total EBT.
  

When the media reports BRK's stock portfolio, they generally do not include the companies Warren owns outright. Look at BNSF:

On another note, AAPL, comprising 43% of BRK's entire equity portfolio is trading at recent lows. Once AAPL gets back on track, BRK is going to look even better.

So, bottom line, hitting on all cylinders, BRK:

• the China story, thumbs up;
• oil and OXY, thumbs up;
• Apple and AAPL, thumbs up; and,
• now, CN could face work stoppages, benefiting UNP and BNSF.

I'm looking for UNP and BRK-B having another good week.

*******************************
The CP-KSU Merger

Now, back to the CP-KSU merger. 

It's gonna happen but it's not over yet.

Shareholders voted to approve the merger and to the best of my knowledge, the KSU shareholders already got their $90 / KSU share and their CP shares. 

The final regulator to approve the deal says CP has supplied all necessary paperwork.

UNP is contesting but I doubt it will go anywhere. 

The procedural schedule is here. 

Only date of interest too most folks: July 1, 2022.

Final briefs are due July 1, 2022.

I assume the final regulator, thee Surface Transportation Board, will announces its decision on or before December 31, 2022. 

World Oil Supply Destruction: Six Million BOPD Greater Than Demand Destruction -- Five Price Shocks Since 1974 -- Berman -- March 20, 2022

Link here.

Amazon Cancels Plans For Controversial Fulfillment Center In Churchill, PA -- March 20, 2022

Link here. It looks like this center was going to support the Washington (DC); Baltimore, MD; and Philadelphia, PA, area, as well as much of what DC folks call the midwest (LOL). About three hours west of Harrisburg. 

People are truly nuts. Personally, I don't get it. Here in Texas we are welcoming businesses. Texas, a pro-growth state.

By Request, A Bearish Case For Oil -- From Analysts -- March 20, 2022

Open the link and follow the thread.

Denver, We Have A Problem -- An Explanation For Initial Production Data For Petroshale Wells In Bear Den? March 20, 2022

Pressed for time, I'm only going to look at FracFocus for one of the four Petroshale wells coming off the confidential list this week. I assume the data is similar for all four wells.

As mentioned earlier, the initial production data for these four wells was not encouraging. The Bear Den oil field is a good-to-great field and I expected more of these wells. If, indeed, they turn out to be less than spectacular, it suggests completion issues: either execution or amount of proppants/water.

So, let's look at the frack data from FracFocus. FracFocus does not include the number of stages.

This was the best of the four Petroshale wells coming off the confidential list this next week.

The well:

• 36893, conf, Petroshale, Crockett Federal 1TFH, Bear Den, 33-053-09187:
  

Date	Oil Runs	MCF Sold
1-2022	12552	0

FracFocus: link here.

• 4.7 million gallons of water;
• 84.6% water by mass

Wow, wow, wow. That may be the answer. An incredibly small frack. I expect to see 10 million gallons of water for a frack when I check FracFocus these days. Some operators are doing well with 7 million gallons of water, but some are doing as much as 14 million gallons of water. A 4-handle water frack takes us back to the early days of the Bakken when BEXP first started doing "big" fracks. [For newbies: BEXP was bought by Statoil, which changed its name to Equinor, which was bought by Grayson Mill Operating, LLC.]

So, let's take a look at another Petroshale well that was completed in December, 2019, just before the pandemic lock down.

The well:

• 36318, 392, Petroshale, Anderson North 2MBH, Croff, 33-053-09024, t10/19; cum 51K 1/20; cum 290K 1/22; a relatively nice well:
  

FracFocus,

• fracked, August 21, 2019 - September 16, 2019 (and that was a long-duration frack)
• 7.7 million gallons of water
• 86.9% water by mass

Wow, wow, wow. Yes, I know. Only two wells, and two different oil fields, but those were the first two I checked. 

The amount of water used is in direct proportion to the amount of sand (proppant) used, so along with the differences in the amount of water used, Petroshale used, perhaps, half of the amount of sand in the well coming off the confidential list this next week compared to the amount of sand used in 2019 before sand prices spiked.

If this is accurate, and, of course I'm not saying it is, the next question follows: if there is a problem with sourcing frack sand (or other problems related to fracking) is it better to complete a well while prices are high with a half-ass completion, or should the operator wait for "better" sourcing times and hope oil prices remain high.

Another observation: those operators with keep pockets (CLR, Hess, MRO) continue to report great wells. 

Another company that reported less-than-stellar initial production data for a well coming off the confidential list this next week was Enerplus. I don't have the time to look at that one yet. 

Anyway, this may be completely wrong, but I do get a kick out of starting something.

Oh, one other thing. This has nothing to do with water shortage in the Bakken. There is a drought in North Dakota -- along with much of the rest of the country -- but there should be plenty of water. I could be wrong on this also, but I've run the numbers before and water is not a legitimate issue in the Bakken, at least compared to all the other issues.

Comment And Commentary On Wells Coming Off Confidential List This Next Week -- March 20, 2022

Re-posting the production data for wells coming off the confidential list this next week with comments and commentary. These observations are snapshots in time and do not reflect the future.

• most important observation: we're starting to see production data for wells coming off the confidential list; up until now, upwards of 90% of wells coming off the confidential list were DUCs; only CLR was consistently completing wells by the time they were coming off confidential list
• having said that CLR was unable to complete the four Brooklyn wells coming off the confidential list this week, suggesting a frack-spread problem (which is not news)
• CLR has typically had mediocre wells in the Bakken; nice wells but nothing about which to write home; that seems to be changing; look at the initial production data in their Long Creek Unit; and remember, CLR has 64 locations in the Long Creek Unit which it is methodically drilling out with one or two rigs;
• Hess has really upped their game; in the early days of the Bakken, Hess had less-than-remarkable wells, but lately, the past year or so, the Hess wells were greatly improved, and this does not appear to be related to location
• Petroshale is getting active: unless we see better numbers when these wells come off confidential list, these Bear Den wells that will be reported next week are disappointing; we'll need to see the frack data
• the MRO well in Werner oil field was a disappointment as was the Enerplus well in Heart Butte.

The wells:

• 38295, conf,  CLR, Rolf Federal 11-17HSL, Brooklyn, no production data,
• 37711, conf, Hess, EN-Johnson A-155-94-2932H-9, Alkali Creek,

Date	Oil Runs	MCF Sold
1-2022	17130	35459
12-2021	22809	33021
11-2021	38421	58066
10-2021	50530	50721
9-2021	6540	8625

• 36893, conf, Petroshale, Crockett Federal 1TFH, Bear Den,
  

Date	Oil Runs	MCF Sold
1-2022	12552	0

• 38296, conf, CLR, Rolf Federal 10-17H1, Brooklyn, no production data, 
• 37706, conf, Hess, EN-Johnson-155-94-2017H-8, Manitou,
  

Date	Oil Runs	MCF Sold
1-2022	11147	15772
12-2021	13201	20248
11-2021	17028	32836
10-2021	30758	52509
9-2021	3807	12984

• 36894, conf, Petroshale, Boone Federal 1MBH, Bear Den,

Date	Oil Runs	MCF Sold
1-2022	5472	0
12-2021	1664	0

• 36889, conf, Petroshale, Clark Federal 2TFH, Bear Den,
  

Date	Oil Runs	MCF Sold
1-2022	6741	0
12-2021	4282	0

• 38297, conf, CLR, Rolf Federal 9-17H, Brooklyn, no production data, 
• 36890, conf, Petroshale, Lewis Federal 2MBH, Bear Den,
  

Date	Oil Runs	MCF Sold
1-2022	4546	0
12-2021	4205	0

• 38298, conf, CLR, Rolf Federal 8-17H1, Brooklyn, no production data, 
• 38299, conf, CLR, Rolf Federal 7-17H, Brooklyn, no production data,
  
•  38213, conf, MRO, Katherine Schettler USA 34-22H, Werner,

Date	Oil Runs	MCF Sold
1-2022	9373	4997
12-2021	10635	4272
11-2021	13436	6174
10-2021	16189	6860
9-2021	10010	2883

• 37710, conf, Hess, EN-Johnson A-155-94-2932H-8, Alkali Creek,
  

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2022	31	16990	16998	17634	24567	22885	1682
BAKKEN	12-2021	27	17140	17157	20111	23600	22390	1210
BAKKEN	11-2021	30	24000	24040	28413	32585	31284	1301
BAKKEN	10-2021	31	43677	43696	65461	36411	35294	1117
BAKKEN	9-2021	18	13773	13646	18333	23783	22805	978

• 36865, conf, CLR, LCU Truman 10-23H1, Long Creek,
  

Date	Oil Runs	MCF Sold
1-2022	51040	76756
12-2021	26777	42919
9-2021	308	0

• 36867, conf, CLR, LCU Truman 11-23H, Long Creek,
  

Date	Oil Runs	MCF Sold
1-2022	43444	65296
12-2021	27299	37341
9-2021	226	0

• 34068, conf, Enerplus, Spider 149-92-23D-29H-TF1, Heart Butte,
  

Date	Oil Runs	MCF Sold
1-2022	6273	3229
12-2021	7103	3657
11-2021	14433	8769
10-2021	15794	9884
9-2021	4104	2330

Initial Productioon Data For Wells Coming Off Confidential List This Next Week -- March 20, 2022

The wells:

• 38295, conf,  CLR, Rolf Federal 11-17HSL, Brooklyn, no production data,
• 37711, conf, Hess, EN-Johnson A-155-94-2932H-9, Alkali Creek,

Date	Oil Runs	MCF Sold
1-2022	17130	35459
12-2021	22809	33021
11-2021	38421	58066
10-2021	50530	50721
9-2021	6540	8625

• 36893, conf, Petroshale, Crockett Federal 1TFH, Bear Den,
  

Date	Oil Runs	MCF Sold
1-2022	12552	0

• 38296, conf, CLR, Rolf Federal 10-17H1, Brooklyn, no production data, 
• 37706, conf, Hess, EN-Johnson-155-94-2017H-8, Manitou,
  

Date	Oil Runs	MCF Sold
1-2022	11147	15772
12-2021	13201	20248
11-2021	17028	32836
10-2021	30758	52509
9-2021	3807	12984

• 36894, conf, Petroshale, Boone Federal 1MBH, Bear Den,

Date	Oil Runs	MCF Sold
1-2022	5472	0
12-2021	1664	0

• 36889, conf, Petroshale, Clark Federal 2TFH, Bear Den,
  

Date	Oil Runs	MCF Sold
1-2022	6741	0
12-2021	4282	0

• 38297, conf, CLR, Rolf Federal 9-17H, Brooklyn, no production data, 
• 36890, conf, Petroshale, Lewis Federal 2MBH, Bear Den,
  

Date	Oil Runs	MCF Sold
1-2022	4546	0
12-2021	4205	0

• 38298, conf, CLR, Rolf Federal 8-17H1, Brooklyn, no production data, 
• 38299, conf, CLR, Rolf Federal 7-17H, Brooklyn, no production data,
  
•  38213, conf, MRO, Katherine Schettler USA 34-22H, Werner,

Date	Oil Runs	MCF Sold
1-2022	9373	4997
12-2021	10635	4272
11-2021	13436	6174
10-2021	16189	6860
9-2021	10010	2883

• 37710, conf, Hess, EN-Johnson A-155-94-2932H-8, Alkali Creek,
  

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	1-2022	31	16990	16998	17634	24567	22885	1682
BAKKEN	12-2021	27	17140	17157	20111	23600	22390	1210
BAKKEN	11-2021	30	24000	24040	28413	32585	31284	1301
BAKKEN	10-2021	31	43677	43696	65461	36411	35294	1117
BAKKEN	9-2021	18	13773	13646	18333	23783	22805	978

• 36865, conf, CLR, LCU Truman 10-23H1, Long Creek,
  

Date	Oil Runs	MCF Sold
1-2022	51040	76756
12-2021	26777	42919
9-2021	308	0

• 36867, conf, CLR, LCU Truman 11-23H, Long Creek,
  

Date	Oil Runs	MCF Sold
1-2022	43444	65296
12-2021	27299	37341
9-2021	226	0

• 34068, conf, Enerplus, Spider 149-92-23D-29H-TF1, Heart Butte,
  

Date	Oil Runs	MCF Sold
1-2022	6273	3229
12-2021	7103	3657
11-2021	14433	8769
10-2021	15794	9884
9-2021	4104	2330

Wells Coming Off The Confidential List This Next Week -- March 20, 2022

Monday, March 28, 2022: 47 for the month, 156 for the quarter, 156 for the year
38295, conf,  CLR, Rolf Federal 11-17HSL,
37711, conf, Hess, EN-Johnson A-155-94-2932H-9,
36893, conf, Petroshale, Crockett Federal 1TFH,

Sunday, March 27, 2022: 44 for the month, 153 for the quarter, 153 for the year
38296, conf, CLR, Rolf Federal 10-17H1,
37706, conf, Hess, EN-Johnson-155-94-2017H-8,
36894, conf, Petroshale, Boone Federal 1MBH,

Saturday, March 26, 2022: 41 for the month, 150 for the quarter, 150 for the year 
36889, conf, Petroshale, Clark Federal 2TFH,

Friday, March 25, 2022: 40 for the month, 149 for the quarter, 149 for the year
38297, conf, CLR, Rolf Federal 9-17H,
36890, conf, Petroshale, Lewis Federal 2MBH,

Thursday, March 24, 2022: 38 for the month, 147 for the quarter, 147 for the year
None.

Wednesday, March 23, 2022: 38 for the month, 147 for the quarter, 147 for the year
38298, conf, CLR, Rolf Federal 8-17H1,

Tuesday, March 22, 2022: 37 for the month, 146 for the quarter, 146 for the year
38299, conf, CLR, Rolf Federal 7-17H,
38213, conf, MRO, Katherine Schettler USA 34-22H,
37710, conf, Hess, EN-Johnson A-155-94-2932H-8,
36865, conf, CLR, LCU Truman 10-23H1,

Monday, March 21, 2022: 33 for the month, 142 for the quarter, 142 for the year

• 36867, conf, CLR, LCU Truman 11-23H,
• 34068, conf, Enerplus, Spider 149-92-23D-29H-TF1,

Sunday, March 20, 2022: 31 for the month, 140 for the quarter, 140 for the year

• None.

Saturday, March 19, 2022: 31 for the month, 140 for the quarter, 140 for the year

• None.

Up And Ready For Another Beautiful Day -- March 20, 2022

Wow, wow, wow, what a beautiful day in north Texas. The temperature will get to 79°F and it's already a bright, sunshiny day. 

I'm looking forward to posting three essays today:

• the cost of Disneyland;
• the Buffett portfolio;
• the CP-KSU merger and current lockout / strike
• seniors getting ready to spend more
• the Bloomberg Opinion piece and the top 1% 

And, of course, an update on the 2022 NIT and 2022 NCAA March Madness.
in the East:

• #1 Baylor eliminated in second round by #8
• #2 Kentucky eliminated in first round by #15

And, if I remember, suggestion for the tech folks over at Hulu:

• automatic switching when sports events from from one "network" to another;
• yesterday, the PGA tournament went from ESPN to NBC Golf at noon; and,
• then from NBC Golf to NBC at 2:00 p.m.
• what a pain

But first, the wells coming off confidential list today.

And I still have to finish "Top Stories" for the week, that task I hate most every week.