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

Tuesday, March 22, 2022

I can't find any news to support this interest in Hershey after-hours.

Recently:

https://seekingalpha.com/article/4493275-hershey-stock-too-far-too-fast-overvalued

Tea leaves: inelastic demand? Sort of like spices, huh?

What about the six-month chart?

Slawson With Three New Permits; Two DUCs Reported As Completed -- March 22, 2022

Agree completely: the BPM is getting the timeline mixed up. From Irina Slav:

West Texas Intermediate is currently trading above $100 per barrel. Many would argue that this price surge is a result of the war in Ukraine, and there is indeed a big war-related premium to all world oil benchmarks.

However, one thing many are currently forgetting as the war hogs headlines is that oil’s fundamentals were taking it on the way to $100 a lot earlier. [The Biden administration is promoting this timeline.]
Investment banks forecast oil above $100 months before the war began, and they were basing these forecasts on oil’s fundamentals, which included limited supply growth and strong demand rebound.

OPEC+ has been adamant it would not pump more than it agreed to under its output recovery plan, and Big Oil has been basically shrinking its core business to stay on the good side of shareholders apparently more concerned about emissions than returns. [Wrong: shareholders are more concerned about returns.]

$6 gasoline in Los Angeles. Link to Charles Kennedy.

for the state: $5.86
the state will probably provide rebate checks to offset high price of gasoline

everyone will get a check: even those who don't drive and those who drive EVs

Flashback: it appears I can recycle my old posts -- simply cut, paste, and re-date. From April 28, 2011. Almost exactly one decade ago. WTI, that day, up $1.05 to $113.81.

Crude oil price / weekly inventories: completely disconnected. Headlines suggesting the price of crude oil is / was related to the weekly draw / build is entirely wrong, lazy, and irrelevant. As Perry Mason would say:

Objection, your Honor. Incompetent, irrelevant and immaterial, and improper headlining in that it takes up matters not part of the explanation.

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Back to the Bakken

Active rigs:

$111.30	3/22/2022	03/22/2021	03/22/2020	03/22/2019	03/22/2018
Active Rigs	35	15	51	68	60

Here we go -- three new permits, #38842 - #38844, inclusive:

Operator: Slawson
Field: Big Bend (Mountrail)
Comments:

Slawson has permits for two Phatkat Federal wells and one Vixen Federal well,

all to be sited NENE 19-152-91;
to be sited 715 FNL and between 1035 FEL and 1109 FEL

Two producing wells (DUCs) reported as completed:

31363, TA-->A-->2,062, Grayson Mill, Topaz 20-17 6H, Banks, no production data,
35498, loc/A-->854, Whiting, Cvancara 11-14TFH, Alger, no production data,

DUCS -- Update -- March 22, 2022

From a reader, thank you very much.

The Bakken: drilled, completed, and drilled but not completed (DUCs). Note:

just before the pandemic lock down, January, 2020, the high of 843 DUCs;
one year later, January, 2021, the number of wells drilled in one month, down to 20;
DUCs: at a record low -- most recent data
may not be entirely accurate, but close:

wells completed in February, 2022: 75
DUCs completed in February, 2022: 13
total number of wells completed: 88
percent of DUCs/total wells completed: 15%

Month / Year	Bakken
	Drilled	Completed	DUC
Dec-13	--	--	570
Jan-14	178	143	605
Jan-17	62	52	781
Jan-18	107	72	768
Jan-19	120	71	790
Jan-20	99	98	843
Jan-21	20	41	756
Feb-21	19	24	751
Mar-21	25	47	729
Apr-21	27	52	704
May-21	29	68	665
Jun-21	31	52	644
Jul-21	32	62	614
Aug-21	39	70	583
Sep-21	41	79	545
Oct-21	42	78	509
Nov-21	45	73	481
Dec-21	50	73	458
Jan-22	51	73	436
Feb-22	62	75	423

The Permian: drilled, completed, and drilled but not completed (DUCs). Note:

just before the pandemic lock down, January, 2020, the high of 3,413 DUCs;
amazingly, drilling did not drop as fast in the Permian as it did in the Bakken;

the drilling lows came in January, 2021

DUCs: at a record low -- most recent data
may not be entirely accurate, but close:

wells completed in February, 2022: 429
DUCs completed in February, 2022: 86
total number of wells completed: 515
percent of DUCs/total wells completed: 20%

Permian
Month / Year	Permian
	Drilled	Completed	DUC
Dec-13	--	--	663
Jan-14	582	590	655
Jan-17	352	259	1,280
Jan-18	486	403	2,073
Jan-19	584	486	2,925
Jan-20	449	460	3,413
Jan-21	188	367	2,827
Feb-21	212	262	2,777
Mar-21	235	442	2,570
Apr-21	251	416	2,405
May-21	260	385	2,280
Jun-21	265	368	2,177
Jul-21	271	393	2,055
Aug-21	280	400	1,935
Sep-21	291	390	1,836
Oct-21	304	402	1,738
Nov-21	311	405	1,644
Dec-21	327	406	1,565
Jan-22	333	416	1,482
Feb-22	343	429	1,396

Not all months are shown, so the highs/lows could have been in other months, but one gets the general idea.

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The Oil Patch

Inflation Coming In At 7.9%. Now This. This Is What Really, Really Scares Jay Powell -- March 22, 2022

Gasoline prices surging.

The very same day this data was released was the day Jay Powell, "Fed chairman," implied the Fed would raise overnight rates more than expected, faster than expected.

I've maintained ever since beginning the blog, the best indicator of the US economy was gasoline demand. And by that metric, the US economy is on fire.

Compare gasoline / diesel demand in:

Russia
Europe
Britain

This has to be terrorizing the Fed: US sees highest gasoline demand since at least 2017.

This is despite:

massive EV penetration (needs to be fact-checked but that's what "everyone" says)
CAFE standards that in some cases border on the absurd
at least five oil-price shocks in recent history that supposedly resulted in demand destruction

Did we mention that gasoline prices are surging with $120 oil?

Demand destruction? What demand destruction?

The bigger concern is supply destruction (see earlier post).

But I digress.

I'm sure I must be misinterpreting the headline story.

Back to the things that put terror into the hearts of "Fed" members: US sees highest gasoline demand since at least 2017.

Greta's head is exploding.

More and more, the story is not "demand destruction," but "supply destruction."

Link to Tsvetana Paraskova.

U.S. gasoline demand on Sunday jumped by 12.6 percent compared to the previous Sunday.
U.S. gasoline prices fell slightly last week from the highs on March 11.

Not one percent or two percent or even five percent or ten percent, but almost 13 percent.

Trivia: the number page on the blog when one searches "demand destruction" was posted Saturday, April 23, 2011.

From wikipedia:

Demand destruction is an economic term used to describe a permanent downward shift in the demand curve in the direction of lower demand of a commodity such as energy products, induced by a prolonged period of high prices or constrained supply.

So, if US sees highest gasoline demand since at least 2017, does that change all those arguments about "demand destruction"?

Is this sort of like Hubbert's "peak oil theory" which has been clearly disproved?

********************************
Finally, Summer

Clearing Out The In-Box -- March 22, 2022

Terrorist incident or distraught pilot? From CNBC regarding that downed Boeing 737-800:

For an aircraft like China Eastern’s Boeing 737-800 to crash in midflight is “simply unprecedented,” said one aviation analyst who cited the plane’s excellent safety record.

“Air travel is the safest form of transport. But when we do suffer incidents or accidents, we don’t see anything like what we have seen in China over the last 24 hours,” Alex Macheras, an independent aviation analyst, told CNBC’s “Capital Connection” on Tuesday.

No bodies or survivors have yet been found from the crash as of Tuesday morning, Chinese state media said. The domestic flight, which was carrying 132 people, nose-dived Monday afternoon in the southern region of Guangxi.

Stormy:

loses appeal;
owes former president $300,000 (or almost that much);
news you won't see in the evening news tonight

Fifty best science fiction books of all time.

as compiled by Adrienne Westenfeld, Esquire
"plenty of imitators have tried to match the heights of our #1 but none have come close."
#16: The Complete Robot, by Isaac Asimov
#12: 1984, George Orwell
#3: The Martian Chronicles, Ray Bradbury
#2: Dune, Frank Herbert
#1: at the link

hint: author, female
hint: author, a teenage
hint: author, married to a rock star
hint: also ranked #1 among horror fiction (needs to be fact-checked)
hint: resulted in at least one movie

****************************
The Apple EV Page

Re-posting:

Apple: if Apple is going to deliver their first EV by 2025, they need to sort out where their EV is going to be built: Foxconn? Kia? Porsche? Apple is involved with a lot of different auto manufacturers. Most intriguing? Porsche.
Porsche CEO Oliver Blume said that the company has discussed "exciting common projects" with Apple, but it it is currently too soon to make any firm decisions on future projects. It is unclear exactly what the seemingly off-hand remark refers to, but it could relate to Apple's long-rumored electric vehicle project.

Blume said that Porsche and Apple traditionally cooperate closely and are "on the same wavelength," and managers from Porsche travelled to the United States late last year to discuss joint projects with Apple.
Porsche: wholly owned subsidiary of Volkswagen
has sprinted out to the forefront in the EV space
has set ambitious targets in the domain
40% of Porsche's deliveries in Europe, last year, were already at least 40% partly electric;
target:
generate half its annual sales from EVs by 2025
80% of all new vehicles by 2030 to be all-electric
globally: Porsche delivered 301,915 vehicles, exceeding the 300,000mark for first time in its history:
2021-end (numbers rounded):
revenues: $40 billion
up $5 billion
operating profit jumped 27% to $6 billion
Apple likes winners.

Well Said -- Nothing About The Bakken -- But Something Pithy About Energy -- March 22, 2022

Never has so much been said in a character-limited tweet. Link here:

The Numbers Page -- Nothing About The Bakken -- March 22, 2022

Twos-day.

22nd

day of March

2022.

$2.

Alleghany: 13.53 million outstanding shares
Warren offered a 28% premium for Alleghany
Warren offered $850 / share for Alleghany
but dropped it to $848 / share
delta: $2 / share for a $850 / share company
the $2?
Warren wouldn't pay for Alleghany's advisor: Goldman Sachs
GS charged $27 million for their advice
$27 million / 13.53 million shares = $2 / share
so Alleghany shareholders will pay GS "directly"
quirky is how some describe it

0.02.

$85 million / $378.32 billion = 0.0002247 = 0.02%
appeals court rules for Apple
WILAN loses, again
Court reverses $85 million judgment
AAPL revenue (ttm): $378.32 billion

$2.

Netflix rolls out new pricing model
additional amount that subscribers will pay to share their password(s)
to be tested first in Chile, Costa Rica, and Peru.

2000.

the year Kenneth Watt forecast "we" would run out oil back in 1970
in fact, consumption unchanged, while..
... proved reserves almost quadrupled.
Alex Epstein.

22%.

from a reader, personal property tax, midwest state, not North Dakota
2021 - 2022
house valuation increased 16%
property taxes increased 22%
no link; personal communication

20%.

gain in one month (?)
Charlie Munger
602,060 shares Alibaba
$71.5 million
$118 / share at time the deal was reported
Alibaba today: $116 / share
down $2 / share: today's value vs the value the day the media reported the transaction
article did not saywhat Berkshire actually paid for the shares
perhaps about $98 / share based on BABA 6-month chart
$98 --> $118: 20% gain.
link here.

Demand Destruction Or Supply Destruction? March 22, 2022

Three suppliers, three "supply destruction" scenarios:

US: government dis-incentivizing production at so many levels;
Saudi Arabia: at war; enemy targeting oil facilities
Russia: literally running out of storage -- will cut back on production

Cutting back on production due to lack of storage: Russia. Link here. Also, at Regina Leader-Post.

First group "financial / economic" indicators:

10-Year Treasury: link here. Yield at 2.355%.
DXY: link here. 98.61.
Silver: link here. $25.24.
Gold: link here. $1,927.
CBOE volatility index: link here. Explained at Investopedia. 23.24. Wow, this has really come down since I last looked.

Lots of green, the St Patrick's Day effect?

Fed watch, from Goldman Sachs: terminal rate unchanged at 3 - 3.5%. Watch for "dog days of summer," 2022:

April: no rate hike
May: a rate hike of 50 basis points; baseplate rate = 0.75%
June: a rate hike of 50 basis points; baseplate rate = 1.25%
four remaining meetings back half of 2022: 25 basis points = 100 bp = a baseplate rate of 2.25% by end of 2022
2023: three quarterly hikes
next up: how the US will pay for all the interest it owes on bonds. LOL.

Warren Berkshire: speaks volumes about his successful investing -- paid a 28% premium for Alleghany. Not a market timer; a "value" timer. Ninety-one years old. His last hurrah? Says he had been watching Alleeghany for sixty years. Sixty years. By the way: William Shatner turns 91 years old this year, also.

Apple: if Apple is going to deliver their first EV by 2025, they need to sort out where their EV is going to be built: Foxconn? Kia? Porsche? Apple is involved with a lot of different auto manufacturers. Most intriguing? Porsche.

Porsche CEO Oliver Blume said that the company has discussed "exciting common projects" with Apple, but it it is currently too soon to make any firm decisions on future projects. It is unclear exactly what the seemingly off-hand remark refers to, but it could relate to Apple's long-rumored electric vehicle project.

Blume said that Porsche and Apple traditionally cooperate closely and are "on the same wavelength," and managers from Porsche travelled to the United States late last year to discuss joint projects with Apple.

Porsche: wholly owned subsidiary of Volkswagen

has sprinted out to the forefront in the EV space
has set ambitious targets in the domain
40% of Porsche's deliveries in Europe, last year, were already at least 40% partly electric;
target:
generate half its annual sales from EVs by 2025
80% of all new vehicles by 2030 to be all-electric
globally: Porsche delivered 301,915 vehicles, exceeding the 300,000mark for first time in its history:
2021-end (numbers rounded):
revenues: $40 billion
up $5 billion
operating profit jumped 27% to $6 billion

Apple likes winners.

The Apple Page -- March 22, 2022

Apple: at the Apple event a couple of weeks ago, I was greatly concerned that Apple was doing away with large screens. I love our 27-inch desktop Mac which is used exclusively for movies, television, streaming, sports. I never use is for "computing." If Apple made a bigger monitor, I would buy it, so I was not happy when it looked like the 27-inch Mac was history.

Apple announced a 27-inch Studio Display but I thought it would only "work" with the new high-priced Mac Studio.

But it turns out that the new Apple Studio Display "is the perfect all-in-one monitor all Mac users." Link here. The 27-inch display will work with any Mac.

But there's a little "secret" that makes this even better. The display is not simply a display in the usual sense. It comes with an A13 Bionic chip, which is used in the iPhone 11 and iPhone 11 Pro which:

... allows it to bring over many of the features that Apple users have grown accustomed to in their other products. The speaker system supports Dolby Atmos and Spatial Audio, so watching movies and listening to music (especially on Apple Music) is a very immersive experience. And the webcam supports Center Stage, a feature on all the latest iPads that automatically pans and tracks your movements to keep you in frame and in focus.

This pretty much says it all:

a stunning 5K Retina display that works with any Mac;
the Studio Display connects to any recent Mac computer via a single USB-C Thunderbolt connection;
this supports up to 96 watts of pass-through power, so the display can charge the laptop, too.
inside, the Studio Display packs a wonderful six-speaker sound system (Apple claims it's the best it's ever put in a Mac),
a studio-quality microphone, and,
it has a 12-megapixel ultra-wide webcam, similar to the latest iPad Air. These are all components that aren't integrated in most external monitors; you'd have to purchase them all separately.

My hunch: software developers are going to take advantage of this in a big way.

**************************
Disneyland

Updates

March 24, 2022: yesterday, I opened a new account at Schway, our "Disney" account. It will probably never hold any Disney (DIS) stock. Such dolce irony. It was kick-started with $1,000 in new money. I will continue to add to this on a monthly basis with new money and RMDs from inherited IRAs. The great-grandparents would approve. It is amazing how fast it takes to open a new account at a discount broker. I think it took less than five minutes; then, wrote the check and deposited it electronically.

Original Post

Experience of a lifetime.

$7,000 for three days for a family of four.

If this is an experience of a lifetime, then begin saving up for it, like it's an experience of a lifetime.

Plan that experience of a lifetime for seven years from now. One is never too old to go to Disneyland for the first time. In fact, I would argue, one's first trip to Disneyland should be when one is old enough to "date." [Do folks use that word any more?] My first trip was as a freshman in college. I would not have done it any differently.

So, $7,000 / seven years = $1,000 / year.

$1,000 / year = $20 / week.

Are you kidding me? An experience of a lifetime for a family of four will cost less than $20 week for seven years. When one is seventy years old, seven years goes by very, very quickly.

This is just crazy enough to incentivize me to open a Schwab account, name it "Disney Fund" and start saving.

I have a meeting with Schwab advisor tomorrow. This will come up in conversation.

Many, many story lines here.

For one year, I will put $20 / week in an envelope in my sock drawer. At the end of one year, I will open the "Disney Fund" at Schwab with $1,000 plus whatever more I want to kick in. RMDs from IRAs might be a great place to start.

And, yes, that Disney vacation will cost much more seven years from now but an investment in America should take care of that.

Oh, back to the experience. This is how I would recommend Disneyland. These are all various sections of Disneyland, names of which I have long forgotten:

first-time visit for family with with five-to-seven-year-olds: the child-themed park only.
second-time visit for family with seven-to-nine-year-olds: the child-themed park and the old-fashioned carnival-themed park
third-time visit with middle school students: the original Disneyland
fourth-time visit with high school students: the "new" Disneyland across the way from the original Disneyland

After my tenth or eleventh visit to Disneyland some years ago, as a 40- or 50- or 60-year old -- I have long forgotten how old I was when I made my last three visits to Disneyland -- the two adult couples with their four children, older elementary through middle school, took turns shepherding the children through Disneyland. I had the second shift.

We arrived at Disneyland when the gates opened, 10:00 a.m. The others began their Disneyland experience. Me? I immediately headed over to the Coca-Cola-themed restaurant on Main Street with my Wall Street Journal and had a roll and coffee, and say there for two hours in a state of bliss. Not one other person was in the restaurant at that time of day. It becomes popular after 2:00 p.m.

By noon I was ready to saunter around Disneyland. I don't recall doing any rides, but I do remember absolutely enjoying the non-riding Disneyland experience while sort of doing my job shepherding the kids around. These days it would be a whole lot easier. Everyone would stay in constant contact via iPhones.

Okay, enough of this. I get to walk Sophia to the school bus.

I'll check for typographical errors later.

Four Wells Coming Off Confidential List, WTI Pulls Back Overnight; And, THE MERGER -- March 22, 2022

Important links:

Whiting was tracked here; no longer.But, great historical data at original post.
Oasis was tracked here; no longer.But, great historical data at original post.
The new WHOasis (Whiting-Oasis) is now tracked here. Or should it be OH!-Whiting?

Oil: this is good; prices drop back a bit overnight. Orderly movement much better than sudden spikes.

Market: wow! I didn't look at the market very closely yesterday after headlines that market turned negative after Jay Powell's remarks: Fed may tighten more than expected; faster than expected.

This morning I'm looking at a few stocks at the close, completely blown away. Numbers below may be rounded:

BRK-B: was up over $7 / share yesterday. Closed at $350.
UNP: was up over $3 / share yesterday. Closed at $265. Futures indicate profit-taking today.
of course, any pull-back makes no sense with current geo-political events.
SRE: was up $3 / share yesterday. Closed at $160.

Diesel: all of a sudden everybody's talking about this. We started talking about this months ago. From Laura Sanicola:

The difference: most natural disasters resolve after two weeks. I think the diesel issue started well before the Ukraine invasion. There is nothing to suggest this will improve any time soon.

Headline of the day comes from The WSJ: stock futures rise after Jay Powell says Fed may raise rates faster, higher than expected. Even the tech-focused NASDAQ-100 rose 0.5%, which is not trivial.

AAPL: this is huge. Apple's new Studio Display is "the perfect all-in-one monitor for Mac users. Link here. This is a huge story. Tim Cook didn't even begin to tell us how incredible this display was.

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

Active rigs:

$112.80	3/22/2022	03/22/2021	03/22/2020	03/22/2019	03/22/2018
Active Rigs	35	15	51	68	60

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,

RBN Energy: Whiting and Oasis return to their roots and merge. Archived.

So far, most of the merger-and-acquisition activity among crude-oil-focused producers in the COVID era has occurred where you would expect it: the Permian, which seems to dominate almost every discussion about the U.S. energy industry. More recently, though, there has been an uptick in E&P consolidation in the Denver-Julesburg Basin in the Rockies and, earlier this month, in the Bakken. There, Whiting Petroleum and Oasis Petroleum — two once-struggling producers — have agreed to a merger of equals that will create the Bakken’s second-largest producer and the largest pure-play E&P. In today’s RBN blog, we discuss the companies’ stock-and-cash deal, which will result in a yet-to-be-renamed entity with an enterprise value of about $6 billion.

The Million Dollar Way (The Bakken Oil Blog)

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