The Million Dollar Way (The Bakken Oil Blog): 04/21/22

Thursday, April 21, 2022

A Humorous Interlude -- April 21, 2022

I normally don't pass these on / post these, but these seem particularly appropriate this week.

Sent to me by a reader. Enjoy.

How Dr Fauci Fooled America -- Newsweek -- November, 2021 -- Re-Printed By MSN -- April 20, 2022

The writers of this article:

Martin Kulldorff, Ph.D., is an epidemiologist, biostatistician, and Professor of Medicine at Harvard Medical School.

Jay Bhattacharya, MD, Ph.D., is a Professor of Health Policy at Stanford University School of Medicine.

Both are Senior Scholars at the newly formed Brownstone Institute.

This article would not have caught my eye except for the fact it was in msn: Microsoft News -- the partner with NBC, MSNBC.

It reads like something I would expect over at Fox News. Full article has been saved elsewhere, but for now, not behind a paywall.

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Puerto Rico, Social Security, and Justice Sotomayor

Schneider at CNN: link here.

Analysis: SCOTUSblog.

Russian Economy: Update -- April 21, 2022

Ukraine-Russia: a race against time.

Russian economy will implode summer of 2022.

Russia's economy is about to implode, watching a train wreck in slow motion:

US banks set to write off $15 billion in Russian assets; link to Michael Kern;
Exxon Mobil may completely withdraw from Russia by June 24, 2022;
Koch Industries leaving; Halliburton leaving. Link here.
Lukoil's CEO and supporter of closer ties between Russian and OPEC has resigned.
Shell in talks with Chinese firms to sell stake in Russian gas project.
Biden bans Russian-linked ships from US ports; link here.

#1 port for Russian-lined ships on US east coast? Boston? ISO NE?

Two "former" oligarchs found dead one day apart, alongside their wives and children. Not too hard to connect the dots.

Blowups Du Jour -- April 21, 2022

Link here.

Energy Round-Up -- April 21, 2022

Updates

Later, 8:44 p.m. CT: see India below. Now this from a reader:

Cash-Strapped Pakistan Cuts Power to Households on Fuel Shortage - Pakistan is cutting electricity to households and industry as the cash-strapped country can no longer afford to buy coal or natural gas from overseas to fuel its power plants.

The South Asian nation is struggling to procure fuel from the spot market after prices of liquefied natural gas and coal surged to records last month as the war in Ukraine exacerbated supply shortfalls. Pakistan’s energy costs more than doubled to $15 billion in nine months ended February from a year earlier, and it isn’t able to spend more on additional shipments.

Original Post

The Biden Surge: tracked here. How is this going? Early report. Availability of oil was not the problem:

US oil: bbl of last resort. Link to Javier Blas.

Polls: I believe I said something in the last day or so. Gasoline prices and presidential approval ratings are perfectly linked. Link to Charles Kennedy.

This activist "stuff" is beyond the pale: California state pension fund, CALPers wants to remove Warren Buffett as chairman of the board. Link here.

Russia's economy is about to implode, watching a train wreck in slow motion:

US banks set to write off $15 billion in Russian assets; link to Michael Kern;
Exxon Mobil may completely withdraw from Russian by June 24, 2022;
Shell in talks with Chinese firms to sell stake in Russian gas project.
Biden bans Russian-linked ships from US ports; link here.

Others:

Pemex: enough cash flow that Mexican government won't cover oil company's debt payments any moore; link here.
India: coal supply shock causes major power outages. Link to Charles Kennedy.
Saudi Arabia: growth outlook to surge; links everywhere, here's one;
graph of the year?
California: importing more gasoline ahead of driving season; link to Charles Kennedy.

OPEC+ exports continue to decline: link here.

production issues,
lack of proper maintenance,
internal consumption increasing as power generation and cooling demand come into play
we'll see much of the same in Russia due to loss of western capital, technology, and expertise;

Two New Permits; BR Renews Thirteen Permits -- April 21, 2022

Active rigs:

$103.80	4/21/2022	04/21/2021	04/21/2020	04/21/2019	04/21/2018
Active Rigs	37	16	30	63	59

Two new permits, #38888 - #38889, inclusive:

Operator: Koda Resources
Field: Fertile Valley (Divide Cuonty)
Comments:

Koda has permits for two Stout wells in NWNW 29-160-102;

to be sited 250 FNL and 480 FWL; and, 250 FNL and 510 FWL.

Thirteen permits renewed:

BR: five Mazama permits; eeight Abercrombie permits, all in McKenzie County.

Nine permits canceled:

Ovintiv (5): three Pittsburgh permits; one Kestrel permit; and, one Gariety permit, all in McKenzie County;
Whiting (4): three Pronghorn State Federal permits, all in Billings County; and one Stenehjem Federal permit, McKenzie County.

One producing well (a DUC) reported as completed:

38611, 3,625, Grayson Mill, Jay 24-13F XE 1H, Banks, no production data,

Streaming Wars -- First Huge Casualty, It Won't Be The Last -- CNN+ -- April 21, 2022

Has it been less than a month? Amazingly, it's been less than two weeks.

CNN and CNN+ have a new boss. Effective April 11, 2022.

There was talk about major changes when CNN / CNN+ moved to Warner Bros Discovery, but I don't think anyone really thought CNN+ would be "let go." But there it is, in The New York Times.

The shutdown is a stunning and ignominious end to an operation into which CNN had sunk tens of millions of dollars, from an aggressive nationwide marketing campaign to adding hundreds of new employees to hiring big, high-priced media stars, including the former “Fox News Sunday” anchor Chris Wallace and the former NPR co-host Audie Cornish.

But the service’s fortunes changed abruptly after CNN’s former parent, WarnerMedia — owner of the prestige TV powerhouse HBO and the storied Warner Bros. film studio — completed its merger with Discovery, home to reality TV hits like “90 Day Fiancé” and the home-improvement gurus Chip and Joanna Gaines. Since the merger closed earlier this month, doubts have swirled over the future of CNN+, which was promoted to CNN employees and subscribers as the future of the network.

CNN had planned to spend more than $1 billion on CNN+ over four years, according to people familiar with the matter, budgeting for 500 additional employees, including producers, engineers and programmers, and renting out an additional floor of its offices in Midtown Manhattan to accommodate them. But the newly formed company has its own corporate priorities that could conflict with the big spending of CNN+.

As part of its deal with former WarnerMedia owner AT&T, Discovery executives agreed to assume $55 billion in debt, which executives are now under pressure to repay. The company also said it would find $3 billion in savings between the two companies, which could result in belt tightening at some divisions.

This, of course, also raises the question about the future or "direction" of CNN without the plus.

"Streaming Wars" are tracked here.

Streaming Wars -- Netflix -- Where Does It Go From Here? Bloomberg -- April 21, 2022

What's the most remarkable "thing" in the video below. It has nothing to do with the singer, her band, or any of the people listening. It's something else. Her father takes the video and does a 360-degree of the audience. These is / are something missing. Very interesting.

I thought of that -- noting what was missing -- when I was re-reading Bloomberg's newsletter on the Netflix debacle.

This is such an incredible story, I will archive it so that it is not lost in the ethernet.

The lede:

For more than a year, Netflix has told anyone who would listen that there was nothing to worry about. Its subscriber growth was slowing, but the problem was temporary. It was just working through Covid weirdness.
Yesterday, the company reversed itself and admitted its business is losing momentum. Netflix lost 200,000 customers in the first three months of the year. The company predicts it will lose another 2 million this quarter. Its stock dropped more than 35% today. Netflix, worth $308 billion in November, is now worth less than $100 billion.
You will read a lot of takes about what this means over the coming days and weeks. Many skeptics of the streaming business will use this moment to claim they were right all along. Netflix is doomed, as is anyone who blindly follows in its footsteps. Ignore them. Netflix defied expectations for a decade and gave every company in Hollywood good reason to try and mimic its success. It’s got 221 million customers, and generates about $30 billion in revenue.
But this isn’t just a bad quarter. This is a watershed moment for the streaming service, which must now attempt its most difficult transition in years. Netflix has always been the upstart, challenging the established powers. That allowed it to move quickly and adapt. It anticipated the last two seismic changes to its business and got in front of the problem before anyone else knew what was happening. It sacrificed its DVD-by-mail business to embrace streaming and started making its own shows before rivals pulled all of theirs.
Now Netflix is the incumbent, the dominant and default streaming service. It must defend its position against rival services that can give customers the same experience as Netflix, often at a lower cost.
So where does Netflix go from here? (A lot of people have asked me this question, so we decided to do a special edition of the Screentime newsletter to cover it all.)

Oh, so what is missing in this story? The writer did not blame the problems that Netflix has on the Russian-Ukraine war. Every other piece of bad news caused by the Biden administration is said to be due to Putin's War. Without Putin's war, there would be no inflation, gasoline would be dirt-cheap, and there would be no supply chain shortages.

As far as the video goes, you’re on your own.

More Stimulus Money Released -- This Will Be The Largest LIHEAP Release In The History Of The Program -- April 21, 2022

Link to Tsvetana Paraskova.

The Biden Administration will release over $385 million to states to help Americans with their home energy costs through the Low Income Home Energy Assistance Program as President Joe Biden is looking to tame the soaring prices of gasoline and energy amid international prices at multi-year highs.

The latest funding, to be made available by the U.S. Department of Health and Human Services (HHS), adds to $4.5 billion in the American Rescue Plan for LIHEAP.
In total, the U.S. Administration would be providing more than $8.3 billion in LIHEAP assistance to reduce heating and cooling costs for low-income Americans this year, which is the largest investment in a single year since the program was established in 1981.

LIHEAP assists eligible low-income households with their heating and cooling energy costs, bill payment assistance, energy crisis assistance, weatherization, and energy-related home repairs. Of course, the lower-middle class and the middle-middle class would see no assistance. Let them eat bread.

The Administration is scrambling to lower home energy costs and gasoline prices for Americans as international oil prices – the largest factor in determining the price at the pump – hit $100 after the Russian invasion of Ukraine. Yes, this is all about Ukraine. Nothing about killing the Keystone XL, banning drilling on federal land, slow-rolling fracking permits.

Gasoline prices in the U.S. hit a fresh multi-year high in March at over $4.30 per gallon. We've talked about this before. That's the average; that's not what most people are paying.

Natural Gas Fill Rate -- April 21, 2022

Link here.

I don't know but social media suggests that natural gas prices are much sensitive to fill rate / amount in storage. I don't know but that makes sense based on what little I know about the dynamics of natural gas fill and release, supply and seasonal demand.

This might provide a bit of background.

Netflix -- April 21, 2022

Locator: 10010NETFLIX.

Updates

April 21, 2022: when the Netfliix story broke, the first question I suggested investors needed to ask -- where did they subscribers go? Now, we have some insight: Paramount and Apple. Google paramount apple stealing subscribers from Netflix. Note this, though:

as recently as March 8, 2022, NextTV: Apple TV Plus had nearly five times more churn than Netflix in 2021. This does not surprise me: Apple TV+ has limited offerings, none of them, it seems, particularly appealing to Americans.

April 21, 2022: Netflix in one chart --

Later, 2:30 p.m. Central Time: timeline today --

futures this morning and at the open, the market surged again.
about 10:30 a.m. CT, about two hours into trading, it's reported that Bill Ackman sells his entire holdings in Netflix, losing $400 million:
sometime after that announcement: the market tanks. Netflix loses another $7.00.
"Go woke, go broke."

Original Post

Background: tracked here at "streaming wars."

A reader brought up something I had completely forgotten in reply to this note; and, here.

From a reader overnight:

Just read your analysis of the streaming services. I think Elon Musk has this one right...Netflix produces stuff that is unwatchable. Their focus on producing content for the Woke crowd has led to a mass exodus of subscribers who don't want to watch that stuff.

Producing stuff that the market doesn't want is a sure fire way to go out of business, deep pockets or not.

Woke content.

I had forgotten all about that. Years ago, Netflix was putting out some great original content, good enough that I was almost persuaded to subscribe to Netflix, but held off. Just too expensive for a couple of movies, or short series.

But in the last two years, I haven't seen a trailer for one "Netflix original" I would want to watch.

That was point one.

Point two.

Netflix is said to be considering some ad-supported content to help lower the subscription cost, or at least maintain.

I subscribe to The WSJ electronic edition. It's fairly expensive but the best at what it does and so I am willing to pay the subscription price. My biggest peeve: when I click on a video embedded in The WSJ and the "story" is preceded by a lengthy commercial. If I'm paying for a subscription, why are there ads at all?

Finally, third point.

Netflix says as many as 100 million folks watching Netflix may be using passwords from extended family members and/or friends. Netflix is said to be taking action to stop this "password sharing." Won't work. Why are folks sharing passwords in the first place? Netflix will simply lose viewers; these are not the kind of folks that will subscribe to Netflix.

By the way, that first point: woke content. Apple is doing the same thing. Too much "woke content." I subscribe to AAPL TV+ for two reasons: a) incredibly cheap, $4.99 / month and for the longest time, free; and, b) I want to keep up with what AAPL is doing. But even Ted Lasso -- I only watched parts of a few episodes. But Ted Lasso was one of their very few offerings that I would consider not part of the "woke culture."

By the way, I see the new Kardashian series is a "Hulu original." Out of complete boredom and some curiosity I watched the first episode last night. Better said, I tuned in to the first episode last night, but it was so incredibly awful I could only last ten minutes and it was background noise at that while I did other things. It may well have a huge following but wow, talk about self-absorbed; awful; Big Brother on steroids.

This is not my dad's Netflix, and that's how I got started with Netflix a decade ago when I first wrote about it. Netflix lost its way.

Bloomberg newsletter: Netflix has finally hit a wall. Where does it go from here? I will come back to this essay. On my way to take Olivia to school.

Three Wells Coming Off Confidential List -- Airlines Surging -- April 21, 2022

So, how's "gasoline demand" going? Link here.

Economy:

someone over on twitter yesterday said the US was probably already in a recession:
look at airline earnings this morning

UAL and AAL are surging

WTI up slightly
market up huge in pre-market trading

BRK-B up nicely in pre-market trading
KMI tops estimates
JNJ tops estimates
AAPL might have a good day

doesn't look like a recession to me
everything suggests the economy is on fire

April 18, 2022: masks off

dividends raised: Sunoco; KMI (albeit, incredibly, incredibly small)
mask mandate ended April 18, 2022
stock of the day: NFLX

Ackman liquidated his NFLX position; see letter here;
in pre-market trading, down 3%; down $7; trading at $219.50
reader has an interesting take on Netflix that I completely missed;

will get back to this later

US LNG exports:

I think this has been forecast / telegraphed for the past several months, if not the past year:

US to become world's top LNG exporter this year; links to Alex Kimani, one of the very good contributors over at oilprice.

Ghost stories for OPEC+:

US running the show when it comes to oil.

Horror stories for US consumers, US oil:

White House: two competing factions

politically pragmatic: hate Big Oil -- they think they can thread the needle
left/green ideologues: hate Big Oil -- will do anything to kill Big Oil

high price gasoline: about the only option left -- ban US exports of crude oil / refined products

that would push US into recession

left/green ideologues: don't care; price to pay to kill Big Oil
politically pragmatic: panic setting in;

gasoline really does cost $6 / gallon in California
unlike past periods when gasoline was this high, this time it's not transitory

Russian oil production: sanctions starting to bite;

short term: uncertainty among buyers to buy Russian oil at this point; compounded by simple issue of paying for Russian oil; rubles issues; Russia cut off from western banking system
long term: Russian oil needs western technology; give it six months and rigs start breaking; won't get fixed;

DOE crude oil inventory: including the SPR, is dropping like a rock;

releasing record amount of SPR will be seen to be as big a mistake as shutting down the Keystone XL
going back to pre-Trump environmental rules, regulations will make things worse;

TSLA: blow-out earnings: others starting to weigh in;

Natural gas: drops below $7.

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Back to the Bakken

Legacy Fund deposits, for April, due out yesterday, not posted, maybe today or tomorrow. Link here.