The Million Dollar Way (The Bakken Oil Blog): 05/13/22

Friday, May 13, 2022

UNP -- No Comment -- May 13, 2022

Director's Cut Posted -- March, 2022, Data

Link here.

Usual disclaimers apply.

Wells off line for operational reasons.

Observations / Analysis

Original Post
Director's Cut, March, 2022, Data

Crude oil production:

March, 2022: 1,120,022 bopd
February, 2022: 1,089,091 bopd
(1,120,022 - 1,089,091)/1,089,091 = 2.84%

Revised revenue forecast:

= 1,200,000 --> 1,100,000 --> 1,000,000 (+2%)

Crude oil price, North Dakota light sweet:

today: $101.75
March, 2022: $104.68
February, 2022: $86.17

Natural gas production:

March, 2022: 3,001,535 MCF/day (+4.6%)
February, 2022: 2,870,829 MCF/day
captured: 95%

Rig count:

today: 39 oil and gas
April, 2022: 37
March, 2022: 33
February, 2022: 33

Wells

Permitted:

April: 55
March: 65
February: 32

Completed:

April: 33
March: 53
February: 90

Inactive:

March: 1,928
February: 1,872

DUCs:

March: 451
February: 463

Producing:

March: 17,080
February: 16,749

NDIC Site Is Down -- This Is The Best We Got -- How Pathetic -- May 13, 2022

Link here.

Energy Notes -- May 13, 2022

What are the top energy stories right now (for the archives):

energy transition is dead; we just don't know it yet;
analysts and policymakers are under-estimating the impact of losing millions of Russian boe every day for the rest of this year, and who knows how long after that;
there is no spare capacity (crude oil); many folks have been saying that for quite some time but for OPEC to say it, that's pretty much the last nail in the coffin;
the US will save Europe's butt again, this time with LNG;
Russia's oil sector will implode, following by its overall economy;
killing the Keystone XL was a bigger deal than even I thought: think diesel and heating fuel)

WTI: $110.

Bakken rigs: this is pretty cool. Bakken is singled out by S&P Global --

noted that Bakken's rig count is the highest since 2020
it would be nice to see the historical data but the NDIC oil and gas server is down and expected to be down for the rest of the year.

Reason for high fuel prices: part of this is correct, but only part of it. Inflation also pays a huge role.
Saudi energy minister: insufficient investment to blame for high fuel prices; link here.

okay, let's say that's accurate, that insufficient investment is to blame for high fuel prices, the next question is why was their insufficient investment;
who was most responsible for that insufficient investment; not to place blame, but to see if those folks are thinking differently about investment; if not, things will continue to get worse (as far as highprices go)

Refiners: years ago I said I would never invest in refiners. Now, it turns out, I own shares in four companies that are among the top ten US oil refiners. Link here. In fact, I own shares in four of the top five, by capacity.

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.

All my posts are done quickly: there will be content and typographical errors. If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them.

OXY: Buffett buys another million shares. That's pretty funny that that is a headline -- in fact BRK already had about 142 million shares.

900,000 / 142.7 million = 0.6% (yawn)
apparently BRK's portfolio has "more than" 143 million shares of OXY which equals about 15.3% of the company.
143 million is 15.3% of what
143 million / 0.153 = 935 million
20% of 935 million = 187 million
187 - 143 = 44 million x $60 = $2.6 billion

Notes From All Over -- Part 2 -- The Pre-Market Edition -- WTI Surges: Up $2.72 -- May 13, 2022

Wow, wow, wow: dividend increases — to be reported later. On the iPad on which it is difficult to post. All I can say now is that I can afford to buy new shoes for Sophia.

Wow, wow, wow: WTI surging? What happened?

Brent: up 2.35% up $2.52; trading at $110.00
WTI: up 2.56% up $2.72; trading at $108.80; trending higher.

some shale companies say they break even at $30-somehthing oil

Smart retail operators would be wise to starting increasing the price of gasoline now.

the Pelosi bill moves along in Congress; will make is easier for the president to "freeze" prices
need to get higher prices on the signs now
you know, retail operators could do something hotels/motels figured out a long, long time ago

hotels/motels post a "standard" rate for the room on the inside of their doors (they did this years ago; I don't know if they still do this)
the rate was excessively high but it was the "bar"
the hotels/motels always charged a much lower price for the room
but it allowed them legal wiggle room to raise prices when demand was high and minimize lawsuits, or at least successful lawsuits

retail gasoline service stations need to do that now: post the "standard" price, say, $25 / gallon but then offer a $20-discount on all purchases made on credit; and a $21-discount on cash purchases.

the service stations would adjust the discount as needed
think of the passing motorist, seeing a discount of $20 on the marquee
wow, I would love to buy gasoline at a $20-discount

I doubt there's any law out there saying retail gasoline can't be sold at a discount.

Google:

can gasoline be sold at a discount?
yes. Link here.

Pre-market:

WTI: $108.90 -- could we see $112 by May 31, 2022?
RIVN: up 7%, after being up 39% or something like that yesterday;
GM: up 1.66%; flat yesterday after a try at a surge earlier in the day;
F: up 3.14%; flat yesterday -- well, up slightly -- after a try at a surge earlier in the day
did the market hit a bottom;

For the Geico Rock community:

European oil majors are banking huge trading profits; link to Tsvetana Paraskova.

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The Car Page

Peak profits. Link here.

think about this headline for a few minutes; see if you can see multiple story lines;

the headline: Wells Fargo double downgrades Ford and GM; says 2022 -- that would be this year -- could be "peak profits" for "legacy" automakers.

Toyota: cuts North American output for the month of May by 30,000 autos; link here.

Japanese automaker Toyota will reduce its North American production by 30,000 vehicles in May, adding to prior cuts as the company struggles with semiconductor-related parts shortages across its operations.

Daimler Truck Group: okay, it's a truck, not a car: I was told last night that my son-in-law is getting overtime at the Portland truck factory; the are behind on orders and working to catch up

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The Apple Page

Dead. Gone. The 3.5 mm headphone jack. Good riddance. Link here.

Google kills the headphone jack in latest Pixel 6A just months after parodying Apple for doing same thing
Apple used to copy everyone else -- or so said the detractors;
now, everyone is copying Apple

Five things you can't do with an Apple MacBook Pro: link here.

you can't predict the idiotic energy decisions being made by the current administration
you can't forecast the price of Rivian stock
you can't open the laptop with a Phillips screwdriver to add more memory
you can't use it while swimming underwater (don't take that out of context; there are exceptions)
you can't fax a six-pack of beer

Notes From All Over -- Part 1 -- The Friday The Thirteenth Edition -- May 13, 2022

Headline of the day (yesterday): US oil pipeline operators are gearing up for higher shale output. Link here to Reuters, the most trusted name in energy. Writer: Arathy Somasekhar.

Because it's "Friday the thirteenth" I won't be leaving my bedroom today.

NDIC website: looks like this will be the fifth day without the "new" website."

WTI: $107.70 and trending higher as the US Congress continues to move the bill forward to control the price of gasoline sold at wholesale or retail. If that happens, I assume US becomes dependent on European oil from France and Spain.

RBN Energy: Yawn. Price trends could pave the way to greater EV adoption, or obstruct it, part 2.

Electric vehicles (EVs) in the U.S. may be at a turning point, with high gasoline prices prompting would-be car buyers to give them a second look — or a first look, in many cases. EV adoption has been slow to pick up speed in the U.S. for a variety of reasons, including the lack of a nationwide charging network and concerns about “range anxiety.” But a major factor has always been that gasoline-fueled cars have been cheaper to purchase and operate than EVs. The recent run-up in gasoline prices, amplified by Russia’s invasion of Ukraine, has changed the math in those comparisons, at least in the short-term. Is the pace of EV adoption about to accelerate, or will trends in gasoline and electric power prices put the transition into cruise control, or even neutral? In today’s RBN blog, we look at how forecasts for power and gasoline prices might shape the conversations around EVs through 2030.

Peter Zeihan: the energy transition is dead; we just don't know it yet.

Twitter: Elon Musk's plan to acquire twitter in jeopardy. I posted that a couple days ago, pretty much in passing, and now it's hitting the mainstream business pages.

Chart of the day: US refining margins surge to a fresh all-time high; above $55 per barrel -- that's the margin. Link here. The chart is posted at that link.

I didn't get that excited about the chart; what interested me was the WTI 3-2-1 crack spread. The question is why the crack spread is not WTI 3-1-2?

The answer? The Keystone XL was killed. Not enough heavy oil to make enough heating oil, diesel to meet demand. I guess that's not correct. Refiners are meeting demand ... but just at a very high price for consumers.

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Diesel

Links:

major truck stop chains Loves and Pilot are warning about imminent diesel shortage on the East Coast; link here.

This was the first reply: "So wouldn't they raise prices and that would decrease diesel usage a bit."
So out of touch. In his/her defense, he/she is not American, as far as I can tell. Never lived through the OPEC embargo back in 1973. The current diesel situation looks as bad as that event, but in a different way, and, yes, California's response was to ration gasoline sales.

ZeroHedge has the story here.

Major trucking fleets across the eastern half of the US are preparing for an "imminent" diesel shortage, according to logistics firm FreightWaves. Founder and CEO of FreightWaves Craig Fuller said "3 very large fleets" are preparing for diesel pumps at fuel stations to run dry. Drivers of these fleets received notifications about fuel shortages that could materialize in the coming weeks across the Mid-Atlantic and Northeast regions.

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Natural Gas

Links:

prices to surge: EIA predicting $8.59 Henry Hub for last six months as storage struggles to keep up. Nancy Pelosi needs to write another "price-gouging" bill. I hope she includes the price of eggs in this bill.
demand to rise in 2022 --EIA: link here. Whatever happened to energy transition?

US LNG exports to reach -- get this -- 11.99 bcfd iin 2022 -- give me a break -- this is an estimate -- why "11.99"? Just call it "12." I guess "11.99" makes it sound more ... well, scientific.
exports to reach 12.63 bcfd in 2023; my hunch: 12.65; just a hunch and some back-of-the-enveloped doodling -- actually I just combined the number of months in a year and the "usual retirement age" for Americans

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Automobile Manufacturers / EVs

Rivian: burning cash like crazy -- key point in Rivian's earnings -- Barron's.

1Q22: Rivian's letter to shareholders here -- incredible photos; small print not so good.
1Q22: Rivian earnings here -- CNBC.

demand remains "high"
production is on track
what we're not seeing: profitability; timelines; margins; dividends.

Cathy Wood? Buying GM.

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Airlines

For the Geico Rock community: air fares are going up. One wonders if the Pelosi-bill will include price gouging by airlines? Airlines should have been storing aviation fuel when oil was sub-$30.

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Inflation

Notes:

inflation is not a concern:

if you are not buying a used car;
if you don't eat; and,
if you don't use energy.

core CPI us 0.57% month-over-month; higher than expected. And, I guess, longer than expected.

year-over-year: 8.3%; forecast: 8.1%; previous: 8.5%
things are never so bad, they can't get worse.

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Ticket to Success

NBA raises ticket prices as attendance plummets:

https://www.breitbart.com/sports/2022/05/11/report-nba-raises-ticket-prices-attendance-plummets/.
Pelosi is not warning about NBA-ticket-price gouging.

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Putin's War

Which countries rely most on Russian gas? Great graphic. Peter Zeihan.

Finland next?

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