They're Reading The Blog: Forget Production, Transport; It's All About Refining -- May 26, 2022

Link to Charles Kennedy. 

US refiners set to add just 350,000 bpd capacity by end-2023.

I did not read the article. The headline told me all I need to know. [Later: I read the article; a good article; well worth the read.]

From Bloomberg, today, May 26, 2022, 1:45 p.m. CDT: 

The Biden administration is reaching out to the oil industry to inquire about re-starting shuttered refineries as the White House scrambles to address record high gasoline prices that setting off political alarm bells ahead of the midterm elections. 

More than 1 million barrels a day of the country’s oil refining capacity — or about 5% overall — has shut since the beginning of the pandemic. Elsewhere in the world, capacity has shrunk by 2.13 million additional barrels a day. And with no plans to bring new U.S. plants online, even though refiners are reaping record profits, the supply squeeze is only going to get worse.

It sounds like the administration is grasping at straws, or whatever it is they grasp for now that we're not supposed to be using straws. (Yes, I know "we" are talking about "different" straws.)

At the end of the day, all indications are that demand will eventually outrun supply. 

Later, 9:54 p.m. CT: when I came back to edit this post, it dawned on me that Europe is in a world of hurt. Let's assume, for argument's sake, there really is no spare capacity, and that two, three, four years from now global demand will be one barrel more than global supply.

Global supply is pretty much fixed -- how much is being produced and where it's going. If global demand is one bbl short, there will be a free-for-all to get that last bbl. Of the three major players (Russia, Mideast, and US) the US has the most flexibility and potential to cut off oil exports ... for example, cut off oil exports to Europe. In fact, the White House press secretary has stated that cutting US exports to Europe is an option still on the table. Think about that. Think what Europe is going to be paying for oil if US suddenly withholds exports, and knowing that the Saudis have said they don't have the spare capacity to make up the difference. 

Just a rambling thought.

By the way, this raises a number of other issues: the morality of an oil embargo, and even the legality of an oil embargo from a global legal point of view. The same questions raised during the OPEC embargo decades ago.

Murex With Five New Permits: SHD Renews Four Permits; BR Reports One Completed DUC; And Oasis Reports One Dry Hole -- May 26, 2022

WTI: $114.10

Active rigs: 39 or thereabouts.

Five new permits, #38908 - #38984, inclusive:

• Operator: Murex
• Field: Beaver Lodge (Williams); West Bank (Williams)
• Comments:
• Murex has permits for five TL- wells (Kyle Donovan; Terry Lynn, Pattie Ann, Kory Dale, Andrea Faye) in Beaver Lodge and West Bank, in SESW 10-156-96, 
• to be sited 375 FSL and between 2280 FWL and 2400 FWL (note: the NDIC report says the wells will be sited 375 inches from the south line).

Four permits renewed:

• SHD Oil & Gas: a Narcissus, a Delta, a Demeter, and a Cheetah, all in McLean County, all NENW 18-150-91;

One producing well (a DUC) reported as completed:

• 32425, 0, BR, Cleetwood 21-27TFH-A, McKenzie County

One dry hole:

• 34109, dry, Oasis, Fraser Federal 5300 11-35 3B, Williams County;

Calling It A Day -- May 26, 2022

It's the last day of school for Olivia and Sophia. I'll be involved with some last-school-day activities with Sophia -- an ice cream social for her entire school! 

So, I'm going to call it a day for now. I'll probably post some stuff later tonight if it's worth posting, but for now going to take a rest. 

WTI surged as much as 4% earlier this afternoon but has since settled back to 3.41%, up $3.76, and trading at $114.10.

From an investment point of view, I'm no longer much interested in the day-in, day-out trading range of WTI. I'll still follow it and will still report it but I'm not interested in following it from an investment point of view. 

I'm more interested in seeing how this plays out.

Some analysts suggest that oil will drop back significantly (for any number of reasons) and we could see it move back to $80 or less.

I don't see that. I have trouble believing that oil won't go significantly higher once the driving season starts -- upwards of $120 or more. But others say this won't happen.

So, I'm more interested watching what might drive the price of oil back to $80 or less. Everything I read suggests just the opposite. So, we'll see.

I'm also interested in the steps the Biden administration will take to try to bring gasoline prices down. I don't see many arrows in their quiver or tools in their toolbox to have much of an impact on lower prices at the pump.

"Everybody" keeps talking about "oil" as in "oil production. That's not the long pole in the tent right now regarding the price of gasoline at the pump. The long pole is refining capacity as well as the impact of plain old inflation. 

However, six months from now, "oil" as in "oil production" may become the long pole in the tent as Russian oil production starts to fall significantly. There was an interesting story earlier today suggesting that Russia and Saudi Arabia (and the US for that matter) produce about the same amount of oil each day. The Saudis do that with 2,000 wells; the Russians, with 40,000 wells, if I recall correctly. 

Not only does Russia need to maintain a lot of wells too maintain production, Russia has the same problem with the Red Queen on the treadmill that the US has, although I don't buy into that model as much as many others do. But to some extant it’s an accurate analogy.

Back to options by the White House, about the only things yet to be tried which have nothing to do with production:

• windfall profits tax;
• curtail LNG and/or crude oil exports from the US.

I expect both. It's what their base expects.

See you later. 

Slawson: To Place Up To Four Wells On A 640-Acre Unit In Big Bend Oil Field -- June, 2022, Dockets

June, 2022, NDIC hearing dockets.

Slawson with an interesting case. Link here. 

• 29435, Slawson, four wells on an existing 640-acre unit; the drilling unit is section 28-152-91, Big Bend-Bakken, Mountrail County.
  

I'll come back to this with a map and more information once I can access the "new" NDIIC oil & gas website.   

Usual disclaimers apply.

Ovintiv: To Place Up To Nine Wells On A New 1920-Acre Unit In Sand Creek Oil Field -- June, 2022, Dockets

June, 2022, NDIC hearing dockets.

Ovintiv with an interesting case. Link here. 

Again, this is a case, not a permit: 

• 29406, Ovintiv, nine horizontal wells in a new standup 1920-acre unit; Sand Creek-Bakken, sections 16/21/28-153-96, McKenzie County 

I'll come back to this with a map and more information once I can access the "new" NDIIC oil & gas website. Usual disclaimers apply.

Ovintiv: To Place Up To Thirteen Wells On An Existing 1280-Acre Unit In Westberg Oil Feild -- June, 2022, Dockets

June, 2022, NDIC hearing dockets.

Ovintiv with an interesting case. Link here. Again, this is a case, not a permit:

• 29421, Ovintiv, thirteen wells on a 1280-acre unit; Westberg-Bakken, the 1280-acre unit: sections 29/32-152-96, McKenzie County

I'll come back to this with a map and more information once I can access the "new" NDIIC oil & gas website.  

Usual disclaimers apply.

Hearing Dockets -- June Dockets -- June, 2022

Usual disclaimer applies: I do this quickly for my benefit. I do not expect readers to read this summary. There will be content and typographic errors. I used shorthand that may be confusing.  For all I know the links may not even be correct. I haven't checked them in quite awhile. In a long note like this there will be content and typographical errors. If this is important to you, go to the source.

Link here.  

Tracked on the blog here.

Cases, not permits.

Thursday, June 30, 2022
1 page.

Both are continued cases, #29279 and #29449: drill back policies.

Thursday, June 23, 2022
12 pages.

The cases:

• 29425, Enerplus, one well; Antelope-Sanish, establish an overlapping 1280-acre unit; sections 23/24-152-94, McKenzie County.
  
• 29426, Hunt, one well, Wolf Bay-Bakken, establish an overlapping 2560-acre unit, sections 1/2/11/12-146-93; Dunn County.
  
• 29427, Grayson Mill, one well, Todd-Bakken, establish an overlapping-acre unit, sections 5/6/7/8 - 154-100; Williams County.
  
• 29428, Mercury Resources, one well, Buford-Madison, establish an overlapping 1280-accre unit, sections 11/14-152-104; Williams County;
  
• 29429, CLR, three wells on each of two units, Hamlet-Bakken, establish two overlapping 1920-acree units, sections 4/9/16 and sections 21/28/33-160-96; Divide County;
  
• 29430, Hess, one well, Sorkness-Bakken, establish an overlapping 2560-acre unit, sections 2/3/10/11-157-93, Mountrail County;
  
• 29431, Hess, one well, establish an overlapping 2560-acree unit; sections 14/15/22/23-157-93; Mountrail County.
  
• 29432, CLR, commingling,
  
• 29433, CLR, pooling,
• 29434, CLR, pooling,
• 29435, Slawson, four wells on an existing 640-acre unit; Big Bend-Bakken, section 28-152-92; Mountrail County;
  
• 29436, EOG, pooling,
• 29437, EOG, pooling,
• 29438, Grayson Mill, pooling,
• 29439, Resonance Exploration, pooling,
• 29440, Resonance Exploration, pooling,
• 29441, Resonance Exploration, pooling,
• 29442, Crescent Point Energy, commingling,
• 29443, Hunt, SWD,
• 29444, Hess, six wells on an existing 1280-acre unit; Sorkness-Bakken, sections 3/10-157-93, Mountrail County;
  
• 29445, Hess, seven wells on an existing 1280-acre unit; Sorkness-Bakken, secctions 15/22-157-93; Mountrail County;
  
• 29446, Hess, pooling, 
• 29447, Hess, pooling,
• 29448, Foundation Energy Management, pooling

Wednesday, June 22, 2022
8 pages.

The cases:

• 29403, Empire North Dakota, establishing four 160-acre units; a vertical well in each, NE/4, NW/4, SE/4 and SW/4 of section 17-161-78; Bottineau County;
  
• 29404, Empire North Dakota, establishing one 160-acre unit; one vertical well; SE/4 of section 19-161-78; Bottineau County;
  
• 29405, Ovintiv, one well; Sand Creek-Bakken, establish an overlapping 3840-acre unit, sections 15/16/21/22/27/28-153-96; McKenzie County;
  
• 29406, Ovintiv, nine horizontal wells in a new standup 1920-acre unit, Sand Creek-Bakken, establish a standup 1920-acre unit; sections 16/21/28-153-96; McKenzie County;
  
• 29407, Petro-Hunt, pooling,
• 29408, Petro-Hunt, pooling, 
• 29409, Petro-Hunt, pooling,
• 29410, Petro-Hunt, pooling,
• 29411, Petro-Hunt, pooling,
• 29412, Petro-Hunt, pooling,
• 29413, Petro-Hunt, pooling, 
• 29414, Hess, commingling,
• 29415, Hess, commingling,
• 29416, Hess, commingling,
• 29417, Grayson Mill, commingling,
• 29418, Grayson Mill, commingling,
• 29419, Grayson Mill, commingling,
• 29420, Grayson Mill, commingling,
• 29421, Ovintiv, thirteen wells on a 1280-acre unit; Westberg-Bakken, on an established 1280-acre unit; sections, 29/32-152-96; McKenzie County;
  
• 29422, Ovintiv, two wells, Clear Creek-Bakken, on a 2560-acre unit, sections 28/29/32/33-152-96; McKenzie County;
  
• 29423, Lime Rock Resources, pooling,
• 29424, Lime Rock Resources, pooling
  

Thursday, June 16, 2022
1 page

• 29449, NDIC, to consider amending current field rules and/or impose a policy for drilling horiznotal wells from a surface location outside the spacing unit.
  

Is Anyone Paying Attention? I Can't Make This Up -- May 26, 2022

Compare a quarterly dividend of $8 with the previous quarterly dividend of 25 cents. Link here.

Graph: 

Earthquake -- 6.9 -- Peru -- May 26, 2022

Link here.

In other news:

Chicago is trending over on Twitter. 

****************************
Gasoline

Anticipation -- May 26, 2022

Updates

Later, 9:31 a.m. CT: wow, wow, wow -- is anyone paying attention? WTI just surged 3% while Brent jumped 2% --

• Brent: $116.60
• WTI: $113.70

Windfall profits tax:

• Hungary announced windfall profits tax earlier this week;
• UK hits oil and gas companies with 25% windfall tax;

Earlier Notes

Opening trades, pre-market:

• CVX: up $1.02; would be a new intra-day 52-week high
• EOG: up $1.42; ditto
• XOM: up 66 cents; ditto
• PSX: up 65 cents; ditto
• MNRL: up 94 cents; ditto; could hit $30 today
• DVN: up 91 cents; may be one of the laggards, not hitting a new intra-day 52-week high
• HES: up $1.23; would be a new intra-day 52-week high; and, would hit $120

At the open:

• CVX: up 53 cents; up 0.4%
  
• EOG: up $2.78; up 2.1%; trading at $136 -- all well above pre-market
  
• XOM: up 82 cents;
  
• PSX: up $1.19; up 1.1%; trading at $100 -- all well above pre-market
  
• MNRL: up 63 cents; has not yet hit $30
  
• DVN: up 97 cents
• HES: up $2.06; up 1.8%; trading at $121 -- all well above pre-market

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.

Mid-morning:

• CVX: up 92 cents
  
• EOG: up 93 cents;
  
• XOM: up 45 cents;
  
• PSX: down 6 cents; say what?
  
• MNRL: up 91 cents; has not yet hit $30
  
• DVN: huge -- up almost 3%; up $2.00; trading at $74;
  
• HES: down 24 cents; say what?

Lunch hour:

• CVX: up $2.16 -- what happened? Oh, there is it, WTI surged 3.5%; up $3.86; and trading above $114, again.
  
• EOG: up $2.27
  
• XOM: up 80 cents;
  
• PSX: up 45 cents;
  
• MNRL: up $1.34; trading above $30, now
  
• DVN: huge -- up almost 3%; up $2.00; trading at $74;
  
• HES: up $1.37;
  

That "Stunningly Massive Draw" Reported Yesterday -- Not So Much -- May 26, 2022

Despite headlines to the contrary, WTI / Brent did not soar yesterday following the EIA weekly petroleum report. 

I did not find the EIA report particularly notable except that refiners were now operating at 93% of their operating capacity and they are gradually changing their focus on gasoline to focusing on diesel.

Over on social media, someone thought a huge draw was reported yesterday. Considering where we should be, I did not consider it much of draw. Certainly not a "stunningly massive draw." LOL. 

WTI / Brent stays relatively flat after the report? Corroborates my view that the draw was not all that massive.  Today, a day later, WTI is up about half a percent, hardly reflecting a "stunningly massive draw."

XTO -- GBU Permits -- Grinnell Oil Field -- May 26, 2022

The NDIC oil and website is coming back up. For all I know, it's completely back up but I won't check for another week or so, except for some sites, like the daily activity report. I don't want to be disappointed, getting my hopes up and then not being able to find that not all the data is yet accessible or working perfectly.

I'll be glad when it's back to it's "new normal," whatever that might be. 

When the site is back to normal, I'll be able to update wells and fields. 

I was reminded of that yesterday when I went to check up on XTO's GBU in Grinnell oil field. In the May 24, 2022 daily activity report it was noted that XTO had renewed seven GBU permits in the Grinnell oil field. 

Grinnell is a very, very good field. I track it here but it has not been updated in a long time.

Buffett Watch -- May 26, 2022

Oldies but goodies. Two links:

• why did Buffett buy Occidental?
• Berkshire Hathaway's portfolio moves in the 1Q22.

Was SNOW a huge mistake? Link here.

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.

*********************************
Unrelated To Buffett

In other news.

Robbin' the 'hood: 

Williams-Sonoma soars. More evidence the gap between the investing class and the non-investing class is continuing to widen.

Williams-Sonoma's stock is rising in after hours trading, on the home furnishing retailer’s better-than-expected fiscal first-quarter results. It’s the latest sign that wealthier consumers aren’t pulling back in the face of inflation, or scrimping on home goods despite the pandemic’s waning hold on the country.

After the bell Wednesday, Williams-Sonoma  said it earned $3.50 a share, on revenue that rose more than 8% year over year, to $1.89 billion. Analysts were looking for EPS of $2.90 on revenue of $1.81 billion.

I wonder why? Link here. Is anyone paying attention? Did Trump, Obama, or Bush ever have any years like this?

Interesting List Of Companies Hitting 52-Week Highs Yesterday -- May 25, 2022

Link here.

Some of the companies hitting 52-week highs yesterday:

• Antero Reesources
• Brigham Minerals
• Chevron Corp
• COP
• Coterra Energy
• Crescent Point Energy
• EOG
• XOM
• Hess
• HF Sinclair
• Marathon Oil Corp
• Marathon Petroleum Corp
• Permian Basin Royalty Trust
• Phillips 66
• San Juan Basin Royalty Trust
• SandRidge Energy
• Shell

Many of the advances yesterday were in the two too five percent range.