Odds And Ends -- Wednesday -- July 22, 2022

Tea leaves: hardest hard landing ever. Recession:

• either;
• one of the briefest ever, lasting less than two quarters; or,
• one of the longest, severest ever.

My reading of the tea leaves: too early to tell. But early signs suggest one of the severest recessions ever, but not necessarily a long one.  Things to watch:

• housing prices:
• unemployment numbers

For investors:

• it looks like two years of buying shares on steep discount.

We can start here, link here: this is a most incredible story.

• Dos Bocas: dos joke

White House press secretary: has anyone really listened to this bimbo?

Oil companies: instead of "trading barbs with the president," simply announce huge dividends and pull the rug out from underneath this rube.

AMD is the one to buy: MS link here. 

Politics: 

• Trump: winning some, losing some:
• Trump: a pariah right now.

Wow, wow, wow: Chevron - Cheniere partnership. Link here. 

Chevron Corp on Wednesday signaled its move into the booming U.S. liquefied natural gas export market with two agreements designed to increase sales of its shale gas to global markets.

Top U.S. gas producers have been striking deals with LNG developers to tap skyhigh global prices with demand forecast to double by 2040. The United States is expected to become the largest LNG exporter this year, leapfrogging Australia and Qatar.

In deals disclosed on Wednesday, Chevron agreed to buy 2 million tonnes per annum (mtpa) of LNG each from units of Cheniere Energy Inc and Venture Global LNG. The deal with Cheniere would include first deliveries in 2026 and continue through 2042.

OXY: BRK-B buys more OXY; apparently 9.55 million more shares.

Greta: no longer a cute 8-year-old:

• Swedish activists call for investigation into Greta's link with a Russian NGO directly funded by Russian foreign ministry during 2019 - 2021.

Employment: US unemployment near a 70-year low. Link here. 

Three-month tax holiday: Congress -- not only "no," but "hell, no."

"Damn The Torpedoes, Full Speed Ahead" -- CLR With Six New Permits -- June 22, 2022

NDIC GIS map: no update. 

WTI: $104.

• there are only two explanations for the sudden drop in the price of oil;
• we'll come back to this later;

Active rigs: 42 or thereabouts; certainly not more;

Six new permits, #39043 - #39048, inclusive:

• Operator: CLR
• Field: Jim Creek (Dunn)
• Comments:
• CLR has permits for six Kelling wells in SESW 4-145-96; 
• to be sited 500 FSL and between 2412 FWL and 2187 FWL, 

Five permits renewed / reinstated:

• Whiting (2): two Pennington permits, Mountrail
• RimRock (2): a Chokecherry permit and a Prairie Rose permit, both in Dunn County
• MRO: a Juliet permit in Dunn County

Five permits canceled:

• Oasis (4): four MHA permits, all in Mountrail County
• CLR: a Chloe permit in Williams County

Three producing wells (DUCs) reported as completed, without the NDIC GIS map, not much can be said:

• 38293, 1,626, CLR, Springfield 11-8HSL, Brooklyn, minimal production, 
• 38296, 1,473, CLR, Rolf Federal 10-17H1, Brooklyn, minimal production,
• 38297, 1,667, CLR, Rolf Federal 9-17H, Brooklyn, minimal production, 

Tea Leaves: US EIA Hired Same IT Firm The NDIC Employs -- I Can't Make This Stuff Up -- June 22, 2022

Oh, no.

The federal government agency tracking energy has hired the same IT firm handling the NDIC website and data bases. 

Link here:

Things are never so bad that they can't get worse.

Apparently every report except one will be delayed. 

Particularly true for this administration. 

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Influenza-Like Illness

Most recent update.

Link here.

The above graph captures patients visits for influenza-like illness (such as seasonal flu and Covid-19 and its variants), but those laboratory-confirmed influenza are excluded from the graph above. In other words, all these patients went to the doctor because they thought they had "the flu" or Covid." But those with laboratory-confirmed influenza (true seasonal flu) were removed from the numbers. 

The following graph is, without question, one of the most incredible graphs I have ever seen in all my years of medicine.

There is nothing new here since we started posting this chart two years ago. It is simply staggering.

Video Of The Day -- Presidential Speeches -- June 22, 2022

Link here. 

Yes, I know. 

Updating The US LNG Export Terminal List

As of June 22, 2022:

Updating US LNG Export List -- June 22, 2022

Add the following to the original list:

Cheniere: FID on Corpus Christi State 3, link here;

• note in graphic below; this was scheduled for 2020
• 10+ million tonnes per annum
• Cheniere has one of the largest liquefaction platforms in the world, consisting of the Sabine Pass and Corpus Christi liquefaction facilities on the U.S. Gulf Coast, with total production capacity of approximately 45 mtpa of LNG in operation and an additional 10+ mtpa of expected production capacity under construction.
• compar 55 mtpa with the large Qatar project now being planned

Sempra: signs 20-year supply HOA deal with UK's Ineos; link here.

• to be delivered from either the proposed Port Arthur LNG Phase 1 project, or
• the Cameron LNG Phase 2 project

Port Arthur? Just last week, link here; and, here:

Since 2015, the company has discussed the possibility of building a facility with the capacity to produce 13.5 million tons of LNG per year, split between two liquefaction trains, on a plot of land it has owned for more than 50 years on the Neches River.

Updated, June 22, 2022:

Morning Shorts -- LNG -- June 22, 2022

Cheniere: FID on Corpus Christ State 3, link here;

• 10+ million tonnes per annum
• Cheniere has one of the largest liquefaction platforms in the world, consisting of the Sabine Pass and Corpus Christi liquefaction facilities on the U.S. Gulf Coast, with total production capacity of approximately 45 mtpa of LNG in operation and an additional 10+ mtpa of expected production capacity under construction.
• compar 55 mtpa with the large Qatar project now being planned

Sempra: signs 20-year supply HOA deal with UK's Ineos; link here.

• to be delivered from either the proposed port Arthur LNG Phase 1 project, or
• the Cameron LNG Phase 2 project

Trans Mountain pipeline: no longer profitable; link here;

• net present value: a negative $500 million
• based on delta between the pipeline's cash flow and its $3.4 billion purchase price

Flashback: some LNG links from along ago --

• https://themilliondollarway.blogspot.com/2012/08/out-and-about-all-day-no-more-blogging.
• htmlhttps://themilliondollarway.blogspot.com/2013/05/proposed-joint-qatar-exxon-lng.html
• https://themilliondollarway.blogspot.com/2016/10/list-of-potential-us-lng-export.html

"Original comment here": 

• https://themilliondollarway.blogspot.com/2019/05/big-drop-in-wti-now-below-58-rbn-energy.html#comment-form

One Well Coming Off Confidential List -- EV Update -- June 22, 2022

Earthquake: Afghanistan.

Removed: South Dakota AG

Ford:

• EV sales set record, again;
• Ford to end car production at German Saarlouis plant;
• selects Valencia, Spain as "preferred site" to build next-generation EVs for Europe

Stellantis:

• announces more indefinite layoffs: cites rising gasoline price and interest rates slowing sales;

Daimler Truck:

• world's largest truck maker facing enormous supply chain pressure;

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

Far Side: link here.

WTI: slumps to $102.70.

Active rigs: 42 or thereabouts

Wednesday, June 22, 2022: 31 for the month, 169 for the quarter, 329 for the year

• 38661, conf, CLR, LCU Reckitt 12-22HX, 

RBN Energy: greater Houston's vision for a Texas-Louisiana hydrogen hub.

One of the biggest, most important steps in the U.S.’s ongoing energy transition will be the selection and build-out of at least four new clean hydrogen hubs –– development supported to a significant degree by an $8 billion commitment in last year’s bipartisan infrastructure bill, which was signed into law by President Biden in November. Surely there will be a lot of angling among states and regions to land big chunks of that federal money, but it’s a safe bet that one of the new hydrogen hubs will be located along the Texas-Louisiana coast. After all, this stretch of low-lying land not only boasts the U.S.’s highest concentration of existing hydrogen production and consumption, it also offers an extensive network of hydrogen pipelines, easy access to vast amounts of natural gas and renewable power, scores of potential sites for underground hydrogen storage and carbon sequestration, and a slew of marine terminals for exporting hydrogen-packed ammonia to global markets. Best of all, perhaps, the region has the human capital to make a new energy hub happen — heck, look at the infrastructure and markets the folks and companies between Freeport and Lake Charles have already developed for crude oil, natural gas and NGLs. In today’s RBN blog, we begin a detailed look at the federal government’s push to advance clean hydrogen as a fuel of the future and the Houston-led effort to make the western Gulf Coast a buzzing center of hydrogen-related activity.

Coal And Europe's New Energy Policy -- June 22, 2022

Link here.

Dividends -- FANG -- Diamondback Energy -- June 22, 2022

FANG raises dividend by 7.1% and return of capital to at least 75% of free cash flow, from its previous commitment of at least 50% of free cash flow, at the beginning of 3Q22. Paywall.

Without paywall, StreetInsider: 

Diamondback Energy, Inc. announced the next step in its return of capital program.

Beginning in the third quarter of 2022, the company’s board of directors has approved an increase to its return of capital commitment to at least 75% of free cash flow (as defined below), from its previous commitment of at least 50% of free cash flow. 

Additionally, the company today announced its intention to increase its base dividend to $3.00 per common share annually ($0.75 per quarter) beginning with the second quarter of 2022. When declared, this will represent a 7.1% increase from the company's previous annual base dividend of $2.80 per share ($0.70 per quarter) and implies a 2.5% annualized yield based on the June 17, 2022 closing share price of $122.29. Diamondback’s base dividend will remain its primary mechanism for returning capital to stockholders, with additional return of capital expected to come in the form of variable dividends and opportunistic share repurchases.

For the second quarter of 2022, the company plans to maintain its first quarter 2022 base-plus-variable dividend payout of $3.05 per share, which implies a 10.0% annualized yield based on the June 17, 2022 closing share price of $122.29. 

Diamondback has also repurchased 1,966,516 shares of its common stock for approximately $253 million to date during the second quarter at a weighted average price of approximately $128.42 per share. While the second quarter has not yet ended, the company expects that the combination of these stock repurchases together with its expected base-plus-variable dividends for the quarter will constitute a return of capital to stockholders well in excess of 50% of Diamondback’s free cash flow for the second quarter.

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.

41,000 Posts -- June 21, 2022

 

Dividends -- Devon -- June 22, 2022

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.

Devon Energy, link to Motley Fool;

Devon Energy (DVN 4.38%) is paying out a gusher of dividends these days due to its oil-fueled dividend framework. The oil producer pays a growing fixed-base quarterly dividend that it complements with a variable payout based on its cash flow.

With oil prices surging, both dividend payments have soared this year. Its most recent payment pushed its annualized dividend yield to around 6.5%, much higher than the S&P 500's 1.4% yield.

Devon recently added more fuel for the dividend by agreeing to purchase additional oil-producing land in the Williston Basin. The highly accretive deal will enable Devon to immediately boost its fixed quarterly dividend. It should also provide the cash to pay even higher variable dividends in the future.

Devon Energy is acquiring the leasehold interest and related assets of RimRock Oil and Gas in the Williston Basin of North Dakota for $865 million. The bolt-on deal features 38,000 net acres of producing and drillable land largely adjacent to Devon's existing position in the region. The acquisition will significantly increase Devon's scale in the area:

Overall, RimRock will grow Devon's production in the region by more than 30%. Meanwhile, there's enough undeveloped land to drill at least 100 highly economical wells in the future.

Devon is getting these assets for an unbelievable price. It's only paying about 2.2 times its estimated cash flow. Furthermore, its investment will earn an estimated free-cash-flow yield of greater than 25% at the current projected oil and gas prices over the next year. Because of that, it's immediately accretive to all the company's key per-share metrics, including earnings, cash flow, and free cash flow. Overall, it will grow its earnings and free cash flow by 3% to 5% per share in the first year.

And even though Devon is paying $865 million in cash, the oil company will maintain a top-tier balance sheet following the deal. Because of how highly accretive it is, its leverage metrics will remain largely unchanged, preserving one of the best balance sheets in the oil patch.