Wednesday, July 20, 2022
Things Have Changed -- July 20, 2022
Things have changed:
- coal is the new "security fuel";
- auto manufacturers are in deep doo-doo; they just don't know it yet;
- $100-oil for the long haul;
- oil super-cycle is just beginning;
- Bitcoin? Last "coin" standing?
- "Only Murders In The Building": "Twin Peaks" for the 2020s but so much better;
- next Fed rate increase: one and done
- OPEC+: spare capacity is a myth;
- Russia: no technology infrastructure to re-build military hardware lost in Ukraine;
- Russia: no technology to replace western technology needed for oil patch;
- call it a recession; but it ain't;
- 5%: the new "easy money";
- M2;
- psychedelic microdosing is the new speed;
- canned tuna is the new protein;
- ERCOT reliability;
- at best, a Pyrrhic victory for Putin;
- USC football: national champs favorite;
- Biden will still beat any GOP rival in 2024;
- I used to care but things have changed.
What A Great Country -- Idle Rambling Wednesday -- July 20, 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. Full disclaimer at tabbed link.
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.
Wow, I'm in a great mood.
The NDIC GIS map server is back up and so is the "rig" location list.
Wow, this is outstanding. It will take me a few days to get used to the new map, but the new app is so robust it is going to be hoot.
In an earlier post I noted that COP was going to exit the Gulf of Mexico and casually asked what the rest of the story might be?
Shell is also going to exit the Gulf of Mexico. Actions have consequence. The Biden administration wants to shut down drilling on federal land (onshore and offshoree) and apparently Shell and COP are willing to play along.
I used to own shares of Shell, but no longer. I am still heavily invested in COP. Just imagine all the cash Shell and COP will generate when they sell their assets in the Gulf and get rid of all that CAPEX. Can you say "dividends" and "buybacks"?
Speaking of investing, some folks are starting to ask the same question I've already brought up: auto manufacturers are in deep trouble. They just don't know it yet.
EVs are going to suck them dry, margins are going to be minimal, competition will be keen. This story that Ford is laying off 8,000 blue collar ICE workers to concentrate on EVs. This speaks volumes. EVs are sucking the cash out of auto manufacturers.
Tesla: free cash flow this past quarter.
Look at the numbers. I believe their free cash flow was less than the cash raised with the sale of their bitcoin. We'll sort that out later, but if accurate, that speaks volumes.
Silver coins: Recently, I mentioned the worst investment one can make: silver coins and/or silver bullion. It turns Aaron thinks just like me. Link here.
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Clearing Off The Desktop
Some graphics yet to be posted.
LNG to France: great thread and great graphics.
Gaslighting: I guess "they" are reading the blog. Not long ago I talked about the Biden administration gaslighting and keystoning America.
Now, from zerohedge, it's almost as if this whole "green" thing is the biggest gaslighting in history. Link here.
$100-oil: despite draining the SPR, oil remains at $100. What happens when October comes? Others are also asking. Several things:
- if necessary, "they" will keep draining; the law says a minimum must be kept in storage, but if there's an emergency, reserves can go lower;
- the emergency: midterm elections in November;
- so, they will continue to drain thee SPR well past October; trust me on this;
- and, then after November, it really doesn't matter and we'll be past the driving season also
Biden says he has cancer: got it from Delaware pollution, he says. That must be solar pollution. Skin cancer? I assume he got it driving big rigs across the southern US for two decades before becoming a US senator.
BRK-buying surge: now we know why.
The rumors were that it was due to Robinhood. Turns out the rumors were correct. I can't make this stuff up. A purchase of 1/1000th of a share of BRK was rounded up to a full share by regulation for reporting purposes only, so one thousand slices of 1/1000th of BRK = one thousand shares trading hands. A million 1/1000th slices = one millions shares, when in fact, only 1,000 share were traded. I assume this is driving Gary Gensler nuts.
Best story of the day: the combatant commander for the US South Command -- a helicopter pilot. Link here and here.
At the first link, be sure to read the last line. I was sure this US South Command commander had a wife. LOL. I will share these links with our granddaughters.
Investing: amazing the crazy comments over on twitter.
The Dow surges 750 points in one day. That evening futures point to a 30-point loss. Some take this to suggest the rally will be short-lived. Must be a newbie. And so what if the rally is short-lived. Just another opportunity to accumulate shares in great companies at great discounts.
19%. Apparently that's the percentage of Hispanics who support Biden. Link at National Review.
COP Looking To Exit The Gulf Of Mexico -- July 20, 2022
Reuters:
- COP looking to sell its stake in the Ursa platform and Princess subsea well in the Gulf of Mexico;
- it would mark COP's exit from deepwater energy production off the US Gulf coast.
It will be interesting to "see" the rest of the story.
From the linked about one year ago:
ConocoPhillips is set to become the second-largest oil and gas producer in the contiguous U.S. following its $9.5 billion purchase of Royal Dutch Shell PLC’s assets in the Permian Basin.
The company’s acquisition of 225,000 net acres in West Texas is a big bet that drilling in the busiest American oil field will underpin returns for a decade. It is also the latest example of how competition to consolidate is reshuffling the pecking order among top U.S. shale drillers.
ConocoPhillips has been among the biggest spenders in the recent consolidation wave. It closed a $9.7 billion purchase of Permian oil producer Concho Resources Inc. in January, before disclosing its plans to buy Shell assets.
From April 26, 2022, oilprice, Goldman Sachs: top five shale plays for 2022, remember, GS still rules Wall Street:
- Hess
- EOG
- Pioneer
- COP
- Kosmos Energy
The Data Was Accurate Last Week -- July 20, 2022
All that talk about possible one-offs last week appear not to hold water.
Numbers are in for last week and gasoline demand looks horrific.
Tesla Earnings -- Big Bottom Line Beat -- 2Q22
Big bottom line beat.
Earnings:
- non-GAAP EPS: $2.27 vs $1.80 forecast;
- non-GAAP revenue: $16.9 billion vs $17.1 billion beat
- vehicle prices are up 25% to 30% from a year ago, automotive margins compressed for the quarter to 28%
- previously: margins were 33% in 1Q22
- a slightly disappointing delivery figure of 254,695 EVs for 2Q22
- the company sold 75% of its position in Bitcoin: total Bitcoin sales, $936 million
- shares up nicely for the day
Common Sense Prevailed -- July 20, 2022
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The Market Is Relieved
Indices:
- Dow 30: up 50 points
- S&P 500: up 23 points
- Nasdaq: up $185 points
KMI, link here:
- raises dividend ever so slightly, from 27 cents to 27.75 cents/share
- earnings: $621 million vs $516 million same quarter a year ago; 28 cents/share
- net income: $635 million vs a loss of $757 million same quarter one year ago;
- distributable cash flow: $1,176 million vs $1,025 million same quarter one year ago; 52 cents per share;
- guidance is positive
And, Perhaps For Other Reasons As Well -- July 20, 2022
I can think of two other reasons:
- the margins have decreased to the point they are no longer economically viable (Chinese flooding the market with cheap solar tiles); and/or,
- no one is buying into rooftop solar any more.
Or perhaps Elon Musk just has too much on his plate right now to worry about the sun.
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One Really Has To Ask
Was Greta Thunberg "a" Manchurian candidate?
China has three or four industrial competitors on the world stage. Germany's economy has been destroyed. Japan's is teetering. That leaves the US and President Biden is addressing the issue sometime today. It looks like China / Greta could score a trifecta.
To The NDIC Folks: A Huge Thank You! July 20, 2022
For all the grief I've given the NDIC folks over the past year or so regarding the switchover to the new system, I apologize.
I am so thrilled the GIS map server is back up. I've seen this format before. This application is so much better -- it's like going from the 20th century to the 21st century. Because it is so much more powerful it will require a bit more time to learn and to work through all its capabilities.
For readers, the map seems to load a bit more slowly but Apple's brand new M2 MacBook Air should have no problem with it.
My hunch: the NDIC waited to launch the new GIS map server until Apple released the M2 MacBook Air which was released less than four business days ago.
I am absolutely thrilled.
I just knew there would be a reason to convince my wife why I need a new computer. LOL.
Top Story Of The Month! NDIC GIS Map Server Is Up -- July 2022
Direct link here: https://gis.dmr.nd.gov/dmrpublicportal/apps/webappviewer/index.html?id=a2b071015113437aa8d5a842e32bb49f.
Or,
- go through the NDIC home page: https://www.dmr.nd.gov/oilgas/
- then click on GIS Map server at the sidebar at the left.
A huge "thank you" to the reader who alerted me to this. This is absolutely huge.
This works on the Safari browser. I haven't checked the other browsers, Firefox or Chrome.
It's a different look than before which I will discuss later.
For now, heading out of some kind of Asian food. Sushi but probably ramen.
The Book Page -- Nothing About The Bakken -- July 20, 2022
I have just finished Nick Lane's Transformer: The Deep Chemistry of Life and Death, c. 2022.
Finished in the sense that I've turned all the pages and read most of the words in/on the first 178 pages, but then scanned to the end, p. 284, where the appendices begin/began.
I cannot recommend this book too anyone who does not have at least an undergraduate degree in biochemistry. An undergraduate degree in biology will not fill the bill. It’s very, very difficult to read.
It will be one of my top shelf books that I will return to often. Despite a very challenging subject, it's always a joy to read Nick Lane's writing.
It's a book about the Krebs cycle, and thus ultimately about mitochondria.
It's too bad I can't recommend it to my readers in general. I have an 80-year-old reader who just two days ago e-mailed me, and I guess, asked me, about the aging process, and why some folks are fortunate to live well into their nineties, and others, not so much.
Ironically, for lack of a better word, it all started with my rambling about military medicine. He and I were on the same page with regard to military medicine and he cited examples of several of his military "lifers" who did well by the VA system. Maybe more on his examples later. I always enjoy a good narrative involving a US Marine, the best of the best in the US military.
I provided a lengthy reply to his question / comments / observations regarding aging.
So, I was quite happy -- and quite surprised -- that the sixth chapter, the penultimate chapter just before the epilogue, was all about the aging process.
Nick Lane argues that the aging process has everything to do with the Krebs cycle and mitochondria, and nothing to do with our non-maternal genes, or maternal genes for that matter, in the rest of our cells. The mitochondria and the mitochondrial genes are all inherited from our mother, going all the way back to Mitochondrial Eve.
Page after page, paragraph after paragraph, sentence after sentence, the science is so challenging to defy any understanding, but it -- aging -- all goes back to mitochondria -- where cellular respiration takes place and the Krebs cycle
Note: In Canada and the U.S. , the preferred spelling is aging. British usage favours the variant ageing, which is also accepted in Canada. Nick Lane is British.
Just when one is about to give up on the writing Nick Lane summarizes it on page 232, the very end of chapter five before the chapter on aging:
To answer your question on aging, I can do no better than statistics.
Ageing itself raises our risks, by switching metabolism towards aerobic glycolysis, promoting cellular growth. But clearly this state iis stable over decades. We are then at the mercy of our own lives -- unfortunate genes, one ciigarett too many, poor diet, bad sunburn, exhaust fumes, viral infection: sharp focus for the command 'grow!' set in a permissive metabolic context.
If my argument in this chapter is right, the best we can do is to keep our mitochondria active. Keep exercising. Breath deeply. Eat carefully. Caloric restriction. Don't fall back on fermentation but oxidise NADH in your mitochondria as far as possible. Keep your Krebs cycle moving forwards (sic).
Nothing is failsafe, but there's no doubt that regular aerobic exercise and a healthy diet -- caloric restriction -- will help you to protect you against cancer (and, yes, past your 80s cancer is perhaps the greatest risk of dying over which you have some control).
There's irony in my advice, for I am asking you to nurture your mitochondria. Don't let cell respiration run down, which is the underlying cause of cancer as we age. Not because our cells revert to some degenerate state, but because declining respiration perturbs the Krebs cycle.
As for me, I was in the pool yesterday for three hours, swimming the whole time. Slowly of course, I could sense happy mitochondria.
By the way, the Apple Watch and the Apple culture:
- closing your rings on your Apple Watch: stay active during the day
- breath deeply: zen and the Apple Way
- eat carefully, caloric restriction: sushi
Nope, nothing to do with the Bakken.
Disclaimer: In a long note like this there will be typographical errors. In addition, my editor and proofreader is out of town and on vacation for two weeks.
Weekly EIA Petroleum Report -- July 20, 2022
WTI, prior to data release: $102.50.
WTI: one-half hour after data release: $102.50.
- US inventories of crude oil decreased by 0.4 million bbls ... or in other words, flat.
- US inventories of crude oil stand at 426.6 million bbls; 6% below five-year average.
- US imported 6.5 million bopd; again flat; four-week average: 6.5 million bopd.
- US refiners operating at 93.7% of their operable capacity.
- US distillate fuel inventories decreased by 1.3 million bbls; inventories are now a whopping 23% below the five-year average.
- US jet fuel supplied was up 9% compared to same four-week period last year.
Implied US oil demand, link here:
Also, SPR at its lowest since 1985. A data point that absolutely means nothing.
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Re-Posting
Updates
July 20, 2022: housing market in free fall. Or not.
Original Post
Whenever I see stories about high inflation here in the states, I keep coming back to this graph:
I was reminded of that when I came across this today (link: https://twitter.com/LanceRoberts/status/1549346241737379843):
I now follow Lance Roberts.
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The Book Page
If you want to understand the current divisiveness in the US Republican party, re-read the history of the War of The Roses.
Or, alternatively, if you want to understand what the War of Roses was all about, look no further than the current disarray in the US Republican party.
Here We Go Again -- July 20, 2022
Not more than a month ago, a reader asked about my thoughts on an LNG export publicly trading company in which a big energy investor might be interested. I could only think of one: LNG.
Doesn't fit my criteria. Yet.
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Silver
I can't recall if I posted this earlier. I thought i did.
At the coin show this past weekend I was unable to find any 2021 US silver eagles.
The number of these US silver eagles minted each year runs about 15 million to 30 milliion. Link here.
$50 million / 900,000 = $55 / coin? That seems cheap for a proof, expensive for bullion but I'm pretty much a novice when it comes to silver.
Silver ETF trading at $17.50 which sounds about right.
Clearing Out The In-Box -- July 20, 2022
Some people see the cup as half empty: after the Dow surges 754 points yesterday, today's Yahoo!Finance headline -- "futures struggle to build on Tuesday's rally." Oh, give me a break. Dow futures right now, minutes before the market opens, down .... drum roll ... 20 points.
GS: increases its quarterly dividend to $2.50. Link here.
Texas: electricity demand hits all-time record. ERCOT holds. Easily.
USAF -- 375 fighters: link here.
- one tactical squadron: 20 planes
- three tactical squadrons / wing (base): 60 - 75 planes
- 375 / 75 = 5 locations
- locations; milestones.
US Navy: requests a force of 373 ships.
US Army: HIMARS -- link here.
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Back to Chips
While AOC is pretending to be handcuffed during a DC protest, Nancy is busy advising her husband onn financial matters.
The five companies that will most benefit from the Pelosi Chips Act (PCA): 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.
Wednesday, July 20, 2022
What we're all waiting for today: gasoline demand. Will be posted later today.
Weekly EIA petroleum report later this morning.
President Biden: after disastrous trip to Saudi Arabia, will double-down on renewable energy:
- will probably take cue from the Germans; link here.
Netflix: I've long lost interest in Netflix, but for the record, 2Q22 earnings. Link here.
- after numbers came out, shares closed 6% higher; closed just short of $202;
- worldwide subscriber much loss than expected: 970,000 vs forecast of two million
- guidance: expects to add one million subscribers
- revenue up nine percent
- will clamp down on "account sharing."
Beating a dead horse: link here.
Germany, link here:
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Cleaning Up
Cleaning Up
Twins, age 2 years 3 months.
The twins cannot come down to breakfast until after they cleaned up their room, generally meaning their Duplos.
Earnings -- 2Q22
Note: this is, hands down, one of the most boring things I to do each quarter. I doubt anyone really looks at it but the day I quit doing this will be the day I miss posting something important. The word "important" is used loosely. Very loosely.
This is so boring that I actually didn't record a thing for 1Q20, but that was two years ago. Maybe things have changed. LOL.
This is linked at the top of the sidebar at the right during earnings
season. After earnings -- pretty much after XOM and Apple posts
their earnings -- this post will move back into obscurity.
Disclaimer: this is not an investment site.
Earnings -- 2Q22
April - May, 2022
April - May, 2022
This is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here. If this is important to you, go to the source. There will be content and typographical errors on this page. If something looks wrong, it probably is.
Cash flow of the oil companies, 2Q22: link here.
Deere: a hit and a miss.
MRNL: huge quarter.
BRK: link here.
NOG: link here.
OXY: Link here.
- net profit: $3.6 billion vs $4.7 billion in the 1Q22
- adjusted income for shareholders: $3.2 billion vs $2.1 billion
- free cash flow: $4.2 billion
- highest quarterly FCF to data
DVN: link here; beat; raised dividend.
CLR: July, 2022, corporation investor presentation.
AAPL: beats, huge. Record revenue.
AMZN: shares surge; up 13%!
Huge quarter for:
- Mercedes
- Ford
- Shell
- TTE
Meta (Facebook):
- third consecutive quarter misses expectations
- in deep trouble with Apple blocking ads
- Zuckerberg says Apple and Meta in philosophical fight
Refiners: link here.
Tesla: Big bottom line beat. Earnings --
- non-GAAP EPS: $2.27 vs $1.80 forecast;
- non-GAAP revenue: $16.9 billion vs $17.1 billion beat
- vehicle prices are up 25% to 30% from a year ago, automotive margins compressed for the quarter to 28%
- previously: margins were 33% in 1Q22
- a slightly disappointing delivery figure of 254,695 EVs for 2Q22
- the company sold 75% of its position in Bitcoin: total Bitcoin sales, $936 million
- shares up nicely for the day
BKR: 2Q22 earnings. Shares are down 6% in pre-market trading.
Netflix: I've long lost interest in Netflix, but for the record, 2Q22 earnings. Link here.
- after numbers came out, shares closed 6% higher; closed just short of $202;
- worldwide subscriber much loss than expected: 970,000 vs forecast of two million
- guidance: expects to add one million subscribers
- revenue up nine percent
- will clamp down on "account sharing."
Welcome To My World -- July 20, 2022
BKR: 2Q22 earnings. Shares are down 6% in pre-market trading.
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Back to the Bakken
Far Side: link here.
WTI: $102.80. Folks getting nervous about what Biden might do later today.
Natural gas: $7.430.
NDIC GIS map: remains in-op.
Active rigs: 41 or thereabouts
Wednesday, July 20, 2022: 16 for the month, 16 for the quarter, 355 for the year
- 26368, conf, Slawson, Armada Federal 2-14-13H,
RBN Energy: a key driver behind today's high refining margins.
Refining margins today — whether in the U.S. Gulf Coast (USGC), Rotterdam or Singapore — are at record highs.
Given current high crude oil prices, gasoline and diesel prices at the pump everywhere are also at unprecedented levels, making refinery profits a major topic of conversation — and not just for politicians. While some of the explanations of refining margins are just political talking points, several others are well-established and accepted, and still others consider factors that are less frequently cited, even by those familiar with energy markets.
One such factor is the price of natural gas and how it’s impacting refinery operations and competitiveness around the world. Today’s RBN blog discusses the crucial role natural gas prices play in refinery operating expenses and refining margins, and examines how favorable natural gas prices in the U.S. are providing a substantial competitive advantage for domestic refiners.
XTO's Myrna Federal, Myrna, And Darlean Wells In Alkali Creek
The Myrna / Myrna Federal wells:
- 18431, 550, XTO, Myrna 21X-2, Alkali Creek, t9/10; cum 223K 5/22; off line as of 9/21;
- 34816, PNC, XTO, Myrna 21X-2BXC,
- 34817, SI/NC, XTO, Myrna 21X-2B, Alkali Creek, no production data,
- 34818, PNC, XTO, Myrna Federal 21X-2E,
- 34819, SI/NC, XTO, Myrna Federal 21X-2A, Alkali Creek, no production data,
- 34820, SI/NC, XTO, Myrna Federal 21X-2EXH, Alkali Creek, no production data,
- 34821, PNC, XTO, Myrna Federal 21X-2AXD,
The Darlean wells:
- 34934, SI/A, XTO, Darlean 41X-2D, Alkali Creek, first production, 2/22; t--; cum 132K 5/22;
| Pool | Date | Days | BBLS Oil | Runs | BBLS Water | MCF Prod | MCF Sold | Vent/Flare |
|---|---|---|---|---|---|---|---|---|
| BAKKEN | 5-2022 | 23 | 38617 | 38644 | 38039 | 72775 | 70317 | 1522 |
| BAKKEN | 4-2022 | 23 | 43077 | 42940 | 36665 | 78543 | 58137 | 20312 |
| BAKKEN | 3-2022 | 31 | 41616 | 42042 | 36532 | 67836 | 61584 | 6107 |
| BAKKEN | 2-2022 | 9 | 8300 | 7364 | 15680 | 14025 | 13584 | 370 |
- 34935, SI/A, XTO, Darlean 41X-2H, Alkali Creek, first production, 2/22; t--; cum 125K 5/22;
| Pool | Date | Days | BBLS Oil | Runs | BBLS Water | MCF Prod | MCF Sold | Vent/Flare |
|---|---|---|---|---|---|---|---|---|
| BAKKEN | 5-2022 | 20 | 31056 | 31149 | 31376 | 52129 | 50372 | 1088 |
| BAKKEN | 4-2022 | 23 | 39348 | 39417 | 38040 | 68253 | 50526 | 17646 |
| BAKKEN | 3-2022 | 27 | 53845 | 53216 | 52118 | 87561 | 79491 | 7883 |
| BAKKEN | 2-2022 | 2 | 277 | 246 | 370 | 325 | 0 | 325 |
- 34936, SI/A, XTO, Darlean 41X-2C, Alkali Creek, first production, 2/22; t--; cum 97K 5/22;
| Pool | Date | Days | BBLS Oil | Runs | BBLS Water | MCF Prod | MCF Sold | Vent/Flare |
|---|---|---|---|---|---|---|---|---|
| BAKKEN | 5-2022 | 20 | 23851 | 23939 | 51953 | 45056 | 43535 | 942 |
| BAKKEN | 4-2022 | 23 | 31359 | 31336 | 50367 | 59484 | 44026 | 15387 |
| BAKKEN | 3-2022 | 31 | 36545 | 36663 | 39714 | 58193 | 52830 | 5239 |
| BAKKEN | 2-2022 | 6 | 5020 | 4454 | 8721 | 7684 | 7208 | 438 |
- 34937, SI/A, XTO, Darlean 41X-2G2, Alkali Creek, first production, 2/22; t--; cum 114K 5/22;
| Pool | Date | Days | BBLS Oil | Runs | BBLS Water | MCF Prod | MCF Sold | Vent/Flare |
|---|---|---|---|---|---|---|---|---|
| BAKKEN | 5-2022 | 22 | 36527 | 36522 | 47971 | 61581 | 59504 | 1286 |
| BAKKEN | 4-2022 | 23 | 38704 | 38592 | 50270 | 68576 | 50763 | 17731 |
| BAKKEN | 3-2022 | 28 | 38242 | 37815 | 48455 | 62628 | 56856 | 5638 |
| BAKKEN | 2-2022 | 2 | 369 | 327 | 962 | 419 | 0 | 419 |
It's Not More Oil That We Need -- July 20, 2022
Link: https://twitter.com/staunovo/status/1549412977295740930.
I used to think it was refinery capacity but I'm not so sure any more.