The Million Dollar Way (The Bakken Oil Blog): 02/23/23

Thursday, February 23, 2023

Reason #38 Why I Don't Fear High Interest Rates -- JPow: How I Stopped Worrying And Learned To Embrace Inflation -- February 23, 2023

If people are willing to carry 25% interest on their credit card debt, a Fed rate of 6% certainly isn't going to frighten them.

What is it about a Fed rate of 6% that has everyone so concerned?

Okay -- Who's Responsible For Writing This Guy's Speech? -- February 23, 2023

Well, if you are a farmer and “they” want to put a CO2 pipeline through your property this should give you a warm fuzzy:

I wonder if he had a slide of the explosion in East Palestine, OH, as part of his presentation? LOL.

It May Be A Great Company But It's In A Lousy Business -- To Paraphrase Charlie Munger -- February 23, 2023

Streaming: link here. Streaming wars.

Warner Brothers Discovery.

Link here.

I can't read financial statements but this doesn't seem to be very promising:

TSM -- Re-Posting -- February 23, 2023

Updates

February 24, 2023: Biden's $50-billion semiconductor plan.

The centerpiece of the plans, which Commerce Secretary Gina Raimondo laid out during a speech, is the creation of at least two semiconductor manufacturing and research hubs in the U.S. These sites—she hopes—will create new U.S. manufacturing and research capabilities and supply chains that will generate momentum for the sector even after the government money runs out.

February 23, 2023: it's a stock picker's market --

February 23, 2023: for the life of me, I do not understand

why Warren Buffett would sell his TSM and buy PARA. Obviously he sees something the rest of us don't. By the way, looking at WBD today was not a good look for PARA. As Charlie Munger would say, "no matter how good a company PARA is, it's in a rotten sector." PARA has two things going for it: a) a 4% dividend; and, b) a takeover target.

February 23, 2023: here's the story that a reader was referencing. Link here.

February 23, 2023: a reader tells that Bloomberg has a story about TSM looking to build a new facility in Japan. I'll look for that story later. But this is simply amazing:

Original Post

Link here.

Let this sink in for a minute.

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And Then My Second Favorite Company

Link here.

Gasoline Demand Increases But Crude Oil In Storage Also Increases; Crescent Point Energy With Eight New Permits -- February 23, 2023

Weekly EIA data:

days crude oil in storage: 31.7 (an increase from the week before, 31.2); link here; fourth consecutive week that storage has increased;
gasoline demand, link here:

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Back to the Bakken

Active rigs: 44.

WTI: $75.39.

Natural gas: $2.314.

Eight new permits, #39678 - #39685, inclusive:

Operator: Crescent Point Energy
Field: Little Muddy (Williams); Church (Williams); Winner (Williams)
Comments:

Crescent Point Energy has permits for eight CPEUSC wells, Getzlaf (2); Farthing (3); Clermont (3); NENE 25-158-101;

to be sited 300 FNL and between 300 FEL and 475 FEL (spacing between each well, 25 feet)

The March, 2023, NDIC Hearing Dockets

Link here.

The NDIC hearing dockets are tracked here.

The usual disclaimer applies. As usual this is done very quickly and using shorthand for my benefit. There will be factual and typographical errors on this page. Do not quote me on any of this. It's for my personal use to help me better understand the Bakken. Do not read it. If you do happen to read it, do not make any investment, financial, job, relationship, or travel plans based on anything you read here or think you may have read here. If this stuff is important to you, and I doubt that it is, but if it is, go to the source.

Wrapping Things Up Until Later This Evening -- ERF: Most Interesting Nugget In Its Press Release -- February 23, 2023

NOG: 4Q22 and full year 2022 results. Link here.

sneak-a-peek: EPS miss by quite a bit;
increased reg div by 13% to 34 cents/share, 1Q23
increased reg div by 20% to 30 cents/share, 4Q22
nice production increase; now at 78,854 bopd

EOG: 4Q22 and full year 2022 results. Link here.

sneak-a-peek: mixed
“special dividend”: $1.00
reg div maintained: 82.5 cents from 75 cents (increased in January, 2023)
EPS miss: $3.30 vs $3.31 (others say $3.37) on higher drilling costs.
revenue beat: $6.72 billion vs $6.62 billion
most recent: production up 5% q/q to 909,100 bopd
forecast, 2023: 944,000 to 1.03 million bopd
average realized US crude oil price rose 9% to $85.68
social media;

ERF: reported today. Link here. Press release. I recall some talk some time ago that ERF was considering changing its HOR from Canada to the US -- look at this little nugget in the press release --

Completed the divestment of substantially all its Canadian assets during 2022 for total consideration of $278.9 million (CDN$380.4 million), before purchase price adjustments.

The NDIC hearing dockets for March, 2023 have been posted. Link here.

The Weekly EIA Petroleum Report -- February 23, 2023

EIA's weekly petroleum report, link here:

US crude oil in storage increased by another whopping 7.6 million bbls; at 479.0 million bbls, US crude oil in storage is 9% greater than the five-year average
and folks are worried about re-supplying the SPR -- oh, give me a break
imports: increased by a very, very small amount, but the four-week average is still 3.1% greater than the four-week average a year ago;
refiners are operating at 85.9% of their capacity; sticking to their pledge to cut back on refining (now, why would they do that?)
distillate fuel inventories increased by 2.7 million bbls -- good -- going into the planting season -- and are still an incredible 12% below the five-year average; it’s going to be a bumper crop for farmers this summer; cau you spell Deere?
jet fuel supplied was up only 0.6% compared with the same four-week period a year ago -- I have no idea what this means with regard to the economy

Bottom line: are refiners making a huge amount of money?

My Favorite Chart -- February 23, 2023

Locator: 10001MMF.

Based on a random comment from a reader in an e-mail note, this post developed.

Some time ago -- a year ago, two years ago, I said this (see below) was "my favorite chart."

A different reader laughed at me when I posted that, suggesting that I knew nothing about investing -- he/she was probably correct.

Well, let's take a look at "my favorite chart" in terms of a recession; a pullback in the stock market; JPow's problem with "transitory inflation"; and, the list goes on.

In round numbers, the chart shows $5 trillion in money market funds.

Eighteen months ago the figure was in the same $5 trillion ballpark.

Does anyone recall the Fed rate eighteen months ago? Zero percent.

Does anyone recall what one's money market was paying? Zeropointone percent.

One may recall that some countries, Germany being the most notable, were paying a negative rate. "Investors" in money market accounts were willing to pay a slight premium to protect their capital.

So, eighteen months ago, $5 trillion paying zero percent or thereabouts (or less).

Now, four percent.

$200 billion.

Assume that 20% of Americans account for 80% of money in money market accounts.

80% of $200 billion = $160 billion.

20% of 330 Americans = 60 million Americans.

These folks don't need that money; they don't need the interest generated. How can one say that? Because they parked their money in those money market accounts when those accounts were paying zero percent.

So, let's see where we are.

60 million Americans.

30 million couples.

$160 billion / 30 million couples.

$5,000 / year.

That may not sound like much but I can guarantee you my wife would be thrilled with a check for $5,000 for the holidays. As opposed to $1.98.

My numbers may be way off. That's fine. Plug in your own numbers and your own assumptions.

From a macro-economic point of view, $5 trillion should add $200 billion to the US economy. And this is going to go on for the foreseeable future.

And folks pay taxes on those earnings.

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Global Warming Smacks Portland, Oregon

Cheniere Crushes It -- February 23, 2023

For me, the Cheniere story today (see below the fold) is just the beginning.

Earlier today, link here:

Now, Cheniere today:

Link here. And, here.

Briefly:

fiscal year revenue more than doubles;
4Q22 profit vs year-ago loss;
expects price-sensitive Asian LNG demand to resume
shares surged 8% to $160

Meanwhile:

Cheniere and its units have started the pre-filing review process with the Federal Energy Regulatory Commission for the proposed Sabine Pass stage 5 expansion project, which is being designed for an LNG production capacity of about 20 million tonnes per annum, it said.

Conversion: 20 million tonnes per annum = about 8,873,114 boe per annum = 25,000 boe / day (link here)

From August 22, 2022 with "Sabine Pass stage 5" noted:

Energy, emerging market:

debt: $98 trillion
250% of combined GDP for emerging market countries.
these emerging markets need energy, too, and they're paying UK prices for natural gas
the US? Paying US prices for NG: about $2 / MMbtu

EVs -- February 23, 2023

Updates

February 24, 2023: Debacle.

Original Post

Rivian: to report February 28, 2023. Ouch.

Lordstown: halts production. Propulsion anomaly. Down 14% today; market cap, $230 million. Down 60% for one year.

Nikola: fourth-quarter revenue falls short after it delivers just 20 trucks. Market cap: $1.2 billion. Down 7% today; down 70% for one year.

GOEV: down 7% today; down 85% for one year.

FISKER: down 4% today; down 40% for one year.

Lucid: revenue falls short of estimates as it guides to higher EV production in 2023. BofA dowwngrades Lucid Group, citing near-term demand concern. Reuters. Down 16% today; down 65% for the year.

ARVL: shares dropped 9% yesterday. Down 3% today; down 90% for one year.

Ford EV production stoppage: announced about a week ago; no updates. Down 2% for the day; down 30% for one year. Pays 5%.

Buzz: Nividia making Mercedes-Benz a technology company.

Economic Indicators -- February 23, 2023

Economy, 8:30 a.m. ET:

GDP Annualized, quarter-over-quarter, 4Q Second Estimate (2.9% expected, 2.9% prior)
Personal Consumption, quarter-over-quarter, 4Q Second Estimate (2.0% expected, 2.1% prior)
GDP Price Index, quarter-over-quarter, 4Q Second Estimate (3.5% expected, 3.5% prior)
Core PCE, quarter-over-quarter, 4Q Second Estimate (3.9% expected, 3.9% prior)
Initial Jobless Claims, week ended Feb. 18 (220,000 expected, 194,000 during prior week)

Results:

Employment:

WTI Holds; Profiteering In Biden's Backyard — February 23, 2023

Is oil back?

Economy, 8:30 a.m. ET:

GDP Annualized, quarter-over-quarter, 4Q Second Estimate (2.9% expected, 2.9% prior)
Personal Consumption, quarter-over-quarter, 4Q Second Estimate (2.0% expected, 2.1% prior)
GDP Price Index, quarter-over-quarter, 4Q Second Estimate (3.5% expected, 3.5% prior)
Core PCE, quarter-over-quarter, 4Q Second Estimate (3.9% expected, 3.9% prior)
Initial Jobless Claims, week ended Feb. 18 (220,000 expected, 194,000 during prior week)

US LNG: chart of the day.

Chevron, Venezuela: better than expected for Chevron? Link here.

A reminder: link here.

OXY: and there's talk that with the recent pullback in the oil sector, Warren Buffett may be buying more of the company.

Saudi Aramco: slips to third place. The big story here is not the fact that Saudi Aramco slipped to third place but despite AAPL trading at recent lows, AAPL's market cap is still head and shoulders above MSFT and SA.

Profiteering: link here.

Inside a sprawling factory just off the President Biden Expressway in downtown Scranton, Pennsylvania, the future arsenal of Ukraine’s war effort is being forged, one red hot artillery shell at a time. Running full-tilt, as it was on a recent January morning, the Scranton Army Ammunition Plant churns out roughly 11,000 artillery shells a month. That may seem like a lot, but the Ukrainian military often fires that many shells over just a few days. To meet that demand, the Scranton plant is undergoing a massive expansion, fueled by millions of dollars in new defense spending from the Pentagon. It’s investing in new high-tech machinery, hiring a few dozen additional workers and will eventually shift to a 24/7 schedule of constant production.

NVDA beats, LCID widely misses: link here. Also, link here:

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Back to the Bakken

Active rigs: 47.

Peter Zeihan newsletter.

WTI: $74.56.

Natural gas: $2.151.

Thursday, February 23, 2023: 66 for the month; 137 for the quarter, 137 for the year
39096, conf, Kraken, Jenna 28-33 2H,
39090, conf, CLR, Colette 2-18HSL,
38415, conf, Liberty Resources, AZ W 158-93-13-24-2MBH,
36051, conf, Oasis, Foley Federal 5301 12-13 4B,

RBN Energy: Petra Nova’s new lease on life after a critical test for carbon-capture technology.

The lack of successful projects has long been a thorn in the side of the carbon-capture industry, with a few high-profile cases falling short of expectations for a variety of economic and technological reasons. When looking for a prime example of how a highly touted (and taxpayer-supported) project can still fall short, the Petra Nova facility southwest of Houston, which completed its three-year demonstration period shortly before being shut in 2020, often comes to mind. But now it’s just a few months away from getting another shot, courtesy of its new owner and recovering oil prices. In today’s RBN blog, we look at the impending restart of the Petra Nova project, how falling oil prices overshadowed its technical successes, and its importance to the carbon-capture industry.

Elon Musk Returns To California (Spoiler Alert: He Never Left) — February 23, 2023

Link here.

Tesla Inc. said it was establishing its global engineering headquarters in Palo Alto, California, a state that Chief Executive Elon Musk has at times criticized.

Mr. Musk moved Tesla’s headquarters to Texas from Silicon Valley in 2021, saying at the time that the company’s ability to scale up in the San Francisco Bay Area was limited. He had previously likened California to a sports team that rested on its laurels after a winning streak, saying, “they do tend to get a little complacent, a little entitled, and then they don’t win the championship anymore.”

Mr. Musk struck a cheerier tone on Wednesday evening, saying at an event in Palo Alto that the company would “build the future here.”

Tesla has maintained a presence in Silicon Valley even after moving its headquarters to Texas and it employs around 48,000 people in California, Mr. Musk said. That amounts to more than a third of the company’s global workforce as of year-end.

Many of those employees work across the San Francisco Bay in Fremont, California, home to the company’s first car plant. That facility has the capacity to make around 650,000 vehicles a year, Tesla has said.

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Thursday, February 23, 2023