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Monday, April 3, 2023

Freight Train, Freight, Going So Fast -- April 3, 2023

Locator: 44300B.

I'm heading to bed. I'm exhausted. It's been a long day.

But first, just some random thoughts.

Can you imagine how all those folks -- including investors -- who hate Big Oil feel today?  I don't know if I've ever had a better day in the market. [“Surprise cut” by OPEC. WTI jumps from $74 $80.]

Governor Newsom blaming US Big Oil for gouging Americans at the pump? LOL.

Janet Yellen saying it was "unconstructive" for OPEC+ to surprise "us" with a production cut, which in the big scheme of things is a million-bopd cut when global demand is running at 100 million bopd. Give me a break. Incentivize US oil companies to drill in North America and see what happens.

Regardless, I'm in a great mood. 

But frankly, I'm surprised that taking one million bopd of crude oil off the global market had such a big effect on the American stock market. 

And remember it gets worse: June 23, 2023, when WTI oil is physically added to Brent.  

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Things Are Going Too Fast

This is the music only version of the trailer for ASTEROID CITY (2023), with everything except music (eg. dialog, sound effects) removed as well. Presented in 4K. Featuring the songs: 

 ➤ "Last Train to San Fernando" by Johnny Duncan 

➤ "Freight Train" by Chas McDevitt and Nancy Whiskey

Nine New Permits; Four DUCs Reported As Completed -- April 3, 2023

Locator: 44299B.  

Active rigs: 44.

WTI: $80.86.

Natural gas: $2.121.

Nine new permits, #39779 - #39787, inclusive:

  • Operators: Continental Resources (5); Oasis (3); Liberty Resources
  • Fields: Rattlesnake Point (Dunn County); Alger (Mountrail); North Tioga (Burke)
  • Comments:
    •  Rattlesnake Point is followed here, though seldom updated any more;
    • CLR has permits for three Thorvald wells, NWNE 7-146-96; and two Cuskelly wells, also NWNE 7-146-96; 
      • all to be sited 375 FNL and between 2030 FEL and 2360 FEL;
    • Oasis has permits for three Blanchet Federal wells, NENE 21-156-93; 
      • to be sited 361 FNL and between 633 FEL and 723 FEL;
    • Liberty Resources has a permit for a Casey well, NENE 11-159-94; 
      • to be sited 350 FNL and 1145 FEL

Four producing wells (DUCs) reported as completed:

  • 38171, no IP reported, CLR,
  • 38806, 479, Crescent Point Energy,
  • 38808, 295, Crescent Point Energy,
  • 38810, 58, Crescent Point Energy,

IGV: Did OPEC+ Just Kill The Tech Rally? Michael Fitzsimmons -- April 3, 2023

Locator: 44298B.  

Updates

Later, 10:59 p.m. CT: Janet Yellen says the "surprise cut" is "an unconstructive act."

  • was it constructive when President Biden said very, very clearly: "no more drilling"?
  • is it constructive when President Biden does everything he can to shut down US oil sector and then asks the Saudis to increase their own production?
  • was it a constructive when Biden precipitously and prejudicially killed the Keystone XL pipeline on his first day in office?
  • was is constructive when President Biden said "no" to COP's 5-well drilling program in the Willow Project?
  • was it constructive when Biden released record amounts of oil from the SPR for purely political reasons?
  • was it constructive to gaslight Americans when he said the administration would start refilling the SPR this year?
  • the list goes on.

If the Bakken was shut down tomorrow, would anyone notice?

  • the OPEC+ "surprise cut" is about one million bopd, less than what the Bakken produces daily.
  • everything I read suggests analysts are "sour" on the Bakken

Original Post

If you have time for just one article this week, this is the article I would recommend, if you are an investor in US equities.

Link here.

Supreme Court Rule 25. April 3, 2023

Locator: 44297B. 

Updates

Later, 11:56 p.m. CT: 34 felonies; will SCOTUS let Trump serve prison time?

Later, 9:24 p.m. CT: see note at end of original post.

Original Post 

One source

Second source.

Note: my understanding. I could be way, way wrong. If this is important to you, go to the source(s).

Trump.

Tomorrow's arraignment.

SCOTUS Rule 25: Writ of certiorari, of course, under consideration.

Requires four justices to agree to hear the case.  Requires five justices to rule in favor of Trump.

Chief Justice Roberts does not want the US judicial system to turn into a circus.

Chief Justice Roberts will want the charges to rise to the level of a felony in the eyes of the justices.

Timeline:

45 days for lower court to provide SCOTUS with filings. Not sure about this -- needs to be fact-checked but sounds about right. Written briefs limited to 40 - 50 pages. Again, needs to be fact-checked but the number of pages is severely limited.

90 days for SCOTUS to file written opinion after conclusion of oral arguments.

30 days after filing writing opinion, the decision becomes final. 

Right to a speedy trial but that's only part of the discussion.

**************************
Note

A reader sent me this e-mail in reference to the note above:

 You obviously have no idea what you are talking about.

My not-ready-for-prime-time reply:

You are so correct (about me not knowing what I'm talking about), but I used to know even less. LOL. My real weakness was natural gas, but I've come a long way even on that.

The blog was started as a personal Microsoft document for my purposes only but then realized HTML worked better, and as long as I had HTML, I could share with others.

I often tell folks not to read my blogs (because I don't know what I'm talking about but trying to learn. But that's why I almost always include links so folk can go to the source.

And the great thing, free, no password, no nothing -- no one needs to read the blog. At the end of the day it's for my benefit, good or bad.

So much more could be said, but need to move on.

I need to add this which I used to post often. 

I know very little about oil. I know even less about natural gas. 

I know even less about almost everything else. 

I don't recommend anyone reading my blog but if one does, read it for the Bakken. 

If I blogged only about the Bakken I would get very bored and would eventually run out of energy to keep blogging. I blog about other things to keep me "going" and to put the Bakken in perspective. 

I write much more about this at the "welcome" which is a stand-along page, tagged at the top, upper left. 

And for heaven's sake don't make any life decisions, financial decisions, investing decisions based on what you read here or think you may have read here. This is not an investment site.

I'm going to put this note in "draft" for the next couple of days, and then re-post it so it does not distract folks from the Bakken.

The Market Held Up Quite Remarkably -- April 3, 2023

Locator: 44296B.

Wow, I'm quite surprised. The market held up quite well. I expected a lot of profit taking.

Biggest winner today: Saudi Aramco.

I certainly thought profit-taking would have dampened the euphoria before the close. There is still almost an hour left of trading, so it's not yet over, but AAPL was a surprise; UNP was not.

The biggest surprise: CAT. (I don't follow the airlines).

Not a surprise:

  • UNP: down
  • BRK (OXY): up
  • MCD: up

A surprise:

  • AAPL: up
  • T: up
  • CAT: up
  • CHRD: a huge suprise, up $9.
  • COP: up 9% (?)
  • HES: up $11

It should be noted that the following three companies have been quite forthcoming about raising dividends:

  • DVN
  • COP
  • CHRD

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

Again, all my posts are done quickly. There will be typographical and content errors in all my posts. If any of my posts are important to you, go to the source.

The "Surprise Cut" -- What Was That All About -- April 3, 2023

Locator: 44295B.

Updates

April 4, 2023: for OPEC, the time was right to move the markets, experts say. Hart Energy.

April 4, 2023: A reader sent me this earlier this morning:

Excellent.

That makes a lot of sense.

That was a nice way to state it: triggering event.

Lots and lots of issues but the question I should have asked in my original note (see link above), what was the triggering event or tipping point?

That really, really makes sense. Saudi needed to protect Brent $80-floor at all costs and when SecEnergy Jennifer "no clue" Granholm said she wouldn't refill the SPR this year, and, in fact, she said, it would take years to refill -- the Saudis must have gone ballistic. Especially coming from "no clue" SecEnergy. 

I remember the day when Granholm said the volume of the SPR was measured in bbls of oil per day (bopd). Wow. LOL. 

Again, thank you for that note.

Later, 11:12 p.m. CT: a reader opines.

Later, 10:59 p.m. CT: Janet Yellen says the "surprise cut" is "an unconstructive act."

  • was it constructive when President Biden said very, very clearly: "no more drilling"?
  • was it constructive when President Biden does everything he can to shut down US oil sector and then ask the Saudis to increase their own production?
  • was it an construcctive when Biden precipitously and prejudiciously killed the Keystone XL pipeline on his first day in office?
  • was is constructive when President Biden said "no" to COP's 5-well drilling program in the Willow Project?
  • was it constructive to release record amounts of oil from the for purely political reasons?
  • was it constructive to gaslight Americans when he said the administration would start refilling the SPR this year?
  • the list goes on.

Later, 5:10 p.m. CT: some argue the “surprise cut” was directed against “short sellers.” That would certainly go a long way to explain this action by OPEC.

Original Post

Perhaps the most interesting "energy question" this month: why the surprise OPEC cut? The Arab culture, much like the Chinese, tend to move slowly, cautiously, wanting no surprises.

But the OPEC cut was a complete surprise. The "cut" doesn't even seem to have been coordinated. Almost as if there was some back-room, back-channel decision making. Obviously it had to have had the approval of the Saudi prince-heir apparent. 

It certainly was not in the best interest of the Chinese, with whom the Saudis have been growing closer.

It will be interesting:

  • to see the op-eds that come out on this story; and,
  • the unintended consequences.

The big question, in hindsight, how did no one see this coming. Did anyone see any op-ed pieces suggesting that Saudi Arabia was likely to cut prices? If so, I certainly didn't see them. There were plenty of articles and tweets of just the opposite: that by driving season this summer, US demand for crude oil would exceed supply. This "cut" -- based on those analyses -- suggests that OPEC is thinking just the opposite. 

The one unintended consequence I am most interested in is how quickly US shale operators can take advantage of this "surprise." Most analysts, it seems, suggest that US shale operators cannot respond like they did in the original Bakken boom, 2007 to 2014. I'm not in that camp. I think we will be surprised, but it might take a year just because the oil companies have drawn down so much since the pandemic.

The second issue is the price of gasoline, and if it increases significantly, how the Biden administration responds. As we know, the Biden policy is definitely "no more drilling."

The third issue, of course, is what happens in California. It seems it will be easy for Governor Newsom to suggest that US oil companies will take advantage of this "surprise," raise prices at the pump, and gouge the California driver. It might be difficult for the average Californian to accept that when they actually know what's going on. 

The fourth issue, what will the Fed do? Will the sudden change affect JPow's actions and/or words? 

So, the first bit of analysis, superficial as it is:

I don't think the decision to cut production was "anger-driven." Even if directed against short sellers, that doesn’t mean it was driven by “anger.”

I think it has more to do with the concern about a global recession, driving down oil demand, and driving down prices. Some have already said this "surprise cut" was to save $80-Brent at all costs. Saudi Arabia would want to get ahead of that. For Saudi Arabia it's a win-win. If there is no global recession, nothing has been lost by cutting production; and, if there is a global recession, they will have been smart to get out in front.

The "surprise cut" does seem to give Russia some breathing room. I don't see how the "surprise cut" has hurt Russia's position. It's very possible Russia and Saudi Arabia coordinated on this from the very beginning, some weeks ago.

And as stated above, it certainly was not in the best interest of the Chinese, with whom the Saudis have been growing closer.

Flashback: From The Blog

Locator: 44294B.

From February 4, 2020:  

Cancer


We've spent, what, trillions of dollars on fighting cancer?

In the big scheme of things there have been some real successes.

But in the big scheme of things, it certainly doesn't appear we're getting much in return for how much has been spent. 

Man was on the moon and safely back "before the end of the decade" as JFK had sought.

The Manhattan project to end WWII. Two years.

Cracking the DNA code by a couple of Cambridge labs in less than a couple of years (one can quibble about the actual amount of time). 

But cancer? 

From Reuters Tech Today -- April 3, 2023

Locator: 44293B.

From Reuters tech today:


 Shell, Volta. Link here.

Enbridge: a "fluff" piece on Enbridge, behind a paywall, but nice to see Enbridge in the news, and to be noted as the FedEx of midstream across North America (or at least the US and Canada):


KMI vs DVN: wow, it must be the day for Motley Fool. Again, posted only because of my interest in both KMI and DVN. I make no recommendation whatsoever. 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

Again, all my posts are done quickly. There will be typographical and content errors in all my posts. If any of my posts are important to you, go to the source.

Laser-Focused On Dividends -- April 3, 2023

Locator: 44292B.

Opportunities, 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

Again, all my posts are done quickly. There will be typographical and content errors in all my posts. If any of my posts are important to you, go to the source

From the Motley Fool link above.

One of the above has been a very, very long-term holding for me.

One of the above I've held for about three years. Perhaps my best "catch."

One of the above I started accumulating about one year ago and is now one of my favorites.

The other two were "new" to me.

Oil, LNG, Apple, And Buffett -- April 3, 2023

Locator: 44292B.

$100 oil. Link here.

Russia's flagship product: link here. The Chinese were stocking up. I don't know if $47 is before or after a) insurance; b) transportation costs (takes another $2/bbl off quoted price); c) kickback to oligarch.

AAPL: absolutely the last thing I expected. Link here.

Buffett: will steal the show in 2Q23. Link here.

When you have someone sitting on $130 billion in cash, as Buffett is, any word on bank valuations, if Berkshire considered doing deals for troubled regional banks, and government actions to save financial institutions will carry tremendous weight.

And it's not just the money aspect here, it's Buffett's knowledge of the banking system that further ups the intrigue.

Buffett saved Solomon Brothers in the early 90s after a trading scandal. He gave a lifeline to Goldman Sachs during the financial crisis. And he is a top shareholder in several financial stocks, including American Express, Bank of Americ, Citigroup, and U.S. Bancorp.

‌ What Buffett may say on high-profile tech holdings HP, Apple, and Amazon — where CEO Andy Jassy is increasingly on the hot seat — could come as the tech trade stays in favor beyond the first quarter. Some have even begun musing tech is this year's safety trade, and we're curious on how Buffett sees it.

Buffett investing, link here. Nothing new; a version of this story has been told several times in the past three months. This is Motley Fool's take. Most interesting is ATT being one of the three. Of 15,000 public companies, to be one of three listed is pretty nice. I've mentioned before that I park money in ATT pending other investments:

LNG: another huge market opens up. Link here.

Here We Go: WTI At $80 -- Monday, April 3, 2023

Locator: 44291B.

Buffett's headache: link here.

SEATTLE (AP) — A federal judge ruled Monday that BNSF Railway intentionally violated the terms of an easement agreement with the Swinomish Indian Tribal Community in Washington state by running 100-car trains carrying crude oil over the reservation.
The ruling in the civil case comes after two BNSF engines derailed on Swinomish land earlier this month (March, 2023), leaking an estimated 3,100 gallons of diesel fuel near Padilla Bay. BNSF operates a rail line through the Swinomish Reservation under a 1991 easement agreement that allows trains to carry no more than 25 cars per day.
It also required BNSF to tell the tribe about the “nature and identity of all cargo” transported across the reservation. In his written order U.S. District Court Judge Robert Lasnik said the railway made a unilateral decision in increasing the number of trains and cars crossing the reservation without the tribe’s consent, The Seattle Times reported. 

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Back to the Bakken

Active rigs: 44.

Peter Zeihan newsletter.

WTI: $80.30.

Natural gas: $2.125.

Tuesday, April 4, 2023: 10 for the month' 10 for the quarter, 265 for the year
38847, conf, Enerplus, Seam 149-93-05A-08H,
38823, conf, Whiting, Ryder Olson 31-1HR,
38605, conf, Hess, EN-Farhart-156-93-0409H-H
38322, conf, Whiting, Braaflat 11-11-2H,

Monday, April 3, 2023: 6 for the month; 4 for the quarter, 261 for the year
38880, conf, Whiting, Richard Olson 31-1HR,
38879, conf, Whiting, Mariah Olson 31-1HR2,
38691, conf, Ovintiv, Clear Creek Federal 152-97-36-25-12H,
31214, conf, BR, Gladstone 4-1-13TFH,

Sunday, April 2, 2023: 3 for the month; 3 for the quarter, 258 for the year
38848, conf, Enerplus, Pattern 149-93-05A-08H-LL,

Saturday, April 1, 2023: 2 for the month; 2 for the quarter, 257 for the year
38692, conf, Ovintiv, Clear Creek Federal 152-97-36-25-6H,
38543, conf, Whiting, Marlys Olson 31-1H,

RBN Energy: when price does not matter -- exchange trading, diffferentials, and the cash roll.

As crude oil exports have become an integral part of US/Canadian trading, the market has evolved to accommodate this profound transformation. But the mechanisms used to price many of the most significant export grades are obscure and little understood outside a small cadre of professional traders and marketers. This is particularly true for the most liquid grades that employ a trading approach known as “exchange trading” or “spread trading,” in which volumes at regional hubs are valued in buy-sell transactions against domestic sweet crude at Cushing. In this context, “exchange trading” does not mean trading on a regulated exchange. Instead, it means trading via an exchange of barrels between buyer and seller. In today's RBN blog, we delve into some of the most complex aspects of this trading mechanism.