Barron's Is Reading The Blog -- December 22, 2023

Locator: 46377BRK.

I about fell off my chair when I saw the headline for this story flash across my screen:

From the linked story:

Berkshire Hathaway stock is having a disappointing finish to 2023, putting Warren Buffett’s conglomerate behind the S&P 500 over the past 10 years. 

The Class A shares have lagged behind the S&P 500 by about nine percentage points during the current quarter and now are up about 16% in 2023. That compares with a roughly 26% total return for the index. 

The shares are up an annualized 12% in the last 10 years, slightly behind the 12.2% yearly total return, including dividends, for the index. Berkshire also is behind the S&P 500 over the past five years with a 13.4% annualized return, compared with 16.4% for the index., according to Bloomberg calculations. Berkshire’s Class A shares were up 0.3% Friday to $542,600 while the Class B stock was 0.1% higher at $356.47.

The best thing about this article: Barron's is doing the same thing I'm doing -- shortening the timeline to something reasonable. Instead of looking at BRK and investment decisions over the past 30 or 40 years, Barron's is looking at the most recent five years and the most recent ten years. 

When you really cut to the chase, BRK can be looked at "pre-2016" and "post-2016." 

I dare someone to take out AAPL from the BRK portfolio and calculate the return since 2016. In the past ten years AAPL paid a dividend and provided a return of almost 80,000%. In that same period, BRK comes in at zero.

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Back to the Bakken -- re-posting from earlier

WTI: $73.52.

Active rigs: 34.

Two new permits, #40399 - #40400, inclusive:

• Operators: MRO, Hess
• Fields: Reunion Bay (Mountrail); Sorkness (Mountrail)
• Comments:
• Hess has a permit for an EN-Starla well, SESW 9-157-93; 
• to be sited 580 FSL and 2126 FWL;
• MRO has a permit for a Donkin USA well, SESW 33-152N-93W; 
• to be sited 317 FSL and 1794 FWL;

Four permits renewed:

• Grayson Mill (3): three Tufto permits;
• Oasis: a Barro permit, Burke County, Black Slough;

One producing well (a DUC) reported as completed:

• 24622, 2,147, MRO, Skip 31-29H, Dunn County;

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Gimme, Gimme, Gimme

Another Musical Interlude -- Hey, It's Christmas -- December 22, 2023

Locator: 46376WILLOW.

COP: breaking. Link here. 

 The wiki page.

Alaskan lawmakers from both sides, as well as the Arctic Slope Regional Corporation, have supported the Willow project.

In March 2023, the Biden administration approved the project

Environmentalist organization Earthjustice immediately filed a lawsuit on behalf of conservation groups to stop the project, saying that the approval of a new carbon pollution source contradicted President Joe Biden's promises to slash greenhouse gas emissions in half by 2030 and transition the United States to clean energy.

Judge Sharon Gleason upheld the Biden administration's approval in November 2023.

ConocoPhillips announced its final investment decision (FID) to develop the project -- one month later.

The project could produce up to 750 million barrels of oil and 287 million tons of carbon emissions plus other greenhouse gases over 30 years, according to an older government estimate, release the same amount of greenhouse gasses annually as half a million homes.

The BLM has predicted adverse effects on public health, the sociocultural system of Native American communities, arctic wildlife and the complex local arctic tundra. [Same arguments for the TAPS which never came to fruition.]

From wiki: 

Over its anticipated 30-year life, the Willow project could produce 200,000 barrels of oil per day, producing up to 600 million barrels of oil in total. 

Could someone check me on the math:

• 600 million bbls / 200,000 bopd = 3,000 days = 8.2 years.

Oil, once produced is, for the most part, not put in storage for more than a few months and is consumed within days once refined, distributed, and bought by end-users.

How do we get "carbon emissions and greenhouse gases over 30 years."

But, having said that, two ways to look at this:

• 600 million bbls / 200,000 bopd = 8 years, as noted above; or,
• 200,000 bopd x 356 days x 30 years = 21,900,000,000 = 21,900 million bbls

Money

According to the Bureau of Land Management, the Willow project is projected to deliver $8 billion to $17 billion in new revenue for the federal government, the state of Alaska and Alaska Native communities. 

Let's take the high end: $17 billion

• assume a royalty rate of 25%, low end: $68 billion in revenue
• assume a royalty rate of 50%, high end: $34 billion in revenue

Then:

• $68 billion / 600 million bbls = $113 / bbl
• $34 billion / 600 million bbls - $57 / bbl

Disclaimer: I often make simple arithmetic errors.

Environment:

With regard to any adverse environmental impact, it's a wash: California is shutting down a similar amount of oil activity in its state.

There are two ways to stop a "Willow Project" once approved:

• in court; or, if that doesn't work,
• photo ops of thousands of protestors gluing themselves to permanent structures while listening to Greta.

The legal path has come to an end (?). 

I can't imagine a thousand protestors gluing themselves to baleen washed ashore along the North Slope. 

The project could produce 750 million bbls of crude oil at a rate of 200,000 bopd. 

To put that in perspective, the Bakken is producing at a rate of one million bopd and, unfettered, at $200 / barrel could produce two million bopd for fifty years. At the current rate, the Bakken will continue to produce through December 14, 2099.

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The Mamas And The Papas

It's amazing, Paul Shaffer shows up everywhere. 

It's also amazing, the person in that group I miss the most? Yeah, the same one you miss: Mama Cass. 

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16

 Paul Shaffer

A Musical Interlude -- December 22, 2023

Locator: 46375B.

Description for the music video above:

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Back to the Bakken

WTI: $73.52.

Active rigs: 34.

Two new permits, #40399 - #40400, inclusive:

• Operators: MRO, Hess
• Fields: Reunion Bay (Mountrail); Sorkness (Mountrail)
• Comments:
• Hess has a permit for an EN-Starla well, SESW 9-157-93; 
• to be sited 580 FSL and 2126 FWL;
• MRO has a permit for a Donkin USA well, SESW 33-152N-93W; 
• to be sited 317 FSL and 1794 FWL;

Four permits renewed:

• Grayson Mill (3): three Tufto permits;
• Oasis: a Barro permit, Burke County, Black Slough;

One producing well (a DUC) reported as completed:

• 24622, 2,147, MRO, Skip 31-29H, Dunn County;

TGIF -- December 22, 2023

Locator: 46374B.

Breaking: US Supreme Court won't intervene; Trump-Colorado ballot case; next stop: appellate court. 

Cathie Wood: incredibly good interview on CNBC today. 

Incredible. Ignore Cathie Wood at your own peril. Ten years ago when she started the company, she invested in Nvidis at $5 / share. She continues to hold NVDA but has pivoted elsewhere for new money.

I've not heard a better analyst speak on CNBC. When SBV went under, Bitcoin was a flight to safety. Say what? No wonder the conventional banks are scared. Or unaware. Think Charlie Munger. Five-year horizon. Mentioned her top picks with that horizon in mind. Bitcoin, of course, but CRISPR -- lots of time spent on CRISPR. Sickle cell this year; thalassemia next year (2024). If you have time for one thing today, listen to the Cathie Wood interview.

Ticker of the day: SCCO. SCCO will replace DE in my investment buckets. SCCO is a two-sector play: tech, big-cap-div-paying. We all had access to the same information one year ago.

 

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

Not so busy today, at least compared to yesterday. But today will be all about energy.

Personal investing: bought SNAP.

Jargon:

• Microsoft's PowerPoint referred to as "slide deck": CNBC.

Coal: now that COP28 is behind us, we can get back to "normal," and back to work:

• Japan to re-starts Yokosuka, the country's #2 coal-fired unit; Argus;
• India plans to expand its coal power fleet to meet soaring demand; envisages 63% more capacity than earlier plans; link here.
  

LNG:

• lack of Arctic tankers puts Russia's LNG development dreams on ice; link here;

Oil:

• Buffett keeps adding more and more OXY; link here and here;
• China's oil demand continues to soar; link here.
• top global oil producer: US #1;
• Angola quits OPEC;
  

American economy:

• consumer sentiment up; today's numbers;
• corporate profits have held up relative gross national product (GNP); at a healthy level relative to history; Liz; 
  
• GDP: 3Q23 -- up 6.2% year/year; say what? One has to go back to the 50s and 60s to see these kinds of numbers;
• rent inflation down; short spike; transitory; link here;
• inflation: core PCE 3.2 vs 3.3 estimate y/y 
• on CNBC, Fidelity spokesperson equally amazed; incredibly bullish; sees no recession
• sees the bull market broadening
• investors have not missed the biggest part of the run yet
  
• fun to watch from where he reports: at home, apartment
• commercial microphone; pretty impressive "photo-op"
  
• two bikes, including an E-bike; skateboard in corner against entrance door
  
• narrative is finally changing; we figured this out two years ago -- CNBC finally noting same thing;
  

Geopolitics:

• Iran providing real-time data for Houthis to attack shipping; what's the strategy? Doesn't make sense.
• winners: crude oil investors
• loser: one -- China; a close Iranian ally
• Israel widening its operations in Gaza; obviously behind the scenes the Biden administration is not taking Israel to task
  
• Germany: planning permanent military deployment to Lithuania (note: "deployment" and "permanent" mutually exclusive)

Tech and investing:

• laptops making huge comeback; winner: Microsoft; Arm's backk; Intel and AMD are getting ready for a Windows refresh
• Microsoft discontinues Windows Mixed Reality; link here; link here. May become a stand-alone post.
  
• Amazon: absolutely incredible; link here;
• Micron surges; bullish story for all of tech; 
• Apple: next-gen CarPlay will start with Porsche and Aston Martin; 
• The Verge: may need to be a stand-alone post;
  
• 2024 vehicles from high-end automakers will get the first taste of Apple’s “cohesive design experience that is the very best of your car and your iPhone.”

Sports:

• LA Dodgers: another $325-million contract for a star player;
• on top of the $700-million contract just a few weeks ago;

Angus bull sales:

• start to get ready; they begin in January; from 2021 -- #2 record price, from Nebraska;
  
• #1 sale was in 2019; North Dakota
  
• best Australia can do?  $375,000 -- some years ago
  

Presidential pardons: marijuana use on federal land and DC

• much could be said; maybe later

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Back to the Bakken

WTI: $73.81.

Sunday, December 24, 2023: 36 for the month; 185 for the quarter, 755 for the year
39500, conf, Enerplus, Brown Bear 157-99-1-12-3H,
39290, conf, Hess, GO-Tong Trust A-157-96-2032H-4,

Saturday, December 23, 2023: 34 for the month; 183 for the quarter, 753 for the year
39646, conf, Grayson Mill, Fleck 150-100-1-12-5H,
39497, conf, Enerplus, Brown Bear 158-99-36-25-3H,

Friday, December 22, 2023: 32 for the month; 181 for the quarter, 751 for the year
39026, conf, Hess, GO-Golden Valley-157-96-2833H-3,
38113, conf, Formentera , LFM1 21-33 161-93 CMB,

RBN Energy: the SPR is slowly being refilled; how much is enough? Seriously, as long as I've been blogging -- 10+ years -- the SPR has never affected oil prices. The SPR is now seen for what it is -- another political plaything.

It seems like everyone has an opinion about the Strategic Petroleum Reserve (SPR), and everyone is at least a little bit right. For example, many assert the SPR provides a helpful crude oil supply buffer in the event of a major disruption from, say, a strong hurricane in the Gulf of Mexico or a war in the Middle East. Others say the market can take care of itself — the SPR just muddies the waters by getting government (and worse yet, politicians!) involved. Still others say the oil market has changed dramatically since the SPR was established almost a half-century ago and that the strategy behind the reserve should be revised in response to those changes. In today’s RBN blog, we discuss the very gradual refilling of the SPR after a big draining — and an ongoing debate about the reserve’s future.