No New Permits; Two DUCs Reported As Completed -- February 14, 2024

Locator: 46821B.

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Weekly EIA Petroleum Report

Weekly, link here.

• US crude oil in storage: 2% below 5-year average
• US crude oil inventories: increased by a whopping 12 million bbls
• imports: averaging 7% less than last year
• refiners: dropping even more -- now down to 80%
• distillates: 7% below five-year average
• diesel is going to be the big story this summer
  gasoline inventories a wash: total motor gasoline, down; finished gasoline up
• jet fuel supplied: up 1.5% y/y

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Back to the Bakken

WTI: $76.54.

Active rigs: 37.

No new permits.

Two producing wells (DUCs) reported as completed:

• 35215, 1,802, XTO, Teddy Federal 12X-5EXH,
• 40017, 2,746, Grayson Mill, Dale 20-17 2H, 

Well of interest:

• 21476, 3,241, Grayson Mill, Dale 20-17 1H, t4/12; cum 307K 10/23; off line;

Cisco Systems -- CSCO; Gasoline Demand; Market Wrap -- February 14, 2024

Locator: 46820MARKET.

Market Wrap

Headlines:

• BRK: releases 14F for 4Q23; see below. Trivial. Six months old. Means nothing to "average 'mom-and-pop" investor"; money managers know that.
  
• CSCO: to cut 5% of workforce; guides lower; that's not unusual for CSCO. Trivial.
• SpaceX: has filed to move incorporation from Delaware to Texas. Neither trivial, not trivial; simply interesting.
  
• Nvidia: market cap passes Alphabet and Amazon; now third most valuable US company. Not trivial. MOJO, FOMO, YOLO wouldn't go on this long if there wasn't fire where there's smoke;
• someone or "someones" know something the rest of us don't
• money managers flummoxed
  
• industrial sector surged in today's market; not trivial, or was sector so beaten down, nowhere to go but up? Trivial? Hard to say what it means; could just as easily be a head fake;
  
• CPI: report yesterday, trivial. 
• Not trivial: the PCE to be reported Feb 29, 2024 (yes, it's leap year)
• Japan: economy unexpectedly slips into recession, hurt by week domestic demand. Not trivial. 
• both Japan and Singapore miss GDP expectations; not trivial.
  
• Lyft: CEO takes responsibility for guidance error. Trivial. Story is over. Investors have moved on.
• US mortgage rates surge again: JPow and Fed now their own worst enemy; not trivial; 
• JPow and Fed's inaction making life difficult for homeowners, home buyers
• housing industry; leading indicator; if housing sector falters, recession looms; not trivial;
• housing data very confusing;
• most recent numbers are scary.
• deflation, where prices fell in January, 2024; most important chart you can look at tonight;
• oil prices give up advance as US crude stockpile surges; lots of interesting statistics; not seeing any analysis; superficial, energy seems to be suggesting slowdown, if not outright recession; not trivial.
• gasoline demand: very, very concerning -- second only to housing sector as a leading indicator; not trivial:

Gasoline demand:

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Weekly EIA Petroleum Report

Weekly, link here.

• US crude oil in storage: 2% below 5-year average
• US crude oil inventories: increased by a whopping 12 million bbls
• imports: averaging 7% less than last year
• refiners: dropping even more -- now down to 80%
• distillates: 7% below five-year average
• diesel is going to be the big story this summer
  gasoline inventories a wash: total motor gasoline, down; finished gasoline up
• jet fuel supplied: up 1.5% y/y

*******************************
Cisco

4Q23: A beat on both top line and bottom line, and everything after that, blah, blah, blah.  And then increases the quarterly dividend by a penny. Whoo-hoo!

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BRK's Quarterly 14F Released

BRK: top 4Q23 moves. Link here.

• sold a bit of AAPL; 1% of his AAPL holdings;
• slashed stakes in Paramount (PARA) -- one of his recent mistakes (buying PARA in the first place); headfake for those who follow Buffett
• continued to slash stakes in HP (HPQ)
• bought CVX; added 15.8 million shares; after cutting CVX positions in previous quarters;
• making big commitment to Sirius XM (SIRI)
• exited four stocks, including Brazilian fintech StoneCo (STNE)

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The Market Today

The market pretty much recovered much / all of what "it" lost yesterday.

Across the board, "everyone" said the market reaction was overdone.

Across the board, "everyone" agreed that the "inflation figure" was due almost solely to "rent" and that figure was incorrectly calculated, based on false data and/or wrong assumptions.

Across the board, "everyone" agreed that regardless of the "correct" inflation figure, inflation is heading down. 

General consensus, it no long matters "when" the Fed cuts. What matters is whether the Fed starts cutting this year.

So, bottom line: all three indices traded nicely into the green. Not only that, the industrial sector (e.g., CAT), hit all-time intra-day highs. Whoo-hoo!

The big pullback allowed for a nice buying opportunity yesterday for the nimble and quick, daring to jump over the proverbial candle stick. LOL.

On another note, the CPI is not even JPow's favorite inflation data point. Behind closed doors testifying before US Congress today JPow said he was not "concerned" (or something to that effect) about the CPI reported yesterday.  He and the Fed favor the PCE.

 

And there's more. The PCE is likely to come in at 2.0, maybe 1.9. Imagine what happens if the PCE comes in with a 1-handle.

*********************************************
Earlier

Screenshots of earlier notes from the blog on market action the past 24 hours:

Devon -- Dividend Watch -- February 14, 2024

Locator: 46819DIV.

Updates

February 14 2024: David Messler's take over oilprice.com.

The merger and acquisition deals are coming in the shale patch, at a rate almost too fast to document. Last week news broke about Devon Energy, (NYSE:DVN), and Canadian-based producer, Enerplus,opening merger talks. Enerplus has some choice acreage in the Bakken play that would be very attractive to Devon as it fills in a lot of gaps in its own prime Bakken acreage. 

They also hold some non-operated acreage in the Marcellus, that would likely be sold off as Devon has no other operation in that basin. The Bakken is home to some of the longest shale laterals, and the ERF “jigsaw puzzle” pieces would assist DVN greatly in maximizing the production from the play. Details are sketchy at this point, and I wouldn't be surprised if ERF isn't holding out for a cash premium given the liquids-rich “dirt”- 68%, they own. That would be the smart play for their shareholders. DVN has reached for its checkbook in its last couple of deals, for RimRock, and Validus. The stocks of both companies are off from peaks set in Q-3 of last year, DVN about 30% and ERF about 15%.

This is the time to be merging with companies that can contribute immediately to the bottom line, and synergistically make Newco potentially a better entity than the two were separately. That’s what’s supposed to happen anyway. The question arises, should Devon be the one buying? Here’s the problem with the moves Devon has made employing this fill-in-the-gaps, “bolt-on” strategy, from a shareholder perspective. They aren’t getting paid for it by the investing community! Perhaps ERF should be buying Devon’s Bakken acreage. The industrial logic works that way as well. We will table that thought for now, but return to it as we close out the article.

Original Post 

Devon acquiring Enerplus?

Haven't seen update since several days ago

Devon appears not to have announced 1Q24 dividend yet.

Motley Fool's take.

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OXY

OXY down 0..5% today.

Past year:

Weekly EIA Petroleum Report -- February 14, 2024

Locator: 46818B.

Birthdays: quick! How old is Taylor? How old is Travis? Hint, if you get one answer correct, you will get both answers correct, assuming you get the first answer correct. And then quit.

********************************
Lana Del Rey

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Now, Back To The Good Stuff

Personal investing: wow, wow, wow, I took advantage of that huge pullback in the market yesterday. Whoo-hoo! 

Market: 

• this market is so incredible (in a good way)!
• CPI: 0.3% vs analysts hope of 0.2% -- and that resulted in huge sell-off -- a 0.1% tick -- and that tick was reality vs hope. LOL. But I'll take it -- great buying opportunity.
  
• all of the CPI can be explained away with shelter
• most of shelter is the price of homes / mortgages (not rent)
• what's driving high mortgage rates? LOL. If you can't answer that question, there's no hope
• bottom line: the Fed right now, is its own worst enemy and this is going to make it worse
• despite war in Gaza; US bombing / striking Iranian targets; Red Sea/Suez closed and oil holding below historic highs-- if oil holds, one less (and it's a huge one) inflationary risk
• did you all see the incredible build in US oil? 12 million bbls; normally fluctuates around a +/- 1 million bbls
• did you see refiners' operable capacity: 80%. Holy mackerel, 80%.
• are we at winter / spring / summer transition for winter-to-summer blend already
• here in Texas, the flocks of geese flying north is remarkable -- yeah, summer is here
  
• we're done with wage increases for the year
  
• if the Fed cuts rates before the election, one can already see the conspiracy talk
• cognitive dissonance
• MAGA investors want the Fed to cut rates
• MAGA investors don't want the Fed to cut rates 'cause it will give the election to Kamala Harris
• as for me, for the first time in a long time, I'm at peace with myself, comfortable in my own skin
• by the way, look how ICE plans to make up the budget deficit now that the MAGA politicos killed the southern border bill -- and their plan is fiscally right, morally right, and right for the country

Nvidia (NVDA): 

• at 5:00 p.m. yesterday, NVDA was up $6 from the day before at 5:00 p.m.
• today, NVDA is up another $5 / share

ASML: up $14 today.

So much for that tech sell-off.

AAPL: is now below $185 today, its traditional support level. 

• will have huge announcements for new products in March
• high on my list? The 15-inch M3 MacBook Air
• right now, I'm using my 13-inch M1 MacBook Air while letting my workhorse, and Intel-based 13-inch MacBook charge
• the M1 is so incredibly fast, amazing -- I can only imagine what the M3 will do
• eager to see the pricing
  

Heinz: on another note -- ouch. Down 6% today.  

Heinz CEO was a bit disingenuous on CNBC today: saying his company's inflation costs were 3.4% and and he was holding his inflation prices to 1%, and the "last thing he would do would pass inflation costs on to consumers" or something to that effect.

In fact, multiple sources are reporting that food inflation for 2023 was 1.3% for "food at home" and as far as I'm concerned that's the important number for me. "Food at home." And careful shopping can significantly bring that figure down.

By the way, next time you wash your dishes, note how much ketchup is washed down the sink.

***********************
Weekly EIA Petroleum Report

Weekly, link here.

• US crude oil in storage: 2% below 5-year average
• US crude oil inventories: increased by a whopping 12 million bbls
• imports: averaging 7% less than last year
• refiners: dropping even more -- now down to 80%
• distillates: 7% below five-year average
• diesel is going to be the big story this summer
  gasoline inventories a wash: total motor gasoline, down; finished gasoline up
• jet fuel supplied: up 1.5% y/y

Happy Valentine's Day; Permian With A Breakeven Of $40 (Or Less) -- February 14, 2024

Locator: 46817B.

Two big articles today:

• wind's cost crunch: Bloomberg
• EVs -- reality is setting in: WSJ

COP: next dividend, record date, February 19, 2024 

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Back to the Bakken

WTI: $77.98.

Thursday, February 15, 2024: 40 for the month; 99 for the quarter, 99 for the year
39991, conf, CLR, Omlid 12-19H,
39535, conf, Hess, EN-Person A-156-94-1522H-3,

Wednesday, February 14, 2024: 38 for the month; 97 for the quarter, 97 for the year
40050, conf, CLR, Harms East Federal 34-33H,
39156, conf, Hess, RS-F Armour-156-92-1224H-6,
34061, conf, SOGC (Sinclair), Bighorn 5-6H,

RBN Energy: Diamondback / Endeavor duo challenges Taylor and Travis for couple-of-the-year honors.

A Super Bowl game (and halftime show) for the ages followed up only hours later by a made-in-heaven combination of two of the largest, most admired E&Ps in the super-hot Permian? It doesn’t get any better than this, unless you’re a Taylor Swift fan too — in which case, it may be impossible for you to “shake it off.”

In today’s RBN blog, we examine the newly announced plan by Diamondback Energy and Endeavor Energy Resources to combine into a Travis Kelce-sized Permian pure play with more than 800 Mboe/d of crude oil-focused production and more than 6,000 well locations with breakevens of $40/bbl or less.