OXY-WT Jumped Nearly 25% Yesterday; Down 2% In Pre-Hours Trading Today; Update On ENB --November 10, 2020

Note: by the way before we get started. "That Covid-19 vaccine" news story? I'm not buying it. Ninety percent effective? Okay.

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. 

Enbridge: so, in all the noise this past week, how did ENB do? From SeekingAlpha:

Summary

• Enbridge yields a safe and secure 8.5% in an era of near-zero interest rates and a 0.78% 10-year U.S. Treasury.
• 3Q20 results announced Friday morning were solid. The mainline is back at full-capacity; repair work on Texas Eastern's eastern leg has been completed and is back in service before winter.
• DCF/share of $1.03 easily covered the $0.81 dividend by 1.27x. The $4.65/share midpoint of full-year DCF guidance covers the current annual $3.24/share dividend by 1.44x.
• Heading into winter season, ENB's underappreciated Union Gas utility - the largest gas utility in North America by volume - will shine.
• ENB have highly visible cash flow and is a STRONG BUY with a $40 price target.

Note: I haven't watched the market or the news in weeks (months?) but after a reader sent me the Dow news yesterday, I thought I would look. One word: wow. Up another 163 points in Dow Futures today.

ENB: up 5.5% yesterday; up another 2% in before-hours-trading now. What's not to like. LOL. And the really, really great news: if Biden is sworn in, new pipeline construction is dead:

• ENB CAPEX plummets --- great news for ENB traders;
• existing pipelines: artificial moat for investors;

Nikola: reports a 3Q20 net loss of $117.5 million. Nikola founder Trevor Milton subpoenaed by DOJ. Well, doesn't that just make your day?

Beyond Meat tanks after hours. Well, there goes another fad. Hey, guys -- one needs five things for a healthy immune system. Unless your diet is full of oysters, the "only" thing that provides zinc is ... North Dakota beef. Okay, just joking. All beef. Not just North Dakota beef.

AAPL: EU's anti-trust action against Amazon must be spooking AAPL investors. LOL. But here's what's really going on: it appears Warren Buffett sold about $4 billion of AAPL in 3Q20.

Tesla: EV sales more than double in China, but Tesla lags.

Plug: best quarter yet.

Boeing: 737 MAX approval "imminent." Apparently, according to social media, so is "the vaccine."

OXY: drops another 4% as 3Q20 earnings disappoint.

OXY-WT: jumped 25% yesterday; down all of 2% in before-hours trading.

Conoco - Concho -- Fitzsimmons -- SeekingAlpha -- October 15, 2020

For those investors unhappy that "their" company is not returning wealth in the form of dividends, note this article from Mike Fitzsimmons over at SeekingAlpha.

Summary:

• Rumor has it that Conoco Phillips intends to purchase Concho Resources. The combination would make COP a major force in the Permian Basin.
• I've been worried about a big acquisition because Conoco was holding so much cash and not returning it to shareholders in the form of dividends.
• I estimate it would take at least $13 billion+ to take out Concho - that would be ~$13+/boe based on Concho's proved reserves.
• Certainly Concho is cheaper than it was pre-Covid, but that doesn't mean it is worth it for COP to double-down on more O&G assets in an age of energy abundance.

If I had to name one contributor I feel "most safe" with over at SeekingAlpha, it is Mike Fitzsimmons. Long story. Trust me.

Whatever. 

Archived.

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.

Eleven Wells Coming Off The Confidential List Today -- May 6, 2019

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or think you may have reader he.

Note: I am inappropriately exuberant about the Bakken.

Fitzsimmons: over at SeekingAlpha -- Enbridge has 30% upside.

Wells coming off the confidential list over the weekend, today -- Monday, May 6, 2019: 19 wells for the month; 114 wells for the quarter

• 35200, 2,194, WPX, North Mabel 2-35HS, Mandaree, t3/19; cum --;
• 32511, 220, BR, CCU Mainstreeter 6-1-25MBH, Corral Creek, t3/19; cum --;
• 29135, 1,958, Bruin, Fort Berthold 147-94-1B-12-6H, McGregory Buttes, t11/18; cum 141k 3/19; see production data here;

Sunday, May 5, 2019: 16 wells for the month; 111 wells for the quarter

• 35201, 2,396, WPX, North Mabel 2-35HB, Mandaree, t3/19; cum 19K 27 days;
• 35006, SI/NC, Hess, CA-Ferguson Smith-155-95-3031H-5, Capa, no production daa,
• 34427, 773, Oasis, Martin 5302 11-4 2B, Rosebud, t11/18; cum 91K 3/19;
• 34040, 613, Oasis, Aagik 5298 41-35 6T, Banks, t11/18; cum 100K 3/19;
• 34039, 733, Oasis, Aagvik 5298 41-35 5B, Banks, t11/18; cum 122K 3/19;
• 34037, 1,787, Oasis, Aagvik 5298 41-35 3BX, Banks, t11/18; cum 219K 3/19; over 325K in less than five months;

Saturday, May 4, 2019: 10 wells for the month; 105 wells for the quarter

• 35203, 2,615, WPX, North Mabel 2-35HW, Mandaree, t3/19; cum --;
• 35007, SI/NC, Hess, CA-Ferguson Smith-155-95-3031H-6, Capa, no production data,

The Aagvik wells are tracked here.

Active rigs:

$61.34	5/6/2019	05/06/2018	05/06/2017	05/06/2016	05/06/2015
Active Rigs	64	62	49	27	85

RBN Energy: re-contracting issues for older Permian crude pipelines.

Old age and treachery will always beat youth and exuberance. So the saying goes, and it often holds true for midstream projects as well as people. Many times we’ve written that existing pipe in the ground beats new pipeline projects; it’s frequently easier and faster to expand the capacity of an older pipe than it is to build an entirely new pipeline. But eventually, contracts on these old pipelines expire, and as they do, shippers may have new, more attractive options — maybe proposed new pipes offer better connections to gathering systems, the ability to segregate batches of crude oil, and/or access to more desirable markets.

Most importantly, they probably are willing to charge a lower tariff. In the Permian, we’ve seen a slew of new pipelines advance to construction by promising lower and lower shipping costs to move crude from West Texas to the Gulf Coast. Today, we look at how older pipelines’ re-contracting efforts will be affected by their competitors’ lower tariffs and operational advantages.

Existing Permian pipelines, from RBN Energy:

EOG Over-Valued; COP Under-Valued -- Fitzsimmons -- April 22, 2019

From SeekingAlpha:

• Continuing my potential M&A analysis of domestic O&G producers, today, I compare two of America's best: EOG and ConocoPhillips
• From a high-level perspective, it is clear that EOG is valued at a significant premium as compared to COP
• Yet COP realizes ~$8/boe higher pricing due to its conventional assets in places like Alaska and Australia (to name just two)
• Meantime, COP generated more than 3x the FCF as compared to EOG, and production is only 1.7x higher
• In my opinion, EOG is overvalued, and COP significantly undervalued - especially when compared to EOG

Obviously, much more at the link.

Archived.

For the record: I am unaware of anyone who knows the oil sector better than Mike Fitzsimmons. 

Cushing Update -- RBN Energy -- December 20, 2018

Tallgrass Energy: may be up for sale -- Fitzsimmons over at SeekingAlpha --

• Tallgrass popped higher Wednesday. and it's not even a marijuana stock.
• Bloomberg says a consortium of companies including StonePeak Infrastructure Partners are considering a deal to buy Tallgrass.
• Three insiders bought a total of 88,828 shares during November for a total value of $1.8 million-plus.
• Institutional and insider ownership is high, which means individual investors will have little say and are just along for the ride.
• Recent insider buys indicated management would need a price of at least $25.50/share for a 20% return on their recent insider buys.

OPEC may fail to get the price correction it wants.

*********************************

Back to the Bakken

Wells coming off confidential list today -- Thursday, December 20, 2018:

• 34921, SI/NC, Slawson, Whitmore 4-7-6H, Parshall, no production data, 
• 34206, SI/NC, Hess, BB-Chapin-151-95-0506H-10, Blue Buttes, no production data,
• 33691, 1,011, Oasis, Lite 5393 41-11 12T, Sanish, Three Forks, 50 stages; 10 million lbs (small, medium, large white sand and ceramic), t7/18; cum 93K 10/18;

Active rigs:

$46.50	12/20/2018	12/20/2017	12/20/2016	12/20/2015	12/20/2014
Active Rigs	68	51	41	64	182

RBN Energy: Cushing -- still the preeminent crude oil hub for the US. Archived.

The Cushing, OK, storage and trading hub plays critically important roles in both the physical and financial sides of the crude oil market. Located at a central point for receiving crude from a wide range of major production areas — Western Canada, the Bakken, the Rockies, SCOOP/STACK and the Permian among them — the hub also has numerous pipeline connections to Gulf Coast refineries and export docks, and to a large number of inland refineries. And, with Cushing’s 94 MMbbl of storage capacity and status as the delivery point for NYMEX futures contracts for West Texas Intermediate, the hub’s inventory levels and the WTI-at-Cushing price are closely watched market barometers.

But like a lot of other U.S. energy infrastructure in the Shale Era, Cushing’s place in the energy world has been in flux. Most importantly, Permian production has been surging, the ban on U.S. oil exports is a fading memory, and the Gulf Coast — not Cushing — is where most U.S. crude production wants to go.

It's Always Darkest Before The Dawn -- The Market, Energy, And Political Page -- December 9, 2018

Link here to SeekingAlpha:

• Chevron released its 2019 capital budget this week, but before we look at that, let's take a look at the company's YTD financial performance.
• Through the first three quarters of 2018, Chevron delivered an impressive $13.5 billion in FCF - which equates to $7.04/share.
• As a result, the company's strong $4.48 annual dividend (3.9%) and re-started share repurchase plans are in great shape.
• Chevron remains my top pick of the international integrated companies and is cash-flow neutral at $50/bbl Brent (it closed Friday at $61/bbl).
• The recent sell-off has the stock trading on the cheap. It's a great buying opportunity for excellent income and capital gains potential. 

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on anything you read here or think you may have read here.

From the linked article, two items:

and,

All of this free-cash-flow generation is the result of a production profile that continues to be the best of the integrated majors.

Average daily production is expected to be up ~7% this year.

Big Foot, a big project in the GoM that has had a checkered past, just recently achieved first oil. Big Foot is designed for a capacity of 75,000 bopd and 25 MMcf/d of natural gas. Chevron is the operator and has a 60% working interest. Equinor, the old StatOil, has a 27.5% stake.

Chevron's working interest in Big Foot equates to 45,000 bpd oil and 15 MMcf/d natural gas net to Chevron. That significant even for a company of Chevron's size and is a positive catalyst moving into 2019.

***************************

Glass Ceilings -- And This Is Why We Have Them

From an earlier post with very slight editing:

Meanwhile, in the White House, lots of changes being announced for the second half of the Trump's first term. State Department spokeswoman Heather Nauert is Trump's choice to succeed Nikki Haley as US ambassador to the United Nations, even as the White House moved to downgrade the job from a Cabinet-level position. Nauert, a former Fox News host who arrived at the State Department in 2017, would be a relatively inexperienced newcomer in one of the most high-profile positions in US diplomacy. Her nomination sets the stage for a potentially tough Senate confirmation hearing, where [mostly old white men] will likely grill Nauert on her qualifications for the position.

************************************

Pretty Boys

Is it just me or does it appear the three pretty boys of politics, across two continents and three nations, are starting to implode? Beto, Macron, and Trudeau. Beto could be the outlier but the other appear to have crashed and burned.

The Market, Energy, And Politcal Page, T+29 -- December 5, 2018

Disclaimer: 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.
 
Pipelines: for several faithful readers -- Tallgrass Energy update from Michael Fitzsimmons over at SeekingAlpha.

• Tallgrass is now a dividend-paying corporation. That means no IDRs, no K-1 tax forms, and a simplified corporation structure.
• But the company's business is still the same. It has interest in two tier-1 pipelines: REX (natural gas) and Pony Express (oil).
• Tallgrass has transitioned away from the MLP model that is so out of favor with investors and Wall Street.
• The current 8.7% yield is safe and secure. Two auspicious crude oil pipeline projects ensure organic growth going forward.
• The shares are a Buy and could rise to $26/share over the next 12 months, for a total return potential of 25%+.

**********************************

Digital Media Implosion

Obviously there's a lot more to this, but when I quickly read through these articles about all the digital media outlets that were going broke (see screenshot from the Drudge Report below), one common thread: most of them were political in nature, even such digital magazines as Vanity Fair, have become way too political. I have quit subscribing to The New York Review of Books and The London Review of Books because there was just too  much anti-Trump stuff. I've also pretty much quit reading The New Yorker for the same reason having canceled my subscription a year ago or so, after subscribing for decades. I can read it in the library but generally not interested any more. People have simply gotten tired, fed up, bored. irritated, whatever, with all the political stuff.

One wonders if we might see the same thing on cable networks and or network television.

It was interesting to note that the Weekly Standard may be ending, it was a conservative outlet, but interestingly enough, it was noted for being anti-Trump.

**********************************

In Other News

The Market, Energy, And Political Page, Part 4, T+8 -- November 14, 2018

See link here. From Mike Fitzsimmons over at Seeking Alpha --

• Imperial Oil, which is majority owned by Exxon, has decided to move ahead with "Aspen," a 75,000 bpd, C$2.6 billion oil sands project
• this decision was a big surprise considering the lack of pipeline exit capacity that has WCS trading at a $44/bbl discount to WTI
• it looked to be worse of a decision after a federal Judge subsequently dealt the Keystone-XL pipeline another blow
• meantime, oil prices have crashed as President Trump backtracked on the Iran sanctions by giving waivers to Iran's top-eight customers
• there are very good reasons why no oil sands projects have been green-lighted since 2013. Aspen shouldn't have either

In my mind, there are only two reasons for doing this:

• Exxon sees something on the horizon that the rest of us don't; or,
• Exxon is desperate to recoup some of their investment.

With regard to the latter, perhaps they hope to "define" what they have and then sell it.

But it is amazing to see how much money the oil companies can make when times are good.

75,000 bopd x $15/bbl = $1.125 million / day.

$2.6 billion / $1.125 million = 2300 days = 6.3 years.
 

CVX Vs XOM -- Fitzsimmons -- 3Q18; Dividend Increase Over At COP? COP Turning Into A Cash Machine -- SeekingAlpha

Disclaimer: 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.

Michael Fitzsimmons on earnings: CVX vs XOM.

******************************

COP

From SeekingAlpha:

• net income increased $1.9 billion, or $1.59 per share, in the third quarter ended September 30, 2018, which included a $345 million payment related to a settlement agreement with PDVSA
• the dividend is now $1.22 per share on a yearly basis and a share buyback program of $3 billion
• ConocoPhillips is turning into a cash machine. Debt reduction, share buyback, increased CapEx and dividend accretion are the topics, and they are a pleasant subject.

Disclaimer: 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.

I've long maintained that at some point shareholders would be rewarded for their patience.  I had missed the COP dividend announcement or if I posted it earlier I had forgotten about it.

COP dividends, quarterly:

• February, 2014: 69 cents; February, 2014, was not so long ago
• May, 2015: 73 cents
• July, 2015: 74 cents
• during 2016: 25 cents/quarter
• during 2017: 26.5 cents/quarter
• during 2017: 28.5 cents/quarter
• apparently, next dividend will be 30.5 cents/share

Selected revenue data:

• 1Q16: $5 billion
• 3Q18: $10 billion

From the CEO:

"In the third quarter, we generated $1.6 billion, or $1.36 per share of adjusted earnings.

And here's some interesting perspective. The last time ConocoPhillips generated quarterly adjusted earnings of $1.6 billion from continuing operations was in the third quarter of 2014. Brent was over $100 per barrel and our production was almost 1.5 million barrels of equivalent oil per day.

So we're as profitable today as we were then despite prices being 25% lower and volumes being 20% lower. So bigger isn't always better."

Also, from the article:

ConocoPhillips' singularity is that the company presents a high exposure to Brent oil price which has yielded the company a definitive edge over its U.S. rivals, who have been hit by production transport bottlenecks that have weakened prices of Texas local crude.

These bottlenecks will be solved.  

Shale:

• Production in Lower 48 represents 32.8% of the total output including Libya. The Lower 48 includes the three US shale basins (Eagle Ford, Bakken, and Delaware) and also the production from the Gulf of Mexico.

Eleven New Permits; Seismic Event Halts Fracking In Great Britain Temporarily -- October 26, 2018

Fitzsimmons: COP hits a grand slam. See this post for more.

• ConocoPhillips' Q3 EPS report was proof positive its strategic plan is working to perfection
• led by the company's leading Eagle Ford position, it earned over half-a-billion bucks in the Lower 48 segment
• the Alaska segment also was very strong, delivering net income of $427 million, up more than 4x yoy
• COP is one of the highest quality global E&P companies in the energy sector and is a free cash flow cow at current oil and gas prices
• for those keeping track - after another $900 million of share buybacks during the quarter - COP's outstanding share count at the end of the quarter was 1.172 billion, down 4% from year-end 2017. That means COP generated an estimated $1.62/share in free cash flow during Q3 alone. Even with another 7% increase in the quarterly dividend in the last month to $0.305/share, the quarterly dividend equates to only 18% of the free cash flow the company generated during the quarter. Point is, COP's biggest problem these days is what to do with all the cash it's generating. Answer: Share buybacks and proof that the company was not joking when in July it announced it was expanding the 2018 planned share repurchases by 50% to $3 billion and increased the total share repurchase authorization from $6 billion to $15 billion. Simply put, COP is a cash cow at current global and domestic oil and gas prices.

Also, from the Fitzsimmons contribution at SeekingAlpha, this was notable:

In responding to a question on the Q3 conference call about when Eagle Ford production would start to top-out and level off, Al Hirshberg - EVP of Production & Drilling - said:

So, there's still more room for us to run there and more room for us to grow .... we're not in the flattening out mode like we have talked about in the Bakken where we were looking to kind of hold steady. The Eagle Ford is going to continue to grow for quite some period of time. It's not the – the flat spot on is not in sight. It's not something that's going to happen next year.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what your read here or what you think you may have read here.

Breaking news: at last count, the Germans had zero (0) horizontal oil wells; the French had zero (0) horizontal wells; and the Brits had two (2) new horizontal wells permitted. Earlier this week, while the first of two UK wells was being hydraulically fractured, a micro-seismic event (0.4 on the Richter scale) was noted; the operator was alerted to proceed with "all due caution." Sometime in the last twenty-four hours, another seismic event was noted; this time, the event registered 0.76  the Richter scale. Well, let Tsvetana tell the story:

Less than two weeks after Cuadrilla resumed hydraulic fracturing in the UK for the first time in seven years, the company paused fracking at its drilling site in northwest England on Friday morning after a 0.76 on the Richter scale micro seismic event was recorded, the latest of some dozen seismic events since fracking started, but one that was above the 0.5 threshold requiring a halt.

According to regulations, in case of micro seismic events of 0.50 on the Richter scale or higher, fracking must temporarily be halted and pressure in the well reduced.

On Friday morning, a 0.76 on the Richter scale event was recorded, in an event classed as “red” in the traffic light monitoring system regulated by the Oil and Gas Authority, Cuadrilla said today, adding that “All the relevant regulators were informed without delay and we have verified that the well integrity is intact.”

Work will now pause for at least 18 hours and is expected to resume in the morning on Saturday, October 27, the company said.

Comment: I assume if much more of this goes on, the Brits will join the French and the Germans with zero (0) new horizontal wells.

This is interesting. In the US, most of us like to believe that seismic events associatied with fracking are due to injecting produced water / brine produced from fracked wells back into salt water disposal wells. It has been my understanding that fracking itself was not associated with seismic events. I believe Oklahoma has had the most experience with this issue.

If I recall correctly, at least one seismic event has been associated with oil and gas activity in North Dakota but I thought it was believed to be associated with injecting produced water into a salt water disposal well. I've long forgotten the specifics. I think it's been over a year since I've read any articles coming out of Oklahoma regarding seismic events. However, the first hit returned by a google search just now was to a Business Insider article dated February 2, 2018, and yes, the correlation was with disposing produced water into saltwater disposal wells and not due to fracking directly.

*************************************

Back to the Bakken

Active rigs:

$67.49↑	10/26/2018	10/26/2017	10/26/2016	10/26/2015	10/26/2014
Active Rigs	67	53	36	68	194

Eleven new permits:

• Operators: WPX (6); Kraken Operating (3); Lime Rock Resources (2)
• Fields: Spotted Horn (McKenzie); Lone Tree Lake (Williams); Murphy Creek (Dunn)
• Comments: WPX has permits for a six-well Bird Bear / Hackberry pad in 35-150-94; Kraken Operating has permits for a three-well Ruffing pad in 22-157-99; and Lime Rock Resources has permits for a 2-well a "Twist and Neal" pad in lot 2, section 4-143-95; 

Thirteen permits renewed:

• EOG (6): six Hawkeye permits in McKenzie County
• Bruin E&P Operating (5): two Johnson permits; one Sylte permit, two Helstad permits, all in Williams County
• QEP (2): two Vegas permits, both in McKenzie County

Two permits canceled:

• Oasis: a Hendricks permit, and a McFarland Federal permit, both in Williams County

Six producing wells (DUCs) reported as completed:

• 33795, 138, Crescent Point Energy, CPEUSC Nelson 8-30-31-157N-99W TFH, Lone Tree Lake, t9/18; cum 5K after 14 days;
• 33789, 385, Crescent Point Energy, CPEUSC Nelson 5-30-31-157N-99W MBH, Lone Tree Lake, t9/18; cum 9K after 14 days;
• 33793, 158, Crescent Point Energy, CPEUSC Nelson 4-30-31-157N-99W MBH, Lone Tree Lake, t9/18; cum 8K after 14 days;
• 31419, 2,009, Rimrock Oil & Gas, Moccasin Creek 16-26-27-13H, Moccasin Creek, t6/18; cum 64K 8/18;
• 31420, 1,396, Rimrock Oil & Gas, Moccasin Creek 16-26-27-12H3, Moccasin Creek, t6/18; cum 70K 8/18;
• 32630, 2,018, Rimrock Oil & Gas, Moccasin Creek 16-26-27-13H3U, Moccasin Creek , t6/18; cum 69K 8/18; ("H3" suggests a "third bench" well, but in fact this is a Three Forks first bench; the earlier Moccasin Creek wells were KOG permits; this was a Whiting permit)
• Note: #22462, a middle Bakken well, is on this same 4-well pad; it is back on-line; no jump in production; 

The Market, Energy, And Political Page, Part 5, T+68 -- October 25, 2018

Fitzsimmons: COP hits a grand slam.

• ConocoPhillips' Q3 EPS report was proof positive its strategic plan is working to perfection
• led by the company's leading Eagle Ford position, it earned over half-a-billion bucks in the Lower 48 segment
• the Alaska segment also was very strong, delivering net income of $427 million, up more than 4x yoy
• COP is one of the highest quality global E&P companies in the energy sector and is a free cash flow cow at current oil and gas prices.

Original Post

First slide below, from the COP 3Q18 presentation. 

• Adjusted earnings y-o-y --
• 3Q18: 1,595 million
• 3Q17: 198 million
• ratio: 8x
• On a per share basis, y-o-y --
• 3Q18: $1.36
• 3Q17: $0.16
• ratio: 8.5x

And yet oilprice.com says:

ConocoPhillips reported on Thursday a fourfold jump in its third-quarter earnings, easily beating analyst expectations, as higher oil prices helped the U.S. firm to book higher realized prices across all commodities. ConocoPhillips posted third-quarter earnings of US$1.9 billion, or US$1.59 per share, up from US$400 million, or US$0.34 per share, earnings for the third quarter of 2017. Adjusted earnings—excluding special items —came in at US$1.6 billion, or US$1.36 per share, jumping from adjusted earnings of US$200 million, or US$0.16 per share, in Q3 2017.

Apparently, many, many ways to report things -- "four-fold = 8x"?

COP: earnings call today. Slides here. Fourteen slides.

ISO New England: stayed well below $100 this morning. But it's going to be interesting to watch when we have first "cold snap" in Boston.

The gap widens, link here. Natural gas is up 1.43% today.

I still think the "natural gas story" could be the energy story of the year (calendar year 2018) -- the real question is whether it will be US regional, US national, regional/global, or global. US regions to watch: New England. Outside the US: British Columbia along the coast.

Hyperbole, Much? -- Phillips 66 -- Fitzsimmons -- October 21, 2018

Didn't Warren Buffett own/sell a lot of shares of PSX or was it just COP? I've long forgotten.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or think you may have read here.

Hyperbole, much? Michael Fitzsimmons writes: "Phillips 66: the sale of the century." Summary:

• Friday's $6.35 drop in the share price was way overdone;
• the trigger was apparently the Trump administration's desire to ease rollout of the UN's new international maritime clean fuels standards;
• while Phillips 66 would be a beneficiary of the new rules, they were not worth 5.8% of the company's entire market cap; and,
• PSX is a STRONG BUY with a bullish Q3 EPS report expected Friday

Sempra Energy Dumps 981 MW Of Solar Electric Power; Previously Posted -- October 16, 2018

Previously posted, from SeekingAlpha:

• ConEd is a dividend aristocrat that has hiked its dividend for 44 consecutive years.
• The company's base electric and natural gas distribution businesses generate among the most stable earnings in the utility sector.
• ConEd recently announced it was buying 981 MW of solar electric power generation assets from Sempra Energy.
• In January, the company increased its quarterly dividend by 3.6%. The stock currently yields 3.8%.
• Investors now get a nice combination of yield and renewable energy exposure.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decision based on what you read here or what you think you read.

***********************************

Hyperbole?

From Howard Bloom, The God Problem, p. 154:

The sixth century evokes the image of an orchestra expectantly tuning up, each player absorbed in his own instrument only, deaf to the caterwaulings (sic) of the others. Then there is a dramatic silence, the conductor enters the stage, raps three time with the baton, and harmony emerges from the chaos. The maestro is Pythagoras of Samos, whose influence on the ideas, and thereby on the destiny, of the human race was probably greater than of any single man before or after him.

And he didn't even invent that for which he is most famous. 

The Market, Energy, And Political News, Page 2, T+14 -- August 28, 2018 -- More "False Precision" -- API

API: weekly crude oil change -- absolutely flat -- a build of 0.038 million bbls which works out to 38,000 bbls -- absolutely impossible precision.

I was out doing errands all day so I have to work fast to catch up. Huge "thank you" to reader(s) for sending me links.

Venezuela: oil discovered in 1914; free economy: by 1950, Venezuela had the 4th highest per capita income in the world; squandered it all. Hugo Chávez asked "so, what don't you want?" The masses said they don't want a free economy; they wanted free money; they wanted other people's money. Bernie Sanders, Occasional Cortez, and Pocahontas have said the same thing: they don't want a free economy; they want free money; free college; free medical care; free everything. And so it goes.

Biggest surprise all day: the markets held after a huge run-up yesterday. One would have thought a lot of profit-taking today. But all four major indices held, all closing higher, albeit barely in most cases.

Making America great again.

• rumors and tea leaves suggest Apple could have one of the largest hardware announcements ever in September
• Apple rumored to launch three new iPhones this year
• mini-Mac looks to be upgraded 

Disclaimer: this is not an investment site. Do not make any investment, financial, relationship, travel, or travel decisions based on anything you read here or think you may have read here.

The market:

• all four major indices -- already at record highs -- or flirting with record highs -- closed higher today
• AAPL hit an intra-day high
• S&P 500 closes at record, briefly hits 2,900 for first time ever;
• UNP: hit an all-time high yesterday; some profit-taking today
• YUMC: up almost 4% today
• CNBC: XLNX "breaking out"
• MLPs: talking head "somewhere' suggested MLPs may be an area of interest in the short term
• most stocks of interest flat to slightly down today; oil and oil service stocks definitely down

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Fitzsimmons On PSX

From SeekingAlpha:

So, the big question on the Q2 conference call was what to do with all the cash that will be generated?

As discussed, the company wants to build up its cash to a more comfortable level ($2-3 billion) after draining it to buy back $3.3 billion in shares from Berkshire Hathaway.

There also was talk of paying down a bit more debt.

But as can be seen from the $1.3 billion in net income in Q2 alone, while generating $2.4 billion in CFO during the quarter, it won't take long for PSX to increase its cash on hand and reduce debt.

So then what? Obviously, more buybacks and dividend increases. As Garland said on the conference call, "what a great problem to have." He expands on the subject by giving the 10,000-foot view summarizing PSX's cash generation and allocation numbers:

I think the portfolio is going to generate $5 billion to $6 billion of cash. We've got $1 billion of sustaining capital. We want to fund kind of another $1 billion to $2 billion of growth, so call it, $2 billion to $3 billion of capital. So that takes care of that. We've got $1.5 billion dividend today and that leaves room for another $1 billion to $2 billion of share repurchases and that kind of all balanced within our means.

Note that the company had only 464 million shares outstanding at the end of Q2. So "$1 billion to $2 billion", call it $1.5 billion of cash, amounts to an incremental ~$3/share annually. Considering the current quarterly dividend of $0.80 ($3.20 on an annual basis) equates to a roughly $1.5 billion commitment, the outlook for both dividend growth and share buybacks is obviously excellent.

I say this because if, for example, all the excess capital were allocated to growing the dividend only, the dividend could roughly double.

This Is Not An Investment Site -- Do Not Make Any .... July 22, 2018

Fitzsimmons on Chevron over at SeekingAlpha:

• integrated global energy giant is hitting on all cylinders (production, refining, & chemicals), yet the stock has been relatively weak
• that presents an opportunity for investors prior to the upcoming Q2 EPS report, which is due out this coming Friday
• current Q2 consensus EPS estimates have risen $2.10/share, but I think the company could earn $2.45+
• the current $4.48/share annual dividend yields 3.6%. Blue chip Chevron is a BUY and I raise my end-of-year price target by $5 to $145

At the moment, CVX is trading for 122 and change. An end-of-year price of $145 ... well, what can I say?

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For All Those Bernie Sanders / Alexandra Ocasio-Cortez Supporters 

Funny how things work out. Yesterday I posted three "international" stories -- for the archives, to keep the Bakken in perspective -- and then this, from The WSJ: oil-rich Iraq can't keep the lights on.

Does this sound familiar? Think Venezuela.

From the linked article:

Temperatures across southern Iraq are so high in the summer months that birds drop dead from the sky due to heat exhaustion. And tap water runs piping hot.

So when Iraq’s power supply faltered this month as a heat wave ramped up air-conditioning demand, it ignited an angry question: Why can’t one of the world’s top oil producers keep the power on?

Protests have rippled through Iraq’s oil-rich south for over a week as demonstrators railed against the government’s failure to provide basic services like electricity, health care and clean water. They have posed a serious enough risk that authorities have shut down the internet and sent in troops to quell the unrest.

More:

Iraq had been purchasing electricity from Iran for several years, but Iran cut the power citing unpaid debt and electricity shortages of its own. Ministry of Electricity spokesman Mosaab al-Modares said Iraq has the money to pay, but can no longer transfer the funds without violating U.S. sanctions on Iran.

The biggest problem, however, isn’t electricity generation, but distribution. As much as 65% of the power supply is consumed by people who illegally tap into the grid or don’t have electricity meters, according to the Ministry of Electricity. Fee collection is also weak. In 2015, its best year to date, the ministry said it collected just 12% of fees.

The government tried in 2015 to collect more fees and stop illegal power consumption, but a popular backlash stalled it. Among the biggest opponents, Mr. Modares said, were private power generator owners, who he says collectively make around $10 billion in annual profits from the government’s failure to provide electricity.

This comment hit the nail on the head:

“Iraqi electricity demand has grown to 23,000 megawatts at peak summer demand, but the country can only produce 15,900 megawatts, according to Iraq’s Ministry of Electricity.”

“…private power generator owners, … make around $10 billion in annual profits from the government’s failure to provide electricity.” 

A few questions.

The “make around $10 billion in annual profits” number?

Is the number credible? We don’t know because we don’t know if the source’s data was reviewed for accuracy. The source, a government official, might have a reason to provide an inaccurate number.

How much of the production deficit (23,000-15,900=7,100), if any, is produced by the privateers?

How much does it cost the privateers to produce the energy?

In some worlds the privateers would be considered entrepreneurs. 

Maybe the importance of the article is to point out that governments’ bureaucracies are, in fact, inefficient everywhere.

Maybe Iraq should privatize its government electric company. 

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The Golf Page

For the golfers who did not qualify for The Open this week, there was the Barbasol Championship in Nicholasville, Kentucky, where Brittany Lincicome played

Lincicome [was] only the sixth woman to ever play in a PGA TOUR event, and just the second to break par [once, on the second round; six over on the first round].

Only two women have completed 72 holes in official TOUR events: Babe Didrikson Zaharias at the 1945 Phoenix Open and the 1945 Tucson Open and Shirley Spork at the 1952 Northern California-Reno Open.

So, how did she do?

She missed the cut, ending tied for third or fourth. From last.

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The Book Page

Some weeks ago I was in my "China phase" -- among several books I read included two regarding the "opium wars," one fiction, one nonfiction.

Now, this book, of all things -- Barons of the Sea, Steven Ujifusa, c. 2018.

Reviewed at The WSJ.

For me, many, many dots connected, again.

But there is a dark side to the story. The Delanos, Forbeses and other American shipping fortunes were made not simply by importing tea to the U.S. but by smuggling opium from India into China. While there were no legal restrictions on opium in the U.S. at the time, the drug had been banned in China by imperial edict in the late 18th century on account of its disastrous social consequences.

Addiction was rampant, having spread from the wealthy to every stratum of Chinese society. “The Chinese government was nervous about using force to crack down on the trade,” Mr. Ujifusa writes. “Craving for the drug had overwhelmed all means of enforcement. So had bribery.” For British and American traders, however, the profits to be made by smuggling far outweighed any moral considerations; a single shipload of opium was worth tens of millions of dollars in today’s currency. Mr. Ujifusa’s “barons of the sea” were, in essence, America’s first drug cartel.

By the way, completely unrelated, the "opium wars" helps me put the current US-China trade war into perspective. It will be interesting to see if some writer at The WSJ can connect the dots. LOL.

Alcoa To Restart A Third Potline At Its Indiana Smelter -- Bullish On America? -- July 18, 2018; Fitzsimmons On PSXP Midstream; Line 3 Update; And California Dreamin'

American economy? This is pretty bullish, one would think. Link here at SeekingAlpha.

Alcoa expects to complete the restart of the third potline at its Warrick aluminum smelter in Indiana by the end of the year; related costs will be incurred in Q3 and Q4, estimated at $5M after-tax.

A potline is a row of electrolytic cells used in the production of aluminum. By the way, the same thing -- re-starting a potline --was reported in New Zealand a few weeks ago. No mention of President Trump or the trade war mentioned in the SeekingAlpha note.

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Odds and Ends

Fitzsimmons on Phillips 66 Partners from SeekingAlpha:

• on Wednesday, PSXP raised its quarterly distribution 5.3%, continuing the torrid 30% CAGR since the IPO
• but if the MLP model is "broken" as so many (including myself) believe, is even a high-quality MLP like PSXP worth holding?
• considering the yield, its high-quality GP, and the number of very attractive demand-pull growth projects, the answer is "yes."

Disclaimer: this is not an investment site. 

Line 3 update from businessinsider dated today:

Aecon Group Inc. announced today that SA Energy Group, a 50/50 joint venture between Aecon and Robert B. Somerville Co. Ltd., has been awarded a $282 million contract by Enbridge Pipelines Inc. for Spreads 8 and 9 of the Line 3 Replacement Phase 2 project in Manitoba.  

The scope of work includes constructing 92.2 km of pipeline in the area of Brandon, Manitoba for Spread 8, and constructing 96.5 km of pipeline near Morden, Manitoba for Spread 9 extending to the Canada-U.S. border.

Construction is expected to commence in August 2018, with anticipated substantial completion by the end of 2018. Recently, under Phase 1 of the Line 3 Replacement project, SA Energy Group successfully completed Spreads 3 and 4 (261 km), in Saskatchewan.

California dreamin': well, that ends that. The California Supreme Court said the initiative to divide the state into a triad cannot be on the November, 2018, ballot. But, the Court said it will re-visit the issue later.

And, of course, you know what's coming. LOL:

California Dreamin', The Mamas and Papas

The Market, Energy, And Political Page, T+46 -- July 16, 2018

Disclaimer: this is not an investment site. I am posting the SeekingAlpha article on Enbridge due to the relationship between Enbridge and the Bakken.

Enbridge: from SeekingAlpha; Fitzsimmons is a regular and knowledgeable contributor to SeekingAlpha, a contributor I enjoy following -- 

• Enbridge already announced C$7.5 billion in asset sales this year, more than twice managements original C$3 billion bull-year target
• the market appears to have ignored the asset sales, but has responded very well to positive news on the Line 3 Replacement Project
• further share price appreciation will likely be tied to progress on the earnings front -- and the Q2 report is due out on August 3, 2018
• also, discussion of PSX (Phillips 66); DCP; Line 3
• from the linked article (but there is so much more at the linked article)

Putin-Trump summit: I think this was a much more important "summit" than folks seem to think. My hunch: the mainstream media is completely missing the importance of this "summit." Trump also took advantage of being "in the area." He attended the NATO conference in Brussels, which put him within "same time zones" and just hours from Scotland -- he saw the Queen; the Prime Minister; and, his golf course -- and hours from Helsinki which gave him a chance to see Vladimir Putin. Great, great use of time. 

Putin-Trump summit: for folks paying attention, the anti-Trumpers, never-Trumpers, and the mainstream media were already reporting negative stories on Trump's nominee for the Supreme Court even before Trump had named a nominee. And we're being asked to believe the reporting coming out of the Trump-Putin summit? Those stories were written as soon as the "summit" was announced, months ago.

For Jane Nielson and Art Berman. From Reuters --

The world's biggest oil traders are counting hefty losses after a surprise doubling in the price discount of U.S. light crude to benchmark Brent in just a month, as surging U.S production upends the market.

For those that understand the alphabet soup, the spread is: WTCLc1-LCOc1.

Trading desks of oil major BP and merchants Vitol, Gunvor, and Trafigura have recorded losses in the tens of millions of dollars each as a result of the "whipsaw" move when the spread reached more than $11.50 a barrel in June.

Duck and hide: this is being reported in multiple British tabloids, but we will link the oilprice.com story.  There are actually two stories here. First, short term, Ireland needs to get its crude oil reserves out of the UK before Brexit; and second, long term, Ireland could become the first country in the world to quit fossil fuel investment altogether, after the Fossil Fuel Divestment bill was passed by the country's lower house last week.

We also learn in the article that EU countries must keep emergency stocks of crude oil and/or petroleum products equal to at least 90 days of net imorts or 61 days of consumption, whichever is higher.

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Woodworking Course

The granddaughters are kept busy with various "schools" throughout the summer -- computer coding, sailing, athletics, cooking, baking, etc.

Olivia was enrolled in a week-long, half-day only wood working course. No power tools were allowed due to liability issues so all sawing, sanding, and nailing was done "by hand."

Olivia made a "miniature" Adirondack chair for Sophia. Here she is putting on the finishing touches:

Two Articles On The Permian After A Very, Very Busy Day-- June 12, 2018 -- Reading Between The Lines, The Permian Could Be A Disaster For Some Operators In The Short Term (One To Two Years) Including Apache

The Permian is turning out to be a bigger challenge than operators acknowledged two years ago. All good news for the Bakken.

The first article is a "keeper." It has been archived. Lots of incredible data. 

From Michael Fitzsimmons over at SeekingAlpha: an update on Apache's Alpine oil field.

• the Alpine discovery, announced two years ago, is a world-class field
• but it is predominately a wet-gas field which will require substantial midstream infrastructure to gather, transport, and process
• meantime, the pricing outlook for dry-gas and NGLs is anything but certain
• investors looking for a large independent oil and gas E&P firm might consider the largest of them all instead: ConocoPhillips
• it appears as though the Alpine High field is primarily a wet-gas play, and overwhelmingly so
• specifically, note the very low oil split of 15% (or less...) of a typical well's production. And while NGLs contribute ~50% of the production, that still leaves 35% (or more) of the split to dry gas. That's one thing we don't need a whole lot more of - especially in the Permian Basin where dry gas prices already are below NYMEX
• Mike cites an RBN Energy blog today: What about all those NGLs? A blog on RBN Energy today (see Magical Mystery Tour - Soaring NGL Supplies May Soon Overwhelm Mont Belvieu Fractionation Capacity) points out that NGLs "don't do anyone much good until they are fractionated into "purity products" like ethane, propane, normal butane..." and that the existing fractionation plants in Mont Belvieu are running flat-out to keep up with already burgeoning production
• In the case of Phillips 66, it is probably getting much of its feedstock from its mother company ConocoPhillips, which is pumping the heck out of the Eagle Ford shale these days
  

From SeekingAlpha news editor:

• a worsening pipeline bottleneck in the Permian Basin is seeing investors favor more diversified independents with a smaller footprint in the area
• EOG Resources CEO Billy Thomas says Permian constraints likely will weigh on U.S. production growth next year so much that it will be "much slower next year than it is this year," with inadequate infrastructure in place to take away gas and oil until late 2019 or 2020
• "Allocating away from the basin or into a Permian name protected by either firm transport agreements or meaningful basis swaps is likely a necessary move," Seaport Global says, listing APC, DVN, PXD, PE, AREX and WPX as among the least exposed to the Permian's "differential blowout" while APA, FANG, CDEV, XEC and AXAS are the most exposed
• Argus says money managers are targeting firms that have minimum exposure to the widening differentials, both with Permian crude and Brent, but also are low-cost operators with presence across a range of basins, such as COP, MRO and APC

 Disclaimer: 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.

Newfield Update -- Michael Fitzsimmons -- June 11, 2018

Over at SeekingAlpha. It was Fitzsimmons, I believe, who said Newfield was the top operator in the Bakken -- I could be wrong [I was wrong: it was Mike Filloon -- see this link] -- maybe I will look that up later ... but now... at the linked article:

• Q1 EPS was impacted by an (unrealized) $79 million derivative loss (-0.39/share)
• in the meantime, the company's Q1 domestic production was 39% dry gas
• the company has some prolific STACK wells, but the relatively high dry gas split and the hedging program are headwinds
• yet the stock has been beaten down, in part, owing to Oklahoma drilling restrictions due to high earthquake activity in the state
• it may have been beaten down too much - but where is the catalyst moving forward?

I've talked about hedges and derivatives before. CLR is not hedged (yet).

Trade War? What Trade War? Iran Sanctions? What Iran Sanctions? Pushback Against Trump? What Pushback? -- Wow -- Dow Up Over 200 Points In Early Trading -- The Market, Energy, Political Page, T+4 -- June 4, 2018

Time for some music -- in the mood for --

Come On, Eileen, The Dexys Midnight Runners
The market -- oh, before I forget, the disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on anything you read here or think you may have read here.

Now, back to the market:

• AAPL: $192, up $2.19, up 1.13% -- a new all-time high
• BABA: $207, up $2.65, up 1.3% -- a new all-time high
• EOG: $120, up $2.38, up 2% -- am I missing something?
  OAS: $13.29, up 10 cents; up 0.76% -- am I missing something?
• TSLA: $297.66, up almost $6; up 2% -- a great trading stock
• SRE: $104,up 18 cents; up 0.24%
• VLO (see below): $127, up $2.86, up 2.3% -- 52-week high -- another open book test

EV sales, May: the chart is not yet complete, for the month of May, but getting closer.  Check out Tesla deliveries.

SpaceX: speaking of Tesla, I read somewhere that SpaceX won't be launching space-tourists in 2019; original plans have been delayed. I assume the link is easy to find.

Valero: Mike Fitzsimmons has an update on Valero over at SeekingAlpha. Brent-to-WTI discount at $11. US refiners with excellent marine access to the Gulf of Mexico will be in the catbird seat. One of those is Valero, which has a current export capacity of 462,000 bpd.

Facebook: is "slow-rolling" one word, two words, or a hyphenated word? Just wondering.

Study linked over at the Drudge Report: too much bad news can make one sick. This explains the crude/foul language being used by late night talk shows. For the alt-left, there has been nothing but bad news for the past two years.

His movie: Bill Clinton insists he doesn't owe Monica Lewinsky an apology for hijacking her life by taking advantage of her while president – and says HE'S a victim because he left the White House deeply in debt. Speaking of bad news: Bill Clinton left the White House with Hillary. Now, that's a real downer. But since leaving the White House, Bill's fortunes have turned -- in 2017 it was estimated his net worth was $70 million. Hillary? From TownAndCountry magazine:

Since Clinton herself said she and her husband left the White House "dead broke," what they've made since then provides a good idea of their net worth today.

Wealth-X estimates Hillary Clinton's net worth to be at least $18 million, and her federal financial disclosure filing in 2015 showed that she had between $11.3 million and $52.7 million in the bank.

Not so bad considering she's said she and her husband were $12 million in debt at the end of his presidential administration in 2001.

Comment: And their only work as far as I know: speeches and books. 

Melania: apparently Melania is "in hiding." I don't blame her. I hope she has the common sense to drop out of sight for five more years, at least. Will drive the pundits and paparazzi nuts. 

Homeless shelter: in the homeless shelter, despite the heavy downpour of rain this morning, there are only six of us. On the other hand, the drive-through is non-stop and the app-ordering-walk-in-pick-up (AOWIPU) crowd is one heavy stream. In fact it almost looks like a rivulet of drug addicts. The bathrooms, for the most part, remain unoccupied.