Monday, November 2, 2015

TransCanada Asks President Obama To Delay Review Of The Keystone Proposal -- November 2, 2015

There is so much going on, and so much to post, but it's been a long day -- blogging as well as biking and spending more time than usual with the youngest granddaughter (15 months old) in the park, I have hit a wall. Can't post any more at the moment. Maybe later tonight; otherwise I will have to wait until tomorrow morning.

Whether I get back to these stories or not, I don't know, but I want to post / link them, so I can clear the mailbox:
****************************************
Earnings Being Reported Tuesday

Frontier Communications (FTR); forecast a loss of one cent; AP here; 7-cent loss vs forecast of a one-cent loss;
Targa Resources Partners LP (NGLS); forecast 10 cents; press release  here; looks like 2 cents, well off the forecast; shares surge 11% in pre-market trading; Targa Resources to buy Targa Resources Partners; $7 billion deal also reported at FuelFix;
TransCanada (TRP.TO); forecast 60 cents; press release here; 57 cents, it appears;
Sempra Energy (SRE); it was a $1.00 in 2Q15; forecast 88 cents; beats by 11 cents; AP here;
The San Diego-based company said it had profit of 99 cents per share. Earnings, adjusted for non-recurring costs, came to $1 per share.
The results surpassed Wall Street expectations. The average estimate of four analysts surveyed by Zacks Investment Research was for earnings of 83 cents per share.
Sprint (S); forecast a loss of 8 cents; loss is greater than twice expected; 15-cent loss vs 7-cent loss at this site; also at The Wall Street Journal;

Babcock & Wilcox Enterprises (BW); forecast 32 cents; press release here; big miss; 25 cents;
Black Hills Corporation (BKH); forecast 58 cents; 64 cents adjusted; AP here;
MPO: press release here; 95-cent loss; AP here; beats by $2.91;
Newfield Exploration (NFX); forecast of 16 cents; AP story here; huge beat at 21 cents per share;
Oasis Petroleum (OAS); forecast of 6 cents; AP story here; works out to 9 cents/share;
OKE, OKS; AP story; OKE 41 cents vs 39 cents forecast; beats;
Plains All American (PAA); forecast of 25 cents; beats by 4 cents; 28 cents EPS
Tesla (TSLA); forecast a loss of 50 cents; AP story here; loss at 58 cents is bigger than expected; but deliveries better than expected and TSLA surges 7% in after-hours trading
Posted by at

Five (5) New Permits; HRC, Newfield Report Nice Bakken Wells -- November 3, 2015

Active rigs:


11/2/201511/02/201411/02/201311/02/201211/02/2011
Active Rigs69193181187195

Wells coming off the confidential list Tuesday:
  • 27000, 1,911, HRC, Nelson 157-100-25A-36-2H, Marmon, 34 stages; 4.1 million lbs, t5/15; cum 91K 9/15;
  • 29840, 962, CLR, Maynor 2-35H1, Crazy Man Creek, Three Forks, 30 stages, 5.9 million lbs, t5/15; cum 58K 9/15;
  • 30398, SI/NC, Newfield, Gariety 150-98-30-31-4H, 15 days spud to TD, within the middle Bakken 100% of the time; 84.2% in the 15' primary middle Bakken target; 10.8% in the middle Bakken "B" facies; 5% in the middle Bakken "E" facies;  Siverston, huge wall;
  • 31012, SI/NC, Newfield, Wahus State 152-97-12-1-12H, Westberg, producing,
  • 31033, SI/NC, Statoil, Vachal 3-34 5TFH, Alger, no production data,
Six (6) new permits --
  • Operators: BR (4), Oasis (2)
  • Fields: Corral Creek (Dunn), Siverston (McKenzie)
  • Comments:
Fourteen (14) permits renewed:
  • ERF: 1, Hall in McKenzie
  • Triangle: 2, Gullickson Trust, in McKenzie
  • Whiting: 1, Faiman in Dunn
  • Petro-Hunt: 3, Marinenko (3) in Dunn
  • HRC: 1, Fort Berthold well in McKenzie
  • WPX: 5, Etstatis (5) in McKenzie
Four (4) producing wells completed:
  • 29024, 8, Enduro, GCMU 6-32-H1, Glenburn, a Madison well, t10/15; cum --
  • 29834, 1,182, Petro-Hunt, Dolezal 145-97-7C-7-6-5H, Little Knife, t10/15; cum --
  • 29835, 1,479, Petro-Hunt, Dolezal 145-97-7C-6-4H, Little Knife, t10/15; cum --
  • 30779, 2,325, BR, CCU Gopher 1-2-15TFH, Corral Creek, t9/15; cum 5K 9/15;
*********************************

 30398, see below, Newfield, Gariety 150-98-30-31-4H, Siverston:

DateOil RunsMCF Sold
9-20151810732348
8-20152404334696
7-20152748739512
6-20152875118200

29840, see below, CRL, Maynor 2-35H1, Crazy Man Creek:

DateOil RunsMCF Sold
9-201592918423
8-201564156681
7-20151511116678
6-20151923921477
5-201580428583

27000, see below, HRC, Nelson 157-100-25A-36-2H, Marmon:

DateOil RunsMCF Sold
9-2015127469350
8-2015166269752
7-20151502711218
6-20151761114749
5-20152847226596
Posted by at

MDU Says It Will Close On Sale Of Fidelity By Year's End -- November 2, 2015

Disclaimer: more than usual, I have interspersed personal commentary within the data points from various sources regarding the MDU sale of Fidelity (oil exploration, production). This is not an investment site; do not make any investment or financial decisions based on anything you read here or think you may have read here. Please feel free to read this but do not quote me on anything. I have no formal background in the oil and gas industry and no formal background in the financial industry. The bulk of my life has been spent enjoying life in the United States Air Force, for whom I would have "worked" for a whole lot less, had I not had a family to support. I think that's accurate.

Updates
 
December 31, 2015: from the MDU message board -
Legacy Reserve and the stocks now in the tank . Numbers are approximate - Legacy Reserve was $14 -15 a year ago this time; now +/- $1 .40. MDU fire sale loss on Fidelity @ $ 725,000,000 confirm # with your own sources.
November 5, 2015: Denver Biz Journal is reporting that Fidelity is shutting down, eliminating 106 employees about 75 of them in Denver. Most of the employees will most likely find work with new companies who bought Fidelity assets.

November 4, 2015: a little more information regarding the oil and gas assets MDU did not yet sell as part of the Fidelity sale (and probably won't sell unless they get a really, really good deal); comments provided by a reader who is familiar with the area:
The Cedar creek NG field is located in southwest ND and is SE of Baker, MT. I believe this to be the first or one of the very first of Fidelity exploration plays. Fidelity has owned it since the mid-1930s. The operational cost is just about nothing, and the 63 ND NG wells consistently  produce approximately 53,000 MCFT per month. I do not follow the MT production. I bet MDU keeps this property.
November 4, 2015: MDU earnings transcript. I think it's going to be nearly impossible for me to get any accurate number on the Fidelity deal. The bits and pieces I've read suggest this was worse than originally posted. From page 4 of the transcript, Q & A:
From a use of proceeds perspective, as we announced $450 million. About $325 million of that is in the cash proceeds; $125 million relates to net operating loss, refunds or carryforwards due to selling certain assets below the tax basis.
So we would anticipate as we announced use of proceeds to repay debt essentially at Fidelity, allocated debt. And a lot of that will happen here in 2015, about $300 million and then the remaining $125 million will happen probably into 2016, potentially 2017, but primarily 2016 as we monetize those NOLs on future tax returns. 
So, of the original $450 million, it looks like MDU will get $325 million cash, but this might not have included all their Fidelity assets, specifically natural gas assets in the southwest part of the state (North Dakota) and in Montana. But putting it altogether it looks like they (or someone valued) their mineral acres, their in-place infrastructure, roads to pads, well sites, pads, on-going production at $325 million in cash; maybe 90,000 acres in total. If so, about $3,600 / acre. 

More excerpts from the transcript at the bottom of this post.

The morning after, November 3, 2015: MDU shares drop 5%. 

Original Post
Disclaimer: this is not an investment. Do not make any investment or financial decisions based on anything you read here or think you may have read here. This particular post was done in haste and may include typographical and/or factual errors. If this information is important to you, go to the source. This blog is most definitely not the source. However, if you want some good reading recommendations or music recommendations, this is the place to come.
 
The company also announced that it recently entered into five purchase and sale agreements and closed on one of the agreements in October, for the sale of the oil and natural gas assets held by its indirect subsidiary, Fidelity Exploration & Production Company. The other four sale agreements are expected to close before year-end. The aggregate sale proceeds from the five agreements and estimated tax benefits are expected to be approximately $450 million. Debt repayment is planned as the primary use of funds. The company has one remaining property that it continues to market, which represents less than 10 percent of total year-to-date production. 
"We are pleased to be nearly complete with the sale process for our oil and natural gas assets," said David L. Goodin, president and CEO of MDU Resources. "The sale prices are in line with current and prospective market conditions, and exiting the exploration and production business will allow us to focus more fully on our remaining businesses.
If I read this correctly, MDU is in the process of closing or has closed on five separate deals to dispose of its oil and gas exploration and production subsidiary, Fidelity.  Although the deal can't be seen this simply, a first look, $450 million / 120,000 net acres = $3,750 / acre which includes producing acreage, pads, well sites, pumpers, gathering systems. Note that back in July, 2014, they were getting upwards of $45,000 / acre. And that was over a year ago. Despite decreased activity in the Basin this past year, I assume there has been some value added to the Bakken.

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

From my "Bakken Operators" page:

MDU Resources (Fidelity)
  • 3Q15: announced sale of Fidelity; to close by year-end; five separate purchase agreements; the aggregate sale proceeds from the five agreements and estimated tax benefits is expected to be approximately $450 million; if even as few as 100,000 net acres = $4,500/acre (see bullet dated July, 2014)
  • November, 2014: in its 3Q14 earnings statement, MDU said it was "marketing" Fidelity
  • July, 2014: to sell 4,363 acres in Mountrail County for $200 million. $200 million / 4,363 acres = $46,000 / acre.
  • 124,000 net acres (MT and ND); acquired 27K acres in Richland County, MT; announced 1Q12; production record set: 3,500 bopd 
  • 5 rigs operating in the Bakken (2Q12); MDU has a total of 9 rigs (down from 10 in previous conference call); 5 is significant increase from 2 rigs 1Q12
  • 95,000 net acres -- CEO, 2011 earnings report
  • BEXP presentation says MDU has 66,000 net acres; about a month later, up to 90,000 net acres
  • June 25, 2011: MDU acquires 20,000 additional Bakken acres in Montana; MDU says they now have "90,000" net acres in the Williston Basin Bakken 
  • MDU: WBI
  • Of all the operators, the most disappointing (personal opinion); HQ in Bismarck, ND; seemed to have missed the Bakken right in their backyard; "discovered Cottonwood oil field; sold it to Oasis after some disappointing wells; Oasis became "overnight" success with this purchase; MDU re-entering the Bakken in 2011; doing better; MDU (utility) focused on natural gas; waited a bit too long to shift to oil 
****************************
Excerpts And Data Points From The Earnings Transcript
3Q15


Opening remarks regarding perhaps MDU's most-watched asset sale in quite some time:
We are pleased to be nearly complete with the sale process. We have entered into five separate purchase and sale agreements and closed on one of the agreements in October. The remaining four sale agreements are expected to close before year-end.
The aggregate sale proceeds from the five agreements and estimated tax benefits is expected to be approximately $450 million. The sale prices are in line with current and prospective market conditions and commodity price expectations and we believe are fair when compared with recent oil and natural gas asset sales closed by other companies.
And that was it for opening remarks for perhaps MDU's most-watched asset sale in quite some time.

I think they spent as much time on updating the Spirit Wind Farm, 43 wind turbines, 107.5 MW, at a cost of $220 million = $2 million/MW. [Purchase agreement here.]

It is interesting that when they calculate the Fidelity asset sale they are quick to include the tax benefits, but when providing the "total cost" of a wind farm, it is unlikely that "all" costs are included.

Now to the Q & A.

The first question had to do with MDU's Cedar Creek property in the southwest part of the state, a natural gas field. Their answer: they couldn't find a buyer at the price they wanted. It sounds like this property is generating monthly revenue at almost no cost:
We did have interest in our Cedar Creek net profits interest project asset there. And when we looked at the offers versus what we felt the value of the asset is, we just felt like that we should continue marketing particularly given the fact that what we get is a monthly check which is our net proceeds from the asset. There are no operations or engineering capability requirements and there is no capital investment needed. So we are continuing to market it, and when we get the appropriate – a good price for it, then we'll move forward with that.

MDU cannot name the buyers (five of them) but they can say that they are all private E & P companies. Let's assume Lime Rock Resources is one of them.

MDU will still be spending money in the Bakken but it will be less (I think this is unrelated to exploration and production; this would be to support the "utility" services they provide others. It sounds like $60 million in 2015; and $20 to $25 million in 2016.


I assume this has to do with the brand-new Dickinson refinery, 50% owned by MDU:
Now moving on to our pipeline and energy service group. We had an adjusted loss of $1.2 million for the quarter. Earnings were impacted by operating results of the refinery and lower realized prices at the Pronghorn facility. Partially offsetting this were the regulated transportation pipeline volumes that were up 19% year-over-year.
Our after-tax portion of the refinery's loss was $5.8 million for the quarter, the result of challenging market conditions including low diesel and naphtha prices along with historically narrow local Bakken basis differentials, which affected the crude acquisition pricing.
They certainly didn't sound excited about this investment and didn't talk about the high completion cost or the delay or overrun in cost.

I did not find this conference call particularly enlightening considering all the stuff going on. The seem to be drifting and at sea.
Posted by at

Blue Bell Is Back -- November 2, 2015; When It Comes To Global Warming, No One Is Paying Attention

The folks in north Texas have been anticipating this news for several weeks now: Blue Bell ice cream returning to north Texas.

My wife had me go to the store next door -- Minyard's, formerly Tom Thumb -- to pick up one gallon, or whatever size they come in. David, from Blue Bell, was in the process of moving buckets of the ice cream from his pallet to the freezer, as I walked in. It looks like I was the second person to have picked up a bucket of Blue Bell today from this particular store. When I went to pay, there was one other person ahead of me. She, too, had come just for the Blue Bell.

After dropping it off at home, I rode down to Target, about five blocks away to see if they were stocking Blue Bell. Nope.

Back on the bike, and over to Albertson's to see if they had Blue Bell. Yes, they did, and there were several people in line with their ice cream purchases. Since I was there I bought a pack of 12 little "dixie" cups, half vanilla, half chocolate. I figure if we don't have room in our little freezer, I can find someone in the apartment complex who would like them.

Wow, what a great country! For the past several weeks, much of the talk in this part of the country has been the return of Blue Bell as of November 2, 2015. And right on schedule, it shows up. I asked David, the Blue Bell employee mentioned above, if he's been able to find work all this time that Blue Bell was not supplying ice cream to its customers. He said that he had been working. He was, in fact, from Tennessee, and had been "called" in to help Blue Bell ramp up in Texas.

And yes, the answer to your question is a resounding yes. He has three coolers packed with dry ice to take his own Blue Bell back to his family in Tennessee.

I also asked him why he lives in Tennessee.

All My Ex's Live In Texas, George Strait
 
Just joking....his accent told me he was a Tennessee native. No accent here in north Texas.

***********************************
Your Next Home: 89 Square Feet
The Climate Issue: The National Geographic

This tells me that no one is paying attention when it comes to global warming. The screen shot below is from page 20 of this month's issue of The National Geographic. It reads like something out of the Harvard Lampoon, or even The Onion. In fact, the latter could simply re-produce it in its entirety and pass if off as satire.

The editors of The National Geographic are saying that each of us -- yes, you, me, your neighbor, and your children -- could make a difference with regard to global warming if we would just downsize from our American home to a new "home," 89 square feet.

At the same time, if we could simply decrease our electricity use to that of the average Bangladeshi, just 300 watts per year vs the US average of 12,000 watts, it would make all the difference in the world as noted in the next paragraph.

On page 31 of the same issue, the editors tell us that if we do nothing, the average temperature of the earth will rise 8.1 degrees Fahrenheit by 2011. If we continue with current policy, the average temperature will rise by 7 degrees. If we supported the Kyoto Protocol, the average temperature would rise 5.6 degrees. Again in Fahrenheit.

The reason they do this in Farhrheit even though the global standard is Celsius is because Fahrenheit degrees are more "dramatic." For example, 3.6 degree F sounds almost twice as bad as 2 degree C; they are equal.




So, we are being asked to move into an 89-square-foot house and decrease our electric usage to that of an average Bangladeshi to maybe, perhaps, possibly, for a difference between 7 degree and 5.6 degrees Fahrenheit  -- 1.4 degrees or less than one degree Celsius.

It is issues and articles like this that has led me to let my subscription to the magazine expire. I did renew it for our older granddaughter, and I never talk to her about this subject. I also don't bring it up with my wife; the science, she tells me, is closed. And since she is a great cook, I don't want to spoil that relationship. Living in a one-bedroom, 740-square-foot apartment is about as much as she is willing to take to save humanity from global warming.
Posted by at

Looking At The Wrong Tree To Cut Down? -- November 2, 2015

Oil subsidies mean Alaska is losing hundreds of millions of dollars. Link here.

From FuelFix, September, 2015:
Oil prices are so low, they’re hovering at benchmarks not seen in years, plunging oil-dependent Alaska into a crippling budget deficit. But the industry’s woes won’t affect the payout from the state’s oil investment account to Alaskans even though state government has been scrambling to pay the bills.
In fact, most predictions put the yearly oil check at near record levels, about $2,000 for nearly every man, woman and child who lives in the 49th state. Last year’s check was $1,884.
For the record, this year the checks were cut for $2,072.

The population of Alaska is about 800,000 people. $2,000 x 800,000 = a lot of money.

16 with 8 zeroes.

1600000000.

1,600,000,000.

$1.6 billion dollars. (Note: I often make simple arithmetic errors.)

Alaska has no state income tax.

Maybe it's just me but the state legislators may be looking at the wrong tree to cut down.

North Dakota is a considered a "high-tax" state for oil companies (compared to Texas, see Filloon), and residents of North Dakota do not get an annual check from the state's oil money.

**************************
Carnival Cruise Lines

To run on natural gas, not diesel. I wonder if anyone has given any thought to running these ships on human waste. After all, they are making electricity from manure in Wisconsin.

***************************
Chipotle's E. coli Outbreak 3rd This Year

Link here.

The folks commenting on possible causes are probably not too far off target. 
Posted by at
Labels:
Subscribe to: Posts (Atom)