The Vultures Are Circling -- February 27, 2018

On my drive up to Lewisville this evening to take our oldest granddaughter to water polo practice I was thinking about vultures. We have a lot of vultures of one sort or another in Texas. Especially in the summer. Years ago when running to keep in shape to meet USAF standards, I often saw dozens of vultures roosting on those high-voltage transmission towers.

But I wasn't thinking about Texas vultures tonight. I was thinking about the vultures circling Venezuela. Over on Twitter there has been more and more chatter in the last couple of days regarding Citgo failing and Russia (Rosneft, specifically) getting ready to pounce. Then, earlier today a tweet suggesting that the US was ready to intervene to keep Russia from getting a toehold inside Venezuela. The tweet suggested that China wouldn't let Russia or the US get the booty without a fight.

So, early this afternoon, tweets suggesting that the US, Russia, and China were getting ready to go head-to-head/toe-to-toe on Venezuela or Citgo or some piece of either or both. It's complicated.

Now, tonight, on twitter again, this story from The [London] Financial Times: Swiss trader seeks go-ahead to buy Venezuea-Russia oil loan.

I said it was complicated.

Washington approval of the Swiss request could avert Russia (Rosneft) from taking over a stake in Citgo refineries in the US.

First thought: wow, I'm glad we have adult leadership in the White House, starting with the President. Can you imagine President Obama: "I can guarantee you that Russia won't get Citgo. I keep my word. I bring a gun to a knife fight. I said you could keep your insurance plan. I said you could keep your doctor. I absolutely, positively guaranteed that the Russians were not meddling in our presidential elections. So, tonight, I can, again, absolutely, positively guarantee you that the Russians won't own a refinery in the US."

So, back to the story:

Commodity trader Mercuria has asked the US Treasury for permission to buy out a $1.5bn loan between Russia’s Rosneft and Venezuela’s state oil company, which had raised the prospect of Moscow taking control of refineries on US soil. 

The cash-strapped Venezuela state oil company PDVSA, which has borrowed more than $6bn from Kremlin-controlled Rosneft, caused consternation in Washington last year after putting up a stake in its US-based refining subsidiary, Citgo, as collateral against a portion of the loan. 

The move by Switzerland-based Mercuria would see the trader put up the money to buy out the $1.5bn loan tied to Citgo, before syndicating it to other investors, according to people familiar with the proposal. 

If approved by the US Office of Foreign Assets Control, the deal could avoid a potential diplomatic tangle in the event that PDVSA defaults on its loans, with the US seen as unlikely to approve Rosneft taking over the 49.9 per cent stake in Citgo’s plants. Both Russia and Venezuela are subject to US sanctions, with Rosneft and PDVSA executives singled out for attention from the Treasury. 

Mercuria, which has a deal to supply Citgo’s three US-based refineries with non-Venezuelan crude oil, is attempting to structure the deal so as not to breach US restrictions on providing new finance to Rosneft.  

There is so much more at the linked article.

This is complicated.

And it's going to get more complicated.

We haven't heard from the Chinese yet.

And again, this is a $1.5 billion deal -- and that's just a start. The Venezuelans have at least $6 billion in loans from Russia.

They're Reading The Blog Over In Germany -- LOL -- February 27, 2018

This is really quite incredible. Someone in NATO must be reading the blog. Just ten days ago I posted a long note about military expenditures. I was surprised how much Saudi Arabia spent on defense spending and absolutely aghast to see how little Germany spent on defense. From that post:

What about Germany? Germany is #9 on the "money" list, spending less than even France, the UK, or Japan. But wow, look at this: based on GDP ranking, it would be ranked #19 on the list of the top 20 countries. No wonder Bernie and Trump are so mad.

Only Canada, coming in last, spends less on a GDP basis. From the bottom up:

• Canada's military defense spending: 1.0%
• Germany (less than Brazil): 1.2%
• Spain: 1.2%
• Brazil: 1.3%
• Italy: 1.5%

Now, today, from channelnewsasis.com this incredible story: less than half -- again, less than half -- of German submarines and warplanes are ready for use.  Not 1% or 5% or 10% but fully half of German submarines and warplanes are not ready for use. In the US, military commanders would be fired if even 10% of their command was unprepared for their mission. From the linked article:

Missing spare parts and quality defects at a time of increased operations mean less than half of Germany's submarines, warplanes and some other key weapons are ready for use, according to a government report on Tuesday.

The defence ministry delivered a 106-page report about the still "unsatisfactory readiness" of many key weapons systems to parliament on Monday, amid growing public outcry about the military's failure to get a handle on the issue.

It confirmed the gist of a parliamentary report released last week that cited big, persistent gaps in military personnel and equipment.

The report said readiness was improving slowly, with 550 more weapons available in 2017 than in 2014. But more time and money were needed to recover from decades of spending cuts.

Wow! What can I say? Absolutely incredible. But because the situation is actually "improving" and it appears they are using the word loosely, nothing will be done. I doubt Angela Merkel has even read the full report -- perhaps the executive summary and that would be it.

Five New Permits; Four Permits Renewed; Two Producing Wells Completed -- February 27, 2018

API, weekly crude oil inventories: a slight build of 0.933 million bbls; forecast a build of 2.7 million bbls.

Active rigs:

$63.01↓↓	2/27/2018	02/27/2017	02/27/2016	02/27/2015	02/27/2014
Active Rigs	57	41	38	119	194

Five new permits:

• Operators: CLR (3); Whiting (2)
• Fields: Willow Creek (Williams County); Pembroke (McKenzie County)
• Comments:

Four permits renewed:

• Whiting (2): a Roggenbuck permit, and a Ray permit, both in Mountrail County
• NP Resources (2): two Ellison Creek Federal permits in Billings County

Three permits canceled:

• Petro-Hunt: an M. Thorson permit in Burke County
• Whiting: Roggenbuck permit in Mountrail County
• Hess: an SC-hoving permit in Williams County

Two producing wells (DUCs) completed:

• 29559, 19, Statoil, Heinz 18-19 6H, Patent Gate, t1/18; cum --
• 32976, 55, BR, Dodge 3A TFH, Dimmick Lake, t1/18; cum --

Dry hole:

• 34208, dry, Ballard Petroleum, Nelson Trust 11-20; a Madison well; Wildcat;

EOG Posts 4Q17 And Full Year (2017) Results

Disclaimer: done quickly; there will be typographical and factual errors. If this is important to you, go to the soure.

Link here.

Income:

• 4Q17, income: $4.20/share (non-GAAP: 69 cents/share)
• 4Q16, income: a loss of 25 cents/share (non-GAAP: a loss of one cent/share)
• full year, 2017: $4.46/share (non-GAAP: $1.12/share)
• full year, 2016: a loss of $1.98/share (non-GAAP: a loss of $1.61/share)

Operational highlights:

• crude oil and condensate increased 20% year-over-year; 335,000 bopd in 2017
• total NGLs grew 8%
• natural gas volumes decreased 6% primarily due to the sale of Barnett and Haynesville dry gas assets in late 2016

2018 capital plan:

• expects to grow crude oil volumes by 18%
• generate double-digit ROCE
• cover capital investment and dividend payments within discretionary cash flow
• EOG can deliver on its 2018 plan at oil prices below $50
• EOG can generate significant free cash flow at a $60 oil price
• CAPEX expected to range from $5.4 to $5.8 billioin
• EOG expects to complete approximately 690 net wells in 2018, compared to 536 in 2017
• at least 90% of completed wells in 2018 will be "premium"
• EOG has an inventory of approximately 8,000 such wells
• 11 years of premium inventory

Catching Up On The New Yorker -- Nothing About The Bakken -- February 27, 2018

After decades of subscribing to The New Yorker, I finally bailed. Just too much TDS. But I do try to look at it on a weekly basis. Because of winter weather, I did not bike to the library, 3.8 miles away by car, probably about 4.0 miles by bike. It's been a long time since I've been to the library but I was eager to catch on what I had missed. Or had not missed. 

From The New Yorker.

January 1, 2018

• Letter From France: "The Home Front: Leila Slimani's dark exploration of our most intimate taboos, "Lauren Collins, p. 34.
• Slimani just won the Goncourt, France's most prestigious literary prize, which counts among its laureates Proust and Malroux.
• The Goncourt has, more often than not, gone to a middle-aged white man and so the committee had also broken from history in consecrating Slimani as the face of French literature. At thirty-five, she was the second Moroccan and the twelfth woman to receive the award (and the first to do so four months pregnant). 
• Chanson Douce, her second novel, sold six hundred thousand copies in its first year of publication, making Slimani, who lives in Paris, the most-read author in France in 2016.

• A Reporter At Large: "The Glut Economy: will the booms and busts of the energy industry always dominate Texas? Lawrence Wright, p. 42.

January 8, 2018

• A Reporter At Large: "Making China Great Again: how Beijing learned to use Trump to its advantage," Evan Osnos, p. 36.

• Looks like a nice update of China. Discusses China's "Belt and Road Initiative."

• Portfolio: "A New Silk Road: China is investing billions in building pathways to Europe, Central Asia, and the Middle East," photographs by Davide Monteleone, p.46. 

• The photographs were uninspiring; a real let-down. To say the least.

• A Critic At Large: "Been There: the presidential election in 1968," Louis Menand, p. 69.

• Might be an interesting read. 
• Unfortunately the book reviewed is one by Lawrence O'Donnell who is on my list of most "fake" journalists.

January 15, 2018

• The cover features Kaepernick -- one more reason why I won't re-subscribe to the magazine.
• Nothing of interest. Amazing to the degree to which the editor is afflicted with TDS.

 January 22, 2018

•  The cover was a blank and so were the contents. $8.99 at the newstand.

January 29, 2018

• An article glorifying prisoners. $8.99 at the newstand.

February 5, 2018

• Nothing. Still $8.99 at the newstand. But if you are affected by TDS, you will still love the magazine. It's your weekly fix.

February 12 & 19, 2018 (two issues); hope there's something in this issue. We've suffered through three consecutive issues in which only the cartoons justified the price. Sort of.

• A long, long article on polar explorers. Might be interesting. 
• The Critics, Life and Letters: "It's Still Alive: two hundred years of "Frankenstein." 
• Finally, something of interest.

February 26, 2018

• Annals Of War: "Escaping ISIS: how a small group of immigrants helped save their people back home. 
• ISIS intended to wipe out the Yazidi religion in Iraq. Yazidis in America had a plan, so they started driving to Washington.
• Wow, it never quits, TDS. Now a long article on beauty pageants and, of course, Trump. By Jeffrey Toobin, a regular. I guess if you are a regular for the magazine and write anything negative on Trump it will get published. Tedious.

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

Tulip Season

They are outdoors during the day, if the weather is fine, but they come in at night, when they are watered, and fed, and read a story about the Bakken.