No More Blogging Until Friday Morning -- August 1, 2019

Tariffs? What tariffs? This is life during wartime!


All this talk about tariffs, cry me a river!


Trump: take a piece of my heart!

Trump: I hate myself for loving you. Not!

NFL season opener, September 5, 2019, Green Bay Packers vs Chicago Bears (pre-season tonight, by the way, Broncos vs Falcons):

I Just Can't Get Too Excited About All This Tariff Talk -- August 1, 2019

Updates

August 3, 2019:

1. It turns out I was wrong in the original post below when I saia a $2,000 Apple computer could jump 10% to $2,200 due to the new 10% tariff on consumer goods coming from China. In fact, the tariff is based on the "cost of manufacturing" the item, not the retail price. So, if the actual cost of manufacturing the Apple computer is $150 in China, then the additional tariff would be $15. But Apple could still jack up the price to $2,200 blaming it on Trump's tariffs.

2. Countries make money from duties/tariffs. As soon as Trump increase import duty by 10%, China could do the same thing; blame it on Trump (retaliation) and then book the extra duty.

3. In the US, and I bet this is true in most other countries, money raised through duties/tariffs goes directly to the Executive Branch (i.e, the President of the US). The money raised does not go into the General Fund and it is not controlled by Congress. It goes directly to the Executive Branch, and the president decides where to "spend" it. That's why you are not hearing much noise from US farmers regarding tariffs. Trump is sending tariff money to those suffering most, in this case, the farmers. I doubt president is sending much money to Nike and/or Kaepernick. My hunch is Kaepernick does not know this. This also explains the meltdown by the spokesman for the US foot apparel industry last Friday (or whenever it was) on CNBC. 

4. Finally, it's up to the Chinese whether they want to see the 10% increase in tariffs. All they have to do it say they will get to serious negotiations (wink, wink).

Original Post 

 
In round numbers, the GDP of the US is $20 trillion. And increasing every year. By at least 2%. More if the US Congress would get out of the way.

$750 billion trade with China, most of it one way.

750 billion / 20 trillion = 3.75%

Of that 750 billion, maybe 20% in tariffs or $150 billion

$150 billion / $20 trillion = 0.75%

I just can't get too excited about all this tariff talk.

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

WTI: $54

It's not like we haven't been here before.

And, we are no longer dependent on OPEC oil.

I just can't get too excited about all this tariff talk.

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

The US is incredibly rich and getting richer every day.

How rich are we?

The Democrats running for president promise to send each American $1,000 / month.

The Democrats running for president promise free medical care for all, including free medical care for undocumented "residents." They would promise the same for felons behind bars but such felons already get free medical care. Instead, felons will get the right to vote.

The Democrats running for president promise free college for all, and will "erase" all outstanding student debt.

The Democrats running for president are in favor of open borders.

That's how rich we are.

The Democrats running for president have the math to prove that we can afford all the above.

No one in the mainstream media has been able to prove them wrong.

Even Nobel Laureate Paul Krugman says deficits no longer matter.

I just can't get excited about all this tariff talk.

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

How many times in the past year were we told that tariffs would be increased if China-US trade talks went badly?

Earlier this week there was a headline story that China-US trade were going badly.

I don't take the president literally, but I do take him seriously.

I just can't get too excited about all this tariff talk.

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

I lost all "faith" in Apple's commitment to the US when on June 28, 2019, its CEO made the decision to move Mac Pro production from the US to China.

Obviously Apple was not worried about tariffs.

A $2,000 Mac Pro will now cost Americans maybe $2,200. My hunch is that competition will keep the Mac Pro from going up in cost due to tariffs. Apple's margins will decrease from 37% to 36.8% but "services" won't be affected.

I just can't get too excited about all this tariff talk.

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

Oil plummeted from $58 to $54/bbl in one day.

The price of gasoline should go down next week.

99.9999% of all Americans are going to love cheaper gasoline.

California drivers will send a thank-you note to President Trump; they may even vote for him in 2020.

I just can't get too excited about all this tariff talk.

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

The Fed just cut rates for the first time in a decade.

Cheap money.

I just can't get too excited about all this tariff talk.

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

Automatic reinvestment of dividends.

I just can't get too excited about all this tariff talk.

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

But mostly I'm looking forward to:

• a $1,000 check from the US government every month (actually, for us, a married couple, $2,000 -- that will pay our rent with enough left over for two sushi dinners each month)
• free medical health care
• free Harvard college education for our three granddaughters
• our son-in-law no longer having to pay off his student debt 

And, yes, I just can't get too excited about all this tariff talk.

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

And two years from now, we will all be even richer.

A thousand-dollar check to each American each week; free electricity (wind and solar energy); free medical care for the first time in our lives; free college education for all.

I just can't get too excited about all this tariff talk.

I'm simply waiting for 2021 when everything is free and all this talk about tariffs will be a thing of the past.

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

How concerned are we about the tariffs?

Drudge does not mention it.

Fox News does not mention it.

The LA Times barely mentions it.

Fake news (NYT and Washington Post) will cover it in nauseating detail, as will CNBC and MSNBC.

I just can't get too excited about all this tariff talk, and apparently neither can Kim Kardashian.

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

Absolutely not a bit concerned with all this talk about tariffs.

Oh, to be five years old again.

EOG Reports 2Q19 -- August 1, 2019

Locator: 10010EOG.

Updates

October 23, 2023: EOG update -- permitting and drilling.

September 5, 2021, 2Q21 presentation: I can't find current net acres for EOG, but probably about 300,000; canceled all their Hawkeye permits; everything suggests EOG will shut down their operations in the Bakken; probably 50/50 whether they sell their Bakken assets / acreage; or hold them for the long term. 300,000 acres * $20,000 = $6 billion.

August 3, 2019: EOG continues to deliver free cash flow in a challenging environment -- SeekingAlpha contributor, Z4 Research. Data points:

• the 2Q19 numbers: 
• oil production was above guidance range
• oil price above guidance at $1.18 per barrel above WTI (they estimate 2Q realization will be $3.36 / barrel above their peer group; it was $3.79 above last quarter)
• CAPEX was below guidance at $1.6 B vs guidance of $1.7 B
• cash operating expenses on a per unit basis were down 7% YoY
• favorite quote watch: "EOG generated $2.1 billion of discretionary cash flow in the second quarter 2019, one percentmore than the same prior year period despite a 12 percent decline in the NYMEX WTI benchmark price." 
• after dividends of $127 mm, free cash was $352 mm
• guidance: 
• 2019 volumes: tightened to 794 to 823 MBOEpd (mid of 809 Mboepd) vs prior range of 781 to 842 Mboepd (mid of 811.5 Mboepd) 
• 2019 CAPEX: unchanged vs prior range of $6.1 to $6.5 B. No change to 740 net well completions
• well costs down 4% YTD

Original Post

 EOG reports. Link here.

• production --
• crude oil production increased 18% year-over-year
• 455,700 bopd, a new company record
• NGLs increased 16%
• natural gas grew by 10%
• total company production growth of 16%
• financials --
• exceeded target with CAPEX below target
• income of $1.46/share; $0.848 billion
• compare 2Q18: $0.697 billion or $1.20/share
• net cash: $2.7 billion
• wells are costing less
• discretionary cash flow increased by one percent despite a 12 percent decline in NYMEX WTI benchmark price

Before 2Q19:

• 1Q17: sets company record -- 315,700 bopd -- about what Libya does when that country gets its act together
• 1Q16: EOG presentation: 120,000 acres core; 110,000 acres non-core;
• 3Q15, EOG presentation: 120,000 acres core; 110,000 acres non-core;
• 1Q14: down to 90,000 acres of Core Bakken; Antelope Extension: 20,000 acres; Core well -- 92% oil, 2% gas, 6% NGL; Antelope well -- 78% oil, 11% gas, 11% NGL
• 580,000 net acres; November, 2012, NOG says 600,000 acres
• BEXP presentation says EOG has 600,000 net acres (as does Filloon, June, 2011)
• Bakken Core: Parshall oil field, for the most part; 100,000 net acres; 640-acre spacing
• Bakken Lite: Bakken outside the Parshall oil field. e.g., northwest of Williston; 480,000 net acres; 320-acre spacing
• Three Forks: 
• February 1, 2011: company says they may be going down to 5 rigs; cut back to 2 frack crews; I don't think EOG fracks during the winter

NOG Reports 2Q19; Beats -- August 1, 2019

NOG reports. Remember, forecast, 11 cents. Actual results for 2Q19:

• production increased 66% year-over-year
• cash flow: $93 million, a 7% increase over the first quarter
• CAPEX: a 3% decrease over first quarter
• 2Q19 production: 3.2 million boe; averaging 34,965 boepd; 66% increase year-over-year
• net income: 12 cents (a beat)
• adjusted: 12 cents

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

No need to look at share price today; WTI dropped over 7%. Bad day for oil bulls.

NOG is tracked here.

Compare with earnings / production one year ago:

2Q18 earnings: adjusted earnings, 9 cents; beats by one cent; raises full year production guidance by 60% over 2017; 2Q18 production exceedes expectations, increased 53% y/y and 17% sequentially; now averaging 21,046 boepd; exited the quarter with 16.4 net wells in production; added 8.1 organic net wells; three acquisitions this year: Salt Creek; Pivotal; and W Energy; Salt Creek closed June 4, 2018;

WTI Plunges Over 7%; Down $4.28; Trading At $54.30

Oil: worst day since 2016; WTI suffers worst day in four years (?); blamed on Trump tariff announcement.

10-year bond: lowest since 2016.

Dividends: automatic reinvesting -- making America great.

Jobs (link here):

• prior: 206K
• revised prior: 207K
• forecast: 214K
• actual: 215K

Warning: China and American tech companies (Apple, e.g.) were given warning at least a year ago Trump would raise tariffs if there was no movement toward a more level playing field. This, too, will pass. 

Kellogg: up almost 10% today; who wudda guessed?


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

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

Back to the Bakken

Active rigs:

$54.30	8/1/2019	08/01/2018	08/01/2017	08/01/2016	08/01/2015
Active Rigs	58	63	60	34	74

Five new permits, #36805 - #36809, inclusive:

• Operator: RimRock
• Field: Heart Butte (Dunn County)
• Comments:
• RimRock has permits for a 5-well "gem" pad in lot 1 / 2cion 18-148-92, Heart Butte oil field

One permit renewed:

• Enerplus: a Wallaby permit in McKenzie County

One permit canceled:

• Petro-Hunt: a USA permit in McKenzie County

producing wells (DUCs) reported as completed: pending