Rig Counts Don't Matter (Not To Be Taken Out Of Context) -- December 26, 2019

Link here, Platts S&P Global.

From the linked article:

Continued production in Oklahoma's SCOOP-STACK demonstrates how tracking rig count to determine production swings has become an antiquated practice in some US shale plays.

For example, crude oil production in the SCOOP-STACK recently reached annual highs of 488,000 b/d even as rigs continued to plummet to new lows last seen in 2016.

While producers had more than 100 rigs deployed across the SCOOP-STACK in January, the number has since fallen to 44 rigs.

While tracking rigs used to be a key indication of where basin production would head in the near-term future, SCOOP-STACK operators have proven in 2019 this modeling concept does not always apply, as the region is expected to grow production 7% year over year, while rigs are down 60% year to date from the most recent drilling data by Enverus.

While well-level efficiencies are a key contributor toward understanding production gains or losses, the SCOOP-STACK happened to significantly draw from their built drilled-but-uncompleted (DUC) inventory for most of 2019, as heightened completion activity from January through May helped operators grow production.

Moving into 2020, Platts Analytics is forecasting the SCOOP-STACK to grow by 11,000 b/d, as operators such as Continental Resources and Encana can continue to utilize the same strategy developed in 2019.

All Three Major Indices Hit All-Time Highs -- Boxing Day, 2019

S & P 500:

• up 1,6.53 points
• up 0.51%
• closed at 3,239.91
• intra-day high: 3,240.08
• 52-week high: 3,240.08

NASDAQ:

• up 69.51 points
• up 0.785
• closed at 9,022.39 (first time ever over 9,000)
• intra-day high: 9,022.46
• 52-week high: 9,022.46

DOW:

• up 105.94 points
• up 0.37%
• closed at 28,621.39
• intra-day high: 28,624.10
• 52-week high: 28,624.10

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Four Biggest Economies In Europe: Will Struggle To Recover In 2020 -- Barron's

Data points from the article (paywall; access through Starbucks):

• UK will leave the EU at the end of January, 2020
• Boris will look to clinch an economic deal before the end of 2020
• UK's hope: inflation will remain low ('cause the economy won't grow) and then the Bank of England can lower rates -- LOL -- if the economy takes a turn for the worse)
• the UK at least has a stable government (Boris' landslide); not the same can be said for:
• Germany: leadership split among two parties; political paralysis likely
• Germany's unemployment barely more than 3% so unlikely it would incentivize fiscal expansion
• France: EU's strongest growth rate;
• same problem as Germayn -- political paralysis
• Italy: will continue to underperform
• staggering under a debt load topping 130% of GDP
• (is US debt load about 105% of GDP?)

WTI Trending Toward $62 -- No New Permits Today? -- December 26, 2019

Active rigs:

$61.74	12/26/2019	12/26/2018	12/26/2017	12/26/2016	12/26/2015
Active Rigs	56	68	53	41	62

No new permits today.

Four permits renewed:

• Hess: four EN-Madisyn permits in Mountrail County

More On The IRA Tax Law Changes -- December 26, 2019

I track the new IRA rules at this post. For something I thought was relatively simply, it is much more complicated than I ever imagined. From MarketWatch:

Beneficiaries of individual retirement accounts may not see their inheritances for a decade under the newly passed SECURE Act, and when they do get the money, they may be taxed heavily for it.

Under the new retirement legislation, which was signed into law just days before Christmas, beneficiaries of inherited IRAs will need to withdraw that money within 10 years — that is, if they have access to it at all within that time.

Previously, nonspousal beneficiaries could opt to take only required minimum distributions over their life expectancy, rather than taking all the money within five years. (Required minimum distributions are calculated with factors such as the beneficiary’s age, life expectancy and account balance.) That tax-advantaged possibility disappears with the SECURE Act, which only allows one option: up to 10 years to drain the account.

After the 10th year, any money that is left must be taken and the account closed, regardless of the tax consequences. 

Okay, we knew most of that. The "if one has access to it at all within that time."

I was a bit confused on that, but it appears that the writer suggests that if the beneficiary is held in a trust that dictates when/how the money can be withdrawn there could be problems with the new tax laws.

Imagine a 25-year-old grandson named beneficiary of a trust to include an IRA. Imagine if the grantor of the trust dictated that the proceeds could be not be distributed until the beneficiary was 45 years old, which would be 20 years from now. Under the trust, the grandson would not have access to the trust IRA until age 45, 20 years from now. But the new law says the IRA funds must be completely distributed within ten years.

I may not be interpreting the writer's thoughts correctly, but one gets the idea. My hunch is that either there are provisions in the law to address this, or the IRS will formulate rules. I assume the IRS would say the US tax law supersedes the trust instructions and that the IRA must be liquidated in full upon the tenth year. Ouch.

Be that as it may, a relatively simple-sounding change in the law seems to be a bit more complicated than I thought.

We May Have An Explanation For Burning Oil To Generate Electricity -- Even If Not Needed -- December 26, 2019

Re-posting from earlier today. I don't want folks to miss it. If accurate, it just explains how "crazy" the world has become.

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Burning Oil In The US To Generate Electricity

To Max Out Pollution Credits By The End Of The Year

Fact: ISO New England has more than enough energy the past two days (including today) so as not to have to use oil. Earlier I asked why ISO New England might be burning oil under these circumstances. A reader who corresponds with me closely regarding ISO New England and understands it very, very well, had this to say after I posed the question:

I have also been curious as to why oil is being burned as per the ISO. 

While I am certain the source/reason can be found, I, my self, do not know, but suspect it is coming from the oil burning Wyman plant in Yarmouth, Maine.

The restrictions on emissions might be prompting an 'end of the year' burning of onsite fuel so as to 'use up' all the permitted pollutants before December 31, 2019. 

Don't know, but the steady ~355 Megawatts produced from oil for several mid-morning hours indicates a controlled, purposeful operation.

If accurate, it shows just how screwed up the world really is. 

The reader's response came in reply to my note below, posted earlier today:

Plenty of energy today, not sure why they're burning oil to generate electricity:

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