Random Thought Before I Go Off-Line For The Next Several Hours -- May 10, 2021

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. 

The annual meeting was a week ago Saturday. 

Ever since, his shares have been on a tear, up again. 

Except for confirming Buffett does have a transition plan and has named his successor, one can argue nothing new came out of that meeting that we didn't already know.

So, the natural question is: why is BRK-B (and BRK-A) on a tear right now?

I'm looking through my oil-stained spectacles and into my oily-crystal ball (that needs cleaning) and running my right palm over an oil-streaked Ouija board and see/hear only two things:

• DAPL - CBR
  
• Colonial Pipeline - CBR (see first comment)

For those who suggest this:

• the re-opening trade; and,
• all his holdings are doing well (accept his biggest -- AAPL) ... 

... a reminder to take a look at this post not long ago. For Berkshire Hathaway, BNSF accounts for:

• 9% of its revenue, but
• 25% of its earnings

And, yes, BNSF will haul a lot more than oil. Like grain. To export terminals on the west coast.

But as noted, I'm looking through oil-stained spectacles ...

... later ... see first comment --- the reader might also ask by WTI is surging in light of the Colonial Pipeline shut down -- with refined products nowhere to go, and WTI building up in the system, one would think WTI would drop, nor rise, in price. 

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GBR

Grain by rail.

Canada's wheat exports rose in early May despite dwindling global demand for old crop, while new crop seeding quickened from earlier in the spring following a return of favorable weather conditions. Link here.

Bonanza Creek Energy - Extraction Oil & Gas -- May 10, 2021

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. 

No longer a rumor: BCEI and XOG merger.

• link here;
• Bonanza Creek Energy: up 3.6% in pre-market trading
• market cap: $1.1 billion
• Extraction Oil & Gas: up 1.9% in pre-market trading
• market cap: 1.1 billion

Deal:

• Extraction shareholders to receive 1.1711 shares of Bonanza for each share of Extraction
• Civitas: new name
• aggregate enterprise value: $2.6 billion
• shareholders will each own 50% of Civitas
• expected to close3Q21

Strategic rationale? See link below.

From StreetInsider:

• The merger will create a leading energy producer in Colorado's DJ Basin, a basin characterized by low operating costs, extensive infrastructure, ample takeaway, multiple producing horizons and responsible energy production.
• The combined company will operate across approximately 425,000 net acres, with a production base of 117 thousand barrels of oil equivalent per day (117 Mboe/d, on a pro forma 1Q21 production basis).
• The transaction is expected to be significantly accretive to free cash flow and other per-share metrics.
• At closing, Civitas is projected to be one of most well-capitalized companies in the industry, with a leverage ratio below 0.3x pro forma 1Q21 Net Debt / 2021E EBITDA.
• Civitas expects to achieve annual expense and capital savings of approximately $25 million.
• Bonanza Creek's recently announced annual dividend of $1.40 per share is expected to be increased by Civitas to $1.60 per share effective at closing, with such increase representing a distribution of approximately half of the transaction synergies to Civitas' shareholder base.
• Bonanza Creek President and Chief Executive Officer, Eric Greager, will serve as President and CEO of Civitas. Other senior leadership positions will be filled by current executives of Bonanza Creek and Extraction.
• Extraction Chairman of the Board, Ben Dell, will serve as Chairman of Civitas, and each of Bonanza Creek and Extraction will nominate four directors to Civitas' diverse, eight-member Board.
• Civitas will take to the next level an E&P business model that has been actively embraced by both Bonanza Creek and Extraction, defined by operational discipline, a strong balance sheet, commitment to free cash flow generation, financial alignment with stakeholders, environmental and community leadership, and best-in-class governance.
• At closing, Civitas will be Colorado's first net-zero oil and gas producer (scope 1 and scope 2) through an intensive, continuing focus on reducing operational emissions and a multi-year investment in certified emissions offsets.

Initial Production Data For Six Wells Coming Off Confidential List -- May 10, 2021

The wells:

Monday, May 10, 2021: 18 for the month, 42 for the quarter, 123 for the year:

• 37633, drl/NC, BR, Cherry Blossom 1S MBH, Haystack Butte, no production data,
• 36920, F/A, MRO, Adonijah USA 44-5TFH-2B, Reunion Bay, first production, 11/20; t--; cum 239K 3/21; is anyone paying attention?

Sunday, May 9, 2021: 16 for the month, 40 for the quarter, 121 for the year:

• 37632, drl/NC, BR, Cherry Juice 1T TFH, Haystack Butte, no production data,

Saturday, May 8, 2021: 15 for the month, 39 for the quarter, 120 for the year:

• 37631, drl/NC, BR, Cherry Danish 1U MBH, Haystack Butte, no production data,
• 37093, AL/A, MRO, Ruggles 14-33H, Bailey, first production, 11/20; t--; cum 98K 3/21;
• 36810, F/A, Zavanna, Blue Heeler 20-17 1TFH, Stony Creek, first production, 11/20; t--; cum 98K 3/20;

Production data:

36920:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	3-2021	31	37204	37232	29369	54912	52703	0
BAKKEN	2-2021	27	31676	31619	24775	55989	51547	2476
BAKKEN	1-2021	31	43625	43882	42683	63465	60860	0
BAKKEN	12-2020	31	66239	66320	71753	86498	82551	0
BAKKEN	11-2020	21	60451	59583	71360	64793	61263	0
BAKKEN	10-2020	4	0	0	306	0	0	0

 37093:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	3-2021	31	16586	16581	51793	9843	7863	781
BAKKEN	2-2021	28	17825	17782	54763	10259	8233	757
BAKKEN	1-2021	31	23520	23558	63257	12666	9800	1224
BAKKEN	12-2020	29	24434	24250	70645	12632	9333	1600
BAKKEN	11-2020	9	15588	15459	53262	7117	5275	779

36810:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	3-2021	31	14315	46	17322	33534	31754	1665
BAKKEN	2-2021	28	13669	13086	16558	22018	21260	654
BAKKEN	1-2021	31	18404	16867	20590	22224	21889	220
BAKKEN	12-2020	31	26371	24045	28577	25235	24165	608
BAKKEN	11-2020	11	25637	23923	25501	22114	21730	384
BAKKEN	10-2020	0	0	0	0	0	0	0
BAKKEN	9-2020	0	0	0	0	100	100	0

What's The Opposite Of A Black Swan? May 10, 2021

Colonial Pipeline: yesterday I mentioned that this may become Biden's first major test. Some pundits: Biden has a week to get this pipeline open. A week. Apparently the president has declared a "state of emergency" regarding same. And just like that, America's crude oil and natural gas pipelines have become essential and a national asset. Even a caveman could see this. Big winners: truckers. If lasts longer than a month, CBR, although if it lasts that long, "we're" in deep trouble.

Six Wells Coming Off The Confidential List -- Waltons Buy 2,000-Acre Ranch In North Dakota -- May 10, 2021

The ratings are in: SNL -- third highest ratings for the "show" this past Saturday with Elon Musk and Miley Cyrus. Great headline but not saying much: SNL has been in decline for years, ratings already low, so third highest "so far" this year not all that great. Need to compare those ratings with NASCAR race yesterday, for example, for with Joe Biden's last press conference. 

Atmospheric CO2: ten days into May and we still don't have the April numbers. Link here.  It must take a long time to massage and vet the numbers.

RBOB gasoline: futures. 

First things first: Waltons buy $3.8 million ranch near Medora; link behind a paywall; unless I'm missing something this seems like a win for everyone; obviously the minerals will be orphaned;

• agweek; paywall
• BrainerdDispatch;
• Rob and Melani Walton
• 2,000-acrea ranch
• will continue to graze; coordinate/cooperate with neighboring ranchers
• largest benefactors of the library (see below)
• have donated $50 million towards the library
• target price of the library: $100 million
• Melani Walton
• born in Williston, ND; raised in Sydney, MT
  
• native of eastern Montana; graduate of Dickinson State University
• trustee of the Theodore Roosevelt Presidential Library Foundation
• Rob Walson
• once served as chairman of Walmart, founded by his father, Sam

Colonial Pipeline: yesterday I mentioned that this may become Biden's first major test. Some pundits: Biden has a week to get this pipeline open. A week. Apparently the president has declared a "state of emergency" regarding same. And just like that, America's crude oil and natural gas pipelines have become essential and a national asset. Even a caveman could see see. Big winners: truckers.

Jobless recovery: this is quite interesting; will touch on it later. 

Least important story over the weekend: Doge.

Biggest story over the weekend: Elon Musk and Miley Cyrus on SNL. 

Rumor: BCEI and XOG merger?

• link here;
• Bonanza Creek Energy: up 3.6% in pre-market trading
• market cap: $1.1 billion
• Extraction Oil & Gas: up 1.9% in pre-market trading
• market cap: 1.1 billion

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. 

Cardinal Health: raises dividend. 49.1 cents, up from 48.6 cents; record date, 7/1/21; payable 7/15/21.

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Back to the Bakken

Active rigs:

$65.47	5/10/2021	05/10/2020	05/10/2019	05/10/2018	05/10/2017
Active Rigs	17	19	66	60	50

Six permits coming off the confidential list --

Monday, May 10, 2021: 18 for the month, 42 for the quarter, 123 for the year:

• 37633, conf, BR, Cherry Blossom 1S MBH,
• 36920, conf, MRO, Adonijah USA 44-5TFH-2B,

Sunday, May 9, 2021: 16 for the month, 40 for the quarter, 121 for the year:

• 37632, conf, BR, Cherry Juice 1T TFH,

Saturday, May 8, 2021: 15 for the month, 39 for the quarter, 120 for the year:

• 37631, conf, BR, Cherry Danish 1U MBH,
• 37093, conf, MRO, Ruggles 14-33H,
• 36810, conf, Zavanna, Blue Heeler 20-17 1TFH,

RBN Energy: how Plains' Crane terminal help move Permian crude oil to market, part 4. 

Plains All American has an extraordinary collection of crude oil gathering systems and shuttle pipelines in the Permian Basin, as well as full or partial ownership interest in a number of long-haul takeaway pipelines to the Gulf Coast and the Cushing hub. As important as many of these individual systems and pipelines may be, it’s the interconnectivity among these assets — and especially Plains’ crude oil terminals in Midland and other West Texas locales — that gives the midstream giant’s Permian infrastructure a value far greater than the sum of its parts. 

Today, we’ll discuss the important role that Plains’ two terminals in Crane, TX, play in balancing the midstream company’s Permian crude oil delivery network and providing destination optionality.In today’s blog, we build on that by discussing a very different pair of terminals at Crane, namely Plains All American’s eastern and western facilities, which are just part of Plains’ broad, far-reaching, and highly integrated midstream network in the Permian.