Notes From All Over -- Part 2 -- October 5, 2021

Gas deal, long story, short version:

• Questar Pipeline.
• Dominion.
• Berkshire Hathaway looked to buy Questar from Dominion earlier this year; 
• changed mind when Warren Buffett thought regulators wouldn't okay it.
• dormant
• earlier today, being reported that Southwestern Gas interested in Questar
• Carl Icahn, investor in SWX said "no"
• tonight it's being reported SWX bought Questar Pipeline
• link at Hart Energy. 
• SWX paid $2 billion
• if I recall, Warren Buffet was going to pay $1.3 billion
  

Biggest Rivalry In Baseball -- Wild Card Series Starts Tonight .... October 5, 2021

... and ends tonight. This is quite incredible. A one-game playoff between the New York Yankees and the Boston Red Sox. Win or go home. Well, only true for NYY ... the game is being played in Boston.

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Printing Money

Literally. The debt limit? Janet Yellen can raise the debt limit on her own --apparently she doesn't need permission. As US Secretary of the Treasury she can apparently authorize her department to print a "one-trillion-dollar" coin and deposit it with the Federal Reserve. Link here.

A White House spokesperson has ruled this out. My hunch: the White House will launch its own cryptocurrency, and call it, not Bitcoin, but Bidencoin. 

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WTI: To Infinity And Beyond

Per bbl:

• today: $80
• through the next six months: $90 trading range
• end of 2022: $180

That's what some are saying.

Killing the Keystone XL could come back to haunt Resident Biden. 

If OPEC+ is near their capacity short term, and WTI moves toward $100 / bbl, it's unlikely US shale operators would hold back.

Big Headline, Small Story -- But Deep Inside The Story, What We've Been Saying For Quite Some Time -- October 5, 2021

OPEC+ raises November oil production quote to 39.7 million bpd. That was the headline. Link to Tsvetana Paraskova. Some details:

• will stick to plan
• will ease collective cuts by 400,000 bpd
• article discusses Russia's confusing situation: official Russian data doesn't discriminate betweeen crude oil and condensate production, but condensates are excluded from Russia's OPEC+ quote

Now look at this:

Bloomberg estimates put Russian crude and condensate production in September at 10.7 million bpd. If condensate production was around 880,000 bpd, this would put Russian crude oil output at 9.83 million bpd, which would be 130,000 bpd above quota, as per Bloomberg calculations.

Analysts say that Russia may have reached its capacity to produce oil, while several OPEC members of the pact such as Angola, and at times, Nigeria, have struggled to pump to quotas over the past few months.

This is one of the key reasons for the over-100-percent compliance with the total cuts.

And then this: 

The OPEC+ group of producers raised their compliance with the production cuts to 116 percent in August, up from 109 percent compliance in July, sources from the alliance told Reuters in September. Despite the higher production, OPEC was actually pumping at some 10 percent below its overall quota for the 10 members bound by the OPEC+ pact in August, due to outages and technical difficulties in countries such as Nigeria and Angola, Bloomberg noted last month.

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Aramco Mega Deal
Saudi Foreign Investment to Record in 2Q21

Link to Charles Kennedy.

Saudi's foreign direct investment (FDI)

• generally runs around $1 billion per quarter
• but 2Q21: a staggering $14 billion
• key investment: $12 billion that involved Saudi Aramco: pipeline network in the desert

WTI Closes Seven Cents Below $79; Four New Permits -- October 5, 2021

Breaking: Jim Cramer will be interviewing ENB/CEO at top of the hour on Mad Money. Jim has made it very clear. He said he has been very, very negative on oil. He says very clearly four oil companies represent change: ENB, PXD, CVX, and DVN. "These are real change companies" -- Jim Cramer. Quite amazing. See my "Devon post," August 7, 2021. 

$3.5 trillion bill: LOL. I've been saying this for weeks. Joe Manchin has his price. LOL. He must have finally gotten something he wanted into the spending bill. Now signals he's ready to support super spending. It's good that the $3.5 trillion won't cost taxpayers a dime, according to Resident Biden. LOL. 

Debt ceiling: meanwhile, GOP getting ready to support raising the debt ceiling. 

Simple arithmetic: 1+1 = 3.

• 1: $3.5 trillion spending bill
• 1: debt ceiling raised
• 3: market

NFLX: surges on back of "The Squid Game." Netflix hits record high. Netflix downloads hit record high. This is quite incredible. No link. Featured on CNBC. Google it. In original language. Dubbed. Still #1 in US. Reminder: Seinfeld back on Netflix. 

WTI: wowza! Closes just seven pennies below $79. Nothing to suggest this isn't going higher in the short term. 

Hold your horses: link to Tsvetana Paraskova. The energy transition will take decades, not years. Some / many / most energy transition proponents (may) have confused Covid energy demand destruction with a change in consumer behavior.

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Back to the Bakken

TENORM:

• North Dakota has permitted a second TENORM waste well
  
• will be located halfway between Williston and Alexander along US Highway 85.
• link to WillistonHerald.

Active rigs:

$78.93	10/5/2021	10/05/2020	10/05/2019	10/05/2018	10/05/2017
Active Rigs	23	11	58	64	59

Four new permits, #38598 - #38601, inclusive:

• Operator: Murex Petroleum
• Field: Tioga and West Tioga (Williams)
• Comments:
• Murex -- first time we've seen this name in a long time in the Bakken -- has permits for two Sheldon Mark wells, and two Borstad wells, 
• all in NESE 34-158-95;
•  the wells will be sited 2227 FSL and between 510 FEL and  660 FEL;

Ovintiv resurveyed five locations, the Kramer pad in NENE 18-150-97, McKenzie County;

Who's Winning, Who's Losing -- October 5, 2021

Shale, some of those who make money from the US shale oil and gas industry:

• blue collar (roughnecks, drilling and fracking, infrastructure, truckers)
• white collar (geologists, lawyers, landmen)
• CEO, directors, bankers
  
• venture capitalists
• major investors
• mom-and-pop retail investors
  
• mom-and-pop mineral owners
• surface owners (often farmers)
  

So, of the categories above, where is the biggest shift, taking into account the data at this article?

Comments:

• during a boom, the mom-and-pop mineral owners do particularly well, but in the manufacturing stage, their returns may drop a bit;
• in the current situation, when shale operators are refusing to go crazy with drilling, and North Dakota production drops from second place to third place, mom-and-pop mineral owners will see a drop in royalties -- unless the price of oil increases significantly

Derivatives:

• North Dakota dropping from second place to third place is a non-story; but a great story, nonetheless

In other words:

• if one's primary income from shale tends to be from the mineral rights, it might not look so good now, except for the fact that less production is being offset by higher prices;
• if one's primary income from shale is through investing in shale companies like Devon, CLR, etc., now is a pretty good time -- see the linked article above.

Bottom line:

• I'm lovin' it.