Statoil To Abandon Greenland For "Greener" Pastures; Delta Airlines Refinery 4Q13 Earnings

For background, scroll through this site: Cairn and Statoil in Greenland.

It appears things did not work out so well for Statoil in Greenland: Statoil will "abandon" Greenland's west coast for greener pastures, at least according to Bloomberg.

Statoil ASA (STL), Norway’s biggest energy company, may walk away from exploration in west Greenland as it tries to contain spending.

The licenses are an “exit candidate” as they are costly and Statoil is being choosier where it explores, Tim Dodson, the head of exploration, said in an interview in Sandefjord, Norway. “It has to do with the costly nature, it has to do with the risk profile,” he said, adding the matter isn’t yet decided.

An exit would be a blow to Greenland’s ambition to pump its first crude oil, aided by Statoil’s experience exploring in the Arctic. Cairn Energy Plc (CNE) spent about $1 billion in a Greenland campaign in 2011 that failed to produce any discoveries.

Statoil, 67 percent-held by the state, this month said it sought to rein in investments after spending reached a record $19 billion last year. Rising costs and lower profitability are hurting oil producers. Royal Dutch Shell Plc (RDSA), last week had its first profit warning in a decade with fourth-quarter earnings at Europe’s largest energy company seen falling from a year before. 

I've blogged about Cairn and Greenland periodically on the blog. I was initially excited about the prospects, but like so many other stories, it seemed not to pan out so well. These stories reinforce, for me, again, how good the Bakken really is. Let's hope the ND state attorney doesn't screw it up.

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From Delta Airlines 4Q13 earnings transcript:

On the fuel front, our all-in price per gallon for the quarter was $3.05. The Trainer refinery produced a $46 million loss for the quarter, but overall fuel expense for Delta declined $91 million from lower market fuel prices and nearly $60 million in hedge gains.

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A Note to the Granddaughters

I did not know this until recently. And now that I know it, I'm thrilled.

I never cared for Sean Hannity. I have posted that before.  A couple of weeks ago I heard Savage Nation in the Hannity time slot here in the DFW metroplex area. I thought it was a short-term replacement while Sean was on vacation.

Today, I heard that Savage Nation is a replacement for Sean Hannity in this time slot, a change which occurred on 52 talk-radio stations across the nation. Wow. I don't care for Savage as much as others apparently do, but I could not stand Hannity, and Savage Nation might be a great change. Maybe I'll tune in for awhile and see what I think. I seldom catch Rush any more. And when I do, I generally listen for about ten minutes. Only three minutes if my wife is in the car with me.

Later...oh, here's the rest of the story: both Hannity and Rush are leaving Cumulus for Clear Channel. Not a big story. But are both Hannity and Rush (New York-based) moving to no-state-income-tax state of Texas?

For Investors Only -- 4Q13; Something Doesn't Ring True At Target

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here.

Some of these stories are old; I did not get around to them until now.

EPD announced [about a week ago] that the board of directors of its general partner declared an increase in the quarterly cash distribution paid to partners to $0.70 per common unit, or $2.80 per unit on an annualized basis. The quarterly distribution will be paid on Friday, February 7, 2014, to unitholders of record as of the close of business on Friday, January 31, 2014. This distribution, which represents a 6.1 percent increase over the $0.66 per unit distribution declared with respect to the fourth quarter of 2012, is the 47th distribution increase since Enterprise’s initial public offering in 1998 and the 38th consecutive quarterly increase.

I can't make this stuff up: Windows 8 is perceived by some to be so awful that a) H-P will take advantage of this by getting back into hardware and loading Windows 7 instead; and, b) some think Windows 8 explains the death spiral of the PC.

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IBM:

IBM's fourth-quarter net income grew 6 percent, surpassing Wall Street's expectations even though revenue declined. Its shares fell in extended trading after the results came out — and CEO Ginni Rometty said she's recommending that senior executives, including herself, forgo personal bonuses for the year.

IBM Corp. said Tuesday that it earned $6.19 billion, or $5.73 per share, in the October-December period. That's up from $5.83 billion, or $5.13 per share, in the same period a year earlier. Results benefited from tax audit settlements that lowered IBM's tax rate to 11.2 percent in the quarter, from 25.5 percent a year earlier.

IBM's adjusted earnings were $6.13 per share in the latest quarter.

Revenue fell 5.5 percent to $27.7 billion from $29.3 billion.

Analysts, on average, had expected adjusted earnings of $5.99 per share on revenue of $28.27 billion, according to FactSet.

The IBM results were said to have spooked the market. For heaven's sake, considering the head winds, this was not a bad report. The guys wearing the visors and green glasses in the back room can probably come up with any number they wanted, but that's true every quarter. So when I see $5.73/share earnings this quarter compared with $5.13/share in the same quarter one year ago, I can't get too excited.

And, oh, remember -- there were six less shopping days between Thanksgiving and Christmas ... which really messed up UPS ... or so they say.

I think folks need to get a grip; enjoy life; and not see a crisis with each earnings report. Some days these analysts and traders seem less mature than our 7-year-old granddaughter. Okay, bad comparison. She is very, very mature. These analysts / traders seem less mature than our 10-year-old granddaughter when she stays up all night with her friends on a sleep-over. LOL.

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Just this morning on NPR or some radio station, BlackBerry, announcing a new contract with DOD, said the company was in great condition, plenty of cash. Now, tonight this story: BlackBerry is selling "all" its Canadian real estate to raise cash. Doesn't sound all that healthy.

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The Target breach:

“We cannot estimate the costs related to the credit breach, including replacement cards and terminals, legal and settlement fees, and doubt that (Target) will have visibility on these costs for some time,” she said in a report. “We therefore expect (Target) to err on the side of prudence.”

Landes, who slashed her price target on the stock to $47 from $66, said Target may need to shoulder the cost of replacing up to 40 million cards at $10 apiece. She said it’s unlikely that Target has insurance related to potential lawsuits from banks. Target may need to replace about 50,000 of its so-called point-of-sale systems at cash registers.

  While Target has cut its outlook earlier this month, the analyst said “there’s definitely further risk to (per-share profit) should Target’s fundamentals continue to be weak or deteriorate.” Every 0.5 percentage point dent in comparable sales in the U.S. versus her estimate represents about a 15-cent hit to the company’s annual per-share profit, Landes said, adding every $100 million in incremental expenses is also another 15-cent profit hit.

Something doesn't "ring" true. Target says their system is now safe and yet they say they may have to replace 50,000 of its point-of-sale systems at cash registers. Something doesn't ring true.

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Monday -- January 21, 2014; Oil Is Back

Active rigs:

	1/21/2014	01/21/2013	01/21/2012	01/21/2011	01/21/2010
Active Rigs	186	186	203	165	82

RBN Energy: the future of ethane. A continuation of the series.

There simply is not enough petrochemical demand to absorb all of the ethane that the U.S. can produce.  The result is rejection - ethane sold as natural gas at fuel value rather than being extracted and used as a petrochemical feedstock. Today around 250 Mb/d of ethane is being rejected, and that number could increase by 200% over the next three years.  Yes, you read that right.  Rejection could triple.  As NGL production from the big shale plays increases, the U.S. petrochemical industry will not be able to use most of the incremental ethane - thus rejection.  But it may not play out that way.  All that ethane could be exported - perhaps as liquid ethane. Or is there another possibility: Spiking ethane into the soon to be exported volumes of LNG from terminals like Cheniere Sabine Pass, Freeport, ETP/Southern Union at Lake Charles and Dominion at Cove Point?  Today we continue our exploration into the possibility that surplus ethane could be exported in the form of “hot” LNG.

The Wall Street Journal

Target tried antitheft cards.

Target Corp. TGT -1.98% Chief Executive Gregg Steinhafel is calling on retailers and banks to adopt chip-based credit-card technology to better protect shoppers. But the debate was different a decade ago, when the executive was on the other side of the issue as Target pulled the plug on a $40 million, three-year program that did just that.

Chip-based credit cards—in which a smart chip in the card works with special readers installed at stores—are widely used in Europe and Canada, making it more difficult for thieves to profit from the sort of massive data breach that hit Target over the holidays. 

Executives in Target's credit-card division tried to keep the program but lost out to the concerns of executives responsible for store operations and merchandising, a group that included Mr. Steinhafel, who worried the technology slowed checkout speeds and didn't offer enough marketing benefits, according to a person familiar with the decision.

It's interesting. I've always been amazed at check-out speeds at Target. One never shows an ID, one never signs anything. It comes as no surprise Target was hacked. I will never use a credit card at Target again, and will seldom shop there any more.

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High-tech monitors often miss oil pipeline links.

Energy and pipeline companies like to point out they use high-tech sensors and remote-monitoring systems to automatically alert engineers when a pipeline starts to leak oil.

However, most leaks usually aren't discovered that way, according to a review of four years of liquid pipeline accident records. The overwhelming majority of these pipeline spills, ruptures and leaks were discovered by somebody near the accident site, a Wall Street Journal review of a database of more than 1,400 accident reports collected by the federal Pipeline and Hazardous Materials Safety Administration found. 

Most are found by farmers harvesting or seeding their fields. 

The Los Angeles Time

Oil demand increases.

Worldwide demand for oil will increase 1.4% this year as developed economies strengthen, building off a strong final three months of 2013, the International Energy Agency said Tuesday.

The projections in the organization's monthly oil market report add to forecasts of a global economic pickup in 2014.

Unexpectedly higher demand in the U.S. in the fourth quarter of last year helped boost global oil deliveries by 135,000 barrels a day to an estimated 92.1 million barrels, the report said.

The increase meant that, after declining 1.1% in 2012, oil demand grew 0.2% last year in the 34 advanced economies that are members of the Organization for Economic Cooperation and Development.

The last time the OECD nations had recorded a yearly increase in oil demand was 2010, the agency said.

Just before I left the house I heard a report on NPR that US oil demand now exceeds that of China, the first time this has happened in many years. I can't find a source yet to confirm that. I will watch for it. But oil is back.

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A Note to the Granddaughters

The blog is full of references to the current political climate. It turns out that what is happening in the United States is not new. From Athens: A Portrait of the City in its Golden Age, Christian Meier, c. 1993, pp 58 - 59.

In this situation Solon, son of Execestides, tried to convince his fellow citizens that their society was fundamentally flawed, that they were living in "misorder" (dysnomia). Indded, he said, they were heading toward catastrophe, but they were not helpless. He reportedly urged all parties to entrust the city to a wise man who might reestablish order.

There are no equivalents in English for the Greek words katartister or euthynter, used to describe a person given the powers Solon was given. "Arbitrator" would come closest, if the term were not so closely associated with mediation. In this case, however, mediation was at most a fortunate side effect of the reforms, because what mattered to Solon was the establishment of a new "right order," not a mere compromise between conflicting interests. (Solon considered improper the very notion that these interests could be at odds.) The best translation is the cumbersome "he who puts things right again."

Solon was ultimately elected to public office, possible directly to the post of archon (chief magistrate), mostly likely in 594 BC (although it may have been as late as 575). When elected, he was given almost unlimited powers as well as a substantial treasury, which could have been procured only by taxes on the wealthy. He was almost certainly allowed to hire a staff and may have undertaken to build a rudimentary police force.

This marked the beginning of something entirely new in Attic history. Previous efforts to bring about a better and more just social order had been limited in scope. Now, for the first time, the entire structure of the polis underwent reform.

Nothing comparable had ever happened  in world history: a profound transformation of existing conditions, initiated not by a monarch, or an aspiring monarch, but by an individual chosen by the citizenry. Solon did not relieve the citizens of their own responsibility but merely enacted what they seemed to want. In all likelihood people were willing to entrust their fate to him because their fear of violence and murder left them no choice. But whatever their motivation, they placed immense trust in Solon.

Just as there are no equivalents in English for the Greek words katartister or euthynter, used to describe a person given the powers Solon was given, there are no English words to describe ObamaNation.

IBD Updates The Chinese Acquisitions Of North American Energy

Under "The Big Stories" at the side bar at the left, I have a link called the "Asian Connections."

That post updates the Chinese acquisitions of North American energy assets.

Investor's Business Daily posted an update on the same subject last week:

Here's another clip for the China scrapbook: China-based energy firms led the world in oil and gas-related acquisitions in 2013, with a big piece of that representing a move into North American shale oil and natural gas.

A Jan. 2 report from IHS showed overall deal activity declined 20% in 2013 after notching a 10-year high — with more than $250 billion in deals — the year before. Asset-based transactions dropped 15%. Corporate mergers declined 50%, with no single deal announced at more than $5 billion, IHS said.

China's Cnooc (CEO) closed its $15.1 billion acquisition of Calgary, Alberta-based Nexen in February. Because the deal was announced the prior year, it was tallied in the 2012 M&A count.

The Williston Wire -- January 17, 2014

The Williston Wire is full of interesting stories today. Headlines, without links:

From Oil and Gas Journal, the Bakken and Three Forks is the largest continuous US oil accumulation.

From The Bismarck Tribune, North Dakota oil production nears the one-million-bopd mark. Oil production spiked in North Dakota in November by 28,000 bopd, almost 3 percent over the previous month.

The Williston Wire even linked one of Mike Filloon's recent articles at SeekingAlpha on the Bakken operators.

From The Oxbow Herald, construction on BNSF's construction on the Northgate Commodity Logistics Hub is well underway.

From The Bakken Magazine, Savage expands Bakken transloading, adds crude-by-truck. Savage has announced expanded service offerings at its terminals in Uinta Basin and in the Williston Basin to include crude transportation via truck. With Savage's capability for CBR transloading services, the addition of truck transportation allows Savage to offer oil and gas companies a complete logistics solution from wellhead to the refinery.

From The Williston Herald, The Williams County Planning and Zoning Commission on Thursday recommended its approval for a proposed diesel hydro-skimming plant and tank storage facilty that may become the largest employer in Trenton. [I assume the school district is the largest employer right now. I am unable to find the population of Trenton. At Wiki, the 8 largest cities in Williams County are listed -- the 8th is Springbrook with a population of 29 back in 2011.]

Is the boom over? North Dakota's economy grew at 2.44 percent in 3Q13. This compares to a 38.6% increase in the same period, 3Q12. The big jump a year ago had to do with the state and oil companies pouring money into infrastructure. Western North Dakota was ramping up as fast as possible to support the big increases in oil production in the Williston Basin. Now that the infrastructure in place, one might expect new records in oil production.

From Reuters, US CBR shipments up 71 percent from 2012.

From The Bakken Magazine, Tervita Corp has announced the opening of its first engineered landfill in North Dakota at Blue Buttes, a 60-acre site that will accept non-hazardous solid waste from oil and gas exploration and production in the Bakken.