Procrastinating -- Nothing About The Bakken -- June 17, 2015

I'm procrastinating. I should be reading, not blogging or surfing the net. I have no family commitments until 8:30 a.m. tomorrow morning. I am free for the rest of the day (it's 3:00 p.m. CT). It would be a perfect day for a long bike ride, but the rain from Tropical Storm Bill still threatens. The storm has moved through, and there is nothing on the radar scope but yet additional rain is predicted through midnight tonight, and the skies are pretty dark. Not sure what to do.

While procrastinating, I happened to catch the headline that Musk/Tesla borrowed $750 million (announced earlier this week). My first thought: that's a strange figure. For all intents and purposes, that's $1 billion. My hunch is that realistically, Musk would have liked $1 billion but that would been quite a headline for the pundits: "Tesla Borrows $1 Billion." So, for PR reasons, perhaps he went with $750 million rather than $1 billion.

It's also possible he went to the banks seeking $1 billion, but they balked, reluctantly settling for $750 million. Supporting that is the fact that Musk had to get the loans from multiple banks, not just one (Deutsche Bank, Bank of America, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Wells Fargo and Credit Suisse) -- seven big name banks in all. And the loan needs to be paid back in less than five years.

One wonders if we might not be witnessing the Greek problem: "If you owe your banker a thousand pounds, you are at his mercy. If you owe your banker a million pounds, he is at your mercy."

Some time ago, I read somewhere that AAPL was one of the most "shorted" stocks. Today, according to Yahoo!Finance, the number of APPL shares shorted represent 1% of total shares outstanding. TSLA? 25% of outstanding shares are shorted.

Tesla's debt is $2.65 billion according to Yahoo!Finance. I doubt that includes the $750 million announced today. And Tesla is burning through cash. Operating cash flow is an astounding negative $250 million and levered cash flow is a phenomenal negative $1.1 billion. (Some numbers rounded.)The rest of the "key statistics" for Tesla look just as bleak.

Apple? Operating cash flow is an astounding $75 billion, and levered cash flow is $45 (numbers rounded).

So, the "$750 million" number is strange:

• it isn't quite $1 billion but "really" it is
• as fast as the company is burning through cash, another $750 million hardly seems enough especially in a capital intensive industry
• it took seven banks to agree to this loan
• 25% of outstanding shares are shorted (watch out for a "short squeeze")

Another troubling development: Musk is reaching out for help on his battery (announced in today's WSJ). I thought Tesla/Musk had "all" the answers with regard to battery power. Apparently not; he's hiring an outside expert from Nova Scotia, a province well known for its technology breakthroughs, especially in the area of battery technology. Something smells. 

Random Look At Petrogulf Antelope Drilling Unit That Could Get 16 Wells -- June 17, 2015

From the January, 2015, dockets:

• Case 23580, Petrogulf, Antelope-Sanish, 16 wells on an existing 1280-acre unit, 25/36-151-94; McKenzie, 

So, what does that drilling unit looks like today:

From 20,000 feet:

From 5,000 feet:

From 500 feet:

The wells currently on the pad:

• 25948, 2,088, Petrogulf, Sandstrom 151-94-1H, 30 stages, 2.8 million lbs, t12/13; cum 232K 4/15; still flaring,
• 25949, 1,367, Petrogulf, Sandstrom 151-94-2HTF, t12/13; cum 285K 4/15; still flaring,
• 28522, 2,106, Petrogulf, Three Tribes 151-94-3H, ICO, t12/14; cum 120K 7/15; still flaring some,
• 28523, 1,572, Petrogulf, Three Tribes 151-94-4HTF, t12/14; cum 81K 4/15; still flaring,

Random Update On The Monster ERF Well In The Sanish -- June 17, 2015

Updates

Later, 2:05 p.m. CT: about an hour after posting the original post below, I noted that Zacks  had a piece on Enerplus. Note: this is not an investment site. Do not make any investment or financial decisions based on anything you read or think you might have possibly read at this site. ERF is one of the few Bakken operators paying a dividend; it currently pays 5%.  

Original Post

For background to this update, see an earlier post.

What caught my eye today regarding this well -- after all this time, it's still flowing without a pump. Yes, it's possible a pump has been placed but the paperwork has not been filed with the NDIC. But for now, the NDIC shows this well is not on a pump.

Not that in October, the company placed temporary NGL units on the pad to reduce flaring. 

• 26737, 3,374, Enerplus, Ribbon 152-94-18B-19H, Sanish, again, much of the paperwork says "Bakken," and the target was clearly the middle Bakken (middle Bakken "C") but the scout ticket says the Sanish pool; 42 days (316 hours) of drilling; 42 stages; 10.0 million lbs sand; t4/14; cum 377K 4/15;

One wonders to what extent this well is being choked back. 

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
SANISH	4-2015	30	17714	18005	4755	36195	33951	0
SANISH	3-2015	25	17089	17258	4036	29289	27175	0
SANISH	2-2015	26	21009	20759	4740	35182	32640	0
SANISH	1-2015	22	11266	11551	2283	18818	14892	0
SANISH	12-2014	18	416	988	2914	3926	2341	0
SANISH	11-2014	30	25660	25970	6455	39772	3678	36094
SANISH	10-2014	31	32179	32299	7075	51486	0	51486
SANISH	9-2014	30	33551	33297	6600	53682	0	53682
SANISH	8-2014	31	39805	39850	7787	63688	0	63688
SANISH	7-2014	31	37084	37018	7413	22253	0	22253
SANISH	6-2014	28	31107	30020	6236	18664	0	18664
SANISH	5-2014	31	54002	53862	11121	32401	0	32401
SANISH	4-2014	23	56416	55909	31325	33850	0	33850

How Do You Like Me Now? -- June 17, 2015

This is really quite incredible. Starbucks buys a bakery chain, most of which is located in San Francisco, and then closes all its cafes. Bloomberg is reporting:

Starbucks Corp. will close all 23 La Boulange bakery cafes by the end of September, even as it continues to use the brand to sell food at its coffee shops.

“Starbucks has determined La Boulange stores are not sustainable for the company’s long-term growth,” the Seattle-based company said in a statement on Tuesday. “The La Boulange brand will continue to play a significant role in the future of Starbucks food in stores.”

Starbucks agreed to buy the San Francisco-based Bay Bread and its La Boulange brand in 2012 for $100 million. The French-themed bakery sold homemade granola, flank steak sandwiches and organic bread.

Homemade granola ... homemade ... homemade in San Francisco ... .. I wonder what Starbucks found in that homemade granola -- inquiring minds want to know...

How Do You Like Me Now, Toby Keith
Back to La Boulange -- it looks like the owners got a good deal; the employees are looking for new jobs. How do you like Starbucks now?

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Disclaimer

This is not an investment site. Do not make any investment or financial decisions based on anything you read here or think you may have read here.

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GDP Now

GDPNow:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2015 was 1.9 percent on June 16, unchanged from June 11. The nowcast for real GDP growth ticked up to 2.0 percent after yesterday morning's industrial production release from the Federal Reserve boosted the forecasts of real investment in petroleum and natural gas well structures and motor vehicle and parts dealer inventories. The GDP nowcast moved back down to 1.9 percent after this morning's housing starts release from the U.S. Census Bureau reduced the forecast for real residential investment growth from 8.8 percent to 6.8 percent.

The Fed, today:

Federal Reserve policymakers on Wednesday kept the central bank’s benchmark short-term interest rate near zero, opting against the first increase since 2006 after determining the economy still isn’t strong enough to handle it.

Fed officials sharply downgraded their economic forecast for this year. They projected the economy would grow between 1.8% and 2% this year, well below the range of 2.3% to 2.7% in its last forecast in March.

If they’re correct, annual growth would be the worst since 2011 and would be far from the breakout performance some economists had hoped for this year.

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Finally

The reaction was a bit delayed, but finally investors noted it. SRE is up toay, slightly over 1%.

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Well, That Was Easy

More love lost. Former Nokia CEO leaving Microsoft.

Dance Me To The End of Love, Leonard Cohen

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That Glow Didn't Last Long

There are five sports stories on the front-page of the internet edition of The Wall Street Journal today; none of them are on the new NBA champions.

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Best Non-Bakken Story Of The Day

Treehouse for corporate meetings, with non-stop beer. 

Whisky For My Men, Beer For My Horses, Toby Keith, Willie Nelson
Speaking of which, how do you remember whether to spell it "whiskey" or "whisky"? It's easy. If the origin is a country with no "e" in it, it's "whisky" without the "e" (Japan, Scotland, Canada). If it's from a country with an "e" in it, it's "whiskey" with an "e" in is (United States, Ireland). There is at least one exception to the rule: George Dickel Tennessee Whisky.

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Slog

I slogged through and finally finished This Side of Paradise. It was not a pretty sight. Wow, what a pain. But I'm glad I finished it. The novel will haunt me for quite some time, and that's how I judge fiction.

At the end of this particular copy, were the contemporary book reviews. Perhaps the most interesting part of the book. I will have to read parts of Fitzgerald's book again. But I am eager now to re-read Catcher in the Rye.

Wednesday, June 17, 2015 -- Tropical Storm Bill Hits DFW Metroplex; Reuters Reporting Strong Demand For Oil

Strong demand: Reuters is reporting crude oil up more than a dollar, over $65 for Brent, $60 for WTI, on strong US demand. Forecasts are all over the map: some say going higher; some say going lower. But this graphic, posted earlier -- I think, last week -- tells the story:

Never mind: oil fell back almost 2% in early afternoon trading after "speculators" took their profits and got out.

Active rigs:

	6/17/2015	06/17/2014	06/17/2013	06/17/2012	06/17/2011
Active Rigs	78	187	184	214	173

RBN Energy: Gulf Coast condensate splitter economics update.

Weather in north Texas: the "eye" of the storm is on the south side of Dallas (at 7:30 a.m.) and moving ever so slightly to the west of due north. If it stays on that track, the "eye" of the storm will move through the corridor west of the airport and east of Ft Worth -- exactly over Grapevine / Southlake. Right now in our immediate area, very wet but the rain is not coming down very hard.

Folks have asked about increased energy consumption in the Mideast. See this post.

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The Bismarck Tribune is reporting the approval of a 150,000-bbl crude oil storage depot in Watford City: 

Dakota Access Pipeline went to the McKenzie County Commission for authority to locate a massive crude oil terminal on the south edge of the Watford City limits.

The request was narrowly approved and moves forward the company’s plans to build a 1,100-mile pipeline from the Bakken into Illinois to supply Midwest and Gulf coast refiners with the North Dakota product by the end of next year.

Cushing: approximately 50 million bbls of storage capacity, I believe.

My hunch: about 1 million bbls of storage capacity in the Bakken.

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EIA "Energy Cookie"

EIA is reporting:

First-quarter 2015 financial results for globally integrated oil companies—ones that focus on both the exploration and production of crude oil (upstream) and the refining of crude oil into petroleum products (downstream)—show that total earnings were $22 billion (54%) lower than in first-quarter 2014.

Lower crude oil prices contributed to a decline in profits in the upstream sector of $28 billion (80%) compared to first-quarter 2014.

Profits in the downstream sector, however, were the largest for any quarter since third-quarter 2012, almost $6 billion (95%) higher than in first-quarter 2014, which offset some of the decline from the upstream segment. --- EIA

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Talk About Buying Influence

#1 On The List Led The Anti-Keystone Fight

Note Delta Between #1 and #2

Remember: it's Steyer's party and Bloomberg's party that want campaign finance reform. LOL.

Numbers rounded in some cases:

• Steyer: $75 million
• Bloomberg: $30 million 
• Koch: $5 million