SM Energy To Buy Midland Basin Firm For About $1 Billion; Sold Some Bakken Assets -- August 8, 2016

SM Energy to acquire Rock Oil Holdings, LLC. Data points:

• acreage in Howard County, TX; west Texas, near Odessa/Midland; I assume this is Permian Basin
• $980 million / 24,783 acres = $40,000 / acre 
• earlier today, another source noted there are about 1,200 DUCs in Texas
• majority of DUCs (271): EOG, BHP Billiton, Anadarko
• EOG acreage concentrated across Karnes and Gonzales counties 
• BHP acreage is near EOG's in Karnes and DeWitt counties
• Anadarko acreage is in the southern portion of Dimmit and LSalle counties
• Howard County: the major city is Big Spring, up the road from Odessa/Midland on the way to Abilene

It should be noted that in the linked article above, it was reported that SM Energy had previously reported selling its producing assets in North Dakota and Montana to undisclosed buyers. From Oil & Gas Investor one week ago:

SM trimmed another 45% off its 2016 capex, down to about $705 million. The budget has roughly equal amounts to SM’s core assets:

• 30% Permian Basin; 
• 30% Eagle Ford;
• 30% Bakken/Three Forks; and
• 10% for other plays.

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From The "For What It's Worth" Department

Op-ed on Saudi's situation, posted a couple of days ago at Naked Capitalism.  Nothing in the linked article that regular readers don't already know, but it's an August, 2016, update. The comments are always entertaining. I find it interesting how quickly folks forget.

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At midday: new highs at 281, including Newfield,  with only one new low on the NYSE.

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Early trading: The market is fairly flat, leaning toward the downside, but even so, there are 226 new highs on the NYSE and zero (0) new lows at the moment. That will change by the end of the day.
 

A Showdown In RFS And RINs In The Offing? EPA To Move Biofuel Past The "Blend Wall" -- RBN Energy -- August 8, 2016

Active rigs:

	8/8/2016	08/08/2015	08/08/2014	08/08/2013	08/08/2012
Active Rigs	34	73	193	182	199

The reason the RBN story below is important, from The Washington Times:

The Environmental Protection Agency’s move to add more ethanol to gasoline will wreak havoc on lawn mowers, snow blowers, boats and even cars, say critics.

Mixing an additional 700 million gallons of ethanol and other biofuels into the nation’s fuel supply to meet a goal of 18.8 billion gallons in 2017 will raise the biofuel percentage to 10.44 percent, or past the “blend wall” after which car engines can be damaged, said Heartland Institute research fellow Isaac Orr.

“It’s hard for anyone to argue that the renewable fuel standard has been a good policy, and the Environmental Protection Agency’s decision to increase the amount of ethanol in the nation’s fuel supply means this train wreck of a policy will continue for at least another year,” Mr. Orr said in a Thursday statement.

“Owners of small engines like lawn mowers, snow blowers, and boats are hurt by ethanol mandates because ethanol is hard on these engines,” he said.

RBN Energy: is there a showdown on the RFS and RINs in the offing?

Renewable Identification Numbers (RINs) have grabbed the attention of refiners this spring and summer, and for good reason. The price of RINs –– ethanol credits used by refineries to prove compliance with the federal Renewable Fuel Standard –– have soared, and the credits are having an outsized negative effect on some refiners’ costs and profitability. Part of the RIN price spike can be attributed to concerns that there may not be enough to go around this year, and that the situation in 2017 may be far worse. But the rocketing cost of the credits is also raising questions about whether the largely unregulated and opaque RINs market is being manipulated or even cornered by those hoping for a quick, Powerball-size profit. Today, we continue our review of the RINs market with a look at which types of refiners are hit hardest by high RIN prices, and at whether we might be heading off a RIN-availability cliff.

Imagine for a moment that your biggest monthly bills weren’t your mortgage, your car payment, and maybe child-care or private-school tuition but, say, the cost of shampoo or pet food or paper towels. You would know something was seriously out of whack, yes? Well, consider the fact that for a number of U.S. refineries, their biggest operating cost in the second quarter of 2016 was not for labor or natural gas or electricity, but for RINs – paper credits created by the Environmental Protection Agency (EPA) to help ensure that the provisions of the Renewable Fuel Standard (RFS) are being complied with. Few guessed we’d end up here, with RIN prices approaching $1/credit, and no one can say with certainty what 2017 will bring. Still-higher RIN prices? More merchant refiners getting into the fuel-blending business or even the retail gasoline biz to mitigate their RIN risk exposure? A complete reworking of the RFS and the RIN program by EPA or Congress?  In the land of government mandates, it seems like anything could happen.

The Ledecky Page -- Just One Item -- August 7, 2016

Ledecky wins the gold in world record time

And Ledecky smashes her own world record. GB’s Jazz Carlin gets silver, USAs Smith has bronze. The victory was in doubt for about 0.0004 seconds - the first 0.0004 seconds. An amazing swim from an amazing champion.

From this site.





This is from 2015. The women do not swim the 1500 meter in the Olympics. When you watch this video you see why they did not add it in 2016 either:

Production Data For Two Wells Coming Off Confidential Over Weekend, Monday, To Be Posted -- August 7, 2016

Monday, August 8, 2016
32306, SI/NC, XTO, Lund 41X-17D, Siverston, no production data,

Sunday, August 7, 2016
None.

Saturday, August 6, 2016
32307, SI/NC, XTO, Lund 41X-17HXE, Siverston, no production data,

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The Pause That Refreshes

Updates

Later, 9:21 p.m. Central Time: a reader provided a nice summary of this past week with regard to the climate. This is the home page for SEPP.

Original Post

 

The pause in "global warming" has now been stretched back to 1998.

Meanwhile, four legitimate peer-reviewed scientific articles have concluded there has been no evidence of any rise in sea levels, anywhere, due to manmade global warming.

There are four new "legitimate" peer-reviewed scientific articles that show there is no "human hand" behind any rise in sea levels. Any rise in sea levels can be explained by natural phenomenon, not due to humans.

Scientists who have recently attempted to detect an anthropogenic signal in regional sea level rise trends have had to admit that there is “no observable sea-level effect of anthropogenic global warming,” or that the “sea level rise pattern does not correspond to externally forced anthropogenic sea level signal,” and that sea level “trends are still within the range of long-term internal decadal variability.” 

• First study: Hansen et al., 2016, Five individual oscillations caused by the lunar nodal oscillation -- no evidence of human cause.
• Second study: Palanisamy, 2016. Any sea level spatial trend pattern in the tropical Pacific can be explained by the wind driven vertical thermocline movement.
• Third study: Hadi Bordbar et al., 2016. Again, the changes in the tropical Pacific are attributed to unprecedented strengthening of the Trade Winds; not related to human activity.
• Fourth study: Dangendorf et al., 2016. The authors suggest that there is an element of anthropogenic climate change, a fraction of the 20th century sea level rise represents a response to pre-industrial natural climate variations such as the Little Ice Age.

Tesla: $40 Car Washes While Standing Around Waiting For Car To Charge; ObamaCare: Insuring Only Those Who Are Already Sick -- WSJ Op-Ed -- August 7, 2016

Note: this is not an investment site. Do not make any investment, financial, travel, job, or relationship decisions based on what you read here. If this information is important to you, go to the source. I post this to help me put the Bakken in perspective.

Tesla: adding insult to injury. Okay, so you've just plunked down $70, 000 and have just received your new Tesla. You can charge for free, but it's going to cost you $40 to get the car washed. 

Tesla is trying to take away the one drawback of the Supercharger system: standing around doing nothing for more than 30 minutes or so while your car gets a charge, and longer if there is line.

Surprisingly, Supercharger stations don’t even provide a simple squeegee and water for windshield washing. If you ever see a Tesla parked at a gas station, it’s safe to assume it’s there to clean it’s windshield.

Tesla Motors Inc is currently experimenting the service at its supercharger station at the Fremont Factory, and if the reviews come out to be good, the service shall be launched soon at the other stations too.

The wash system could be subscription service in itself with costs being $80 a month for the Model S and $90 for the Model X. Ideally, the costs for the Model 3 would be somewhat less expensive.

As of now, there has been no comment from the EV firm on the matter.The decision solely rests upon Tesla Motors Inc whether or not to proceed with the project, but the fact is, it is still a great deal of cash to pay for some efficiency at the charging station. For owners, who do not want to spend this much, and still want to kill their time could simply bring a work tablet, or a collection of their favorite shows.

Warren Buffett/BRK. From 24/7 Wall Street: major changes in Warren Buffeet holdings as Berkshire announces earnings.  In the first dozen or so listings, I saw hardly any changes despite the headline.

• Goldman Group, 11 million shares vs 12.6 million share at the end of 2015
• Graham Holdings, remains a very tiny stake in what remains of the Washington Post breakup
• AMEX: the same 151.6 million shares
• Apple: listed as a new position with almost 10 million shares (see updated report just one week later; now Apple is said to be up to 15 million shares)
• Coca-Cola: same stake of 400 million shares
• IBM: again a larger stake, averaging his cost basis lower; 81 million shares
• Wells Fargo & Co: same stake of 480 million shares
• Kraft Heinz: no change; 326 million shares
• Phillips 66: the same 76 million shares
• ATT: no longer listed as a stake; has been diminishing of late; tied to a stake in DirecTV
• Kinder Morgan Inc: same stake of 27 million shares
• Axalta Coating System: same stake of 23 million shares
• Bank of New York Mellow (big whoop): declines slightly from 25 million shares to 20 million shares
• Charter Communications: slightly larger at 10.326 million shares vs 10.281 million shares

... and so it went. I didn't see much new despite the headline. Having said that, there were a few interesting tidbits. Buffett has some of the same problematic decisions the rest of us have -- except involving somewhat larger sums of money.

Insider buying jumps. Also from 24/7 Wall Street, but no link. After the last story from 24/7 Wall Street, hardly seems worth the time to go to the article. Here's the headline: insider buying jumps at COP, Bank of America, Boeing.

WMT vs Amazon: from Business Insider --"everyone is underestimating Walmart's ability to crush Amazon." Actually, I think there's enough to go around for everyone. I doubt Jeff Bezos is concerned.

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Must Be A Really, Really Slow News Day

This tells me more about the size of China than about the likelihood of this contraption ever becoming mainstream. 

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The Death Spiral

Updates

Monday, August 8, 2016: close to home. SayAnythingBlog is reporting -- 

Obamacare Costing Hundreds of UND Graduate Students Their Health Insurance Next Week--

Hundreds of graduate students are losing coverage provided by the University of North Dakota, and Obamacare is most certainly the culprit.

The university first announced the change back in May. “As you may know, due to provisions in the Affordable Care Act, the university is no longer allowed to pay for graduate assistant health insurance. Instead, graduate assistants are required to obtain their own health insurance,” the university announced in an online posting.

The cut off date for his plan is August 15, 2016.

347 graduate students were covered by Graduate Health Insurance during spring semester 2016.

He added that the university had not reduced or eliminated insurance coverage in any other area due to Obamacare, and that UND signed a memorandum of understanding with Altru Health System allowing them to help students find new coverage.

Original Post

 

It will be interesting how/if/when Hillary Clinton runs ads on ObamaCare. What made me think of that is the increasing number of stories coming out about ObamaCare right now. I predicted that we would see that crescendo as we move into premium-setting season (August - September - October) and then open season starting in November. The dates may be off but probably not by much. Be that as it may, what I did not expect what mainstream and well-respected media outlets to start referring to the ObamaCare challenges as "a death spiral."

When I saw that in an op-ed in The Wall Street Journal overnight several hours ago, it caught my attention, but to see this headline from Mark Perry, posted one hour ago, really stunned me:
"quotation of the day on the ObamaCare death spiral." Oh, now I see it. Mark Perry is linking the same WSJ op-ed I noted:

It’s hard to exaggerate the alchemy of distortions that are turning ObamaCare into such a pending disaster that big insurers like Aetna, Anthem, Humana and UnitedHealth Group, once supporters, can’t cut back their participation fast enough.

ObamaCare was always going to be a questionable deal for taxpayers if the only people who signed up were poorer people whose premiums were largely paid by taxpayers. That was fine as far as insurers were concerned. They can make a profit even if taxpayers are the only ones paying.

For insurers, the problem lies elsewhere: ObamaCare policies have proved so unattractive that even customers eligible for subsidies are turning away unless they also happen to be seriously or chronically ill. That’s because deductibles and copays keep going up with each successive renewal period. For a family of four on a bronze plan, the deductible is now above $11,000. This is the equivalent, in the case of routine illness or injury, of not being insured at all.

And the problem only gets worse as insurers, to stem their losses, keep hiking premiums, copays and deductibles. With each turn of the wheel, ObamaCare becomes an insurance program that appeals only to those who already know they face large health-care costs.

Not only is Hillary going to have to promise free college to all Americans but she is also going to have to promise free health care to all.

Of course, the bigger question is whether 50 years from now, we will call it ObamaCare, HillaryCare, or National Health Service. We don't call "social security" some name related to FDR.

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Sunday Reading

I'm back to reading again The Portrait of a Lady, Henry James, the 2007 Signet Classic edition. I wrote about this some years ago.