ConocoPhillips (COP) Will Sell Its Kenai (Alaska) LNG Export Terminal -- November 18, 2016

From SeekingAlpha:

• ConocoPhillips says it is in the process of selling its Kenai liquefied natural gas export terminal in Alaska, and will open a "data room" associated with the sale in January
• COP says its current focus is on North Slope operations; COP has a nearly $1B capital budget for Alaska in 2016, and has accepted delivery of two new drilling rigs this year
• COP says it has not exported any gas so far in 2016 because of market conditions, but the Kenai plant remains operational and ready to resume exports

Note: this is not an investment site. Do not make any investment, financial, travel, relationship, or job decisions based on anything you read at this blog. If this is important to you, go to the source.

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A Note For The Granddaughters

I'm actually ahead of the "game" this year. Often I wait until it's too late, but for whatever reason I cleaned up my equity portfolio before the end of the year, selling my losers (and some were significant) and using whatever cash I might have for new investments.

A reader asked me earlier this month on some of my thoughts on investing. I am the last person one would want to ask. No doubt I would have done much better over the years had I turned everything over to a professional financial advisor, but

• I would not have had as much fun;
• I would not have learned as much; and,
• I would not have stayed involved in the US economy, which I really enjoy

I have mentioned to other readers that I seldom check my portfolio unless I plan to sell or buy something. In the process of buying something, I then check to see if there's anything worth selling. I am not a trader. I am pretty much "buy and hold."

Now that I am retired I don't have as much discretionary income as I had when I was part of the labor force. Most of my discretionary income available for investing comes from dividends that are not automatically reinvested from which they came.

It takes a few months for enough cash to accumulate to make purchases in new investments worthwhile.

So, that brought me back to the reader's question, about my thoughts on investments.

Reflecting on that, I asked myself, where did I do best over the years? What investments did the best? Anecdotally, it appears I did best when a company was spun off, or a company was bought, or a company was sold. And some of those "events" were incredibly significant. The problem: no one can predict those "events."

Two of the commonalities of those "events" were:

• the "events" all involved blue-chip stocks (small-cap, mid-cap, or big-cap)
• shares in all companies had originally been bought with a 20-year horizon

Examples:

• BNSF/Berkshire
• BAX/Baxalter/Shire
• ATT breakup (years and years ago)

Close but no cigar:

• HAL/BHI

Pending:

• GE/BHI

Some of these deals resulted in a better outcome even if the dollar amount at the time was not particularly noteworthy. For example, at the time, I would have preferred that BNSF not be bought by Berkshire (for several reasons) but it has turned out to be much better than expected over the years.

So, now with my cash today, where do I invest?

For awhile I was accumulating GE because I think it's a great company for someone with a 20-year horizon. But then when I saw the big computer chip companies buying smaller computer chip companies, I began to wonder whether accumulating XLNX might not be a better idea. In other words, invest in a great company with a "small market cap" in an enviable sector, thinking it might be taken over.

So, a challenge: should I change my investment strategy from accumulating a big-cap company like GE and investing in a blue-chip company that might be bought by another company? So, I'm struggling with that right now, but I think I've come to a solution.

I think I will stop here. The post is getting long. Maybe more later.

Oh, some thoughts with regard to the economy / political environment.

XLNX was recently in the news as a possible buyout candidate, but that "excitement" died when a chip company other than XLNX was bought by a larger chip company. I had invested in XLNX over the years and the question rose whether I should now sell it, that it was temporarily out of favor as a take-over candidate. Then Trump won the election, and XLNX suddenly looks incredibly better. I did not sell; I purchased more. I bought XLNX before the election (for the same reason) but with the election outcome, I feel even better.

The other day, I mentioned GEO. In the current political environment, it's interesting. Two problems: I don't see this as something I would accumulate over a 20-year horizon; and, it's in a sector I know little about. I haven't said I won't invest in GEO but it would go against two of my "rules" when investing.

Another High-Proppant EOG Well In The Bakken -- November 18, 2016

Correction: originally I said this was a middle Bakken well; it's a Three Forks B1 well.

Track high-intensity wells here. 

The average amount of proppant being used by other operators in the Bakken is somewhere between 4 million lbs and 8 million lbs. Anything over 10 million lbs gets my attention. Here's another EOG high-proppant well:

• 31403, 1,447, EOG, West Clark 117-0136H, Clarks Creek, Three Forks first bench, 36 stages, 27.65 million lbs, t5/16; cum 132K 9/16;

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	9-2016	28	26233	26679	37575	75879	71350	4134
BAKKEN	8-2016	21	21395	21243	29171	48541	40762	7450
BAKKEN	7-2016	31	33296	33386	48688	74521	65210	8811
BAKKEN	6-2016	30	32510	32269	58498	72921	70628	1809
BAKKEN	5-2016	14	18278	17857	39081	36703	33969	2528

See first comment. The reader was impressed with the amount of natural gas produced (MCF) and was curious about the depths at which this well was drilling.

Many "boe conversion" sites on the net; this is one.  Using that conversion table:

• 75,000 mcf = 12,934 boe
• conversion factor appears to be ~ 5,800 at that conversion site
• in June, 2016, the BOE would be approximately: 32,510 + (72,921/5,800) = 32,510 + 12575 = 45,085 boe for the month of June, 2016

From the completion report:

Stimulation was said to have occurred in the "Bakken" but the drilling report / geologic report said "Three Forks target zone." The application permit was for the "Three Forks B1" within 960-acre drilling unit.

From the drilling/geologic report:

• spud, December 21, 2015
• FTD, December 31, 2015
• TD: 18,217 feet
• total lateral: 7,269 feet; target total: 7,269 feet (in-zone, 100%)
• KOP: 10,291 
• Three Forks entered at 10,774 feet; curve TD was reached at 10,948 feet, below the Samson E1 marker.
• "A total of 7,269' of lateral was drilled, of which 7,269' occurred in the Three Forks Target, in-zone calculation is 100%.

 

It's Already Happening: The Wall -- November 18, 2016

From my long post yesterday:

As you start to think about "the wall," remember that joke about two walkers approaching the woods, with one of the two walkers stopping to put on tennis shoes; when asked why, because he certainly can't outrun a bear, he said, "I don't have to outrun the bear; I only have to outrun you."

That holds true for "the wall." Texas will take the lead, partly because the "real' problem is in Texas. Once the word gets out that Texas is taking the lead on border security, the problem will move west to New Mexico, Arizona, and California. That will be fun to watch. [Update, one day later, November 18, 2016: it is now being reported that Central American immigrants are now pouring through Yuma, New Mexico.]

RINS And Refining -- November 18, 2016

Futures: Dow 30 green again. Oil up slightly.

Trump's threat to place a 35% tariff on cars manufactured in Mexico: Trump tweeted late last night to say that the Chairman of Ford called him personally to say that Ford has decided to keep Lincoln production in Kentucky. Trump reminded folks that he owed this to Kentucky for the state's confidence in Trump as president. There remains a bit of "confusion" exactly what's moving, who said what when, but the headline is what it is. A reader sent me the Bloomberg link.

New CIA director: member of the Republican Party's Tea Party; graduated first in his class from West Point; close confidant of Mike Flynn's -- see below. (Look at the age of the new CIA director and then see comments on age below.)

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Back to the Bakken

Active rigs:

	11/18/2016	11/18/2015	11/18/2014	11/18/2013	11/18/2012
Active Rigs	38	65	184	183	187

RBN Energy:  RIN costs and their widely varying impact on refiners and refining.

Over the past few weeks, publicly traded independent refining companies reported their latest quarterly results, and nearly all lamented on a common theme: the cost of Renewable Identification Numbers (RINs) is out of control. However, the financial burden is not felt equally across the industry, as companies with integrated marketing operations (refining, blending and retailing) don’t face the same RINs-cost albatross as merchant refiners who don’t have retail operations. Today we review the escalating RIN costs that obligated parties have endured this year and explain how the degree of financial pain depends on the level of refiners’ downstream integration.

RINs have become a leading topic of conversation—and angst—in the refinery sector, and we’ve been exploring the matter in the RBN blogosphere. In our initial bl 

og a few years ago, we described the evolution of ethanol mandates and the limits on how much ethanol can be blended into gasoline without affecting engine performance.

OPEC meeting: cut of at least 700,000 bopd needed to bring market balance -- Rigzone.

OPEC meeting: Saudi's oil minister urges OPEC to cut oil output to low end of target. The ceiling: 32.5 million bopd. In the September, 2016, meeting OPEC agreed to limit between 32.5 million and 33 million bopd.

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WSJ Headlines That Caught My Eye

Michigan seeks stay of order to deliver bottled water to Flint, MI:

• delivering almost 400,000 cases/week is "unnecessary and likely unable to carry out"; 
• four cases of water per resident each week to roughly 30,000 homes; 
• door-to-door delivery would cost about $10.5 million a month; 
• currently 78,000/week being delivered through distribution centers around the city

Scotch whisky makers to appeal ruling on minimum alcohol prices

• industry says rule incompatible with EU rule
• Scotland's highest court: ruled that a floor on per-unit alcohol prices is legal
• law passed by Scotland's parliament in 2012 to combat alcohol abuse
• the law established a 50-pence floor on per-unit alcohol prices
• not yet enacted due to law being tied up in court since 2012

The key to reducing oil imports to zero -- an op-ed from John Hofmeister (not worth reading)

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The Political Page

Newest presidential appointments:

• CIA Director: Mike Pompeo, US Representative, Kansas; West Point, Harvard Law School, member of the Tea Party Movement
• Attorney General: Jim Sessions, US Senator, Alabama

If Alabama's Senator Sessions leaves Alabama to become a member in the Trump administration, who might replace him as a senator from Alabama? The governor of Alabama will appoint a "short-term" replacement and set a date for an election to fill the Sessions' vacancy. The short list:

• US Representative Martha Roby (she and Terri Sewell were the first women elected to Congress from Alabama in regular elections)
• Attorney General Luther Strange
• state senator Trip Pittman
• state senator Cam Ward

Did I hear this correctly on MSNBC Morning Joe this morning? In the US House of Representatives, the average age of the:

• Democratic congressmen: 68 years old
• Republican congressmen: 48 years old 
• the Democrats have lost 68 US House positions during the Obama administration (8 years) 

Add Japan's Abe to Trump's column: says Trump is trustworthy leader.

Bloomberg to end its daily politics show. The hosts are Mark Halperin and John Heilemann. The daily program will be off the air as of December 2, 2016, but will air four hour-long specials before finally coming to a close on January 20, 2016. The program first aired in October, 2014.

Conflict of interest? All that talk about a "blind Trump trust" is just that, "media talk." Won't happen; not required.