Futures Mean Squat -- But, Having Said That --- December 3, 2017

Updates

Later, 7:15 p.m. Central Time:

 

Original Post

Assuming ABC News doesn't report another inaccurate news report, it could be an exciting day on Wall Street tomorrow. Tonight, the futures:

And, WTI is down slightly, trading just slightly below $58.

CNN reports why Wall Street is euphoric over the tax plan (and, of course, as usual, it's a superficial explanation, fits CNN's theme, and completely misses the real reason why Wall Street is euphoric. As I understand it, corporations won't see their tax breaks until 2019 -- at least the "big" tax break -- but those individuals paying federal taxes (about 50% of the US population) will see tax breaks next year. (No one knows whether individual tax breaks will take effect for the 2017 or the 2018 calendar year.)

Between now and the end of the year, any significant move down in the market will represent a huge buying opportunity, unless there are major geopolitical events that cause the market to plunge. But even then, it's likely a plunge in the market would be a buying opportunity.

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

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The Trump Rally

From an earlier story, for the archives.

The Dow has spiked nearly 6,000 points since President Trump's election last year, notching 80 daily record highs since then.

The S&P 500 and Nasdaq are also near all-time highs. The latter is up a whopping 30% since the election.

"Investors are feeling golden," said Sam Stovall, chief investment strategist at CFRA Research. "Until you get signs that this economy is likely to roll over and die, investors believe stocks remain the place to be."

The boom in the stock market is a clear reflection of improvements in the U.S. economy. New numbers published on Wednesday show the U.S. grew at a brisk 3.3% pace between July and September, the best growth since 2014 and the second-straight quarter of 3% growth. [And first estimate for 4Q17 GDP is an incredible 3.5%.]

The global economy is also gathering momentum. Most major countries are growing at the same time for the first time in years.

Among Many Nice Wells Coming Off Confidential List This Week, EOG Will Be Reporting Four Spectacular Clarks Creek Wells -- December 3, 2017

Disclaimer: I often make simple arithmetic errors. In a long note like this there will be typographical and factual errors. If this is important to you, go to the source.

I track the EOG Clarks Creek wells here.

33050, conf, EOG, Clarks Creek 75-0719HX, Clarks Creek. 7/17: 60,170 + 85,764K/6001 = 60,170+14,204 = 74,464 boe in one month sold:

Date	Oil Runs	MCF Sold
10-2017	36508	80036
9-2017	34226	60803
8-2017	57069	94244
7-2017	60170	85764
6-2017	41645	15762

32794, conf, EOG Clarks Creek 74-0719H, Clarks Creek. 7/17: 66,039 + 94,086K/6001 = 66,039 +15,678 = 81,717 boe in one month sold:

Date	Oil Runs	MCF Sold
10-2017	33056	94887
9-2017	32263	61850
8-2017	51146	87778
7-2017	66039	94086
6-2017	47392	17014

32796, conf, EOG, Clarks Creek 73-0719H, Clarks Creek. 7/17: 59,709 + 84,999K/6001 = 60,170+14,164 = 73,873 boe in one month sold:

Date	Oil Runs	MCF Sold
10-2017	27889	113440
9-2017	34631	80000
8-2017	52049	93206
7-2017	59709	84999
6-2017	45483	18118

32795, conf, EOG, Clarks Creek 110-0719H, Clarks Creek.7/17: 50,738 + 72,096K/6001 = 50,738+12,014 = 62,752 boe in one month sold:

Date	Oil Runs	MCF Sold
10-2017	29335	104337
9-2017	33823	77059
8-2017	45724	79899
7-2017	50738	72096
6-2017	43748	16870

Wells Coming Off Confidential List This Week -- Decemer 3, 2017

Wells coming off the confidential list this next week:

Monday, December 11, 2017
33562, conf, MRO, Lois USA 14-34H, Reunion Bay, no production data,
33216, conf, Kraken Operating Feller 22-15 3H, Lone Tree Lake, no production data,
32316, conf, EOG, Van Hook 71-1411H, Parshall, nice production;
31630, conf, Oasis, Lawlar N 5199 41-23 3T, North Tobacco Garden, very nice production;

Sunday, December 10, 2017
33600, conf, Resonance Exploration, Resonance Senescall 6-36, Sergis, producing, albeit not much;
33217, conf, Kraken Operating, Feller 22-15 4H, Lone Tree Lake, no production data,
32315, conf, EOG, Van Hook 70-1411HX, Parshall, a nice well;

Saturday, December 9, 2017
33412, conf, MRO, Winona USA 21-2TFH-2B, Antelope, no production data,
33050, conf, EOG, Clarks Creek 75-0719HX, Clarks Creek, a huge well, 60K in each of two months;
32794, conf, Clarks Creek 74-0719H, Clarks Creek, a huge well; 66K in one month; 51K in next month;
31836, conf, Whiting, Evitt 34-12H, Truax, a huge well;

Friday, December 8, 2017: 36 for the month; 146 for the quarter
33414, SI/NC, MRO, Wilbur USA 31-2TFH, Antelope, no production data,
33413, SI/NC, MRO, Chauncey USA 31-2H, Antelope, no production data,
32796, 2,518, EOG, Clarks Creek 73-0719H, Clarks Creek, 4 sections, GL, 55 stages; 13.2 million lbs, t6/17; cum 220K 10/17;
32795, 2,204, EOG, Clarks Creek 110-0719H, Clarks Creek, 4 sections, GL, 60 stages; 17.5 million lbs t6/17; cum 204K 10/17;
Thursday, December 7, 2017
33208, 1,244, Whiting, Evitt 14-12-4TFHX, Truax, Three Forks, 39 stages; 9.3 million lbs; t6/17; cum 90K 10/17;
33134, 1,063, Liberty Resources, T. Haustveit E 156-95-26-3MBH, 27 stages, 8 million lbs, Beaver Lodge, t6/17; cum 99K 10/17;

Wednesday, December 6, 2017
33415, SI/NC, MRO, June USA 31-2H, Antelope, no production data,
32612, 1,179, HRC, Fort Berthold 148-94-35D-26-13H, McGregory Buttes, Three Forks, 34 sstages; 5.1 million lbs; t7/17; cum 85K 10/17;
32611, 1,482, HRC, Fort Berthold 148-94-35D-26-12H, McGregory Buttes, 33 stages; 5 million lbs, t7/17; cum 106K 10/17;
32608, 1,196, HRC, Fort Berthold 148-94-35D-26-11H, McGregory Buttes, 4 sections, 34 stages; 5.1 million lbs, t7/17; bcum 103K 10/17;
31835, 1,582, Whiting, Evitt 34-12TFH, Truax, Three Forks, t6/17; cum 112K 10/17;
30169, 1,155, Oasis, Cook 5300 41-12 11T, Willow Creek, Three Forks, 50 stages; 19 million lbs,, with ceramic, large; t6/17; cum 63K 10/17;
28701, 480, Oasis, Cook Federal  5300 41-12 10BX, Willow Creek, 4 sections, 50 stages; 20.1 million lbs; large sand; small ceramic, t6/17; cum  109K 10/17;27352, 268, Oasis, Cook 5300 12-13 7T, Willow Creek, Three Forks, 50 stages; 6 million lbs, large, small, some resin coated, t6/17; cum 65K 10/17;
Tuesday, December 5, 2017
33416, SI/NC, MRO, Miles USA 41-2TFH, 2B, Antelope, no production data,
33340, dry, Armstrong Operating, Frenzel 1-35, Wildcat, no production data,
32902, SI/NC, BR Lovaas 4-8-12 MBH, Blue Buttes, no production data,
31434, SI/NC, Slawson, Osprey Federal 2 SLH, Big Bend, no production data,

Monday, December 4, 2017: 18 for the month; 128 for the quarter
33066, SI/NC, XTO, Deep Creek Federal 44X-5C, Lost Bridge, no production data,
32903, SI/NC, BR, Lovaas 5-8-12 UTFH, Blue Buttes, no production data,
31612, SI/NC, BR, HE 3-8-20UTFH, Elidah, no production data,
31611, SI/NC, BR, HE 4-8-20MBH, Elida, no production data,
31433, SI/NC, Slawson, Osprey Federal 7-26-29TFH, Big Bend, no production data,

Sunday, December 3, 2017: 13 for the month; 123 for the quarter
32904, SI/NC, BR, Lovaas 6-8-12MBH, Blue Buttes, no production data,
31850, 1,191, Whiting, 3J Trust 24-8-2PH, Bell, 45 stages; 9.4 million lbs, t6/17; cum 76K 10/17; already shut in as of 10/17;
31613, SI/NC, BR, HE 2-8-20MBH, Elidah, no production data,

Saturday, December 2, 2017: 10 for the month; 120 for the quarter
33323, SI/NC, WPX, Mandaree South 25-36HZ, Spotted Horn, no production data,
33065, SI/NC, XTO, Deep Creek Federal 44X-5B, Lost Bridge, no production data,
31431, SI/NC, Slawson, Osprey Federal 6-26-29TFH, Big Bend, no production data,

Week 48: November 26, 2017 -- December 2, 2017

Biggest story in the Bakken this past week: MRO reports a well that produced 75,000 bbls in one month.  A close second was the report that Bakken gas flaring rebounds, a story that RBN Energy felt significant enough to devote an entire post to the news.

Politically, Heidi Heitkamp passed up an opportunity to help ND farmers.

The stock market surged this week, hitting new milestones on anticipation the US Senate would pass the GOP tax bill. They did. At the same time, WTI stayed steady.

All that talk about ND receiving more in federal handouts than it sends to Washington, DC? Poppycock: New York and North Dakota, per capita, are almost tied.

Meanwhile, the GDP estimate for 1Q17 jumped from 2.7% to 3.5% overnight based on consumer spending.

One of the bigger, if not the biggest energy story this past week: Saudi Arabia's foreign reserves actually increased, unexpectedly, and reversing a two-year trend. Here, and here. 

In the oil sector, this was a non-story: Nebraska regulators vote "no" with a 3-2 "yes" vote to approve the Keystone XL.

One of the bigger, if not the biggest, non-oil energy sector story this past week was the announcement that Cape Wind was finally dead.

In the Harold Hamm vs EIA forecasts: EIA - 1; Harold Hamm - 0. Having said that, the EIA was "way wrong" back in 2016.

Most concerning story this week? It appears an American business journalist thinks the US government somehow controls the nation's crude oil production.
 
Operations:
MRO reports a well that produced 75,000 bbls in one month
Newfield's Moberg wells see significant jump in production
Oasis has three rigs working one drilling unit
Whiting has two rigs on the 15-well Mega-Pad in Banks Oil Field
CLR getting ready to frack more Burr Federal wells 

Fracking:
CLR completions strategy
Newfield reports a 62-stage frack

Miscellaneous
More nonsense: update on UND-EERC's science project to determine feasibility of storing "dirty" CO2 undergroung  

An October Surprise -- December 1, 2017

At this post, earlier this week, it was noted that Saudi Arabia's foreign reserves account had unexpectedly increased.

At the post was a link to a Reuters article with more information, and one of the few sources so far to report on this unexpected development.

Some data points:

The bank’s net foreign assets rose by $8.3 billion from September to $485.9 billion last month; they shrank by 9.3 percent from a year ago. The reserves peaked at $737 billion in August 2014 before starting to drop as oil prices plunged. 

The government has been liquidating the reserves to cover a big budget deficit caused by low oil export receipts, and to build up its top sovereign wealth fund, the Public Investment Fund, which is becoming a key force in developing the economy.

So, if I understand this correctly, Saudi Arabia is taking cash (liquidating) from its reserves to fund two items:

• it's monthly expenses (executing the national budget); and,
• the Public Investment Fund -- I assume this is to pay for Prince Salman's Vision 2030

So, if the kingdom is taking money out of reserves to pay for its budget (which I assume does not change much month-over-month regardless of how much they have cut the budget for the year) and to fund another slush fund (the Public Investment Fund), how did the foreign reserves account, not only reverse direction, but grow significantly in one month?

Reuters' explanation: the price of oil has gone up. LOL.

Here's the EIA chart, Brent spot price:

The spot price has increased significantly, but it's my understanding that sellers/buyers of oil work off six-month contracts. Of course, they can be rolling contracts, new ones signed each month, so one probably needs to go back a few more months than that posted above. But one assumes that when oil was $40 / bbl some months ago, buyers would set a ceiling not a whole lot higher than that ... one can argue this all day long, but without the figures we will never know. The bottom line for me is that contracts are set for weeks and months in advance and using the spot price to explain Saudi Arabia's good fortunes in October, 2017, sounds a big disingenuous.

At the same time, Saudi Arabia is supposedly exporting less oil over time to stay within the agreed quotas.

[Saudi consumes a lot of its own oil for air conditioning needs in the summer, and by October that is over. Saudi can now produce the same amount of crude oil but sell more overseas, but this is a "red herring" [unless Saudi is cheating]: it does not matter how much Saudi is producing; it matters how much they are exporting.

We won't know for the next few months whether the increase in foreign exchange reserves was a one-time event (an anomaly as NASA would call it) or if it truly was due to rising price of Brent, and status quo on exports.

Getting back to the two areas where liquidated foreign reserves go:

• executing the national budget
• funding the slush fund

As noted earlier, one would expect the monthly cash flow for the national budget would not change much month-over-month. That leaves the slush fund. I would assume the same thing: that the prince has an execution plan and that funding the slush fund should not change a whole lot month-over-month.

So, for me if this turns out to be a one-time event, an anomaly, the question needs to be asked. Was there a one-time event in October that might explain this?

A reader suggests that it might have been related to the purge. That makes a lot of sense -- except the purge seems to have taken place on/about November 4, 2017. It could have been going on for some weeks earlier, and it was only being reported by November. That's a tough one. But it's very possible, the prince was using a silk glove in September and October to get wealthy princes and even-wealthier tycoons to pour cash into the foreign reserves account, and then used an iron fist in November for those who were not paying their fair share.

How much money do these wealthy tycoons have?

Alwaleed is the richest Saudi, with a $28 billion fortune that dwarfs King Salman's net worth of $17 billion. Kamel and Ibrahim are also billionaires. Since the arrest, there have been news reports of frozen bank accounts. But the crown prince may be eyeing more than these notables' money.

Wiki has a list but appears to be somewhat out of date, based on Alwaleed's wealth as reported by The Washing Post (the link above).

Back to the data points at the very beginning of this long note: the foreign reserves account rose by $8.3 billion. It should have decreased by about $3 billion. That's a spread of $11 billion, easily covered by Prince Alwaleed, with or without his consent. LOL. And that's just one of several wealthy tycoons and wealthy princes.

I'll leave it there. If Saudi's foreign reserves continues to grow (or at least not continue to hemorrhage) then perhaps there is a secular (long term change) that explains the October surprise. I'm kind of hoping it's an anomaly -- makes for good speculation. LOL.