Wednesday, September 18, 2019

Haven't forgotten: I still have to get back to a reader regarding Scanlan wells. 

Weekly EIA petroleum report: pending

Fed: announcement tomorrow? I'm betting, "no change." 

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

Futures:

• all major indices red 
• T: down a bit; should open around $17
• AAPL: down a bit if one considers "down 6 cents" for shares trading at $220 significant
• UNP: down a bit; should open around $166
• SRE: no activity yet; flirting with new highs
• ENB: up a bit; should open around $35.50
• EPD: no activity yetl
• CVX: no activity yet;  
• F: flat at $9.28
• TSLA: I have no idea what is going on with these shares; currently trading at $245

AAPL: I see Costco has dropped the price of the iPad Pro by $150. It had been discounted $100 until recently; now down again in anticipation of new products rolling out soon. I think I mentioned I just bought a new iPad Pro a couple of weeks ago over at Costco. Incredible tablet.

Apple / Corning: hook-up for $250 million for more Gorilla Glass. No link. Story everywhere.

Apple valuation: market cap back below $1 trillion. Late last week AAPL shares were trading for $225; this week, $220.

Netflix buys "Seinfeld."

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From Fake News To Outright Lies

Even CNN Took Note

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And Off To School

Saudi Arabia To Flood The World With Oil By End Of November -- September 18, 2019

Swing producer: again, we won't find out if US shale is the swing producer. "Alfalfa" says everything is returning back to normal. Saudi plans to flood the world with oil by the end of November, promising to produce 12 million bopd. No links. Stories everywhere.

In the meantime, who can boost production to make up current Saudi shortfall? I mentioned that yesterday; it's a non-problem. Right now, it's all about a race for market share as consumers look for more reliable sources for oil. China for one is loading US oil to make up for Saudi loss. WTI now back to $58 should tell us everything we need to know. Link here. Bloomberg has a long list of oil-producing countries, how much they produced in August, and their capacity. Looks like they probably took the list from the CIA Fact Book.

Saudi Arabia's foreign reserves account: I can hardly wait to see the January, 2020, data. 

ND Legacy fund: September, 2019, deposits should be posted Friday, September 20, 2019, or early next week.

Flaring: global gas flaring value to hit $16.4 billion "this year." "This year" was not explicitly stated in lede, but I assume it means calendar year 2019. Link here. Lots of ink spent on the flaring story for the past ten years; I consider it a non-story, except as a story of opportunity. If only the US federal government was as efficient as the oil and gas industry.

EOG / Cheniere hook up: in a long-term agreement, EOG will supply natural gas to Cheniere Energy. Details here. "The approximately 15-year gas supply agreement period begins in 2020."

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

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Back to the Bakken

Only one well coming off confidential list today -- Wednesday, September 18, 2019: 45 for the month; 177 for the quarter:
35700, conf, Petroshale Thunder Cloud 1MBH, McGregory Buttes, no production data;

Active rigs:

$58.87	9/18/2019	09/18/2018	09/18/2017	09/18/2016	09/18/2015
Active Rigs	62	64	56	32	67

RBN Energy: capital dries up as new crude, gas, and NGL infrastructure comes on line. Archived.

U.S. energy markets are coming to the end of their latest infrastructure cycle just as the reality of tight capital markets is sinking in.

Permian crude oil and natural gas takeaway constraints are being relieved by new pipeline capacity. Long-delayed LNG terminals and NGL-consuming petrochemical plants are coming online. Essentially all growth in crude, gas and NGL production volumes is being exported to global markets that — so far, at least — have been absorbing the incremental supply. But there is a chill in the air. Besides the recent bump-up in crude prices tied to last weekend’s attack on Saudi oil facilities, commodity prices have remained stubbornly low. Easy access to capital is a thing of the past. No longer can private equity count on the build-it-and-flip asset investment model. Yup, it’s another inflection point in the Shale Revolution that we’ll start exploring today. All this has huge implications for energy flows, infrastructure utilization and price relationships across all of the energy commodities.

Minnesota Supreme Court Won't Take Up Pipeline Challenge -- September 18, 2019

Impossible to keep up. Will do the best I can.

Mexico-Sempra: smajor Mexico gas pipeline at cent of dispute begins operations. Sempra flirts with all-time highs.

Oil prices continue to fall: "Saudi quickly restores output, API reports rising stockpiles." Data points:

• "Alfalfa" says Saudi will be back to normal by end of September
• will produce an average of almost 10 million bopd by end of September
• which, by the say, is well down from the 12 million bopd they once said they could product
• but then, "Alfalfa" said production would be at full capacity of 12 million bopd -- sounds like they will flood the market with crude oil to regain market share
• meanwhile, API data even before the attack: US crude oil inventory rose by 600,000 bopd (which is "flat" or unchanged in the big scheme of things

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

Tea leaves: price of oil could plummet by end of year if:

• you believe "Alfalfa"
• hostilities end in the Mideast

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Enbridge

Apparently this took place yesterday, September 17, 2019.

The Minnesota Supreme Court has rejected an appeal by opponents regarding the environmental impact statement for Enbridge's proposed $2.9 billion pipeline - setting the stage for state utility regulators to fix the flawed document.

While the high court's decision restarts an oft-stalled process, it could still take several months before Enbridge gains the go-ahead with its controversial plan to replace the aging and corroding Line 3 across northern Minnesota.

In June, the Minnesota Court of Appeals shot down utility regulators' approval of the environmental impact statement, or EIS, for the project, putting the long-delayed project in further limbo.

More to follow. Enbridge is my favorite pipeline company (not as an investment, as an enterprise to simply follow. Long, long story.)

From Reuters; Bloomberg; and wcfcourier:

From a reader:

I find it very interesting that the normal sources for USA Indian news have not a single word on this. Were they not expecting a decision this soon, or were they not expecting this decision? 

I like to look at the actual court orders/rulings, but no luck with the Minnesota Supreme Court site. I was able to search it, and their Opinions are current, but what I wanted to see was this order declining to hear the case. That section hasn't been updated since August.

Enbridge shares: up a bit yesterday. It will be interesting to see what it does today. Enbridge has been a "doggy" stock for quite some time, but pays over 6%.

Back to the case. It's still confusing.

• some time ago Enbridge got the permit from state regulators. Opponents challenged.
• appellate court says the permit was faulty (or more accurately, some part of the EIA were faulty); apparently the appellate court implies that if the EIS is "corrected," the company can go ahead 
• the Minnesota Supreme Court supported the appellate court even though opponents wanted the permit thrown out completely, saying that the EIS was not the only issue
• I assume the state regulators will determine if the EIS is adequately corrected, but at that point opponents could take it to the appellate court again arguing that the EIS is still inadequate
• one would assume that the appellate court and the regulators would work together to make sure the new EIS is adequate
• so three years?

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Guyana

More on this later, but this looks to be as big a story as the attack on Saudi Arabia, except Guyana is playing out a big more slowly.

Will drive "peak oilers" bonkers.

Idle Rambling On A Tuesday Night -- September 17, 2019

Remember how quaint this article seemed when it first appeared?

Link here. From Investor's Business Daily:

The U.S. topped Saudi Arabia in oil exports in June as Riyadh complied with OPEC's production cut deal and shale production surged.

Crude oil prices fell.

Already the No. 1 producer of oil, the U.S. exported nearly 9 million barrels per day of crude and oil products in June, beating Saudi Arabia and Russia.

Saudi Arabia then retook the U.S. as top producer in July and August as hurricanes forced halts to production and shipments. But the U.S. could reclaim the title of top oil exporter later this year. The IEA said crude exports alone could rise 33% from June levels to as much as 4 million barrels a day as new export infrastructure comes online in Q4.

LOL.

When was that? September 12, 2019.

LOL.

I remember making a big deal out of the US "briefly" being the #1 global exporter of oil and petroleum products. I don't want to forget that second part, "... and petroleum products."

I got a lot of push back / blow back for being so inappropriately exuberant about the US "briefly" being ...

That was September 12, 2019.

Then, September 13, 2019. Force majeure declared by Sempra ...

And, then September 14, 2019, 4:00 a.m. local time, 10 - 20 Iranian drones and/or cruise missiles knock out of half of Saudi's production, or something like that ...

So, even before Iran took out 5.7 million Saudi Arabian bopd, the US was #1. It will be interesting to see what the next few months be.

By the way, WTI spiked but never got anywhere close to where some thought it might go, and now it's dropping back to pre-attack levels.

Underlying theme: has Saudi Arabia become irrelevant?

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LGBT

It's funny how things happen.

We haven't been to McDonald's in a long, long time, but Sophia wanted to go today. We went.

PlayPlace was empty except for a four-year named Laura. She was sitting alone in a booth; we assumed correctly that her adult was ordering at the counter.

We sat down in the booth with her; Sophia had a fast friend.

Moments later, Ron joined us. He was of my generation, maybe ten years older. The girls played.

He, like me, was the Uber-driver for his grandchildren.

But within minutes Ron was telling me about Laura's sibling, her 17-year-old transgender grandson, Jim.

Jim was born anatomically a female and raised as a girl. Sometime in late elementary school she said she felt like a boy. Since then it's been "hell" for the family but things are getting better, and now that Jim has turned 17 he is starting male hormone therapy. Such therapy is not allowed, apparently in Texas, even with parental consent until age 17.

I mentioned to Ron that I was a retired pediatrician and one of the first patients I ever saw in training was an eight-year-old who came to me because her mother thought something was wrong. Same story. Eight-year born anatomically as a female, raised as a girl, but something didn't seem right. We requested chromosome studies and it turns out "she" was actually XY -- genetically a boy.

Ron and I had a long, very interesting conversation. On top of all this, Ron is probably one of the richest, most successful men in the local area, but now he's an Uber-driver for his grandchildren and sharing French fries with his four-year-old granddaughter in PlayPlace.

[Note: names have been changed.]

Another Staggering Deal In The Oil Patch -- September 17, 2019

Updates

November 16, 2019: see how this deal positively affected North Dakota.

Original Post 

I simply cannot keep up.

It staggers the imagination that the Democrats running for president -- all of them except Biden and I doubt he remembers his talking points anyway -- all of them except for Biden want to shut down the US oil and gas industry. It staggers the imagination on so many levels.

So, here we go again. Another $5 billion deal. And this one is huge.

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

Did you all see this? Energy Transfer -- the DAPL folks -- bought SemGroup and paid an eye-popping 65% premium to its closing price last Friday, September 13, 2019. A 65% premium! Wow, I can buy new shoes for Sophia. LOL. It turns out that Energy Transfer got SemGroup "cheap." See what Motley Fool has to say:

Energy Transfer announced this week that it would acquire SemGroup for $17 per share, an eye-popping 65% premium to its closing price last Friday. The cash-and-stock deal valued the midstream company at $5 billion, including the assumption of debt.

While the acquisition of SemGroup will do several things for Energy Transfer, the main driver of this deal is how it will bolster the company's oil transportation business. Here's a look at why Energy Transfer is making a $5 billion bet on crude oil.At the heart of the deal is SemGroup's Houston Fuel Oil Terminal Company (HFOTCO), which is a world-class crude oil terminal on the Houston Ship Channel. That facility can store 18.2 million barrels of oil and has five deepwater ship docks from which it can export oil to global markets. Supporting the terminal are stable take-or-pay contracts that provide predictable cash flow.

In addition to HFOTCO, Energy Transfer will pick up crude oil and NGL gathering assets in the DJ Basin of Colorado and Anadarko Basin in Oklahoma and Kansas. The company will also get some crude oil and NGL pipelines that connect those two regions to oil terminals in Cushing, Oklahoma, which is a major oil hub. Finally, Energy Transfer will gain a significant oil gathering and transportation business in western Canada.

Although Energy Transfer is paying a substantial premium for SemGroup, it's getting all these assets at a good value. The company is paying only nine times EBITDA after adjusting for the expected $170 million in annual cost savings. For comparison's sake, Kinder Morgan recently sold its Canadian subsidiary and a related pipeline for 13 times EBITDA. The low price Energy Transfer is paying despite the significant premium is a result of the slump in SemGroup's stock over the past few years. The current offer price, for example, is still 28% below where shares traded a year ago and more than 50% below where they were three years ago.

So much more at the link. If anyone is paying attention: this is simply incredible.

I would imagine ET thought it easier to buy a pipeline company rather than tring to build another one after their DAPL experience.