Mid-Day -- Monday, June 13, 2022

Breaking news: some time ago I mentioned on the blog that I never paid attention to Libya. 

On the world stage, Libya is background noise. However, with loss of Russian oil, even if it's just a couple of million bbls, Libya can start to have an affect on global oil prices. And today, that may be what's going on now. After being as low at $118 or thereabouts, WTI is now back above $120 and trending toward $121. 

News? Libya oil fields, a million bopd, are apparently completely shut down. In addition, after an "early Covid scare in China, things seem to be back to what they were last week in China -- gradually re-opening as Covid becomes less of a concern.

Saudi Arabia: we should start hearing / reading stories that Saudi Arabia is increasing production. 

What you may not hear is that Saudi Arabia increases production about this time of the year every year: Saudi Arabia's domestic oil consumption surges in the summer as Saudi princes turn on the air conditioning, and the source of that electricity? Crude oil.

White House: it seems every tweet, soundbite, message from the White House is 180° from the previous tweet, soundbite, message on the same subject. Truly confused. The tea leaves suggest that Biden's Saudi trip will be a photo op disaster. Unless you like bone saws.

The grid:

• ERCOT (Texas): capacity 87K vs 68K demand; no problems for the grid today:
• ISO-NE: green at $70 / MWh
• ISO-NY: brown in Long Island, at $110

WTI: wow, I did not expect to see this -- back over $120, and now trading at $121.50.

Usual disclaimer.

Midstream: link to Alex Kimani, five midstream stocks with perfect exposure to soaring oil prices. I accumulate shares in two of the following five companies; and, am considering a third:

• Cenovus Energy, Canadian oil sands
• Ovintiv: previously "Canadian," has now "moved" to the US
• COP:
• PSX:
• Targa Resources:

For investors, from Barron's the other day:

The publication makes the case that energy stocks have more room to rise, especially for investors willing to mix it up with renewables-focused companies. 

Energy is noted to still be the cheapest sector in the S&P 500, trading at 9.8X expected earnings over the next year. Another positive identified is that balance sheets in the sector are healthier than they’ve been in years. 

Politics are also working in favor of energy stocks, with the reality of soaring gasoline prices increasing tolerance for traditional energy sources. Energy is also seen as due for a major investment cycle. Goldman Sachs noted that capital expenditure in oil and gas production has fallen 61% since peaking in 2014, and overall primary energy investment has dropped 35%. 

That means the three years could see a major rebound as producers ramp up supply to meet demand, and companies in sectors facing severe capacity constraints could see a boost. 

The six energy stocks that made the cut were EOG Resource (EOG), Enel (OTCPK:ENLAY), Phillips 66 (PSX), Sunrun (RUN), Shell plc (SHEL), Liberty Energy (LBRT).

Graphite And EVs -- June 13, 2022

Disruptive:

• EVs: link here. Scorecard. 
• graphite
• not for me. "Energy transition is dead" is followed here.
  
• EVs charging.  

From last week:

On Diagramming Sentences -- The Book Page -- June 13, 2022

From Literary Hub today:

Opening one of her most popular, Under Two Flags, at random, this is the first sentence I saw:

Cigarette said not a word, but she took out of some vine-leaves a cold, hard lump of ice, and held it to him; the delicious coolness and freshness in that parching noontide heat stilled the convulsion; his eyes thanked her, though his lips could not; he lay panting, exhausted, but relieved; and she—thoughtfully for her—slid herself down on the floor and began singing low and sweetly as a fairy might sing on the raft of a water-lily leaf.

I didn’t love it. At the same time, she was original! I’d never seen a sentence before with four semicolons and two em-dashes. I wished I were still in Advanced Grammar in college. We brought in sentences to diagram on the board and tried to outdo one another with structural complexity.

I loved it but Ada's Calhoun's assertion bothered me. I assume Ada Calhoun is a serious reader and has "read everything."

If so, how could she say she had never seen a sentence before with four semicolons and two em-dashes?

Well, color me embarrassed. Ada is correct, and I was very, very wrong. LOL.

I would have thought Henry James would have out-ouided Ms Ouida but I was wrong. This Henry James passage has four semicolons but no em-dashes.

The house had a name and a history; the old gentleman taking his tea would have been delighted to tell you these things: how it had been built under Edward the Sixth, had offered a night’s hospitality to the great Elizabeth (whose august person had extended itself upon a huge, magnificent and terribly angular bed which still formed the principal honour of the sleeping apartments), had been a good deal bruised and defaced in Cromwell’s wars, and then, under the Restoration, repaired and much enlarged; and how, finally, after having been remodelled and disfigured in the eighteenth century, it had passed into the careful keeping of a shrewd American banker, who had bought it originally because (owing to circumstances too complicated to set forth) it was offered at a great bargain: bought it with much grumbling at its ugliness, its antiquity, its incommodity, and who now, at the end of twenty years, had become conscious of a real aesthetic passion for it, so that he knew all its points and would tell you just where to stand to see them in combination and just the hour when the shadows of its various protuberances—which fell so softly upon the warm, weary brickwork—were of the right measure. 

That single sentence was the longest sentence in any of Henry James' novels. A single paragraph would run for pages. 

Run On "Banks?" Great Couple Of Weeks For EV Stories -- June 13, 2022

First things first:

• I guess the Texas grid held after hitting record demand;
• apparently things are in better shape than expected: works that way as long as the sun shines and the wind blows, which means Texas will be fine this summer
• that doesn't mean we won't have warnings, alerts, brownout and rolling blackouts but won't amount to much
• bigger story will be watching ISO-NY and ISO-NE 
• that "winter thing" a couple of years ago: not only a "one-off" but it wasn't due to excessive demand
• ERCOT today: 
• capacity projected to be 86K MW
• demand projected to max out at 76K MW
  

Nicest thing about 104°F over the weekend?

• Monday morning, today, feels almost cool
• poolside with strong breeze; quite cool
• this a.m. -- still in bed -- I thought the a/c had come on -- it felt so cool -- but I don't use a/c when my wife is not home
  

The Sports Page:

• NASCAR yesterday: what little I saw, not interested
• PGA: stellar tournament this past weekend and now the US Open this week -- Brookline (Boston), MA
• Rory! Phil, who?
• NBA: fifth game tonight; now it gets serious; series tied; Stephen Curry amazing

Cryptocurrency:

• two cryptocurrencies stop withdrawals: Binance and Celsius;
• is this like a "run on the banks"?

Bear market. Everything is on sale.

EVs:

• ELMS: seeks bankruptcy protection
• happening faster than expected, link here;

Ovintiv: this is really, really cool

• a couple of days ago I brought this up, link here;
• today, we have a bit more background, link here.

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Banner Week For Coal-Powered EVs

These made my week (actually, over the past two weeks, or so):

• GM Chevy Volt runs on coal.
• ELMS seeks bankruptcy protection.
• California grid.
• Coal: India and China coal production surging by 700 million tons per year; greater than all US coal output; link here.

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Solyndranization Of America

See Solyndra tag for background. See the list.
SPACs: just another name for laundering.

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BNPL

Let's see, one pays for a large luxury item -- let's say, an Apple computer -- $2,500 -- on a major credit card, with "promise to self" to pay off in one month

• promise broken
• first month balance not paid in full: 24% APR interest rate
• difficulty paying it off; miss the deadline; vacationing, forgot about due date? Add "late fee" to that 24% APR interest
• Big Bank: making huge amount of money

Now, imagine, make that same large luxury item purchase and retailer says, "four easy installments" with no late fees and no interest as long as fully paid on time -- over "four easy installments"

• now we get story after story in the press telling us BNPL is "bad"
• ever wonder who plants those stories?
• next big thing: BNPL
• but interestingly, we've had BNPL forever -- only difference, AAPL is now getting into this big time

Firestone: has had BNPL for as long as I can remember. An incredible marketing idea. Except for annual inspections and simply oil changes, my hunch is that the average automobile "tune up" or "servicing" runs $600 for the average American, being able to pay for that very, very necessary charge over six months at no interest is a godsend for many. I wonder how many folks take advantage of this?

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Anti-Fracking

Tea leaves suggest OPEC knew long ago that their spare capacity was a myth.

• their biggest fear: US shale would fill the gap
• all of a sudden, OPEC loses not only money, but power
• then, story after story about the dangers of fracking
• ever wonder who planted those stories?

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From Twitter

Things don't just happen.

They happen by design. 

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But ...

... having said all that, my favorite story all weekend was AP's fact checking confirmed that EVs placed a strain on California's power grid more than a year ago ... and it was not covered by mainstream media until someone noted it on twitter.

The AP trying to spin that story was more hilarious than the actual story itself.

WTI Drops Below $120 As China Hints At New Covid Outbreak And Biden Ramps Up Rhetoric; To Visit Saudi Arabia; Six Wells Coming Off Confidential List -- June 13, 2022

Far Side: link here. 

WTI: $119.0 -- another Covid lockdown coming in China?

Active rigs: 40 or thereabouts

Monday, June 13, 2022: 21 for the month, 159 for the quarter, 319 for the year

• 38432, conf, WPX, Wounded Face 14-15HC, McGregory Buttes, no production data,
  
• 37188, conf, Zavanna, Edgar 10-3 6TFH, Poe, first production, 12/21; t--; cum 86K 4/22;
  
• 37010, conf, CLR, LU Reckitt Federal 2-22H, Long Creek, no production data,
  

Sunday, June 12, 2022: 19 for the month, 156 for the quarter, 316 for the year

• 37186, conf, Zavanna, Edgar 10-3 4TFH, Poe, first production, 12/21; t--; cum 85K 4/22;
  

Saturday, June 11, 2022: 18 for the month, 155 for the quarter, 315 for the year

• 38477, conf, WPX, Hall 14-15HIL McGregory Buttes, no production data,
• 38134, conf, CLR, Dennis FIU 8-8H, Cedar Coulee, no production data,
  

RBN Energy: gas flow, price impacts of the Freeport LNG outage.

An explosion June 8 at Freeport LNG, the 15.3 MMtpa (2 Bcf/d) export terminal on Quintana Island, TX, has knocked it offline at a time when the global market is already facing tight conditions because of the war in Ukraine and other factors. The explosion, fire and subsequent shutdown — which fortunately did not include any injuries — sent U.S. natural gas tumbling off recent highs and shot global gas prices higher. 

Much is still unknown about the developing situation, including exactly how long the outage will last. While Freeport has said it expects the terminal to be offline for at least three weeks, multiple regulatory agencies have investigations underway and will likely need to approve a return to service. In today’s RBN blog, we look at the latest news from Freeport LNG and run through the potential market implications, starting with impacts to the U.S. gas market.

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Initial Production

• 37186, conf, Zavanna, Edgar 10-3 4TFH, Poe, first production, 12/21; t--; cum 85K 4/22;

Date	Oil Runs	MCF Sold
4-2022	21681	21832
3-2022	13536	17658
2-2022	16008	20935
1-2022	23045	18628
12-2021	15096	9058

• 7188, conf, Zavanna, Edgar 10-3 6TFH, Poe, first production, 12/21; t--; cum 86K 4/22;
  

Date	Oil Runs	MCF Sold
4-2022	24417	25168
3-2022	11742	21194
2-2022	11550	15607
1-2022	27390	23057
12-2021	11641	6840