Mike Filloon On The Smaller Bakken Operators; Soaring Grocery Prices

It's been a long time since we've heard from Mike Filloon. And, as usual, very, very good.

The contribution is from SeekingAlpha.

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or anything you think you might have read here.

Filloon mentions these are the Bakken operators he likes for 2014:

• Triangle (TPLM) 
• Kodiak (KOG) 
• Abraxas (AXAS) 
• Oasis (OAS) 
• Whiting (WLL)  

In addition, he likes Emerald Oil (EOX) and devotes the article to Emerald.

Incidentally, Filloon says this early on in the article:

As you can see in the above diagram, the Wahpeton pad tests 8 wells per interval. Four source rock (sic) were targeted, from the middle Bakken to the third bench of the Three Forks. Continental probably has more well data than any other operator in the Bakken. It's choice to drill the tightest spacing to date (and most expensive pad) in this area shows confidence. Continental has alluded to Wahpeton as a success and it's reason to pursue this spacing using three pads. Each pad is near the Hawkinson, Rollefstad and Tangsrud pads.

That's interesting. I was always under the impression there was one source rock, the Upper Bakken which "fed" the underlying formations.

By the way, there were a lot of typographical errors in this article.

Readers need to know that the article will only be available for a limited time.

The best part of the article is Filloon's optimism on southern ops in the Bakken. To date, I have not been particularly impressed, but Filloon is very, very optimistic. He noted that along with Whiting, Oasis has also invested in the southern edge of the Bakken.

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A Note to the Granddaughters -- Science

The photo is a bit too dark but it will be a nice reminder of how we spent a recent afternoon. We were studying electric circuits. The older one was putting together a circuit that would  produce different alarm sounds by waving her hand over a photo-receptor. Electricity was one of my weaker subjects in high school, and I have learned more about electricity working with our 10-year-old granddaughter than all I learned in high school. The younger granddaughter, by the way, is drawing a cartoon of her grandfather -- that would be -- getting electrocuted. LOL.

 Electric Circuits -- February 16, 2014

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A Note to the Granddaughters: Price Of Bread in 2014

I am not sure what to make of this. CBS News is reporting:

Food prices soar as incomes stand still.

While the government says prices are up 6.4 percent since 2011, chicken is up 18.4 percent, ground beef is up 16.8 percent and bacon has skyrocketed up 22.8 percent, making it a holiday when it's on sale.

"Oh my god!" Singer said as she spied bacon for $3. "The things that are going up in price are the things I absolutely need to buy," she said. "It's the meat, it's the milk, it's the eggs and it's getting out of hand."

So many comments, I don't know where to begin. That's been my impression also, the soaring food prices.  Bread is most interesting: generally, bread costs between $3.00 and $4.00 per loaf here in Dallas, Texas, area. But one can find store-brand white bread for 99 cents. In San Antonio it was 88 cents, but there's a huge difference between $1 and $4 and the product is not that much different.

I also noted that food prices are about 50% higher in southern California (Los Angeles) compared to Texas. The only two differences between Texas and California grocery stores is this, as far as I know: southern California grocery stores are highly unionized and southern Californians keep preventing Wal-Mart form moving in.

I really don't know.

Another observation. The article suggests that CBS is surprised that the government says prices in general are only up 6% since 2011 whereas food prices are up around 20%. Why should that be surprising? Does one really believe the 6%? It seems to me that most numbers provided by this administration -- from jobs to global warming to health care -- have been way off the mark.

Food prices up 20% since 2011? It would be interesting to see what the real tax increases have been on Americans since 2011 -- including the biggest new tax, Obamacare.

Permanently Colder -- All Due To Global Warming

Updates

February 17, 2014: the original post was done somewhat tongue-in-cheek, but a reader sent me a very nice scientific analysis of what is going on. The article is based on research supported by NASA. Folks might want to keep it bookmarked for future reference.
 

Original Post

I can't make this stuff up.

Now they tell us that the colder weather we've experienced the past couple of years is going to be "permanent." AFP via Yahoo!News is reporting:

A warmer Arctic could permanently affect the pattern of the high-altitude polar jet stream, resulting in longer and colder winters over North America and northern Europe, US scientists say.

The jet stream, a ribbon of high altitude, high-speed wind in northern latitudes that blows from west to east, is formed when the cold Arctic air clashes with warmer air from further south.

The greater the difference in temperature, the faster the jet stream moves.

According to Jennifer Francis, a climate expert at Rutgers University, the Arctic air has warmed in recent years as a result of melting polar ice caps, meaning there is now less of a difference in temperatures when it hits air from lower latitudes.

So, if I'm reading this right, global warming is really only going to affect the Arctic; it's going to be "permanently" cooler in the northern hemisphere, outside of the Arctic. And, of course, the Antarctic has been getting colder, at least based on an increasing volume and expansion of ice.

I can't make this stuff up. Algore was right on the global warming part; he was just wrong on the "location." It will only be warmer in the Arctic; everywhere else .... colder. 

Photo Of Another Bakken Well In The Sweet Spot Of The Bakken: Northeast Mckenzie County

The contributor writes:

The photo is of #24220, HRC's Berg Trust Federal 1-26-35H. HRC is drilling additional wells in the spacing unit, but is doing them from the southern side of the unit, where the Berg Trust is in the north side of the unit. 

He writes that this little corner of McKenzie County is a microcosm of the Bakken as a whole. Lots of different fields (North Fork, Pembroke, Haystack Butte, Siverston, etc), lots of different operators (XTO, Continental, Burlington, Newfield, Kodiak, Slawson), and even different spacing (640, 1280, 2560). The flaring is even radically different from one operator to the next. 

• 24220, 2,078, HRC,  Berg Trust Federal 1-26-35H, Pembroke, middle Bakken, 30 stages; 3.3 million lbs sand; t3/13; cum 96K 12/13;

What Determines The Price Of Oil

On February 11, 2014, I wrote:

The most noteworthy data point this morning: the price of oil continues to melt up without a good explanation. I posted this two days ago, and the sentiment remains:

The major factors affecting the price of oil:

• Mideast politics and hostilities (Syria, Iran, Israel); sabre-rattling
• strength of the dollar
• US economy six months out
• Chinese manufacturing index
• global economy six months out

Of the five, I think the US economy six months out as telegraphed by the Fed's actions is the most important (on the day of posting). On a day-to-day basis, all things being equal (e.g., no report of a war breaking out in the Mideast, it is the strength of the dollar).

I received a note from a reader suggesting that Mideast politics will be the major factor affecting the price of oil going forward, and sent a link to this article: 

• Headline: Iran flexes muscles in Gulf 

• Story: 

The Iranians now feel confident enough to attack Sunnis openly - scary for the Saudis. For the first time, the Iranians are attacking not just the Saudi government, but also the Wahhabi extremist Sunni sect that is the ideological underpinning of the Saudi regime. Wahhabis have been declared to be "worse than Jews" and heretical.

"If they refuse to convert (to Shi'ism) killing them is not a sin." Of course, to Shi'as, all Sunnis are heretical, as they in turn are considered heretical by the Sunnis, but until recently the ayatollahs have been cooperating with Sunni governments and terrorist organizations such as Hamas and Islamic Jihad to confront the Israelis and the West.

This tactic is apparently now ending, as the Iranians feel themselves capable of confronting their Sunni rivals as well as secular regimes and Western governments, given what they see (and proclaim) as their "victories" in the negotiations with the six powers.

It was just the other day that I suggested that one of President Obama's lasting legacies will be a Mideast nuclear arms race. Saudi Arabia will go nuclear before the decade is out. History will look back on this period as a lost opportunity: the Obama administration and Israel had a window of opportunity and did not take it.

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A Note to the Granddaughters

I finished The Girl With The Dragon Tattoo this afternoon in between activities with the granddaughters. An incredible book. Very good. For me, I would not have enjoyed the book half as much (I might not even have completed it) had I not seen the movie first. 

The director said the movie was five acts which made it a difficult movie to write and film. According to wiki, a five-act play: exposition, rising action, climax, falling action, and dénouement. The challenge with Dragon Tattoo there were two stories, but the bookends story -- the libel suit was overshadowed by the story in the middle: the serial murder mystery.

I've moved on to The Great Gatsy, the book, and the 2013 movie.

Another "Keystone" Pipeline Delayed -- Here We Go Again; The US State Department Wants A "Do-Over"; Bill McKibben's Fingerprints Are All Over This One

The Obama administration appears ready to kill another shovel-ready project. Enbridge is reporting that its Clipper pipeline project has been delayed due to US presidential inaction. Among other things, the president was golfing in Hawaii. GlobalNews.ca is reporting:

Enbridge is reporting that the U.S. State Department is taking longer than expected to review an expansion to an Alberta-to-Wisconsin pipeline.

But executives with the Calgary-based energy shipper said Friday they’re confident of getting a green light in time to expand the Alberta Clipper line to 800,000 barrels per day by the middle of next year.

Enbridge obtained a U.S. federal permit in 2009 before starting up the first 450,000-barrel-per-day phase of the line, but the State Department says it needs to amend its environmental review before allowing the expansions to go ahead.

So many story lines in this short article. But none of this worries me any more. The Australians have the solution:

World's Largest
The series on the I-98 is seeming less and less fictional every day. 

And, of course, there's always rail. LOL.

Seriously: the  Canadians and the Canadian government better get their act together; realize that the US is not the ally they can count on any more.