All Along The Watch Tower

Futures mean squat, but it is fascinating to watch events unfold.

We may be seeing another historic event unfold literally in front of our eyes in real time. I'm waiting for Christiane Amanpour to make the announcement.

Everything suggests that Baghdad will have a new government by this weekend. It's almost fait accompli based on stories being reported by The New York Times. Maliki saw this coming, asked for US support, was denied. At the same time the US was releasing the top five Taliban leaders from custody and sending them back to jihad. And in the middle of this, the Dow futures are up (at the moment) and the price of WTI oil and Brent crude oil inches up. It's a crazy world.

It's hard for the average person to follow what's going on in Iraq in real time, but the best proxy may be the Dow futures and oil futures. Money managers, speculators, movers and shakers, and Donald Trump have access to news of events that we don't.

So, we watch.

And "watch" seems to be the best word. It's the word being used by others, as in "The US watches as Iraq spirals out of control."

Set the table for three: POTUS, SecDef, and SecState. I don't have access to cable television so I am unaware of whether any of these three have made any speeches, but based on articles on the front page of The New York Times it almost sounds like POTUS, SecState, and SecDef have "pulled a Bergdahl." Disappeared.

From wiki:

Prepare the table, watch in the watchtower, eat, drink: arise ye princes, and prepare the shield./For thus hath the Lord said unto me, Go set a watchman, let him declare what he seeth./And he saw a chariot with a couple of horsemen, a chariot of asses, and a chariot of camels; and he hearkened diligently with much heed./...And, behold, here cometh a chariot of men, with a couple of horsemen. And he answered and said, Babylon is fallen, is fallen, and all the graven images of her gods he hath broken unto the ground.

I don't think there's any question that the marauders who took Mosul, Tikrit, and are now "sweeping" (a New York Times term) toward Baghdad did not have the backing of Iran and Syria. Bluntly: this whole thing is being choreographed by Syria and Iran. It's impossible to believe that Iran and Syria could have pulled this off without the covert aid from Russia, a long-time supporter of both Iran and Syria. It was pure serendipity that I posted my thoughts about all of this less than 72 hours ago. I was going to wait until the weekend; glad I didn't.

Iraq implodes. The president of the United States is planning his "closed-to-the-public-photo-op-trip" to a remote Indian reservation that straddles the border of North Dakota and South Dakota. Hillary is on a book tour. And Eric Cantor is asking "what just happened?"

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A reader sent me this story. I told him I couldn't post it this evening because my wi-fi connection was not working (reliably) but at the moment it seems to be working (sort of).

The Houston Business Journal is reporting:

The world's largest ethane export terminal is coming to the Houston Ship Channel.
Houston-based Enterprise Products Partners LP announced that it will construct a refrigerated ethane export facility in Houston to build off of the ongoing domestic shale boom.

Enterprise had previously narrowed down the location to the Texas Gulf Coast before deciding on the Houston Ship Channel.

The giant midstream company has signed a 30-year agreement with the Port of Houston Authority for use of facilities adjacent to Enterprise's existing Morgan’s Point terminal. Enterprise also plans to build a pipeline from its Mont Belvieu natural gas liquids fractionation and storage complex to provide direct access to the ethane supply.

The facility is expected to begin operations in the third quarter of 2016, according to Enterprise. The export terminal will be able to load fully refrigerated ethane at approximately 10,000 barrels per hour.

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

Meanwhile, Don sent me this upbeat article on SandRidge, in a Seeking Alpha contribution by Richard Zeits, SandRidge Energy, A Strong Start to 2Q14:

The latest batch of initial production test data for SandRidge Energy's wells in Oklahoma shows continued strength in the average IP rates. Following a weak start in Q1, the company posted a turnaround in March. April well results were even stronger.

The fourteen wells that were brought on production in April and for which data is now available, on average tested with 510 barrels of oil and 1.8 MMcf of natural gas per day. The average oil IP test rate in April for these wells exceeded the average for the first quarter by a factor of two. The natural gas IP rate was also very strong. The result was boosted, to a significant degree, by three "monster" wells .

Of note, all the three "monster" wells were drilled as offsets to existing producers. This may indicate that SandRidge is becoming more effective in using its existing wells and subsurface data for identifying the most promising drilling locations. Also of note, the percentage of poorly performing wells, based on available data, declined dramatically in March and April relative to the previous months.

The fourteen wells with first production in April that have been reported so far is just a small portion of all the wells that the company plans to turn to sales during this quarter. However, in combination with the very strong March wells that will achieve peak production during Q2, the drilling results reported so far give some confidence that SandRidge will report a solid sequential production increase in Q2.

An aside/comment: I do not recall other "analysts" using the word "monster" very often in describing wells. I have had a full page devoted to "monster wells" from the very beginning.

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All Along The Watchtower, Bob Dylan

The Oasis Chalmers Wells In Baker Oil Field, McKenzie County, Bakken, North Dakota

These three Oasis wells have interesting names -- memo to self -- follow-up on these wells later. The "R" suffix can stand for "re-entry" wells but my hunch is these are "Revised" permits.

• 28599, loc, Oasis, Chalmers 5301 44-24 3BR, Baker,
• 28600, loc, Oasis, Chalmers 5301 44-24 4T2R, Baker,
• 28601, loc, Oasis, Chalmers Wade Federal 5301 44-24 12TXR, Baker,

Earlier Chalmers wells:

• 20407, 1,395, Oasis, Chalmers 5300 31-19H, Baker, middle Bakken, 36 stages; 4.8 million lbs sand/ceramic;  t12/11; cum 159K 4/14;
• 27215, drl, Oasis, Chalmers 5301 44-24 2T, Baker, Three Forks NOS;
• 28342, drl, Oasis, Chalmers 5301 44-24 2TR, Baker, Three Forks B1;
• 27214, drl, Oasis, Chalmers 5301 44-24 3B, Baker, middle Bakken;
• 27213, drl, Oasis, Chalmers 5301 44-24 4T2, Baker, Three Forks B2;
• 28252, DRY, Oasis, Chalmers Wade Federal 5300 44-24 12T, Baker, Three Forks B1; completed 5/13/14; no information at well file regarding this well, why it was dry;

Eleven (11) New Permits -- The Williston Basin, North Dakota, USA; Shock And Awe In Iraq; President's Visit To North Dakota Closed To The Public

Wells coming off the confidential list Thursday:

• 24663, 377, Whiting, Zalesky 14-8PH, North Creek, t12/13; cum 13K 4/14;
• 25694, drl, Hess, BW-Erler 149-99-1522H-2, Cherry Creek, no production data,
• 26357, 223, OXY USA, Dakota Meyer 1-19-18H-143-97, Crooked Creek, t12/13; cum 21K 4/14;
• 26574, 349, American Eagle, Tangedal 13-31-164-101, Colgan, t3/14; cum 15K 4/14;
• 27016, 141, Hunt, Sioux Trail 160-101-13-24H-1, Sioux Tail, t2/14; cum 10K 4/14;

Active rigs:

	6/11/2014	06/11/2013	06/11/2012	06/11/2011	06/11/2010
Active Rigs	188	187	210	169	125

Eleven (11) new permits  --

• Operators: Zavanna (4), Hess (4), Oasis (3)
• Fields: Long Creek (Williams), Alger 9Mountrail), Baker (McKenzie)
• Comments:

Wells coming off the confidential list today were posted earlier; see sidebar at the right.

WTI oil and Brent oil continue to hold their gains, albeit barely. Reports from Iraq suggest the marauders from the north are sweeping towards Baghdad. The US is making contingency plans to evacuate the US embassy. If the Maliki government falls by the weekend, this will be more shock and awe than the original shock and awe. USA considering air strikes according to some reports.

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Oneok looking to build another 200 mmcfpd natural gas processing plant, this one south of Watford City. KQCD is reporting:

A natural gas processing company has applied for a permit to build a new plant in Western North Dakota, and the Public Service Commission wants to hear from you.

The PSC will hold a public hearing this month on a proposed natural gas processing plant south of Watford City.

ONEOK submitted an application to process natural gas from oil production wells, and could collect up to 200 million cubic feet of natural gas per day.

 This would make #7 for Oneok in North Dakota? 

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It appears to be just a photo op for President Obama, his wife, and a few tribal chiefs. This is the president who wanted promised the most transparent administration ever. The president's visit to North Dakota is closed to "the public." The Bismarck Tribune is reporting. I'm surprised he thought anyone would show up. Actually, it's just the reverse. The turnout was going to be so poor, he didn't want it seen by reporters. I don't think folks know how remote this site is that he will be visiting. No one will be there, regardless if it was open or closed to the "the public." I remember the challenge of organizing "rent-a-crowds" when I was at a remote base and a general officer was going to visit; it was miserable to round up enough people interested in showing up. Regardless, I'm not a bit impressed. I remember when President Ronald Reagan visited Bitburg, Germany: open to all. It was a huge, exciting event. But times are different. Now we have "transparent" presidencies. And selfies of the president are as close as we get.

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Shock And Awe In Iraq

From the linked story above:

Sunni militants extended their control over parts of northern and western Iraq on Wednesday as Iraqi government forces crumbled in disarray. The militants overran the city of Tikrit, seized facilities in the strategic oil refining town of Baiji, and threatened an important Shiite shrine in Samarra as they moved south toward Baghdad.

The remarkably rapid advance of the Sunni militants, who on Tuesday seized the northern city of Mosul as Iraqi forces fled or surrendered, reflects the spillover of the Sunni insurgency in Syria and the inability of Iraq’s Shiite-led government to pacify the country after American forces departed in 2011 following eight years of war and occupation.

Now, for those who might have forgotten, the Sunnis are the "peaceful" Muslims. The Shi'ites are the military Muslims. Good, got that straight.

The New York Times is reporting that President Obama denied Maliki's request for help. I'm reminded of the Manchurian candidate post.  At the time the decision was being made to release the top Taliban leaders, the decision was also being made to deny Maliki the support he requested.

May the force be with you.

The US is considering air strikes but once the marauding bands reach the suburbs of Baghdad, air strikes aren't going to do much good, unless one can justify knocking out $15,000-Toyota pickups with multi-million-dollar air-to-ground missiles.

You will know how the war is going when Ms Christiane Amanpour starts broadcasting on Al-Jazeera.  If I watched television (or even had access to cable television), I would be tuned to Wolf Blitzer in the "Situation Room."

Random Update On Some Of The Players, Plays In The Eagle Ford

Over at Seeking Alpha, a long, long article:

Despite the fact that "everybody knows" the Eagle Ford thins out in Lee County, the results obtained by Venado are very encouraging.

The location of Venado's wells (in and around Lincoln, TX) suggests that a whole swath of acreage to the northeast of Lincoln extending into Burleson County is worthy of further exploration and testing.

Companies such as EnerVest/EV Energy Partners , Apache and Clayton Williams are in the best position to move forward as they already have established positions in the county.

Both Halcón Resources and SM Energy have small toeholds in the county but, given the fragmentation of leasehold ownership in the county, there is opportunity to pick up modest starter positions for relatively low cost.

Acquisition of or partnership with private operators Browning Oil, Impetro Operating, U.S. Operating and/or WCS Oil would provide a quick way to get a larger position in the play... but that is probably a 2015 event at the earliest. There are 21+ wells planned to be drilled during the 2nd half of 2014. Investors should keep an eye out for the results. If they are good, activity in the county will increase dramatically in 2015 (assuming oil stays at $100+).

June 11, 2014: For Investor Only; Williston To Get New High School -- Best News Of The Day; Dickinson Getting A New McDonald's

Best news of the day in the Bakken: 

Williston is getting a new high school.

Voters showed massive support for the $34 million bond referendum at the polls Tuesday night, casting 2,738 votes for the school and 879 against.

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Oil prices are slightly lower on Wednesday following activity in Iraq that included Islamist militants taking control of a northern Sunni city.

Chicago Energies Inc. options trader Peter Amandio tells TheStreet's Joe Deaux that this development has taken control of the global crude trade. The EIA reported that crude oil inventories fell by 2.6 million barrels, which was more than the 1.7 million barrel draw that analysts expected. Gasoline inventories gained more than anticipated, which Amandio says has everything to do with the arbitrage trade between Brent crude and WTI crude.

$105.30 is the new ceiling. Bottom line: the unexpected draw and turmoil in Iraq should have pushed price of oil higher, but the "ceiling" is $105.30 and "speculators" nervous about going that high. Today's oil price action had nothing to do with numbers; it all had to do with psychology -- "fear" in this case, overcame "greed."

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This is the headline over at Drudge: ""Washington watches as Iraq speeds toward disaster." So true. I have not heard a peep from John Kerry, Chuck Hagel, Michelle, or President Obama regarding Iraq. WTI oil and Brent oil futures remain flat today: we are in a period of backwardization (according to RBN Energy) putting pressure on upward movement which is probably countering the events in Iraq. However, if over the next three or four days Iraq continues to spiral out of control and the price of oil does not move significantly upward, that will speak volumes. If nothing else, it will tell me how important the Bakken experiment really is (negates events in the Mideast) and/or it tells me that "speculators" had already baked into the price of oil the events going on in Iraq. 

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

Wow, this is turning out to be a very interesting day. The Dow is down a 100 points -- no reason except for profit taking -- and oil is holding its own. News is coming quickly out of Iraq -- pushing Syria off the front page again. It appears that Iraq is about to implode in civil war, Sunnis against Shi'ite, and I can't keep them straight. We'll sort that out later. But the al Qaeda off-shoot that took the major Kurdistan city of Mosul have now taken Tikrit, even closer to Baghdad.

I think Americans are going to be studying Iraqi geography once again as we get to experience another one of Obama's legacies: losing Iraq. North of Baghdad lies Kurdistan, probably the most stable area in the region ... until now. There are three cities north of Baghdad to watch: Mosul (taken by anti-Baghdad, pro-Muslim, al-Qaeda); Tikrit, on the road from Mosul to Baghdad (also taken by the same group) and the capital of Kurdistan, Irbil (or Arbil) forming the apex of the triangle of these three cities to the northeast. If the al-Qaeda "insurgents" have their own "Lawrence of Arabia," it will be interesting to see what comes next: Baghdad or Irbil.

I don't think the Dow is down a 100 points due to this Mideast news; if so, oil would be climbing, and it's now. It's mostly flat for the day, mostly down slightly right now.

But even with the Dow down a 100 points, and oil flat, there are some surprises among the companies trading at 52-week highs, especially among the Bakken plays: BCEI, COP, DVN, EOG, HES, MRO, and WLL.  AAPL also traded near its 52-week high but has dropped back in later trading. EOG surges 2%, nearing $111. Whiting surges almost 4%. OAS surges almost 1.5% but still off it's all-time high. Hess up over 1%.

The Wall Street Journal

The top story, of course, is the action in Iraq. Mosul is Iraq's second largest city. It appears that foreign policy, or lack thereof, is spiraling out of control for this administration. I believe President Obama will be visiting North Dakota while the Mideast goes up in flames. Actually, perhaps it won't be that bad compared to shock and awe. Just a civil war in a country most of us no longer care about.

It appears the WSJ has not sorted out the reason by the Republican's #2 man in the House was defeated. That will come out over the next few days. Very, very interesting.


This is the headline story in the Los Angeles Times also: a California court rules that the state's strong teacher-tenure laws are unconstitutional. I doubt the ruling will hold on appeal. (A reader caught my error; I agree with the reader.)

Maybe mercury isn't so bad: the FDA is recommending pregnant women and children eat more fish.

This caught me off-guard: the 57 US states are grappling with an imminent problem -- the federal Highway Trust Fund could soon run out of money. To address the possible shortfall, states are preparing to put off projects or trying to boost hteir own sources of funding. That probably won't happen in Kansas where income tax cuts are starting to hurt.

US officials were warned that at least two of the five "Bergdahl-swappees" would return to top Taliban posts -- President Obama SecDef Hagel said, "Swap." It will be interesting to see if there is enough room under the bus for yet another Cabinet chief.

Trainwreck: small employers in 18 of the 58 US states will offer only one health plan to workers when ObamaCare's small-business exchanges open this fall -- according to bureaucrats in Washington, DC.

Suicide-in-Vermont: in a first, Vermont sets wage floor above $10.10/hour. 

Ukraine offers safe passage to civilians caught up in civil war. I would not have posted this, but it's a reminder how things are spiraling out of control while President Obama shores up his native American support by visiting North Dakota later this week.

This is interesting, and fair, and a nice, clever twist re: frequent-flyer miles. I always thought the way airlines did frequent-flyer miles was crazy. Apparently, American Airlines thought the same thing: frequent miles will now be based on price of ticket, not number of miles flown.

Paula Deen will launch new cooking network. I assume there will be a Sterling Soup segment.

 Now it's P. F. Chang with a data breach.

The Los Angeles Times

"Stunned unions cry foul after tenure rules struck down." 

Texas governor Rick Perry is trying to woo Tesla to come to Texas.

I'm starting to lose count, but I believe there have been three new earthquakes reported in southern Claifornia in the last 48 hours. I think these are related to fracking in North Dakota.

Oooh....sports... LA Kings ... a 4-0 sweep? ... San Antonio Spurs.... a full 7-game series?

The Dickinson Press

Huge, new McDonald's going up in Dickinson.

Traffic accident between mile marker 145 and 146 on US Highwest 85 west of Watford City has shut down the highway.