Clearing Out The In-Box -- April 29, 2022

Oil:

• is it time for another SPR release?
• this is why Schumer - Pelosi are so concerned
• they can put all the auditors they want between crude oil at the well head and the pumps at my neighborhood service station, but those auditors cannot possibly affect the price of oil. Period. Dot.
• surging
• I guess losing 60% of the Bakken is not trivial
• or, maybe it's short covering as we get to the end of the month
• Brent: up 2.34%; up $2.52; trading at $110.10
• WTI: up 2.36%; up $2.49; trading at $107.80

Chevron:

• a reader tells me that Chevron plans to increase their production by 35% (year-over-year?)
• all the auditors ...

Records:

• oil set to record the longest winning streak in three years

Solar:

• US solar industry braces for slump in new capacity
• solar farms: NIMBY
• rooftop solar panels: folks don't have the cash to install such systems
• supply chain shortages and raw material inflation: will kill US solar

Russia:

• one year from now we'll be reading stories about Russian oil sector collapsing due to lack of western technology
• if I know that, Putin knows that

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

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Business Models

No pun intended.

Victoria's Secret will open a "storefront" on Amazon.

When a reader sent me that link, my reply:

Supports my assertion that companies like Amazon will lap others.

It also suggests that Victoria's Secret is really, really hurting.

I don't go to the malls much any more, maybe once or twice a year I visit the local mall to take Sophia. I find the malls generally empty and that's where the bulk of Virginia's Secret stores are located.

We will know in a year or so if this business decision is as bad as CNN+, New Coke, Edsel, AMC Gremlin. or the US Football League which lasted three years trying to compete with the NFL.

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Little Missouri River at Marmarth, ND

Level is at recent record highs, link here.

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Amazon

How bad did these affect Amazon's earnings?

• high price of gasoline / diesel
• supply chain issues
• inflation
• Rivian

A response:

This stock's poor performance has nothing to do with government stimulus checks or no government stimulus checks. This is about the end of the Pandemic, an overvalued American dollar, and what happens when you operate a delivery company and fuel prices skyrocket. 

Amazon is simply saying here that we are going to defend our market share we won in the last 2 years from the brick and competitors who are now getting back all their customers that Amazon stole or borrowed, depending on your point of view. If you are willing to look the other way on several more quarters of scorched earth pricing and profits, Amazon is for you as an investor. Amazon has the financial power to do this. However, most other Ecommerce companies do not. Many will fail in the next year or two.

*************************
Pantheon Resources

Why are we not hearing more about Pantheon Resources and Alaska?

Link here to SeekingAlpha.

 

A reader alerted me to Pantheon Resources. 

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Intel Continues To Un-Impress Me

Link here.

********************************
Biden's Foreign Policy: Leading From Behind

A reader sent me a cartoon of Biden and his foreign policy. An anti-Biden cartoon.

My reply:

I have no idea what Biden's foreign policy is but actions speak louder than words. 

Ukraine is not scoring the successes we see reported each day without huge, unprecedented support from the US.

Biden is asking for an unprecedented $33 billion for Ukraine and to get it quickly, and he will get it. At least most of it. GOP will be crazy to vote against it.

Quick: who's running the US war in Europe?

• name the US president
• name the US VP
• name the SecDef: it's not Rumsfeld
• name the Pentagon's Chief of Staff: it's not Colin Powell
• name the US European commander: I have no idea
• name the Air Force commander in Europe (USAFE): I have no idea and if I don't know, no one except a few actually know and where do you think Ukraine is getting all their intel (drones and RC-135s)
• name the US combatant commander: it's not Stormin' Norman

Devil's advocate:

• if Trump were president, Trump would clearly be in charge;
• Trump would be a very, very visible Commander-in-Chief
• things would be a lot worse with Trump running the show

Just being a devil's advocate.

The Book Page, Inflation Watch -- April 29, 2022

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The Book Page

I am really embarrassed. Huge apology. 

In all my recent notes about the books on my top shelf, I keep forgetting, perhaps the best of the best, Zen and the Art of Motorcycle Maintenance by Robert M. Pirsig, c. 1974 or thereabouts.

Fortunately, we have this: Robert M. Pirsig on the book he wrote (and the one he didn't). 

***********************
Inflation Watch

Years ago when we lived in San Antonio, my wife and I loved an occasional leisurely breakfast at La Madeleine's, a French bakery and café.

We haven't been there in years.

Today, based on their on-line menu:

• a chocolate croissant: $3.20
• coffee: $2.44
• tip: 20% = $1.28
• total: $6.77

At home:

• same chocolate croissant from local grocer: $1.00
• coffee, Keurig: 50 cents
• no tip
• total: $1.50

Add an orange juice ($3.07 at La Madeleine) vs $3.99 for a jug of orange juice from local grocer which probably has a dozen servings (33 cents).

NDIC Hearing Dockets For May, 2022 -- Huge Number Of Cases: 26 Pages But Very Few Cases On Each Page

Usual disclaimer applies: I do this quickly for my benefit. I do not expect readers to read this summary. There will be content and typographic errors. I used shorthand that may be confusing.  For all I know the links may not even be correct. I haven't checked them in quite awhile. In a long note like this there will be content and typographical errors. If this is important to you, go to the source.

Link here.  

Tracked on the blog here.

Cases, not permits.

Thursday, May 26, 2022
1 page.

The cases:

• 29402, WPX, pooling, 
• 29401, WPX, pooling,
• 29400, Grayson Mill, pooling, 
  

Thursday, May 26, 2022
13 pages.

The cases:

• 29361, NDIC, KT Enterprises, a treating plant, McKenzie County;
  
• 29362, Grayson Mill, amend, Stony Creek and/or Avoca-Bakken, establish an overlapping 1920-acre unit, section 36-155-100 and sections 1/12-154-100; one well, Williams County
  
• 29363, Grayson Mill, Todd-Bakken, establish an overlapping 1920-acre unit, sections 12/13/24-154-102; six wells on that unit, Williams County
• 29364, WPX, amend, Heart Butte and/or Deep Water Creek Bay-Bakken; an overlapping 1280-acre unit, sections 9/16-149-91; one well; an overlapping 3840-acre unit, sections 2/3/4/9/10/11-149-91, one well; Dunn, McLean counties;
  
• 29365, Bowline Energy, amend, Buffalo Wallow and/or Bully-Bakken, establish an overlapping 2560-acre unit, sections 4/5/8/0-148-100; one well; McKenzie County;
  
• 29366, Enerplus, amend, Eagle Nest-Bakken, establish two overlapping 2560-acre units, sections 2/3/10/11 and sections 3/4/9/10-148-95, one well; Dunn County;
  
• 29367, Slawson, amend, Big Bend-Bakken, establish a 160-acre unit S/2 SE/4 of section 21 and N/2 NE/4 of section 28-152-92; for additional operations in the Fox 2-28H, file # 20855); Mountrail County;
  
• 29368, CLR, West Capa-Bakken, amend, rule change, Williams County;
  
• 29369, CLR, Dollar Joe-Bakken, amend, rule change, Williams County;
  
• 29370, CLR, St Demetrius and/or Bullsnake-Bakken, amend, an overlapping1920-acre unit, and four overlapping 3840-acre units; wells on section lines; Billings County;
  
• 29371, CLR, Crazy Man Creek-Bakken, amend, dissolve an overlapping 2560-acre unit, which authorized a single well; Williams County;
  
• 29372, CLR, Willow Creek-Bakken, amend, dissolve an overlapping 2560-acre unit, which authorized a single well; Williams County;
  
• 29373, CLR, Viking-Bakken, amend, dissolve an overlapping 2560-acre unit, which authorized a single well; Burke County;
  
• 29374, CLR, suspend/revoke an Oasis permit; #36048, McKenzie County;
  
• 29375, Grayson Mill, pooling,
  
• 29376, Slawson, pooling,
  
• 29377, Slawson, pooling,
  
• 29378, Slawson, pooling,
  
• 29379, Slawson, pooling,
  
• 29380, Slawson, commingling,
  
• 29381, CLR, pooling,
  
• 29382, CLR, pooling,
  
• 29383, CLR, pooling,
  
• 29384, CLR, pooling,
  
• 29385, CLR, pooling,
  
• 29386, CLR, pooling,
• 29387, CLR, SWD
  
• 29388, Bowline Energy, pooling,
  
• 29389, KODA Resources, pooling,
  
• 29390, KODA Resources, pooling,
• 29391, KODA Resources, pooling,
• 29392, KODA Resources, pooling,
• 29393, KODA Resources, pooling,
• 29394, KODA Resources, SWD,
  
• 29395, Enerplus, commingling,
  
• 29396, Crescent Point Energy, commingling,
  
• 29397, Rimrock, commingling,
  
• 29398, Hunt Oil, SWD
  
• 29399, Hunt Oil, SWD
  

Wednesday, May 25, 2022
13 pages

The cases:

• 29331, NDIC, to consider the confiscation of assets
  
• 29332, Empire North Dakota LLC, establish eight 160-acree units, a vertical well in the Spearfish formation; eight wells, Bottineau County;
  
• 29333, Empire North Dakota, establish a 640-acre unit, section 29-161-78; Spearfish; one well;Bottineau County;
  
• 29334, Empire North Dakota, establish a 320-acre unit; E/2 of section 30-161-78, one horizontal well in Spearfish formation, Bottineau County;
  
• 29335, Empire North Dakota, establish a 640-acre unit, one horizontal well, Spearfish, Bottineau County,
  
• 29336, Petro-Hunt, East Tioga and/or White Earth-Bakken, establish an overlapping 2560-acre unit; sections 22/23/26/27-158-94, Mountrail County
  
• 29337, Oasis, amend, Sorkness-Bakken, establish two standup 1920-acre units, sections 11/14/23; and section 12/13/24-157-93, four wells in each; eight wells, Mountrail County;
  
• 29338, Oasis, amend, Sorkness-Bakken, establish two overlapping 3840-acre units; sections 10/11/14/15/22/23 and sections 11/12/13/14/23/24-157-93; one horizontal well in each, Mountrail County
  
• 29339, Oasis, amend, Alger-Bakken; establish a 1600-acre unit, E/2 E/2 fo sections 2/11, the W/2 of sections 1/12, and all of section 13-156-93, four wells, Mountrail County;
  
• 29340, Oasis, amend, Camp and/or Willow Creek-Bakken, rule exemptions for #38523, Rilynn Federal, McKenzie County,
• 29341, Oasis, amend, Camp and/or Willow Creek-Bakken, rule exemptions for #38524, Rynn Lee, McKenzie, Williams
  
• 29342, Hess, amend, Ray-Bakken, establish a standup 1920-acre unit, sections 20/29/32-157-96; seven wells, Williams County
  
• 29343, Hess, amend, Ray-Bakken, establish an overlapping 3840-acre, sections 19/20/29/30/31/32-157-96; one well, Williams County;
  
• 29344, Ovintiv, amend, Grinnel-Bakken, Sand Creek-Bakken, and/or Keene-Bakken/Three Forks, establish an overlapping 3840-acre unit, sections 2/3/10/11/14/15-153-96; McKenzie County
  
• 29345, Ovintiv, amend, the Sand Creek-Bakken, establish a standup 1920-acre unit, sections 3/10/15-153-96, McKenzie County
  
• 29346, Ovintiv, amend, Lost Bridge and/or Bear Creek-Bakken, establish an overlapping 2560-acre unit; sections 10/15/22-148-96; Dunn County;
  
• 29347, Kraken, amend, Hebron-Bakken, establish a laydown 2240-acre unit; sections 34/35/36-155-104; and, sections 31-155-103, Williams County
  
• 29348, NDIC, bond determination, RTR Energy, Hettinger County
  
• 29349, Hess, commingling,
  
• 29350, Hess, amend, Tioga-Bakken, eight wells on a 1280-acre unit, sections 11/14-157-95; Williams County;
  
• 29351, Hess, pooling,
  
• 29352, Hess, Big Butte, conversion, #27294, to injection well; Mountrail County
  
• 29353, ditto, #27295,
  
• 29354, ditto, #27296,
  
• 29355, ditto, #27297,
  
• 29356, Whiting, Sanish-Bakken, six wells on a 1920-acre unit, sections 1/2/3-152-93; Mountrail County;
  
• 29357, Grayson Mill, commingling,
  
• 29358, BR, commingling,
  
• 29359, Ovintiv, Lost Bridge-Bakken, two wells, on a lease-line 2560-acre unit, sections 10/11/14/15-148-96; Dunn County
  
• 29360, Petro-Hunt, pooling,
  

Earnings -- Tech -- 1Q22 -- The Four Common Themes

I don't want the blog to get too far afield of the Bakken, so a lot of my political, earnings, non-Bakken posts will be posted elsewhere. I will link them later. But I have to post this here just to get started. Much of the rest will be posted elsewhere. I will provide the links when posted.

This is not an investment site.

Everything below pertains to investing, not trading. Investing means having a 30-year horizon, not a 30-day horizon, or for some, a 30-hour or 30-minute horizon. 

Earnings: there were some common themes coming out of the earnings reports from yesterday afternoon: AAPL; Amazon, Roku, Robinhood, and Intel.

• getting crushed
• even with good earnings, share prices of great companies are being crushed;
• with bad earnings, share prices of great companies are really being crushed;
• with no earnings being reported by meme companies, shares are imploding; some could go to zero
• moats:
• meme companies most at risk: those with no moats; great examples of companies with no moats:
• DoorDash, UberEats, GrubHub
• Teledoc: having no moat will kill this company
• Zillow, Rocket Mortgage, 
  
• the NASCAR analogy:
• great companies are lapping the also-rans
• at least a couple of analysts are patting themselves on the back for "warning" us about Amazon; but think about this:
• one assumes Amazon has some of the brightest logistics folks on board
• if Amazon is struggling, imagine the others
• companies like Amazon have really, really deep pockets; they will spend their way out of this and lap those companies without that money
• like NASCAR, the great companies will keep getting better; the gap between the great companies and the others will widen
• the-bear-chasing-two-runners analogy:
•  if Apple is having supply chain problems, imagine how tough it is for their competitors
• what does not kill you, will make you stronger
• a lot of meme companies are going to get killed
• great companies will only get stronger
• the faster runner survives; the slower runner gets eaten by the bear
  
• energy: if there was one huge mistake by delivery companies like Amazon: 
• it was not transitioning to EVs fast enough; 
• even transitioning to CNG (if they did) appears to have been a mistake; 
• last mile (more appropriately, last ten-mile) delivery companies were perfect niches for EVs.
• they didn't switch quickly enough -- and I'm talking about ten years ago -- before Covid and China and Ukraine and Biden and whatever else comes next
• Robinhood: another company with no moat
• Roku: another NASCAR analogy company: Roku. 
• Seems to me Roku is the Danica Patrick or the Bubba Wallace of the streaming companies. 
• Roku, Danica, and Bubba get/got a lot of headlines; once in awhile they even do great, but in the big scheme of things, they always finish, at best, near the middle, and generally at the end of the pack
• there was a reason Danica left racing when she did; 
• Bubba's backer (yes, singular) has deep pockets so Bubba will be around for awhile; 
• Roku? time will tell.
• so those are the four themes coming out of yesterday's earnings from five well-known tech names:
• meme stocks will get lapped when times are challenging (the NASCAR analogy)
• companies with no moats will disappear
• the bear-chasing-two-runners analogy: if companies like Amazon, Apple are challenged with supply chain issues and price of energy, imagine how their competitors are being affected
• energy 
• Cathie Wood memes have jumped the shark. Just to throw that in so folks don't think I missed it.
• oh, by the way, there's another theme that is bubbling to the surface, impacted Amazon and Ford: EVs
• EVs are going to be kill some of these companies 
• this is going to be a hard nut to crack
• a reader sent me a note regarding CNN+ yesterday, suggesting that was the worse business decision since Edsel and New Coke. I was confused by the note; I will come back to it later, but it has a great tie-in with the EV story.

Something to think about: share buybacks --

• over the past year, Amazon actually issued $10 billion in more shares; that was over the past year;
• Apple announced another $90 billion in share buybacks; adds to previous buyback programs
• speaks volumes; links here for Apple:
  
• CNBC earlier this year;
• five-year history for AAPL;
  
• speaks volumes; for Amazon, from March 22, 2022 --
  
• Amazon approved a $5 billion repurchase program in 2016. 
• Over 2016, 2017, 2018, 2019, 2020 and 2021, Amazon spent … nothing. It made no repurchases.Mar 22, 2022:
• remember, Tesla has done the same thing: has issued more shares over the years
• whatever one thinks about share buybacks, it's a huge discriminator between companies when deciding where to put one's investing dollars
• all things being equal including a hunch that both Apple and Amazon will be huge companies thirty years from now, what one metric might help you decide between Apple and Amazon? Stock buybacks?

Something to think about: dividends --

• Apple pays a dividend (albeit not much)
• Amazon: has never paid a dividend and is likely to never pay a dividend

Something to think about: AAPL and dividends and buybacks

• think about all the money Apple is not sending out in checks every quarter -- buying back shares and really, really being disciplined when it comes to dividends in the first place -- but all those shares being bought back -- dividends not being paid on those
  

Oil Surges; Six Wells Coming Off Confidential List -- April 29, 2022

ISO NE: even if price of electricity doesn't spike to the 6th and 7th deciles, it is consistently running much higher in price than what I'm used to seeing.

• link here;
• earlier this a.m. surged to $120/MWh
• surged at same time as hydro "kicked in"; probably due to demand increasing as a new day begins, and wind, of course, does not respond

Oil surges:

• Brent: up 1.68%; up $1.81; trading at $109.40
• WTI: up 1.25%; up $1.32; trading at nearly $107
• diesel: average price hit a new record high overnight, $5.155 / gallon
• surpasses previous record of $5.153 / gallon set March 10, 2022
• see link and comments;
• helps explain the Pelosi-Schumer silliness yesterday
• White House monitoring the situation; all options on the table
• except:
• fewer regulations
• no new pipelines
• no new drilling
• no fracking

Price of oil surging:

• probably as much as a "short squeeze" as anything
• all things equal, expect crude oil to fall next week
• the fundamentals have not changed
• GDP suggests we are in a recession already
• plenty of oil in storage and in pipelines
• refiners working at 90+% capacity
• everything suggests plenty of oil (except perhaps "right" kind of oil -- see surging diesel prices; would be much worse if middle of winter and competing with heating oil)

White House: as much time spent on forgiving college loan debt as working to solve high-gasoline prices.

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Back to the Bakken

Active rigs:

$106.70	4/29/2022	04/29/2021	04/29/2020	04/29/2019	04/29/2018
Active Rigs	36	16	31	64	62

Friday, April 29, 2022: 61 for the month, 61 for the quarter, 220 for one year

• 38137, conf, CLR, Flint Chips Federal 10-5H, Cedar Coulee, no production data,
  
• 37855, conf, Whiting, Lacey 43-2-2XH, Sanish, producing, a nice well,
  
• 37703, conf, Whiting, Lacey 43-2XH, Sanish, producing, a nice well,
  
• 37495, conf, True Oil, Northern State 31-36, North Branch, no production data,
  
• 36522, conf, Hess, BB-State A-151-95-1615H-5, Blue Buttes, a very nice well,
  
• 36107, conf, CLR, Gordon Federal 1-5H, Haystack Butte, a nice well;
  

RBN Energy: off-season blizzard slams Bakken natural gas production.

Extreme blizzard conditions wreaked havoc on North Dakota energy infrastructure last weekend, taking offline as much as 60% of the state’s crude oil production and more than 80% of natural gas output, and leaving utility poles and power lines strewn across the landscape. 

On the gas side, the unprecedented supply loss is having never-before-seen impact on regional and upstream flows and storage activity. 

It is also compounding maintenance-related production declines in other basins, leaving Lower 48 natural gas output at its lowest since early February. Moreover, the extent of the storm-related damage to local infrastructure could prolong the supply recovery. In today’s RBN blog, we break down the aftereffects of the offseason winter storm on regional gas market fundamentals.

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Initial Production

The wells:

• 37855, conf, Whiting, Lacey 43-2-2XH, Sanish, producing, a nice well,

Date	Oil Runs	MCF Sold
2-2022	25147	21583
1-2022	30430	21511
12-2021	28476	17133

• 37703, conf, Whiting, Lacey 43-2XH, Sanish, producing, a nice well,

Date	Oil Runs	MCF Sold
2-2022	21340	15237
1-2022	23431	13050
12-2021	17223	9990

• 36522, conf, Hess, BB-State A-151-95-1615H-5, Blue Buttes, a very nice well,

Date	Oil Runs	MCF Sold
2-2022	30316	54681
1-2022	27226	44196
12-2021	36387	59815
11-2021	41499	66551
10-2021	6224	9917

• 36107, conf, CLR, Gordon Federal 1-5H, Haystack Butte, a nice well;

Date	Oil Runs	MCF Sold
2-2022	21227	37219
1-2022	31879	49596
12-2021	31539	45127
11-2021	27033	35235
10-2021	378	0