WSJ: Shale performance not meetng forecasts

The Wall Street Journal via Morningstar has another of their ongoing takedown articles on shale oil. The newspaper has been writing about disappointing shale production for sometime. Admittedly, however, shale production keeps on increasing each year. So the question is: is the WSJ wrong and production will keep increasing or will their analysis eventually be proven correct?

In February 2015, Whiting told investors that it expected the wells it drilled that year in North Dakota to produce 700,000 barrels of oil and gas apiece over their lifetimes. In 2018, Rystad estimated those wells were on track to produce only about 590,000 barrels. Rystad has since revised that forecast to about 540,000 barrels, or roughly 23% less oil and gas than Whiting projected.

. . . In October 2016, Encana Corp. estimated that its wells in the Eagle Ford shale of South Texas ultimately would produce about 580,000 barrels of oil and gas each. Rystad's initial estimate showed Encana's Eagle Ford wells from that year on track to generate less than 360,000 barrels. Rystad's forecast has since dropped to about 345,000 barrels of oil and gas, roughly 41% less than Encana told investors.

Coronavirus: Africa

I have a day job so I'm writing this on Sunday. This might be seriously dated or not by the time it posts on Tuesday. As of Sunday, there wasn't a single reported case of coronavirus in Africa. If that is still the case on Tuesday, then this won't be dated.

US News and World Report via Associated Press has an article up about the country of Zambia and how it is dealing with the threat of the coronavirus. Now I admit, I had to look up where Zambia is. Zambia is in Southern Africa. It is north of Zimbabwe and south of Congo. It has a population of 17 million.

The virus that has spread through much of China has yet to be confirmed in Africa, but global health authorities are increasingly worried about the threat to the continent where an estimated 1 million Chinese now live, as some health workers on the ground warn they are not ready to handle an outbreak.

. . . But the effort has been complicated by a critical shortage of testing kits and numerous illnesses that display symptoms similar to the flu-like virus.

. . . Those growing worried include employees at the Sino-Zambia Friendship Hospital in the mining city of Kitwe in northern Zambia, near the Congo border. Chinese companies operate mines on the outskirts of the city of more than half a million people. One company is headquartered in Wuhan, the city at the center of the virus outbreak. Hundreds of workers traveled between Zambia and China in recent weeks.

. . . But the employees and others familiar with the matter, some of whom spoke anonymously under the new rules, say some Chinese patients checked in with coughs and fevers but did not get placed in isolation. 

Coronavirus: Africa and Uyghurs

I'm writing this Sunday night after the Super Bowl so many things could change from now and when I actually post this. I've been thinking about how this could spread across the globe and my thoughts shifted to countries that might not have the best healthcare systems and also has connections with China.

As of Sunday, I don't believe there have been any reported cases in Africa. There have been suspected cases, but I believe all have turned out to be due to other illnesses.

Al Jazeera wrote about this on Saturday, February 1st:

Amid the mounting concerns, medical experts appear certain that the deadly virus will also infect people on the continent, pointing to the deepening trade and travel ties between China and Africa that has seen many countries on the continent become popular tourist, business and investment destinations for the Chinese.

"There is a large amount of travel between China and Africa; hubs such as Addis Ababa, Cairo and Nairobi are at particular risks due to the large amount of Chinese travellers that pass through these airports."

Coronavirus: Random Thoughts on a Couple Myth/Ethics Articles

I'm writing this Saturday morning. South China Morning Post has the number of Coronavirus cases at just over 12,000. By the time I actually post this, the number of cases will be much higher. Anyways, I've come across various articles about how we should deal with this virus and I just want to throw in my 2 cents.

Yahoo posted an article about the myths of the coronavirus. Most of the myths I agree are myths. One I think is really disputable. The author makes the case that the coronavirus is not deadlier than the flu. I think that is debatable based on how you look at the data: absolute numbers versus percentages.

“Coronavirus is obviously worrisome and dangerous with about a three percent fatality rate, but in the U.S. this flu season, we’ve seen more than 8,000 flu deaths and some of those are children,” says [Dr. Purvi] Parikh [a infectious disease specialist at NYU Langone Health]. According to the CDC, more than 15 million Americans have been infected with the flu in the 2019-2020 season and more than 140,000 have been hospitalized with the virus.

Sweden: Moderate Party Wants Snap Elections

Yahoo has the following:

The leader of Sweden’s largest opposition party, the Moderates, called for a snap election as he tries to oust the Social Democrat-led government that rules with support of his former allies.

. . . The Social Democrats lead Sweden in coalition with the Green Party, and with the support of two long-standing allies of Kristersson, the Center Party and the Liberal Party.

. . . In Sweden, snap elections can only be called by the sitting government. But Kristersson made clear that his party wants to try to topple the Social Democrats before the next vote is due to be held in 2022 . . . As part of that push, he has moved closer to a formal cooperation with the nationalist Sweden Democrats, to confront the fragile government. 

Wuhan Coronavirus

I will say one thing: China is under counting (perhaps on purpose) the number of individuals infected by the Wuhan Coronavirus.

My first thought is that there are 5 people infected in the United States (which might sound like a laughable reason why China is undercounting, but please follow my argument as I highlight the first 2 individuals that were reported to have the virus).

One individual is in Washington State. The USA Today reported on January 23rd:

There's only one known case in the United States, the unidentified Snohomish County man in his 30s who returned from Wuhan last week and became ill.

IEA and IHS Markit Oil and Shale Reports

IEA put out a report for the month of December. I don't have access to that report, but there is a summary version.

1. They estimate that global oil demand increased by 900 kb/d versus prior year; near 75% of the increase occurred in China while India saw an increase of 135 kb/d. They see 2019 demand increasing by 1.1 mb/d and 2020 demand increasing by 1.2 mb/d.

2. Even with demand still growing by over 1 mb/d, IEA still sees an over-supply of oil as they see "2020 non-OPEC supply growth to 2.1 mb/d, global oil inventories could build by 0.7 mb/d in 1Q20."

3. If I'm reading the details correctly, OPEC + is aiming to reduction production by 0.5 mb/d from current levels. So if OPEC + is -0.5 mb/d, but non-OPEC is +2.1 mb/d then it looks like oil supply will increase by 1.6 mb/d?  That supply growth does appear to be higher than demand growth.

Shale Oil: Beyond 2020

In my previous post about shale oil, I mentioned that there is a wide range of forecasts for 2020 production growth. What about beyond 2020?

OilPrice recently consolidated some quotes from corporate executives. Here's a quote from Scott Sheffield, CEO of Pioneer Natural Resources:

The Permian basin is “going to slow down significantly over the next several years,” and he noted on the company’s latest earnings call that the company is also acting with more restraint because of pressure from shareholders not to pursue unprofitable growth. “I’ve lowered my targets and my annual targets, a lot of it has to do with…to start with the free cash flow model that public independents are adopting,” Sheffield said.

Here we see an emphasis on free cash flow.

Libya: Haftar in Tripoli

Al Jazeera has a nice summary of which "foreign actors" are supporting the Government of National Accord (GNA) or the Libyan National Army (LNA - or the Libya Arab Armed Forces)

Supporting the GNA

Qatar
Turkey

Supporting the LNA

Egypt
France
Russia
Saudi Arabia
Sudan
United Arab Emirates

Somewhat neutral

Italy
United States

The one foreign actor not mentioned is Chad mercenaries/rebels, which I'd say supports the GNA.

After that quick summary of support, there is actually a lot that is happening in Libya.

Part 2 of 2: General Soleimani: killed on January 3rd, 2020

This is part 2 of my discussion around the death of General Soleimani. Part 1 looked at the death of Soleimani, why it might be good policy and why the US took this action now.

MIGHT IRAN LEADERSHIP BE REJOINCING

Part of me thinks that Iran's political leadership is relieved that Soleimani was killed. Why? Back in May 2019, The Daily Beast tossed out this random speculation:

If Soleimani’s behavior is prelude to something, it’s probably not retirement but a future political career.

That appeared to be nothing, but speculation. Yet it is something to consider as Soleimani's wealth and power was growing. It is hard to believe that Iran's political leadership wasn't concerned.

Part 1 or 2: General Soleimani: killed on January 3rd, 2020

GENERAL SOLEIMANI DEATH/WAS THIS GOOD POLICY?

I've written about General Soleimani off and on since I started to write this blog. I guess this might be one of my final blog posts about the general though the blowback from this assassination may result in future posts.

Bloomberg had the following:

Qassem Soleimani, the Iranian general who led the Revolutionary Guards’ Quds force, has been killed in a U.S. airstrike in Baghdad, according to two people familiar with the development. The attack occurred near Baghdad international airport. Details about the assault remained unclear, but one of the people said an Iraqi militia leader, Abu Mahdi al-Muhandis was also killed.

Venezuela: Various News Items

MIGRANT CRISIS

Has the migrant crisis in Venezuela slowed down? Back in a March 2019 blog post on Venezuela's migrant crisis I had the following quote and discussion:

"Yahoo had the following to say about migration out of Venezuela:

"Without any significant change that could reverse the economic, political and social crisis in Venezuela, the total number of migrants and refugees could reach between 5.39 and 5.75 million by the end of 2019," said the report commissioned by OAS Secretary General Luis Almagro.

This seems to increase the range that the Miami Herald wrote in December when they stated that the U.N. Refugee Agency had an estimate of 5.4 million by the end of 2019.

The Yahoo article seems to have an estimate of anywhere between 2.7 million to 3.4 million have already fled Venezuela from between 2015 and 2018. Not sure which numbers are from where, but one comes from the Organization of American States while the other comes from the United Nations."

Little Women: White Privilege?

Of the potential Oscar Best Picture movies that I've seen so far, Little Women is my favorite. It replaces Once Upon a Time in Hollywood. (The one movie I haven't seen yet is 1917 so my opinion might shift again.) There was a tenderness in that family that I just loved. The movie had me wanting to be part of that family.

Yet, in this "woke" era that we live in, I couldn't help but think of how one could interpret this movie. One way to view this film is from the lens of the post/current #metoo movement. Another view that I thought about was the idea of white privilege.

(Note: the following is based on what I saw in the film and doesn't include source material that might provide additional context on the life of the March family.)

The film is set largely among the wealthy. Yes, the March family throughout much of the film is not wealthy, but I would argue the family does come from wealth. Aunt March mentions this to Jo early in the movie. She mentions that she is wealthy and that Jo's father and mother lost their money. (I forget the exact wording used.) This surely implies that Jo's grandparents had been well off and set both Aunt March and Father March off well in life. Now it isn't because Jo's parents lost their money due to gambling, alcohol, and bad investments. It can be argued that the family lost their money doing charity work during the Civil War.

Libya: Growing International Warzone?

There has long been foreign powers involved in Libya, but are foreign military involvement about to increase dramatically?

Via a news site called AMN, I read the following:

The spokesperson for the Libyan National Army (LNA), Major General Ahmed Al-Mismari, said on Friday December 27, that the LNA is only a few hundred meters away from the main neighborhoods of Tripoli.

. . .  He stressed that “the Libyan National Army took control of strategic areas along the airport road in Tripoli,” noting that “dozens of bodies of militia were found along the road.”

In mid-December the LNA stated that they planned to take Tripoli. The battle between the LNA and the GNA (Government of National Accord - in Tripoli) had been in a long standstill over Tripoli. This new push appears to be moving forward -- though at still a slow pace as the LNA has still not controlled the "main neighborhoods of Tripoli."

Shale Oil: 2020 Forecasts

Shale estimates for year-over year changes in production for 2020 are coming in and there is a wide variance of thought. Bloomberg via MSN has the following:

What’s ticking folks off these days is how the International Energy Agency in Paris and the Energy Information Administration in Washington still predict robust U.S. production growth next year, despite the dire reality on the ground. The IEA expects an increase of 900,000 barrels a day, while the EIA forecasts 1 million, which would mean practically replicating this year’s expansion.

Those projections don’t jibe with the vibe in Texas, home to about half of U.S. crude output. Capital-hungry producers are being starved of funding, stocks have plunged and there’s been zero appetite for public offerings, making the downturn potentially more enduring than previous price-related busts.