WSJ Wealth Adviser Briefing: Dow 23K, Adviser Profile, Soros Wealth Transfers

Another day, another round number. The Dow Jones Industrial Average closed above 23000, the latest milestone in a year with quite a few. (And this on the day before the 30th anniversary of Black Monday.)

But often lost in these headlines moments are causes for caution. Ominous trends. Ambiguous developments.

Two WSJ Wealth Adviser alum take a look at one worrisome trend that has emerged recently: investors keep yanking money out of stock funds.

Investors pulled roughly a net $36 billion out of U.S. stock mutual and exchange-traded funds in the third quarter, according to EPFR Global. Overall in 2017, more money has flowed out of such funds than has flowed in, EPFR data show, even as the Dow has climbed to 51 fresh highs this year.

Many investors are concerned that the steady rise in U.S. indexes has left shares looking expensive. They also recently have grappled with elevated tensions between the U.S. and North Korea, hurricane-related disruptions to the economy and signals that the Federal Reserve is planning to raise interest rates further and wind down its unprecedented asset-purchase program. …

… Others think the money leaving U.S. stock funds is a positive development. The outflows have coincided with elevated cash holdings and could signal major indexes can climb even higher. They figure with less invested in U.S. stock funds, there is plenty of money to put back in if investors get more optimistic.

These analysts and investors reckon some caution is healthy in a rising market. What would worry them that a peak may be near, they say, is the kind of exuberance they remember seeing from investors in the dot-com boom in the late-1990s.

Below, some of the best analysis and insight from WSJ writers and columnists, and occasionally beyond, on investing, the wealth-management business and more.

TALKING POINTS
Change atop AmEx
. Kenneth Chenault, the head of American Express and one of the country’s most prominent African-American corporate leaders, will step down as chairman and chief executive on Feb. 1.

Havoc in hedge land. The prospect of interest rate increases in the U.S. and U.K. is playing havoc with the trades of several large hedge funds.

PLANNING AND INVESTING
Giving
. George Soros‘s mammoth wealth transfer provides a template for ultra-rich families who often grapple with how to balance their philanthropic and investment goals, especially as the individuals who made the fortunes get older.

Retirement review. The U.S. Government Accountability Office released a report that calls on Congress to establish an independent commission to “comprehensively examine the U.S. retirement system and make recommendations” on ways to improve retirement security. The report noted that it has been 40 years since the last such commission, appointed by President Carter, evaluated the nation’s retirement system. Among the challenges on the horizon, the report notes, are the underfunding of Social Security, which is projected to be unable to pay full retirement benefits starting in 2035, and the shift from a defined benefit pension system to 401(k)-style plans, which puts the risks and responsibilities of funding retirement onto the individual. The GAO report recommends appointing representatives from government agencies, employers, the financial services industry, unions and academia. –Anne Tergesen

BUSINESS AND PRACTICE
WSJ Adviser Profile
: Richard Saperstein, chief investment officer at HighTower’s Treasury Partners, says his firm often pairs advisers of different ages to manage accounts or oversee funds. Younger advisers benefit from the veteran’s experience, he says, while the younger advisers can re-energize their more-seasoned counterparts.

TRAVEL AND LIFESTYLE
Watch watch. WSJ’s horological expert searched the market for mechanical watches—the most desirable sort—and found three thrifty timepieces ($250 and under) that meet his exacting standards

The Middle Seat. Why United Airlines has quietly opened an unmarked, invitation-only eatery at Newark Liberty International Airport

ADVISER CALENDAR
 ADISA 2017 Annual Conference / Las Vegas, Oct. 23-25
– ACA Fall Compliance Conference / San Diego, Oct. 25-27
– FinCon 2017 / Dallas, Oct. 25-28
– The SRI Conference / San Diego, Nov. 1-3
– ACP Annual Conference / San Antonio, Nov. 8-11

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The WSJ Wealth Adviser Briefing covers topics of interest to wealth managers, financial planners and other advisers. It’s delivered to subscribers by email each workday morning; you can sign up for email delivery here: http://on.wsj.com/WealthAdviserSignupPlease send tips, suggestions or other comments to Wealth Editor Brian Hershberg at brian.hershberg@wsj.com.

Follow WSJ Wealth Adviser on Twitter: @WSJadviser
Follow WSJ Personal Finance on Twitter: @WSJPersFinance

Source: WSJ

 

Can't Get There from Here – Prospects for Ethane Production and Transportation from the Marcellus/Utica

Available ethane in the Marcellus/Utica is expected to increase 70% by 2022 to 800 Mb/d, from about 470 Mb/d this year. That should be good news for the slew of ethane-only steam crackers coming online in that time frame, primarily along the Gulf Coast. But unfortunately, there is limited ethane pipeline takeaway capacity out of the region and today more than half of the potential ethane supply is being rejected into the natural gas pipeline stream. Without additional takeaway capacity, that rejected volume is expected to grow and few additional ethane barrels will make their way to the Gulf Coast. The question is, will transportation economics support additional pipeline development to where the demand is growing the most? Today, we will explore how the changing ethane market is likely to impact the Marcellus/Utica producing region.

Source: RBN Energy

 

EnerCom to Host 2018 EnerCom Dallas Oil & Gas Investment Conference, Feb. 21-23, 2018

EnerCom, Inc. will host its EnerCom Dallas investment conference Feb. 21-23, 2018, at the Tower Club Dallas. Investment and oil and gas professionals may register for the event through the conference website. Conference Details: Modeled after EnerCom’s The Oil & Gas Conference® in Denver, EnerCom Dallas offers investment professionals a unique opportunity to listen to oil and gas company senior management teams update[Read More…]
Source: Oil & Gas 360

 

Oil release in the Gulf of Mexico triggers BSEE panel investigation

The BSEE has initiated a panel investigation into an oil release from subsea infrastructure located about 40 miles southeast of Venice, Louisiana.


Source: Offshore

 

Forum Highlights Importance of Fracking to Colorado Manufacturing

All signs are pointing to the makings of a U.S. manufacturing renaissance, and the U.S. shale boom is a clear contributor. According to recent reports, U.S. manufacturing is expanding at its fastest pace in 13 years. Coincidentally, both the U.S. manufacturing and oil and natural gas industry seem to be on the same upward trajectory over the course of the last decade. Last week, Colorado manufacturers explained the nexus between the two industries during a Colorado Energy and Manufacturing Forum hosted by Consumer Energy Alliance and the Colorado Business Roundtable.

The forum included a manufacturing panel discussion featuring Tom Bugnitz from Manufacturer Edge, Tim Heaton from CAMA, and Jeff Popiel from GeoTech Environment Equipment & Leptron Unmanned Aircraft Systems. One of the panelists highlighted the importance of natural gas to the Colorado manufacturing industry:

“Those companies that are melting, coding, […] anything that’s high energy intensive, they are using natural gas in Colorado, they have benefited from the low pricing, and it is without a doubt been part of the driving force for the growth in manufacturing in Colorado. Thank you to the gas side of the house, because that has clearly benefited manufacturing.”

Both of Colorado’s U.S. Senators attended last week’s forum. Senator Michael Bennet acknowledged the innovation and benefits the oil and natural gas industry brings to Colorado.

 “The cost of natural gas has dropped like a stone because of the ingenuity of people in this room and people like you around the country. When people hear a message that says, ‘we should displace coal and we believe that fracking is terrible,’ what they hear is an anti-jobs message and an anti-science message.”

Senator Bennet is onto something here about the “Keep It in the Ground” groups, and this “anti-jobs” and “anti-science” message is not being well received by the manufacturing industry that relies heavily on affordable and reliable energy from the oil and natural gas industry.

A panelist explained the importance of affordable and reliable energy sources for Colorado manufacturers:

 “What I tend to worry about with this, in my job, is what are the things around the corner that are going to kill us, literally and figuratively. And one of those is resiliency and the other is reliability, and the issues we are starting to see around the country and also in Colorado is can we depend on quality and availability of the energy we are looking for? Cost is one thing, and then there’s the cost if you can’t get it and if it’s not reliable.”

Panelist gave hard numbers for what the manufacturing industry means to Colorado’s economy, further driving home the point that affordable and reliable energy is paramount.

“In Colorado there are 6,000 manufactures. To put it in perspective, tourism is about $20 billion a year industry, and manufacturing is about $22 billion; we have 140,000 employees.”

The National Association of Manufacturers (NAM) released a 2016 study quantifying the industry’s growing demand for natural gas. In a press release, NAM President and CEO Jay Timmons gives an overview of what natural gas means to manufacturing and the U.S. economy:

“Manufacturers use natural gas for fuel, such as drying, melting, machine drive and space heating, and as a feedstock in refining, chemicals and primary metals sectors. Domestic natural gas has transformed the U.S. economy, made our companies more competitive, created jobs and put money back in the pockets of working Americans.”

As the U.S. manufacturing industry grows, so will the demand for natural gas. Not only is natural gas affordable and reliable, it’s also one the cleanest burning energy sources and has played a key role in lowering U.S. carbon emissions. Manufacturing, much like oil and natural gas, is necessary and touches every facet of our lives.

Source: Energy In Depth

 

Exxon Buys its First Crude Oil Terminal in the Permian 

Terminal is anchored by Exxon Permian assets acquired in January   Exxon Mobil Corporation (ticker: XOM) acquired a crude oil terminal in Wink, Texas from Genesis Energy LP to handle Permian basin crude oil and condensate for transport to Gulf Coast refineries and marine export terminals. The facility is interconnected to the Plains Alpha Crude Connector pipeline system. Exxon said its[Read More…]
Source: Oil & Gas 360

 

Coast Guard suspends search for missing worker in Lake Pontchartrain

The Coast Guard has suspended its search for the man who was unaccounted for after an explosion on an oil platform in Lake Pontchartrain near Kenner, Louisiana.


Source: Offshore

 

Brexit & Beyond: British Wage Squeeze Continues, Merkel Begins Coalition Talks, Court Denies ECB Bond Buying Halt

Brexit & Beyond: Europe in Flux is The Wall Street Journal’s round-up of news and analysis of how Brexit will affect global business, economies and finance. You can sign up here.

MUST READS

German Chancellor Angela Merkel speaks during a campaign event of Christian Democratic Union on Oct. 13, 2017.
DAVID HECKER/EPA/Shutterstock

Squeeze on British Consumers Continues: The squeeze on British consumers continued in the three months to the end of August, with average wages including bonuses falling by 0.3% when adjusted for inflation, compared with the same period a year ago.

Germany’s Merkel Begins Tricky Three-Way Coalition Talks: A weakened Angela Merkel kicks off talks on forming Germany’s first three-party government, a process fraught with pitfalls that experts think could stretch into next year.

Germany’s Top Court Denies Request to Halt ECB Bond Buying: Germany’s constitutional court threw out a cease-and-desist request that could have halted the European Central Bank’s giant bond-buying program as the central bank prepares to extend its purchases into 2018.

Europe Urges Better Protection of ‘Soft Targets’ From Attacks: The European Union urged its member states to better secure public spaces from terror attacks and design them with the threat in mind, after a spate of deadly assaults have hit crowded urban areas in recent years.

Europe Doesn’t Expect Fresh Influx of Returning ISIS Fighters: European and American officials said Tuesday fewer Islamic State fighters than expected have returned to Europe as the extremist group has lost ground in recent months, and they don’t expect a major influx in the wake of the fall of Raqqa, Islamic State’s de facto capital in Syria.

British Intelligence Chief Notes Quickening Pace of Terror Threats: The head of Britain’s domestic intelligence agency said there has been a dramatic uptick in the threat of Islamist extremism to the U.K., with plots occurring at a faster tempo than at any point in his career.

Calls Grow to Deny Italy’s Central Bank Chief a Second Term: Political pressure in Italy is rising with calls to deny a second mandate to central bank Governor Ignazio Visco when his term ends this month, amid mounting criticism of the bank’s performance in managing the crisis that has afflicted the country’s banks in recent years.

President Trump Reiterates Support for ‘Responsible Debt Relief’ for Greece: President Donald Trump on Tuesday reiterated U.S. support for “responsible debt relief” for Greece after meeting the Greek Prime Minister Alexis Tsipras at the White House.

IN THE PAPERS

The Six Tribes of Brexit Revealed – Financial Times

Brexit Strategy ‘In Paralysis’ as EU Withdrawal Bill Delayed – The Guardian

What Happened to the Conservative Party? – Bloomberg

For Theresa May, the Brexit News Only Gets Worse – New York Times

Why Dover is Braced for Customs Gridlock after Brexit – Financial Times

Source: WSJ

 

Faber Quits Five Boards Following Comments on Race

Marc Faber, the bearish newsletter writer who encountered sharp rebuke after his racist remarks, has resigned from at least five corporate boards.

Ivanhoe Mines, which oversees projects in Southern Africa, said late Tuesday that it requested and accepted Mr. Faber’s resignation. “Ivanhoe Mines disagrees with, and deplores, the personally-held views about race that Marc Faber has published in his current investment newsletter,” the company said in a statement.

NovaGold Resources also announced Mr. Faber’s resignation late Tuesday, effective immediately.

Mr. Faber said in an e-mail to The Wall Street Journal that he had resigned from the board of Sunshine Silver Mining & Refining, a silver company, as well as the board of a Vietnam-focused fund at Dragon Capital. Neither company immediately returned requests for comment.

Mr. Faber faced backlash Tuesday after writing, “thank God white people populated America, and not the blacks,” in the most recent edition of his newsletter, “The Gloom, Boom & Doom Report.” Already, financial television networks where he often appeared said they would no longer book him, and he had resigned from the board of Sprott, an alternative asset manager, at the company’s request.

“Altogether 5 in one day,” Mr. Faber said by e-mail, in reference to his board resignations. He added: “If saying what I said leads to these consequences I prefer not to be on these boards.”

Mr. Faber has been associated with a number of companies and investment firms in recent years, according to records kept by S&P Capital IQ. Indochina Capital, which makes investments in Vietnam, still has him listed on its website as the chairman of the board of directors. Mr. Faber said he remains on that board. The company did not immediately return a request for comment.

Since the backlash, Mr. Faber has stood by his remarks. In an e-mail he sent with responses to questions that were not posed by The Journal, he said: “Why should I regret stating historic facts?”

Answering a question about the backlash, he said: “It bothers me greatly that I had to hear all the time I was at school and at University about enlightenment, freedom of speech and of expression that the media nowadays did not find anything better to do than to label me as racist. To call someone a racist is a form of low blow insult. Insult is the response of the weak to strength of character.”

Responding to a question about whether he had lost subscribers to his newsletter, he said: “No, I think most people actually agree with me and certainly defend freedom of expression even if it does no [sic] coincide with their views.”

To a question about whether the companies from which he resigned are as moral as they say, he said: “Morals in the corporate world? ‘When it comes to money, everybody is of the same religion’ = Voltaire. I am not God. I am not here to judge other people. One CEO stated that I must have been on some drugs when I wrote my Gloom Boom & Doom report. Since I have only taken Cocaine three times and marijuana about ten times in seventy years, I did not think these were appropriate comments.”

Source: WSJ

 

Forty-two Percent of Americans Say Technology – Made Possible By Petroleum – Responsible for Improving Life the Most

A new Pew Research Center survey found that 42 percent of Americans credit advances in technology with having the most impact on improving lives over the last 50 years, followed by medicine and health advancements with 14 percent. And while only five percent of respondents felt energy and the environment should top the charts, the reality is that it is because of energy  – specifically the oil and gas industry  – that many of the technological innovations over the past 50 years have been possible.

According to Pew, these responses were similar to those given in two separate surveys in 2016, when 22 percent said the technological revolution was one of the most significant events in history and 52 percent said that technology had a generally positive impact on society as a whole. Perhaps more telling, 22 percent and 20 percent of participants in the latest survey said advances in technology and medicine, respectively, would continue to have the most significant impacts on life for the next 50 years.

While the survey doesn’t specifically mention shale or the petroleum industry, technological advances that have improved daily lives and extended life expectancy are absolutely connected to oil and natural gas in both obvious and not-so-obvious ways.

Most associate oil and natural gas with things like fuels used for transportation, heating homes, cooking and providing feedstock for power generation. But in addition to all of these uses, there are more than 6,000 products that are made from petroleum. The following EID infographic shows a few of these products:

How is that possible? Natural gas is a clean-burning and affordable fuel that has a multitude of uses. There are some natural gas plays — like those found in the Utica, Eagle Ford, and parts of the Marcellus Shale — where there is an abundance of what is known as “wet gas.” This gas is comprised of natural gas liquids (NGLs) in addition to the more commonly discussed methane that is used for heating and power generation. NGLs include propane, butane, isobutene, pentane, and a byproduct that is the basic building block for plastics – ethane.

Oil and natural gas, and ethane in particular, have been a staple in the advancement of technology, enabling the development of everything from cell phones to the dashboards in cars. It is because of these petroleum products that Americans can communicate and travel easier, and have an array of comforts many of us take for granted daily as the following EID infographic shows:

What’s more is petroleum products have helped to extend modern lifespans and provided the means for life-saving technologies, as another EID infographic explains:

It is because of advances in technology within the oil and gas industry itself that America is now on its way to energy dominance. Thanks to improvements to hydraulic fracturing and horizontal drilling, a vast abundance of oil and natural gas has been unlocked from previously unviable shale formations.

The shale renaissance that has occurred over the last decade or so has enabled the United States to become a global leader in exporting liquefied natural gas (LNG), which has been and will continue to be a boon for the U.S. economy.  It is providing the feedstock needed to bring back U.S. manufacturing and helping to rejuvenate the American chemical industry. And it is significantly lowering U.S. carbon emissions by providing a readily available supply of natural gas to be used for power generation, while significantly reducing air pollution.

So, yes, as 56 percent of Americans acknowledged in the latest Pew survey, advancements in technology and medicine have had profound impacts on our lives and livelihood. Life expectancy has increased over the last half century with a newborn in 2015 expected to live to 79 – eight years more than those born in 1960. Thanks to the shale renaissance made possible by fracking, the oil and gas industry will be even better able to provide the feedstock it always has to fuel those innovations and improvements.

Source: Energy In Depth

 

ExxonMobil Acquires Crude Terminal In Permian Basin

Exxon Mobil Corp. announced Oct. 18 that it has acquired a crude oil terminal in Wink, Texas from Genesis Energy LP. The terminal is in the rapidly growing Delaware Basin, part of Permian Basin—one of the most prolific plays in the U.S.

The terminal is strategically positioned to handle Permian Basin crude oil and condensate for transport to Gulf Coast refineries and marine export terminals. The facility is interconnected to the Plains Alpha Crude Connector pipeline system and is permitted for 100,000 barrels per day of throughput with the ability to expand.
Source: Oil & Gas Investor

 

Open Records Petition Seeks More Sunlight on NY AG’s #ExxonKnew Strategy

A free market group petitioned the New York Supreme Court Tuesday to force New York Attorney General Eric Schneiderman to turn over emails from his Gmail account related to his investigation of ExxonMobil. The move follows a Vermont court ruling earlier this month ordering former Vermont AG William Sorrell to appear for a deposition related to his own involvement in Schneiderman’s campaign against the company.

That Order was reaffirmed, in yet another Order by the same court in response to further efforts to avoid disclosure about the use of Gmail to conduct this campaign.

The Energy and Environment Legal Institute (E&E Legal) revealed in related litigation that Schneiderman used his private Gmail account to conduct official government business, a move that could signal efforts to avoid disclosing emails that would ordinarily be responsive to a public records request. The private Gmail account was found within a privileged log of correspondence Schneiderman’s office submitted to the court in the course of blocking E&E Legal’s previous attempts to obtain the public records.

The search by Schneiderman’s office which excluded the Gmail account is now the subject of a re-argument scheduled for next week.

The Daily Caller reported earlier this year that Schneiderman’s Environmental Protection Bureau Chief also used a personal Gmail account to prepare for meetings with environmental groups. The Vermont development about that state’s then-AG using a non-official — again Gmail — account suggests the possibility he used it to communicate with his partner in the ExxonMobil investigation, Schneiderman. The Vermont court order came in response to a similar petition by E&E Legal – one of nearly a dozen the organization has had to file in Vermont and New York after the AGs stonewalled the group.

E&E Legal lead attorney Matthew Hardin issued a statement, writing:

“It’s clear that, whether or not Schneiderman and Sorrell were using GMail as a means of circumventing official government e-mail accounts in the hope of keeping official discussions away from public records requests, moving official emails to non-public accounts doesn’t make them any less public…Regardless of what e-mail accounts they used, if it relates to official business in their public capacities, it is open to our requests. It’s time these two AG offices stop making open records requesters sue as their default position, a position openly acknowledged in emails E&E Legal has already obtained.”

E&E Legal also published a video describing the history of the #ExxonKnew campaign, tracing the effort back to the infamous 2012 conference in La Jolla, Calif., where activists drew up a strategy for holding companies accountable for “climate change damages.”

“This scandal has it all, from major party donors using money and influence, engaging politicians willing to use their offices to advance a campaign-to-order against political opponents” said E&E Legal President Craig Richardson.  “After seeing the history laid bare in our video, it’s easy to understand why Eric Schneiderman and Bill Sorrell are fighting so hard to keep these records out of the public eye. Their problem is they are breaking the law in the process.”

Source: Energy In Depth

 

Can Palaeozoic Shale Gas Impact Australia’s East Coast Gas Market?

The East Coast Gas Market is finely balanced with current conventional and coalbed methane resources stretched to both supply LNG export markets and meet domestic demand. While this situation has developed into a political issue for federal and state governments, exploration companies have been identifying and investigating the potential of Palaeozoic shale gas in the Northern Territory of Australia. It is still early days, but with the advent of the Northern Gas Pipeline linking eastern states with the Northern Territory, any gas reserves commercialised from the Palaeozoic shales could contribute to the future supply of the East Coast Gas Market.

The Australian Gas Market

There are three main domestic gas markets in Australia: the East Coast Gas Market (ECGM) — supplied from Bass Strait and Cooper Basin fields, the West Coast Gas Market (WCGM)— supplied from North West Shelf fields, and the Northern Territory Gas Market (NTGM)— supplied from Amadeus Basin fields.
The ECGM includes the states of New South Wales, South Australia, Victoria, Tasmania, and Queensland, and is largely isolated from the WCGM and NTGM. In 2015, the Australian Competition and Consumer Commission (ACCC) documented that the available gas productivity would be enough to supply the ECGM demand forecast for 2018 (subject to the timely development of reserves and demand changes). Since then, the ACCC has released an updated Interim Report revising its outlook for 2018, and instead forecasts a shortage of between 55-108 petajoules (PJ) of gas.
This shortage has led to domestic gas users facing high prices (ranging between US$10-16 per gigajoule in H1 2017) and increased uncertainty, as suppliers are becoming less willing to enter into long-term contracts. Many industries (including chemical and alumina production) have been affected, and some have even started deferring contract negotiations in the hope that better conditions return.
The Australian Energy Market Operator has estimated that the total domestic demand forecast for 2018 is between 1,956 and 2,009 PJ. The ACCC has estimated that more than 60% of this is attributable to exports from three LNG projects in Queensland, which are: the Australia Pacific LNG project (capacity of 9 million tonnes of LNG per year (MMt/y)), the Queensland Curtis LNG project (total capacity of 8.5 MMt/y) and the Gladstone LNG project (full capacity of 7.8 MMt/y).
With the LNG projects able to export a significant amount of gas produced from a large portion of the available 2P reserves (approximately 60%— mostly coalbed methane), the federal government recognised the need to ensure security of supply to domestic users. To address this, on 1 July 2017 the government implemented the Australian Domestic Gas Security Mechanism (ADGSM), which allows export controls to be placed on the industry depending on the domestic market forecast. If a gas shortfall is predicted, a limit preventing LNG exporters drawing too much gas from the domestic market is invoked. Gas producers have also showed alignment with the federal government by guaranteeing that they would meet forecast domestic demand for 2018 and for years beyond. However, despite these assurances, it is believed no formal agreements have been signed that cement this guarantee.

In addition to the large volume of gas consumed by the LNG projects, the ACCC has recognised two issues limiting the supply side of the balance. The first is the decline in production. The Gippsland Basin currently produces the highest volume of gas, equating to 330 PJ, however this is expected to fall to 244 PJ in 2018, as traditional sources continue to be depleted and final investment decisions are deferred, for example as in Shell’s Arrow gas project.
The second issue is legislative. To date four states: New South Wales, Northern Territory, Tasmania, and Victoria have introduced moratoriums and bans on hydraulic fracture stimulation. These bans have prohibited companies exploring for and developing unconventional resources, which could potentially have a large, positive impact on the supply side of the balance. Through a change of government, the Northern Territory is the most recent state to introduce the restricting regulations.

Northern Territory Palaeozoic Shales

There are seven basins and major sub-basins in the Northern Territory. The Amadeus, Beetaloo, and McArthur basins have historically had the highest level of exploration activity. However, since 2015 only 11 wells have been drilled (all in the Beetaloo, and Georgina basins), by Santos, Origin Energy, and Pangaea. Exploration results from these wells have been mixed, however Origin’s 2015-2016 four-well campaign in the Beetaloo Basin has emerged as one of the most positive.

Figure 1: The basins of Northern Territory, Australia

Figure 1: The basins of Northern Territory, Australia

During the campaign, Origin drilled three wells (Amungee Northwest 1, Kalala South 1 and Beetaloo West 1) that have supported the presence of a laterally continuous, organic-rich source rock of Proterozoic age called the Velkerri Formation. Further analysis has indicated that the middle section (the B Shale) of this formation has excellent source-rock quality, with gas-filled porosity in the range of 3-5%, and geomechanical properties conducive for hydraulic fracture stimulation.
Later in 2016, the Amungee Northwest 1H well was spudded to begin a multistage fracture stimulation test, targeting the B Shale over a 1,000m horizontal section. The average production rate during the 57-day extended test was 1.1 million cubic feet of gas per day (MMcfg/d). Following this, Origin made a preliminary estimate of petroleum-in-place for the Velkerri B Shale Gas Pool, estimating that its acreage potentially held a gross original gas in-place volume of 496 trillion cubic feet of gas (Tcfg) and technically recoverable resources of 85 Tcfg (representing a 16% recovery/utilisation factor).

Figure 2: Origin Energy’s Beetaloo acreage with 2015-2016 well campaign

Figure 2: Origin Energy’s Beetaloo acreage with 2015-2016 well campaign

Potential Economic Impact

Further work in Origin’s campaign has stalled following a moratorium on fracking introduced on 14 September 2016 by the newly elected Labour party. Simultaneous to the moratorium, the party also commissioned a Scientific Inquiry into Hydraulic Fracturing in the Northern Territory. As part of this ongoing investigation, Origin illustrated that a large-scale project could potentially provide 400-500 terajoules of gas per day to the ECGM, based on a 400-500 well project spanning 20 years.
Further analysis in this example suggests that this could represent a life-cycle capital cost of greater than A$5.5 billion (~US$4.3 billion), based on an assumption of an average well cost of A$12 million (~US$9.4 million) and plant costs of A$5 million (~US$3.9 million) per annual PJ of capacity. Further to the additional long-term gas supply, the federal government and Northern Land Council would also benefit from revenues raised by royalties levied on production (which could be up to 12% and 1% respectively), and taxes including the Petroleum Resources Rent Tax, which is set at a rate of 40%, and the Corporation Tax, which ranges between 28.5% and 30%.
Origin’s exploration campaign is still in its infancy but has highlighted the possibility of significant unconventional potential in the Beetaloo Basin and perhaps beyond. This is further mirrored by other exploration companies and the US Energy Information Administration, which have suggested that the Velkerri shales may extend into the McArthur Basin, and that the technically recoverable shale resources in Australia could potentially be >400 Tcfg.
A resource this large is difficult to overlook, and with the Northern Gas Pipeline (scheduled for completion in late 2018) providing a possible transport route to the ECGM, it seems unlikely that these resources will remain undeveloped indefinitely. However, with the moratoriums and bans on fracking currently in place, and the long lead time from exploration to production, it seems remote that any progress made will remedy the forecasted gas shortage in 2018. The federal government has recognised that this legislation is exacerbating the current ECGM situation and is considering imposing penalties on states (through the redistribution of Goods & Services Tax receipts) that do not favour approving development plans based on an individual project basis.
Additionally, the federal government is also reviewing royalty options for landowners to incentivise exploration. A lifting of the moratoriums and bans may also help to boost the declining gas supply by increasing the number of final investment decisions taken, however this is also a function of the oil price, which is currently stunting the economic viability of some projects. To fully re-balance the market, the government also needs to address issues on the demand side. To achieve this, it may impose export limits on the three LNG projects, however this has been deemed as a temporary measure.

The post Can Palaeozoic Shale Gas Impact Australia’s East Coast Gas Market? appeared first on Drillinginfo.

Source: Drilling Info

 

US Shale Industry To See Wave Of Investment, Total CEO Says

The U.S. shale industry will see another production surge in 2018 as producers have sharply ramped up bets against a fall in oil prices, major oil executives and bankers said in London on Oct. 18.

Activity amongst small- and mid-sized producers is ahead of last year’s pace, analysts said, and a sharp increase in output could undermine the recent rally that in September pushed benchmark Brent crude to levels not seen since mid-2015.

Patrick Pouyanne, CEO of Total SA (NYSE: TOT), speaking at the Oil & Money conference in London, said he expected global oil demand to grow strongly again this year, by up to 1.6 million barrels per day (bbl/d).
Source: Oil & Gas Investor

 

Soros’s Transfer Provides a New Template for Ultra-Rich Giving

Soros Fund Management was one of the world’s earliest hedge funds and the vehicle for George Soros‘s legendary wagers on the global markets. In recent years, it has managed money for just two clients: Soros family members and Open Society Foundations, the global philanthropy network Mr. Soros founded to promote democratic values and human rights.

As we reported Monday, the 87-year-old Mr. Soros has transferred over the last several years roughly $18 billion of his wealth–the bulk of his fortune–to Open Society, vaulting it to the topmost ranks of foundations in the world.

The wealth transfer makes Open Society the Soros firm’s biggest client and takes advantage of a crisis-era law change that requires hedge-fund managers bring back offshore income by the end of 2017 and either pay taxes on it or donate it to charity. The timing of the transfer, which has long been planned and which people familiar with the matter say was not driven by a desire to take advantage of the tax loophole, amplifies how much he has been able to give away to his philanthropy.

The transition also provides a template for ultra-rich families who often grapple with how to balance their philanthropic and investment goals, especially as the individuals who made the fortunes get older.

In legacy-planning, Mr. Soros created an investment committee at Open Society to oversee the management of its newfound funds. That task is a sizable one for a foundation, let alone a professional money management firm. Mr. Soros chairs the committee, but it is meant to outlast him.

Members include Eileen Aptman, chief investment officer for the family office of the Belfer oil-and-gas family; Bill Ford, chief executive of growth-equity firm General Atlantic; Ben Inker, who heads GMO LLC’s asset allocation team; Pierre Mirabaud, former chairman of Swiss Bankers Association; and Daniel Sachs, chief executive of Swedish investment company Proventus AB.

Mr. Sachs said Open Society had a more flexible investing mandate than many of its philanthropic peers partly because Mr. Soros has not mandated that its assets last in perpetuity. “We have freedom to take larger risk when others take risk off the table,” he said.

Mr. Soros also chose as his investment firm’s new chief investment officer Dawn Fitzpatrick, a former UBS Asset Management executive who is less a trader than an allocator of funds. In doing so, he passed over several other candidates, including those who were focused traders, according to people familiar with the matter. She is the Soros firm’s seventh investment chief since 2000.

An Open Society spokeswoman said it did not plan to change the scale of its grantmaking despite the influx of cash.

Source: WSJ

 

RockRose in North Sea transactions with two Japanese groups

RockRose Energy has agreed to acquire Idemitsu Petroleum UK from Japan’s Idemitsu Kosan.


Source: Offshore

 

Soaring Shale Development is Driving Record U.S. Oil and LNG Exports

The U.S. Energy Information Administration (EIA) released its latest drilling productivity data this week, reporting that shale oil production is set to increase in November for the 11th straight month. In total, crude oil production from shale development is estimated to reach a record 6.12 million barrels per day (b/d), while shale natural gas production is expected to increase for the eighth consecutive month to 60.9 billion cubic feet per day (Bcf/d).

Thanks to incredible growth in shale development through technologies such as hydraulic fracturing (fracking) and horizontal drilling, the United States is now firmly positioned to not only meet domestic energy demands, but also provide vital energy resources to trading partners around the world via record oil and natural gas exports. Here’s a closer look at these remarkable trends.

Oil Production

According to EIA, U.S shale oil output is projected to increase by 81,000 b/d from October to November, with the majority of this growth – about 50,000 b/d – coming from the Permian Basin of West Texas and southeastern New Mexico. Oil production in Oklahoma’s Anadarko region and North Dakota’s Bakken is expected to grow by 9,000 bpd and 8,000 b/d, respectively, while the Niobrara Shale in Colorado and Wyoming is estimated to increase by 9,000 b/d.

Overall, crude oil production from U.S. shale regions is expected to reach 6.12 million b/d, almost two-thirds of which stems from production in Texas’ Eagle Ford and Permian shales. Together, these two Texas shale plays will account for nearly 3.9 million b/d in November, with Permian production alone estimated to top 2.66 million b/d next month.

As oil production from shale development continues to grow, EIA is forecasting that overall U.S. oil production will reach an average of 9.9 million b/d in 2018, exceeding the record high of 9.6 million b/d set in 1970 – a feat made all the more impressive by the two years of low oil prices relative to the highs of the early 2010s. The West Texas Intermediate (WTI) oil price, the U.S. crude oil benchmark, has dropped by over 50 percent from its high of over $100 at the end of 2014. Yet, despite a difficult market, production is thriving as companies are investing in efforts to streamline production, as well as technologies that help produce more oil at lower cost.

Moreover, EIA’s prediction of record production comes even as U.S. rig counts are half of what they were just two years ago. In 2014, American oil production increased by 1.2 million b/d – the largest annual growth at the time – hitting an average of 8.7 million b/d. According to Baker Hughes, 2014 production was achieved with an annual average of 1,862 active rigs, yet currently there are 932 active rigs producing an average of 9.4 million b/d. This means that more than 700,000 b/d is being produced with half as many rigs, a testament to the advancement in shale development over just the past few years, as well as the rich natural resources in the United States.

Natural Gas Production

As with oil production, natural gas production is also soaring. According to EIA’s latest data, U.S. shale gas production is expected to increase by 827 million cubic feet (Mcf/d) next month, with majority of this production coming from the Appalachian Basin (Marcellus and Utica shales) in the Northeast United States.

Stretching across the Pennsylvania, New York, West Virginia and Ohio, the Appalachian Basin alone is expected to grow by nearly 400 Mcf/d in November, with significant production growth also coming from the Permian. Surprisingly, natural gas production from the Haynesville Shale in Louisiana is projected to increase by 146 Mcf/d next month, as this once dormant play is seeing new life thanks to lower cost production and higher demand from Gulf Coast petrochemical and LNG infrastructure. In total, natural gas production from shale development is expected to top 60.9 Bcf/d.

But while the Appalachian Basin, Permian and Haynesville are leading the expected production increase, EIA data shows that all seven of the major U.S. shale regions are forecast to increase in natural gas production. Like oil production, advances in shale development have led to unprecedented growth in domestic natural gas levels, helping U.S. production grow roughly 39 percent in just the past 10 years.

Exports

As production levels reach record highs, the U.S. now has the unique opportunity to become a key player in the global energy market just a decade after being one of the world’s largest importers. As the world’s largest producer of oil and natural gas, the development of liquefied natural gas (LNG) export projects across the Gulf Coast and the lifting of the oil export ban in 2015 has boosted U.S. exports of both oil and natural gas, bringing with it billions of dollars in economic impact.

In fact, over just the last year, LNG pipeline receipts (natural gas going to LNG facilities) have increased from an average of 0.0 Bcf/d in October 2016 to 2.8 Bcf/d this past week. Moreover, the United States is expected to become a net exporter of natural gas by the end of 2017, as U.S. liquefaction capacity is expected to grow from 1.4 Bcf/d at the end of 2016 to 9.5 Bcf/d by the end of 2019. This development will infuse billions of dollars into the American economy – as much as $73 billion by 2040 – and provide hundreds of thousands of jobs to hard working Americans.

Already, the influx of oil and natural gas production is driving substantial investment across the United States. A report from the Texas Oil and Natural Gas Association (TXOGA) found that as of June 2017, companies have announced $71 billion of potential investment to build new chemical manufacturing facilities or expand capacity along the Texas Gulf Coast. Additionally, nearly $50 billion in infrastructure development is planned for the Port of Corpus Christi alone, thanks to oil production from the Eagle Ford shale in South Texas, as the Port of Corpus Christi now exports more crude than other U.S. port at 316,000 barrels per day. To put that in perspective, that’s double what the Port was exporting just a year ago and, at $50 a barrel, would still equate to almost $5.8 billion in oil exports per year.

Conclusion

As this latest EIA data show, advancements in shale development continue to improve American oil and natural gas production while also lowering costs. By keeping the U.S. industry competitive in the face of low commodity prices, shale development has helped position America as a global leader in oil and natural gas production, and is driving our ability to become a top exporter as well.

Source: Energy In Depth

 

Supply Growth Continues, But What About Demand?

Even at today’s low commodity prices “we will see production growth” with crude prices at $60/bbl and natural gas at $2.85/Mcf for the foreseeable future.

 

Those were the predictions of Maria Sanchez, manager of energy analysis for Drillinginfo Inc. in her Oct. 12 presentation to Hart Energy’s A&D Strategies Conference and Workshop. “Those are the basic prices that will support production growth,” she added.

 

The economics of U.S. production continue to support higher supply—and even a slight improvement in prices translates into significant production gains, Sanchez said. Also, demand is growing, but that growth is at a slower rate than that of production.

 
Source: Oil & Gas Investor

 

Wall Street Reacts to IBM’s ‘Impressive’ Quarter

International Business Machines’s shares are surging Wednesday after the company reported third-quarter results that earned praise across Wall Street.

The stock popped more than 8% shortly after the opening bell, reaching as high as $158.60. It hasn’t traded that high since early May.

IBM has been working to transition from older businesses such as building and maintaining technology on customers’ premises to higher-growth operations like delivering pay-as-you-go services over the internet.

Overall, IBM’s revenue slipped 0.4% and profits fell 4.5% in the third quarter. But analysts were encouraged by growth in the company’s hardware and “strategic imperatives” divisions.

Strategic imperatives, which houses newer businesses such as cloud computing and its Watson AI platform, is the crux of the company’s transformation plan. Revenue from the division grew 11% to $8.8 billion from a year earlier. The segment now accounts for 45% of total revenue, up 2 percentage points from a quarter ago.

IBM, which gets about half of its revenue from overseas, also benefited from currency swings, analysts said. The U.S. dollar has fallen against currencies such as the euro this year, making overseas results worth more.

Here’s a sampling of what analysts are saying:

Amit Daryanani, RBC (Price Target: $160): IBM reported an impressive Sept-qtr print with upside on both revenue and EPS…driven by positive growth trajectory on the cognitive segment coupled with improved margin performance across multiple sub-segments but most notably in systems/hardware side. We see potential for IBM to sustain revenue/EPS upside once again in Dec-qtr largely driven by f/x.

 

Arvind Ramnani, KeyBanc Capital Markets (Sector Weight): IBM bucked recent earnings performance by delivering robust 3Q revenue and a modest EPS beat. Currency tailwinds, mainframe, and transaction software contributed to the revenue beat. However, we would need to see a more sustainable pivot in IBM’s business momentum to become more constructive on the stock.

 

David Grossman, Stifel (Buy, $182): While one quarter does not make a trend, we are encouraged by the 3Q result and believe the stock can continue to re-rate higher as the business shows ongoing signs of stabilization.

 

Moshe Katri, Wedbush (Neutral, $155): The bottom line, IBM remains in a “work-in-progress” mode, as its continues to convert its revenue base away from asset/labor intensive legacy into asset/labor light “digital” solutions.

Source: WSJ

 

OPEC Leans Toward Nine-Month Extension Of Oil Supply Cut, Sources Say

OPEC is leaning towards extending a deal with Russia and other non-members to cut oil supply for a further nine months, four OPEC sources said, although stronger-than-expected demand growth may allow the group to delay a decision until early next year.

OPEC, plus Russia and nine other producers are cutting oil output by about 1.8 million barrels per day (bbl/d) until March 2018, in an attempt to eradicate a supply glut that has weighed on prices.

After slow initial progress, OPEC is more confident the cut is working. Oil prices are near a two-year high, supported by falling stocks, strong global demand, a slowdown in U.S. shale output and high overall adherence to producers’ supply pledges.
Source: Oil & Gas Investor