additional articles 4-21-14
New York Times
Ice or Molten Salt, Not Batteries, to Store Energy By MATTHEW L. WALD
‘Saudi America’: Mirage? By CLIFFORD KRAUSS
publication, title, author to google search if interested
Speculators’ Natural Gas Wagers Rewarded With Late Rally: Energy By Naureen S. Malik
Onsite Generation: Can Utilities Rethink Their Business Proposition? by Ken Silverstein - Contributor
CNG as a fuel sets a record in Texas in 2013
Staff Writer - Dallas Business Journal
Compressed natural gas vehicles consumed a record 2.5 billion cubic feet of natural gas in Texas in 2013, according to the Energy Information Administration.
That makes sense with all the new CNG fueling stations popping up and more and more fleets converting to natural gas.
Also, industrial consumption reached a 10-year high in Texas, a sign that the petrochemical industry is booming again, according to the EIA. More than 1.5 trillion cubic feet were consumed for industrial purposes in Texas, the most since 2004.
The amount of natural gas consumed for electric power generation dropped 6.6 percent from 2012 to 2013, according to the EIA. The electricity produced from natural gas also declined more than 10 million megawatt hours from 2012 to 2013.
That could change in 2014 with four new natural gas power plants totaling more than 2,100 megawatts coming online this summer.
Nationwide, consumption of natural gas also set a record with 26 trillion cubic feet consumed.
Rice—which is based in Canonsburg, Pa., about 20 miles southwest of Pittsburgh—has had the most eye-popping results, especially for its founding family: CEO Mr. Rice, two younger siblings and his father, company director Daniel Rice III, a former fund manager for BlackRock Inc.
"It looks to me like the Rice family rolled the dice and won," says Jay R. Ritter, a University of Florida professor who studies IPOs. It is relatively common for tech-company founders to accumulate impressive stock wealth from an IPO in relatively little time. But in most other industries, it is rare for someone to start a company and just a few years later, "be worth hundreds of millions of dollars on paper," Prof. Ritter says.
Mr. Rice IV says his father put up $50 million, which the CEO and his siblings used to acquire its leases. Private-equity firm Natural Gas Partners invested $300 million in 2012, and received shares valued then at around $900 million. The rest of the initial capital, Mr. Rice says, came from borrowing.
Rice Energy's rise has had its bumps. In 2010, the company entered into a joint venture with Alpha Natural Resources Inc., to drill on land held by the coal company. Before the deal, less than 2% of the assets of a BlackRock mutual fund run by Mr. Rice III were invested in Alpha. After the deal, Black Rock's investment rose to more than 9%, a relationship that wasn't reported publicly.
Shortly after it was disclosed by The Wall Street Journal, Mr. Rice said he would leave BlackRock. He couldn't be reached for comment for this article and previously declined to discuss the matter.
Mr. Rice IV and the rest of top management, who are in their late 20s and early 30s, "came in to this with no preconceived notions," says Cameron Horwitz, a managing director at U.S. Capital Advisors LLC in Houston, which provided investment-banking services to Rice in its IPO. "They let the data run the company."
The land-grab approach, pioneered by Chesapeake and copied by its rivals, left companies spending more than wells generated in revenue. Some huge companies that bought into the energy boom, such as Royal Dutch Shell PLC, have written down their shale assets and said that drilling for natural gas was a losing proposition.
The Marcellus Shale spans 95,000 square miles across four states. But only a small part of that is considered economically feasible, and investors now will pay dearly for the companies that can drill in those sweet spots.
"The real appeal for investors is premium acreage," says Gordon Douthat, an analyst with Wells Fargo. Driving down costs is important, too, he says. "It's a pretty easy formula, but many people haven't been successful doing it." Rice, he says, has drilled some of the most productive wells in southwestern Pennsylvania.
Several companies with similarly small, focused footprints have had successful IPOs. Diamondback Energy Inc., which is focused entirely on the Permian Basin of West Texas and emphasizes its low drilling costs, went public in late 2012. Shares of the company, which is based in Midland, Texas, have quadrupled since then.
Another Midland company, RSP Permian Inc., went public in January and raised $390 million. Two founders of the company, which holds 33,900 acres in five counties in West Texas, held shares valued at nearly $200 million each, according to Securities and Exchange Commission filings.
While these newly public companies are spending more than they make, they say they offer investors fast growth and are spending necessary money to drill wells and lay pipes that will generate positive cash flow in the next few years.
Antero Resources Corp holds 433,000 acres in the Marcellus Shale and Ohio's Utica Shale. The Denver-based company's $1.6 billion IPO in October was one of the year's largest and its shares have climbed 44% since then.
The New Winners and Losers in America's Shale Boom
Smaller Drillers With Tight Focus On Quality of Sites Appeal to Investors
By Russell Gold And Theo Francis
A new breed of energy company is a hit with investors using a mantra long scorned in the oil-and-gas business: Small is beautiful.
When the U.S. energy boom began almost a decade ago, the companies leading the way believed bigger was better. They amassed huge land holdings so they could drill thousands of wells—and then struggled as the glut of natural-gas freed through hydraulic fracturing pushed down prices.
Like their bigger rivals, the upstarts frack to tap previously untouchable oil and gas deposits in dense shale formations. But these companies have focused on the right property instead of the most property—and raked in big stock paydays as a result.
For the most part, neither the less-is-more upstarts, nor the bigger-is-better graybeards are bringing in more than they spend to drill and frack. The difference is that Wall Street no longer is throwing cash at established shale players holding loads of acreage.
"It's quality over quantity. We don't have one million acres and we don't strive to have one million acres," says Daniel Rice IV, the 33-year-old chief executive of Rice Energy Inc., which drilled its first well in 2009
The company, which went public in January, has a stock-market value of $3.9 billion, its stock up 44% since its initial public offering. The Rice family owns a third of the stock.
Rice holds the rights to lease about 90,000 acres in the Marcellus Shale, nearly all in two counties in Pennsylvania and one in Ohio.
Compare that with Chesapeake Energy Corp which holds leases to drill on nearly 13 million acres in eight states, after vacuuming up as many leases as possible in the mid-2000s. Despite having the right to drill in an area 140 times that of Rice, Chesapeake's market value is $18.33 billion.
Parachuting "was working, but we weren't that effective with it," he explains. "We have really seen a pick up in momentum since we added to our staff."
It takes a special kind of adviser to move to North Dakota and service a clientele that is more conservative, and more independent minded than elsewhere, advisers and consultants say. It also might take some practice to detect the millionaires.
"The dress code out here is basically jeans, boots, and a hoodie," and many are in their 30s, Mr. Johnson says.
Also, advisers must be more than investment managers--they need to be versed in the ways and methods of the oil and natural gas industry.
"You have to understand the mineral rights versus the surface rights and who owns what," Mr. Johnson says. "You don't want that deer in the headlight look."
Clients often take a portion of their new wealth and invest it in what they know--that is more oil wells or in land. "A financial adviser who does well in that state will be more about asset protection than about asset growth," says James Dean, the head of the financial services practice at consulting firm WealthEngine Inc.
Patience is required, experts say. Clients who gain wealth quickly often need more time to make investment decisions, and don't respond well to sales pitches, says John Nersesian, chairman of the Investment Management Consultants Association.
"These people have broken their backs," he says. "They are not necessarily interested in turning their money over to an adviser. They want to be involved."
Wells Fargo's private-banking unit moved three advisers into the state last year and hired another. Now the San Francisco-based bank is looking to add three more advisers in western North Dakota, says Bryan Johnson, a regional managing director at Wells Fargo Private Bank.
North Dakota ranks 29th in millionaires households per capita, up from 46th place five years ago, according to Phoenix Marketing International. Maryland ranks No. 1., and last year, North Dakota had the biggest increase in such households from 2012, the research firm says.
As of March 31, 1,589 investment advisory representatives and 72,803 stock brokers were registered to do business in the state--an increase of almost 40% for both groups over the last five years, says Karen Tyler, the North Dakota securities commissioner.
"We really have seen a steady increase in the number of registrants here, but not necessarily domiciled here," she says.
The reasons why not enough advisers are moving into the state vary.
Consultants say advisers are generally not a mobile group, and many might not have fully recognized the opportunities in a state whose population is growing and becoming wealthier.
Of course, "there is the weather, it's small towns," says Well Fargo's Mr. Johnson, referring to the most obvious complaints about the state. Another turnoff that advisers cite is a scarcity of certain services--such as shopping stores, entertainment, and schools.
Nevertheless, Ms. Tyler says she isn't worried about the growing number of out-of-state advisers helping investors in North Dakota. After all, complaints haven't gone up, she says.
"With technology and access to information, it wouldn't be surprising" to see investors choosing their money to be managed in the state and outside, Ms. Tyler says.
But Wells Fargo decided two years ago that moving people to the state and hiring there makes more sense than commuting advisers, Mr. Johnson says.
Oil-Rich North Dakota Needs Advisers
North Dakota now ranks 29th in millionaires households per capita
By Matthias Rieker
For two years, Wells Fargo financial adviser Melissa Moulton would commute from Sioux Falls, S.D., to western North Dakota, spending two work weeks a month with clients who needed advice on how to handle their newfound wealth.
She kept getting invited to weekend barbecues and fishing excursions, so she decided to make a permanent move up north. "I saw an opportunity to reach new clients," Ms. Moulton says.
Today, advisory firms such as Wells Fargo hope there are more advisers like Ms. Moulton willing to take a chance on a state getting richer but where advisers are scarce.
The state's historic oil boom, and businesses from trucking to restaurants that benefit from it, are creating more millionaire households that need financial advice.
Advisory firms, however, are struggling to find advisers willing to move to North Dakota, which is famous for its remoteness, icy winters and largely treeless landscape. As a result, many firms are servicing the state from afar.
"No question, there is a need for some more financial advisers out here," says Brian Johnson, an adviser in a Tioga, N.D., branch of Investment Centers of America. The firm, headquartered in Appleton, Wis., manages $13 billion in assets.
Mr. Johnson resorted to hiring his 23-year old son Eric, who is studying for his securities brokerage license. Until he receives it, Eric is helping his father with secretarial work.
Investment Centers hired about 15 advisers in North Dakota last year and is looking to add another five to six this year, says Chief Executive Greg Gunderson. The firm's goal is to position its advisers in branches of local banks, rather than its own offices.
"It's been a long time coming for North Dakota," he says, citing the state's increasing wealth.
I also think Menards is better then Home Depot. I was in Menards Friday the parking lot was packed. A recent back issue of Forbes had a long piece on Menards...it was an interesting story.
Menards is a private company.
From AMERICAN WEEKLY STOCK REPORT - April 17, 2014
MDU Resources Group, Inc. (NYSE:MDU), NYSE's 7th largest building materials & fixtures company by market capitalisation, lifted 89.30c (or 2.6%) in the trailing week to close at US$35.11. In the NYSE market of 1,944 stocks & 37 units traded today, the stock has a 6-month relative strength of 89 which means it is beating 89% of the market. A price rise combined with a high relative strength is a bullish signal. Compared with the S&P 500 Index which rose 31.8 points (or 1.7%) in the week, this represented a relative price increase of 0.9%. In the past week the market capitalisation has risen US$168.6 million.
- The stock has a score of 6 out of 9 set by Joseph Piotroski [pass mark greater than or equal to 5 ]:
Positive net income; positive operating cashflow; good quality of earnings [operating cashflow exceeds net income]; improvement in long-term debt to total assets from 0.2 to 0.3; improvement in current ratio from 1.3 to 1.4; improvement in asset turnover [growth in revenue of 9.7% exceeded growth in assets of 5.7%].
- Price/Earnings of 23.8 versus sector average of 29.1 and market average of 18.4.
- The earnings yield of 4.2% is 1.4 times the 10-year bond yield of 2.9%.
- Price/Sales of 1.48 versus sector average of 1.7 and market average of 1.5. We estimate the shares are trading at a current year Price/Sales of 1.6 and a forward year Price/Sales of 1.6.
- The Price to Book of 3.0 lower than average of 6.7 for the Total NYSE Market. We estimate the shares are trading at a current year Price to Book of 3.4 and a forward year Price to Book of 3.4.
- Return on Equity of 9.9% versus sector average of 10.7% and market average of 12.3%.
- Return on Capital Employed of 8.0% versus sector average of 8.6% and market average of 11.2%.
"We don't have any stores in North Dakota, but I sure wish we did," said Michael Glazer, CEO of Stage Stores Inc., which operates around 900 U.S. department stores under the names Bealls, Goody's, Peebles, Palais Royal and Stage.
Still, Stage is benefiting from the 250 stores it has in Texas, as well as dozens of outposts in Louisiana and Oklahoma. Stage said those stores outperformed the rest of its store base in 2012 and 2013, though sales slowed during the winter after a spate of ice storms blanketed the region.
The department store chain said it monitors employment levels county by county and uses those numbers to decide where to put new stores.
"There's a correlation between the energy boom and county employment rates," Mr. Glazer said. "And wherever energy comes in, jobs follow and people spend more at our stores."
Corporate News: Home Depot Joins the Shale Rush
Banjo, Shelly. Wall Street Journal, Eastern edition
When most retailers look for places to open new stores, they take into account economic indicators like job growth and new home building. Now, some retailers are considering another data point: drilling permits.
Home Depot Inc. has all but given up on opening new stores in the U.S., but the home-improvement retailer made an exception in January to open a store in an area it said it couldn't pass up: Minot, N.D., in the heart of the American shale oil and gas boom.
"If you had said to me seven years ago, you'll be opening a store in Minot, North Dakota, I would have asked, Why?" Chief Executive Frank Blake said in an interview. "One of the great stories of the U.S. is the shale oil development, and it's happening in areas where we don't have a lot of stores now."
The 100,000 square-foot store is more than a four-hour drive from Home Depot's nearest location and is the only U.S. store Home Depot opened in the fiscal year ended Feb. 2.
Home Depot is among a number of retailers including Wal-Mart Stores Inc. and GameStop Corp. targeting oil and gas towns in North Dakota, Texas and Louisiana, in an otherwise dour environment for retail real estate. The rise in online shopping and decline in foot traffic has led a number of retailers to scale back store construction and the size of the stores they do build.
Simply Mac, a subsidiary of GameStop Corp. that resells and repairs Apple Inc. products, targeted two store openings last fall in the oil and gas boomtowns in the West Texas cities of Midland and Lubbock.
In one Wal-Mart store in Williston, N.D., hourlong lines led the retailer to raise wages for cashiers and stock clerks to $17 an hour and bring in staff from nearby stores and other states. Wal-Mart said it has since caught up to demand with local hires.
Big Oil comes up short in shale By Collin Eaton - Houston Chronicle (this story is dated 4/11/14, I should not of tried to post it since it is to long for this format - it will be easier to Google search it).
Older crude oil tankers may end up on U.S. rails
Article by: DAVID SHAFFER , Star Tribune
Oil giants find it's slippery in shale
Bismarck Tribune, The (ND)
Author: By COLIN EATON
HOUSTON Eons before the first wildcatters smelled oil in West Texas, massive slabs of eroded sediment had fused and folded into thick bands underground, trapping the primordial sludge in layers of earth too deep to reach until modern-day engineers discovered a way.
The technological breakthroughs of the past half-decade have made the plains near Odessa and Midland, Texas, - long considered past their prime - some of the most coveted land in the nation. Pioneer Natural Resources, an Irving-based independent producer that has been active in the region for decades, estimates the Permian Basin holds 50 billion barrels of oil in stacked stone wedges.
"We have six Bakkens sitting on top of each other," Pioneer CEO Scott Sheffield said recently, referring to North Dakota's prolific Bakken Shale.
But the same North American oil patches that have lifted Pioneer and other independent oil producers to an unprecedented status in the energy industry haven't come up gushers for major integrated oil companies like Royal Dutch Shell and BP. While big companies dominate the deep waters of the Gulf of Mexico and frontiers overseas, their smaller counterparts have claimed the most lucrative territory in the Bakken , the Permian and the Eagle Ford Shale in South Texas.
Throughout the 1980s and 1990s, Pioneer amassed hundreds of thousands of acres in West Texas. Only in recent years, however, have producers begun to corral wells closer together, sometimes as close as 350 feet, to tap into the separate layers of oil. Pioneer alone is pumping from 7,000 wells.
After research last year, including 3-D seismic scanning and a small program to fracture the elusive formations called "stacked intervals," Pioneer plans to spend $2.2 billion to set up 16 horizontal rigs in the play this year. It will be more expensive than drilling vertically, but the economics make sense, Sheffield said.
ConocoPhillips ups its Eagle Ford reserve estimates
by Sanford Nowlin Reporter - San Antonio Business Journal
ConocoPhillips, one of the largest acreage holders in the Eagle Ford Shale, has boosted its reserve estimates for the South Texas oil-and-gas play by 39 percent — from 1.8 billion barrels of oil to 2.5 billion.
Officials with the Houston-based exploration and production company say they expect its Eagle Ford production to top 250,000 barrels of oil equivalent per day by 2017. That’s roughly 100,000 more than the company’s target goal at the end of last year.
“ConocoPhillips’ wells in the Eagle Ford have the highest oil rates per well and are leading the industry in value,” CEO Ryan Lance said. “This is attributable not only to the fact that we are in the best part of the play, but also to our relentless focus on technical innovation and drilling and completion cost efficiencies.”
Much of ConocoPhillips’ Eagle Ford acreage is centered around Karnes and Live Oak counties, some of the play’s most active drilling areas.
ConocoPhillips also is applying efficiencies gained in the Eagle Ford to its operations in other domestic shales including the Bakken, Permian and Niobrara plus its overseas holdings, Lance added.
"If he comes at it from the bonding standpoint there's going to be considerable resistance," Ankney said. But he added, "I'm not going to cut off my nose to spite my face. I want to get some help up there."
Tens of thousands of workers have been drawn to the region in the past several years, increasing demands on school systems, wastewater treatment plants, law enforcement and other basic services.
Most drilling is occurring in neighboring North Dakota. Yet the pressures from a growing population have spilled across the border.
Bullock planned to promote his proposal Thursday during appearances in Culbertson, Sidney, Glendive and Billings.
During the 2013 Legislature, Bullock vetoed Ankney's bill despite it receiving overwhelming bipartisan support in both the House and Senate. Its backers mustered enough votes in the Senate for a veto override but fell short in the House by six votes.
The measure would have created a fund to pay for improvements with $15 million initially and at least $10 million more added annually until 2020 from U.S. mineral royalty revenue.
Bullock proposes $45 million in oil patch grants
Associated Press State Wire: Montana (MT)
Author: MATTHEW BROWN Associated Press
BILLINGS, Mont. (AP) — Gov. Steve Bullock proposed a $45 million grant program Thursday to ease strains on water and sewer systems in eastern Montana towns that have struggled to keep pace with the demands of the fast-growing Bakken oil patch.
The proposal needs approval from the 2015 Legislature. It would be paid for with state bonds — an aspect that's likely to run into opposition from some lawmakers.
The Democratic governor last year vetoed a broader, Republican-sponsored measure that would have set aside money from mineral revenues to pay for water, sewer and road projects in the Bakken .
Bullock said Thursday the veto was needed to balance the budget. But he agrees with the Legislature on the need to respond to the changes underway in the Bakken .
"Soaring prices, inadequate resources and a massive influx of new residents is vexing local governments like never before," Bullock said in a statement. "Some of these challenges can be handled at the local level, but many of them require help and resources from the state."
Cities, towns, tribal governments and local water and sewer districts in 13 eastern Montana counties would be eligible for the grants.
Two additional initiatives were put into effect immediately: A reduction in the State Revolving Fund interest rate for construction projects, from 3 percent to 1.25 percent, and an offer to deploy state employees to give local governments technical assistance in land use planning, affordable housing and grant applications.
State Rep. Duane Ankney, the Colstrip Republican who sponsored the vetoed Bakken infrastructure bill, said he supports the idea of more state aid for eastern Montana and said it was overdue. He said how to pay for it is a matter that will have to be taken up by lawmakers next year.
OKE current yield is now approximately 3.80%.
TULSA, Okla., April 17, 2014 /PRNewswire/ -- The board of directors of ONEOK, Inc. (OKE) today increased ONEOK's quarterly cash dividend by 16 cents per share, or 40 percent, to 56 cents per share, effective for the first quarter 2014, resulting in an annualized cash dividend of $2.24 per share. The dividend is payable May 15, 2014, to shareholders of record at the close of business April 30, 2014.
"This latest dividend increase – our first as a pure-play general partner of ONEOK Partners – is further evidence of our ongoing commitment to deliver sustainable, long-term value to our shareholders in the form of increased dividends," said Terry K. Spencer, president and chief executive officer of ONEOK.
"We expect that increased distributions that ONEOK receives from ONEOK Partners, driven primarily by completed capital-growth projects from the partnership's previously announced $6.0 billion to $6.4 billion capital-investment program, will strengthen ONEOK's cash flow available for dividends and enable ONEOK to continue increasing the dividend to shareholders."
In January 2014, ONEOK affirmed its plans to increase dividends by 1.5 cents per share per quarter for the remainder of 2014, subject to board approval. ONEOK also affirmed its 2014 cash flow available for dividends is expected to be in the range of $560 million to $640 million, reflecting higher anticipated cash distributions received from its general and limited partner interests in ONEOK Partners (OKS).
ONEOK also has estimated an average annual dividend increase of 20 to 25 percent between 2013 and 2016, which includes the announced and planned increases in 2014 and 10 percent annual increases in 2015 and 2016, while maintaining a long-term dividend coverage ratio of approximately 1.05 times, subject to board approval.
Since January 2006, the company has increased the dividend 18 times, representing a 300 percent increase during that period.
Some gas-producing regions also lack the pipelines needed to connect with consumers. Without pipelines, gas gets trapped and sold at a discount near the hubs where it is produced. It is then cheap enough for local power plants to burn for electricity, diverting it from storage for next winter's heating supplies. In the Northeast, that dynamic is boosting gas consumption at power plants by two or three billion cubic feet a day, Citigroup analysts said in a note.
This is likely to contribute to higher prices, analysts say. Regulators require utilities to secure gas supplies before each winter. Analysts estimate they will have to acquire between 2.6 trillion and 3.1 trillion cubic feet of gas in storage by November.
Small inventory builds only make that challenge harder and lead to rallies like the market saw Thursday, analysts and traders say.
"The market exploded," said Santiago Diaz, a broker at INTL FCStone Latin America in Miami. "If we weren't able to put enough gas in this week, then we could see some high demand from storage players scrambling to put gas in the ground."