July 15th, 2014

Shell hits big in GOM - Shell Oil Co. today announced an offshore discovery in the Gulf of Mexico it believes contains 100 million barrels of oil equivalent. The discovery was made about 75 miles offshore in the eastern portion of the Gulf in water that’s nearly 7,500 feet deep. .. The discovery is within 10 miles of two other discoveries, known as Appomattox and Vicksburg; combined, the three total 700 million barrels of oil equivalent, Shell said. FUEL FIX

Macondo is the new Godzilla - Sometimes, the movies have to invent disasters—a killer asteroid here, a global warming monster there—before they reach proportions dramatic enough for the big screen. Other times, disasters happen on their own, in a way that makes it hard not to wonder if they were planned in advance by a group of Hollywood executives eager for their next hit. Take the BP oil spill: On April 20, 2010, the Deepwater Horizon oil rig exploded in the Gulf of Mexico, resulting in an undersea oil leak that gushed for 87 straight days. According to Deadline, that explosion spawned a New York Times article that in turn sparked a bidding war, making it only a matter of time before someone made a movie about it. That movie is Deepwater Horizon, and that time is soon. AVCLUB

Evidently there are no geo-political events to worry about - West Texas Intermediate crude fell below $100 a barrel and Brent tumbled to a three-month low as supply-disruption concerns eased with Libyan output gains and as Iraqi shipments are unaffected by an insurgency.

Libya is seeking to boost oil exports after two ports reopened and Iraqi lawmakers today elected a speaker of parliament. U.S. crude output rose to the highest since 1986 in the week ended July 4, and further gains are likely as benign summer weather is expected to increase pumping from North Dakota, the second-largest oil-producing state.

“The market may have a hard time handling the surge in Libyan oil production,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “In a very short time the market has moved from concerns about insufficient supply to what may turn into an oversupply situation.” BB

Interesting dinner conversation - The US could find its light crude oil production growth stymied if it doesn’t allow more of it to be exported, speakers warned during the US Energy Information Administration’s 2014 energy conference’s first day…

During the crude export discussion in which Auers participated, Jason Bordoff, who directs the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs, said, “Many people are concerned that if more US crude exports aren’t allowed, refineries will be so overwhelmed with domestic light crude that they’ll deeply discount the prices they’re willing to pay. This is a matter of crude quality, not adequate supplies like LNG exports. Recent experience suggests a lot of the US crude oil production growth forecasts have been conservative. We’re learning more as we produce more.” OGJ

Freeport LNG ready to build - Houston-based Freeport LNG Development LP has new investors, and its CEO plans to start construction in October on its massive liquefied natural gas export project. Freeport LNG Chairman and CEO Michael Smith said he believes the company will receive federal approval “within the next 30 days” from the Federal Energy Regulatory Commission to commence construction. HBJ

Dems still competitive in crucial Senate races - Democrats hold single-digit leads in the key Senate contests of Colorado and Michigan, as well as in Colorado’s gubernatorial race, according to new NBC News/Marist polls of these two states. But with less than four months to go until Election Day, Republicans are narrowly ahead in the race for Michigan governor. In Colorado’s Senate contest, incumbent Sen. Mark Udall, D-Colo., leads GOP challenger Cory Gardner by seven points among registered voters, 48 to 41 percent; another 10 percent are undecided. NBC

Billionaire anti-fossil fuels Democrat donor, Tom Steyer, wrote an op-ed explaining why he is now and enviro despite having made his fortune betting on compressed dinosaurs…

… as he attacks the core industry of PA - Outside money has entered the Pennsylvania governor’s race in a big way, with a new ad from billionaire Tom Steyer’s NextGen Climate super PAC accusing Gov. Corbett (R) of giving favorable treatment to oil and gas companies while shortchanging public schools. The ad, running statewide, demands that Corbett publicly disclose the meetings and communications he’s had with oil-and-gas lobbyists and donors. PHILLY

READS OF THE DAY…. the Rand Paul Pile On…. Looking for the next oil boom? Follow the tech… 

Only in America… TSA stops reporter for holding DC license; doesn’t believe dC is a real place. 

Murphy’s Muddle of the Day: Couple arrested for having sex on the roof of a Chipotle. 

What caught my attention:  Meet the Anti-Elizabeth WarrenBTW, she basically advocated breaking up JPM during the Yellen testimony this morning.  That’s why we all back Clinton in 2016.  

You can’t make this stuff up - President Barack Obama’s administration is drawing on Reagan-era legislation in order to justify warrants for data held by U.S. companies outside of U.S. territory — warrants which Microsoft, Apple, Cisco and others argue are unenforceable beyond U.S. borders. Microsoft and others commonly store customer data on servers physically closest to account holders. “Overseas records must be disclosed domestically when a valid subpoena, order, or warrant compels their production,” the government said in a brief filed last week according to Ars Technica. “The disclosure of records under such circumstances has never been considered tantamount to a physical search under Fourth Amendment principles, and Microsoft is mistaken to argue that the SCA provides for an overseas search here.” DC

Who would have thought? - Congress’s nonpartisan budget watchdog warned Tuesday that U.S. entitlement programs would drive the country’s debt to unsustainable levels in the coming years.

The federal debt is now 74 percent of the nation’s gross domestic product (GDP), the Congressional Budget Office (CBO) said in its latest long-term budget outlook, a product of the outsized budget deficits the U.S. recorded following the 2008 fiscal crash.

That figure is already twice the debt level held in 2008, and matched in U.S. history only by a brief span after World War II. But CBO also projects that the public’s share of debt will increase to 106 percent of GDP in 2039, driven by increased spending on healthcare programs like Medicare and on Social Security. HILL

July 14th, 2014

A non-eagleford shale acquisition story - Whiting Petroleum Corp said on Sunday it would acquire Kodiak Oil & Gas Corp for $3.8 billion in stock, to become the largest producer in North Dakota’s Bakken shale oil formations, eclipsing Harold Hamm’s Continental Resources Inc. By surpassing Continental, Whiting is signaling its desire to become the preeminent player in what is considered one of North America’s most-prolific shale formations, where more than 1 million barrels of oil are extracted daily. “It’s going to allow our production at the combined company to grow faster than Whiting standalone did before,” Whiting Chief Executive James Volker said in an interview.  RIGZONE


Mexico’s “privatization” trudging thru the legislative trenches - Mexico’s Senate will next week vote on legislation aimed at opening up the North American country’s oil industry to foreign players, according to a report…. The Senate has been debating competing proposals on how to change or rewrite 21 separate laws needed to implement the reforms, a gargantuan and lengthy task. Upstream reported recently that lawmakers in Mexico are expected to target completion of the nation’s new oil reform laws between late next month and mid-August after missing an initial 23 June deadline to complete the process. UPSTREAM 

API’s new lobbyist is a Democrat - The new chief lobbyist at the American Petroleum Institute (API) might defy some conventional wisdom about oil and gas backers: He’s an unabashed Democrat who doesn’t see turning the Senate red and points to an “ongoing and open dialogue” with an Obama administration that fossil fuel interests have often used for target practice. EENEWS

Texas Railroad Commisioner urges a cow town not to ban frac-ing 

Rand Paul says Rick Perry is “dead wrong” on Iraq after Rick Perry calls Rand Paul a sissy

Weatherford divests land-rig operations to neo-communists - Weatherford International  has agreed to sell its land rig operations in Russia and Venezuela to Russia’s state-controlled oil giant Rosneft for $500 million in cash, as the oil-field services company continues to slim down and focus on its core businesses. The Russian rig operations include 61 land drilling crews and a fleet of workover rigs, while the Venezuela operations include six land drilling rigs, Weatherford said Monday, adding the rig operations generate roughly half of the company’s total existing revenue in Russia and about one-third of the company’s business in Venezuela. WSJ

… as Putin moves to fill the Chavista void in the Caribbean - Saying Russia would provide support to overcome the ‘illegal blockade of Cuba,’ Russian President Vladimir Putin said Friday, he would help revive Cuba’s offshore oil exploration, and would reinvest $3.5 billion of Cuban debt into development projects. CS MONITOR

Don’t tell Al - Antarctica continues to defy the global warming script, with a report from Meteo France, that June this year was the coldest Antarctic June ever recorded, at the French Antarctic Dumont d’Urville Station. According to the press release, during June this year, the average temperature was -22.4c (-8.3F), 6.6c (11.9F) lower than normal. This is the coldest June ever recorded at the station, and almost the coldest monthly average ever – only September 1953 was colder, with a recorded average temperature of -23.5c (-10.3F). WUWT

Enviros only need a couple hundred stoners to make the news - Hundreds of protesters marched Sunday in Washington, D.C., to show their opposition to a planned natural gas export terminal in Maryland that would ship gas fracked in the United States overseas to Asia. “This Cove Point terminal would drain huge pools of Marcellus Shale gas for export 6,000 miles to Asia. It would be the first such liquefied natural gas export facility … ever, built right next to a residential neighborhood,” the groups said in a press release. “Local residents are deeply concerned about an accident on the facility that could escalate into a major fire or other life-threatening event.” AJ

Quote of the Day…. “The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.” – Vladimir Lenin

Murphy’s Muddle Headline of the Day… Hot English Teacher Victimizes 2 18-year-old males by banging them, giving them beer. 

Texans are not buying enough vacation homes in secondary markets - While nearby Galveston experiences a once in a generation construction boom, and Colorado enjoys its comfortable status as “Texas-West”, many once sought after vacation markets are still reeling from the economic downturn.   A quick glance at properties on Zillow shows a surprising amount of homes across the price-spectrum in Napa Valley and Santa Fe that were foreclosed on in the last 12 months.  

This trend of rolling foreclosures steadily coming to market has been noticeable in Miami over the last two years, but that property bubble was widely-publisized and the South Florida banks that survived the crisis are assumed to be working out mortgage-related insolvencies.   

So who holds the delinquent mortgages in these other fashionable markets, how big is the zombie / shadow housing inventory, and is it an intelligent investment decision to dive in where there is continued weakness, or to buy a vacation home in a market that has already displayed strength and future development potential?   Send your thoughts to info@schillerreport.com or share them with @Schiller713 on Twitter.    

… If you are in the market… for a wine palace, check out this bad boy in St. Helena that “beckons the elite”.    If you are more of a Breaking Bad-type, this 9,500 sqft adobe has been on some bank’s books since 2009.   Or, if entertaining Brazilian bikini models is more your thing, you can make this 51st St. Miami PH yours with a quick call to Deutsche Bank.  

… meanwhile, spec homes are on the rise in River Oaks   

PE gets in to the LA wetlands racket - A private equity firm is selling environmental credits to developers in an effort to fund the restoration of the Louisiana wetlands, the New York Times reports. The company, Ecosystem Investment Partners, hopes it can make a profit while doing the work required under the 2012 Comprehensive Master Plan for a Sustainable Coast, the Times sys.   NOLA

Reading Assignments… Bill Gates: A front row view of the financial crisisMortimer Zuckerman: The full-time scandal of part-time AmericaAmie Parnes: Obama the pariah

July 7th, 2014

Happy Monday and welcome back to the summer work week.   Here’s the news: 

The next crisis in DC: Highway Trust Funding and the Gasoline Tax - Lawmakers are under pressure to refill the Highway Trust Fund when they return to Washington after the Fourth of July weekend or risk losing thousands of construction jobs that could set back recent job growth.  The Department of Transportation has warned that allowing the Highway Trust Fund to go broke would cost the U.S. about 700,000 jobs — more than twice the 288,000 that were created last month, according to a jobs report celebrated by the administration…. The traditional source of money for the highway trust fund is the 18.4 cents-per-gallon federal gas tax, but a $16 billion-per-year hole has developed as cars have become more energy efficient in recent years.  The current transportation bill includes approximately $50 billion in infrastructure spending, but the gas tax only brings in about $34 billion per year.  THE HILL

… Geoffrey Norman: More fuel efficient cars causing Highway Trust Fund to go broke

Enviros are upset about drilling in the FL Everglades… that has been going on for 70 years - Alarmed by the spread of oil drilling in the Everglades, environmental activists and some lawmakers are pressing for stricter regulation of the energy industry and a state ban on new fracking-like techniques that blast open oil deposits near Florida’s aquifers. Critics in Collier County, the center of a mini-oil rush, warn that drilling leads to pipelines, refineries and hazardous-wastewater disposal — a domino effect that threatens a delicate ecosystem and water supplies. They say Florida is ill-equipped to control the search for black gold and that Texas wildcatters are taking advantage of the state’s limited laws. SS

Jeff Landry, former Congressman and candidate for Louisiana Attorney General on the Legacy Lawsuit issue: “Unlike Buddy Caldwell, I will not accept contributions or support from legal predators who seek to suck the life out of the most important industry in our state. I support the legislature and the governor for recently passing and signing legislation (HB 799) that will put an end to the hiring of private legal counsel on a contingency fee basis. This law, however, outrages Buddy Caldwell, who stated it “would hamstring the state’s ability to pursue legal actions.” The only thing it will hamstring for Buddy is his ability to reward his campaign contributors with lucrative legal contracts, many of which negatively impact the oil and gas sector.”    

*** Jeff Landry will be in Houston today at 4pm for a private event in Houston.  Please email me if you are interested in attending. *** 

Latest NOAA data is interesting - The National Oceanic and Atmospheric Administration’s most accurate, up-to-date temperature data confirm the United States has been cooling for at least the past decade. The NOAA temperature data are driving a stake through the heart of alarmists claiming accelerating global warming. FORBES

UT Chancellor begging for his job a little longer - The Texas Tribune reports that University of Texas President Bill Powers has countered by asking for an opportunity to make a “graceful” departure that would see him depart his post only after the 2015 legislative session. HBJ

… Former TX Senator Kay Bailey Hutchison likens Mr. Powers to “Great Leader” Kim Il-Sung.

Houston named the most-competitive metro area in the US

Headline of the Day…. Stripper Tenant From Hell Refuses to Leave Her Den of Sex


Clinton moves away from Obama - Hillary Clinton has begun distancing herself from President Barack Obama, suggesting that she would do more to woo Republicans and take a more assertive stance toward global crises, while sounding more downbeat than her former boss about the U.S. economic recovery… As she mulls a presidential bid, Mrs. Clinton also has suggested that her husband’s administration offers a more viable model for governing in polarized times than Mr. Obama’s. WSJ

There is a growing buzz about a Romney 3.0 campaign, which is pretty interesting the more I think about it.   Emil Henry lays out his case for Mitt in 2016, making parallels with Richard Nixon, which obviously has its own downside.   If that’s your thing, the NRSC is now selling “Romney Was Right” bumper stickers.   

CFK thought it would be cute to send her Marxist Elvis to negotiate with bondholders - Argentina’s economy minister will lead a delegation that will meet with a court-appointed negotiator in a long dispute with U.S. holdout creditors. The economy ministry said Sunday night that Axel Kicillof will meet Daniel A. Pollack in New York on Monday. Pollack is presiding over negotiations between representatives of Argentina and U.S. bondholders aimed at resolving the conflict over $1.5 billion in debt. The holdout funds will not be part of the meeting. KHOU

…. here is some background on Axel Kicillof - you will need to run it through a browser if you can’t read Spanish.   It’s also worth noting that several Latin American analysts have told me privately that he is CFK’s on-again-off-again “boy toy”, which may be why he routinely drops out of the public arena for months at a time when she gets fussy towards him.    

If you only read one thing, make it this excellent piece by Sara Schaefer Munoz on the 13 individual investors tied up in the Argentinian Debt Debacle. Highlights: 

“Norma Lavorato worked and saved for decades, but has spent most of her twilight years waiting for the Argentine government to pay back the $45,000 she invested in sovereign bonds and lost in Argentina’s massive 2001 default.

“I’ve had patience, a lot of patience,” said Ms. Lavorato, a spry 85-year-old who turned down the small settlement offers the government made to other bondholders. “I worked for 43 years. That money is mine.”…   

…”The scolding of holdouts vexes citizen bondholders like 57-year-old Horacio Vázquez. Mr. Vázquez, who started a group representing the individual holders, said they have been referred to as “little vultures” in the local press, with a recent article on Mr. Vázquez by a pro-government news outlet, Tiempo, linking to a Youtube video of a fluffy, vulture chick. The site also published a piece titled “These Are the Argentines Who Are on the Side of the Vulture Funds,” naming Ms. Lavorato and her 89-year-old sister, among others.

“We are discriminated against by the country that caused the problem, and still we haven’t received our money,” said Mr. Vázquez, an electrical engineer who lost $73,000—and his job—following the default.”…

… Economic and political troubles [in Argentina] are growing, with the country mired in recession and international reserves falling from $53 billion in January 2011 to $29 billion. And recently, Vice President Amado Boudou was indicted on bribery and influence peddling charges.”

Reading Assignments…. Nathan Gonzales: Why Democrats and Republicans can’t be friendsJohn Richardson: Lance Armstrong in PurgatoryGrover Norquist: How Uber can help the GOP gain control of the cities

July 2nd, 2014

Hello loyal readers!  Its been a while, but I hope you are all doing well and planning to flee soon for the 4th of July.  Remember, you can always get real-time news by following @schiller713 on Twitter.  Here is what’s happening today:  

TX producing more crude than Iraq - “Nearly as much crude flowed from Texas as from Iraq, which was the second largest OPEC producer in April at about 3.2 million barrels per day, according to Bloomberg.The news agency estimates that Iraq’s production fell to 2.9 million barrels in June amid insurgent violence. That would drop it below Texas if the state’s supply continued to rise, as it did every month since 2011.” FUEL FIX

ND limits flaring - “The North Dakota Industrial Commission today approved policy aimed at reducing the amount of natural gas flaring from the Bakken and Three Forks Formations. The policy establishes oil production limits that will take effect if producers fail to meet requirements to capture natural gas at the well site.  “Today’s policy approval is a dynamic shift in the way regulators approach reducing natural gas flaring,” said Gov. Jack Dalrymple. “The surge in shale gas production has required the Commission to take an unconventional approach at regulations by getting operators to make plans to capture natural gas at day one.” ND.GOV

BLM’s giant permitting backlog - “The Bureau of Land Management is currently sitting on a backlog of 3,500 applications that need approval to move forward, according to a government watchdog report. The Interior Department’s inspector general reported that the huge huge backlog of drilling is declining, but inefficiencies in the agency means “review times are very long” for approval of oil and natural gas drilling permits on federal lands. “Although oil and gas operators share responsibility for this situation, inefficiencies in the U.S. Department of the Interior’s (DOI) review process impede productivity,” the DOI inspector general’s report says.” DC

States take the lead in gas tax increases - “Gas tax increases in several states are taking effect ahead of the holiday weekend as Congress struggles to raise the tax nationally or find another way to cover transportation funding.  New Hampshire, Maryland and Indiana all implemented increases in their state gas taxes on July 1, according to reports…  Infrastructure advocates have pushed lawmakers to increase the federal gas tax for the first time in 21 years as the Department of Transportation said this week that it would soon begin cutting back on infrastructure reimbursements to states.” THE HILL

SGY sells shallow water assets to Talos - “Stone Energy Corp. said Monday that it has agreed to sell certain Gulf of Mexico Shelf oil and gas fields to Talos Energy Offshore in a $200 million deal. The Lafayette-based company says the sale will allow it to focus on drilling projects onshore and in the deepwater Gulf. According to a release, Talos, a Houston-based oil and gas company active in the Gulf of Mexico, will pay $200 million in cash upfront and assume $117 million in future costs to plug and abandon wells on the properties.” NOLA

PEMEX ramping up CAPEX ahead of “privatization” - “Mexico’s state-run oil company Pemex will launch a $6 billion investment in 2017 aimed at maintaining current levels of production at its once-supergiant Cantarell field over the next decade, a Pemex official said on Tuesday. Discovered in 1976, output from the offshore Cantarell field once supplied over 2 million barrels per day (bpd), or more than half of Mexico’s total crude production. But output at the field has fallen more than 80 percent since 2004 to hover around 340,000 barrels per day.” RIGZONE

Cheniere backs down on exec comp - “Cheniere Energy, facing a shareholder lawsuit over “excessive” executive compensation paid out last year, said in court filings last week it wouldn’t seek investors’ approval of another round of stock awards. In the lawsuit over past compensation, the investors claimed that Cheniere failed to follow its bylaws and Delaware law when it did not count abstentions as “no” votes in a February 2013 vote. They are seeking to recover 25 million shares issued by the company last year.” CHRON

Anyone looking for a country manager based in Athens?  DM me for my CV - “Greece is planning to cut tax rates for oil and gas companies as it wants to attract them to help exploit its untapped offshore hydrocarbon resources, according to a report. Under the plan, oil and gas explorers will pay 25% tax, down from 40% currently, and 5% of the tax will go to local communities, Reuters reported. “We have done this in order to incentivise our investors to invest in the future of Greece,” Ioannis Maniatis, Greece’s energy minister, said at a conference in London. He did not say when the new tax rates would come into effect.” UPSTREAM

BHP sponsors Houston Dynamo - “BHP Billiton Ltd. inked a multiyear deal to be the exclusive sponsor of the Houston Dynamo’s jerseys. Financial terms were not disclosed. “Our international workforce and business scope is one of the reasons why the Dynamo sponsorship is a great fit for our company,” Tim Cutt, president of BHP’s Houston-based petroleum and potash division, said in a statement.” HBJ

Random Skinny-Dipping Opportunity of the Day…. there is a secret pool in the Mojave Desert

Obama beats Bush - “President Barack Obama is the worst president since World War II, 33 percent of American voters say in a Quinnipiac University National Poll released today. Another 28 percent pick President George W. Bush.”   QUINNIPAIAC

Landrieu / Cassidy still tied in potential runoff - “The likely Landrieu/Cassidy match up for the December runoff is tied at 47. Among those who support Maness or Hollis or are undecided for the November election, 68% move to Cassidy for December compared to only 11% who move toward Landrieu. Even though only 6% of voters are undecided in that match up, they don’t set up great for Landrieu- 61% voted for Romney to 20% who voted for Obama, and she has a 14/65 approval rating.” PPP

…. Landrieu pivots to illegal shrimp? - “Foreign governments continue to unfairly spend hundreds of millions of dollars to dump underpriced shrimp into the United States and put our shrimpers, crawfishermen and seafood producers at an unfair disadvantage,” Landrieu said. “This funding will beef up our efforts to punish those who cheat the market and our seafood producers. “I will continue to use this committee to protect these jobs, a time-honored way of life, and the thousands of shrimpers who call the Gulf Coast home.” HAYRIDE

Pot grows into Big Business - “Former New Mexico Governor Gary Johnson will serve as president and CEO of a Nevada-based company working to develop marijuana products for sale in states where the drug is legal, such as Washington and Colorado, he said on Tuesday. Johnson, the 2012 Libertarian party nominee for U.S. president and a longtime supporter of marijuana legalization, was named to the position with Cannabis Sativa Inc as part of the company’s acquisition of another marijuana-related company, Kush.” REUTERS

Reading Assignment…. Ben Goad: SCOTUS’s shellacking of Obama

Comment of the Week: Houston is a mass of non-descript clutter

The WSJ ran an article on the Ashby Highrise court case in Houston.  You can read the full article here, but the real gem is a summarization of Houston development found in the comments section.   

Houston is a mass of non-descript clutter.

The city’s growth is perpetual now – it grows because it’s big and it’s big because it grows. But the basis for it’s size and prosperity is oil / gas / chemical industries, the Houston ship channel (which effectively makes Houston a port city), finance, high tech, the Texas Medical Center, and a half century of massive immigration (mostly Mexican, but also huge numbers of Vietnamese, Middle-Easterners, and others).

But none of this growth, and accompanying prosperity, is due to a lack of zoning. The absence of virtually any type of land use control doesn’t help Houston grow, it just helps it grow in a certain way – into a big mess. A thriving mess, but a mess nonetheless. Houston is a fire ant hill that somebody stepped on.

The older, close-in residential neighborhoods that were not savvy enough to have incorporated in the past (many did) have all turned into hodge-podges of clutter. The area in question here, an 80 year old residential section near Rice University, is one of the few that has survived. The Ashby developers don’t want to build near this neighborhood, they want to build right in the middle of it – not because they need to, but because they can.

Of course the property values around the building will deteriorate – as residential properties. But their value will grow for commercial development, and that’s what they will become. Then more nearby residences will lose value, and the cycle perpetuates – the neighborhoods shrink, and the high rises and accompanying retail etc, expand. That’s the story of Houston.

The city didn’t have to be that way, but it is. You can get rich in Houston, but be prepared to do so surrounded by a mass of non-descript clutter, which will never, ever get any better, only worse.

Venezuela energy-issues explained in the comments section

The Guardian ran a Venezuela piece “Venezuela leader reacts angrily to threat of US sanctions” over the weekend.  The article itself was dull and largely focused on Mr. Maduro’s expansive vocabulary of 3rd grade dismissive adjectives.

As is often the case, the real meat was in the comments section where the apologists and collaborators make their case for equalization of squalor and corruption.

Reader Cigars neuters the Chavistas and provides great analysis as to the oil and gas issues facing Venezuela, why they can’t cut off crude exports to the US, and why China is not a long-term solution.


Cigars Josephine Related


You are wrong. China loves Venezuelan oil, and they need to maintain a 8% increase in consumption every year until they reach their goal of 100 million barrels a day.
Indeed, China does like the oil. They have loaned venezuela a whole of money and Venezuela ships them a lot of oil as interest payments. The issues with oil to China are a few.

1) The US still pays cold hard cash for Venezuela oil.
2) The US buys less and less oil from Venezuela every month.
3) When Chavez took over, Venezuela produced 3.3 million barrels a day, now they produce 2.3 million barrels a day, due to Bolivarian idiocy.
4) venezuelan consumption of oil has increased from increased from 450,000 barrels a day to 800,000 barrels a day. This consumption is a loss to the Bolivarian Republic as they subsidize gasoline so it sells for $0.05 a gallon.
5) Almost every other trading partner except the US has struck silly deals with Venezuela as in oil for chicken and oil for wheat.
6) Since 2001, The US has gone from importing 55 million barrels a month to 22 million barrels a month from venezuela.
7) Venezuelan refining capacity has collapsed. Venezuela now steadily imports more and more of US gasoline every month.
8) Venezuela pays a lot of money to ship oil around the capes. They ordered 42 oil ships to try and become their own shipping company. These tankers were built in shipyards around the world. Many have been finished since 2012. PDVSA does not have the $ to have these ships released. They languish, finished, yet unpaid for.


There are also other countries in South America and Africa that need oil and Venezuela is ready to negotiate

9) Venezuela oil is a heavier crude than most. Most refineries require it be mixed with lighter crude before it can be refined. Most refineries are also not capable of doing this, limiting Venezuela’s customers.

so, study your geopolitics!
Time to study indeed.

Venezuela is broke. They no longer sell enough oil to import enough milk. They entire economy is collapsing. Industry after industry has been nationalized. The government and oil company have borrowed as much as they can, and are begging people, countries and oil companies to borrow more against the worlds largest undeveloped reserves.

Venezuela cannot pay the airlines it owes, or up to $60 Billion more of imports that have already been received and all the Bolivars have been collected, but there are no $ to pay the interest on whats owed, never mind buying new shipments of food. Puerto Cabello is grinding to a halt.
There are water shortages in Carcass, Electricity shortages in Zulia.

What you are seeing in Venezuela, is protests turning into riots when Socialists run out of food.

Enough food, razor blades, toothpaste, etc will not be delivered again until the replacement government negotiates with creditors and begs someone for a bridge loan.

Hunter Biden joins Ukrainian BOD

Via ZeroHedge: 

Burisma Holdings, Ukraine’s largest private gas producer, has expanded its Board of Directors by bringing on Mr. R Hunter Biden as a new director.

R. Hunter Biden will be in charge of the Holdings’ legal unit and will provide support for the Company among international organizations. On his new appointment, he commented: “Burisma’s track record of innovations and industry leadership in the field of natural gas means that it can be a strong driver of a strong economy in Ukraine. As a new member of the Board, I believe that my assistance in consulting the Company on matters of transparency, corporate governance and responsibility, international expansion and other priorities will contribute to the economy and benefit the people of Ukraine.”

The Chairman of the Board of Directors of Burisma Holdings, Mr. Alan Apter, noted: “The company’s strategy is aimed at the strongest concentration of professional staff and the introduction of best corporate practices, and we’re delighted that Mr. Biden is joining us to help us achieve these goals.”

Family-owned boat companies join forces in the GOM

A major JV has been announced in the Gulf of Mexico – three family-owned boat companies are joining forces to create an independent with the resources of a large public company.  New CEO Blake Miguez also says this move will allow the NewCo to better “contend with the increase of government regulations in the Gulf and allow us the resources to diversify into Deep Water.”  

Here is the release: 



Iberia Marine Service, LLC, Comar Marine, LLC, and Texas Crewboats Inc., privately owned and family operated marine transportation companies operating in the Gulf of Mexico with over 135 years of combined experience in the industry, are pleased to announce a newly formed joint venture company, SeaTran Marine, LLC.

Leading SeaTran Marine will be its new CEO, Blake J. Miguez, who is also the President of Iberia Marine Service. “We have always been and will continue to be a client driven company.  Combining our resources in this unique manner will allow us to better serve our client’s needs.  SeaTran will offer our clients all of the benefits of a small privately held company while having all of the resources of a large public company.  Most importantly, we can offer our clients more flexibility and better customer service.”

Steve Miguez, CEO of Iberia Marine Service commented, “I am very excited about SeaTran and have high expectations for the new management team that we put together.  My son Blake has all of the leadership qualities necessary to grow SeaTran into a premier offshore marine transportation provider that keeps pace with our ever changing industry.”

Glynn A. Haines, CEO of Comar Marine said, “Considerable thought, time, and effort has been put into structuring SeaTran to ensure that our clients will be provided the best possible products, service and support going forward.  SeaTran is made up from the best people from all three of our companies and under Blake’s proven leadership, I am confident that SeaTran will provide a level of customer service that will be second to none.”

Captain Elliott Cundieff, CEO of Texas Crewboats remarked, “We are very pleased to be a part of SeaTran. Each of our companies brings many years of experience to the table with this new joint venture.  I believe this unification will help ensure that we will have the necessary resources to meet the new and emerging operational and regulatory needs required by our clients today and in the future.”  Elliot’s son and Vice President of Texas Crewboats, Casey Cundieff, added, “SeaTran Marine is exactly the type of unification were looking for as an opportunity to continue the strong reputation that we built by providing our clients with quality offshore marine transportation.”

Going forward as SeaTran, the combined fleets will provide clients with multiple benefits. Customers will now enjoy complete and surplus coverage in all major ports in the Gulf of Mexico with a total of 27 vessels available for hire with an additional four new 205’ class DP2 vessels currently under construction.  The first newbuild is scheduled for delivery as early as October 2014 followed by March 2015, July 2016, and November 2016 delivery dates. SeaTran Marine, will represent the largest Crew / Fast Supply Vessel fleet in operation in the U.S. Gulf of Mexico market. Our team can now offer for hire a wide variety of vessels ranging in length from 110ft to 205ft including but not limited to those with Dynamic Positioning (DP1 / DP2 capabilities), ABS class, U.S. Coast Guard certified, as well as vessels rated for emergency and standby operations. SeaTran Marine crews will be held to heightened safety standards under voluntary ISM compliance that includes all necessary training regiments for any Gulf of Mexico or future foreign operations. SeaTran Marine has strategically located it’s main operating facility on the central Gulf Coast in Amelia, Louisiana with additional dockside facilities in Freeport, Texas and New Iberia, Louisiana.  SeaTran Marine also has sales offices and personnel strategically located across the Gulf Coast in Houston, Lafayette, and Houma.  Clients will now receive a unified notice for all available Iberia Marine, Comar Marine, and Texas Crewboat vessels offering the ease of one point of contact, instead of three, to hire any needed vessel.

Iberia Marine, Comar Marine, and Texas Crewboats are marine transportation companies with long histories of servicing the Gulf of Mexico’s offshore oil and gas industry. Now under SeaTran Marine they will continue to provide their customers with complete solutions to any requirements in the offshore marine transportation market. For additional information about SeaTran Marine please contact any of our sales team conveniently located throughout the Gulf coast:

Mitzi Alario                 (832) 746-3245

Ben Matthews              (337) 552-5042

Greg Cornes                 (985) 981-7381

While our new website is being constructed, please visit each company’s website below for vessel specifications and additional information or call our office at (985) 631-9004.

Iberia Marine Service               www.iberiamarineservice.com

Comar Marine                          www.comarmarine.com

Texas Crewboats                      www.texascrewboats.com

Visit www.seatranmarine.com for more information in the future!

May 5th, 2014

Happy Cinco de Mayo, and welcome to #OTC week in Houston.  Send your best news and tips to info@schillerreport.com or @schiller713.  Here is the news: 

Senate moving forward with bill to mandate KXL –  “The vote to authorize immediate construction of the controversialKeystone XL Pipeline may come to a crucial head next week, as two Senators introduced a bill on Thursday calling for binding legislation. Lead sponsors Senators Mary Landrieu, D-La., and John Hoeven, R-N.D., are trying to wrestle control of the decision-making process from the White House, which has waffled for more than five years and disregarded five major approval-granting studies.” BIZPAC

Oklahoma energy execs float new production tax idea -  “Executives from three of Oklahoma’s largest oil and natural gas companies have proposed a new plan for the state’s tax on oil and natural gas production. The newest proposal would change the gross production tax rate to 2 percent for both horizontal and vertical wells for the first four years of production. The rate would then rise to 7 percent. The proposal has earned the backing of Larry Nichols, executive chairman at Devon Energy Corp.; Harold Hamm, CEO of Continental Resources Inc.; and Chesapeake Energy Corp. CEO Doug Lawler.” NEWSOK

That was quick… TXU already has a reemergence plan -  “A deregulated unit of Energy Future Holdings Corp. that filed for bankruptcy protection last week is planning to issue $9 billion of new debt to pay senior creditors including Apollo Global Management LLC (APO) and Oaktree Capital Group LLC (OAK), according to two people with knowledge of the deal. First-lien lenders to the Texas Competitive Electric Holdings subsidiary will forgive about $23 billion of debt in exchange for ownership of the restructured company as well as proceeds from the $9 billion transaction, according to court documents and the people, who asked not to be identified, citing lack of authorization to speak publicly.” BLOOMBERG

Iran offers White Knight service to Europe - “Iran has indicated it would be willing to supply natural gas to Europe amid concern that Russia could retaliate against EU sanctions by restricting its own supplies of the fuel. The Islamic republic’s oil minister, Bijan Namdar Zanganeh, said at the weekend: “As a country capable of supplying gas in very big volumes, Iran is always willing to be present in Europe’s market, either through pipeline or in LNG [liquified natural gas] form.” BI

Bulls backing off crude after inventory numbers - “Money managers reduced net-long positions in West Texas Intermediate, the U.S. benchmark grade, by 0.9 percent in the seven days ended April 29, the second weekly decrease, the Commodity Futures Trading Commission said. Short positionsclimbed to the highest level in about a month.” BLOOMBERG

Petroleum Club announces its new location… still inferior to the Houston Club -  “The Petroleum Club, which moved to the Exxon building in 1963, will move to the top floor of 1201 Louisiana across from the Hyatt Regency in downtown Houston where it will lease about 30,000 square feet. The 35-story building is also known as Total Plaza.” UPSTREAM

OTC photos over the years… How to drink all night without getting a hangover…. 

Read of the Day…. Christopher Monckton: The ocean ate my global warming 

GOP provides a glimpse of what’s to come if they when the Senate - “House Republicans unleashed a barrage of oversight measures against the Obama administration last week, virtually guaranteeing Benghazi and the IRS will be a big part of the debate ahead of the November elections — and keeping an already energized GOP base fired up as voters head to the polls.” ROLL CALL

Wealthy Dems focus on gerrymandering state legislatures - “A group of wealthy liberal donors who helped bankroll the Center for American Progress and other major advocacy groups on the left is developing a new big-money strategy that could boost state-level Democratic candidates and mobilize core party voters. The plan, being crafted in private by a group of about 100 donors that includes billionaire hedge fund manager George Soros and San Francisco venture capitalist Rob McKay, seeks to give Democrats a stronger hand in the redrawing of district lines for state legislatures and the U.S. House.” WAPO

GOP candidate escaped The Birdcage - “A Republican candidate for North Carolina State Senate, and supporter of the state’s constitutional prohibition on same-sex marriage, was revealed this week to have been a female impersonator at a gay nightclub about a decade ago.” MEDIAITE 

Buzz kill – “Not a single Louisiana House member voted for an amendment Wednesday that would have allowed veterans to discuss using medical marijuana with physicians at Department of Veterans Affairs hospitals and medical centers.” NOLA


Reading Assignments… Loren Steffy: Information is crucial to safety in GOMAndrew McCarthy: The AWOL Commander-in-ChiefJon Mainwaring: Israel, the Oil, Gas Opportunity Katie Tubb: 6 environmental truths the Left conveniently ignores

April 30th, 2014

Happy Wednesday.   Send your best news and gossip to info@schillerreport.com, or @schiller713.   Here is the news: 

Reaction to the Boysie-Landrieu ad, from a NOLA transplant: “The only solace i take is that every candidate Boysie endorses loses.”  

James Carville and Dick Morris are both writing that Rick Perry is one of the most-likely GOP nominees in 2016… #FearTheOops?

House panel OKs bill to speed up LNG approvals - “The House Energy and Commerce Committee passed a bill Wednesday that would speed up exports of liquefied natural gas… The House bill requires that the Department of Energy (DOE) issue a decision on applications for natural gas export facilities no later than 90 days after the comment period ends or once the bill is enacted… The measure had initially sought to approve all pending applications immediately, and to allow for export to World Trade Organization countries.” THE HILL

Economists support oil and gas exports - “The vast majority of economists surveyed this month by The Associated Press said lifting restrictions on exports of oil and natural gas would help the economy even if it meant higher fuel prices for consumers. More exports would encourage investment in oil and gas production and transport, create jobs, make oil and gas supplies more stable and reduce the U.S. trade deficit, they say.” FNP

Lack of customer interest halts Williams-Boardwalk pipeline - “Investments in a proposed pipeline to move natural gas liquids from the Utica and Marcellus shale plays to the Gulf Coast have been suspended because of a lack of interest. The Williams Companies Inc. (NYSE: WMB) said April 28 it is halting capital investments in its Bluegrass Pipeline because of an “insufficient level of firm customer commitments,”  according to a news release. The company still is talking with potential customers about the pipeline, however.” HBJ

States to investigate whether injection wells cause earthquakes - “State oil and gas regulators and geologic surveys are forming a working group with the Interstate Oil & Gas Conservation Commission and Groundwater Protection Council to examine whether a relationship exists between injection wells and seismic events in several states, IOGCC said on Apr. 29.” OGJ

Baker Hughes joins the frac-disclosure bandwagon - “Baker Hughes believes it is possible to disclose 100% of the chemical ingredients we use in hydraulic fracturing fluids without compromising our formulations,” the company said in a surprise announcement on its website. The Houston-based company said the new disclosure policy aimed to achieve “a balance that increases public trust while encouraging commercial innovation”. UPSTREAM 

Following sanctions aimed at everyone except them, Gazprom fires back with veiled threat - “Russian state-controlled natural gas giant OAO Gazprom said Tuesday there are “renewed concerns” that political and economic tensions between Russia and Ukraine could disrupt shipments of gas to Europe. Gazprom is currently locked in a dispute with Ukraine over prices and nonpayment of bills and has given the country a May 7 deadline to settle its arrears or move to advance payment for its gas. Continued nonpayment would result in a cut in gas flows for Ukraine, which could impact European customers, the company has said. Gazprom says Ukraine’s gas debt will reach $3.5 billion in May. Gazprom supplies Europe with 30% of its gas, around half of which flows through Ukraine.” WSJ

Woodside wants to get more oily - “Chief Executive Peter Coleman said Wednesday the company wants to “balance” its core business as one of Asia’s biggest liquefied-natural-gas suppliers with new global oil opportunities…. “We’d like to balance our exploration portfolio, in particular to get more oil opportunities in that portfolio, so we’re looking at parts of the world where we can get access to early oil opportunities,” Mr. Coleman said… Mr. Coleman declined to be specific about which new oil regions he is targeting, but said they must fit into Woodside’s desire to be a “basin master,” where the company can secure relatively cheap and early exposure to globally significant prospects. However, he said Woodside won’t be venturing to any countries where “I’ll need a really heavy coat. “So you are probably not going to see us in some parts of South America; you’re not going to see us in Russia.” WSJ

Iran cancels Chinese oil contract - “Iran has canceled a $2.5 billion deal with a Chinese state oil company over what authorities say were delays in fulfilling its contractual obligations, Iran’s official IRNA news agency reported Wednesday. The state-owned China National Petroleum Corporation had signed a contract with Tehran in 2009 to develop the giant Azadegan oil field in the southwest of the OPEC member state. Iran’s oil ministry had given the Chinese company 90 days to meet its obligations or face expulsion from the project. When that did not happen to Iranian satisfaction, IRNA says officials decided to terminate the project.” AP

Video of the Day… Diane Keaton plays beer pong with Jimmy Fallon 

US regulatory costs are now the 9th biggest economy on earth - “After years of rapid growth during the Obama administration, the cost of federal regulations is now bigger than the entire economies of all but nine countries in the world… Compiling reports of compliance costs from various government agencies and outside sources, author Clyde Wayne Crews found that the “regulation tax” imposed on the economy now tops $1.86 trillion. By comparison, Canada’s entire GDP is $1.82 trillion. India’s is $1.84 trillion.” IBD

Feds go after “Too Big to Jail” Banks - “The new strategy underpins the decision to seek guilty pleas in two of the most advanced investigations: one into Credit Suisse for offering tax shelters to Americans, and the other against France’s largest bank, BNP Paribas, over doing business with countries like Sudan that the United States has blacklisted. The approach applies to American banks, though those investigations are at an earlier stage.” NYT

Young voter polling spells doom for Democrats in 2014 - “Fewer than one in four young U.S. voters plans to vote in this year’s congressional midterm elections, with Republicans significantly more likely to head to the polls than Democrats, according to a poll released on Tuesday. The poll of voters aged 18 to 29 by Harvard University’s Institute of Politics found young voters’ trust in public institutions, including the White House, Congress and the military, at a five-year low with young voters trusting them to do the right thing just 31 percent of the time.” REUTERS

…. Ronn Fournier: How Obama lost the millennial generation

Reading Assignments…. G. Allen Brooks: NOIA’s position on offshore contractor regulation shifts…  Dave Fehling: Why Alaska is reconsidering Texas-inspired oil tax cut…. Richard Haass: A foreign policy flirting with chaosMaureen Down: Is Barry Whiffing?

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