Energy & Commodities
Saudis Panic Over Texas Oil Powerhouse
Where Oil Workers Drop $60 for a Steak
“Restaurant was dirty and flies buzzing around!”
“The food was very greasy. The floors were covered with garbage.”
“Bathrooms, filthy! Dust everywhere! If you’re not going to clean all the antiques, then don’t display them!”
These are just some of the reviews the legendary steakhouse The Barn Door in Odessa, Texas received in the past year.
Sounds lovely, doesn’t it? But it doesn’t matter how dirty this dive is… or if it charges $0.75 for a glass of tap water.
The place is packed every night.
On Friday nights, it becomes a zoo, overflowing with oilmen ready to drop $60 on a steak — the restaurant’s banner entrée dubbed the Tomahawk.
The Tomahawk is a carnivore’s wet dream. A perfectly aged bone-in rib-eye steak that’s at least two inches thick and about two pounds of what patrons describe as “succulent glory.” It could bring Fred Flintstone to his knees.
Management at The Barn Door must love it too… the Tomahawk sells out every single Friday. And with thousands of oil workers migrating to West Texas, it’s no small wonder that eateries in the area are seeing huge spikes in business.
Revenue at The Barn Door jumped from a recent $1.4 million to an estimated $4 million for 2013. The local McDonald’s boasts wages of $14 an hour.
And it’s all because of the oil rush back into the legendary Permian, where multiple new shale oil formations have been discovered thanks to horizontal fracking.
Tomahawk steaks, Big Macs, and oil aren’t the only industries soaring in the region.Everything is booming. Million-dollar homes are popping up in the city of Midland like dandelions on a spring hillside.
From 2011 to 2012, there were 33,000 new vehicle registrations given out. Traffic has become so congested that advocates in the area are seeking $1.5 billion in fixes to roads burdened by heavy trucks.
Crowded highways didn’t stop holiday shoppers, though. Unlike the rest of the U.S., retail stores averaged a 7.4% bump in sales, while some places saw increases of 15-20% compared to 2012.
Maybe that’s one reason why the Midland and Odessa areas have some of the lowest unemployment rates in America. While the rest of the nation sat at 7.3% unemployment in October 2013, Midland was at a paltry 3.1%.
And the rising tide is lifting all ships. The Standard Sales Company recently started construction on a $20 million beer distribution center. What goes better with a two-pound slab of beef than an ice-cold brew to wash it all down?
Union Pacific is getting in on the action too, with $14 million recently invested in railway expansion in the area.
Another sure sign that oil will be carrying Texas on its back for many years to come are the leases currently being acquired to build a 58-story skyscraper in Midland. Unlike any building ever constructed in the area, the tower would be double the height of the next tallest office.
So The Barn Door better get used to the hordes of hungry customers that sometimes wait more than an hour to get a table. The oil boom in Odessa is just starting…
A new report by a professor at the University of Texas predicts Texas shale formations alone will make up one-third of the global oil supply within 10 years.
Yes, you read that correctly. One-third of global oil production will be coming from Texas!
And if you think the professor is just trying to talk up his research, think again. Last week, Saudi Prince Alwaleed Bin Talal basically begged Saudi Arabia to address the threat of U.S. shale oil.
The billionaire businessman Bin Talal went so far as to call it a “matter of survival.” Since 92% of his country’s budget comes from oil, the prince should be worried.
In West Texas alone, there’s a new formation I’ve dubbed “the Petroplex” that may hold as much as 100 billion barrels of oil. A formation that size would be the 2nd largest oilfield ever discovered on the planet.
That’s what the CEO of Pioneer — one of the first major drillers to buy large acreage blocks in the Petroplex — said in an interview about 3 months ago:
“We believe [the Petroplex] will reach 100 billion boe recoverable reserves at some point in time [and it] could possibly become the largest oil and gas discovery in the world.”
Now, maybe you think the CEO of Pioneer is biased, since his company’s working in the region.
But here’s what Forbes reported…
“… the region [Petroplex] is producing more oil than the pipelines can handle…” and “New infrastructure is being laid to send oil from the Petroplex straight to the refinery center in Houston…”
And CNBC said:
“Oil flows like water in the Petroplex.”
And it’s about to get even bigger.
Keith Kohl
Energy & Capital
I have just completed extensive on-the-ground research of the Petroplex, and I found a little-known company trading for less $8 that’s already producing oil in the area.
My report shows you exactly where the Petroplex exists (even the names of the counties), the companies drilling for oil there, and specifically the small $8 driller ready to hit the big time.
A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing’sEnergy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor’s page.
I have pilfered from him before, and I will no doubt pilfer again. For Mark Twain is an excellent source of inspiration. Apparently, he said something along the lines of ’reports of my death have been greatly exaggerated‘ in relation to a misinformed newspaper article about one of his relatives. Regardless, it has been ringing in my ears recently as I have been reading about coal. For despite the anthracitical fuel being the red-headed stepchild of the energy complex, talk of its demise would appear misplaced. I present my case henceforth.
1) Coal has historically been, and is currently, the leading fuel in the US power generation mix. It is also expected to play a leading role for many years to come:
OTTAWA (Reuters) – Canada bluntly told the United States on Thursday to settle the fate of TransCanada Corp’s proposed Keystone XL pipeline, saying the drawn-out process on whether to approve the northern leg of the project was taking too long.
The hard-line comments by Foreign Minister John Baird were the clearest sign yet that Canada’s Conservative government has lost patience over what it sees as U.S. foot-dragging.
Baird also conceded that Washington might veto the project, the first admission of its kind by a Canadian government minister.
The 1,200-mile (1,930-km) pipeline would carry 830,000 barrels a day from the Alberta tar sands in western Canada to the U.S. Gulf Coast. Ottawa strongly backs Keystone XL, which it says would create jobs and provide a secure supply of oil to Canada’s closest ally and trading partner.
“The time for Keystone is now. I’ll go further – the time for a decision on Keystone is now, even if it’s not the right one. We can’t continue in this state of limbo,” Baird said in a speech to the U.S. Chamber of Commerce.
Although the State Department is responsible for ruling whether the pipeline meets the national interest, President Barack Obama has made clear he will make the final decision.
Obama is under heavy pressure from environmental activists to veto the northern leg, and Washington seems in no hurry, despite the growing irritation in Ottawa. Canada is the largest single supplier of energy to the United States.
The State Department issued a largely favorable initial environmental impact assessment in March 2013, which was followed by a public comment period. On paper, at least, the department should have issued an updated impact assessment and then a final recommendation by the end of 2013.
….read page 2 HERE
In this week’s Bulletin, I am highlighting the recent positive action in Uranium shares, specifically URA – the GlobalX Uranium ETF, shown below in both a daily and weekly chart. The key has been recent accumulation patterns confirmed using my own Leibovit ‘VR’ Indicator (shown below with green arrows). Weekly accumulation has been underway for nearly four months as prices rise to the blue 50 weekly moving average (currently at 17). The blue daily 50 day moving average sits at 16.25. As a point of reference, the February, 2011 peak in URA stood at 67.26 and it’s lowest low occurred in October, 2013 at 13.82. My target? I would look for a minimum move to 18.75 with potential as high as 22.00-23.00. I can find no recent news regarding Uranium which I interpret as a bullish sign.
Mark Leibovit is Chief Market Strategist and Publisher for the Leibovit VR Gold Letter and the author of ‘The Trader’s Book of Volume’ which was published in 2011 by McGraw-Hill. You may have recognized Mark as one of the ten “Elves” on Louis Rukeyser’s Wall Street Week television program where he served as a weekly consultant for 7 years and also as a regular Market Monitor guest for 30 years on PBS’ The Nightly Business Report. He is a popular speaker at investment conferences both in the U.S. and Canada and is often seen on PBS, BNN and FOX Business News. TIMER DIGEST Magazine has named him the #1 Gold Timer for the twelve-month period from 8/26/10 to 8/26/11 and for the 5-year period ending 2010. He was also named the #1 Intermediate Market Timer for the 10-year period ending in 2007. Mr. Leibovit was a member of the Chicago Board Options Exchange where he became a market maker in several stocks including Newmont Mining. Through the late 1980s he was Technical Research Director for Rodman & Renshaw and subsequently began publishing several financial newsletters. He holds a CIMA and AIF designation and is a member of the Market Technicians Association (MTA) and the CFA Institute.
A Guide to Our Metal Commentary
Our charts are based on data compiled at the market close prior to publication. If you have questions on our current stops or targets, please don’t hesitate to drop us an email at mark.vrtrader@gmail.com. If overall market action necessitates a bulletin, we will send it out as necessary, but I would encourage you to subscribe to the VRtrader Platinum service which often sends out multiple bulletins each day. Please go to www.vrtrader.com for more information. Charts herein incorporate the common 50 and 200 day moving averages. If you would like access the Leibovit Volume Reversal signals daily, subscribe to my ‘Add-on’ Leibovit VR Indicator from either Metastock or ESignal.
Please note that daily and weekly charts can show different technical patterns. Sometimes the formation of Positive Leibovit Volume Reversals occurs in the weekly charts and not in the daily charts. Just look for the red ‘VRs’ which represent sellers and the blue ‘VRs’ which represent buyers. The blue line in our metal charts represents the 200 day moving average and the green line represents the 50 day moving average. Keep in mind moving averages are only points of reference, but their existence becomes a self-fulfilling (almost like magnets) among traders.
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Disclaimer: All investments are subject to risk, which should be considered on an individual basis before making any investment decision. Volume Reversal Ventures LLC, the owner, publisher and editor of The Leibovit VR Gold Letter, is not responsible for errors and omissions. This publication is intended solely for information and educational purposes only and is not to be construed, under any circumstances, as an offer to buy or to sell or a solicitation to buy or sell or trade in any commodities or securities named within this newsletter. Information gathered to create this letter is from sources believed to be reliable, but is in no way guaranteed. Furthermore, you cannot be assured that your will profit or that any losses can or will be limited. It is important to know that no guarantee of any kind is implied nor possible where projections of future conditions in the markets are attempted. Hypothetical or simulated performance results have certain inherent limitations as to liquidity and execution among other variables. Some recommended trades may include securities held by Volume Reversal Ventures LLC or its officers or affiliates or family members and their personal investment decisions may be different those discussed or made in The Leibovit VR Gold Letter. Volume Reversal Ventures LLC is not compensated in any way for publishing information about companies mentioned in the financial commentary. All readers should consult their own personal investment adviser before making an investment decision. Copyright © 2013 The Leibovit Gold VR Letter and Volume Reversal Ventures LLC.
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