Advances in Drilling Technologies Lower Costs

EIA's "Today in Energy" reports on how "Developments in drilling methods and technology are leading to efficiency gains for oil and natural gas producers":

1. "For example, "pad" drilling techniques allow rig operators to drill groups of wells more efficiently, because improved rig mobility reduces the time it takes to move from one well location to the next, while reducing the overall surface footprint. A drilling pad is a location which houses the wellheads for a number of horizontally drilled wells. The benefit of a drilling pad is that operators can drill multiple wells in a shorter time than they might with just one well per site."

"In the top picture above, each of the four drilling pads hosts six horizontal wells. Pad drilling allows producers to target a significant area of underground resources while minimizing impact on the surface. Concentrating the wellheads also helps the producer reduce costs associated with managing the resources above-ground and moving the production to market."

2. "Moving a drilling rig between two well sites previously involved disassembling the rig and reassembling it at the new location ("rigging down" and "rigging up") even if the new location was only a few yards away. Today, a drilling pad may have five to ten wells, which are horizontally drilled in different directions, spaced fairly close together at the surface. Once one well is drilled, the fully constructed rig can be lifted and moved a few yards over to the next well location using hydraulic walking or skidding systems, as demonstrated in this video by Range Resources."

"One of the industry's more recent innovations, pad-to-pad moves, underscores the efficiency gains from rig mobility and pad drilling. During the drilling operation in the bottom picture above, rig operator Nabors Industries transported a fully-assembled drilling rig about one mile between drill sites. The cost of rigging down and rigging back up can be high enough that producers may find it more efficient to build a road between two pads, transport the rig intact, and have it arrive ready to drill the next well."

August Home Sales Show Double-Digit Gains

Local reports are coming in for August home sales and so far they're all showing double-digit gains from last year, here's a sample:

1. Milwaukee -- Sales of existing homes rose 21% in August in the metro Milwaukee area, extending a string of 14 year-over-year monthly increases that is reducing the inventory of homes on the market. Through the first eight months of 2012, sales were up 27.7%.

2. Baltimore -- Home sales were the highest for the month of August since 2007, with a 17.5% year-over-year increase.  Pending sales in August were up 18% versus last year and the average home price increased 3%. 

3.  Memphis -- Home sales in August were up 21% year over year, representing the eighth consecutive monthly increase from 2011.  Inventory is down, days on the market are down, and agents are cautiously optimistic for growth.

4. Birmingham -- August home sales increased 18.4% vs. last year, average price was up 13% and median price by 3%.

5. Nashville -- Home sales increased by 27.3% in August compared to a year ago, and the median price increased by 1.8%. 

6.  Iowa -- Home sales pushed 15.5% higher to 3,602 in August over a year ago, and the median sale prices climbed 3.8 percent.

7. Denver - August home sales increased 18% above last year, and average prices were up by 10%.

8. North Texas (29 county region) -- Sales of existing homes in North Texas in August were up 18% from a year ago, marking the 12th consecutive month of gains, and eight straight of double-digit increases.  The median sales price rose 8 percent to $164,000. 

Update: From Barron's cover story "Happy at Last":

Nothing's wreaked quite the havoc on the U.S. economy, and indeed the national psyche, as the six-year slide in home prices. It wiped out some $7 trillion in household wealth, savaged bank balance sheets, and induced the Great Recession and the tepid recovery.

Yet there are unimpeachable signs that this national nightmare is now over. Home prices are starting to rise, if somewhat haltingly, in most areas of the country. And a number of forecasters predict home-price increases around 10% or so nationally over the next three years, with some metropolitan statistical areas, such as Midland, Texas, and Bismarck, N.D., likely riding the energy-exploration boom to better than 20% jumps in residential-real-estate prices.

Read more here: http://www.star-telegram.com/2012/09/10/4247329/north-texas-home-sales-up-18-percent.html#storylink=cpy

Nothing's
Nothing's wreaked quite the havoc on the U.S. economy, and indeed the national psyche, as the six-year slide in home prices. It wiped out some $7 trillion in household wealth, savaged bank balance sheets, and induced the Great Recession and the tepid recovery.
Yet there are unimpeachable signs that this national nightmare is now over. Home prices are starting to rise, if somewhat haltingly, in most areas of the country. And a number of forecasters predict home-price increases around 10% or so nationally over the next three years, with some metropolitan statistical areas, such as Midland, Texas, and Bismarck, N.D., likely riding the energy-exploration boom to better than 20% jumps in residential-real-estate prices. wreaked quite the havoc on the U.S. economy, and indeed the national psyche, as the six-year slide in home prices. It wiped out some $7 trillion in household wealth, savaged bank balance sheets, and induced the Great Recession and the tepid recovery.
Yet there are unimpeachable signs that this national nightmare is now over. Home prices are starting to rise, if somewhat haltingly, in most areas of the country. And a number of forecasters predict home-price increases around 10% or so nationally over the next three years, with some metropolitan statistical areas, such as Midland, Texas, and Bismarck, N.D., likely riding the energy-exploration boom to better than 20% jumps in residential-real-estate prices. Read more here: http://www.star-telegram.com/2012/09/10/4247329/north-texas-home-sales-up-18-percent.html#storylink=cpy

Mfg. Profits Are 35% Above Pre-Recession Levels

U.S. manufacturers had another solid quarter of profits from April to June, according to data released today by the Census Bureau.  The total after-tax profits for American manufacturing corporations totaled more than $149 billion in the second quarter, a slight increase from $148.2 billion in the first quarter of 2012, but down slightly from the all-time quarterly high of $153.4 billion of profits in the second quarter of 2011 (see chart above).  

Manufacturing profits have ranged between $146 billion and $153 billion over the last six quarters starting at the beginning of 2011, which contributed to record-setting profits in 2011 on an annual basis of almost $600 billion.  Based on the first two quarters of this year, manufacturing profits are on track to approach $600 billion again this year.  

In the three years before the recession started (2005-2007), manufacturing profits were averaging about $110.0 billion per quarter, so the recent average of $148.5 billion per quarter since 2011 puts current manufacturing profits 35% above pre-recession levels.  This provides evidence of an industry that has not only made a complete recovery from the 2007-2009 recession, but shows that U.S. manufacturers as a group are now actually significantly more profitable than before the recession.  

Cartoon of the Day: American Politics

Society Needs a Little Classing Up

Columnist Andy Heller attended a Broadway show recently for the first time in 20 years, and writes in the Sunday Flint Journal ("If you ask me, society needs a little classing up") about what appears to be America's declining standards of fashion and manners in Broadway theaters, including rampant "cellphoneitis," people dressing like slobs, and rude talking during the performance. Here's Andy's conclusion:

"I think it's sad. I'm as casual as they come, but even for me things have gone too far. As a society, we need to class it up a bit. You can do your part. I suggest starting small. Next time you go to a play, wear your very best t-shirt. The one without the curse word on it."

And I might add: Next time you attend a play, why not wear your very best pair of Walgreen's flip-flops?  

Sunday Morning Links

1. Nashville Home sales Increase 27.3% in August, and in Denver by 18%.

2. 3D printed guitar.

3. Current 2012 Electoral Map Based on Intrade Contracts for Each State: 303 Obama, 235 Romney.

4. As A/C Coolant Is Phased Out in the U.S., Smugglers Reap Large Profits in the Black Market.

5.  It's Been Almost A Year Since ECRI's Lakshman Achuthan Made His Recession Call, and ECRI's Weekly Index Has Risen in Each of the Last Five Weeks?

6.  At Top Business Schools, an MBA Application Drought.

Amazon Economics: The Amazon Doctrine

 
In the video above, while unveiling the new Kindle Fire HD tablets, Amazon CEO Jeff Bezos explains one the reasons for Amazon's amazing success starting about 1:05:00, it's called:

The Amazon Doctrine

Above all else, align with customers. 

Win when they win. 

Win only when they win. 

That's Amazon's corporate version of consumer sovereignty, explained here as "profit-seeking sellers find that they can make the greatest profit by providing the best possible products for the price (or the lowest possible price for a given product)."

HT: Sprewell