Super short this week, as I am sitting in a pub writing this as part of my apres-ski on a quick family trip to the mountains and I don’t want to drip beer on my keyboard.

No direct oil and gas topic this week, instead, I will revisit one of my drillbits from last week where I said I wouldn’t mind being a fly on the wall for Trump/Trudeau, Round 1. Turns out that would have been a waste of time, prompting the question, what happens if you go to Washington and no one cares except an out of control Canadian media?

Last Monday, Justin Trudeau and a team of cabinet ministers descended on Washington DC for the all-important first face to face meeting with President Donald Trump and a bevy of important political appointees and elected officials.

It was a tense affair for Canadians, as we held our breath, sure that le Grande Orange was going to epically smack down our frail, weak-minded, carbon tax loving, progressive, selfie-taking, nice-haired PM. Sadly, nothing of the sort occurred.

Instead, we were treated to another boring, bland, truism and platitude spouting Canada/US summit followed by, of all things with these two mismatched leaders, a summit on empowering women in business.

Where the Barack/Justin bromance was all about saving the world by solving the environment and shared values and a hip new modernness to Canada/US relations, this meeting felt like Justin had been sent to visit his cranky Uncle Donald – the guy who spoils every family get together by throwing back a few too many rye and cokes. saying inappropriate things about the cheerleaders on TV and complaining about how “foreigners” can’t drive.

And much like it is always possible to survive those family occasions, so too it was really pretty irrational to think that this meeting wasn’t going to be well scripted and managed on both sides.

Let’s face it, the US doesn’t really notice us much, but the relationship is critical. There is too much trade at stake and jobs and energy security (yes, that) for it to really go any other way and both leaders would have been well-versed on what to say and, more importantly, what not to say or even talk about.

I’m guilty of the same attitude that the media here held. I was convinced that some kind of exceptional theatre was going to play out. The only impression I was left with was that Justin Trudeau did a decent job of holding his own and was able to match the outsized personality of Donald Trump with a little panache of his own.

So what does this mean for Canada/US relations going forward? Well I don’t think they will be golf buddies (does Justin even golf?) like Prime Minister Abe from Japan, but the message has been sent to the minions by both leaders – this relationship is too important to let ideology screw it up, keep up with the integration of the economies, tweak things that may need to be fixed and carry on, nothing to see here.

Which is, after all is said and done, the best possible outcome of the meeting. Wait, skip that, the best outcome of the meeting was that it was buried in the news cycle, so much so that I am pretty sure that by the time Foreign Military One (our rust bucket prime ministerial plane) got its instructions from the Dulles Tower to taxi out to runway 1-5, pretty much everyone in Washington had forgotten that the Canadians were even there.

While Canadians perpetually decry that the US media doesn’t pay enough attention to us, the reality is that maybe that wilful ignorance and lack of attention is precisely the reason why we are so successful. Shhh – it’s OK if they call you Joe instead of Justin, there’s a lot of worse things that could happen.

On the other hand, while Donnie loves Justin was being ignored, the mighty city of Medicine Hat, Alberta was the subject of an article in the venerable New York Times, the link is attached. I can assure you this isn’t fake news and it’s pretty cool.

https://www.nytimes.com/2017/02/15/world/americas/medicine-hat-canada-natural-gas.html?_r=1

Question of the day – How in the world can you make money paying more than $60,000 an acre in the Permian basin? It’s not a rhetorical question. I really want to know. It reminds me when income trusts were still around and companies were being sold for more than $100,000 per flowing boe. How did we go from bust to bubble in such a short period of time? Speculation, once it gets going, can be hard to stop. I heard an ad on ESPN satellite radio the other day soliciting investment in operating oil wells in the Permian – seriously. Sell all your publicly traded investments and plow some money into producing oil wells – great tax breaks, cash flow into perpetuity and it’s diversified across 30 wells. Hoo boy, how do I get in on this runaway freight train? This is crazy to me. Are there no rules?

Speaking of speculation, I note that STEP Energy Services is planning to go public as is Source Energy Services. Both of these companies are portfolio companies of Calgary-based private equity funds (ARC Financial and Triwest Capital Partners respectively) and seeing as how they are the first Canadian energy service companies to file IPOs since, well, forever, they represent a confident signal to the market that things are turning around. Of course it remains to be seen what investor appetite look like, but I would much rather buy a well-run Canadian energy service company than a bunch of oil wells sold over the radio even as I struggle to see how they get valued.

Prices as at February 17, 2017 (February 10, 2017)

• The price of oil was choppy during the week ending flat as increased drilling activity, storage and OPEC compliance battled for market influence.
  • Storage posted a big increase
  • Production was flat
  • The rig count in the US continues to grow

• Natural gas was weak during the week as milder weather reduced bullish sentiment and pushed prices down

• WTI Crude: $53.37 ($53.84)
• Nymex Gas: $2.843 ($3.040)
• US/Canadian Dollar: $0.7633 ($ 0.7643)

Highlights

• As at February 10, 2017, US crude oil supplies were at 518.1 million barrels, a increase of 9.5 million barrels from the previous week and 45.3 million barrels ahead of last year.
  • The number of days oil supply in storage was 32.7, ahead of last year’s 32.2.
  • Production was down for the week by 1,000 barrels a day at 8.977 million barrels per day. Production last year at the same time was 9.135 million barrels per day. The change in production this week came from a small drop in Alaska deliveries and increased Lower 48 production.
  • Imports fell from 9.392 million barrels a day to 8.491, compared to 7.919 million barrels per day last year.
  • Refinery inputs were down during the week at 15.498 million barrels a day
• As at February 10, 2017, US natural gas in storage was 2.445 billion cubic feet (Bcf), which is 4% above the 5-year average and about 11% less than last year’s level, following an implied net withdrawal of 114 Bcf during the report week.
  • Overall U.S. natural gas consumption was down by 4% during the week on warmer weather and demand declines across all sectors
  • Production for the week was flat and imports from Canada rose by 9% from the week before
• As of February 13, the Canadian rig count was 263 (41% utilization), 183 Alberta (43%), 25 BC (35%), 48 Saskatchewan (42%), 7 Manitoba (47%)). Utilization for the same period last year was about 30%.
• US Onshore Oil rig count at February 17 was at 597, up 6 from the week prior.
  • Peak rig count was October 10, 2014 at 1,609
• Natural gas rigs drilling in the United States was up 4 at 153.
  • Peak rig count before the downturn was November 11, 2014 at 356 (note the actual peak gas rig count was 1,606 on August 29, 2008)
• US split of Oil vs Gas rigs is 80%/20%, in Canada the split is 56%/44%
• Offshore rig count was down 3 at 18
  • Offshore rig count at January 1, 2015 was 55

Drillbits

• Trump Watch: Donald lost a National Security Advisor, a labour secretary and had a press conference.