​US ECONOMY

​MORE OIL IN WEST TEXAS

Job growth will even out across the US in 2017. Previously booming cities will see job gains slow, while some smaller communities are in for a pickup. Since the recession, the swiftest job growth has tended to cluster int the biggest cities. Next year, the growth rate in big cities will largely match the US average 1.4% Cities in for slower job gains next year Philadelphia, Baltimore, Orlando and Fort Lauderdale Dallas Seattle, Denver, Sacramento Smaller metro areas that will add more jobs at larger neighbors expense Spokane Boise St George Bend. High income home and labor costs in many Western metro areas are pushing employer to relocate to cheaper locales

​DECEMBER NEWSLETTER 3 


















Independent oil and gas producer Callon Petroleum Co. (NYSE: CPE) announced late Tuesday that its operating subsidiary has entered a definitive agreement to acquire about 27,552 gross surface acres and other producing properties for a total cash price of $615 million. American Resource Development, American Resource Development Upstream and American Resource Development Midstream are the sellers.

In a separate announcement the company said it priced a secondary offering of 40 million shares to raise gross proceeds of $656 million to fund the acquisition. That pencils out to $16.40 per share, a discount of $1.00 per share from Tuesday’s closing price of $17.40.

This is Callon’s first entry into the Delaware basin portion of the Permian Basin, and it adds 16,098 net surface acres to the company’s net acreage in the rest of the Permian Basin. When the deal closes (expected by February 13, 2017) the company’s total Permian acreage will total about 55,500 net acres.

Sponsored by Northwell HealthEMS Routing

In addition to the net acreage, Callon also acquires about 1,945 barrels a day of oil equivalent production (71% oil) from 20 gross operated wells in the Wolfcamp and Bone Springs formation of the Delaware basin. The company said there are 206 net identified horizontal drilling locations already in inventory targeting the Wolfcamp with an average lateral length of 7,500 feet and 36% of the inventory with 10,000-foot laterals.

Chairman and CEO Fred Callon said:

The position is well-suited for long lateral development and offers the potential for the development of multiple shale and sand intervals in the core of the Southern Delaware Basin’s over-pressured oil window. We are looking forward to adding a fourth core operating area to our Permian portfolio and are currently planning to deploy an operated horizontal drilling rig to this acreage by mid-2017, in addition to our plans to be running four horizontal rigs in the Midland Basin by the end of 2017. Overall, we believe that this position is an excellent fit with our broader Permian portfolio and organizational capabilities, and, importantly, accretive to the value proposition for our shareholders.

In an analysis by S&P Platts Global published Tuesday, the internal rate of return (IRR) on a typical Delaware basin well is currently 37%, the best IRR of any location in North America. If crude prices reach $65 a barrel, the IRR rises to 51% in the Permian. Here’s why:

Well economics in the Delaware surpass those of competing plays with a robust oil initial production (IP) rate of 575 b/d, $6.0 million estimated drilling and completion (D&C) cost and a production mix that is heavily weighted towards oil at 76%. Not only that, the Delaware’s proximity to demand centers in the US Gulf Coast area and the overall quality of the barrel set it apart from the rest of the herd.

The adjacent Midland basin is almost as good, with a current IRR of 34% and a jump to 48% if crude reaches $65 a barrel. Wells in the Midland are a little cheaper to drill and initial production rates are about 100 barrels a day lower.

Callon shares traded down $0.90 earlier this morning at $16.50 but were recently seen at $16.59, down about 4.7% in a 52-week range of $4.21 to $18.53. The consensus 12-month
price target on the stock is $18.73

EARNINGS UP

​AMAZON/ EBAY & COUNTERFEITS

​Micron Technology Inc. (NASDAQ: MU) reported fiscal first-quarter financial results after markets closed Tuesday. The company posted $2.45 in earnings per share (EPS) and $6.8 billion in revenue, compared with consensus estimates from Thomson Reuters that called for $2.19 in EPS and revenue of $6.41 billion. In the same period of last year it posted EPS of $0.32 and $3.97 billion in revenue.

During the quarter, revenues increased 11% compared to the fourth quarter of 2017, reflecting increased demand for our mobile, server and SSD products.

Also consolidated gross margin grew to 55.1% from 50.7%, sequentially, reflecting margin expansion for both DRAM and Trade NAND products supported by ongoing strength in the pricing environment and a favorable product mix.

Looking ahead to the fiscal second quarter, Micron expects to see EPS in the range of $2.51 to $2.65 and revenues between $6.8 billion and $7.2 billion. The consensus estimates call for earnings to be in the range of $2.51 to $2.65 per share in the quarter.

On the books, Micron’s cash and short-term investments totaled $6.17 billion at the end of the quarter, versus $5.43 billion at the end of the previous fiscal year.

Sanjay Mehrotra, Micron president and CEO, commented:

Micron’s strong results were driven by double-digit sequential revenue growth in mobile, server and SSD applications, with expanded gross margins and improved profitability. We are making solid progress on our strategic priorities to drive cost competitiveness, deploy high value solutions and strengthen our balance sheet. We believe these actions will position Micron to benefit from the broad demand trends ahead of us.

Shares of Micron closed at $43.98, with a 52-week range of $20.34 to $49.89. Following the announcement, the stock was up over 5% at $46.18 in the after-hours trading session

​The holiday shopping season is not just big business for virtually every retailer, it is also the season to be jolly for a lot of crooks. And with 90% of holiday shoppers planning to hit the online stores this year, consumers need to be conscious of the possibility that a bargain price that sounds too good to be true may, in fact, be false.

It’s not hard to for a counterfeit or fake item to hide in plain sight on the giant e-commerce sites. Amazon.com Inc. (NASDAQ: AMZN) offers more than 350 million products to its customers. Of that total, some 12.23 million are sold directly by Amazon while the rest are sold by the company’s Marketplace sellers. eBay Inc. (NASDAQ: EBAY) has 1 billion items for sale from some 25 million resellers. Both suffer from a relatively small, but costly and potentially dangerous, counterfeiting problem.

According to a recent report from counterfeit awareness and consumer advocate site The Counterfeit Report, its research has uncovered 2.5 million counterfeit items for sale on eBay. The firm has also reported 1.8 million counterfeit items to eBay for removal from the auction and retail site’s listing.

The Counterfeit Report also has submitted infringement notices on 11,713 counterfeit items sold at Amazon. The firm notes that it “conducted dozens of name-brand test purchases from Amazon Fulfillment and Amazon Marketplace sellers, but never received an authentic item. Counterfeits were also purchased from Amazon Direct and Amazon Warehouse Deals.”

In October, Apple Inc. (NASDAQ: AAPL) reported that nearly 90% of its chargers and cables labeled as genuine at Amazon.com are, in fact, counterfeit. Apple has sued a New Jersey company, Mobile Star, for putting Apple’s logo on the cables and chargers.

Inexplicably, the e-commerce giants don’t notify consumers that they have received a counterfeit, that they may be in danger, and that they are entitled to a refund — even when the websites know or have been notified by the manufacturer that the items are counterfeit, or fake (items that don’t even exist in the manufacturer’s product line but bear its registered trademark).

Counterfeiting is a $1.7 trillion global criminal enterprise that is profitable, difficult to track and generally unpunished. The damage is not limited to trademark violation, however. According to The Counterfeit Report, counterfeiting costs U.S. manufacturers more than $250 billion annually and has cost U.S. workers more than 750,000 jobs.

The Counterfeit Report offers the following advice to consumers:

Avoid all online purchases of trademarked items from China, and China sellers on Amazon Fulfillment and Amazon Marketplace. Many manufacturers don’t authorize sales on these websites.
Buy online directly from the manufacturer, or their authorized retailers with clear return policies.
Always buy with a credit card, never cash, PayPal withdrawals or wire transfers.
When in doubt about a product, seek advice and compare it with an authentic product at an authorized retailer.
Always keep the disputed product; it is your only proof of receiving a counterfeit. If returned, sellers will simply deny it is counterfeit and sell it to another unsuspecting consumer.
Notify the offending website and dispute the purchase. Request a refund from the seller or website.
If a refund is denied, notify your credit card company that you have retained the counterfeit product and are disputing the charge.

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