Sunday, May 15, 2022

Marathon Oil Reports First Quarter 2022 Results

We mentioned Marathon Oil Corporation (MRO) in a Links post in March:

Marathon Oil caught the market a bit off guard today when it disclosed that it had bought back $724mm of its stock in 4Q21. Halfway through February, it further disclosed that the buyback is still running hot with ~$375mm repurchased year to date. Measured as a % of market cap, MRO’s repurchase activity is heads above the rest of energy, beating CNX who took advantage of 4Q price strength to step up its buybacks, and MPC who is in the midst of a laborious return of capital after selling its Speedway business for $21B last year. Even on an absolute basis, MRO’s 4Q activity stands out, falling behind only COP (7x market cap) and MPC (3x market cap, distributing asset sale proceeds). We learned a while ago to follow the capital, not the narrative.

Marathon is an independent E&P company, based in Houston, with operations in the Eagle Ford, Bakken, STACK/SCOOP and Permian. It's a bit smaller than our Canadian oil majors - the market capitalization (at $27) is $18 billion and the enterprise value is $21 billion. They reported earnings for Q1 last week - highlights:

  • Marathon Oil Corporation (NYSE:MRO) reported first quarter 2022 net income of $1,304 million, or $1.78 per diluted share, which includes the impact of certain items not typically represented in analysts' earnings estimates and that would otherwise affect comparability of results. The adjusted net income was $749 million, or $1.02 per diluted share. Net operating cash flow was $1,067 million, or $1,280 million before changes in working capital.
  • Outstanding first quarter financial delivery highlighted by $940 million of adjusted free cash flow at 27% reinvestment rate. Returned 50% of first quarter cash flow from operations (CFO) to equity investors through $592 million of share repurchases and $52 million base dividend.
  • Expect over $4.5 billion of 2022 adjusted free cash flow at a reinvestment rate of approximately 20% on a $1.3 billion capital budget, assuming $100/bbl WTI and $6/MMBtu Henry Hub. 
  • In the last two quarters, we've returned approximately 60% of our total CFO back to our equity investors, meaningfully exceeding our minimum 40% commitment. We've executed $1.6 billion of share repurchases over the last seven months, driving significant per share growth through an 11% reduction to our outstanding share count, and have announced five consecutive increases to our quarterly base dividend. With over $4.5 billion of adjusted free cash flow generation expected this year, we remain well positioned to continue delivering financial results and return of capital that are compelling not only relative to the best companies in energy, but relative to the best in the S&P 500.
  • The Company continues to expect oil and oil-equivalent production to remain flat with the 2021 averages.

So they repurchased 3% of outstanding shares in one quarter. They're trading at 6 times annualized, adjusted net income, and the FCF/EV yield based on guidance for 2022 is 21%.

Some highlights from Q1 conference call:

  • My third key takeaway is that Marathon Oil represents a truly compelling investment opportunity. We've rebased our 2022 financial outlook to pricing more consistent with the current environment $100, WTI and $6 Henry Hub. At these prices, we expect to generate over $4.5 billion of free cash flow this year at a reinvestment rate of just 20%. That translates to a free cash flow yield of about 25% on the current equity value.
  • I have long said that our company and our sector must deliver truly outsized financial outcomes relative to the S&P 500 during periods of constructive pricing to attract increased investor sponsorship. We are successfully delivering on this obligation.
  • As a reminder, our framework calls for delivering a minimum of 40% of cash flow from operations to our equity holders when WTI is at or above $60 per barrel. This represents a return of capital commitment at the top of our E&P peer space and is competitive with any sector in the S&P 500. The overall objectives of our framework are to maintain capital return leadership versus peers and the S&P 500, maximize our equity valuation, and reduce downside equity volatility by providing clear minimum capital return commitments tied to specific commodity price environments.
  • Our return of capital targets are based on our cash flow from operations, not our free cash flow. This is purposeful, intended to make clear that our shareholders get the first call on cash generation.
  • And while our equity value has appreciated since we kicked off our buyback program, our free cash flow yields is actually appreciated even more. We're trading at about a 25% free cash flow yield at $100 oil. Even testing buybacks at our current share price against a longer dated forward curve of $60 to $70 WTI. Our free cash flow yield is in double digit territory. Buybacks remain a very good use of cash, because we believe our equity is fundamentally mispriced. As long as that's the case, we'll continue to aggressively repurchase our own stock, it's the best acquisition we can make.

The latest investor presentation is worth a look.

Magellan Midstream Reports First-Quarter 2022 Financial Results and Raises 2022 Annual Guidance

[Previously regarding Magellan Midstream Partners: Pipeline Earnings - 2021, Pipeline Earnings - Q3 2021, Magellan Midstream Partners, L.P..]

Magellan Midstream Partners (MMP) reported results last week. Highlights from the results: 

  • Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $166 million for first quarter 2022 compared to $221 million for first quarter 2021. The decrease in net income primarily resulted from mark-to-market (MTM) adjustments for hedge positions related to our commodity-related activities in the current higher commodity pricing environment as well as the favorable impact to our prior-year results from the 2021 winter storms.
  • Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $265 million for first quarter 2022 compared to $276 million for first quarter 2021. Free cash flow (FCF), a non-GAAP financial measure that represents the amount of cash available for distributions, expansion capital opportunities, equity repurchases, debt reduction or other partnership uses, was $240 million during first quarter 2022 versus $267 million during first quarter 2021.
  • Refined products operating margin was $235 million, a decrease of $26 million primarily related to the impact of MTM adjustments for futures contracts used to hedge our commodity-related activities. Excluding these adjustments, financial results from this segment's fee-based activities increased between periods. Transportation and terminals revenue increased $12 million primarily due to increased transportation volumes as a result of the continued demand recovery from pandemic levels as well as additional contributions from our Texas pipeline expansion projects.
  • Crude oil operating margin was $104 million, a decrease of $6 million. Transportation and terminals revenue decreased slightly primarily related to reduced storage revenue due to lower utilization and rates following recent contract expirations. Otherwise, higher average rates on our Longhorn pipeline and higher terminal throughput fees as a result of more customers utilizing a simplified pricing structure for services in the Houston area offset fewer tariff movements on our Houston distribution system.
  • During first quarter 2022, Magellan repurchased over 1 million of our common units for $50 million, resulting in total repurchases since inception of 17.5 million units for $850 million under our $1.5 billion repurchase program authorized through 2024. 
  • FCF is now projected to be nearly $1.46 billion for 2022, or $575 million after distributions. Full-year FCF guidance includes the expected $435 million proceeds from the pending sale of our independent terminals.
  • Based on actual first-quarter results and current number of units outstanding, net income per unit is estimated to be $4.35 for 2022, with second-quarter guidance of $1.12 per unit.

The current market capitalization is $10 billion and enterprise value is $15 billion. The earnings yield based on management guidance is 9%.

Current dividend yield is 8.5% and their 2050 debt is yielding 5.3%. That's an equity risk premium of about 3.2%. When we first wrote about Magellan in March 2021, it was 5.8%. It has contracted partly because of higher interest rates (and corporate bond yields) and partly because the dividend yield has fallen. 

See how low Magellan's dividend yield got at the peak of the midstream boom in 2014-2015. It was yielding under 3% - yet their debt was yielding closer to 5%. As a negative 2% ERP, the equity was not very compelling, and it subsequently had a substantial decline.

Canadian Natural Resources Limited Announces 2022 First Quarter Results

[Previously regarding Canadian Natural Resources (CNQ) (one of the Canadian oil majors along with Cenovus and Suncor): Canadian Natural Resources Limited - Q4 and FY 2021 Results and Canadian Natural Resources Limited ($CNQ).]

Canadian Natural Resources (CNQ) reported results last week. Highlights from the results:

  • In Q1/22 net earnings and adjusted funds flow were strong at approximately $3.1 billion and approximately $5.0 billion respectively, and our balance sheet continued to strengthen. So far in 2022 up to and including May 4, 2022, returns to shareholders have been significant as we have returned a total of approximately $3.1 billion through dividends and share repurchases. 
  • Canadian Natural delivered net earnings of approximately $3.1 billion and adjusted net earnings from operations of approximately $3.4 billion in Q1/22. Cash flows from operating activities were approximately $2.9 billion in Q1/22. Canadian Natural generated strong quarterly adjusted funds flow of approximately $5.0 billion in Q1/22, an increase of approximately $2.3 billion from Q1/21 levels.
  • Direct returns to shareholders in Q1/22 were strong, totaling approximately $1.8 billion, comprised of approximately $0.7 billion of dividends and approximately $1.1 billion of share repurchases.
  • Year-to-date up to and including May 4, 2022, the Company has returned approximately $3.1 billion to shareholders through approximately $1.6 billion in dividends and $1.5 billion from the repurchase and cancellation of 21.5 million common shares.

The current market capitalization of CNQ (at a $60 share price) is US$70 billion, and the enterprise value based on the March 31st balance sheet is about US$81 billion. So the earnings yield is 18% and the AFFO/EV yield is 25% (annualized Q1 numbers).

Their proved reserves of liquids at the end of the 2021, net of royalties, were 9 billion barrels, calculated based on a $66 price for WTI. You are paying about US$9 per barrel of proved reserves of liquids at the current share price. That does not count the 11 trillion cf of natural gas reserves.

The PV-10 of proved reserves, again assuming a $66 oil price and a $3.70 Henry hub natural gas price, was $65 billion at the end of 2021. So you're paying 1.25x the PV-10, but of course that is at a much lower oil and gas price.

Suncor Energy Reports First Quarter 2022 Results

[Previously regarding Suncor: Goldman Sachs on Suncor and Cenovus, Canadian Oil Sands Earnings (Suncor and Cenovus) - Q4 2021, Suncor Energy Inc..]

Suncor (SU) reported results last week. Highlights from the results:

  • "In the first quarter of 2022, Suncor generated the highest quarterly adjusted funds from operations in the company's history of $4.1 billion, or $2.86 per share, including record adjusted funds from operations from our Oil Sands assets, as commodity prices increased," said Mark Little, president and chief executive officer. "Our increased cash flows enabled us to reduce net debt by $728 million and return over $1.4 billion of value to shareholders through $827 million in share repurchases and payment of $601 million in dividends."
  • In the first quarter of 2022, Oil Sands delivered its highest quarterly adjusted funds from operations on record of $3.414 billion, compared to $1.527 billion in the prior year quarter, supported by strong production from the company's In Situ assets, including Firebag, which produced its 750 millionth barrel of oil during the quarter, and the ramp-up of production at Fort Hills, allowing the company to capture strong upstream pricing. 
  • Refining and Marketing generated $1.597 billion in adjusted funds from operations in the first quarter of 2022, compared to $1.172 billion in the prior year quarter.
  • In the first quarter of 2022, the company returned over $1.4 billion of value to its shareholders through $827 million in share repurchases and payment of $601 million of dividends. As at May 6, 2022, since the start of the year, the company has repurchased $1.3 billion of Suncor's common shares, representing approximately 33 million common shares at an average share price of $39.70 per share, or the equivalent of 2.3% of its common shares as at December 31, 2021.
  • During the first quarter of 2022, in alignment with Suncor's strategy to maximize value through its core business, the company announced that it is taking steps to optimize its asset portfolio through the planned divestment of its Exploration & Production (E&P) assets in Norway. Subsequent to the quarter, based on interest received in the company's E&P assets in the U.K., the company is exploring the sale of its entire U.K. portfolio, and has also announced plans to divest its wind and solar assets to focus on areas of energy expansion that are more complementary to its base business, with an emphasis on hydrogen and renewable fuels.
  • The company also reduced net debt by $728 million in the first quarter of 2022, reaching net debt levels of $15.4 billion, nearly achieving its 2025 targeted net debt range of $12-$15 billion. In the current business environment, the company expects to achieve the lower end of its 2025 targeted net debt range during the second half of 2022.
  • A combination of operational improvements and strong market conditions over the past year have driven stronger free funds flow than the scenario presented at Suncor's 2021 Investor Day. This has enabled the company to significantly increase shareholder returns and the pace of debt repayment, and as a result, the company plans to accelerate its capital allocation plan. Looking ahead, management plans to continue to allocate excess funds equally towards debt repayment and share buybacks until net debt levels have reduced to $12 billion. Then, the company expects to allocate excess funds 75% towards share buybacks and 25% towards debt repayment. Once the company's net debt balance is at its $9 billion floor, the company expects to allocate excess funds fully towards shareholder returns.

Some highlights from the Q1 conference call

  • In the past, the integrated model gave Suncor and its shareholders downside protection. Today, it gives us upside opportunity. Crude oil and refined product markets gained strength in Q1, which accelerated in late March and early April, on the back of a global energy shortage. Cracking margins are responding to low inventory levels, refinery rationalizations and significant crude feedstock shortages throughout the system. Record diesel cracks are providing an additional pricing uplift to our sweet synthetic crude oil due to its significantly higher distillate cut relative to other supply options.
  • We are seeing significant value capture on both ends of our integrated model under current market conditions. Putting this together, approximately 60% of our enterprisewide production is weighted to SCO and distillate, both of which are trading at significant premiums and with a strong macro demand outlook for both. A combination of operational improvements and strong market conditions over the past year have driven free funds flow that is much stronger than the scenario presented at our 2021 investor day. This has enabled us to significantly increase shareholder returns and the pace of debt repayment. Specifically, in the quarter, we bought nearly one and a half percent of the outstanding shares for $830 million and reduced net debt by $730 million.
  • At current strip, we fully expect to execute the full 10% share buyback program and achieve our $12 billion net debt level by later this year.

Another interesting development is that activist investor Elliott Management L.P. has taken a stake in Suncor, and has urged the company to enhance its board and explore opportunities to unlock the value of its assets:

  • Enhanced Capital Return: Increase capital returns from 50% to 80%+ of discretionary cash flow after capex and dividends to provide Suncor’s shareholders an industry leading annual cash return yield.
  • Strategic Review: Explore opportunities to unlock the value of high-multiple assets outside of the core Oil Sands business, including a strategic review of retail.

The market cap of Suncor is $49 billion and EV is $62 billion. They have proved and probable reserves of 5.8 billion barrels, so that's an enterprise value of $11 per barrel. The PV-10 of their proved and probable reserves was $50 billion at year-end, which was calculated based on the $66.56 average WTI price last year. So, the present value of the reserves at a much lower oil price than current WTI covers most of the EV and leaves $12 billion EV for the refining and marketing operations which earned $2.2 billion after tax in 2021. Their adjusted funds from operations in Q1 were $3.2 billion, which amounts to a ~20% AFFO/EV yield. The capital allocation is great - they returned $1.1 billion in the quarter via buybacks and dividends.

Friday, May 13, 2022

Friday Night Links

  • Mr. Smil wants to correct what he sees as two increasingly common bad ideas. One is environmentalism of the kind that promotes what the author argues are “unrealistic” decarbonization goals without a serious appreciation of current global dependence on fossil energy. Arbitrary, long-range targets to be achieved in years that end in “5” or “0” are his bĂȘte noire. Fossil energy, he makes clear, remains the hidden basis not just of transportation but also heavy industry, construction and agriculture. In a few stunning pages, Mr. Smil walks you through a stomach-turning calculation of how much diesel-fuel equivalent of fossil energy goes into every chicken, loaf of bread, and tomato you eat. The other foil for Mr. Smil is a breathless techno-optimism—the promise that apps, AI or terraforming Mars can rescue us from our greatest civilizational challenges. Mr. Smil has a strong preference for physical technologies over digital ones. He is a poet of the cement kiln, the steel forge, PVC and the diesel engine. He lacks the same regard for nifty smartphones or disembodied software. [WSJ]
  • You can think of a variety of reasons why the market would discount these equities. Maybe the market doesn’t believe the PV-10 for an individual company or there are company specific issues (like with AMPY / Beta). That’s fine…. but this discounting is happening sector wide. The two most likely reasons for the sector wide discount are: The market is worried management teams are going to look at current prices and plow all of their cash flow into M&A and drilling new, high cost wells….. and then the companies will blow up when the cycle turns (this is what I like to call “going wildcatter”). The market flat doesn’t believe the commodity curve. But #1 is solvable with shareholder oversight, and #2 is solvable with financial engineering. Which brings me to the question I’ve been thinking about recently (and the purpose of this article): when are we going to see activist funds and private equity step into the energy space? [Andrew Walker]
  • The crucial part of any political campaign is media coverage, and the media won’t cover what isn’t “new”. So I vaguely dropped a note to Steve Hsu saying that I’d come up with a very clever political/media strategy to finally fix the Asian Quota problem, but wouldn’t be able to get around to working on it until the end of the year. And for the next eight months I kept my planned project entirely to myself while I was busy with my software work and various other things. People in the political world tend to gossip an enormous amount and if I mentioned it to anyone at all, such a simple and exciting idea would surely have spread like wildfire. [Ron Unz]
  • I think the opportunity is to buy anti-bubble, value stocks (energy, tobacco, banks, coal, and timber are some cheap sectors) while simultaneously betting against the Robinhood bubble. I think that most of the 19 stocks that I posted above are worthless and a handful are maybe worth 0.1x the valuations they currently trade. That makes it a $1.5 trillion short opportunity, as big as the housing bubble shorts (including the mortgages) were when I started this blog. We know that we can't short them, because criminals and the innumerate can squeeze them to arbitrarily high levels before they collapse. The logical conclusion would be the same one that we came to in 2007-2008: long term put options. I have started to play with the risk/reward numbers on the Robinhood Bubble 19. It is actually hard to beat Tesla as a put option candidate - with NKLA for example, you have a more certain downside but more expensive options. [CBS]

Tuesday, May 3, 2022

Enterprise Product Partners L.P. Reports Q1 2022 Earnings ($EPD)

[Previously: Pipeline Earnings ($MMP $EPD) - 2021, Pipeline Earnings - Q3 2021 ($MMP $EPD), Hydrocarbon Royalties and Pipelines]

Enterprise Product Partners reported results for the first quarter yesterday. The current market capitalization of Enterprise (at $26.35) is $57 billion and enterprise value is $83 billion. Highlights:

  • Enterprise reported net income attributable to common unitholders of $1.3 billion, or $0.59 per unit on a fully diluted basis, for the first quarter of 2022, compared to $1.3 billion, or $0.61 per unit on a fully diluted basis, for the first quarter of 2021. 
  • Distributable Cash Flow ("DCF") was a record $1.8 billion for the first quarter of 2022 compared to $1.7 billion for the first quarter of 2021. Distributions declared with respect to the first quarter of 2022 increased 3.3 percent to $0.465 per unit, or $1.86 per unit annualized, compared to distributions declared for the first quarter of last year. DCF provided 1.8 times coverage of the distribution declared with regard to the first quarter of 2022. Enterprise retained $814 million of DCF for the first quarter of 2022.
  • Adjusted cash flow from operations ("Adjusted CFFO"), which is defined as net cash flow provided by operating activities before the net effect of changes in operating accounts, was $2.0 billion for the first quarter of 2022 compared to $1.9 billion for the first quarter of 2021.
  • Our record Adjusted EBITDA of $2.3 billion in the first quarter of 2022 was driven by our petrochemical and refined products services segment, higher natural gas processing margins, and gross operating margin attributable to the Navitas Midstream acquisition, which was completed on February 17, 2022.

So, the first quarter's annualized earnings ($5.2 billion) would be an 9.1% earnings yield on the current market cap. The annualized Adjusted EBITDA ($9.2 billion) gives an aEBITDA/EV yield of 11%.

In the first quarter of 2019, Enterprise reported $1.26 billion of net income, $1.6 billion of distributable cash flow, and $2 billion of Adjusted EBITDA. So, profits have grown slightly in nominal terms over the past years, since pre-covid times. Distributable cash flow, for example, has grown by 12.5%.

Pipelines are a kind of hedge against over-production by E&P firms. If they bump up against the pipeline transport capacity in a given location (like the Permian), the pipelines' profits should increase sharply since they are bidding for an inelastic supply.

Monday, May 2, 2022

Monday Night Links

  • "I make three assortments in fortune -- first-rate, second-rate, and third-rate fortunes. I call those first-rate which are composed of treasures one possesses under one's hand, such as mines, lands, and funded property, in such states as France, Austria, and England, provided these treasures and property form a total of about a hundred millions; I call those second-rate fortunes, that are gained by manufacturing enterprises, joint-stock companies, viceroyalties, and principalities, not drawing more than 1,500,000 francs, the whole forming a capital of about fifty millions; finally, I call those third-rate fortunes, which are composed of a fluctuating capital, dependent upon the will of others, or upon chances which a bankruptcy involves or a false telegram shakes, such as banks, speculations of the day -- in fact, all operations under the influence of greater or less mischances, the whole bringing in a real or fictitious capital of about fifteen millions. I think this is about your position, is it not?" [Alexandre Dumas]
  • The most pervasive delusion is the Halo Effect. When a company's sales and profits are up, people often conclude that it has a brilliant strategy, a visionary leader, capable employees, and a superb corporate culture. When performance falters, they conclude that the strategy was wrong, the leader became arrogant, the people were complacent, and the culture was stagnant. In fact, little may have changed -- company performance creates a Halo that shapes the way we perceive strategy, leadership, people, culture, and more. [The Halo Effect]
  • We conducted a study involving 20 bariatric surgeons in Michigan who participated in a statewide collaborative improvement program. Each surgeon submitted a single representative videotape of himself or herself performing a laparoscopic gastric bypass. Each videotape was rated in various domains of technical skill on a scale of 1 to 5 (with higher scores indicating more advanced skill) by at least 10 peer surgeons who were unaware of the identity of the operating surgeon. We then assessed relationships between these skill ratings and risk-adjusted complication rates, using data from a prospective, externally audited, clinical-outcomes registry involving 10,343 patients. [NEJM]
  • Democrats face deeper structural disadvantages and more fundamental problems with their coalition that could prove extraordinarily challenging over the near and long terms. You saw this fear bubble up when a piece written by little-known Democratic data cruncher Simon Bazelon stirred deep angst. It suggested Democrats might be “sleepwalking into a Senate disaster.” Its argument is that the 2022 and 2024 elections could produce a GOP Senate majority that’s filibuster-proof. The reason: the combination of the Senate’s right-leaning bias and Democrats’ travails with working-class voters, not just Whites but also possibly Latinos. [WaPo]
  • The Constitution gives red states a significant weapon to drain the copyright swamp, a weapon they could use at absolutely any time should they feel inspired enough. In 2020, the Supreme Court decided a copyright case brought by a photographer against North Carolina. The photographer alleged the state infringed his copyright on photos and videos he made of a shipwreck off the coast of North Carolina. The state raised the Eleventh Amendment (which restricts the power of citizens to sue state governments in federal court) as a bar against his claims. Media companies watched the case closely. In an amicus brief, Dow Jones (the publisher, not the industrial average) complained that if the state’s Eleventh Amendment defense prevailed, then the Court would “open[] the door for state-backed entities essentially to go into business for profit through the unauthorized exploitation of copyrighted material—whether as distributors, aggregators, or even purported authors of plagiarized material.” The issue was personal to Dow Jones because a California state agency had reproduced “approximately 6,700 articles taken from The New York Times, 5,400 from the Los Angeles Times, over 3,100 from The Sacramento Bee, and over 1,500 from The Washington Post” without compensation. Tragic. The Supreme Court ruled in favor of North Carolina, holding that Congress had not validly taken away North Carolina’s Eleventh Amendment immunity. Justice Breyer elaborated on the practical implications in his concurring opinion. “[O]ne might think that Walt Disney Pictures could sue a State (or anyone else) for hosting an unlicensed screening of the studio’s 2003 blockbuster film, Pirates of the Caribbean (or any one of its many sequels),” Justice Breyer noted, but “the Court holds otherwise.” [Revolver]
  • Cooper's gift in the way of invention was not a rich endowment; but such as it was he liked to work it, he was pleased with the effects, and indeed he did some quite sweet things with it. In his little box of stage-properties he kept six or eight cunning devices, tricks, artifices for his savages and woodsmen to deceive and circumvent each other with, and he was never so happy as when he was working these innocent things and seeing them go. A favorite one was to make a moccasined person tread in the tracks of a moccasined enemy, and thus hide his own trail. Cooper wore out barrels and barrels of moccasins in working that trick. Another stage-property that he pulled out of his box pretty frequently was the broken twig. He prized his broken twig above all the rest of his effects, and worked it the hardest. It is a restful chapter in any book of his when somebody doesn't step on a dry twig and alarm all the reds and whites for two hundred yards around. Every time a Cooper person is in peril, and absolute silence is worth four dollars a minute, he is sure to step on a dry twig. There may be a hundred other handier things to step on, but that wouldn't satisfy Cooper. Cooper requires him to turn out and find a dry twig; and if he can't do it, go and borrow one. In fact, the Leatherstocking Series ought to have been called the Broken Twig Series. [Mark Twain]
  • Distributable Cash Flow ("DCF") was a record $1.8 billion for the first quarter of 2022 compared to $1.7 billion for the first quarter of 2021. Distributions declared with respect to the first quarter of 2022 increased 3.3 percent to $0.465 per unit, or $1.86 per unit annualized, compared to distributions declared for the first quarter of last year. DCF provided 1.8 times coverage of the distribution declared with regard to the first quarter of 2022. Enterprise retained $814 million of DCF for the first quarter of 2022. [Enterprise Products Partners]
  • It took a long time, but my study on masks has finally appeared in the prestigious journal Medicine. What is my study about? It is about whether masks decrease case fatality from COVID-19 (because less viral material is transmitted) or increase it. Increase sounds illogical? Ask yourself if you would wear the mask of a Covid patient. You probably wouldn’t, otherwise you could become infected by inhaling the viruses he or she breathed into the mask. My study, based on the U.S. state of Kansas, provides the answer: case mortality was significantly lower in counties without mandatory masks. Mandatory masking increased case mortality there by 85%. Even after factoring in the reduced number of cases due to masks, the numbers still remain 52% higher. Over 95% of this effect can only be attributed to COVID-19, so it is not CO2, bacteria or fungi under the mask. The reason for this is what I call the Foegen effect: deep re-inhalation of condensed droplets or pure virions which were trapped in the mask as droplets can worsen the prognosis. Each of these steps has been documented in the literature. This effect has now even been demonstrated in animal models. [Foegen]
  • Regarding mountaineering: you could climb 20,310' Mt. McKinley, but should you? The "Type A" variety of high agency people can fall into a trap where they do something simply because it is hard and unpleasant. So the highest peak in North America and third most topographically prominent on Earth hijacks the "success center" in their minds. Climbing McKinley costs ~$10k, takes three weeks, is crowded and dirty (Krakauer lamented in the 80s!), and runs serious risks like falling, avalanche, and altitude related injury. (It's also easy to fail to summit.) Climbing at extremely high altitude may as dumb as scuba diving. Here's an experienced climber whose friend died on Mt Shasta (only 14k'!) in California. While it would be fun to accomplish, an economist remembers that every human action competes with the universe of other potential actions. With $10k and three weeks, you could do some serious exploration of Japan, including an inn-to-inn hike between onsen with hot spring soaks and Japanese cuisine. You could live like a king for 10 days of skiing in Utah or Colorado. [CBS]