15
May

Tuesday Morning- Refiner Downgrades, NFX and more!

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Oil Made A Run On $63, But Closed Barely Postive At $62.46. This morning oil is easing on resumption of production of 48,000 bopd from CVX in Nigeria.  Look for a test of $61.50 today.
June RBOB Got ChopBlocked By Lack Of Nigerian News /  Profit Taking. Gasoline had one of its worst days in recent memory yesterday falling $0.06. Today gsoline is off another $0.02 as traders anticipate a second week of inventory builds. I'm still holding that we are seeing the beginning of peak in gasoline prices and as such that wee've seen the top on wholesale prices this year.

Early Read On Crude Inventories:

  • Gasoline - up 900,000 barrels.
  •  Distillate - up 1.2 mm barrels.

Natural Gas Took Another Short-Lived Trip Over $8.  June gas spent most of the trading session above $8 yesterday  and even tested and beat the previous 2007 high at $8.11 before retreating to a more modestly up just a nickel at $7.95.

Odds & EndsAnalyst Watch:(VLO), (TSO) cut to neutral at Banc of America, (MRO) upped to buy at BofA, (AOG) cut to neutral at Jefferies.

Holdings Watch:

Calls

  • (NFX): added 1x position in June  $45 calls.
  • (PQ): added 2x position in July $12.50 calls.

Puts: No action but I'll be looking to dump the last of my TSO $115 and $110 puts as expiry approaches.

Stocks: No Action.

Newfield Takes A Rocky Bite Of Stone. Yesterday, before the open but too late for post time, (NFX) announced that it had acquired a majority of SGY's Rocky Mountain interests.

  • Purchase Price: $575 million.
  • Proved Reserves: 200 Bcfe, 70% gas, 52% developed. ($2.88/Mcfe); In a vacuum that seems a little pricey. (APC) 's recent proved sales have been for closer to the $2.50 although I could make an arguement that they had shorter RPs. Of course, APC paid stunning premiums for Kerr-McGee and Western Gas last summer.
  • Probable and Possible Reserves: 150 Bcfe.  Risking that by two-thirds yields 50 Bcfe for a more agreeable 3P F&D cost of $2.30/Mcfe.
  • Long reserve life assets, on the proved basis alone this would yield a 5% increase in reserve life this year helping to pusing NFX's RP north of 10  within 2 years.
  • Acres: 600,000 net undeveloped. Strewn in and around NFX's current territory.Acreage overlays nicely with existing Uinta play and gives them an entry into the largely undrilled southeastern end of the Pinedale Anticline. It more than doubles their position in the Williston Basin giving them a wealth of prospects there and in several other gassy premier plays (Powder, Jonah, and deep rights in several as well).
  • Announced that not only will Bohai get the boot (low price realizations and it's pretty well developed at this point which is always a good time to sell) but also their UK North Sea assets which have been. Maybe they'll sell these to (END).

21 Responses to “Tuesday Morning- Refiner Downgrades, NFX and more!”

  1. 1
    zman Says:

    Morning Nicky.

    BTW, nice call on n gas yesterday.

    NFX on fire again.

  2. 2
    zman Says:

    Art – I’d guess not. I really think its a combo of the acquisition and proposed dispositions. Call it a sigh of relief they’re gettng out of the North Sea. As to Eugene Island 246/247, did they announce it as back up anywhere? Inquiring minds need to know!

  3. 3
    zman Says:

    Nicky – pretty tough call given the potential for another build in both products tomorrow. Juxtapose another build with the reaction you got in not only gasoline (huge rally) but also distillate (rally) and I think the world is a bit on its ear. The geopol stuff rules right now.

  4. 4
    zman Says:

    Distillates – One guess, late season crop planting at record levels.

  5. 5
    zman Says:

    As if the fundies matter to these guys. 😉

  6. 6
    zman Says:

    Taking EOG June and VLO calls here.

    200,000 bopd Shell Nigerian ouput shut. Widespread unhrest continues.

  7. 7
    zman Says:

    XLE breaking out. Ditto OIH.

    XOI and XNG a hairs breadth away.

  8. 8
    zman Says:

    That story on Nigerian production cuts:

    http://www.upstreamonline.com/incoming/article133541.ece

    I took the photo!

  9. 9
    J Says:

    Nothing says shutdown your pipeline quite like a Soviet RPG-7 pointed at your head.

  10. 10
    p.wilmington Says:

    Z – CRR Carbo is looking oversold. Any thoughts on the fundamentals.

    BTW – Hope your BPG works out.

  11. 11
    zman Says:

    J- If a picture is worth a thousand words than what is a picture of your local MEND rep pointing an RPG at you worth?

    P – thanks. I gotta run in a few but the CRR does look oversold. I’m not in at present and will likely stay with the more liquid names for an expected OIH run up to 165 – 170.

    Thanks for the GL on BPG. It got hit way to hard on that news but it was overextended in the first place!

    Out on 2x position in NFX May 45 calls at $2.95. Nice little 3 week 123% move there.

  12. 12
    zman Says:

    NE still going strong.

  13. 13
    zman Says:

    N- Nat gas still holding in pretty strong.

    Oil up again. I’m surprised to see the XOI and other E indexes tanking here.

  14. 14
    zman Says:

    N – You trade the futures? Have you contemplated a short sale of UNG?

  15. 15
    T-Tupp Says:

    Z- took vlo’s too- hoefuly we’ll se a bearish report with a side of importation (is that a word?)

    I’ve been trading them and puts in the last 10 or o trading sessions… talk about investor ambivalence.. and vol. not just from opens, but intra-day trending

    what’s your thoughts?

  16. 16
    T-Tupp Says:

    k mean low impotation i mean lol

  17. 17
    zman Says:

    I’m not sure yet. They’re looking for gaso builds of 900L to 1.5 mm. Anything short of 90% and 1 mm barrel build will likely be perceived as bullish.

  18. 18
    Art Says:

    No. I just know they are drilling there and are expecting results shortly. This is a shallow water well with deep water potential. Based on my simple number crunching, it could be exciting. They have been having a lot of sucessful wells lately.

  19. 19
    zman Says:

    Ok – I’ll look it up in the last @NFX pub. Thanks Art!

  20. 20
    Art Says:

    Oops! That was EI 346/347. I couldn’t find any data on this project. Why is that? And, do analyists get different data than the public? Putting FD aside. Thanks.

  21. 21
    Marie Says:

    Here you go Z, you now have 3 votes, come on guys, vote for Z

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