07
Nov

Wednesday – EIA Report Date Plus More Earnings

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Commodity Watch:

  • Crude Oil. Wow. We're still on the road to $100. Today very well could be the day if the oil draw comes in large.
    • Bombing of a smallish (115Kbopd) pipeline in Yemen helped send crude north to just short of $97 yesterday, helped by a once again ailing dollar.
    • This morning crude is trading $1.05 to $97.75 on a bombing in Afghanistan, where the fear is that violence will spread out of control and across borders (um...too late).
    • An arctic storm which may bring 60 foot waves in the North Sea causes (COP) to evacuate 500 workers from platforms and combined shut-ins have so far reached over 300,000 bopd from Conoco, BP, Statoil and others.
    • IEA warns energy demand to rise by 50% between now and 2030 with 45% of that coming from China and India. Says the world has not made plans to meet this demand growth.
  • Natural Gas. Fell slightly yesterday to close at $7.86. This morning NG is up a nickel.

EIA Inventory Preview:

expected-110607.jpg

Z Comment:

  • The crude draw could be larger or smaller...difficult to say as you had a partial shut in of the three main export ports in Mexico last week, one of the three was down almost all week. On the products side I would expect as much (small build gasoline, small draw HO) given this time of year.  Any deterioration in products will be good for refining margins at this point and the gasoline number could just as easily be a small draw as demand remains strong and imports remain volatile. On their conference call yesterday, VLO noted that more diesel is being shipped from the U.S. to Europe which may way in on the distillates numbers.

Holdings Watch:

CALLS:

  • (RIG) Exited half of my 2x position in the Nov $120 Calls for $7, up 100% since entry on 10//29. Last bid on the remaining piece $10.
  • (BTU) Exited the second half of my Nov $50 Calls for $6.40, up 184%. We had sold the first half back in October for 
  • (COP) Exited the Nov $80 Calls for $5.50, up 59%.
  • (DRYS) Entered the Dec $125 Calls for $9.70. Last bid $10. See earnings watch below.

PUTS: No Action

Earnings Watch / Stocks We Care About Today

  • DRYS reported $2.38 vs 2.34 expected.
    • Revenues of $150mm vs $139 expected
    • 3Q saw average Time Charter Equivalent rate of $45.5 m per day. This generally runs just a little ahead of the Panamax rate ($43.2 k per day this past quarter) which is what you would expect given the Panamax weighted natural of their portfolio.
    • Fleet utilization was 99.6% during the quarter. I'd expect 4Q to be close to that since there is only a minor amount of maintenance planned.
    • Average ships in service was 33.6 during 3Q and that should bump up to ~ 36 ships in 4Q.
    • Based on fleet employment states, the average Panamax rate will likely be at worst in the mid $60 K per day region for the fourth quarter. That's a ~50% jump over the 3Q average
    • 4Q Revenues Too Low. Combine the higher rates from the company's fleet employment schedule with the high rates for the Capesize vessels and the 7% increase in voyage days available (more ships) and revenue is very likely to exceed $200 million, maybe closer to $225. Street is at $178 (range is $143 to $210).
    • Which means 4Q earnings numbers are likely to go up.  Current estimate is $3.45. Given that the majority of their costs are not ratcheting with higher revenues, margins are expanding rapidly. 07 estimates could jump another $1 yield a 2007 EPS estimate of $10. With 2008 already at $15+, the stock looks exceedingly cheap.
    • Conference call at 10 EST.
    • The stock is trading off 5% in early trading.
  • FTO reported $1.28 ($1.32 once you back out items) vs expectations of $1.20 On The Back Of High Margins.  FTO cites highest in the business refining margins in both the Rockies and the mid-continent
    • Conference call at 11 EST.
    • Still holding.
  • WNR Reported A Complete Brick of $0.69 vs expectations of $0.94. EBITDA was actually up here YoY but the market will not care and this position will go down as a scud in November. Conference call at 10 EST.
  • (TSO) Tricenda files tender offer for 16% of stock at $64. Management now has 10 days to respond to the offer.

Odds & Ends

Analyst Watch: (PTR) to underperform at Credit Suisse, APC PT taken from 70 to 75 at FBR,

222 Responses to “Wednesday – EIA Report Date Plus More Earnings”

  1. 1
    zman Says:

    Morning folks,

    DRYS all over the map this morning, but looking like a slightly weaker open.

    WNR completely bricked…no hope for that position.

    FTO scored a solid beat just minutes ago and had a great 3Q which is rare among refiners this quarter.

    CHK – I wrote a separate piece on last night but that was a very strong quarter.

    N.Sea storm is going to keep oil up through inventories….

    …another very busy day.

  2. 2
    Sambone Says:

    6:52 am EST

    Crude At New Highs On Dollar, Eyes Data

    By Nich Heath
    Dow Jones Newswires

    LONDON — Crude oil futures set new record highs in early London trade Wednesday, as a weaker dollar and expectations of ongoing supply tightness bolstered prices.

    Nymex December crude swept past the new record high of $98.03 a barrel set in Asian trade to peak at $98.62 a barrel, while ICE December Brent forged to a new high of $95.19 a barrel.

    The prospect of $100 crude becoming increasingly likely encouraged further buying interest, and deterred sellers as they braced themselves for more gains, with all eyes on Wednesday’s U.S. Department of Energy inventory data.

    “We have U.S. energy stock numbers this afternoon with again draws expected for crude, the magnet of $100 has been plain to see,” said Rob Laughlin of MF Global. “$100 becomes more of a reality each day as a weak dollar combined with a disillusioned equity and banking sector all fuel an existing bullish trend.”

    At 1126 GMT, the front-month December Brent contract on London’s ICE futures exchange was up $1.23 at $94.49 a barrel.

    The front-month December contract on the New York Mercantile Exchange was trading $1.36 higher at $98.06 a barrel.

    The ICE’s gasoil contract for November delivery was up $2.50 at $829.50 a metric ton, while Nymex gasoline for December delivery was up 228 points at 245.78 cents a gallon.

    “Can it hit $100 today? Absolutely,” a trader said, identifying the Department Of Energy data as the potential catalyst for the move into three figures.

    Crude markets are braced for a third straight weekly drop in U.S. crude oil stocks when the data is published at 1530 GMT Wednesday.

    The disruption to Mexican exports as a result of severe weather last week is widely anticipated to weigh on U.S. crude imports and stock levels.

    Any reduction that exceeds market expectations could send prices sharply higher, although a more bearish set of data poses potential for some weakening, with a draw already seen to be incorporated into crude prices.

    “The draws in the last two sets of data were surprises to the market,” said Olivier Jakob of Petromatrix. “The dynamics are different this time, with the draws having been priced in before the release and they will need confirmation or a surprise on the products side.”

    According to the average of a Dow Jones survey of nine analysts, crude oil stocks will have fallen by 1.6 million barrels in the week to Nov. 2. Gasoline inventories are seen growing by 200,000 barrels, while stocks of distillate, which include heating oil and diesel fuel, are expected to fall by 500,000 barrels.

    Ahead of the inventory numbers, early gains in crude prices could be traced to movements in the currency markets.

    The U.S. dollar sank to fresh historical lows against the euro on Wednesday. This was mainly due to comments from a Chinese official that the country should diversify its foreign exchange reserves, extending the support the weaker greenback offers to crude prices.

    The euro rose to a record high of $1.4708 against the dollar during early trade.

    “Without a shadow of a doubt, the dollar is adding support,” a London-based broker said.

    The mere prospect of prices breaking into three figures itself shoveled strength into crude prices Wednesday, causing sellers to pause as they eyed higher highs.

    “The weak dollar’s definitely providing a bit of support but I think it’s more to do with the fact we’re so close to $100,” a trader said in London. “Funds can smell $100 and won’t be happy until we’re through it. What they do after that is anyone’s guess.”

    With unease over fourth quarter crude supply-demand balances leaving the market highly sensitive to reports of physical supply disruptions, news of the evacuation of some North Sea oil production facilities spurred crude prices higher Tuesday. And the effects continued to be felt Wednesday, with further confirmation from operators that they were moving more staff onshore.

    ConocoPhillips confirmed Wednesday that it was evacuating 500 of its staff from its North Sea Ekofisk operations, as a precaution ahead of severe weather approaching the region.

    BP PLC, already evacuating staff from its Norwegian Valhall platforms, said it expected to shut down production from the field Thursday evening until the weather system passed. The field has a production capacity of 80,000 barrels of oil a day equivalent.

    Market sensitivity was also reflected in the concern at the sabotage of a Yemeni 155,000 barrels of crude oil a day capacity pipeline earlier in the week, which halted the flow of Yemeni crude to export terminals on the Red Sea.

    Meanwhile, projections from the U.S. Energy Information Administration Tuesday that commercial oil inventories held by major industrialized countries will be 4.8% below a year ago by the end of 2007, ensured that the theme of supply tightness keeps the crude markets on edge.

    The International Energy Agency’s Executive Director Nobuo Tanaka said Wednesday he shared the U.S. agency’s outlook.

    “We very much share the same opinions as the EIA on inventories heading into the fourth quarter — the stocks situation continues to tighten,” Tanaka told Dow Jones Newswires at the release in London of the agency’s long-term energy outlook.

    Iran’s nuclear program and a potential Turkish incursion into northern Iraq remain at the top of the oil market’s list of geopolitical concerns, and latest comments from Tehran Wednesday kept alive fears of a potential escalation in the standoff between the West and Iran that would weigh heavily on the important oil-producing region.

    President Mahmoud Ahmadinejad announced Wednesday that Iran has built a landmark 3,000 centrifuges for uranium enrichment, despite international sanctions in place against the country for its refusal to halt its atomic work.

    Scientists say in ideal conditions 3,000 centrifuges can make enough highly enriched uranium in a year’s time for an atomic bomb.

    “They should know that the Iranian nation could not care less about the sanctions,” Ahmadinejad said, adding that its people “will not retreat an iota from any of their rights, especially the nuclear rights.”

    —By Nick Heath; Dow Jones Newswires

  3. 3
    zman Says:

    China says it should put reserves into stronger currency that $. Way to go Benny Boy! And even with the currency help, nobody wants to buy GM car inside or outside the US.

  4. 4
    Sambone Says:

    Wow, US$ in freefall. Look at Gold.

  5. 5
    aitrader Says:

    CHK Jan 42.50 calls currently at 1.25 – what is you take on these Z?

  6. 6
    dooch Says:

    How does one tender shares owned in a brokerage acct? (TSO)

  7. 7
    zman Says:

    AItrader – like the idea but don’t know where they will open…the conference call is starting now.

    Dooch…Tricenda should have instructions in their filing or you can call your broker.

  8. 8
    Sambone Says:

    8:47 am EST

    Nymex Crude Hits New High Ahead Of DOE Data

    DOW JONES NEWSWIRES
    From Market Talk:
    [Dow Jones] Nymex crude shoots higher in electronic trading, breaking a new intraday record at $98.62/bbl as traders await weekly DOE inventory report due out at 10:30 a.m. EST. An unexpectedly large draw in inventories at Cushing, Okla. and nationally could further support prices, analysts say. “We feel that this morning’s new record crude highs will be sustained by this morning’s EIA data,” says Jim Ritterbusch, president of oil-trading advisory firm Ritterbusch and Associates. Nymex Dec crude +$1.06 at $97.76/bbl. (greg.meyer@dowjones.com)

  9. 9
    Nicky Says:

    Talking Heads – John Kilduff wheeled out on cue this morning – he is now a CNBC contributor (God help us!). According to him 100 is a done deal today and his new target is 108. Even Melissa Francis who beat the bullish drum all through Hurricane Katrina took him to task saying come on inventory levels are on the high side of the five year average and this is all about speculation. At which point he said he needed to keep ramping it as he was long the December futures contract.

  10. 10
    zman Says:

    CHK CC

    Barnett: as more drilling shifts to Tarrant county results getting better and better (see last night’s note on EURs here.)
    600 backlog of wells can be added while they drill 600 wells per year so inventory remains the same for at least the next five years.

    Fayetteville Shale: 420,000 net acreas, 500,000 acres seen.

    Deep Bosier: sites ECA buying competitor for $2.5 B earlier this week.

    Big Wells: Deep Anbadarko, Deep Haley, and Deep Bosier….only places you can drill big IP wells 30MM/d type wells…they have big leasehold in each.

    CF positive, reserve growth positive indefinitely,

    See $25 per share increase in 2 years …no deals for next 2 years. This $25 is based on the 40% reserve grouwht they see by the end of 2009

    Drilling costs coming down: new contracts 15 to 17,000 per day (probably down 500 to 750 per day) last quarter and down 15% YTD. Shallower rigs down slightly, cementing costs down 2%, logging prices flat to down about 5%.

  11. 11
    zman Says:

    looks like DRYS is going to open UP now, lol.

  12. 12
    Sambone Says:

    N – “At which point he said he needed to keep ramping it as he was long the December futures contract”. So much for being non biased, eh? LOL

  13. 13
    zman Says:

    CHK CC

    proceeds on next package now over $1B

    1Q08 Rockies and Woodford shale non core for $300mm

    DRYS slides for today’s CC are out…looks like its bid 120 now, lol.

  14. 14
    zman Says:

    DRYS slide 13: 2008 EBITDA of $800mm this is based on prices well below current spot.

    STREET CONSENSUS is $676mm

    slide 14: trades at half the 08 PE multiple of the group. and less than half the expected 08 EBITDA (5.4x for DRYS vs group at 11.5x)

  15. 15
    zman Says:

    CHK call going great, stock is off a few pennies with the crap broad market. I’ll be looking to add Dec or Jans and maybe some longer now. Will wait on inventories.

  16. 16
    zman Says:

    Spoke with one of Phil Flynns traders yesterday. He said Phil was sticking with $97 oil as the price at which the U.S. economy is hurt by high prices.

  17. 17
    Nicky Says:

    Samborne – the last sentence was a joke on my part (just wanted to see whether you were all paying attention) – that said I could see he was thinking exactly that as he fluffed the reply looking to find fundamental support for these prices.

  18. 18
    O.W. Says:

    managed to get some DRYS on that dip for $9.1 .. hope that’s a yee-ha!

  19. 19
    aitrader Says:

    The Chinese dumping T-Bills must have a major market impact. They buy 50% of treasuries these days. Bernanke and Bush can’t deficit spend if there isn’t a market for the paper.

    If the Chinese announce they are pulling the yuan’s fixed float to the dollar I’d say things are going to slide pretty quickly in 2008.

    Energy’s should be the sweet spot for the next 6-9 monhts though.

    Got CHK JAN 42.50’s for 1.10 – sweet!

  20. 20
    rkpagadala Says:

    Z – Is it still a good time to buy DRYS Dec 125’s? I missed it yesterday..

  21. 21
    Nicky Says:

    PF predicting a top today. Also of interest in his report today is that actually wti is now above its all time highs set in 1981 even adjusted for inflation according to Lundberg.

  22. 22
    zman Says:

    Nice OW

    rk – I have more confidence for certain now than I did when I did it. This is a major mo-mo stock but the fundamentals are stout.

  23. 23
    Nicky Says:

    Kilduff on again – close your eyes and buy everything energy according to him.

  24. 24
    jiveyjr Says:

    PQ on the move early

  25. 25
    zman Says:

    check out PQ. $14! somebody finally took note…still ultra cheap but kick,kick,kick

  26. 26
    zman Says:

    ZTRADE: CHK Dec $40 Calls for $1.85 average; doubling up position here. Average cost now $1.65.

  27. 27
    Denise Says:

    Good morning
    A must read on the dollar this am
    http://www.chaskaherald.com/node/3010
    The technician I follow says rally around Turkey day -we will be oversold that week and her ISEE put call was 220% last night-says whenever it’s over 200 we get whacked for a few days

  28. 28
    zman Says:

    CHK said 700,000 acres of their Appalachian gas basin is prospective for the Marcellus Shale (a new relatively new shale play people are starting to get excited about). This would make them by far the largest leaseholder in the play. They are currently drilling some vertical and horizontal pilots and were pretty mum about it since they don’t have gas yet…very interesting.

  29. 29
    zman Says:

    Thanks Denise…we need all the help we can get on the dollar discussion….

    switching from chk to drys cc.

  30. 30
    Denise Says:

    You probably did not read it yet-
    a joke

  31. 31
    zman Says:

    no, juggling two conf calls….

  32. 32
    zman Says:

    DRYS website appears to be down, swamped by the number of lemming who want to listen to the 3Q call…like me.

  33. 33
    zman Says:

    woops, Aubrey just said not as excited about Woodford Shale

    I had not taken the sale of 65,000 non core acres to mean they didn’t like the play so much. NFX may not like that comment. No risk to the story there and CHKs results have been inferior to NFX’s here. Maybe allows NFX to pick and choose some of these to increase scope here.

  34. 34
    zman Says:

    DNR keeps exploding higher…not chasing.

    Oil in 20 minutes

    GO APC

    FTO doing well pre call/pre oil #s. Those numbers

  35. 35
    zman Says:

    DRYS talking about china…good slideshow on this.

    http://www.irwebpage.com/dryships/files/3q07_Presentation.pdf

  36. 36
    O.W. Says:

    Z, are you still punting the rest of RIG prior to the oil # ?

  37. 37
    aitrader Says:

    Nice to see DRYS “talking up” their company in the PDF. They should give lessons to DSX’s CEO (ala “doom n gloom” Cramer interview).

  38. 38
    O.W. Says:

    site is slow for me..

  39. 39
    zman Says:

    DRYS already to Q&A

    Cantor ? use of “tremendous” cash flow:

    continued acquisitions

    ? recently lock ins reflect bearishness?

    no, not at all…it was location specific

    ? time charterer $61,000 Capesizes
    just reflects older contracts…will mirror spot market on rates going forward.

    ? thoughts on why market fell last week:
    just normal volatility

  40. 40
    zman Says:

    OW: this site?

    CHK buyers appear to be waiting on oil

  41. 41
    zman Says:

    DRYS Q&A

    China ? Says they are playing games which is what everyone believes in the near term. China is close to drawing down their own iron ore inventories …think it ends in 2 to 3 weeks as the Chinese have only 4 to 5 weeks of supply and they cannot draw that down to $0

    As to China increasing their own iron ore production…their quality is low.

    oil inventories in 5

  42. 42
    O.W. Says:

    yeah, this one.. hope it’s just a glitch on my end

  43. 43
    Denise Says:

    Z-did you read that John M article I sent this am-said exactly that about ore shipments

  44. 44
    zman Says:

    DRYS off with market now…nothing on call would signal the $3 drop so far.

    crude just rolled over pre #s

  45. 45
    ram Says:

    Those ships are either on the water or loading now.

  46. 46
    zman Says:

    Denise…I skimmed it.

    DRYS call over

    crude down 0.8
    gasoline down 0.8
    distilate up 0.1

    good for the refiners, utilization still stuck at 86.2%

  47. 47
    zman Says:

    CHK breaking through 41

    VLO probably zooms now.

  48. 48
    ram Says:

    DRYS falling hard.

  49. 49
    zman Says:

    cusing fell to 13.4 from 15.1 …very low

  50. 50
    zman Says:

    market deciding to die now.

  51. 51
    irished Says:

    What happen? everything is selling off in the last 10 minutes

  52. 52
    Popeye Says:

    Very difficult to get in here this am.

  53. 53
    zman Says:

    Cushing now at 3.5 year low. That’ll boost WTI for certain.

    Gasoline demand was nearly 1% higher than year ago, despite prices that are way higher.

    On the phone with my host to check into site delays.

  54. 54
    sane Says:

    Waiting for API

    The Funny of the day

    Fed’s Mishkin says oil prices should come down
    Are they not part of the high price factor

  55. 55
    Popeye Says:

    Site reloading fine now but my screen is bleeding blue.

  56. 56
    zman Says:

    crude trading off now…I don’t think it’ll fall out of bed unless it’s technical. They almost have to get $100 soon.

    Nicky…thoughts.

    Bleeding blue?

    Irish: broad market sell off induced some sector profit taking. That was a bullish report for gasoline producers and the dist. build won’t continue and was small enough to be survey error.

    Sane – love to see em when you get em.

    Nicky – are you around? Crude thoughts?

  57. 57
    Popeye Says:

    CNBC talking 180.00 oil. If you are going to raise the bar………

  58. 58
    zman Says:

    re $180 oil… surprised they don’t go for 179.99….marketing studies suggest this fools people.

  59. 59
    Popeye Says:

    Bleeding blue = LOD

  60. 60
    Nicky Says:

    Hi I couldn’t get in until just now.

  61. 61
    zman Says:

    looks like they are noticing the cushing draw. That’s the lowest level there since April 2004 and I have not heard a good explanation of why it’s that low yet. A lot of the oil there now came from Canada and the oil sands and I can’t see that falling off. Could be a pipeline issue…could be an engineered trade. Think PLX runs that system…

  62. 62
    aitrader Says:

    NBR sliding off a cliff after rocketing back up to 29.50 yesterday.

  63. 63
    Nicky Says:

    There was nothing bullish about that data imo. Came in way better than expectations. That said the initial reaction was what the hell buy it as we are going up into option expirations come what may.

    And yes Popeye I thought I misheard when they said 180.

    The data is definitely being leaked early – I have noticed for several weeks now a wild reaction about 2 minutes before and you could see it again today with the plunge.

  64. 64
    zman Says:

    NBR falling on those CHK comments about rig prices still falling …see #10 above.

    Agree leaked, usually there is some swing but its a few seconds and not 2 minutes prior. jerks.

    I think the low utilization is bullish for products and the cushing will drive WTI up.

  65. 65
    Nicky Says:

    Support below the intraday low at 96.10 is as 95.60. If 93.72 goes then the whole move COULD be done…

    that said I am anticipating far more of a spike into the final blow off which I expect will come next week.

  66. 66
    Nicky Says:

    CNBC reporting that 180 and 200 calls being written.

    I do suspect we could see 150 next year but not before a big pullback.

  67. 67
    Sambone Says:

    Nicky’s buddy

    http://www.321energy.com/reports/flynn/current.html

  68. 68
    Nicky Says:

    Broader markets back into support.

  69. 69
    zman Says:

    Nicky – would you eat a hat if we don’t hit $150 next year?

    Sam, obviously she’s PF’s buddy if she is now espousing $150 oil. Better go buy a Prius.

    VLO and COP December calls very tempting here. Products trading in lock step with crude. Gasoline stocks fell most on the Gulf Coast.

  70. 70
    zman Says:

    SD just keeps running. May buy 10% of prospective position as part of a DCA plan.

  71. 71
    Nicky Says:

    TA wise – it looks as if we are in V up and this is just the wave i of the V. In which case we imminently see a ii down to be followed by iii up which will be huge.

  72. 72
    zman Says:

    FTO Conference Call: differential on Canadian crude to WTI is now 50%…never been this high!

    Looks like a great 4Q and a better 1Q based on the increasing differential.

    Rockies PADD gasoline and distillate stocks remain low.

    Recent expansion not yet realized in 3Q …more so in 3Q…

    32% heavy crude in 3Q vs 4Q at 44% heavy crude….will yield wider margins.

  73. 73
    zman Says:

    Sane – any API data?

  74. 74
    Sambone Says:

    11:18 am EST

    Nymex Crude Up Slightly; US Crude Inventories Fall

    By Matt Chambers
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures were up slightly Wednesday, buoyed by a weaker dollar and trading briefly above $98 a barrel after U.S. crude oil inventories fell for the third straight week.

    The closely watched Department of Energy inventory data, which came out at 10:30 a.m. EST, failed to provide the fuel needed to push prices above $100 a barrel, a move many were waiting for, because the drop in crude stocks was lower than expectations. A big draw at the Cushing, Okla. delivery point for New York Mercantile Exchange crude futures supported prices.

    The front-month December light, sweet crude contract on the New York Mercantile Exchange was recently up 31 cents, or 0.3%, at $97.01 a barrel. Prices were trading around $97.50 two minutes before the data, but were pushed as low as $96.10 in a flurry of speculative selling in the seconds before the release. After the release they rose as high as $98.22, just below the record intraday high of $98.62 posted in early screen trading. Brent crude on the ICE futures exchange was down 43 cents at $93.69 a barrel.

    “The stats were neutral to bullish, with the big draw at Cushing providing support,” said Tony Rosado of IAG Energy Brokers in Fort Lauderdale, Fla. “As far as $100 goes,, unless the dollar collapses or there’s a rush of buying around $98, we’ll probably trickle lower” in coming sessions.

    Crude stocks dropped 800,000 barrels to 311.9 million barrels last week, the DOE’s Energy Information Administration said. That compared with an average forecast of a 1.6 million-barrel draw in a Dow Jones Newswires survey of analysts. Stockpiles at Cushing fell 1.65 million barrels to 13.4 million barrels, the lowest since Nov. 12, 2004.

    Gasoline stockpiles fell 800,000 barrels to 194.3 million barrels, compared with an average survey estimate of a 200,000-barrel gain. Distillate stockpiles rose 100,000 barrels to 135.4 million barrels, compared with analysts’ forecasts of a 500,000-barrel draw. Refining capacity was unchanged at 86.2%. Analysts had expected a 0.8 percentage point gain.

    Front-month December reformulated gasoline blendstock, or RBOB, rose 86 points, or 0.4%, to $2.4436 a gallon. December heating oil rose 62 points, or 0.2%, to $2.614 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  75. 75
    zman Says:

    FTO conf call: very positive.

    One thing talking about the crude coming down from Canada running at 50% differential due to lack of oil pipeline capacity coming across the border. No expansion of pipes before 2009. So the glut of oil can’t get down here and therefore, the big and expanding differential.

    Good for FTO espcially in the regular refining operations and makes for strong coking economics which is particularly good for VLO.

  76. 76
    ychong Says:

    I am a newbie here, and I really like what Zman puts out on fundamentals. It gives me more confidence in holding stocks when they are flying sky high.

    I am an amateur, so I don’t do options. but I thought somebody here could give me an advice. I accumulated TSO stock (around 6K) as crack spread was bottoming and still holding the stock (I know I should have sold it when it hit $65, but I didn’t)

    As you know, Tracinda issued an official tender offer today, and I was wondering why the stock price is not closing in faster to the $64 tender price.

    I am slow in figuring things, so please go easy on me. Any recommendations are appreciated. Thanks.

    Yong Chong

  77. 77
    sane Says:

    Z,

    Haven’t seen squat on the API Data.

  78. 78
    zman Says:

    Welcome ychong,

    Re TSO I like the stock going into a stronger quarter for margins and am holding it myself at present.

    The arbitrage to the $64 offer is attributable to the fact that management has not yet made its recommendation to shareholders (they have 10 days from today to do so) and there is a good chance they will tell people not to take the deal as they probably think Kerkorian is getting the stock too cheap for such a large piece and that the guy will demand board seats and they probably like running the show the way they have been. I held it pre offer and will slip into some longer term options AFTER they announce the deal. As far as stock goes, it’s facing better economics in the 4Q and probably 1Q…beyond that hard to say but its a very well run company and the only one I like better in the group is VLO.

  79. 79
    zman Says:

    What’s the word on the broad market…snoozing around down 135?

  80. 80
    zman Says:

    EIA stuff:

    gasoline demand set a record for this time of year. You people have too much money to spend on gasoline. Gas at the pump is 40% higher than year ago levels. Please buy a bicycle or two.

  81. 81
    zman Says:

    FTO call over…very positive. going to hold my $45s and will consider some longer dated, higher strikes.

  82. 82
    ychong Says:

    Thanks, Z.

    I also own VLO and WNR, although WNR is under water.

    Thanks again.

  83. 83
    zman Says:

    Sane – I just read that Mishkin article. What is he smoking?

    Ychong. WNR I have 0 hope of a recovery in the November calls. If you are long the stock that’s a different matter as you have time…I didn’t have a chance to listen to their CC but the pr was ugly. I much prefer FTO going forward.

  84. 84
    TTupp Says:

    i wonder why all the canadian e&p’s and integrates have been outperforming the us one in the past week…

  85. 85
    TTupp Says:

    the drys chart is working out some kinks

  86. 86
    doc Says:

    Sold all COP calls. Xom & COP are not safe trades compared 90% of the favored stocks on this board. You run the risk OF “BAD NEWS” & a 10% drop because of foriegn exposure. For long term both suck.

    Bought CHKDT April 42.50 &$2.60

  87. 87
    zman Says:

    T – didn’t realize they were so much…

    interesting thing on the FTO call…and I probably should have known this but I missed it along the way…TCPL, the huge pipeline company is converting one of their mainline cross border gas pipes to oil. Lack of gas to put in it + plus huge demand for oil sand capacity to get to cushing. Everything coming across the border that holds oil is full.

    agreed re DRYS chart…it will have it’s up day soon enough. Concerned about collateral damage to EXM…once again I’ll say I hate momentum stocks. People don’t know what they are in but they can tell red from green and red must mean bad news.

    re 86…I think that is a bit rash. COP and XOM are very different animals. You know I like the CHK.

  88. 88
    TTupp Says:

    yea kinda, su, imo pcz, mur

  89. 89
    TTupp Says:

    so i was looking at cam’s fundies looks pretty solid.. not a whole ton of competitors that have their clout both in size and in geographic diversification

  90. 90
    sane Says:

    Z,
    Re: 83 the fed lives on their own planet. ( the sound of printing presses in the background )

  91. 91
    doc Says:

    Bought SD for long term
    Stick with winners

    TTupp: are you with BMO or another firm??

    Phil

  92. 92
    Nicky Says:

    Broader market back into support area for the 4th time. 1489 spx remains key.

  93. 93
    TTupp Says:

    canadian dollar is going for 1.1, who was asking which was the best bet against the usd? they mentioned the Australian dollar, they raised rates a quarter point today and that bullish for their dollar, but i think at the end of the day the CAD is the best bet because of the combination of the export of: oil; base materials; precious metals; soft commodities, durable goods. also their are twin surpluses, all while keeping inflation within better terms of most G8 countries- and yes the fact that they haven’t raised the prime interest rates, and i don’t see it coming, although their is an economic dichotomy from the west to east (ie alta oil vs ontario autos, mfg).

    look at the ishares canada: YTD +48% !!1 the S&P TSX index is only up 15% in Canadian dollars. nice return for investing in a super stable country. i personally invest in american securities ie options on us co’s primarially for the liquidity and breadth of choice, but hold the canadian index shares (and borrow of the loan value off of them) priced in usd, but remain hedged since the underlying us a stable petroesque currency.

    😉 im just trying to help you guys out, i remember how pissed i was to see the buying power of my Canadian dollar be eroded away from 1999-2002– and remember, currencies always continue their trend for ong periods, not like stocks…

  94. 94
    Nicky Says:

    Woa wti!

  95. 95
    TTupp Says:

    no i was fired from BMO for being a maverick

  96. 96
    TTupp Says:

    doc / phil

    i have my own firm now, well i am the general partner of a private placement investment limited partnership.

    i took my clients with me, and some of my colleagues too!

  97. 97
    zman Says:

    Nicky – re WTI …just a buying opportunity, lol.

    Tupp- story sounds familiar except I quit of my own accord and only took a box of pencils with me on the way out the door.

    CAM – will ask Wyoming about them. I started looking them over on the weekend, highly diversified and wanted to get his opinion.

  98. 98
    doc Says:

    Nicky: Whats Happining?? At 10AM almost all of my LONGS (nat. resources) were GREEN & my SHORTS were RED. Now it has flipped Making a killing on GRMN & CROX.

    phil

    Wha

  99. 99
    TTupp Says:

    now i make probably 3x ‘s my boss who managed almost $1B and was the regional VP lol, i think im going to fax him my T4 (W2) this year! hahahah

  100. 100
    O.W. Says:

    the yo-yo-ing continues

  101. 101
    TTupp Says:

    nicky re #92, so true. looks like the market is shaking out all the naysayers. aka DDB, Z you know what that is`

  102. 102
    TTupp Says:

    doc why do you ask?

  103. 103
    zman Says:

    S&P approaching Nicki’s level…shippers in lockstep trading with DRYS approaching LOD.

  104. 104
    zman Says:

    “The last time the dollar was this weak against the Canadian currency was 1950; it’s very difficult to make an argument for stocks today,” said Art Hogan, chief market strategist at Jefferies & Co.

    that about sums it up.

  105. 105
    Denise Says:

    Z-thinking of starting some NG long
    your thoughts?

  106. 106
    Sambone Says:

    12:48 pm EST

    Nymex Crude Up Slightly; US Crude Inventories Fall

    By Matt Chambers
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures were up slightly Wednesday, buoyed by a weaker dollar and trading briefly above $98 a barrel after U.S. crude oil inventories fell for the third straight week.

    The closely watched Department of Energy inventory data, which came out at 10:30 a.m. EST, failed to provide the fuel needed to push prices above $100 a barrel, a move many were waiting for, because the drop in crude stocks was lower than expectations. A big draw at the Cushing, Okla. delivery point for New York Mercantile Exchange crude futures supported prices.

    The front-month December light, sweet crude contract on the New York Mercantile Exchange was recently up 31 cents, or 0.3%, at $97.01 a barrel. Prices were trading around $97.50 two minutes before the data, but were pushed as low as $96.10 in a flurry of speculative selling in the seconds before the release. After the release they rose as high as $98.22, just below the record intraday high of $98.62 posted in early screen trading. Brent crude on the ICE futures exchange was down 43 cents at $93.69 a barrel.

    “The stats were neutral to bullish, with the big draw at Cushing providing support,” said Tony Rosado of IAG Energy Brokers in Fort Lauderdale, Fla. “As far as $100 goes,, unless the dollar collapses or there’s a rush of buying around $98, we’ll probably trickle lower” in coming sessions.

    Crude stocks dropped 800,000 barrels to 311.9 million barrels last week, the DOE’s Energy Information Administration said. That compared with an average forecast of a 1.6 million-barrel draw in a Dow Jones Newswires survey of analysts. Stockpiles at Cushing fell 1.65 million barrels to 13.4 million barrels, the lowest since Nov. 12, 2004.

    Gasoline stockpiles fell 800,000 barrels to 194.3 million barrels, compared with an average survey estimate of a 200,000-barrel gain. Distillate stockpiles rose 100,000 barrels to 135.4 million barrels, compared with analysts’ forecasts of a 500,000-barrel draw. Refining capacity was unchanged at 86.2%. Analysts had expected a 0.8 percentage point gain.

    Front-month December reformulated gasoline blendstock, or RBOB, rose 86 points, or 0.4%, to $2.4436 a gallon. December heating oil rose 62 points, or 0.2%, to $2.614 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  107. 107
    TTupp Says:

    re 104, is that a contrarian blurb?

  108. 108
    Sambone Says:

    Z – Low US Dollar? Paulson and Helicopter Ben don’t care. Everybody is still bullish on the economy, etc. “What, me worry”?

  109. 109
    zman Says:

    D – in front of inventories? I might start scaling about $7.50.

    HDDs almost double vs the prior week but I don’t know if we see a draw just yet…have not yet seen consensus on the number. Despite all the prognostications for a return to warmer weather soon, aggregate gas weighted heating degree days are expected to top triple digits this week which should put us into withdrawals next week.

  110. 110
    zman Says:

    re 104 – I agree with Art.

  111. 111
    TTupp Says:

    he was referring to us stocks right?

  112. 112
    zman Says:

    re Art – yes

  113. 113
    Nicky Says:

    7365 is key level for nat gas.

  114. 114
    Nicky Says:

    WTI now has resistance in the 96.10 area. It needs to reverse to the upside and get moving – through 97.10 will be a good sign. Below 93.72 and it could be done…

  115. 115
    zman Says:

    permabear

  116. 116
    Nicky Says:

    broader market in some trouble here. i am expecting a bounce into options but the fact we are taking out 1489 gives us good odds the top is in.

  117. 117
    Nicky Says:

    tut tut z – i am giving the bull chance a fair wack – it just needs to get after it!

  118. 118
    Nicky Says:

    yikes look at the broader market as that key level went. everyone knew it of course.

  119. 119
    Denise Says:

    Thank you Nicky

  120. 120
    Nicky Says:

    no sign of that slime ball Kilduff now on CNBC – why don’t they make these rampers accountable.

  121. 121
    zman Says:

    broad market and crude moving in tandem, down 2% for SPX, comp, DJIA, crude.

    mogas down 1.2%
    Ho down 0.9%
    another good day for cracks.

    which of course means VLO down 3%, TSO down 2% etc…

    my sense is some buyers will step in shortly and try to kick the market back up as we have 2.5 hours left…if not, down another 200 on the DJIA possible.

    Kilduff working on his “flop” sound bite.

  122. 122
    Nicky Says:

    SPX and DOW now back into next key area of support 1483/4 and 13400 on dow.

  123. 123
    Nicky Says:

    we actually are now at the risk of dropping to 1420 on spx. 1605 I think will be impossible.

  124. 124
    zman Says:

    Somebody get Dillon Radigan a quotron. He just said market down due to higher oil today. Wake up man!

  125. 125
    TTupp Says:

    z- the bwu root for btu options is for the new company being spun out? those secondary identical strikes will disappear when the deal is done right? can you explain the options schematics to me here, im confused

  126. 126
    TTupp Says:

    dillon radiagin is the rachel ray od cnbc

  127. 127
    zman Says:

    T it’s for the old company. Price reflects 90% of BTU price + 10% of PCX which is the new company.

  128. 128
    TTupp Says:

    bmo has apa as 52% gas, who was saying something about this the other day? s this inaccurate?

  129. 129
    Nicky Says:

    Z – they are idiots. These markets are all going to fall together in the end. No sign of an oil bull on there at the mo but the slightest sign of a rally and they will all rush on touting buying opportunity no doubt.

  130. 130
    TTupp Says:

    so if i want to trade pureplay btu i would play the root: btu correct?

  131. 131
    Nicky Says:

    I logged on to the CNBC website some time back and see you can’t even contact them now. No doubt they can’t put up with Jo Public ranting at their short comings.

  132. 132
    zman Says:

    re “slightest sign of a rally”…think you are getting that now.

  133. 133
    TTupp Says:

    nicky ive never heard a bullish statement from your keyboard 😉

  134. 134
    Sambone Says:

    1:27 pm EST

    Nymex Crude Falls As Traders Weigh Up $100 Oil

    By Matt Chambers
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures turned negative Wednesday in choppy trading as the market weighed a smaller-than-expected fall in U.S. crude stockpiles and whether prices near $100 a barrel have risen too far too fast.

    Traders said the heights to which crude had scaled, up 62% this year to an intraday record high $98.62 set earlier Wednesday, has made the market jittery.

    “When you get a big run-up to these sorts of untested levels, crude is vulnerable to big swings” when prices start running the other way, said Peter Donovan, vice president at Vantage Trading in New York. “The market is very aware we’re trading at levels’ that are hard to justify.

    The front-month December light, sweet crude contract on the New York Mercantile Exchange was recently down $1.22, or 1.3%, at $95.48 a barrel. Prices ran up briefly past $98 a barrel after the data was released but then drifted lower. Brent crude on the ICE futures exchange was down 90 cents at $92.36 a barrel.

    A slight rebound in the dollar, which fell to a new record low against the euro earlier Wednesday, also weighed on prices. Crude prices have ran hard this year as the dollar declined, because the currency fall makes crude cheaper for traders using other denominations.

    Prices started the day higher, but closely watched Department of Energy inventory data failed to provide the fuel needed to push prices above $100 a barrel, a move many were waiting for, because the drop in crude stocks was lower than expectations. A big draw at the Cushing, Okla. delivery point for New York Mercantile Exchange crude futures supported prices immediately after the data release.

    “The fact that Cushing stocks fell 1.7 million barrels and the market wasn’t rallying meant it was too long (already betting too hard on price gains) and possibly in need of a correction” lower, said Tom Bentz, an analyst at BNP Commodity Futures in New York.

    Crude stocks dropped 800,000 barrels to 311.9 million barrels last week, the DOE’s Energy Information Administration said. That compared with an average forecast of a 1.6 million-barrel draw in a Dow Jones Newswires survey of analysts. Stockpiles at Cushing fell 1.65 million barrels to 13.4 million barrels, the lowest since Nov. 12, 2004.

    Gasoline stockpiles fell 800,000 barrels to 194.3 million barrels, compared with an average survey estimate of a 200,000-barrel gain. Distillate stockpiles rose 100,000 barrels to 135.4 million barrels, compared with analysts’ forecasts of a 500,000-barrel draw. Refining capacity was unchanged at 86.2%. Analysts had expected a 0.8 percentage point gain.

    Front-month December reformulated gasoline blendstock, or RBOB, fell 2.07 cents, or 0.9%, to $2.4143 a gallon. December heating oil fell 1.65 cents, or 0.6%, to $2.5913 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  135. 135
    Sambone Says:

    TTupp – In Nicky’s defense, I’m very, very bearish also.

  136. 136
    Nicky Says:

    I would note that products still look very strong.

  137. 137
    TTupp Says:

    it is true: their aren’t many rainbows & puppy dogs besides Lawrence Kudlow

  138. 138
    TTupp Says:

    Z – can you comment on #130

  139. 139
    zman Says:

    Re BTU I see two sets of options some with root BTU and some with root PWU…a bit confusing…sold my PWU as I hate confusion in the option … this confusion will be happening to RIG holders soon. Seems to lead to less overall traffic in the issues at least early on and therefore wider spreads.

  140. 140
    zman Says:

    ya gotta give me a chance to type it.

  141. 141
    Nicky Says:

    I am bearish on the broader markets T Tupp no doubt. But I have been giving clear levels and many of them have been higher! I did quite clearly state last week that as long as we remained above 1489 we had a chance at 1605. Its still not impossible but now much less likely. I suspect we may bounce back towards 1530.
    I find it staggering the market is as high as it is and no doubt only due to intervention!

    Energy – I quite often give you a bullish number even though I don’t believe the fundamentals support it. No doubt now the long term charts are very bullish.

    There you have it a bullish statement!!!

  142. 142
    zman Says:

    T – try this link re BTU instructions.

    http://www.optionsclearing.com/market/infomemos/2007/oct/23717.pdf

  143. 143
    doc Says:

    BMO; I have an account there. Don’t trust the NG Info. They recently trashed CHK.

  144. 144
    Nicky Says:

    Looks like they may try and close it above 96.

  145. 145
    zman Says:

    doc, did they trash it over F&D costs? if so, they weren’t unique on that aspect of the analysis. Personally I just think analysts are luke warm here pre and post about 2 months ago when the company said they have no need for the Street on the deal side through 2009. Before they feared a deal…no there’s no deal to be had…so they suck up to other companies that are more likely to give them deal flow.

  146. 146
    Sambone Says:

    Really spanking the US Dollar now. Look at Gold!

  147. 147
    Nicky Says:

    Samborne gold has come off big time from the overnight high of 849.

  148. 148
    zman Says:

    DRYS nearing LOD.

    The extra month in the DEC calls means I’m “only” down 35%.

    The November 125s got whacked for 68% so far.

    T – did the link help?

  149. 149
    TTupp Says:

    i think everone who owns dry shippers stocs has went to a “teach me to trade!” momentum trading workshop at their local Best Western. dolts, hope they all lose their IRA’s and their wifes divorce them

  150. 150
    Sambone Says:

    N – Looking at yesterday’s close on Gold at 823.40. Showing 831 now.

  151. 151
    zman Says:

    the silver lining being that maybe their wives are attractive?

  152. 152
    TTupp Says:

    doc, since i have left their the research house has aparently gone to shit. they have dropped coverage of rimm and cameco and some other staple canadian equities. things are lookng pretty piss poor over there. im looking to pay for research from one of the american houses, anone have any suggestions on who is the best in the energy markets? i like FBR , they seem to be ahead of the class.

    ps doc your with harris nesbitt correct, the american investment bank they bought? or are you canadian?

  153. 153
    scoop006 Says:

    Re # 148 I bought Nov. 115, down 48%

  154. 154
    TTupp Says:

    z re 151 , so we can snag em up you mean?

    — STRIKE WHILE THE PANS HOT!!! —

  155. 155
    zman Says:

    When asked about Phil’s thoughts on oil topping at 97 the Alaron trader sent me this.

    In short we believe the two most important items in commodities trading are…….see attached.

    sorry link doesn’t work

  156. 156
    zman Says:

    So there’s Alaron’s fundamental analysis for you, lol.

  157. 157
    TTupp Says:

    Z RE 148, i still dont understand, it says btu is replaced by pwu, but they both still exist

  158. 158
    zman Says:

    when I sold my option it had changed to PWU and as I understand it that represents the 90 /10 split old/spin out. The BTUs weren’t even listed by my system until today. I’m just not sure how one plays the pure BTU at the moment. That was the latest available option memo. sorry.

  159. 159
    zman Says:

    this is what Alaron said was the most important two points about trading oil:

    http://img222.echo.cx/img222/5460/green1xs.png

  160. 160
    aitrader Says:

    Z – one of T’s “divorced wives”?

  161. 161
    zman Says:

    gasoline and heating oil going positive into the NYMEX close. of course, oil is racing to catch up.

    I’m just passssssingggg it alllonnngggg . no comment by me.

  162. 162
    TTupp Says:

    the one option is absurdly expensive re btu

  163. 163
    zman Says:

    Oil closing at 96.40, down a whopping 30 cents.

    The right move now would be to buy VLO/TSO calls. The shift is in for products to narrow the gap.

    T – yeah I know, can’t tell what it represents so I’ll just leave it alone…lots o fish in the sea.

  164. 164
    TTupp Says:

    re 163 vlo, i initiated yesterday, might dd/ add tomorrow,

  165. 165
    O.W. Says:

    some interesting pointers on those two important points in the Wiki: http://uncyclopedia.org/wiki/Liz_Claman

  166. 166
    zman Says:

    T – re VLO, yeah, I’m think of rolling to December here/soon. Nice gains on the NOVs which I see no reason to surrender.

  167. 167
    j Says:

    PQ HOD

  168. 168
    zman Says:

    guess I opened that can of worms…just keep it clean gentlemen …my mother reads this every night, lol.

  169. 169
    zman Says:

    thanks j – been watching that drift higher. like a dope, I didn’t feel like chasing it given the broader market. am starting to see some other signs of green, FTO, CHK…maybe a little convicion building.

    HK should be good tonight by the way.

  170. 170
    apbd Says:

    Do I have to go to Canada to find these good-looking divorcees?
    apbd

  171. 171
    Sambone Says:

    Z – Question on the merger of RIG and GSF. The way I read it, there will be new shares (reclassification) of RIG? If I’m right and after the shareholder vote this Friday, will RIG trade as “When issued” or not?

  172. 172
    TTupp Says:

    windsor has plenty of “rugged cougars” i think my dad brought one of them to the detroit ions game with me and my girlfriend this past sunday eeeek. trainwreck

  173. 173
    zman Says:

    Sam – I plan on being out of it by then but they also need a Cayman court approval. On the call they sounded like they’d be happy to be done by year end. The 9th is the earliest possible date though.

  174. 174
    TTupp Says:

    does anyone else on here trade with interactive brokers?

  175. 175
    aitrader Says:

    Used to – vehhhhy bad customer service. Trades can be slow on some exchanges. Used ’em for stocks mostly.

  176. 176
    Sambone Says:

    Z – I think if it does trade a “WI” on RIG (We’ll see on Monday, I guess), I’m probably going to buy it. The new combined company will be the benchmark going forward.

  177. 177
    zman Says:

    Sambone I agree completely re the common and many analysts are putting the eps at $20 now for 2009. On the options, the breakeven is close to $109 so if it trades flat they will get marked down if RIG is trading higher. I plan on buying options as soon as the new symbols are issues and the spreads die a bit.

  178. 178
    QUARRYMAN Says:

    VMC

    I haven’t mentioned the virtues of accumulating Vulcan Materials around 80 for a week or so.

    Q.

  179. 179
    zman Says:

    Hey Q welcome back…got any comps on it for us?

  180. 180
    zman Says:

    VMC:

    Why the boom to 125, then bust to 80? Raw mats costs going up?

  181. 181
    TTupp Says:

    aitrader- you shoud hear the costomer service in canada, its based out of montreal and they can barely speak english, and pawn you off to te website for everything, but they are one of the few canadian brokers that ofer forex, futures, options, bonds, and equities globally

  182. 182
    zman Says:

    for once I agree with the guy just on CNBC…said this is low volume, pretty orderly, could have been a lot worse on GM/China dollar dump news.

  183. 183
    zman Says:

    In energy land, cheap is mostly working better than expensive except in the case of COP and VLO.

    pickup some SD shares.

  184. 184
    TTupp Says:

    sd?

  185. 185
    TTupp Says:

    i was reading something about btu on bloomberg last night. they quoted coal as being much higher in Australia than the US, is this true? i could imaging being so since the shipping cost more than the product, and auzzies proximity to asia

  186. 186
    zman Says:

    SD – sandridge. gassy OK based stock came public yesterday. Took a small entry in the common.

    wrote this re their S1 filing in July:
    This is what I published on the Sand Rigde IPO back in July when I first took a look. They start trading this morning:

    SandRidge Energy (formerly Riata): proposed symbol (SD). Another Oklahoma powerhouse comes to market.

    * Top notch management: Tom Ward runs the show, former President and COO of (CHK). His name has attracted top management and technical talent, some from Chesapeake and most from other public companies.
    * Top notch underwriters: Lehman, Goldman, B of A,
    * Operations: Big play is gas ladden West Texas Overthrust or WTO which is where the North and South American continents slammed together creating layers of rock with traps for hydrocarbons. Here SandRidge is concentrating on developing the Pinon Field and two prospects: South Sabino and Big Canyon. They plan to have 30 rigs drilling in the WTO by during 2Q07. They have additional activities in the Cotton Valley Reef trend of E. Tx/N. La, along the Gulf Coast, on the GOM shelf, and in the Piceance Basin of Colorado. The later two areas are not the focus here.
    * Potential drilling locations: 3,800 (2,600 in the WTO).
    * Reserves: 1 Tcfe, 85% natural gas. 99% independently engineered by Netherland Sewell which runs which is the #1 or #2 out there in the business. Almost 60% of reserves are in the Pinon of the WTO area.
    * They own 32 drilling rigs outright and participate in a JV that owns another 12 with (CWEI). This is a huge strength both from cost and control/availability standpoints. Especially in this time of spiraling service inflation.
    * More on the WTO: through year end 2006 200 Bcfe has been produced from only 300 wells scattered across several fields (including the Pinon) in the WTO. These are stacked pay or multi zone targets but the area is remote and lacks infrastructure (Terrell and Pecos counties). SandRidge is acquiring a massive 3D shoot over the area now (1,300 sq miles). The first two phase of seismic should help additional infill drilling opportunities in the Pinon and should be complete by year end.
    * The other two WTO prospects are near the Pinon. The Big Canyon prospect has some well control from a 1993 well that tested gas from a sand and a chert (think of fractured quartz or flint) but was abandoned. They drilled two wells which encountered hydrocarbons but no flow info means they were non commercial. They were selected using 2d and the addition of 3D data should firm up some potential targets late 2007.
    * They have installed additional compression capacity for future expansion of Pinon gas production and more is on the way by year end.
    * They gather CO2 from the WTO gas and use it for tertiary recovery of oil in older, post water flood fields in West Texas.

    added this part yesterday day:

    SD – the numbers above are a bit stale looking at the October S1…they have gotten bigger.

    So the numbers are opening market cap of $3.5B Which gives it a moderately priced valuation to reserves ($3 per Mcfe in the ground).

    10 year reserve life
    Growing very quickly
    4600 drilling locations now id’d
    cost falling with production ramp

    P/CF ~ 9x but given the strong growth and unique circumstances I’d say that’s not too high. Also, in a month, those bankers listed about are going to published glowing recs for this one.

  187. 187
    TTupp Says:

    btu has mines in Australia right?

  188. 188
    zman Says:

    re: 185: that sounds right…btu has ops in Australia.

  189. 189
    Denise Says:

    Q-re VMC why is it off 4?
    Saw they presented at a GS conference today

  190. 190
    zman Says:

    shippers will not turn until the market does.

  191. 191
    zman Says:

    T – did you see those comments from DRYS saying the Chinese are playing games with demand expectations trying to beat down the Baltic price index by saying they will dip into their own iron ore reserves. DRYS said the Chinese only have a 4 to 5 week supply and they pull this every year around contract negotiation time. Said any slack will be gone in 2 to 3 weeks as they can’t take the iron ore stocks to 0. Also said with this recent dip some people have been looking at booking shipping at current high rates for long charters (3 to 5 years).

  192. 192
    zman Says:

    wow SD / CLR / DNR

  193. 193
    aitrader Says:

    $ is down against every major and is hitting new lows against the Euro. Market barely noticed the rate cut and seems focused on $ weakness rather than FF rates.

    Denise posted tongue-in-cheek about rapper Jay-Z using 500 Euro notes in his latest video. When even rap stars are touting Euros you know things are bad!

    I’d guess the Fed does an about face at the next meeting and holds or raises. If they don’t we might as well peg to the Euro :-0

  194. 194
    Popeye Says:

    There went S&P 1480.

  195. 195
    Denise Says:

    I’m kind of missing those NYX curbs!

  196. 196
    Nicky Says:

    AIG after the close – market worried about this. Washington Mutual off 16% today.

    Kilduff flip flopping – he has gone a nasty color!

    SPX has support at 1470.

  197. 197
    TTupp Says:

    z- yea i saw that, nice tatics

  198. 198
    Brian08 Says:

    There goes 13,300…

  199. 199
    TTupp Says:

    nxy curbs?

  200. 200
    zman Says:

    could do a short on PTR or CEO as Asia is going to get clocked tonight.

  201. 201
    Nicky Says:

    Aye the futures are already showing the Hang Seng off nearly 1000!

  202. 202
    Denise Says:

    They stopped the trading curbs on the New York exchange-_I think it was down 260-no program trades allowed for a certain amount of time to stabilize the market.

  203. 203
    TTupp Says:

    do you own nxy?

  204. 204
    zman Says:

    Going to go walk a dog and a kid and try to forget this day for a bit. Back in awhile.

  205. 205
    TTupp Says:

    anyone elses quotes coming through as dow closing UP 25, @13,595?

  206. 206
    QUARRYMAN Says:

    Aggregates.
    Fancy word for crushed stone.
    75% of concrete, 95% of asphalt paving is made of crushed stone. Cement holds the stone together in concrete, heavy oils glue the stones together in road paving.

    Every building lot has a road entrance, and a construction staging area, every building has footers, foundations, basements, etc. It’s the first things you do on a job.

    It’s all built with ‘aggregates.’

    cont’d

    Q.

  207. 207
    QUARRYMAN Says:

    I apologize if I’m being pedantic.

    My point is that aggregates are the first construction trade on a building job and generally the first to get paid. (landscapers and sign guys are last!)

    The run-up/run-down is in analog to what you’ve seen in spades all month in the financial segment… the housing and construction slowdown. It became evident earlier with aggregate companies because they are earlier in the cycle.

    Also, aggregates financial are a bit more tranparent tha GS, C, BSC, AIG, CFC. Us quarry guys aren’t as swift at the shell game of hiding expenses and inflating earnings as those guys. What it is is what is and pretty evident within a quarter or two.

    [diff. between ‘smartest guys in room’ and ‘dumber than a box of rocks’]
    cont’d.

    Q.

  208. 208
    QUARRYMAN Says:

    I’m not calling a bottom, but LEAPS and a gentle awareness of ups and downs to write covered callers to lower the LEAP basis seems worthwhile.

    … or just buy a 100 shares for the IRA and forget about it.

    Cheers.

    Q.

  209. 209
    zman Says:

    Q – thanks…what was with the big up then drop in the stock of late. Also, tell me these guys have nothing to do with asphalt making. That business is rotten right now.

  210. 210
    QUARRYMAN Says:

    They supply the rocks. There was some blip due to an environmental prob with a chemical division they sold several years ago.

    IT’s wild that it dropped over 6% today.

    It’s our association with all things home-building and not enough on the fact we’re core ingredient for infrastructure rebuilding.

    I’d heard from one who would know that their Northern Va./D.C. market was down 30% this summer.

  211. 211
    QUARRYMAN Says:

    I’m too intermittent and stupid to call a bottom on the XLF. But, man, this is like the S&L melt down x 2 or x 3.

    It’s a great opportunity to own some great financial companies for cheap… but will value prevail within the time constraints of affordable option contracts?

    Your CHK held up remarkably well today.

    I finally got in the Dec 40s at 1.7 for a 1/3 position. Maybe I should be looking at the Jan 40s for the remaining two legs to buy some more time.

    Q

  212. 212
    bill Says:

    # 174 i trade with Interactive brokers

    I got everything i wanted in the drys earnings. I dont like the volitility but buying on dips has paid off.

    Notwithstanding a market meltdown, i like it better today than i did yesterday. I was adding on the decline.

    One small item, they had a 2.5m charge for interest hedges which are marked to market.

    I come up with over 5.oo in earnings for q4 and rev in excess of 200 m.

    rates have moved closer to record highs

    Here are the future rates

    7-Nov 6-Nov
    SPOT $175,563 $171,534 2.35%
    CS4TC NOV07 $173,036 $170,041 1.76%
    CS4TC DEC07 $174,637 $172,096 1.48%
    CS4TC Q108 $172,219 $169,438 1.64%
    CS4TC Q208 $153,594 $149,938 2.44%
    CS4TC Q308 $127,188 $125,344 1.47%
    CS4TC Q408 $113,188 $111,656 1.37%
    CS4TC CAL08 $141,547 $139,094 1.76%
    CS4TC CAL09 $94,516 $92,813 1.83%

    PM4TC Closing Previous (+/-)
    7-Nov 6-Nov
    SPOT $90,727 $90,391 0.37%
    PM4TC NOV07 $90,897 $90,173 0.80%
    PM4TC DEC07 $91,521 $89,190 2.61%
    PM4TC Q108 $88,278 $85,764 2.93%
    PM4TC Q208 $81,069 $78,444 3.35%
    PM4TC Q308 $68,861 $66,639 3.33%
    PM4TC Q408 $63,361 $62,278 1.74%
    PM4TC CAL08 $75,392 $73,281 2.88%
    PM4TC CAL09 $51,917 $50,750 2.30%

    Based on the rates in their presentation they will do at least 66.7 per day

    11/6 release
    1 Mansota 166,000
    2 alameda 73,000
    3 samaara 55,500
    4 netdola 52,500
    5 brisbane 95,000

    1 bargara 75,300
    2 capitola 80,000
    3 catalina 80,000
    4 corondo 81,750
    5 formentara 72,000
    6 heinrich 28,000
    7 iguana 77,000
    8 La Jolla 46,000
    9 lacerta 59,176
    10 Lanzarotte 95,000
    11 ligari 31,550
    12 maganari 18,400
    13 majorca 72,000
    14 marabella 61,000
    15 mendocino 37,500
    16 menorca 75,000
    17 ocean crystal 40,000
    18 padre 81,000
    19 paraagon 64,000
    20 primera 78,600
    21 redondo 85,000
    22 solan 88,750
    23 sonoma 60,941
    24 tonga 70,500
    25 toro 58,742
    26 Waiki 36,750
    27 Xandu 84,500
    28 ecola 82,000
    29 samatan 80,000
    handy
    1 matria 32,300
    2 clipper gemini 27,000
    3 nb
    4 nb
    5 nb
    6 nb
    7 nb
    8 nb
    9 nb
    10 nb
    2,401,759
    36
    66,716

  213. 213
    zman Says:

    Thanks Bill…I was erring on the side of conservancy when I wrote this the morning post:

    # Based on fleet employment states, the average Panamax rate will likely be at worst in the mid $60 K per day region for the fourth quarter. That’s a ~50% jump over the 3Q average
    # 4Q Revenues Too Low. Combine the higher rates from the company’s fleet employment schedule with the high rates for the Capesize vessels and the 7% increase in voyage days available (more ships) and revenue is very likely to exceed $200 million, maybe closer to $225. Street is at $178 (range is $143 to $210).
    # Which means 4Q earnings numbers are likely to go up. Current estimate is $3.45. Given that the majority of their costs are not ratcheting with higher revenues, margins are expanding rapidly. 07 estimates could jump another $1 yield a 2007 EPS estimate of $10. With 2008 already at $15+, the stock looks exceedingly cheap.

    should have said at least another $1.50 on earnings.

    I just ran the numbers on 36 ships and their rates with the heaviest weighting to Panamax that were present and little credit to any ups for Capesize. That make good sense to you? It’s actually a pretty simple financial model compared to some the refining segment, lol.

  214. 214
    bill Says:

    Z

    You have it pretty well pegged.

    The rates are gross rates and they pay about a 5 % commission so you will lose 10.0 m right there. I was trying to be conservative, lol

    >It’s actually a pretty simple financial model

    LOl thats why i like it. it something my simple mind can comprehend

  215. 215
    bill Says:

    CHARTERING – Panamax
    After a very firm October, November started a bit slower. The Baltic index fell to around USD 90,000 on the average of the 4 t/c routes, down USD 3000. Atlantic market fell during the week, with several ballasters and prompt vessels. Atlantic rounds were done in the low USD 80,000 level, while trips Far East have obtained high USD 80,000. At the end of the week market seems to pick up again along with paper trade, and we have seen fronthaul concluded at USD 92,000. Also more interest in period ship and short period done abt USD 91,000 daily. Not much activity for longer period, but most owners asking USD 80,000 + for 1 year. Pacific market has gone from arnd USD 100,000 level mid last week to mid USD 90,000 this week for Pacific roundvoyages. Some spot vsls has been fixed at lower level. Mid week it seems like the Pacific market is starting to pick up again pushed by the demand for short period tonnage, which is traded arnd USD 95,000 level. Trips from Pacific to Atlantic are traded arnd mid USD 90,000, basically same levels as Pacific roundvoyages. Indian market still arnd mid USD 90,000 level for tonnage del PMO area for trips to China, and short period fixtures reported fixed same levels.
    CHARTERING – Capesize
    The market increased from last week and the average of the 4 TC routes for a modern 172,000 tonner rose about USD 6000 to almost USD 172,000 daily. In the Atlantic a modern 180,000 dwt obtained USD 173,000 daily for a roundvoyage and for a trip from Brazil to the Far East a 180,000 dwt/blt 06 was reported at USD 239,000 daily. It was an active Pacific market where a 172,000 dwt/blt 96 fixed USD 169,000 daily for roundvoyage. We see more interest in the short period market, and a 177,000 dwt/blt 07 obtained USD 170,000 daily for 6/8 months. A 170,000 dwt/blt 00 was reported at USD 152,500 daily for 12 months dely Dec 07 in the Far East.
    ACTIVITY LEVEL
    Capesize Panamax Handysize
    Increasing Firm Slower

    RATES
    CAPESIZE (usd/day, usd/tonne) This
    week Last
    week Low
    2007 High
    2007
    TCT Cont/Far East (172′ dwt) 229,000 212,000 81,000 229,000
    Tubarao / R.dam (Iron ore) 45.00 44.00 19.30 46.75
    Queensland/ R.dam (Coal) 63.00 62.00 29.40 64.50
    PANAMAX
    Transatlantic RV 85,000 87,000 32,000 87,000
    TCT Cont / F. East 90,000 93,000 34,000 93,000
    TCT F. East / Cont 95,000 99,000 30,000 99,000
    TCT F. East RV 950,000 100,000 30,250 950,000
    Murmansk b.13-ARA 15/25,000 sc 26.50 26.75 26.98
    Murmansk b.13-L.pool 15/25,000 sc 27.75 28.00 28.04

  216. 216
    aitrader Says:

    HOUSTON, Nov 08, 2007 /PRNewswire-FirstCall via COMTEX/ — Petrohawk Energy Corporation (HK, Trade ) (“Petrohawk” or “the Company”) announced third quarter 2007 financial results and provided an update on operating activities and the filing of a registration statement with the Securities and Exchange Commission (SEC) covering the initial public offering of units of a Master Limited Partnership (MLP).

    — The Company expects to produce between 295 and 305 Mmcfe/d during
    the fourth quarter, reflecting an assumed November 30, 2007 closing
    date for its previously announced Gulf Coast divestment. During the
    third quarter, the Gulf Coast division produced approximately 100
    Mmcfe/d.

    — Petrohawk reported net income for the quarter of $27 million, or
    $0.16 per fully diluted common share, before adjusting for selected
    items. Net income reached $31 million, or $0.18 per fully diluted
    common share, after excluding selected items (see Selected Item
    Review and Reconciliation table). Cash flows from operations were
    $151 million, or $0.87 per fully diluted common share.

    ————————————-

    Looks like a .05 beat on expectations of .13 EPS. If the markets cooperate today HK should bounce upwards.

  217. 217
    bill Says:

    egle materials from ccall

    http://library.corporate-ir.net/library/18/189/189576/items/269016/3Q07Presentation.pdf

  218. 218
    bill Says:

    Very intersting call on egle

    dry bulk investors , should listen in. If you dont have time forward to Q & A

    china playing games, trying to manipulate prices.

    Ceo says inventories are at 2 year low.

    Conclusion bullish for rates

  219. 219
    bill Says:

    9 % increase in 2007 caused the current high rates.

    Forecast calls for 20 to 25 % growth

  220. 220
    zman Says:

    Thanks bill…can you post this on today’s post?

  221. 221
    really funny Videos Says:

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  222. 222
    wholesale Biker leather gear Says:

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    Zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » Wednesday – EIA Report Date Plus More Earnings

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