09
Nov

Position Update Friday – What A Great / Lousy Week

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Yet another topsy turvy day in the broad markets with a 275 point swing in the Dow peak to trough but on the whole energy did well with most of our positions ending the day in the green. We have one week to go until November options expiration and I'm in a selling mood. Today's post is an attempt to answer questions in advance about my current thinking on current and prospective holdings. It is not complete I'm sure by far (there's no coal discussion for example because I took profits on BTU but I like the coals and will be repositioning shortly) so stop by the comment area and ask those question I have not yet addressed. 

RIO Tinto buyout news from BHP Billiton: this will probably mean good things for the coal stocks.

Commodities Watch

  • Crude Oil - opened up $1.10 then traded as high as $97.70 on the North Sea shut ins and low as $94.62 on economic downturn fears. This morning crude is trading flat at $95.50. Oil has taken up a pattern of trading with the Dow. Dow up = healthy economy given the market's 30 second attention span at present. Dow down = economy going into a recession.
    • Good article from Scoop on how the recent rally is the first energy shock not to come out of a middle eastern supply snafu but rather the result of a sharp increase in demand.
    • Valero had a small, quickly contained fire at its Port Arthur facility. This could be the seminal event that helps drives gasoline not just to a record for Winter (too late already there) but to a nominal all time record which is pretty shocking given that the driving season is some months past. At this time I'd like to point out that the driving season is somewhat of a misnomer in that it applies sharply higher demand for mogas in the summer time and yet demand is running 9.3 mm bpd now, just 0.3 to 0.4 off the summer peaks. Fat Americans are not exactly getting out the bicycles the rest of the time.
  • Natural Gas : Traded up slightly yesterday. This morning NG is trading up a nickel at $7.72.
    • EIA reported a 36 Bcf build, in line with my 30 to 40 estimate. We should dip into withdrawals next week but there may be more of a rounded top to the season then a peak and plunge as Winter isn't seizing the U.S. just yet.
    • Cheyenne pipeline reopened after outage caused by a mid-September fire. This should be a boost for gas in the Rockies, ((COP), (BBG), (PXD) to name three quick beneficiaries).

E&P Position Update:

Group Drivers: strong oil, resilient natural gas in the face of bloated inventories, service costs that have decelerated and in some cases begun to shrink, and in many cases significant gas production growth from increased activity in resource plays (Shales, coalbed methane, etc)

  • (CHK) caught an upgrade from one of the naysayers (Raymond James) I berated in my pre call notes the other night and ended the day at an all time high. (CHK trades at 4.5x 2008 CFPS estimates which will be coming up). Its gassy mid and large cap peers trade over 6.0x. We hold CALLS in the December 40s and Jan 37.50s and $40s for nice profits. I will likely add to the Decembers $40s soon.

  • (APC) kissed an all time high in the morning but closed just short of these levels as market pressure eased its gains. We hold the December 60s and I will likely add to that position and enter a longer dated one shortly.

  • (EOG) this was a trade on earnings that worked well (sold half of November 85s early for a quick double and am now playing with house money). I will likely sell this today or Monday and will roll into longer dated CALLS soon.

  • (NFX) good quarter, think it will make new highs shortly, market and natural gas willing (see below on NG). Hold both the stock and the Jan $55 CALLS.

  • (HK) great quarter and no one cared on yesterday's Bernanke bust of a trading day. Just some highlights from yesterday's conference call interspersed with my thoughts:
    • All costs were at or below guidance.

    • 3D shoot met or exceeded goals in Terryville. "Big wedge" of not too deep Bossier seen across 5 or 6 section and they are geared up to drill. Not laminated like the stuff they have seen before..they are going to drill in 4Q start, not 08 as the press release says. They were looking for Gray Sand targets (which they found in abundance) but 800 or so feet uphole the saw this big slice of Bossier that is unexpected. Gray Sand wells have the ability to triple production yet only add about $600K to a well costing $2.5mm. If you get the Bossier in between...that's just Gravy. They mentioned possibly expanding the 3D shoot.

    • Also, at Terryville they also plan to do more 20 acre downspaced wells as so far the well results are showing higher IPs than the 40s (2.95 MMcfepd vs 2.5 ) but the sample set is small as of yet and their may be some cannibalization of nearby 40s. Still, 15 of next year's 57 wells will be 20 acre tests and if this works you could add hundreds of wells to their backlog of 500 plus drilling locations here. 

    • Fayetteville: Still drilling drilling exploratory tests in eight separate pilot areas. They have an undefined quantity of production awaiting pipeline hookup as gathering infrastructure has not kept pace with drilling. At some point in Q4 or Q1 expect a stairstep function to production here. They have recently moved to a 4 rig program and will jump to 8 in '08 to drill 115 wells. Good economics here a core play for them as they go forward sans the Gulf Coast division

    • Gulf Coast division had some big wells which should help with the sales price. Expect a 4Q close which will help reduce LOE further still while strengthening their balance sheet.
  • Jefferies analyst Chandra, smart guy, sounded like he's coming up to speed for a report. Others voiced more interest than in past calls, pretty enthusiastic on the whole.
  • (COP). Sold the Nov 80s for a nice gain on Wednesday, still think the move here extends to new highs and am holding the Nov $85 which will likely come down to the wire but are now underwater. Still think this one is undeservedly cheap relative to (XOM).

E&P's I Should Own and Don't

  • (PQ) - great quarter, saw it coming and failed to get in due to mental error.
  • (XTO) - all talk and no trade,
  • (DNR) - warming up, needs more work
  • ...and there are many more...if you have a suggestion for a name you think I've given short shrift please don't hesitate to drop me a note or comment on it.

E&P Stocks Currently Held 

Investments: CLR (day 1), NFX, SD (day 2), HK. Speculations: (END), (WHT), and (SCU).

Refiner Position Update:

Group Drivers: Crack spreads appear to have bottomed and are heading higher as gasoline and heating oil stocks remain below year ago levels. I expect these products to continue to play catch up to crude so get used to rising prices at the pump even if crude holds steady. Who would have thought we would be setting records (at least nominal ones) for gasoline in the Winter months.   

  • (VLO) - Cheapest in the group and will benefit from a widening of the spread between heavy and light crude grades.

  • (TSO) - 8 days to go for management to make it's recommendation to shareholders regarding Tricenda's offer to purchase. I continue to hold the November 47.50s, up 235% at present and will likely retired these shortly, see how the board deals with Tricenda, and then make a decision about December positioning. On a fundamental basis, west coast cracks have improved the most (see crack spread tab).

  • (WNR) - Scud. Bad quarter and a bad market did not help. No hope for the November calls. Will sell for a nickel if any of you want them.

  • (FTO) - They had the best quarter of any of the refiners. Fourth quarter results were cited as improving and the spread between heavy and sour crudes has expanded (see chart below) which means they are not paying $90+ for their oil but they are receiving the extraordinary products prices being registered now. They have been and will continue to for at least the near term horizon increasing their dependence on heavier oils. We hold the November $45s, up slightly since purchase but I'm thinking of rolling to longer dated options here very soon.

Heavy oil prices not keeping pace with WTI.

heavy-vs-wti-110807.jpg

Oil Service Position Update:

  • OII - good quarter numbers but a more cautious than usual tone on the call. Could have and should have sold this pre call for a double+ . Am off 50% now and will close soon. Had a good day yesterday but it will need another couple of days of performance like that to recover and I'm not going to double down with a week left and 10% to go to just to get back to break even. Definitely need a green day on Friday to keep me in what looks like a pretty precarious chart given the general market environment.
  • (HAL) - I'm in for a double here on the the November $40s and I've been in positive and negative territory on the position more times than I care to count. I will roll to December this week or next.

Dry Bulk Shippers - this is why I hate momentum stocks, even cheap ones. The group is acting like German U-Boats are hunting them.

  • (DRYS) - Bought the December 125 CALLS when the stock was about $115. Two bad market days and one solid quarterly report later with the stock at 101 those calls have been given a 60% haircut. And DRYS now trades at --x earnings. Usually I say sometimes what is cheap is cheap for a reason. But not in this case. I will wait it out. We were not wrong on the fundamentals for the quarter and the fourth quarter should show a massive improvement. The Chinese continue to play games with threats of using up non-existent stock piles of iron ore in a vain attempt to drive shipping costs lower prior to annual negotiations. They simply cannot stop making steal and they do not have the raw materials in country to make their threat a reality.
  • Motley Manipulation Watch:
    • Article #1. World's Scariest Stocks. I took a chainsaw to this article a few days back. I wasn't alone...no they are changing their tune on one quarter's earnings. I don't know where they get their "analysts" probably in a line where you here the phrase, "would you like fries with that?" about a thousand times a day. 
    • Article #2. Nothing Scary About DRYS Profits
  • (EXM) - Ugh. Daily bashing ... earnings next week and I expect this to recover somewhat if the broad market does but ugh. What sad is that there was hot money in this group to be sure and now it is fleeing without regard for valuation. 

 

Holdings Watch: 

CALLS: No Action

PUTS: No Action

Stock:

  • Bought SD on 11/7 at $32
  • Bought HK at $18.28 

Odds & Ends

Analyst Watch: I'll add in comments.

159 Responses to “Position Update Friday – What A Great / Lousy Week”

  1. 1
    aitrader Says:

    Z – just another plug to check out Helix Energy (HLX). They remind me of HK a bit – had a blow out quarter and positive 2008 guidance and the market hasn’t reacted yet. They were spanked to the tune of a 5% hit due to rumours of an earnings miss before they released their results. Post-earnings the market still hasn’t caught on that they were a beat and positive on 2008 expectations.

    Your “Zman deep analysis” would help me understand if this is an overlooked gem like HK or another ho-hum high-flier wanna-be.

  2. 2
    Sambone Says:

    2:13 am EST

    Crude Bounces As Market Weighs Demand

    Dow Jones Newswires

    SINGAPORE — Crude oil futures rebounded Friday in Asia as bargain hunters, still maintaining their focus on a possible test of $100 a barrel, stepped in to take advantage of two earlier sessions of losses.

    Despite renewed concerns over the health of the U.S. economy, the near-term downside for the oil market is expected to be capped by tight fundamentals, while buying interest was also shored up as the dollar hit a new low.

    “It seems prices are capped around $97-$98 a barrel, and we need one more bullish factor to test $100,” said Rikio Ishikura, a broker at Fimat Japan.

    On the New York Mercantile Exchange, light sweet crude for December delivery traded at $96.19 a barrel at 0655 GMT, up 73 cents in the Globex electronic session.

    The front-month contract gained as much as $1.02.

    Heating oil futures for December rose 102 points to 261.60 cents. December reformulated gasoline blendstock traded at 245.50 cents, 174 points higher.

    At current levels, Nymex crude will end a volatile trading week only modest higher, as economic headwinds touched off fresh doubts about prospects for growth and for energy demand.

    In the wake of Citigroup’s stunning $8 billion to $11 billion write down to reflect the declining value of subprime mortgage-related securities, there are worries more investment houses may have previously unannounced losses that could weigh on the economic outlook.

    “At this point for oil to reach the century mark it is going to take some type of event to drive us there and if it doesn’t happen, soon more than likely we will come up short,” Phil Flynn, an analyst at Alaron Trading Corp., said in an overnight note to clients.

    “Because we have priced in all the bullish news to this point, we are going to have to get something else to drive us.”

    Still, supply-demand factors remained supportive heading into the Northern Hemisphere winter.

    Oil stockpiles around the world have tightened as demand stayed strong in the face of high prices, leaving the market with only a slim margin to work around.

    “With oil stocks tightening, weather disrupting North Sea oil production, geopolitical issues still simmering and the dollar sinking, we suspect fears of weakening energy demand will have to be fully embraced in order to trigger a dramatic slide in energy prices,” said John Kilduff at MF Global.

    Meantime, the dollar’s weakness continued to support dollar-denominated commodity market such as oil.

    The greenback slipped to a fresh all-time low of $1.4739 against the euro midday in Asia, and also wobbled against the Japanese yen.

    At 0655 GMT, oil prices on London’s ICE Futures exchange were mixed.

    Brent crude for December rose 58 cents to $93.37 a barrel, while November gasoil changed hands at $826.75 a metric ton, down $9 from Thursday’s settlement.

    —By Yee Kai Pin, Dow Jones Newswires

  3. 3
    O.W. Says:

    this looks like bearish oil news.. does it have any effect on prices holding steady recently?

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a5Vhp3Ss07rw

  4. 4
    scoop006 Says:

    Z Thinking of buying DRYS common.You think $90. is a sound floor?

  5. 5
    Sambone Says:

    8:51 am EST

    Nymex Crude Slightly Lower As Storm Passes

    DOW JONES NEWSWIRES

    [Dow Jones] Nymex crude heads slightly lower as North Sea production that was shut in because of storms starts to resume. Statements from Fed Chairman Ben Bernanke that US economic growth would slow in the near term also providing little incentive to buy at near-record prices. Dec crude -43c at $95.03/bbl. (matt.chambers@dowjones.com)

  6. 6
    scoop006 Says:

    9:33 AM anyone home?

  7. 7
    Sambone Says:

    US dollar once again getting spanked. Is there a bottom?

  8. 8
    Sambone Says:

    Hmmm, this market may break 13,000 today. Next support is 12,500.

  9. 9
    apbd Says:

    There isn’t a green face in the crowd.
    apbd

  10. 10
    O.W. Says:

    the way my EXM evaporated.. amazing..

  11. 11
    aitrader Says:

    Seems like the DJIA is hitting hard resistance at 13,100 and bouncing.

  12. 12
    O.W. Says:

    Where’s the Z? we need a hero to save our souls!

  13. 13
    Denise Says:

    Good morning-notes from T/A
    Yes I am feeling early (or wrong) but staying long(at least for now)

    Positives from yesterday-
    NYSE upside volume at 47% yesterday-typically low 40’s go with a rally
    High/Lows at 29% -readings under 20 coordinate with a rally
    The mo mo names were sold yesterday-good sign(continuing this am)

    The negatives-we made a comeback yesterday which feeds complacency

  14. 14
    Sambone Says:

    Financials are in a Waterfall chart pattern. Havn’t seen that in years.

  15. 15
    Denise Says:

    Reuters reports that Sample & Cross Capital Management’s Vega Opportunity Fund is said to have lost 75% of its value on trading one-day in August. The losses are supposedly from losing options trades. And you thought Amaranth couldn’t be topped.

    Now I feel better-it’s all relative
    Going shopping for the rest of the day

  16. 16
    aitrader Says:

    Call me an eternal optimist, but this feels like the tail end of yesterday’s dip.

  17. 17
    O.W. Says:

    our sector horseman – RIG – now in the green (now is the key word)

  18. 18
    Sambone Says:

    10:06 am EST

    Nymex Crude Steady, North Sea Weighs, Dollar Supports

    By Matt Chambers
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures were steady Friday as the resumption of North Sea production and concerns about U.S. economic growth offset a weaker dollar and long-term supply concerns.

    North Sea production shut-in Thursday because of severe weather conditions was gearing up to restart, oil companies in the region said. Comments Thursday from Federal Reserve Chairman Ben Bernanke that the economy should “noticeably” slow this quarter also took away some of the recent buying exuberance that has helped push crude prices up 15% in the past month.

    The front-month December light, sweet crude contract on the New York Mercantile Exchange was recently down 13 cents, or 0.1%, at $95.33 a barrel. Brent crude on the ICE futures exchange fell 13 cents to $95.33 a barrel.

    “While the supply outlook and weak dollar remain quite bullish to oil, the market is also facing economic headwinds which will probably cause increased volatility rather than the vertical climb seen over the last two weeks,” Mike Fitzpatrick, vice president for energy risk management at MF Global in New York said in a research note.

    The dollar continued to weaken against the yen and the euro early Friday. A lower dollar has been a big contributor to crude’s recent run-up, making prices cheaper for traders using other currencies.

    Prices were weighed on after there were no signs of damage to oil and gas production in the North Sea after an overnight storm, and that producers had started to resume producing at least 330,000 barrels of oil equivalent that had been shut in.

    Front-month December reformulated gasoline blendstock, or RBOB, fell 11 points to $2.4365 a gallon. December heating oil rose 27 points to $2.6085 a gallon.

    –By Matt Chambers, Dow Jones Newswires

  19. 19
    O.W. Says:

    i think we should take any bounce as an op. to dump some NOV calls, otherwise could end the month with many more scuds than usual.

  20. 20
    zman Says:

    yikes….small technical problems with power out.

    I agree this looks like the tail of yesterday’s selling.

    Oil up a buck

    DRYS – who knows floor here, need to hold above yesterday’s LOD, just like market.

  21. 21
    O.W. Says:

    next resistances on the now confirmed down slopping channell:
    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1926808

  22. 22
    zman Says:

    seeing a few pockets of green…very few

    SD, CLR… SLB, RIG, ….EOG

    this is yet another baby and bathwater day…the refiners getting tossed yet again for no reason…tough to add just yet as its purely a gamble with the Wachovia’s of the world waiting in the wings with more great news. Still I’ll do a little longer dated fishing soon.

  23. 23
    zman Says:

    wow is this ugly…what are the talking heads saying this morning. “Definitely not we told you so”

    Finer on trigger for APC and COP Dec calls

    Thanks OW for the chart.
    Denise…still with the bull call?

  24. 24
    Popeye Says:

    Site very slow for me, seems to hang loading google.checkout.com.

  25. 25
    zman Says:

    Thanks Popeye, we’re seeing that too…Going to contact them about it to see if there is a fix. Also going to be doing some site caching work this weekend to see if we can’t speed it up a bit. Do you mind telling me if you use internet explorer or firefox or another browser? Thanks.

  26. 26
    Sambone Says:

    Hmmm, GOOG and AAPL down again. Tech losing its momentum?

  27. 27
    Sambone Says:

    Uncle Phil

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

  28. 28
    zman Says:

    PF quotes:
    After crosses and losses, men grow humbler and wise

    Early to bed and early to rise makes a man healthy wealthy and wise!

    sounds like somebodies hitting the sauce pre tini time/beer thirty…that’s just sad.

  29. 29
    Popeye Says:

    Firefox here.

  30. 30
    Sambone Says:

    40 more points to go before breaking 13,000. If this keeps up, Monday’s gonna be ugly.

  31. 31
    zman Says:

    so do we get a bounce off 13 even or do we dive lower.

    Popeye – do you know how/have the time to get to a Dos prompt. It might help me solve some things.

  32. 32
    Popeye Says:

    Oh boy this is getting ugly.

  33. 33
    Popeye Says:

    Linux only here Z.

  34. 34
    zman Says:

    Linux…hmmmm…will check into how to do this….was looking to run a tracert and ping from your box to my host.

  35. 35
    Popeye Says:

    Fixed now, thanks.

  36. 36
    aitrader Says:

    Got ’em all – Linux, Mac, Windows, Firefox, IE6, IE7, Safari. Let me know if you need help testing.

  37. 37
    Sambone Says:

    Z – IMO if it breaks 13,000, its going lower.

  38. 38
    zman Says:

    AITRADER – thanks …have you had trouble recently with site delay here?

  39. 39
    aitrader Says:

    Not today – couple of times yesterday it took 3-4 refreshes. Using WinXP and IE7 mostly to access the site.

  40. 40
    Nicky Says:

    Morning all.

    due a bounce – may only make it to yesterdays highs.

  41. 41
    zman Says:

    AItrader – next time you have trouble can your run tracert http://www.gkg.net and ping http://www.gkg.net at a dos prompt, and copy the results and send to me in an email. That goes for anybody else who has a slow run of it. My host says they need the trace routes to pin down a bad router with their provider. They don’t see a problem from the loc and it appears to be intermittent. Thanks in advance…it will keep me half way out of anger management class. The other half would of course be if some could put all the sub prime guys in a big bag and dump in east river.

  42. 42
    Nicky Says:

    Broader market – 5 waves down can clearly be seen. Looking for a 3 wave bounce towards 1485 – 1500.

  43. 43
    Nicky Says:

    WTI in a channel – they need to start their assault on 100 if we are gonna see it into options expiry on Tuesday. If 93.72 they may throw in the towel this time around. 94.50 will be an early warning.

  44. 44
    aitrader Says:

    Nicky – assuming this is Elliott Wave Theory. Does it provide any timeframes or just the overall pattern?

  45. 45
    zman Says:

    ZTRADE: Nov $60 APC Calls – entering for a quick trade.

  46. 46
    Nicky Says:

    I find it totally hopeless for timeframes aitrader. The patterns are amazing though….

  47. 47
    Nicky Says:

    There was some good divergence on that last low, dow made a lower low and spx double bottomed. I think we have a shot at a short term low in place.

  48. 48
    zman Says:

    oil nearly succumbing to the pull of the market.

  49. 49
    zman Says:

    Tristone raised it’s price target on RIG from $135 to $170 this morning.

    They also made DO their top pick which kind of goes hand in hand with what I’ve been saying as alternative way to play RIG/GSF as they merge.

  50. 50
    zman Says:

    feels like we are going to rally again.

  51. 51
    aitrader Says:

    btw – RIG Nov 130’s are going for 1.40 or so right now.

  52. 52
    j Says:

    XLF starting to rally, good sign.

  53. 53
    zman Says:

    aitrader – thanks…just don’t to be in when they announce deal is done…of course, it may run like crazy there at which point you wouldn’t care but the calculations put the stock about $4 in the hole at present were they to announce it now.

    thanks j – hopefully they use lunch time to talk it over and bounce us green into the weekend.

  54. 54
    TTupp Says:

    wow cl is looking for anything to follow, crude used to be negatively correlate to the sp500

  55. 55
    zman Says:

    good morning – T another day, another $5 off DRYS. Earnings for 2008 have come up $1.17 to $16.24 since 10/30. It now trades at 5.9x 2008 EPS.

  56. 56
    zman Says:

    BTU running on up …did you see Rio Tinto is getting bought by BHP…

    TSO climbing out of a hole

    SD = wow

  57. 57
    TTupp Says:

    true that re drys, that why i write calls on it every month, well oct and nov.

    pretty oon itll trade at 0.25x’s

  58. 58
    zman Says:

    will have closer look at HLX on the weekend

    DO is trying to wake up and run.

  59. 59
    Nicky Says:

    Bounce looking very weak in the broader markets so far….

  60. 60
    Sambone Says:

    11:01 am EST

    Nymex Crude Bounces Off $95, Up $1/Bbl

    DOW JONES NEWSWIRES

    [Dow Jones] Nymex crude springs higher, and is now up $1, after being slightly down earlier. Dec crude at $96.46. Prices were weighed by North Sea production resumption, but prices sprang back over losses couldn’t drive crude below $95. “Can’t take it down, so it goes right back up,” says one trader. (matt.chambers@dowjones.com)

  61. 61
    zman Says:

    CNBC piece on oil …lead in was Pakistan crisis, $140 oil ???

  62. 62
    TTupp Says:

    yea they have huge reserves….

  63. 63
    zman Says:

    …maybe of uranium, lol

  64. 64
    Nicky Says:

    Whatever it takes to get it over the 100 for their pay day next week. Hope they all get caught long…

  65. 65
    zman Says:

    ZTRADE: Entering VLO $72.50 December calls for $2.10

  66. 66
    TTupp Says:

    you bad boy. balzy add, i hold the same contract

  67. 67
    aitrader Says:

    Baltic Dry at 10,867 up 123 today.

  68. 68
    zman Says:

    Sharon Efffferson citing AAA about gas price outlook. Since she has only a 2 day memory what she fails to do is point out how wrong AAA and EIA have been on gasoline. As soon as Summer was over both were looking for a 4Q average of around $2.50 or less….WRONG

    Aitrader- I know…and the market couldn’t care less.

  69. 69
    TTupp Says:

    re: 65, i only like to add when its down once- do you agree that it’s plausable that we may kiss the strong support of ~$67 again

  70. 70
    TTupp Says:

    they need to get rid effthffferson and replace her with that breaking news reporter, the cute little blonde, i forget her name, saw her on like tuesday….

  71. 71
    zman Says:

    T – we certainly could and I don’t double down willy-nilly either. If oil bucks the market trend, I don’t see us down there. Unless of course the market just dies in some Nicky induced nightmare. Those crackspread charts are going to look better again next week.

    T – re 70. They need to replace here with someone with balance and a historical persepctive who can call people on their BS instead of just smile and nod.

  72. 72
    zman Says:

    ” the green movement has a problem, they want us to sleep at the foot of Al Gore’s bed and sing kumbaiyah ” – CNBC guest. Now he’s a “funny guy”

  73. 73
    TTupp Says:

    re: 71, paragraph 2, and someone who is at least a 7/10

  74. 74
    Nicky Says:

    #71 – very funny! are we talking energy or the broader markets here??? If its the latter I gave you the one bullish comment I have in me today which is that I am expecting a bounce – and you have it.

    ps I don’t rule out another spike lower as price action is so weak.

  75. 75
    zman Says:

    I’d vote for Nicky but she’d scare the hell out of them.

    “EIA reported a massive build in oil stocks, we turn to CNBC in house oil expert Nicky…Nicky your thoughts”

    “oil’s a dawg, shu fall by alff” – in her best Pikey drawl.

  76. 76
    Sambone Says:

    Don’t pick on poor Nicky.

  77. 77
    zman Says:

    my apologies…but I would like to hear her say:

    “the rain is Spain stays mainly on the plains”

  78. 78
    Nicky Says:

    Lol! At last Samborne my bearish partner in crime!

    Just to give you the heads up I sound like Audrey Hepburn AFTER the elocution lessions!

  79. 79
    Jonesey Says:

    FYI…BHI Report…
    U.S. Rig Count up 6 from last week at 1,801; up 108 year over year.

    Canadian Rig Count down 7 from last week at 361; down 85 year over year.

    The US Offshore rig count is 57, unchanged from last week; down 29 year over year.

  80. 80
    aitrader Says:

    RBOB at 24500 – that’s a new high if I’m not mistaken…?

  81. 81
    TTupp Says:

    And when you got your six pieces, you gotta get rid of them, because it’s no good leaving it in the deep freeze for your mum to discover, now is it? Then I hear the best thing to do is feed them to pigs. You got to starve the pigs for a few days, then the sight of a chopped-up body will look like curry to a pisshead. You gotta shave the heads of your victims, and pull the teeth out for the sake of the piggies’ digestion. You could do this afterwards, of course, but you don’t want to go sievin’ through pig shit, now do you? They will go through bone like butter. You need at least sixteen pigs to finish the job in one sitting, so be wary of any man who keeps a pig farm. They will go through a body that weighs 200 pounds in about eight minutes. That means that a single pig can consume two pounds of uncooked flesh every minute. Hence the expression, “as greedy as a pig”.

  82. 82
    zman Says:

    Thanks and welcome Jonesey!

    that puts gas rigs up $4 to 1,459 strong news for drillers after last week’s big gain. Apparently $8 ish is the point where the resource play laden E&P’s get busy.

    Mission accomplished by CHK and others in September about getting gas off it’s behind. We will need cold soon or gas will be a buck lower. There is a growing backlog of drilled but not tied in wells and they won’t stay that way forever, they will quietly get hooked to production over the span of the 4Q which will result in more companies talking about exit rates relative to 4Q average volumes. tricky, tricky, tricky.

  83. 83
    TTupp Says:

    z whats the 1-2-3 crach roughly at? is it [(RBOB X 42)2 + HO x 42]- WTI ?

  84. 84
    Nicky Says:

    Where we close in wti is going to be extremely critical..

  85. 85
    Sambone Says:

    Nicky – Got your back.

  86. 86
    zman Says:

    AI – you are correct sir.

    T – gross but funny movie

    Crack spread: the generic calculation goes

    (2 X gasoline X 42 + 1 X heating oil x 42) – (WTI X 3)

    use wholesale mogas and HO prices

    that comes to $27.36 at present

    of course it varies by region but on the whole it has been rising of late

    Nicky – agreed 84

  87. 87
    Sambone Says:

    Hmmmm, looks like we’re getting a “Dead cat bounce” in the financials.

  88. 88
    apbd Says:

    Wait a minute, I want to be Mr. Pink!
    apbd

  89. 89
    doc Says:

    CHK– Have 3 NOV calls exp today. Any thoughts on next 2 hours???????

  90. 90
    zman Says:

    …you know dead cats are pretty much worthless

    Doc – opex is next Friday:

    http://biz.yahoo.com/opt/calendar.html

  91. 91
    TTupp Says:

    where do you have a 321 crack chart on here?

  92. 92
    Sambone Says:

    Friday’s movie quote, which movie?

    “Can we lock up and get drunk now?”

  93. 93
    Sambone Says:

    They’re armed.
    What was that? Armed? What do you mean armed? Armed with what?
    Err, bad breath, colorful language, feather duster… what do you think they’re gonna be armed with? Guns, you tit!

  94. 94
    TTupp Says:

    Z- have you dont any work-ups on DO or esv? all same sub-industry right? also, what were you saying about what was going to happen to the RIG stock when the merger get cleared?

  95. 95
    TTupp Says:

    lock stock, you quote the same 2 movies 😉

  96. 96
    TTupp Says:

    You once told me, don’t get emotional about stock. Don’t! The bid is 16 1/2 and going down. As your broker, I advise you to take it.

  97. 97
    zman Says:

    T – not per se. DO is deeper, ESV is shallow and getting more international and cheaper although I suspect they will see rig rates come off int’l as rigs stream out of the GOMex shelf. DO is a direct competititor to RIG mostsly, but it has more mid and shallow rigs as well.

    T – the crack spread tab at upper left has a graphs from Tuesday.

    T – when the deal closes so much goes to shares in terms of value and so much goes to investors as cash. The reset on the stock will bring it down at any level above 109. At present the stock would fall about $4. I just don’t want to be in during the transition. Can get awkward / confusing like BTU the other day

    T – you know what you can do with that advice Bud Fox?

  98. 98
    TTupp Says:

    Greed captures the essence of the evolutionary spirit.

  99. 99
    TTupp Says:

    lol, re97, took all the bids for my novembers today

  100. 100
    aitrader Says:

    Here we go – Friday afternoon breakout 8)

  101. 101
    Wyoming Says:

    Z,

    Good observation on the shut in gas. We have 1 play with about 25MM locked in waiting for increasing pipeline expansion project. No big rush with this inventory.

  102. 102
    Sambone Says:

    “Greed is good” on “Wallstreet”

  103. 103
    zman Says:

    B of A fessing up right now re 4Q numbers and CDO’s

  104. 104
    zman Says:

    nice close for oil over $96.20. products did well as well.

    T – you’ve been to the crack spread tab before, right?

  105. 105
    ram Says:

    Are PBR and XOM close in market cap now? Is either one relatively cheap?

  106. 106
    Denise Says:

    Back from shopping and thinking of dipping my toe in retail
    Hoping for some covering

  107. 107
    zman Says:

    ram: xom is much bigger (twice size). I wouldn’t call either cheap. much prefere COP to XOM. PBR has a lot of good things going for it not the least of which is it knows how to grow.

    Wyoming – every once in awhile I say something worthy, lol.

    SD at 33 climbing. stocks well off lows,

    holy crap; EXM positive. DRYS sure to jump soon (under 6x PE!!!)

  108. 108
    zman Says:

    Denise: CNBC guest said earlier that no woman can find a pair of boots that fit in Manhattan due to unbelievable apparel demand

  109. 109
    TTupp Says:

    104: yes

  110. 110
    Denise Says:

    Hmmmmm…What were they smoking?
    Hoping I can pay for my day.

  111. 111
    zman Says:

    tequila thirty in about thirty

  112. 112
    TTupp Says:

    more like moonshine 30

  113. 113
    TTupp Says:

    z you strike me as a bacardi breezer kinda guy…. jk 😉

  114. 114
    zman Says:

    in Tx, after a comment like that, one of us wouldn’t walk out of the room, lol.

  115. 115
    Denise Says:

    Z-Upon further relection they are probably right-must be the Europeans-Boots cheap here in the good old US of A
    No Europeans in Dallas

  116. 116
    Wyoming Says:

    Denise,

    That is why DFW is a great place to live.

    Z,

    Tequila, no salt, no lime.

  117. 117
    zman Says:

    anybody gone to Walking With Dinosaurs?

    wow BTU

    W – agreed, lime ruins the Sauza, but Austin beats DFW hands down.

  118. 118
    Wyoming Says:

    Austin is good, Wyoming beats all, and I am originally from Ohio.

  119. 119
    zman Says:

    GSF and RIG shareholders approved merger.

    Press release says the merger still hinges on approval of the Grand Court of the Cayman Islands and other closing conditions. Still expect to close by year end. I’m holding my remaining calls into next week for a higher sell price.

    T – have I told you “you’re a funny guy” lately. It’s true.

    Last minute rally, starting to turn more energy green.

  120. 120
    zman Says:

    Wyoming – any thoughts on SD? rally, rally, rally.

    Also, did you see the HK comment about a big unexpected wedge of Bossier on their Terryville 3D? They sounded pretty excited, getting rigs on task immediately ..will drill deep enough to test all three (L. Cotton Valley, Bossier, Gray Sand). Also, they said it’s not laminated like the Bossier they had previously seen. Can they tell that pretty well on the 3D? Especially after just having gotten it in house?

  121. 121
    scoop006 Says:

    Denise, I received an invitation to a Private Grand Opening Celebration of the PINTO RANCH A FINE WESTERN WEAR BOUTIQUE
    for Wedneday Nov.14, at NorthPark Center.
    Cocktails, Hors D’oeuvers and live music will be served. I am sure you will find many pairs of boots to your liking.
    If you want to attend RSVP @ 214-219-9191 x7.

  122. 122
    TTupp Says:

    whats with this “funny guy” business? inside joke b4 i was here?

  123. 123
    Sambone Says:

    3:23 pm EST

    Nymex Crude Rises As Options Traders Eye $100

    By MATT CHAMBERS
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures finished slightly higher Friday, rising on low volumes as expectations that options trading might inspire a run at $100 a barrel early next week offset concerns about U.S. economic growth.

    The front-month December light, sweet crude contract on the New York Mercantile Exchange settled 86 cents, or 0.9%, higher at $96.32 a barrel, just 38 cents shy of its record settlement $96.70, set Nov. 6. Brent crude on the ICE futures exchange was recently up 58 cents at $93.37. Settlement at this level would be a record.

    Options on December crude oil futures expire Tuesday and with high open interest in $100 call options, which give the right, but not obligation to buy the futures contract at that price, many analysts expect prices to be drawn higher.

    The pull on prices is seen as coming both from traders buying futures to inspire a move higher that puts their options bets in the money and from sellers of the call options, who have to sell at $100 if the calls are exercised, buying futures to hedge against price moves higher.

    “A lot of the market focus is centering on these $100 crude options” and if prices move higher close to $100, trading around options could provide an added lift, said Andy Lebow, senior vice president at brokerage MF Global in New York.

    Prices dropped off early in the session after North Sea producers said they were readying to bring back the equivalent of 330,000 barrels of daily oil production that was shut-in Thursday because of bad weather. Comments Thursday from Federal Reserve Chairman Ben Bernanke that the economy should “noticeably” slow this quarter also helped slow Friday’s price rise, which was subdued compared with big recent moves in crude.

    But the big moves in crude aren’t going away, and next week could be “one of the most volatile weeks for oil in years,” according to a Lehman Brothers report released Friday. There are still about 360,000 outstanding December crude oil contracts, which expire Nov. 16, compared with about half that amount a week before the November contract expired, Lehman said. Almost all of them are held by financial participants, who will need to trade out of them this week, rather than take or make delivery, Lehman analysts said.

    The 42,000 December call options at $100 could be the real magnet though.

    “Perhaps, before Tuesday, holders of these calls will attempt to push oil to $100 in a last effort to force these options into the money,” the report said. “The idea would be to buy enough futures to set off a technicals-based rally to $100 before options expiry.”

    As well as the options expiration, traders next week will be focussing on the performance of U.S. and global equities for signs of the health of coming oil demand. The Dow Jones Industrial Average was headed for its third straight loss Friday, down 114 points to 13152 at 3 p.m. EST.

    Not all oil market participants are backing $100 oil next week, even with a weaker dollar and colder weather expected in the U.S. Northeast, the world’s biggest heating oil market.

    “Any declines in the stock indexes could begin to take precedence,” said Jim Ritterbusch, president of trading advisory firm Ritterbusch and Associates. “As a consequence, renewed price strength to above the $100 mark will likely require a significant geopolitical event.”

    Front-month December reformulated gasoline blendstock, or RBOB, rose 1.84 cents, or 0.8%, to $2.456 a gallon. December heating oil rose 1.3 cents, or 0.5%, to $2.6188 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  124. 124
    zman Says:

    Sambone’s favorite seen from “Good Fellas”

  125. 125
    Wyoming Says:

    CNBC joker talking about the PBR results doubling their output, forgets to tell everyone that some facilites will have to be put in.

    SD, anyone who plays like Aubrey is good in my book. They have a different playground that us. I like the CO2. HESS has a big flood in Semiole. Tertiary recovery will be big. It takes a drunk monkey to mess up a Cotton Valley well.

  126. 126
    TTupp Says:

    z – i tought you lived in AK

  127. 127
    Sambone Says:

    T Goodfellas 1990

    Henry Hill: You’re a pistol, you’re really funny. You’re really funny.
    Tommy DeVito: What do you mean I’m funny?
    Henry Hill: It’s funny, you know. It’s a good story, it’s funny, you’re a funny guy.
    [laughs]
    Tommy DeVito: what do you mean, you mean the way I talk? What?
    Henry Hill: It’s just, you know. You’re just funny, it’s… funny, the way you tell the story and everything.
    Tommy DeVito: [it becomes quiet] Funny how? What’s funny about it?
    Anthony Stabile: Tommy no, You got it all wrong.
    Tommy DeVito: Oh, oh, Anthony. He’s a big boy, he knows what he said. What did ya say? Funny how?
    Henry Hill: Jus…
    Tommy DeVito: What?
    Henry Hill: Just… ya know… you’re funny.
    Tommy DeVito: You mean, let me understand this cause, ya know maybe it’s me, I’m a little fucked up maybe, but I’m funny how, I mean funny like I’m a clown, I amuse you? I make you laugh, I’m here to fuckin’ amuse you? What do you mean funny, funny how? How am I funny?
    Henry Hill: Just… you know, how you tell the story, what?
    Tommy DeVito: No, no, I don’t know, you said it. How do I know? You said I’m funny. How the fuck am I funny, what the fuck is so funny about me? Tell me, tell me what’s funny!
    Henry Hill: [long pause] Get the fuck out of here, Tommy!
    Tommy DeVito: [everyone laughs] Ya motherfucker! I almost had him, I almost had him. Ya stuttering prick ya. Frankie, was he shaking? I wonder about you sometimes, Henry. You may fold under questioning.

  128. 128
    TTupp Says:

    how bout funny man from boondock saints

  129. 129
    zman Says:

    AR , not AK

    what’s boondog saints.

    market slipping back into the red now.

    RIG even finally succumbed.

  130. 130
    Sambone Says:

    “Tini time” minus 15 minutes.

  131. 131
    zman Says:

    127 …that’s just good writing.

    T – AR now but TX will always be home.

  132. 132
    Sambone Says:

    Jesus. He brought a six-shooter.
    There’s nine bodies, genius.
    What the fuck were you going to do, laugh the last three to death, Funny-Man?

  133. 133
    zman Says:

    Wyoming – agreed easy pay in L. Cotton Valley, but they are talking stacked targets over 5 or 6 sections so far and are going to expand the 3D most likely. This is very low LOE territory for them…like insanely low. The could perf all three and commingle some much bigger than normal flows for the field.

  134. 134
    Sambone Says:

    Hmmm, Market looks like it wants to go down now, eh?

  135. 135
    zman Says:

    just when I though it was up, they pull it back down! ~ the Zodfather on today’s market.

  136. 136
    Sambone Says:

    It’s all you Zman, it’s all you! LOL

  137. 137
    ram Says:

    Fast and furious program trading now?

  138. 138
    aitrader Says:

    “No, no, it’s all right, he’s just killing my alligator bags and shooting holes in my suits. Man, that’s just MEAN. That’s MEAN, man.”

    My feelings about this week’s market.

  139. 139
    Denise Says:

    Thank you Scoop
    I obviously should have continued shopping
    Well -“I’ll think of some way to get $ back After all tomorrow’s another day!’

  140. 140
    zman Says:

    Ram – looks like it yes

    AItrader – “Payback”….great movie

  141. 141
    Wyoming Says:

    Laminations are tough on a 3D, not my area of expertise. I don’t think the resolution will show that defined. All those waves bouncing around a couple of miles down would cause me my job, would be drunk all the time.

    HK, mid-con not my playground. 315 MM/d and $515 MM capex (50% of us). Hopefully it is PUD’s and not rank exploration.

    SD and HK are good. Growth will be huge, their IPO’s are not pumped like a VMW. They will be lighter on their feet and able to strike oppartunities without gathering up the committees.

  142. 142
    Sambone Says:

    Aitrader – That’s a good movie also. Love the ending.

  143. 143
    Sambone Says:

    Wow, 45 points to go with 5 minutes left, can it do it?

  144. 144
    TTupp Says:

    im trying to write my quarterly to my limited patners, i think im just going to mail out a picture of sharron epperson with an enclosed cd with soundbites of her on CNBC

  145. 145
    TTupp Says:

    ill close at the ubber support of 1450

  146. 146
    zman Says:

    W – thanks, I’m PSDM genius obviously but I thought laminations would be are to see, lol.

    S – you are rooting for the wrong side, but yes, it does look like abandon all ships. Monday morning might be interesting. Still agree that crude $100 likely next week due to opex.

    T – make sure it doesn’t sound like you’re endorsing her, lol

  147. 147
    Sambone Says:

    Tini time!!! Everybody have a good weekend, and see ya next week.

  148. 148
    TTupp Says:

    has anyone seen a crude awakening about peak oil? made my gf watch it with me the other night, she was thrilled (not). i know most of us hate peak oil (cite: 10 bbls found by PBR), but they made some valid points.

  149. 149
    Wyoming Says:

    Commingling is not a problem, becomes more involved with TRRC and other state agencies if they are from different horizons. Curious about well spacing. Easy way to add reserves and increase production. Probably not thick enough if they are not planning horizontals?

  150. 150
    TTupp Says:

    lets all pray for some geopol uprising this wekend so cl opens with a bang sunday niht

  151. 151
    zman Says:

    Have a great one Sam and everyone else…I’ll be in and out over the weekend so drop me a line!

    Wyo – they’re on 40s, testing a few 20s, looks like 20s for about a quarter of the ~ 60 wells there next year.

    T – wow, lol.

  152. 152
    aitrader Says:

    T – yes, liked the explanation of oil’s formation in part I. Very nice graphics. Have one of them on my wall.

  153. 153
    Wyoming Says:

    T,
    Saw it, good. Wikipedia has some good info on Peak Oil. “The Prize” by Daniel Yergin and “Oil” by Upton Sinclair are a couple of good reads. All you have to do is find the time.

  154. 154
    TTupp Says:

    z how to you dray your graphics?

    also, the refiners / cracks pacge only lists the regional cracks, not the 3-2-1, i want to see how todays calculation you did compares to previous weeks

  155. 155
    TTupp Says:

    *draw

  156. 156
    zman Says:

    re 154: those cracks are the 3-2-1’s for the respective regions:

    mid-con, west coast, and gulf coast are 3-2-1

    northeast is a 2-1-1 (they have more focus on HO)

    pac northwest is a 5-3-1-1

    excel for graphics or I can pull some of the cracks direct from my quote system.

  157. 157
    zman Says:

    added another set of crack spread graphs that wasn’t available earlier in the week (I had been using my back set of data which just isn’t as telling)

  158. 158
    Wyoming Says:

    Ttup,

    Forgot, a good book on Peak Oil is “Huberts Peak” by Ken Defefeyes.

  159. 159
    mimster90 Says:

    Do leaps on drys and exm make sense sometime soon?

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