01
Dec

Wrap – Week Ended 11/30/07 (in progress)

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Commodity Watch: 

  • Oil had its worst week since Spring of 2005 as seemingly bearish OPEC comments, a lackluster EIA inventory report, and increasing fear of an economic hiccup weighed heavily on traders minds.

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  • Natural Gas. It's cold...so what?! The reporting week was colder than year ago comps but not cold enough to overcome rising production and a large contango between the front and second months. The 12 Bcf withdrawal fell short of expectations of 20 Bcf and was well off year ago levels of 27. One would have to surmise that were oil to take a larger swoon natural gas would be headed to sub $7-land muey pronto due to a combination of sympathetic trading and rising gas volumes as the natural gas liquids arbitrage slims down. 

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Gas Rig Count Jumped 39 Last Week.  

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Tool That's Too Cool For School Watch. Baker Hughes has launched its much anticipated interactive rig map tool. Detailed rig by rig information avaialbe here. You can kill more time with this thing than with a game of Risk. If the following screen shot bleeds of the place click it to open in a separate window. The red dots are active gas rigs, the blue are oil and the handful of greens are geothermal.

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Take it for a spin here.  This is going to be quite handy in track the progression of both new and older plays, especially if you're doing a little sleuthing on a small cap E&P 

Equities Watch. I'm starting to like the action amongst the energy groups a little more as they have started to take the attitude that for most issues they never discounted $90+ oil prices before so why should they tumble to the same extent oil does now. Note that the oil laden XOI was flat on the week despite a 10% drop in crude. The gassy XNG slipped 1% but again, that's highly palatable when you note the 9% drop in natural gas. While it's true enough that the broader market bounce helped buoy energy, its good to see that a 10% drop in crude was not met with the same kind of reception that has greeted other sectors when their key metrics have peaked or tumbled.

tune back in later in the week...more to come... 

6 Responses to “Wrap – Week Ended 11/30/07 (in progress)”

  1. 1
    zman Says:

    bill, I agree with your comments re the bulks and after patiently waiting for you to change your direction on the tankers will start delving back into the analysis there. I think I have the VLCC rate sites on my main box but I’m on my laptop for the weekend. Can you forward a site similar to the ones for the baltic indexes except for tankers and also for lng rates as well? Would be a big help.

  2. 2
    zman Says:

    From Bill posted on Saturday

    I’ve beeen away nursing my wounds and trying to find sanity. Obviously i lost my ass as i rode this down from 130 to 70..BUT I WONT CAPITULATE!!

    drys market cap is 3.4 b, 2008 ebitda is forecast at 1.b so its trading at 3.4 x cash flow. I ‘ll leave that up to you whether thats good or bad. The ceo on cnbc said on friday that they are making 3 m per day.. do the math 3 * 365 is what???

    http://www.dryships.com/ir.cfm

    this site you can see so video interviews

    Tanker rates have finally expolded to the upside..its too late too help q4 pl but there are some good values there.

    One being topt tankers. (TOPT) They will have a q 4 loss.

    They will have a secondary next week probably priced at 4. After thats out of the way , i expect this stock to quickly be in the 5.s and if you hold a year 7 to 10.

    they are buying 6 dry bulkers. The 6 ships will generate 95 cent per share in cash flow. so at 4.40 you are buy the dry ships cash flow at 5 x and getting the rest of the company 20 ships for free.

    I attended the companies road show in boston on friday and talked to their ceo.

    You might be able to niblle at this at 4.20 or so as the pricing will be announced on tuesday after the market closes. I expect 10 % below current market price.

    Net asset value after the offering will be 7.04 per share.

    another good one is NAT if you like dividends,

    TOPT is not paying a dividend and is a growth stock. So if you want lt cap gains buy topt. if you want a 10 % yield by nat. I love TNP management and i think they are a good buy as well.

    In summary

    topt 100% return in 1 to 2 years
    Nat 10 to 15 % returns
    tnp 15 % return
    ————————————-

    drys 50% return

  3. 3
    kaman Says:

    Lets see if this works…
    http://tinyurl.com/38ubbm

    Forbes article from Friday re: Drybulk outlook. I keep reading about the reset in iron ore prices this coming Spring.

  4. 4
    jazzkool Says:

    Z, Cramer says he likes Diana Shipping (DSX), and someone said it was a buy on Fox Saturday morning programs. Of course, I put no stock in what they say on those FOX shows. It’s almost like they have to come up with some recommendation, or the Fox shows won’t have them back.

    Any thoughts?

    Jazz

  5. 5
    QUARRYMAN Says:

    VMC, 15% return on equity in one week. Just catch it

  6. 6
    bill Says:

    you can track daily tanker rates at this site

    http://www.intertanko.com/
    then click on research & projects

    I post the daily number into an excel spreadsheet

    for suezmax rates the rates for October was as follows:

    3-Oct 21,150
    4-Oct 18,477
    5-Oct 18,110
    8-Oct 17,996
    9-Oct 17,074
    10-Oct 17,090
    11-Oct 16,915
    12-Oct 16,399
    15-Oct 16,301
    16-Oct 17,838
    10/17 24,759
    18-Oct 26,296
    10/19 29,797
    10/22 30,531
    10/23 30,847
    10/24 31,724
    10/25 32,009
    10/26 30,362
    10/29 29,969
    10/30 29,750
    10/31 29,758

    avg oct 23,960

    for November they were:

    11/1 29,178
    11/2 29,551
    11/5 29,034
    11/6 29,279
    11/7 28,570
    11/8 23,514
    11/9 19,176
    11/12 19,571
    11/13 19,793
    11/14 18,982
    11/15 19,648
    11/16 22,195
    11/19 21,944
    11/20 23,000
    11/21 25,000
    11/22 26,197
    11/23 37,867
    11/26 40,830
    11/27 55,141
    11/28 72,288
    11/29 75,881
    11/30 75,961

    33,755

    Notice what happened over the last 2 weeks. They went up from 19 k per day to 76 k per day.

    The rates (while nice) wont positively impact q4 results as there is about a 2 week lag. So Fridays 75 k per day will only be earned for the last 2 weeks of december.

    This is will help q 1 numbers.

    As I said before, Topt will report a q4 loss, as they changed their accounting method for accounting for drydock expenses. But going forwaard, q 1 and beyond they will be reporting profits.

    4 reasons:

    1. Change in accounting method.
    2. better tanker rates
    3. Impact of the 6 new dryships
    4. higher utilization of fleet will result in more operating days at a higher average rate per day.

    This is the cheapest tanker stock out there trading at 35 to 40 % discount to the value of the ships.

    Nat, another name i like is 100 % spot market and they pay out 100 % of their cash flow. book is about 30 and the stock is about 35. They should pay out at least 3.50 bucks in dividends in 2008. So you get 10 % yield with maybe another 10 % to 15 % on the price of the stock for a 20 to 25 % annual return

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