05
Feb

Super Trying Tuesday

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In today's post, (APC) beats and edges guidance higher, (NFX) provides a global update and its mostly about the Woodford plus the usual odds and ends. The broad market is set to get whacked again on more weak economic data.

Commodity Watch:

  • Crude Oil rose $1.06 to $90.02 on the back of better than expected factory orders that signaled that perhaps the sky hasn't fallen on the U.S. economy just and increased Nigerian rebel action marking the five month anniversary of the capture of one of MEND's leaders. This morning crude is trading off about a $1.50.
  • early read on Wednesday's oil inventory report (from the Dow Jones survey)
  • crude up 2.2 mm barrels on the back of another 0.2% decline in refiner utilization to 84.8%.
  • gasoline up 2.0 mm "  ".
  • distillates down 1.8 mm barrels.
  • Natural Gas rose to $0.13 to $7.87 regaining about a third of Friday's loss. This morning gas is trading up another nickel.
  • Imports rose 2.5 Bcfgpd week to week.
    • Canada surged to 11 Bcfgpd which I find almost too high a number to believe.
    • LNG posted sendout volumes of 1.1 Bcfgd, the first time over the 1.0 mark in four months but was still well below year ago levels.
    • In a nutshell, the increased imports could not come at a worse time for gas prices as the weather warms up and year ago comps soar.

Earnings Watch:

APC Thumps Estimates With A Volumes Based (High Quality) Beat.

  • Reported CFPS of $3.38 easily beating expectations of $2.86.
  • Reported EPS of $0.56 but after backing out one time items the real number is $0.90 which beats Street's $0.77 number but no one should care about EPS when looking at E&P companies, especially in the fourth quarter when DD&A, a non-cash item, often fluctuates wildly.
  • 4Q Prouction of 53 MMBOE exceeded the high end of the recently upwardly revised 4Q guidance range of 50 to 52.
  • On a daily basis, 4Q volumes of 576,000 BOEpd exceeded the previously stated exit rate guidance of 560,000 BOE per day.

Guidance: 

  • 1Q volume guidance of 50 to 52 mmBOE may not wow the fans as it is down slightly from the quarter just ended. Look for an explanation of this on the call.
  • 2008: Increased to a range of 205 to 210 million barrels from a prior range of 200 to 208.
  • Cost guidance looks well in hand.
  • 2008 Capex of $4.5 to $4.7B (20% exploration). This is a 15% step up (midpoint) from 2007 levels but should easily remain within cash flow, something some of APC's peers have not been doing and have been criticized (ostracized) for of late.  

Some Very Brief Bits from the Operations Update:

Deepwater development drilling on track.

Less than wowing performance on the exploration front however with one temporarily abandoned well at Atlas Deep in Walker Ridge and one P&A at the Terrebonne prospect in Green Canyon.

Conference call today at 10 est.

Stocks of Interest Today Watch:

(NFX) Provides 2008 Guidance and Update.

  • 2008 guidance of 215 to 230 Bcfe, versus 190 Bcfe in 2007 (net of '07 divestitures) equating to growth of 13 to 21%.
  • Budget of $1.6 B.
  • Woodford Shale Continues To Improve.
    • 2007 exit rate was 165 MMcfepd gross (up from 150 in last update in October); see 2008 exit at 250 MMcfepd
    • Woodford reserves now 1.1 Tcfe, or 45% of total
    • Will spend 40% of the budget here drilling 60 to 70 wells there this year, leaning heavily toward longer laterals (3,000'+) which has increased yields and mult-pad drilling which cuts costs.
    • Latest 10 horizontal extended lateral wells cost $7 mm and yield 4.5 Bcfe, yielding F&D off $1.55 / Mcfe; once upon time the goal was to get this down to at or below $2 per Mcfe...mission accomplished.
  • Rockies: keeping on keeping on here. The regions gets 20% of the '08 budget, mostly targeting infill drilling in Monument Butte but will also test some deeper target there and the developing oil play in the Bakken.
  • GOMEX - 4-5 to deepwater wells, continued development of Power Play (APC operated) and Fastball (NFX op).
  • International - Malaysia continues develop activity towards mid year production plus a deepwater test (Sarawak) will spud later in the year. Production expectations here look a little light of what I previously understood...need to check.
  • NFX reports next week on Feb 12th.

 

(IOC) ELK 4 drilling report - Not yet.

Crack Spread Update: cracks improved for a second consecutive week in all regions save New England. I'll have the updated crack spread graph out a little later today on the refining and cracks tab.

Holdings Watch:

CALLS:

  • (RIG) - Added Feb $130 RIG Calls for average $2.80.

Odds & Ends

Analyst Watch: (DO) upgraded to outperf at Wachovia, (ACI) to overweight at JP Morgan, (POT) upped to buy at Citi, (PETD) picked up at outperf at RBC, all price targets for coal stocks jump at Lehman. 

(PBR) says it sees rapidly rising deepwater day rates.   

40 Responses to “Super Trying Tuesday”

  1. 1
    yona Says:

    *JAN ISM NON-MANUFACTURING: 41.9 V 53.0E; COMPOSITE 44.6 V 52.5E
    – Headline Figure at least a 10-year low
    – New Orders: 43.5 v 53.5 last (lowest since OCT 2001)
    – Employment: 43.9 v 52.1 last (lowest since FEB 2002)
    – Prices: 70.7 v 72.2 last
    **Note this number was released early due to a embargo breech says the ISM

  2. 2
    zman Says:

    Thanks yona, I thought it was out early…somebody is going to get to take a trip to jail.

  3. 3
    kyleandy Says:

    what is “embargo breech”?

  4. 4
    zman Says:

    Lehman raised the N.A. oil and gas industry to neutral from negative.

  5. 5
    zman Says:

    k – somebody talked

  6. 6
    zman Says:

    so a nice beat with nice guidance for APC gets you a 2% lower open.

  7. 7
    zman Says:

    Not sure what is holding nat gas up today. Nothing else is escaping the slide, dow down 190, crude down 1.90. Trading in lock step 10 points on the Dow has equaled $0.10 on crude since the open.

    PBR down $5.5 … seems a little over done.

    DRYS getting smacked.

    Energy sector getting hit for twice the broad market decline…source of funds?

  8. 8
    zman Says:

    Out for a funeral – back by 11:30 CST – will listen to the APC call on the road report back anything salient under the AAATEST name.

  9. 9
    Sambone Says:

    9:44 am EST

    Nymex Crude Slides After Weak ISM Data

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures fell back Tuesday as fears about an economic slowdown returned to the forefront and traders saw U.S. oil stockpiles swelling.

    Light, sweet crude for March delivery was recently down $1.49, or 1.7%, at $88.53 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange had fallen $1.54 to $88.93 a barrel.

    An earlier slide accelerated after data from the Institute for Supply Management showed U.S. business activity in the non-manufacturing sector contracted in January for the first time in 58 months. Analysts had predicted a slight increase in activity in the sector.

    The data followed Monday’s release of figures showing factory orders grew a tad more slowly than expected in December.

    “Clearly, on top of yesterday’s factory orders, to see the non-manufacturing sector down, in this case for the first time in close to five years, is definitely catching traders’ attention,” said Peter Beutel, president of New Canaan, Conn.-based energy risk management firm Cameron Hanover.

    Oil futures are now trading about 12% off their all-time intraday high of $100.09 a barrel, reached Jan. 3. Selling pressure has mounted along with concerns global oil demand will cool on the heels of a U.S. slowdown or recession.

    Adding to pressure on oil futures, analysts see U.S. crude inventories growing in U.S. Energy Information Administration data due out Wednesday at 10:30 a.m. EST. The average estimate among 10 analysts surveyed by Dow Jones Newswires is for crude stockpiles to have grown by 2.2 million barrels in the week ended Feb. 1.

    Gasoline stockpiles are seen building by 2 million barrels, while stocks of distillates, which include diesel fuel and heating oil, are seen falling by 1.8 million barrels.

    “We will look for some price consolidation today, mainly within yesterday’s trading range as the market awaits further guidance from tomorrow’s weekly EIA statistics” and other economic data, Jim Ritterbusch, president of Ritterbusch and Associates, a Galena, Ill. energy markets advisory firm, said in a research note.

    Front-month March reformulated gasoline blendstock, or RBOB, was down 4.67 cents, or 2%, to $2.2650 a gallon. March heating oil fell 4.00 cents, or 1.6%, to $2.4433 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  10. 10
    doc Says:

    HP has been strong for a month. could be a takeout. Being small they are a potential for a Blowout Surprise.

    ANBODY FOLLODW HP????

  11. 11
    doc Says:

    Ridgeland, MS, FEB 05, 2008 (EventX/Knobias.com via COMTEX) — Lehman upgraded the North American E&P industry to Neutral from Negative citing natural gas prices in the near term. This morning natural gas is trading above $7.90/MMBtu. The Stock Traders Almanac reports a bullish seasonal pattern for natural gas shares from the end of February through the beginning of June with an average 10-year gain of 18.6%. After the close on Monday, Anadarko Petroleum (APC) reported Q4 EPS of 56c, below the consensus 77c estimate. However, the company lifted its 2008 oil and gas production guidance for 2008.

  12. 12
    Sambone Says:

    Uncle Phil

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

  13. 13
    zman Says:

    Thanks Doc, except for 11 it implies the company missed which is patently false. Therein lies the danger of reading press headlines and even the blurb sized stories.

    I’d like to say good to be back but holy cow! Dow down 280 and the rest of the market blood red.

    Listened to the APC conference call on the road, pretty interesting stuff for the Rockies going on, deepwater plans remain unshaken by the 2 dryholes in the quarter. Of course, the beat and the company’s prospects don’t matter on a day like today.

  14. 14
    zman Says:

    UBS reiterates Buy rating on NFX after that update.

  15. 15
    zman Says:

    Nat gas up a dime on yet another cold blast coming into the central U.S.

    http://www.accuweather.com/news-story.asp?partner=accuweather&traveler=0&article=2

    Meanwhile in China…Coldest Winter in 100 Years.

    http://www.accuweather.com/news-story.asp?partner=accuweather&traveler=0&article=4

    They are critically low on coal so when this weather abates look for coal prices, coal stocks, and drybulks capable of bearing coal to rally.

  16. 16
    scoop006 Says:

    Z #15 any names that you like where we can take some march calls

  17. 17
    Nicky Says:

    Afternoon all. SPX hit 38% retracement of the rally at 1347. 50% retracement would be 1335.

  18. 18
    zman Says:

    For Coal:

    BTU is the biggest player overall and most leveraged to a China resupply event with its Australia mines. Also, on their 4Q cc, BTU indicated that they did not have nearly the damage in Australia from recent monsoon activity that some of their competitors suffered. On the earnings front, the Street is looking through last quarter’s miss and the weak looking 2008 guidance with eyes on the longer term.

    Also for coal, the new KOL etf could be interesting but not for options.

    For drybulks, I’m long the DRYS and DSX and would think about owning some EXM here.

  19. 19
    zman Says:

    APC did comment that deepwater rigs were still tight, prices moving higher, on the conf call. Add that to a PBR comment about seeing prices rise near term for these rigs and you’ve got to think a turn is due soon but as the Dow is hitting new lows it probably won’t be today. I still haven’t found a thing on Cramer’s cost creep problem. Of course costs are going up in a tight labor market but are they outstripping revenue growth, which is going up on a daily basis? I haven’t seen evidence of that.

  20. 20
    kyleandy Says:

    does the spot mkt affect RIG or are all their rigs under long term contract?? i got the same thing u just mentioned out of APC’s call deepwater prices were rising!! just bot a little more RIG

  21. 21
    Bob Says:

    z- re#19: You mentioned an interest in EXM. Do you think EXM’s proposal to purchase QMAR is in jeopardy? At a takeout of 0.4094 EXM share plus $13 cash, QMAR is trading at a 19% discount to the takeout offer. I have been in and out of QMAR a few times successfully since the offer

  22. 22
    zman Says:

    K – its really all long term stuff with options for more time and maybe a slightly reduced price for their rigs. Generally 6 months and up.

    Bob – I don’t think its in jeopardy…at least have read nothing of the kind…that is a huge arb, nice catch. Definitely better way to play than EXM. Will send out a feeler on potential for busted deal.

  23. 23
    zman Says:

    Morning Nicky, so you think the S&P bounces from 1335 later this week then?

  24. 24
    Nicky Says:

    1360 turns from support into resistance on spx. Its gonna take a move back above here to signal a short term low in place.

  25. 25
    Sambone Says:

    K – Fleet update just came out today. Take alook.

    http://www.deepwater.com/fw/main/Fleet_Update_Report-58.html

  26. 26
    zman Says:

    thanks for the headsup Sam

  27. 27
    Sambone Says:

    Z – I’ll be on a conference call with Blackrock’s energy team at 8:30 am EST on Wednesday. Any questions you want me to ask? If so let me know by 4 PM today. I believe you’ve got my office e-mail or on this blog is fine.

  28. 28
    Nicky Says:

    Dow has support at 12250 – 70 area.

    I am expecting a bounce but difficult to know from what area Z. It is not out of the question that this move could test the lows although I would be surprised.

  29. 29
    zman Says:

    Thanks Sam will have 1 or 2 in a bit.

    Looking at the RIG list as you run down the columns at right the upgrade in those prices is enormous just like it has been the last several months. Getting more common to see $500,000 per day in the ultra-deep segment, and 400s and 500s in the deep capable segment. Also, if you scroll down to the bottom of the report, the standard jackup rates are creeping up which proves up what we’ve been hearing from ESV and others that the GOMEX shallow water rig market is tightening back up. All in all very positive.

  30. 30
    zman Says:

    Sam – my top question would be their thoughts on long term natural gas prices. We know domestic supply is growing. With a large build in international liquefaction capacity scheduled for 2008/09 and a significant 2H08 increase in regassification in this country, do you see a flood of formally stranded volumes causing a glut later this year and especially into 2009 or does Asia a home for much of the new volumes. Does Canada finally decline to the point that new LNG volumes are simply keeping the imports picture status quo?

    that’s wordy for a cc but I’d be interested in their take maybe with just the question being barring weather influences, how do you see prices over the next 1 to 2 years with eye on both domestic production and import volumes?

  31. 31
    Sambone Says:

    Z – Will do. If anybody else wants me to ask a question, just let me know.

  32. 32
    dmh Says:

    Nicky:

    Re wave count. Looking at the S&P and the Naz Comp, on this recent rally neither of them went above the bottom of wave i (or A) ending on 11/26 from Oct high, and the DJI just went above it a small amount so the move up from Jan low can be counted as a wave iv in a 5 wave move from Oct high.

    Agreed 1320-1335 is key Fib support on this wave down otherwise we can fall below the Jan low in a wave v.

    So I think we can still be in a B wave up from Jan lows or in a wave v to new lows

    What do you think?

  33. 33
    Alhambra Says:

    Anadarko ceo on cnbc

  34. 34
    Jonesey Says:

    Z RE #15, this map paints a more ominous weather picture heading into the tail end of the week.
    http://www.accuweather.com/news-story.asp?partner=accuweather&traveler=0&article=7

  35. 35
    zman Says:

    Jonesey – very true, very ominous, NG up a dime today, just under $8. Makes those tough comps easy to swallow after this week and next’s smaller draws.

  36. 36
    zman Says:

    A – Thanks for the headsup on APC on tv. just rolled that back on the DVR. Hackett handled Radigan very well. Radigan has no idea what he’s talking about and the lead in was misleading to the average joe just tuning in.

  37. 37
    Dman Says:

    MACD on the daily RIG chart looks like a good long setup.

  38. 38
    zman Says:

    only slightly tempted to bottom fish today and that’s not enough to make me pull the trigger with this schizophrenic market. Things like APC, NFX, PBR, RIG, BTU on these sized losses would make sense. Wow, FSLR down 14 now. DRYS off nearly 5.

  39. 39
    TTupp Says:

    z- re rat-again. he is clueless. he thinks hes knowledgable & carismatic, but in actuality he steals buzz words from smart guests and recycles the hell out of them for like a week- out of context and all.

    like ive always said: Dylan ratigan is the Rachel ray of cnbc

  40. 40
    zman Says:

    T: ouch. One of the many problems I have with the CBNC concept as a whole is that they put analysts and reporters on the same level and don’t designate who is who. I suggest they tattoo guys like the Rat with a mark, something like the little AOL running man figure and a cliff, on the “reporters” heads. That way, the average guy knows to take anything out of their mouths with a grain of salt.

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