04
Apr

Friday Afternoon Post & Weekend Wrap – Week Ended 4/4/08

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Holdings Watch: Here are this past week's closed trades, subscribers can go to the Holdings Page and Holdings Wiki page for recent additions.

  • (HK) - Out the remaining April $20 calls, 100%, we sold the first half of this position last week, up 94%
  • (HAL) - Out of our remain April $37.50 calls, 181%, we sold the first half last week up 110%
  • (DVN) - Out of the April $105 calls, up 42%
  • (NBR) - Out half the NBR April $35 calls, up 116%

Holdings Wiki Page is Updated (subscribers only) as is the Holdings Page with performance details (subscribers only). 

Want to learn what you get with a subscription? Click here
 
 
How do I sign up? Click here. 

Jefco & JAG Notes Commenting That Rumors Are Swirling Of HK Takeout. I even hear there's a contest on who the acquiring company might be. Hmmm. Here's a Reuters story talking about the pick up in trading activity surrounding these rumors. Of course, the trick is to be thinking along these lines before the mainstream media gets a clue. We've been a fan for quite some time and in and out of the name on numerous occasions but adding to positions since the company's analyst meeting on March 12th, even though the analyst community was very ho-hum/sleepy during that meeting and only sat up and took notice once (CHK) said the Haynesville was the new sliced bread of shale plays. Speaking of (CHK) I'll have more details on the reasoning (or lack thereof) behind JP Morgan's downgrade of the shares in the Monday post.

Z-Contest For HK Acquisition: Subscribers occasionally get a free ride. Pick the acquiring company of Petrohawlk (HK) and get a free month quarter of Zman. That's a $179 value, or 50 lattes, or 2 tanks of gas. How can you pass that up? Stipulations are one guess per customer, (HK) must be acquired within the calendar year of 2008 (just trying to limit my liability here), you must of course already be a subscriber, and your pick needs to be sent along in the comments section of the site (no emails please as we try to live in the land of transparency around here). Here's the list so far:

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The Weekly Wrap - Rock Star of a week.

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1) Equities Watch: In short, gas E&P's have been the place to be. See the first red circle above and note the divergence of (XNG) - (gassy stocks) relative to the (XOI) - (oily) and the (OIH) - (oil service). Thankfully, luckily, or skillfully, this has been our focus for quite some time. 

2) & 3) Natural Gas Beginning To Retreat. In short, natural gas made a second top (double top?) for the season this week, driven higher at first by oil, then by momentum but softened as the week drew to a close after another in line to slightly smaller than expected storage withdrawal was record. Here's a link to Thursday night's gas storage and supply review.


 

Have a great rest of your weekend everyone!

 

25 Responses to “Friday Afternoon Post & Weekend Wrap – Week Ended 4/4/08”

  1. 1
    js1 Says:

    Z,
    Very new sub here. Suppose i can make an HK guess for the heck of it, just in case it doesn’t make it to Mon. I’ll take XTO, SWN, EOG (first one on the list that isn’t taken-wait i see xto and swn are taken).

  2. 2
    zman Says:

    js1 – welcome! Gotcha for EOG

  3. 3
    ellwodo Says:

    I’ll go for CVX

  4. 4
    offthepathh Says:

    I’m going to go with PETCO.. I know it’s a private company, but there’s nothing in the rules about that. So make up a symbol.

    I figure PETCO and petroleum make a good fit and HK has hawk in it’s name which is good for a pet store chain.

  5. 5
    zman Says:

    Got CVX for ellwodo

    HK post close – lot of traders around and some above $22. Last sale was 21.22. Was Cramer yammering about them or was there something else post close?

  6. 6
    ellwodo Says:

    HK – I haven’t seen anything. Reuters ran a story on the rumors and large option buys, which may have made it all more “official”. (Optionmonster.com got a lot of ink with their comments.)I’m with you on the June 22.5s. From my viewpoint the perfect scenario would be a buyer, but anyone other than CHK.

  7. 7
    zman Says:

    Najarian citing huge call volume in HK. Others talking CHK as the buyer but you’d that stock would have seen more put volume than it did, just a few hundred puts compared to 10’s of thousands of calls in various HK strikes.

  8. 8
    jy Says:

    I’ll take Apache in the HK acquisition contest. No other reason than large independents tend to “herd” and they could use some USA resource plays in their slide shows. That Canadian British Columbian Ootla shale play they are in could be years to market if it works. At least they get a long winter drilling season there!

  9. 9
    zman Says:

    Gotcha JY … I think you’re in a tie with Ram’s APC for best pick along those “need to add a U.S. resource play lines.

  10. 10
    zman Says:

    wrap started on this post, just hit refresh.

  11. 11
    PackMan Says:

    Thanks Z for the response yesterday re: UNG. Sold the Apr 45’s today for 1.40.

    Will look to re-enter something on a spike up, if there is one.

    Who’s left in the HK contest ? I’ll take whoever is left.

  12. 12
    texana Says:

    there is a thought that just keeps coming to me about chk/hk. if they have the best research people as aubry said that they do & this play is better than the barnett, can u really afford to let someone else buy 50,000 acres in the heart of the play. another factor is that this whole area is a giant layered cake of hydrocarbon reserviors & with expotentional advancements in technology more of these will be productive in the future. they r in play now & many cos will be looking @ this weekend & coming up with a # that they think it is worth & if they can afford not to take them out. also this play is different than the barnett because the barn did not have previous production & large tracts of land wrer available. the general swath of this play is overlaid in la. &tx by production, so a very large portion of the play acreage will be held by production (hbp) & not available. so u have to buy the hbp co r get a farmout which ruins the returns. this is one of the reasons i like all the domestic e&p cos so much. this is the low hanging fruit that is fixing to get picked with all the $100 boe money. my favs: clr, wll, dvn, eog & sd. if chk does not get hk in a bidding war a say that they take out sd. musing of a late nite o&g trader. hey congrats on all ur new subs ,starting to get fun. thx tex

  13. 13
    scoop006 Says:

    Z- Won’t the stock price of the (HK)acquiring co. decrease on any announcement

  14. 14
    Jay Reynolds Says:

    Tex,

    You wanna have fun, get an Easton’s Type Log for the ArkLaTex. Talk about a Layer Cake… get the colored variety, still avail through the successor to Globe Map Co., which bought their oil field archives in Shreveport, (318)424-6369. : )

    JR

  15. 15
    zman Says:

    Scoop – yes 9 times out of 10.

  16. 16
    scoop006 Says:

    Re #15, so if word leaked out that CO.X was buying HK, one would expect significant put volume: See CVX for Friday

  17. 17
    zman Says:

    Scoop – interesting, wouldn’t dent CVX’s stock price due to size differential … unless CVX takes out CHK. Now that’s a deal that makes sense.

  18. 18
    T-Tupp Says:

    bad week to take a vacation…

  19. 19
    zman Says:

    …its never a good time so when I do go, I just go.

  20. 20
    zman Says:

    first iteration of the quarterly calendar is on the calendar tab

  21. 21
    texana Says:

    z, maybe u could kind of do an update of e&p cos & other possible takeover cos. i’m sure u saw pete on fast money about hk, which was probably the late spike on hk price. i remember in the 80’s when t boone made a play for gulf , he didn’t get it but all the independent cos made a run & many were purchased . there is starting be a little urgency as we get closer to the end of w’s term. oil bashing will start to get popular again & hard to do a deal. most of the e&p cos don’t have any retail or refining so that helps on the antitrust issue.it would seem the most sought after cos would those with production and large acreage positions in the emerging unconventional plays. which is basically all the e&p cos we discuss all the time. once it starts i would expect it to accelerate quickly. we may not get a large pull back on these cos during the pull back in gas prices that normally happens this time of year. if it starts with the smaller e&ps (hk,pq,rrc,crzo,clr,kwk) i would expect a quick move to grab the real jewels dvn,eog,apa,xto,nfx &apc. if china or india makes a move on 1 of these, it will get real interesting. with apa the foreign co could even spin off the us ops & still be happy. watching volume and options for a sign of a move. i bet it starts pretty soon ,but i’m usually early. musing

  22. 22
    zman Says:

    Tex – good musings as usual. I think we are a little overdue for some consolidation in the upstream arena. I think we see a major take out a large cap gassy E&P and some large cap gassy E&Ps take out a few of the mid caps. Amongst the E&P mergers, I’d bet on companies with undervalued reserves (something I’ll take a look at this week) with moose pasture in and around the hot resource plays like you’re saying. Hard to play individual takeouts with options as they always take longer (if they happen at all) than you think but a continue swelling of the group is likely with a spike up after the first one transpires. If I were an E&P in the hunt I’d want to go sooner rather than later to take advantage of current elevated prices (especially on nat gas) and hedge up whatever production of the acquired is not already hedged at the time of the deal for the next 2 years. Shareholders would breath a lot easier with the capital budget of the new assets guaranteed that way and you can always use costly collars with a high ceiling so you don’t give away a future upside move. Just so late night musings of my own…more on this later and remind me if you don’t see by Wednesday.

  23. 23
    Jay Reynolds Says:

    Re 12

    I’m not so sure that acquiring acreage via farm out ruins the economics. The standard, as far as I know, is to assign a 75% net revenue interest. This is the same as the co would get with the 25% royalty interest they are offering around here.

    Incidentally, bonus money offering rates are up to $3,000/ac from $475 three weeks ago.

    JR

  24. 24
    Jay Reynolds Says:

    Looks like all they have is heavy in excess…

    Saudi Aramco Releases May Crude Prices for Asia (Table)

    By Nesa Subrahmaniyan and Dennis Ting

    April 7 (Bloomberg) — Saudi Aramco, the world’s largest oil company, released prices for its crude oil for export to Asia in May, said Asian refinery officials who received a notice from the company.

    The following table gives the differentials in relation to benchmark prices, the month-on-month change and the degrees of gravity as defined by the American Petroleum Institute. The prices are in U.S. dollars.

    Variety API May April Change
    ————————————————–
    Super Light 50.6 7.05 6.35 0.70
    Extra Light 38.5 5.25 4.45 0.80
    Arab Light 32.5 1.45 1.05 0.40
    Arab Medium 31 -3.15 -2.75 -0.40
    Arab Heavy 27 -7.00 -6.10 -0.90
    ————————————————–
    Saudi Aramco’s crude oil prices are determined by destination, with prices for its Asian customers expressed as a differential against the average of Oman and Dubai grades, the two Arabian Gulf benchmarks used by Asian oil traders.

    To contact the reporters on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net; Dennis Ting in Singapore at dting@bloomberg.net

  25. 25
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