07
Apr

Monday Morning – More of the same please!

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Last week was a fantastic one for performance, as was the week before that and this week is unlikely to be as strong although Monday's futures for the equity markets and oil and gas are very strong. I'll be exiting more April positions this week as we are now two weeks from expiry and I want to start positioning a little more earnestly for 1Q results with May or longer dated options.   

Commodity Watch

  • Crude Oil: ended last week slightly higher at $106.23 despite a much bigger than expected (at least by the Street's forecast) build in crude stocks. Crude was pushed higher mid week by a large draw on gasoline stocks and later in the week by a fire at the XOM operated Torrance, CA refinery which forced the shuttered of a hydrotreater (think desulfurization of gasoline and diesel which could catalyze TSO for a trade).  This morning oil is trading up $1.50 despite a small bump in the dollar. 
  • Natural Gas: fell 5% last week to close at $9.32 and I added another set of UNG puts (now holding April $45 and $44s). This morning gas is trading up 20 cents (moving with oil in the overnight session but also with a colder than expected week last week-see below) but I am unswayed in my thinking that a test of  $9 and then quite probably $8.50 is in the very near term cards. 
  • Spring Easy Comps On The Way. This week's storage report comes up against a 33 Bcf injection last year and we will most likely see the YoY storage deficit grow slightly. After that however, the weather got cold last year and the comps will become much easier to start gaining ground against. 

 ng-easy-comps-040608aaa.jpg

  • Weather Watch:
    • Heating degree days for last week came in at 124, once again higher than the 107 previously forecast by the CPC. CPC really needs to recalibrate their degree day forecast model, 
    • This should probably yield the last storage withdrawal, (around 10 Bcf)
    • This week's forecast calls for HDDs to further fall to 86 which is well below last year's 160 HDDs which yields that 26 Bcf withdrawal in the graph above.

Calendar Watch: The first iteration of the 1Q08 calendar can be found by clicking here or the calendar tab at left. This is by no means a comprehensive list but it does include many of the names I pay attention to each earnings season. It's early so not a lot of dates yet but I'll be updating it as we get a little closer to the heart of the season.  At this point it looks like solars (ESLR) and (SPWR) lead off on the 17th followed by the first hyrdocarbon related company, (SLN) on the 18th but many dates are still not out. E&P land looks to be centered around the last week of April and first week of May. 

Conference Watch:

  • IPAA OGIS New York (April 7-9) (Independent Petroleum Association fo America, Oil & Gas Investment Symposemum. Semi-annual meet and greet which puts a lot of mid-sized and smaller E&Ps in front of fund managers they may not often see. Here's a list of the presentations I plan to listen to:

ipaa-ogis-040708.jpg

  • Howard Weil Energy Conference goes on through Thursday. Everybody who's anybody in oil and gas and oil service goes to this one. No list on this one as there is so much going on I just set the news scroll to energy and wait for any important announcements from the headline to fly by. Generally there are a handful of significant announcements that come out of this conference.

Stocks We Care About Today:

Deepwater Drillers: (DO), (RIG), (NE), (maybe (ATW)) among the names most likely to benefit from a stepped up capital budge at (PBR).  PBR plans to spend $15 billion in an effort to double production from 2 mm to 4.15 mm bopd by 2015 in response to increasing demand from Asia. (RIG) also announced a 5 year year contract for its ultra-deep capable drillship Dhirirubhai Deepwater KG2 for $928 mm, or $508 per day beginning in 2010 ... another solider long term contract which speaks to the tightness of rig availability in the 7,500+ water depth market.

Coking Coal Producers. BHP Billiton Seeks To Triple Coking Coal Price to $300 per ton. Analysts had been widely anticipating a double of rates so this will be welcome news to other producers Rio Tinto (RTP), (BTU), (ACI).

(APC) Punts Venezuela. (APC) sold its acreage to largely Lundin owned PetroFalcon for $200 million ... Good riddance given the utter lack of reliability of the current regime.

Joe's Broken RODD Watch: Ok, I've read both reports JP Morgan had out in the last 2 weeks on Chesapeake and there's something of a divergence there.

  • Haynesville JPM Report Nothing But Roses... The first report focused on the Haynesville Shale and said CHK was buying acreage for $10K per acre which is like low end fairway/core Barnett pricing. JPM went on to estimate this acreage was probably worth $40K to $50K per acre. It went on to say that based upon drilling costs of $5 to $6 mm per well (which will come down in short order) and reserves per well of 5 Bcf (which they think is conservative) the program yields a program IRR of 100%. Ok, so we're buying something for $10K that's worth $40 or $50K. That's not a bad idea in my book.
  • ...One Deal Later & JPM Downgrades CHK. But then I read the downgrade of CHK by the JP Morgan analyst, let's call him Joe, after CHK's secondary. This piece uses a metric called Return on Drilling Dollars (RODD): RODD includes the cost of acquiring the unproved acreage as well as exploration and development of the wells. So basically all in costs. But RODD only counts "proved developed reserves"...not all proved reserves. The PUDs which surround existing wells are left out ... so anyone growing acrage in a play like this is penalized. That resulted in the analyst calling CHK financially undisciplined and one of the least efficient operators in the E&P big cap universe (simply an untrue statement and good luck ever being in one of their deals). I too can gerrymander a ratio or metric to highlight or shame a company 
  • So the 2 JPM reports (by two different analysts) are not exactly coming to the same conclusion. The gerrymandered metric of RODD shows a return of 4% since it counts all the costs but none of the PUD (proven undeveloped reserves) that results from those same dollars. Since the calculation does not seem to correlate to stock price appreciation (at least not for the first 19 years of CHK's life as a company) I'd say Joe's RODD is broken, or at least lacking in significance.

(KWK) Announcing Canadian Shale Play. More details to come. 

Odds & Ends

Analyst Watch: (SLB) initiated as a Buy at UBS, Cantor trims their price target for (EGLE) by $2 to $34, otherwise pretty quiet. 

146 Responses to “Monday Morning – More of the same please!”

  1. 1
    reefguy Says:

    IPAA- what time and day is TXCO?

  2. 2
    Sambone Says:

    Nymex Crude Up On Technicals, Dollar In Focus

    DOW JONES NEWSWIRES

    [Dow Jones] Nymex crude is higher, building on Friday’s rally as technical factors push the contract higher. Last week’s low below $100/bbl completed the bull market correction down from the all-time high of $111.80/bbl, and crude is headed for “one final leg up to another new high,” says Walter Zimmerman at United Energy. Oil markets continue to focus on US dollar movements, though the currency is higher this morning. Nymex May crude +$1.17 at $107.40/bbl.(hyunyoung.lee@dowjones.com)

  3. 3
    Nicky Says:

    Morning all

    Frankly I am boggled by energy’s performance in the last few days. If someone can give me a fundamental reason for this massive surge in distillates this morning alonge I would love to hear it. All week they spout the $. Well that is up today so that argument is out of the window.

    Both possible bearish counts are now almost out of the window – both distillates and brent crude have taken out their 108.22 equivalents so it appears crude will do the same imminently. In which case we are in v up having had a very short iv.

  4. 4
    zman Says:

    Morning Reef – TXCO 1:35 Est today

    Nicky – broken hydrotreater on the west coast is the excuse I see.

  5. 5
    reefguy Says:

    z-thx

  6. 6
    zman Says:

    TSO cut to neutral at Credit Suisse. Talk about a day late and 20 dollars short, I’m starting to warm back up to the name for a long trade.

    Oil is on fire, up 1.90 and topping 108 on the HO strength…gasoline still not keeping up.

  7. 7
    zman Says:

    Natural gas up $0.30 as it bounces with crude. Will watch closely obviously and may or may not add to UNG puts. If I had they are likely to be Mays.

    Nicky, got any levels for us on NG?

  8. 8
    Nicky Says:

    Excuse being the operative word methinks. Total speculation – how they didn’t conclude this market was being run by speculators I just don’t know.

  9. 9
    Nicky Says:

    Z – nat gas is even more bizarre. If it takes out 9952 the bullish count looks viable.

    Resistance is at 9.621 and 9.7. Support is at 9.485 and 9.460

  10. 10
    zman Says:

    Thanks Nicky – glad to have you back from vacation.

  11. 11
    isleworth Says:

    Houston ship channel closed because of fog, Coast Guard says

  12. 12
    zman Says:

    Thanks Isle.

    Link to PQ call:

    http://www.investorcalendar.com/IC/CEPage.asp?ID=126679&CID=

  13. 13
    uop Says:

    Z:

    look at HK

  14. 14
    zman Says:

    HK = 52 wk high, no other news though.

  15. 15
    uop Says:

    Z;
    HK calls, wait longer,

  16. 16
    zman Says:

    Uop – I’m in 4 sets of calls now.

  17. 17
    uop Says:

    Z:
    i am in
    may
    may25
    jun20
    jun22.5

  18. 18
    zman Says:

    ZTRADE: Entered May $20 PQ calls for $1.05.

  19. 19
    zman Says:

    I have enough HK for now.

    CHK up a buck … people are agreeing that the JPM call was sour grapes.

    May lose the SU calls in here soon, hopefully above $105.

    APC doing nicely …today’s news was a small deal but it speaks to financial discipline.

    COP over $80. Somebody asked me the other day if it could get there and I said yes…there you have it.

    HAL up another buck plus as I failed to reposition and I’m not chasing.

    NBR moving on up and looking at $36 now which is a full fledged break out. I’ll turn lose of the second half of my April 35s soon.

  20. 20
    isleworth Says:

    Chesapeake Energy CEO bought 500K shares at $45.75. Aubrey bought on that downgrade šŸ™‚

  21. 21
    zman Says:

    CLB breaking out of its range now… this is one of the plays that will greatly benefit from an acceleration in US and a re-acceleration in Canadian gas drilling. Unfortunately, the option spreads are massive…looking for an entry but it may take a little time and testing of the waters.

    Isle – Aubrey can’t stand that analyst. After listening to them fight on the 4Q conference call I can say that the analyst is off base and his argument regarding reserves is not well regarded by other analysts.

  22. 22
    zman Says:

    HK hit 22.08 before backing off a bit here…this one has a clock ticking for the easy profits and although it goes higher, in my opinion and ultimately gets taken out much higher, once the current rumor fades a lot of new “fast” money that doesn’t know a shale from a coalbed will be running for the exits … unless they go ahead and get sold.

  23. 23
    zman Says:

    Starting to look like Friday again for natural gas.

    Oil goes up, then gas goes up. When oil retreated intraday, natural gas sold off and could not recover even when oil went on to new highs for that day. Oil is now up $2.50 and gas looks mired at $9.60 +/1 a few cents.

  24. 24
    zman Says:

    NBR crested $36 … runaway group now getting a bit near term overbought.

    TLM back from the dead and approaching $20.

    EVEP presenting at IPAA at 10:30 est, will give a listen Denise and others interested here. http://www.investorcalendar.com/CEPage.asp?ID=126683

  25. 25
    Sambone Says:

    Off subject – I’ve always wanted to see the hand signals from the pits.

    http://www.nytimes.com/interactive/2008/04/07/opinion/20080407_TRADING_GRAPHIC.html#step3

  26. 26
    uop Says:

    z:
    my rule is;
    sell 1/2 when you have 20% + profit,
    you do ths same,

    HK falls into this category for me.

  27. 27
    zman Says:

    Uop – For me it varies from stock to stock as they all have different trading personalities. On 100% + gainers I generally will lock in half and play with house money on the remainder when the momentum of a move starts to wane or its done better than expected.

    Sam – I need to find a way of putting those little graphics hands in the post so I don’t wear out my bones typing.

  28. 28
    zman Says:

    ZTRADE: Out of SU $100 April Calls (SUDT) for $6.10, up 160% since entry on 3/24. The stock is $105 and it may indeed go to $110 but this was a trade in a company based on an expectation of a rebound in oil and I got more than what I was looking for and even weathered the big crude build last week so I’m out.

  29. 29
    uop Says:

    z:

    missed your rationale on PQ?

  30. 30
    zman Says:

    CHK now trading above price at close of day they announced the secondary.

    Holdings Wiki page updated for PQ entry and SU sale.

    PQ – rationale from my piece on them on 4/3:

    http://zmansenergybrain.com/2008/04/03/pq-still-hitting-on-all-cylinders-still-too-cheap/

  31. 31
    zman Says:

    PQ is one of the ones I want to be long for the 1Q earnings report.

  32. 32
    uop Says:

    SU: great,

    your #28, would this not also apply to COP ?

  33. 33
    zman Says:

    EVEP link not working, oh well, probably nothing new anyway.

    Uop – No, not COP for an oil rally as they are a refiner and higher oil hurts on the downstream, although not as much as it helps on the upstream. I pick that one up from time to time as its cheap and gas was strong which provides a hedge for my UNG since they are the gassiest of the majors after their acquision of Burlington Resouces a few years ago, (they essentially own the San Juan Basin) . It just looked a little overly beat up to me. I’m about break even there at last glance and I should have gone with $75 strikes as this one has put in much better than expected performance and I have naught to show for it.

  34. 34
    uop Says:

    Is there also a “washsale rule for options”??

    here is the story:
    I bought today and slod today the same option for a loss,

    now I consider buying sam optio at lower price as I still believe this to be good next month?

  35. 35
    Sambone Says:

    10:24 am EST

    Nymex Crude Up $2, At Juncture For Big Push Higher

    By HYUN YOUNG LEE
    Of DOW JONES NEWSWIRES

    OTTAWA — Crude oil futures were trading more than $2 higher Monday, building on gains from the end of last week, with the market vigilant for signs of another surge higher.

    The front-month May light, sweet crude contract on the New York Mercantile Exchange was up $2.36, or 2.2%, at $108.59 a barrel. Brent crude on the ICE futures exchange was $1.94 higher at $106.84 a barrel.

    Technical factors pushed prices higher after the May contract broke a key resistance level around $106.50 a barrel, and it could be poised for “one final leg up” above the previous all-time high of $111.80 a barrel, said Walter Zimmerman, vice president of United Energy, New Jersey.

    If the contract manages to breach the first hurdle of $109 a barrel, the “minimum and likely maximum upside target zone for a major multi-year peak becomes the $112 and $120 area,” Zimmerman said in a note.

    The move higher comes despite the strengthening in the U.S. dollar, which has tended to result in a consequent weakening in crude prices. A weaker dollar has prompted investors to flock to oil and other commodities as a hedge against inflation, as well as sustaining the purchasing power of oil consumers using other currencies.

    This inverse relationship was clearly illustrated Friday, when the U.S. Labor Department released data showing non-farm payrolls fell by 80,000 in March, the biggest slump in five years. Immediately following the release, the dollar fell and oil tracked higher.

    The data translates to lower demand for energy, but also means an increasing likelihood of another rate cut from the Federal Reserve and “maybe a bigger cut,” hence the respective reactions in the dollar and crude, said Peter Beutel, president at Cameron Hanover.

    “It comes at a critical moment,” Beutel said in a note. “Prices are trying to decide whether to advance or decline from these levels, and this additional buying, from a non-fundamental or non-technical sense, gives bulls the upper hand.”

    The dollar climbed earlier against the Euro Monday, though levels remained weaker than Friday.

    The market is also keeping a close eye on gasoline inventory levels after recent data indicated slowing U.S. demand. Last week, the Energy Information Administration said revised data for January showed total oil use fell to the lowest level since April 2005. This exceeded the expected rise in China’s oil demand, which market participants are expecting to make up for any slowdown in the U.S.

    Some analysts reckon this could eventually curb the surge in crude prices, despite currency movements, though others are more sanguine. Oil demand from Asia is still strong and the pullback in U.S. demand are hardly indicative of collapse, said Gene McGillian, an analyst at TFS Energy Futures in Stamford, Conn.

    The market will be watching this week’s U.S. inventory data very closely, especially the gasoline stocks and refinery utilization rates, McGillian said.

    For the time being, however, “the tone of the market is we have more work to do on the upside,” he said.

    Further comments indicating that the Organization of Petroleum Exporting Countries won’t increase output levels were also supporting prices.

    “At the moment, there is enough oil in the market and no need to change OPEC’s output,” OPEC Secretary General Abdullah al-Badri said in Tehran late Saturday after arriving the day earlier for a three-day visit to the Islamic republic.

    He added that it was “unlikely” that OPEC would hold an extraordinary meeting before its next scheduled gathering in September.

    There were also reports that fog has shut the Houston Ship Channel.

    Front-month May reformulated gasoline blendstock, or RBOB, was up 2.53 cents to $2.7820 a gallon. May heating oil was 7.79 cents higher at $3.0700 a gallon.

    —By Hyun Young Lee, Dow Jones Newswires

  36. 36
    zman Says:

    uop – I don’t think so but am not sure. I don’t do my taxes and I don’t have the situation you are describing happen very often as I’m not very good at day trading.

  37. 37
    BigJim Says:

    Zman:

    Any positive thoughts on CHK? I know there is a conference with analyst this week.

  38. 38
    zman Says:

    BigJim – if you’re looking for catalytic news pre earnings I doubt there is much. They will be at Howard Weil today at 1:15(more important) and IPAA on Wednesday(less important) this week. They’ll get a chance today to show some new slides regarding their 8 new shale plays to a captive audience and to refute some recent analyst statements but the one today does not look to be webcast.

  39. 39
    BigJim Says:

    Zman Thanks

  40. 40
    Nicky Says:

    I know they upped the margin requirements for natural gas a couple of weeks ago – did they do the same for the rest of the complex?

  41. 41
    zman Says:

    Nicky – don’t think so. Have seen stories that many commodities brokers are taking up margin on lots of different contracts as their customers gambling losses are mounting and now that their houses aren’t worth what they paid for them they can’t go back to the teller to re-energize their futures accounts.

  42. 42
    Popeye Says:

    DRYS doing well today. ~6%

  43. 43
    zman Says:

    Popeye – yep, turned my back and have not gutted up to re-enter. Last trip in (Feb/March) was uncommonly blistering.

  44. 44
    Nicky Says:

    It may be the easiest way for them to pop the energy bubble Z – I therefore think if this run up continues they will do it.

  45. 45
    zman Says:

    Nicky – the trick is to keep the addict alive but addicted. They (the brokerages and the exchanges) have no interest in popping any bubbles.

  46. 46
    Jay Reynolds Says:

    At what crude price would you be a short term seller of USO with an eye towards re-entry later on?

    JR

  47. 47
    zman Says:

    Probably if it treats $110 like a goal, then a ceiling but only for a trade. 2 years out and I think we are $125 to $150. Like you mused re Saudi oil last night, a barrel is not a barrel is not a barrel…

  48. 48
    apbd Says:

    HK volume not impressive when compared to Friday. Is the rumor dying?
    apbd

  49. 49
    uop Says:

    USO;
    just bought may 88 puts,

    this is overblown oil again.

  50. 50
    isleworth Says:

    IOC moving Z….anything new there?

  51. 51
    zman Says:

    Jay – I personally prefer trading APA and SU for oil moves. SU either way (puts or calls) and APA at times long but don’t like shorting that one so much as its a great company. The move here has been unreal however.

    APBD – weakening a bit yes.

    re IOC – nothing I see other the price, I’m sure a rumor or a broker comment inspiring it.

    Uop – good luck with that… Products taking crude up …still waiting on word from the down hydrotreater on the west coast but agreed this is overdone.

  52. 52
    zman Says:

    ZTRADE: Entered NBR $35 May calls for 2.05. Will punt the rest of my April calls here soon.

  53. 53
    Dman Says:

    NFX quietly playing catch-up …

  54. 54
    zman Says:

    Dman – I know, I know…the option spreads have blown out there, will buy but maybe wait on a down day…chart looks like a breakout forming though.

  55. 55
    uop Says:

    Z:

    you do options on ng aND OIL COMPANIES,
    DO YOU GET STOCK OF THESE ALSO ?

  56. 56
    zman Says:

    CLR – unreal move. Will hold my shares at this point to capture long term capital gains rate but May 18th (my 1 year here I’ll be likely to sell).

  57. 57
    zman Says:

    Uop – yes. In companies we hold CLR, SD, HK , NFX, and a little piece of CHK.

    in speculatives we hold:

    END, SCU, GST, WHT – these are all down from where I took them (well down in a couple of cases and they are going to sit there until they ultimately work. Some of them can be found on the reports page. I would not add to any of these now.

  58. 58
    uop Says:

    Zman:

    APA and SU: your#51, which other companies follow oil strongly ?

    also: which refiners are influenced a lot by boil price movements
    Txs

  59. 59
    scoop006 Says:

    Z Re#56 Bought on 6/5/07@$15 sold7/13/07@$18 thought I made a good trade then.

  60. 60
    uop Says:

    Z;
    #58: mistake:dont boil the oil???

  61. 61
    zman Says:

    CHK going up through $48 … still looking for a link to their presentation today.

    Uop – thanks, that was a new term to me…figured it was some chemical engineering vernacular I’d never heard which is possible in refining since its more of a hobby for me and not my mainline focus.

    CLR and BRY very oily, options a little sketchy. EOG (gassy but trades) with oil also a pretty good option trader.

    As far as refiners I think they’ll move as a heard. VLO will do a little better as their facilities are most up to date among the big guys so they can crack a heavier crude mix…FTO same amongst the midgets.

  62. 62
    reefguy Says:

    Oil looking to test 110

  63. 63
    ram Says:

    ZMAN – Unfortunately next friday is expiry already. Any thoughts on which aprils might have enough premium to offset a small rise.

  64. 64
    zman Says:

    NBR only service co down today…odd.

    Scoop – hear ya, I thought so too. Just kept holding and ignoring. Doing the same with SD which has a much higher valuation b ut the long term there is like CHK.

    Reef – agreed. Heating oil and gasoline at records. NG still looks very much like a double top to me.

    Hey Ram – I didn’t follow your meaning there.

  65. 65
    apbd Says:

    Z: We have NBR. Should we have DO also?
    apbd

  66. 66
    uop Says:

    I know what DD is, but what id DO ?

  67. 67
    zman Says:

    APBD – DO would not be my first pick. More likely NE and RIG, and maybe ATW.

    Was looking at those valuations after the latest DW rig contract this am and it looks to me that RIG and NE are cheaper and growing faster when you get out to the 2010 numbers which are the ones most in question at this point.

  68. 68
    zman Says:

    diamond offshore

  69. 69
    apbd Says:

    Uop: It’s Diamond Offshore Drilling.
    apbd

  70. 70
    ram Says:

    If you have options at, a little under, or a little over the strike, and the premium with two weeks is generous to compensate a small move higher, it could be a relative gift.

  71. 71
    zman Says:

    ZTRADE: Entering Jun NFX $60 Calls (NFXFL) for $2.85.

  72. 72
    zman Says:

    Ram – ok, will think about that.

  73. 73
    zman Says:

    at lunch until 1 est

  74. 74
    Sambone Says:

    11:52 am EST

    US Gasoline Demand Seen Falling, To Hit Above $3.60/Gallon

    By IAN TALLEY andSIOBHAN HUGHES
    Of DOW JONES NEWSWIRES

    WASHINGTON — Although the U.S.’s top government energy forecaster Guy Caruso said Monday that he expects U.S. gasoline demand will fall by 85,000 barrels a day this summer compared to last year, Energy Secretary Samuel Bodman continued to call on OPEC to increase crude production.

    Energy Information Administration chief Guy Caruso, speaking to reporters a day ahead of the EIA’s summer energy outlook, said the agency expected the national average retail gasoline price to hit above $3.60 a gallon during the peak of the summer driving season on the back of predicted rising crude prices.

    Bodman said that despite repeated calls for the Organization of Petroleum Exporting Countries to up production, ministers continued to reject his pleas. Speaking on the sidelines on an EIA conference here, the Energy Secretary said he didn’t believe the national average gasoline price would hit $4 a gallon.

    Caruso said, however, that gasoline prices in California may face $4 a gallon, however.

    “I’m sure in certain parts of the country it will get there, probably California,” Caruso told Dow Jones Newswires.

    —By Ian Talley, Dow Jones Newswires

  75. 75
    Nicky Says:

    Re #45. I am not sure I agree that overall people are very worried about how damaging energy at these levels is going to be to an economy teetering on the edge. The fat cats are getting fatter and its starting to really kill the man in the street – I don’t believe they can let that go on. If it was fundamental reasons then that is another story and could be justified but not just blatant speculation.

  76. 76
    uop Says:

    Z:

    NFX jun60: interesting, the NFX options have not moved a penny,
    except your jun60 is up by 0.95$, wonder why none of the others show any change ?

    also:
    NFX on P&F chart hits a resistance top.

  77. 77
    cattleman Says:

    Z- Ref #56. I’ve been holding CLR since just after the IPO as well. Had thought that a U.S. centered oil production company with top management might be a good long term hold. Is your call based on valuation only?

  78. 78
    isleworth Says:

    hey Z,

    PQ selling off after conference. Did you hear any negatives?

  79. 79
    uop Says:

    Z:

    man the UNG puts make – at the moment – look my portfolio bad,

    expect oil and ng to crash soon.

  80. 80
    zman Says:

    Cattle – just based on the move and just thinking about it for now. Will do more work re valuation before I jump out…again not this month.

    Isle – no negatives…I just want to be long for the quarter and am starting to build a position

    Uop – I’m pretty balanced so a lot more stuff up than the UNG down…having a very green day on the whole.

  81. 81
    Nicky Says:

    Trying to filter out the CNBC crap regarding energy but was intrigued as to their reasons behind today’s run up in nat gas so just taken a look. Cold weather in Europe cited as the reason for the rise in distillates. Colder weather forecast for next two weeks as the reason for the run up in nat gas.

  82. 82
    zman Says:

    Nicky – think gas is a one or two day spike up on the way down. This week small drawdown on stocks likely then see post above for comments. It is going to be much warmer this week than the year ago week so look for a build in stocks in next week’s storage report (vs a drawdown of 26 Bcf in the year ago period).

    I was watching nat gas last night and it started to move up with oil and moved in lockstep with it. I think this is just a reflex rally.

  83. 83
    Nicky Says:

    Oil looks close to the end of this wave. Expect a decent correction at the least…

    Broader market – again I think we are getting close to seeing a pullback. We could get as high as 12800 area or just turn back from here towards 12465. I then expect another sharp move higher towards 13000 or a touch higher before a more meaningful correction.

  84. 84
    Nicky Says:

    Relatively speaking nat gas is absolutely flying Z – but I don’t disagree with you.

  85. 85
    zman Says:

    CHK beginning their presentation at Howard Weil…no link available I can find.

    NG still looks like double top… I could go higher of course but these big moves in both directions are common when the commodity is about to reverse.

  86. 86
    zman Says:

    Re NFX resistance, that’s why I’m giving myself plenty of time for the breakout to occur. The speak at IPAA tomorrow afternoon and I would expect them to talk about some good rates on the extended lateral program in the Woodford (6 mm/d ish)

  87. 87
    scoop006 Says:

    HKEX= HK May $22.50 =4700+ call contracts

  88. 88
    zman Says:

    Scoop – they speak tomorrow at IPAA. I would expect in the breakout session for someone to ask them about the conservative size of the Haynesville well reserves (3 Bcfe) versus the 5+ Bcf many people are now estimating CHK’s Haynesville wells to be coming in at. Also, they may have well news on the Elm Grove Horizontals … or they may wait to disclose those with 1Q earnings (which should be out early May. Sometimes companies like to drop a little news before the Weil conference but I don’t know when they speak there.

  89. 89
    Jay Reynolds Says:

    Triple top P&F chart breakout coming at $88 for USO.

    JR

  90. 90
    Sambone Says:

    12:19 pm EST

    Oil Higher On Extended Neste Refinery Outage

    DOW JONES NEWSWIRES
    From Market Talk:
    [Dow Jones] Nymex crude climbs more than $3, dragged higher by heating oil on news that Neste Oil Oyj (NES1V.HE) will extend the shutdown at its Porvoo refinery through May, says Phil Flynn at Alaron Trading Corp. There had been some optimism the refinery, a major producer of gasoil, would return to service at the end of the month following a major fire, Flynn says. Combined with already bullish technical factors, crude has been on a “breakout runaway” all morning, he says. “What’s amazing is that the dollar’s up as well,” which has usually dampened oil prices, he adds. Nymex May crude +$2.74 at $108.97/bbl, down from an earlier high of $109.48/bbl. (hyunyoung.lee@dowjones.com)

  91. 91
    Jay Reynolds Says:

    Raising Chesapeake Energy’s Intrinsic Value Estimates

    http://seekingalpha.com/article/71414-raising-chesapeake-energy-s-intrinsic-value-estimates?source=yahoo

    JR

  92. 92
    Sambone Says:

    Uncle Phil

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

  93. 93
    ram Says:

    NBR – quite the reversal today. Any news?

  94. 94
    ellwodo Says:

    #88 CHK at conf tomorrow – HK is presenting at same conference. With a little synergy maybe the analysts will come away appreciating both more. (Also good time for an announcement:)

  95. 95
    zman Says:

    NBR – none that I saw…possibly once it lost momentum the Cramerites started punting. Group is well off morning highs as well so that’s not helping. Think its probably a short term move and as you saw earlier I’m in the process of rolling into Mays to play earnings.

    Ellwodo- agreed.

  96. 96
    zman Says:

    Just a reminder re copyright laws…please do not post stuff written by others …links ok but the text is not a good idea without permission.

  97. 97
    Alhambra Says:

    South Korean steelmaker Posco said it had accepted a 205-210 per cent rise for its coking coal supplies from Australian miners; as reported by FT.com

  98. 98
    zman Says:

    Thanks Al. That’s a big gain. Coal was a big head fake higher at the open. BTU almost flat now. Still weighing options in the space…it’s a had good little run. If we get an afternoon rally in the broad market we could see a lot of the morning flyers back at their highs this afternoon.

  99. 99
    scoop006 Says:

    Cramer saying stick with agriculture stocks specifically POT & MON.

  100. 100
    ram Says:

    Aparently nothing earth shattereing for CHK at the conference. Does this type of conference usually a stage for revealing major positives?

  101. 101
    ellwodo Says:

    I don’t know what CHK is saying at the conference, but something is sure creating a downdraft

  102. 102
    zman Says:

    Group disregarding commodities and eyeing the broader market, majors given up all gains on the day…

    many E&Ps too… HK flat. I’m continuing to hold but don’t see a reason to add more yet.

    Ram – from time to time the smaller names will give up a new piece of significant data there. CHK is coming down with everything else.

  103. 103
    zman Says:

    All the E&Ps have given up anywhere from half to 100% of their gains this afternoon, its not just CHK.

  104. 104
    Nicky Says:

    Oil back over 109 is enough to stall out the broader market sentiment I would say…

  105. 105
    zman Says:

    Anybody read anything on the likelihood of surprise at AA for tomorrow.

  106. 106
    zman Says:

    ACI saying they will miss 1Q #s, had not seen but that was just on CNBC so they know about. That was Cramer’s favorite coal last week despite the fact that BTU is better positioned to face the big picture influences he was citing.

    Market trying to go red on the Arch coal news in the last hour.

  107. 107
    zman Says:

    DVN head said today (assuming this is from the conference) that they are looking in lots of places to add shale resources but they are not looking to increase their capital budget nor sell any assets. They did not say anything about accessing the capital markets so it sounds to me like they are in the hunt for a shaley E&P.

  108. 108
    scoop006 Says:

    Z This is a new week so ACI doesn’t count

  109. 109
    zman Says:

    anybody getting a database connection error intermittently today?

  110. 110
    Sambone Says:

    #109, nope

  111. 111
    scoop006 Says:

    yes,5 minutes ago

  112. 112
    Popeye Says:

    RE:109 yes.

  113. 113
    reefguy Says:

    yrs 2 minutes ago

  114. 114
    reefguy Says:

    z- did you see the SM slides?

  115. 115
    zman Says:

    Scoop – too right! Market sure didn’t like the warning.

    Thanks Scoop – I found that if you refresh a couple of times in a row it pops up …calling the host now.

  116. 116
    ram Says:

    Yes to #109.

  117. 117
    uop Says:

    Z;
    had also a data error,
    here another one

  118. 118
    zman Says:

    Reef – yes, did not see anything new, going to listen to the presentation a little later.

  119. 119
    zman Says:

    Transferring to backup site:

    http://zmanbackup.wordpress.com

  120. 120
    reefguy Says:

    sm- Carthage Field-The Richardson unit was the big ticket last week…

  121. 121
    Sambone Says:

    I’m back

  122. 122
    zman Says:

    Reef – I saw the slide, could not remember if its new … that PQ territory too.

  123. 123
    zman Says:

    It may prove unreliable so if you have not bookmarked the backup please do so.

  124. 124
    reefguy Says:

    Both playing the Cotton Valley Taylor/Bossier shale on the south rim of the Sabine uplift.

  125. 125
    zman Says:

    It’s amazing how many operators have exposure already with good size acreage positions. Lot of people touting GDP (Goodrich) on this.

  126. 126
    zman Says:

    ACI affirmed year end target EPS and said a lot of rosy things re coal in their presentation. I don’t see where they put in print a reduction in their 1Q or that they will miss.

  127. 127
    reefguy Says:

    Entry tough since most leases HBP, legacy properties with TP, CV production will have potential unless they are vertically severed(i.e. by presciption in La.)

  128. 128
    ram Says:

    I keep thinking that the UNG puts are a small hedge against the gassy stocks, but they are not. At least they don’t work that way currently.

  129. 129
    Dman Says:

    Z – Could #107 (DVN not increasing capital budget) have trigged the reversal in service stocks?

  130. 130
    zman Says:

    Reef – right, which it might be better to just scoop a company up if you want in.

    Dman – I think it was the market going down but maybe a little.

    Ram – not today no, last few days yes.

  131. 131
    zman Says:

    ZTRADE: Added May HK $22.50 calls for $1.20.

  132. 132
    Sambone Says:

    DJ MARKET TALK: ‘Excessive’ Speculation, Not Demand, Driving Oil

    Edited by John Shipman
    Of DOW JONES NEWSWIRES

    3:36 (Dow Jones) “We believe the current record crude oil prices are a result
    of excessive financial speculation and not supply and demand fundamentals,”
    Oppenheimer says. Firm notes global oil demand is lower than projected and
    supply higher, yet crude prices have almost doubled from year ago. “In a
    desperate effort to avoid a recession, the Fed continues to aggressively cut
    interest rates, which is sinking the dollar and forcing investors into
    commodities, and oil in particular. Although we don’t know when this trend will
    reverse, it cannot last forever,” firm adds. (JHS)

  133. 133
    Sambone Says:

    3:47 pm EST

    US Stocks Trim Gains On Weakness In Tech Shares

    By GEOFFREY ROGOW
    Of DOW JONES NEWSWIRES

    NEW YORK — U.S. stocks erased gains in afternoon trading Monday as late session weakness in the technology sector pulled the major indexes lower.

    Shares had traded higher for most of the session as a report that Washington Mutual was close to a $5 billion cash infusion helped give investors another sign that some downtrodden financials are looking to move past the credit crisis.

    After being up more than 100 points earlier in the session, the Dow Jones Industrial Average was recently up 4 points to 12615, while the Standard & Poor’s 500 was flat at 1370. The tech-heavy Nasdaq shed 10 points, or 0.4%, to 2360.

    Leading the technology shares lower, Yahoo shares fell 2.3% after the company’s top two executives reiterated their belief that Microsoft’s takeover bid “substantially undervalues’ the Internet company. However, the executives said they remain open to a deal with the software giant if it “is superior to our other alternatives.”

    Energy companies were on the rise, including Chevron and Exxon Mobil, with oil trading up more than $2 a barrel to $108.91.

    The Wall Street Journal reported that private-equity firm TPG and other investors are close to a deal to invest $5 billion in mortgage lender Washington Mutual. The capital infusion comes on the heels of last week’s moves by UBS and Lehman Brothers to arrange for a combined $23 billion of new equity. Washington Mutual shares rose 28% to $13.05.

    Market watchers also anticipated the start of first-quarter earnings period, set to begin Monday evening with the release of Alcoa’s financials. The first week of earnings period ends with General Electric on Friday. However, there could be muted action in markets until next week, when banks such as Merrill Lynch and Citigroup are due to report earnings.

    Monday’s movement follows meaningful gains for U.S. stocks last week, when a significant drop in U.S. payrolls for March confirmed Federal Reserve Chairman Ben Bernanke’s recent warning that the U.S. economy may be in recession. Though, many said it was a concrete hint more interest rate cuts could be on the way from the central bank. For the week, the Dow increased 3.2%, while the S&P 500 tacked on 4.2%; however, the indices remain down 4.9% and 6.7%, respectively, year-to-date.

    Detrick said the earnings period will shed more light onto the effectiveness of recent maneuvers by the Federal Reserve to battle the credit crunch. He added that ideally, the earnings will be positive and we “continue the little bounce and rally that we’ve seen.”

    Coupled with the sharp move for oil, several exploration and production oil companies were moving higher Monday, including Chesapeake Energy and EOG Resources. Moreover, several other commodities were moving higher, including gains for gold, copper and silver.

    “Materials, commodities and oil are all going to continue to go up as they’re exported to vast regions where global growth just continues,” said , who did note she expects a short-term pull-back.

    Still, Hill remains “overweight” the energy sector, especially as it relates to exploration and production, and services companies, as opposed to the integrated providers.

    Also boosting stocks on Monday were a couple acquisitions, helping to show market watchers that lid on available credit may be slowly lifting. Among the deals, Swiss pharmaceutical giant Novartis said it agreed to buy a 77% stake in eyecare company Alcon from Nestle for about $39 billion in a two-part transaction. Alcon was recently trading up 2% at $151.44.

    In addition, LifeCell’s shares jumped 16.8% to $50.41 after Kinetic Concepts agreed to acquire the company for $1.7 billion. The purchase price of $51 a share represents an 18% premium to LifeCell’s closing price Friday.

    Meanwhile, Vignette shares fell 5.6% to $12.53 after the content management company said it expects to report a first-quarter loss of 3 cents a share to a profit of a penny a share as license revenue fell short of expectations.

    (Tennille Tracy and Steven Russolillo contributed to this report.)

    —By Geoffrey Rogow; Dow Jones Newswires

  134. 134
    reefguy Says:

    Hk 22.50 @$1.25

  135. 135
    Sambone Says:

    Tini time!

  136. 136
    zman Says:

    anyone notice the guys on fastmoney look like the cast of the Sopranos down to hair and overdone facial expressions.

  137. 137
    zman Says:

    I love it when the talking heads on shows like FastMoney don’t know how to pronounce the name nor know where the preeminent energy conference of the year is taking place (that would be Howard Weil (pronounced wheel) and its in NOLA, but then go on to act like they know what’s up with energy stocks…one guy saying the statement out of ACI warning over the 1Q numbers is bad near term for the energy stocks.

  138. 138
    scoop006 Says:

    Z, You must be referring to Pete Najarian.Two weeks ago he pronounced Bucyrus “Bookaris”.

  139. 139
    ram Says:

    How can HK be stampeding Friday, during and after hours, and treading water on Monday?

  140. 140
    zman Says:

    Ram – it traded with the market on the day. It has been very strong and the end of last week was fueled by deal rumors which did not materialize.

  141. 141
    ellwodo Says:

    #140 – I prefer to think of HK’s deal prospects as “not yet materializing”.

  142. 142
    zman Says:

    ellwodo – absolutely agreed but for the pony tail wearing fast money set with a 15 minute attention the game is already up. I’ve said repeatedly they will be taken out (as have they) but timing is an unknown…could be tomorrow, could be November. I’m in for other reasons…”the materialization of the rumor” was just a nice bonus that helped me punt some April calls at a better than expected price.

  143. 143
    texana Says:

    hk instantaneous gratification may take more than an instant

  144. 144
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