21
Apr

Monday Morning – Earnings Start To Swarm This Week

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In Today's Post:

  1. Holdings Watch
  2. Commodities Watch
  3. Earnings Calendar - Week 2 
  4. Stocks We Care About Today Watch - (HAL), (ACI)
  5. Odds & Ends

Holdings Watch: the Wiki and Performance Pages are up to date through Friday. April expiry closed out a really nice run. Things are not always going to be this good and I'm getting a bit more cautious about the near term.

Commodities Watch: If you missed the weekend wrap click here.

  • Crude Oil closed up 6% at $116.90 last week on a weaker dollar, a bigger than expected inventory draw down, and rebel yells from Nigeria. This morning crude is trading up about slightly after having hit an overnight high of $117.40 as Saudi Arabia again expresses doubt about the long term future demand growth for crude and more potential supply disturbances rear their troublesome heads.
  • OPEC Watch: Saudi Reigning in CapEx. Over the weekend, Saudi Arabia expressed its intention to delay further new discovery development beyonds its already stated goal of productive capacity of 12.5 mm bopd by 2009, part of a recent $50 billion boom in drilling and infrastructure. Recent production has been running ~ 9 mm bopd and the Kingdom sees no need for higher production or spare capacity levels at this time and that the growth of biofuels has clouded the demand picture for oil going forward.
  • Tanker Watch: A Japanese tanker was damaged in a rocket attack from a small boat 270 miles off the coast of Yemen in the Gulf of Aden on its way to Saudi Arabia.
  • MEND Watch: The Movement for the Emancipation of the Niger Delta has claimed it attacked 2 more pipelines and while there is as of yet no confirmation I have little doubt in their ability to pull off further attacks and more importantly it appears that they are escalating violence as former leader Henry Okah's trial approaches. 
  • Natural Gas closed up 7.5% to $10.65 last week despite a bigger than expected injection into gas storage (see Thursday night's gas review post here) as bullish traders turned to crude for direction and hurricane forecasts for inspiration. I continue to expect natural gas to soften before cooling load from Summer heat sets in. This morning gas is trading up slightly.
  • Weather: Heating degree days inched lower to 114 last week, up a whopping 32 from the 82 expected in the CPC's original forecast. Note to CPC: your model is completely broken and useless. I will be sending them a letter to this effect today. This makes 16 of the last 18 weeks in which they have underestimated degree day totals, in many cases woefully underestimated.
  • For what its worth, this week's number is set to fall to a demand dulling 45 HDDs although I'll believe it when I see it.
  • Independence Hub Watch: no new news. At last check (April 9) the 1 Bcfgpd capacity gas hub in the deepwater Gomex was set to be repaired and back in service in 1 to 4 weeks.

 

Earnings Calendar: Week 2. These are the primary names I care about this week and while others report you can only track and plan for so many data points in your week

cal-1q08-week-2.jpg

Earnings Watch Takeaways: 

1) (HAL) is likely to set the tone for service, a group I see as playing catch up to the rest of the energy complex with their call this morning.  Service group earnings expectations for 1Q results are likely to be "non spectacular" but that's the quarter in the can and HAL can go a long way towards hammering home the same, "improved North American natural gas" picture that (SLB) laid out on Friday. 

2) E&P Earnings Are Likely To Inspire, But Again Stories, Not Numbers Will Lead The Stocks. Only three E&P names on our list of stocks we care about report this week (see the (1) beside each). Notice however that the expected results are doubles at worst of year ago performance.

This is not just price performance:

  • Oil (WTI): $59.16 1Q07 vs $88.60 1Q08; that's a 50% YoY increase, not a double. 
  • Natural Gas: $6.71 1Q07 vs $7.80 1Q08; up 16%.

Stocks We Care About Today Watch:

(HAL) Reported "In Line" 1Q08 Results, Sets Confident Tone 

  • EPS of $0.64 vs $0.64 expected
  • Revenue of $4 B, also in-line with expectations.

Favorite Quote Watch: The North America region also posted double-digit, year-over-year revenue growth of 11%, confirming this market is much stronger than may have been anticipated just a few months ago." Zcomment: exactly what we wanted to here and this helped to limit the decline in total company operating margins of just 0.7% from the prior quarter.

International, Eastern Ops Provided Growth: Results from (HAL)'s Eastern division continue to provide the backbone of new revenue growth and all of the growth in operating income as expected. YoY non-North American revenues grew 24% 

Guidance: none as expected so the tone of the conference call (9 est) will be pretty important. Other than the quote above they gave no forward looking statements in their pr other than a reference that Russia fraccing business had been weak but was expected to pick up.

In A Nutshell: An "as expected, in line quarter" a bit better than (SLB) in that they didn't miss, with potential for them to say the right things and provide detail regarding the out quarters of 2008. They had expected North American service pricing to stabilize in 2H08 so it will be interesting to see if their new comments show an acceleration to that schedule, especially in light of the increased capital budgets being proffered by many a shale seeking E&P. 

(ACI) Reports One of Best Quarters In Company History.

  • EPS of $0.56 vs expectations of $0.46.
  • Revenue of $699 mm vs expected of $687 mm 

In A Nutshell: Strong quarter for volume growth and price realizations. I may take a small position in BTU which reports before the open tomorrow and has not had the run its peers have had of late but should be benefiting as much and more from the same strong domestic and international demand trends. Conference Call today at 11 Est.

(NBR) reports after the close. 

Odds & Ends

Analyst Watch: Analysts must have slept in, not a lot of movement other than (HOC) getting a slight price target bump from Friedman Billings.

Housekeeping Watch: Site review and new FAQ on the horizon. Hopefully we'll have a new and improved FAQ out within a week or so but if you have any questions about how things work on the site or with your account please ask me. As my dad was fond of saying, "the only stupid question around here is the one that goes down the elevator shaft at the end of the day" so just ask.  

131 Responses to “Monday Morning – Earnings Start To Swarm This Week”

  1. 1
    Sambone Says:

    8:21 am EST

    Crude Hits Record High On Supply Concerns

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures continued their record-breaking run to set new record highs in early London trade Monday, as fresh supply concerns added to last week’s strength.

    Reports of more Nigerian pipeline explosions, and an impending strike at a U.K. refinery that could impact North Sea oil flows raised supply fears Monday, adding to the upwards impetus offered by a weakening dollar and a supportive technical outlook.

    “All these supply disruptions have reminded the market that supply and demand fundamentals are really tight and more importantly, world spare capacity is very limited,” said Nimit Khamar, analyst at Sucden Research in London. “Any major supply disruption could have a large impact on future prices.”

    At 1147 GMT, the front-month June Brent contract on London’s ICE futures exchange was up 34 cents at $114.26 a barrel, having fallen back from its earlier $114.65 a barrel record high.

    The front-month May light, sweet, crude contract on the New York Mercantile Exchange was trading 30 cents higher at $116.99 a barrel, but down from its new high of $117.40 a barrel.

    The ICE’s gasoil contract for May delivery was up $16.50 at $1,067.50 a metric ton, while Nymex gasoline for May delivery was up 70 points at 299.63 cents a gallon, having earlier hit a record 300.40 cents a gallon.

    Nigerian militant group, the Movement for the Emancipation of the Niger Delta, or MEND, said Monday it had blown up two more oil pipelines it believed were operated by Chevron Corp. and Royal Dutch Shell PLC (RDSA). Representatives from the companies weren’t immediately available for comment on the claims.

    The reports follow hard on the heels of a separate pipeline attack claimed by MEND last week that resulted in reduced production and helped prices on their way to record highs.

    Developments in Nigeria are foremost among bullish factors traders are expected to focus on this week, said analysts at PFC Energy.

    “As a result, the geopolitical risk premium will certainly increase in market sentiment,” they said.

    Meanwhile, traders also eyed implications for North Sea crude oil flows stemming from shutdowns at Ineos’ 196,000 barrel a day Grangemouth refinery in Scotland, ahead of a two-day strike due to start April 27.

    The Grangemouth refinery processes around 20% of the crude from the 700,000 barrels a day Forties Pipeline System.

    Forties operator BP PLC (BP) is communicating with Ineos to determine how the strike will affect Grangemouth operations, and it is still not possible to predict the impact on Forties, a BP spokesman said Monday.

    “Since the Forties crude oil stream is also stabilized at the Grangemouth facility before export, it could also lead to a disruption to the export of Forties although this should be for a more limited time than the disruption to the refinery operation,” said Olivier Jaokb of Swiss consultancy Petromatrix. “It should nonetheless provide support to a market which is very quick to react to supply issues.”

    Ineos had Monday already begun shutting down the site for safety reasons ahead of the strike.

    Any lingering expectations that the Organization of Petroleum Exporting Countries might yet look to arrest crude’s record-setting rally with an increased supply response appeared quashed following comments from senior organization members over the weekend.

    An output hike from oil producers would “not solve the problem” of high crude prices, OPEC head Abdalla el-Badri said Sunday. “The current oil price has nothing to do with supply and demand,” he said.

    Earlier the same day, OPEC President Chakib Khelil said the 13-member group has the ability to boost production by 2 million barrels a day but that the market didn’t any need additional oil.

    With crude oil futures starting the week on a distinctly bullish footing, the list and potency of any catalysts for a price retreat seems limited, analysts said.

    “A stronger dollar could fit the bill in this regard, but…it will have to strengthen more than it has,” said Edward Meir, analyst at MF Global in New York. “Falling energy demand could also be another negative, but even here, the sizable slowdown in U.S. demand seems to have gotten shunted to the sidelines, as supply issues have dominated market attention instead.”

    —By Nick Heath; Dow Jones Newswires

  2. 2
    zman Says:

    Morning all, oil through $117.50 up $0.80+; natural gas feeling the pull.

    MEND + Saudi comments + Muqtahda Al Sadr threat + strike at a Scottish refinery that may impact 40s line oil deliveries = higher oil.

    HAL call in 20 minutes.

    South Korea and U.S. form JV to explore natural gas hydrate production potential. This may mean we see Korea in the Alaska project set to test produce hydrates in 2009. APC is involved in this work as well.

  3. 3
    uop Says:

    zman:”

    GM,

    hydrate project in Alaska, have not heard about this, hydrate/mathane on oceanfloor, is that it ??

  4. 4
    zman Says:

    HAL Call:

    N American – better performance than expected in drilling evaluation, signs of strong resurgence in Canada after Spring break up.

    US fracturing – pricing pressures are starting to level off in certain areas.

    U.S. cementing, wireline price pressures are stabilizing and in some areas improving now.

    Seeing some cost inflation for fuel, and they are implementing fuel surcharges.

    International:

    See improvement in Russia, but see weak UK and Nigeria.

    Targeting 20% YoY int’l growth, and they are doing better than that. Latin America very strong including Argentina, Brazil, Columbia, Mexico.

  5. 5
    zman Says:

    Uop – normal yes, not in this case though. more later, on HAL call now.

  6. 6
    kaman Says:

    Z-
    Is this referring to methane hydrates (deep seabed crystals?)?

  7. 7
    kaman Says:

    nevermind

  8. 8
    zman Says:

    K: yes. Need a breakthrough there, nothing of note so far.

  9. 9
    zman Says:

    Oil: a little profit taking setting in, now down $0.50. Note NG marking on a 1 to 10 basis.

    HAL still going over the press release, nothing jumping out more than the previous stuff yet.

  10. 10
    zman Says:

    HAL call:

    No changes to financial model notes
    10 mm shares repo’d in 1Q.

    Shale surge: Marcellus and Woodford – shaveval surface, <25% to > 75% increase in recoveries with their system.

    See only 1 to 2% decline in frac pricing in 2Q. N. Am gas drilling to continue to increase in 2008.

    Expro press release: deal may or may not happen, no new details.

    In a nutshell “we’ve engineered a soft landing in North America, competitive market but are more confident pricing will stabilize and that it will do so earlier than expected.

  11. 11
    zman Says:

    Call going well, Q&A just started, think this likely goes higher as they are answering questions pretty handily. Stock flat at the open but I think goes higher unless oil sells off hard or market goes lower. In those cases it may be subject to a bout of profit taking after Friday’s strong run and I would be tempted to add to longer dated calls.

    Pricing pressures internationally

  12. 12
    zman Says:

    ACI racing higher, may take some BTU calls before their release.

    HAL call Q&A going well. Other service names doing very well with SLB getting a second strong day of performance, DO moving well.

    PBR moving on up.

  13. 13
    zman Says:

    HAL – Expro deal potential likely to put a cap on the shares until further details are released. Sounds like it could be any day now but not today. If a little wind comes out of their sales I would not be surprised but I’d likely take longer dated calls, stock now down about 1.7% and at down 2.5% I’ll add to the longer stuff (probably July 50s.

  14. 14
    isleworth Says:

    EOG on move…new high……

  15. 15
    zman Says:

    SLB tapping on $104. Will continue to play with house money but will stop out if it falls back through 103 and roll to longer calls.

    CHK at all time high.

    APC broke $70 a day too late for me. ug.

    PQ moving back up.

    Isle – I see EOG, never got a full position so I sold on Friday and I’m not going to chase it here.

    HAL – call wrapping up. I’m going to watch it for a little bit post call but the lack of detail regarding the potential Expro deal clearly weighing on shares. I may take a swing at some near term calls, again probably around $46, stock sinking through $46.50 now.

  16. 16
    zman Says:

    HAL call over – I’ve heard smoother ends to a call as they sounded ready to get the hell off and it may go a little lower as the Expro questions were completely stone walled. I’d bet analysts get on the squawk boxes and saw long term good, near term good, wait for fruition of this deal which may be $4b to add. I’m weighing some near term options for a bounce now.

    EOG really popping, no news I see, most likely a broker comment on the Bakken. I’m going to take some CLR momentarily.

  17. 17
    zman Says:

    ZTRADE: CLR June $50 Calls (CLRFJ) for $1.75. I split the bid/ask on this one and it did not take long.

  18. 18
    ellwodo Says:

    Any views on DNR?

  19. 19
    Sambone Says:

    9:55 am EST

    Nymex Crude Flattens Out After New Record

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures stormed deeper into record high territory before trading flat Monday, guided by disruptions in supply.

    Light, sweet crude for May delivery was recently down 12 cents, or 0.1%, at $116.57 a barrel on the New York Mercantile Exchange, after rising to a new intraday record of $117.60 a barrel. The May contract expires Tuesday. June Brent crude on the ICE futures exchange also made new all-time intraday high of $114.86 a barrel, and was recently trading down 7 cents to $113.85 a barrel.

    In Nigeria, about 169,000 barrels a day of crude production was shut in following an attack on a pipeline. Shell Petroleum Development Co., which operates a joint venture there, has declared force majeure on crude oil liftings from its Bonny Light terminal for April and May, a spokesman for the company said Monday.

    The shut-in follows an announcement from militant group the Movement for the Emancipation of the Niger Delta, or MEND, that fighters hit two pipelines it believes are operated by Chevron Corp. (CVX) and a Royal Dutch Shell PLC (RDSA) joint venture in southern Rivers state.

    “170,000 barrels a day is a lot of oil,” said Rick Mueller, director of the oil practice at Energy Security Analysis Inc. in Wakefield, Mass. “It’s good quality oil, which is particularly important as we move into the gasoline season because Bonny Light has a high gasoline yield.”

    About a fifth of Nigeria’s production capacity of 2.47 million barrels a day is on hold due to sabotage and security concerns, according to the International Energy Agency. Nigeria is the fourth-largest foreign supplier of crude to the U.S., the world’s top oil consumer.

    Traders said the mild pullback reflects strength in the market, which made new record settlement highs four days last week.

    “The fact that we haven’t sold off further remains bullish in my mind,” said Peter Donovan, vice president at Vantage Trading in New York. “You’re still flirting with the highs.”

    The oil market also received support as workers at Ineos PLC’s 196,000-barrel-a-day Grangemouth refinery in the U.K. planned to strike April 27 over changes to an employee pension plan, according to a union statement. Ineos warned the proposed strike would close the plant in Scotland for at least a month and could cause fuel shortages in Scotland as early as April 25.

    Adding to perceptions of tight future supply, Saudi Arabia, the world’s biggest oil exporter, said over the weekend it has no plans to boost its oil production capacity beyond the amount it is already pursuing for several years until it gets clearer signs about future crude consumption.

    Saudi Arabia is in the midst of a more-than-$50 billion, multiyear oil production expansion plan to meet growing demand in Asia and other emerging markets. The kingdom is expected to boost its pumping capacity to a total of 12.5 million barrels a day by 2009, up about 11% from current capacity of 11.3 million barrels a day.

    But Saudi oil minister Ali Naimi said he believes the growth in alternative energy like biofuels is casting a growing cloud of uncertainty over future oil demand — forcing the kingdom to put the brakes on capacity plans, possibly for a decade, after 2009.

    Products futures also made new intraday highs Monday. Front-month May reformulated gasoline blendstock, or RBOB, rose above $3 a gallon for the first time before recently trading down 1.08 cents, or 0.4% to $2.9785 a gallon. May heating oil rose to a record $3.3309 a gallon, and was recently trading up 36 points, or 0.1%, to $3.2959 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  20. 20
    zman Says:

    Ellwodo – I’m not close enough to the story to be of real value but it has had a good run and is in my thinking a bit pricey here. Their CO2 business is booming but it’s very oily so if you see some profit taking in oil it could come in quickly. Long term I like them quite a bit but there are other names that are less expensive that I find more attractive for oil exposure like CLR. It probably won’t hurt you but I think valuation may limit the medium term upside more than CLR.

  21. 21
    uop Says:

    zman: what trading platform do you use ?

  22. 22
    ellwodo Says:

    thanks

  23. 23
    zman Says:

    Street smart pro and Thomson

  24. 24
    zman Says:

    Scoop – PQ pinned Friday, unpinned today. This is why the wildz is such a rare bird.

  25. 25
    scoop006 Says:

    However the Goog April $510 covered all loses

  26. 26
    zman Says:

    Scoop – Nice. My only exposure there is the wife’s IRA with the $177 cost basis.

  27. 27
    zman Says:

    HAL trying to find a intraday bottom over $46. Getting close to a quick trade here.

  28. 28
    apbd Says:

    Z: CLR is it gas or oil or both?
    apbd

  29. 29
    zman Says:

    Morning A –

    about 80% oil and they are on the west side of the Bakken play in North Dakota.

    Here’s my last write-up on it:
    http://seekingalpha.com/article/58531-a-tale-of-three-ipos-then-since-then-and-what-now

  30. 30
    apbd Says:

    Morning & TY.
    apbd

  31. 31
    zman Says:

    ZTRADE: Out second half of the SLB position as the market looks weak to me. Sold the May $100 calls for $5.50 for a 182% gain. Will likely roll longer on weakness.

  32. 32
    zman Says:

    HES rocking. I’m guessing that it’s Bakken related and someone wrote a report this morning that is goosing them and EOG. When you look at the North Dakota map server, you can see CLR in and around the HES, MRO and COP Bakken rigs. Very interesting.

  33. 33
    uop Says:

    zman:
    did you get out of HAL (up)or SLB (down) ?

  34. 34
    zman Says:

    Uop – SLB out remainder up 182%. Sold the first half of that trade up 105% on Friday.

    HAL: I have not sold any more HAL since Friday. Am bidding some now on weakness. ($47.50 MAY calls)

  35. 35
    zman Says:

    scratch that, got them.

    ZTRADE: Entered HAL May $47.50 calls for $1.05 for a fairly quick trade on post conference call weakness.

  36. 36
    zman Says:

    oil trading in a tight range around flat in a boring session for the commodity. Ditto NG which continues to shadow moves in oil.

  37. 37
    zman Says:

    HAL looks like it will recover if the market can. Down less than a buck.

  38. 38
    zman Says:

    Wow – that was a quick down on CLR. Group seeming more profit taking as oil starts to drift lower.

  39. 39
    reefguy Says:

    cwei now over $64

  40. 40
    zman Says:

    Morning Reef – Nice call. No news I see but I have a feeling an analyst is chatting it up. Have a news ticker but no story.

    Mixed bag to mostly lower on the group now although early profit taking in HAL is subsiding. Stock down $0.50 now from $1.50 earlier. Lot of morning’s gains have come out of the E&Ps and NFX is catching my eye with earnings on Thursday, I’m long some July calls there and will add if it takes a big hit pre numbers in shorter dated calls.

  41. 41
    jazzkool Says:

    Z, any point in trying to cover my call longs with some June XTO puts?

    BTW, thanks a bunch for SLB!!

    Jazz

  42. 42
    zman Says:

    Jazz – I would think DUG calls might be better as you avoid XTO doing something good to you on those puts this Thursday on the call, unless you are specifically trying to hedge XTO calls. If that’s the case then you could effectively short against the box with puts.

  43. 43
    zman Says:

    Cracks trended up slightly last week except on the west coast but even there it was only a corrective move. NY harbor cracks are now positive to year ago 2Q average which is interesting. I may add a little SUN or VLO soon to my position in TSO which continues to move higher.

  44. 44
    uop Says:

    zman;

    in 31 you say you sold SLB,

    when do they report, today ?

    you expect a drop ?

  45. 45
    uop Says:

    zman:

    all solars are up, interesting as oil is down, they usually go together, same with coal, they are up.

  46. 46
    zman Says:

    SLB reported last Friday. Recall they opened at $92, down $3 ish from their Thursday close and ended the day over $100. I sold half the position I bought Thursday as the stock was cresting 101. Today I sold the rest and if it weakens I’ll probably take some June 110 calls. Long term I expect them to go quite a bit higher.

  47. 47
    zman Says:

    solars are mixed bag today after a huge run up. I’m not chasing for now. The big dog, FSLR reports a week from Wednesday, and arguably the number 2 in the play, WFR reports this Thursday. Group looks very extended/expensive to me but this mo-mo group could go quite a bit higher. Until I can justify this move in the face of a slowing global economy and the glut of PV supply coming on line this year and next I just don’t want to chase the big or little players.

  48. 48
    zman Says:

    HAL back over $47, yee-haw.

  49. 49
    zman Says:

    M&A heating up:

    SLB acquiring Canada based Saxon driling,
    GW acquiring Basic Energy services
    HAL likely to take out Expro.

    I think CLB, CRR, SII could go this year. Could definitely see SLB taking CLB (coring services) out of play. As always, mergers hard to predict and play, especially with options but it is interesting the niche plays being taken. Could also see a deepwater driller taking out OII.

  50. 50
    zman Says:

    Uop and all. One of my favorite things in the world to do is to gauge the initial response of a stock to earnings or an analyst downgrade and react. Often the move is in the wrong direction as it was last week on DO, the week before that on CHK (both analyst moves) and last Friday on SLB . Today’s example (at least so far is HAL).

    HAL now down a dime and rising.

    Reading a report on HK, will let you know what I think, this is one with a $35 NAV based price target, which again, using NAV as the methodology for pricing a swiftly growing (25% unit volume growth for 2008) E&P makes not a lot of sense unless the P/CF multiple is elevated which it is here. I’m holding for earnings.

  51. 51
    uop Says:

    SLB:

    tempted to short this one.

  52. 52
    zman Says:

    Uop – well, I guess that’s what makes a market. I wouldn’t touch a short there.

  53. 53
    uop Says:

    zman;
    strange:

    oil is dropping, many oil related stoicks are moving down.

    YET: friend/foe UNG is moving up.

  54. 54
    Sambone Says:

    Uncle Phil

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

  55. 55
    zman Says:

    I noticed that and it is odd. Until the action on NG improves, I won’t touch more puts there. I still hold those May $50s on UNG.

  56. 56
    uop Says:

    zman;

    gasoline:

    even if oil should drop in price, what will happen to gasoline /

    there is now an ETF for gasoline and I might be interested in this.

  57. 57
    zman Says:

    Gasoline will not fall as fast oil at this time of year unless the independent refiners go back to work in earnest which I really doubt at this juncture.

  58. 58
    zman Says:

    Read the UBS HK piece and it is another insite-less black box print out with a little flavor lifted from press releases. Their $35 target is again NAV based which is not what drives stock prices in this kind of O&G stock or in this kind of market. So that number is pretty useless I can get to a much higher NAV with a few tweaks. I think the stock goes higher and I will buy more in coming days on any significant weakness.

  59. 59
    zman Says:

    Group into greening mode with the market again.

  60. 60
    zman Says:

    HK – moving on news that I apparently do not get. I get a newsbug but no story and it is running up a bit.

  61. 61
    zman Says:

    ZTRADE: Taking June $25 HK Calls (HK FE) for $1.30. Stock starting to move again.

  62. 62
    texana Says:

    bakken plays not mentioned but that have tremendous upside potentional r wll and bexp. wll has 20% of most of the parshall field that eog is drilling & 80% of sanish just west of parshall field. look for ip on these wells in the next couple of weeks.eog has 1 that is tight hole but is rumored at 3000 bopd. wll should get there gas stripper plant running this month & est 120 boe gas liquids per million cu ft. all cos r flaring all gas now. bexp has huge land position on west side of nesson anticline & acreage around & in parshall, with 60 landmen working the area.

  63. 63
    zman Says:

    Thanks Texana. North Dakota has a great oil and gas site up to date to the day for looking at activity. EOG all over the Parshall, WLL in there but more in the Sanish with Murex and Fido.

    WLL has drilled at least one tri-lateral with decent IP.

    RE: EOG had not heard 3,000 but definitely heard multiple 2,000 bopd IPs.

    In that south west side of the active play down in Dunn County have you heard anything about bigger HES, MRO or COP wells? That would bode well for CLR.

  64. 64
    reefguy Says:

    tex- Talking to a Marathon vp, they are now completing laterals up to 9000′ openhole with a single large sand frac. IP’s are over 2000 bopd..

  65. 65
    zman Says:

    Group continues to green up.

    PBR at all time highs.

    Thanks Reef, is that west of the Missouri river?

  66. 66
    reefguy Says:

    z- not sure..

  67. 67
    zman Says:

    Thanks Reef – I’ll track it down. Just trying to spine up for a little more CLR.

  68. 68
    Bob Says:

    Z-I was curious where the earnings estimate for XTO of $1.99 for this quarter originated. I see an avg of $0.92 for the quarter based on 20 estimates, and an average for next year of $4.32 instead of the $9.13 on your calendar.

    Also of some interest may be BHI and SII tomorrow morning BMO. BHI call at 8 AM est

  69. 69
    zman Says:

    Bob – for the E&P names that’s cash flow per share.

    Agreed re the other two …they somehow fell off my list this quarter will add back in. Thanks for the heads up.

  70. 70
    Bob Says:

    OK Thanks on the E&P explanation

  71. 71
    zman Says:

    RE CFPS for E&P names. It just makes a lot more sense to be to compare Cash flow than earnings. Due to the complexities of oil and gas accounting, and different methods used in accounting for exploration for depreciation purposes, net income does not give you an apples to apples picture of companies in the space relative to one another. CFPS takes the non-cash items like depreciation out of the picture and since this is a cash flow reinvestment business, you want to be able to compare them that way than on earnings which is much less meaningful and provides a distorted picture of the group.

  72. 72
    zman Says:

    Interesting article on deepwater production and drilling demand off Brazil.

    http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-DeepWater_20bus.ART.State.Edition1.462b004.html

  73. 73
    zman Says:

    Oil shooting positive into the close.

    Natural gas in a world unto itself, up another $0.14 to $10.72. Wow.

  74. 74
    reefguy Says:

    z- ng has broken with Cl this afternoon

  75. 75
    zman Says:

    Reef- yep. I’m holding my short there but I’m not adding.

  76. 76
    uop Says:

    zman:

    HES way up.

  77. 77
    zman Says:

    LNG fell back to 0.7 Bcfgpd last week from 0.8 Bcfgpd in the prior week – pretty much a flat line for the last 10 weeks and well below year ago levels so I’m sure that is it.

  78. 78
    zman Says:

    Re HES, could be well talk in the Bakken, I see no news and earnings aren’t until next week.

    What’s wrong with the broad market today, no go-go mo-mo left?

  79. 79
    uop Says:

    zman:

    i wonder whether for NG’s price movement down, june puts are a better trade than may ?

  80. 80
    xweto Says:

    Z: now 2x on PBRs … whats your thinking

  81. 81
    zman Says:

    probably safer. The move makes no sense to me now but I have seen moves like this many times and they generally end in a 20 to 30% capitulation from the peak and rather rapidly.

  82. 82
    reefguy Says:

    z- remind me; isn’t april thru june shoulder months for NG?

  83. 83
    zman Says:

    If I had gotten my full load I’d sell half on the PBR and hold the other half for a development plan announcement.

  84. 84
    zman Says:

    Reef – April/May. Just walked outside and it feels like summer, high humidity mid 80s in the south. That’s also going to goose gas higher if people rapidly switch from heat to cooling load. I’ve already slapped a hand or two for going for the cooling mode on the thermostat at my house this past weekend.

  85. 85
    xweto Says:

    ReefGuy: the monthly NG chart shows a regular, cyclical April-June dip

  86. 86
    zman Says:

    …And speaking of those LNG numbers, take a look at LNG, the company. Ouch.

  87. 87
    reefguy Says:

    z- In Dallas itis going to be in 80’s all week AC on already…we might miss the shoulder this year. Any threat of an early(June) hurricane and life might enter the looking glass

  88. 88
    reefguy Says:

    xweto- If this is the dip then were are we on the uptick?

  89. 89
    zman Says:

    #87 = LOL. Too true. Understand that my short in UNG is very small and I won’t be adding until the commodity is making sense to me. Doubling down here is like the opposite of catching a falling knife and although I have no doubt about the fundamentals, I can’t control the spin machines and I feel I have odds at the track.

  90. 90
    zman Says:

    FYI: NBR’s reports after the close. I’m holding. They may miss just like SLB but the I see no reason for them to say things that would be anything but positive or sabotage the momentum in the name. So maybe some profit taking on the open but if its size and the comments work for me I’ll put on a quick trade in addition to my current holdings.

  91. 91
    VTZ Says:

    Z – I have a question about people who are long nat gas. Let’s say you are long a November contract for whatever reason (like a financial institution who is short the dollar and buying energies as is so popular these days).

    If the time comes and you still have your contract in November, what do you do with it if you’re not a consumer of nat gas like a utility? Is your only option to sell the contract to someone who wants it and has storage?

  92. 92
    zman Says:

    VTZ – non-commercial guys almost 100% of the time always roll out before time is up.

  93. 93
    VTZ Says:

    To elaborate more, everyone spouts about how the heating value of nat gas is at a discount to fuel oil but if nobody has the infrastructure to use it, what the hell does it matter?

    Also, if you were a power producer who uses nat gas for peaking, would you really be hedging your nat gas cost now at 10.XX ?

  94. 94
    zman Says:

    Interesting to see where the HK call volume is today.

  95. 95
    zman Says:

    Let go of my second piece of SLB a little early but SLB is now helping to drag HAL higher. As long as we don’t catch a downgrade in the morning I think this one will resume its upward path in a few days.

  96. 96
    uop Says:

    zman on 95: you mean HAL to continue ?

  97. 97
    zman Says:

    Uop – yes and NBR and some of the other service names.

    Reef – any thoughts on CRR and all the proppant that’s gotta be going into the shale plays. Is it just not theirs or am I missing something?

  98. 98
    zman Says:

    VTZ – agree completely on the btu parity argument. When has that mattered?

    On hedging for utilities, no probably not. I would hope that my hedging guru on staff would have locked us in substantially lower…or I’d just call the local municipality and ask for a rate hike.

  99. 99
    reefguy Says:

    z-#97 I do not know of another public service name that is supplying these specialty proppants. Some producers have been lining up there own, direct sources, like Pioneer in the Pieance Basin. CRR is like gold pans to miners.

  100. 100
    zman Says:

    LNG down 24% today. Maybe the can use their new port and storage tanks to import ethanol from brazil, lol.

  101. 101
    reefguy Says:

    LNG new port should be renamed “The George Kaiser Memorial”

  102. 102
    zman Says:

    Makes me less surprised when I look back on the sub-prime thing to see loans like LNG has. Ya really gotta wonder what in the world management was thinking. I know what the bankers were thinking (fat fees). Funny how you don’t see the feds talking about a bailout here.

  103. 103
    reefguy Says:

    LNG their stock price looks like ENRON…

  104. 104
    zman Says:

    Reef – Re CRR- is it the preferred choice in a Barnett frac? or Fayetteville, Haynesville etc? or do they use actual sand in some of those cases and not the artificial variety.

    SLB up $4 and HAL and NBR within a hair of going green. I have a near 50% gain in that morning trade on HAL and will likely hold it through into tomorrow.

    This would be a closing high for HK and CHK.

  105. 105
    zman Says:

    CRR reports later in the week, not a terrible but not a great option trader. I just wonder at the low expected growth rate they espoused on the last quarterly call. It sounded like they were sandbagging (no pun intended) on that call and I just don’t see how they can’t have good things to say about North America. They also have exposure to Russia which HAL this morning said they expect to see pick up soon.

  106. 106
    Sambone Says:

    3:04 PM EST

    Nymex Crude Flattens Out After New Record

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures stormed deeper into record high territory before trading flat Monday, guided by disruptions in supply.

    Light, sweet crude for May delivery was recently down 12 cents, or 0.1%, at $116.57 a barrel on the New York Mercantile Exchange, after rising to a new intraday record of $117.60 a barrel. The May contract expires Tuesday. June Brent crude on the ICE futures exchange also made new all-time intraday high of $114.86 a barrel, and was recently trading down 7 cents to $113.85 a barrel.

    In Nigeria, about 169,000 barrels a day of crude production was shut in following an attack on a pipeline. Shell Petroleum Development Co., which operates a joint venture there, has declared force majeure on crude oil liftings from its Bonny Light terminal for April and May, a spokesman for the company said Monday.

    The shut-in follows an announcement from militant group the Movement for the Emancipation of the Niger Delta, or MEND, that fighters hit two pipelines it believes are operated by Chevron Corp. (CVX) and a Royal Dutch Shell PLC (RDSA) joint venture in southern Rivers state.

    “170,000 barrels a day is a lot of oil,” said Rick Mueller, director of the oil practice at Energy Security Analysis Inc. in Wakefield, Mass. “It’s good quality oil, which is particularly important as we move into the gasoline season because Bonny Light has a high gasoline yield.”

    About a fifth of Nigeria’s production capacity of 2.47 million barrels a day is on hold due to sabotage and security concerns, according to the International Energy Agency. Nigeria is the fourth-largest foreign supplier of crude to the U.S., the world’s top oil consumer.

    Traders said the mild pullback reflects strength in the market, which made new record settlement highs four days last week.

    “The fact that we haven’t sold off further remains bullish in my mind,” said Peter Donovan, vice president at Vantage Trading in New York. “You’re still flirting with the highs.”

    The oil market also received support as workers at Ineos PLC’s 196,000-barrel-a-day Grangemouth refinery in the U.K. planned to strike April 27 over changes to an employee pension plan, according to a union statement. Ineos warned the proposed strike would close the plant in Scotland for at least a month and could cause fuel shortages in Scotland as early as April 25.

    Adding to perceptions of tight future supply, Saudi Arabia, the world’s biggest oil exporter, said over the weekend it has no plans to boost its oil production capacity beyond the amount it is already pursuing for several years until it gets clearer signs about future crude consumption.

    Saudi Arabia is in the midst of a more-than-$50 billion, multiyear oil production expansion plan to meet growing demand in Asia and other emerging markets. The kingdom is expected to boost its pumping capacity to a total of 12.5 million barrels a day by 2009, up about 11% from current capacity of 11.3 million barrels a day.

    But Saudi oil minister Ali Naimi said he believes the growth in alternative energy like biofuels is casting a growing cloud of uncertainty over future oil demand — forcing the kingdom to put the brakes on capacity plans, possibly for a decade, after 2009.

    Products futures also made new intraday highs Monday. Front-month May reformulated gasoline blendstock, or RBOB, rose above $3 a gallon for the first time before recently trading down 1.08 cents, or 0.4% to $2.9785 a gallon. May heating oil rose to a record $3.3309 a gallon, and was recently trading up 36 points, or 0.1%, to $3.2959 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  107. 107
    Sambone Says:

    “When the dollar loses one percent, the price of a barrel of oil rises by four dollars,” he said.

    http://news.yahoo.com/s/afp/20080420/bs_afp/worldenergyoiloutputopec_080420203355;_ylt=AmY0LBS22uWAmC6wx8sVKTGmOrgF

  108. 108
    zman Says:

    greening of the group continues, even DO went positive. HAL looks to be going higher and against my better judgment I’m holding today’s piece into the close despite a 60% gain so far.

  109. 109
    zman Says:

    HK HOD/all time high

    CHK: ditto

  110. 110
    zman Says:

    WMI CEO on CNBC talking about landfill gas. It may be a small source but we need everything we can find and heaven knows we have a lot of waste to produce methane with.

  111. 111
    zman Says:

    Anybody see the HES pop reason?

    CHK posting top notch performance for the group today, another all time high.

    LNG down 36% today.

  112. 112
    scoop006 Says:

    Re CHK heavy call volume May & June

  113. 113
    zman Says:

    Scoop – Najarian was just on CNBC touting it. They called me earlier looking for natural gas drillers and O&G names and I gave them NBR, EOG, HK which they did not use.

  114. 114
    scoop006 Says:

    You need to get yourself a good PR agent

  115. 115
    zman Says:

    Check out the volume in PBR calls.

    Scoop – remember the guy who used to do the radio show with us on MN1. He works for Options Monster now and asks me from time to time about energy for one of their reports. I’m working on getting more ideas over here heard over there…after we’re in.

  116. 116
    js1 Says:

    Been reading the posts now for a couple of weeks and I don’t recall any mention of UPL. Any reason? I’ve been lucky enough to make $ in that one, any thoughts on it?

  117. 117
    zman Says:

    UPL is a good company, no reason it doesn’t get a lot of play except that I never covered it and have not spent as much time on it (little at all really) as I do on my main names.

  118. 118
    zman Says:

    beer thirty! if NBR posts #s give me a headsup.

  119. 119
    zman Says:

    Wind turbine CEOs meeting with Bush: GE, Gamesa, Siemens, Vestas

  120. 120
    isleworth Says:

    NBR prelim $0.81, incl items, may not be comparable to $0.76 First Call consensus; revs $1.32 bln vs $1.28 bln First Call consensus

  121. 121
    isleworth Says:

    NBR trading up in after hours. $37.88 bid

  122. 122
    zman Says:

    NBR 1Q08 numbers out:

    appears to be reporting a beat of $0.81 from cont ops vs 40.76 expected.

    sales were 1.3B vs 1.278 exp.

    press release starts by saying they are seeing a confirmation of the bottom and reason for their previous optimism of a recovery in U.S. is occurring.

    citing medium and longer term positive growth prospects, the strength of demand for their more power ful rigs and the ability to unstack many recently stacked high horsepower rigs at low cost.

    rig rates in U.S. looking good, not falling near as much as expected …will have more in post tomorrow…

  123. 123
    zman Says:

    bid 38.25 …I gotta run to soccer practice in a minute but I’ll sleep well tonight on this one.

  124. 124
    zman Says:

    Cramer should go monkey nutts happy on NBR tonight.

  125. 125
    Jay Reynolds Says:

    http://www.rigzone.com/news/article.asp?a_id=60588

    HAL w/ new, more effective, amend on the fly frac’ing technique.

    I’m hearing it’s going to be a game-changer for the shales.

  126. 126
    Jay Reynolds Says:

    http://www.bloomberg.com/apps/news?pid=20602099&sid=a9zYWNwIe4Rk&refer=energy

    I would presume that this would infer not only lost revenue but some enviornmental costs as well, even in Nigeria?

    “In the statement, presented as an open letter open letter to President George W. Bush, the group said it would not be intimidated by the USS Swift warship, which is transiting the Gulf of Guinea.”

    Tiny quote, more

  127. 127
    js1 Says:

    Najarian pumped NBR on fast $.

  128. 128
    texana Says:

    z, don’t find any infor on sw dunn co,nd. everything is tight. according to bexp3d.com website eog austin wells ip r: 3060bo,2000bo,2000bo & risan 1400bo. wll sanish field: liffrig 2530bo,locken 1651bo, peterson 1080bo,perry 1080bo. bexp investor conf 4-18-08 gives the most detailed overview of the play that i know that is available. like bexp kinda as a wildz type play on takeout by 1 of the bigger players, long jul 7.5. would like to know if reef knows location of mro well with 9000 ft lateral? there is a bakken consortium of i think 9 ep & 1 ser co that r trying different comp techs on eastern side of nesson anticline bakken formation. bexp is using a seal packers on long laterals with success. my bakken theory is that we r still early in play & size of play. get in early and stay long, buy any pullback ,of which there has been none. musing t

  129. 129
    zman Says:

    Thanks Texana. The service co in the consortium is either HAL or NBR right?

  130. 130
    texana Says:

    7ep cos & slb as service co

  131. 131
    Wyoming Says:

    Find it strange that SLB buying a rig co after selling Sedco-Forex to RIG and got out of the business, especially on land where they can not price compete.

    Ceramic proppants, expensive and come into play deeper than +/- 8,000 feet depth. Depends on overburden pressure on closure of fracs. CRR is the leader, Kolstad ex SLB. Ceramics not used in Barnett at all, use sand, economics would be killed if used here. Other ceramic proppant provider is Saint Gobain,

    http://www.saint-gobain-corporation.com/

    http://www.oilandgas.saint-gobain.com/Data/Element/Node/Category/Category_edit.asp?ele_ch_id=C0000000000000002503

    Pioneer does not have a ceramic plant, use an agreement for sand mine mainly for the Trinidad coal bed wells. First foray into getting a sand mine went sour. Sand so scarce in Barnett, some operators using golf course grade material.

    Getting blabby, have to go to work, luck to all.

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