22
Apr

Tuesday – Earth Day Sees Record Oil Prices

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In Today's Post:

  1. Holdings Watch - Sold the last of the (SLB), added (CLR) and added to (HAL) and (HK) call positions.
  2. Commodities Watch
  3. Stocks We Care About Today - (NBR), (BHI), (SII)
  4. Crack Spread Update
  5. Odds & Ends 

 

Holdings Watch: The Wiki Holdings and Performance pages are updated for current positions. 

CALLS:

  • (SLB) - sold the second half of the May $100 Calls taken last Thursday prior to earnings on Friday for $5.50, up 182%. Looking at the closing bell, it appears I sold a little early...but it's a problem to have. I still plan to add longer dated calls but see no reason to chase the current run in the shares.
  • (CLR) - Entered the June $50 calls (CLRFJ) for $1.75. Last bid $1.40.
  • (HAL) - Entered May $47.50 calls (HALEW) for $1.05. Last bid $1.69. This is one my favorite things to do. Read the press release and listen to the call and then act. Not see the number and sell which seems to be the mission of many investors. I continue to hold these calls as well as the May $45s and July $50s. 
  • (HK) - Added the June $25 calls (HKFE) for $1.30. At the time I wrote "stock starting to move again" and indeed it closed at its all time high at $23.81. Continue to hold these calls as well as the May 20s and 22.50s and the June $22.50s and am yet again over weight in the name. They report earnings on May 6th and I plan to take some profits off the table prior to the call just to reduce my exposure if they put on a run to $25+ between now and then. Still waiting on well news here...could be any day or could wait for the call. 

PUTS: No trades yesterday.

Commodities Watch:

  • Crude Oil: closed up $0.79 at $117.48 in boring trading yesterday. This morning crude is trading up slightly into the high $117s after breaching $118 earlier.
  • Nigeria Watch: yesterday MEND said it blew up two pipelines in the Niger delta and later in teh day Shell confirmed that an additional 169,000 bopd of Bonny Light is now offline. No word on a repair schedule just yet.

nigeria-april-042108.jpg

  • Early Read on Crude Inventories (from the Dow Jones Survey):
    • Crude: expected up 1.5 mm barrels,
    • Gasoline: expected down 2.3 mm barrels,
    • Distillate: expected to be unchanged.
  • Chinese Oil Demand Keeps Rising. Latest figures for March show oil demand increased 8% on YoY basis, the strongest monthly increase in 19 months. I continue to believe that some of this is actual demand and some of this is currency hedging via physical barrels.

 

  • Natural Gas:  closed up $0.15 at $10.73 and actually crude for much of the day as the continued cold and absent LNG boosted futures. This morning gas is trading flattish.
  • Imports: Up 0.2 Bcfgpd week to week but down 2.0 Bcfgpd YoY.
    • LNG continues to languish at 0.7 Bcfgpd despite the inauspicious startup of (LNG)'s Sabine Passi regasi facility today. The stock tumbled 36% yesterday on the achievement of what I'm sure is the company's biggest headstone milestone event.
    • Canadian imports ran at 8.9 Bcfgpd, up 0.6 Bcfgpd from year ago levels.

ng-imports-042108.jpg

 

ZComment: Unlike the crude market, the gas market is facing higher supply. Prices continue to ignore and I honestly don't know when this egg will crack. I suspect that an acceleration of injections into storage at a greater pace than last year will have a moderating impact on prices but so far gas shows no signs of slowing down. I suspect a correction in crude would send gas lower but again, the focus here is on hurricane and expected summer heat and not on the numbers at hand so I will not be adding more puts until reason sets in. 

Stocks We Care About Today:

NBR Reported A Nice Beat and Said Exactly The Right Things. My long time readers know I pretty rarely do a cut and paste on a press release but management did a fine job here hitting all the hot points I was looking for and adding a little extra about improving orders in the international segment and even hinted at improved results in the shallow waters of the Gomex. We continue to hold a nice position in May and June calls here.

The Numbers:

  • EPS of $0.81 vs $0.76 expected,
  • Revenue of $1.32 B vs $1.278 B expected.

We went into the Nabor's position a couple of weeks back and have since added to it in anticipation of today's conference call. The original idea was best stated last Tuesday when I wrote:

    • the onshore drilling group has been out of favor for quite some time now due to over capacity which yielded falling day rates and spare rigs in the U.S. and declining drilling activity in Canada. While it is difficult to call a turn to more favored sector status on the part of the analyst community it does appear to be slowly moving that way as E&P's up their capital budgets, especially where it pertains to rig intensive resource plays like the shales.
  • Last Friday I added: NBR by the way is great play on the Bakken. Their rigs are the no kidding around size 1,000 horsepower variety you need to drill 10,000 feet down and then a mile over the section. They have 15 rigs in the play now working for the likes of EOG, WLL, CLR, HES, MRO, COP(Burlington) and the play looks to be accelerating so NBR is going to benefit from increased natural gas AND oil. 

And They Answered With The Following:

"It is becoming increasingly likely that we may have already seen a bottoming out in the results for our large, important Lower 48 Land Drilling unit,"

The largest component of the pending incremental demand will be 1,000 and 1,500 horsepower rigs with upgraded pump capacity and power. These rigs are in short supply today and will be at a premium in any recovery  ...  Nabors currently has 85 stacked rigs with roughly 50 of these capable of returning to service with limited expenditures since virtually all of the stacked rigs have worked in the last 18 months. Approximately 30 of these rigs are in this highly desirable 1,000 to 1,500 horsepower class.

and then they added: 

International operations we are seeing a further increase in the already high level of bidding activity and we are enjoying a high success rate in capturing these bids in all of the important global markets, including the Middle East, North Africa, South America, Russia, and even Eastern Europe.

Zcomment: Now I call that saying the right things.

Nabors 1Q08 Conference Call: 11 Est. 

BHI: Reports Slight Miss, Sees North America Improving.

  • Reported EPS of $1.18 (after items) vs $1.20 expected. Revenue came in a little light at $2.674 B vs 2.695 B expected.
  • Notably, North American revenues were up on a YoY (+8%) and sequential (+4%) basis. Revenue outstripped the percent gain in rig activity which again sounds like bottoming action on pricing. Even Canada was up 4% on revenues vs a 1% decline in activity.
  • "results from North America were better than expected" ....hmmm, seems to be something of a recurring theme with 1Q08 results.
  • they see higher drilling activity in 2H08 and in addition to natural gas activity pointed to higher levels of oil directed activity as well. (Bakken).
  • International ops still seen growing low to mid teens. Latin America was very strong, especially Brazil, on a YoY basis as was Russia. North Sea remained weak like it did for almost everyone reporting so far and no one is calling a turn there yet.
  • Margins in drilling and eval were flat which is impressive.
  • Conference Call: 8:30 Est. I don't have a position but want to hear their comments. 

SII Reports In Line Quarter

  • Reported EPS of $0.87 vs $0.87 expected; Revenue came in at $2.37 B as expected.
  • Results were led by strong international growth (revenues up 24%) led by Russia/FSU, North Sea and Latin America.
  • Margins in their oilfield segment - bits and mud - inched up 0.2% from 4Q07 and 0.6% from 1Q07.
  • Conference Call 11:00 Est. Same as above, no position at this time but want to hear their take on several markets, domestic and international. 

BJS Misses, Guides Next Quarter Lower.

  • Reported 2Q08 EPS of $0.43 vs expectations of $0.55.
  • Guiding 3Q08 to EPS of $0.39 to $0.43 ...  current 3Q consensus is $0.50.
  • Miss was due to significant pricing pressure in January in North America, Feb and March said to be more stable. The see a brighter outlook going forward despite the second bullet above.
  • Conference call at 9:30 EST.... I don't have a position here and will read the transcript.  

Offshore Drillers: Brazil to spend $72 B over next four years. Ok, so while there is some debate about the potential size of PBR's Carioca fields (600 million barrels to 33 billion barrels) there is no longer any doubt about their capex plan regarding the largely offshore program coming in the next 4 years. The 5 to 8 billion barrel Tupi field alone will see 10 deepwater rigs added for evaluation and development drilling. So the picture for deepwater capable drillers just keeps getting better. 

Crack Spread Update: For the most part cracks inched higher last week as gasoline paced gains in crude. Refiner discipline is key now as we approach a time when non-trip related gas demand should begin moving up. If the trajectory of gasoline in storage continues to fall with the same slope it has had in recent weeks I think the refiner will be able to set a tone on their conference calls that is better than on the last two calls. Nothing of real note in the graphs below except a little more improvement and that YTD northeast cracks are actually running ahead of 2Q levels. This makes some sense in that they both ran up less last year and the region has seen several operating snafu of late. I'm contemplating adding (SUN) and (VLO) to my current small position in (TSO). 

crack-spread-041808.jpg

Odds & Ends

Analyst Watch: Friedman Billings upped their price target on (HAL) from $43 to $55 and on (WFT) from $74 to $91. (SM) upped from hold to buy at Jefferies.

 

147 Responses to “Tuesday – Earth Day Sees Record Oil Prices”

  1. 1
    Sambone Says:

    6:54 am EST

    Supply Woes Help Crude To New Highs

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures continued their blistering record-setting run in London trade Tuesday, climbing to new heights as supply concerns, a weaker dollar and a bullish technical outlook again propelled prices upwards.

    ICE Brent crude breached $115 a barrel for the first time on record, while Nymex light, sweet crude futures traded above $118 a barrel, also a first.

    “We still have an undercurrent of bullish news in the market — the (U.K. refinery) strike at Grangemouth and the ongoing unrest in Nigeria are the main features, but we still feel that the desire of traders to own oil as it looks strong technically is still the force that is driving prices regularly to all time highs,” said Glen Ward, energy broker at ODL Securities in London.

    At 1036 GMT, the front-month June Brent contract on London’s ICE futures exchange was up 22 cents at $114.65 a barrel, having touched a new high of $115.03 a barrel earlier.

    The front-month May light, sweet, crude contract on the New York Mercantile Exchange was trading 17 cents higher at $117.65 a barrel, off from a new high of $118.05 a barrel. The May contract expires later Tuesday.

    The ICE’s gasoil contract for May delivery was up $8.50 at $1,065.50 a metric ton, while Nymex gasoline for May delivery was down 30 points at 297.61 cents a gallon.

    “For the moment, there does not seem to be anything stopping the price juggernaut we are seeing in energy, as markets are seizing on bullish news while ignoring anything bearish coming their way,” said Edward Meir, analyst at MF Global in New York.

    News of the shut-in of Nigerian crude oil production continued to ripple through the market Tuesday. Shell Production Development Company said Monday it had shut-in 169,000 barrels a day of production from its Bonny Light fields and declared force majeure on its imports for April and May as a result of militant attacks on one if its pipelines feeding the key Bonny Island oil export terminal.

    “Bonny Light is a “Cadillac” crude with a high yield of gasoline, so its loss comes at an especially bad time, with the official start of “driving season” just five weeks away,” said Peter Beutel of trading advisory firm Cameron Hanover.

    The oil market continued to eye the standoff between unions and Ineos, owners of the U.K.’s 196,000 barrel-a-day Grangemouth refinery. The two parties are due to resume talks Tuesday with the aim of resolving a pensions dispute that has prompted workers to announce 48-hour strike action from Apr 27, and which could ultimately result in the refinery being shut for a month.

    Traders are concerned that a prolonged shutdown at Grangemouth could have a knock-on effect that would disrupt production from North Sea oil fields, including the Forties pipeline system.

    While market demand fears associated with an economic slowdown in the U.S. are offset to some extent by strong signs of demand growth in emerging economies such as China — Chinese customs data Tuesday confirmed that the country imported a record 17.3 million tons of crude oil in March, up nearly 25% on a year earlier — high oil prices could yet toll on the global economy the International Energy Agency warned Tuesday.

    After the world’s biggest oil producers and consumers said Monday at a conference in Rome that record-high oil prices are threatening global economic growth prospects, executive director of the IEA Nabuo Tanaka replied that it was “possible” when asked if high oil prices could lead to recession.

    A fall in the dollar against most major currencies offered more support for crude prices Tuesday, although its influence in steering prices may have taken on secondary importance following recent fundamental developments, some analysts said.

    “Naturally, the weaker dollar still supports most commodities, including oil, but at the moment investors are concentrating more on market fundamentals, with Nigerian attacks highlighting the market’s sensitivity to various supply or geopolitical disruptions,” said Andrey Kryuchenkov at Sucden Research in London.

    —By Nick Heath; Dow Jones Newswires

  2. 2
    PackMan Says:

    Abby Jo trotted out on CNBC this morning says Oil too high, should be 90-95.

    FWIW; she doesn’t really have the sway anymore, but still, its Goldman talking.

  3. 3
    PackMan Says:

    Crude is too high ? Really ? Hadn’t noticed.

  4. 4
    zman Says:

    Thanks Packman – agreed re AJC

  5. 5
    zman Says:

    NBR bid up $1.10.

    BHI conference call starting.

  6. 6
    zman Says:

    CLB – I’m going to look at taking some June Calls here for tomorrow’s earnings. I’ve been meaning to do this for some time.

    BHI – still pre Q&A. Mostly good stuff.

  7. 7
    PackMan Says:

    de nada Z

  8. 8
    zman Says:

    BHI Q&A: demand in N. America looking better 2H08, British Columbia very exciting, GOMEX going to improve second half, not seeing price pressure beyond expectations, seeing areas of improved prices.

    Rig count expectations: 2008 seeing 4% US growth and they say that’s conservative (was expected up 1% last quarter), Canada seen down 1 to 2% which is much better than previously expected (was expected down 8 to 10%).

    World up 8 to 10% rigs.

  9. 9
    zman Says:

    HAL price target increases I’ve seen so far this morning.

    RBC took HAL price target from $51 to $60. Jefferies increased theirs from $52 to $58.
    Friedman from $43 to $55.

  10. 10
    uop Says:

    zman:

    GM

    any SLB attractive?

  11. 11
    zman Says:

    Uop – long term I think it is, seeing a little pt this am, watching. HAL more attractive to me.

  12. 12
    zman Says:

    CHK on fire again, all time high $53 wow.

  13. 13
    texana Says:

    reef do u happen to have township and range for that mro 9000′ lateral?

  14. 14
    zman Says:

    NBR reaction pretty odd.

  15. 15
    Dman Says:

    Hi Z,

    Cramer had a piece out yesterday saying that mutual-fund inflows were pushing up E&P’s like CHK, APC etc. Says “Mutual Fund Monday” is back & expects it to stay a while.

    Certainly the wind in CHK’s sails seems to have picked up lately & it feels like big money.

    Downdraft just now …CLB at 135 = tempting.

  16. 16
    uop Says:

    zman:
    you plan to sell some of your HK calls, May ?

  17. 17
    Sambone Says:

    9:39 am EST

    Nymex Crude Flags After Hitting Fresh Record

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures eased up after reaching a new record high Tuesday, torn between supply problems and expectations U.S. stockpiles are rising.

    Light, sweet crude for May delivery was recently down 56 cents, or 0.5%, at $116.92 a barrel on the New York Mercantile Exchange, after earlier climbing as high as $118.05 a barrel. The May contract expires Tuesday. More actively June Nymex crude was trading at $116.02 a barrel, down 61 cents.

    June Brent crude on the ICE futures exchange was down 43 cents to $114.00 a barrel, after climbing to a record high $115.05 a barrel.

    Nymex crude futures earlier shot to new records on an assortment of supply worries. Crude production in Nigeria, already running below capacity because of security problems, was buffeted again after rebels hit two oil pipelines there Monday.

    Royal Dutch Shell PLC (RDSA) has been unable to gain access to the pipelines, which feed into a key export terminal, a spokesman said.

    As well, a joint venture that includes Shell said it had been forced to shut in around 169,000 barrels a day of crude exports from its Bonny terminal in southern Nigeria for the rest of April and May after a separate pipeline attack last week.

    Nymex crude rose 79 cents to a settle at a record $117.48 a barrel Monday and is up 22% year to date.

    “This news would normally have caused oil prices to spike more dramatically because Bonny Light crude is one of the preferred grades by U.S. refiners for making gasoline,” said Addison Armstrong, an analyst at Tradition Energy in Stamford, Conn. “However, with U.S. demand running nearly 2% behind last year’s levels and a considerable surplus of gasoline in storage, the reaction in the futures markets to the news was somewhat muted after an initial flurry.”

    A strike threatened by workers at Ineos PLC’s 196,000 barrel-a-day Grangemouth refinery in the U.K. also stoked worries that a shutdown could disrupt production from North Sea oil fields, including the Forties pipeline system.

    An updated picture of oil markets in the U.S., which consumes more than 20% of world oil output, is due out in weekly statistics scheduled for release Wednesday. After reporting two surprise drawdowns in a row, analysts expect the Energy Information Administration will report crude stockpiles rose last week by 1.5 million barrels.

    “After some significant draws over the last couple weeks, the market is going to look for a build in crude stocks,” said Andy Lebow, senior vice president for energy at brokerage MF Global in New York. “Failing that, people will see it as constructive” for prices, he said.

    After rising in five of the last six sessions, analysts say the market could be poised for pullback.

    “We have basically gone vertical here,” Lebow said. “I don’t think one would be surprised in the least if we saw a sharp selloff.”

    Front-month May reformulated gasoline blendstock, or RBOB, fell 1.96 cents, or 0.7% to $2.9595 a gallon. May heating oil fell 2.92 cents, or 0.9%, to $3.2822 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  18. 18
    zman Says:

    Thanks Dman. I think they’ve been buying for months now but the flows may have accelerated of late.

    Service taking a breather this morning. Watch SLB for a turn there but for now its all red and CLB is no exception. Tempting.

    Must be some news on CHK coming as a $2 move this early is abnormal and much, much bigger at 4% than the group.

    Uop – at some point, yes. Probably on spike a little later this month.

  19. 19
    zman Says:

    VLO leading refiners up.

  20. 20
    scoop006 Says:

    Z sold vlo april $52.50@ $4. Bought 4/9/08 @ $1.80.

  21. 21
    Dman Says:

    CHK acting a bit crazy. Rumors anyone?

    Looks like it wants to keep on up.

  22. 22
    scoop006 Says:

    #20 MAY

  23. 23
    zman Says:

    nice scoop

    RE CHK – all I can see in the way of news is a conference at Oklahoma State which is not open to the public as far as I can tell.

    The energy groups seeing some profit taking with the market now.

    CLR coming in almost 3%, considering adding to yesterday’s position.

  24. 24
    zman Says:

    DRYS taking out Ocean Rig.

  25. 25
    scoop006 Says:

    Will the DRYS news send the stock price down?

  26. 26
    zman Says:

    Dunno yet, it’s valued in NOK and they will hold a conf call on Thursday. Not sure what all ocean rig has in assets, thought it was 2 deepwater capable rigs and the diversification into a stronger long term market, even if it represents a small piece of their revenues/op inc might be a welcome thing in the face of overcapacity perceived by many in 2009-10 timeframe.

  27. 27
    zman Says:

    As SLB goes, so goes the service co’s. HAL at HOD but still down, NBR starting to gain ground back into greenland. Call in 40 minutes there.

  28. 28
    zman Says:

    CHK – rumor is APA for CHK. I doubt it. More likely DVN, APC, or a Major, possibly CVX if anyone takes them.

  29. 29
    zman Says:

    ZTRADE: NBR – Added June $40 Calls (NBRFH) for $1.15.

  30. 30
    zman Says:

    BJS: what I wrote this morning, note second and fourth bullet:

    * Reported 2Q08 EPS of $0.43 vs expectations of $0.55.
    * Guiding 3Q08 to EPS of $0.39 to $0.43 … current 3Q consensus is $0.50.
    * Miss was due to significant pricing pressure in January in North America, Feb and March said to be more stable. They see a brighter outlook going forward despite the second bullet above.
    * Conference call at 9:30 EST…. I don’t have a position here and will read the transcript.

    Stock off 15%. You can’t miss in this market and guide poorly or you get slaughtered.

  31. 31
    zman Says:

    HK making a run on $24

  32. 32
    scoop006 Says:

    DRYS seems the street likes the news

  33. 33
    Popeye Says:

    HK: There went $24.

  34. 34
    reefguy Says:

    chk- Moving on Haynesvillr/Bossier shale hysteria

  35. 35
    zman Says:

    Agreed Scoop

    NBR starting to act right. HAL still on the fence watching SLB.

    Looks to me like the broad market sluggishness is benefitting energy.

    Crude expiry today and oil is now at an all time high of 118.33, up 0.85

  36. 36
    zman Says:

    Reef – Option Monster pinged me that there is an Apache for Chesapeake rumor going around.

  37. 37
    zman Says:

    Najarian doubts it will happen, as do I, he may throw cold water on it later on CNBC. However, he may just say wrong suitor. I said DVN, APC (who is resource playless) or a major – Nice pr move for someone like CVX who advertises green energy all the time to pick up what will be the largest natural gas producer in the U.S. by year end.

  38. 38
    zman Says:

    NBR 1Q slides are available on their site.

    http://library.corporate-ir.net/library/70/708/70888/items/289010/1Q08EarningsPresentation.pdf

    Trend towards higher EPS given better rig contract rollovers both domestic and international is pretty well laid out.

    Call starts in 10 minutes

  39. 39
    zman Says:

    Another HAL PT upgrade: Tristone goes from $55 to $65.

  40. 40
    Nicky Says:

    Re# 2 – does’nt really make sense as GS were clearly long oil a week ago – they are always talking it up.

  41. 41
    zman Says:

    Morning Nicky – about 4 weeks ago GS called oil lower during the second quarter on lower U.S. demand, said it would go back to $90 or $95 (can’t remember which) but that it would go higher longer.

  42. 42
    js1 Says:

    CHK also helped by Jubak adding to his pick list with $62 target by Dec 08.

  43. 43
    zman Says:

    Thanks JS – I guess better late than never is still a good thing. CHK is still cheap despite the recent run but you gotta wonder what took these guys so long to wake up to it. Must be the debt load and outspending of cash flow but they should have a longer term view. Upgrades at this point smack of confidence brought about by commodity prices and not management.

    Anybody see a negative comment on SLB this am? Stock still going lower and weighing on the group.

  44. 44
    isleworth Says:

    Z – you on NBR call?

  45. 45
    zman Says:

    Tempted to dump my CHK and roll to longer strike but that is a trap in a sense as in, they come out and say they aren’t aware of any offers and the stock falls and you have a high strike way out of the money call. Still, I may take some 6 month or longer out calls.

  46. 46
    uop Says:

    zman:

    oil and ng dropping together,

    if these would indeed drop further,
    what would happen nto all those green oil and gas plays /

  47. 47
    Dman Says:

    Z – I wonder if SLB is just a technical pullback.

    I sense a disturbance in the force at $105 originating from the October 07 quadrant 🙂

  48. 48
    zman Says:

    NBR – Conf call: rollover prices much better than expected, costs and downtime per rig improving on their new rigs, drilling record wells in all the important markets.

    yes on callCo

  49. 49
    Nicky Says:

    Euro came very close to 1.60, dollar tanking all supportive of oil. WTI out performing products – signs of divergence but whether it is meaningful at this minute remains to be seen.

  50. 50
    zman Says:

    uop – it depends on how much they fall. Stocks are not discounting anything like the current strip in oil or gas. Would they pull back some? Sure.

  51. 51
    zman Says:

    Good article in the WSJ on what’s next (or not next for Saudi). Relates to their delay of developing more fields post 2009 as I stated in yesterday’s post. It’s been know for some time that the big fields are almost done being developed there. I you don’t know much about Saudi’s history and near future it is worth a read.

  52. 52
    zman Says:

    SLB back to where I sold my second set of options yesterday. Looks more technical than me.

    NBR saying seeing signs as we speak, in rig count up from 1Q average up 12 rigs to 238, margins improving with contract rollovers. They expect an overall increase in rig count vs last year, don’t see much if any further deterioration in margins. That’s pretty good news.

  53. 53
    zman Says:

    CHK Rumor: Simmons and Co saying results in Haynesville are better than expected.

  54. 54
    zman Says:

    ZTRADE: Added CHK July $60 calls for $1.90 (CHKGL)

  55. 55
    Nicky Says:

    Z re #41 – I think quite a few were calling it lower then Z including TBoone – most have since reversed their positions. Since then GS have certainly come out with higher targets implying to me they are long. TBoone’s fund lost 20% on his brief short foray. So he has a vested interest in talking it up – no doubt why he was on every tv station a week ago telling the world he too is long! Listening to CNBC – most of the traders don’t even know why they are long!

  56. 56
    zman Says:

    Nicky – agreed. Too funny re the traders. I hear the same re gas guys and they have no idea about the numbers but, hey, up is up.

    NBR approaching the Q&A. Still confident and saying the right things.

  57. 57
    Nicky Says:

    I would think $120 is possible on the May contract before it expires today. Somebody is going to want the credit for that I would imagine. The internal wave count is very unclear and although I suspect the end is drawing near there is very no way of telling how far this runs. It is already way higher than most imagined it would go on this run I think.

  58. 58
    isleworth Says:

    Coker & Palmer downgrades KWK, CXG, XTO to Accumulate from Buy, downgrades PLLL to Neutral from Buy

  59. 59
    Nicky Says:

    Trade below today’s low of 115.94 may be an early indicator followed by a move below 112.72 that this wave is done.

    Euro over 1.60 – a green light for oil.

  60. 60
    zman Says:

    Hooray HAL.

    PBR > $130

    Q&A NBR

    an analyst actually used the phrase “knocked the cover off the ball” regarding Canada. Management tempered enthusiasm but said that the longer term was good given the new shale demand Good this year a little bit and more impact next.

  61. 61
    zman Says:

    NBR – analysts sounding very pleased. I imagine they run for the squawk boxes soon.

    NBR saying they can add 30 to 50 more rigs this year without labor issues in the States. Not saying if the demand is there for that size increase but from what I’m hearing elsewhere and what they said about seeing U.S. demand in all geographic locations. I would call the tone optimistic, still cautious, but more optimistic in quite some time.

  62. 62
    zman Says:

    NBR Q&A:

    management more comfortable with 2008EPS, see it much higher in 2009/2010.

    rig requirements: subset of rigs needed to deal with unconventional drilling. very well positioned. management reminds that the shales are not just a US phenom but also Canada.

  63. 63
    zman Says:

    going to take yesterday’s May HAL 47.50 calls off the table. Just boosting my cash.

  64. 64
    zman Says:

    ZTRADE: Out HAL $47.50 May Calls (HALEW) for $1.94, up 85%

  65. 65
    kiaora Says:

    Z…why are the 47.50s better than the 45s?

  66. 66
    zman Says:

    K – Re HAL. The 47.50s will get hurt worse than the 45s. I still hold the May 45s and the July $50 calls. Plus I think I said I took those for a quick trade and 85% in less than a day isn’t too bad.

  67. 67
    zman Says:

    Wow SM off to races on that Jefco upgrade.

  68. 68
    zman Says:

    DVN opted to bump their ownership in the Kaskida discovery, one of their 4 lower tertiary deepwater gomex discoveries. Their increasing confidence is interesting in the face of upcoming news on their still drilling or potentially evaluating “Chuck” prospect… This is a very deep, very high dollar well that has been drilling since last summer.

  69. 69
    Nicky Says:

    May crude makes it to within 25 cents of 120.

  70. 70
    reefguy Says:

    sm moving on improving wolfberry economics( they liked it at 70 oil must be great at 120)

  71. 71
    zman Says:

    why is vespa not public and why is WGO not a $0 stock?

  72. 72
    zman Says:

    Re 69 … and OPEC rules out emergency meeting prior to the regular meeting in September.

  73. 73
    zman Says:

    Reef – thanks re SM, getting that cautious feeling again ast profit taking higts the sector with oil up 2. Strange to see natural gas not following it up today.

  74. 74
    reefguy Says:

    z- I have been observing a bit of a lag between the two in moves; like the bulls forgot about one or the other when pushing upward…

  75. 75
    reefguy Says:

    BTW- XB crosses $3/gallon before taxes and trucking and marketing margin. Pump prices will be over $4 next week

  76. 76
    zman Says:

    $120 oil is puting a lid on this market.

  77. 77
    zman Says:

    Phil Flynn must be in complete self-hatred mode about going short oil at $97.

  78. 78
    zman Says:

    I bet we get another surge higher on the energy group once NYMEX trading is over for the day and for the May crude contract.

  79. 79
    zman Says:

    June crude is trading a dollar lower as the forward curve is in backwardation. I imagine it too will make a run on $120 given the current hysteria.

  80. 80
    uop Says:

    zman;
    my CHK, COP, HAL are over 100% in green,

    if I take your #78, they will get another boost, tempted to sel 1/2.

  81. 81
    zman Says:

    good rules rule of thumb: when in doubt sell half and when a double sell half and play with the house’s money. Simple rules that keep me from being overly greedy and out of trouble. Everything may go red as the DJIA tumbles.

  82. 82
    Nicky Says:

    It could be that a run on the May contract into expiry will be it. It wouldn’t be the first time it happened like that.

  83. 83
    zman Says:

    Could be but I’d just be guessing if I tried to call a top on oil. I and others have been saying 115 and $120 for awhile now and the market will need something to get it moving higher or I’d bet on a little profit taking. However, we get numbers tomorrow and if Mexico imports continue to stink then you could see a draw and that would like send the new front month contract to 120.

  84. 84
    Nicky Says:

    Opec must be loving this. Whilst I don’t blame them for not hiking production their continual rhetoric only serves to push the price higher.

  85. 85
    zman Says:

    No kidding, better go fill up the gas tank at lunch. $3.50 gas is going to look like a bargain soon.

  86. 86
    zman Says:

    Head of DRYS has personally bought 4.4% of the company his company is acquiring. I don’t particularly like the CEO competing with his company’s bid or the idea that by buying his stake before the announcement of the tender offer he benefits from his own decision. Seems a little shady and he has a somewhat shady rep anyway. I’m going to stay away.

  87. 87
    uop Says:

    zman:
    SLB coming back ??

  88. 88
    scoop006 Says:

    thanks for #86. sold half this AM for an almost double.

  89. 89
    zman Says:

    SLB: what do you mean coming back?

  90. 90
    reefguy Says:

    z- NG time lag over going green

  91. 91
    zman Says:

    ZTRADE: Took a starting position in DVN Jun $125 calls (DVNFE) for $5.60. See #68 above and previous comments re Chuck prospect on the site.

  92. 92
    zman Says:

    TSO price target cut last night from 35 to 26 by Deutsche. Down market exacerbating the move with the shares off almost 5% now. Ugly.

  93. 93
    uop Says:

    zman: my 87 on SLB, moved a little but wrong signal.

  94. 94
    zman Says:

    Uop – I’m not following re SLB?

  95. 95
    zman Says:

    Still think energy closes green this afternoon in the same trend as of late. Get the nymex closed, allow the broad market to recover a bit and the energy sectors likely green up too/more.

    CHK may already be starting to bounce back towards the highs, often rumor like that will drive the stock up early, followed by a little lunch time profit taking and then a furious climb into the close.

  96. 96
    Jay Reynolds Says:

    Lead engineer for JW Operating Co in NW LA says with what’s going on in the Haynesville Shale that CHK is going to need 50 more rigs, not 9-10.

    Whether this is a green light or their way of saying “lease to us” instead of CHK unknown.

  97. 97
    zman Says:

    JW – NBR said they could add the 50 rigs needed pretty quickly. I was very surprised to here they could crew them in the U.S. without difficulty. Where are they going to get the manpower for that, unemployed investment bankers?

  98. 98
    apbd Says:

    Stratfor reports some political progress in the Niger Delta. May not have much effect because MEND not included.
    apbd

    http://us.f344.mail.yahoo.com/ym/ShowLetter?MsgId=51_7930725_168666_1514_7291_0_216050_24281_3586597245&Idx=2&YY=80850&y5beta=yes&y5beta=yes&inc=25&order=down&sort=date&pos=0&view=a&head=b&box=Inbox

  99. 99
    zman Says:

    Afternoon A,

    Any talks without MEND are pointless and in fact will tick them off and make things worse.

  100. 100
    Sambone Says:

    Uncle Phil

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

  101. 101
    zman Says:

    If I were not long so much NBR I would be adding on those results. Should be some nice price target upgrades tomorrow.

    Ratings there are 4 strong buy, 9 buy, 6 hold, 1 moderate sell. Seems like room for some rating increases as well.

    When you look at HAL their rating have moved to all buys over the last month.

  102. 102
    zman Says:

    Glad not to have been in BJS, down 15%. It pays to do a little research and not just decide that you like service ….it’s not as homogeneous as the talking heads make it out to be.

  103. 103
    apbd Says:

    DRYS at $80 through 200 Day SMA. Is this for real? Do we care?
    apbd

  104. 104
    zman Says:

    Re DRYS: Stock is just about back to where it was when it reported shockingly good 1Q results and fell apart. I’d like to see less momentum in the stocks and more stability of the economy. Also, see #86 above.

  105. 105
    Jay Reynolds Says:

    Re 97

    Driving through Lafayette, LA the ED radio ads are gone, replace with “if you can run a cement pump sign on for $100K/yr to start in the offshore industry. Folks holding “Sign on bonus” signs on the side of the road. Job fairs just about non-stop. But the graying of the workforce and all we can hire around here, with what we can pay in the stripper market is “worms”

  106. 106
    zman Says:

    Jay – thanks for the color. That’s how NBR described Canada but not the U.S.

  107. 107
    Jay Reynolds Says:

    RE MEND.

    Didn’t take ’em long to get hacked off.

    Two further attacks on Nigerian pipeline confirmed by Shell.

    http://www.bloomberg.com/apps/news?pid=20602099&sid=aW3csiE5c.EY&refer=energy

  108. 108
    zman Says:

    yep, it’s going to be a long, hot, expensive summer.

  109. 109
    kyleandy Says:

    apbd re 103 at least one of us cares!!!!!

  110. 110
    zman Says:

    Ky – I care, just not with my wallet currently which generally seems to focus my attention, lol.

  111. 111
    zman Says:

    crude and nat gas diverging into the close. how odd.

  112. 112
    zman Says:

    SLB approaching HOD.

  113. 113
    kyleandy Says:

    z am long DRYS but just chickened out and sold some 90 calls against it. i triggered the rally by selling 1/2 my position at 68

  114. 114
    zman Says:

    Ky – I hate it when that happens.

    XTO call at 4 est, will likely listen to replay as I’m not long.

    Nymex closing without a $120 hit on oil. Probably assures the June contract will hit it.

    Now that commodities are closed we may/should in my thinking get a relief rally this afternoon that oil didn’t blow out the top

  115. 115
    ram Says:

    Anybody see negative news on NOV?

  116. 116
    Denise Says:

    Good afternoon-from the “our goose is cooked “(with $120 crude)
    Observation from T Crescenzi- The rebate plan is expected to return about $130 billionand 30b of biz stimulus

    Oil was at $93 at the time

    If crude stays at todays levels-it would cost an additional $200 billion over the next year(assuming 20.5 barrels a day use)

    I have been selling energy today expecting a pullback and bought some more dug

    Speaking of Doug-Mr K went short oih today and is still long Dug

  117. 117
    zman Says:

    Hey D, what’s Kass’ reasoning behind a short of the OIH?

  118. 118
    Denise Says:

    Also people are overlaying the crude chart with the Nasdaq bubble and the peaks are eeriely similar

  119. 119
    Denise Says:

    Z-did not share- (presume he thinks there overbought ) or maybe his global recession crude down thesis?

    but I also read that finanials now 16.80% of S&P energy 13.250(maybe slightly off using memory)

    2 years ago I believe energy weighting was 6% and financials 25%

  120. 120
    jiveyjr Says:

    I bot some WLL, that outta stop that one deal in its tracks

  121. 121
    zman Says:

    greening underway after a little delay.

    NOV – no news I see, down equiv % to the OIH move today. Be glad you’re not in BJS.

  122. 122
    zman Says:

    Jivey – hear ya, my second piece of CHK put the kybosh on that deal too.

  123. 123
    isleworth Says:

    Z – any change in thoughts on refiners in light of today’s oil spike and refiner weakness?

  124. 124
    isleworth Says:

    I know you just had your toe in. Did you see the DB piece on TSO?

  125. 125
    zman Says:

    Isle – not really. Products failed to keep up but its one day and its not like gasoline is expected to fall tomorrow so that probably goes higher unless crude gets killed on a build. We have the possibility of one more week of weak imports due to port closures which could lead to a downside surprise on the crude numbers and that, in this market, would probably give us the $120 test. TSO got his with a severe price target downgrade and that cooked it and the group and they continued to weaken all day. I’m not ready to punt it yet but I’m going to wait a little closer to earnings. VLO has had a good, fast 10% run and probably is subject to a little profit taking.

  126. 126
    zman Says:

    stepping out for 20 minutes. keep greening the group while I’m gone.

  127. 127
    zman Says:

    Back in the shop, little greener than I left but not a lot. Still think NBR catches some upgrades or at least PT upgrades in the morning.

  128. 128
    scoop006 Says:

    see DRYS

  129. 129
    Sambone Says:

    3:33 pm EST

    Nymex Crude At High On Supply Woe, Demand, Dollar

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures closed above $119 a barrel for the first time Tuesday on signs of shaky supply, sturdy global demand and a fresh low for the dollar.

    Light, sweet crude for May delivery settled at $119.37 a barrel, up $1.89, or 1.6%, on the New York Mercantile Exchange and in intraday trading rose as high as $119.90. The May contract expired Tuesday. More active June Nymex crude settled at $118.07 a barrel, up $1.44.

    June Brent crude on the ICE futures exchange settled at $115.95 a barrel, up $1.52, also a record.

    Oil is now nearly double its closing price a year ago, and up 24% in 2008. The latest impetus for buying came as Nigeria suffered further interruptions in output and China reported record oil imports last month.

    “There doesn’t seem to be anything on the horizon that makes you want to get out of black gold,” said George Gero, vice president of global futures at RBC Capital Markets in New York.

    Nigeria, already running below capacity because of security problems, was buffeted again after rebels hit two oil pipelines there Monday. Royal Dutch Shell PLC (RDSA) has been unable to gain access to the pipelines, which feed into a key export terminal, a spokesman said. On Monday, a joint venture that includes Shell said it had been forced to shut in about 169,000 barrels a day of crude exports from its Bonny terminal in southern Nigeria through May after a separate pipeline attack last week.

    A threatened labor strike at Ineos PLC’s 196,000 barrel-a-day Grangemouth refinery in the U.K. also stoked worries that a shutdown could disrupt production from North Sea oil fields.

    At the same time, global oil demand is expected to rise about 1.3 million barrels a day this year to 87.2 million barrels a day, according to the International Energy Agency. Tempering concerns about the demand impacts of a slowdown in the U.S. economy, China imported a record 4.09 million barrels a day of crude oil last month, final data from its General Administration of Customs showed Tuesday.

    “From the point of view of investors, the supply and demand fundamentals don’t look like they are going into oversupply territory anytime soon,” said Bart Melek, commodities strategist at BMO Capital Markets in Toronto.

    A major conference of the world’s largest oil consumers and producers ended Tuesday with a measured statement about the risks of oil prices. The International Energy Forum, after meeting in Rome this week, said in a statement that “oil prices should be at levels that are acceptable to producers and consumers to ensure global economic growth, particularly in developing countries.”

    The dollar’s new lows against the euro, which recently traded at more than $1.60, has also fueled dollar-denominated crude’s rise as exporters adjust their prices to compensate for its weakness. Investment funds have poured into commodities including crude as a hedge against inflation.

    Dollar deterioration and inflation expectations are “the most important factors” behind oil’s price rise, Societe Generale analysts said in a note to clients. “At the same time, the supply and demand fundamentals have been supportive secondary factors, but important nonetheless.”

    Front-month May reformulated gasoline blendstock, or RBOB, rose 3.73 cents, or 1.3% to $3.0164 a gallon, its first close above $3. May heating oil climbed 55 points, or 0.2%, to $3.3169 a gallon, also a fresh record.

  130. 130
    zman Says:

    DRYS = wow.

  131. 131
    Sambone Says:

    Tini time

  132. 132
    tater Says:

    Quick question. Been looking into FTO. Do you have a suggestion on how I can find out how their refurb went on the El Dorado refinery? Trying to figure out if they are back up, and at what capacity, and I’ve been having a heck of a time trying to find that kind of info. If you could point me in the right direction I would really appreciate it.

  133. 133
    zman Says:

    Tater…let me scratch about a bit and if I find it I’ll let you know how. It’ll be a few hours.

  134. 134
    redjack Says:

    re #132 ..me too

  135. 135
    tater Says:

    Thanks. Not looking for you to do the work, just need some direction. They were supposed to do a fairly major upgrade in March and I am thinking of trying to catch a bottom as their numbers should be very crappy, but their outlook great. Thanks for your help, no emergency.

  136. 136
    zman Says:

    Ok, but I agree with your premise. I take it the company website is no help? Then I’d check their presentation and last quarter’s pr to try to pin down the timing of the upgrade. Google El Dorado and Bloomberg, and check the EIA snafu nightly sheets (located in a link above and to the right). You could also just shoot IR an email or call them. These little guys love to talk about things like that as long as they haven’t gone quiet pre earnings.

  137. 137
    Jay Reynolds Says:

    Gene Isenberg, CEO of NBR fairy ebullient on prospects, drawdown to stacked rig count, says they have leading edge on purpose built rigs for shale on Cramer.

  138. 138
    scoop006 Says:

    Cramer interviewing Eugene Eisenberg, CEO of NBR says rig shortage.

    Cramer says tough times for NBR behind it; stick with and BUY NBR

  139. 139
    tater Says:

    http://www.frontieroil.com/attachments/contentmanagers/42/d_qrtrplans.pdf

    Didn’t give their website enough time. Trying to do too many things at once (which is easily my number one fault in trading). Bear Sterns presentation piece also kind of interesting. Thanks again for your help.

  140. 140
    zman Says:

    #137 / #138 Thanks guys, will watch it later. Amazing how they can 1) release those kind of results, 2) hold a conference call with 20 or so analysts on it and 3) close up $0.18. Then Cramer comes along with the CEO and the stock is trading after the close at yesterday’s after market highs. Light volume to be sure but who are these people who just buy what he says to buy and didn’t buy it earlier in the day? I need a bigger microphone or soap box or maybe I need to get a camera and the CEO on tap. Hmmmm.

  141. 141
    Jay Reynolds Says:

    With CHK and HK closing in from E & W on the Haynesville Shale in NW LA, I’d sort of expect HK to start showing more signs of life.

    The absence of each competing in the “other’s territory” is interesting…really putting the squeeze on the independents in middle who are operating under leases, mostly in the Cotton Valley, with deeper rights open in the Shale.

  142. 142
    js1 Says:

    Cramer didn’t say he loved Eisenberg did he? Or say something like he is “money in the bank”. Every time he does that it is like the kiss of death. See SGP, NLY, SHLD, LVLT….

    I remember last time he touted “Nabors of Arabia”… back around when it was over 40.

    Also, look out for another “taking NBR private” or buyout rumor. That will mark a short term top to be sure.

  143. 143
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