28
Apr

Monday Morning – Welcome To Energy Earnings Week Three

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Good Morning. Oil and gas prices remain aloft early this morning and we are in for another busy week of earnings. I continue to take advantage of higher stock prices in the group by taking profits in the near month and extending out longer and higher where appropriate. 

In Today's Post:

  1. Commodities Watch
  2. Holdings Watch
  3. Energy Earnings - Week Three
  4. Why I'm In What I'm In Now Watch (Part 1 - (HK), (CHK), (NBR), (PQ))
  5. Odds & Ends 

Commodity Watch:

  • Crude Oil traded up 2% to close last week at $118.52 last week. This morning crude has traded near the $120 mark as potentially supply pinching hotspots mount. I've been saying for awhile traders wanted to take out $115 (check!) and $120 ($119.93 so far this morning); what they do once they get there besides retreat in the near term is hard to pin down. 
  • Turkey Shoot Watch: Turkey sent troops into Northern Iraq again this past weekend. This is always good for a point or two in oil prices, especially if nothing else is going on however, the pipelines between the two countries have not been endangered by past rebels hunting excursions by the Turks.
  • Strike Watch:
    • Scottish Reginery Strike shuts 700,000 bopd North Sea line Sunday morning. Scheduled to last 2 days.
    • Nigerian contractors working for Exxon remain on strike. According to Bloomberg, the Nigerian union workers are claiming current Exxon production is running some 765,000 bopd offline, up from 200,000 bopd last Friday. If this is the case, then Nigerian production has been cut near in half when you take this strike and add the additional 140,000 bopd shut in by MEND attacks last week. Exxon has said that some but not all of its 800,000 bopd of production is shut in at present. (March production from Nigeria was estimated at 1.96 million bopd).   

  • Rebel Watch #1: Nigeria. Rebels storm Bonny Island police station, killing 5 officers and taking weapons. This is only going to get worse this summer as Henry Okah, former MEND leader, goes on trial.
  • Rebel Watch #2: Pakistan. Ethnic Baluch tribes in Pakistan near the border with Iran and Afghanistan have attacked two pipelines (no word on volumes) in protest over a lack of sharing of the countries oil wealth. Sounds similar to the complaints voiced by groups in Nigeria and Mexico.
  • Natural Gas traded up 3% to $10.96 last week.  Gas continues to rise despite an ever increasing short position and mounting evidence (in the form of 1Q08 E&P reports) that production is rising at a near record pace. 
  • Weather Watch: Heating degree days plunged to 48 last week from 114 two weeks ago. This should produce an injection north of 709 Bcf this week. 

Holdings Watch: Wiki Holdings & ZEB Perf Tabs are Updated.

 

Energy Earnings - Week Three - Another Busy Week.

cal-1q08-week3.jpg

Why I'm In What I'm In Now Watch: (Part 1, the rest of the names held will be in Tuesday's Post)

HK - The undiscovered E&P that has begun to be discovered. I continue to take profits and roll longer and in some instances higher in this gassy, high growth, take-out candidate. Holding 3 strikes of calls in June for:

  • 1Q Results (date still not set)
  • results from three horizontal Taylor Sand results in the Elm Grove field. Back in mid-April I had mused that the  announcement of these could take the stock into the mid $20s if they tested at mid teen's MMcfepd rates...too late, we're already at $25.19 as of Friday's close.
  • The stock moved on Friday after (SWN) reported strong results in the Fayetteville Shale. I'm see lots of permitting of FS wells by HK as well. Their acreage is largely concentrated in the Northern part of the play, shallower, less costly to drill and apparently in the path of recent movement as the resource potential in the North may be firming up.
  • Another increase in Haynesville Shale is likely by the time of the call,
  • Upside to production guidance is possible,
  • Valuation has closed the gap with peers but I think upside and the potential for takeout has transferred has matured the multiple here.

CHK - Perennial Gassy, High Growth Rate E&P Favorite. Holding May and July calls. 

  • Holding for earnings 1Q08.
  • Looking for more details on the oil shale plays announced in March,
  • Looking for test results from wells drilled into the Haynesville shale,
  • Looking for W. Texas Barnett comments
  • Street starting to give the name more respect
  • Still undervalued to peers at 5.0x 2009 CFPS and 6.0x 2009 EBITDA. Estimates for 2009 are likely to increase as both price and volumes rise from current expectations.

NBR - North American Focused Land Driller; Right Place, Right Time. Holding 3 strikes of June Calls.

  • Held through earnings and they said all the right things regarding a recovery in North America.
  • Analysts slowly bringing numbers and ratings up here.
  • Canada remains a wild card with little apparent downside unless gas prices collapse which I don't expect,
  • I do expect more E&P companies to announces budget hikes as their confidence is bolstered and the "Shale mania" prompts them to add rigs. Comments by (HAL) and (SLB) on their quarterly calls indicated the North American rig count could end the year 100 to 200 rigs higher than it started and that both natural gas and oil directed drilling is the cause.
  • NBR has the largest readily available fleet capable of handling demand for the power intensive horizontal shale drilling.
  • The stock remains cheap to the market and the service companies and earnings trading at 9.8x 2009 estimated EPS of $3.90. Timing of the turn in Canada can accelerate the numbers here...note that 2010 estimates here are already up to $4.54 and climbing.

(PQ) - Cheap Smaller E&P With High Breakout/Take-out Potential. Holding May and July Calls.

  • Holding for earnings May 6th
  • Woodford Shale: Recent wells coming in the 4 to 4.5 Bcfe type curve with initial production (IP) around 6 MMcfepd, versus their prior expectations of 2.5 to 3.5 Bcfe ...expect more details here and perhaps a bumped up drilling schedule (though it's probably a little early to add another rig to the 3 they have running),
  • Fayetteville Shale - they've non-operated here and as others accelerate their FS drilling schedules they participate in more wells which they have the borrowing capacity to handle present. They may already be through half of their planned 60-80 2008 well participations by the time of the call. 
  • Haynesville Shale exposure via Carthage field in Northwest Louisiana,
  • In the Gulf Coast they have some high potential targets planned for this summer which would be gravy but are not catalytic to the shares at this time.
  • Stock remains cheap to its peers at 3.9x 2009 estimated CFPS and 4.0 2009 TEV/EBITDA. Cheap, cheap, cheap.

Odds & Ends 

Analyst Watch: (MMR) cut from buy to hold at Jefco, Broadpoint Capital lifts (NFX) target from $63 to $80, Lehman raises E&P targets across the board as it adjusts its price deck.

 

 

 

73 Responses to “Monday Morning – Welcome To Energy Earnings Week Three”

  1. 1
    reefguy Says:

    PQ- matyalso be running because of high rate oil well drilled at Weekley Prospect in Houston County. LaRue Heirs tested 1333 BOPD from Buda. Two offsets have cum’d over 300k BO each.

  2. 2
    zman Says:

    Thanks Reef, that’s that Horizontal Buda program. Had not seen a rate there yet.

  3. 3
    Sambone Says:

    8:07 am EST

    Crude Higher On North Sea Pipeline, Nigeria

    By Angela Henshall
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures traded higher in London Monday buoyed by supply fears following the closure of the 700,000 barrel-a-day Forties North Sea pipeline system and strike action from oil workers in Nigeria.

    The global crude oil market is facing an unprecedented supply crunch that pushed the front-month Nymex light, sweet crude contract to within a hair’s breadth of $120 a barrel — it hit a new high of $119.93 earlier in the session.

    Further disruption in Nigeria is potentially more of a problem for the market than the BP PLC (BP)-operated FPS shutdown, said Olivier Jakob, analyst at Petromatrix, as assessments on crude oil flows from Nigeria are difficult to gauge “which makes for a greater justification of a (crude) risk premium.”

    At 1143 GMT, the front-month June Brent contract on London’s ICE futures exchange was up $0.63 at $116.97 a barrel.

    The front-month June contract on the New York Mercantile Exchange was trading $0.62 higher at $119.14 a barrel

    The ICE’s gasoil contract for May delivery was down $3.75 at $108.200 a metric ton, and Nymex gasoline for May delivery was down 37 points at 305 cents a gallon.

    Current crude oil prices have now absorbed news of a two-day strike at Ineos’ 210,000 barrel-a-day Grangemouth refinery in Scotland, some London-based crude oil traders said.

    “That news has already been priced in the market and I don’t think that will affect prices today,” said a broker. “It’s all about whether this dispute will escalate and affect other refineries. It will then have more effect on prices…as it would fuel panic buying from the speculators.”

    The North Sea Forties Pipeline System, which carries around 40% of the U.K.’s oil production has been taken offline because its Kinneil gas-processing plant, which relies on steam and power generated at the Grangemouth refinery, won’t have access to these crucial utilities during the two-day strike. The Kinneil plant processes Forties crude oil before it can be exported by tanker.

    Unrelated industrial action in Nigeria by Mobil Producing Nigeria, a subsidiary of ExxonMobil Corp. (XOM) is potentially more of a concern and could take out 800,000 barrels a day of production.

    Similar disputes have been difficult to resolve, according to traders of West African crude oil, and this latest action follows a series of attacks on pipelines that have cut supply.

    Negotiations have reached an impasse, and strike action could potentially halt a large portion of the company’s daily output for some time, though no force majeure has been declared and shipments from storage are ongoing.

    However, it is unlikely the Nigerian state and Exxon would allow so many barrels of oil off the markets in such a high-price environment, said Sebsatian Spio-Garbrah, an analyst at Eurasia Group.

    “President Umaru Yar’Adua, who has in the past intervened to resolve similar disputes, returns back to Nigeria tonight from a one-week hospital stay in Germany,” he said, adding the president is likely to spur both sides to reach a quick agreement.

    Although supply concerns remain primary drivers, crude price movements continue to be closely aligned with U.S. dollar fluctuations. “The week will be heavy in dollar inputs with Wednesday a key data day on the combination of the Department of Energy weekly U.S. inventory statistics and the FOMC (Federal Open Market Committee) meeting.”

    —By Angela Henshall, Dow Jones Newswires

  4. 4
    reefguy Says:

    pq- sorry wrong well name, #1H Gillette Sand Branch Creek Field. First production in mid January, February averaged 802 BOPD

  5. 5
    Dman Says:

    Hi Z,

    I usually forget to give actual feedback on the site, so while I remember: these EPS tables and the why-Z-is-in-it summaries are super-useful

    Forties fiasco: I read on TheOilDrum.com that apart from the oil, about 1% of global NG supply normally goes thru there & is now shut in.

  6. 6
    zman Says:

    reef- oh, ok, the buda should be still turning to the right at this point.

    Dman – thanks.

    Reddish open except for DO which is red. Saw another downgrade there. I’ll probably hold through this week to see if it can turn around.

  7. 7
    zman Says:

    Group starting to green as crude finds its legs, expect to see $120 during the regular session today.

    Re the Forties pipeline, I did not think there was anywhere near that much gas in the system. Interesting and something for the gas traders to seize upon as increasing European NG prices and keeping more LNG away from US shores. Oh well. Forties should start to come back online in the next 24 hours but I heard a spokesman say the refinery, which provides steam for the 70 fields connected to it, will take 3 weeks to get back to 100% and that further strikes are possible as the pension matter is still unresolved.

  8. 8
    uop Says:

    zman:

    GM,

    up north the weather is warmer, you expect some price drop this week on NG ?

    NFX looks good.

  9. 9
    Sambone Says:

    9:43 am EST

    Nymex Crude Up, But Off Highs As Supply Fears Ease

    By Brian Baskin
    Of DOW JONES NEWSWIRES

    HOUSTON — Crude-oil futures traded higher Monday, in choppy trading as traders assessed the longevity of supply concerns that sparked a price rally ahead of last weekend.

    Light, sweet crude for June delivery traded 48 cents, or 0.4%, higher at $119 a barrel on the New York Mercantile Exchange. The front-month contract traded as high as $119.93, a fresh all-time intraday record high, in electronic trading overnight. June Brent crude on the ICE futures exchange traded 2 cents lower at $116.32 a barrel.

    Oil futures rose Friday on the anticipated outage of a major North Sea oil pipeline, as well as a labor strike and increased militant attacks that had shut in production in Nigeria. BP PLC (BP) shut down the 700,000 barrel-a-day Forties oil pipeline on Saturday, after a strike at a refinery in Scotland deprived the pipeline system of power and steam. The Nigerian strike has forced Exxon Mobil Corp. (XOM) to halt some, or possibly all, of its 800,000 barrel-a-day production in the country.

    Friday’s rally is seen as short-lived by some analysts. The refinery strike is set to end Tuesday, which could lead to the quick return of Forties crude.

    The Federal Reserve is also due to meet this week, without a clear consensus in the market as to how it will alter interest rates further after the expected small cut Wednesday. Further cuts would likely send more money flowing into commodities as an inflation hedge, while signs that the Fed will hold steady going forward could cause the dollar to strengthen. Oil prices fell hard when the dollar firmed significantly against the euro Thursday, but further strengthening on Friday appeared to have no impact.

    “Both (the Forties and dollar) developments could possibly induce a correction in energy prices later in the week, but for now the trend appears higher still,” wrote Ed Meir with MF Global. “We expect the markets to remain firm at least until mid-week.”

    The Nigerian production outages were also seen as having a fleeting impact on the market, which has grown used to occasional large-scale interruptions to the flow of West African oil.

    “Historically, labor strikes in Nigeria have not lasted long and we see little reason for this one to prove different,” wrote analysts at Barclays Capital.

    Front-month May reformulated gasoline blendstock, or RBOB, recently traded down 1.12 cents, or 0.4%, at $3.0425 a gallon. May heating oil traded down 2.54 cents, or 0.8%, at $3.2774 a gallon.

    —By Brian Baskin, Dow Jones Newswires

  10. 10
    zman Says:

    Morning U – Yep but I expected it last week and the week before that and now we’re through $11. I will not short/buy puts in this environment until I perceive a change in sentiment. Maybe that happens with this weeks biggest of the season injection but maybe not.

    The E&P guys need to be announcing that they have hedge the heck out of their expected production during the 1Q calls.

    CNBC reporting traders are saying that record short position in natural gas is causing gas to move higher.

  11. 11
    scoop006 Says:

    check out volume in CHK July $60 & $65 calls

  12. 12
    zman Says:

    Much more weakness (another dollar lower or so) and I’ll take a little OII call position for Wednesday earnings. They benefit from the seasonal hype surrounding hurricane season as well as from the string of Brazilian deepwater discoveries, all of which will require a slew of ROVs to hook up…that’s pretty far off in some instances like the Carioca discovery but Tupi work is underway and I bet they talk about the plays on their call.

  13. 13
    zman Says:

    Scoop – that’s impressive this early in the morning. A guest on CNBC just said option activity in CVX and XOM (both of whom report this week) is up b/c traders expect them to knock it out of park due to high crude prices but that they will likely not due to the fact that they are refiners as well. True. CHK on the other is likely to knock the ball well out of the park on earnings. Note that NFX beat CFPS by about $0.40 last week and CHK is followed by the same bunch of analysts and will likely beat top line too so…. there you have it. Plus Aubrey has to say more about Marcellus, the oil shale plays, the Haynesville, W. Tx Barnett etc and the stock is still cheap.

  14. 14
    zman Says:

    HAL being kept in check a second day over the DOJ investigation into bribery in Nigeria. Honestly I think it is a non-event and that they will have the back of their hand slapped and little more in the end, whenever the government decides to stop pursuing it.

  15. 15
    VTZ Says:

    Not sure if this is in the realm of what we care about, but Total bought Synenco (the 40% sinopec-owned oil sands project in Alberta) for 480 million.

    The 60% share for 480 million represents ~1 billion barrels so they are paying ~50 cents per barrel of reserves (although in oil sands you can’t book reserved until you start mining them if the rules don’t change).

  16. 16
    zman Says:

    CLR = wow, up another 3%. Earnings next Monday.

    VTZ – I saw that but was lazy and failed to drop it in the odds & ends section. I care b/c it gives you a low end valuation on SU.

    HK down at open and failed to go green with group after a 12% move on Friday this one may need a rest. If it does breach green it will likely run hard again.

  17. 17
    scoop006 Says:

    Z Can you update calendar tab tonight

  18. 18
    zman Says:

    Scoop – yep, I’ll add week 3 to it now.

  19. 19
    zman Says:

    Pq about to break out…could be another $1 to $2 in this prior to numbers. See post today on reasoning. Reef – where’d you see that rate reported?

  20. 20
    VTZ Says:

    Z- About the valuation on synenco I also think it is extremely cheap (I was joking with my friends and people at work about trying to raise capital myself to buy it and I figured I would need at least 700 mil). So I wouldn’t worry about how you value Suncor as they warrant a premium based on the fact that they have cash flows.

    Part of the reason why synenco was so cheap was undoubtedly because they would have to raise in the order of 10 billion dollars (in this credit market) to build the project and the fact that Alberta is the most expensive place to build in the world (with Fort McMurray leading the way).

  21. 21
    zman Says:

    Probably should have said BQI, not SU … only 1 cuppa joe so far this am.

  22. 22
    reefguy Says:

    19- Drilling info, rrc

  23. 23
    VTZ Says:

    Well for BQI, in Saskatchewan there’s no certainty on the royalty regime for oil sands so that’s probably going to put a cap on it.

  24. 24
    uop Says:

    zman:

    this NG price is ?????
    now I am getting nervous.
    where is this going ?

    if more NG is found and supplied, and the weather getting warmer,
    why is this happening ?

    This behaves like its getting scarcer.

  25. 25
    zman Says:

    Uop – pendulum swinging way too far in my opinion. Bigger than year ago injections in the offing and the return to service of Independence Hub both auger for lower prices. High oil will provide support. When in doubt sell half. This is my one short and balanced by all the E&P and service longs. Like I said, I won’t be adding until I set the momentum break…that will happen on a day with data, maybe or maybe not this Thursday.

  26. 26
    zman Says:

    DVN – creeping back up by the way.

    HK turning green – think that runs

    CLR jumping almost 5% now…I think people want into this one badly prior to earnings.

    Refiners not performing as RBOB isn’t keeping pace with oil. My one toe in TSO has been broken in half. Considering adding VLO before they announce tomorrow.

  27. 27
    Nicky Says:

    Morning all. Nat gas looks to be near the end of this iii and is into the target areas.

    WTI and the rest look in need of another pop to the upside but I think there too this is almost done.

    Wednesday is shaping up to be a big day imo. Will the air come out of commodities generally when the Fed either doesn’t cut or cuts by 0.25 and signals they are done? Just so happens that products expire Wednesday too. Will probably not see the results until Thursday…

    I am not sure how much the fund positions matter right now. You have nat gas with record short interest going up and you have crude with huge long interest also going up.

    Crude seems to have taken nat gas along for the ride in the last few months with a general feeling that natural gas is underpriced compared to the rest of the complex. Again fundamentals have not mattered.

  28. 28
    zman Says:

    Morning Nicky,

    What are fed fund futures pricing in for a rate cut. Euro not exactly falling out of bed here.

  29. 29
    scoop006 Says:

    CLR now officially a triple

  30. 30
    uop Says:

    zman:

    did you comment on NFX,

    earnings is 7/24,

    what is the driver ?

  31. 31
    zman Says:

    Nice scoop. My late entry into the options has me up a little better than 50%. My common position on the other hand….

  32. 32
    zman Says:

    Uop – NFX reported last week. Please refer to the reports page. I’ll have some bullets in tomorrow’s Why I Own What I Own Part II for this week but I’ve beaten this over the head pretty good on the reports tab.

  33. 33
    scoop006 Says:

    I was referring to the common when you wrote about it on 6/5/07.

  34. 34
    zman Says:

    Scoop – oh, I thought you sold between then and now.

  35. 35
    zman Says:

    Nicky – have you noticed Sharon E is doing the oil numbers less and less and Bertha is on it more and more. Maybe your letters to CNBC worked.

  36. 36
    scoop006 Says:

    I did. But the stock still tripled since you pointed it out

  37. 37
    zman Says:

    Scoop – yea, its one of the priciest names I own. Most domestic names are overwhelmingly natural gas leveraged. CLR is one of the few extremely oily plays out there that isn’t stodgy like a BRY so it gets a little more multiple than I would have thought for things like Bakken and Woodford exposure. They’ll probably beat the pants off numbers and have test rates in North Dakota on their call next week.

    Somebody asked about WRES awhile back, that’s oily and has not moved. They are growing swiftly and will mint money this summer if oil stays anywhere near here. Thin options trader but interesting.

  38. 38
    Nicky Says:

    Hi Z. Funny you should mention that about Sharon EPP as I literally just turned CNBC on and thought the same thing myself. Bertha is so much less hysterical – its quite a relief.

    Regarding Fed funds rate – the market is discounting only a 78% chance for a 25 bp rate cut at this week’s FOMC meeting, which is a big change from just a month ago when the market was fully expecting a 50 bp rate cut this week. If the Fed doesn’t cut the funds rate by 25 bp this week, then the market is discounting a maximum 96% chance of that rate cut at the next FOMC meeting on June 24-25.
    Regarding Euro – not exactly falling out of bed no but as with gold, silver currently tracing out a correction to the upside. Target areas are 1.5733 – 1.5843 but it may not make it that far before it rolls over again.

  39. 39
    zman Says:

    Tyson chairman calling for an end to ethanol subsidies and an end to sugar based ethanol import tariffs. About time, maybe it can get some traction in congress as everyone on capital hill has finally seen the light that corn in the gas tank is a horrible idea.

    Nicky – thanks, Forties restart tomorrow already pressuring crude. Probably see more rebel activity or dingy boat attacks if it dips more than $2 or $3, lol.

  40. 40
    Sambone Says:

    12:37 pm EST

    Nymex Crude Trades Flat On Waning Supply Worries

    DOW JONES NEWSWIRES
    From Market Talk:
    [Dow Jones]Nymex crude is trading flat after spending most of the morning positive, as the market anticipates the return in the next few days of North Sea production lost when workers at a U.K. refinery went on strike. Shell and Exxon both still have shut-in significant Nigerian production, keeping supply concerns at the forefront. June crude trades at $118.60, up 8c. (brian.baskin@dowjones.com)

  41. 41
    zman Says:

    Lot of brokers saying bottom fish BJS after their miss. May be worth a gap fill a couple of points higher and I do see their point as the call was fairly optimistic despite the brick on estimates. Bad news behind them etc, etc, at least that’s their story and if the N. American market does tick up as I and many, many others now expect BJS will certainly benefit. I’m going to diversify a bit and take a little NBR and / or HAL off the table and replace with a starting position in BJS. Nice gains in both and nothing personal…also want to raise a little cash as I’m getting that “this is too easy feeling”

  42. 42
    zman Says:

    ZTRADES: Raising a little cash

    NFX: Out June $60 calls for $6.80, up 139%. Continuing to hold the May calls for now.

    HK: Out June $22.50 calls for 3.40, up 165% . Still hold the other calls.

  43. 43
    Sambone Says:

    LONDON (Dow Jones)–Exxon Mobil Corp. (XOM) Monday took the drastic step of
    declaring force majeure on its energy operations in Nigeria because of an
    ongoing labor strike, signaling the damaging affect the dispute is having on
    its operations in the country.
    The declaration means ExxonMobil is unable to meet its contractual obligations
    because of a shut-in by the strike of around 800,00 barrels a day of crude oil
    output
    ExxonMobil also said it was still hoping for a resolution to the strike.
    “We have notified all relevant agencies including the Nigerian National
    Petroleum Corp. and the Department of Petroleum Resources and are working with
    them to ensure quick resolution of the issues,” the company said in a statement
    sent to Dow Jones Newswires.
    The state-run NNPC management is mediating in the strike, which the workers
    began Thursday over their demands for higher wages at ExxonMobil’s Nigerian
    unit, Mobil Producing Nigeria Unlimited. Talks are being held Monday in the
    capital, Abuja.
    -By Spencer Swartz, Dow Jones Newswires; +44 (0)20 78 42 9357;
    spencer.swartz@dowjones.com

    (END) Dow Jones Newswires
    04-28-08 1310ET
    Copyright (c) 2008 Dow Jones & Company, Inc.- – 01 10 PM EDT 04-28-08

  44. 44
    Sambone Says:

    I guess everybody has seen this in regards to the big find in Brazil?

    http://www.bloomberg.com/apps/news?pid=20601109&sid=aOspOz2AMLLU&refer=home

  45. 45
    zman Says:

    Thanks for that last link Sam

    Gotta run to an appointment, back in 1 hour.

  46. 46
    zman Says:

    Back in the saddle. Pretty much everything where I left it., maybe down a touch on a couple of names but boring, pre earnings trading.

  47. 47
    scoop006 Says:

    any thoughts on SWN today

  48. 48
    zman Says:

    SWN – up 20% Friday, pulling back 3% today, not a big deal, would consider it after another day like today tomorrow…not sure we get it.

  49. 49
    ram Says:

    ZMAN – One of the rare ocassion that I have deviated from the ZTRADES is NOV. To the best of your knowledge, is NOV on the fore front of developing parts to tackle new frontier like in #44?

  50. 50
    scoop006 Says:

    Z are you going to trade any OII or VLO today

  51. 51
    zman Says:

    Morning Ram – they are at the forefront.

    Scoop – still mulling. Did you see SUN? ouch.

  52. 52
    ram Says:

    Thank you!

  53. 53
    reefguy Says:

    cwei up another $2.87

  54. 54
    zman Says:

    reef, on that one you just have to sit back and enjoy it.

  55. 55
    reefguy Says:

    54- reminds me of the .com’s I am not getting it.

  56. 56
    isleworth Says:

    Z – what’s your strategy re VLO reporting? Tks.

  57. 57
    isleworth Says:

    Valero Energy set for 04/29, before market. Last qtr, co reports Q4 (Dec) EPS of $1.02 per share, $0.38 better than the First Call consensus of $0.64; revenues rose 52.2% year/year to $28.67 bln vs the $24.23 bln consensus. Stock closed up 10.35% at $60.46, with a high of $61.39 and a low of $58.94 with volume of 19.25 mln shares traded.

  58. 58
    zman Says:

    Isle – I think I’m going to wait out earnings and hold my TSO which will bounce if VLO does. Premiums are pretty jacked up on the Mays and Junes and while I think expectations are low and that they will say things look sort of better, I’m still not wild about the group.

  59. 59
    isleworth Says:

    tks Z. Expectations are low as it was no doubt a rough quarter on spreads 🙂

  60. 60
    Sambone Says:

    3:33 pm EST

    Crude Inches Up, Market Sees Quick End To Outages

    By Brian Baskin
    Of DOW JONES NEWSWIRES

    HOUSTON — Crude oil futures ended slightly higher Monday, as traders bet on a quick resolution to production outages in the U.K. and Nigeria.

    Light, sweet crude for June delivery settled 23 cents, or 0.2%, higher at $118.75 a barrel on the New York Mercantile Exchange. Futures set a record high of $119.93 in overnight electronic trading, but didn’t approach that level again once the U.S. trading day began. June Brent crude on the ICE futures exchange settled 40 cents higher at $116.74 a barrel.

    Trading was choppy as traders weighed the growing production outages in Nigeria against the expected restart of North Sea oil fields shut over the weekend. Oil has risen 4% since hitting lows Thursday, when the market appeared to be teetering on the edge of a downward correction.

    ExxonMobil Corp. (XOM) declared force majeure after as much as 800,000 barrels a day of Nigeria oil output was halted over the weekend due to a strike by oil workers. Companies invoke the force majeure clause in their delivery contracts when they are unable to meet obligations due to events out of their control.

    Exxon’s labor problems came on the heels of two attacks last week on oil installations belonging to Royal Dutch Shell PLC (RDSB.LN). Between one-half and three-quarters of Nigeria’s 2.5 million barrel a day production capacity is now believed to be shut down.

    Nigeria has seen both work stoppages and periods of increased militant attacks over the last few years, however, and some reduced production out of unstable regions is already factored into the price of oil in what is known as the “risk premium.”

    “It’s a huge cut, but historically these labor-related outages don’t last long over there,” said Jim Ritterbusch, president of the trading advisory firm Ritterbusch & Assoc. in Galena, Ill. “The market is looking for it to be resolved within the next couple of days, and Exxon to restore production a couple days after that.”

    The return this week of North Sea production cut off Saturday night is also anticipated. BP PLC (BP) shut down its 700,000-barrel-a-day Forties pipeline system ahead of the start of a two-day strike Sunday at the Grangemouth, Scotland, refinery that provides power and steam to the pipeline.

    Workers are scheduled to return to their posts on Tuesday, and BP is expected to bring back the Forties pipeline within 24 hours after utilities are restored.

    Looking ahead, the Federal Reserve will decide Wednesday whether to cut its benchmark rate, an event that is closely watched in commodities markets for its impact on the dollar. Economists expect a quarter percentage point cut, but believe the Fed could hold rates steady for a period after that. Rate cuts are designed to stimulate the economy, but recently they have caused the dollar to weaken. This, in turn, is taken as a cue by some investors to put more money into oil and other commodities as a hedge against inflation.

    Wednesday’s cut could prove a double-edged sword for oil, with a large reduction signaling that the worst is yet to come for the U.S. economy — and therefore oil demand — while a smaller cut would strengthen the dollar, said Daniel Pavilonis, senior market strategist with Lind-Waldock.

    “We’ll see $120 before the (Fed) meeting,” Pavilonis said, adding that oil prices are likely to fall after the cut, especially if the dollar rallies.

    Front-month May reformulated gasoline blendstock, or RBOB, settled 2.30 cents, or 0.8%, lower at $3.0307 a gallon. May heating oil settled 40 points, or 0.1%, lower at $3.2988 a gallon.

    —By Brian Baskin, Dow Jones Newswires

  61. 61
    zman Says:

    Thanks Isle – I’d probably play it for a small amount but I’m in cash raising mode and have a few names I want to own more for earnings (OII, XCO). Also, waiting for a really red day to beef back up the HK and NFX positions.

  62. 62
    zman Says:

    Also, very likely to add to CHK calls pre cc on Friday morning.

  63. 63
    tomdavis12 Says:

    Z: Any thoughts about the NE earnings last week. I was away. As an aside I have heard that DO has NOT been putting enough money into the maintenance of their equipment. Like the leaks BP had with their pipelines last year I hope DO does not have any big problems. Does seem like something the Tischs would allow. I can not confirm or deny this rumor. I have used NE and RIG instead.

  64. 64
    zman Says:

    Tom – I have not seen/heard that re DO but it does not mean its out there. Sounds a little like a unverifiable short rumor which has just enough shred of reality in it given recent unexpected dry dock time for people to bite on it. I’m not married to the name at all and will punt if it does not shape up soon.

    NE – I barely glanced at since its not one of my active names but will have a look this evening.

    That was a market inspired red close for the energy groups and not at all panic laden. See you guys after while.

  65. 65
    Jay Reynolds Says:

    Am I getting some bad info that CHK is reporting Friday, May 2nd? (Per schedule above)

    I’d GLADLY take a day off to hear/enjoy some pointed questions.

  66. 66
    zman Says:

    Jay – CHK changed their conference call time. They report Thursday after the close with conference call Friday at 11 EST.

    FTI reported after the close, guiding higher

  67. 67
    ellwodo Says:

    HK – don’t know if it means anything, but it’s up almost $1 in AH. One can always hope.

  68. 68
    T-Tupp Says:

    z- do you now anything about MRO? folow it much? seems to beleaguered compared to its peers….

  69. 69
    zman Says:

    See that Elwo – looks like somebody wanted a 1,000 shares real bad.

  70. 70
    zman Says:

    Hey T – not enough to comment intelligently. It falls in that no man’s land between Big Cap E&P and Major. It has refining ops and exploration that is meaningful. I know more about MUR and HES than I do it but that’s not saying much on those two either. I can have a look if you like. I noticed earnings have been coming down hard for MUR and have to assume its the refining portion bringing it in.

  71. 71
    ellwodo Says:

    #69 That wouldn’t have got my imagination going, but the 169,000 share before that at $0.30 over the close did.

  72. 72
    zman Says:

    El – I saw that but it looked like a balancing trade to me. I just looked at it’s not an out of sequence but a post close buy. Hmmm.

  73. 73
    ellwodo Says:

    Pleasant dreams.

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