28
May

Wednesday – Oil Easing

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Housekeeping Watch: No EIA oil inventory report today. It is scheduled for Thursday (tomorrow) at 1 pm EST. 

Yesterday was a pretty mixed bag for the energy sectors; a mostly directionless, low volume day except for the service names. One of the things I like about extending into these plays is that when they move up, they often do so without continuous multiple support. By that I mean that analysts are not constantly marking their estimates to the market price of a commodity. I know how much oil and gas are up and where analyst estimates are and so I can be reasonably sure of the upside limit to estimate increases in the E&P space. But with service, the calculation is more complex and often is delayed closer to actual earnings, allowing the stocks to move up on qualitative rather than quantitative data. Right now, all qualitative evidence points higher for North American onshore drilling and oil services.

 

In Today's Post:

  1. Holdings Watch - added SLB back to the fold, added more NBR.
  2. Commodity Watch
  3. Stocks We Care About Today
  4. Odds & Ends

Holdings Watch: Wiki holdings tab is updated.

  • SLB - Entered the July $105 calls (SDBGA) for $4.40.
  • NBR - Entered the July $42.50 calls (NBRGV) for $1.85.

Commodity Watch:

  • Crude Oil tumbled $3.34, to close yesterday at $128.85. To me support looks to be in the $123 to $125 range. Nicky is at $124 to $126 and comments that a move through $124 on strength could signal the top is in. This morning crude is trading off $2.50 to fall just under $127 as the dollar strengthens slightly and fear sets in over how slack gasoline demand may have been over Memorial Day weekend. 

 

  • Putin Watch: Vlad is back, slashing taxes in an effort to stimulate Soviet Russian oil production which has been flagging in recent months. Russian lawmakers will get the tax reduction bill later this week and expectations are that this tax reduction could boost production to as much as 12 mm bopd
  • Nigeria Watch: Nigerian Oil Minister Odein Ajumogobia said on Monday he expected 175,000 barrels per day of oil production to be lost following the latest sabotage.

 

  • AAA Watch: AAA forecasts that U.S. motorists taking trips in excess of 50 miles would fall 1% to 37.9 million this year. We should get AAA's actual numbers shortly. 
  • Natural Gas: ended yesterday off $0.06 at $11.80 on the July contract, giving up an early day foray into $12 plus territory. 
  • Imports: At 8.1 Bcfgpd, running 2.9 Bcfgpd shy of year ago levels
    • LNG Stuck at 0.7 Bcfgpd, down 2.3 Bcfgpd from last year
    • Canadian piped gas at 7.4 Bcfgpd, down 0.6 Bcfgpd and potential a concern as this is the longest gas volumes from Canada have remained sub 8 Bcfgpd in quite some time.

ng-imports-052808.jpg

 

Stocks We Care About Today:

(SWN) Jumps To The S&P 500. Expect a quick but often short-lived pop as index funds add it to their portfolios.

(SLB) And (GE) In Carbon Sequestration Joint Venture. GE will bring expertise in coal gassification while SLB adds "geologic storage expertise". The complete package can be used to build a new clean coal power plant or to retrofit existing plants. "Carbon sequestration" will be one of the top five new phrases added to everyone's vocabulary by the end of 2008.

Expro Delays Shareholder Meeting Until June 9. (HAL) and a consortium including Goldman Sachs called Umbrellastream are in a bidding war over Expro, a mid-size European oil service firm. Umbrella has the latest high big and (HAL) is widely expected to counter.   

Deutsche Bank - Energy & Utilities Conference (all times EST). These are just the stocks I care about and then only some of those. For a complete list of conference attendees click here.

Wednesday, May 28th:

(GDP) - Goodrich Petroleum - (8:20 - 9:05) - AKA, the other big Haynesville Shale play. Don't own it but see what their latest spin is on the play.

(HAL) - (8:20 - 9:05) - Still holding June and July positions calls at present and fully expect the stock to recapture $50 when the group gets its sea-legs.

(VLO) - 9:10 - 9:55 - just want to hear their latest thoughts on distillates, summer gasoline and spreads.

(BBG) - Bill Barrett - (10 - 10:45)

(CHK) - (10:50 - 11:35) - Aubrey is not doing the presentation so I doubt there will be anything new here. 

(SD) - Sand Ridge - (11:40 - 12:25)  

(NFX) - (2 - 2:45) - Mancos and Bakken news could be around the corner.

(OII) - (2 - 2:45) - will listen to replay

(BHI) - (3:40 - 4:25) - mulling an entry here.

Thursday's DB Conference names we care about in order of appearance: (CLR), (KWK), (XCO), (PXD), (NBR), (SII), (SWN), (XTO), and (FTO). I'll bullet point them in tomorrow's post.  

CXO - Peaking my interest, more on this one in a few days. 

Odds & Ends

Analyst Watch: (FTO) raised to neutral at B.S., (BAS) cut to neutral at UBS, Jessup starts DO and ATW at buy with price targets of $184 and $159 respectively, Kaufman Brothers initiates the solar sector at Buy except for FSLR which they give a Hold rating and a $260 target.

Did you know watch? Did you know that in certain circumstances, your subscription to Zman's Energy Brain can be tax deductible. Don't take my word for it but check with your tax accountant. Good news for those of you who file late.

 

 

179 Responses to “Wednesday – Oil Easing”

  1. 1
    zman Says:

    Listening to HAL presentation now. GDP does not appear to be webcast but nothing new in their presentation on the Haynesville.

  2. 2
    zman Says:

    New Bakken Player. XTO buying Bakken properties for $1.85 billion. Acquisition is from private firm Headington and comes with 68 million barrels proved reserves and 352,000 acres in Montana and North Dakota.

  3. 3
    zman Says:

    Nigeria: This is from the HAL presentation Q&A. Nigeria had more projects on the books years ago than anywhere else, but until the security situation settles down they don’t see any of their big customers in a major ramp there.

    I’d add that the Yar’Adua government is one year in now and things appear to be worse. Standstill to down production from this area, where a lot more development projects are on hold, is a key support for oil. This is light sweet crude country in an increasingly heavy oil planet. So with growing per capita global gasoline and diesel demand you don’t need further discombobulations here to rally oil prices.

  4. 4
    zman Says:

    One would think it will be a good day for the Bakken player list given that purchase by XTO in #2.

    CLR (held), CRK, WLL (held), BEXP, EOG, SM, CXO, NFX (held)

  5. 5
    john11 Says:

    Any comments regarding the the XTO deal and implied valuations for other Bakken players?

  6. 6
    zman Says:

    John – implied valuations are pretty tough as none of them are pure Bakken players. Also the acreage is scattered in and out of the core of the play for each player and for this buy. If you just do the straightline math on acreage it would yield some pretty impressive numbers. For instance, if you take the same metric for NFX’s acreage it would imply a price close to $1 billion for their 177,000 acres and I know they did not come close to paying that. I’ll see about putting together a back of the envelope table later today but I would expect CLR and WLL to get the biggest collateral bang for XTO’s buck.

  7. 7
    john11 Says:

    thanks Z, I know it was a broad question.

  8. 8
    zman Says:

    John11 – but a good one…

    VLO presentation ongoing, very positive, putting a lot of emphasis on diesel margins , I’m getting closer to taking a piece, 2008 margins much stronger than 2007 for diesel cracks, 2009 forward curve higher than that. Showing Maya (heavy) crude now at $22 discount to WTI and they expect it to stay high. Good for them, good for FTO.

  9. 9
    el_vogel Says:

    Good morning Z –

    I jumped out of HK just as it started taking its latest haircut and I’m wondering alout whether or not the current price range is a decent re-entry point? I’d love to hear your $0.02 on it…

    Thanks!

  10. 10
    zman Says:

    EL V – back to you short on that, just listening to VLO right now and they are confusing me at this early hour.

  11. 11
    el_vogel Says:

    No worries! I’m in no hurry.

  12. 12
    zman Says:

    Sharp sell down in oil service and E&P this morning on very light volume. I’m bidding a little SLB but won’t be aggressive. This smells like a change from the recent open green and turn red action of the last week or so.

    Tempted to go after VLO based on the current presentation.

    FTO moving on up.

    HK – I probably start fishing around $25. Nice trade for EL V gettng out.

  13. 13
    zman Says:

    ZTRADE: Bought June $52.50 calls with the stock at $52, down about $1.20 today.

  14. 14
    uop Says:

    zman:
    you bought which stock ?

  15. 15
    zman Says:

    ooops – CHK

  16. 16
    zman Says:

    Oil service reversed and going green with higher oil. Again, very light volumes this week so expect lots o volatility in the commodities and the energy groups.

    VLO call went very well and left me thinking I need to be more long the indie refiners and maybe a Major.

  17. 17
    antrimshale74 Says:

    Oil recovering a bit. CLR getting smacked around pretty hard today.

  18. 18
    zman Says:

    Antrim – yeah I see it. Look at BEXP rising on the XTO Bakken purchase. If oil goes green CLR and the others should jump up. Volume very light.

  19. 19
    kyleandy Says:

    just sold CHK 50 june puts at 1.30. seemed pretty pricey too me

  20. 20
    isleworth Says:

    Z- any thoughts on why CLR is getting hit in light of Bakken commentary at conference?

  21. 21
    zman Says:

    CLR is not speaking now so the hit is extraneous and on light volume. We are in a pattern where moves get exaggerated as the day goes on so I’m not reading anything into it. They speak at the DB conference tomorrow.

  22. 22
    reefguy Says:

    ioc- Elk 4 drilling report #7- Prep to run DST- Does not sound definitive, just a rehash of DST #1.

  23. 23
    uop Says:

    zman;
    did insiders buy FTO recently ?

  24. 24
    zman Says:

    Uop – Re FTO. Nothing very recent that I have seen on the insider transactions. Rumor continues to float around that SU wants to buy them to refine their Canadian crude, in a sense cutting out the middle man. On VLO’s call, they reiterated their efforts are ongoing to get Canadian heavy oil to the Gulf Coast and pipelines are being built. FTO would be closer and a good nab for SU.

  25. 25
    reefguy Says:

    ioc- down almost a buck on Drilling report #7…

  26. 26
    zman Says:

    DRYS – getting a big bounce this morning, ostensibly on a slight uptick in Capesize and Panamax dayrates. I’m going to watch as I think its just a post earnings bounce on the way lower in front of a China- Olympics induced slow down in traffic.

  27. 27
    isleworth Says:

    If FTO is in talks, insiders cannot be buying……

  28. 28
    zman Says:

    Reef – thanks, agree rehash.

    Oil up $0.66 to $129.50 as the dip buyers come back to the market.

    SD hit another 52 wk high and looks like it may run again.

    Isle – right and the companies have declined to comment.

  29. 29
    isleworth Says:

    Yahoo Finance now providing REAL TIME quotes for free 🙂

  30. 30
    john11 Says:

    Wonder how much TSF was a factor in XTO acquisition.

  31. 31
    zman Says:

    Re XTO, it could not have hurt, no telling how much Three Forks Sanish underlies their position.

    CLR just slipping technically. I may punt and rebuy my small remaining June position as there is no chart support here. It

    CHK presentation in 1 minute. Don’t expect any surprises there.

  32. 32
    zman Says:

    XTO conference call in 10 minutes and I will switch to that from CHK.

  33. 33
    zman Says:

    XTO slides for the Bakken acquisition are out. They specifically mention TFS potential but no numbers included. They are showing this is a 4 to 6 year payout depending on price deck (on current production). I would expect it to be quicker as they drill up the undeveloped acreage here.

  34. 34
    zman Says:

    CHK has 5 Hz wells on line in the Haynesville. 6th well coming on now and 7th well drilling. Details in a bit.

  35. 35
    zman Says:

    CHK – well results remain confidential in the Haynesville. They just said go to the SONRIS site for rates soon.

    They said they will be reporting rates on 7 to 8 horizontal wells in early August on their 2Q conference call.

    They expected high deliverability and they got it but no details for now.

  36. 36
    zman Says:

    CHK in both Barnett and Fayetteville have seen IPs increase by about one third in last five quarters while per well drilling costs continue to fall.

    Drilling 1st horizontal Marcellus well in PA (for them) in July. Continue to be slow to develop.

    CHK hedged 40% now in 2010 above $10/Mcf.

  37. 37
    texana Says:

    xto deal was for private co so they did not have to get into bidding war, that also got them membership into the consortium & ongoing research on drlg & comp techs. mro is making stealth move in area with recent acq of 100,000ac from priv cos in dunn co. bexp recently bo 46,000 ac from private co, they definitely have out the for sale sign. they have 25% wi in @ least 3 wls drilling in parshall &austin with eog. eog drilled dry hole 6 miles ne of parshall setting up eastern boundary of the play. clr’s ac position along nesson anticline makes them a prime target plus they have so many other great prospects. wll is the the most undervalued of the plyers & will mostly likely be taken out by eog for there total oil reserves which includes their co2 fields in ok &tx, min bid 150. they have 4 wls comp that they op that should ip @ least 1000boepd/wl in the next week, 4 eog wls that they have 20% wi in that will comp in the next 2 wks. nat gas comp station in ops by end of june if not before,with strippable liquids @170boe/1mmcfg. all players r now flaring gas probably about 10mmcfgpd in parshall/sanish flds. consultant told me last week that they r trying to get to 197 drlg rigs total in the williston by next yr, but don’t have the men r equip

  38. 38
    zman Says:

    Thanks Tex. You been on the XTO/Bakken call? I jumped on late.

    Sounds like they will be half paid out in 30 months as they hedged 40% of current acquired volumes at $127 this morning.

  39. 39
    doc Says:

    How much did you pay for the chk calls today? Do you have any nov call?

  40. 40
    zman Says:

    RE CHK purchase.

    Bought $52.50 June calls for $2.10

    I also hold June and July $60 calls here.

  41. 41
    doc Says:

    D you hold any nov national oilwell varco?

  42. 42
    antrimshale74 Says:

    CLR creeping up nicely from that drop this morning. Let’s hope it lasts. Oil has so far recovered well, too.

  43. 43
    zman Says:

    Doc – no I don’t but only b/c I missed the recent run.

    Antrim – yeah, XTO did a good job of singing the praises of the Bakken. Agree with Texana’s points about CLR being a good target but I don’t think EOG would do it, Mark Papa likes to say “organic growth” too much.

    SD presentation starting.

  44. 44
    ellwodo Says:

    #35 Do you think CHK meant there won’t be any hard news out on Haynesville results until Aug/ If so, does this argue against holding July calls for HK?

  45. 45
    zman Says:

    On SD call back to you in a bit Elwo.

  46. 46
    zman Says:

    Tom Ward, CEO of SD said some recent eastern side wells IP’d at 9 mm/d. This is 13% decline curve country, very flat and their type curve has been 7 Bcf wells that IP at 3 mm/d. The recent average has been 5 mm/d and this is sweet gas, not CO2 laden.

  47. 47
    zman Says:

    SD has 1.5 Bcfgpd of CO2 available to ship to the Permian for Tertiary oil flood. Very high demand for that CO2 at these oil prices.

  48. 48
    zman Says:

    SD – considering selling their E. Tx Cotton Valley unit, largely undeveloped. Could be worth about a $1 billion which could forestall the need for further equity issuance next year.

  49. 49
    zman Says:

    SD 75% hedged for 2008 at $8.89.

    Elwo – The short answer to that is I don’t think so. There could be more news out of others but more than that they have other plays and with gas up here it should relaunch after the digestion phase plays out. It does auger for taking longer calls as well or the stock but for now I’m waiting for this market to firm up a bit (complete the digestion).

  50. 50
    zman Says:

    SD Haynesville – COG has drilled vertical Haynesville wells on the Minden wells in E. Texas.

    SD has 13,000 acres in the core area of the Haynesville and they will likely sell when prices go higher, think they can ultimately get $50 mm for it.

  51. 51
    ram Says:

    ZMAN – I appreciate the info from these conferences. What do you think about a one word synopsis at the end of each bit – like – good, bad, or ugly? The novice energy minded person like myself is still trying to understand “energy speak.”

  52. 52
    zman Says:

    SD – saying in the near future they may be updating the type curve for the Pinon field. The current 7 Bcfe type curve has been established since 1984 and they may up it soon it sounds. Also sounds like they will be upping their 2009 production forecast.

  53. 53
    zman Says:

    Ram – its a good idea.

    CHK – good, no change.

    VLO – good

    SD – good, poorly attended, probably because of the strength in the stock makes fund managers think they missed it. I’m considering taking more shares for the summer.

    HAL – good, nothing unexpected.

    Ram – is there something you’d like to see added on the definitions page?

  54. 54
    zman Says:

    WLL turned the corner to green, CLR trying, little BEXP up 7%.

    Anybody notice oil back over $130? You can almost time the moves in oil by the number of bears or bulls CNBC trots out to talk about it. In inverse proportion of course.

  55. 55
    Nicky Says:

    Morning all. There is a possibility that the top is in in oil and that the high last week was a truncated 5th. Lending some support to that count is that we have 5 waves down from there. If so we are now in 2 and should find resistance in the 130.80 area. Further resistance is in the 132.00 area and much above that and we will be looking at the uptrend still being intact.

  56. 56
    ram Says:

    Oh no. #46 and #47 seemed contradictory to me. But that’s not true of course. It’s the continuous learning of energy terminology and the use in phrases that I will tackle.

  57. 57
    zman Says:

    Ram – ah I see re 46 and 47. Let me try to make clear. On the one hand, more CO2 in the well means less methane (natural gas) for sale so that’s bad. You have to do something with all that CO2. One choice is to sell it to someone else (not at the prices you’d get were it CH4 (methane molecules) but better than a sharp stick in the eye or having to reinject it into the ground.

    Oil companies nearby use water and in some cases CO2 to enhance oil production by injecting it into oil reservoirs. SD has a lot of CO2 available (1.5 Bcfgpd and growing) but at present production is constrained by both processing of the gas into separate streams of CO2 and CH4 and by CO2 pipeline capacity to those oil fields. They are expanding both processing and pipeline capacity to alleviate this bottleneck.

  58. 58
    zman Says:

    Afternoon Nicky. I cited you in the post. We may approach your first resistance level today or tomorrow.

    Anybody seen estimates yet on the EIA #s for tomorrow?

  59. 59
    VTZ Says:

    Z – How much do people pay for CO2 for use in tertiary injection? Do you know the $$ per tonne? I was just curious as to how this compared with the value of CO2 in the carbon trading markets and also the carbon tax rates that may or may not be introduced.

  60. 60
    texana Says:

    bet u a month sub that wll gets taken out before hk. notice that wll eur 800to 1mil boe to xto 1/2mil est. maybe the dnr wine

  61. 61
    Nicky Says:

    Z – it feels like it is all gonna come down to the stats tomorrow for the direction. Do the bulls really have the ammunition to run it over 135 again. Doesn’t feel like it to me so if they do it may be very short lived. If we are in v up then minimum upside target is 135.09.
    After 130.80 area there is resistance around 131.60.

  62. 62
    texana Says:

    wll hi priced options what ur $ion the sep105s?

  63. 63
    zman Says:

    VTZ – I don’t know the answer to that, will check with SD and DNR as they are some of the big kids on the block.

  64. 64
    Denise Says:

    Good morning,

    Thought this was worth paying attention to from J Shartis-Over 60 oil and oil service stocks had “buying climaxes” last wk (bearish weekly reversals)
    Statistically these signals are correct 80% of the time

    hmmmmm……….

  65. 65
    zman Says:

    Tex – No Bet! Lol.

    Nicky – I’d be much more comfortable with oil down around $105 to $115. Otherwise the equities will continue to play the “when is it going to fall game” and the broad market will suffer from the high price.

  66. 66
    zman Says:

    Tex – It could be NFX that goes with core Woodford and Monument butte and a sleeper play in the Bakken with 177,000 acres.

    WLL – I came in at $6.20 on those Sept $105s so I off a bit at $5.70 bid, not worried, in fact, you could call me complacent about it.

    Denise – thought you were on vacation. So a buying climax is bad? Hmmmm. Gotta love voo-doo I guess. My thought is that despite the run E&P stock valuations are little changed and in some cases down to where they started the year.

  67. 67
    Dman Says:

    Plenty of media coverage about the impact of less driving with oil up here, but what about the impact of airlines pulling planes out of service?

    Have we heard much from the “oil will knock out the US economy and that will take out the Chinese and we’re all going to be rooned” camp lately? Trying to figure out where we are in the sentiment cycle of doom.

  68. 68
    zman Says:

    Dman – I think we are in the waiting on numbers phase. I saw a lot less cars out and about this weekend, but I also saw a lot of people scarfing some pretty primo priced food and shopping at Sony Style, not known for its bargains and the Apple Store was standing room only.

    We should be getting AAA Memorial day traffic numbers soon. EIA gotta wait til next Wednesday to capture weekend gasoline sales but you will get part of it tomorrow.

  69. 69
    zman Says:

    OII creeping north.

    CLR green, WLL really green, rest of “Bakken” plays mixed.

    Everything XTO said about rising activity in the Bakken along with Texana’s 197 rig count comment in the Williston Basin (contains the Bakken) plays into NBR’s hands. And HALs, and SLBs and probably CLR, CRR, and SII.

  70. 70
    antrimshale74 Says:

    What a relief with CLR. Nice day trade there!

  71. 71
    Nicky Says:

    Dman – I watched the BBC news last night which frankly is much better at reporting global news than anything you see in the US which, without being too controversial, tends to report as if there is no world outside the US at times. First thing on the BBC was the massive truck drivers rally yesterday in the UK which blocked major roads for hours. They have threatened to go out on strike totally if the government do not lower fuel tax within 7 days. They did this once before with disastrous results. Then onto France and Greece where the fisherman are now blocking the ports in protest over the fuel prices. Frankly it looked close to flat out anarchy. The question was asked when US citizens were going to do something. The british government are clucking around like headless chickens that there is nothing they can do except understand everyone’s pain. Bodman the US energy secretary last week was almost pitiful I thought. He didn’t even seem to realise that we had an energy crisis so heaven help us. By the time they act it will be too late – it probably already is. So far I see zero attempt to do anything by the government except force Opec’s hand. I think it is now widely accepted that the market is being run by the speculators (depending on who you believe of course) – well if so of course they can crack down on that so why the heck haven’t they? The knock on effect of this is gonna be huge imo.

  72. 72
    zman Says:

    CLR = down hard on no news = thesis, thesis, thesis. Don’t get me wrong, there will come a day to punt but I think we are a ways from there.

    CHK = ditto of the above.

    Nicky – agreed re BBC although what they think the U.S. can do about oil prices I do not know.

    NFX presentation in 30 minutes. I think they have news by RBC conference next week.

  73. 73
    zman Says:

    Hey, WLL trade no longer underwater.

    Services improving but HAL still stuck at the starting gate. Think it rallies in the next little bit.

  74. 74
    Nicky Says:

    Well if its a straight out demand/supply problem they can’t do much. But I have yet to see a line at a gas station! That said when the truckers went on strike last time in the UK there was no gas to be bought anywhere.
    If its speculation they of course can curb it.

  75. 75
    zman Says:

    Nicky – agree no lines but what says higher prices are not the answer to higher prices as they have been since time immemorial? The crude being made into gasoline is coming from remoter, more costly sources and is increasingly of a lessor grade. Demand, long term demand, continues to move up and to the right. Without higher prices people have little incentive to risk capital to go after the remoter, harder to process crude. Last year, the Majors and E&P companies spent incredible amounts of dollars to find a lot less crude than in past years.

    On the speculative side, if you plug one area (and thereby attack the free market) don’t you think it will just spring up in some place like, oh I dunno, Dubai?

  76. 76
    Nicky Says:

    Yes don’t disagree re higher prices being the answer to higher prices, but bottom line this is absolutely killing people – maybe more so abroad – in Europe the price is twice the price it is here. And I think Dman was saying where is all the doom and gloom forecast from this. Well if people are cutting down on their driving they sure as heck aren’t driving to the stores either.

    Regarding the speculation – yes agree that too is a problem but do you just let it continue unabated to the cost of everyone? It probably is gonna take a worldwide move which I think the President of France was suggesting. What about the suggestion made by Dennis Gartman and others that they start selling out of the SPR?

  77. 77
    reefguy Says:

    sd testing 55

  78. 78
    zman Says:

    NFX > 200 MMcfepd from the Woodford, that’s up from 187 on the 1Q call, slide in their presentation was from a week ago and shows 196 which is also light.

    Saying EUR Woodford wells over 4.5 Bcfe, not news but its different from how they presented it before, they are starting to get comfortable with the bigger size of these wells.

    Caney – gas saturated and all HBP (held by production)

    Nicky – I think OPEC cuts by a like amount if you open the SPR.

  79. 79
    reefguy Says:

    z- get the feeling sd is orbital

  80. 80
    Denise Says:

    Nicky-
    I have been in and out most of wk but-Mr K has started a traffic watch/comments on the LIE(Long Island Expressway)weekly commute yesterday-(antidotally says its down about 10% over last year day after memorial day)

    John Maudlins “Whither the price of Oil” is a must read this wk(forgive me if someone mentioned this) He takes a look at the Mike Master’s congressional speculation piece.

  81. 81
    zman Says:

    Reef – agreed. I’m still holding.

    NFX – Mancos – 2 wells completed, testing now.

    Bakken – early results look good, not giving away details.

  82. 82
    Nicky Says:

    I will see if I can find his article Denise – thanks.

  83. 83
    zman Says:

    NFX – Mancos shale. Have sat on the sidelines and watched industry push the costs down. Competitors (this is gasco and STR) drilled for $8 to 9 mm. NFX sees drilling these for $4.5 mm and they are “encouraged” by what they have seen.

  84. 84
    zman Says:

    Reef – SD pushing $56.

  85. 85
    Denise Says:

    It is a free weekly email-he puts (assume it covers his costs) those swarmy ads in the middle-more than happy to forward
    If you go to the web site you have to sign up(so he can send the spam-but not to bad)
    sknitch@earthlink.net

  86. 86
    reefguy Says:

    sd- buyers still pushing

  87. 87
    Dman Says:

    Nicky, I am skeptical that a oil/housing/finaince driven downturn in the US will halt China/India/Brazil, but this is a case that was being made vigorously a few months ago & I am wondering where it has gone. I am mainly trying to gauge where we are in the sentiment cycle because I want to know if there will be bargains in our favourite stocks over the next few months. It’s getting to that time of year where the broad market can take a serious dive & often does. Plenty of anecdotal evidence that driving habits and car-buying preferences are finally shifting in the US and I would expect the doomer camp to make more of it. If oil gets moving a bit I think that will happen in a big way.

    The truckers in the UK, like those everywhere, are looking for someone to blame & that would be the government. But truckers are heavily subsidized (don’t see too many getting out of their rigs to repair the road surface they destroy) so I’m not very impressed. The government, if they have any brains (I said if) knows that even of they set the tax to zero, soon enough the price will be back up again & then what will the truckers do?

    I read somewhere that the Port of LA is converting all their trucks to CNG. I don’t know how much it costs (does it need a new engine?) but there might be an investment thesis here somewhere.

  88. 88
    Dman Says:

    SLB = nice

    Z – what do you make of XCO here?

  89. 89
    zman Says:

    Dman – was just updating positions, something I do now and again through the day when bored with a conf call, in excel vs my live broker blotter and was thinking about that. I’m down 88% and its not small for me. I’m not going to add to the 25s and would consider extending into the $20 of a longer month but right now I see no reason to rush. Not going to dump here as it may catch a break once the group gets a good 2 day (LOL) rally going.

  90. 90
    Nicky Says:

    Dman – CNBC were running a piece yesterday that Chindia could not decouple from the rest of the world. I think they then ran another segment on Fast Money too. Plus the European CNBC had a section yesterday morning on the same.
    The feeling was that China had already rolled over in fact and probably was’nt even going to last into the Olympic Games. Their stock market certainly points that way.
    I am not sure about sentiment cycle but I see overall market weakness into July/August time (will be choppy) and then I still maintain we see a very good rally into the end of the year if not the Spring of 2009. When that is done then watch out below – a multi year global bear market. That tells me that the above will not de-couple. Just imo fwiw!

  91. 91
    antrimshale74 Says:

    I still can’t get over the turnaround in CLR today… very nice. Too bad I missed that nice buying opportunity in XTO, though.

  92. 92
    Denise Says:

    I would imagine that a lot of the international allocations are/will return back to our markets

    In addition we are starting to finally see the buying of our “cheap” companies-by the Europeons-

  93. 93
    zman Says:

    I hear ya Antrim and while I thought it could rally on what looked on the surface to be a pretty sweet entry into one of the hottest plays around I just have not done the work there to make me comfortable with the past run up.

    Wow X, thought it had a little further to fall, will buy it back lower next time.

  94. 94
    antrimshale74 Says:

    Gasoline still outpacing oil’s move today. I would presume this will be good for most of the refiners. I can only tolerate $4.30 gas knowing that I’m more than making up for the extra cost with trading profits. So up, up and away!

  95. 95
    zman Says:

    Getting the move I wanted in SLB, HAL , NBR all with sharp reversals of early light volume red and moving higher into green.

    CHK to green as well.

    SD through $57.

    CLR moving higher as well.

    NFX getting left behind and really no reason for the divergence.

  96. 96
    zman Says:

    Antrim – you can alway hedge out your cost at the pump by buying UGA.

  97. 97
    Dman Says:

    Nicky, #90: “rollover” = slowdown or ???

    I have heard that China has slowed down from 11% to 10% but do you think it has gone further than that?

    Just looked at the Shanghai Composite chart. Yep, that’s down big all right, but still a double from 2 years ago. End-of cycle vs. slowdown ….

  98. 98
    zman Says:

    ZTRADE: Out Half SD $55 July Calls (SDGK) for 5.30, up 203%. Time to play with house money as the stock extends its gains.

  99. 99
    scoop006 Says:

    You just undercut my offer @ $5.40 re SD

  100. 100
    reefguy Says:

    z- out 40% of my SD july 55, play with house money on balance

  101. 101
    zman Says:

    Scoop – It’s had a strong run here which I can’t fully explain other than this market seems a bit thin. It may very well go on to $60 which is why I hold the rest. If it goes on back down to $54.50 or so I’ll take those off your hands.

  102. 102
    Dman Says:

    Z i # 95 thanx. Just re-entered the NFX. Also edged into some longer DITM calls on FTI, hoping to average down but will hang on grimly if it takes off again.

  103. 103
    Nicky Says:

    Dman – I don’t see Chinese stock market exceeding those highs anytime soon. It may be double what it was 2 years ago but last time I looked it was over 40% off its highs. Looked just like another bubble to me.
    By rollover I mean no further upside in growth for now. And yes I expect it to slow further.

    CNBC reporting that Platts expect a 800,000 build in crude tomorrow. Tradition energy saying they expect to see a draw of 1.7million which would put us below the 5 year average.

  104. 104
    zman Says:

    What a difference a few hours makes … CLR. I’m going to be punting the remainder of my June position either today or tomorrow.

    Thanks Nicky

  105. 105
    zman Says:

    Deepwater drillers taking off again. I may re-enter any of them at any time as the thesis only gets stronger day after day. RIG, DO, NE, ATW.

  106. 106
    scoop006 Says:

    Z #101 You funny guy. Now I’ll sell them for $7.on the next up day

  107. 107
    zman Says:

    Scoop – and I’ll see ’em for $6.90.

  108. 108
    reefguy Says:

    sd giving back a buck

  109. 109
    ram Says:

    ZMAN – Missed the SD info minutes ago – now down $1 from ZTRADE. Thoughts.

  110. 110
    scoop006 Says:

    Z Was this mornings CHK a day trade? I’m in @ $2 and bid is $2.60. Any thoughts

  111. 111
    scoop006 Says:

    Ram re #109 Word got out that ZMAN sold

  112. 112
    ram Says:

    I thought what happens in ZLAND stays in ZLAND. Where’s the leak?

  113. 113
    uop Says:

    zman:
    oil price always lets the energy stocks bounce up or down,

    therefore the longer term outlook for the energy stocks – independent (if there is such a thing) of oil price is important, P/E ratio, cheap/expensive etc are all considerations:

    question: what is your longer term view on:
    HK
    CHK
    NBR
    HAL
    PBR
    FTO
    VLO
    EOG,

    a short remark or plus/negative is good enough

  114. 114
    reefguy Says:

    sd down two bucks

  115. 115
    reefguy Says:

    exxi moving on 1.5MM shares

  116. 116
    zman Says:

    Ram – I think its extended and could pull back a couple but that it will likely go higher (market willing) within a few days. Depends on whether or not you want to whether that. We have yet to have a good green day from start to finish in maybe 5 or 6 trading days now so maybe that’s tomorrow. As always there is going to be some fear and trepidation around inventories (we get both and in inverse order tomorrow (very tricky)) so it could be a whole different ball game in the afternoon (the oil # comes out at 1 EST).

  117. 117
    scoop006 Says:

    ZMAN is a MARKET MOVER

  118. 118
    sane Says:

    Re fuel prices,

    The government can’t wave a magic wand and cause energy prices to plummit, but if they really wanted to solve the problem they should throw the book at the problem. Get rid of the corn ethanol boondoggle. Toss out all of the drilling restrictions. Give securities and incentives to alt energy producers. Provide incentives for energy efficiency (auto/home/business). Lift the retarded tarrifs. Educate people on energy consumption/production. Spur competition and let the market sort it out. Make it a national priority. Set an example as the largest energy user in the world and be a leader. Hell, declare a war on energy consumption and a lack therefor of energy production (since we have no problem declaring wars).

    Right now we are acting like a bunch of communist treehuggers. Government, please save me…. I want you to tax the energy companies, but don’t let them drill in my back yard. ( Government waves magic want and the Oil Fairy descends and puts a barrel of oil under each of our pillows as we sleep) Gimme a break. It is like having Ebola and the doctor telling you that the treatment will hurt for a while and you will survive, but you choose to die because you feel the treatment shouldn’t hurt. The ironic thing is it hurts like hell all the way you death.

    Sad…

  119. 119
    VTZ Says:

    So much for spliiting the bid ask with this option guy… that got me nowhere except down a lot of money.

  120. 120
    zman Says:

    Uop – long term all of those go higher.

    HK – pricier than usual at present but more promise there too, likely to see upside to production guidance by 2Q
    CHK – cheap, guidance likely upped in 2H slightly, also going to get busy in Haynesville
    NBR – benefits from a big expansion in N. American drilling, cheap on PE to history and to S&P
    HAL – benefits to N. American expansion, also to deepwater expansion where they make 3 to 4x what they make when helping out on an onshore well.
    PBR – big up
    FTO – gets acquired higher than here
    VLO – up, cheap now on depressed forward earnings.
    EOG,

    VTZ – which name is that?

  121. 121
    VTZ Says:

    on those stupid SD options

  122. 122
    irished Says:

    Was ready to vote for sane for President until I read 2nd paragraph and communist treehugger which,in my recollection, is a first time either word was associated with the other . Good first paragraph!! Wow communist treehugger. LOL

  123. 123
    zman Says:

    Sane = Wow. You sound like me at BBQ parties, especially after a few PBR’s. Agree completely and would add that the government needs to be sponsoring scholarships for geophysicists, engineers of all types petro. We are sadly short of intellectual capital spending. We need more kids to go to college with the idea that they are going to graduate and find more oil and gas.

  124. 124
    VTZ Says:

    I’m not exactly complaining. It’s just annoying.

  125. 125
    zman Says:

    VTZ – that is one of the problems in trading thinly trade options. They have completely blow out the spread now on this pullback in the stock. It’s what keeps me from buy a truckload of names like PQ. Not only does the buyer have to be right but they have to have the patience to be really right on the name.

  126. 126
    reefguy Says:

    vtz- July 55 sd going to sell for 10 bucks on june 23

  127. 127
    VTZ Says:

    K I’ll hold the rest then haha.

  128. 128
    zman Says:

    Thanks Nicky, any idea when AAA solidifies its traffic number for Memorial Day. Thought it was today but maybe not til next week.

  129. 129
    zman Says:

    Re daytrade thoughts on that CHK trade, sorry, knew I missed a comment. It had not been thought to be but how do you argue with those kind of returns. My cost is $2.10 on 30 contracts with $2.85 bid staring at me now. Hmmmm.

  130. 130
    Nicky Says:

    It was interesting Sane that when CNBC ran a poll as to who was to blame for the high price of energy I think it was less than 5% blamed it on the oil companies. As you rightly say who the hell are the government to say that the oil companies can’t make money and if they do it will be taken off them – that’s crazy and where does one draw the line. I didnt’ see anyone saying that when people were making lots of money in real estate it was obscene.
    If instead of throwing billions at the Iraq war they showed they were serious by throwing a lot of money at an alternative energy program it may put the energy market (and the speculators!)on notice.
    But it seems to me that apart from dragging a load of people before the Senate in an attempt to show they are worried about the situation they are actually doing nothing. Whilst they can’t wave a magic wand there is plenty they can throw at this as you say. Its the apathetic reaction which drives me nuts cos can’t you just see where this is all going to end.

  131. 131
    Dman Says:

    Z – re #123: with prices in their current range or higher, I’d be inclined to turn out engineers for for solar/wind/ocean and of course also the least sexy of them all: energy conservation

  132. 132
    Nicky Says:

    Z – all I have seen is the Mastercard survey which said gasoline numbers were down 5.5%(or thereabouts!)

  133. 133
    zman Says:

    Dman – I agree and I was typing fast so I skipped the alt energy crowd. Seriously though, there has long been a science shortage in energy. Ask XOM all the way down to HK and they will tell G&G people (geologists and geophysicists) are aging as a group. Lots retiring, not lots graduating. More of a problem now than before as drilling gets more complex. Any of you oil guys want to add to that please do.

  134. 134
    sane Says:

    z,

    Agree on the scholarships deal. It was like back in the early 90’s when I got my degree in nuclear engineering. 7 people in my graduating class. Nobody offering crap. Very few jobs after getting out. Went to school for a couple more years and got a degree in computer science because the incentives were there. Now the nuke industry looks to be perking back up and now they can’t get enough people.

  135. 135
    irished Says:

    Thanks Z sold my chk for 4 figures. nice profit!

  136. 136
    kyleandy Says:

    reef what IOC going to be on june 23

  137. 137
    zman Says:

    And the NFX trying to go green.

    Sane you could have always gone to Iran for a nuke job, lol.

    Nice green day giving me a little breathing room in the HAL and NBR loads I have.

  138. 138
    Nicky Says:

    FWIW the longer term energy charts just look outright bullish. Sorry to say but I guess that’s what drives me crazy. You can see it in the charts and then you can see the fundamentals (or otherwise) that are going to get us there and then you just want to scream that if they just could alter the fundamentals the charts would not play out (even if you know they are going to!). If that makes any sense at all to anyone!
    So in the wretched crystal ball I see a top which if not already in is imminent. Then a decent pullback but after that its onwards and upwards. Nightmare.

  139. 139
    Dman Says:

    NBR has bounced perfectly off the central BB. Managers waiting for a dip have now had one & will need to scramble to get long.

  140. 140
    tomdavis12 Says:

    Z Aubrey buying more CHK. What an animal.

  141. 141
    VTZ Says:

    At the risk of complaining for the second time today, but I have an opinion on the prospect of more engineers and what I think is the fundamental problem here.

    DISCLAIMER: I myself am a chemical engineer.

    First off I think there is a significant disconnect between say the value that an engineer provides to society and the value that a banker provides.

    The reason why more people do not go into engineering is that it’s a hard profession to get into (ie not everyone can or wants to learn the math, etc.) and in relation to other professions, lots of engineers do not see the compensation until later in their careers.

    In the US and Canada far more glamour is placed on lawyers, bankers and entrepreneurship than technical skills and knowledge.

    If you asked a high school student what they think is more prestigious and what they would aspire to be I guarantee 9/10 would say that lawyers and businessmen are more prestigious.

    In the meantime, the world is suffering from an energy shortage and wondering why 130 dollar oil is not providing energy solutions.

    The answer is that engineers are in short supply across North America and the world and it wont change until people start viewing the engineering profession as something that is more valuable.

  142. 142
    zman Says:

    Interesting to see the broad market recovering post NYMEX into the green. Dragged up XOM, COP etc.

    Nicky – for shame saying you are sorry to see energy looking bullish, lol. This is an energy site. What kind of fun would it be to have to short these stories.

    Ahhh, NFX now green. That’s pretty much everything I care about but DNR and that Concho I mentioned in the post.

    Those CHK calls are bid $3, bought earlier at $2.10 and I’m holding into the open but my punt prior to oil numbers.

  143. 143
    ram Says:

    ZMAN – When did APA go out in a ZTRADE?

  144. 144
    Nicky Says:

    Short term in crude. If and its a big if the top is in this move up really can’t go much above 132. If the top is in we should move down hard below support which is now at 129.65, then 128.00 and then todays low at 125.96 should easily be taken out.
    If the top isn’t in then likely we have completed an abc correction today at 125.96 and new highs lie ahead.

  145. 145
    Dman Says:

    Re: 141: in France (& Germany, now I think of it), engineers have always been highly thought of, whereas lawyers have nowhere near the status they do in the Anglosphere.

  146. 146
    Nicky Says:

    Sorry Z – I just quake at the thought of what $200 oil is gonna do to the bigger picture.

  147. 147
    scoop006 Says:

    Z re #129 sold CHK for $3.10.

  148. 148
    Nicky Says:

    Also metals looking somewhat more bearish the last two days. Are they leading the way? Dman any thoughts on silver?

  149. 149
    Nicky Says:

    Broader market – volume better than yesterday – favors higher highs still ahead.

  150. 150
    zman Says:

    VTZ – as a former banker / finance guy I take no offense whatsoever to your statement. Actually moviestars and doctors get more glamor than financial types and if you judge by the number of shows on TV so do Cops. I was ME before I switched to business and I could hack the math in class but not the prospects post graduation so here I am. As I said earlier, price solves everything and until G&G people start making giant dough we won’t mint them. It’s actually more complex than that though b/c as you say it is hard and the schools, at least in the U.S. aren’t turning out a lot of kids who want to hand Analytical Geometry and Calculus.

  151. 151
    scoop006 Says:

    G&G people?

  152. 152
    reefguy Says:

    z-up 7.7% today..

  153. 153
    zman Says:

    Ram – APA? March 28th was last sale.

    Nicky – I was just kiddin ya.

    G&G – geologists and geophysicists

  154. 154
    zman Says:

    Nice daytrade Scoop

    Reef – In aggregate? Not too shabby.

  155. 155
    VTZ Says:

    It wasn’t intended to be a slam to banker/financial types, just more of a statement of what I fee the reality is as an engineer and a simple explanation.

    You’re also correct that it’s hard to get kids interested in calculus.

  156. 156
    reefguy Says:

    In aggregate, this may be a z testimoninal in part.

  157. 157
    zman Says:

    VTZ – I didn’t take it as a slam but I know what you mean. I think a lot of banker types, especially analysts, should be used for carbon sequestration projects. Talk about a lot of void space to fill with gas.

  158. 158
    ram Says:

    ZMAN – So I ended up with JUN APA 140’s. I probably confused with EOG that I also bought on 4/29. Sold EOG’s but I am still hanging on to APA’s – go figure. Therefore, thoughts on APA?

  159. 159
    sane Says:

    VTZ,

    Agreed about the perceved importance of technical skills. My frist job out of college was not writing software for technical fields, but writing software to calculate derivatives for a financial firm and they treated me like an assembly line worker with no skill.
    I remember a few years back, my sister and I both got new jobs around the same time. She got a job doing investments for one of the large banks, I started working at a nuke plant. At a family cookout around that time people there were enamored by the amount of dollars she was talking about while they could really care less about the megawatts I was talking about. People are drawn to money whether it is yours or someone elses.

  160. 160
    zman Says:

    Ram – back to you this evening on that, gotta step out.

  161. 161
    VTZ Says:

    sane –

    People don’t care about:
    -dams until hurricane Katrina
    -megawatts until they have brownouts and blackouts
    -oil production until they are paying xx.xx $ per gallon

    It is a far harder concept to explain to people that building a nuclear reactor, dam, power grid, or offshore oil platform is a risky endeavour that requires planning, experience and skill in operation, not to mention risk management.

  162. 162
    zman Says:

    RE CHK purchases on 5/23 that just hit the tape.

    Nothing says lovin’ like the CEO buying $30 million worth of the stock near its all time high.

  163. 163
    VTZ Says:

    Z – Forgot to post this the other day.

    About Canadian drilling forecasts by PSAC

    http://www.psac.ca/media_centre/pdf/20080423.pdf

  164. 164
    zman Says:

    Thanks V, will have a look.

    Ram – still thinking about APA

  165. 165
    zman Says:

    V – saw another report saying Canadian wells would top 18,500 and that 2007 was a lower number than that. Had it in a post the other day, will look for it.

  166. 166
    zman Says:

    wiki tab updated

  167. 167
    VTZ Says:

    This might have been it from CAODC:

    http://www.financialpost.com/analysis/story.html?id=532910

  168. 168
    ram Says:

    Thanks from the bb. diffi didifficultberry

  169. 169
    ram Says:

    Thanks . diffididifficultberry

  170. 170
    Wyoming Says:

    Look for US Land rigs to bounce big in the second half 2008. Our rig search for the expanded Shale drilling program resulted in $26k per day quotes. Size does not matter in this case, 1000 HP or 1500. The previous rate was $17k. Look for pressure pumping to increase rates, secondary services are usually lead by the drilling contractors.

    As to the lack of Oilfield workers, I don’t recall Joe or Jane Public complaining in 1998 when I laid off 100 out of 152 staff. One guy had a daughter with Leukemia, that was a fun day. $15 diesel would be fine with me and I never heard of a cow blowing up when it was producing $5/gal milk. Sore subject with me.

  171. 171
    zman Says:

    Wyoming

    I heard of rates in the high $19Ks last week. HAL indicated this morning pressure pumping prices may not come up until year end. They see equipment coming out of Russia to meet demand in U.S.

    On the layoffs, I was on the 17th floor of building in Congress avenue in Austin when oil was $12 and unemployed oil service workers were marching to the capitol. Nobody but locals cared as I recall. I don’t get the current witch hunt or what the powers that be think it will accomplish. Guarantee if they get their way and punish the oil company the way they want we’ll have $200 oil and $20 nat gas. Cooling bills > $1,000/month etc.

  172. 172
    Wyoming Says:

    Rig prices are real, honest Abe.

    Getting ready to do a simo frac, 1 local crew was dispatched up north, our second crew is coming out of another state. This will get real crazy this summer/fall. Probably slow down some late Nov and Dec. Holiday’s and most budgets have been spent. Drilling rigs will continue as we are being asked to get up to 4 rigs Jan ’09 and not a 2009 ramp up.

    Election year posturing by our inept officials. They will get it when the realize that Joe and Jane can not afford $10 gas nor the $60k Hybrid. Alt energy will suffer supply/demand issues so I don’t think Electric will lower.

    Hello wage inflation.

  173. 173
    zman Says:

    Wyo – I never doubted your number and glad to hear it as NBR is my largest position followed by HAL. I’m even up 5% on my Chinese tubular play, lol.

  174. 174
    Wyoming Says:

    WH will be interesting tomorrow, looks to be the breakout point or a double top. It should be up but the market is fickle. I got about 10%, stuck my neck out and bought more than double down around 7.3

    NBR was one of the bids.

    Energy market is weird (good) I will step aside when Joe Kernan on CNBC tells us to buy oil rather than imply it is way overdone and should be shorted….

  175. 175
    zman Says:

    Wyoming – I hear ya, I actually sort of like Joe b/c every time some political guest says the words, price controls, windfall profits, or punish big oil he calls them a socialist and tells them to drive less.

  176. 176
    Wyoming Says:

    Beer thirty.

    Thanks for all of the insight, it has been a good month.

    Joe is JP Morgan’s shoe shine boy.

  177. 177
    zman Says:

    Me too, gotta go write. And I thought JPM’s shine boy was the other Joe, their E&P analyst.

  178. 178
    Wyoming Says:

    Not sure, I was referring to the story about JPM getting a stock tip from Joe and he immediately crossed the street and called his broker to sell all of the shoe shine boys recommendations.

    I’m probably being a little dense and half the beer is gone.

  179. 179
    zman Says:

    Had not hear that one, lol. I was thinking of their analyst Joe Allman who got into a fight with CHK management on the 4Q conference call about how to handle reserve additions. He lost but he did downgrade the stock at $46.

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