In Today's Post:
- Holdings Watch
- Commodity Watch
- Stocks We Care About Todayll
- Odds & Ends
Holdings Watch: Wiki Tab and Performance Tabs have been updated. As I'll be away from the market ext week I have a convenient excuse to take profits. A better reason would be the number of green days interspersed in the past months trading which tells me there's a lot hot money which knows tickers and charts and not the stories. When they decide it's safe to go back into the banks I want to be in front of my screen and not a few thousand miles from it. Also there is the possibility of a near term discombobulation in oil due to the Saudi's Producer/Consumer summit on June 22-. Other than the one June call position my remaining July and longer calls would likely be held longer were it not for my trip. You're unlikely to see me sell any of the common positions this week.
- (NFX) – Added more July NFX calls (NFXGN) for $2.35. Average cost here is now $2.63. I added to my position in the July $70s and continue to hold the September $65 calls after the company upped guidance (again) yesterday. Potential near term catalysts include results from a number of Mancos Shale wells, results from the company's first few Bakken wells and, in July, the spudding of the first horizontal dual lateral for NFX in the Woodshale which could drive F&D costs into the realm of $1/Mcfe. Not bad when you get to sell it for $13. See the Tuesday post for more details on yesterday's release. New subscribers please note there is a handy clickable calendar in the lower left hand toolbar and a search bar at upper left.
- (HK) – Added (HK) HK September $40 calls (HKIH) for $4.30. I continue to hold the September $20 calls and the common here.
Crude Oil: July crude closed down $0.60 at $134.01. The chorus of top callers pointing to the intra-day reversal on Monday as a sign of oil's near term doom continues to swell (again). This morning crude is trading up about a buck.
- Nigeria Watch: The Nigerian oil union Pengassan is renewing its threat to strike if no agreement is reached by today with Chevron. Such a strike would likely shut in 460,000 bopd of (CVX) production.
The EIA Inventory Review (estimates from the Dow Jones survey)
The #1 most super important thing in today's release = gasoline demand. And it's number #2 and #3 etc, etc, etc… Last week we saw a surprise recovery to 9.4 mm bpd of gasoline demand and I guessed that its possible that the $17 rally in crude prices in Thursday and Friday of that data week had workers running to the pump on the Friday commute home, trying to beat the guy with the long pole to the sign at the corner. If that's correct gasoline demand should fall in this report as by the following Monday U.S. average gasoline prices had reached the psychologically damaging $4 level. If it doesn't fall back look out above.
Crude Imports Remain Seasonally Apathetic To Price. Another thing to look, especially this week is imports which have been kind of average for the level of production the Saudis and other OPEC members say they are producing. No bounce here soon and the logistical argument for offloadings in the Gulf Coast begins to look pretty thin.
- Refiners…So What Would I Like To See, What Gets Me Off The Bench. Gasoline demand at 9.1 mm bpd or better, another dip in refinery utilization and in gasoline production
Natural Gas: closed up 2 pennies yesterday to $12.95 as last week's warmer weather prompted many traders to look for a smaller injection tomorrow. This morning gas is trading up well into the low $13's.
Stocks We Care About Today:
S&P Affirms 'B' Rating On (HK) Debt. I generally care about rating agencies unless they act uppity about new debt in front of wave of a play like this as they are overly conservative, seem to have difficulty getting around a reserve report and have no vision with regard to the forward strip. In this case I have no problem with their decision.
Enhanced Oil Resources Inc (EOR.V) Quick Look.
- Recoverable CO2 reserves of 15 Tcf between in the St. Johns field straddling the AZ / NM border. CO2 used in "CO2 floods" to enhance oil recovery factors. Big demand here; DOE study saying there is potential demand now for 13.5 Bcfgpd per day of Helium.
- Latest completion methods paying off with most recent well producing CO2 of 6 MMcfpd vs older wells at 2. They think they will have 2 Tcf reserves proved up by their Phase 1 CO2 drilling program (100 wells should have been done in May).
- Need takeaway capacity from St Johns to get CO2 to various floods. Proposed pipeline set for completion 2010.
- initial production target of 0.35 Bcfgpd
- grows to 0.5 Bcfgpd beyond 2010.
- Oil Production – 150 bopd net, tiny, but it covers 3/4 of their overhead.
- No debt, $15 mm cash. They are going to have to raise just $200 mm through 2010.
- 143 mm shares fully diluted at $1.35 per share equals TEV of $193 mm. That share count will be going up
- SD and especially DNR also have large CO2 reserves. Pricing of CO2 here is an unknown as they are takeaway constrained.
- Its interesting enough to do some more work on but I'm not touching it for now.
(KOG) Quick Look coming soon.
Odds & Ends
Analyst Watch: Jefferies on the Haynesville Shale warpath this morning raising price targets for (CHK) from $75 to $85, for (GDP) from $66 to $82, for (HK) from $38 to $49, and for (GMXR) from $63 to $82. (PVA) started at Jefco at Buy with $93 price target. Credit Suisse slashing estimates for the ethanol producers amid spiking corn prices.