17
Jul

Thursday – Natural Gas Preview and Oil Inventory Review

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Everything is once again forgiven for the broad market and once again the energy sectors are being used as a source funds to buy everything from airlines to banks.

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch - gas preview and oil review
  3. Stocks We Care About Today
  4. Subscriber Mail Bag
  5. Odds & Ends

Holdings Watch:

  • Added (WFT) July $40 calls (WFTGH) for $0.60 as another play on (SLB)’s Friday earnings.

Commodity Watch

Natural Gas fell $0.08 to close at $11.40 with slumping oil. Natural gas inventories at 10:35 EST may provide a boost to prices today. That tropical wave (94L) continues to move west but remains poorly organized. This morning natural gas is trading up slightly.

Natural Gas Storage Preview  

  • My number: 80 Bcf Injection. Last week 98 Bcf were injected into storage. Last year saw 71 Bcf go into storage and the five year average for this week in history is 76 Bcf.
  • Supply: Probably flat to up less than 1 Bcfgpd (less than 7 Bcf per week) as higher production is nearly offset by continued low imports and higher exports.
    • Imports: totaled 8.5 Bcfgpd, down 3.7 Bcfgpd from year ago levels.
  • Weather: Last week saw the hottest weather of the year to date with CDD's rising to 80 but in line with year ago levels.
  • Street Consensus: 88 Bcf Injection (from the Bloomberg survey)

ZComment: Gas has fallen 15% since the beginning of the month. While it often takes its cue on direction of price movement from oil it has underperformed oil during this period and my sense is that we approaching a near term bottom in prices and that sense will be strengthened by a series of low, and in today's case lower than expected, storage builds. 

Crude oil traded off $4.14 to close at $134.60 after the EIA reported an  "unexpected" build in crude inventories (read on). Options on futures expire today so expect more volatility. This morning crude is trading even after losing a point earlier in the session.

  • Brazil Strike Watch: Initial talks between PBR and the oil union failed last night so it looks like the strike will run through its planned 5 days. PBR says production is now unaffected out of the Campos basin (80% of their 1.8 mm bopd output) but another union, which covers all regions in Brazil is planning to walk off the job in solidarity with the first group.  A strike extension is now being considered.
  • Nigeria Watch: "Community members" blew up a small, 20,000 bopd, ENI oil pipeline this morning.

The Oil Storage Review

exp-vs-act-071108.jpg

ZComment:

Yesterday I wrote:

Looking for a couple of things this week and neither of them bode necessarily well for the numbers staying in line with estimates. Last week I was thinking imports were due for a small dip and we got which produced an over large draw on crude stocks despite continued anemic demand from the refining sector. Those don't always last long and any sort of catch up from a logistical standpoint, even if imports were to simply rise from 9.5 to a more seasonally normal 10.0 mm bopd would likely yield a build in crude stocks which in the current environment would be unwelcome.

and 

The second item is again gasoline demand which continues to show a divergence, due to high prices at the pump, relative to year levels. Earlier this year we saw periods of belt tightening in which drivers were clearly driving less. No it looks as if drivers are saying enough is enough. If demand does not continue to rise seasonally, albeit at a rate 3 to 4% less than last year I think we see further pressure on wholesale gasoline prices and therefore crude. 

 

Not patting myself on the back but thinking that the game was a bit rigged yesterday. I don't know why the estimates were where the were yesterday, it seemed like a good bet imports would rebound, boy did they, and that gasoline demand would remain weak enough that stocks of it built, not declined. But sometimes the numbers look suspicious, especially calling for a decline in gasoline when we are experiencing a string of slack demand numbers. That just looked odd. And the degree to which the expected draw on inventories drew was strange as well. Now, if I were a short, and had access to a survey like this, I would probably set the bar as low as possible so when the big build that I really saw coming actually occurred, it would look like just that much more of a "surprise". What this helps to confirm is that the bias for oil prices has shifted into "let it fall mode". Not sure how much lower they take it or if sentiment here will quickly swing out of this position but for now it appears the bulls are content to step aside. 

On to the oil slide show ...

CRUDE OIL - "Unexpected" build in inventories.

Utilization and Refinery Inputs. Utilization inched up to 89.5% but we continue to run at levels well below seasonal norms. 

util-vs-inputs-071108.jpg

Imports Rally, Hitting 10.8 Million Barrels of Oil per Day, up sharply from last weeks 9.5 mm bopd.

crude-imports-071108.jpg

crude-stocks-071108.jpg

GASOLINE - Also saw an unexpected build. Inventories remain high.

gasoline-demand-071108.jpg

gasoline-071108.jpg

gasoline-stocks-071108.jpg

Stocks We Care About Today:

CHK Updates Guidance, Boost Long Term Volume Expectations. We knew this was coming and I don't think it will get that much of a reaction out of analysts today. It's good to grow and keep your costs in CHK but with all the noise in the market I'm thinking most analysts will treat this as minor data point. CHK steered clear of giving away the quarter by talking about 2008 numbers so there is probably a volume beat coming when they report at the end of the month.  

  • Production Guidance:
    • 2008: unchanged at 21% growth to 2.36 Bcfepd
    • 2009: increased to 19% from 16% (2.81 Bcfepd)
    • 2010: increased to 19% from 15% (3.34 Bcfepd)
  • Operations Cost Guidance: Unchanged. This is more important than the production growth bump in my book as they are not experiencing inflation above prior expectations.
  • Hedges:
    • 2008 71% of remaining expected (last 3 quarters)  gas production hedged with swaps at average $9.05; another 5% collared with ceilings just under $10. This is well known and in line with prior guidance.
    • 2009: 50% swapped at $9.44
    • 2010: 20% swapped at $9.56

Subscriber Mailbag: Questions that were posed on the site after the bell when I was at dinner. Thought this would be a better place to answer them than yesterday's comment section at midnight.

Does that guidance show CHK trading between 3.8-4.2 2010 CFPS? for a company with 18% production growth per year… hrmmmm ~ VTZ

Yes, their guidance has them trading at 3.7 to 4.2x 2010 CFPS and 4.8 to 5.0x 2009...too cheap for that growth.

Is the recent filing for CHK an improvement over what analysts are currently gaging the company ~ Ram

One other thing to note is that while the Street's 2009 CFPS is in the middle of the guidance range, it's 2010 consensus estimate is $12.69, far short of the guidance of $13.60 to $15.60. And CHK's numbers will have been run on a pretty conservative price deck. I don't think that analysts will say a lot about their 2010 numbers yet as it is pretty far off and 2009 is more of the time frame that people look to for forward multiples, but either way, it is cheap and (CHK's) guidance is not done going up for this period. 

Per my observations, the Proved reserves of all gas shale plays will increase substantially compared to 2007, principally due to Haynesville shale. Does this observation make sense? Also, all the HK, Encana, etc seems to rush to drill the shale vigorously. If this is so, I feel there is a good chance that gas prices will come down probably in few months. Can you comment on the validity of this observation. Which other play is as rich as Haynesville shale. I see bakken play is pretty hot as well, and is more skewed towards oil. ~ rv9

The proved reserves of those companies that are involved in "resource plays" are likely to grow at a faster pace than usual this year. Unlike exploration, resource plays like gas shales and coalbed methane, once established bear little risk in finding hydrocarbons and are more of a manufacturing process - delineate the play, get the science down to make it economic, hone the process over time to get your costs down and drill up your acreage. Resource plays have become increasingly popular for E&P companies over the last several years due to this predictability following Mitchel's cracking of the code in the Barnett.

Getting back to your question, the Haynesville will play a roll this year in that growth but more in coming years as will the Marcellus, Huron, Woodford, Fayetteville, Barnett and a host of other smaller shale plays in the U.S. 

On the price angle, so far increased production from these plays has yielded above normal growth rates in U.S. gas supplies. We're probably running up 5 Bcfgpd, or 9%, relative to year ago figures. This would seem to argue for lower prices but at the same we have seen increased utilization of gas for electricity generation, lower imports due to long awaited deliverability issues in Canada that seem to be materializing now, constrained LNG imports due to world market prices that are much higher than in the U.S. and higher exports to Mexico. Another factor to consider is the decline rate nature of the shale wells. They drop drastically from their initial production levels and then produce much smaller quantities for 15 to 25 years. So to continue to grow you have to keep drilling. This places upward pressure costs and below a certain gas price, and it will vary from play to play, drilling activity will be reigned in. 

Which other play is as rich as the Haynesville? In terms of gas content and deliverability and the rapidity with which this play will grow I'd say none. The Marcellus and Huron in Appalachia may end up being as big but will take much longer to develop. The Bakken is probably 90% oil but the reserve potential there is truly massive as well.  A couple of plays that I see continuing to improved are the Fayetteville, dominated by (SWN), (CHK), and (HK) and the Woodford led by (NFX).

Odds & Ends

Analyst Watch: EOG upped to sector perform by RBC.

 

 

 

 

179 Responses to “Thursday – Natural Gas Preview and Oil Inventory Review”

  1. 1
    Sambone Says:

    7:27 am EST

    Crude Dn As Market Faces Up To Weakening Demand

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures traded lower in London Thursday, easing on follow-through selling after weekly U.S. inventories data offered further evidence that global energy demand is weakening.

    “Long-term fundamentals still remain tight,” said Nimit Khamar, analyst at Sucden Research. “However, in the short term there is a real concern about the health of economies globally…this may result in temporary demand destruction, which could weigh on oil markets further in the short term.”

    Analysts at Commerzbank said although crude prices continue to retreat, oil’s top formation doesn’t yet appear to be over “and a renewed advance is possible at any time.”

    At 1106 GMT, the front-month September Brent contract on London’s ICE futures exchange was down $1.06 at $134.75 a barrel.

    The front-month August light, sweet, crude contract on the New York Mercantile Exchange was trading $1.06 lower at $133.54 a barrel.

    The ICE’s gasoil contract for July delivery was down 50c at $123.775 a metric ton, while Nymex gasoline for July delivery was down 129 points at 326.65 cents a gallon.

    Wednesday’s update on U.S. oil inventory data helped embellish a picture of easing supply-demand balances as the U.S. — the world’s largest consumer of oil — continues to temper its appetite for refined products amid record prices.

    “The energy landscape looks increasingly bearish from both the demand and supply point of view,” said Edward Meir, analyst at MF Global in New York. “On the supply side, despite all the latest geopolitical headlines, crude exports are running at high levels from a number of countries (Saudi Arabia, Nigeria, Iran, and Iraq come to mind).

    “More alarmingly for the bulls, this production could be arriving just as demand, particularly in the U.S. and to some extent in Europe, is slowing markedly,” Meir said.

    Meanwhile signs that tensions between Iran and the U.S. may be easing are threatening the geopolitical risk premium inserted into oil prices.

    The Guardian newspaper reported Thursday the U.S. will announce in the next month plans to establish a diplomatic presence in Iran for the first time in 30 years, although the newspaper didn’t identify sources in its story.

    Meanwhile, U.S. President George W. Bush is sending the State Department’s third most senior diplomat to meet with Tehran’s top arms negotiator in Geneva Saturday, the closest contact between the two countries since the 1979 Iran revolution.

    “It doesn’t help support prices that Washington, for all its belligerent rhetoric towards Iran, is in fact giving signs that it is turning away from the military option and increasingly resorting to a policy of engagement with Tehran,” said Antoine Halff, analyst at Newedge in New York.

    With Atlantic hurricane season well underway, oil market participants were eyeing three weather patterns showing signs of potential cyclone formation Thursday. Two of these in the southern Caribbean represent medium potential for tropical cyclone formation, the U.S. National Hurricane Center said Thursday.

    Markets remain anxious of the potential destructive impact of hurricanes on Gulf of Mexico and U.S. Gulf Coast oil producing infrastructure, and any intensification of the weather patterns could provide a significant fillip to oil prices.

    —By Nick Heath, Dow Jones Newswires

  2. 2
    hermanmar1e Says:

    Don’t hang your hat on CHK’s flat costs, that’s something they have no control over! BTW, they are not even close to 6.5MM$/well on their Haynsville project, still north of 10MM$.

  3. 3
    zman Says:

    H – I have to disagree with that. They have some degree of control on op costs and they do rise in the out years so they are not flat. But they have kept costs close to $1/Mcfe mark with production increases so that’s not too shabby.

    On the last conference call, they said the well was drilled and completed for $6.5 mm which sounded pretty low to me and that they expect to drop that by about 10% over time. Where are you getting the north of $10 mm figure?

  4. 4
    zman Says:

    Stifel starts OII at buy

  5. 5
    hermanmar1e Says:

    $1/Mcfe for LOE, I can believe that. But there is no way their F&D is that low, not with escalation of steel and diesel prices.

    $10MM is very low even for offset operators, everyone will be shooting for $6.5MM after they have the play figured out much like the Barnett.

  6. 6
    zman Says:

    MMR has results out, nothing of note on the Blackbeard well.

    H – Ok, I was talking LOE.

    On the F&D it’s going to depend on spacing and what they ultimately pay for all those acres. They’re talking 4.5 to 8.5 Bcfe per well and if they come in at the low end of that range the F&D wouldn’t be stellar. But they are saying their core looks like 6.5 Bcfe, and they generally low ball the initial numbers in play, they have in the past. If the rumored IP’s are correlative to EURs, the wells will be bigger than 6.5 and finding costs will be pretty good.

    On the completed well costs:

    To date, our costs to drill and complete horizontal Haynesville Shale wells have averaged approximately $6.5 million and we anticipate that we will be able to reduce these costs by at least 10% once full-scale development of the play is underway based on other shale play experience.

  7. 7
    zman Says:

    Al Gore challenges the nation to produce every kilowatt of electricity through wind, sun and other Earthy friendly energy sources within 10 years.

  8. 8
    sane Says:

    Ahhh lemme get out my rainbow powered generator for Gore.

  9. 9
    Sambone Says:

    Luv it, Sane

  10. 10
    zman Says:

    Hear ya Sane. I’m all for what he is talking about but 10 years? That is simply not possible. Not logistically, and not from a political and regulatory standpoint.

  11. 11
    ram Says:

    ZMAN – Is HK looking to be pinned at 45?

  12. 12
    zman Says:

    Ram – Don’t know, a little early I think to tell.

    Service trying to make a little move early, maybe its follow through on the fast money comments on SLB. Just saw a piece outline a ramp in June service spending in North America which should play into SLB’s comments on their call tomorrow.

    E&P open up but looks pretty nervous this morning aside from MMR.

  13. 13
    T. J. Says:

    $XNG -12. Inventory number leaked?

  14. 14
    antrimshale74 Says:

    XLF moving straight up this AM.

  15. 15
    zman Says:

    TJ. Doubtful, group is seeing $ exit in direct proportion to the rise in the broad market. E&P profits being taken so they can buy banks.

  16. 16
    zman Says:

    oil shooting up, could just be futures options expiration day volatility / short covering.

  17. 17
    SkyKing Says:

    Wow, SLB recovering a lot of lost ground.

  18. 18
    reefguy Says:

    mmr-aomeone needs to ask, “is drilling slow because your cutting sands and circulating out gas?”.

  19. 19
    ddaley Says:

    Great Call on SLB 100’s, my position is up 100% overnight. MP calls for pinning @100

  20. 20
    zman Says:

    The WFT moving nicely now on the SLB move.

  21. 21
    zman Says:

    rv9 – let me know if the post answered your ? from last night of if you need further elaboration.

    Oil trading very quietly for a futures opex day. CNBC reporting high open interest n the $135 July puts and saying it will gravitate to 135 due to that. They said high open interest in the $130 calls yesterday would make oil fall to $130 today.

  22. 22
    zman Says:

    Reef – tuned in late to the MMR call, doesn’t look like they have gone to Q&A yet, anything of note said so far on Blackbeard?

  23. 23
    el_vogel Says:

    chk looks like it’s thrashing around a bit on slightly higher volume?

  24. 24
    zman Says:

    El-V – E&P names not ready to run just yet, very indecisive action so far but at least we aren’t falling completely out of bed again.

    NG down 4 cents with 3 minutes to go before storage number.

  25. 25
    crysball Says:

    104 bcf injection.

  26. 26
    zman Says:

    104 Bcf, that will sting, gas down 33 cents

  27. 27
    reefguy Says:

    MMR- Q and A started

  28. 28
    zman Says:

    Well I had that number wrong, not sure where the bump came from.

    Gas went through $11 briefly before getting a small bounce. E&P getting shelled early afterwards.

  29. 29
    rv9 Says:

    zman, thanks for your explanation

  30. 30
    reefguy Says:

    spent $55MM to date on BB. Original afe $32 to 31,500 dry. have set a liner to 31,924′ so Jim Bob thinks this is not bad??? Waiting on the sand question

  31. 31
    zman Says:

    One of the things about DUG I don’t like as a hedging for energy (E&P). Looking at the screen right now nearly everything in E&P land is red, from 1% to 3% down and yet dug is off almost a percent as well. XOM is up and since it doesn’t move with the E&P’s perfectly and since XOM is close to a quarter of DUG, it does not make a great hedge.

  32. 32
    zman Says:

    Black Beard has the feel of a boondoggle. Other things about this stock are being ignored due to the potential for them to announced the deepest dry hole ever drilled.

  33. 33
    ram Says:

    Recently, XLF calls have been a proxy for hedging against E&P land. Just an odd thought.

  34. 34
    reefguy Says:

    32-Starting to see it as self-angrandizing momument to Jim Bob

  35. 35
    Sambone Says:

    10:05 am EST

    Crude Trades Higher, But Full Recovery Elusive

    By TATYANA SHUMSKY
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures rose Thursday, as the market recovered from two days of steep declines caused by a surprising build in U.S. crude inventories and easing Iran tensions.

    Light, sweet crude for August delivery was recently up $1.10, or 0.8%, at $135.70 a barrel on the New York Mercantile Exchange. Brent September crude on the ICE futures exchange was up 95 cents at $136.76 a barrel.

    Futures edged higher, but recovered only a fraction of the $10.58 lost over the previous two sessions. Market participants said that the factors behind the big drop were still in place, and didn’t rule out further declines.

    A surprise 3 million barrel build in U.S. crude inventories reported Wednesday sent crude futures prices cascading more than $4. Oil products also posted a stock build during the July 4 holiday weekend, traditionally a high-demand period.

    “Some are pointing to evidence of demand destruction as one of the reasons for the sell off in crude, and, certainly, yesterday’s U.S. stats help to support this notion with gasoline demand now down 2.1% year-on-year,” wrote Addison Armstrong at Tradition Energy.

    Fears of a conflict with Iran also faded, as a senior U.S. State Department official is set to attend a meeting with Iranian officials in Geneva, the highest level of contact between the U.S. and Iran in 29 years.

    The meeting will focus on an incentives offer aimed to halt Iran’s uranium enrichment program.

    “Any high level of contact has got to go some distance towards reducing the level of tension that exists between our two countries, but I don’t think the tension can be eradicated by one visit,” said Peter Beutel at Cameron Hanover.

    With the front-month contract sinking as low as $132 a barrel Wednesday, some traders are talking about a turning point in this historic bull run.

    Previous projections expected the market to crest at $150 a barrel. “We almost got there,” said Peter Donovan, vice president at Vantage Trading. The market now needs to fall below $131 a barrel to trigger the next significant leg down, he said.

    Front-month August reformulated gasoline blendstock, or RBOB, traded 15 points, or 0.05% higher, to $3.2809 a gallon. August heating oil gained 99 points, or 0.26%, to $3.8509 a gallon.

    —By Tatyana Shumsky, Dow Jones Newswires

  36. 36
    zman Says:

    ZTRADE: Sold the remaining July CHK $60 call position (CHKGL) position for $0.10, down 95%. The original position was sold for a 40% gain last week. The CHK July $65s will expire worthless.

  37. 37
    ddaley Says:

    Tiny nibles on the AUG XLE 80 calls. 83,000 puts at that strike for July. Would lend some support there.

  38. 38
    reefguy Says:

    bb- has sands with porosity and shows, could be gas or oil, but at what cost?

  39. 39
    Sambone Says:

    Weather – Bertha is still alive, Die Bertha, Die! I think this is one of the longest lasting canes on record? not sure though.

    http://www.ssd.noaa.gov/goes/flt/t1/loop-rb.html

    Watching 94L at 65W, 12 north. Still not a TD.

    Watching 83 W, 12 north. Seems to be building.

    http://www.ssd.noaa.gov/goes/east/tatl/loop-rb.html

    Big wave coming off Africa. 20W, 5 north. This one could? possibly be “Cristobal”, maybe?

    http://www.ssd.noaa.gov/eumet/eatl/loop-rb.html

  40. 40
    BirdsofpreyRcool Says:

    #32 z – sorry, i’m such a geo-geek… but i recall the deepest dry hole ever drilled. It took the Russians 24 years and over 40,200 feet to prove to themselves that hydrocarbons are not generated from the earth’s molten core. The russians thought that hydrocarbons from dead organic matter, buried for millions of years, was a Zionist hoax. That is so weird, that you know i can’t make this stuff up. “The Kola Superdeep Borehole.” one of those fun geo-facts!

  41. 41
    zman Says:

    Bird – you got me there. Still at 32,500′ they are unable to tell if they are even in the l miocene. “Cuttings look like powder”. I’d rather go to Vegas than put another dollar on that.

  42. 42
    BirdsofpreyRcool Says:

    z – fore shore!

  43. 43
    reefguy Says:

    mmr call over…I just do not know about bb. I want to be an optimist. I heard things that are good, but when do we get a test?

  44. 44
    zman Says:

    Broad market flat now…due to oil rally?

    ZTRADE: Closed the remaining HK July $45 calls for $0.35, down 82%. Sold 1/3 of them last week for a 105% gain. The $50 strike calls will expire worthless.

  45. 45
    BirdsofpreyRcool Says:

    last bit of deep well info: there was a well drilled in the Anadarko Basin in 1974 that was the deepest of it’s time. They stopped drilling at about 31,500 feet when the well encountered “molten sulfer.”

    So, tough to believe you would find any hydrocarbons that deep. Any oil/gas would be burned to a crisp. So, agree with z… mmr is drilling a monument to self. but it’s not a reason to buy mmr.

  46. 46
    cargocult Says:

    What is a good price to add CHK shares?

  47. 47
    rv9 Says:

    Z or anyone else:

    Can you provide us with URL for oil and NG futures in US and elsewhere on real time.

    I use

    http://online.wsj.com/mdc/public/page/mdc_commodities.html?mod=2_0030&refresh=on

    Which is delayed

    Thanks

  48. 48
    tomdavis12 Says:

    Z: We were hoping that demand for steel piping would be good for X, TS. They have been pummeled with energy. Any thoughts. NUE beat numbers. I have not listened to call. Stock down 10% today.

  49. 49
    doc Says:

    I was looking at yahoo finance key statistics. They show?e mmr with a price to sales of 1.91 and chk with a price to sales of 3.91. Would that make chk an expensive stock?

  50. 50
    zman Says:

    cargo – I own the shares higher than here. If anyone want to give some TA on it now would be a good time as the group is trading technically and not on fundamentals although today’s weakness is partially gas market related.

    Tom – everything I’ve read lately say pipe demand continues to spiral higher and there is not enough capacity coming on to soften prices or satisfy demand … seems that the metals, along with energy are suddenly yesterday’s new and I will wait for them to completely capitulate before I commit more capital there (I hold WH common now for the I think the long haul).

  51. 51
    zman Says:

    doc – E&P’s don’t trade on P/S so I don’t think its a useful metric. They trade on P/CF or TEV/EBITDA.

  52. 52
    kyleandy Says:

    rv http://www.netdania.com for oil

  53. 53
    ddaley Says:

    Nabors Ind to offer an additional $750 mln of senior notes

  54. 54
    cargocult Says:

    I’m long CHK with costs in the $40’s and sold some at $54. I might pick it back up at that price. Amazing that it is revisiting these prices. All those moments of regret at selling for $54.

  55. 55
    Nicky Says:

    Morning all. Broader market – volume is up on yesterday which would favor a higher high still out there. Maybe one more pop above today’s highs. If the bearish count is to prevail then 11450 really should hold the upside.

    Oil – options expiry seems to be skewing the action to holding around the 135 level. Still think we see a bit more upside action for wave 2 and it seems unlikely now that we make new lows before that.

    Low still doesn’t look like it is in for the $ which could push energy and metals back up.

  56. 56
    uop Says:

    zman:
    agree, I have DUG as a hadge, yet it does not do the job.

    But, for my E&P positions, I cannot find a good hedge, maybe USO but that is oil,

  57. 57
    jack Says:

    z – any thoughts on adding to PQ Aug 22.5’s with stock down to 23.5?

  58. 58
    zman Says:

    ZTRADE: Added CHK August $57.50 calls (CHKHA) , smallish, for $2.55 with stock below $54.

  59. 59
    zman Says:

    jack – I am thinking about that exact strike, can easily bounce $3 to $4 on or before earnings and would still be quite cheap. The group action gives me pause though and I think right now that a recovery will be seen first in the big cap names, so far, no joy there.

  60. 60
    Nicky Says:

    Wow nat gas. There is support at 10.650 and 10.460. I think its a precursor for what the oil market is setting up to do very shortly.

  61. 61
    arodeen Says:

    Z – Are you holding the SLB July 100’s through tomorrow, or looking for an exit today?

  62. 62
    zman Says:

    Energy shares just capitulating now. Aubrey about to look pretty smart on those hedges. Where’s Cramer now?

    XNG down 17% in 9 days. That’s the worst thrashing since October 2005. We’re due for a bounce. Not saying we will get one but this is getting nutty.

    Aro – I’m holding all of the SLB calls through the morning.

    HK trying to hold $40.

  63. 63
    zman Says:

    ZTRADE: Out CHKGM, the CHK July $65 calls for $0.05, can’t believe somebody bought them. 98% loss on that one.

  64. 64
    kyleandy Says:

    rv – for gas http://www.firstenercastfinancial.com/market-pricing.php#

    looks like my oil price site is 10 min behind

  65. 65
    zman Says:

    Natural Gas at May lows. That injection was an odd number given the weather. The fear is that now we are finally seeing volumes from the shale plays show up in the numbers. Gas will likely have a tough time between now and next Thursday although we are due a bounce here as well. I’d say the only thing that can support gas are bouncing off 10 from above, a big heat wave or a hurricane.

  66. 66
    uop Says:

    zman;

    drop in oil and NG drags all E&P down, that shows a strong correlation,
    made a bad mistake not protecting E&P with an index or cover ,

    puts in UNG and USO would have done it,

    money has moved a lot into financials,

  67. 67
    doc Says:

    The weather is hot out here in pa. 90s all week. Aubrey last buy 200,000 shares at 59.15

  68. 68
    zman Says:

    Uop – yes, I made a mistake not hedging the portfolio.

    ZTRADE: out half WFT $40 July calls taken yesterday for $0.90, up 50%. Continuing to hold the other half and the higher strike August calls.

  69. 69
    el_vogel Says:

    i don’t know about you guys, but I’m ready for that retracement now…

  70. 70
    zman Says:

    HK tanking into the 39s. When the bounce comes it will be a big one. We’ve fallen into support but I’m not sure it will matter

    Agreed EL-V

    I may take some UNG puts for the next week which would probably ensure a rally in gas.

    Oil trying to rally back, so far E&P could care less.

  71. 71
    Dman Says:

    Bought back the Oct 30 PQ calls sold against my ITM PQ call position. Have to admit it is dicey though. Nothing much in the chart to stop it falling further.

  72. 72
    uop Says:

    zman;
    I have made all wrong moves with UNG, now it down, I got out too soon,

    if hurricane strikes, UNG goes up,

    what do you think now about CHK and HK: its so low, it might be the time buy calls ?
    But hedge at the same time E&G.

  73. 73
    VTZ Says:

    Regardless of what the charts say, at some point these companies have fundamental value. This is straight capitulation. Why you would sell it off 25% when estimates are based on commodity prices well below this and most companies are hedged anyways, I am not too sure.

  74. 74
    zman Says:

    Uop – I’m pretty gun shy on adding to them right now. Yes cheap but not a lot of reason being used in the space right now.

    VTZ – they have plenty of fundamental value above these levels but right now they are killing the group without a notion of fundamentals.

  75. 75
    Bleemus Says:

    NBR Nabors Ind: Moody’s reviews Nabors’ ratings for possible downgrade (42.84 -0.72) -Update-

    Moody’s placed the ratings of Nabors Industries under review for possible downgrade. This rating action follows the company’s announcement of a $750 mln senior unsecured notes offering with the proceeds to be used for general corporate purposes including potential increases in capital expenditures. “This additional bond offering will further increase Nabors’ leverage levels, which were already high for its A3 rating. Despite strengthening North American drilling activity and expectations of escalating demand, Moody’s is concerned with Nabors’ increasing financial risk and the uncertainty regarding the ultimate use of proceeds from the offering.”

  76. 76
    VTZ Says:

    Any guesses of how much more capitulation we are going to get? How much more money needs to flow out into the banks?

  77. 77
    zman Says:

    Bleemus – thanks. I’m going to hold for now.

  78. 78
    ddaley Says:

    40 has been the pin number for HK for some time. 55! is the number for CHK

  79. 79
    el_vogel Says:

    #73 I don’t follow all of this full-time, so this is just an educated guess(which overqualifies me as a CNBC correspondent), but here’s my hypothesis… a great deal of this is likely sector rotation into something else (likely financials from what it looks like), and some of the reasoning behind that would be perhaps to at least average down some of the steep losses in the sectors being rotated into.

    If I were running a fund, it might look good (depending on a real recovery) or at least not AS bad if I could average down the costs of my securities as they’re plummeting…

    Not that I think it’s a good idea – I rotated out from trading financials puts to trading energy calls earlier this year; after these last couple of weeks, I now need to come up with a better hedging strategy 🙂 trouble is, I don’t have time to read the McMillan on Options book I picked out for just such the occasion.

    But I digress! Back to work…

  80. 80
    ram Says:

    ZMAN – I guess I spoke too soon earlier, HK will be at 40 for a while. This has been tough.

  81. 81
    zman Says:

    V – either the gassy stocks make a stand here or fall another 5 to 10%. But that’s just a guess. Oil down $2 now like rubbing salt.

    Hear ya Ram, I’ve taken a haircut here

  82. 82
    ram Says:

    I wonder if the shorts got chased from the financials to E&P land. If the buyers are gone from mid May to late August, then the shorts are left.

  83. 83
    VTZ Says:

    I wonder if this is a huge shakedown prior to both option expiry and earnings.

  84. 84
    ram Says:

    ZMAN – The CHK AUG 75’s are crushed. I can’t phrase the question right – I’m thinking of selling at what premium is left and buying a closer strike, but I’m not sure of the economics.

  85. 85
    ddaley Says:

    S3 for HK is 37.56

  86. 86
    ram Says:

    O.K. What happened? Did the price of NG go to $5?

  87. 87
    ram Says:

    dd – what is S3?

  88. 88
    zman Says:

    Ram – if you swap the same money from the high to the low strike and you get a rally, the low ones are going to participate more quickly than the now far out of the money puts.

    NG is at 10.57, down 0.83

  89. 89
    ram Says:

    Z – was puts sort of a slip based on what’s going on?

  90. 90
    zman Says:

    yep, meant calls.

    Another day like today and I raise cash and sit until earnings really start.

    SLB back to flat on the day, every else red but a slightly up refining group.

  91. 91
    ddaley Says:

    Ram:
    S3 is the botom of the support levels,based on a “pivot point” formula
    There is R(resisitence) 1, 2, &3, and S (support) 1, 2, &3.
    I enter them every evening on charts, as the big guys tend to follow them.
    Info and calculator here, calculator at the bottom:
    http://www.tactrading.com/floor-pivot-trading.htm

  92. 92
    ram Says:

    Thanks ddaley.

  93. 93
    zman Says:

    NYC back from lunch, lets see if they have any appetite for bottom fish.

  94. 94
    PackMan Says:

    HOUSTON, July 17 (Reuters) – Natural gas company Chesapeake Energy Corp (CHK) said in a U.S. regulatory filing that it would fund its ambitious exploration plans for 2009 and 2010 by selling assets rather than debt or equity.

    Over the next several years, Chesapeake is ramping up spending to develop the Haynesville Shale gas field in northern Louisiana and other plays. Chief Executive Aubrey McClendon has said Haynesville could be the most significant find in the company’s history.

    According to the filing with the U.S. Securities and Exchange Commission on Wednesday, the company expects proceeds of $4.6 billion in 2008 from debt and equity offerings, but its heavy reliance on capital markets to fund growth have stirred some concern among investors and analysts.

    Chesapeake said it expected to sell undeveloped leasehold or producing properties for $3 billion to $4 billion in both 2009 and 2010.

    Also in the updated outlook, the Oklahoma City company hiked its production growth forecasts for both years to 19 percent from 16 percent for 2009 and 15 percent for 2010. Its 2008 forecast remains at 21 percent.

    In a note to clients on Thursday, Capital One Southcoast said Chesapeake’s new outlook was in line with its expectations.

    The company’s stock has fallen about 15 percent this week, outpacing a 9 percent decline in the American Stock Exchange index .XNG.

    A sharp drop in crude oil and falling natural gas prices have contributed to the weakness in energy stocks.

    On Thursday, shares of Chesapeake tumbled $3.53, or more than 6 percent, to $53.14 on the New York Stock Exchange, while the index fell about 4 percent. (Reporting by Anna Driver; Editing by Lisa Von Ahn)

  95. 95
    Nicky Says:

    Nothing worse than a ‘I told you so’ I know BUT I rubbed several people on here up the wrong way last week by saying that this move was on the charts last week. Nothing falls forever and nothing goes up forever its as straightforward as that as far as I can tell. Energy had a great run and financials had been slammed – how much lower could they go short term?
    I still dont see the bottom as being in for the broader market. When the next move down comes I expect it to tie in with a move up in oil which will probably look very bullish and have everyone saying that the correction in energy stocks is over. Well I don’t think it will be I think it will be the heads up to liquidate them for now as I expect a much bigger rally in the broader market between now and November and I think that it is clear from the last 24 hours that they are going to be looking to buy some of the stocks they think have been trashed.

  96. 96
    zman Says:

    Nicky – looks to me like NG takes a shot at $10 soon. Thoughts?

  97. 97
    el_vogel Says:

    Nicky,

    I for one am always grateful for a dissenting opinion. As for any of us, whether I follow any strategy based on your analysis or not is up to our own allocation decisions, but a view contrary to popular consensus is an especially important consideration for any market discussion since, as you pointed out, markets tend to go both up and down.

  98. 98
    zman Says:

    EL V – me too.

  99. 99
    Nicky Says:

    Z – I think a bounce is due! Look for a move above 10.790 for an early sign.

  100. 100
    Nicky Says:

    Broader market – getting towards resistance levels.

  101. 101
    Nicky Says:

    Volume is deteriorating too in the broader markets…

  102. 102
    zman Says:

    Thanks Nicky and if I seemed terse you have my apologies. Not my be best month. Your opinions are highly valued. Sometimes you say “energy” meaning oil and I say “energy” meaning the stocks that produce it or help to produce it. I separate the two whereas some people see it all as fungible. Oil is due for a drop but the stocks have not appreciated at the same degree as it has. Just a thought on a very red day.

    Oil looking to break through 130, looking at some USO puts.

    SLB getting a re rally for tomorrow earnings.

    Tempted to buy July calls on the close in the most hammered big cap names and sell on the open.

  103. 103
    BossmanG Says:

    Z, what do you think of this upcoming earnings season for these energy plays? Do you think its possible for them to return to their highs?

  104. 104
    Nicky Says:

    Z – you are never terse – its no fun being right to be honest when I can see its hurting people. That said if I can put up a call that helps then I will do so. Hence my call that the next bounce will I think be the last chance to get out of energy future longs for a bit and that may mean the energy shares too.
    Okay I have a couple of options for oil -the most bearish one says that ii which looks very stunted finished this morning which means we are in iii down which would be very bearish and mean we are likely to absolutely collapse from here down to 120 – 125. We need 130 to hold I think. My preferred count says that i is just ending and we now get a decent bounce for wave ii BEFORE it then collapses!

  105. 105
    ram Says:

    Collapses?

  106. 106
    zman Says:

    Bossman – wish I could say. We see this from time to time in the group. Great news not being rewarded, rush to use profits in the group like an ATM to buy financials. What I can say is that for the most part on the names we traffic in most around here, analysts will need to boost estimates following the conf calls. I don’t think we get back to the highs of late before Sept/Oct but I could be wrong and am thinking we are overdue for a bounce.

    Thanks Nicky. A collapse to $120 or $125 is not that much of a downside case. Are you saying collapse further below $120?

  107. 107
    Nicky Says:

    Ram bounce if it happens should take us above 136 area and then I expect a big move down. It will feel like it is collapsing but in truth probably only take us back to 115 ish possibly 100 – 105.

  108. 108
    zman Says:

    ah ok, gotcha, thanks.

    Lot of put buying going on CHK, HK, and some other gassy names.

  109. 109
    ram Says:

    I don’t think I’ve ever seen more HK puts than calls before. I wonder if this is indicative of a bottom or a major support failed so everbody is rushing to take advantage of additional selling.

  110. 110
    zman Says:

    Most of the Hayneville players are off 10+%

  111. 111
    Garyinhou Says:

    Hey Z.. what a whoopin’ Let me know your thoughts on this…

    We need as a whole for oil to retreat to a more reasonable level, for our economy and pocketbooks and big a** trucks. The sooner we get this massive correction out of the way the better, and we can all begin to focus on the individual co’s fundementals once again.

    North American drilling has been on the rebound, oil at anything above $60 keeps em busy. The mfgs (NOV, CAM, FTI) are backlogged to grandmas house over hill and dale to the tune of billions.

    Results for many of our fave’s will continue to be records or near so..

    Heck, we need our refiners to recover too…

    This could be a bath we needed to take, as painful as it is.

    Thoughts?

  112. 112
    SkyKing Says:

    When does SLB report tomorrow?
    Thanks all, for your insight.

  113. 113
    VTZ Says:

    Talisman worth less today than october 2005, fwiw.

  114. 114
    BirdsofpreyRcool Says:

    BP is buying CHK’s woodford assets… more support for the shale plays

  115. 115
    zman Says:

    CNBC should have stuck to their argument from yesterday. Oil down $5 ish to below $130 as we approach the close.

  116. 116
    zman Says:

    BP buying CHK’s Woodford interest for $1.75B

  117. 117
    zman Says:

    Will work out ramifications for NFX and CHK. Should be pretty positive for CHK’s debt ratings. Stocks could care less at present.

  118. 118
    VTZ Says:

    so what happened to 70$+ price targets for HK at 9 dollar gas?

  119. 119
    ram Says:

    S3 for HK is here at 37.56.

  120. 120
    mahout Says:

    Zman,
    What a headwind! Think it’s over @ 120.
    Move into financials won’t last, more Fin. troubles coming. Long time holder CHK, couldn’t stand the anomaly any longer, bot more @ 53.
    Love the service, great info and comments.

  121. 121
    zman Says:

    The CHK/BP deal values Woodford acreage at 19,444 per acre which is higher than I would have thought.

    NFX has 165,000 net acres which translates into $3.2 billion. At current stock price, total enterprise value of NFX is $7.95 B. NFX produces right at 30% of its volumes from the woodford. There’s a bit of a disconnect in valuation with the remaining 70% of the company for $4.7 B. Just back of the envelope math but on any other day analysts would view this very favorably for both companies.

  122. 122
    ddaley Says:

    Z-
    Much of the IV will be out of the SLB JULY 100 when the options open tomorrow, post earnings. Are you looking for a move over 100 to save the price of the option? Thanks

  123. 123
    zman Says:

    V – this is generally when the analysts just hid in their offices.

    mahout – thanks, agree, what an absolute bashing of anything to do with energy.

    WLT down $12!

    ddaly – yeah but I didn’t have this kind of day in mind when I took that. Last quarter the stock moved up north of $10 once the call started after they reported a miss and from these same levels so it could happen again.

  124. 124
    ram Says:

    Nicky – Do you think we are still in wave i? If so, wave iii could take these stocks back to 07 prices.

  125. 125
    Fred Says:

    I bought more HK and CHK common, good value down here.

  126. 126
    zman Says:

    Fred – I agree and on the common of both of those I am not concerned. Would like to see some sideways action in the group before I pick a point to increase exposure. Today energy being treated like it is poison. Maybe its the Al Gore affect.

  127. 127
    Sambone Says:

    1:59 pm EST

    Nymex Crude Sinking As Options Approach Expiry

    By TATYANA SHUMSKY
    Of DOW JONES NEWSWIRES

    NEW YORK — Nymex crude futures slumped to a nearly six-week low as traders scrambled to cover short positions ahead of the expiration of options Thursday.

    Light, sweet crude for August delivery recently traded $4, or 2.9%, lower at $130.60 a barrel on the New York Mercantile Exchange. August crude traded as low as $129.75 a barrel, the lowest price seen since June 6. Brent September crude on the ICE futures exchange traded down $3.52 at $132.29 a barrel.

    Futures moved significantly lower for the third straight session, adding to a $10.58 drop over Tuesday and Wednesday. The correction started Tuesday with comments from Federal Reserve Chairman Ben Bernanke that the U.S. economy would take months to emerge from sluggish growth. Downward momentum mounted Wednesday on a surprise build in U.S. oil and product inventories.

    Now, the market’s plunge has taken on a momentum of its own, similar to the rapid increase in prices seen last week, traders said. The move was accelerated with the expiration of options on the August crude contract, which forced traders to reconcile bets they had taken out earlier in the month with the current price of crude.

    “Whichever way it gets covered, it induces selling into this market,” said Ray Carbone, president at Paramount Options, a Nymex brokerage.

    Declines could continue on Friday if an apparent thaw in U.S.-Iranian relations continues to develop, he said. Officials from both nations will attend a meeting in Switzerland to discuss Iran’s nuclear program, the highest-level contact in 29 years.

    “We may have a bounce tomorrow, because if (the meeting) doesn’t go well all of it a sudden it intensifies debate about Iran,” Carbone said.

    Front-month August reformulated gasoline blendstock, or RBOB, recently traded 10.47 cents, or 3.2%, lower at $3.1747 a gallon. August heating oil traded 6.74 cents, or 1.8%, lower at $3.7736 a gallon.

    (Brian Baskin in New York contributed to this article)

    —By Tatyana Shumsky, Dow Jones Newswires

  128. 128
    VTZ Says:

    HK broke the lower BB today. Almost at the 50 day SMA.

  129. 129
    Nicky Says:

    Ram – you mean energy or broader market?

  130. 130
    sane Says:

    Does anybody know the market symbol for Nymex RBOB Gasoline Futures?

  131. 131
    crysball Says:

    given the bloodbath, am would expect this will prompt some positive releases by the affected companies, but doubt it will stem the the tidal flow.

  132. 132
    apbd Says:

    Has Iran got any missles left? We need an ” event.”
    apbd

  133. 133
    zman Says:

    UJ/Q8 (august gasoline)

    Crysball – agreed, guess we need an intra day turn and then someone like Cramer can come on and tell us its safe to go back in the water.

    A – I think MEND is likely to do something soon. Funny how Iran has fallen into a black news hole.

  134. 134
    VTZ Says:

    I think the event we need is some earnings from the banks to remind people why they are terrible investments still.

  135. 135
    ram Says:

    Nicky – Energy.

  136. 136
    ram Says:

    Since energy is not doing well now, anybody have thoghts on googles report after the market. I know some made money here on otm calls when google reported. Wondering if people will think that will repeat. I’m looking for a moneymaker!!!

  137. 137
    crysball Says:

    From the Motley Fool

    The Bakken Is Blooming
    By Toby Shute July 16, 2008 Comments (0)
    0
    Recommendations

    Two weeks ago, we took a look at the red-hot Haynesville shale. I’d now like to direct your Foolish attention northward, to another resource play that’s turning plenty of heads.

    The Bakken formation is located in the Williston Basin, which stretches from North Dakota and Montana on up into Canada. Like the Haynesville, the Bakken is a shale play that was uneconomic until recent advancements were made by folks like Halliburton (NYSE: HAL) in the areas of horizontal drilling, fracture stimulation, and completion technology. Unlike the Haynesville, the Bakken is primarily an oil accumulation.

    The U.S. government pegs the technically recoverable prize on the U.S. side at three or four billion barrels. As we’ll see, that estimate may significantly understate the size of the play.

    Just to get a point of terminology cleared up, there’s a big difference between so-called “oil shale” and the crude oil-bearing sedimentary rock that Bakken producers are tapping.

    The massive oil shale resource out in the Rockies’ Green River Basin does not contain crude oil. It’s actually kerogen, a pre-cursor to crude that hasn’t cooked in the earth’s oven long enough. We would need to simulate millions of years of natural heating and pressure in order to bring that stuff up to par. For that reason, the economics are less than compelling.

    The Bakken formation, on the other hand, contains real live Texas tea — fully cooked and ready to be refined. EOG Resources (NYSE: EOG) has identified a similar oil play in the Fort Worth Barnett Shale. These sorts of plays are proving highly profitable — hence the industry hoopla.

    That brings us up to the recent spate of updates out of the play.

    Continental catches the wave
    No company is more synonymous with the Bakken than Continental Resources (NYSE: CLR). Continental is the largest leaseholder in the play, with about half a million acres. As oil has soared and drilling results have made the Bakken’s potential clearer over the past year, Continental’s shares have more than quadrupled.

    Well, the hits just keep on coming. A recently completed well has reportedly flowed at roughly 1,100 barrels of oil equivalent per day. While well short of some of EOG’s monster results, that’s still a pretty serious well by onshore U.S. standards. For some context, The Wall Street Journal recently reported that the biggest producer in the lower 48 is a 1,600 barrel-per-day Swift Energy (NYSE: SFY) well. Initial production rates tend to drop off sharply, but Continental still has a strong result there.

    What’s more important is that this well didn’t even target the Bakken. It sits in the Three Forks/Sanish formation, which lies below the Bakken. That government estimate I mentioned before? It doesn’t include this additional target, which may in time prove to be a completely separate reservoir.

    Brigham’s bragging rights
    While Brigham Exploration (Nasdaq: BEXP) controls far less acreage than Continental, the smaller E&P’s leasehold stacks up impressively against bruisers like Marathon Oil (NYSE: MRO) and EOG. It’s hard to disagree with the company’s claim of having the position with the greatest impact.

    Brigham has also released some fresh well results, including an early flow rate of around 727 barrels of oil equivalent. In addition to internally funded prospects like this one, Brigham participates in lots of third-party wells as a minority partner. This helps to spread both capital and risk around. Not that Brigham’s being shy with capex: The firm has now hiked its 2008 Williston budget by 127%.

    XTO says tally ho
    Speaking of ponying up, XTO Energy (NYSE: XTO) just closed its purchase of a serious swathe of primo Bakken territory. Apparently the firm wasn’t content with a mere 350,000 acres. XTO has also gone ahead and scooped up an additional 100,000 for a mere $115 million. At a little over $1,000 an acre, that’s peanuts. Of course, the acreage is unproven, but it wouldn’t take much for this additional acquisition to prove a bargain in hindsight.

    XTO, whose leasehold could soon leapfrog that of Continental, is also talking about the potential of the Three Forks/Sanish formation. It would behoove Bakken observers to monitor results of future wells that are completed in this emerging play. The Bakken could go from just blooming to booming.

  138. 138
    zman Says:

    A very little bit of bottom fishing going on, got a bid out for a small piece of August HK 40. Probably a bad idea but down 17% is way too much in my book.

  139. 139
    rseidman Says:

    In case any of you missed this:
    17-Jul-08 15:08 ET

    Chesapeake Energy CEO bought 750K shares at $57.25 on 7/15 (52.46 -4.21)

  140. 140
    zman Says:

    Thanks RS, I had not seen it.

  141. 141
    Nicky Says:

    Ram – even with the move down late I still think its i as otherwise what would count as ii doesn’t look right. Either way the trend is down…. If we are already in iii down then likely we see only a minor bounce here and then down hard.

  142. 142
    zman Says:

    ZTRADE: HK August $40 calls (HKHH) entered for $3 with the stock down 17% on the day.

  143. 143
    ellwodo Says:

    Since majors aren’t being hit as bad, any guesses as to whether they might see this as a buying opportunity for some companies like HK and XCo?

  144. 144
    Popeye Says:

    Ring the damn bell already.

  145. 145
    zman Says:

    Elwo – that’s gotta be on their minds. Falls into the whole get green with gas concept and you know this firesale has got to be making them think. APC, is also not down terribly during this and they could take out some of the smaller names like HK giving them a much needed resource play angle.

  146. 146
    ram Says:

    Come on APC take out HK!

  147. 147
    Nicky Says:

    Could get interesting after the close. Earnings out of IBM, Google, Microsoft, AMD etc.
    Volume still confirming this move up which should top out by tomorrow but probably make a higher high tomorrow. first. Minor cycle high due today so should come no later than tomorrow. Could be done today.

  148. 148
    ram Says:

    Nobody’s thinking about the GOOG earnings?

  149. 149
    tater Says:

    Z – Thinking that somebody may ask SLB’s CEO something about “what will oil at $100 do for your forward earnings outlook?”

    Do you have an opinion on a possible answer?

  150. 150
    zman Says:

    My very tiny and probably meaningless 2 cents on GOOG. As someone who has used their payperclick feature a couple of years ago and more recently I can tell you they bulloxed it up. The bid process has been altered to be much less transparent for keywords than it was just a year ago. This led me to stop using them for search driven traffic as they would randomly delist keywords I liked like Chesapeake or natural gas storage. I have techie friends who say a lot of people have been miffed with the pay-per-click side and left it. Yahoo in the meantime has improved their offering. I don’t use either of them at present as they ultimately proved to be a waste of cash. Don’t know how much of their business is pay per click but that’s my two cents.

    CHK finding traction late.

  151. 151
    ram Says:

    Thank you ZMAN. Hopefully tomorrow is a better day.

  152. 152
    zman Says:

    Tater – absolutely do. It will be good for earnings. Reasoning is that no E&P or Major in their right mind models the economics of their plays on $130 oil. Many are modeled in the $70s and $80s to determine the economic threshold. So a project that meets a company’s hurdle rate of say, a 20% IRR at $80 is certainly greenlighted at $100.

  153. 153
    Sambone Says:

    Tini time, bout time!

  154. 154
    Garyinhou Says:

    Tag em and bag em..

  155. 155
    Nicky Says:

    Google out, misses and tanks…

  156. 156
    zman Says:

    Gary sorry for late response to 111. I agree, necessary on oil but painful and way overdone on the stocks. The stocks are not done purely due to oil and ng being off but due to the ATM feature, taking E&P profits to buy freddie and fannie.

  157. 157
    Bleemus Says:

    House Democrats discussing sale Of 10% Of SPR oil reserves; plan would apply to about 70 mln barrels – DJ

  158. 158
    zman Says:

    Huh, maybe I should start tracking GOOG, lol.

    muchneededflavoredwaterthirty.

  159. 159
    zman Says:

    Bleemus – I just can’t see that getting approved. $8.4 billion at $120. What’s the point of that? We’re well supplied as the imports data above shows. These guys are trying to cut gasoline prices which will increase gasoline consumption. They are just clueless and this recent and incessant need to mess with free markets by all sides in Washington is really just very dangerous and short sighted.

  160. 160
    VTZ Says:

    Bleemus, then maybe they can pay back the FED 9 billion dollars of the money they just gave away.

  161. 161
    zman Says:

    Crysball – regarding your comment about PR’s coming out more and more to support the group, I’m sure the BP/CHK deal was done before the close instead of the normal 4:01 time to make sure people saw and analysts would be on top of it during the trading day. Should be some first call notes in the morning with nice things to say after this drop unless the analyst community is gutless/shell shocked from the last couple of days. Someone should also write nice things about the valuation translation to NFX from this deal.

  162. 162
    Nicky Says:

    IBM beats, Microsoft misses…

  163. 163
    orion Says:

    What’s with HK up 5% after hours? news?

  164. 164
    zman Says:

    orion – looks like an out of sequence trade on HK; don’t see any news.

  165. 165
    VTZ Says:

    probably a settlement trade from earlier in the day

  166. 166
    orion Says:

    must have been bad data, now HK is even AH

  167. 167
    VTZ Says:

    Merrill just posted larger than expected losses. Hopefully that leads the group nicely and people say… wait a minute… why did we rally financials again?

  168. 168
    VTZ Says:

    “Excluding restructuring charges, Merrill lost $4.42 a share, compared with analysts’ average expected loss of $1.94 a share according to Reuters Estimates.”

    Terrible… why do I want to own a 30 dollar stock like that?

  169. 169
    zman Says:

    VTZ, MER bid down 2.70 in AH. Guess they kitchen sinked the quarter and the Street didn’t like it. Moody’s whacking their ratings on MER’s debt.

  170. 170
    VTZ Says:

    Moody’s should be whacking all the banks on all their debt, anybody who went to the credit window, because they are should be getting whacked.

  171. 171
    ddaley Says:

    re MER. SKF is up 10 points AH. It has moved 65 points in two days. It is a moneymaker if you get on the right side of the trend.48,000,000 shares today

  172. 172
    Nicky Says:

    Even IBM down after hours and they beat. As you say VTZ reality may be dawning again in the financials – futures already off quite a bit. Rally in financials looks overdone short term. Stocks that reported being smacked down hard. So I think a reprieve for the energy sector tomorrow. Even if oil goes a touch lower first I favor a move up. I personally still believe the top is in for oil now but we should see a bounce.

  173. 173
    Bleemus Says:

    Cramer focusing on energy vs financial trade.

  174. 174
    zman Says:

    oil up a buck in the after market.

    listened to Cramer on oil and it was hard to get his direction. Said his call to get back into the group was wrong and that they could fall 10% or more soon. Then said he was buying the stocks at the open. Then said he sees oil falling to $110. Then said he would be buying oil stocks now. Trying to figure out if his trading time frame is 30 minutes or 1 hour.

  175. 175
    PackMan Says:

    Get ready for the next Nigerian rebels press release … lol

  176. 176
    Bleemus Says:

    Cramer is a nut. I find him entertaining but never touch his trades.

    He was “buying energy on the open”, “sees oil going to $110” and apologized for being bullish on gassy plays.

    Schizophrenia has never been fun to watch till now.

  177. 177
    bill Says:

    when chk release q2 earnings they are going to have a massive hedge (non cash)over ONE BILLION loss as ng was over 13 on 6/30

    Ironically, with ng now in the 10’s they made up that loss in 3 weeks, which will show up in q3.

    Maybe dec calls are the way to go here

  178. 178
    SkyKing Says:

    Zman-
    When can we expect SLB to release earnings? Fri. Morning.?

  179. 179
    zman Says:

    yes, before the open, 6 am EST with a call at 9 EST.

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