22
Jul

Tuesday And 2Q Earnings Begin In Earnest

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In Today's Post:

  1. Holdings Watch - Added (NFX), (XTO)
  2. Commodity Watch
  3. Earnings Watch - (HAL), (XTO)
  4. Stocks We Care About Today
  5. Crack Spread Update
  6. Odds & Ends

Holdings Watch - The Wiki Tab is updated.

  • (NFX) - Added August $60 Calls (NFXHL) for average $1.95. They report 2Q on Thursday.
  • (XTO) - Entered starter position in XTO $60 August Calls (XTOHL) for $2.35. See comments regarding their 2Q report below.

Commodity Watch:

Crude Oil rebounded $2.16 to close at $131.04 in storm influenced trading. This morning oil is trading up slightly.

  • China Watch: From Reuters ~ "Overall in June China consumed 7.75 million barrels of oil per day, up 6.5% from a year earlier after May saw the lowest growth in eight months." This data comes on the heals of many comments in the press that Chinese demand must be falling since export growth eased last month. It also occurs after China decided to lift gasoline and diesel product prices which may have prompted refinery restarts as margins improved which would mean more oil demand. 
  • Tropics Watch: Dolly continues to be a late bloomer of a tropical storm although development into a hurricane is expected to be rapid just prior to landfall. The track is still targeting Brownsville which steers it pretty clear of U.S. and Mexican energy infrastructure and I am surprised oil isn't giving back a little of yesterday's storm rally this morning.

Natural Gas closed off 6 cents at $10.51 due to slightly cooler than expected weather last week and a storm track for Dolly that did not threaten much in the way of Gulf of Mexico natural gas production assets. This morning gas is trading off $0.15 to $0.20.

  • Imports Watch: Imports were 9.3 Bcfgpd, down 2.9 Bcfgpd from year ago levels but up eight-tenths of a B per day from the prior week as both LNG and Canada show signs of life.
    • LNG Shows First Uptick  In Months: LNG imports ticked up last week to 1.1 Bcfgp; it has been flatlined at 0.7.
    • Canadian piped volumes Inched Up As Well: At 8.2 Bcfgpd, Canadian volumes move up nearly half a B per day but remain well short of year ago volumes of 9 Bcfgpd.

 

Earnings Watch: (Stocks We Have Holdings In That Reported)

HAL Reports An "In Line" Quarter; Points To Further Improvement In All Regions and Business Lines

  • Reported EPS of $0.68 vs $0.68 Street Consensus (range of $0.65 to $0.70)
  • Reported Revenue of $4.5 B (record level) vs $4.25 B Consensus. Growth was experienced in all product lines and both in the U.S. and international markets
  • Favorite Quotes Watch:

Eastern Hemisphere Margins expanded to 21% ... We still believe that Eastern Hemisphere margins can continue to expand [E.Hemi margins were 19% last quarter and 22% one year ago] 

Latin America continued its exceptional growth [revenues up 33% YoY and 17% sequentially while margins remained a consistent 21%]

For the U.S., revenue grew 14% YoY and 12% sequentially, ... operating income expanded 5% sequentially, as higher activity offset the impact of the pricing pressures on our fracturing business (see next quote) 

Referring to the U.S. fracturing business: Pricing had largely stabilized by the end of the second quarter, and we expect price to remain firm or improve going forward.

And to sum up "increasing energy prices, above levels previously envisioned, coupled with expanding drilling and completion budgets for N. American customers, bodes well for future activity. This strengthens last quarter's expectation that the next leg up in this extended cycle is near, and we anticipate the strategies we have employed will allow us to continue performing at a high level.

  hal-2q08.jpg

In a nutshell: Not a lot to find fault with, pricing trends firm to up after multiple quarters of sliding is not a bad thing, signs of robust activity in the U.S. and abroad abound, and margin expansion is expected in its second biggest region. As usual no guidance was given but the call should provide enough tidbits for analysts to continue to increase numbers here.

  • Conference call at 9 am EST

XTO Reported Slightly Better Than Expected 2Q08 #s, Boosts Guidance (mostly due to recent acquisitions)

  •  

  • Reported CFPS of $2.38 vs $2.27 Street Consensus (range of $2.09 to $2.45)
  • Reported Revenue of $1.94 B vs $1.8 B Consensus
  • 2Q08 Production: 2.2 Bcfepd vs 2.113 Bcfepd in 1Q08. Guidance was 2.192 to 2.212 Bcfepd
  • Guidance:
    • Production: 2008 production guidance was 23%, now going to 29% YoY target.
    • Unit Operating Cost Outlook (per Mcfe): Guidance remains most unchanged, slight bump to production taxes seen
      • LOE guide was $1.00 to $1.05/Mcfe for the rest of the year
      • Production taxes was $0.85 to $0.95
      • Cash G&A was $0.25 to $0.30
  • Operations Update - The Big Moving Pieces
    • Freestone Trend (E. Tx)
      • 0.503 Bcfped vs 0.502 net avg Bcfepd last quarter
      • growth planned of 10 to 15% / yr
      • 348,000 acres vs 347,000 net acres (still 100+ spacing, eventually expect to get down to 20 acre spacing
      • Rig count remains flat at 27.
    • Barnett Shale: Continues to improve, adding acreage
      • 0.462 Bcfepd vs 0.425 Bcfepd net in 1Q08
      • Rig count remains flat at 18
      • 280,000 acres vs 250,000 net acres last quarter
      • saw several new wells in the core area with production averaging mid to low 5 MMcfgpd, last quarter these were spread across the 4 to 4.9 MMcfgpd IP range
    • Arkoma Basin (think Woodford and Fayetteville Shales)
      • Fayetteville:increased to 380,000 vs 300,000 net acres, 5 rigs running, was 1 rig last quarter, continue to see IP's in the 2 MMcfepd ranges
      • Woodford: 120,000 net acres, 6 rigs running, had been drilling 3 MMcfepd wells
  • Conference Call at 11 EST

 

Stocks We Care About Today:

(WFT) Earnings Wrap - Stock Missed #s Yesterday And Rallied Into The Close. The key takeaway from yesterday's results and numbers was not the number miss (that was Canada and a large project startup expense in Mexico). The important point was management continuing to stick to its guns on strong international growth in the back half of 2008 and for 2009. If they make the 40% 2009 goal then estimates will be walking up, but probably pretty slowly. I'll punt both the August 40s and 47.50s into further sector based strength in the next few days.

(BJS) Reports Much Better Than Expected Quarter

  • Reported EPS of $0.48 vs $0.40 expected (range of $0.37 to $0.42); revenue came in at $1.33 B vs $1.25 B expected,
  • "the significant milestone of achieving price and margin stabilization in U.S. pressure pumping operations appears to have occurred during the quarter ... improved margins in international pressure pumping were also achieved"
  • for the 3rd calendar quarter of 2008, they see U.S. drilling activity up 3 to 4% sequentially
  • Guidance: BJS sees 4Q EPS higher than current Street consensus.
  • Conference call at 11 EST which conflicts with (XTO)...I will listen to this one later as they are the source for pressure pumping trends. Pressure pumping prices have been weak; a turn here may be in the works. 

BHI Reports Big Beat

  • Reported EPS of $1.40 (ex items) vs $1.24 expected (range of $1.19 to $1.29); revenue came in at $3 B vs $2.76 B expected.
  • They expect gas-directed rig activity to pick up in the second half
  • Price, utilization and productivity improvements offset inflationary pressures (labor and material) keeping margins flat
  • Conference Call: 10 Est.

 

(NBR) Reports After The Market Closes Today. Not likely to get a beat here, not with a slow Canadian quarter like we had, but North American guidance should outweigh inline results or even a small miss

Crack Spread Update - Still No Improvement

crack-spread-071808.jpg

Refining Stock Move = Dead Cat Bounce.  The independent refiners rebounded as a group yesterday as Dolly threatened Corpus Christi. That was it. The fundamental outlook did not improve and when the threat of the storm passes I would expect them to slouch further as earnings season doesn't kick off until VLO reports at the end of the month. For now, I will stay away and listen to that and other conf calls from the group to see if the hope of a recovery is around the corner (which I doubt). 

Odds & Ends

Analyst Watch: (BRY) started at Buy at Broadpoint.

 

168 Responses to “Tuesday And 2Q Earnings Begin In Earnest”

  1. 1
    Sambone Says:

    3:42 am EST

    Crude Markets Range Bound, Eye Tropical Storm Dolly

    Dow Jones Newswires

    SINGAPORE — Crude oil futures lost ground Tuesday in Asia, but sentiment was cautious after the U.S. state of Texas issued a hurricane warning as Tropical Storm Dolly made its way through the U.S. Gulf.

    The system, the first named storm of the year to enter the Gulf — home to a quarter of U.S. oil output as well as numerous offshore production facilities — has heightened supply unease and drawn the market’s focus away from concerns over weakening demand.

    The storm is forecast to make landfall Wednesday, possibly strengthening to a hurricane, and could bring heavy rainfall to coastal areas near the U.S. refining hub.

    “Dolly is one of the factors. The situation is not so serious at the moment, but (the storm’s) direction is hard to predict,” said Ken Hasegawa, a broker at Newedge Japan.

    On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at $131.01 a barrel at 0705 GMT, down 3 cents in the Globex electronic session.

    The contract for September, which moves to the front month Wednesday, slipped 6 cents to $131.76 a barrel.

    On London’s ICE Futures exchange, Brent crude for September fell 7 cents to $132.54 a barrel.

    Nymex crude Monday snapped a four-session losing streak as traders covered short positions on the heightened U.S. Gulf weather alert.

    While the Atlantic hurricane season typically peaks only late in August, the energy industry has been closely monitoring developments since the severe disruptions to refinery operations along the Gulf Coast, as well as offshore oil and gas production facilities, in the wake of hurricanes Katrina and Rita in 2005.

    Royal Dutch Shell PLC (RDSB.LN), Chevron Corp. (CVX) and Devon Energy (DVN) were among the companies that have evacuated some workers as a precaution.

    While Dolly, the fourth named storm of this season, isn’t expected to disrupt the U.S. oil and gas supply chain, there’s still about 1 million barrels a day of Mexican oil output in the Bay of Campeche that could be at risk in case of a powerful hurricane.

    Some analysts also pointed to the market’s contango structure — prompt prices are at a discount to forward — as an indication of the market’s upside potential.

    “Upside follow-through could prove arduous from here. Nonetheless, we are not ruling out further gains in nearby futures toward the $135 level…(allowing) for some further rolling of short positions forward — a supportive consideration to the curve,” Jim Ritterbusch, president at trading advisory firm Ritterbusch and Associates, said in his daily note to clients.

    Nymex crude last week fell 11% on concerns high oil prices would hurt demand over the long term, and doubts persisted Tuesday.

    South Korea, Asia’s No. 3 oil buyer, posted a 4.5% on-year drop in its crude imports to 2.25 million barrels a day, alongside a 20.4% plunge in commercial crude stocks in June, a month when Nymex crude first tore through $140 a barrel.

    Significantly, the country’s refiners appeared to be cutting back: average crude run rates were down a sizable 9.9% on year and 12.8% on month, according to state-run Korea National Oil Corp.

    At 0705 GMT, oil product prices were mixed.

    Nymex heating oil for August chalked up 134 points to 376.13 cents a gallon, while August reformulated gasoline blendstock stood at 321.50 cents a gallon, losing 21 points.

    ICE gasoil for August changed hands at $1,221.25 a metric ton, rising $9.25 from Monday’s settlement.

  2. 2
    zman Says:

    XTO section added to the post

    HAL call in 2 min

  3. 3
    zman Says:

    HAL 2Q08 Conf Call

    North America

    pricing declines at the lower end of the range expected.

    exp unconventional drilling to increase in second half…mentioned the need for their tech in the Haynesville and Marcellus.

    improved outlook for all business, increased ability to increase prices to offset higher costs

  4. 4
    zman Says:

    Oil back below $130 as the Dolly story fades from being meaningful. Natural gas getting hit again, now down 36 cents and eying a test of $10.

  5. 5
    Nicky Says:

    Morning all. Oil looks like it is going to have a very hard time getting to any of the higher fib levels mentioned yesterday. Pressure is on to the downside and the bounces may be very minimal.

  6. 6
    zman Says:

    Haynesville wells are 1.5 to 1.7x more drilling and fracturing intensive than Barnett wells.

    Morning Nicky – looks like Much Ado About Dolly is over. NG really taking a hit now.

  7. 7
    zman Says:

    HAL Q&A:

    utilization increasing, expecting much stronger 2H08 in Canada. Lots of equipment left the region during the weak time, some will return …pricing will still increase there.

    early in the Haynesville but they wplan to be very active there.

    E&P opening very red on low volumes, OIH same but rebounding as BHI, BJS, and SLB move higher. HAL had a good quarter and a better outlook and is coming off opening lows now.

  8. 8
    zman Says:

    SLB and WFT working higher, HAL going green

    XTO off, probably on the boost to capex although you had to see that coming with the recent Bakken and Haynesville acquisitions. Maybe people wanted more in the way of an operations update. Will add to my small position if I like what I hear on the conf call at 11 est.

  9. 9
    zman Says:

    knock, knock, this thing on?

  10. 10
    ram Says:

    It could be the shock from the last three weeks.

  11. 11
    zman Says:

    Just trying to make sure we don’t have a wire loose, Ram.

  12. 12
    reefguy Says:

    It is hard to type when your bleeding from pores

  13. 13
    jsaun14 Says:

    I’m ordering a new one…This one jinxed.

  14. 14
    zman Says:

    No wonder XTO off, paying $800 million for 12,900 acres in the Barnett. That’s $62,000/acre, must have some facilities with it…that is awfully high.

  15. 15
    BirdsofpreyRcool Says:

    XTO hammering got a bit silly… 19% growth projected each yr over the next 4 years (to double size of company). Not many industries can boast that these days.

  16. 16
    tomdavis12 Says:

    Z – Headlines show XTO expecting lower nat gas pricing. Anyone stands out as hurt by or helped by $9.00 gas.

  17. 17
    VTZ Says:

    Looks like today is another sell everything energy day.

  18. 18
    BirdsofpreyRcool Says:

    z – i don’t think the math is right on the barnett stuff. they didn’t give enough details… it’s the old XOM/Harding/PTSG acreage package. It comes with a 100-mi pipeline and some pretty signigicant right of ways in the Dallas metroplex area.

  19. 19
    Sambone Says:

    Z – Recommend you start a sub cat under weather and call it Hurricane. Start by adding this. It is where energy patch is in Texas. I’ll give you more links later.

    http://tonto.eia.doe.gov/state/state_energy_profiles.cfm?sid=TX#map

  20. 20
    zman Says:

    Tom – in this market it will hurt all of the names. If you look at the more hedged names, like a CHK, they are getting hurt just as bad as the less hedge guys like an MCF or an EOG. Completely back to baby and bathwater action here.

    Bird – yeah, that’s what I was thinking with my “facilities” comment. Think the market did the math early and started running for the exits. Guidance was good, quarter was in line to slightly up so I figure had to be the Barnett acquisition.

  21. 21
    zman Says:

    NG through $10, down 61 cents to 9.90

  22. 22
    VTZ Says:

    HK getting 100% thrashed again

  23. 23
    antrimshale74 Says:

    Guess we should have bought a pile of WB at the open.

  24. 24
    Sambone Says:

    Large file for off shore rigs in the GOM.

  25. 25
    BirdsofpreyRcool Says:

    z – yep. your intuition was correct. hopefully XTO will go into more detail on the conf call. it’s actually a very very nice package deal… XOM thought they were going to get closer to $1b for it. with oil down, no one cares, of course.

  26. 26
    Sambone Says:

    #24
    http://www.gomr.mms.gov/homepg/lsesale/Visual2.pdf

  27. 27
    jsaun14 Says:

    O&G is foolish…I didn’t see anyone on the road this a.m. and the meter is barely turning as I try to keep the house under 80.

    We need some Lehman and Citi. Especially when their competitors are calling them out on the floor for inflating their Tier 1’s.

  28. 28
    arodeen Says:

    I didn’t expect to get an earnings beat from XTO just to see it drop the stock ~8% that day. Where are all the crazy pills coming from and when will people stop taking them?

  29. 29
    zman Says:

    Nicky – got any levels on CL and NG?

    I’m going to punt all well out of the money E&P calls today. Small bounce started, we’ll see how it does. Not going to get emotional about trading and trade angry on the long side into this either.

    Service outlook is strong across the board and while my options are largely out of the money they are a few days away from being not so out of the money.

    Natural gas is factoring another big injection now.

    Re crazy pills…maybe it takes the next tropical wave, maybe it takes actual bank failures. We’re about to the levels on oil I said I’d be comfortable with a few weeks ago but the level irrationality is high right now and its all or none action in the group which is not my favorite.

  30. 30
    antrimshale74 Says:

    RBOB looking rather unhealthy this AM.

  31. 31
    SkyKing Says:

    #28 – I agree. Why the heck is WB way above what it was on Wed., when they had a big miss and dropped the dividend.
    Then, the energy stocks drop when a possible hurricane looms and the middle east has become more threatening.

  32. 32
    reefguy Says:

    xto- bought the common today when down 8%

  33. 33
    calvo Says:

    Z — good-evening from Down Under… as a newcomer to this field have been learning _a lot_ from you and others on this site – thanks to all! Looks like there’s no bottom for NG at the moment… Nicky, how low you’d guess NG could fall in the worst-case scenario (say, another large injection on Thursday plus CL down to the 115-120 area)? Too bad your UNG puts from a few month ago were not longer-dated, Z!

  34. 34
    zman Says:

    SLB – FBR takes target from $120 to $125 today.

  35. 35
    zman Says:

    Welcome to the, er um, party Calvo. No lie on the UNG puts. At the time NG could do nothing but go up and the production increase was largely masked by lower imports. That may or may not be changing . Last week’s number was very high to consensus and high to what the recent back of the envelope straight line math would have suggested. The weather was the same last week as the one before so it will be telling if we get another big one on Thursday…at this point NG has priced one most of the way in but technical selling could send it to $9.

    Down under eh? Guess I need to start looking at Woodside.

  36. 36
    Fred Says:

    DUG – Dude Unload Gas, helping at times like this.

  37. 37
    zman Says:

    Re: DUG – true today but more than the opposite of this move yesterday so you either have to buy and hold it or trade it well. Note that 1/4 of it is XOM (last I checked) and XOM is up slightly now with the indie refiners who may try to make another run up on down oil.

    XTO just getting crushed now, down 11%, call in 20 minutes.

  38. 38
    reefguy Says:

    xto- down 11%

  39. 39
    Sambone Says:

    10:23 am EST

    Crude Falls $4 As Dolly Fears Fizzle

    [Dow Jones] Nymex crude futures dropped $4 as traders discounted fears over Tropical Storm Dolly. Late in Monday’s session crude prices got a boost from rumors of evacuations in the Gulf of Mexico, says Ray Carbone, president at Paramount Options. However, Dolly is now projected to avoid all major oil infrastructure in the area, easing market concern. “We’re seeing the reaction to the storm not being a factor at all in Gulf production,” Carbone says. Nymex Aug crude -$3.87 at $127.17/bbl.

    Reported Earlier:
    NEW YORK — Nymex crude futures sank Tuesday morning on renewed dollar strength and fizzling concerns over Tropical Storm Dolly.

    Light, sweet crude for August delivery was recently down $2.19, or 1.7%, at $128.85 a barrel on the New York Mercantile Exchange. The August contract expires Tuesday, and most trading volume has shifted to the September contract. September crude recently traded at $129.70, down $2.12, or 1.6%. Brent crude for September delivery on the ICE futures exchange fell $1.49 to $131.12 a barrel.

    Oil futures fell as Tropical Storm Dolly continued on its projected course toward southern Texas, and away from key oil infrastructure in the central Gulf of Mexico. The storm is seen reaching hurricane strength, but not disrupting any major oil production or refinery operations.

    The market is “taking some of the Dolly premium off,” said Phil Flynn, with Alaron Trading Corp. in Chicago.

    The passing threat has shifted market attention back to “deteriorating global economic conditions and the effect it may have on demand,” said Mike Fitzpatrick, analyst at MF Global. Concerns about the U.S. economy sent oil prices 11% lower last week, with Dolly offering a brief respite from declines on Monday.

    Futures also took a hit after Federal Reserve Bank of Philadelphia President Charles Plosser said that an interest rate hike could come sooner than many expect.

    An interest rate hike will boost the dollar against the euro, and has the potential to entice some buyers out of the crude markets.

    Front-month August reformulated gasoline blendstock, or RBOB, dropped 3.76 cents, or 1.17% to $3.1795 a gallon. August heating oil fell 2.37 cents, or 0.63%, to $3.7242 a gallon.

    —By Tatyana Shumsky, Dow Jones Newswires

  40. 40
    Sambone Says:

    Z – Weather

    Watching new wave off of Africa at 17N, 19W. looks like it already has a spin going.
    http://www.ssd.noaa.gov/eumet/eatl/loop-rb.html

    Dolly – As per all stations, she is projected to miss our energy patch. Ya know I trust those guys, BUT in the last little bit it seems “Hello Dolly” has started moving straight north.
    http://www.ssd.noaa.gov/goes/flt/t2/loop-rb.html

  41. 41
    calvo Says:

    #35 yes, Down-Under and almost asleep (0:50am) – guess you might have more fun with Woodside than most gassy US stocks at this moment… you clearly were ahead of your time with the UNG puts, Z!

  42. 42
    Nicky Says:

    Okay oil – it does look like iii down has begun whilst 131 holds. If so major support is not until 122.27 which is a very key area. If wave ii is still unfolding then likely we are in b of an abc and we get one more shot to the upside which gets to or above the 132.90 region.

    Nat gas – looks to be in v of 3 and therefore probably getting close to some sort of low – famous last words! Support at 9.775, 9.450.

  43. 43
    tater Says:

    I am sure that oil and gas prices are absolutely controlling the action today, fairly obvious statement. That said, there are a couple of price levels that are influencing the action of some individual stocks within this down-commodity environment.

    Sometimes I feel like I have something charted pretty well, (HK was an example) other times, maybe not so good.

    The CLR charts seem to be pretty accurate at present, maybe it can be of some help this morning, it has for me.

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882

  44. 44
    zman Says:

    XTO now below level from beginning of year. Growing at 29% this year, cheap to group, with costs under control and big upside plays in place in the Bakken and Haynesville and having augmented its Barnett core inventory today. Gotta think it turns.

  45. 45
    zman Says:

    WILDZTRADE: (somewhat risky but I think the Street is missing this one today). Added (XTO) August $55 calls for $1.90.

  46. 46
    zman Says:

    XTO Conference call starting

  47. 47
    doc Says:

    Z-Two years ago I heard north America was running out of natural gas. In 2008 new discoveries in Haynesville and Bakken etc. Isnt that bearish for natural gas prices and investing in natural gas stocks?

  48. 48
    zman Says:

    on the xto call doc, back on that in awhile.

  49. 49
    Nicky Says:

    Wow T Boone on CNBC confirming he is long oil.

  50. 50
    zman Says:

    xTO – seeing some nice new wells in the Freestone, IPs of 15 mm/d, about 10 Bcfe per well for $7.5 mm, low F&D. Freestone had some problems in the quarter with processing plants or they would have taken out the upper end of guidance. Everything back on line now. Doesn’t matter today but this is for my notes.

  51. 51
    Nicky Says:

    Sounding a little testy when asked whether his new plan is to make him money – he has plenty of money he says!

  52. 52
    zman Says:

    Re T Boone – and we thought he was just full of wind.

  53. 53
    Nicky Says:

    I don’t care what he says if he is long nat gas too he must have lost a ton of money.

  54. 54
    zman Says:

    XTO –

    First well did 650 bopd, drilling first TFS test now. Acreage is all over the CLR acreage where they announced TFS wells.

  55. 55
    zman Says:

    XTO

    Woodford with 6 rigs going to 7 or 8

    Fayetteville, seeing F&D close to a buck per Mcfe.

    CEO Overview of the new XTO:
    $10.6 billion in acquisitions year to date.
    added 2.3 Tcfe
    added 1.4 mm acres they think has another 6-8 Tcfe of reserve upside under it.
    cash flow of this $2.4 billion, almost entirely hedge it first 12 months (at better prices than current).

    They had 11 Tcfe at the end of 2007, they think they will double production and reserves by 2011 with these acquisitions.

  56. 56
    zman Says:

    Nicky – rumor is a couple of billion on both oil and gas lost this month by TBP.

    XTO still talking. stock in holding pattern down 9% waiting on the Q&A. CEO just said he looks forward to doubling the stock as he has 10 mm shares himself. Sounds like they are backing off further big acquisitions, think maybe they do only $1 billion in acquisitions rest of year (so 90% done) …they are starting the digestion phase.

  57. 57
    zman Says:

    XTO on today’s Barnett acquisiton. See upside of 4x current reserves/production from those assets.

  58. 58
    Nicky Says:

    Z I suppose that is a drop in the ocean!

  59. 59
    zman Says:

    A friend of the blog sent over a GS piece highlighting buy rated EOG and hold rated CHK as benefiting from XTO’s land grab efforts. Not today probably but the concept makes sense.

    Re Docs Question.
    CEO of XTO saying we are not in a gas surplus mode and that current production growth is not going to drive us there. His reasoning is that the greater visibility of the shale plays will lead to further end use market development. He mans gas-fired electricity generation, something we are already begin to see occur. That’s pretty much what I would have said to Doc at least on a short term basis.

    Q&A starting

  60. 60
    zman Says:

    XTO Q&A

    on Three Forks Sanish in the Bakken – little early, they don’t have the core data back on their first well, but they have good shows.

    Barnett will slow in the next 3 to 4 years. Think it peaks at a lower level than people think at present.

    Availability of equipment/steel. It is a worry but they have done some good deals for rigs and pipe.

    Drill and complete costs are up 5 to 10% YoY, not as much as they would have thought.

  61. 61
    uop Says:

    zman:
    can CHK and HK recover:
    valuation of their assets and potential, is that ok ?

    or do these also just depend whar oil does ?

  62. 62
    zman Says:

    Uop, in the next several days they will key off oil and to some extent nat gas. Recovery depends on timeframe you are talking about. They are pretty unlikely to see their 7/2 highs by August expiry, unless something turns for oil/gas. Numbers should give both CHK and HK a pop but the current environment probably will cap it. In my opinion, the downdraft we have seen is overdone with little in the way of discretion from one company to the next. I plan to come out of the higher strikes opportunistically and take more near the money strikes closer to their earnings.

  63. 63
    uop Says:

    zman;
    CHK earnings is 7/31 and HK on 8/7.

    agree that short term these can hardly recover, must go at least to october.

  64. 64
    zman Says:

    Wow.

    http://uk.reuters.com/article/oilRpt/idUKN2227689520080722

  65. 65
    jazzkool Says:

    This might have been mentioned in earlier post but BRY upgraded by Broadpoint with $66 TGT. Still tanking!

    Jazz

  66. 66
    zman Says:

    Thanks Jazz, it was by Bleemus and those are always in the post at the bottom if I catch them. On a morning like this people could care less. Would not have mattered if it had been GS.

  67. 67
    zman Says:

    dollar not helping oil today, dollar index up almost 1%.

    E&P continuing to drift off as lunch in NY starts.

    OIH stocks trying to fin a bottom here.

  68. 68
    zman Says:

    XTO – call went fairly well, analysts seemed in a daze. Nobody is likely to care about much that was said, at least today. Maybe see a small bounce post lunch but I didn’t hear any “ah-ha” type statements on the call that would make analysts run for the squawk box.

  69. 69
    Pete Says:

    Z
    re:29

    Are you looking to sell the E&P calls into any rally from here and what about the common? If no rally still punting today?
    I hope I worded that correctly.

  70. 70
    T. J. Says:

    Re: XTO Earnings Call…boy, they did a job on the Haynesville Shale potential though they own some of it. Anyone know what motivated them to say what they did?

  71. 71
    zman Says:

    Pete – still waiting and watching. I have not yet seen the surveys for tomorrow’s inventory expectations and would like to see them as I doubt we can maintain peak imports (last week was 10.8 mm bopd) and as such we may see a return to draw downs on crude. The other factor that may boost crude would be an increase in gasoline consumption. Gas a has come off a few cents and the normal psychological reaction in the past from the public has been to fill up while the price is off the peak. Lot of people have been driving about on a quarter tank.

    TJ – Sounded like he was being honest about the potential but wanted to hit names that have outperformed his stock. That “haven’t yet drilled a well but seen their stocks triple ” comment was aimed at half of the names on the H.S. players list. Stock started easing from the moment he said. Pretty unfortunate choice of words and you could sense the bitterness and sarcasm which does not play well with the Street. Don’t think it cuts any ice with the Street or makes a difference to the play numbers at all but on a day like today, it was not needed.

  72. 72
    isleworth Says:

    Z- any thoughts on where do you think HK may present a good value in this downdraft? It’s down 15% almost today

  73. 73
    VTZ Says:

    Value doesn’t mean anything until oil stops going down.

  74. 74
    md Says:

    XTO 2nd qtr. realized price was $8.50 NG MMCF. When valuing a co. what formula does the street use as it’s average whether CL , NG or Crack.

  75. 75
    Pete Says:

    thanks for the reply I’m going to go out and top off all the cars for the cause.

  76. 76
    BirdsofpreyRcool Says:

    z – i don’t understand why XTO CEO kept swinging punches at the “hype-sters.” Is he mad b/c their stocks have left XTO in the dust? or, is it because it has driven up the cost of leasing acreage? I would guess the latter. XTO has always had a conservative approach to their reporting and reserve management; but why take swings at the competitors? I agree, street doesn’t like those sorts of comments. thanks for your color.

  77. 77
    zman Says:

    Isle – I agree with VTZ for today. Investors in pure hatred of E&P stocks today so a good value at $40 I would say with a +/- $10/sh would be my best guess.

    md – for the trailing quarter they use realized prices for crude and natural gas, modified for a regional differential and then they take the hedges into account. So you might be looking at NYmex less a small discount for a Haynesville player and Nymex + a premium for one in Appalachia for instance for natural gas. Going forward, they use their price deck, which is their forward quarterly estimate for NG, oil, NGLs etc, modified for the regional differential and then for hedges.

    Thanks for the effort Pete.

    Bird – I think the comments stemmed from both, maybe he’s trying to stem the rising tide of acreage there. But the shots were at public companies as well and could easily be construed to be against CHK (that serial equity issuer comment) and that’s uncool. Especially after you just said the HS is over-hyped. CHK has been there a lot longer than XTO. Anyway, it was uncharacteristic and obviously said out of frustration.

  78. 78
    zman Says:

    Scanguage guy on CNBC just said that with a $169 gauge that lets you see real time fuel economy they got a Prius on a 30 mile course to average 98 mpg. Said the gauges that go on your dash are selling like hotcakes.

  79. 79
    BirdsofpreyRcool Says:

    z – yeah. i caught the punches thrown in Aubrey’s direction. The oil patch is filled with “characters;” always has been, always will.

    I am sorry XTO didn’t go into more detail on the Barnett acqnt. Like you said, i think the street is a bit shell-shocked today.

  80. 80
    Sambone Says:

    12:42 pm EST

    Nymex Crude Drops $5/Bbl As Storm Fears Abate

    By Tatyana Shumsky
    Of DOW JONES NEWSWIRES

    NEW YORK — Nymex crude futures dropped $5 a barrel Tuesday, as the market further discounted fears of Tropical Storm Dolly and as natural gas futures fell sharply.

    Light, sweet crude for August delivery was recently down $4.76, or 3.63%, at $126.28 a barrel on the New York Mercantile Exchange. Brent crude for September delivery on the ICE futures exchange fell $4.42 to $128.19 a barrel.

    The front-month contract lost $5.41, hitting an intraday low of $125.63. Crude futures had not traded at this price level since June 5, over a month ago.

    Crude futures prices tumbled as traders grew confident that Tropical Storm Dolly posed little threat to oil infrastructure in the Gulf of Mexico. Though forecast to strengthen to a hurricane before landfall, Dolly’s projected path towards southern Texas is expected to avoid any oil rigs or refineries.

    “It now appears that the worst fears from Tropical Storm Dolly will not be realized,” said Tim Evans, analyst at Citi Futures Perspectives in a morning note.

    As traders discounted the risk premium associated with Tropical Storm Dolly, there was little bullish news to keep crude futures prices buoyed.

    “The only thing keeping this market up was the storm,” said Tony Rosado at GA Global Markets.

    Natural gas prices led the energy complex in losses, slumping as much as 6% to an intraday low of $9.889/MMBtu as storm fears abated and amid forecasts for mild weather in key demand areas. Nymex gas for August delivery recently traded 52.6 cents lower, at $9.984/MMBtu.

    Cooler temperatures cut demand for air conditioning, thereby reducing the call for gas-fired electricity.

    In addition, “people are probably having a bit of thermostat response to high prices,” said Antoine Halff, deputy head of research at Newedge USA, LLC.

    With Dolly fears abating, traders are shifting their focus back to market fundamentals. The tightness between oil demand and supply is appearing to ease as “the demand outlook is looking much less bullish than many analysts expected earlier,” said Halff.

    With additional production from the Middle East also easing supply concerns, “people are reassessing market prospects for the second half of the year,” Halff said.

    This is leading many traders to shift from bullish to bearish strategies.

    “Overall the psychology is shifting more towards selling rallies than buying dips,” said Nauman Barakat at Macquarie Futures USA.

    A stronger dollar is also weighing down crude prices. The greenback was helped by hawkish comments from Federal Reserve Bank of Philadelphia President Charles Plosser, who said rates hikes are likely to come “sooner rather than later.”

    The remarks spurred the dollar to gain ground against the euro, sending crude futures lower as foreign buyers found themselves at a disadvantage.

    Chart watchers are looking for crude prices to sink lower in search of support. Ray Carbone, president at Nymex brokerage Paramount Options, expects $122.16 a barrel to be a key area.

    “We’re going to look at that as a magnet, at least on the technical side of support. But the market looks pretty weak at the moment,” he said.

    Front-month August reformulated gasoline blendstock, or RBOB, dropped 11.57 cents, or 3.60% to $3.1014 a gallon. August heating oil fell 8.74 cents, or 2.33%, to $3.6605 a gallon.

    —By Tatyana Shumsky, Dow Jones Newswires

  81. 81
    Sambone Says:

    Hmmmm, this kinda goes along with what Hank paulson said about getting ready for Hedies to go bankrupt. ouch!

    http://uk.reuters.com/article/oilRpt/idUKN2227689520080722

  82. 82
    kiaora Says:

    Tater…..Any look at potential resistance/bottoms in E&P would be great. re # 43

  83. 83
    Sambone Says:

    #81, I bet GS was their banker and called their margin loan, JUST AT THE RIGHT TIME!

  84. 84
    rseidman Says:

    Z: Are you holding CHKHU – entered 7/14 on any real hope for recovery? Will you notify us when you punt.

    What are your thoughts on all the August CHK options purchased before this plummet?

    Are you hoping for an earnings jump, or a supply disruption?

    I think it would both, personally.

  85. 85
    rseidman Says:

    I meant to say “I think it will need both, personally”

  86. 86
    zman Says:

    RS – yes I do hold it and will through earnings on 7/31. Probably won’t get back to par there but that is a moot point when making the sell decision. I do plan to toss the CHK HO’s sooner as there is little hope and less leverage to an up move. I still hold much more hope for the $57.50s calls and will definitely hold them through earnings. See a beat on production, on CFPS, and on reserve revisions there. Plus news on an oil shale play and more HS stuff. They are not blind to this fall and will try, if possible, to wow the crowd. Same goes for EOG.

  87. 87
    rseidman Says:

    Thanks

  88. 88
    Bleemus Says:

    Since Aubrey bought a ton at $57 I expect him on a unicycle and wearing a clown suit during his CC.

  89. 89
    john11 Says:

    And of course Aubrey will have something nice to say about XTO.

  90. 90
    ram Says:

    I wonder why there is no M&A activity in the small E&P like the recent activity in biotech. All the positive news has not gone away and the stocks are cheaper by 30%. You can bid some of these up by 40% and still not get at the highs.

  91. 91
    zman Says:

    Ram – its probably not far away. The mids and smalls have definitely taken a bigger beating than the large caps although they had a bigger run up as well. I think APC is most likely to add a resource play of the big caps. The purchase by BP of CHK’s Woodford assets is telling that the Majors have noticed the reliability of the shale plays. Very hard to play from an options standpoint but I do hold stock in some names that could go by the wayside in this market.

  92. 92
    arodeen Says:

    http://seekingalpha.com/article/86225-xto-energy-just-picked-a-bad-day-to-announce-earnings?source=yahoo

    This guy appears to have had the same day we did.

  93. 93
    zman Says:

    Bottom fishing in the group corresponding to bottom fishing in oil and ng. NG trying to close over $10.

  94. 94
    arodeen Says:

    China Tries To Make Exxon A Pawn

    I hadn’t heard this before.

  95. 95
    zman Says:

    Action of the last five minutes in crude and the group proves the group is being traded purely on crude price. See spikes up in XTO and CHK vs oil going from down $4 to down $2.50. These two names are almost entirely gassy and yet the charts line up to the minute. That kind of nonsense makes me want to pull in my horns and sit this period out.

  96. 96
    Dman Says:

    Added some CHK exposure today as it circled the drain surrounded by all that ecaping bathwater.

    Re. Boone Pickens: one reason he was a bit grumpy could have been the testimony from some of the other “experts” hauled out before Congress. The word “asinine” would be way too polite and I think Boone has a lot of frustration ahead of him if he thinks the politicians are actually going to offer leadership. Of course the recent drop in oil will have meant a lot of politicians are already thinking “oh, the problem has gone away now, so we’ll get back posturing about other stuff”.

  97. 97
    cadillac Says:

    Looks like XTO could reverse half of its losses today…Looking at the glass half full.

  98. 98
    1520sbroad Says:

    Z- agree on #95. All a stock needs is the word energy in it and crude oil is the peg.

    i am not much of TA but i did notice that HK seemed to bounce off it’s 50 day line earlier today.

  99. 99
    antrimshale74 Says:

    Sitting out does seem very tempting these days.

  100. 100
    Sambone Says:

    Z – Good news! Mr. Right/Uncle Phil now saids to sell your crude. That means it will go from here!

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

  101. 101
    zman Says:

    Well, at least we know the hot money has left the energy building. Of course, it bought goog and aapl the last few days so maybe it will come back.

    Agreed Broad re 50 day.

    Arodeen – will have a look

    Dman – thanks for the laugh.

    Sam – no doubt. Do they still let him come on Fox biz or is he now just shouting from roof tops, lol.

  102. 102
    Sambone Says:

    I was out yesterday and caught a minute of Fox Biz news. Their “Money honey’s” are more plentiful than CNBS. Didn’t see Nicky’s broker on there though! LOL

  103. 103
    ram Says:

    Uncle Phil sounded like he just lost a lot of money. It seems he is chasing the trend versus being in the know where the trend is going.

  104. 104
    ram Says:

    Has anyone noticed if the short interest in the stocks that we care about increased dramaticaly?

  105. 105
    Popeye Says:

    Crameroo calls a bottom on NG.

  106. 106
    Nicky Says:

    There was a headline going across CNBC a few minutes ago saying that the CFTC find supply and demand the reason for the high oil prices. So sounds like they are not looking to do anything about speculation at this point.
    Samborne – re#83 can’t you just bet on it! Maximum pain and then the plug is pulled on the oil price. I daresay if they could have hung on a week things would be looking very different now.

  107. 107
    Brian08 Says:

    Damn this baby must have a concussion by now…

  108. 108
    ram Says:

    Hello Nicky. Any new technical info to help us through the rest of the week?

  109. 109
    zman Says:

    On call with tech support

  110. 110
    ram Says:

    For our stocks or the website?

  111. 111
    Nicky Says:

    Re 106 – I am wrong – the Senate has passed a vote to take measures to curb speculation.

  112. 112
    VTZ Says:

    Haha – I’d certainly like more technical support than we’ve gotten 🙂

    Speaking of technicals and whatnot I was just reading Jim Sinclair’s post today and he had this cute little rant that I tend to agree with (without having seen what the markets was like more than 10 years ago):

    Some of you have been around these markets for a long time as I have. One of the things that strikes me is that we are supposedly in a new era in which investors are extremely sophisticated. I would pooh-pooh that entire notion for I must say, this is undoubtedly one of the dimmest group of “investors” I can recall. They can be run in and out of markets with ease merely by pushing prices through critical support or resistance levels. I would go so far to say that today’s markets are far easier to manipulate than at any other period in history because of the lack of fundamentalists that are left manning the turrets of the investment houses and money management firms. These modern day technical junkies can be pushed around easier than one-legged man in a butt kicking contest. That is their Achilles heel and is the ONLY REASON government manipulation of the markets is possible. Take away the technical buy and sell algorithms, and our markets would be free once again. The reason is obvious – the feds would attempt their interventions and would be thwarted because fundamentalists, who are not fooled by short-term gimmicks, would lie in wait and pounce on the opportunity presented by obvious distortions of price induced by government led forays into the marketplace such as what we are witnessing today. Such actions taken by a large percentage of the trading/investing community would completely negate the attempts of the Plunge Protection Team which would eventually just go away and leave the markets to themselves. In the long run, that would actually be much more beneficial to our system than these cynical ploys that we are now experiencing.

  113. 113
    Nicky Says:

    Ram – broader market has resistance at 1275. Still think we see a bigger pullback at some point.

    Nat gas – despite Cramer’s call its hard to see it staging a strong rally if oil starts to fall hard. I actually think nat gas could go to 9 or lower before a bottom is in and cycles point to this low in August. Yes we could see a short term rally but there is firm resistance now at 10.799.

    Oil – best we can hope for is a minor bounce. I think 135 is max upside for now and even that’s a long shot at this point. It just feels to me like they are readying to absolutely tank this market….

  114. 114
    kaman Says:

    Anyone else read David Sterman’s RealMoney piece (panned it) on COP pre-earnings tomorrow? Accurate?

  115. 115
    zman Says:

    tech support for reuters commodity trader,

  116. 116
    ram Says:

    Thanks Nicky.

  117. 117
    Sambone Says:

    Wow V, you sound like me.

  118. 118
    zman Says:

    Nicky – agreed your near term thoughts on NG. Test of $9 could come quick if we get a big injection this week. Cramer was most likely talking about buying stocks that produce gas.

  119. 119
    tater Says:

    kiora re:#82

    Real life calling today. Feel free to name some tickers and I’ll see what I can get done. Tues nights are tough for me, but let me know what you’d like to see. Check the same link, I might have what you want done already.
    Also left a note on end of Z’s Sat board, don’t know if anybody looks at Sat.

  120. 120
    zman Says:

    V – well said. They should rename the free markets the micro managed markets.

  121. 121
    VTZ Says:

    That wasn’t me that was Jim Sinclair. I just thought it fit nicely. Should have put quotations… apologies.

  122. 122
    antrimshale74 Says:

    Massive intra-day moves in the financials. Guess we really should have bought a few truckloads of that WB this AM.

  123. 123
    zman Says:

    V- well plagiarized, lol.

    Crude stocks expected to be down by 700,000 barrels tomorrow. That could be light, thinking imports come off the highs and we get a bigger reduction in inventories. Given the recent beating oil has taken a bigger than expected draw could provide a green day.

  124. 124
    Sambone Says:

    ” the conclusion that the financials are a generational buy.”

    Anyone wanna buy some old Lincoln Savings and Loan stock? Mr Keating said it was a buy.

    “Just like in 2001/02 when everybody said buy the dips in the tech/internet stocks, evidently so today, the bottom has been seen!!! Just like those internet stocks, many of today’s financials are on the way to zero”

    Just some quotes I found today to explain that “All is well”! kevin bacon – Animal house

  125. 125
    VTZ Says:

    I said I was reading his post and he had a cute little rant I agreed with! haha.

  126. 126
    Sambone Says:

    Is this puppy heading north?

    http://www.ssd.noaa.gov/goes/flt/t2/loop-rb.html

  127. 127
    zman Says:

    Sam – pretty hard to tell, is there something over Mexico in its way? Even if it does go north the legislature will just vote to ban it from doing so.

    The senate said they think their anti-speculation bill will cut oil prices by up to 50%.

  128. 128
    Sambone Says:

    Anti-speculation, ya right. I posted this when you were down south. You may have missed it. This is my read on Oil speculation, baby!

    http://money.cnn.com/2008/06/27/news/economy/The_onion_conundrum_Birger.fortune/?postversion=2008062713

  129. 129
    reefguy Says:

    z- i thought i saw some green…then i realized it was pickens clne

  130. 130
    arodeen Says:

    Supposing E&P stocks are trading based on technically following crude prices, why did XTO get hit harder than almost everyone today? My logic says that a good earnings release and call would stand out to resist that trend, but instead it seemed to follow it more so than its peers. What gives?

  131. 131
    Sambone Says:

    A – “The crowd” is exiting.

  132. 132
    zman Says:

    At this point, XTO not down as much as CHK or many of the mid-caps. No rhyme or reason to pricing action today.

  133. 133
    arodeen Says:

    Sure, but why more exodus from XTO than EOG or DVN, for instance?

    Another note, SLB and RIG seemed to resist the drain better than many other service names. Do you think that makes them more ready to bounce (although the ball does seem flat lately)?

  134. 134
    arodeen Says:

    Fair enough. I may have underestimated the hues of red on my screen.

  135. 135
    Sambone Says:

    Just bght some more SKF on a whim. Oh well, it’s only money!

  136. 136
    zman Says:

    Aro – possibly people didn’t like the lack of disclosure regarding the Barnett purchase thinking it was pricey. The Q&A spent very little time on it and no one asked the obvious question of “why did you pay $60,000 per acre for this”. They simply said its potential will improve by 4x over time, production and reserves…guess it wasn’t enough for people. Also, you got the fact that they have spent $10.6B ytd date on acquisitions and are now going to slow down and digest those assets, converting unproved reserves to proven developed producing reserves. That will take $ and as the commodities fall I can see the trepidation. But honestly, I think its just an exaggeration of the move that started this morning and that it is unjustified in a sea of unjustified data points.

  137. 137
    zman Says:

    Re second part of 133, yes for SLB and HAL made and effort as well, outlook was again very strong…people could just care less today. RIG same deal and as certain parts of the offshore strengthen, like Gomex JU, they could see earnings lift from their non deep stuff.

  138. 138
    Sambone Says:

    Tini time!

  139. 139
    Garyinhou Says:

    no joy in mudville

  140. 140
    arodeen Says:

    When you decide to write a book on the last few weeks, keep that line for the subtitle: In a Sea of Unjustified Data Points.

    Sam – I just put $50 on #17 at an online casino for the same reason. Well, that and fundamentals don’t seem to matter at this point.

  141. 141
    zman Says:

    XTO to offer 26 mm shares – announced after the close.

  142. 142
    kiaora Says:

    This has really been puzzling me….In May & June what was all the buying and upgrades of the E&P names based on in light of the last two weeks? Something is just out of wack.

  143. 143
    SkyKing Says:

    #142-
    It’s got to be related to the possibility of war with Iran.
    Regardless who starts it.

  144. 144
    cadillac Says:

    Not good.

  145. 145
    VTZ Says:

    Hahah, so much for bashing “serial equity issuers”…

  146. 146
    kiaora Says:

    Z..could I get your opinion on # 142

  147. 147
    zman Says:

    K – back to you in 10to 20 minutes

  148. 148
    Garyinhou Says:

    NBR after hours whupping in progress

  149. 149
    Garyinhou Says:

    err.. XTO I mean.

    NBR announced .67 (after .06 charge)

    so is that ahead of estimates?

  150. 150
    Fred Says:

    WM – Trading up 10% in after hours with huge losses. Don’t understand it?

    lost $3.33 billion, or $6.58 per share, which compares with a profit of $830 million, or 92 cents per share in the year-ago period.

    Thomson Financial says analysts, on average, were expecting a loss of $1.05 per share.

  151. 151
    Nicky Says:

    That last half an hour in the broader market was a rare event. Huge tick which hit overbought. Likely shorts being forced to cover when they realized the market wasn’t falling. Soooo we are either in the middle of a wave 3 or the end of a wave 5. Cycles point to a low into the 24th…..

  152. 152
    VTZ Says:

    To me the NBR report looks ok and the guidance is pretty good considering how they say that:

    “It is now clear that our operating income bottomed out in the second quarter and the outlook for the second half and beyond is improving more rapidly than we had anticipated.”

  153. 153
    Nicky Says:

    Joe Terranova on Fast Money saying he doesn’t think oil looks like it rolled over today and puts the move down to expiration. I wouldn’t disagree and still think oil is susceptible to a rally.

  154. 154
    zman Says:

    K – re 142 and out of whackness. The buying was based on increased potential to raise production numbers as the Haynesville and other hot plays showed promise of record setting production rates. The analysts were slowly taking up their oil and gas price estimates in a rising commodity price environment. They are still well below the current numbers for annual prices on oil and gas. Will show in post tomorrow. But with crude and ng falling so quickly, it calls into question whether they raised estimates too high and will have to pull them back down…I don’t think so but of course that depends on how far oil and ng fall.

  155. 155
    Nicky Says:

    …and the move in financials has come a very long way in a very short time. This could turn on a dime.

  156. 156
    zman Says:

    NBR: if you wash out the 6 cents of noise in the quarter, which is what the more recent headlines are doing its a 3 cent beat of the consensus number of $0.70.

    That being said, the language used is much more important as V says in 152. Their rig count was up in the quarter, and is higher still now, they saw improvements everywhere but Canada and Alaska which were known to be weak and were not actually as weak as expected.

  157. 157
    Nicky Says:

    Fred WM giving back those gains on the news that Moody’s is looking at a downgrade.

    Interesting point by the Fast Money guys that the $ has not participated to any degree in this rally, and really neither has Freddie or Fannie. All should be taken as warning signs.

  158. 158
    PackMan Says:

    dont discount the effect of naked short selling rules (long overdue) in the financials. Could be massive forced covering of naked positions. That and oil trade unwinding ….

  159. 159
    PackMan Says:

    FRE ran up from $7 early to $10 at the close. FNM, didnt check, but likely similar.

  160. 160
    jsaun14 Says:

    Think the inventory reports tomorrow can help the cause?

  161. 161
    zman Says:

    JS – possibly, if crude imports dip to more normal levels we’ll see a bigger draw than the 0.7 mm barrel one that is expected. If we get a build then oil gets drilled (sorry but true). Whether or not a larger draw cuts any ice is likely a function of what comes with it. Big product builds and it likely won’t matter.

    Crude is up a hair on story that some production shut in by Dolly.

  162. 162
    Nicky Says:

    Packman FNM hardly moved today. I don’t disagree but the higher it goes the harder it is going to fall. This is a classic bear market rally, hard and vicious. The fundamentals haven’t changed from 5 days ago but some of the financials are now up 30% plus in those few days. Again I am not disputing what you say – far from it as I was screaming that the financials were a buy a week ago but I am now feeling we are getting closer to the time where they may be a sell again. That’s not to say that the Dow can’t hit 12k and the spx 1300.

  163. 163
    zman Says:

    So did Cramer just saw buy the energy stocks. Showing multiple after market ups including NBR

  164. 164
    bill Says:

    xto announces a secondary stock gets crushed some more

  165. 165
    antrimshale74 Says:

    No. Cramer thinks that everything except energy is a buy in the near term. He said that over the next 18 months, the story on energy is bullish.

  166. 166
    zman Says:

    right, 6% dilution if they sell the shoe along with the 26 mm shares which is pretty likely. so dilute the current CFPS ’09 estimate by 6% gets you to $11.38 next year, on that basis they are trading at 4.6x which is pretty cheap for a company growing at 29% this year and at least 20% next year. At that dilution is not offset by the increase in growth estimates that came along with today’s acquisition. So you are probably, at $52, looking at the stock trading at 4.0x next year’s numbers….and no one cares.

    thanks antrim … wow, what a fair weather fan that guy is.

  167. 167
    Bleemus Says:

    WFT Weatherford initiated with a Hold at Stifel Nicolaus (38.37 )

    Stifel Nicolaus initiates WFT with a Hold saying while they acknowledge the company’s position as a leading provider of technology-intensive products and services that optimize production of hydrocarbons from both aging and new reservoirs – and its associated growth potential – they think that investment risk-reward is fairly well balanced at this time.

  168. 168
    jd Says:

    Gulf States to Accumulate $4 Trillion by 2015, Deutsche Says
    2008-07-23 11:48:12.70 (New York)

    By Matthew Brown
    July 23 (Bloomberg) — Gulf OPEC members, including Saudi Arabia and the United Arab Emirates, will accumulate net foreign assets of $4 trillion by 2015 if oil stays near today’s prices, said Deutsche Bank AG.
    The reserves will rise from the current $1.2 trillion if the price of oil averages $114.4 per barrel, Deutsche said in an e-mail today. By comparison, the U.K.’s gross domestic product, the fifth largest in the world, was $2.38 billion last year.
    “Asset accumulation of this magnitude is unprecedented in the region, reflecting the fact that between 1970 and 2007 oil prices averaged $24.5 per barrel,” said Caroline Grady, London- based Gulf economist for Deutsche in the note dated July 21.
    Record oil prices will allow Gulf states to save more this year than ever before even as spending increases, filling the coffers of their sovereign wealth funds and providing a cushion should the price of crude fall in the future.
    Saudi Arabia, the largest Arab economy, needs an oil price of $44 a barrel to avoid a fiscal deficit this year, the highest breakeven level among GCC Organization of Petroleum Exporting Countries, Deutsche said. The breakeven price for the U.A.E. is $40 per barrel, Qatar is $35 and Kuwait is $14.50.
    “Breakeven oil prices have increased in line with rising expenditure levels as the oil boom is increasingly viewed as permanent,” said Grady.
    The price of crude has increased 68 percent in the last 12 months, and has averaged $114.05 so far this year compared with
    $72.36 in 2007.
    “Our rule of thumb is that every $1 per barrel increase in the oil price adds another $3.5 billion annually to the GCC OPEC net foreign assets with Saudi accounting for around two thirds,” said Grady.

    Related news:
    For Gulf economy stories: {TNI ECO GULF BN }

    –Editors: Philip Sanders, Andrew Atkinson

    To contact the reporters on this story:
    Matthew Brown in Dubai at +971-4-364-1022 or mbrown42@bloomberg.net

    To contact the editor responsible for this story:
    Chris Kirkham at +44-20-7673-2464 or ckirkham@bloomberg.net

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