28
Jul

MENDing Oil

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Word Of The Day Watch: Detonation Engineer. See it in context:

"In keeping with our pledge to resume pipeline attacks within the next 30 days, detonation engineers backed by heavily armed fighters from the Movement for the Emancipation of the Niger Delta ... sabotaged two major pipelines in Rivers state of Nigeria," the group said in a statement emailed to Reuters.

 

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Stocks We Care About Today - CHK
  4. Earnings Calendar
  5. Odds & Ends

Holdings Watch: The Holdings Wiki tab is updated.

 

Commodity Watch:

  • Crude Oil fell 16% last week to close the week at $123.26. Crude is now off 16% from its 2008 early July high. This morning crude is getting a little bounce from the MEND activity.

Nigeria Watch: Shell said it has shut in "some production" in the Nembe Creek pipeline, a 130,000 bopd feeder line into the Bonny Light terminal due to sabotage. No word yet on this or the second mentioned pipe. MEND, who I propose change the first word of their name from Movement to Rebellion to give their acronym a little more bit and to better reflect what it is they do, had promised to come off bombing holiday soon and this return raises the geo-political risk level in the price of oil which had been waning.


Iran Watch: Not to be left out of the hunt for headlines, Iran is claiming it now has 6,000 working centrifuges, up from the 3 to 4,000 that it claimed were in operation back in April and in line with its stated goal at that time. The good news is, according to Iran, the U.S. and E.U. are Ok with this level of enrichment activity. Apparently they don't read the same newspapers I do.

 

Gasoline National Average $4. The U.S. national average has fallen to $3.97. Time for cause and effect to set in. We've had 4 weeks in a row of 9.3  mm barrel per day-ish consumption of gasoline in the U.S.; let's see if prices falling away from this psychological barrier will cause a run on the pump. Probably not in this week's release but we should see it next week.

  • Natural  Gas fell 14% last week closing at $9.08, a four month low. Natural gas is oversold and I continue to believe a bounce into the high $10's (say in the last range of support around $10.80) is in order in the next few weeks as long as those oddly high injection rates don't reassert themselves right when the weather is truly getting hot. This morning gas is moving up a little better than oil as I am not alone in thinking the time is approaching that short traders will begin to cover and that very little from a supply/demand balance standpoint has changed in the last 2 weeks. Only more data will prove up whether or not supply is finally outstripping demand or not and the assumption that it has may be a little ahead of itself.

 

Weather Watch

CDD's for last week edge lower to 78, this is well above (hotter than) the year ago week and above normal. I think the number looks out of joint with the hot weather most of the country saw last week and is indeed well below the early read which called for cooling degree days of 90. I did a little snooping on a regional basis and the culprit seems to be along the Eastern Seaboard, a region which can swing gas consumption from week to week so don't look for that really small injection this week that I was writing about next week.

CDD's for this week (affecting next week's gas injection) are set to jump to 92.

Tropics Watch: Nothing of note.

 

Stocks We Care About Today:

China Looking At Chesapeake Assets? China National Petroleum Corporation (CNPC) is pondering bids for minority stakes in CHK's Fayetteville and Marcellus shale plays according to the South China Morning Post this morning. Interesting but let's see them get it past a xenophobic congress. Nonetheless it should be good for a boost today as it further serves to heat up the M&A rumor mill after a number of recent shale deals including BP's by of (CHK)'s Woodford shale assets last week.

DVN And The Baxter Shale. To be added in comments.

E&P's Fall From Grace. This is not a comprehensive list but includes some of our favorite names. Here is how poorly they have fared since the peak on July 2 ...

E&P Multiple 2008 CFPS share estimates are up across the board. Just looking at 2008 numbers the group is largely cheaper than it was at the start of the year with a few notable exceptions, like CHK who has been more hedged than most and has seen decent stock price appreciation as well. Typically these stocks will trade in a range of 4 to 8 forward cash flow with higher multiples given to names with strong balance sheets, long reserve life, low operating cost structure and/or strong production growth profiles. More important than where a stock trades in relation to its group is where it trades in relation to itself. The '08 multiples show below are low to norm except in the case of the newer names on the list like (CLR) and (SD) which don't have a long enough trading history to go by. The one exception to this is CLR which is low to the normal peer group multiple but relative high as CHK goes. In this case, the moves comes at a time when both CHK's NAV and future cash flow generation are all too obvious to a "just waking up" analyst community.


 

 

Earnings Watch

This Week's Calendar:

 

Odds & Ends

Analyst Watch: BMO ups (FST) to outperform, SunTrust ups (RRC) to buy, (RDC) gets upped to neutral at JPM, Friedman cutting price targets across the board on the coals.

 

96 Responses to “MENDing Oil”

  1. 1
    Sambone Says:

    8:01 am EST

    Crude Up On Nigeria Attack But Demand Weighs

    By Lananh Nguyen
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures rose over $1 a barrel in London Monday after Royal Dutch Shell PLC (RDSA) confirmed some of its production had been disrupted in Nigeria, most likely due to a militant attack.

    But market participants said the bounce could be short-lived, as concerns over oil demand continued to dampen the outlook for prices.

    “We still have bullish headlines, bombings of pipelines in Nigeria, tropical storms and hurricanes and the ongoing Iranian nuclear issue, but these all seem outweighed by the drop in demand due to the high oil price,” said Glen Ward, an energy broker at ODL Securities in London.

    At 1150 GMT, the front-month September Brent contract on London’s ICE futures exchange was up $1.24 at $125.76 a barrel.

    The front-month September contract on the New York Mercantile Exchange was trading $1.19 higher at $124.45 a barrel.

    The ICE’s gasoil contract for August delivery was up $10.50 at $1,166.25 a metric ton, while Nymex gasoline for August delivery was up 393 points at 307.16 cents a gallon.

    Oil prices were buoyed after Shell said some oil production had been disrupted after its 130,000 barrel a day Nembe Creek pipeline was damaged.

    Militant group Movement for the Emancipation of the Niger Delta, or MEND, claimed responsibility for two pipeline attacks in an e-mail earlier Monday. Shell said it was also investigating the report of a second attack.

    Despite the output loss in Nigeria, wider macroeconomic concerns continued to weigh on oil market sentiment.

    “I think the market is focusing on demand and macro woes, (but the) market needs to come off 20% from the highs to become a bear market…so it’s not there yet,” said a crude oil trader in London. He said the current upward price move was a correction from an “overdone” selloff last week to two-month lows.

    “Traders have been looking at weakening economic statistics and continuing credit constraints as factors impacting demand,” worrying that high prices would continue to curtail oil consumption, said Peter Beutel of Cameron Hanover.

    Meanwhile, technical charts for ICE Brent crude oil continued to reflect a downward trend, said Julian Keites of Newedge Group.

    “For the moment the downtrend remains,” and a price break above $127.51 a barrel would suggest weakness is leaving the market, Keites said. Brent prices are approaching their the 100-day moving average at $122.68, an important technical level which hasn’t been breached since February, Ward said.

    “We now seem to be in the situation where every rally is being sold…(traders) are not just liquidating long positions but also looking to establish shorts,” Ward said.

    Looking ahead, key data releases were expected to dominate market activity, said Olivier Jakob of Swiss-based consultancy Petromatrix. Participants were likely to scrutinize revisions to May demand data from the U.S. Department of Energy Wednesday.

    “This week will be providing many key numbers for the global markets and the dollar index; including U.S. GDP and eurozone inflation on Thursday, and the key U.S. employment data for July, released on Friday,” Jakob said.

    —By Lananh Nguyen, Dow Jones Newswires

  2. 2
    Sambone Says:

    7:56 am EST

    Rooted In Futures, SemGroup Woes Spread To Physical Oil

    By BRIAN BASKIN
    Of DOW JONES NEWSWIRES

    NEW YORK — SemGroup LP’s (SGRP.XX) implosion has left a hole in the intricate web of oil pipelines and storage terminals relied upon by refiners throughout the Midwest.

    Over the last eight years, the Tulsa, Okla.-based private company bought or acquired oil pipelines, trucks and storage terminals across a swath of the oil patch stretching from east Texas to the Kansas-Nebraska border. At least 2,000 producers, big and small, sold their oil to SemGroup, which sent the crude onto refiners across the region.

    SemGroup filed for Chapter 11 bankruptcy protection on July 22, citing a $3.2 billion loss in the futures market. The top 30 creditors are owed up to $1.4 billion, with as many as 5,000 others also due money, many from physical oil transactions for which SemGroup never paid.

    A publicly traded subsidiary, SemGroup Energy Partners (SGLP), owns most of the pipelines and terminals that the private SemGroup used to move its oil, including tanks at Cushing, Okla., a key storage hub closely monitored in energy markets. Under new management, the public company has vowed to forge new relationships with producers and refiners.

    “This is a toll road business model, we are simply paid based on volume transported,” said Gabriel Hammond, managing director at Alerian Capital Management, one of the hedge funds that took over management of the public company on Monday. He was speaking in a conference call with investors and analysts earlier this week.

    If only it were that simple. Few producers have so far been willing to pay the toll if they believe the road ahead could be blocked at any minute by financial troubles bleeding over from the private SemGroup to the public one. Pipeline space is typically booked a month or more in advance, so for now it’s business as usual across both SemGroups’ assets. But the companies are quickly falling behind in scheduling future oil deliveries.

    “I think it’s been about three weeks or so since I’ve seen (SemGroup traders) in the market,” said one physical oil broker. “It’s interesting how things can change overnight.”

    Hammond said it could be weeks before the company knows how successfully it can operate without its former parent, which provided 89% of its revenue in the first three months of 2008.

    Key Link

    One SemGroup Energy Partners pipeline system delivers oil to a ConocoPhillips (COP) refinery in Borger, Texas, while a second links east and south Texas oil to other pipelines that criss-cross the Midwest and Gulf Coast. ConocoPhillips declined to comment.

    “They helped get feedstocks to and from areas that are difficult to get products out of,” said a person at a different refiner that did business with SemGroup.

    The privately-held SemGroup also operated a pipeline system, between Wichita, Kan., and Cushing, a region home to many small producers that rely on a single oil marketing company for their entire business.

    Central Kansas Crude LLC, for example, trucked 5,000 barrels a day from small producers to a pipeline owned by SemGroup that connected into Cushing. When SemGroup told the company on July 18 that it would have difficulty making payments, the trucking operation was shut down immediately, leaving many producers with nowhere to send their oil, said Rick Navarro, director of crude oil supply at Central Kansas Crude.

    “We don’t know what their payments are going to be to us, so we can’t commit a barrel to them,” Navarro said. “We’re kind of in limbo.”

    Central Kansas Crude is owed $21.8 million by SemGroup, according to the bankruptcy filing.

    In a July 22 letter, SemGroup’s new chief executive Terry Ronan told suppliers that they might be eligible to be paid existing bills if they continue to do business with the company.

    “If your supplier protection agreement is accepted by SemGroup, you will receive payment, in full, in cash or kind of your pre-bankruptcy claim,” the letter says.

    Companies that are due payment for goods and services provided to SemGroup before the filing must agree by Sunday to provide goods or services to SemGroup through Jan 31, according to a copy of the letter reviewed by Dow Jones.

    SemGroup LP pipelines are running at 75% of normal volumes, said spokesman Lance Ignon. “If the oil suppliers sign up for the company’s Supplier Protection Program .. then the company expects volumes in August to be at or above current levels,” Ignon said.

    Eye On Cushing

    Disruptions in any of the two key Semgroup systems could quickly be felt at Cushing, the largest oil storage center outside of the Strategic Petroleum Reserve. In June, SemGroup Energy Partners purchased 2 million barrels of recently completed storage capacity at Cushing from SemGroup LP. That brought the public company’s capacity at Cushing to 7 million barrels, or about 15% of the total.

    Cushing is the delivery point for the benchmark light, sweet crude futures contract traded on the New York Mercantile Exchange. Consequently, small, unexpected changes can have a big impact in the oil futures market, with Cushing storage levels viewed as a proxy for the U.S. oil supply.

    Credit problems likely have limited oil purchases by companies such as SemGroup for a while, said Antoine Halff, deputy head of research at Newege USA, LLC, in New York.

    “Marketers .. that normally take physical delivery of crude are constricted in the amount of credit they can get to fund all the purchases, the deliveries,” Halff said. “That’s basically putting a cap on how much oil they can buy.”

    Oil prices have fallen sharply over the last two weeks, which could partly reflect this falling demand, he said.

    “That’s helping overstate what is already a steep demand contraction,” said Halff.

    Not everyone sees SemGroup’s collapse as a disruptive force in the market. Numerous pipelines cut through Texas and Oklahoma, and Cushing storage is only at half capacity. If SemGroup vanishes for good, the physical market will simply rearrange itself around other companies’ assets, one trader said.

    “Gathering and (storage fees) may increase a bit, but it’s insignificant in the overall scheme of things,” the trader said.

    —By Brian Baskin, Dow Jones Newswires

  3. 3
    zman Says:

    Thanks Sam … saw Semgroup owes PXD $30 mm this morning.

  4. 4
    mahout Says:

    Z:
    Much appreciate your thoughts on my thoughts. Here’s hoping for that much more calm and smooth U shaped bottom you spoke of.

  5. 5
    zman Says:

    Anytime M! Keep the questions coming.

    CHK looks like it may be interesting today. Even if you never get a bid from the Chinese on some of their assets it applies time pressure to other interested parties.

  6. 6
    Bleemus Says:

    XTO XTO Energy: Recent deals designed to extend growth, not hide problems; lowering ests and tgt to $67 – Credit Suisse (48.67 )

    Credit Suisse cuts their tgt on XTO to $67 from $78. Firm notes XTO’s Q2 report was slightly better than expected on price, while production and operating costs were generally in-line with firm’s expectations. Firm reduces their 2008/2009 EPS ests by 6% and 11% to $4.48/$5.49 (consensus $4.35/$5.81) from $4.75/$6.19 to reflect the ~$1.25 bln equity offering, a higher DD&A rate and higher interest expense partially offset by stronger production

  7. 7
    zman Says:

    Kilduff was just on CNBC talking down oil, saying that OPEC is now looking to sink prices to forestall a switch to electric cars and lower consumption of oil in general. I think they will try to maintain a level that keeps them safely in between $100 and $150. Get too close to either and they get burned.

  8. 8
    zman Says:

    SLB back to the bottom of a 4 month base ranging between 96 and 108. That’s pretty hard to figure out as it is set to grow faster than is historically normal, the multiple is low and the Street is very much behind the stock as a favorite in the oil service space having just gone through a series of upward price target and earnings estimate revisions.

  9. 9
    Pete Says:

    test

  10. 10
    zman Says:

    Oil giving ground (down $0.40) and placing a drag on the group again. NG back to flat.

  11. 11
    zman Says:

    I see you Pete.

  12. 12
    reefguy Says:

    E and P- dont report good news:
    IOC tets Elk 4 at 10.4 MMCFPD from matrix porosity, has a gas column of over 2000′. The stock sinks 3%

  13. 13
    crysball Says:

    Dark pools. What are they and what do they mean
    Dark pools are trading platforms that match big blocks of institutional trades in completely off market deals. This area of the market is becoming more and more popular with traders seeking absolute anonymity, especially ones worried about revealing their sophisticated trading strategies in an open market. Investors trading on ‘lit’ exchanges are completely separate and only find out about these trades well after the fact.
    Often referred to as the ‘upstairs market’, it is a process not unlike you calling up your broker with an idea and he or she seeing if there is any interest from friends, associates or contacts in the business to taking the other side of your trade. These pools are only meant for very large fish though as large minimum order sizes are meant to discourage everyone but the very largest of institutional clients.

    The issue with these pools is two fold. Obviously they lack transparity and any reduced information can cause the market to be less effecient. The other more serious problem is that they are taking trading volume away from the traditional stock exchanges and that isn’t god news for anyone who trades there.

    Five years ago there were seven dark pools and today that number has grown to over forty which handles about 12% of the daily U.S. equity trades. Goldman Sack’s Sigma X is the largest broker owned pool and they executed trades of some 406 million shares on July 17th making it the seventh largest market for U.S. stocks that day.

    From http://www.askchriscarter.com

  14. 14
    zman Says:

    Re IOC – back of the envelope on that pay combined with original well thoughts and you’ve gotta think they have enough gas to think about that LNG terminal now, right. I’ve been away from the name for awhile now. Hmmm.

  15. 15
    Dman Says:

    Z – I like the MEND to REND idea. From a strictly PR point of view, MEND conjures up images of my grandmother repairing socks, which is not really going to make anyone scared of them.

    On SLB, could it just be a valuation thing? It is still at 16 x ’09 estimates. To me that seems neither dirt cheap nor horribly expensive. What’s your take on the valuation?

    Iran watch:

    1.
    I have to concede, Iran has conformed strictly to Nicky’s timetable from last week, with various scary headline attempts forthcoming. Oil doesn’t seem to be running all that scared though.

    2.
    The A-man talking about the 6000 centrifuges being accepted by the EU and US: since there has been a “freeze for freeze” offer (enrichment expansion for sanction expansion), this looks like an attempt to lock in a higher freeze point for Iran, prior to accepting the freeze offer. However, it is important to remember that the mullahs, not the A-man, are actually running the show (foreign policy and military command). The fact they have chosen him to deliver this line suggests it may be more of a feint.

    3. NBC interview approaching: http://www.msnbc.msn.com/id/25862441/

    4. The fact that John “Bonkers” Bolton and various other neconservatives with strong connections to the White House are experimenting with new levels of apoplexy provides more evidence that the turn by Bush is real. If it wasn’t, Bolton in particular would probably know by now, and would be dialing the blood pressure back somewhat.

  16. 16
    zman Says:

    Dman – re SLB. It’s growing at least 20% next 2 years and at 16x ’09 it is still cheaper than it usually is. Their outlook is up, I think the bite on the stock maybe that people think everything will slow if oil goes crashing through $100. I’d say 1) I don’t buy a big oil crash into double digits and 2) the cycle is a long one and extending and projects are decisioned on much lower price decks than the current strip.

  17. 17
    VTZ Says:

    My company (a major) uses 65 dollar oil and 6.50 gas still to base their economics.

  18. 18
    zman Says:

    Thanks V – that is exactly what I mean by “much lower price decks”.

    Do you use the same criteria for M&A as well as projects …if you can hedge it at deal time I don’t see why you would but I’ve seen several say their M&A and their project decks are equal.

  19. 19
    Dman Says:

    crysball: when do the dark pool trades show up on the exchanges and hence in the charts? Or are you saying they never do?

  20. 20
    VTZ Says:

    I’m not sure about that.

    Also, decisions are made based on things other than economics like political risk, but globally all the project economics are based on the same deck.

  21. 21
    Sambone Says:

    EIA reports; Headlines
    May oil use -902,000B/D vs yr ago
    US May revised Gasoline use 9.216 B/D, -2.3% vs yr ago
    US May revised oil use lowest any month since May 2003
    US Jan-May revisewd oil use avg -889,000 B/D vs yr ago

  22. 22
    Sambone Says:

    D & C: Dark pools don’t show up anywhere on anybodies radar. Hence the name Dark Pool. They are not regulated so they don’t show on the tape. 15% of all trades will be done in Dark Pools by 2010.

  23. 23
    zman Says:

    Thanks Sam – so the monthly data, which a lot of people tell is more accurate, albeit delayed, vs the weekly data I track.

    Crysball – one of my former firms was very good at that. We called it trade matching which sounds a lot more friendly than dark pools.

    Tater- I assume CHK’s action today is a little more of the follow through you’d like to see as the intra day so far has topped the prior two days intraday highs as we try to top $50.

  24. 24
    zman Says:

    Sam – do they show up in the volume ever?

  25. 25
    Sambone Says:

    LONDON (Dow Jones)–Nigeria’s main militant group said it bombed two Royal
    Dutch Shell PLC-operated oil pipelines early Monday and warned more attacks
    were planned over the next month, helping push up oil prices by more than $1 a
    barrel.
    Shell (RDSB.LN) confirmed one of the pipelines, Nembe Creek, was damaged
    without saying exactly how and said it was forced to reduce flows through the
    pipeline.
    “We can say that part of Nembe Creek was damaged and that we have shut-in some
    production,” Shell spokesman Rainer Winzenried said, declining to confirm what
    precisely caused the damage. Nembe Creek typically operates at around 130,000
    barrels a day of capacity and feeds the Bonny oil export terminal.
    He said it was unlikely the company would provide exact outage figures and
    said Shell was still investigating claims by a Nigerian militant group that it
    bombed a second Shell-operated pipeline early Monday.
    The Movement for the Emancipation of the Niger Delta, or MEND, said in an
    e-mail statement to the media that it attacked two Shell-operated pipelines in
    Rivers, one of the West African nation’s main oil-producing states.
    The disparate and disgruntled group has waged a more than two-year campaign
    bombing pipelines and abducting foreign oil workers in an effort to obtain a
    greater share of Nigeria’s oil wealth.
    The group’s attacks have largely accounted for shutting-in anywhere from
    400,000-600,000 barrels a day of production at any one time in Nigeria since
    early 2006.
    MEND has used a publish-what-it-attacks strategy, bombing pipelines and then
    sending out e-mails to the media to communicate its deeds, which have usually
    happened as claimed.
    The September oil futures contract on the New York Mercantile Exchange traded
    up around $1.20 a barrel at $124.50 a barrel at 1410 GMT.
    Separately, Shokri Ghanem, head of the Libyan National Oil Co., said Monday
    that ongoing pipeline maintenance work in Libya could keep 100,000 barrels a
    day of production shut-in through August and perhaps longer. The maintenance
    work was originally supposed to last until early to mid-August.
    Ghanem, speaking to Dow Jones Newswires, said Libya, had a total of
    150,000-200,000 barrels a day production shut in and was pumping around 1.5
    million barrels a day, down from 1.7 million barrels a day in recent months.
    The shut-ins are a combination of the ongoing pipeline maintenance work that
    started earlier this month and the closure of a Total SA (TOT)-operated field.
    Ghanem said Total’s 75,000 barrel-a-day al-Jurf field was still shut after a
    drilling accident in May. Total wasn’t available for comment.
    -By Spencer Swartz, Dow Jones Newswires
    Dow Jones Newswires
    07-28-08 1041ET

  26. 26
    Dman Says:

    Z – #5 are you thinking only of someone taking a chunk of CHK assets or of the whole takeout question?

    Mind-reading question: given that Aubrey was saying the stock is a double from $50-ish, would you expect him to hold out for that sort of price?

  27. 27
    Sambone Says:

    24 – Nope, they are made to hide all trades from the light, volume, makers, each side, size is all hidden from view.

  28. 28
    Dman Says:

    Sam, it begs the question: what exactly is the point of having highly regulated exchanges and companies if the shares can be traded elsewhere with no visibility?

  29. 29
    zman Says:

    Dman – At last thought from Aubrey he said $150 so yeah, I think he holds out for $100.

    As to the takeout, both partial assets as they plan to sell down some plays and the whole compant. M&A guys need to nab them while the nabbing is cheap.

    Sam – are these trades all registered shares or are some of them restricted. If restricted I’d guess they’d need a filing. If from a 5%+ holder they would definitely need a filing. I personally think that kind of thing is bad fro the free markets. Free should be mean unfettered by too much regulation but also transparent. Who specializes in dark pools? Sounds like someone who will get spanked by Congress.

  30. 30
    zman Says:

    Another dark pool thought. How does it move the price? If you can’t see the selling but it is an arranged trade, does it really affect pricing? Now we will have dark pool trade rumors as in “dude, it’s getting dark pooled!” Great.

  31. 31
    Bleemus Says:

    Will Dark Pools Swallow Wall Street?

    http://www.portfolio.com/news-markets/national-news/portfolio/2007/07/06/Dark-Pools-Grow-Scrutiny-Does-Not

  32. 32
    reefguy Says:

    ioc- The matrix porosity is the key element. This is substantial and it would seem to give enough hard data to overcome an unbelieved management.
    The whole equity situation in E and P stocks makes little sense. If you stay hidden(no news) you do not take a price hit. It seems people are selling on good news…Seems to me that indicates a lot more sellers than buyers

  33. 33
    Brian08 Says:

    I know that XOM and COP are huge companies, but could they really “afford” to swallow CHK at $100/share?

    Those seem to be the only companies that could afford to buy CHK, no?

  34. 34
    zman Says:

    Reef – re E&P sentiment. I think its a mixed bag on reaction to news, seen some good ones and if they have help from the Street they are sometimes able to gains a little ground. The big overhang causing a hangover in the group is the commodities…If they settle out for a little bit…not run up but just trade sideways I think the group can do a quick 5 to 10% run. I do think people don’t care about the 2Q numbers right now (unless they miss) and are looking for the next big thing (as long as it doesn’t require a deal to pay for it). I think CHK knows this all too well and has some tricks later this week.

  35. 35
    Sambone Says:

    #29 – Z, Is that a joke? “Sounds like someone who will get spanked by Congress”

    The big boys are all fighting for dark Pools. Restricted and non restricted, no filings.

    D – #28, I ask that question everyday. Look at OTC derivatives. 500 trillion (1/2 Quadrillion) non regulated market.

    Ask Cox and the SEC about naked shorts? LOL, Ask Congress? The system is rigged.

  36. 36
    zman Says:

    Brian – that puts it at about $75 billion,

    APC paid big premiums for WGR and KMG in the same day a couple of years back and that was a $21 B deal. COP bought BR before that for $36 B. So yes, its a big price tag. But the acquiring firms have grown during that time too and if you carve off some of the assets at the time of the deal and hedge out the production you can probably get a second year accretive deal done without paying more than half cash. But I think goes to a one of the really big ones too.

  37. 37
    Dman Says:

    RIG now at about 8 x ’09 EPS

  38. 38
    Sambone Says:

    By David Bird
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–U.S. oil demand in May was 4.4%, or 902,000 barrels a
    day, below a year ago, at 19.729 million barrels a day – the lowest level for
    any month since May 2003 – revised government figures released Monday show.
    The Energy Information Administration data represents a downward revision of
    3.2%, or 660,000 barrels a day, from preliminary data, which had shown a drop
    of 242,000 barrels a day, or 1.8%.
    Data on EIA’s Web site show demand for the first five months of 2008 averaged
    19.825 million barrels a day, down 888,600 barrels a day, or 4.3%, below a year
    ago.
    Demand for gasoline, the most widely used petroleum product, averaged 9.216
    million barrels a day, down 2.3%, or 213,000 barrels a day, from a year ago.
    The revised figure is 92,000 barrels a day below the preliminary figure for the
    month.

    -By David Bird, Dow Jones Newswires

    Dow Jones Newswires
    07-28-08 1055ET

  39. 39
    Dman Says:

    Z – #36: or if not, it *becomes* one of the big ones ….

  40. 40
    Dman Says:

    Interesting quote today from Cramer, relevant to #35 (dark pools) even though he was writing about a different issue:

    “Throughout my life I have always marveled that the smartest thing the so-called smart people on Wall Street do is take advantage of the little people who really just want to make a little money in the market. It is what these Wall Street folks do best.”

  41. 41
    crysball Says:

    RE: Dark Pools
    Sambone answered the questions asked, and yes the system is rigged to favor the few large firms who seek to avoid the light of day.

  42. 42
    zman Says:

    Crude – After going negative earlier this morning I am assuming the up $1+ we are seeing now is attributable to the monthly EIA data showing a smaller than expected (by some) decline in gasoline consumption.

    Nice to see a nearly 5% green move on the CHK.

  43. 43
    cargocult Says:

    Is this a buy recommendation for GS?

  44. 44
    zman Says:

    Cargo – you mean the dark pool stuff, probably? They are the death star of that kind of thing.

  45. 45
    arodeen Says:

    Tater – thanks for the comments on the longer term CHK charts Fri.

  46. 46
    zman Says:

    fyi we have CLR before the open, I hold the common and probably won’t add any options at this time…results could provide a nice boost to the Bakkens, especially for the likes of BEXP and EOG where I have a couple of strikes and which reports later in the week.

  47. 47
    zman Says:

    Friedman slashing targets on E&P’s, looks like they’ve lowered their oil and gas price forecasts. APC goes from 95 to 75, APA from $150 to 125, NFX from 90 to 70,PQ from 35 to 27.50, HK from 60 to 45.

    they cut the group to a hold, kept outperforms on NFX, PQ, HK

  48. 48
    Dman Says:

    This is why FTI is down 4% and CAM is up today:

    “Cameron in agreement to provide subsea systems offshore Angola; value of initial phase estimated at $800 mln (CAM)”

    FTI had been winning most of these big deals, so this is a coup for CAM. My January calls in CAM are underwater & I’m thinking about adding on this news, with the stock only up 1%.

  49. 49
    tater Says:

    Hey guys,
    re #23, 45

    Playing with NOV. Can’t seem to get a good entry today. Oh well, Monday.

    CHK – I love the company, but don’t like that much price movement downward. It leaves resistance scattered above at all the common MA’s (20, 50 etc) and other points, kind of like a minefield. For what I do, really makes a person work for a buck.

    I just don’t want anybody to get chased out of a good thing longer term because the hedgies are screwing around, that’s pretty much why I post some of that stuff.

    Patiently awaiting your next SLB trade idea. You own that puppy.

  50. 50
    zman Says:

    Tater – agreed re working hard of late to make a buck or not lose all bucks. Very spotty sentiment. Group looks like it wants to move back up but with a very nervous eye cast towards oil. I won’t trust the little move here in CHK or in much else until we close NYMEX green for a couple of days. Stories still matter as you can see by some of the pre earnings moves in names like CLR. I want to see follow through and more sack having instead of bag holding analyst calls.

  51. 51
    tater Says:

    As usual, I am going to ask you to force yourself to take the opposite side and give your best shot at telling us how CLR might report a worst case scenario.

  52. 52
    Sambone Says:

    By David Bird
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–U.S. oil demand in 2007 averaged 20.68 million barrels a
    day, a fractional 7,000 barrels a day below a year earlier, but at the lowest
    level since 2003, revised government data released Monday show.
    The dip in 2007 followed a 117,000 barrel-a-day, or 0.6%, drop in 2006,
    figures from the Energy Information Administration show.
    Though modest, the back-to-back declines mark the first two-year fall in U.S.
    oil demand since 1990-1991, after Iraq invaded Kuwait and U.S.-led forces
    responded with Operation Desert Storm. Back then, the two-year decline was a
    substantive 300,000 barrel-a-day, or 1.8%, drop.
    Despite a rise of 8.7%, or 22.4 cents a gallon, in retail regular gasoline
    prices to a record annual average of $2.796 a gallon, demand for gasoline
    inched up 0.4%, or 33,000 barrels a day, to a record 9.286 million barrels a
    day.
    The gain, though, was just about one-third of the size of the rise in 2006 and
    was the smallest since 1991, when gasoline demand fell 47,000 barrels a day.

    -By David Bird, Dow Jones Newswires
    Dow Jones Newswires
    07-28-08 1234ET

  53. 53
    Sambone Says:

    By Siobhan Hughes
    Of DOW JONES NEWSWIRES

    WASHINGTON (Dow Jones)–Natural gas providers are pressing Congress for a
    bigger role in the nation’s fuel supply, arguing that major new domestic
    discoveries could provide an answer to high oil prices, dependence on foreign
    suppliers and concerns about pollution.
    At a U.S. Senate hearing last week, Texas oilman and billionaire T. Boone
    Pickens called for natural gas to be used to power vehicles. He later delivered
    the same message to U.S. House lawmakers. Meanwhile, a Texas investment banker
    and Chesapeake Energy Corp. (CHK) executives had already gotten the attention
    of Rep. Rahm Emanuel, D-Ill., persuading him to support incentives for
    natural-gas vehicles.
    “They laid a claim that the recent findings of natural gas were game-changing
    in the industry,” Emanuel said. Last week, Emanuel, the No. 3 Democrat in the
    House, introduced a bill that would provide tax credits for the purchase of
    natural-gas vehicles and home-refueling systems, along with other credits to
    encourage gas stations to install natural-gas fuel pumps.
    The pitch comes four months after Chesapeake announced that a field known as
    the Haynesville Shale, in Louisiana and east Texas, could be the most
    significant in its history. The company estimates that the shale – rock made up
    of layers that can split into sheets – could produce as much as 44 trillion
    cubic feet of natural gas, or almost twice the the amount consumed in the U.S.
    last year.
    “This is a revolution for the country and nobody gets it,” said Ralph Eads, a
    Houston banker who is the chairman of Jefferies Randall & Dewey, the energy
    investment banking unit of Jefferies & Co. The banker, who says he has known
    Emanuel for several years, says that he has no commercial stake in the outcome.
    While companies such as Anadarko Petroleum Corp. (APC) and Devon Energy Corp.
    (DVN) would all benefit from increased demand for natural gas, Chesapeake,
    which projects it could be the biggest U.S. natural-gas producer by the end of
    the year, could be the biggest beneficiary.
    Chesapeake Chief Executive Aubrey McClendon will be in Washington on Wednesday
    to testify before the U.S. House Select Committee on Energy Independence and
    Global Warming. And the natural gas industry plans to release a report this
    week that is expected to highlight discoveries.
    “We want to hear about these new gas discoveries that are potentially changing
    the long-term direction of energy supply in a significantly positive way,” said
    Rep. Ed Markey, D-Mass, the chairman of the Energy Independence and Global
    Warming Committee. He said that he hasn’t yet reached any conclusions.

    Price Volatility, Technical Hurdles Remain

    The pitch isn’t guaranteed to succeed. Natural-gas prices are notoriously
    volatile, raising questions for consumers, who depend on stable prices. The
    process of extracting gas from shale through horizontal drilling, which
    involves drilling a well straight down and then making a turn, also concerns
    some people.
    “This is so new and so uncharted we don’t know enough to tell you it’s bad,
    and we don’t know enough to tell you it’s good,” said Jim Bradbury, an
    environmental lawyer who is on a Fort Worth, Texas, task force that is studying
    whether to revise its ordinances to deal with wells drilled in the city’s
    neighborhoods. The city lies on the Barnett Shale, considered the nation’s
    largest although its reserves may be surpassed by the discovery of the
    Haynesville Shale.
    For now, his biggest concerns involve the 3.5 million to 4 million gallons of
    water that are pumped into the shale to break the rock up and release gas, and
    whether the contaminated water can then be disposed of in deep underground
    wells without making its way up into underground drinking water.
    Just last week, New York Gov. David Paterson directed the state’s Department
    of Environmental Conservation to examine potential environmental impacts
    associated with drilling in the Marcellus Shale, which lies beneath parts of
    New York, Pennsylvania, West Virginia and Ohio. The move followed a report by
    non-profit news service ProPublica and public radio station WNYC citing
    instances of drinking water contamination in states where similar drilling
    activity occurred. At the same time, the governor also signed a bill that
    fast-tracks horizontal drilling in the Marcellus Shale.

    Industry Insists Pros Outweigh Cons

    The industry, meanwhile, insists natural gas has advantages. The price for
    compressed natural gas last year worked out to the equivalent of paying about
    $3 per gallon, according to cngprices.com. That compares with the current U.S.
    average of $4.06 for a gallon of gasoline and the San Francisco average of
    $4.45 a gallon, almost the highest in the nation.
    Another selling point: Cars that run on compressed natural gas generate 25%
    fewer carbon-dioxide emissions than cars that run on conventional gasoline,
    according to the U.S. Environmental Protection Agency. Already, environmental
    groups are starting to take notice.
    “If there is a way to get at a large influx of affordable natural gas, it
    would provide the country alternatives that it doesn’t currently have to take
    some of the squeeze off energy consumers,” said David Hamilton, the director of
    global warming and energy programs at the Sierra Club. “We think if we could
    get consumers a choice of a cleaner fuel, that’s a good thing.”
    The availability of natural gas in shale also gets around a thorny political
    problem facing oil companies, which want to gain access to off-limits areas
    such as the Arctic National Wildlife Refuge or coastal waters off of Florida
    and California.
    “There’s plenty of gas to do what I’m talking about,” Pickens said.
    The Texan oilman has been grabbing headlines lately for investments in wind
    power, but he also controls Clean Energy Fuels Corp. (CLNE), the largest
    provider of natural gas for vehicles. After meeting privately with House
    Speaker Nancy Pelosi, D-Calif., and other Democrats last week, he said, “I
    didn’t find us that much out of step.”

    -By Siobhan Hughes, Dow Jones Newswires
    Dow Jones Newswires
    07-28-08 1200ET

  54. 54
    Sambone Says:

    Off subject

    “Which comes first? Sports or buses?”

    http://www.nytimes.com/2008/07/28/education/28sports.html?_r=1&oref=slogin

  55. 55
    zman Says:

    Thanks Sam – that Randall & Dewey guy is one of Aubrey’s go to bankers for asset deals. Makes sense that they should hold hands while in Washington. I agree, Congress doesn’t get it on natural gas but then I could say that about them and (fill in blank here).

    Tater: Worst would be a miss which I doubt we get. That goes for anyone, miss and get crunked. Next worst would be lower IP’s out of wells drilled to the north of their current production. If it looks like we are starting to see the boundaries of the TFS or even the middle Bakken in the sweet spot be defined or if we start to see spotty performance in the play making it look loss homogeneous on their acreage that would call their multiple into question. What else? A large acquisition…those are not in vogue right now. Like I said I’m in the stock and a $5 move to either side here would not at all shock me.

  56. 56
    zman Says:

    Sambone – no sports in high school. That would never happen in Texas.

  57. 57
    zman Says:

    Considering taking profits in the HK $30 calls as they are still over a week away from announcing and I can reposition easily and it is not trading all that well. Fast growth yes, dirt cheap, not exactly but cheaper than it has been in awhile. Group trading: not great, smaller stocks in the group trading: not so good, maybe a little worse. So I’m thinking take it off the table and add it back before the CHK call on Friday.

  58. 58
    zman Says:

    ZTRADE: Out HK $30 August Calls for $5.00, up 43%, stock continues to act poorly and I will likely buy these back before Chesapeake reports on Thursday as that news may move Petrohawk.

  59. 59
    zman Says:

    WILDZTRADE: Entered BEXP August $15 calls for $1 with the stock at $14 as a play on CLR’s earnings tomorrow.

  60. 60
    zman Says:

    That BEXP is small for a quick trade.

  61. 61
    Sambone Says:

    Off subect again!

    Henry “Bazooka” Paulson, 2:30 pm, today – Quote

    “Son, we live in a world that has points and those points need to be guarded by men with bazooka’s. Who’s gonna do it? You? You, Nancy Pelosi? I have a greater responsibility than you can possibly fathom. You weep for the US dollar and curse the Fed; you have that luxury. You have the luxury of not knowing what I know: that the US dollar’s death, while tragic, probably saved the US credit markets and that my existence, while grotesque and incomprehensible to you, saved the credit markets. You don’t want the truth because deep down in places you don’t talk about at parties you want me on that point, you need me on that point.We use words like Credit,Goldman Sachs, Dark Pools. We use then as the backbone of a life trying to defend something. You use them as a punchline. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very freedom I provide and then questions the manner in which I provide it. I would rather you just said “thank you,” and went on your way. Otherwise, I suggest that you pick up a Bazooka and stand a point. Either way, I don’t give a damn what you think you are entitled to.”

  62. 62
    zman Says:

    Sam = funny.

  63. 63
    Pete Says:

    Z,
    Are you still holding the HKHK?

  64. 64
    zman Says:

    Pete – yes, not a lot of hope there. Plan to sell it on any significant pop in the stock.

  65. 65
    Fred Says:

    Sam sounds like something Nicholson would have done like in “you can’t handle the truth”. It should be Henry “Bonkers Bazooka” Paulson IMO.

  66. 66
    zman Says:

    oil and the group devoid of direction. they definitely want to sell the rallies on crude which makes it pretty tough to make a buck in the stocks.

  67. 67
    doc Says:

    Sounds like a hedge fund planted an article about a takeover of chk. After the election the democrats wont have bush to blame for energy policy. sentiment on offshore drilling may change and oil service stocks may get higher valuation

  68. 68
    zman Says:

    Hear ya Doc, we’ve been planless for a long time. Blaming one admin or another is pretty pointless as this has been coming since the 70’s. I saw Obama speak over the weekend and while he sounds like a guy with a $15B/ year plan to fund better running engines and new fuels he was talking about getting gasoline prices down now …which isn’t really going to help much if we want to get off foreign oil.

    Oil running up into the close which is a bit odd.

  69. 69
    zman Says:

    ZTRADE: VLO September $35 calls (VLOIG) added for $2.24. Earnings out before the open tomorrow. No one really expects much out of the group as its well known how poorly the cracks here have behaved. Looking for them to get a bit of a relief rally and to talk about the diesel export market where cracks are very healthy.

  70. 70
    zman Says:

    wow, go VLO

  71. 71
    zman Says:

    That’s more like it, VLO coming back into the range where I bought it with oil up $1.60 at the close of NYMEX.

  72. 72
    Dman Says:

    Z – at the risk of asking you to repeat (or just link to) recent comments that I’ve missed, are you expecting fundamental improvements in VLO in the next month or so?

  73. 73
    zman Says:

    Dman – Its a feeling about the stock and to a lesser extent about the group. Has a washed out feel to it.

    1) expectations: none. So its the opposite of priced to perfection. In this case you can miss and still rally as poor earnings are factored in.

    2) They can point to diesel, where cracks are about double what you see every Tuesday on my sheet. Diesel exports continue to be strong, just anecdotal evidence there as the weekly govt data is itself only an estimate and a stale one at that.

    3) they’re cheap, maybe cheap for a reason as the forward estimates are pretty suspect but again, everyone knows that.

    4) a rally in crude won’t likely help these guys but you may see a pick up in gasoline demand as prices drop below that key psych level of $4/gal.

    Anyway, I went in smallish and then it popped on the get in before the bell rally. If it keeps going up at this rate into the close I may take half off and play with house money. Man, been a bit since I could say that.

  74. 74
    cadillac Says:

    Z,

    Your timing during the day, is again right on. I can’t tell you the number of times I see your Ztrades and shortly there after see the stock up.

    Good work again.

  75. 75
    Fred Says:

    FWIW I am amazed some refinery prices are so low like $8 for ALJ, a lot owned by the Israelis, and I did read some upbeat refinery comments today in:

    http://seekingalpha.com/article/87289-insiders-preparing-for-major-drop-in-oil-prices?

  76. 76
    Pete Says:

    Z, How is the outlook for August HAL and SLB you see any more news coming to help them along?

  77. 77
    zman Says:

    Cad – it stinks that it ran the second after I took it. I’ve been inching towards convincing myself to take a position in these pre earnings. It has come back to my level twice now but all that is moot as I’ll hold through earnings unless it puts on a big run into the bell in which case I’d probably punt a third to a half.

    Pete – I’m not that worried about them as I think between now and then we get a run in that group for more than 30 minutes at a time. I don’t think much will come out between now and then in terms of “holy cow” news except for the rig count which did its share of advancing on Friday to new recent highs. If the rigs are busy then HLA and SLB and NBR and WFT are all busy. UNT too although that one at least gets a shot at earnings still. The broad market is taking them lower this afternoon…if we can get that ship to settle down I think they will move back up. I’m not adding right now and may pull the SLB 110s off the table and put back into the 100s at next convenience but I’ll probably give them another week before doing that.

  78. 78
    Pete Says:

    Thanks for the heads-up I needed it

  79. 79
    zman Says:

    Fred – thanks for the article, good reach and I had not been paying very much attention to the insider buying. I give that half a measure of “too cheap” and half a measure “trading angry”. Those guys work hard in a completely unappreciated industry, they go to cocktail parties where more than half the people there think they much be off the charts rich as their stocks much be exploding with oil up here, right? So I can see them yelling enough is enough and getting out their checkbooks. So that’s an anger trade and may not be good for you. They have to do it, just to show their faces at the club….it may not be the best for you. As far as insider buying goes, I’d give more credit to a management buying its shares at elevating levels. But that’s just me and I could be wrong.

  80. 80
    md Says:

    #21 & 23.You were going to get back to me on Monthly product supplied. The market pays no attention to it so who’d argue. Perhaps for tomorrow mornings post you can weigh in with your assessment.

  81. 81
    zman Says:

    md – had not forgotten. I think the market cares about the monthly data but one for a few hours or days after it is released. Today oil popped on the news and I suspect it was the down 2.3% for gasoline news which is really not a lot given where prices were at the time. I’ll think about it some more…

  82. 82
    Sambone Says:

    Weather – Watching the GOMEX at this time. This puppy could? spin up pretty quick.

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

  83. 83
    Sambone Says:

    By Tatyana Shumsky
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures edged higher Monday on supply
    interruptions in Nigeria and escalating rhetoric from Iran, though
    macroeconomic concerns continued to weigh on the market. Light, sweet crude
    for September delivery settled $1.47, or 1.19% higher, at $124.73 a barrel on
    the New York Mercantile Exchange. Brent crude on the ICE futures exchange
    closed $1.32 higher at $125.84 a barrel.
    Crude futures got a leg up when Royal Dutch Shell PLC (RDSA) confirmed Monday
    that some of its production had been disrupted in Nigeria after an attack on
    its 130,000-barrel-a-day Nembe Creek pipeline. The African nation’s main
    militant group said it bombed two oil pipelines early Monday. Whether a second
    pipeline had in fact been damaged is still unconfirmed.
    Shell has yet to clarify the extent of the damage, but oil traders see
    Nigerian production problems as the key element keeping prices buoyant.
    “That might actually be the reason these other bearish factors are being
    totally overlooked for the time being,” said Nauman Barakat, senior vice
    president of global energy futures at Macquarie Futures USA in New York.
    Nigeria produces highly viscous and low-sulfur crude that’s coveted by refiners
    due to its relatively high yields of light products such as gasoline.
    Data released by the Department of Transportation showing a 3.7% drop in
    vehicle-miles traveled in May versus a year ago muted the impact of the bullish
    international news. This is the largest-ever drop for the month of May, when
    road traffic typically grows due to public holidays and the onset of the summer
    driving season.
    The decline in miles driven underscores the extent that U.S. demand for
    petroleum products is eroding in the face of scalding gasoline prices.
    “Consumption has been down, here in the U.S., and that’s been tempering these
    problems that we’ve had,” said Mark Waggoner, president of Excel Futures in
    Newport Beach, Calif. “It’s an ongoing tug of war between the bullish and the
    bearish news.”
    Tensions between Iran and the U.S. resurfaced as a weekend statement by Iran’s
    President Mahmoud Ahmadinejad revealed Tehran has expanded its nuclear
    enrichment program, ignoring calls for a freeze.
    Ahmadinejad also told NBC television in an interview aired Monday that a
    genuine shift in the U.S.’s approach to Iran would garner a positive response
    from Tehran.
    The strife in Nigeria, which continues to keep high-quality crude flows off
    the global market, has affected traders more than the “saber-rattling that’s
    coming out of Iran,” Waggoner said.
    Front-month August reformulated gasoline blendstock, or RBOB, gained 3.77
    cents, or 1.24%, to $3.07 a gallon. August heating oil rose 3.91 cents, or
    1.11%, to $3.562 a gallon.

    -By Tatyana Shumsky, Dow Jones Newswires Dow Jones Newswires
    07-28-08 1537ET

  84. 84
    Dman Says:

    Z- any thoughts on KWK here?

  85. 85
    Bleemus Says:

    NOV Natl Oilwell Varco: Q2 preview (74.71 -0.03) -Update-

    NOV is set to report Q2 earnings tomorrow before the market open. Street consensus is for revs of $3.2 bln and EPS of $1.13. Much insight into the oil services and E+P industries, the customers of NOV, can be gauged from the numerous cos that have already reported. These cos reported good fundamentals with pricing and demand ramping up, however, headwinds from energy commodity prices have proven difficult to overcome for share prices… If one thinks of oil field services as the second derivative to the price of oil, then NOV would be the third derivative. They, like the big name oil field servicers, have business segments that aren’t impacted by the gyrations in the price of energy commodities, but are swayed more by the secular trends in pricing and production techniques. Catalysts for the current period would of come largely on the back of momentum seen in Q1, save for the seasonal weakness in Canadian spring break-up. Recall that Q1 saw strength from horizontal and directional drilling, relative strength in the jack-up market and noticeable strength in deepwater rigs. Also, co enjoyed pricing leverage on some of their products. In Q1 the co also provided forecasts on a multitude of their business segments, despite their policy of not giving specific margins: 1) co believed that pressure pumping would be weak in Q2 because of over-supply in the market (this has been countered by recent statements by customers); 2) price increases would be possible (confirmed in SLB’s earnings call where they cited inflationary pressure from 3rd party parts providers); 3) seasonal weakness in Canada; 4) inflationary effects would largely offset price increases to keep margins flat; 5) rig technology segment would enjoy mid single-digit q/q growth; 6) FY08 backlog of $4.4 bln for remaining 3 qtrs of FY08; 7) mid-single digit gains for petroleum services and supply segment with stable margins (Q1 saw operating margin of 23.5%); 8) capex of $400 mln for remainder of the year; and 9) drillpipe segment to see lower margins. We will be listening for color on the strength in Russia, US, Middle East and Latin America. There have also been rumors on large tenders out of PBR (Brazil) for 40 rigs, so we will be listening for color that. We feel that technology uptake by providers in North America will drive margins for NA operations. Note that the harsh land environments of shale plays requires higher technology, however E+P cos have been slow to realize their value. Street will likely be watching for more development on the Grant Prideco acquisition, growth in backlog (Q1 stood at $9.9 bln), outlook, and margin pressure. Related stocks are TTES, TS and CAM.

  86. 86
    zman Says:

    D – I like them pretty much always, unreal BTU equivalent price they receive should be another strong quarter on the production side and there is a good chance of a beat but I’m away from them right now.

  87. 87
    zman Says:

    Broad market melting now.

  88. 88
    zman Says:

    Thanks Bleemus, that from Briefing? I’m setting that one out which probably means it goes higher.

  89. 89
    zman Says:

    Well, we MENDed oil, just not the group. Lousy broad market.

    Beer thirty!

  90. 90
    Bleemus Says:

    Yes, from Briefing.

  91. 91
    doc Says:

    I bought some coal stocks today-btu and ico and 1 mineing equipment terex

  92. 92
    T. J. Says:

    STR earnings up 54%. http://biz.yahoo.com/bw/080728/20080728006211.html?.v=1

  93. 93
    T. J. Says:

    Correction…STR “net income” up 54%. http://biz.yahoo.com/bw/080728/20080728006211.html?.v=1

  94. 94
    davidmac40 Says:

    Natural Gas Rises as Lowest Prices in Four-Months Lure Buyers

    By Reg Curren

    July 28 (Bloomberg) — Natural gas in New York advanced as the lowest prices for the fuel in four months attracted speculators.

    http://www.investorvillage.com/smbd.asp?mb=1781&mn=2185&pt=msg&mid=5285047

  95. 95
    Bleemus Says:

    CLR Continental Resources beats by $0.05, beats on revs (63.72 )

    Reports Q2 (Jun) earnings of $0.75 per share, $0.05 better than the First Call consensus of $0.70; revenues rose 108.8% year/year to $303.4 mln vs the $280.3 mln consensus. Co also announces that President and Chief Operating Officer Mark Monroe will retire effective October 31, 2008.

  96. 96
    Bleemus Says:

    VLO Valero Energy beats by $0.04, beats on revs (31.81 )

    Reports Q2 (Jun) earnings of $1.37 per share, $0.04 better than the First Call consensus of $1.33; revenues rose 51.4% year/year to $36.64 bln vs the $34.93 bln consensus. “Despite the difficult environment for margins on gasoline and many secondary products, Valero continued to be profitable. Wide differentials for the heavy and sour feedstocks that we can process in our refineries benefited us significantly in the second quarter… Looking at market fundamentals, we expect distillate margins should be strong for the rest of the year and next. However, we expect gasoline margins to continue to be weak and industry utilization rates to decline. We expect secondary products to have a margin recovery, particularly if the price of crude oil stabilizes or falls, as the prices of these products lag changes in the price of crude oil… Concerning asset sales, although we have received preliminary indications of interest from parties regarding our Ardmore and Memphis refineries, we have not yet received a proposal that we believe is in the best interest of our employees and shareholders, so these refineries remain under strategic review. Obviously, gasoline margins have weakened and the availability of financing is clearly lacking as the financial markets continue in turmoil. However, we plan to continue to pursue a potential transaction for Aruba.”

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