05
Aug

Tuesday Morning – Oil Continues To Plunge

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I took some high strike August calls off the table yesterday for what little they were worth (see holdings watch below). Throughout this decline in the group and the commodities (about the last four weeks) I have slowly added to E&P and Oil Service call positions and this has turned out to be the wrong move. Valuations which were cheap have gotten cheaper. Fear has taken the place of reason and while I recognize it for what it is, I also recognize that it is better to protect capital  instead of being stubborn like a captain going down with his ship and not being able to fight another day on more reasonable waters.

The headlines each day read something like "oil drops on lower demand" which is incorrect since no new data points on demand are available and nothing new is offered in the body of the stories but reporters have to eat and word count matters to them. The sell off in oil is more related to a general sell down in commodities than it is to demand destruction (witness the even greater fall in natural gas which is less subject to price elasticity of demand and to that of gold which has been slashed). I do expect tomorrow's oil report to provide some support for oil but the power of fundamentals versus sentiment is very low at present and I won't be adding new positions until reason replaces fear in the groups.

In Today's Post:

  1. Holdings Watch - clearing the decks
  2. Commodity Watch
  3. Earnings Watch / Stocks We Care About Today
  4. Odds & Ends

Holdings Watch: Flushing some high strike call positions. The Holdings Wiki tab is updated.

  • EOG: out $120 August calls for $0.10, down 98%
  • WFT $42.50 Aug calls closed for $0.15, down 93%.
  • SLB $110 Aug calls closed for $0.15, down 94%.
  • Added to SLB $100 August calls for a quick trade at $1.50 with the stock off 4% at $96. Just think the retreat after earnings is overdone as neither the move in oil or natural gas is a game changer for them at this point.
  • CHK - Out the Aug $57.50 calls for a dime, down 96%.
  • XTO - Out the Aug $55 calls also for a dime, down.

 

Commodity Watch

Crude Oil fell $3.69to close at $121.41 after traders shrugged off a weak and disorganized tropical storm in the Gulf and focused on hopes for a peaceful resolution to the Iran nuclear standoff despite a lack of response from Iran and a test of a new long range anti-ship missile. This morning crude is trading off sharply, falling as low as $118 overnight, and looks to be headed into the mid teens. Later this week I expect another pickup in gasoline consumption to buoy crude at least briefly.

  • OPEC Watch 1: According to a Reuters survey, OPEC boosted production for a third straight month in July. The survey did not specify the amount of the increase but said the increase came primarily from Saudi. Given the recent shift in rhetoric out of cartel members, its pretty obvious OPEC has been working to bring prices down in an effort to scuttle the "lets get off foreign oil" movement that has ensued with $4 gasoline.
  • OPEC Watch 2: An OPEC "source" said the cartel is unlikely to adjust production at their next meeting (September 9) unless oil were to fall below $80. I doubt the reaction to oil price levels is that low but please see the prior bullet regarding statements like this. This source also said that oil prices had not fallen for fundamental reasons but due to easing tensions with Iran and could easily rebound.
  • Brazil Strike Watch: A 5 day strike planned to begin today was called off yesterday morning.
  • Russia Watch: Russian production fell to 9.78 mm bopd in July, down 1.1 % from June levels of 9.89 mm bopd.
  • Iran Watch: Iran reportedly delivered a response to the  EU regarding its nuclear program ...no word yet on what it says.

Natural Gas tumbled $0.66 to $8.73, a 6 month low on the lack of significant impact of that storm and predictions of cooler weather in the 6 to 10 day forecast. I expect a significant bounce here soon as well but so far we continue to work lower in massive percentage increments.

  • Natural Gas Imports: remain off 2.5 Bcfgpd from last year's levels but are 0.3 Bcfgpd higher than last week.
    • Canada ticked up slightly to 8.8 Bcfgpd, down 0.2 Bcfgpd from last year.
    • LNG stayed flat week to week at 0.9 Bcfgpd, off 2.3 Bcfgpd from last year.

 

  • Tropics Watch: Edouard strengthening as it heads toward landfall on the east Texas Gulf Coast around midday but it appears unlikely to have any significant impact on production or refinery operations.
  • Hurricane Forecasters Now See More Active Season. They now see 17 names storms, up from 15.

Earnings Watch / Stocks We Care About Today:

GMXR - Little Minnow Reports Big Beat - Don't own it but watching for an entry. The stock is down 35% from its recent highs three weeks ago while numbers continue to go up as the company continues to execute.

2Q08 Numbers:

  • Revenue of $38 mm vs $34 exp
  • EPS of $0.77 vs $0.57 expected
  • CFPS of $1.80 vs $1.40 expected
  • Production of 35.7 MMfepd, so it is small which means that larger IP wells from the Haynesville/Bossier should translate into rapid growth.
  • LOE fell on a per unit basis to $0.97, down from $1.18 per Mcfe in 1Q and they expect it to stay at this per unit level as production rises in the out quarters.

Operations Update:

  • Drilled 30 CV and Travis Peak vertical wells for an average cost of $2.3 mm apiece providing good returns and stable cash flow as they head towards the following bullet.
  • plan to drill and operate 4-6 net horizontal Haynesville/Bossier wells in 2H08 with another 2 wells tapped byJV partner (PVA) 
  • Capex - no increase since early July...right or wrong this has been a pretty big reason to sell these stocks of late.

In a nutshell:

  • Much stronger than expected quarter marked by record production and good cost control.
  • Haynesville acreage boosted by 40% to 38,455. Adding rigs in the play this year, more built to suit next year.  They had 435 Bcfe in proved reserves as of YE07. Putting a 6 Bcfe EUR on its acreage risked 50% with an 80 acre spacing and 25% royalty assumptions yields a net potential reserve estimate of 1.08 Tcfe, or 2.5x current reserves.
  • The stock is trading at a TEV of $1.045 billion:
    • If you assume they could garner $2.50/Mcfe for their in the ground booked reserves which is beyond reasonable that leaves the Haynesville acreage for free
    • A takeout at a 50% premium to yesterday's closing price would probably get the deal done and would still only value the Haynesville/Bossier acreage at under $10,000 per acre, a far cry from the $20K to $30L per acre deals we have been seeing of late.
    • Where are their acres in relation to the CHK and the perceived core acres? Harrison and Panola counties Texas, on the border with Louisiana, about 10 miles west of/adjacent to where CHK is drilling its 5 to 15 MMcfepd IP wells.
  • Conference Call: Today, 11 EST.

(VLO) Suffered Damage At A Sulfur Loading Tank Monday. Their Houston refinery is running at temporarily reduced rates.

(XTO) Files $2.5 Billion in Debt. This should have been expected given their string of recent acquisitions but so much for pointing the finger at others for being serial filers.

Odds & Ends:

Analyst Watch: HSBC boosts RDS.A to outperform, otherwise pretty quiet on the analyst front.

226 Responses to “Tuesday Morning – Oil Continues To Plunge”

  1. 1
    zman Says:

    Oil off $2, NG off 25 cents.

    TS Ed. came ashore in Texas, no impact expected aside from some shipping and crude imports delays.

    Iran’s apparently delivered a non-response regarding a freeze of its nuclear program:

    http://english.aljazeera.net/news/middleeast/2008/08/200885101521764323.html

  2. 2
    Nicky Says:

    Morning Z and all.

    Z – I am thinking no move by the Fed is going to be dollar negative and therefore supportive for oil. Wonder how long before they start talking about this as the $ was constantly given as one of the main reasons for energy moving up.

    We have made our lower low on the charts and the abc count is still alive! b has to bottom out above the 115.00 level for the abc to remain a possibility. If it does not the count is far more bearish.

    For anyone following metals I am still thinking we have the same pattern playing out in gold and the equivalent level gold has to hold above is 873.

    Broader market – a very large triangle appears to be unfolding and if so there looks to be a good chance that the 1270 spx area will be as high as we go before turning lower.

  3. 3
    Sambone Says:

    7:45 am EST

    Crude Down More Than $3, Demand Concerns Weigh

    By NICK HEATH
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures fell more than $3 in London trade Tuesday as concerns that demand is eroding amid an economic slowdown fuelled increasingly bearish market sentiment.

    Any support gleaned from the presence of Tropical Storm Edouard in the Gulf of Mexico faltered Tuesday as the weather pattern looked set to exert minimal disruption on the region’s oil and gas producing facilities. And tensions between Iran and the major powers over Tehran’s nuclear program also failed to stop crude’s fall, with the market seemingly focussing squarely on demand.

    “It seems that the market is losing interest in geopolitical and weather-induced “props’, and instead is becoming more aware of growing supply/demand imbalances,” said Edward Meir, analyst at MF Global in New York. “On the demand side, energy participants are sensing that the global growth picture is deteriorating rapidly, and is now no longer confined solely to the U.S.”

    At 1111 GMT, the front-month September Brent contract on London’s ICE futures exchange was down $2.13 at $118.55 a barrel, having earlier dropped to an intraday low of $116.91 a barrel.

    The front-month September light, sweet, crude contract on the New York Mercantile Exchange was trading $2.04 lower at $119.37 a barrel after trading down to $118 a barrel earlier.

    The ICE’s gasoil contract for August delivery was down $28.50 at $1,075.50 a metric ton, while Nymex gasoline for September delivery was down 502 points at 295 cents a gallon.

    The U.S. National Hurricane Center reported in its 0400 CDT (0900 GMT) advisory Tuesday that the center of Tropical Storm Edouard was approximately 50 miles southeast of Port Arthur, Texas, and about 85 miles east of Galveston, Texas. Edouard could approach hurricane strength by the time its center crosses the coast, the NHC said. The center of Edouard is expected to be near or over the upper Texas or southwestern Louisiana coasts by midday Tuesday.

    In its latest update Monday, the U.S. Minerals Management Service reported that about 11,539 barrels a day — or 0.87 % — of Gulf of Mexico oil production was shut-in as a result of storm-related evacuations from oil producing infrastructure in the Gulf.

    “Very little production is shut in. It will cause some disruption but it’s at a time when stocks are quite adequate,” said Christopher Bellew at Bache Commodities in London. “Also OPEC production has been creeping up at a time when demand is a little poorer,” adding to the downward pressure on prices, he said.

    According to a Dow Jones survey released Friday, production from Organization of Petroleum Exporting Countries reached its highest level so far this year in July on increased barrels from Saudi Arabia and Iraq and a recovery in Nigerian output. OPEC pumped 32.675 million barrels a day on average last month, up 1.1%, or 366,000 barrels, from 32.309 million barrels a day in June.

    But despite signals of an increasingly bearish fundamentals backdrop, crude’s rapid descent from last month’s record highs above $147 a barrel — including the steep fall Monday — owes more to technical indicators, some said, with selling triggered as prices moved through significant support levels and as sentiment turns increasingly bearish.

    “Any fundamental explanation for the intraday move down yesterday is likely to be cosmetic given the nature of the selloff and the way in which it has permeated most commodities — this is a move that is driven by the fund community taking a technical view on the markets,” said Hamza Hamza, fund manager at Sucden UK Ltd in London. “There has been a shift in sentiment and psychology is trumping the fundamentals at the moment.”

    Ongoing tensions surrounding Iran’s nuclear program continue to attract market attention although failed to halt crude’s fall Tuesday. The six major powers of the U.S., the U.K., France, Germany, Russia and China Monday threatened to pursue new sanctions against Iran — OPEC’s second largest producer — if it doesn’t accept their offer of incentives to freeze it’s uranium enrichment program.

    Mindful of the U.S. dollar’s influence on oil prices, market participants will also be eyeing the U.S. Federal Reserve’s Open Market Committee’s decision on interest rates due 1815 GMT Tuesday. Economists expect the FOMC to leave U.S. interest rates unchanged at 2.0% after its meeting.

    —By Nick Heath; Dow Jones Newswires

  4. 4
    zman Says:

    Morning Nicky, agreed re $. Think ECB is more important for that on Thursday.

  5. 5
    zman Says:

    UNT numbers on the tape. Beat on revenues missed on EPS: $2.00 vs $2.03 expected. Other metrics look pretty solid, call at 11 EST, probably will listen to the GMXR call instead.

    NG now down $0.15, back to trading 1/10th the move in crude.

  6. 6
    zman Says:

    PXD had numbers out last that were strong, and it raised guidance. Growing production everywhere they operate from Sprayberry to Raton to Tunisia. Very interesting story, don’t feel compelled in this market to jump on anything new today obviously.

  7. 7
    zman Says:

    APC call at 10 est by the way, good quarter but want to hear them talk about their first op’d spud off Brazil and their thoughts on Shales – they mentioned spudding 2 wells with good results in the Marcellus, like to see if they are playing elsewhere as well plus its always good to get an update on the gas markets from Hackett.

  8. 8
    VTZ Says:

    Mainland Resources, Inc. And Petrohawk Energy Corp Enter Definitive Agreement For Joint Development Of Haynesville Shale Property, Louisiana

    Just on DJ newswires

  9. 9
    zman Says:

    Thanks V – saw and decided not to comment. Small acreage (2700) and 100% of costs by HK on first well that spuds next month. Might be a good deal for MNLU although I thought I saw this deal mentioned a coulple of weeks ago…MNLU trades BB and in Frankfurt (yuck!).

  10. 10
    Sambone Says:

    Weather – Watching blob at 33W, 9N. I’m not expecting much at this time.

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

  11. 11
    zman Says:

    Thought so, that’s old news from 7/15 on MNLU/HK

  12. 12
    Garyinhou Says:

    CRK had a huge 2Q, so I imagine they will be crushed today..

  13. 13
    VTZ Says:

    Sorry just saw the headline, didn’t see any details but MNLU seemed familiar.

  14. 14
    zman Says:

    Hey, never apologize I might have missed it. That one, like Cubic has been nothing but up during all this which tells you what kind of market we’re in. It reads like a very good deal for them but I have done the math.

  15. 15
    Garyinhou Says:

    CLR down 5% early

  16. 16
    zman Says:

    DNR down 16% for taking in their tertiary recovery volume growth for 2008 from 22% to 20%. Beat on top line and CFPS but missed on earnings. If you are a fund manager in this environment, you toss them and buy back in later. This one is (was) a relatively expensive name in the group.

  17. 17
    BirdsofpreyRcool Says:

    materials index at lowest level since Jan 22, energy lowest sice Feb 8, consumer staples and healthcare higher. guess that is where money is flowing today.

  18. 18
    zman Says:

    Not even tempted to fish the group in here.

  19. 19
    zman Says:

    Hmmm…. Really not tempted to bottom fish the group. I like the response #18 got from the market so I thought I’d try again. I’d like to believe an intraday reversal matters right now. I don’t at this point as tomorrow’s numbers and the Fed’s later today will likely cause wild swings in the economy.

    APC call in 10

  20. 20
    Garyinhou Says:

    somebody was tempted I guess, buy programs or something.. wow.. like a shop vac

  21. 21
    zman Says:

    Gary – I’d say I can’t believe the GMXR is down with some of the other stuff up now but, nah, I can believe it.

  22. 22
    reefguy Says:

    ng went green…and i am not drinking..yet

  23. 23
    zman Says:

    Reef – hear ya re drinking in the morning. Seems like some managers have been drinking these past few days, drinking hemlock that is.

  24. 24
    Sambone Says:

    NEW YORK (Dow Jones)–The already active Atlantic hurricane season may be even
    busier than previously expected, said forecasters at Colorado State University,
    who on Tuesday raised their expectations for storm activity.
    Forecasters now say they see 17 named storms, nine hurricanes and five intense
    hurricanes with sustained winds of 111 miles-per-hour or greater in the season,
    which began June 1 and runs to Nov. 30.
    On June 3, the forecasters called for a very active season, with 15 named
    storms, eight of which would become hurricanes, with four becoming intense
    hurricanes.
    The climatological average between 1950 and 2000 is 9.6 named storms, 5.9
    hurricanes and 2.3 intense hurricanes.
    The National Oceanic and Atmospheric Administration has projected 12 to 16
    named storms, including six to nine hurricanes, including two to five major
    hurricanes. NOAA said there is only a 25% probability of a near-normal season,
    meaning a 90% chance of normal or above normal and only a 10% chance of a below
    normal season.
    NOAA will update its forecast at 11 a.m. EDT Thursday.
    Colorado State forcasters will issue an update on the last two months of the
    season Sept. 2.

    -By David Bird, Dow Jones Newswires,
    Dow Jones Newswires
    08-05-08 0954ET

  25. 25
    zman Says:

    Thanks Sam, that explains the little pop in gas and the group, I would not expect it to have much staying power although it would be nice to be wrong on that.

  26. 26
    tomdavis12 Says:

    Z: Is NFX also near its CFPS low? 4 – 5 ?

  27. 27
    isleworth Says:

    “Invest at the point of maximum pessimism.” – Sir John Templeton

  28. 28
    Sambone Says:

    Off subject – For Nicky

    “I guess the Chinese actually do own us!”
    Sambone-August 2008

    http://www.bloomberg.com/apps/news?pid=20601109&sid=azswcZQvmUX0&refer=home

  29. 29
    Brian08 Says:

    Be fearful when others are greedy and greedy when others are fearful — Mr. Warren Buffett

  30. 30
    zman Says:

    APC talking about mounting inflationary pressures.

    APC has 175,000 net acres in Haynesville; 4 tests in the second half.

    Tom – NFX on the very silly side of cheap. They got no credit from the Street as they raised production guidance in June for Malay, and no credit for falling costs and improving results in the Woodford. Street however had taken CFPS in 2009 to $14. Now it is at $15.31 so yeah, its cheaper than cheap.

  31. 31
    zman Says:

    APC – primary well at Redhawk (deepwater gomex) watered out. Ouch, that was a first of its kind spar and I know they didn’t expect that well to be done so soon. More drilling planned but that’s going to smart and will put pressure on thoughts for some the recent gathering hub and spoke gas projects in that area of the deepwater.

    “when in doubt, sell half” ~ most recently Phil Davis but I think he lifted it off someone else, lol.

  32. 32
    Garyinhou Says:

    “Nothing is over until we decide it is, was it over when the Germans bombed Pearl Harbor? No.. and it ain’t over now” – Bluto

  33. 33
    tomdavis12 Says:

    Z: You pointed out yesterday that you saw some action in CHK @ $45. That is 4 times cash flow. That is the five year low. I sold OCT 45 puts today @ 4.60 and I hope I get put. Of course if it gets to $40 I will have green gills but I have the cash.

  34. 34
    zman Says:

    Hear ya, Tom. Long term these names will come back, short term they are oversold and trading on sub $100 oil and sub $8 gas, maybe well below those numbers. If you are an analyst sitting on the sideline, you wait for the commodities to trade sideways and then you upgrade if you think commodity prices hold close to current levels.

  35. 35
    zman Says:

    It’s stunning what all these large cap E&Ps are trading at relative to NAV ~ Jim Hacket, CEO APC

  36. 36
    Sambone Says:

    “Mr. Market” Ben Graham

  37. 37
    zman Says:

    I can understand a little bit of trepidation on the part of the E&P names when facing repeated comments about service cost inflation however, unless prices just crash, the production growth that the current capital budget cycle will generate makes these names very cheap on current and forward year cash flow and extremely cheap on assets.

    But from the service side, this is nothing but good news, again assuming capital budgets don’t shrink due to a price deck crash. This is the first time in a couple years where the service companies have had real pricing power and incredibly strong demand.

  38. 38
    Nicky Says:

    Nat gas behaving well technically. We saw our lower low though it went a touch further than I would have expected and seriously tested the wave b scenario. Anyway if the count is right I see us now heading up to the 10.00 area.

    Oil action is not exactly thrilling as the move off the lows looks a touch corrective right now. But as said earlier we would have to come under 115 to negate the abc scenario. C I think should take us back above 130…

    Broader market – so far so good…what will be telling is what happens at the 1270 area in the SPX.

  39. 39
    tomdavis12 Says:

    Z: I keep pointing out to anyone who will listen that CHK has now beaten wall streets estimates for 27 quarters in a row by an average of 11.5%. This includes NG prices from $5 – $15. I believe you can make a case that this management knows what they are doing. Fast Money was trying to make a case for MSFT trading at 11 times cash flow with management that has only made mistakes over the last 3 years. I’ll take CHK.

  40. 40
    zman Says:

    Tom – I don’t disagree and the common is in every family member whose account I have any say over (which is all the ones who buy me stuff at Christmas).

    Oil off $0.35 now. Anybody see the contents of that letter from Iran yet?

    Still on the APC call, sounds like most things working very well here. Some of the stuff like greater natural buttes where they are seeing strong performance and in new tests in the deep Mancos shales are going to have positive implications for NFX. Nice to have a gas Major in the same play with you confirming the efficacy of your project.

  41. 41
    Nicky Says:

    Sam re #28 – I guess they knew they could be looking at a repeat of what happened in January whilst the US was on holiday and Asia tanked the markets. This is a house of cards and they must know it by now….

  42. 42
    zman Says:

    APC Comment: Don’t see a glut in natural gas, think we need the gas unless we just a very warm winter. Cited power generation and export market growth.

    Haynesville and Marcellus look like fabulous reservoirs, don’t think it happens as quickly as everyone thinks either from a service company or transportation line point of view.

  43. 43
    apbd Says:

    Blood is flowing in the streets. The time is ripe. I shall buy. NOT!
    apbd

  44. 44
    davidjeso Says:

    Z – let me throw this out. What are your thoughts on buying slightly out of the money Aug. puts for KWK ahead of earnings? Instead of swimming upstream, I’m thinking of playing along…PXD had great earnings and is down, DNR had a miss and is getting pounded. At 7.5x 2008 EPS, KWK seems expensive relative to the group…a la DNR. I hate to buy puts as I think this market is oversold, but it seems to be the only way to make money right now (or just sit on the sidelines, of course).

  45. 45
    zman Says:

    David – can’t fault the logic as it would be in line with what we’ve seen of late. I’m not going to do it because while I like those guys I don’t stick close enough to the story to know if they have the possibility of having something up their sleeve but it may work fine. They reap an extra high price realization due to their high liquids cut in their gas stream and at times, this has allowed them to crush estimates. However, crushing expectations is little guarantee of a rising stock price here nor is upped guidance. So I guess I’m ambivalent to the idea. I can tell you I would not do it for PQ later this week.

    This little rally is not holding up well in the commodities or the stocks. Just no conviction.

  46. 46
    davidjeso Says:

    Z – fair enough and really good comments. Still don’t know what, if anything, I’ll do, but it’s nice to have another opinion…any other thoughts on the play are much appreciated as well.

  47. 47
    Sambone Says:

    Not sure if I have posted this or not. If so, pls ignore.

    Energy Stocks Running Out Of Gas

    By PALASH R. GHOSH
    A Dow Jones Newswires Column

    NEW YORK — Energy stocks are down for the year, despite historic highs in crude oil prices, some huge profits from Exxon Mobil Corp. (XOM), and continued surging demand from China and India.

    Indeed, the S&P Energy index has slipped 5.6% year-to-date through Friday, while virtually all energy subindexes are in the red.

    So, why has the U.S. energy sector delivered such a lackluster performance amid such a cornucopia of blessings?

    Well, to be fair, energy has significantly outperformed the broader market — the S&P 500 index has declined 13.7% year-to-date. But with crude oil prices breaching $140 this year, one may wonder why energy equities have not done better.

    Ben Halliburton, chief investment officer of Tradition Capital Management in Summit, N.J., says that long-term investors may believe that profits in the energy sector, as well as crude oil prices, have already peaked, as global demand slows and the cost of oil and gas production creeps ever-upward.

    For example, Exxon just posted the largest quarterly profit figure in corporate history — an astronomical $11.7 billion — and its shares dropped that day. “Exxon has been underinvesting its exploration plays for many years,” he said. “They just don’t have the resource base to drill and increase production. Investors are well-aware that Exxon has a very low growth rate going forward and declining growth rate in production.”

    More importantly, with regard to the global supply/demand picture for crude oil, “we are now on the steep part of the supply curve,” Halliburton added.

    There may also be other factors damping the performance of energy securities — things that have nothing to do with supply/demand or crude oil prices.

    Zach Liggett, portfolio manager for Utopia Funds, explained that energy stocks now form such a large portion of the U.S. equity universe that any weakness in the overall market will hurt them too, regardless of the price of crude oil.

    Energy shares now represent about 15% of the S&P 500 by market cap, up from 5% in 1998, when the current secular bull market for oil commenced.

    “Whenever the stock market falls, it will be hard for energy stocks to have any positive absolute return momentum simply because they now represent a larger chunk of the market,” Liggett said. “Energy stocks are still simply stocks and sometimes they follow the normal behavior of other stocks. Think of all those index funds that are geared to the S&P 500 index. If there is fear in the equity markets, oil stocks will go down in lock-step, regardless what happens to the underlying commodity.”

    Halliburton also pointed out that some parts of the energy industry are in abysmal shape, notably the refining and marketing segment, and they are dragging the whole sector downward. In fact, S&P’s Refining & Marketing subindustry index has plunged about 53% year-to-date through Friday, reflecting weak profit growth in that business.

    But for now, energy demand is intertwined with how much money people and corporations have in their pockets.

    The developed world — plagued by softening economies, credit crises and worsening consumer spending — is actually showing decreases in crude oil consumption, somewhat offsetting robust demand from China and India.

    “Going into 2009, with a sluggish economy, we’ll likely see flat or even slightly declining consumption demand for crude oil,” Halliburton said. “Saudi Arabia is likely to increase production and even Iraq may be pumping 1 million barrels per day in a few years.”

    Halliburton thinks the price of crude oil in 2009 could range from $100 to $120 barrel, reflecting flattening demand and higher supply. “If demand weakens significantly, and we have a severe recession, crude prices could go down even further,” he added.

    Energy stocks also look very cheap now. S&P’s energy sector is trading at about 8.3 based on estimated 2008 earnings. But Liggett indicated that while the P/E for energy shares may seem modest, when one adjusts for a more normalized profit environment, they don’t seem so attractive anymore.

    “Profit margins for energy companies are near historic highs, but they probably peaked in 2007,” he said. “It’s logical to assume that as production costs climb, profit margins will begin a long steady decline in the coming years. Combine that with stalled global demand, crude oil prices are also likely to face further headwinds. Thus, energy is not a growth story.”

    Energy-related shares will likely continue to show lackluster returns even if oil prices remain where they are — although Exxon and BP PLC (BP) might not care too much, already having amassed untold billions. We may even see energy stocks resume their traditional role as solid value plays — strong dividends and moderate growth.

    (Palash R. Ghosh has been writing about U.S. and international equity and bond markets for the past 17 years.)

    —By Palash R. Ghosh, Dow Jones Newswires

  48. 48
    Sambone Says:

    9:25 am EST

    Nymex Crude Drops As Demand Fears Return

    By Brian Baskin
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures traded lower as the market refocused on eroding fuel demand.

    Light, sweet crude for September delivery traded $1.36, or 1.1%, lower at $120.05 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded $1.56 lower at $119.12 a barrel.

    Futures are extending Monday’s $3.69 drop, having eradicated last week’s rebound. Oil prices rose following a July 30 report showing a surprise draw on U.S. gasoline inventories, but that data alone hasn’t been enough to reverse a decline in oil prices dating back to mid-July. Oil prices have come off 17% since settling at $145.18 a barrel on July 14. The front-month record settlement was hit July 3, at $145.29 a barrel.

    The market had also factored in an outside chance that Tropical Storm Edouard, which formed in the Gulf of Mexico over the weekend, would damage oil production. Edouard had a bigger impact on refiner demand, forcing several Texas refineries to reduce runs as the storm made landfall near Galveston, Texas, on Tuesday.

    “It seems that the market is losing interest in geopolitical and weather-induced “props,” and instead is becoming more aware of growing supply/demand imbalances,” wrote Edward Meir with MF Global.

    With Edouard moving inland, the next direction for oil prices comes with the release over the next two days of fresh gasoline demand surveys, from MasterCard Inc. and the U.S. Energy Information Administration. Last Tuesday, MasterCard Inc. (MA) showed the biggest year-on-year drop in gasoline purchases since June. The EIA on Wednesday reported a large drop in gasoline stocks, however, providing hope for an imminent recovery.

    Analysts expect the EIA to show a 300,000 barrel decline in oil inventories, a 1.6 million barrel draw on gasoline stocks and a 1.6 million barrel build in distillate inventories for the week ended Aug. 1, according to a Dow Jones Newswires survey.

    “Attention has really shifted from supply disruption to demand disruption,” said Peter Beutel, president of Cameron Hanover, a trading advisory firm.

    Front-month September reformulated gasoline blendstock, or RBOB, recently traded down 2.56 cents, or 0.9%, at $2.9746 a gallon. September heating oil traded 2.55 cents, or 0.8%, lower at $3.3246 a gallon.

    —By Brian Baskin, Dow Jones Newswires

  49. 49
    zman Says:

    Sam – Demand fears return?! Did they ever go away?!

    GMXR call starting.

  50. 50
    mahout Says:

    Z and all:
    This perceptionland, liquidationland and fearoftomorrowland is sure hard! I’m moanin, groanin and gettin depressed.

    A few weeks ago I dropped my cell phone in the toilet. I yelled and moaned and groaned. I figured my beloved black shiny LG (life WAS good) that I enjoyed so much, with all my accumulated numbers was gone forever. Well, I had my wife fish it out and you know what? It didn’t work so good after that. And I remembered somebody told me one time, that if you let your life go into the toilet, it won’t work so good after that. The screen wouldn’t come on, it made funny noises and the battery went to zero fairly fast, no staying power. It was flying-blind so to speak. But, it would still call in and out! So I kept it and kept using it. I called the experts and with great certainty they said,”Dump it. It would go dead in 2 weeks. It wasn’t worth repairing”. But, I needed it and kept using it. After a while, it began to recover somewhat. The screen would come on once in a while. Hot dog! I thot. But, just when I needed the screen for a quick call, it wouldn’t light up! In my moanin and groanin and frustration and depression I still held on to it and used it. Well, it gradually got well and now in spite of the negative experts it is fully functional and WORKS AS IT SHOULD again.
    Is there a lesson here for us?

    Right now, bleeding from every pore, I would take any kind of a bottom. A V,U,S CURVE, or CORKSCREW, or whatever. Just give me a bottom, please. But, I’m determined to keep holdin on. Hopin it will get well and WORK AS IT SHOULD again, just like my cell phone.

    Is anyone with me on this?

    Appreciate so much the service and all the comments and info and humor.

  51. 51
    reefguy Says:

    The Bottom: By acclamation it is today, now and here! No more blood from this stone…as too my pores have bleed all my blood…

  52. 52
    Bleemus Says:

    “I had my wife fish it out”

    I can’t stop laughing.

  53. 53
    regale Says:

    Your wife fished it out of the loo?

  54. 54
    zman Says:

    Great map page 7

    http://files.shareholder.com/downloads/GMXR/376784224x0x219882/04eafad6-7b37-49e9-8742-bafdcbc2b37d/2008.08.05%20GMXR%20Q208%201H08.pdf

  55. 55
    zman Says:

    GMXR – drilled 20 vertical Haynesville/Bossier wells, they see Haynesville as 350 feet thick, “tremendous porosity”, 10% dolomite (could be underestimating the porosity on logs),

    Thinking 7 Bcfe per well here for $6.5 mm. Think developed it is worth $190,000 per acre based on a $9 gas price. Bet ya Aubrey is on this call.

  56. 56
    BirdsofpreyRcool Says:

    GMXR – most exposure per share to the Haynesville.

    what’s NRI? (net return on investment?)

  57. 57
    zman Says:

    GMXR calculating their worth at about $400 per share which is so high no one will believe/care.

    NRI – net revenue interest (working interest less royalty)

  58. 58
    BirdsofpreyRcool Says:

    GMXR – “4P”? when did people start presenting their Wish List?

  59. 59
    zman Says:

    GMXR Q&A starting.

    Oil getting thumped now, down 2.60 and falling. NG still up…amazing.

  60. 60
    Sambone Says:

    M – How did you talk your wife into “Fishing it out”? What did you say?

    To answer the question, I think the worst is over. I have been buying RIG, PBR, and CHK at these levels. If they go down more, I’ll buy more. The party isn’t over. I mean 1 year ago, Crude was at $76?

  61. 61
    zman Says:

    GMXR Q&A

    where are new acres? In and around core area – extreme E. Tx. Should have well results in December.

    This is my new favorite thought for a takeout candidate. My best guess would be CHK buys it.

  62. 62
    mahout Says:

    Reefguy #51:
    That’s what I want to hear, The bottom is today! Thanks.

    Bleemus #52:
    You made my day.

    Regale #53:
    Si!(In Arizona we some times say “Si” for yes). Wives are wonderful!

  63. 63
    BirdsofpreyRcool Says:

    z – re: #61… only if the Kenworthys want to sell!

  64. 64
    antrimshale74 Says:

    Today’s chart for oil is a mirror of yesterday’s thus far and that is not good.

  65. 65
    Nicky Says:

    Mahout – great post!

    Yes I think there is hope! Reefguy may just be right as now is the moment for it to turn if its going to be honest. Oil still has a bit of room on the downside but gold needs to turn up right now!!
    Nat gas may be leading the way…..

  66. 66
    zman Says:

    GMXR – will have results on first 3 shale wells in next 90 days. Expecting IPs of 5 to 7 MMcfgpd, little lower than would have thought but they are drilling shorter laterals early as the units in Tx are irregularly shaped.

  67. 67
    mahout Says:

    Sam #60:
    Here’s what happened. She came runnin when I yelled so loud and was relieved I was not seriously hurt or something. So it was easy to get her to do it. I just noted that my hands were too big to get down in that little area, very little of the phone was showing. She said my hands are smaller (a lot smaller in fact, I’m 6′ 3″ and she is just a little girl), so I’ll get it. Who was I to object? Again, wives are wonderful.

  68. 68
    Bleemus Says:

    Big CFTC data revision raises oil traders’ eyebrows [ RTR http://tinyurl.com/6rkkmr ]

  69. 69
    Sambone Says:

    Wow, Logic actually worked?!

  70. 70
    BirdsofpreyRcool Says:

    GMXR – THE question being asked: will Haynesville kill the price of mmBtus?

  71. 71
    BirdsofpreyRcool Says:

    GMXR – can make a LOT of $$ at $8.50 nat gas….

  72. 72
    zman Says:

    BOP – same response as from the big cap CEOs. It will be slower to develop, there won’t be a glut, and current prices yield a lot of cash flow generation.

    Thanks Bleemus. It seems like semantics which category someone falls into (spec or commercial trader) now that we’ve had the move we’ve had but I think the bears may spin that negatively saying the spec will have to liquidate.

  73. 73
    mahout Says:

    Nicky #65:
    Appreciate it very much that you think there is hope. Thanks for making those wonderful charts available to us. And those comments, sometimes I think I even begin to understand some of them. I’m workin on it.

  74. 74
    Bleemus Says:

    PXD Pioneer Natural Resources: Q2 earnings call (55.30 -1.35)

    On the call, co says they are getting encouraging results in Spraberry and Edwards fields. Co has been drilling more wells per rig. Spraberry is getting almost half of their capex. Co sees rising costs primarily in tubulars, fuel and pumping services… Co continues to exceed production estimates of 14% production per share annualized growth rate through 2011… Further on Spraberry, say their objective is to capture as many resources as possible — co’s tgt is for 1 bln boe net reserves. They are using 20 acre drill spacing, waterflooding and 40-acre field development… Co is beginning to explore horizontal drilling (plan to frac 2 wells in remainder of 08 and 5 in 09) and shale interval. Spraberry rigs is now drilling 2 wells/month from 1.8. They are planning to add 4 rigs from 2010-11… Pierre Shale has only undergone vertical drilling but horizontal is set to go in Q3… In the Ratone, the co will ramp up transportation so the yield is less exposed to regional prices… Barnett Shale: 7 wells drilled thus far, with most coming in at 1 mmcfd. Average drilling costs are $2.8 mln/ well… Tunisia: total production from 3 areas is 7.5 mboed.

  75. 75
    Nicky Says:

    Gold bouncing – early heads up folks…

  76. 76
    zman Says:

    GMXR call over, attractive valuation, strong growth, lost in the maelstrom of the current market. Will put in back of mind and watch a little more closely. I have a spot in my heart of for little engines that could like this, especially ones where I can argue the in ground selling price of their conventional reserves outweighs their current TEV meaning you get the 38,000 acre Haynesville/Bossier play for free. No kidding, if you look at recent deal prices they could VPP the Cotton Valley / Travis Peak for $5 per Mcfe or about 2.0 Billion, double the company valuation. Somebody ought to suggest that to CHK, buy the company for $2 B, VPP the conventional for $2 B and take on the new acres for free.

  77. 77
    BirdsofpreyRcool Says:

    z – nice summary of GMXR cc. thanks.

  78. 78
    antrimshale74 Says:

    I wonder how much of this broad market rally will disappear going into the Fe announcement? What if the market is spooked by the tea leaves left by the FOMC?

  79. 79
    VTZ Says:

    Nicky, thanks for the gold heads up šŸ™‚

  80. 80
    zman Says:

    Refiners doing well again on down oil, less down HO. Some order restored in the world.

    NG up 15 cents now near HOD.

    One thing is clear, if the stocks do get a bounce, big cap service should lead the way, lot of spikey bounces in SLB. HAL will wait for SLB to show it the way despite being cheaper as perception there is more tied to N. American nat gas.

  81. 81
    Nicky Says:

    Barron’s –
    interviews RGE Monitor Chairman, Nouriel Roubini. Roubini warned as early
    as 2 years ago that a housing bubble would lead to a significant decline in
    home prices, as well as, the collapse of subprime mortgages, trouble with
    FNM and FRE and a deep US recession. Roubini now estimates that the economy
    is in “the second inning of a severe, protracted recession,” which will last
    at least 18 months, adding that he expects a banking crisis to persist for
    “a while”, and hundreds of banks to fail. Also, consumers are in trouble,
    saving less and increasing debt, noting that even with tax rebates retail
    sales increased only 0.1% in July, and were down in real terms. Overall, he
    estimates that the financial crisis will lead to credit losses of at least
    $1T and most likely closer to $2T. In terms of the fallout, Roubini says
    community banks are in trouble, at most where housing is weak. Also, out of
    ~36 medium-sized regional banks, “a good third” are in distress, including
    Wachovia (WB) and Washington Mutual (WM), adding that half of this group may
    go into bankruptcy and some of the majors could become technically
    insolvent, though they could end up being seen as too big to fail.

  82. 82
    Nicky Says:

    The complete article is here:

    http://online.barrons.com/article/SB121763156934206007.html

  83. 83
    Dman Says:

    Late to the play here, but let me just add that I too am blown away that anyone can (or would!) get the lady of the household to fish *anything* out of the loo.

    I think I would have tried flushing it.

    But it’s easy to say that when it isn’t *your* beloved cellphone beeping at you from the depths of the S-bend šŸ™‚

  84. 84
    mahout Says:

    Sam #60:
    Glad to hear you are in a buying mood. And particularly those stocks. I asked myself the other day, What are the very best stocks in the Universe to buy today?
    I had to answer honestly that the best things I see right now are CHK and RIG, Which I have owned for some time. I don’t own PBR. It also looks very good to me, but sorrowfully, I can’t kiss all the girls in the world. Here’s what I said to myself about RIG:
    There is too much basic value to RIG (and too low a market valuation), too much earnings, too much growth in earnings, too much cash generation, too good of a strategic position for the company for the next 1,2,3,4 years, too much pricing power (my word, they signed a 5 year contract for one of their ships the other day for $650,000. A DAY!, a big increase over past rates), there is too big of a need for their services, they are too large (economies of scale),too good technically, too good in reputation to continue this painful fall. There are mountains of cash in this country and around the world looking for good investments. My gut tells me(right or wrong)that RIG is one of the best and safest investments in the energy patch and in the whole investment universe right now. Two months from now I expect to see a clear bottom and a new nicely positive channel for RIG.

  85. 85
    Nicky Says:

    I thought only the English used the word ‘loo’!

  86. 86
    Sambone Says:

    Off subject – Just had to share!

    http://www.tri-cityherald.com/1406/story/263706.html

  87. 87
    antrimshale74 Says:

    Sambone, that guy much have been long oil and short financials too long.

  88. 88
    mahout Says:

    Dman #83:
    I am dutifully ashamed of myself.
    But I sure like having my cellphone back.
    Thanks for your excellent comments.

  89. 89
    Dman Says:

    M: your cellphone was in distress, you did what you had to do šŸ™‚

    Z- regarding the analysts getting out of their bunkers: isn’t it likely that they’ll do so only once a rally is, well, almost finished?

  90. 90
    zman Says:

    Dman – some will yes, but we are long way from that. I think they don’t want to step in front of the commodities and will wait for stability or something that looks like it. You see calls here and there related to earnings but no big sector upgrades by the big boys yet. I think we are close to one of those but it will probably happen on a Monday or Tuesday.

  91. 91
    ddaley Says:

    I love this talk of a bottom, but a “bottom” may lead to sideways action for two months, and there is no money in that unless you “trade” it.
    That said if service is going to do well, and no buyers yet today, then why not OIH calls, as one then has the safety of big money behind you?
    Any thoughts?
    There is Feb. -Mar support at 180, but it is hard for me to see any institutional buying of the service sector until oil makes it clear that is really not going down anymore.
    Largest open interest is the AUG 180 puts, so it may well close there on the 15th. OIH AUG 180 is $7, SEPT are $12, as a spread.

  92. 92
    Nicky Says:

    Apologies if someone has already posted this:

    http://uk.reuters.com/article/oilRpt/idUKN0530610520080805

  93. 93
    teomax Says:

    just a small tip to anyone investing into microcaps.
    WEL, small international oil service firm, consisting of ex-HAL guys, just beated estimates (3x times in in a row) by cca.60% – est. were 5 cents, they had 8 cents EPS.
    They just really nice growing story.
    I hope they will make it big sometimes in the future šŸ™‚
    http://finance.yahoo.com/q/ks?s=WEL

  94. 94
    antrimshale74 Says:

    I see that GLBL is getting blown to bits today.

  95. 95
    zman Says:

    DD – I’m pretty leery of bottom talk before big numbers, this could all go away and re-crush sentiment on the groups. Am long more near the money calls now in Service and E&P so will participate if it rallies but don’t feel the need to add at this time. I’d rather add in stability and play individual names that can really move (up) if we get a rally… SLB for that close right now.

    Teo – love the John Wayne movie about that, have liked the stock in the past, will look into. They have changed their business model in the last year so need to relook.

  96. 96
    Dman Says:

    DD – big money started selling the service & E&P names before oil & gas started their powerdive. So the reverse might apply. In fact, our friend Cramer promised that the stocks would turn before the commodities bottomed. You can take that to the bank … as long as you find a bank that accepts Mr Cramer’s promises in lieu of cash, lol.

  97. 97
    Pete Says:

    Z,
    What do you think of the common in NBR going forward?

  98. 98
    zman Says:

    NG up 22 and making a run on 9. Short covering could take it all the way to Nicky’s $10 level but probably not much higher. Seeing broker comments echoing the sentiment from the E&Ps that the fears of a gas glut next year are overblown…just not going to develop that fast and many people with acreage won’t have rigs or tubes to drill it as soon as they have promised.

  99. 99
    breakhound Says:

    Anyone watching RIG. having a good day today. It’s bouncing off a trendline from 1 year ago, might hold. and a non gasy name WMT near a 52 week high.

  100. 100
    antrimshale74 Says:

    In the FWIW column, HK has been having a good day all day.

  101. 101
    zman Says:

    Pete – I bought it higher for a 2 year hold. I have not heard anything to make me think that was a mistake. The stock is cheap and they should benefit from the pickup in activity as they can get rigs to market faster than most of their peers. That said, the stock is definitely suffering from abandonment issues and I honestly don’t expect to get anything for my August or September options as the tumble has just been relentless. But for the long term, I like the outlook.

  102. 102
    apbd Says:

    Just back from a VA check-up to find the potty tale. Hope your wife washed up before fixing dinner. lol
    apbd

  103. 103
    antrimshale74 Says:

    Canadian markets were closed yesterday for the Civic Holiday, so it comes as no surprise that Toronto is down heavily. However, the TSX was down almost 400 points at the open and the TSX Venture was down almost 5% at one point today. The economy is heavily dependent on natural resources and the TSX is a good metric to view sentiment in the energy equities.

  104. 104
    zman Says:

    Break – RIG like SLB seems to be one that will rise more when people decide energy is in fact not dead. Bet they do $20 EPS in 2010, estimates have been walking that direction for some time now. The rate of deepwater, high spec dayrate growth may slow for them as more units enter service however there have been a lot of shipyard delays over the last 2 years and many of the scheduled rigs may slip further into the future. This little dip in oil is not going to cause anyone to delay a deepwater project.

  105. 105
    VTZ Says:

    antrim – We had to catch up for the beatdown that potash, suncor and all the other big cap gold ag and energy stocks took on monday.

  106. 106
    Nicky Says:

    CNBC getting super bearish on commodities. $100 oil blah blah blah….they could be a great contrarian indicator here. Sentiment feels overly bearish to me.

  107. 107
    zman Says:

    Antrim – re HK. Shhhhh. Honestly I think its just that it had a worse than group day yesterday. But I do like the idea of a bottom here.

    Still have not heard what if anything re Iran’s nuclear program was in their letter.

  108. 108
    zman Says:

    Nicky – agreed, glad to hear them say it. They were leading out bull after bull with $150 oil when we were at $147.

  109. 109
    Nicky Says:

    Z – CNBC reporting that the powers to be are meeting over Iran tomorrow…
    if the Fed get dovish….
    plenty of reason for a snap back rally if they want it…

  110. 110
    antrimshale74 Says:

    Sorry Z! Personally, I’m trying to shift my focus from long calls to equities. The unpredictability of everything is killing me and with the time dependency of options and all… besides, implied volatility makes for some nice covered calls.

  111. 111
    zman Says:

    Valero said earlier operating refineries at reduced rates along Gulf Coast. MRO shut one smaller refinery down due to ST. Ed. The group needs to shut several down for several days; would really breath life into it.

    Thanks Nicky. Sounds like UN Sec Council will give Iran more time as they demonstrate/threaten they can shut down the Strait.

  112. 112
    zman Says:

    Antrim – Hear ya, my equity holdings outweigh my options holdings significantly. Partly by design, partly by default.

  113. 113
    Nicky Says:

    Not sure Z – think they could lose a lot of credibility if they start backing down here. Iran have missed the deadline or more like given the world the finger and I think the pressure is on to put more pressure on.

  114. 114
    zman Says:

    Nicky – I don’t know how tough some of the security council members will be. Iran talking about making some of their oil deals a better deal for investors/partners. Money talks…

  115. 115
    Nicky Says:

    Z – yes you are right there!

    However still favoring the upside for now. I have to, we can’t have Mahout dropping his cellphone down the loo again and his poor wife having to go fishing again!

  116. 116
    Sambone Says:

    By Susan Daker
    Of DOW JONES NEWSWIRES

    HOUSTON (Dow Jones)–Oil and gas producers and refiners barely blinked as
    Tropical Storm Edouard landed Tuesday morning along the coastal border of Texas
    and Louisiana, an area rich with energy infrastructure.
    Unlike what some predicted, Edouard did not gain enough strength to become a
    hurricane and turned slightly northeast as a strong tropical storm, saving
    Galveston, Texas, from a direct hit. The storm did, however, spawn flash flood
    and tornado warnings in the Houston-Galveston area. Downtown Houston resembled
    a ghost town, as many offices closed and non-essential municipal employees were
    kept home.
    Oil futures on the New York Mercantile Exchange were down $1.79 to $119.62 in
    late-morning trading Tuesday. Natural gas futures were up 6 cents to $8.79 a
    million British thermal units.
    Even as Edouard fizzled, a closely-watched hurricane forecaster upgraded the
    outlook for the 2008 hurricane season, suggesting there could be more severe
    impacts to energy infrastructure in the weeks ahead.
    Forecasters at Colorado State University now predict 17 named storms, nine
    hurricanes and five intense hurricanes with sustained winds of 111
    miles-per-hour or greater this season, which began June 1 and lasts until Nov.
    30. Earlier this summer, the forecasters predicted 15 named storms, eight
    hurricanes and four intense hurricanes.
    Edouard popped up off the Louisiana coast Sunday, and by Monday caused seas
    rough enough to halt ship traffic on three major waterways that service several
    refineries. Those waterways remained closed Tuesday.
    The rough waters also prevented the off-loading of one tanker Monday at the
    Louisiana Off Shore Oil Port but marine operations were to resume Tuesday
    afternoon, according to a spokeswoman. The LOOP still made deliveries via
    pipeline throughout the storm, Barb Hestermann said.
    Energy markets have closely watched hurricane season ever since outages from
    the 2004 and 2005 storms sent energy prices soaring. But this year, economic
    concerns triumph over storms.
    Tuesday, one small Texas refinery remained closed as a precaution but most
    other area refineries reported no major outages. A small percentage of offshore
    oil and gas production was also off-line.
    Marathon Oil Co. (MRO) closed its 72,000 barrel-a-day refinery in Texas City,
    according to spokeswoman Angelia Graves. Graves said Tuesday morning she could
    not say when the refinery would restart.
    Motiva’s Port Arthur refinery experienced a small power outage but “all units
    are either operating normally or in the process of being restreamed in order to
    resume normal operations,” the company said in a statement.
    Valero Energy Corp. (VL0) reported that its Port Arthur, Texas City and
    Houston refineries were running at slightly reduced rates.
    “Feedstock supply in Texas City is tight due to port closures,” company
    spokeswoman Teri Levy said.”We do not anticipate production to be materially
    affected at any of our refineries.”
    The Lake Charles Pilots Association and Houston Pilots Association continued
    to suspended ship traffic Tuesday.
    Lake Charles pilots guide ships like oil tankers and cargo vessels along the
    Calcasieu Ship Channel in southwestern Louisiana. Citgo Petroleum Corp. and
    Calcasieu Refining Co. operate refineries in Lake Charles.
    The Houston ship channel services the busiest petrochemical port in the
    country.
    The Sabine-Neches waterway, which services Port Arthur and Beaumont, Texas
    remained closed as well.
    Neither Exxon Mobil Corp. (XOM), which operates a refinery in Beaumont, nor
    Total SA (TOT), which runs a refinery in Port Arthur, reported problems
    Tuesday.
    On the production and drilling side, some evacuated workers began traveling
    back to the Gulf of Mexico Tuesday.
    Royal Dutch Shell PLC (RDSA) said that it would begin redeploying personnel
    to offshore operations Tuesday and Wednesday, as weather allowed. The storm did
    not impact Shell’s production, according to a company statement.
    Chevron Corp. (CVX) also started returning people to the Gulf and planned to
    have everyone there by Wednesday, a company spokeswoman said.
    Apache Corp. (APA) evacuated 110 people and reported a small shut-in of
    natural gas and oil production. There was no word Tuesday morning on whether
    they returned.
    Other producers like Exxon and Devon Energy (DVN) did not report evacuating
    people.

    -By Susan Daker, Dow Jones
    Dow Jones Newswires
    08-05-08 1311ET

  117. 117
    Pete Says:

    re: 101
    Thanks Z in the boat with you on that.

  118. 118
    zman Says:

    VTZ’s Bio is on the Bio page. Wow.

  119. 119
    BirdsofpreyRcool Says:

    what “speculation”… this might have something to do with the huge price moves in oil

    The Commodity Futures Trading Commission has changed the reporting classification of one massive participant in the market for NYMEX crude oil futures from “commercial” to “non-commercial” after reviewing its trading activity and concluding that “commercial hedging or risk management activities did not constitute a significant part of the overall trading activity.”

    This single insititution had huge long-short spread positions amounting to around 327 million bbl of crude oil, and amounted to around 20% of the entire futures and options positions previously attributed to producer and consumer “hedgers”.

    There are not many institutions in the world capable of running positions on this scale. The spread risk is enormous.

    Moreover, the CFTC concluded that this position has been essential non-commercial (ie non-hedging) since at least the start of Jul 2007 because it has retroactively changed the reporting of positions all the way back to Jul 2007.

    The revisions are not confined to crude oil and apply to other NYMEX energy contracts. There has been a similar but much smaller revision to the reporting of natural gas positions. It again affects a single institution (probably the same one) with a mixture of spreading positions but with a more pronounced short bias in the case of natural gas.

    Further details are available from the CFTC website, but the relevant sections are attached below:

    Special Announcement ā€“ July 18, 2008

    Effective with this week’s Commitments of Traders (COT) report, the Commission staff has reclassified certain positions in the energy futures and options markets from the Commercial category to the Noncommercial category. As described in the Backgrounder for the COT report, reportable traders provide information to the Commission, on a market-by-market basis, on whether they use a market for commercial purposes, i.e., use a market for hedging or risk-management. This information is normally the basis used for determining a trader’s classification as a commercial trader in the COT report. However, Commission staff periodically evaluate these classifications and will change a classification in light of new or additional information. In this instance, information provided as part of a Commission Special Call to select market participants improved the Commission’s knowledge of certain business operations, resulting in the reclassification of certain positions because commercial hedging or risk management activities did not constitute a significant part of the overall trading activity.

  120. 120
    zman Says:

    GMXR finally got a bounce. No sale here.

    This looks like another throw away day to me, at least group not plunging headlong into the abyss.

  121. 121
    Nicky Says:

    Iran responds to EU but can’t grasp but it is!

    Can’t see VTZ bio Z.

  122. 122
    zman Says:

    #121 not sure meaning of that, but I can guess their response made no sense.

    VTZ bio should be there now.

  123. 123
    Nicky Says:

    Sorry Z – yes meant to say I couldnt grasp what they were saying except I did hear that Iran responded with questions. ie playing for time.

  124. 124
    zman Says:

    Nicky re the Iran story – here’s one just out with a great quote

    One European diplomat told Reuters the contents of the letter were “laughable” but also declined to give details.

    and

    “The letter handed over is not an answer to the offered package. The letter does not mention the freeze-for-freeze issue,” the Iranian official said.

    here’s the story:

    http://www.reuters.com/article/politicsNews/idUSBLA52940720080805

  125. 125
    PackMan Says:

    FBR hits a bunch of names that we follow here:

    Friedman, Billing & Ramsey issued the following share price target changes on Monday:

    Company Name Symbol New Trg Old Trg Current Time Span

    INCREASE:

    ITT Corp ITT $73.00 $70.00 $64.80 12 Months

    Roper Industries ROP $70.00 $69.00 $61.03 12 Months

    DECREASE:

    Boston Private Fincl BPFH $8.00 $12.00 $7.36 12 Months

    UCBH Holding UCBH $5.00 $6.00 $4.28 12 Months

    CNA Surety SUR $16.00 $20.00 $12.23 12 Months

    Bancorp, The TBBK $7.00 $16.00 $5.24 12 Months

    Teradyne TER $13.00 $16.00 $8.98 12 Months

    Arch Coal ACI $98.00 $101.00 $55.47 12 Months

    Alpha Natural Resources ANR $128.00 $178.00 $88.91 12 Months

    Peabody Energy BTU $104.00 $109.00 $66.58 12 Months

    CONSOL Energy CNX $153.00 $196.00 $82.38 12 Months

    Fouindation Coal Hldgs FCL $110.00 $135.00 $60.53 12 Months

    Massey Energy MEE $123.00 $135.00 $69.49 12 Months

    Patriot Coal PCX $220.00 $250.00 $134.70 12 Months

    Anadarko Petroleum APC $75.00 $95.00 $59.10 12 Months

    Apache Corp APA $125.00 $155.00 $111.50 12 Months

    ATP Oil & Gas ATPG $45.00 $55.00 $28.53 12 Months

    CNX Gas CXG $35.00 $45.00 $32.59 12 Months

    Comstock Resources CRK $65.00 $85.00 $61.60 12 Months

    Mariner Energy ME $25.00 $40.00 $27.27 12 Months

    Newfield Exploration NFX $70.00 $90.00 $51.73 12 Months

    Noble Energy NBL $100.00 $105.00 $75.74 12 Months

    PetroQuest Energy PQ $27.50 $35.00 $20.90 12 Months

    Pioneer Natural Resource PXD $80.00 $90.00 $60.09 12 Months

    Rosetta Resources ROSE $25.00 $30.00 $23.95 12 Months

    Petrohawk Energy HK $45.00 $60.00 $33.29 12 Months

    St. Mary Land & Explo SM $45.00 $65.00 $44.23 12 Months

    Stone Energy SGY $50.00 $70.00 $53.15 12 Months

    Swift Energy SFY $60.00 $65.00 $51.51 12 Months

  126. 126
    zman Says:

    Thanks Pack, I think they cut their out year price deck for all 3 commodities.

  127. 127
    Nicky Says:

    Z – can you imagine the nightmare of trying to deal with them. They just play games continually.

  128. 128
    Nicky Says:

    no change by Fed

  129. 129
    Nicky Says:

    one dissenter

  130. 130
    Nicky Says:

    expect inflation to moderate but expectations surrounding inflation are uncertain.

  131. 131
    zman Says:

    dollar index started to weaken a little after announcement but bouncing back already.

  132. 132
    VTZ Says:

    I fail to see how inflation is goign to moderate unless they are talking strictly about energy costs and they expect further downward pressure.

  133. 133
    Nicky Says:

    Ron Pisani saying Fed have this all wrong – saying they have missed the fact that commodities have cracked and that the financial markets remain in a terrible mess. Says they should be cutting and down to zero if necessary.

  134. 134
    zman Says:

    Stepping out for an annual checkup. Unless we get a big rally in energy I doubt much of note will happen by the close. Will be back in a few hours.

  135. 135
    mahout Says:

    APBD #102:
    Gosh, I didn’t think of that!

    Z #104 and Breakhound #99:
    Hooray for below 1,000 feet of water.
    OCS here we come, I hope, I hope, I hope.

    Nicky #115:
    Agree, Agree, most certainly Agree!

  136. 136
    Fiveanddimer Says:

    VTZ – when I consider any announcement by the Fed, I always view it as an attempt to guide public perceptions, not to disclose information. In other words, it is pure propaganda. That does not mean that it is useless, but it just has to be understood from the right perspective. In this case, they are obviously trying to guide inflation expectations lower. Whether or not they really believe that inflation will be lower later this year, is another matter.

  137. 137
    BirdsofpreyRcool Says:

    VTZ – wonderful background. Very timely, as oil sands become a more and more important asset.

    Do you follow Oil Sands Quest (BQI)? It seems a bit controversial as there is a rather large short position in the stock.

    any comments you have would be greatly appreciated.

  138. 138
    Nicky Says:

    Now saying the statement was hawkish – well if it was it was bravado – they are in no position to raise rates and everyone knows it.

  139. 139
    Nicky Says:

    Spx futures reached 1277 on the fed. There is a chance of a double top or one more slightly higher high and it tanks…

  140. 140
    VTZ Says:

    I follow BQI a bit but I would suggest that there are far more attractive plays that are further along in development. UTS energy is partnered with Teck Cominco for the mine side and Petro-Canada for the oil side. They will be the first oil sands junior (100% oil sands exposure) to be developed.

    I think BQI could potentially be overpriced considering the quality of the resource but they do have a large landholding. I would also wonder where they intend to get financing. At these levels it has come down a lot but I would suggest one of the ones currently in development with startups coming soon.

    UTS and Opti-Canada are bot hmore attractive in my books due to their partners.

  141. 141
    occam Says:

    VTZ: Interested in your thoughts re PBG’s THAI process.

  142. 142
    Sambone Says:

    DOW JONES NEWSWIRES

    Iran’s response to an incentives package offered by six world powers is
    unacceptable, U.S. officials said Tuesday, according to the Associated Press.
    Earlier, a source with Iran’s Supreme National Security Council told AFP a
    message Iran sent to European Union foreign policy chief Javier Solana didn’t
    contain the final response to an incentive package offered by the six powers in
    exchange for a uranium enrichment freeze. The officials cited by the AP say the
    letter is a restatement of Iran’s insistence that it should be allowed to
    continue peaceful nuclear activities.
    Story at:
    http://ap.google.com/article/ALeqM5imG-Gmyrfld190llCL7AdcThgngAD92C9JO00

    -Dow Jones Newswires;
    Dow Jones Newswires
    08-05-08 1429ET

  143. 143
    VTZ Says:

    I actually just looekd at uts and they are down almost 10% today and I would consider adding. If you don’t see oil falling through 100 they would be an absolutely amazing long term hold.

  144. 144
    VTZ Says:

    PBG’s THAI process is great proprietary technology but it is still a variation of steam assisted recovery which is very energy intensive and the mineable sands are far more desireable.

  145. 145
    VTZ Says:

    PBG is a good company with good properties though.

  146. 146
    Nicky Says:

    Bill Gross from Pimco saying the same thing that we are in a recession and when has the Fed ever raised rates during a recession – the thought is laughable.

  147. 147
    mahout Says:

    Fiveanddimer #136:
    Agree. Not only can Ben NOT read the tea leaves when other people can , he is a walking talking obvious propaganda machine. Don’t we need something better than that?

  148. 148
    BirdsofpreyRcool Says:

    VTZ – thanks for your comments. Agree that BQI is kind of an “out there” company that will need to find a financing partner or sell out to really accomplish much with the assets. That said, they have a heck of a large, contiguous landholding.

  149. 149
    Nicky Says:

    Art Cashin – if the Fed were really worried about inflation then you would have seen more dissenters.

  150. 150
    reefguy Says:

    ot: GMXR- I read transcript and read that reservoir in hy/bossier is comprised of shale(quartz) and 10% calcite, 10% dolomite and 7% pyrite. When e-logs are run, the density porosity tool is calibrated on a sand(quartz) matrix or limestone(calcite) matrix. When you add a significant fraction of heavier minerals like dolomite or pyrite you can greatly underestimate the porosity. On a limestone matrix, I have seen the pay section indicate 12-16% porosity. in a sandstone matrix it indicates 6-10%. The addition of pyrite, which has a density of 4.6g/cc(maybe higher) as compared to quartz which is 2.65g/cc really zoinks the data.

  151. 151
    Fiveanddimer Says:

    mahout – I’m in the camp with Jim Rogers and Ron Paul concerning the Fed: We’d be better off without it. Hearing the Fed talk about controlling inflation is the ultimate irony, since they are the primary cause of and the guarantor of inflation. From 1776 until 1913, the cost of a suit of clothes remained fairly constant. Then we created the Fed, and since then the dollar has lost over 95% of its purchasing power. And the money printing is excelerating with all the bailouts. A prudent man (woman) would probably want to own some gold.

  152. 152
    reefguy Says:

    Just confirmed: BP Cap commodity fund down 73% in July

  153. 153
    mahout Says:

    Nicky #146:
    Bill Gross was saying we are in a recession already when Ben was still talking about growth! Who is smarter, Bill Gross or Benwhocannotreadthetealeaves?
    No question!

  154. 154
    VTZ Says:

    To calrify what I said about UTS above… they don’t even need 100 dollar oil to be valued more than they are here. They are dirt cheap no matter how you cut it and are a likely buyout candidate by either one of their partners or someone looking for oil sands exposure.

  155. 155
    kyleandy Says:

    for us americans, what is corp name of UTS

  156. 156
    mahout Says:

    Fiveanddimer #151:
    I am with you 100%.
    Wouldn’t it be great to actually have a free market in short term interest rates?
    We’re supposed to have a free country and free enterprise aren’t we? Let that price fluctuate in a free market too.
    The record of the Fed is nothing short of dismal and harmful IMO.

  157. 157
    VTZ Says:

    It’s on the TSX but it’s just UTS energy. In my opinion, easily the best oil sands play.

    Here it is being priced the same as almost 3 years ago when the construction had not even started and they were much further from production and oil was 65 bucks. Granted, costs have gone up but the way their deal is set up is they are less exposed to capital than their partners.

  158. 158
    VTZ Says:

    UTS.to on yahoo for example

  159. 159
    Nicky Says:

    #151 – we may end up without them in the end!

    Ben was the guy who in 2005 said housing wouldn’t fall in Florida. How can anyone have any faith in a guy who can’t even see the obvious.

  160. 160
    Nicky Says:

    Cisco after the bell – is John Chambers going to spoil the party?

  161. 161
    Nicky Says:

    Volume is well up today which points to higher highs still out there.

  162. 162
    VTZ Says:

    Also, of note. UTS has properties that are not part of the current partnership that could be areas of expansion with exploration upside.

  163. 163
    PackMan Says:

    Re: the dollar. Is it the Fed. Or is it Congress. Or both ?

  164. 164
    Nicky Says:

    So far double top at 1277 on spx. If we take out 1284 then 1300 – 1320 looks likely…

  165. 165
    Fiveanddimer Says:

    Re 165 — all our political leaders are complicit in the destruction of the dollar. But it is the existance of the Fed as an unlimited checking account that makes it all possible.

  166. 166
    VTZ Says:

    Five – at the expense of inflation… so why is the dollar rallying?

  167. 167
    Nicky Says:

    VTZ – because the market is choosing to believe right now that the Fed is worried about inflation and likely to raise rates.

  168. 168
    VTZ Says:

    Those people are going to get ran over.

  169. 169
    Dman Says:

    Nicky,

    not sure what you mean about the Iranians being difficult to deal with. People have this idea that they are all crazy. For visual evidence to the contrary, check out this typical example of serenity in Iran:

    http://www.reuters.com/news/pictures/slideshow?collectionId=1926&galleryName=24%20Hours#a=13

    Seriously though, I think the Iranians have a much harder time dealing with Bush.

    After all, the Iranians are predictable: they have endlessly said that they will continue enrichment (as the NPT explicitly allows them to) and they show no sign of not keeping their word.

    But imagine being in their place trying to guess what Bush will do: the options range from nothing through to a nuclear first strike. That’s a wide range (to put it mildly), and no expert that I’ve read is prepared to make a 100% prediction (i.e. not even ruling out an unprovoked nuclear attack, unlikely as it might seem). I think most governments would have caved under that kind of stress and clearly Bush expected them to at some point. I wouldn’t want to be in their place, frankly.

  170. 170
    Nicky Says:

    I think so too and sooner rather than later there is likely to be a snap back rally in commodities that will take everyone’s breath away. As soon as everyone realizes that everyone is back in their car now gas is under $4…..

  171. 171
    Sambone Says:

    By Brian Baskin
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures fell for a second-straight day on
    concern about declining U.S. gasoline demand.
    Light, sweet crude for September delivery settled $2.24, or 1.8%, lower at
    $119.17 a barrel on the New York Mercantile Exchange. September Brent crude on
    the ICE futures exchange closed down $3.38 at $117.30 a barrel.
    Futures fell as low as $118 a barrel in intraday trading, reflecting continued
    concerns about U.S. gasoline demand. Consumption has been lower for most of the
    year from 2007. The market began to pay close attention to weak demand only as
    the summer driving season failed to end the year-on-year declines.
    U.S. gasoline demand for the week ending Aug. 1 was down 3.4% from a year ago,
    according to MasterCard Inc. (MA).
    On Wednesday, the U.S. Energy Information Administration is scheduled to
    release weekly oil and product inventory data. Last week, a surprise draw on
    gasoline stocks sent oil futures higher. The market has since erased those
    gains, but market participants see potential for another boost to oil prices
    from Wednesday’s data.
    Much of the trading action is seen coming through spread trades, where
    investors bet on the gap between crude futures contracts. When the front month
    gains on outer months, as it did Tuesday, it usually indicates a belief that
    near-term supplies are tight. September crude trades at a five-cent discount to
    October, narrowed from a 28-cent gap on Monday.
    “It will be an exciting spread to watch and play, with crude stats tomorrow,”
    said Tony Rosado, a broker with GA Global Markets.
    The swinging spreads could also indicate a move by large speculators, others
    said. Banks tend to “roll” their positions at the start of the month, exiting
    the front-month and buying an equivalent stake in the second-month contract.
    When big speculators were supporting the oil rally earlier this year, the roll
    exaggerated daily price increases. If those banks are now betting that oil
    prices will fall, it would exaggerate the decline in outer-month contracts,
    said Peter Donovan, with Vantage Trading.
    “Speculators can be short as well as long, and it looks like they’re short,”
    Donovan said.
    Oil prices were also hit when the Federal Reserve held a key interest rate
    steady. Analysts expect at least one rate hike by the end of the year. A rate
    increase would strengthen the dollar, which could in turn hurt oil and other
    commodities used as a hedge against a weaker U.S. currency.
    “If the dollar rallies much beyond where it is, that’s going to put a lot of
    pressure on commodity prices,” said Mark Waggoner, president of Excel Futures
    in Newport Beach, Calif.
    Front-month September reformulated gasoline blendstock, or RBOB, settled 4.38
    cents, or 1.5%, lower at $2.9564 a gallon. September heating oil settled 6.81
    cents, or 2%, lower at $3.2820 a gallon.

    -By Brian Baskin, Dow Jones Newswires
    (Tatyana Shumsky in New York contributed to this article)

    Dow Jones Newswires
    08-05-08 1526ET

  172. 172
    Nicky Says:

    Great visual evidence Dman!

  173. 173
    Fiveanddimer Says:

    Re 166 and 167 — my guess is that after sliding for most of the past year, the dollar was due a bounce. I say, “Great!” Gold is now on sale in dollar terms. Trust me — this situation will not last forever.

  174. 174
    Dman Says:

    Tone of the market: in trying to diagnose whether there is any real sign of stability, I notice that unlike other down-oil days, the stocks are mixed: some are actually green! It’s not much, but maybe it points to the re-emergence of the notion that how a company is doing might have some relation to the stock.

  175. 175
    jsaun14 Says:

    I can’t believe the market buys this inflation fighting rhetoric…Big Brother takes every opportunity available to kick the dollar in the shorts.

  176. 176
    antrimshale74 Says:

    Interesting end today in the energy stocks.

  177. 177
    mahout Says:

    PackMan #135:
    Thanks. All mine still favorable til they change it again.

  178. 178
    jy Says:

    Re #32:
    “Germans? Pearl Harbor? Forget it. He’s rolling.”

  179. 179
    VTZ Says:

    Don’t worry jsaun they aren’t actually goign to DO anything, they’re not really into that sort of stuff. They’d prefer to talk the dollar up as if to say to the world: “Cmoooooonnnn. No?… cmooooooooooooooonnn. No? You sure? … cmooooon”

  180. 180
    Dman Says:

    At risk of being controversial: Cramer not looking too bad with his broad market bottom call. (As I understand it, he was saying that the July 15th low would be the bottom).

    Just doubled down my Jan AUY DITM calls. I know nothing about gold, but my Forbes guru predicted the current drop about 5 months ago & said it should be bought when it happens. Figure he must know his precious metals…

  181. 181
    jsaun14 Says:

    VTZ – I read ya loud and clear.

    Chinese Treasury: Ahhh sooo, Uncle Sam 4.6% no enough. You debt too much now. Need more return for risk or we no buy.

  182. 182
    Nicky Says:

    Dman – somewhat premature to call his good I would say when remember he was saying it would be an all time low and the market would never see these lows again.

    Gold b wave looks doubtful with the late day slide – if so then we are likely in iii of v before B up. B up I still think is likely to go to the 935 – 950 area and then we should see a good fall…

  183. 183
    Sambone Says:

    Tini time!

  184. 184
    Dman Says:

    Nicky, I agree in the sense that Cramer probably had 150 different versions of this call (of which I only saw one). So with 150 different scenarios he can claim he was right!

  185. 185
    mahout Says:

    Nicky:
    Dow up 330 points. If the Dow takes off up, won’t that tend to drag the big cap energy stocks with it?

  186. 186
    BirdsofpreyRcool Says:

    VTZ – UTS… is it mining? or in situ? thanks.

  187. 187
    antrimshale74 Says:

    Speaking of Cramer, it seems that he called the market bottom in March, too. I remember him saying to buy KRE. Maybe that was in January. The thing about Cramer is that while he is no dummy, he is used to a very short term trading strategy. If you don’t read everything he puts out and you miss something, then you will miss he change of sentiment from bullish in a sector to bearish or vice versa. If he is right about a market bottom this time (he clearly wasn’t the last time), then I would have to say that is fantastic. I would love to know for sure where the floor is in this mess.

  188. 188
    Dman Says:

    M: actually that was one point I forgot to mention in #174: looks like some of the broad market lift is helping *some* energy players. Complication is that funds want to buy other sectors and use energy as the source of those funds.

    Since a better economy is good for energy demand, it actually makes sense that once the “source of funds” issue plays out, energy should benefit from a stronger market.

  189. 189
    Dman Says:

    A: #187: exactly right. His instinct is to trade for a horizon of a few minutes to a day. He tries to do slower position trading for his service, but in the public eye he always reverts back to calling the next 5 minutes.

  190. 190
    antrimshale74 Says:

    Speaking of Canadian plays, anybody have any thoughts on Connacher Oil and Gas(CLL.TO and CLLZF.PK)?

  191. 191
    VTZ Says:

    UTS is mining. Has very good property.

  192. 192
    VTZ Says:

    connacher is also a good play, imo.

  193. 193
    Nicky Says:

    Cramer was telling everyone to buy natural gas to above $13! I personally believe he will be very very wrong. Yes we will see short term rallies. But what the heck does he think has changed? Housing is still going down, the world is in debt up to its eyeballs, hundreds of banks are likely to go belly up. He called the bottom on what grounds? Hope that’s all! And sorry but that is not going to cut it.

  194. 194
    VTZ Says:

    UTS isn’t actually the operator, they just have a 20% interest in the Fort Hills project. Petro-Canada is the operator.

  195. 195
    BirdsofpreyRcool Says:

    VTZ – thanks!

  196. 196
    VTZ Says:

    Anybody interested in UTS …

    http://www.uts.ca/documents/presentations/05May2008%20Q2%20%20Investor%20Presentation.pdf

    For their info.

  197. 197
    mahout Says:

    Dman #188:
    Thanks. Makes sense now. We’ve got to get that “source of funds” issue behind us. My feeling is if they are sourcing out of energy to put it into financials they are making a big mistake and will soon know it. Big bad news like waves of failing banks is still highly possible.
    Wouldn’t touch financials with somebody else’s 50 foot pole.

  198. 198
    Dman Says:

    Nicky, #193: typically the markets turn well before everything starts looking rosy. By the time evidence of a turn in finance/housing etc becomes clear, the market has already anticipated it. So it’s true that there is still a huge mess, but it’s not fair to say that hope is all Cramer’s analysis is based on. I do think he may be underestimating some knock-on effects of all the various disasters, but will that be apparent in the next 6 months? Don’t know…

  199. 199
    Dman Says:

    Nicky,

    another point: the world isn’t “in debt up to its eyeballs”. China, India, Japan, OPEC, Russia etc are awash with cold hard cash & have to do something with it. The US has plenty of debt, that’s fer sure. Solution: US sells assets to cash holders, which will be good for asset prices and reduce US debt.

  200. 200
    Nicky Says:

    Well at the moment the evidence is quite to the contrary. I think his call is based on no more than trying to be ahead of everyone in calling the bottom. Just trying to be a super hero and that’s all. From what others tell me if you follow him he underperforms the market and as that is pretty awful that is saying something. But I can’t stand the guy as you can see!

  201. 201
    crysball Says:

    http://library.corporate-ir.net/library/20/202/202140/items/300377/ATN_InvestorPresentationJuly2008.pdf

    Fascinating presentation on Marcellus Shale & Chattanooga Shale with map of Marcellus shale showing all the major players players position in the SW PA Fairway [core] and the thickness of the Marcellus in the various location.

    Interesting, AN has its own gathering & pipeline system in place and is immediately connecting up every Marcellus Well [both Hor. & Vertical] immediately………while most of the other players are shutting their Marcellus wells in.

    ATN also pays a 6% dividend.

    Earnings release after hours today wih CC tomorrow morning.

  202. 202
    crysball Says:

    Typo should have been ATN.

  203. 203
    Nicky Says:

    The de-coupling argument is starting to wear a little thin – India’s Sensex is down 29% this year, China’s Shanghai 47% to name just two! So in essence things are even worse there than here surely.

  204. 204
    zman Says:

    Re ATN – I watch that and forgot the date of the earnings, will include in the morning piece along with all the news you can use and a bllet review to date of earnings season…just because results don’t matter in the current environment doesn’t mean they won’t once the dust settles.

  205. 205
    Dman Says:

    Oh, now I see, Nicky. I didn’t realize you were letting your emotions influence you! In recent years it looks to me like Cramer does underperform the market. He was much much better when he actually ran a fund and was shorting away like crazy. But now he can only go long, which is probably a fundamental mismatch with his style. And he simply has too many media commitments to juggle. The market is just too hard to be doing all that as well as trading.

  206. 206
    VTZ Says:

    UTS earnings are actually today… I didn’t realize. They update at 5:30 EST. CC tommorow. Most likely they will talk about capital costs and raising capital.

  207. 207
    md Says:

    After tomorrows HK and PQ CC would you do a back envelope comparison of valuations say between the various players inc. CHK, XTO,NFX

  208. 208
    Dman Says:

    Nicky, the decoupling argument is in the process of being tested. If China and India power ahead with, say, 5% or more growth even as the US & Europe go thru a recession, then it will be case closed. If they get dragged down into stagnation or recession, it will be case closed the other way and lookout below for commodity downside targets. This really is the first time that so many diverse yet economically significant centres of growth have been on stage in the industrial era. So it is unclaimed territory for economics, a.k.a. “the dismal science”.

    Do the stock markets in India and China *necessarily* indicate recessions over there? An important question I would like to see answered.

  209. 209
    ellwodo Says:

    #207 let me add a request for XCO (their cc is also tomorrow, 2:30 ET).

  210. 210
    Nicky Says:

    Dman quite the contrary. I am admitting I don’t like the guy but I am backing that up by letting the facts do the talking. I don’t care whether he can only make money by going short the market or not. If that is the only way he makes money then what the heck is he doing on tv every day advising people to buy shares. His poor track record is enough to make me take zero notice of him. Who knows how many others have lost money taking his advice.

  211. 211
    Nicky Says:

    Dman – as always an interesting discussion with you. As we all know only time will tell…..

  212. 212
    ellwodo Says:

    HK – anyone else find it strange that HK didn’t issue an earnings press release today after the bell, ahead of their cc tomorrow? They made such a release last quarter. I’m sure it is wishful thinking as always, but I’m hoping for the cc to start “Joining me at the mike is…(potential buyer)”. Alas, I’ll probably wake up tomorrow to see HK’s release posted around 7 am or so, but at least I can dream tonight.

  213. 213
    Bob Says:

    ell-HK cc is Thursday, so they will probably announce Wed AMC

  214. 214
    BirdsofpreyRcool Says:

    there you go… KOG announcing a capital raise. no surprises there.

  215. 215
    zman Says:

    Tons of E&Ps that I care about reporting tonight and tomorrow. Plan to start dumping out pre call notes as the night goes on. These will be in the general post area and deposited on the reports tab. These will contain just the high points and some quick thoughts as there are a ton of them.

  216. 216
    ellwodo Says:

    #212 and 213 – no, HK has put out a earnings announcement press release (see their site) that their cc is tommorow Aug 6 at 10 am ET. But they haven’t put out an actual earnings release today (unlike they did last year). Odds are they will do so before the open tomorrow, but it at least lets me get wishful until that happens.

  217. 217
    zman Says:

    Elwo – XCO pre call note posted.

  218. 218
    ellwodo Says:

    Thanks.

  219. 219
    Jay Reynolds Says:

    VTZ – are you involved in any oil sands processes that result in having to pump liquids having more corrosive properties than “usual saltwater”?

    Thanks,

    JR

  220. 220
    ellwodo Says:

    Z – as always, the XCO pre call note is excellent. Thank you.

  221. 221
    T. J. Says:

    Excuse my ignorance as a new subscriber, but where might I find the “pre call notes” and “general post area”? And why, when I type in “leave a reply”, why can’t I see all that I am typing?

  222. 222
    zman Says:

    TJ – they are located at upper left on the Reports tab and also here if you click the title of the site.

    On the other matter, I have no idea as I’ve never heard of that one. Will send a note to my techsup on that one and put in a housekeeping watch or email to you when I get a response.

  223. 223
    zman Says:

    TJ that should have said ZEB Reports tab at upper left. Just added the link for the XCO one.

  224. 224
    zman Says:

    PXP Pre Call note up and on the reports tab.

  225. 225
    texana Says:

    About 3 weeks back I made the observation that big money bought $ 100,000,000 worth of august puts on XLE in a single day. At least one other sub noted this action also. Fast forward to today and approximately 12 points lower on the xle and approximately $ 80,000,000 in profit later for this big money player it looks like they closed a lot of positions today. We will not know until tomorrow on the reset of open interest.Xle trades a mirror image of the $usd, which seems poised to break out upward from its longer term down trend but is at resistance now. Until the xle can base and move sideways any rally would be suspect. Another note, with no disrespect meant to anyone, is that there still seems to be to many people trying to buy the bottom on any move up.Probably we have a bit more down side till most of the small participants throw in the towel. So in a strange way this is a good thing, as all of the energy stocks are pretty much moving in tandem with the xle, irregardless of their fundamentals. So the stocks that are being punished , even with a good story, will be on sale for the longer term investment…. Should the $usd break out to the upside I would expect oil to continue downward towards $100 and the xle to continue downward. I can wait as cash is a position also. late nite musing t

  226. 226
    zman Says:

    Kyle – I think ECA and SM. TXCO may have the most leverage to it.

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