08
Aug

Friday Morning

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Two steps forward and two steps back. I still think we are bottoming in the equities but there's no rush to go long with oil threatening mid teens and then $110. Stories continued to perform yesterday in many cases but the halo of good news will be overcome and valuation once again thrown to the wind if oil really breaks down here.

In Today's Post

  1. Holdings Watch
  2. Commodity Watch - Natural gas review
  3. Earnings Watch - SD
  4. Odds & Ends - Bakken and Haynesville permanent posts coming soon.

Holdings Watch:

  • HK - Sold the HK August $30 calls for $4.10, up 71%.

Commodity Watch:

Crude oil closed up $1.44 at $120 yesterday as disruptions of the pipeline in Turkey seemed to overcome a stronger dollar and repeated cries of demand destruction. However, this morning oil is trading back to recent lows as the dollar gains strength after bearish economic comments from Europe yesterday.

  • Iran Watch: EU and U.S. threaten more sanctions. Iran yawns.
  • Turkey Pipeline Watch: The 1 mm bopd BTC pipeline is still on fire. Officials say it will likely be put out today or Saturday. Once extinguished the pipeline is likely to be brought back on line within 10 days.
  • Big Dollar Rally Watch: The dollar index continues to rally this morning putting the in the largest one day move in months and charging back to levels not seen since February. This will dictate the price of oil in the near term.

Natural Gas traded higher following the release of a smaller than expected injection into gas storage trading as high as $9.09. Then the gas market suffered a change of tune, with gas falling sharply to close off $0.20 at $8.57. I can surmise that the decline was the combination of profit taking, the collapse of a yet of undisclosed hedge fund or two or three. This morning gas is trading off in lockstep with oil.

  • Independence Hub is back on line after a week or so of maintenance adding back 1 Bcfgpd to production.
  • Tropics Watch: nothing much to report

The Gas Inventory Review

In a nutshell, the EIA reported a smaller than expected injection into gas storage, only 4 Bcf higher than year ago levels despite very similar weather highlighting the increasing demand for gas-fired generation. Without higher demand, higher gas supplies this year should have resulted in a larger injection. Moreover, the Producing Region saw a 7 Bcf withdrawal last week due to intense cooling load in the South. I continue to see end of year storage in the 3.25 to 3.4 Tcf range which should be support gas prices going into winter in the $9 to $10 range once the current retrenchment has run its course.

Natural gas market participants continue to be concerned about a perceived glut in gas next year and the potential for a breakdown in the price of oil.

  • In the past two weeks large cap E&P CEOs have listed a variety of reasons why domestic supply  will not growth as fast as it did this year including a slowing of growth from the mature shale plays, limitations to takeaway capacity from new shale plays, slower development that expected of some new shale plays, rig and other oil service tightness, and the lack of "another I-Hub" coming into existence.
  • On the imports side, at least one consultancy is predicting a recovery in LNG volumes brought into the U.S. in 2009 as new international capacity comes on line. 2008 was actually supposed to the year of big incremental supply but so far, high international gas prices and led to the opposite.
  • As to oil falling, that is in the hands of the dollar for now and I think a fall to $115 is likely.

Earnings Watch /Stocks We Care About Today:

SD Reports Better Than Expected Quarter; Guides To 35% Growth In 2009.

The 2Q Numbers:

  • EPS of $0.21 (net of item) vs $0.16 expected
  • CFPS of $0.93 vs $0.81 expected
  • Production of 280 MMcfepd, up 11% sequentially, and 70% YoY. Note current production is 295 MMcfepd.

Reserve Review:

  • 2Q Reserves grow 11% sequentially to 1.918 Tcfe, (one of two companies that report reserves on a quarterly basis)
  • Reserve Replacement (all in): 998%. That  is a simply stunning number
  • Finding Costs (all in): $1.80 / Mcfe. Very good.
  • Now estimate Pinon Field (their primary asset) 3P reserves are 5.1 Tcfe, up from 4.1 Tcfe at last estimate

Guidance:

  • 2008: Reiterated at 274 MMcfepd, despite a fire at a processing plant (previously announced) and shut ins for workovers that shut resulted in a temporary loss of 25 MMcfepd.
  • 2009: initiated with a 35% growth target (370 MMcfepd)

Operations Update

  • We've been looking for them move to the east in the West Texas Overthrust where the CO2 content is lower. Drilling here resulted in 11 sweet gas (low to no CO2 content) completions adding an average 8.3 Bcfe per gross to reserves (or 91 Bcf in aggregate).
  • They now see the Pinon field as producing from 3 separate major thrust faults. These are extend across the West Texas Overthrust where (SD)'s acreage now totals 610,000 net acres, up from 547,000 in March.
  • As you move west to east the in the WTO, the CO2 content, which must be processed out and therefore creates a processing bottleneck constraining production, falls to 0%. And these wells have looked better than their earlier wells in their bread and butter Pinon.
  • They now have 34 rigs running in the field, 29 of them in the sweet gas areas (east Pinon).

 

 Conference Call:  9 EST.

Odds & Ends

Analyst Watch: Nada

Housekeeping Watch: Bakken and Haynesville permanent posts will be added over the weekend to the ZEB Reports Tab at the top.  These will be headed by the lists of major players in the plays along with their acreage and other metrics but will serve as a place to catalog important bits of data and resources on the plays. They are bare bones now but I will work to back build them over time. Once they are posted please submit any additions for them to zmanalpha@gmail.com.

156 Responses to “Friday Morning”

  1. 1
    Sambone Says:

    8:33 am EST

    Crude Down $2 As Dollar Pushes Higher

    By Reza Amanat
    Of DOW JONES NEWSWIRES

    LONDON — Crude futures traded $2 lower in London Friday, as continued demand concerns and a stronger dollar weighed on market sentiment.

    “It is just getting more and more pressure from dollar strength and it doesn’t seem reversible for now,” said Serge Laureau, commodities strategist at Saxo Bank in Copenhagen of crude’s recent downwards trend. “Everything being equal, if we don’t have any geopolitical news or a hurricane, we should see oil continuing to trade lower in the next month. I think the market is coming to the reality that OECD countries’ demand is falling, and should spread to other countries in the next month or so, and it’s starting to be priced in.”

    At 1148 GMT, the front-month September Brent contract on London’s ICE futures exchange was down $2.10 at $115.76 a barrel.

    The front-month September contract on the New York Mercantile Exchange was trading $1.97 lower at $118.05 a barrel.

    The ICE’s gasoil contract for August delivery was down $20.25 at $1,037.25 a metric ton, while Nymex gasoline for September delivery was lower 3.63 points at 296.64 cents a gallon.

    Further strengthening of the dollar is expected to see investors reduce their exposure to commodities, oil included, said Olivier Jakob, managing director of Swiss-based consultancy Petromatrix, a development that could pile added pressure onto crude prices.

    The dollar hit multi-month highs against most major currencies Friday, a bleaker outlook for the euro zone helping it strengthen markedly against the single currency in particular. The euro traded down to $1.51 Friday, it’s lowest level in five months.

    “Macro players had been, in recent weeks, de-leveraging some of their commodity exposure and the recent move in the dollar should push them to move back further to neutral commodity exposure if not short commodities if the trend on the dollar starts to accelerate,” Jakob said.

    The extent of the damage and likely outage resulting from the fire on the Turkish section of the Baku-Tblisi-Ceyhan, or BTC, pipeline remained unclear Friday. A spokesperson for Botas International Ltd, said the fire has yet to be extinguished.

    The BTC pipeline carries Azeri crude and condensates from the Caspian Sea to the Turkish port of Ceyhan. Closure of the pipeline has prevented approximately 850,000 barrels a day of Azeri oil from reaching the crude markets.

    Meanwhile some participants continue to expect the risk premium from supply disruptions to rise, as concerns over future attacks on the BTC pipeline increase and the conflict between Russia and Georgia — which hosts a section of the pipeline and can provide an alternative outlet for Azerbajani exports — escalated Friday.

    Lending further pressure to crude, distillate prices continued to fall Friday, with ICE gasoil prices slumping to four month lows.

    “Although the entrance of U.S. and European consumers to purchase heating oil for winter storage on current softer prices may reinforce an upward move precipitated by the BTC outage, it appears that the bearish factors in distillate are keeping the market muffled for now,” Michael Waldron, a London-based analyst at Lehman Brothers.

    Looking ahead, traders will also keep abreast of geopolitical developments concerning the Iranian nuclear issue, after the European Union presidency announced the introduction of a fresh set of sanctions against Iran over its nuclear program Friday. The new sanctions will include restrictions on public loans and tougher cargo inspections.

    —By Reza Amanat, Dow Jones Newswires

  2. 2
    zman Says:

    Russia Vs Georgia

    http://ap.google.com/article/ALeqM5hV2N6fVKS5slf10A13Dj_uIdaZ4QD92E2PBO0

    the BTC pipeline, the one that’s on fire now, goes through Georgia, not sure if it goes through the South Ossetia region where the fighting is concentrated.

    SD call in 20 minutes

  3. 3
    zman Says:

    Latest hurricane season prediction:

    http://www.heraldtribune.com/article/20080808/ARTICLE/808080346&title=The_Hurricane_Center_nudges_up_prediction_on_number_of_storms

  4. 4
    Sambone Says:

    Headline
    DJ Boone Pickens: Still Long On Oil, Further Price Drops Possible

  5. 5
    zman Says:

    Link to 4 slides for SD call. Shows the WTO by new thrust designations and they are sure to go over in infinite detail on the call. Despite commodities today, I think this one can build during Q&A and during the day as the results were very stout and the future looks bright.

  6. 6
    zman Says:

    Isn’t Boone in Beijing at the Games? Thought he was going to give oil a pep talk this am re demand on CNBC.

  7. 7
    Bob Says:

    Dollar Really stregthening overnight. Yesterday 1.547 per euro, this morning 1.506. A drop of $3.2 in oil means no change in euros

  8. 8
    zman Says:

    Nigerian court denies bail to rebel leader. Henry Okah. What a shock.

    He will be tried in secret and if convicted could be executed in which case MEND, who he used to lead, will go ape nuts.

  9. 9
    zman Says:

    Bob – I don’t have a chart I can post easily/quickly but the Dollar index looks like a cup and handle with the cup extending from late Feb to now.

  10. 10
    Bob Says:

    Z-I see that when I do a longer term chart

  11. 11
    1520sbroad Says:

    BTC does go thru georgia – it was built by a consortium that supports georgian independence from Russia. This will likely be a mess if Russia and Georgia continue to shell each other as they have started doing this morning and yesterday.

  12. 12
    Bob Says:

    We had a triple top on the way up at $1.47, then a double top at $1.59-$1.60

  13. 13
    Sambone Says:

    The BP Plc-led Baku-Tbilisi-Ceyhan oil pipeline, which has been closed since Aug. 5 due to an explosion in Turkey, runs about 100 kilometers south of the South Ossetian capital of Tskhinvali.

  14. 14
    tater Says:

    Hey,

    I posted a weekly dollar and a daily dollar a couple days ago if you want to look at it (first 2 charts), and I spent a bit of time re-working the daily UNG (page 2). I think the UNG is worth a peek.

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882&cmd=show%5Bs147407472%5D&disp=O

  15. 15
    zman Says:

    SD CC Notes #1

    New 3D in house for 60 days now, already discovered a new fault block.

    They said they would be at 325 mm/d now if not for that fire.

    45 wells working now.

    increasing drilling for sweet gas drilling…still expect wells from the 1st Cab. to have EURs of 7 over time (most recent 11 were 8.3 Bcfe)

  16. 16
    zman Says:

    SD CC Notes 2

    I like Tom Ward a lot, very smart. But wow does he talk fast. He talks faster than I can type and he goes back and forth between geology, big picture, financials, guidance and back to well results and geology. Will have to listen to the front of this call again so I can pause it. Everything good just need to better understand how this is unfolding.

    The only negative so far is the statement that they will have to go to equity/debt markets in 2009 if they don’t sell off an asset in E. Tx.

  17. 17
    crysball Says:

    Z, could you please define ‘APE NUTS’ ?

  18. 18
    hermanmar1e Says:

    Zman

    Don’t think they will have problems selling off acreage in E.Tex as there are some dominant players out there and there is some Haynesville potential. We looked at the acreage.

  19. 19
    crysball Says:

    Any one interested in investing in South Ossetia Real Estate?……………for sale reasonable.

  20. 20
    VTZ Says:

    no buyers in SD at all… 10k shares only?

  21. 21
    zman Says:

    SD hedges

    2H08: 78% at $9.14
    2009: 17% at $10.50

    Q&A:
    Looking at the WTO.

    Were focused on major wrench faults moving north and south, now thinking major thrust faults moving east to west.

    within Pinon they think they could have multiple reservoirs north south and could continue further to the south.

    They do get deeper moving from west to east.

    What in the world re SD bid/ask? That makes no sense at all.

  22. 22
    VTZ Says:

    Apparently the MMs are still at breakfast or something… there is no volume and the spread is ridiculous

  23. 23
    VTZ Says:

    I just saw a bid over the ask too haha

  24. 24
    Sambone Says:

    My house in South Ossetian capital Tskhinvali has been flattened. Maybe I can get a FHA loan to rebuild.

  25. 25
    zman Says:

    SD Notes: Long fellow 9-16 well. Did not get first Cab well, but they have the Cab A very shallow which ties to a well drilling 5 miles to the east.

    Gotta think analysts will jump off the call and say this should be up. Of course today it won’t matter.

  26. 26
    zman Says:

    Energy indexes back to the lows of the month or just above.

    XLF is up with FNM, MBIA etc.

    XLE results knocking it out of the park and yet here we are.

  27. 27
    Sambone Says:

    DOW JONES NEWSWIRES

    Oilman and energy investor T. Boone Pickens remains in long positions in
    natural gas and crude, and believes the latter could see further price
    declines, he said Friday on CNBC.
    “My positions are not as big as they were, but I’m still long,” Pickens said.
    In May, Pickens predicted oil would rise to $150 a barrel by the end of 2008.
    “I think you could still pull back some” from current oil prices, he said.
    An all-time record of $147.27 was set July 11 on the New York Mercantile
    Exchange. The price was around $118 in midmorning trading Friday.
    Last month Pickens launched a self-financed media campaign to push reduced
    U.S. dependence on imported oil by using alternatives such as wind energy – in
    which he is a major investor. On Friday he said he has met with House Speaker
    Nancy Pelosi, nearly all House Democrats, Senate Majority Leader Harry Reid and
    some top Republicans in Congress. He has yet to set up a meeting with either
    party’s presumptive presidential nominee but hopes that will happen “soon.”
    Also in Friday’s CNBC interview, Pickens repeated a criticism made in late
    July that he had sold his entire stake in Yahoo Inc. (YHOO) because of the
    Internet company’s “pathetic” management. He didn’t specify the amount of his
    loss.

    Web site: http://www.cnbc.com
    -Dow Jones Newswires;

    Dow Jones Newswires
    08-08-08 0942ET

  28. 28
    zman Says:

    I’m thinking we close the gap down on SD today unless oil breaks 117 and then move with the group on Monday.

  29. 29
    zman Says:

    and there went $117.

  30. 30
    zman Says:

    I’ll wait until Monday to sell most of my remaining August calls. Maybe we get a deal or a commodity bounce but we are below the lows now for the OIH and the XNG seen last month and earlier this week. We are back to stories not mattering at time and I’d rather go to cash and stock almost entirely and wait for a real solid bottom on oil, ng, and the therefore the group. I will punt high strike options for what I can today as they will get dropped further no matter the move (unless it is up huge monday which I am not betting on) as we enter the last week of trading for the Aug. expiration.

  31. 31
    bill Says:

    Tanker rates have crashed and brought stock prices down with them:

    Brokers say there is no ‘obvious reason’ behind the tanker-rate crash.

    Dramatic falls in VLCC and suezmax rates are sending shockwaves through the market.

    Owners are running for cover while tanker-derivatives players are seeking to trade their way out of trouble.

    The heaviest rate dives have been for VLCCs, dropping on some routes from $200,000 per day to $40,000 per day.

    Brokers say some players are attempting to stem the tide but they believe it is too little, too late.

    The main name in this context is Nobu Su-controlled Taiwan Maritime Transport (TMT), which is taking in ships on short-term charters. The company is understood to have fixed five VLCCs but brokers doubt it is enough to prevent the market from falling further.

    Brokers say there has been no obvious reason for the fall of Worldscale (WS) 140 points over the past two weeks. The trigger appears to have been a change in sentiment with a recognition that the market has been overpriced. Others say charterers had been spacing out their cargoes and sapping faith from the market. “Charterers are playing the market a lot better than they have been recently and confidence wained,” said David Collins of Clarkson Geneva.

    They believe the VLCC market is likely to get worse before it gets better.

    “The optimism and confidence of owners have been shattered,” said Collins. “Owners are chasing the market downward.

    “It’s probably going to go down a bit further before it starts going up and at the moment there is very little sign of any encouragement,” he added.

    VLCC time-charter rates plunged to $41,435 per day, their lowest level since the spring after a sudden and surprising change in the market on 28 July.

    For the past six months, they have been trading at between $100,000 per day and $150,000 per day and as much as $195,000 per day for voyages from the Middle East Gulf to the Far East. That route the TD3 has wilted from WS240 to WS108 with the last done deal struck at around WS99.

    Ben Goggin, a freight-forward-agreement (FFA) broker at London-based Simpson Spence&Young (SSY), says the forward market has also taken “a massive beating”.

    The TD3 is the most liquid tanker route in the FFA market and players caught with long positions are seeking to cut their losses.

    “Someone must be feeling the pain,” said Goggin. “But lots of people have traded out of their positions as it came all the way down.”

    The speed of the fall has made some fixtures look quite smart.

    Andreas Sohmen-Pao’s BW Group was one of the first to accept rates of WS180 and WS150 when other owners were sizing up their options.

    “Everyone thought they were a bit too aggressive but they turned out to be really good fixtures,” said Tor Svelland of Oslo-based Carnegie.

    The futures market is not pricing in a rapid return to high rates recently as high as WS200-plus.

    FFA rates for the fourth quarter of the year on the TD3 are trading at a low WS140.

    “It’s quite surprising it’s so low but people are getting a bit nervous,” said Goggin.

    The fall in the VLCC sector has been mirrored in the suezmax market, which spiked at $170,000 per day on 24 July but has now plunged to around $68,000 per day.

    Aframaxes have been hit to a lesser extent with a fall from $75,000 per day to $47,690 per day.

    This has dragged the Baltic Dirty Tanker Index (BDTI) down by 25% to its lowest level since May.

    Some banks including Carnegie suggest trading strategies that bet on a low market for the coming months. “I think it’s still going to be a bumpy road but the market could stay down there for longer than people expected,” said Svelland.

    Such strategies include buying call options on the TD3 and TD5 for August and the end of the year.

    The TD5, a suezmax route from West Africa to the US, has fallen from WS345 to WS186. On Tuesday alone it dropped WS50 or $24,416 per day to end at $54,166 per day.

    Only the time-charter market appears to be weathering the storm.

    Clarkson reports one-year rates for modern VLCCs at $90,000 per day. But brokers say this only reflects the high spot rates so it seems only a matter of time before they drop into line with the rest of the market.

    The falls of the past 10 days have to be put in context of the historically high market for modern VLCCs this year.

    Now there is a recognition that the market of the past few weeks was “artificially high”, says Collins.

    “Owners did a very good job of holding on to things. There was a reasonable amount of panic from charterers,” said Clarkson’s Collins.

    “However, cargoes have been a lot more spread out and every fixture is bringing the market down. Owners have lost confidence. There’s very little sign of optimism for the short term. I can’t see any sign of an upturn,” he added.

    The sudden lack of VLCC enquiries may have acted as the catalyst for the sudden end to the long-running bull tanker market. Moreover, fixtures of single-hull vessels have been virtually non-existent and rates remain untested but are bound to be lower. Another factor contributing to the falls is the high cost of bunkers.

  32. 32
    zman Says:

    Next time I say something like “it won’t always be this easy” and I’m still buying ask why. Ug.

  33. 33
    Nicky Says:

    Morning all. Action in the metals is obviously now extremely bearish. Who said I was mad when I suggested 800 and lower was a possibility? We are back at the 850 region in gold which is key key key support and has held 3 times but if goes then watch out below. Silver has broken its equivalent level already.

    Same position re oil now too. There will be a bounce but we are going lower…

  34. 34
    zman Says:

    Bill – along those lines, FRO looks like it has a gap to fill about 8 points south of here.

  35. 35
    zman Says:

    Refiners only thing green on my screen except the DJI. Dollar bounce is massive now, up 1.6%.

  36. 36
    bill Says:

    On the dry side, rates are down as well but i still like free and ocnf. Ocnf reports on monday

    Free is has “handysize bulkers”

    see below

    Investors have responded positively to Precious Shipping managing director Khalid Hashim’s prediction that good times lie ahead for the handysize-bulker market.

    The Thai-listed company’s shares were up 13% this week following encouraging results net profit grew in the second quarter from THB 829.85m ($24.71m) to THB 1.24bn.

    The company has already seen average time-charter earnings jump from $12,342 per day to $16,511 per day.

    Hashim believes that handysize operators such as Precious are in the best position in the dry-bulk market, even though capesizes have been grabbing investors’ attention.

    He says that compared to other sectors, there is little fleet growth with a possible shortage of ships developing.

    “If you have a capesize I suggest you sell it, cash in and buy a few handysizes,” said Hashim

  37. 37
    zman Says:

    Bill – EGLE said much same about Handy/Supra size. Said they were taking a lot of cargoes that are traditionally Pana or Cape.

  38. 38
    zman Says:

    Dollar actually gapped up and is in what I would call resistance now.

  39. 39
    Popeye Says:

    Well despite #31 DRYS is the only green on my screen.

  40. 40
    tomdavis12 Says:

    Z: NE green for a millisecond. Have you looked at RIG since the earnings?

  41. 41
    bill Says:

    I like egle as well and have a few shares. Its a longer term play s new ships nget delivered. Their current ships are on long term charters so they are not affected (as much) to changes in the spot market, (although the price still moves with spot)

    re 39–msg 31 tlks about tanker’s drys is bulker

    you need to add other names to your screen, lol

    nm, ocnf, gnk,exm, egle, free all up nicely in the bulker sector

    yes, the tanker stocks are down today with the price of oil

  42. 42
    Nicky Says:

    Metals have now stabilised. I would very surprised if gold took out the 850 level today being a Friday and after such a huge fall this week.

    The move in the indices is not to be trusted…

  43. 43
    Bleemus Says:

    Stopped out of my SD trade so it should bounce hard now. 😉

  44. 44
    breakhound Says:

    good morning all. take a look at the FXA. absolutely crushed today. This could be leading gold even lower. Gartmen letter suggested shorting MON

  45. 45
    zman Says:

    Tom – only to see it dropping. They’re business is strong and getting stronger. Just doesn’t matter with oil coming in. Did not see the NE numbers but they were dead even with RIG on forward cheapness. The funny/sad thing is, no projects that these guys will get bids for will be canceled over this drop in oil. Maybe we see a plateau

  46. 46
    zman Says:

    …in day rates but so far activity has been such that they continue to rise. PBR had another discovery announcement this morning.

    SD = unreal.

    Wonder why PVA is up today with all the other E&Ps trashed.

  47. 47
    tomdavis12 Says:

    Z: Do you ever throw out silly number valuations for any of your sweet spot names? Is that a futile exercise? Even the banks had a tradeable rally from their 7/15 low.

  48. 48
    zman Says:

    Tom – Do you mean like a $150 back of the envelope # for CHK based on current + potential reserves? In that case, no I really don’t. It’s not silly for buying the shares. But it won’t matter for options in this sea of hate environment. Very tough.

  49. 49
    Nicky Says:

    T Boone seemed to imply he that although he was long he was somewhat hedged now.

    Whilst it is good to see oil come down (or not!) I feel that people like him will be banging their heads against a brick wall now with all talk of alternatives probably going on the back burner which will be a huge mistake. Prices needed to stay up for longer for people to be convinced that the supply problem is not going away.

    So what it does make me think is that once this ‘correction’ is over we are probably going a lot higher than 150….

  50. 50
    tomdavis12 Says:

    Z: No I was thinking more in terms of where have any of these names bottomed before. What metric was meaningful. If 4 times CFPS was a meaningful low for CHK in the past then we should start to look at the $40 – $45 range as a possible tradeable bottom. As far as options go, we have to leave that to you as the master. Us equity guys may not need as much wind in our sails as option traders need to nibble.

  51. 51
    zman Says:

    on a call, back to you in a bit.

  52. 52
    Nicky Says:

    Z – if only nat gas hadn’t gone quite so high I think we would be dusting that hat off by now!!!! You would think at some stage this will be a great buying opportunity…look to now be in 3 of 5 down…..likely to go to 7 or a bit lower BUT cycles are due for a low in nat gas in August and a bounce into October…

  53. 53
    zman Says:

    Tom – 3 to 4x, these P/CF low multiples always occur at commodity price inflection points. Analysts will be pulling their 2H08 price decks down now so CFPS numbers are going to contract slightly for 2008 and probably a little for 2009. This will have the effect of making the equities a little more expensive on the fwd numbers but I think the bottom is reasonable on CHK as 1) they are largely hedged and 2) I expect a gas price bounce this month.

  54. 54
    tomdavis12 Says:

    Z: Just trying to keep things lively. When I look at my screen, I want to just throw up on myself. Since Nicky has the TA part of NG covered. I remember twice when Aubrey announced a shut down of NG production that caused a pop in the price. Since he is top dog the other will follow. I would expect at $7 – $7.5 he will start his shut in’s. I did not notice if the last two times he did it near his collars. Do you remember?

  55. 55
    Sambone Says:

    Hmmm, is this good or bad?

    U.S. military personnel were among those at Georgia’s Vaziani military base Aug. 8 when it was bombed by Russian fighter jets, Rustavi-2 TV reported. A bomb reportedly hit a cafeteria building at the base. No word has been reported about casualties.

  56. 56
    zman Says:

    Just ugly. Stepping out to a meeting for an hour. Make oil rally while I am gone.

    Tom – It had to be close to his swap price. It wasn’t a lot of production but it was well timed. He may also slow hookups in the Barnett in end of 3Q. As long as he safely makes numbers he gets the benefit of saying the quarter’s production average X while current prod is X+.

    One thing to remember on gas is that prices in the field are lower than Nymex by $0.50 to a $1.50. Probably puts the hurt on rockies guys like BBG but look at that decline…unreal.

  57. 57
    tomdavis12 Says:

    Z: There are many marginal drills @ 7.50 that will be put on the shelf. Then where will this unbelievable new production be?

  58. 58
    zman Says:

    Tom – there are. Not to mimic Aubrey but conventional players will be the ones to cut capex and maybe we need to see that to give gas prices a floor. So far, it doesn’t matter if you can grow the top line 20%+ next year, they hate for it and for the higher capex that that growth requires. I think higher cost ($/LOE) guys get hurt worse but they probably all continue to suffer until that floor comes into play. I’ll have a ranking of LOE on Monday.

  59. 59
    zman Says:

    I will likely increase exposure to VLO and shy away from E&P adds except for small bounce trades, quick in and outs. On the OIH I am still not convinced business there is anything but excellent and I’ll adding very small longer dated calls there next week market conditions willing.

  60. 60
    Nicky Says:

    Its odd that oil and gold haven’t reacted to the Russian news – tanks rolling across Europe – its hardly peaceful news!

  61. 61
    zman Says:

    The press seems to be happy to copy and paste demand destruction comments from article to article and to down play anything to do with geopolitical concerns. Israel could probably hit Iran right now with barely a reaction in crude. Ok that’s not true but its obvious that the trade is to sell crude now and buy it back sometime before year end. Wake me when you think it has bottomed.

    Any thoughts on that dollar index chart? Was thinking it was in resistance and it backed away when I said that so….

  62. 62
    Nicky Says:

    Z – $ has gone parabolic already! Not a good sign. That said we may get a small pullback but its likely going higher yet.

  63. 63
    Sambone Says:

    Crude Sinks Along With Other Commodities

    From MARKET TALK

    [Dow Jones] The stronger dollar is sending commodities lower across the board. Nymex crude futures, gold and other commodities are posting sharp declines as the euro sinks towards the $1.50 mark. “This is not an oil specific story at all, it’s really a change in sentiment here by investors and traders,” says Mike Zarembski, analyst at OptionsXpress. Investors are rushing towards the rising dollar, leaving behind investments in commodities. “You can really see the effects of money shifting from one market segment to another,” Zarembski says, adding, “as long as the dollar sentiment is changed there’s a good chance that oil going to continue being weaker as well.” Nymex Sep crude -$3.82 at $116.20/bbl.

  64. 64
    Nicky Says:

    Broader market – back at resistance for the third time now – Dow 11680, SPX 1291.
    SPX has firmer resistance at 1300 area.

  65. 65
    zman Says:

    Average forward multiple of the Gulf of Mexico shelf focused E&P (multiple of 2009 CFPS) = 2.4x.

    Average decline of same group from their summer highs = 31% (most damage done since July 2). Range is down 22% to down 42%.

    Charts look horrible on these: BDE, CPE, HLX, ME, MMR, SGY, WTI. Just going through now to see what their op costs looked like this quarter. Know it is higher than the resource players we normally look at.

  66. 66
    Fred Says:

    Nicky – Maybe go long UUP as an oil hedge.

  67. 67
    Nicky Says:

    Nat gas looks like its trying to stage a bounce…oil if they can’t hold it here you would think as per Tater’s chart that 110 should produce a bounce…

  68. 68
    elduque Says:

    Any explanation for SD’s price performance?

  69. 69
    zman Says:

    Kloza saying if you are a chartist on oil you have to right off further highs in oil after breaking 116 today.

  70. 70
    occam Says:

    Bakken problem?

    BISMARCK – Pipeline and refinery construction projects will limit North Dakota oil exports in coming months, the state’s chief oil and gas regulator told lawmakers Wednesday.

    Lynn Helms, director of the state Department of Mineral Resources, said the biggest operators in North Dakota’s Bakken shale oil development don’t plan to cut back on drilling or production plans. But they will not expand by buying or bringing in more drilling rigs until early 2010.

    He told members of the Legislature’s interim Budget and Finance Committee that the state will have “very slow growth between now and the first quarter of 2010.”

    Helms said the Enbridge pipeline, a major outlet for North Dakota oil running from near Williston to Grand Forks and beyond, will shut down soon for pressure testing in preparation for an upgrade project. The pipeline will go from a capacity of 110,000 barrels per day to 160,000 barrels per day. Its capacity will be reduced during the upgrade construction.

    RELATED CONTENT
    Janell Cole Archive
    Also, the Mandan Tesoro Refinery is expected to shut down for several weeks next year to conduct a major maintenance. It will refine little to no oil during that time, Helms said.

    He said the state should still be able to produce and transport 160,000 barrels of oil per day selling at $97 per barrel. The state now produces more than 156,000 barrels per day, and in June its price peaked at more than $136 per barrel before trending down along with the world price drop.

    If production goes higher, the extra oil will likely sell at a steep discount, he said.

    The Budget and Finance Committee is taking input on state revenue and spending trends in preparation for the 2009 session.

  71. 71
    zman Says:

    El D – The only thing I can think of is that they said they would go to the equity / debt markets next year if they didn’t sell an asset package. They have said that before but I think once the selling started people just abandoned ship. Results were strong, outlook for their WTO better than they thought three months as new seismic redefines the play for them. Just doesn’t matter today.

  72. 72
    zman Says:

    Thanks Occam – had not seen that yet. CLR and EOG made mention of having transportation commitments in place that largely satisfied their expected volumes next year. There are typically growing pains when new basins or born or new plays come along. Sounds like a temporary problem that may impact the players with a bigger than expected differential.

  73. 73
    zman Says:

    I put up a table on the shallow water Gulf of Mex players at the bottom of the post. Cost not running away and these are extremely cheap but people are reasoning that the risk associated with these and the higher costs (higher than their resource players peers on shore) will make them less attractive.

  74. 74
    Nicky Says:

    Another 300 point bear market rally. Hate to say it but you only see 300 point rallies in bear markets!

  75. 75
    antrimshale74 Says:

    Z-It looks like your buddy Vlad is angry about the oil drop and decided to start a war. He might have to invade Iraq to have any impact in the market.

  76. 76
    BirdsofpreyRcool Says:

    was not on the SD cc. other than energy prices being down…. what did they say to crash the stock 14+%?

  77. 77
    zman Says:

    Antrim – I hear ya. Not even sure that would do it now.

    Anybody see any comments on SD from the Street? Looking for any reason to buy closer to the money. This move just looks ridiculous.

  78. 78
    zman Says:

    SD off nearly 50% from highs now / people just panicing out of the name now. very tempted to take some longer dated 45 calls as I listened to the call, didn’t here anything like a 16% down kind of problem vut I’ve been surprised by a lot of late and will wait and listen to the call again.

  79. 79
    BirdsofpreyRcool Says:

    SD. amazing. must have been the capital-raising comment. didn’t think we would see such a high quality name back down in the 30s.

  80. 80
    ram Says:

    If this was SD’s first quarter, it would probably be up 16% vs. down the same. I am barely old enough to remember Zweig’s phrase when you didn’t understand the logic: “don’t fight the tape” or “the trend is your friend”. I wish there was a “current” market service where you can see big money flows.

  81. 81
    BirdsofpreyRcool Says:

    Lehman saying that “oil has peaked for the next few years”

  82. 82
    BirdsofpreyRcool Says:

    guess Iran is planning on opening a Disneyland too… and Saudi production is going to double (the light, sweet stuff)… and Hugo Chavez is going to reinvest in PDVSA… and Nigeria is a garden spot… and Russia is best friends with everyone now… and Nancy Pelosi wants an oil rig drilling in her backyard.

    right.

  83. 83
    zman Says:

    That’s brilliant on Lehman’s part. Wonder which analyst there came up with that line. Wonder if Goldman will defend their year end number.

  84. 84
    Nicky Says:

    Oil at 115 and everyone thinks everything is now okay. Amazing when I think they said oil over 80 would send us into recession.

    50dma is at 1297 on spx so attracting price.

  85. 85
    BirdsofpreyRcool Says:

    oh yeah, and China and India stop growing their middle class and infrastructure needs.

  86. 86
    zman Says:

    BOP – you sound like I feel.

    If Lehman is right and I think they are dead wrong, refiners are likely to be a steal here.

  87. 87
    Nicky Says:

    Right Z – GS must be pooping themselves!

  88. 88
    Nicky Says:

    Lehman are way ahead of themselves…next few years? lets try next couple of months shall we…

  89. 89
    VTZ Says:

    I’m just about ready to put my money into a shoebox.

  90. 90
    zman Says:

    BOP – another day like this on NG and Aubrey and crew will begin to think about making some pretty public curtailments.

    SD down 18%. Seen only positive broker comments so far.

  91. 91
    zman Says:

    I would guess that we get another good sized draw on gasoline inventories next week.

    Absolutely abysmal performance on my part this past 5 weeks. Yuck.

  92. 92
    BirdsofpreyRcool Says:

    re: Aubry… don’t know. depends on his hedges right now, i think. he might want to continue CHK production and let some of the other guys absorb the volume cuts. it’s not like we are tracking the storage season at above historical rates…

    few too many variables out there right now. think prices on the equities are attractive, but would not want to play options. timing is a bit unclear right now.

  93. 93
    zman Says:

    Well we got the 115 level everyone has been talking about, what do you think now Nicky? $110? Just asking from a TA perspective.

  94. 94
    zman Says:

    BOP – after next Friday I will be equities, cash and about a half dozen Sept call positions.

  95. 95
    Nicky Says:

    Well its going to start getting much more tricky for the shorts down here as the risk reward is now for an earth shattering short covering rally should they decide to flick the coin! And we are coming down to some pretty key support areas ie 115,110….

  96. 96
    Sambone Says:

    Hmmm, a blob at 57W, 22N has my attention.
    The first link is the one I usally look at.
    http://www.ssd.noaa.gov/goes/east/tatl/loop-rb.html

    The second link has my attention.

    http://www.goes.noaa.gov/HURRLOOPS/huwvloop.html

  97. 97
    breakhound Says:

    Z, in all due respect u know more about this stuff than me but on trading psychological standpoint u should turn bearish on your long term theses from time time to avoid bad months. Maybe using covered call startegy on your favorite longs once a stock has dropped below it’s fifty day moving average would smooth out returns.

  98. 98
    BirdsofpreyRcool Says:

    that said, i can think of no better place to put long-term money than in the domestic e&ps.

  99. 99
    BirdsofpreyRcool Says:

    re#94… a hurricane should make the sept calls work (all the really nasty ones are in late august/early sept anyway) and then the spare cash can be put to work in long-equities. i do think nat gas is $9 by Christmas. just not seeing LNG imports and Canadian supply ticking up. And won’t exit injection season over-pressured…

  100. 100
    Nicky Says:

    Crikey Sam – that should do the trick!

  101. 101
    Nicky Says:

    I don’t believe anyone is pricing hurricanes into the energy market right now and we are heading into the heart of the season. Even a whimper of one will be enough to have the shorts covering imo.

  102. 102
    zman Says:

    Thanks Break.

  103. 103
    texana Says:

    SD, looks like a short attack. Easily accomplished as all of the officiers of the army are not allowed to participate during earnings. LOOK FOR BOUNCE NOW TO CLOSE TO COVER.

  104. 104
    Sambone Says:

    The thing about this one is that it’s on nobodies radar. It’s got spin.

  105. 105
    Nicky Says:

    Yes I have just looked on the Intellicast site and they don’t have it.

  106. 106
    zman Says:

    Tex – heck if I can tell what they based it on as costs were in line, guidance was big and absorbed a one time hit to production from a plant fire without reducing near term guidance because they are doing better than expected at Pinon East. It could be that they didn’t find 1st Cabillo in one well on the west side where they had hoped to, in the normally CO2 rich area. Or its the talk of a deal but they specifically said the deal would be in 2009 and they have mentioned this possibility before. It seems like the market is discounting a deal at the close. If they meant that I sure did not hear it but I am not going to buy any more until at least Monday and probably later than that. Don’t need to bottom fish the groups or this stock even though, man, it just doesn’t make sense.

  107. 107
    zman Says:

    From the Crown Weather Site:

    The second area of interest is actually of much more interest to me: It is the area around the eastern Atlantic. Satellite imagery early this morning is showing a few disturbances in the eastern Atlantic and over the continent of Africa. None of these disturbances, including the disturbance near 32 West Longitude is expected to develop over the next couple of days, however, there are screaming hints from the global models that this entire area will “consolidate together” and potentially pop a storm as early as Tuesday (GFS, Canadian and UKMET model) or not until Thursday (European model). The model consistency in forecasting a fairly rapid upswing in tropical cyclone development starting next week and continuing for the next 3 to 4 weeks has been quite good. In addition to this model consistency, the next pulse of the Madden-Julian Oscillation is expected to move into the Atlantic by the middle to late part of next week and remain in place through the Labor Day weekend. All of these signs are pointing towards a potentially busy second half of August into the first half of September.

  108. 108
    ram Says:

    Good afternoon ZMAN.

  109. 109
    Sambone Says:

    Hmmmm, is this good or bad?

    Official
    WASHINGTON (AFP)–Georgia has asked the U.S. military to provide aircraft to
    move Georgian troops home from Iraq as fighting rages in Georgia’s breakaway
    South Ossetia region, a U.S. military official said Friday.
    “There has been a request for lift support…to take out some of their
    forces,” said the official, who spoke on condition of anonymity.
    The official said the request, which was received by the State Department, was
    being looked at but had not yet been approved.

    Dow Jones Newswires
    08-08-08 1508ET

  110. 110
    zman Says:

    Monday – time for a deal. Free quarter to whoever picks the buyer of GMXR if it happens between now and year end.

    Good afternoon Ram, I’d say what’s up but that would be a pretty short conversation…refiners and everything else not energy.

    Sam – um, so the U.S. would be supporting another country to go to battle with Russia? How very cold war.

  111. 111
    breakhound Says:

    Anyone have a good strike and month to buy UNG calls?

  112. 112
    Bleemus Says:

    TROPICAL WAVE IS TILTED FROM 21N60W INTO THE CARIBBEAN ALONG
    14N62W TO 9N62W MOVING W 10-15 KT. THE MIMIC TPW PRODUCT SHOWS A
    WEAK AREA OF DEEP LAYERED MOISTURE FIELD EXTENDING FROM THE
    CENTRAL ATLC ACROSS THE LEEWARD ISLANDS INTO THE NE CARIBBEAN.
    SHOWER ACTIVITY IS W OF THE WAVE AND ASSOCIATED WITH AN UPPER
    LEVEL TROUGH.

  113. 113
    ram Says:

    BP

  114. 114
    Sambone Says:

    #110
    COP

  115. 115
    breakhound Says:

    #110 SGY

  116. 116
    texana Says:

    What I’m saying is that it is a computer generated stock trade directed at this stock when they know that their best defense cannot fight. To me this has nothing to do with the fundamentals of the stock at all.

  117. 117
    zman Says:

    Texana – Are you guessing that is the case?

  118. 118
    texana Says:

    shell

  119. 119
    Garyinhou Says:

    110 – should be cheap enough by end of year for us to pool our money and buy them ourselves, suggest we go cash now and start planning.

  120. 120
    Bleemus Says:

    #110

    CHK

  121. 121
    zman Says:

    Gary – Agreed, got a guess?

  122. 122
    texana Says:

    yes,

  123. 123
    zman Says:

    Tex – well, its probably a good guess.

  124. 124
    1520sbroad Says:

    #110 – CHK

    i also think SWN buys HK

  125. 125
    italyinvestor Says:

    Sam – That’s pretty bad but understandable given that we (Southern European Task Force based in Vicenza Italy) just finished a two week exercise in Georgia training with the Georgian Army. Odd timing as we just redeployed our last few guys a few days ago. I wasn’t on the exercise (I was deploying back from Afghanistan to Italy) so i’m not sure what command post exercises they conducted, but if one of them was a US strat air move, they would likely ask for the support. My read is that they are asking for strat lift (C-130, C-17, C-5 or commercial contracted air) versus tactical lift (helicopters). We could easily fly or contract someone to fly their troops to Tiblisi and stay out the conflict area.

  126. 126
    1520sbroad Says:

    im in for #119 if all else fails

  127. 127
    zman Says:

    1520, Bleemus beat you to CHK, go another?

  128. 128
    BirdsofpreyRcool Says:

    #110 APC or HES

  129. 129
    kaman Says:

    GMXR 2b taken by SWN

  130. 130
    1520sbroad Says:

    I’ll say DVN as my second choice

  131. 131
    zman Says:

    bop – only one spin per player

  132. 132
    Nicky Says:

    And you think you’ve got problems:

    John Edwards admits to lying about extra marital affair….

  133. 133
    BirdsofpreyRcool Says:

    rats. i was going to take DVN too. as my 3rd choice.

  134. 134
    BirdsofpreyRcool Says:

    ok… APC = my one spin

  135. 135
    zman Says:

    Wow, talk about partying at work:

    Edwards told ABC News that he lied repeatedly about the affair with a 42-year-old woman but said that he didn’t love her. He said he has not taken a paternity test but knows he isn’t the father because of the timing of the affair and the birth.

    ABC said a former Edwards campaign staffer claims he is the father, not Edwards.

  136. 136
    Popeye Says:

    Nicky, was it with a man or woman?

  137. 137
    Garyinhou Says:

    #110 – OXY

  138. 138
    antrimshale74 Says:

    Looks like some short covering in energy at the end of the day here, eh?

  139. 139
    1520sbroad Says:

    $400 haircuts was the first clue on that guy

  140. 140
    antrimshale74 Says:

    Some people made a nice bucket load of money today and don’t want to be greedy.

  141. 141
    tomdavis12 Says:

    Z: XTO 110

  142. 142
    zman Says:

    I’ll have a spreadsheet up on GMXR over the weekend.

    If you just take their acreage, multiple it by the highest levels we are hearing about ($30K) that’s move than their mkt cap+debt. So if CHK is willing to pay $30K an acre they could get their 435 Bcf proved at year end, plus whatever they’ve add so far this year for next to nothing. Maybe you pay $1.5 for the whole thing and VPP off the stuff you don’t want.

  143. 143
    Sambone Says:

    By Tatyana Shumsky
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures fell Friday as renewed strength in the
    dollar cemented a downturn that began nearly a month ago.
    Light, sweet crude for September delivery settled $4.82, or 4.02%, lower at
    $115.20 a barrel on the New York Mercantile Exchange. Brent crude settled at
    $113.33 a barrel, down $4.53, on the ICE Futures Exchange.
    The move marks the lowest crude futures settlement price since May 1 and the
    largest single-day drop in dollar terms since July 17, when prices fell by
    $5.30.
    The losses on Friday followed a steep fall in the euro, which declined against
    the dollar on a bleak economic outlook for European economies and a sense the
    U.S. economy may have already seen the worst of its problems. The euro fell
    below $1.50 for the first time since late February, hitting a low of $1.4997.
    Many foreign investors exit positions in dollar-denominated commodity markets
    when the dollar strengthens, in order to lock in profits in their local
    currencies.
    When the dollar was weakening, “commodities hedge funds and sovereign wealth
    funds that were heavily long the dollar would buy oil to hedge the value of
    their losing dollar,” said Phil Flynn, with Alaron Trading Corp. in Chicago.
    Now, those same funds are unwinding those positions, he said.
    Crude oil futures rounded off a volatile week that saw the front-month
    contract give up $9.90, or 7.9% of its value from last Friday’s settlement of
    $125.10 a barrel.
    Since posting a record high settlement price of $145.29 a barrel on July 3,
    crude futures have dropped $30.09, or 21% amid a three week long downward trend
    sparked by fears of eroding U.S. demand that continue to haunt the market.
    As the downturn has proven to have legs, it has gained its own momentum, as
    traders have begun selling whenever oil rallies.
    “The smart money is selling the bullish news,” said Christopher Mennis,
    president at New Wave Energy, in Aptos, Calif.
    Traders aren’t expecting the oil market to rebound in the near future, with
    many forecasting new lows in the coming days. Lehman Brothers analysts
    predicted in a note Friday that oil prices have peaked and will remain soft for
    the next year.
    “Unless there’s geopolitical problems of some sort you can expect lower (crude
    prices),” said Mark Waggoner, president of Excel Futures in Newport Beach,
    Calif. “I think it’s well within its reach to get to $112 next week, maybe even
    $110.”
    Not even direct threats to world oil supplies could stop oil prices from
    falling Friday, however. BP PLC (BP) shut down the Baku-Tbilisi-Ceyhan pipeline
    following a fire on the Turkish portion Wednesday. The pipeline, which averaged
    850,000 barrels a day, could be down for up to five weeks.
    Front-month September reformulated gasoline blendstock, or RBOB, fell 11.53
    cents, or 3.84%, to $2.8874 a gallon. September heating oil declined 10.56
    cents, or 3.27%, to $3.1280 a gallon.

    -By Tatyana Shumsky,Dow Jones Newswires;
    Dow Jones Newswires
    08-08-08 1551ET

  144. 144
    Sambone Says:

    Tini time, baby I need it today!

  145. 145
    zman Says:

    Looks like somebody is thing the same way for GDP late too. There’s got to be a deal around the corner. Of course, to pay for it, Aubrey’s stock would get even more punished in this environment.

  146. 146
    apbd Says:

    I made $ 50. total on a RIMM day trade.
    Wowee. Not like the old days. Enough to take the wife to breakfast but not dinner. Have a great weekend.
    apbd

  147. 147
    tater Says:

    If anybody was just watching Fast Money and heard the comment from the farmer guy about lots of farmers planting soy beans instead of corn, I can tell you, I’m up in Wisconsin and I was just driving around my other house in the sticks (real corn country) and I was just saying to my wife how every corn field seemed to be beans. Now I know why (he said fertilizer costs).

    Other than shorting the Potash clan, anybody have any thoughts for a trade on that? (I’m thinking that corn gets made into ethanol, so tenuous as that energy connection is, I figure the question is kind of ok).

  148. 148
    zman Says:

    AGU and TRA make nitrogen fertilizer. Last I remember, corn was a multiple of the fertilizer requirement of beans. Makes since although those companies are going to be facing huge improvement on their #1 cost, ng.

  149. 149
    Fiveanddimer Says:

    The latest from Matt Simmons can be heard at the financialsense.com site. The streaming audio feed will not be available until early Saturday morning. The interview was done this past Monday. If you’re not familiar with the Financial Sense site, I suggest you take some time to check it out. The archive of audio interviews is priceless.

    http://www.financialsense.com/fsn/main.html

  150. 150
    tater Says:

    Thanks Z. I’ve been sitting out for a while now other than some small daytrades. Getting antsy for a new idea I guess.

  151. 151
    Nicky Says:

    In looking for areas that oil may find a low – obvious one is 110 but there is also a Gann line which comes in around 112. Its starting to look like oil may take the shape of a big 3 wave move lower, so once this low is in, bounce to partially retrace the move down, fib areas 38.3, 50 and 61.8, then another leg down which typically may equal the leg we are seeing now.

  152. 152
    mahout Says:

    Z:
    Late coming back.
    On #110, ECA.

    Also on #119 would love to participate in taking GMXR. I would sell my AAPL and my hurricane insurance stock. Sorry, I could never sell these beauties with losses that would stun a Rhinoceros cause they are going to RISE AGAIN!

  153. 153
    Fred Says:

    On #110, HES

    Here’s an interesting piece on VLO:

    http://seekingalpha.com/article/90058-as-oil-slides-will-contrarians-turn-to-refiners?

  154. 154
    zman Says:

    Thanks Fred.

    Weekend wrap in a coupla hours.

  155. 155
    Alhambra Says:

    Could this be a cause for SD’s move?
    http://www.platts.com/Oil/News/9207833.xml?src=Oilrssheadlines1

  156. 156
    zman Says:

    A – No, that’s not it. Those are headline results and not operating results. They beat on adjusted earnings and their costs were in very good control on a per unit basis. Nobody cares what the raw $ costs increase to if your production increases more. They also issued guidance of 35% for 2009 and released excellent reserve metrics. I think it sold off early and cascaded on a weak day into the close.

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