08
Jan

Thursday – Oil Review and Natural Gas Preview

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In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Preview
  4. EIA Oil Inventory Review
  5. Stuff We Care About Today
  6. Odds & Ends

 

Holdings Watch: No changes yesterday

Commodity Watch:

Crude oil fell $5.95 to close at $42.63 after a uniformly bearish data report out of the EIA. This morning crude is trading off $1 to $1.50 after (WMT) bricked their sales target.

  • OPEC Watch: Venezuela on the tape cutting deliveries to U.S. refiners by 189,000 bopd as part of its OPEC quota compliance.
  • MidEast Conflict Watch: Rockets were fired into northern Israel from Lebanon potentially indicating that Hezbollah could be inviting Israel into fighting on a second front. Fighting between Israel and Hamas in Gaza continues. 

Natural gas fell $0.11 to close at $5.87 trading lower with continued moderate weather and the move lower in oil prices. This morning gas is trading up slightly prior to what will likely be a pretty bearish looking EIA gas storage report at 10:30 EST this morning.

  • From Russia With Not So Much Love Watch: Russia has suspended transit gas to Ukraine and talks appear to be deadlocked. 

 

  • Natural Gas Producers 2009 Outlook. This is a Citi report that a number of people asked me to look over. I more or less agree with most of the main points in the piece and will summarize them here:
    • E&P Stocks Bottom Before The Rig Count Does.  The Citi analyst points to a rebound in E&P names at the beginning of the last big rig down turn in 2001/2002 and points out that this down turn in rigs is faster than prior ones and that E&P has probably found a bottom. That's a bit of an oversimpification as he used an equaly weighted index of E&P names he chose to make his point. I took the liberty of contrasting the U.S. land and offshore gas oil and gas rig counts (you get casinghead gas from those oil wells  ya know) against the performance of the XNG (the Amex Natural Gas Producers Index) and got a more delayed reaction than his statement that E&P recovers after the first 8% of the rig move but his point about it bottoming (not necessarily moving back up) before the rig count does is fairly valid. Here' how those rigs and the XNG compare:
    • Onshore Supply Growth High But We Have Not Seen Down Rig Count Numbers Yet. Can't argue with that one as its been what I've been saying for some time now. The author says January data (which we would see at the end of March will show production falling). I think this may be a month or two early but it's around the corner either way.
    • He listed LNG increases in 2009 and reserve writedowns at year end as current concerns. Both are valid concerns although some LNG projects will be delayed and the last area they will want to ship to will be the low paying U.S.. I think we see a bigger year for LNG imports than 2008 but that's not saying much and the delta will likely be offset by further declines from Canadian imports (and the author and others I've read of late see the same 1 to a little over 1% decline in U.S. supply due to a 0.5 Bcfgpd drop from Canada. Reserve writedowns will occur, especially for the higher cost producers but the future SEC rules will help to mitigate the sense of dismay investors feel over these numbers.  
    • He indicates those with financial leverage, as well as gas leaning production will outperform in the upcycle. I agree and that puts CHK back in the limelight but that assumes we are done bottoming.

 

Natural Gas Inventory Report Preview

  • My number: 65 to 75 Bcf
    • Weather: Gas-weighted HDDs fell to 194. The last time we saw a reading like this was 192 back in the first week of December when we saw a pathetic withdrawal of 67 Bcf. This past week's 194 reading was focused a little more on the west
    • History
      • 5 year average: 78 Bcf
      • Last year: 171 Bcf (it was very cold with HDDs of 220)
    • Imports
  • Street Consensus: 79 Bcf

 

EIA Oil Inventory Review - In a nutshell, much bigger than expected numbers on the inventories side across the board, the crude build is due to sharply higher imports and continued lackluster demand from the refiners. Last week traders were able to take solace in what may have been perceived by some as a near term top in Cushing stockpiles. This week, crude stored at Cushing hit a new record high. I suspect oil will test $40 near term.  From a demand standpoint, gasoline continues to be soft vs year ago levels due to the economy and lower jobs numbers don't bode well for a quick recovery. In the Spring gasoline normally takes over as a driver for crude. This year, if crude is to move higher it will need to do so from a supply side motivation and that is simply a tougher way to go about getting to higher prices. 

CRUDE OIL - Much bigger than expected number due to weak demand and big imports. Stocks are now 15% over year ago levels and 10% over the 5 year average. While the number is bearish I believe it will be used to steel OPEC's resolve to meet soon rather than later and lead to further press releases from OPEC nations like the one from Venezuela late yesterday crying, "look at me, I'm complying too". 

 

Crude Imports surged to a record (for this week of the year) 10.5 mm bopd. Kind of says something about demand around the rest of the world when U.S. inventories have been rising and refineries are making press releases about cutting back on production (and therefore their need for oil) due to weak margins which in turn are attributable to weak end user demand.

 

GASOLINE - Also a much bigger than expected number as production remained high despite those refiner press releases. Gasoline normally builds this time of year in preparation for the early season maintenance in advance of the driving season and stocks are roughly in line with the five year average and year ago levels.

 

Gasoline Demand. Rally soon? The red, blue and green lines kind of say it all as we look to Spring. If the 2009 (grey squares) don't start marching up and to the right and not just to the right, gasoline will likely be joing crude and distillates as overstored, again, taking a away one of the main Spring time motivators for crude prices.

 

 

DISTILLATES - Bigger than expected but less so due to weather. Overstored at 7% above the year ago level and 4% over the five year average. Resurgent cold in February which is forecast could prove a big help here but we'll need to see real improvement in the global economy to help out the exports market (over a protracted problem with gas supplies going from Russia to the Ukraine) to make a dent in the numbers just yet. That, or a further tumble in refinery utilization.

Demand Remains Lofty Due To Cold But Will It Last?

This is likely to fall back in January if the weather forecasts are correct. Though demand is not broken down by product (you can't really tell what's diesel fuel in the demand figure from what's heating oil) it appeared that late in the year distillate supplied for export was falling off and it now appears that recent cold weather has yielded a small uptick in demand that will go away with warmer weather revealing that export problem again.

 

 

Stuff We Care About Today

CHK Awards Aubrey $75 Million. At least, that's how the headlines are going to read. This is probably going to tick off a number of investors and analysts alike and I think that it may cause a down tick in the shares today which may provide an opportunity to get long more calls closer to the current to the price.  The particulars:

  • $75 mm payment for working interest expense for five years for the wells Aubrey is in partnership with the company on.
  • Salary $975,000 and bonus of $1.95 mm... that's in line with many of his big cap peers
  • They reduced his ownership vs compensation requirement in light of his recent forced sale
  • I think this puts him back in a position of re-acquiring shares which is ultimately what you want your CEO doing.
  • I don't see that they have added a rule to prohibit margin buying which was the whole problem here and I think they will have to consider doing that this year.
  • Good news for the stock that Aubrey's not going anywhere.

EOG Quick Bullets For Packman

  • Very low debt to total cap (18%) for the industry and heading toward 0 debt probably in 2010. I honestly don't think that's wise but they want to be a mini-XOM with cash on the balance sheet to take advantage of times like these. It's a more conservative approach than I normally prefer for capital structures, but right now, the low debt is attractive.
  • They are gassy, about 82% but inching towards a slightly oilier profile, with strong success in the Bakken and other unconventional oil plays. Unfortunately, they did not hedge 2009 oil when prices were high.
  • As to the Bakken, they are drilling the highest profile wells in the play with several 3,000 bopd producers of late, something you rarely see any more in U.S. onshore oil drilling.
  • They have transitioned from a 1s and 2s type player to a repeatable success machine with the Barnett, Bakken, and up and coming plays like their horizontal oil play in Colorado.
  • Long reserve life assets with large acreage position will allow them to high grade during low price times and accelerate growth when prices become more stabilize.
  • We are overdue for updates here on from that Colorado play, the Barnett oil play (which at one time they said would see them double production on an energy equivalent basis out of the Barnett  by the end of 2010 but which surely has been scaled back a bit now with prices.
  • Gas hedges: A little lighter position than many of their peers at 38% at $9.71 for 2009.
  • Production growth in 2009 of 10 to 14% and based upon where gas prices are right now I'd bet they angle to come in at the low end of that range as they have stated they would in a sub $7 environment.
  • As I mentioned in yesterday's post, analysts are close to having brought their oil and gas price decks down enough if the current 12 month strip is to be believed, meaning for now, estimates probably are not going to fall much further. At this point, EOG's 2009 consensus CFPS is $15.08, down from 17.92 projected for 2008 but this still puts the name at a historically low forward P/CF of 4.6x.

Odds & Ends

Analyst Watch: Oppenheimer reiterating a number of E&P and Refining stocks with outperform ratings. 

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

  1. 1
    Wyoming Says:

    Couple of links (information and article):

    http://blogs.epmag.com/judy/2009/01/06/no-rigs-thank-you/

    http://www.epmag.com/

  2. 2
    tater Says:

    Added GDP GMXR and updated HK

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882&cmd=show%5Bs157244604%5D&disp=O

  3. 3
    Sambone Says:

    Oil Stocks To Gain More Than 20% In ’09  Oppenheimer

    DOW JONES NEWSWIRES
    Of MARKET TALK
    9:02 (Dow Jones) Oil and gas stocks are likely to gain more than 20% on average over the next six months, Oppenheimer says, as the market feels effect of OPEC production cuts and declining non-OPEC production due to reduced capital spending. Price volatility will continue, firm says, but any pullback is a buying opportunity. Oppenheimer says oil prices below $45/bbl are unsustainable and above $75/bbl are unjustified, and it sees prices in a $55/bbl-$65/bbl range during the slowdown. Nymex light sweet crude recently at $41.54/bbl. (EBW)

    Crude Higher, Geopolitics Trump Demand Fears
    By Nick Heath

    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures recouped some of Wednesday’s sharp falls Thursday, climbing more than $1 as tensions in the Middle East overshadowed a fresh burst of demand doubts.

    Rockets fired from Lebanon into northern Israel early Thursday triggered fresh concern the conflict could widen, denting hopes for a ceasefire that would bring Israel’s 13-day offensive in the Gaza Strip to a close.

    Reflection that Wednesday’s near-$6 drop in crude futures — sponsored by U.S government data revealing steep builds in U.S. crude and products inventories — may have been excessive also supported prices, but Thursday’s moves higher were capped by hesitancy over upcoming economic data which could further stoke demand fears.

    At 1234 GMT, the front-month February Brent contract on London’s ICE futures exchange was up $1.08 at $46.94 a barrel.

    The front-month February light, sweet, crude contract on the New York Mercantile Exchange was trading 49 cents higher at $43.12 a barrel.

    The ICE’s gasoil contract for January delivery was up $2.25 at $502.75 a metric ton, while Nymex gasoline for February delivery was up 218 points at 109.82 cents a gallon.

    After dismal December ADP U.S. employment readings weighed on prices Wednesday, U.S. December non-farm payrolls data due Friday are now the focus of macroeconomic attention, many market participants said. Weekly U.S. jobless claims are due 1330 GMT, and poor readings could harden expectations that demand for crude will remain weak, or even weaken further as economies continue to show signs of slowing.

    “The less-than-inspiring global macro backdrop cannot be emphasized enough at this stage,” said Edward Meir, analyst at MF Global in New York. “Of course, from time to time, markets could see short-term bounces based on “in the moment” exogenous fundamental variables, or technical moves that look impressive, but are equally deceptive.

    “Both these elements were on display in the post-Christmas bounce we had in crude, which took prices to just under $50 before the run ultimately fell apart on Wednesday,” he said.

    Nonetheless, geopolitical developments have helped pull supply fundamentals back into focus entering 2009, analysts said, supporting prices in the process. The violence in the Middle East has sparked fears a regional oil supplier could become involved in the conflict in some way. Those fears were heightened following the rocket fire from inside Lebanon Thursday, which prompted an artillery response from Israeli forces.

    Meanwhile, talks to find a resolution to the standoff between Russia and Ukraine over natural gas prices were underway Thursday. The spat has brought a halt in the supply of gas to European countries and boosted expectations that demand for oil products as alternative heating and generation sources will increase.

    While near-term support could retreat upon a resolution of either development, oil producers’ apparent intent to reduce supply amid weaker demand could have a more lasting effect in underpinning prices, some suggested, following the Organization of Petroleum Exporting Countries’ decision last month to cut output by a further 2.2 million barrels a day effective Jan. 1.

    Oil demand may fall by up to 45% as the global financial crisis deepens, the pan-Arab Al Hayat newspaper reported the adviser of Saudi oil minister, Majed Al Munif as saying Thursday.

    “We know demand is going to be poor, but OPEC is taking action,” said Helen Henton, head of commodity research at Standard Chartered in London. “Overall, if supply is cut as expected, we should see prices stabilize here. I think a rebound will come later in the year.

    “Once any sense of demand comes back…(given) supply has been cut back considerably, we could see prices move quite steeply higher,” she said.

    -By Nick Heath, Dow Jones Newswires

  4. 4
    BirdsofpreyRcool Says:

    KOG – out with their operational update. PR just as expected: basically, “we reached TD, encountered oil and gas shows, set a liner, and will complete after the 2nd well is drilled.”

    Comments on new rig and crew: after delays, well was successfully TD’d in 38 days, within the initial estimate of 40 days.

    So far, so good.

  5. 5
    Sambone Says:

    78 Bcf Draw Expected

    By CHRISTINE BUURMA
    Of DOW JONES NEWSWIRES

    NEW YORK — Analysts and traders expect government data scheduled for release Thursday to show an average-sized draw from gas storage after mild weather last week across much of the U.S.

    The U.S. Energy Information Administration is expected to report that 78 billion cubic feet of gas were withdrawn from storage during the week ended Jan. 2, according to the average prediction of 12 analysts and traders in a Dow Jones Newswires survey.

    The EIA is scheduled to release its storage data Thursday at 10:30 a.m. EST.

    The survey’s median was 79 billion cubic feet, with a high of a 57 bcf pull from storage and a low of a 115 bcf withdrawal. The estimated withdrawal falls short of last year’s 147 bcf pull from storage and matches the 78 bcf five-year average withdrawal.

    “This rather modest figure is in keeping with what was a very mild week last week, the slow demand holiday season, and a “truing” up of the storage data,” wrote Martin King, vice president of institutional research with FirstEnergy Capital Corp. in Calgary, Alberta, in a note to clients. “As storage operators came back from holidays, they will incorporate their more complete set of data into last week’s data submission.”

    Gas in U.S. storage as of Dec. 26 totaled 2.877 trillion cubic feet, 2.3% below last year’s level and 2% above the five-year average.

    The EIA’s weekly storage page is http://tonto.eia.doe.gov/oog/info/ngs/ngs.html.

    –By Christine Buurma, Dow Jones Newswires

  6. 6
    BirdsofpreyRcool Says:

    Global Refinery Update: A Reliance spokesperson stated that all operations at both Jamnagar refineries (total capacity 1.24mmbd) are continuing as normal following an explosion yesterday.

  7. 7
    Sambone Says:

    LONDON (Dow Jones)–Saudi Arabia has started to inform some refineries that it
    is making steep cuts in deliveries to implement the latest OPEC reduction since
    Jan. 1, a top trader said Thursday.
    Kuwait and the United Arab Emirates “are reducing deliveries but Saudi Arabia
    is cutting the hardest,” the trader said.
    On Dec. 17, the Organization of Petroleum Exporting Countries decided to
    reduce its members’ output by 2.2 million barrels a day from Jan. 1, the
    largest cut since quotas were first implemented in 1982.
    Markets are keeping a close tab on the implementation of the OPEC cut and in
    particular on Saudi Arabia, the largest producer in the group.
    The Kingdom’s new producion target is 8.05 million barrels a day, down from
    8.48 million barrels a day under the previous goal.

    By Benoit Faucon, Dow Jones Newswires Dow Jones Newswires
    01-08-09 0827ET

  8. 8
    BirdsofpreyRcool Says:

    Credit Market Update: Three steps forward, one step back.

    IG 207 +4bps from offical close

    HY 79 3/4 -7/8 from official close. This is close to one full point move in the high yield index… in the wrong direction. A one point move in a day makes traders say “wow.” In this case, “wow” is not in a good way.

    We have made a lot of progress in the investment grade debt world, but high yield debt (the most sensitive barometer of credit) is only marginally better, off it’s december lows. That said, it is still better. This is the one to watch closely. Want to see it get back up to 85 or so, before we can breath safely again.

  9. 9
    zman Says:

    Thanks for the updates and links guys, had to be out for the pre-open.

  10. 10
    orion Says:

    HK green…
    looking a a few SU Feb 25’s or 22.5’s

  11. 11
    zman Says:

    Orion – me too.

    CHK reaction to Aubrey signing pretty good from Street comments I’ve seen so far, no backlash in the shares to speak of this morning.

    Re HK, I have a question list in with the company, I’ll let you guys no what I hear. Last year they put out an ops update near the end of January and they have at least as much to talk about now as last year. Maybe 5 more Haynesville wells, and 2 Eagle Ford wells.

  12. 12
    zman Says:

    Speak of the HK.

    Got a big no comment from them on future press release which really wasn’t my direct question and they omitted talk of wells I asked about. They are seeing some cost declines on the service side but not much yet. Pretty timid respondent underling in the IR dept.

  13. 13
    zman Says:

    Thanks Nifkin for the comment on yesterday’s post re Thomas Weisel rating changes…would be scratching my head over the underperformance at SWN otherwise.

  14. 14
    zman Says:

    BOP – who is KOG’s 40% partner in that Moccasin Creek well?

  15. 15
    Dman Says:

    Z – the reliable contra-indicator analyst on KWK has worked his magic.

  16. 16
    elduque Says:

    BDI +32 to 821.
    TED 1.26

    Stuff is starting to move in the right direction.

  17. 17
    zman Says:

    ZTRADE: FSLR January $160 Calls (HJQAL) with the stock up $3 at $151.50. This is just a quick trade, call it an Obama play if you like as we approach inauguration, and the stock has been acting right and is cheap for it at present.

  18. 18
    zman Says:

    Dman – as you can see from the post I don’t really think his math on the previous turns in E&P vs rigs is valid unless you cherry pick your list of E&Ps, just not that clean but I do agree that the E&Ps are likely to turn up before rig counts do. Over time, the two factors move together, especially with regard to up moves, as generally E&P company’s are in happy-happy joy-joy mode when they are adding rigs.

  19. 19
    BirdsofpreyRcool Says:

    z – #14. Hunt Oil. The same guys who sold all their Bakken acreage to XTO last summer.

  20. 20
    zman Says:

    ZTRADE Addendum. Those FSLR calls were added at $4.50 and the stock has since doubled its gain on day so now at $5.20 bid and I would not chase it too far. Apologies, can only type so fast and that’s a wild one.

  21. 21
    zman Says:

    Does that mean its really XTO? Just wondering if there is another way of getting at data here.

  22. 22
    zman Says:

    ZTRADE: SU February $25 Calls (SUBE) added for $1.60 with oil down 50 cents at $42 and the stock flat on the day.

  23. 23
    tater Says:

    What are you doing Z? Don’t you know everybody is an oil bear now?
    I like it!

  24. 24
    zman Says:

    FSLR trading completely market tied. If you think we close green, and this is just for you hot headed trader types, this is my play on it. Analyst coverage of late has been more, not less, friendly, after a series of price target slashing in early winter. Capacity for solar is widely thought to be 20% over demand for 2009…old, well known story, and this is the best margin play on green collar job adds out there in my book.

  25. 25
    zman Says:

    Tater – thanks much for those charts. I was wondering what you thought of the SU daily chart. I got my start reading Oneil books for a portfolio manager a long, long, time ago. Anyway, that’s a scoop chart. Highlighter in hand I would comb the green and blue weekly books looking for those and hit them with a big S and a dogeared page for the pm, especially if I could find dead volume in the base of it and then rising volume, like we’ve had on this little move up. Those can be pretty powerful.

  26. 26
    BirdsofpreyRcool Says:

    z – no. It is not XTO. But it is the same guys (Hunt Oil or Hunt Petroleum, something like that, it’s a private company) who sold all their Bakken acreage to XTO this summer at $5k/acre.

    KOG has never officially named this partner… but, people in and around the industry know it’s Hunt. So, not like it’s “inside info.”

  27. 27
    kyleandy Says:

    anybody know why NAT opened so weak this morn???

  28. 28
    zman Says:

    BOP – thanks, so that’s an info dry hole.

    47 Bcf, very small number, going to sack gas.

  29. 29
    BirdsofpreyRcool Says:

    storage…. Fugly

  30. 30
    zman Says:

    Producing regions saw a build in stocks of 14 Bcf. Texas production still very strong and likely still rising for a short time.

  31. 31
    zman Says:

    Apparently the market is now in the hands of the Obama speech regarding his stimulus package. That could take us green despite all the red data out there today.

    Beutel speaking on CNBC said he sees a rally in crude from now through Memorial Day.

    Re NG, just went back and check the data, have never seen a regional build this time of year in storage. Not even close. This should put the nail in the coffin for the rig count. No reason to slow the decline in rigs if the U.S. can put gas into storage in the dead of winter in the nation’s biggest producing region.

  32. 32
    BirdsofpreyRcool Says:

    z #28… best way to get info is from the drillers. maybe Wyoming knows someone who knows someone… but, you’re right, the KOG Bakken wells are tight holes.

  33. 33
    zman Says:

    SWN acting like the perfect proxy for NG numbers again, down 6%. I had meant to sell mine (indicated this on Tuesday) pre number and got distracted. Will hold longer for a bounce now and potential for a NG bounce as it plays off the drop in rigs tomorrow.

  34. 34
    zman Says:

    SU starting to work, the NG number should hit the land drillers and the major oil service, so far no reaction there. Could be more that willingness to shrug off bad news. Interesting.

  35. 35
    tater Says:

    Sorry, had to reboot. Added SU and SWN. Nothing is in any kind of order, again just use the “chartbook” tab at the top right of the chart screen toggle between charts.

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

    Just a note. I tend to get in and out of things fairly quickly (no chance of a 506% gain doing that!) and have closed all of my short positions and am in all cash at the moment. I am seeing a jumbled mess for an overall picture of the market and I personally find that to be a time to go walk the dog.

  36. 36
    Sambone Says:

    BRUSSELS (AFP)–Ukraine has signed an agreement with the European Commission
    inviting independent monitors to verify Russian gas shipments to Europe, an
    official with Kiev’s delegation to the E.U. said Thursday.
    The memorandum, signed by Naftogaz chief Oleg Dubina and Deputy Prime Minister
    Hryhoriy Nemyria, “opens the way to immediate transit via Ukraine,” said
    Viacheslav Kniazhitski, who is in charge of energy issues for the delegation.
    He said the European Commission still had to sign an agreement with Russia on
    sending monitors.
    Gazprom chief Alexei Miller was due to meet with commission officials late
    Thursday evening, although it was unclear if it was to sign an agreement.

    Dow Jones Newswires
    01-08-09 1106ET

  37. 37
    BirdsofpreyRcool Says:

    Obama speach starting…

  38. 38
    zman Says:

    “we will double the generation of alternative energy in the next 3 years” ~ Obama

    jobs to come from building solar panels and wind turbines.

    FSLR up $6 to $8 during that part of speech but broad market not acting so great now.

  39. 39
    mahout Says:

    BOP #26,

    Believe it was Headington Oil Co. LLC that XTO acquired putting it into the Montana Bakken. Incidently, i think XTO paid way too much, exhibiting a little panic at the thought of missing out on the Bakken rage. At any rate their timing was horrible, one reason i sold all my XTO. Comment by Bakken expert on the Bakken blog of Jan 6 was something like: Bakken stocks lost 70 to 80% in 2008 and without $60 to $70 dollar oil a lot of the small companies will go chapter 11.

  40. 40
    zman Says:

    New download from the EIA shows their December 25 numbers was 2897, not 2877. As I was saying yesterday, these guys will change things on you without notice. Today’s release shows a 47 Bcf drop but still uses the 2877 number, If you look at the corrected data (that they use themselves in the file they say to download here:

    http://www.eia.doe.gov/oil_gas/natural_gas/ngs/ngs.html

    (see second link, year end 2008 number in spreadsheet)

    then the number would be 67 Bcf which is is more in line with what I was thinking. Your tax dollars not able to do simple math.

  41. 41
    BirdsofpreyRcool Says:

    mahout – you are so right!! i was feeling a little squirrely about the Hunt/XTO comment. Lemme go back and see who Hunt sold all their Bakken acreage to… at the top of the mrkt. My (total) bad. Thanks for correcting.

  42. 42
    zman Says:

    mahout – Yep, its was headington. I agree, they did this deal and a deal for Haynesville and other acreage too in a me too move last Spring. Not a big fan of the CEO and think he’d do better to act as a proponent of the industry and not a detractor of his peers.

  43. 43
    sportlock Says:

    Z,

    Great catch on the EIA data. I went and checked the link and sure enough there was the 2897 number. I feel a lot better and as usual when a number is that weird someething is usually not right with it. Thanks again.

    Bill

  44. 44
    zman Says:

    Bill. The EIA guys will tell you to look at the date which is one day off from the reporting date last week December 25, not December 26. They should note it somewhere but as usual don’t. Ugh.

    Broad market none too happy with Obama speech. BOP, can you get a read from your trading desk on rest of day action. My sense is we close higher.

  45. 45
    Dman Says:

    Z – lemme get this right (#40)

    The thing that whacked NG is actually fictional? A mistake?

  46. 46
    mahout Says:

    Tater # 35,

    “A jumbled mess for an overall picture”

    That’s kind of like what i see whenever i look at charts.LOL Seriously, i took a long hard look at HK last night on my Ameritrade charts and came to this conclusion. HK has definitely turned the corner and is trying on small volume to penetrate the 17,18,19 dollar area. And if it does crack 20 it would be an easy move to 24. Which i think it will eventually do. Then i saw your chart this morning (i voted for you) and you see a range to trade short of 20. Add to this, Cl is probably headed down to 40ish Re Z and 35 Re you. What’s a person to do?
    Guess i’ll go walk the dog also. But maybe an option out a few months would make sense here for me. What do you think?

  47. 47
    BirdsofpreyRcool Says:

    OK… i’m basically right. XTO bought Hunt Petroleum last June. The legacy of HL Hunt. The Bakken acreage came with it. We don’t know the exact value that XTO placed on Hunt’s 15k of net acres in the Bakken at the time (but it was rumored to be around the Headington number).

    z – you are right too. There is a 1-well commitment that KOG has with XTO that came with XTO’s purchase of Hunt. XTO operates and we think it will spud this quarter. So, when that well commences, could be a flow of info from XTO.

    But, the same Hunt guys who sold to XTO, then approached KOG with a partnership proposal. The proposal was unsolicited by KOG, but came at a good time. KOG accepted.

    So, XTO did buy the Hunt acreage. KOG is partnering with XTO on one well in the Bakken. The ex-Hunt mngtm are the current partners in KOG’s FBIR Bakken wells. They have an up to 7-well commitment to be drilled over the next 30 months. Nov 5, 2008 PR.

    Got the details straight now. Thanks mahout and z.

  48. 48
    Popeye Says:

    Sorry if you have already seen this but has to be a plus for FSLR if it somewhat close to true.

    An analyst says a Sempra Generation project powering California homes beats conventional sources on cost-effectiveness.

    http://www.latimes.com/business/la-fi-thinsolar5-2009jan05,1,1659151.story

  49. 49
    ram Says:

    Missed the SU. You had mentioned doubling down on trades that are under water. Still thinking?

  50. 50
    zman Says:

    Dman – they have data through the 25th in one file and through the 26th in another. Looking at the withdrawal last week and dividing by 7 (number of days in the week) gets you 20 Bcf. Hmmm. 2897 in the file using the 25th and 2877 using data from the file from the one from the 26th. When they do this its clear they wanted to be at a known number (at least as close to known as you can be) for their historic model. I thought last week’s number was a little on the low side and this week’s number is again. Feels like some adjusting going on. Impossible to say and if they did not make a note about it it means they won’t talk about it.

    The real takeaway is that demand is soft. That production impaired in the gulf and along the gulf coast this Fall saved the storage bacon and it is now coming back on line. That build in the producing region is nutty and I think real which means TX is topping 20 if not 21 Bcfgpd, record highs. Rig count there is plummeting. That will come off but it will take to come off. No reason to expect a big bounce in gas right now and maybe just a moderate one in the spring. If we get a milder than expected January (and its already seen to be pretty mild) then we could have too much gas on hand going into the injection season which would put gas down into the range of $5 and then rigs would come off even further.

  51. 51
    BirdsofpreyRcool Says:

    z – checking with the desk. they called the sell-off, post-speech. No word yet on where they think it goes from here.

    This morning, they thought we would see “early highs, sell off into lunch, then wishy-washy.”

  52. 52
    zman Says:

    Thanks BOP and Mahout. Will likely take a piece at that fishcake on the next down dip.

  53. 53
    zman Says:

    Popeye – thanks much will have a look. If true that is SIZE type news.

  54. 54
    zman Says:

    Ram – probably nothing else today, looking at the HK for Feb calls ($20s) to add to though, maybe tomorrow, maybe Monday. I think they do a PR, I think it happens after January expiry and before the earnings number (don’t recall seeing the date for 4Q yet). I think a lot of people will try to get news out if they think the market cares. HK did not care to gauge if people care. I will say that IR is a more important job than people think and that rote answering of questions is a real buzzkill for me when I help to support their stock with my kid’s college funds. I’ll call them next week.

  55. 55
    BirdsofpreyRcool Says:

    z – Trading Desk standing behind their “wishy-washy” comment. So, basically non-committal from here.

    That said, they are hoping we do NOT see an end of day rally. Would be better to have a sell-off, going into tomorrow’s Jobs Report.

  56. 56
    mahout Says:

    BOP,

    Thanks for clearing that tangled web up.

  57. 57
    cargocult Says:

    Any suggestions for the best way to play the oil services long?

  58. 58
    Sambone Says:

    12:25 01/08 *DJ Prosecutors: Madoff Had $173M In Signed Checks In Desk

  59. 59
    zman Says:

    Cargo – A week ago I came close to taking positions again in DO or RIG or maybe OII. I didn’t, they ran. Looking at yesterday’s post you can see the deepwater guys are the only people will show up earnings in 2008, 09, 10 while everyone else is looking down this year and mixed bag next year. Right now, I’m waiting on their charts to fall back a bit.

    For a little more sly play, I like an OII long vs an SLB short. Wyoming is not kidding about the pain SLB is about to endure. Hard to say if job cuts there help the stock or not but I sort of think not. Talk about wishy-washy answers for you but you’ll note I’m not in the service names right now.

  60. 60
    BirdsofpreyRcool Says:

    mahout – thanks for your help. Thing is, I guess the reason I didn’t keep all the details exactly straight is because if KOG’s first two wells don’t come in economic, then nothing else really matters. But, nice to have the ex-Hunt guys picking up 60-80% of the cost of those wells. I have to think they are not “dumb money” in the play.

  61. 61
    cargocult Says:

    The time to get in may be when everyone is out.

  62. 62
    zman Says:

    BOP – another question for your trading desk if you don’t mind. What’s a good number tomorrow for jobs? ADP was supposed to be down 250,000 and we got down 693,000. November was down 533,000 on payrolls and the estimate I show is 500,000 lost which is the same as before ADP. So I guess I’m looking for the over/under here.

  63. 63
    zman Says:

    Cargo – right, as long as they don’t stay out.

  64. 64
    tater Says:

    Hey mahout,
    Thanks from me as well. I guess the dog walk is a good idea, clears the head. What I came back with is the sage wisdom that has been pounded into my head time and time again;
    Be sure to work your trades in the same time frame as your analysis.
    I know I seem to post those same words monthly, but we all need to be reminded of it. It is very tough to be jumping between time frames, having one trade going as a daytrade, another as an investment, still another in that wishy washy period of “I’ll sell it when it turns profitable.” The different time periods tend to become mush, and so does our trading. The most simple answer is to just write down your time frame and targets (and sell stops) the moment you make your trades. Another is to just stick with, and become expert at, only one time frame.
    Sorry if that seems to be “beginner” type advice. I consider it to be one of the basic fundamentals that we need to go back to and affirm every now and again.
    In the context of HK, I think it means that if you are “investing”, you can afford the luxury of only caring where it is going to be trading 1,3,5, maybe 10 years from now. Maybe buy it on a fixed interval over a fixed time period. (Even better, watch Z’s moves for a cue as to timing).
    If you are merely “trading” it, looking for quick short term gains, then you better pay attention to all the little bumps in the road. For me, that means TA. For others, conference calls and quarterly reports. Pick your medicine.
    Lots of words. Hope it helps.

  65. 65
    Sambone Says:

    By Liam Denning
    A DOW JONES COLUMN

    Got an empty property gathering dust and negative equity? Here’s an idea: Fill
    it with crude oil and sell the stuff forward.
    Oil futures several months out are trading at a steep premium to spot prices.
    Nymex light crude for delivery in May commands more than $50 a barrel, compared
    with a cash price of about $43. That locks in a profit if you buy physical
    barrels and sell them forward, even after paying for storage.
    If you’re worried about ruining the carpet, it’s better to store oil in tanks.
    Trouble is these are pretty much filled already.
    That leaves floating storage. But you’d better hurry. Shipping prices
    collapsed as trade slowed last year, but they are now rising sharply as traders
    at the likes of Citigroup (C) and BP (BP) fill tankers and moor them off
    Scotland. Thursday, daily charter rates for tankers shipping crude from the
    Middle East to the U.S. jumped 45%, according to London’s Baltic Exchange.
    If you really don’t want to get your hands dirty, you could just buy tanker
    futures. Despite the latest jump, they are roughly a third of where they were
    six months ago and will probably continue rising as surplus oil looks for a
    home.
    Absent selling forward, though, the one thing you do not want to buy and hold
    as demand declines is crude itself.

    (Liam Denning joined The Wall Street Journal from the Financial Times, where
    he wrote for the Lex column. Previously, he was an investment banker at Goldman
    Sachs.)

    Dow Jones Newswires
    01-08-09 1306ET

  66. 66
    Sambone Says:

    Off subject

    By Chad Bray
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–About 100 signed checks worth more than $173 million
    were discovered in the desk of disgraced financier Bernard L. Madoff shortly
    after his arrest last month and were “ready to be sent out,” prosecutors said
    Thursday.
    In a brief filed Thursday, Assistant U.S. Attorney Marc Litt said the checks
    were found by investigators searching Madoff’s office after his arrest Dec. 11
    on a securities fraud charge.
    “The only thing that prevented the defendant from executing his plan to
    dissipate those assets was his arrest by the FBI,” Litt said.
    Madoff, the founder of Bernard L. Madoff Investment Securities LLC, allegedly
    told senior employees – later revealed to be his sons – at his Manhattan
    apartment on Dec. 10 that he intended to surrender to authorities in a week,
    but wanted to use the $200 million to $300 million he had left to make payments
    to certain selected employees, family and friends, prosecutors said.
    The Wall Street Journal, citing people familiar with the matter, reported the
    sons brought the matter to the attention of their lawyer, who notified federal
    authorities that night. He was arrested the next day.
    Prosecutors are seeking that Madoff’s bail be revoked after he and his wife
    mailed more than $1 million in watches, diamond jewelry and other valuables to
    relatives and others late last month.
    The government claims Madoff violated an injunction freezing his assets in a
    separate civil case brought by the U.S. Securities and Exchange Commission and
    Madoff “presents a danger to the community of additional economic harm” if he
    remains free – namely through the dissipation of assets available for
    restitution if he were convicted.
    Ira Lee Sorkin, a lawyer for Madoff, has said the items mailed were “purely
    sentimental” and Madoff didn’t realize the asset freeze applied to “personal
    items.”
    Sorkin has suggested Madoff’s bail conditions could be modified to incorporate
    restrictions in the SEC order prohibiting the transfer of assets and valuable
    items could be held in a vault in escrow.
    Sorkin didn’t immediately return a phone call seeking comment on the
    government’s filing Thursday.
    The magistrate judge hearing the government’s detention motion is expected to
    rule on Friday or Monday, according to his chambers.
    Shortly before his arrest, Madoff, a former chairman of the Nasdaq Stock
    Market who had been a force in Wall Street trading for nearly 50 years,
    allegedly told his sons that the firm’s investment-advisory business was
    “basically a giant Ponzi scheme,” and he estimated the losses from the fraud
    were at least $50 billion, according to court documents.
    In a Ponzi scheme, funds from new investors are typically used to pay
    distributions and redemptions to existing investors.
    Since Madoff’s arrest last month, dozens of investors, charities and companies
    have emerged as victims.
    A receiver has been appointed for his firm and a trustee has been appointed to
    liquidate the firm’s U.S. arm.
    (Dow Jones is owned by News Corp. (NWS). In addition to this and other
    newswires, Dow Jones publishes The Wall Street Journal and its international
    and online editions.)

    -By Chad Bray, Dow Jones Newswires
    Dow Jones Newswires
    01-08-09 1311ET

  67. 67
    BirdsofpreyRcool Says:

    z – the bloomberg estimate for the Jobs Report was -500k before yesterday’s ADP report. Even tho ADP has shown itself to be somewhat of a random walk, the shocking -693k (vs -495k exp’d) was… well… shocking.

    After the ADP number, a handful of the bloomberg economists in the survey revised their numbers down… some, a lot. So, the new “expected” Jobs number is -523k. My desk thinks that anything at or slightly below the -523k will be considered “good” and the mrkt will rally. Anything closer to the ADP report… watch out. Then, we will need to hold 850 on the SPX, to keep from finding that new low Nicky has been talking about.

  68. 68
    BirdsofpreyRcool Says:

    Follow-up from the Trading Desk: a big number (in the range of the bloomberg -523k estimate) may send the SPX down big initially. But, if it comes within that range (and not closer to the ADP number), then they think we will rebound, quickly.

    So, there you have it. Volatility and Uncertainty continue to drive the boat.

  69. 69
    mahout Says:

    Tater,

    Yes it does help. I like your advice on this. Going out to play pool now to clear my head. Many thanks.

  70. 70
    zman Says:

    Thanks much BOP

  71. 71
    md Says:

    Z NG Was this the reason for the adjustment. I just came back on so I hope I’m not repeating the obvious.
    Post #5
    This rather modest figure is in keeping with what was a very mild week last week, the slow demand holiday season, and a “truing” up of the storage data,” wrote Martin King, vice president of institutional research with FirstEnergy Capital Corp. in Calgary, Alberta, in a note to clients. “As storage operators came back from holidays, they will incorporate their more complete set of data into last week’s data submission.”

  72. 72
    PackMan Says:

    hearing some big snow storms called for northeast for this weekend and next week.

  73. 73
    Dman Says:

    Z – from a long-term stock viewpoint, if I want to buy undervalued NG reserves, I’d look at CHK stock. Are there an equivalent stock situations for oil reserves?

  74. 74
    BirdsofpreyRcool Says:

    The good news is that, regardless of what the stock market, or even the credit indices are telling you, real investors are buying real cash bonds. There has been a rush of new issuance that has been well-received (albeit, at nice prices for investors). If this move into single-name bonds and new issuance keep up, the stock market should rally from here. Frankly, the stock market has vastly UNDERperformed the bond market since the beginning of the year.

    So, the KEY tomorrow will be how bond investors respond to the Jobs report. If they continue the buying spree, stocks will go up. If they stop buying credit, the credit bears will step in, accelerate the move to the downside, and the stock market will fall. That is really the sequence to watch. The bond market will set the tone.

  75. 75
    BirdsofpreyRcool Says:

    IG 206… wider on the day… but, it’s not telling the real story. People are not really trading the indices, they are on an individual bond buying spree. Good stuff.

  76. 76
    zman Says:

    Dman – BRY, CLR

  77. 77
    Dman Says:

    Thanks Z. Hadn’t looked at BRY before.

  78. 78
    zman Says:

    should have added WRES and WLL to that list as well.

  79. 79
    zman Says:

    Dman – all of those have some risk of a ceiling test writedown with their 4Q press release. BRY is Kern county crude (heavy) with is pretty low $ at present and not especially low cost to produce. They do have some angle of attack on the Haynesville Shale (gas) right now though that makes the story a little more interesting.

  80. 80
    Dman Says:

    Yikes, that’s some leverage there at BRY.

  81. 81
    zman Says:

    Yep, but Gil Yang was right in his comment that when the market stops fretting over debt levels the leveraged names will outperform the low debt guys like EOG. That’s part of why he likes that KWK so much.

  82. 82
    zman Says:

    md – re 71, yes.

  83. 83
    zman Says:

    Crude near LOD down 2 at 40.60, they want to test 40. If they crack it I will walk on my remaining SU Jan calls.

  84. 84
    BirdsofpreyRcool Says:

    and don’t forget HK is considered a high-debt name. B3/B- rated puts it at the bottom of the acceptable range. But, if you can manage that much debt, it provides a turbo-booster to your returns on equity.

  85. 85
    BirdsofpreyRcool Says:

    i’m joining tater and going to walk the dog.

    Today’s trading is pretty much meaningless from here. But I do hope there is NOT some sort of rally into the close. It will make managing through tomorrow’s Jobs number easier if the mrkt closes down around here.

  86. 86
    Dman Says:

    #81 yes & I assume it’s the ability to service the debt (& roll it over if necessary), rather than how scary it looks, that should be the issue.

  87. 87
    cargocult Says:

    Why id BRY so cheap? PE 2.2

  88. 88
    zman Says:

    Dman – re 86 exactly.

    BOP – better to walk the dog today than kick it tomorrow.

  89. 89
    zman Says:

    High debt has pounded all similar names lower, they also have lower value crude so until recently they had some pretty rotten returns, and they have DJ Basin natural gas which is pretty depressed at present as well. And they are a small E&P stock. I don’t recall their hedge situation so the E in the PE is probably still pretty suspect so it may not be as cheap as it looks.

  90. 90
    Popeye Says:

    CHK & HK at PPS parity.

  91. 91
    Dman Says:

    My dog is asking for walkies but I’m distracting her with food

  92. 92
    Pete Says:

    Z,
    excellent call on SU. At SU present level which would you favor for oil going forward SU,CLR or BRY ?

  93. 93
    zman Says:

    SU first, then CLR and BRY. I really like the way CLR handles themselves and their #1 position in the Bakken but I doubt they are profitable at these oil prices and they are unhedged at last check.

  94. 94
    Pete Says:

    thanks Z

  95. 95
    Dman Says:

    Z – so CLR unprofitable at $40-ish oil & no hedges gives lots of leverage to oil. Is that what you meant?

  96. 96
    zman Says:

    Dman – Yep, as long as oil does decide to go up. I was a little sloppy on my thought. I was thinking not profitable at $40 (or $50 for that matter) in the Bakken, not for the whole company. When oil goes back up people will scouting out the unhedged beneficiaries. My sense is that the financially heavily leveraged and unhedged (otherwise as gunslingers) will outperform the unlevered and light hedged (like EOG) and the levered but hedged (CHK).

    Maybe someone like me should put that in chart format.

  97. 97
    zman Says:

    Russia to restore gas to Europe once EU monitors arrive at compressor stations along the trans-Ukraine route.

  98. 98
    Sambone Says:

    BRUSSELS (Dow Jones)–The European Union failed to reach an agreement with
    Russia and Ukraine to resume gas flow, top officials said Thursday, undermining
    hopes for a quick solution to a crisis that is disrupting the European Union
    economy.
    “Unfortunately, I cannot name the date and time when gas will be reinstated,”
    said European Energy Commissioner Andris Piebalgs at a press conference. He
    explained there was no agreement on Russia’s request also to send its own
    observers to Ukraine to oversee the gas flow.
    The E.U. proposed sending international monitors to supervise the flow of gas
    from Russia through Ukraine and make sure this resumes. Between 10 and 12
    monitors representing the European gas industry and the European Commission
    will nevertheless go to Ukraine on Friday to be in place once the supplies can
    be resumed, Piebalgs said.
    The E.U. needs to push Russia and Ukraine to restore gas supplies as soon as
    possible, as a dispute about gas prices between the two countries has been
    heavily affecting Europe since Tuesday, disrupting its economy, especially in
    Eastern European countries. Some 80% of the bloc’s gas imports from Russia flow
    through Ukraine.
    “There has to be a solution,” said Jonathan Stern, director of gas research at
    the Oxford Institute for Energy Studies. “Things are just getting worse by the
    hour in Eastern Europe,” he said.

    -By Alessandro Torello and Matthew Dalton, Dow Jones Newswires (Frank Huetten in Brussels contributed to this report.)

    Dow Jones Newswires
    01-08-09 1400ET

  99. 99
    Dman Says:

    Now there’s an optimist (Mr Stern in #98), using the phrase “there has to be a solution” in the same sentence as “Eastern Europe”. Methinks Russia is trying to drive a wedge between Ukraine & the EU.

  100. 100
    zman Says:

    ok, maybe not 97 and 98. Things apparently still pretty fluid.

    Oil did a good job of bouncing off that LOD and did not get that close to 40 (hit 40.54) and has since rallied post close to 42.

    I think I will my remaining SU calls for Jan into the jobs number tomorrow.

  101. 101
    zman Says:

    Dman – the Russian don’t like these headlines.

    http://www.nato.int/issues/nato-ukraine/index.html

    It’s not about the money. You only know it is about the money when they say “it’s not about the money”.

  102. 102
    zman Says:

    Hate to do this but I have to step out for 20 minutes.

  103. 103
    Sambone Says:

    By Christine Buurma
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Natural gas futures ended more than 4% lower Thursday
    after U.S. government data indicated that the economic downturn continues to
    curtail demand.
    Natural gas for February delivery on the New York Mercantile Exchange settled
    floor trade 28.9 cents lower, or 4.92%, at $5.583 a million British thermal
    units after reaching a low of $5.55/MMBtu in combined electronic and floor
    trade earlier in the day.
    A Thursday report from the U.S. Energy Information Administration showing a
    modest pull from inventories suggests that the U.S. economic recession is
    making a significant dent in gas consumption, particularly among industrial
    users, analysts and traders said.
    “Industrial demand is definitely off,” said Ed Kennedy, a broker with Hencorp
    Becstone Futures in Miami.
    Several major industrial consumers, including Dow Chemical Co. (DOW), DuPont
    (DD) and Alcoa Inc. (AA), have announced layoffs and reductions in capital
    expenditures in the past few weeks.
    The EIA reported a storage withdrawal of 47 billion cubic feet for the week
    ended Jan. 2, below the 78 bcf five-year-average draw and last year’s 147 bcf
    withdrawal. Analysts and traders in a Dow Jones Newswires survey had predicted
    a 78 bcf draw.
    “I thought surprises would fall toward the bearish side, but I definitely
    wasn’t looking for a number this small,” said Jim Ritterbusch, the president of
    Ritterbusch & Associates, a Galena, Ill. energy advisory firm. “It continues to
    suggest that this recession-induced slide in industrial demand is a sizable
    item.”
    The Christmas and New Year’s holidays also likely curbed gas demand as
    factories closed in observance, Ritterbusch said.
    The latest withdrawal brings the total amount of gas in storage to 2.83
    trillion cubic feet, 1.1% above last year’s level and 3.2% above the five-year
    average.
    Traders appeared to shrug off weather forecasts pointing to below-normal
    temperatures in the U.S. Northeast and parts of the Midwest over the next two
    weeks. Cold weather generates demand for natural gas for heating.
    Frontier Weather, a Tulsa, Okla.-based private forecaster, was predicting
    below-normal temperatures in the eastern U.S. from Jan. 13 to Jan. 17, with
    readings 12 to 16 degrees Fahrenheit below normal near the Great Lakes.
    Below-normal temperatures were also expected in the region from Jan. 18 to Jan.
    22.

    -By Christine Buurma, Dow Jones Newswires
    Dow Jones Newswires
    01-08-09 1535ET

  104. 104
    Sambone Says:

    LONDON (Dow Jones)–Russia’s gas monopoly OAO Gazprom (OGZPY) said late
    Thursday that despite the efforts of the European Commission, there has been no
    agreement on multilateral monitoring to help solve the gas crisis, and it
    blamed Ukraine for failing to sign the deal.
    A draft of the protocol on the establishment of an international expert
    commission on the transit of natural gas through Ukraine, prepared by the
    Russian side and viewed by Dow Jones Newswires, proposes that the ministries of
    energy of Russia and Ukraine, the European Commission and “gas producers,
    purchasers, transporters and independent experts” appoint one representative
    each to the monitoring body.
    “Anything less risks producing a partial and inaccurate picture of gas transit
    volumes,” Gazprom said in a statement.
    A Gazprom’s spokesperson also said that 10 purchaser countries had signed the
    agreement, but Ukraine has refused.
    “The E.U. Commission then produced a far more limited proposal involving just
    gas experts and E.U. officials. Gazprom rejected this as inadequate for
    monitoring the Ukrainian transit effectively,” Gazprom said.
    The copy of the protocol viewed by Dow Jones Newswires has only signatures,
    those of Gazprom and Russia’s Energy Ministry. It also has spaces for
    signatures by the European Commission, the Ministry of Energy of Ukraine,
    Ukraine’s national gas company Naftogaz, and 12 companies.
    The list of companies includes Germany’s E.On Ruhrgas AG; France’s GDF-Suez
    S.A. (GSZ.FR); German natural gas importer Wingas, which is a joint venture
    between BASF SE’s (BAS.XE) unit Wintershall Holding AG and Gazprom; RWE
    Transgas, a Czech unit of German energy company RWE AG (RWE.XE); Austria’s gas
    distributor OMV Econ Gas; Italy’s Eni SpA (E); Slovakia’s SPP; Public Gas
    Corporation of Greece DEPA S.A; Bulgaria’s Overgas; Hungary’s Panrusgas Gas
    Trading PLC; Moldova’s Moldovagaz; and engineering company SGS Vostok.
    Gazprom has various stakes in some of those companies.
    Gazprom said it intend “to resume gas supplies as soon as satisfactory
    conditions for monitoring the flow of transit gas through Ukraine are agreed.”
    Gazprom will keep pressing for a resolution of the crisis, and will continue
    the search for an agreement with its Ukrainian counterpart, the company said.

    -By Alexander Kolyandr, Dow Jones Newswires
    Dow Jones Newswires
    01-08-09 1535ET

  105. 105
    Sambone Says:

    Off subject – From a Blog

    “CNBC reports that an 82 year old New York State man, Richard S. Piccoli (no, we absolutely did not make that up and though there is no apparent relation to Jeff Spicoli, this will not, in any event, prevent us from posting Jeff’s picture) took in at least $17 million since 2004. Apparently, he targeted the clergy. (That, we approve of heartily).

    We think Jeff makes a fine poster boy for all things Ponzi, actually, after putting him up.”

    Brad Hamilton: Why don’t you get a job Spicoli?
    Jeff Spicoli: What for?

    Brad Hamilton: You need money.

    Jeff Spicoli: All I need are some tasty waves, a cool buzz, and I’m fine.

    Did Jeff go on and work on Wall Street as a banker?

  106. 106
    zman Says:

    Seems we are going quietly into the close.

  107. 107
    Sambone Says:

    Jeff Spicoli – “What Jefferson was saying was, Hey! You know, we left this England place ’cause it was bogus; so if we don’t get some cool rules ourselves – pronto – we’ll just be bogus too! Get it?”

  108. 108
    Dman Says:

    tater, that’s an amazing job you are doing on the charts. I need to spend more time looking at them. The detailed analysis across multiple timescales is seriously useful.

  109. 109
    Dman Says:

    Z – is GLOBEX tracking USO in this little rally or is USO doing its own thing?

  110. 110
    tater Says:

    So I guess somebody likes the layoffs at SLB

  111. 111
    tater Says:

    Thanks D

  112. 112
    zman Says:

    D – It seems to be running a little with the stock but oil has rallied late in the day more as well. USO is just a little ahead of that move, within normal limits.

    We seem to be getting BOP’s rally she did not want.

  113. 113
    tater Says:

    My mistake on SLB. Took my third eye off the ball (oil and general market) trying to set a bid price.

  114. 114
    BirdsofpreyRcool Says:

    hey! i have nothing against a good rally. it’s just that tomorrow’s number and reaction has the possibility of setting the tone for the next couple of months.

    We get past the number, credit continues to rally, then we get to see something like 1075 on the SPX. If not, we hope to hold 850.

    It’s easier to go up, if you went down the day before. Tomorrow’s reaction is just so important. I want all the “help” i can get.

  115. 115
    Wyoming Says:

    I see literally a last minute shopper in SLB, up 0.22. There were about 600 lay off’s yesterday. Head to Jan 22, 1999 if you want to see my opinion. Same energy environment as today. Heading home. Have a good one.

  116. 116
    zman Says:

    CVX on the tape warning about a 4Q miss. Citing weakness in chemicals, bigger than expected charges, price weakness in the upstream. Says Q4 earnings to be significantly lower than Q3.

  117. 117
    zman Says:

    Not a lot of meat in the CVX warning. They basically said they are going to make significantly lower earnings in 4Q from 3Q.

    The Street is at $1.78 now. Versus the $3.25 they made in Q3 it may already be in the numbers, difficult to tell as they are only providing 2 months of the quarter for comparison purposes.

  118. 118
    zman Says:

    Wyo – SLB on the tape laying off 1,000 (5%) of N. American staff. Says looking to make cuts elsewhere.

  119. 119
    Wyoming Says:

    They will do it over a couple of rounds.

  120. 120
    jomama Says:

    Hi Zman, visiting for a month and checking out your site. I’m usually on phil’s site.
    quick question: what are your thoughts on xom? do you think that xom will be giving a similiar warning? thanks

  121. 121
    zman Says:

    Jo – its possible, they are both in the same boat regarding commodity prices, shrunken refining margins, and a slack chemicals segment. In general, CVX and COP have been quick to warn while XOM has been less so. I think the warning from CVX is not guaranteed to be a downer for the stock on anything but from an extremely short time span, like maybe just Friday as the estimates already reflect what you’d call “significantly lower” at present. Glad to have you here, ask away.

  122. 122
    PackMan Says:

    Z – EOG – many thanks !

  123. 123
    zman Says:

    Pack – they are on the tape this afternoon with an 8K, pretty run of the mill, hedge update (have not looked hard at that yet, says they will be within cash flow on capex (no kidding) and that debt will be flat at end of 2009 with end of 2008 levels. I think I said they’d get to 0 debt by 2010 so that sounds fine. They also mentioned they will update production guidance for 2009 when they announce 4Q results (they were at 10 to 14% range and I bet they go ahead and pick the low end of the range for their target now given where gas prices are are).

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