14
Jan

Wednesday Morning

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Gloomy Story of the Day: Weak retail sales.

Apologies if the site seems slow this morning, the issue has been reported to my host and will hopefully be resolved shortly after the open. If not, we may switch to the backup site for the day.

In Today's Post:

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

Holdings Watch: No changes yesterday

Commodity Watch

Crude oil rose $0.19 to close the day at $37.78 yesterday in choppy, directionless trading tied to the shabby performance of the equity market and not really affected by news that Saudi Arabia is going sub quota in February. This morning crude is trading up slightly after hitting $39+ over night.

  • MEND Watch: The rebels with a cause are making noises they will end the current ceasefire (ceasefire?) over the killing of one of their gang leaders by the military.  "Our first spectacular urban attack on a military patrol will announce the end of the ceasefire." If they do start attacking the military instead of oil installations it may actually allow some production to get back on line in Nigeria. I would expect that there will be a storm of activity later closer to summer if lead Henry Okah is not released. 
  • OPEC Watch: The new Cartel president is talking about the possibility of cuts in March; I'm no longer reading about the potential of an emergency meeting prior to the March meeting.
  • Crude Trader Sentiment Watch: (aka, It Can't Be That Simple Watch)
    • Oil was rising "on the back of [the] record-breaking cold wave," wrote MF Global analyst John Kilduff, who also pointed out that strengthening in oil could lose momentum as economic worries and demand concerns return ~ from Marketwatch.
    • “The Saudi comments are giving us a bit of support but I doubt they will be enough to keep the market in positive territory,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. “The economy is in terrible shape, which is putting pressure on almost all commodities.”~ Bloomberg

Natural gas got slammed, falling $0.36 to close at $5.18 yesterday as the coldest weather of the year invades a majority of the U.S.  The drop was in part due to Russia reopening the gas taps to Europe yesterday which theoretically would free up more LNG to come to the States and a perhaps a delayed response to the jobs report from last week which auger for continued and further depressed industrial demand. Seems like an over-reaction. This morning gas is trading pretty flat.

  • Pickens Watch. He makes a good argument here for more natural gas drilling and met with Nancy Pelosi yesterday to make his case while vowing to stay on Obama watch to gauge any progress.
  • Early Read On Thursday's Gas Withdrawal. I'm seeing numbers of between 109 and 125 Bcf and I'm zeroing in on a 120 Bcf withdrawal myself.

Oil Inventory Preview

ZComment: Its probably time for a smaller build in crude or even a drawdown this week after high imports last week. Still, only two things can really rally crude from here beyond a one or two day pop.

  • One would be signs of increased gasoline demand that produces a reduction in gasoline stocks ... that's pretty unlikely looking at the MasterCard data which continues to show down 4% demand.
  • The other would be a sharp drop in crude stocks at Cushing, OK. That seems unlikely at this point as well ...as refiners reduce runs to prop up weak margins, something I might add which has helped to breath a little life into the shares of the independent refiners in the last couple of weeks. 

Stuff We Care About Today

Pritchard Capital Energize Conference: Schedule for today. There does not seem to be a way of listening in but the presentations in many cases are archived on the company sites.

GST Finishes Drilling Another E. Tx Well. This was the sidetrack mentioned in the press release last week. They found 71 feet of pay It's not completed yet but this is another case where management is press releasing un press release worthy news (it won't be completed for another 30 days) but there is pressure on them to get news out the door. See last week's thoughts here.

HK Notes From BMO Conference Yesterday

  • H.S. production “well over” 100 mm/d now up from 84 as of 1/4/09
  • Two new wells on, one at 17mm/d, one at 24 mm/d. These were two of five I thought they would be press releasing but they opted to just slip them into the presentation.
  • HK has now drilled 30 wells in the Haynesville Shale but only released well results on 10 and will release more wells (sounds like 3 to 5) in the operations update.  Still don’t know if they wait for the 4Q results for that or go sooner. CEO Floyd said the others are remarkably consistent with the ones that have been announced. He thinks that Elm Grove is probably the core of the play, which is their backyard in terms of acreage.
  • Well costs going up to $8.5 to 9 mm per well as they go to longer horizontal sections and more fracs (4,500 foot lateral and 15 fracs). The concepts is to reduce the ultimate number of wells needed to drain a section from 7 or 8 down to 5 or 6 so the overall cost drops despite the per well increase in costs.
  • He mentioned the second Eagle Ford Shale well is completing and that it and a third well drilling now "look great".

Viewer Late Night MailBag:

Zman what is your order of best buys for NG producers? You have recently mentioned EOG, SWN, HK, GMXR, CHK, GDP and probably a few I missed. ~ mimster90

Mimster - in order of preference

  1. HK - big and bigger wells, 3 shale play focus,
  2. SWN - well hedged, not overly leveraged financially, solid grower, and one of the few E&Ps you will see this year with a higher capital budget than last year. The only knock on them is that they are not a Haynesville player (although they could stealthily enter now)
  3. GDP and GMXR - toss up. Haynesville galore. Clean balance sheets, well hedged, even higher production growth rates, a bit smaller so they may get occasionally lost in the market shuffle.
  4. EOG - gassy, almost assured to grow at the 10% of their 10 to 14% range this year as they will down shift again with their February number release due to low gas prices. Under-leveraged but will not reduce debt levels further this year due to low prices. They needed to hedge more earlier, not terrible and fully in their numbers at this point but a bit of a knock on the normally conservative management team.
  5. CHK - last but only because you forced me. They are in the right places and have recently even said the right thing. Realize that the margin between #1 and #6 on this list is pretty thin.
  • If you are meaning for longer term (2+ years) then EOG and CHK should move closer to the top of the list and GMXR should easily top it.

XTO Monetizes 2009 Hedges:

  • Raised $900 million resetting 37% of 2009 hedges
  • Proceeds go to debt pay down, sees end of year at $11 billion in debt.
  • No word on where this leaves them in terms of hedge postion although that would have been easy to put in the pr. One has to assume that the new hedges are quite a bit lower than the old ones.
  • Not pointing this out for XTO purposes but I do think we will see more of this if the credit markets don't loosen up soon. Personally I think its a bad move if you are just going to offset it will lower revenues and earnings in the coming quarters. At least they said they reset them and didn't go naked as there is always the possibility the

Odds & Ends

Analyst Watch: (CLB) upped to Over-weight at JPM, (SU) cut to Sector Perform at RBC, (STP) cut to Underperform at FBR, Jerfco cuts (BPZ) to Under, JPM cuts (PDE) and NOV) to Underweight and (RIG) and (SII) to neutral. (CCJ) cut to Sector Perform at CIBC. Finally, Argus cuts (NBR) price target to $20 from $35 but keeps Buy on it - the shift to drilling more long lateral horizontal wells like in the Haynesville is benefitting the high horsepower fleets of companies like NBR.

OptiSolar Cuts Work Force In Half. Tough times reach even the solar industry as the private company was unable to secure financing to expand into a larger facility despite having the contract for the largest solar power plant in the U.S. yet announced (550 MW with PG&E which is about half the size of your typical nuke).

The GDP notes from yesterday have been added to the reports tab.

 

135 Responses to “Wednesday Morning”

  1. 1
    BirdsofpreyRcool Says:

    Credit Market Opening: Ugh. Sums up reaction to economic data reports this morning. Basically, consumer not buying and deflation continues. IG index opened around 221 (+2 from close), then backed up from there. High yield index even worse.

    I would feel worse about all this if we didn’t see continued corporate bond issuance taking place. This is not Deja-Vu-January as this is not a repeat of last year’s market — so far. Credit is showing a thaw… deals are getting done (albeit at juicy yields for investors). We are far far from any sense of normalcy in the credit market, but heading the right direction — so far.

    IG 228 +9 from close

    HY 76 3/8

  2. 2
    BirdsofpreyRcool Says:

    Nortel Networks declared BK this morning. They have tons of debt and were rated Caa2 / B- (S&P a little behind the ball with their B- rating, but Moody’s got it right), so it doesn’t come as a huge surprise. With almost 4.5B of long-term debt, this is a fairly large bankruptcy.

  3. 3
    elduque Says:

    BDI +9 920
    TED -.02 .97

  4. 4
    Sambone Says:

    By Nick Heath
    Of DOW JONES NEWSWIRES
    LONDON (Dow Jones)– Crude oil futures traded higher Wednesday, as investors
    continued to focus on OPEC comments suggesting further production cuts could be
    unveiled to shore up prices.
    Forecasts for a blast of colder weather in the U.S., including the key heating
    oil-consuming northeast region, also lent support to prices, as did a continued
    failure to resolve the natural gas dispute between Russia and Ukraine that has
    cut off Russian gas flows to Europe.
    However, price upside was capped on anticipation that weekly U.S. government
    oil inventory data due 1530 GMT Wednesday will reveal another build in U.S.
    crude stocks, emphasizing a picture of plentiful supply amid current weaker
    global crude oil demand.
    “I think continued builds would have a negative effect on the market. With
    stocks where they are, it’s difficult to believe in a long-term upward move at
    the moment,” said Tony Machacek, energy broker at Bache Commodities in London.
    At 1214 GMT, the front-month February Brent contract on London’s ICE futures
    exchange was up 83 cents at $45.66 a barrel.
    The front-month February light, sweet, crude contract on the New York
    Mercantile Exchange was trading $1.06 higher at $38.84 a barrel.
    The ICE’s gasoil contract for February delivery was up $3.00 at $480.00 a
    metric ton, while Nymex gasoline for February delivery was down 125 points at
    113.64 cents a gallon.
    Saudi Arabia’s oil minister Ali Naimi said Wednesday that current crude oil
    prices aren’t reflective of market fundamentals and needed to be maintained at
    a level that encourages future investments. His comments Tuesday, that Saudi
    Arabia, OPEC’s largest producer, will cut its February production by more than
    its target set by OPEC in December, helped spur prices higher, aided by the
    group’s secretary general hinting that a further production cut could be
    unveiled when OPEC meets in March.
    In an attempt to help arrest the decline in crude prices, OPEC announced a
    record 2.2 million barrel-a-day cut in production levels last month, effective
    Jan. 1.
    Market participants were wary Wednesday that the U.S. Energy Information
    Administration’s weekly update on crude oil and products stocks could land
    fresh pressure on crude prices Wednesday, as witnessed last week when a
    surprise 6.7 million-barrel build in crude stocks brought the oil market’s
    stronger start to 2009 to a sudden halt.
    In a Dow Jones Newswires survey of 15 analysts, all but two expect stocks to
    rise, with expectations ranging from a draw of 1.7 million barrels to a build
    of 4.5 million barrels.
    Seasonal weather helped underpin crude and products prices Wednesday. The U.S.
    National Weather Service Tuesday forecast temperatures along the U.S. East
    Coast and across parts of Midwest will be “much below normal” between Jan
    17-21.
    “The bitterly cold weather about to engulf the nation could lead to some of
    the heaviest demand for heating oil in a number of years,” said Peter Beutel of
    trading advisory Cameron Hanover.
    Hopes of a swift resolution to the dispute between Russia and Ukraine over
    natural gas prices floundered Wednesday. Despite Russian requests to restart
    gas flows to Europe, Ukrainian state gas firm Naftogaz said Wednesday it won’t
    open the taps to its system for a “technical reason.”
    Gas shortages in some Eastern European countries have boosted demand for fuel
    oil and distillate as alternatives to natural gas, and a drawn-out resolution
    to the problem could prolong demand for them.
    -By Nick Heath, Dow Jones Newswires

    Dow Jones Newswires
    01-14-09 0735ET

  5. 5
    BirdsofpreyRcool Says:

    Credit CDS Indices a bit weaker, ahead of open:

    IG 229

    HY 76 1/8

  6. 6
    zman Says:

    RIG looking like it goes sub $50 on a downgrade today, I’ll be interested around #43 to $45.

  7. 7
    zman Says:

    The weather service warned that exposed flesh can freeze in 10 minutes when the wind chill is 40 degrees below zero or colder.

    http://news.yahoo.com/s/ap/20090114/ap_on_re_us/snowstorm

  8. 8
    Sambone Says:

    By Brian Baskin
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude futures traded flat Wednesday as the market waited
    to see whether U.S. oil inventories would continue to surge.
    Light, sweet crude for February delivery traded four cents, or 0.1%, higher at
    $37.82 a barrel on the New York Mercantile Exchange. Brent crude on the ICE
    futures exchange traded 37 cents, or 0.8%, higher at $45.20 a barrel.
    U.S. oil and product inventory data due out later Wednesday are expected to be
    the driving force behind market activity for the rest of the week. The February
    futures contract will expire next week, and traders are watching the inventory
    data to determine whether the massive $6.50 gap between February and March
    crude is justified.
    In December, swelling inventories helped drive that spread to a record $9 at
    one point just before the January contract expired. Inventories at the Nymex
    contract delivery point in Cushing, Okla., reached a record last week, and
    stocks are high nationwide. But signs that inventories have peaked,
    particularly at Cushing, could cause the spreads to narrow.
    “These spreads have gotten so wide that at some point there was going to be
    traders coming in to try and flatten those out,” said Addison Armstrong, an
    analyst with Tradition Energy in Stamford, Conn.
    Analysts surveyed by Dow Jones gave an average forecast of a
    1.8-million-barrel build in oil inventories for the week ended Jan. 9. Gasoline
    stocks are seen growing by 1.4 million barrels and distillates, including
    heating oil and diesel, by 800,000 barrels.
    Inventories are growing despite indications that members of the Organization
    of Petroleum Exporting Countries are cutting production following an agreement
    to reduce output on Dec. 17. Demand is seen dropping by even more, as the
    economic downturn deepens world-wide. U.S. retail sales fell by more than
    expected in December, the Commerce Department said Wednesday, the latest sign
    that the economy has yet to hit bottom.
    “The…numbers we are getting seem to be getting worse by the day,” wrote Ed
    Meir with MF Global.
    Front-month February reformulated gasoline blendstock, or RBOB, recently
    traded down 2.19 cents, or 1.9%, at $1.1270 a gallon. February heating oil
    traded 81 points, or 0.5%, lower at $1.5060 a gallon.

    -By Brian Baskin, Dow Jones Newswires

    Dow Jones Newswires
    01-14-09 0923ET

  9. 9
    BirdsofpreyRcool Says:

    IG 227 backed off from the 229 wide of day

  10. 10
    elduque Says:

    -38 in Ely, Mn today, now that is cold.

  11. 11
    BirdsofpreyRcool Says:

    IG 230 back to scared again.

    SPX 850 is pretty key to hold here.

  12. 12
    BirdsofpreyRcool Says:

    IG 228

  13. 13
    BirdsofpreyRcool Says:

    IG 227… back away from the edge… nothing to see there…

  14. 14
    zman Says:

    There went 850 on the S&P. Only thing green on the screen is oil at up a penny. I see some brokers now calling for an upside surprise (better than expected) news from the oil inventory report. Were that to happen the sector would likely go greener than normal as money flocks that direction. I’d bet though that its a short term reaction good only for a trade. Volumes in E&P and other energy are extremely light and have been on this last pullback which is somewhat encouraging as we don’t seem to be in liquidation mode and only in follow the market’s lead mode.

  15. 15
    BirdsofpreyRcool Says:

    IG 227

    SPX 850 holding…

  16. 16
    Sambone Says:

    LONDON (Dow Jones)–The Niger Delta’s main militant group will retaliate after
    the army killed a rebel commander and it is gearing up to end its ceasefire, a
    spokesman for the group said Wednesday.
    Militant attacks by groups seeking a better redistribution of oil revenue have
    shut down about half a million barrels of oil a day of Nigeria’s production,
    sending jitters into global oil markets.
    In an e-mailed statement, the Movement for the Emancipation of the Niger
    Delta, or MEND, said it “decreed today, January 14, 2009 every soldier in
    uniform inside the Niger Delta region as a fair target in reprisal for these
    killings which is (sic) now becoming a common practice endorsed by the Nigerian
    government.
    “Our first spectacular urban attack on a military patrol will announce the end
    of the ceasefire,” it said.
    The movement had decreed a ceasefire late September, saying it wanted to give
    peace a chance and time for the government to release its leader Henry Okah.
    MEND, which said the dead commander didn’t belong to its movement, has in the
    past threatened reprisals when groups it is ideologically aligned with are
    being attacked.
    The commander, who was named as Tubotamuno Angolia by both the army and MEND,
    had given an interview to Dow Jones under the nom de guerre “General Point-One”
    where he said he wanted to disarm.
    -By Benoit Faucon, Dow Jones Newswires
    Dow Jones Newswires
    01-14-09 1004ET

  17. 17
    nifkin Says:

    Crude options expire today- largest open interest $35..potential for pinning there if DOEs are negative

  18. 18
    zman Says:

    NG making a run on $5 now. SPX at 846. Volumes still very light in energy land but that will change with the numbers in 15 minutes. It seems that what went up the most including solar and things like shipping are falling the hardest now.

  19. 19
    BirdsofpreyRcool Says:

    Spent some time with a Houston Ship Channel Pilot over the holidays. He is seeing roughy the same volume of tankers come into port, but they are only carrying about 1/2 the typical volumes (we’re talking container ships here). His Pilot’s Chapter is warning their members that 2009 is not going to be a good year for volumes. He says, it’s only a matter of time before 1/2-full ships become 1/2 the volume of ships.

    So, tough to see where the recent rebound in shipping indices and stocks will stick.

  20. 20
    BirdsofpreyRcool Says:

    HY index at 76… don’t like to see this level

    But JNK (high yield bond ETF) still trading at a premium to underlying NAV of $30.94. People still not thinking this is a 100% carbon copy repeat of Jan 2008.

  21. 21
    zman Says:

    oil off 50 cents pre numbers

  22. 22
    zman Says:

    crude up 1.2 mm barrels
    gasoline up 2.1 (that’s a little high)
    distillate up 6.4 mm barrels that way high

    imports backed off a little but not a lot to 9.7

    stocks at Cushing crept up to 33 mm barrels from 32.2 mm

    gasoline demand fell back to 8.76 mm bpd.

    not a lot of good cheer in this report.

  23. 23
    zman Says:

    oil off $1.50 now.

  24. 24
    zman Says:

    and natural gas has a $4 handle now at $4.99.

  25. 25
    BirdsofpreyRcool Says:

    IG 230 back to wides with SPX not holding 850. Bond indices following stock lower.

    Nope, not a lot of good cheer in the air.

  26. 26
    zman Says:

    ZTRADE:

    SWN – SWN Jan $30 Calls (SWNAF) for $0.35 for a quick trade on a bounce in natural gas in the next couple of days. Bought with the stock at 27.70, off 6% with the rest of the market in the red today and after some pretty dismal oil numbers. Gas briefly dipped below $5 and looks like it may bounce after bad days yesterday and today and in spite of pervasive and colder than expected weather.

  27. 27
    Sambone Says:

    NEW YORK (Dow Jones)–U.S. crude inventories rose 1.1 million barrels, at the
    low end of analysts’ expectations in the week ended Jan. 9, according to data
    released Wednesday by the U.S. Department of Energy.
    Crude oil stockpiles gained 1.1 million barrels to 326.6 million barrels,
    compared with an average survey estimate of a rise of 1.8 million barrels.
    Petroleum product stocks also rose, with gasoline stocks rising more than the
    average of expectations and distillate stocks gaining 6.3 million barrels, or
    eight times the average of expectations.
    Gasoline stockpiles rose 2.1 million barrels to 213.5 million barrels, the
    department’s Energy Information Administration said in its weekly report,
    compared with a 1.4-million-barrel rise forecasted in a Dow Jones Newswires
    survey of analysts.
    Distillate stocks, which include heating oil and diesel fuel, rose 6.3 million
    barrels to 144.2 million barrels, compared with analysts’ forecast of a rise of
    800,000 barrels.
    Refining capacity utilization rose unexpectedly by 0.6 percentage points to
    85.2%. Analysts had expected a 0.7 percentage point fall.

    U.S. Oil Inventories:
    For week ended Jan. 9:

    Crude Distillates Gasoline Refinery Use
    EIA data: +1.1 +6.3 +2.1 +0.6
    Forecast: +1.8 +0.8 +1.4 -0.7

    Figures in millions of barrels, except for refining use, which is reported in
    percentage points. Forecasts are the average of expectations in a Dow Jones
    Newswires survey of analysts earlier in the week.

    – By David Bird, Dow Jones Newswires

    Dow Jones Newswires
    01-14-09 1043ET

  28. 28
    Sambone Says:

    NEW YORK (Dow Jones)–Oil inventories at Cushing, Okla., reached a record high
    for the second straight week, as weak demand and the large gap between monthly
    futures contracts drove more barrels to the storage hub.
    Inventories rose by 800,000 barrels to 33 million barrels in the week ended
    Jan. 9, according to the U.S. Energy Information Administration. Cushing is the
    country’s largest storage hub outside the Strategic Petroleum Reserve and the
    delivery point for the New York Mercantile Exchange’s crude futures contract.
    With U.S. demand declining, refiners and producers are sending more barrels
    into storage. February crude also trades at a steep discount to March, creating
    an incentive to park oil at Cushing and other storage hubs to take advantage of
    the increase in prices over time.
    Cushing has a total capacity of about 47 million barrels, but some tanks are
    used to manage the flow of oil between pipelines, or are reserved for specific
    crude blends. The total storage that may be used for Nymex deliveries or
    physical oil speculation may be closer to 36 million barrels, analysts say.

    -By Brian Baskin, Dow Jones Newswires
    Dow Jones Newswires
    01-14-09 1040ET

  29. 29
    BirdsofpreyRcool Says:

    JNK – price reflects underlying NAV now. What we are seeing in the credit indices (like IG and HY) is not what we are seeing in the individual CDS market and cash bond mrkt. Investors still buying bonds… and then buying individiual CDS to lock in the spread on those bonds. This is bullish, for credit.

    JNK NAV around $31

  30. 30
    Nicky Says:

    Morning all.

    Still same oil outlook for me – expect to see $35 and below for final leg down.

    Broader market. I thought 850 or thereabouts may hold but down cycle is still in play and time wise we have time for it to go lower. 820 is my next level that may halt the decline. I am not expecting the November lows to be taken out before we stage a rally. Many are expecting that but this decline looks corrective to me….

  31. 31
    choices Says:

    BOP, thanks for update on JNK. I just bought a few cents over NAV.

  32. 32
    zman Says:

    Oil down $2 now to 35.50 ish, probably moves with the broad market for the rest of the week.

    NG battling about the $5 mark.

  33. 33
    BirdsofpreyRcool Says:

    choices – seems like JNK is a better reflection (and composition) of the actual HY bond mrkt, of the two HY ETFs. Should be a good income producer this year.

    I think the Nortel bankruptcy is making the bond indices trade squirrelier than the actual underlying bonds today. That is spooking some of the non-traditional buyers of bonds (and the ones who buy JNK and HYG instead of the underlying bonds). So, the positive news in credit continues, but is not reflected in the indices.

  34. 34
    tater Says:

    Nice calls Nicky!

  35. 35
    BirdsofpreyRcool Says:

    TSO preannouncing 4Q… looks bettern expected.

  36. 36
    zman Says:

    BOP, just saw that too. May be worth a small pop in the shares. They give a good explanation of recent west coast margin strength. I suspect SUN could put out this same press release with regard to east coast margins. Always amazed to see how far off the refining analysts get it.

  37. 37
    zman Says:

    Nicky – how much lower on the leg lower are you thinking?

  38. 38
    BirdsofpreyRcool Says:

    z – i think the only thing worse than trying to predict e&p earnings is trying to predict refinery earnings. And don’t even get me started on the integrateds. Too many moving parts.

  39. 39
    choices Says:

    Z-As mentioned previously, the contango on Mar CL is substantial, approx $7. What usually happens to the ETF’s based upon crude, such as USO, when Feb CL expires on 1 Feb.

    Thanks.

  40. 40
    choices Says:

    BOP, spread between bid and ask on JNK seems substantial at times, over 0.20 at times this morning.

  41. 41
    zman Says:

    February crude expires on 1/20. The guys running the ETF will have bought into the March contract starting this week I think and will be selling the Febs this week and next week. Given the high amount of oil in storage at Cushing which is what the NYMEX closes against we could see some substantial weakness in WTI next week. For the ETF, the steep contango makes life very tough/expensive.

  42. 42
    BirdsofpreyRcool Says:

    choices – JNK, yes. you have to be careful, buying it. Never buy during the first or last hour of the day and always use a limit order (I know you know all that).

  43. 43
    zman Says:

    If one were thinking that high gasoline inventories and low gasoline prices were probably not going to persist into ad infinitum now (or soon) might be a good time to use UGA to hedge out your driving needs thus locking in the price.

  44. 44
    zman Says:

    I’m thinking natural gas puts on a rally next 1 to 8 days in anticipation of a big gas withdrawal from storage next week.

  45. 45
    choices Says:

    Thanks, Z, for the comment and the correction-not sure why IB lists expiration as 1 Feb but dig deeper and the First Notice and Last Trading day is 1/20.

  46. 46
    md Says:

    I’m hurting on UNG Jan. $23 @ 1.50 which I bought after last weeks inventory revision. Are you thinking UNG or gassy stock.

  47. 47
    zman Says:

    You can always see expiration in the top right corner of these charts:

    http://charts3.barchart.com/chart.asp?sym=CLG9&data=A&jav=adv&vol=Y&divd=Y&evnt=adv&grid=Y&code=BSTK&org=stk&fix=

    Choices – to be sure, I am not ETF expert but these seem to have been set up, oddly enough, to make money for the company that created them, and not as a good mirror of crude. I prefer stocks over ETFs to play commodities if your not going to open a futures account. While you do have company/analyst risk to contend with you also have the benefit of the market which normally (not now) goes up a great % of the time than not.

  48. 48
    zman Says:

    md see 47

  49. 49
    zman Says:

    … and #26 where I took some SWN. I will likely add more in a Feb strike tomorrow after the numbers.

    Lack of volume in this sell down is interesting. GMXR is off 8% and has traded a whopping 41,688 shares on the day…that’s pathetic.

  50. 50
    choices Says:

    Re #49, volitility is also remarkable, almost as bad as the coal stks-BEXP up 12-13% yesterday, down 11.65% today on lighter volume.

  51. 51
    choices Says:

    Feb Nat Gas trying to hold $5-bounced off $4.97 and now at $5.07

  52. 52
    Nicky Says:

    Z – for the wave completion pattern we only need to take out the low of 35.30 and in fact it could truncate and not quite do so.

    Looks to me like 3 of 5 is complete and we are now in the wave 4 correction with another shot to the downside needed.

  53. 53
    zman Says:

    Thanks Nicky. Below that 35.30 level are there any levels you would say are key to break or not on the way to everyone’s $25 figure. Honestly, at this point, I’d just as soon see oil collapse to $25 so OPEC would act again, so some big ticket high profile projects would get canned and so the spineless wall street analyst set would go ahead and upgrade the E&Ps, pounding the table that it can’t go any lower.

  54. 54
    zman Says:

    What is the ETF for diesel? I know UGA for gasoline but don’t see the diesel one, if it exists, which I think it does.

  55. 55
    zman Says:

    BOP – re 19. Thanks, very good color there.

  56. 56
    BirdsofpreyRcool Says:

    rebounding in nat gas names… where is the near contract now?

  57. 57
    Nicky Says:

    I really am not expecting to see 25 or anywhere near it on this run (famous last words) – maybe $33.

    Once we bottom then expect a wave B bounce to take us back to the $60 area. After that for wave C we should see $25 and below.

  58. 58
    zman Says:

    $5.03 for Feb contract. I am seeing mini-rally in the names too although it just may be the market inching up into lunch.

    Same price for the March contract and then it advances a dime each month through 5.70 in October before moving up in the $7s by next January.

    Nicky – I’m holding you to $33 then, lol. We are thus much closer to the low than the top which should auger well for the beat down energy sector.

  59. 59
    zman Says:

    Re 57 – that kind of volatility should make for exceedingly difficult times businesses planning hedges

  60. 60
    BirdsofpreyRcool Says:

    z – yeah, my Pilot friend sees a lot of very useful stuff. For example, this summer, when oil prices were so high, he was seeing crude tankers come in full, but scratching his head over diesel tankers leaving full. There is a school of thought that oil spiked this summer on a shortage of global diesel… what he saw seemed to lend some creadence to that theory. I check in with him occassionally, I should do it more. Will update what I hear.

    Harbor Pilot = BEST job in the world!!

  61. 61
    mahout Says:

    Z,

    Citibank appears to me to be disintigrating even after all the Billions the Fed and Treasury have pumped in. This raises considerable fear about the true financial condition of our major banks and the horrific losses they may have to report shortly.
    I think this is the major story of the day (Banking system in danger again) and affects everything else (all markets).

  62. 62
    Bob Says:

    54- UHN for heating oil. Avg daily volume is around 5,000 shs. No options

  63. 63
    zman Says:

    Thanks Bob, much obliged, looking at it for a different purpose but thanks for the options comment as well.

    Mahout, you are correct on that one, it was only the sales pre open, not it is pure fear.

  64. 64
    sane Says:

    API Data

    Crude UP 658K
    Gasoline UP 3.6M
    Distillates UP 418K

  65. 65
    Sambone Says:

    RIYADH (AFP)–Saudi Arabia has called an emergency summit of Gulf countries in
    Riyadh on Thursday to discuss the Gaza Strip crisis, state news agency SPA said
    Wednesday.
    Saudi King Abdullah called the summit due to escalating tensions “resulting
    from the Israeli aggression against the Palestinian people,” SPA said.

    Dow Jones Newswires
    01-14-09 1157ET

  66. 66
    Sambone Says:

    12:14 01/14 *DJ EU Warns Of “Political Consequences” From Gas Crisis

  67. 67
    zman Says:

    Thanks Sane – I wish those were the “official numbers” much more benign. Do you have the actually barrels the API says are in storage?

    #65 …. that’s a bit different than Iran calling for action. Hmmm.

  68. 68
    zman Says:

    Wow, TSO’s “good news” fell over like a three-legged dog. Probably an opportunity there as its the gasoline build that killed them, they are still doing better than expected.

  69. 69
    tater Says:

    NIcky, if you are still around, do your timing intervals for the waves coincide for the SPX and crude (maybe even gold or the $USD if you are looking at that)? Not asking you to present the balance of all your work, just wondering if they seem to be working together for you or are they looking to diverge somehow.
    That alone would be very helpful when I plan on the size of my Campbells Soup order for my cave.

  70. 70
    Sambone Says:

    Z – #65, remember the “Oil embargo” in the 70’s. Don’t think they can afford it this time though.

    http://en.wikipedia.org/wiki/1973_oil_crisis

  71. 71
    1520sbroad Says:

    #61 – CitiSmithBarney brokers were told numerous times in nov, dec that SmithBarney was “not going to be sold, it is the crown jewel, highest margin business, etc.”

    Guys that i still talk to there are thrilled to potentially shop their book (leave), or get a retention bonus (stay at morgan stanley smith barney et al).

    Does make me wonder what is next…

  72. 72
    mahout Says:

    Tater,

    Cave sounds good right now. My screen is red, red, red. Everything down 4% to 8%, pretty uniform. That should tell us something but what is it?

    I like campbell’s soup. Don’t forget the cheese and crackers. (and the joy juice).

  73. 73
    zman Says:

    Have you seen how expensive campbells is of late, best to go with ramen.

    I think this back to all red and all green days tells you not a lot of thought is going into the buy/sell shares decision process. Best to trade quick and know your rationale but not fight trend. Saying that I’ll be recapitalizing the 10K soon (not in a giant hurry at this juncture) and will be thinking quicker, smaller trades until the market decides its time to have some sort of attention span again.

  74. 74
    BirdsofpreyRcool Says:

    trader back from lunch… noticed it was cold outside… he bought some HK.

  75. 75
    BirdsofpreyRcool Says:

    1520 – another strategist this morning, shares your views… worth sharing.

    Beleaguered Citi CEO Vikram Pandit is making some moves that don’t make sense to me and have unnerved the market as well. It is in part that I started my career at Smith Barney 142 years ago that I have a more than a passing interest in his decision to sell/merge SB with Morgan Stanley. Smith Barney doesn’t require a lot of capital, consistently makes money, and is a jewel in the Citi crown. I know that when crunch time comes, you sell what you can, not what you want. But to let the star division go is being interpreted that an increasingly desperate Citi has more capital problems than generally thought.

  76. 76
    sane Says:

    API Acutal Barrels

    Crude 327.5 MMbls
    Gasoline 214.6 MMbls
    Distillates 141.3 MMbls

  77. 77
    BirdsofpreyRcool Says:

    IG 227

  78. 78
    Sambone Says:

    WISLA, Poland (AFP)–Ukraine President Viktor Yushchenko, who is locked in a
    politically-charged row with Moscow that has left many European consumers
    without gas, Wednesday dismissed accusations that Kiev was to blame for the
    crisis.
    “Ukraine can clearly prove it has no fault in this dispute. We have not cut
    gas deliveries, nor have we stolen gas. We will do all in our power to resume
    deliveries to Western Europe,” Yushchenko told reporters during a visit to
    Poland.
    “Russia wants to undermine our credibility as a transit state for gas to
    Europe, but our technical system is sound,” he said.
    Russia cut supplies of European gas via Ukraine a week ago following a
    payments dispute between Ukraine’s Naftogaz and Russian gas supplier OAO
    Gazprom (GAZP.RS).
    Russia resumed natural gas supplies Tuesday after international experts were
    placed along pipeline routes through Ukraine under an agreement reached with
    the European Union, only to shut them off again several hours later.
    Gazprom said Ukraine was blocking gas. It has also accused Kiev of siphoning
    gas.
    Ukraine countered that the Russian energy giant had deliberately routed the
    supply in such a way that it was impossible for Ukraine to pump it on to
    European customers.
    E.U. Commission chief Jose Manuel Barroso Wednesday urged European nations and
    companies to take legal action if the flow of Russian gas to Europe does not
    resume quickly.
    Yushchenko reaffirmed Ukraine wasn’t at fault.
    “We’ve asked the European Union to examine the circumstances under which this
    crisis arose. If (Russia) claims we stole gas, it can take Ukraine to an
    arbitration court. There we can prove this is not true,” he said.
    Yushchenko also blasted Russia for demanding that Ukraine pay $450 per 1,000
    cubic meters of gas it receives for its own use.
    He said the rate was two to three times higher than that charged to other
    European countries, and said that a loan offered by Russia to help Ukraine pay
    was part of a strategy to push Kiev into debt and allow Gazprom to take control
    of Ukraine’s pipelines, through which more than 80% of Russian gas transits.
    Poland is a staunch ally of pro-Western Ukraine in the row with their
    communist-era master Moscow.
    Poland has been relatively untouched by the gas-supply crisis which has hit
    badly other central and southern European countries.
    Deliveries of Russian natural gas to Poland dropped to 84% of their contracted
    volume. While supplies via Ukraine have been halted, Poland had a buffer thanks
    to deliveries through a pipeline crossing Belarus.

    Dow Jones Newswires
    01-14-09 1246ET

  79. 79
    1520sbroad Says:

    BOP – bingo. SmithBarney runs 15-17% profit margin. most businesses would kill for that kind of margin.

  80. 80
    mahout Says:

    BOP #74,

    I admire scientific buying like that!

  81. 81
    BirdsofpreyRcool Says:

    1520 – most HFs would kill for those returns too.

    Citi is doing some really weird stuff. Their stance on BK judges modifying mortgages was stand-out-asinine too. Basically, it undermines contract law and, if passed, would make it a lot more expensive for the majority of people who DON’T default on their loans to get loans. I’m all for helping people… but, i hate to see 90% of the population have to pay more for the mistakes/poor fortune of 10%. It’s not necessary and it doesn’t make long-term sense.

  82. 82
    1520sbroad Says:

    i read a piece the other day that talked about the proposed stimulus package and the fact that it will likely approach $1 Trillion. The writer noted that a trillion is almost an incomprehensibly large number. I thought this was a useful way to bring it to a more understandable number – A trillion has 12 zeros left of the decimal point and 1 trillion seconds is equal to roughly 31,500 years. Longer than humankind has been around.

    where exactly is the cave? someplace warm i hope.

  83. 83
    1520sbroad Says:

    # 81 – the bankruptcy move was likely to keep the gov’t from asking (at least not immediately) where the $45 billion went.

  84. 84
    BirdsofpreyRcool Says:

    mahout – agreed… but, in a way, is that any different than a retail analyst checking out what is selling at the local department store? “Gee… the JonesNewYork rack is looking empty… better put a ‘buy’ on the stock…”

    It’s C-O-L-D outside… turn up the heaters… use up the gas!

  85. 85
    tater Says:

    Mahout,
    Joy juice? Better invite Wyoming! I think he’s french though. He’ll probably only bring wine.

    Re #49 about big moves on small volume. Sure does seem that this market is all about faking you out. Almost like bigger money wants to buy into certain areas, but they want to clean everybody out first.

    Had a conversation with a buddy of mine last night. Seems almost as if the market had a big feel good run-up post election in Nov/Dec that was “supposed” to happen around the inauguration. Now we are selling that rally, because that’s what we do. Now are we going to have people actually coming to play come inauguration because they really now do feel good? Kind of a mind twister, double fake out kind of thing, but I am beginning to believe in the logic of it.
    Reminds me of the iocane powder in the Princess Bride.

  86. 86
    zman Says:

    right, colorless, odorless, tasteless but upon sniffing it you’d bet your life that was it.

  87. 87
    pearl1301 Says:

    z – are you planning on holding those jan17.5 calls on HK until expiration? any chance these pop?

  88. 88
    BirdsofpreyRcool Says:

    IG 225 still spooked by the NT bankruptcy, but trying to get over it

  89. 89
    zman Says:

    Re the HK and days like today. The spoke again this morning at Pritchard. Probably nothing different but someone liked what they heard. On a day like this, pockets of strength (or less weakness) beget more strength or at least less and less weakness. Meanwhile, the weak can get weaker for no reason as well. Fun, fun.

  90. 90
    mahout Says:

    Tater and 1520’sbroad,

    On the cave: Is your famous dog allowed in. I like dogs. I’d feed him (excuse me, it) some of my left over crackers with cheese on it. I know the way to a dog’s heart. Ramen is ok too. Do you have a flat screen TV in there? Would be nice.

  91. 91
    zman Says:

    Pearl – think they have shot… we got the news, just not in the form of a press release. Action will depending 90% on what the broad market does. I have some $20 strikes as well and it appears those are toast. I will likely add more Feb exposure if it gets much weaker. But back to those $17.50s they are the near strike and have seen lots of volumes, should we get a bounce in NG away from $5 tomorrow they should do well (very gassy and growth with lots of near term catalysts). The gas number will be important but probably quickly takes a back seat to expectations of next week’s number. If tomorrow is double and not triple digit then all bets are off as gas will likely scoot towards $4.50 not caring at all about the cold but instead about lost industrial demand.

  92. 92
    zman Says:

    ALJ – smaller refiner flat on story Obamanation could boost demand for asphalt. Plausible, asphalt margins have been terrible over the last 12 months.

  93. 93
    BirdsofpreyRcool Says:

    z – what do you think tomorrow’s nat gas draw will be? you’ve been amazingly accurate…

  94. 94
    BirdsofpreyRcool Says:

    bloomberg consesus looking for -104 Bs tomorrow

  95. 95
    zman Says:

    I’m only amazingly accurate every 3 weeks and this is not that week. Probably 95 to 120 Bcf. Sorry for the big spread but the last few weeks have been awkward with holiday light demand influences. Street is at 105. I think the over/under is 100 for direction of the reaction.

  96. 96
    Nicky Says:

    Hi Tater,

    Yes looking at them all myself.

    Metals I think are approaching a low. Move down again is corrective and I think somewhere around 800 may stem the decline (could go to 760 – 780 area).

    $ approaching a top and euro a low.

    Cycle lows are due in this timeframe but could stretch out another week or so although my preference is for a low by the 20th.

    So yes in answer to your question everything is going to turn together.

  97. 97
    tater Says:

    On an ugly day for those on the long side, there is a bit of good news for HK on the chart. If you take a quick look at the candles for the last 4 days including today, you see a long stem on them. Without getting all voodoo, it means that the underlying action on the day rejected the lower price. Somebody keeps buying on the downswing. It is what you want to see if you are getting long.

    Hate to admit it, but I actually do own a cave. Too chicken to go into it though. So far.

  98. 98
    tater Says:

    Nicky,
    I know that is an astronomical amount of work that you put in. Thank you for sharing!

  99. 99
    mahout Says:

    Z #92,

    Obamanation! Wooha! That’s close to political!
    But it’s Ok. I’ll be very careful with my spelling. Wooha!

  100. 100
    BirdsofpreyRcool Says:

    tater – thanks for the chart lesson on HK. I bought some more near open (something I know I should never do… and now I remeber why), but added on the downsweep. Sold my cheaper shares to the cold trader, but want to hold the rest into the number tomorrow. So, any charting colour you can give on HK is always greatly appreciated!

  101. 101
    zman Says:

    now how can an innocent little typo like that be political lol, so I forgot the space. So far I’m less than pleased with the appointments affecting energy but only scratching the surface, I’m sure they are pro drilling and pro natural gas, deep down, away from the public eye.

  102. 102
    zman Says:

    BOP – HK is the best performing E&P on my screen today, were it not for the broad market they would be outperforming. I think the quicker than expected laydown and the stealth announcements on those 2 wells are having an impact. Unfortunately I have not seen a single analyst comment on Floyds thoughts re takeaway capacity in the Haynesville limiting growth for those who have not yet arranged for firm transportation. Many of the pipeline expansions in the area are running behind schedule due to the financial markets. If they were paying attention to those thoughts gas would not be sub $5 now.

    Gasoline flirting with green on the day while HO is getting smashed on the big storage build. Refiners getting crushed. Thinking about it but not yet acting, glad I’ve been out of that arena, probably stay out into earnings season.

  103. 103
    mahout Says:

    Tater #97,

    You keep teachin me and i may actually learn somethin. I always wondered what those funny little straight line tails really meant. So there is a real cave after all. I knew it, I knew it! It had to be true. But sadly it’s still unfurnished, apparently. But that can change i’m sure.

  104. 104
    tater Says:

    Quick note on the candle voodoo, have to let them finish the day. Today’s candle isn’t done forming yet.

  105. 105
    zman Says:

    Almost looks like panic in the SWN interday chart, may add a little more in here.

  106. 106
    BirdsofpreyRcool Says:

    z – Floyd’s presentation yesterday made a total believer out of me. The PetroHawk story is not to be missed.

    What he said about take-away pipeline capacity makes total sense too. Remind me, didn’t he say that it would be a problem for others in 2010, but that HK either had the existing pipeline availabilty and/or had the necessary post-2009 pipelines under construction? I recall his saying that the credit crunch is hurting the other guys; can’t borrow to build out the infrastructure. Wonder if HK can take advantage of that, somehow. I never mind seeing some “3rd party transportation tarrif income” added to the income mix.

  107. 107
    choices Says:

    I’m fully aware that hope is not a trading strategy but it is about all I have left: Feb NG poked below $5 to $4.94 and is now bouncing now up to $4.99. IF it closes above $5, it may be some consolation but it seems to be having trouble getting thru $5. This of course falls into the big FWIW category.

  108. 108
    scottjasonm Says:

    z-
    Are you thinking SWN Jan’s or Feb’s?

  109. 109
    zman Says:

    Yep, you got it re 2010. He said he has been invited to join a consortium talking about building more pipes but is hesitating as that’s really not what business they are in. I know they have enough firm transport arranged to suffice for 2009 volumes, but will need to add more in 2010 if they keep even this lower drilling pace, think its 12 rigs, with these kind of initial production numbers. Also, don’t hear many talking about how CV wells may have a tough time getting to market due to line pressures. Keeps me from going hog wild on guys like PQ down here. Something I need to check into more deeply.

    Oil green, go figure.

    HK too. Wahoo.

  110. 110
    zman Says:

    Jan’s only for a very quick trade (probably not going to do it), Febs for a bounce into next week’s number.

  111. 111
    tater Says:

    Put the SWN chart back up. Still in that triangle.

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882&cmd=show%5Bs159046797%5D&disp=P

    (use the “chartbook” toggle at the top right of screen to find charts)

  112. 112
    BirdsofpreyRcool Says:

    amazing, coming back up toward 850 on SPX… if we can get back above that, the world won’t look so dismal (and we can save tater from spelunking for a while longer)

  113. 113
    BirdsofpreyRcool Says:

    IG 225

  114. 114
    BirdsofpreyRcool Says:

    little ray of sunshine: Monsanto just boosted their dividend from 24 to 26.5c

  115. 115
    Sambone Says:

    Off subject – Food for thought

    http://www.elpasotimes.com/newupdated/ci_11444354

  116. 116
    gaamblor Says:

    random question but how is DXO up today with crude down?

  117. 117
    zman Says:

    Don’t know. A guess would be they are invested in more non-front month options on futures (to get the 2x performance) and those are down less. Or it could be just noise, oil is off a percent on the front and less on the strip, the DXO is up about a percent. These ETF returns are far from mirrors of that which they try to reflect.

  118. 118
    kyleandy Says:

    gaamblor it could also matter how DXO traded between 3-4 yesterday afternoon after crude closed. it could have gotten out of whack then, and adjusts back today.

  119. 119
    zman Says:

    Kyle, yep good point.

    Market is just wow ugly now. RIG at $49, $6 more lower and I’m in for sure, maybe $4 more.

  120. 120
    Sambone Says:

    NEW YORK, Jan 14 (Reuters) – The U.S. Minerals Management
    Service said on Wednesday that 11 percent of the Gulf of
    Mexico’s U.S. oil production remained shut following last
    year’s hurricanes, along with 15 percent of the region’s
    natural gas output.
    That marks a moderate recovery from a month ago, when 14.1
    percent of the region’s 1.3 million barrels per day of crude
    output capacity and 19.7 percent of its 70.4 billion cubic feet
    per day of natural gas output capacity was shut, according to
    the report.
    (Reporting by Richard Valdmanis)

    Wed Jan 14 19:07:20 2009

  121. 121
    Sambone Says:

    By Brian Baskin
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures ended lower Wednesday as rising oil
    and product inventories provided a testament to weakening demand.
    Light, sweet crude for February delivery settled 50 cents, or 1.3%, lower at
    $37.28 a barrel on the New York Mercantile Exchange. Oil pared steep losses
    late in the session, a move market participants attributed to the expiration at
    the end of pit trading of options to buy or sell February crude. February Brent
    crude on the ICE futures exchange settled 25 cents, or 0.6%, higher at $45.08 a
    barrel.
    After a brief resurgence at the start of the year, oil prices have resumed the
    slide that took crude from above $145 a barrel in July to below $34 last month.
    Demand continues to decline in the U.S. and other major economies, while extra
    oil and refined products are piling up at storage terminals.
    Oil inventories in the week ended Jan. 9 hit a record 33 million barrels at
    Cushing, Okla., the Nymex contract’s delivery point, according to the U.S.
    Energy Information Administration. Fuel inventories also grew by more than
    expected, with gasoline stocks rising by 2.1 million barrels, compared with an
    average forecast of a 1.4-million-barrel build, while distillates, including
    heating oil and diesel, rose by 6.3 million barrels, far exceeding an expected
    800,000-barrel increase.
    The product builds came despite refiners running at a seasonally low 85.2% of
    capacity, according to the EIA.
    “Refineries are loading up barges and tankers and just having them sit full of
    crude oil,” said Darin Newsom, a senior analyst at DTN, a market-information
    service. “This is an indication of just how bearish this market actually is.”
    The tight storage situation caused February crude to end Wednesday at a $6.91
    discount to March, the third-largest such deficit ever. Traders expect the gap
    to continue to widen as the February contract enters its final week of trading,
    and note that the March-April spread also has expanded to $4.09.
    “Seven dollars is ludicrous, $4 is astronomical, and April-May at $2.50 is
    extremely wide,” said Peter Donovan, vice president of Vantage Trading in New
    York. “It doesn’t go on forever though. At some point you’re going to see the
    supply side start to tighten up a bit.”
    Eventually, production cuts by the Organization of Petroleum Exporting
    Countries or other producers will bring supply in line with weakened demand,
    causing some of those full storage tanks to empty out, Donovan said.
    Front-month February reformulated gasoline blendstock, or RBOB, settled 1.88
    cents, or 1.6%, higher at $1.1677 a gallon. February heating oil settled 5.10
    cents, or 3.4%, lower at $1.4631 a gallon.
    Gasoline ended stronger as traders anticipated the increase in demand that
    usually comes in the spring and summer, Newsom said.

    -By Brian Baskin, Dow Jones Newswires
    Light, sweet crude for February delivery settled 50 cents, or 1.3%, lower at
    $37.28 a barrel on the New York Mercantile Exchange.

    Dow Jones Newswires
    01-14-09 1529ET

  122. 122
    zman Says:

    Just going through the oil data and looking at product make, it appears refiners are continuing to make distillate because that’s where the margins have been. They are simply making too much. Exports must be worse than they thought. Heating oil only goes so far when the trucks stop moving.

    Anybody out their in trucking today? Sane, you in trucking these days? Demand looks bad obviously and inventories are already very bloated. Refiners may have seen their highs for quite some time.

  123. 123
    zman Says:

    Distillate demand was just off a cliff and you know I don’t like that phrase. Definitely thinking to short refiners in here.

  124. 124
    zman Says:

    Thinking a pair trade, long an airline or trucker and short SUN/VLO

  125. 125
    BirdsofpreyRcool Says:

    Thinking of drinking, martini straight up.

  126. 126
    zman Says:

    NFX on the tape trimming 09 capital budget.

    Says now looking for 6 to 10% production growth (250 to 260 Bcfe), down from an early 8 to 13% projection (255 to 267 Bcfe).

    70% hedged at $8 on gas
    50% of oil hedged at $129
    50% of oil with collars with floors at $107

    They also mention 2008 production was 236 Bcfe which is in the range of 235 to 238 Bcfe given on the last call.

    Woodford seen growing 30% in 2009 with a 12 rig program (down from 14 as of last notice)

    Rockies seen going after oil almost exclusively which is pretty wise given the weak Rockies gas price realizations that will likely be pervasive this year.

    Deepwater program. Development plans unchanged, exploration goes from 5 wells to 2.

    Net debt to cap still low, but they increase their bank borrowings from $285mm to $514 mm.

    One last comment would be they are reiterating their commitment to live within cash flow (in 2009 it seems since they did not in the 4Q). They put the capex at $1.45 billion so assuming that is minimum cash flow that comes to $10.96 per share. They are using a price deck of $50 oil and $6 gas for modeling capex/cash flow. The Street is at CFPS of $10.87.

  127. 127
    zman Says:

    BOP, as long as its noon or later where you are …

  128. 128
    ram Says:

    and you are not on the Texas side of Texarkana. Arkansas I could drink, Texas side – not. What’s wrong with you Southerners?

  129. 129
    zman Says:

    That’s a loaded question, lol. I assume you were in a dry county. While it’s true that blue laws are frustrating on Sundays, a neighbor on the legislature legalized growler takeouts so there is always the local micro brew available.

  130. 130
    zman Says:

    Jay R – check your email.

  131. 131
    Wyoming Says:

    Checked with the Res Type Eng, my comments on the n from yesterday is correct.

  132. 132
    zman Says:

    Thanks Wyo. And I would have thought you would have commented on my typo from earlier.

    Did your reservoir guy give you a scale or key to the numbers. I know what a 1.1 looks like on a production curve but what number is a straight-line decline curve and what is a flat line production. Maybe I need to look in a math book, not in the O&G books I have on the shelf.

  133. 133
    Wyoming Says:

    Did not see it, point me, I could use a good one. Stopped breathing thru my eye lids today and got caught looking. What sucks is that I got out on Friday with a decent profit, which would be great right now, only started the fade to reverse course …. trying to find a unicorn that craps Skittles.

    Yes, the number should be less than one, however, in unconventional gas wells, above one is acceptable. Heading toward 2, the hyperbolic decline is less severe. Suhooo, the 1.1 makes sense for what Ol’ Floyd was talking about. BTW, she started giggling when I asked, something about Drillers and Meat heads … very unprofessional (she is married to another driller).

  134. 134
    zman Says:

    #92.

  135. 135
    Wyoming Says:

    Obamanation? Too much and you go blind?

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