22
Jan

Thursday – Oil Inventory Preview Plus

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In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. EIA Oil Inventory Report Preview (11 EST release time today)
  4. Stuff We Care About Today - Viewer mailbag, HK, NE, SLB
  5. Odds & Ends

Holdings Watch: No changes yesterday. I was looking for a rally, mission accomplished but we need to retake the 850 level on the S&P500 (as several of you have pointed out) and we need to get the oil numbers safely out of the way before I'll comfortable getting more long the energy names. Otherwise, puts on the OIH and / or SLB and puts on the independent refiners (sorry but it will likely be TSO) may be in the offing.

 

Commodity Watch

Crude oil rose $2.71 to close the day at $43.55 yesterday, buoyed by the equity market rally and a friendlier dollar . This morning crude is trading off slightly after a overnight run above $44.

  • China Watch. China GDP expected to be 7% came in at 6.8% for the fourth quarter.That's down from 9% in the 3Q period and some expect the deceleration to take China all the way to 3 or 4% growth this quarter before a number of stimulus packages, rate cuts, and potentially a hacking back of the yuan (which will be a real test for the new U.S. administration) reaccelerate the Chinese ecnomy where the target growth rate is 8%.This slower growth has been weighing on crude prices and will continue to do so until China pulls out of their steep dive just above ground level. 

 

  • Declining Contango Watch: Flatter contango by far from a week ago. Front months have come up while the out months are flat to down in the last five days. The impetus to tanker loads of crude for later delivery at a higher price just went way down. As the 12 month contage was $20 just last week this could mean that more production will be headed back to the traditional market and that front month prices may not be able to sustain the current rally for long as that production arrives.


Natural gas rose $0.14 to $4.78 yesterday with strong oil. The Street is looking for a withdrawal from storage of about 170 Bcf. If we don't get that look out below. This morning gas is trading just under par on the day.

 

EIA Oil Inventory Report Preview (11 EST release time today)

ZComment: After yesterday's 6.6% rally in crude and a 4% rally in the 12 month strip we will need to see a) a reversal in the recent inventory surges at Cushing, and b) a recovery in products demand (both gasoline and diesel). By the way, if you wonder where the Street comes up with its numbers for products during these off demand months for gasoline look no further than the five year average. This week's gasoline inventory change expectation: up 2.1 mm barrels; five year average: up 2.2 mm barrels. Gasoline inventories normally rise this time of year.

  • Refiner Watch: Seeing a lot of unplanned and extended maintenance. I've been railing on for months that the refiners need to curtail production of both gasoline and distillates.  If this translates into distillate production pulling away from record highs it would be welcome news for the refiners and I'd back off my opening statement that I'd really like to short them, especially after the run they have had.
  • Crude Imports Watch: Imports have been running ahead of year ago levels for the last several weeks and its about time those OPEC cuts (only takes 30 days from port to port at most) to show up in the U.S. import numbers.

Stuff We Care About Today


Viewer Night Time Mailbag: Impact of a potential water shortage on Canadian oil sands production ~ from Calvo.  A brief Globe & Mail article cites Alberta restricting water consumption from the Athabasca River. I know that the companies use a fair amount of water and that without another source they would have to limit production however I can't tell from the article if  the restrictions would reduce current or just constrict future water consumption rates. I'd ask VTZ to chime in on this one.

HK Reports Reserves; Announces Offering. The reserves are preliminary and are designed to offset the blow of the debt offering.

  • 2009 Reserves (preliminary):
    • 1.35 to 1.40 Tcfe, an increase of 25 to 30%
    • 300% reserve replacement. Not bad, a bit better than 2007 reserve replace
    • they will be taking a price related impairment of $1.1 to $1.3 billion. I don't really care about this as its a non-cash charge and the writing down of these assets does not affect the drilling side of the business in any way.
    • No comment on what this does to their borrowing base.
    • Finding costs won't be very pretty but not data was provided to breakout the 2008 capital budget
  • 4Q Production was 361 MMcfepd, in line with prior guidance of 355 to 365 MMcfepd.
  • Debt offering: $300 million senior notes. Use of proceeds for the usual blah, blah, blah, some debt exchange but not broke out. With the writedown debt to total cap would seem to bloom to north of 40%. My sense is that the
  • In a nutshell, stock comes off a bit on the offering and lack of specificity in the press release including a complete lack of operational update or offer of a conference call.

NE Reports Better Than Expected Earnings:

  • The 4Q Numbers:
    • Revenue of $910 mm vs $941 mm expected
    • EPS of $1.59 vs $1.52 expected
    • Rig Metrics:
      • Fleet Utilization down 3% from last report (and down 5% YoY), with the decline coming from jackups
      • Average day rate of $190K per day, up 7% sequentially (and up 22% YoY) with the increase coming from all rig categories, but especially from the deepwater capable fleet (semi-submersibles and drillships). 
  • Guidance:  2009 booked for 79% of potential rig operating days; 2010 40% booked. This compares to 81% and 40% in the year ago period. As usual, no real forward looking comments in the press release about rates although the tone has become much more cautionary as you would expect.
  • In A Nutshell: Good quarter. Debt remains low for the group at less than 15% of debt to total cap, share buyback a bit slower but continues, and their backlog remains large ($11- billion). The largely booked near term horizon should provide stability for analyst estimates.
  • Implications for others:
    • For the deepwater players: should be positive on the day for RIG and DO as NE scored its own $600+ K per day contract for a new rig demonstrating that demand continues at peak rates for these rigs.
    • For Jack-Up operators (RDC), (ESV) should be a brief bit of of good news as JU rates inched up again and demand for higher specification rigs continues.
  • Conference Call: 2 pm Est

Tomorrow's Earnings:

SLB Reports Before The Open On Friday. More important than the numbers, this call will be worth listening too. Expected tone: depressing with more layoffs coming and a pervasive fear of pricing pressure in North America as activity stalls and goes into a tailspin. 

Odds & Ends

Analyst Watch: SunTrust cuts (WTI) and (GDP) to Neutral, Berstein trims price targets on the Majors.

(VLO) Starts Up Windfarm. Phase I of a 50 Megawatt project sited next to its McKee refinery in Amarillo began operations today. This a $100 mm project that will ultimate see 33 turbines turning to supply the refinery with green power.  Savvy move that might just get them a nod in a speech or two.

  • Cost to install wind power: $2 mm per Mw, (quick to set up and the fuel is cheap when ithe weather cooperates)
  • Cost to install a natural gas fired power plant: $0.5 mm per Mw (takes a 2 years to build, gas is also clean burning and the fuel is abundant)

137 Responses to “Thursday – Oil Inventory Preview Plus”

  1. 1
    Sambone Says:

    By Lananh Nguyen
    Of DOW JONES NEWSWIRES

    LONDON (Dow Jones)–Crude oil futures rose in London, piggybacking gains in
    the equity markets.
    “We suspect that energy markets will continue to shadow the U.S. equities over
    the next few days, as the state of the U.S. banking system will be front and
    center in terms of market attention,” said Edward Meir, an analyst at MF Global
    in New York.
    At 1231 GMT, the front-month March Brent contract on London’s ICE futures
    exchange was up $0.38 at $45.40 a barrel.
    The front-month March light, sweet crude contract on the New York Mercantile
    Exchange was trading $0.32 higher at $43.87 a barrel.
    The ICE’s gasoil contract for February delivery was up $5.25 at $434.50 a
    metric ton, while Nymex gasoline for February delivery was down 118 points at
    116.20 cents a gallon.
    Resurgent stock markets – cheered by the inauguration of U.S. President Barack
    Obama – gave oil prices a lift early in the session. Buying was also spurred by
    traders covering short positions, or bets that the market would fall.
    Market participants were now turning their attention to a key U.S. oil
    inventory snapshot due at 1600 GMT, delayed by a day by the Martin Luther King
    Jr. holiday Monday.
    Analysts surveyed by Dow Jones Newswires forecast crude inventories for the
    week ended Jan. 16 would rise by 1 million barrels, while gasoline stocks were
    seen up 1.6 million barrels. Distillate inventories were predicted to decline
    by 600,000 barrels.
    The oil market will also keep a close eye on stock levels at Cushing, Okla.,
    the delivery point for Nymex’s light, sweet crude oil contract. The difference
    between front-month Nymex crude futures and later contract months has narrowed
    sharply after widening to unprecedented levels in recent weeks due to a supply
    glut at Cushing.
    “The recent relative strength in crude will probably require some support from
    today’s…stats, but if the inventory builds are bigger than expected that
    could pressure the oil prices back down,” said Marius Paun, a broker at ODL
    Securities in London.
    Some participants and commentators suggested the narrowing contango – where
    front-month futures contracts are cheaper than deferred months – could be the
    beginning of a turnaround for oil prices.
    “I see the strengthening of the timespreads as the first signal that the
    fundamentals are starting to improve here,” said Torbjorn Kjus of DnB NOR in
    Oslo.
    Latest production cuts by the Organization of Petroleum Exporting Countries
    are starting to tighten the market and counteract a stark decline in demand,
    but it will take months before fundamentals balance out, Kjus added.
    Separately, data emerged from China Thursday showing the country’s demand for
    diesel, which is largely consumed by the industrial and power sectors, may have
    been particularly sluggish due to the sharply slowing economy.
    China’s diesel output in December declined 9.5% on year, according to data
    from the National Bureau of Statistics. Some of the nation’s refiners are
    expecting refining activity to remain slow at least through February, industry
    sources said.
    -By Lananh Nguyen, Dow Jones Newswires (Jing Yang in Shanghai contributed to this report.)

    Dow Jones Newswires
    01-22-09 0750ET

  2. 2
    BirdsofpreyRcool Says:

    Things We Care About in the Credit Market: HK announced they plan to sell $300mm of 5-yr senior notes.

    I have no doubt that HK will be able to raise the $$. Only question will be what price. So, good news for HK, I would thing. The proceeds will be used to pay down senior bank debt and to fund a portion of its 2009 capital budget.

    Oh… bad news is that HK took a $1.1B impairment on high-cost assets. But, this was not unexpected.

    Will update with progress as I see it.

  3. 3
    zman Says:

    Thanks BOP – I had just sent you an email along those lines. I don’t know the structure of their current debt but the impact of the impairment upon stockholders equity and the new added debt will likely push them north of 40% debt to cap. I honestly don’t like them commenting that some of the debt will be used to fund capex. If prices don’t warrant drilling, don’t drill. Don’t grow as fast. It can’t all be for getting acreage into HBP status. I saw, cut what’s not.

  4. 4
    Wyoming Says:

    http://www.epmag.com/WebOnly2009/item28239.php

    Uh yea, need more land open to drilling …

  5. 5
    BirdsofpreyRcool Says:

    HK – also, there will be a conference call… just not for the equity market. Watching the stock will give us a sense of how the debt road show is going. Again, I think they have no problem placing this debt… just comes down to price (yield). Guessing 11.5%… a far cry from the 7 7/8% they paid on their last trip to the debt market. But, not out of line with the New Normal.

  6. 6
    BirdsofpreyRcool Says:

    HK – as of 9/30/08, HK had nothing drawn on their bank facility. This must have changed, as they will be using part of the new $300mm of Sr Notes to repay the bank. At the time, HK had about $1,830mm of Senior Notes (including debt assumed with the KSC and Mission acqtns). Also at the time, HK’s bank agreement was $1.5B with a borrowing base of $1.1B. The only bank covenant mentioned is a 2.5x interest coverage floor.

    The equity market may dislike this offering, for a bit, but it gives HK more financial flexibility at a time when nat gas prices are tough to predict. Financial flex is a good thing to have these days.

  7. 7
    Sambone Says:

    By Christine Buurma
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Natural gas futures slipped Thursday, reaching a fresh
    two-year low on weak economic data and ample supplies.
    Natural gas for February delivery on the New York Mercantile Exchange was
    trading 24.7 cents, or 5.17%, lower, at $4.533 a million British thermal units
    after reaching a low of $4.529/MMBtu in combined electronic and floor trade.
    Gas futures last fell below that level on Sept. 27, 2006.
    Dismal economic data were pressuring natural gas prices lower Thursday. Home
    groundbreakings fell 15.5% to 550,000 in December, according to the Commerce
    Department. Meanwhile, Labor Department data showed that initial claims for
    jobless benefits jumped 62,000 to 589,000, the highest level since November
    1982.
    Economic woes have driven gas prices down amid concerns about waning demand as
    factories shut and industrial consumers scale back gas usage.
    “Poor housing and job claims data won’t help the cause,” wrote Drew Wozniak,
    vice president of market research and analysis with ICAP Energy in Louisville,
    Ky., in a note to clients Thursday.
    An abundance of gas in storage was also sending prices lower. Total gas in
    U.S. storage as of Jan. 9 was 2.736 trillion cubic feet, 3.1% above the
    five-year average and 1% above last year’s level.
    “Even the cold weather couldn’t hold gas prices,” said Mike Fitzpatrick, a
    broker with MF Global in New York. “The ample storage really hasn’t been put to
    the test this year.”
    Physical natural gas for next-day delivery was trading 12 cents lower at
    $4.74/MMBtu at the benchmark Henry Hub, compared with early Wednesday, while
    gas at Transcontinental Zone 6 in New York was down $1.15 at $6.50/MMBtu,
    according to the IntercontinentalExchange.

    -By Christine Buurma, Dow Jones Newswires

    Dow Jones Newswires
    01-22-09 0931ET

  8. 8
    Sambone Says:

    By Brian Baskin
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude futures traded lower on new signs of weakening
    demand, which is seen adding to already high oil inventories.
    Light, sweet crude for March delivery traded $1.35, or 3.1%, lower at $42.20 a
    barrel on the New York Mercantile Exchange. Brent crude on the ICE futures
    exchange traded 58 cents lower at $44.44 a barrel.
    Both the U.S. and China reported disappointing economic indicators, the latest
    confirmation that a recovery in demand from the world’s largest oil consumers
    is likely still far off. China said its gross domestic product grew by 6.8% in
    the fourth quarter, down from 9% in the previous quarter. U.S. housing starts
    fell 15.5% in December from the previous month, more than the 4% decline
    expected by analysts.
    The latest data helped to halt a rally that had seen oil rise by $8 since Jan.
    15.
    “What hasn’t changed are the fundamentals, and the fundamentals [show] the
    market’s a mess,” said Stephen Schork, editor of the Schork Report, an energy
    newsletter. “The economy is a mess and therefore demand is going to follow
    suit.”
    Refineries often undergo maintenance in February and March, which could reduce
    demand even further, Schork said.
    The Organization of Petroleum Exporting Countries is attempting to reduce
    production in response, but global oil inventories are still rising. A record
    amount of oil is being stored at Cushing, Okla., the Nymex contract’s delivery
    point, and other storage centers are reporting historically high inventory
    levels.
    Oil inventories are expected to rise by another 1 million barrels in the week
    ended Jan. 16, according to a Dow Jones survey of analysts. Gasoline stocks are
    seen increasing by 1.6 million barrels, while distillate inventories, including
    heating oil and diesel, are expected to fall by 600,000 barrels.
    The data is due out at 11 a.m. EST from the U.S. Energy Information
    Administration.
    Front-month February reformulated gasoline blendstock, or RBOB, recently
    traded down 4.77 cents, or 4.1%, at $1.1261 a gallon. February heating oil
    traded 3.52 cents, or 2.5%, lower at $1.3508 a gallon.

    -By Brian Baskin, Dow Jones Newswires
    Dow Jones Newswires
    01-22-09 0933ET

  9. 9
    crysball Says:

    Z, Quake coming?????????

    Scientist: New fault could mean major Ark. temblor

    – Haydar Al-Shukri, director of the Arkansas Earthquake Center at the University of Arkansas at Little … LITTLE ROCK, Ark. – A previously unknown fault in eastern Arkansas could trigger a magnitude 7 earthquake with an epicenter near a major natural gas pipeline, a scientist said Wednesday. Haydar Al-Shukri, the director of the Arkansas Earthquake Center at the University of Arkansas at Little Rock, said the fault is separate from the New Madrid fault responsible for a series of quakes in 1811-12 that caused the Mississippi River to flow backward.

    Acres of cotton fields cover the fault west of Marianna, about 100 miles east of Little Rock, but stretches of fine sand mixed with fertile soil gave away the fault’s location, Al-Shukri said. Liquefied sand bubbled up through cracks in the earth, while ground radar and digs showed vents that let the sand reach the surface, he said.

    The fault, likely created in the last 5,000 years, sparked at least one magnitude 7 earthquake in its history. Such temblors cause massive destruction in their wake.

    “This is a very, very dangerous (area) at risk of earthquake,” Al-Shukri said. “When you talk about (magnitude) 7 and plus, this is going to be a major disaster.”

  10. 10
    zman Says:

    BOP – good points in 5 and 6. We shall wait and see. I just would have liked to see an ops update and more detailed plan for the funds at this time. Feels like they are still spending faster than they would like us to know about. Let me know if you hear anything.

    Crys – zoiks, my house is 100 years old, unlikely to withstand that kind of movement.

  11. 11
    zman Says:

    I’m not doing anything pre numbers today unless the broad market just falls apart taking everything back to yesterday’s lows which I kind of doubt will happen. I liked the NE quarter and may take a little of one of the offshore drillers but have not looked at the options this morning. Just for a trade most likely.

  12. 12
    elduque Says:

    BDI +45 945
    TED +.039 1.05 Slightly weaker

  13. 13
    BirdsofpreyRcool Says:

    Trading Desk says: buy in the 1st hr for a rally thru lunch and into the afternoon and final hour.

    Caveat: MSFT may have thrown a wrench into that. So watch that stock.

  14. 14
    zman Says:

    One thing I forgot to mention in the post on HK is that year end exit rate of 400 MMcfepd listed in the press release is equal to their 2009 volume number which means that if they just hold flat all year they will attain their 30% growth target.

  15. 15
    zman Says:

    ZTRADE: $10KP

    Bought (2) RIG February $50 Calls (RKJBJ)for $3.30 with the stock off $1.20 on the day and after the better than expected results at NE. See post for details.

  16. 16
    zman Says:

    DRYS on the tape cutting capex, suspending dividend.

  17. 17
    zman Says:

    HK doing a good job of shrugging off the debt deal so far, again outperforming the group early. Need to get benign numbers out of the EIA before I add more to my trading position here.

  18. 18
    elduque Says:

    z any comments on Nat Gas drop

  19. 19
    elduque Says:

    BOP – Re SD conv. Where do I find it, so I can buy it.

    Thank you

  20. 20
    zman Says:

    El-d. Hmmm. Just saw it myself. Seems there is a warm forecast out somewhere. Maybe people are just selling into what they think will be another disappointing set of numbers tomorrow. Hard to say. The stocks seem to be paying more attention to the broad market by a good measure.

    More on HK. So far so good. Not to beat a dead shale well but if this is how the market is going to treat price related impairments this year I’m going to be a happier guy than I thought at the end of February. The stocks have discounted a lot including weak prices and their impact on reserves. F&D costs will be distorted by all the writedowns and since most people are in the same ocean, all the boats will continue to move in the same direction. The one caveat would be those overleveraged players with high lifting costs (especially the oily ones). Those guys may have some debt troubles soon. I’ll come up with a list.

  21. 21
    zman Says:

    BOP – nice cool headed comments on HK this am. Perhaps I was a little harsh in my critique. I still say this was not the press release I was looking for but that does not mean its not around the corner.

  22. 22
    BirdsofpreyRcool Says:

    elduque – it’s the only 8.5% SD convertable preferred out there. I don’t see a price for it on Bloomberg… so don’t know how it’s trading (and not much help on how to buy it).

    Anyone else out there better at looking up preferreds?

  23. 23
    zman Says:

    BOP – got a cusip on it?

  24. 24
    BirdsofpreyRcool Says:

    z – let’s hope… i bot it back…

  25. 25
    BirdsofpreyRcool Says:

    SD convert pref’d CUSIP = 80007P406

  26. 26
    zman Says:

    Thanks BOP – no fruitcake for you if you own it again.

  27. 27
    BirdsofpreyRcool Says:

    file under news flash: “Blind Squirrel Finds Nut”

  28. 28
    zman Says:

    Free live oil quote link sent in by one of the friends of the site:

    http://www.cx-portal.com/wti/oil_en.html

    Looks to be accurate to my live quotes that for some reason I pay for each month. Hmmm…

    Will add this link to the links at upper right of site.

    Thanks EC for sending!

  29. 29
    zman Says:

    Thoughts for one of our email in guys who can’t comment on the site due to a pesky compliance department:

    I bought some RIG a few minutes ago, think they will do well, same DO. Less sure on the shallow guys but it might be time for a reprieve there too. But on the deepwater, the damage done to the stocks makes little sense given how locked in 2009 and 2010 are for contracts and how well rates continue to hold up. RIG was a $150 stock last summer. Seems odd its at $50 and will still print $16 of EPS if not more this year.

  30. 30
    zman Says:

    Faber on CNBC reporting Dr. Doom commenting that China’s GDP report is misleading in that it is YoY and Quarter on Quarter like other countries report. He says that if the number were adjusted to match standard reporting China’s 4Q number would not be 6.8% but closer to 0.

  31. 31
    gaamblor Says:

    “RIG was a $150 stock last summer. Seems odd its at $50 and will still print $16 of EPS if not more this year.”

    Remember DRYS….the numbers are almost identical

  32. 32
    zman Says:

    Gaamblor – right, the stock numbers. But the denominator (the E in P/E) is quite different. DRYS benefited from the spot dry bulk market during the run up but its EPS estimates have collapsed with carrier rates. RIG has much of 2009 and 2010 already locked down with contracts.

    DRYS:
    2008 EPS: 12.30
    2009 EPS: 5.54 (3.55 to 8.32)

    RIG
    2008 EPS: 14.34
    2009 EPS: 14.90 (range of 12.85 top 18.04)

    DRYS is doing what they need to do to survive so maybe we are at the low point there.

  33. 33
    elduque Says:

    SD 8.5% not for public consumption

  34. 34
    zman Says:

    Market and energy selling off in advance of the oil numbers which we get in another 20 minutes.

    Interesting factoid on HK. Implied volatility up as I’m now up 12% on my 17.50 Feb Hk’s despite the fact that I never broke above break even yesterday on them at these same levels in the stock. Market seems to be anticipating more news.

  35. 35
    choices Says:

    Z-re your comment on China growth in the discussion section above and #30, PetroChina PTR, the huge state-owned petro company, is off from $101 on Jan 6 to a close of $77 yesterday-not a good sign about China growth.

    Tom

  36. 36
    BirdsofpreyRcool Says:

    Financials dragging the mrkt down… again.

  37. 37
    zman Says:

    El-d – How so?

    EC – have you looked at those SD converts. They didn’t start out as busted, just discounted but that’s a good firm, not about to go under, just stressed with prices where they are.

  38. 38
    Popeye Says:

    HK now more than four bucks over CHK PPS.

  39. 39
    BirdsofpreyRcool Says:

    El-D … I see what you mean. The SD convert pref’d was not listed as a 144a Private Placement… but I see it described as “private” on the description page. I haven’t seen it put that way before (usually see 144a issuance). An issue that size, I would expect to be registered at some point. I’ll ask.

  40. 40
    zman Says:

    Choices – I have not been keeping my eye on them. Hard to tell with all the subsidies and pricing machinations over there how their profits will come out.

    Re Financials. I took a look at the top half of the XLF the other day and suffice it to say they all look cheap on forward numbers. But does anyone have any clue if those numbers are anywhere close to the mark. I still here/read people who say its time to bottom fish that group but I’ve got to ask why, when things are less clear now than they were a year ago when those same voices said to make that trade. At least with energy you can make your best guestimates on commodity price, multiply that by a volumes range and come up with a number that will be within a hand grenade of the truth, and, oh yes, they are just as cheap or cheaper than those financials, and have much to the power of 10 better looking balance sheets.

  41. 41
    zman Says:

    Why couldn’t those microtard guys be more like IBM or AAPL? Really crimping the market today.

  42. 42
    VTZ Says:

    Z – RE: Oil sands water consumption from the post.

    Alberta Environment (AENV) licenses the companies to remove a max flow and a normal flow from the rivers (Athabasca near Fort McMurray and North Saskatchewan near Fort Saskatchewan). The licensed volumes if ALL the “proposed” (but now cancelled) projects went through is something in the 3-5% of annual flow. The problem is in the winter when the water flow is naturally reduced and there is a large amount of ice. Many rivers in the US have licenses for ~10% of annual flow.

    AENV has the right to ask the producers to reduce consumption in periods of low flow (NOTE 1: the only “consumption” is evaporation off of cooling towers, the rest of the water is recycled or cleaned in the wastewater treatment plant and returned to the river)

    It has been a risk before and could happen in the future. All the companies have large river water ponds to accomodate periods of low flow. I suppose that if this is an ongoing problem it could be a problem for growth.

  43. 43
    zman Says:

    HK positioning to yet again be a winner in the event of a rally in the broad market. I like to see repeated strength from names, especially in this environment.

    Thanks for checking BOP.

  44. 44
    zman Says:

    Thanks V. Does not sound like a major impediment. Wonder if they could source from elsewhere (like a water bearing zone) or just increase the size of their ponds.

  45. 45
    zman Says:

    crude: up 6.1 mm
    gasoline: up 6.5
    distillate: up 0.8 mm barrels

    bad numbers on the surface

  46. 46
    VTZ Says:

    “Current water license allocations totals about 1.8% of the Athabasca river flow. Actual use in 2006 was about 0.4%. In addition, the Alberta government sets strict limits on how much water oil sands companies can remove from the Athabasca River. According to the Water Management Framework for the Lower Athabasca River, during periods of low river flow water consumption from the Athabasca River is limited to 1.3% of annual average flow. The province of Alberta is also looking into cooperative withdrawal agreements between oil sands operators.” – Wikipedia

  47. 47
    zman Says:

    No help on the crude imports which came in at 9.9 mm bopd.

    Utilization at refiners did fall, which explains part of the rise in stocks.

    Cushing only up 0.2 mm barrels which is the only bright spot I see so far.

  48. 48
    zman Says:

    Gasoline demand fell again but distillate demand rebounded (slightly) with the cold weather.

  49. 49
    tater Says:

    Thanks EC for the crude site, and thanks VTZ for the oil sands info (as always).

  50. 50
    zman Says:

    ZTRADE: $10KP

    TSO – Entered (5) TSO February $12.50 PUTS (TSONV) for $0.65.

  51. 51
    Sambone Says:

    OTTAWA (Dow Jones)–U.S. crude and oil products inventories soared past
    analyst forecasts in the week ended Jan. 16, according to data released
    Thursday by the the U.S. Department of Energy.
    Crude oil stocks jumped 6.1 million barrels to 332.7 million barrels, the
    department’s Energy Information Administration said in its weekly report. That
    compared with an average forecast of a 1 million-barrel build in a Dow Jones
    Newswires survey of 13 analysts.
    Gasoline stockpiles rose 6.5 million barrels to 220 million barrels, compared
    with an average survey estimate of a 1.6 million-barrel gain.
    Distillate stockpiles were up 790,000 barrels to 145 million barrels, compared
    with analysts’ forecasts of a 600,000-barrel draw.
    Refining capacity fell 1.9 percentage points to 83.3%. Analysts had expected a
    1 percentage point drop.

    U.S. Oil Inventories:
    For week ended Jan. 16.
    Crude Gasoline Distillates Refinery Use
    EIA data: +6.1 +6.5 +0.8 -1.9
    Forecast: +1 +1.6 -0.6 -1

    Figures in millions of barrels, except for refining capacity, 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 Hyun Young Lee, Dow Jones Newswires
    Dow Jones Newswires
    01-22-09 1115ET

  52. 52
    sane Says:

    API

    Crude UP 9.8M
    Gasoline DOWN 43K
    Distillates UP 73K

  53. 53
    zman Says:

    Thanks Sane. Traders ignoring that API gasoline number, RBOB is getting hosed.

  54. 54
    zman Says:

    I’ll probably take a look at SLB puts in here.

  55. 55
    BirdsofpreyRcool Says:

    HK – debt conf call deets: will be held at 11:30 am (EST) today with slides, for QIBs only. I would be very surprised if the debt presentation doesn’t help the stock.

  56. 56
    BirdsofpreyRcool Says:

    Tim Geithner approved… that should help the financials… and the mrkt, i would think.

  57. 57
    zman Says:

    Agree BOP. I know you know some of these guys including the Jefco HY analyst. If you look at this presentation:

    http://library.corporate-ir.net/library/10/105/105858/items/320259/543047E9-FE62-4B31-9F90-B30535631D5E_BMO%20Unconventional%20Gas%20without%20McSpirit.pdf

    Slide #9. I would like to know if they update it. Could be 3 more wells on it.

  58. 58
    zman Says:

    RBOB – down 8%. Oil not cracking lower. Demand poor. All bad for refiners.

  59. 59
    md Says:

    Any opinion on Opti from Z or V

  60. 60
    zman Says:

    I’ll leave that to V

  61. 61
    Bob Says:

    Another 52 week low for SLB in front of earnings

  62. 62
    T. J. Says:

    Tim Geithner yet to be approved by full Senate.

  63. 63
    kyleandy Says:

    bop – trading desk position same as before?

  64. 64
    VTZ Says:

    Give me a bit md, I’m kind of busy.

  65. 65
    Sambone Says:

    This is funny, John Thain got pulled into old Ken Lewis’s office and it took 19 minutes to fire him. I wonder if he got his bonus like all the other Merrill folks before the deal with Bank of America was sealed.

  66. 66
    kyleandy Says:

    sam i thot gasparino said he went into thain’s 1.2 million redecorated office and fired him

  67. 67
    Sambone Says:

    Wow, don’t ya just love being a BAC shareholder? K, either way short man with bulging eyes took a axe to him, LOL. Ya gotta give Thain an “attaboy”. He sold MER to Ken for $29.00 ashare when it was trading at $13.

  68. 68
    BirdsofpreyRcool Says:

    kyleandy – trading desk backed off from thinking it will be a green day. they are still thinking we will close higher than the lunch-time lows. their caveat today was that their algorithm was run prior to MSFT’s earnings announcement. They said that “might throw a wrench in it.”

    Will check if there is any update.

    HK at 17.75 seems attractive… but, no technicals behind that thought.

  69. 69
    BirdsofpreyRcool Says:

    #62 – was relaying a bloomberg headline on Geithner. guess it was a little early. seems it was only the Committee that approved at this point.

  70. 70
    BirdsofpreyRcool Says:

    Trading Desk now stands at 50/50 for a rally, with a 70% chance we close in the red. They pointed out that closing red does not mean we go lower, we could bounce a lot higher from here and still close red.

  71. 71
    BirdsofpreyRcool Says:

    El-D – you were right, sadly, on those SD convert pref’ds. They were issued in response to an inverse inquiry from an institutional holder, done quite quickly, and placed in private hands. So, put away and out of sight.

    Too bad. Great piece of paper.

  72. 72
    zman Says:

    Waiting to close to take puts on SLB, pretty sure I’ll do it. Not expecting a miss, just pessimistic go forward.

  73. 73
    VTZ Says:

    md,

    6 months ago I thought OPC was one of the best buys available because of their ability to pay back their debt quickly at those prices and potentially pay out dividends or do something else with their capital.

    Now it looks inreasingly likely that they will be unable to pay back or roll over their debt without dilution (2.4 billion with production of ~20 kbpd of light sweet crude).

    Having sold 15% of their stake to Nexen as a requirement to meet short term cash obligations they took a book value loss. They also look vulnerable to a complete buyout if Nexen decided it was favorable.

    Bottom line is the world for them has changed, reduction in oil price and credit availability leaves a grim outlook. If oil snapped back to 60 I would say they are worth something again but as it stands now, they will either be diluted or taken out by Nexen at a not-so-favorable price. Considering Nexen just bought 15% of their JV project for 730 million, they could buy out the rest 1.7 billion and call it a day.

  74. 74
    zman Says:

    Oil down 5%, gasoline down 9%. Refiners starting to back off a little more than earlier as oil hovers above $41 off its lows. VLO looks to be leading the charge lower but the stocks are not willing to crack just yet. If you right the ship in terms of crack spreads by lowering utilization but without seeing increased demand, it won’t last. Inventories are simply too high for those cracks to keep the recent gains without demand. Lower utilization does however mean lower throughput and therefore the volume part of your revenue is down … tough position to be in.

  75. 75
    zman Says:

    NXY was talking up the idea of making oil sands acquisitions last week at the Goldman conference.

  76. 76
    Nicky Says:

    Good morning and ugh!

    Broader market – lots of possibilities (a lot of help I know!) but my preferred has us in a wave iv triangle with us currently in wave d down.

    Crude – at some stage we are going to need to test or undercut the feb contract lows….

  77. 77
    VTZ Says:

    I would say that udner the current circumstances its almost a given that NXY finishes off OPC soon, question is at what price?

  78. 78
    zman Says:

    V – would that eventuality raise BQI up the snack list? Or are they not far enough along?

  79. 79
    zman Says:

    NE trying to go green. I like them and RIG for a trade into their call in an hour and a half.

    HK as well trying to go green with Dow down 220. Setting up nicely. Option premiums inching up with the stock doing so. I will probably take Feb 20 calls if I can nab them under a buck.

  80. 80
    BirdsofpreyRcool Says:

    TBT doing well. Geithner’s comments about China manipulating it’s currency is causing a sell-off in longer-dated treasuries. Not really sure you want to pound the table on that issue right now, Tim. Especially in front of some new Treasury issuance next week…

  81. 81
    zman Says:

    Nicky – from a fundamentals standpoint on oil, the refiners are doing what they need to do to help themselves and its causing crude to pile up in the U.S. There is, in technical terms, a lot of crude in storage now. The big build OPEC saw coming is here. The unwinding or at least flattening of the contango is likely to make that worse. While I think natural gas is close to its lows (maybe 50 cents lowers at some point for a short span), its hard to see with the data we keep getting and imports still showing up despite OPEC’s cuts (and yes, we should have seen some impact by now so thanks a lot Canada for the U.S.) how oil does not retest those lows. The only thing that can save it from that is a bounce in the equity markets with financial buyers coming in for a short cover.

  82. 82
    BirdsofpreyRcool Says:

    trading desk pointing out: GS, MS, and JPM turn positive. Usually preceeds a positive bounce.

  83. 83
    VTZ Says:

    They are towards the bottom of my list until price is way higher πŸ™‚ Someone with a lot of research dollars and cash might be interested but it would be a tough acquisition… They are at least 5 years out of meaningful commercial

    First takeouts, UTS by PCA/PCZ, CLL.

  84. 84
    zman Says:

    Anyone seen a broker comment on the NE quarter? The one I saw just after the open was positive but I am not seeing any shifts in recommendations or targets just yet as they are all waiting on the call. Just wondering if anyone is hearing any preliminary thoughts there. I thought the quarter and outlook/positioning was good.

  85. 85
    VTZ Says:

    I meant to say meaningful full-scale commercial production.

  86. 86
    VTZ Says:

    “Noble Cut To Neutral From Add By Cap One” is all I see

  87. 87
    zman Says:

    Thanks V. SU sounds like they are not going to be one of the acquirers, I wonder if they might partner up more given their debt load and long range plans vs their cash flow. Saw another bit player oil sands project got hung up yesterday – Habanero.

  88. 88
    VTZ Says:

    I think Suncor will try to live within their means. So long as they still have Voyageur as an expansion opportunity, there is no reason to acquire anything.

  89. 89
    cargocult Says:

    If mid $40’s is a sweet spot for buying RIG, what is your take on selling the Feb $45 PUT for $2.60?

  90. 90
    zman Says:

    Right. The master move would be for XOM to buy SU for cash. $38 B on the balance sheet, TEV of SU, $28 B. They probably won’t do it but it makes a lot of sense and I don’t think there will come a time when Canada will nationalize the assets of a foreign oil company. REP facing that in Libya now.

  91. 91
    zman Says:

    Cargo – Its not a bad idea, could go either way right now. The $45 is my read on the technicals and I think Tater would tell you it goes lower than that before it goes higher from a TA basis as well. I was buying for a bounce on the NE news and may be indeed a bit early.

  92. 92
    VTZ Says:

    Z- That would certainly be the master move… Some day XOM is going to surprise us all with something.

  93. 93
    zman Says:

    TSO starting to roll off now.

  94. 94
    BirdsofpreyRcool Says:

    wow… price talk on the HK’s wider than I expected. Talk is deal to be priced at a discount to yield 12.75 to 13%. But there is a lot of interest. $300mm size upped to $500-600mm face amount.

    Books will close at 2 pm, with pricing shortly thereafter.

    Could see a bounce in the stock once the deal is pronounced “priced and done.” It’s a 144a issue, at this point, so only insitutional investors can buy it. Another nice piece of paper, tho.

  95. 95
    md Says:

    V txs
    TD Newcrest had a speculative buy recomendation on Opti 1 yr target of $4

  96. 96
    zman Says:

    V – you mean like volume growth, lol. Or a real North American acquisition. I guess they will have flat to up N. American volumes from a full year of Thunder Horse but then what? More offshore Africa where everyone is going to put the bite on your production sharing contracts and threaten you with nationalization. Come home to N. America XOM.

  97. 97
    zman Says:

    BOP – whose running the book?

  98. 98
    BirdsofpreyRcool Says:

    JPMorgan

  99. 99
    BirdsofpreyRcool Says:

    but, lots of banks on this deal: JPM//BAS/BMO/BNP/Wach/Barc/Fortis/RBC/Natixis/Piper/Wedbush.

    rather odd to see BNP there, as they shut their high yield desk down last week, I heard. interesting who’s not on the list: GS, MS, MER, CS… well, guess BAS is MER now. no Jefferies, either.

  100. 100
    Sambone Says:

    [Dow Jones] Cash flow for major oil companies is expected to decline on
    average by 33% this year from the 2008 record, says Fadel Gheit, analyst at
    Oppenheimer & CO. Inc. in a note to clients released Thursday. Exxon Mobil
    Corp. (XOM) and Chevron Corp. (CVX) have sufficient cash to make up for any
    shortfall to fund higher capital programs and even raise their cash dividend,
    he says. However, BP PLC (BP) and Royal Dutch Shell (RDSA) could have up to a
    $10 billion cash flow shortfall each and may have to reduce their capital
    spending or increase debt to maintain their dividends, Gheit added.

    Contact us in New York at 201-938-2030 or anna.raff@dowjones.com.

    Dow Jones Newswires
    01-22-09 1325ET

  101. 101
    zman Says:

    No Jefco is surprising. Very proficient in the spot secondary market. Glad to see a large syndicate, hate to think Joe Alman at JPM would be fielding all those fund manager calls…his lack of faith in the past on shale play economics/reserves has been most disconcerting.

  102. 102
    zman Says:

    ZTRADE: Added HK Feb $20 calls (HKBD) with the stock even on the day for $1.

  103. 103
    BirdsofpreyRcool Says:

    Gregg Brody is the energy high yield analyst at JPMo. I haven’t worked with him, so can’t say… but, maybe he’s more rah-rah on the shales than Joe.

    That said, at 13%, my GRANDMOTHER should be able to place that paper!

  104. 104
    zman Says:

    BOP – good point.

    Oil retaking 42 level. Odd bit of strength. What is they say about a market which is able to take bad news and go up anyway?

  105. 105
    BirdsofpreyRcool Says:

    “climbing the wall of worry”

    either that or, “short-covering”

    or, “Max pain trading”

    they all work.

  106. 106
    choices Says:

    HK, RIG, DO all acting well in here-I think wall of worry or max pain works for me.

  107. 107
    zman Says:

    I was thinking “oversold” but those others work too. If this day trading of HK thing doesn’t work out for you you always can write headlines for Bloomberg ya know, ;-).

  108. 108
    BirdsofpreyRcool Says:

    z – I’m not a day trader!!

    Just tossing the nut back and forth a few times today. Blind Squirrel Amusement.

  109. 109
    zman Says:

    Sorry, that was low of me. That sting you feel at the back of your neck is pride messing you, lol.

    NE call starting.

  110. 110
    zman Says:

    DO / RIG suddenly green on the day. Its more fun not to be an original thinker.

  111. 111
    elijahwc Says:

    SZ re: #75, 77 & 78. The only place NXY can go is so TOT here.

    PARIS (Dow Jones)–French oil major Total SA (TOT) can keep up an “aggressive” investment strategy despite low oil prices, Chief Executive Christophe de Margerie told France 24 television, according to a transcript distributed by the channel.

    “We are going through a period where the cash will be strongly limited but, thanks to the policy we’ve had in the past, thanks to all the actions we’ve taken to get a good balance sheet, to have our investment strategy based on 15-20 years and not on two years, we have the capacity to continue this, I would say extremely aggressive strategy – which means keeping our investments at least, at least in volume,” de Margerie said according to the transcript.

    The interview will be broadcast late Friday, France 24 said.

    -By Adam Mitchell, Dow Jones Newswires; +33 1 40171756; adam.mitchell@dowjones.com

  112. 112
    BirdsofpreyRcool Says:

    z – no worries. You’re funny when you stoop.

  113. 113
    zman Says:

    Oil could give two figs about the inventory numbers, rising with Dow.

  114. 114
    BirdsofpreyRcool Says:

    z – good call on scooping up those add’l HK calls. The stock should go up, when they announce that the bond deal closed. That will probably be after mrkt close, but should make for a nice day tomorrow, assuming no Micro-squish-like announcement.

  115. 115
    zman Says:

    NE CC

    1) they are not in a panic.
    2) no seeing bidding activity stop
    3) not seeing wholesale cancellations, saw one competitor see a contract get cancelled.
    4) only a fraction of their business is with smaller companies.
    5) how ya going to look in 12 months. If oil rebounds to $50 to $60 their share price will rebound with it. If not some of their customers will have some trouble.
    6) M&A: they are not in a hurry to do a deal, not yet seeing the kind of value they are looking for yet compared to newbuild opportunities. Don’t have to do anything.

    Fantastic opening statement by CEO.

  116. 116
    zman Says:

    Tater – At what level would the move in HK satisfy you as per your statement that it needs to get up soon?

  117. 117
    tater Says:

    The Jan 6th high at 19.30 (I have conflicting data, might have that high at 19.29) is the line in the sand for me. Now that doesn’t take into account the billionaires who love to run stops. But the line is at 19.30.
    Don’t forget you’ve got gap problems at 22.69.

    SPY chart shows that 83.72 is the resistance on this last downswing since Jan 6th.

    SPY 15 Min chart
    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882

  118. 118
    zman Says:

    Analysts trying to poke holes in the 2009 NE story, so far no joy. Stock backed off with the broad market and everything else but the sentiment on the call is pretty positive.

  119. 119
    choices Says:

    Maybe day trading is the answer in this casino but unfortunately I have no skills in that area.

  120. 120
    zman Says:

    Wyoming – thanks for #4.

    Choice – nor do I.

  121. 121
    tater Says:

    I know it has become a cliche to talk about what a beast this market has become in terms of trading, but …
    I think your use of the term casino is exactly right. If NY is looking for a recipe to get more IRA and hedge fund withdrawals, this seems to be the ticket.

  122. 122
    tater Says:

    Well, it looks like we will still be able to go to Red Lobster and Starbuck

  123. 123
    zman Says:

    Moody’s takes HK to Negative. I despise the mechanical nature of the rating agencies and think that if anything should be tossed out as we regulate everything, it should be them.

  124. 124
    zman Says:

    Moody’s says they would return HK to Stable outlook if they raise equity and continue to report sequential production growth (which would prove to them that the company’s 2009 spending is “productive”. If only Google or some other tech company could invent a way for me to slap someone through their monitor.

  125. 125
    choices Says:

    Re 123, the rating agencies are a joke, albeit a grim joke, after their performance in the credit markets over the past few years. I believe it was Frontline on PBS did a special not long ago and surprise surprise it was all about money doing the ratings on credit products-they themselves did not understand their models as recounted by employees (former)-CEO’s of rating agencies were paid enormous sums and walk away free and clear. They do not need to look back at the shambles and they continue to issue reports on legitimate businesses-sorry I just realized that I was ranting.

  126. 126
    Sambone Says:

    By Kate Haywood
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Speculative-grade companies are selling more than $1
    billion of junk bonds Thursday as they seize the opportunity to raise cash to
    repay debt and fund their operations.
    The biggest deal is from wireless infrastructure provider Crown Castle
    International Corp. (CCI), which is in the market with $900 million in notes.
    This is larger than the initial target of $600 million, according to one person
    familiar with the situation. Petrohawk Energy Corp. (HK) also plans to sell
    $500 million-$600 million in bonds – more than the originally planned $300
    million – and gas transmission and distribution company Tennessee Gas is
    looking for $250 million in what are known as drive-by offerings.
    A drive-by offering means there is enough demand for a deal without borrowers
    having to do a long investor roadshow. Drive-bys used to be fairly common in
    the junk bond market, but they have been few and far between since the credit
    crisis began. The drive-bys are yet further indication of a reopening of the
    new-issuance market for lower-rated companies and follow Nielsen Co. BV’s $330
    million junk-bond sale Wednesday.
    “As time goes by, the pace of issuance is picking up and more and more deals
    are getting done,” said Martin Fridson, chief executive of investment firm
    Fridson Advisors in New York.
    This is excellent news for companies that need to raise cash and have been
    locked out of the market for months. Investors caution, however, not to get too
    excited, saying that well-known companies with strong credit profiles will
    continue to find it easier to sell debt but lesser-known firms that are
    vulnerable to the weak economy will still face difficulties.
    “[Crown Castle, Petrohawk and Tennessee Gas] are well-known, good-quality
    companies that would normally have access to the market,” said Kenneth
    Monaghan, head of high-yield credit and portfolio manager at Rogge Global
    Partners in New York.
    Investors have turned their attention back to corporate bonds over the last
    few weeks, as yields on risk-free assets, such as Treasurys, are so low that
    buyers get very little return.
    “High yield is catching part of this, where people are looking for limited
    downside with very high yields,” said Gary Sullivan, head of high-yield bond
    portfolio management at DB Advisors, the institutional asset management arm of
    Deutsche Bank, on a call with journalists last week.
    This renewed interest has allowed speculative grade borrowers to sell $1.428
    billion of bonds already in January, making it the busiest month for high-yield
    issuance since July 2008 when companies raised over $3.8 billion in the market,
    according to data provider Dealogic.
    “It doesn’t say that the market has turned around, but to see three companies
    coming to market simultaneously after months of very little issuance is
    striking,” Fridson said.
    A revival of the junk bond market, which is a vital source of financing for
    some of the world’s major companies, is becoming more and more important as the
    default rate increases and the number of borrowers being downgraded to
    sub-investment grade rises. Speculative-grade borrowers made up the majority of
    U.S. corporate debtors for the first time in 2007, according to Standard &
    Poor’s.
    Crown Castle is expected to price its bonds to yield 11.25%-11.5%, according
    to a person familiar with the deal. The bonds are expected to come at a
    discount to par value to give a coupon of 9%. The yield on Petrohawk’s 5
    1/2-year bonds is expected to be 12.75%-13% and the coupon is seen in the
    mid-10% area. Tennessee Gas, a unit of El Paso Corp. (EP), is expected to sell
    its seven-year senior notes at a discount of around 95 cents on the dollar to
    yield 9%-9.25% for a coupon of 8%-8.25%.
    The yields are less than what the companies could have ended up paying had
    they tapped the market last year. But the cost of borrowing is still at record
    highs.
    U.S. junk bonds have returned 4.71% year-to-date after having fallen over 30%
    since the start of last year, Merrill Lynch Master II High Yield Index. Risk
    premiums, or spreads over risk-free Treasurys for high-yield bonds, meanwhile
    stood at 16.71 percentage points Wednesday, according to Merrill. That’s nearly
    twice what they were at the start of 2008 but well below the peak of 21.82
    percentage points in mid-December.
    Average yields are around 18%. This is down from highs of more than 20% last
    year, but it’s still more than double the yields junk bond issuers have
    traditionally been used to.
    Successful deals from Crown Castle, Petrohawk and Tennessee Gas won’t
    necessarily mean that fallen angels – companies that have had their credit
    ratings cut to junk from investment-grade – will find it easy to raise
    financing in the bond market, Rogge’s Monaghan said.
    “There is money coming into the market and people are looking to buy new
    deals. But it doesn’t mean that it’s going to be a walk in the park for every
    company that wants to tap the market,” Monaghan said.
    All three deals are expected to price later Thursday, according to people
    familiar with the situation.
    -By Kate Haywood, Dow Jones Newswires
    Dow Jones Newswires
    01-22-09 1500ET

  127. 127
    Coug1984 Says:

    Z- Did NE say anything about whether they exercised or extended the options for the three additional globetrotter drillships? I think those options were supposed to expire at the end of ’08. Thanks.

  128. 128
    zman Says:

    Coug – I didn’t hear it but I took a call during the Q&A for a couple of minutes. Will get back to you when the transcript is published later today.

  129. 129
    zman Says:

    Coug – They renegotiated the options during the fourth quarter for globetrotters 2, 3, and 4 at better prices, expires March now but they said the shipyards really want the work.

    #1 is $585 mm, the next ones will be closer to $550 mm. That’s everything in the price from ship to crew training to spares.

  130. 130
    zman Says:

    Nothing done on my SLB puts.

    Beerthirty.

  131. 131
    calvo Says:

    #42, #46 …thanks for you insights, VTZ

  132. 132
    BirdsofpreyRcool Says:

    HK – deal priced and closed. Low end of price talk and high end of amount raised. $600mm of Senior notes due in 5.5 yrs. 10.5% coupon priced at 91.3 to yield 12.75%.

    For a B3/B junk bond credit, it was a pretty good deal. Bonds are already trading up in the aftermarket to 92.75 from 91.3.

    Given that they originally set out to raise only $300mm, no surprise that Moody’s felt they had to say something about the debt load. Still, adds lots of nice-to-have-around cash and bank availability to HK’s balance sheet.

  133. 133
    zman Says:

    Thanks BOP. Was there any indication what their cash balance would be post deal?

  134. 134
    zman Says:

    GOOG beats, jumps AH

  135. 135
    PackMan Says:

    BOP … how about you get us all a copy of that trading algorithm ?

    That would be nice ….

    LOL.

  136. 136
    zman Says:

    Gas rigs down 50, down 237 YoY. Big drops in Colorado and Texas, Louisiana and OK down 5 apiece.

    Horizontal rigs up 10 which won’t help sentiment on gas, the commodity forgotten in today’s rally.

  137. 137
    zman Says:

    Don’t see doing anything today including taking profits. I’m going to go watch the kid grow and will be on my blackberry if anyone has anything pressing but I can’t imagine what that would be. Here’s to a green day in energy land, I think we got two of those this week. Wow. Beer thirty called early, have a great weekend!

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