27
Jan

Tuesday Morning – Earnings Starting To Heat Up

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Obama Speech / Impact Watch: One of my hobbies is tracking data and trends in data. Over the course of the Bush presidency, it became obvious that a speech by the President meant a short term slide in the markets. It became uncanny. So I thought, why not track it for President Obama? So far an appearance by Obama is a coin toss (using only the CNBC worthy appearances and starting the week before the innauguration. I'll keep ya posted.

 

Housekeeping Watch: Ice Storm Warning. If I disappear for a bit later tonight I will relay through BOP.

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update
  4. Earnings Watch - VLO, BTU, BJS
  5. Stuff We Care About Today - RDC
  6. Odds & Ends

Holdings Watch: The wiki tab has been updated.

  • RIG - $10KP - Sold half (1) RIG Feb $50 call for $7.90, up 139% with the stock up $4.20 after Goldman Sachs added the name to their Conviction Buy list.

 

  • BTU - $10KP - Added (2) BTU Feb $25 Calls (BTUBY) for $2.10. A bit risky in front of earnings tomorrow but coal prices have held up quite a bit better than other commodities while the producers have been punished with falling natural gas prices.

 

  • SU - $10KP - Added (3) SU Feb $22.50 Calls (SXHBX) for $1 with the stock up $1 and oil nosing over $48.25. Earnings are behind us and this is essentially a manufacturing story. We have their outlook on volumes and costs and there is room for upside do to cost improvement. The stock would seem to be discounting lower prices than the 12 month strip ($52+) would suggest so until it comes into more of a parity with current forward prices I plan to more actively trade the name.

Commodity Watch:

Crude oil fell $0.74 to close at $45.73 yesterday after a morning rally from a rare bit of positive economic data crossed the tape in the form of existing home sales (up 6.5% for December) and better than expected Leading Indicators. The decline came late, with the broad markets, and frankly, wasn't very convincing. This morning crude is trading off slightly but is trying to hold in the $45 area. This is the first time in recent memory that oil has run counter to further expected builds in inventories.

  • API Watch: API begins reporting their look at crude and product inventories on Tuesday evening beginning today. Should make for an interesting re-jiggering of the numbers prior to the EIA's numbers on Wednesday. Sane, let me know when you see them out. 
  • Australia Watch: It's tropical watch season down under and Cyclone Dominic has shut in a little over 200,000 bopd or half of Aussie crude production. The storm is weakening and won't be a concern but things are getting busy weather wise down there.  This can also disrupt iron ore and coal shipments (with a more last impact on the later at times) headed to Asia.

Natural gas fell $0.03 to close at $4.49 yesterday, trading higher with most other commodities. The February contract expires Wednesday and the Thursday contract is trading at $4.46. The Strip then looks like this. This morning gas is trading pretty flat.

  • Imports: up 1.2 Bcfgpd from the prior week as Canada and LNG volumes tick up: 
    • LNG - first tick above a B a day in three months. Send out volumes increased to 1.3 Bcfgpd, up 0.4 Bcfgpd from the year ago week and up 0.4 from last week. Hmmm. Bears watching. Further moves above the 1 Bcfgpd level will put further pressure on natural gas prices.
    • Canada increased to 8.4 Bcfgpd from 7.6 Bcfgpd in the prior week. Noise. Overall trend remains down.

Crack Spread Update: Refining margins eased in all regions of the country with the smallest decline coming on the West Coast as product inventories remain bloated and demand remains weak.

Earnings Watch:

 

BTU Reports Better Than Expected 4Q08 Numbers On Volume and Prices; Guides To Lower Volumes But That Should Be Expected

  • The Numbers:
    • Volumes of 69.4 mm tons vs 66 mm tons in 3Q08 and 63.3 mm tons in 4Q07. (for the year they sold 256 mm tons)
    • 4Q08 Revenue of $1.88 B vs $1.7 B expected
    • 4Q EPS of $1.11 vs $0.74 expected. For the year they reported EPS of $3.63 vs their target of $3.00 to $3.25 and the Street's $3.22.
  • Guidance:
    • Bottom line guidance deferred for now,
    • 2009 volume targets of 230 to 250 mm tons
  • The Brief State of the Coal Markets:
    • Australia - still have logistics problems for other producers?
    • China - still restraining exports, fifth year and looking to be down another 20% on exports this year. Some day they may be a net importer.
    • India - another year of record imports
    • Coal demand: 200 GW of coal-fired generation capacity under construction globally.
    • Met Coal demand off with steel demand this year
    •  
  • Favorite Quote Watch: "We are seeing a sharp global supply response to temporarily reduced demand, through voluntary coal supply and capital spending reductions.
  • Conference Call: 11 EST

VLO Reports Better Than Expected Quarter; Cuts Spending Plans

  • The 4Q Numbers:
    • Revenue of $18.6 vs $19.95 B expected (lower throughput ...)
    • EPS of $1.41 (excluding a non-cash goodwill writedown) vs $0.88 expected (... but at better than expected margins)
  • Comments: calling on refiners to match production with demand, says operating at 70 to 75% utilization.
  • Capex for 2009: falling from $3.5 B to $2.7 B.
  • Conference Call: 11 EST

BJS Reports Stronger Than Expected Quarter.

  • The 1Q09 Numbers:
    • Revenue of $1.43 B vs $1.43 B expected (talk about good company "guidance")
    • EPS of $0.56 (ex item) vs $0.46 expected
  • In a Nutshell: This is largely a pressure pumping (think frac jobs) company and it saw some holdover strength in the U.S. and Canada last quarter. Going forward they see week natural gas prices and a declining rig count impacting their business and they see reducing their own level of spending by 20 to 25% but declined to give further guidance in their press release. They are seeing pricing fall off in the U.S. I don't own but will listen to the replay for clues about where service costs are headed.
  • Conference Call: 10 EST

Stuff We Care About Today

WLL offering 8 mm shares.

  • They should highlight Bakken stuff on the road show that may have favorable impacts on EOG, CLR, HES, BEXP, maybe even KOG.
  • I don’t recall the last time someone did a secondary so it will be pretty interesting to see how it gets priced, ecially a deal this large as they only have 42 mm shares out now.
  • Hopefully it doesn't put the bug into head of companies like HK and CHK.

RDC Cancels Jackup Newbuild.

  • Canceled one ordered Jackup and halted contrustion of 2 more,
  • Not surprising as there is lots of JU capacity hitting the market this year and demand/rates look ready for a mild tumble with lower commodity prices,
  • Should be a benefit to NE, DO, RIG, ATW deepwater driller ideas as they all have JU fleets as well.
  • Maybe a negative for ESV as they are mostly JU driller and it highlights the weakening demand environment in that market.  

Odds & Ends

Analyst Watch: (GNK) cut to Perform at Opco, (RDC) pt cut from $24 to $18 at Credit Suisse.

128 Responses to “Tuesday Morning – Earnings Starting To Heat Up”

  1. 1
    BirdsofpreyRcool Says:

    Color from the Trading Desk… please note the accompanying odds.

    For Today: Switch game plans and play for a rally.

    Go Long on the morning pullback, usually early, for a rally up into lunch. Look for a few points with less than average odds of 55/45. Be sure to tighten stops after any rally in the morning and especially after 11:05 and 12:35. Tighten again at lunch at 1:00 pushing long positions through it until 2:05. Trading after 2:05 is 50/50. (EST)

  2. 2
    BirdsofpreyRcool Says:

    Credit comment (from someone other than me): guy from Dow this morning was asked about people’s recent comments that credit mkt was thawing, he kind of chuckled and said “i am a realist and maybe for some select cos it has, but I think we are in for a real tough year”.

  3. 3
    BirdsofpreyRcool Says:

    Credit Market Indices: Rally continues!

    IG 199 1/2 psychologically great to see this below 200

    HY $75.25 moving up, the right direction. would like to see it back over $78 (and ideally back in the $80s). but, says that traders expect the most credit-sensitive bonds (junk bonds) to rally.

    So, green to start the day in credit.

  4. 4
    zman Says:

    Thanks BOP

    I’m on the edge of the ice storm, light accumulation so far, high of 33, rain all day. Low of 24 tonight with significant icing expected and an actual inch of snow. Our area is pretty notorious for power outages due to ice. So if I’m not around tomorrow will relay messages via blackberry. Of course I won’t have quotes or news or anything to describe other than walls of my candle lit hovel but I’ll be around.

  5. 5
    BirdsofpreyRcool Says:

    JNK ETF NAV = $30.30

  6. 6
    BirdsofpreyRcool Says:

    z – good practise for tater’s cave

  7. 7
    BirdsofpreyRcool Says:

    BTU – conf call at 11:00am. any game plan, price target here? or, just play it as it lays?

  8. 8
    zman Says:

    BTU – good question, bid is just under $26 pre open from 23.84 last night. Safe move is to sell the initial pop. Very good quarter and they seem to be making the right moves, can always buy back during the CC but the lack of guidance may mean some funds use this as an opportunity to exit as it means the company does not have enough faith in the very term to price what little coal is not contracted already for 2009. That may be more headache than some fund analysts need right now.

  9. 9
    zman Says:

    VLO down a buck at the open on those results, wow, I’m a little pleasantly surprised.

  10. 10
    zman Says:

    Anyone see a broker comment on FSLR today?

    Oil in profit taking mode again, down $1.90 from up over $1 overnight, now change in news other than Hugo making empty threats for OPEC, saying they could cut another 4 mm bopd.

  11. 11
    Dman Says:

    BOP – I just did a post for you in Monday’s thread. I will try to look up some docs on the engineering approach to global warming. The most memorable method doesn’t involve sending up particulates into the air. Instead a giant sunshade would be send piecewise into space. From memory it was only going to cost $16 trillion. So that’s only a couple of years worth of TARPs at the current rate. Of course, things don’t usually go according to budget 🙂

  12. 12
    reefguy Says:

    EPL- Trouble from Wexford Capital. Equity going to zero

  13. 13
    zman Says:

    Reef – that is simply amazing. EPL is not some flybynight company as you know, with a bunch of acreage and an idea. That’s a real E&P company … dying.

  14. 14
    reefguy Says:

    EPL:The first of a dozen after redetermination are going to go away.

  15. 15
    elduque Says:

    BDI +9 1004
    TED unch 104.75

  16. 16
    BirdsofpreyRcool Says:

    Dman – thank you for following up on our discussion. I’ll take a look.

    I’ve heard about the giant sunshade too… scientists are nothing, if not creative! And thank goodness for that.

  17. 17
    zman Says:

    Reef – no kidding, this is the reason I’ve delayed my single digit midget piece until mid to late Feb… to see where the reserve hits are going to take the borrowing bases. Going to be like Russian Roulette to play anyone small with debt at this point.

    Dman -have you seen project to cover part of the arctic in a white tarp to reflect more sunlight back out of the atmosphere. Now that’s good for the environment and for natural gas as one of them employs a DuPont product made in part from natural gas.

  18. 18
    BirdsofpreyRcool Says:

    z – thanks for the BTU trade… stock up over 12%, I stepped to the curb. It’s free to go to $28 now.

  19. 19
    BirdsofpreyRcool Says:

    IG 201… couldn’t hold under 200. still, a far cry from 293 last november.

  20. 20
    Dman Says:

    Reef – EPL green on my screen. ??

    Care to name the dirty dozen?!

    Z – I have to think you are kidding me with the white tarp thing. Or is it a TARP constructed of all the banknotes they are printing?

  21. 21
    zman Says:

    Dman – Saw it on one of the discovery channels, can’t seem to locate it on the web.

  22. 22
    zman Says:

    BJS conference call ongoing. Will let ya know if they say anything interesting.

    BOP – the next play is probably ACI, reports Friday, significant PRB coal production, (prices holding up very well in the PRB at $13.44 now.). Stock up about 5% now. Much cheaper name than BTU, due to different product mix but that may be a good thing as they don’t have to really deal with the weak steal markets. Should get plenty of analyst support if they don’t botch Friday numbers which I don’t think they will. Analysts have recently reduced price targets but they are much higher than are current levels. Barclays just went to $45 with the stock at 16.70 today.

  23. 23
    zman Says:

    VLO off $2 on their quarter, TSO off $1.08, will continue to hold the TSO puts for now.

  24. 24
    BirdsofpreyRcool Says:

    BTU – wow

  25. 25
    zman Says:

    Gotta think that ACI runs too, honestly better position for this environment except for debt level. Interesting to see big up ticks in the weekly energy demand data over the last couple of weeks after a long string of down 1% demand for the U.S.

  26. 26
    Dman Says:

    NG interesting. Canadian trusts (ERF PVX PWE) stubbornly green for some reason.

  27. 27
    crysball Says:

    Vaalco Energy [EGY] updates drilling activity…the Drillbit speaks.

    In Summary:
    1)Major bump in Reserves as the new Ebouri field [shallow offshore Gabon] Proves-up…no figures published yet they hit pay on all 4 vertical Pilots and a sidetrack. My best guess is well North of 35 Million Barrles.

    2) 1st Ebouri Horizontal gravel pack completion finished last week & is already tied back and flowing oil to the FPSO [41′ of pay]….rig Adriatic VI.
    3 A 2nd Ebouri North Horizontal development well started this week to a 65’pay vertical pilot sidetrack just drilled last month, …rig Adriatic VI
    4) another Vertical pilot to the SE of Ebouri will be drilled in Feb…rig Adriatic VI.

    A second Jackup Rig [Pride Cabinda] which just finished drilling Ebouri North Vertical pilot & sidetrack ] is now moving 4.4 miles SE to drill a vertical pilot in Etame North prospect to be followed by another vertical pilot in Etame South prospect.

    Drilling onshore Gabone [2 verticals] will commence in Feb …….Nabors 854 rig.

    North Sea Farm-n [Gas] drilling starts in March.

    The big hitter is Angola, with semi-sub drilling in Q3/Q4 on a target with threee zones totaling 150 million barrels.

    Final Note: Vaalco has NO DEBT, and $100 million+ in the bank………not bad for a 30 person company.

    Here is the link:
    http://biz.yahoo.com/prnews/090127/ny630

  28. 28
    zman Says:

    Crys – thanks for keeping me updated here. This will cook when oil prices go higher as they keep stacking up good news. At some point you have to think they get noticed by a Major or more likely someone like an APA and get picked up for peanuts on the reserve barrel if the stock doesn’t advance soon.

  29. 29
    BirdsofpreyRcool Says:

    I’m not one for the rumor mill… but hearing that there may be some truth to the BP for CHK rumor. But I’m merely an observer in that name.

  30. 30
    Dman Says:

    Z or Crysball – is EGY cashflow positive at current crude prices? I.e. are they chewing thru the $100m ?

  31. 31
    zman Says:

    D – they were cash flow positive through the 9 months. I think their capital program is not all that costly but I have not modeled them up vs current oil strip so I don’t have a ballpark on how CF positive they are now. Even were they to be slightly tunneling into their cash it would take a while at recent spending rates (like 5 years) to get to $0 cash.

  32. 32
    zman Says:

    NOAA says Global Warming largely irreversible for the next 1,000 years:

    http://news.yahoo.com/s/afp/20090127/ts_alt_afp/uswarmingenvironmentclimate_20090127132619

  33. 33
    choices Says:

    D-payout ratio on those three is around 60, which is considered reasonably safe for the distribution (for now). Yield on PWE and PVX is over 15%, I have ERF at about 11% but you prob have that info.

  34. 34
    BirdsofpreyRcool Says:

    PetroHawk bond update: the 10 1/2% bonds issued the other day at 91.3 are now offered at 94.5. Nice to see something rally that should rally.

    The HAWK 9 1/8s are 90-91.5 in the institutional market. so, they have rallied a bit, along with the new bonds. Still think retail could buy these for 92.5, which is a 11.3% yield to worst (7/13) and a 18.06% yield to first call (7/10).

  35. 35
    zman Says:

    ZTRADE: ACI $20 Feb Calls (ACIBD) for $0.55 with the stock rallying 7% on the BTU numbers. Earnings Friday.

  36. 36
    zman Says:

    Those are a bit riskier as we are a ways out of the market.

    BTU call starting in 5 minutes.

  37. 37
    zman Says:

    ACI is a scoop chart by the way.

    BTU running through their press release.

  38. 38
    BirdsofpreyRcool Says:

    z – i can now understand your fondness for the scoop chart.

  39. 39
    zman Says:

    it has the benefit of being pretty easy to spot for the masses.

  40. 40
    choices Says:

    PWE-0.23 $C ex-dist 28 Jan, announced 0.23 would hold for the next two months.

    http://www.pennwest.com/documents/Januarydistribution.pdf

  41. 41
    zman Says:

    BTU on the coal markets:

    2008: extremely turbulent year. High U.S. exports first half to slump second half. Met coal shipments dropped with steel demand.

    2009 market: See soft met coal through the year. Higher customer stock piles.

    Positives: coal prices appear to have stablilized.

    China stock piles falling, steel make rising again.

    India looks strong as well.

    U.S. demand rising on this cold and inventories are again falling.

    Industry is responding by cutting 70 mm tons of 2009 production cuts globally.

  42. 42
    zman Says:

    BTU coal markets continued:

    60 to 70 mm tons reduced demand in U.S. and 40 mm tons of cuts so far.

    Appalachian production is down 5 to 12% by state.

    Going forward: geology and permitting in the eastern U.S. will stay tough get tougher.

    See strong rebound in the coal industry as supply / demand rebalances.

    BTU specific: benefitting more than others from Asia market, more cash than peers, strongly contracted for 2009/10.

    Q&A about to start.

  43. 43
    zman Says:

    BTU Q&A:

    Illinois Basin – number of projects in permitting and final engineering stage. Process of discussing base load contracts for that basin. Expect to see larger volumes from the basin next several years.

    Coal trading business – gives insight into the markets, helps with capital decisions for the rest of the company, 2008 was a great year for trading last year maybe not as good a year this year, will not expand to other products like electricity trading.

    Share Repo – authorized $1 billion, so far repo’d $200 mm of stock. In the current climate they want to hoard cash so they are not saying if they are buying back stock now, were active in second half of 2008. Acquisitions are likely to take precedence over share buys.

  44. 44
    zman Says:

    BTU Q&A 2

    1Q09 guidance: how does it look sequentially?

    Midwest: don’t see significant volume changes.

    West: pretty flat 4Q to 1Q, had previously stated there would be cuts for volumes in 2009, but they are loaded toward the 2 to 4Q 09 period.

  45. 45
    zman Says:

    Oil trying to hold $43. Feels like profit taking. Bloomberg has a story out on less tanker for storage demand out there. Probably bad for the FRO’s of the world. I would not be surprised to see oil rally from here as it feels like some things in the market that need to turn are in fact turning to stabilize oil prices. When I say rally I’m not looking for a big jump but it is trading quite technically and I defer to Nicky on size of any rally.

  46. 46
    zman Says:

    BTU Q&A – diesel fuel costs and natural gas costs (for explosives) are being hedged now for 2 to 3 years out. They expect to see a 30% reduction in operating costs with the fall in oil and gas prices if prices remain low for 2010.

    The see steel production off 20% in 2009, the steel mills are bringing down their met coal stock piles now, then will operate at a lower rate in 2Q through 4Q. Starting to see signs of China steel market recovery. They think its a bit early to determine what happens with met coal prices. So maybe a little early to look at someone like WLT again.

    On the whole, the BTU call is going very well.

  47. 47
    crysball Says:

    Re: EGY cashflow :

    The answer is at best an educated guess, becasue they have so many things going on concurrently…..but I concur with Z that it would be several years even if they go negative on cashflow with lots of capital spending.

    First they are paid off of Brent Spot [average for the month] and have no hedges….Brent [thanks to Ivan the Gorilla] has been better than Nymex.

    Second , Offshore Gabon production will cap about 25,000 b/d due to a royalty bump [has been running 21,000 b/d] until the new Ebouri Horizontal well started flowing last week…another well [Ebouri North Horizontal]to flow in March.

    Vaalco only pays a % of the offshore drilling/infrastructure Capex [consortium partners the rest]….the amount varies but ranges from 30% to 40%.

    Vaalco gets credit for Capex against ‘cost oil’ on the Gabon offshore.

    Vaalco Onshore conecession they hold 100% interest……….and if they are successful pipelines are nearby.

    The Finding & development costs for Vaalco are VERY LOW………due to business strategy …& low Overhead…my conservative guess is they are positive on cashflow at $40/42 barrel Brent Spot.

    Historically, company is very frugal with their cash…..they make it go a long way.

  48. 48
    zman Says:

    BTU Q&A

    U.S. Coal Demand: They see it down 60 to 70 mm tons this year:
    1) destocking at utilities and steel mills (probably 20 mm tons)
    2) GDP down (15 to 20 mm tons)
    3) Exports: less likely, strong dollar, weak foreign econ
    4) Low natural gas prices: displacing some coal demand, with the sharply lower gas prices (10 to 15 mm tons). This bodes for some higher gas demand in the coming shoulder season. They said that usually there is not much of an impact but this time may be different with such sharply lower prices.

  49. 49
    BirdsofpreyRcool Says:

    z – thanks for the running comments from the BTU call. you are a quick typist.

  50. 50
    zman Says:

    Ha, you should hear me talk.

    BTU call over:

    1) analysts generally seem satisfied
    2) no hang up type issues on the call
    3) there was some surprise over the amount of demand fall off on a global basis expressed by a couple of analysts…they should realize they were bagged by this management team on the EPS expectations for the 4Q and that they are likely giving them the overly conservative view again. Hard to tell what numbers are going to do from here for 2009, maybe unchanged to slightly down. 2010 numbers are likely to go up from here on cost savings.

    I’ve been ordered to run out and get food and beer for the hovel. Back in 1 hour.

  51. 51
    Dman Says:

    choices – thanks for the PWE info

    crysball – #47 thanx

    Z – I too think crude is profit-taking today. Just the feel of it & the stocks are not acting too bad for a 5% drop in crude.

  52. 52
    ram Says:

    ZMAN – After the BTU CC, do you feel even more comfortable with the ACI calls?

  53. 53
    zman Says:

    Ram – about the same, maybe a little better.

    BTU will likely move now (for the rest of the day) with the Dow. Should be some nice Buy reiterations there tomorrow. If the DOW has a big up day and BTU closes up 15 to 20% gain on ACI going to be double that of current level. Don’t really need ACI to go to $20 for the ACI $20 Feb calls to do quite nicely. Ok, now I’m running out for ice supplies.

  54. 54
    Dman Says:

    BHP up 6% – reaction to BTU ?

  55. 55
    BirdsofpreyRcool Says:

    IG 199… below 200. good.

  56. 56
    zman Says:

    Wow. Boring market. Doesn’t look like I missed much.

    Has anyone seen comments post call on VLO?

    BHP – Dunno. Could be the cyclone shutting in some production which is in oversupply for iron and coal.

  57. 57
    BirdsofpreyRcool Says:

    talk about demand for steel and coal rebounding in china

  58. 58
    zman Says:

    oh yes, and that, good point BOP. This market is about to put me to sleep. Flynn and Ritterbucsh out saying the oil move is just profit taking, oil market searching for next big move.

  59. 59
    BirdsofpreyRcool Says:

    z – new intern keeping you up at night?

  60. 60
    zman Says:

    Nope:

    http://www.amazon.com/Sony-MDR-NC6-Noise-Canceling-Headphones/dp/B000629GES

  61. 61
    zman Says:

    Friend of the site just sent in this live quote page for oil, ng, HO, etc

    http://nymexdatardc.cmegroup.com/index.html

    Will add to the link list at upper right.

  62. 62
    BirdsofpreyRcool Says:

    z – you go to BED with those things on??? impressive!

  63. 63
    zman Says:

    Didn’t say I sleep but they do help one concentrate, very good for listening to conference calls for web broadcasts.

  64. 64
    BirdsofpreyRcool Says:

    i could use some of that myself… concentration, that is

  65. 65
    zman Says:

    Hard to imagine dollar weakening much when the U.S. can auction $40 billion in 2 year notes yielding less than 1% (biggest auction ever) and have the deal over-subscribed by 2.69 to 1.

  66. 66
    zman Says:

    BOP – market looks to be in holding pattern awaiting the last half hour.

    Tomorrow we get:
    COP – boring with constrained capex but not likely to disappoint as they’ve pre-announced.

    HES – could be pretty interesting, almost always a hot project thrown in

    BHI – the last of the big 3 service companies to report. Yes the outlook will be dire, yes its already in the stock at least in the near term, no I won’t be playing that one.

  67. 67
    BirdsofpreyRcool Says:

    feels like mrkt holding it’s breath. that treasury auction went a little TOO well… it’s good there’s still a bid for US treasuries, but money that goes to buy USTs does not go into corporate debt deals. So, the credit crunch is still very much alive and unthawed.

  68. 68
    BirdsofpreyRcool Says:

    usually (these days) stocks sell off when oil sells off. that connection isn’t working today. wonder who changes direction first?

  69. 69
    zman Says:

    Cramer just pounded the table on X on the steel comments earlier and a good quarter and then on BTU.

  70. 70
    zman Says:

    Oil markets closed for the day, stocks didn’t take much of hit and can easily rally to green with a move in the broad market higher. Listening to the oil service calls I’m hearing a lot that sounds like stock prices are already reflecting a lot of the hit from commodity prices and that people are looking to bottom fish recommendations.

    Did get a piece sent earlier where a refining analyst, Gil Yang, recommended shorting the group after the recent rally. I don’t think his track record has been the best but I do agree with him on that call.

  71. 71
    BirdsofpreyRcool Says:

    with the economy still headed down and to the right, makes sense that refining can’t hold onto recent gains. but, so tough to short in a bear mrkt, as odd as that sounds. the upticks can be pretty violent.

  72. 72
    zman Says:

    Roger that, 5 days down, then 1 up but just short of the mid point of the last 5, then down again, its why you don’t see me do much put buying in here.

  73. 73
    zman Says:

    Citi cancels $50 mm jet buy after congress ridicules them and the president mentions flying on corporate jets is not a good use of taxpayer money. I’m sorry but isn’t that business too? Aren’t we trying to stimulate the economy. They’ve had the plan on order since 2005.

  74. 74
    BirdsofpreyRcool Says:

    yeah… in theory, people think it’s easy to make money going either long, or short the market. fact is, it’s a lot tougher to make money shorting. better to play from a deck of long positions + cash. when in doubt, go to cash.

    one of the best investors (a hedge fund mngr, by the way) in the world told me that.

  75. 75
    BirdsofpreyRcool Says:

    z – agreed with the “flying for biz” comment. problem is, the rules change completely, when you go begging to Washington. Once the camel’s nose is in the tent, the camel gets to tell you what color underwear to put on in the morning.

    hey! These guys made their own bed. executive comp is so far outta bounds… perks too. Sad thing is, I never wanted to see our Govt get into the biz of telling people what they should make. But, those idiots went and lifted the tent door flap….

  76. 76
    BirdsofpreyRcool Says:

    heck… in reality, those Idiots blew the tent entirely off the tent poles!! Nothing subtle about it.

    Idiots.

  77. 77
    zman Says:

    Only reason I mention is because they outfit the Dassault Falcon jets in Little Rock and one of their customization specialists is a friend of mine. One less plane in the sky means one more in inventory and less work for the crews who change out the seats, put in the mahogany bars, etc, etc. That’s your tax dollars putting Americans out of work while talking about stimulus.

  78. 78
    zman Says:

    …so instead of those tax dollars buying a new plane and keeping factory workers employed, several million go to the plane company in the form of cancellation penalties and the asset side of the balance sheet gets nothing. Nice.

  79. 79
    BirdsofpreyRcool Says:

    z – nice to see ya gettin’ a little political in your old age!

  80. 80
    BirdsofpreyRcool Says:

    hearing HK did the debt deal to prefund their 50/50 JV in a HV pipeline. speculation as to who the partner is, but makes a lot of sense. i would think that would pop the stock up another leg. thoughts?

  81. 81
    zman Says:

    Re 80. Is that coming from buy or sell side?

  82. 82
    zman Says:

    Re 80. I would very much like to see APC do something like that. Would make a lot of sense for them and would jump start an effort to get more resource projects into their play list.

    Depending on who does it with them I would guesstimate that someone of similar size brings the stock an immediate 10% pop and a lasting after glow but not a move back into the mid $20s.

    If they do it with a large cap like APC you probably get 20% to 25% and depending on how much debt that large cap has, more speculation that they will get swallowed.

    If its a Major, and I will send you a hat if it is, then they go up 20% and then start a slow incline.

  83. 83
    BirdsofpreyRcool Says:

    came from the sell-side… but, a plugged-in old-timer from the oil patch, sell-sider. HK’s partner would be one of the pipeline companies… 50% of the capacity would be avail to other players on a pay-to-play basis.

    again, makes sense to me.

  84. 84
    zman Says:

    Oh, a pipeline company. Good for HK production growth, slight negative for natural gas prices, not much of an impact on HK beyond the modeling change for 2010 gas volumes. Say 5 to 10% pop on the stock with no increase in speculation for a deal.

  85. 85
    zman Says:

    Holding my BTU through the close. Good day there up 12 to 13%, feels like just the start given the sentiment change. May add 17.50 strike ACI call position but will probably not add more 20s pre call on Friday.

  86. 86
    zman Says:

    X is a scoop chart as well. Have not yet listened to their earnings but that one is down from 170 to $30 (a point I made two months ago to be fair) but Cramer is now yelling about it as well. Its not the end of the world it just feels like it. China is ramping steel production to meet domestic need, the U.S. will do so later this year after inventories are destocked. The stock will precede the turn.

  87. 87
    BirdsofpreyRcool Says:

    sector question: if people start to feel better (for a while) post-earnings… what sector(s) will outperform? financials? energy? consumer discretionary? materials? emerging mrkts? chemicals? transportation? homebuilders?

    care to take a stab at rank ordering?

  88. 88
    BirdsofpreyRcool Says:

    wondering if the financials don’t outperform energy for the next two weeks or so… now that a lot of the financial earnings are out there. There is this huge, collective FEAR of nat gas oversupply that seems to keep a lid on the E&Ps… that and weak economy = low oil prices line of reasoning.

  89. 89
    zman Says:

    Probably financials first. Then little clue who beats who. Energy should do well as long as prices remain stable or go back up which I think they will.

  90. 90
    Dman Says:

    BRY a potential scoop chart?

  91. 91
    BirdsofpreyRcool Says:

    guess we were typing at the same time…. i’d have to say, i agree with you.

  92. 92
    zman Says:

    Early read on crude inventories for tomorrow from Reuters:

    crude: up 2.9 mm barrels
    gasoline: up 1.8 mm barrels (that’s getting out of hand)
    distillates: down 0.7 mm barrels.

  93. 93
    Dman Says:

    Is there any E&P that has actually followed NG down the last leg?

  94. 94
    BirdsofpreyRcool Says:

    UYG looking scoopy, too.

  95. 95
    zman Says:

    BRY needs a catalyst. Like a strike in the Haynesville or higher oil prices. Not saying it can’t pop if the group but they have some costly production and I think it will take something to move them. I’d be worried they are going to get hit with the ugly stick on reserves very soon.

  96. 96
    zman Says:

    Dman – unfortunately yes. GMXR comes to mind and GDP has done less well than I would have thought too. SWN did but recovered quite quickly. All the little pennies that were popping in the first week of the year like GST have succumbed again as well. If you like gassy companies either GMXR or GDP are hard to beat for high growth, low cost, lots of prospects, good hedges, little to no debt etc.

  97. 97
    Hoss Says:

    Pickens webcast at invescopowershares.com just beginning now.

    Looks like a combination Pickens Plan/Invesco “Green” ETF advert – Q&A may be interesting though.

  98. 98
    zman Says:

    Needanespressothirty! Ice storm shifting north now so I will almost certainly be on line tomorrow.

  99. 99
    zman Says:

    Thanks Hoss. Will listen now.

  100. 100
    zman Says:

    TBP quote – I’ve been directed by valuable, good looking, smart women all my life. Fantastic stuff, really.

    He’s urging sign up with the Pickens Plan which I have and I suggest you do as well as I think he’s on to something.

  101. 101
    zman Says:

    There is a function to ask questions for the Q&A part of the webcast. Pretty cool.

  102. 102
    BirdsofpreyRcool Says:

    IG went out at 199 -10 for the day. really good stuff. will be key to hold onto the gains tomorrow. we get mortgage applications numbers tomorrow morning, other than that, not a huge eco-number day.

    ABC Consumer Confidence comes out at 5pm today. Lately, the confidence surveys have been getting more attention than in the past.

  103. 103
    zman Says:

    I submitted a couple of questions re getting Obama to include natural gas in his energy plans and talking about the U.S. being the Saudi Arabia of coal and what can be done to change how the new president looks at coal.

  104. 104
    Bob Says:

    API: Crude Build 800k, per CNBC

  105. 105
    mahout Says:

    Z & BOP,

    On the Citi jet. Enjoyed your comments. We had a G2 and kept upgrading had a G4 I remember and at one time we had 3 aircraft. We had 128 active subsidiary companies, some in Canada, Ireland, G.B., Italy, Mexico, Hawaii, etc. ‘Came in handy. Lots of places to visit.
    Flew on it a few times, great plane. We had 2 pilots on payroll (not cheap) and I remember we had it cleaned one time. I happened to see the invoice: 50,000 bucks for cleaning! It also came in handy to take the B of D on a nice annual vacation meeting to places like Scotland for golf in august. Don’t tell me these planes are not necessary to normal Corporate functioning. Yuk, Yuk, Yuk.

    Also, i would ask the question: When members of our government such as the President and Speaker of the House and House members, all the Senators and it seems like the list goes on to great length, don’t they fly in planes that are a use of the taxpayer’s money?

  106. 106
    zman Says:

    Thanks Bob. Let me know if anyone sees their products numbers too.

    Mahout – too funny.

    Still listening to TBP – very entertaining. Not heard how we are going to get Washington to get on board with the plan.

  107. 107
    zman Says:

    TBP – saying the problem with Washington isn’t that they lie about the problem, they just don’t understand how to handle the problem.

    I can attest to that. When APC’s gas guy was in DC for hearings with then Secretary of Energy Bill Richardson, Richardson was heard to say to his aid “we have a natural gas problem in this country”. Gas pretty much went from $1.50 to $15 in the years after that comment until the shales gained prominence.

  108. 108
    nifkin Says:

    api: CRUDE + 0.800MMBBLS
    GASOLINE + 0.942MMBBLS
    DISTILLATES – 0.345MMBBLS

  109. 109
    zman Says:

    Thanks Nifkin. Given the variance we normally see between EIA and API data I’m not sure it changes analyst’s thoughts much about what I put out in #92 but directionally the two agree.

  110. 110
    zman Says:

    They just asked my lamest question: how much electricity can be saved by upgrading out energy grid? Answer, I’m not an expert but but 20% is what they tell me

  111. 111
    mahout Says:

    Z and Bop,

    In addition to being hopelessly naive ( see #105) i guess I’m ignorant too. What the heck is a scoop chart? If you like it Z, i want to know about it. Forgive my ignorance.

    BOP,

    Loved your list in #87, but i think you forgot AIRLINES! LOL Your question made me remember in “Yes Prime Minister” Jim Hacker was asked a particularly difficult question at a press conference and he answered very intently: “That’s a very good question (pause) next question!

    Seriously, who can tell, but i don’t think it will be Homebuilders. They are mostly drenched in debt and they will go under with very little sympathy from the Govt. or anyone else. They made a lot of money by over-producing that gave us all a headache.
    It could be some of the financials. I’m thinking B of A. That’s what we used to call it even tho the symbol is BAC. When you realize that here is a company that has grown extraordinarily large, huge in fact, and the Govt. has in effect told them “we will cover all your losses”! If they can get it together a little bit it might be quite a ride.

  112. 112
    BirdsofpreyRcool Says:

    Mahout – used to be they gave out company cars to anyone — above whatever level I was at — at the time, too!

    Loved your comments re: the corporate jet set.

    NetJets is a pretty useful concept. Doesn’t do as much for the CEO ego… but it works.

  113. 113
    BirdsofpreyRcool Says:

    mahout – i’m thinking financials too. scooped up some UYG the other day. It’s the anti-Sambone trade, so I don’t plan to spend a lot of time in it… but something is kicking it up after-hours. Is it the news about the good bank/bad bank stuff?

  114. 114
    BirdsofpreyRcool Says:

    CHK operational update out…

  115. 115
    sane Says:

    API Numbers

    Crude UP 800K
    Distillate DOWN 345K
    Gasoline UP 942K

  116. 116
    mahout Says:

    BOP #113,

    Yes, i think that’s what it is, “the Bad Bank concept”.
    IMO this will be irresistable to anyone in Govt. It will give the impression that they are actually doing something to fight this crisis when all they will be doing is concentrating all the crap in one toilet, so to speak. They are going to be shocksd at the size of that toilet tho. It would be so simple to stop all this foolishness by suspending Mark to Market accounting and let time determine the toxic assets value and the losses to be incurred. I know i’m a radical and not to be listened to. I have to learn to love Govt. and be at peace. Right, Comrad Commissar Tater?

  117. 117
    BirdsofpreyRcool Says:

    Dman – i read your thoughtful response from last night. I am not going to pick apart the career of a scientist. But James Hansen has made a lot of money — and a high-profile career — playing both sides of the climate change card.

    That said, climate change is real. Climate changes. Always has. Always will.

    Where you and I may hold differing opinions is 1) how much is influenced by man, and 2) how much can be controlled by man.

    Hint: the levees holding the Mississippi back from New Orleans couldn’t keep a city below sea level, just south of a lake, in an active hurricane area, dry forever.

    Do not confuse the ability to measure climate change with the contribution of man to that change. Just because we are here, doesn’t mean we “caused” it. At one time, dinosaurs ruled the world. It’s widely believed that they succumbed to climate change. So, it is not an unprecidented event. But to attribute it entirely to man, and/or to think we can somehow control it, i fear is like thinking New Orleans will never again be under water.

    There isn’t enough money in the world to hold back Mother Nature when she really sets her mind to it. I just hate to see money wasted. And people tied up in knots and arguments over it.

    So, we can agree to disagree, for now. I am willing to change my opinion, in the face of compelling data. Frankly, it’s easier not to take the other side of this argument these days. So, i’ll try not to poke at this hornet’s nest again.

  118. 118
    BirdsofpreyRcool Says:

    mahout #116 – agreed! Mark-to-market just put a giant bull’s eye on bank balance sheets. Hedge funds with CDS arrows used banks for target practise. Maybe BearStearns was brought down by it’s own, internal financial mishandling… but Lehman was targetted — successfully — by the Global Macro Bears. All because of the confluence of the M-to-M rules + CDS leverage.

    Sad stuff, truly.

  119. 119
    VTZ Says:

    Anecdotal commentary…

    Today at one of the Hotels in Downtown Calgary Saudi Aramco is having a job fair trying to pick up some of the workers who have been recently laid off from the EPC companies.

  120. 120
    BirdsofpreyRcool Says:

    CHK announces offering of $500mm notes.

    After HK got thru the debt door, this was totally expected.

  121. 121
    zman Says:

    Here ya BOP, just running through the ops update now, will have for the morning, stock coming under a little pressure in the AH.

  122. 122
    zman Says:

    $500 million due 2015, bet that gets upsized.

    Use of proceeds: to repay their revolver

    So the $1.75 billion listed in the cash and cash equivalents in the operations update is what, funny money? To me they are doing this because the market wants debt paper right now, and they are able to. They are swapping low cost revolver debt for high cost high yield debt. I understand the debt window may only be open for a short time and they don’t want to burn through their cash but with Aubrey, this smacks of paying down your revolver while keeping your cash balance the same so you can later charge back up that revolver. Stock now bid 14.78 offer 14.80 with a last of 15.64. Maybe CHK was the one spreading the takeover rumor, LOL.

  123. 123
    BirdsofpreyRcool Says:

    z – the LAST thing Aubrey wants is a takeover bid. But, CHK is a bit of a wounded animal right now… and they have a wealth of core data and production expertise in the HVS.

    There are a lot of shales worldwide… not just in the US. A MOC could use that info… not just as a politically-safe investment here in the US… but they could export that producion knowledge to, say, eastern europe.

    Big picture stuff.

  124. 124
    zman Says:

    Hear ya BOP, I’ll have a run through in an hour of so. Glad I don’t have options on it at this point as they are violating the no more debt rule (repeatedly) and they have plenty already. Its unfortunately there is no conference call for the masses on this.

  125. 125
    BirdsofpreyRcool Says:

    z – i honestly don’t know why Aubrey lays down rules and limitations for himself… “no more debt”… “no more acquisitions”… “no more equity”…

    He needs to enter a 12-step program: first admit to yourself: you can’t keep promises.

    That’s ok. But, don’t make them in the first place.

    Key to survival in this environment – be nimble, stick to what’s important, take money when it’s available.

    No one is really sure where energy prices, especially nat gas, are going. So key is “financial flexibility.”

    If HK stock pops on a good quarterly report, i wouldn’t be surprised to see them offer a 2ndary on the heels of the report.

    Take money (and profits) when you get them. Stay in the game. Live to play another day. “Survival 101” in a Bear Market.

  126. 126
    BirdsofpreyRcool Says:

    P.s. I don’t mean to be preachy… these are mainly “notes to myself.” I need the reminders.

  127. 127
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  128. 128
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