29
Oct

Monday Morning – U.S. Markets Closed Due To Sandy

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Market Sentiment Watch:  Ecodata heavy week culminating in the last payrolls report before the election but all U.S. stock and option markets are closed today (and likely tomorrow as well) due to Hurricane Sandy. In today's post please find The Week That Was, the 3Q12 energy earnings calendar for week 3 (more E&Ps we care about), and a few other odds and ends. Stay safe out there. 

 

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Monday Ecodata Watch:

  • Personal income (forecast of 0.4% and a last read of 0.1%)
  • Consumer spending (forecast of 0.7% and a last read of 0.5%)

 

The Week Ahead:  (we may see some of this pushed back due to Sandy)

  • Tuesday 10/30: Case-Shiller home prices, consumer confidence,
  • Wednesday 10/31: EIA Oil Inventory Report, employment cost index, Chicago PMI,
  • Thursday 11/1: EIA Natural Gas Inventory Report, ADP employment, jobless claims, productivity, Markit PMI, ISM, construction spending, car sales, 
  • Friday 11/2: nonfarm payrolls, unemployment rate, factory orders.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. The Week That Was
  4. Stuff We Care About Today - 3Q12 Energy Earnings Week 3, HK
  5. Odds & Ends

Click the link directly below this to ... Holdings Watch:

ZMT (Zman Medium Term portfolio):

  • The ZMT is updated on the ZEB positions page.

ZLT (Zman Long Term portfolio)

  • The Blotter is updated. 

 

Commodity Watch

Crude oil closed down 4% last week at $86.28 amid a weak equity market and persistently high production and inventory levels in the States, especially at Cushing. Brent trade off only a percent on the week as it is continues to labor under lower local market production. See more comments in The Week That Was section below. This morning crude is trading about $0.70 lower on thoughts of reduced throughput and demand related to Sandy.

  • Refining Watch: East coast refining capacity = 1.19 mm barrels at six facilities or about 7% of US refining capacity. Much of that was shut down yesterday or will be today in advance of Sandy. 

Natural gas closed down 6% at $3.40 last week on much anticipated mild weather profit taking in the front month contract. The 12 month strip retreated 4% as well and now looks like this.  Look for one more big late season injection this week and then a sharp drop in injections followed by further deterioration in the storage surplus. See The Week That Was section below for comments on the end of the injection season.  This morning gas is trading flat.

  • Weather Watch:
    • Cooling Degree Days - one last bit of warmth then off the map of things we watch this time of year.
      • Last week saw cooling degree days of 11 vs 13 in the prior week (which helped to produce the 67 Bcf injection Thursday).
      • This week's forecast calls for CDDs to move down to 5.
    • Heating Degree Days - about to get chilly
      • Two weeks ago: 55 HDDs (helped with that 67 Bcf injection number from last week as well as it was well short of normal).  
      • Last week: 64 natural gas weighted HDDs vs 87 normal for this week of the year. 
      • This week's forecast: 97 HDD's vs a normal reading of 102 and last year's 112. Next week's injection will be small but will also be impacted by power outages alnog the east coast. 

The Week That Was

Stuff We Care About Today

Earnings Calendar - 3Q12 Energy Earnings Week 3

Comments on Tomorrow's Company Reports:  Note that due to Sandy the calendar above is likely to see some shifting back to the later part of the week. 

  • XCO
    • We own it in the ZLT
    • Looking for another quarter in which they remind people that bankruptcy is not around the corner,
    • Especially as natural gas prices have bottomed and begun to recover they should reiterate the large decline in per unit operating costs here and how that plays into EBITDA per Mcfe as prices rise,
    • Last quarter they actually were able to raise production guidance for the first time in recent memory after reporting a sequentially higher quarter,
    • While I don't own names for quarterly beats in generally they are starting to turn the corner with the help of better prices and a steadfast focus on cost reduction.  Look for more comments here a little later in the day. 
  • APC
    • We do not own the name
    • listen to the name out of habit and respect for management's thoughts on commodity prices, service costs, and emerging trends
  • VLO
    • We don't own and I don't have exposre in the refiners at the moment
    • But the Valero call is a quarterly must listen in the refining space
  • FST
    • We don't own the name
    • I continue to watch and find reasons not to play
  • OII
    • We own the name in the ZLT
    • Rarely offset a surprise on the numbers side as they provide good guidance and have good visibility into their near term activities,
    • This is my way of playing in the higher margin end of the global deep water market

Other Stuff

HK Correct Table Watch:  This table was supposed to be in last Tuesday's post but the wrong table (one of the recent model's for HK) was included instead ... our apologies for the change up. This one highlights the value of HK's second Williston Basin buy on metrics. 

 

 

Odds & Ends

Analyst Watch:

  • COG - Canaccord raises target by $2 to $82, rating stays Buy

19 Responses to “Monday Morning – U.S. Markets Closed Due To Sandy”

  1. 1
    zman Says:

    Ecodata Watch

    Consumer spending up 0.8% vs 0.7% forecast

    Personal income up 0.4%, in line

    http://www.marketwatch.com/story/consumer-spending-rises-08-in-september-2012-10-29?link=MW_home_latest_news

  2. 2
    skimo Says:

    Any color on SSN's report press released last nite?

  3. 3
    zman Says:

    Morning skimo, no because I have not seen it yet, it's not in the spot on their website indicated for quarterlies, sent Terry an email last night, no reply yet. 

  4. 4
    skimo Says:

    I sent you the link I got via email, you should have it momentarily.

  5. 5
    zman Says:

    re 4 – got it, reading, will circle back, 75 bopd on Defender is not bad, down to $10 mm in cash is lower than I thought by about $5 mm

  6. 6
    zman Says:

    SSN

    – cash a bit low but not by a lot at this point

    – Defender – OK, waxy crude so reconfiguring, hadn't heard them mention that at all in the past

    – SOA 2 – going back to frac last (should be lower) zone that they skipped. Odd.  Then goes on to say they didn't have a stratigraphic trap but need a structural trap instead, so sort of points to a broader play. Saying great porosity, just wet at this location.   They will need to raise some money to pay for this. 

    – Abercrombie well (tiny interest) run by CLR to the south of Gretel (Prairie Falson) … not a bad rate there so far, probably borderline economic well,  they will spud a well close to this one next year

    – Working over Australia II (fine with me) and Gretel II (why waste the cash as it was thought to be poorly placed and in the faulted out zone)

    – North Stockyard – swapping acreage about and assuming operation ship (they have working interests in 3 sections across and 2 down so they are bumping up in the northern ones and reducing in the southern ones.   Saying they see 10 infills (probably all short laterals as a guess) 

    – So jury still out on Defender, SOA2 (same area Permian), and Montana Bakken play.   Getting busier back over in North Dakota, though I don't see the advantage of them assuming operatorship. 

  7. 7
    zman Says:

    Early lunch thirty, back in a bit. 

  8. 8
    mimster90 Says:

    zman, I did reduce my position around the time you did on SSN. Thank you! Since it's a slow day with the US markets closed. Has SSN lost focus? Have they said anything about how or when they will raise funds? Why do they want to become operators and do they have anyone on their team that has relevant operational expertise? Why are they still fooling around with SOA2? it seems they should have higher priority [better chance of getting a decent return on] things to do and spend our money on.

  9. 9
    zman Says:

    re 8 – You're welcome. I sold it out of the ZMT but did not take it out of the ZLT yet. 

    NYSE saying they will be closed tomorrow. We will be open covering a number of conference calls as outlined in today's post if they are not postponed. 

  10. 10
    nrgyman Says:

    Another good article on the natgas-to-transportation fuel conversion (GTL) industry potential.  Lots of potential here, as natgas can be converted into diesel, gasoline and jet fuel economically to foster a profitable industry long into the future.  Not sure about the environmental impact of converting and then burning in ICEs–seems like direct burning of natgas would be more efficient and environmentally friendly.  But the natgas distribution network challenges and the cost of massive ICE conversions would be eliminated under this scenario.  I can see LNG for trucks and GTL for cars, jets, trains, etc being a real possibility, with competition driving down costs.  Key cost, though, is natgas–and under either scenario natgas prices will rise.  We could be at the beginning of a big natgas demand tsunami if this catches on.  Natgas producers are big beneficiaries.  As natgas prices rise the thermal coal and solar & wind producers should also benefit.  
     
    http://seekingalpha.com/article/959421-like-corn-ethanol-it-s-possible-for-gas-to-liquids-to-be-too-successful

  11. 11
    zman Says:

    Oil down slightly on refinery damage fears and reduced product demand but volume is also less than half normal.

    Natural gas up about 2% on colder weather but again, volumes are very light. 

    Expecting EIA to delay oil and gas inventory reports and the NGM that was set for release on Wednesday

    That is a big crane hanging off the side of one 57 tower. 

  12. 12
    brodway Says:

    Hoping everyone in the Northeast and Mid-Atlantic areas are safe and ready to weather this horrible storm. Here in Northern NJ winds are bringing down some pretty large trees due to high winds. This is the second year in a row that we've been hit a storm in late October. Last year it was a snow storm that bummed the kids Haloween plans. Looks like this year may be no different. 

  13. 13
    zman Says:

    re 12 – ditto and stay safe. 

  14. 14
    ram Says:

    Zman, is the same management in place at SSN since the beginning when you invested?

  15. 15
    zman Says:

    re 14 – yes

  16. 16
    zman Says:

    Of the 6 names reporting tonight for tomorrow, 2 have released results already and we will be on whichever calls happen tomorrow and will have the usual Tuesday post out in the morning. Stay safe, beerthirty. 

  17. 17
    zman Says:

    OII on the tape, in line on EPS, above on revenues which were a new quarterly record. Margins holding strong allowing for a new EBITDA record as well as ROV utilization stays above 80%. 

  18. 18
    zman Says:

    XCO on the tape with an inline quarter. Costs continue to fall. EBITDA of $123 mm beats recently upwardly revised est $122 mm. Revenue was $192 mm vs $174mm. 

  19. 19
    RMD Says:

    Regular gas prices were all over the map from NJ to AR.  Roughly speaking:
    southern NJ  3.67
    n. Va 3.13 (yo, fill up)
    W Va  back to 3.66 (wise move in Va)
    E.. KY 3.13 (I want my $ back)
    W. KY about the same 3.20+-
    n/w Ten 3.26
    NJ had nothing to do with the storm, it's just high there.
     

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