20
Apr
Friday Random Thoughts
Friday is often my day to catch up on random gleanings from the oil patch so here goes.
Natural Gas: Sideways Trading After Uneventful Report. I predicted a 45 Bcf withdrawal and the EIA reported a 46 Bcf withdrawal. The Street was looking for a number in the mid 30s and gas traders were non-plussed by the report. See last night's gas post for my current thinking.
Odds & Ends
Analyst Watch: (EOG) and (ECA) cuts to hold by AG Edwards and Bear Stearns cuts (VLO), (MRO) and (SUN) to underperform.
(SLB) Posts Strong Results. Reported a nickel beat driven largely by strong growth in international projects. Quick highlights:
- greatest strength seen in Africa, Europe, Asia,
- it was slower in the onshore US market but they see that picking up
- they see more drilling US or as they put it "the fundamentals for reinforced natural gas activity in North America are becoming apparent". Caveat- increase in service industry capacity will limit pricing power except in areas of new technology used to exploit unconventional gas wells. I read that as coil tubing operators, better frac techniques etc.
- they site OPEC supply cuts and "continuing weak non-OPEC supply performance" for the rebound in oil prices.
- their multistage frac technology looks to be working well and could provide upside to the shale drillers in particular.
- I'll be revisiting calls on Carbo Cermaics today (CRR) as they continue to benefit from the same drivers.
Canadian Oil Production Hits New Record. According to StatCan, Canadian oil production rose to 3.432 million bopd in Febrary and further to 3.623 million bopd in March 2007. StatsCan sited: 1) a partial return to production for the offshore Hibernia Field which had some mechanical difficulties in February, 2) higher bitumen and synthetic crude production from Alberta, and 3) expanded capacity at the Syncrude plant in Alberta.
Nigeria Watch: Forcados field expected to be back on production by end of May.
From Reuters ~ When asked how Nigeria would remain within its 2.04 million barrels per day production target set by Opec's most recent agreement, Daukoru told reporters a rise in global oil demand may soak up extra Nigerian supplies. Comment: In other words, he doesn't plan to stay within his quota.
Nigeria Watch #2. Elections tomorrow. I'm for Umaru Yar’Adua, known to be a reformer, who has done good things in his state. Hopefully, his plans to deal with the rebel and communities at learge through increased social programs and jobs will be received with less violence.
Nigeria Watch #3. Rebels seized three Nigerian workers from a (RIG) rig in the delta today.
Putin Watch: Russia is playing the environmental card with Imperial Oil threatening to revoke production licenses and suspend Imperial's use of newly constructed pipelines.
Alaron Watch Day 3: May crude moves $1.30 in the wrong direction to $61.83. that leaves seven trading days to rally $6. Even if you get the benefit of a $1.50 increase on Monday with the contract roll, I don't think you're going to make it. Don't worry though, CNBC won't bring it up again...it was just a good oil pump headline for them.
Spitzer Watch: New York governor Eliot Spitzer announced plans to reduce state electricity consumption by 15% by 2015. The 15 by 15 campaign calls for the construction of "clean" power plants, less poluting power plants, and conservation. Sounds like good business for everyone fron (GE) (gas-fired turbines) to mega construction player Shaw Group (SGR).
Upcoming Events Watch: (BPG) to speak at IPAA on April 25th. This an interesting little Illinois Basin CBM minnow I did a snapshot piece on earlier this month. Since that report on April 3, (BPG) has done nothing go up and currently rests at $1.20. I'd also add that it rose without me as pennies are generally not my thing. At least that's what I tell myself when I have a double slip through my hands. By the way, I feel the same way about (END) - (good assets, great management and loaded for bear technical team) but am much more confident in the value there. The (END) reports can be seen here.
Noble (NE) to buy at Stern Agee.
April 20th, 2007 at 7:32 amLoren – Thanks for that chart
give me a couple of hours to get a pot of coffee in me and we’ll talk about that chart.
Joe – I’ll throw a line chart of each year’s storage on the gas storage page in a few minutes.
April 20th, 2007 at 7:37 amJon – I added it here at the bottom of the page:
http://zmansenergybrain.com/?page_id=8
It’s kind of crowded but I think that’s what you were looking for. Let me know if want to see anything else. Glad you’re an avid reader. Make sure you sign up for the RSS delivery.
April 20th, 2007 at 7:56 amEnergy up with XOM which is up with the Dow which is up with GOOG. It’s a crazy world.
SLB earnings were very strong, outlook very strong. Not really wowing the Street.
Sounds like compression capacity may be high which brings HC in the spotlight.
April 20th, 2007 at 9:32 amGoing to call it a day. Still holding calls on NFX. Very nice but scary market move.
April 20th, 2007 at 11:06 amDave – check back over the weekend, just touching up that NFX piece now.
April 20th, 2007 at 11:11 amZman ….thanks I shall
April 20th, 2007 at 11:14 amZ, do you know anything about MDU? Earnings Monday, 2 previous Q’s they beat by 15% and 32%. The stock has been on fire for the last month. More of a distribution- pipeline- utility company than an oil/gas company.
April 20th, 2007 at 11:56 amSorry Jon, I’m probably not the guy to ask there. I’d be winging it!
April 20th, 2007 at 1:12 pmYour “winging it” is probably be better than most “research”. I’ll dig into it and see if I can find any red flags. The chart and the fundies look pretty good for the last few years, so I was curious.
April 20th, 2007 at 1:25 pm