Commodity Watch:
- Crude Oil: Extreme volatility. Yesterday oil fell hard, rebounded and sold off again as tensions along the Turkey/Iraq border seemed to ease. This morning oil is rebounding $1.75 to $95.75. Crazy market.
- Early Read on Inventories: crude down 1.6 mm barrels.
- Natural Gas: Trying to hold the line at $8. This morning gas is trading flat at $8.01 after falling yesterday to just under the round number support at $8 in sympathy with week oil.
- Imports Languish. Imports last week remained near 2007 lows at 9.7 Bcfgpd. (see NG imports section below).
- Weather Watch: The next week will bring cold in the south and southeast and continued warmth in the west.
Earnings Watch / Things We Care About Today:
(APC) Reported EPS of $0.70 (after items ) vs expectations of $0.38. In a nutshell...good results but not the best on cost control.
- Revenues were $3.03 B vs expectations of $2.22 B. Not a quality beat per se but one based on higher than expected prices as costs were above plan ...still it's a beat and their 5-9% expected growth target for 2008 is likely to get the most attention.
- 3Q Production: 510,000 BOEpd vs 3Q guidance of 489 to 510,000 BOEpd. Note: they would have been closer to 514,000 BOEpd were it not fire a fire at a 3rd party facility in the Rockies.
- 2007 Guidance: re-affirmed midpoint of prior guidance
- 2008 Guidance: initial 5-9% growth target
- Costs were higher than expected and have been marched up to reflect this in the fourth quarter which means 4Q numbers would be coming down were it not for the fact that oil and gas prices will serve to mask this relative to analysts commodity price decks. I'd also point out that while LOE came in above guidance it is still below most of its peers at less than $6 /BOE (<$1 Mcfe).
- Differentials look a little wider as well.
- Deepwater GOMex: Independence hub at 850 MMcfepd as of yesterday. The operations update lists a number of wells development and exploration that are new. Also, the gassy Redhawk spar is getting compression added to up capacity. This gives APC several sources of incremental near term volume adds.
- Here' a link to their operations update.
- Conference call at 9 EST
(CRK) Scores A Strong Beat. Reported EPS of $0.37 vs expectations of $0.27.
- Production: 23.1 Bcfe, up 35% YoY (onshore up 38%, offshore up 31%) . Volumes were up 6% sequentially.
- Prices were up 10% on oil and down 4% on NG relative to year ago levels which is pretty much what you expect this quarter.
- Exploration still coming a bit lame with year to date results at 1 for 4 tests.
- I know I haven't talked about them much of late but that's only because the stock got away from after expiration two months ago. These guys are low cost, high growth, gassy operators and they continue to improve their operating metrics.
- Conference call at 11:30 EST.
(VLO) Reported $1.40 (after excluding items) vs $1.36 expected. Much better results than those seen from (TSO) last week.
- First comment from management: so far in the fourth quarter, the margin environment has been difficult as prices for refined products have failed to keep pace with the increase in feedstock costs...
- ...however "unlike the third quarter, we're seeing more favorable discounts for the sour and heavy feedstocks that Valero processes.
- Those statements are key since the narrowing of the discount between light sweet crudes (like WTI) and sour crudes like the stuff VLO has the capability of processing is what really impacts margins, even more than the selling price of the products they make.
- I will continue to harp on the them of prices catching up to oil but this expanding discount means VLO could have a much stronger 4Q than this just past Q.
- Selling the refinery in Aruba - non core asset, no surprise to see it go.
- Repurchased 11% of outstanding shares since beginning of 2007. Plan to repo another $1.2 B of shares this quarter (that's 17 mm shares or 3% of the company).
- Conference call at 11 EST
(HOC) Reported $1.04 vs $1.17 expected (unscheduled downtime causes miss even as margins expanded)
- The refiner's production was down 3% YoY due to previously announced unscheduled maintenance at its Navajo refinery. They estimate downtime at Navajo cost them $0.20 on the bottom line. This is one of two refineries they run, the other being Woods Cross.
- Gross margins increased by $2.09 / barrel or 12% which will be unique or at best rare for a refinery to be able to say this quarter.
- Conference call 10 EST. We have no position here and I'll get to the call later.
(PQ) Reported EPS of $0.16 vs expectations of $0.14 (which had been sliding slightly in recent days).
- Production up 16% YoY to 87.8 MMcfepd (guide was 82 to 87 so once again they beat numbers)
- 4Q Guidance: 83-89 MMcfepd and 76% gas which is a little oilier than last expectation (80%) as they bring more oil on line from the E. Texas Basin.
- LOE fell to $1.11/Mcfe from $1.28 (combo of higher production and the absence of GOMex costs)
- Operations:
- Woodford Shale: 6 Horizontals completed, now operate gross prod of 8.5 MMcfepd, and the fifth one of these was another big one with an IP of 4.8 mm/d while the 6th came in at 2.3 mm/d. 2 rigs now, going to 3 in 2008.
- Fayetteville Shale: participated in 4 horizontals to date, plans to be active on its 18,000 acres but not a lot of meat in the release (again). It's early and the wells are not yet completed or two of them are two aren't, hard to tell, but no rates given.
- East Texas Basin. 100% success rate during the quarter, activity centered in Carthage field, (see my recent report here)
- Gulf Coast Basin - three high potential exploration wells drilling which should all reach TD in the 4Q.
- I should have a position here and do not. This was a very good quarter and this mini-Newfield just continues to keep promising and over-delivering and some day the Street will catch on.
(END) reported EBITDA of $33.9 mm; net income was $0.00 after backing out non cash items.
- production of 9,700 BOEpd vs 7,800 in 2Q,
- Guidance - 2007 at 9,000 to 9,400 (unchanged vs last quarter),
- Conference call 10 EST. I'll listen to the replay and be back with comments on this later in the week if anything seems interesting.
Holdings Watch:
CALLS:
- (EXM) - Added the $65s of November for $4. Tumultuous day in shipper land but last bid $2.80.
- (CHK) - Beefed up my position by adding the December $40s for $1.45. Last bid 1.45.
- (COP) Nov $85 CALLs for $1.61. This brings my average cost down to $2.19. Last bid $1.46.
DryBulk Commnets from Bill: Start reading at comment 176 on yesterday's post. I could not agree more with his comments and he has my thanks. I won't go into another bashing tirade on Cramer as I did the Motley Fool regarding the dry bulk sector today due to time constraints forced on me by the volume of earnings reports but I will say 10 things.
- I still hate momentum stocks and wish these had not been "discovered" by JC
- The stocks are cheap.
- The "correction" in the day rate index, the Baltic Dry Index, is insignificant. It is not a correction, it is a blip.
- The "news" that more ships will enter the market in three years should be no surprise to anyone not on a respirator.
- The stocks are cheap.
- The stocks, are moving pretty much in tandem despite the fact that they range from almost 100% spot to almost 100% contract.
- The rates for the Panamax and Handymax ships have shown little deceleration and no decline.
- The Chinese are playing games trying to get shipping rates to fall, they do the same with their import "numbers" for oil from time to time to make it appear they are slowing consumption. You can generally wait a month or two and the numbers balance out.
- The stocks are volatile with Cramerians heading in and heading out on a day by day or even hour by hour basis. I put a lot more faith in Jefferies and Cantor than I do in Cramer.
- The stocks are cheap.
Crack Spreads: Nothing to write home about yet but the long awaited (or at least often mentioned on this site) narrowing of the gap between crude and products is starting to evidence itself across the U.S.
Natural Gas Imports: Flat with prior week at 9.7 Bcfgpd.
- LNG: 0.6 Bcfgpd which, like last week, is half of year ago volumes.
- Piped Imports : 9.1 Bcfgpd, also flat with the prior week and down slightly (0.1 Bcfgpd) from the year ago week.
Odds & Ends
Analyst Watch: (FSLR) big price target ups at Credit Suisse, Deutsche Bank, and Piper.
Sand Ridge Energy (SD) IPO: Priced at $26, above the expected range of $22 to $24. Another Oklahoma City based E&P, run by Chesapeake co-founder Tom Ward...I'll have comments after the close.
6:16 am EST
ICE Brent Hits Record High At $92.36/Bbl
By Nick Heath
Of DOW JONES NEWSWIRES
LONDON — ICE Brent crude oil futures traded to an all-time high of $92.36 a barrel in London Tuesday, amid speculation that Wednesday’s U.S. Department of Energy inventory data will reveal another drop in U.S. crude stockpiles.
A weaker dollar, stronger European equity markets and uncertainty over Turkish military action in northern Iraq added strength to crude oil futures’ climb Tuesday, helping Brent surpass its previous $92.31-a-barrel high, but the impending weekly inventory report was seen as the key driver, and possibly the springboard to $100-a-barrel crude.
“I think tomorrow’s numbers are going to be an interesting set of data. I think crude is going to be the shocker,” said Jim Rintoul of TheOilTrader.com. “As a headline number tomorrow it could give the bulls enough to ram it to new levels.”
At 1105 GMT, the front-month December Brent contract on London’s ICE futures exchange was up $1.71 at $92.20 a barrel.
The front-month December crude contract on the New York Mercantile Exchange was trading $1.82 higher at $95.80 a barrel.
The ICE’s gasoil contract for November delivery was up $5.50 at $814 a metric ton, while Nymex gasoline for December delivery was up 389 points at 242 cents a gallon.
—By Nick Heath; Dow Jones Newswires
This is what I published on the Sand Rigde IPO back in July when I first took a look. They start trading this morning:
SandRidge Energy (formerly Riata): proposed symbol (SD). Another Oklahoma powerhouse comes to market.
* Top notch management: Tom Ward runs the show, former President and COO of (CHK). His name has attracted top management and technical talent, some from Chesapeake and most from other public companies.
* Top notch underwriters: Lehman, Goldman, B of A,
* Operations: Big play is gas ladden West Texas Overthrust or WTO which is where the North and South American continents slammed together creating layers of rock with traps for hydrocarbons. Here SandRidge is concentrating on developing the Pinon Field and two prospects: South Sabino and Big Canyon. They plan to have 30 rigs drilling in the WTO by during 2Q07. They have additional activities in the Cotton Valley Reef trend of E. Tx/N. La, along the Gulf Coast, on the GOM shelf, and in the Piceance Basin of Colorado. The later two areas are not the focus here.
* Potential drilling locations: 3,800 (2,600 in the WTO).
* Reserves: 1 Tcfe, 85% natural gas. 99% independently engineered by Netherland Sewell which runs which is the #1 or #2 out there in the business. Almost 60% of reserves are in the Pinon of the WTO area.
* They own 32 drilling rigs outright and participate in a JV that owns another 12 with (CWEI). This is a huge strength both from cost and control/availability standpoints. Especially in this time of spiraling service inflation.
* More on the WTO: through year end 2006 200 Bcfe has been produced from only 300 wells scattered across several fields (including the Pinon) in the WTO. These are stacked pay or multi zone targets but the area is remote and lacks infrastructure (Terrell and Pecos counties). SandRidge is acquiring a massive 3D shoot over the area now (1,300 sq miles). The first two phase of seismic should help additional infill drilling opportunities in the Pinon and should be complete by year end.
* The other two WTO prospects are near the Pinon. The Big Canyon prospect has some well control from a 1993 well that tested gas from a sand and a chert (think of fractured quartz or flint) but was abandoned. They drilled two wells which encountered hydrocarbons but no flow info means they were non commercial. They were selected using 2d and the addition of 3D data should firm up some potential targets late 2007.
* They have installed additional compression capacity for future expansion of Pinon gas production and more is on the way by year end.
* They gather CO2 from the WTO gas and use it for tertiary recovery of oil in older, post water flood fields in West Texas.
What I don’t have yet is a few crucial numbers. How many shares are coming at what proposed price. I’ll republish this when I get those. For now I’d say very interesting. It’s a grower with long-life gassy reserves. It just depends on what kind of multiples to CF and reserves they give it. It appears to be well run, has top talent and the costs and balance sheet look in line. It’s got a powerful set of energy savvy bankers behind it which won’t hurt either. And it’s prospect rich to boot. But I’ll get back to you on the numbers when I have them.
SD – the numbers above are a bit stale looking at the October S1…they have gotten bigger.
So the numbers are opening market cap of $3.5B Which gives it a moderately priced valuation to reserves ($3 per Mcfe in the ground).
10 year reserve life
Growing very quickly
4600 drilling locations now id’d
cost falling with production ramp
P/CF ~ 9x but given the strong growth and unique circumstances I’d say that’s not too high. Also, in a month, those bankers listed about are going to published glowing recs for this one.
Oil up $2 to $96.
the dry bulkers are up 4 % in pre market with the winner of the day is qmar up 8 % on rumors of a takeover.
drys (my favorite) reports tonight
analyst 2.34 my forecast 3.01 + 50 for ship sales = 3.51
Last year it was .48 cents
GNK on cnbc at 9:10 am
APC still in early part of CC
RIG bid 126
COP bid up $0.80
CHK likely to be strong today prior to earnings
***** APC LOE/Mcfe : explained the bust on numbers, one time charge in there. It is $5.02 /Mcfe after backing that out the charge and at the low end of guide.
Makes me much happier with cost control. Stock bid up a buck for the open.
Morning all. Hey Z you see JR from the Oil Trader is being quoted in Samborne’s post #1.
WTI did make new highs – just. I am on alert for a high anytime. Could come from here onwards but that doesnt mean we won’t see 100 plus.
Sorry not exactly useful analysis but we are in unchartered waters.
As mentioned before there is a fib level at 98.20.
APC conf call notes:
still on schedule on debt reduction
2/3 hedged on gas for 2008 at favorable prices
nice basis swaps for the Rockies region: very small differential to Henry Hub for 2008 to 2010. $1.50 off Hub in ’08 and smaller going forward is excellent given that Rockies gas has been trading below $2 at times this past few months given a glut of gas in the region and little takeaway capacity increase available yet.
VLO bid up nicely
HAL back to $40
Z, what do you think of selling FTO if it gets back to our buy price. Seems like we have to wait and hope WNR kills, or should we just sell today if it rallies hard? Both report pre market tomorrow.
Jazz
cnbc talking about vlo,gnk to come
re VLO:
“weak margins on qtr”
“any end in sight”
“Higher oil prices hurting vlo”
How would you trade refiners?
Sour spreads are widening…analyst likes it longer term
Bill- I’m in several now…core position in VLO. The end is in sight…see graphs above. VLO did much better than TSO on the quarter despite both out of control oil prices relative to products and narrower spreads to sour. Sour is opening back up and VLO is going to benefit as soon as the 4Q.
APC conf call going very well. Not going to be quick to add here since oil is up so much.
Switchin to PQ call
WTI backing off 96 again. Inventory numbers tomorrow are going to come as no surprise. We may see a pop but I don’t think it will last as its built in already.
Wow, US dollar getting spanked once again – BIG TIME!
PQ conf call note:
Fayetteville: two drilled, two completed, waiting on infrastructure.
No comment on decline curves
Average on all acreage.
Drill 40 to 50 non operated wells next year. The operator would have 8 rigs up by next year.
Woodford: costs on the new horizontal (probably close to $4 mm completed) as they came in light on drilling days.
Samborne I would guess that has more to do with the price of oil than anything else this morning.
A dollar low is imminent though and I think very close..
FST running on number release.
N – Agreed
Still on CC but will answer a few comments:
FTO: buy sell has nothing to do with what I paid for it. That dog doesn’t hunt in the market. I’m holding until I sell and I don’t think WNR influences FTO in the slightest. FTO will rise if VLO does and if cracks continue. As to whether you should sell, as you know, I don’t give advice…I just tell you what I’m doing when I do it.
Broader markets – 1489 is absolutely key in the spx. If it goes we should head into the 1460’s. Charts do look like we need another leg down. If 1489 can hold then spx can make a run at 1600.
PQ CC:
Pelican Point sidetrack drilling now. Now drilling their original desired position. They have a higher interest now as they picked up some non-consent interest and operating now. This is big potential reserves (now bigger since they have a little more now). 95 Bcfe project.
Looks like the stock is going to wait on 4Q exploration results.
VLO call in 5
ZTRADE: Out half of the 2x position in the RIG Nov 120s for 131% gain from my $3.03 cost.
any thoughts on CHK which reports after the close?
sd cooking the guys i know that work there says it has some of the best acreage in the play
Z, thanks,
Jazz
ZTRADE: out remaining half of BTU NOV $50 calls at $6.40, up 184%. This one was renamed PWUkj after their spin out.
Tex – that’s a fantastic company…I didn’t get shares and I am not chasing this morning but if it will pull back a bit I’ll start nibbling on some shares….you know it runs long term. Second coming of CHK and all, lol. See comments 2 and 3
Dooch: love the CHK, own Dec and Jan calls here.
Z – I’m back long on TSO. What’s your play on the Kerkorian deal? I.e. are you thinking of doubling up or just sit pat on your existing TSO position?
9:53 am EST
Crude Oil Rises To Record High On Supply, Dollar
By GREGORY MEYER
Of DOW JONES NEWSWIRES
NEW YORK — Crude-oil futures touched a new all-time intraday record high Tuesday as supply concerns mounted and the dollar weakened.
Light, sweet crude for December delivery was recently up $2.09, or 2.2%, at $96.07 a barrel on the New York Mercantile Exchange after hitting a fresh record $96.44. Brent crude on the ICE futures exchange rose $2.08 to $92.57 a barrel after hitting its own record of $92.74.
Supply concerns helped drive the rally. Analysts surveyed by Dow Jones are predicting a 1.6-million-barrel draw in U.S. stocks to be reported by the Department of Energy weekly inventory report due out Wednesday.
Further heightening worries, a bomb blast damaged a pipeline in northern Yemen Monday, halting oil flow to the Hudeida export terminal on the Red Sea, according to Agence France-Presse. The pipeline has a capacity 155,000 barrels of crude oil a day. Yemen itself produces 380,000 barrels a day.
In the North Sea, ConocoPhillips (COP) is preparing to evacuate five installations located in its North Sea Ekofisk oil fields if current poor weather conditions deteriorate. The impact on oil output is not yet clear.
“Worries about declining crude oil inventories in tomorrow’s DOE inventory report, further weakness in the U.S. dollar and a Yemeni pipeline attack helped push oil prices back,” said Addison Armstrong, an analyst at at TFS Energy Futures in Stamford, Conn.
The dollar reached a record low against the euro on the back of heightened market volatility. The euro jumped up to $1.4562, beyond its previous synthetic high extrapolated from historical dollar-Deutsche mark levels.
A weaker dollar makes dollar-denominated oil futures cheaper for buyers in foreign currencies, further driving up crude demand.
A strong start in the U.S. stock market also supported prices in oil, said Phil Flynn, an analyst at Alaron Trading in Chicago. The Dow Jones Industrial Average was recently trading up 34.22 points to 13,577.62.
“Every time the stock market rebounds, the oil market tags along,” Flynn said.
Front-month December reformulated gasoline blendstock, or RBOB, rose 5.12 cents, or 2.2%, to $2.4323 a gallon. December heating oil rose 4.51 cents, or 1.8%, to $2.5890 a gallon after reaching an intraday record of $2.5970.
—By Gregory Meyer, Dow Jones Newswires
Did not mean to sound harsh to Jazz…apologies.
Go COP, VLO, HAL etc…
AItrader – I’m just sitting…Tricenda offer has not been finalized yet to my knowledge and TSO has 10 days to comment after finalization which takes us beyond expiry. I’m holding mine for now as their cracks are recovering nicely now.
Oil up $2.60 at $96.60
FYI
FTO at $2.95 bid which is essentially breakeven. I’m still holding but they do report tomorrow so there is some risk they pull a Holly (HOC) and brick the quarter.
All the shippers are up except DSX, which is the dog of the day. After the CEO’s “brilliant” comments on Cramer it’s no wonder. The CEO must be short his own company’s stock :-/
CHK at all time high.
CRK exploded out of the gate, up $4 on those results.
Aitrader: I thought Bill said they weren’t that bad…did you watch the clip/did it look that bad? I have not yet had a chance to view for myself but Cramer is so short sighted I’m surprised he can go to the bathr…. nevermind.
PQ – I may take a little on soon but see no rush no. The lack of big guidance from company on the call which the Street likes to be spoonfed is holding the stock down. If you want a laugh…listen to a replay of the Q&A. Wall Street has their second string covering this one. “umm, ummm, so, umm, how many Fayetteville Shales, will you, um drill next year?” Come on, wake up man!
The CEO said basically “predicting shipping rates is a very dangerous game” which the market translated as “we don’t know if we’re going to make any money” and “we see a lot of competition in 2-3 years” which again seems to have been interpreted as “and it’s going to get worse”.
Some pundits commented that it was a disconnect between Greek and US cultures, but in the short term the market took it to mean “don’t expect a good earnings report on Nov. 14th”.
DSX down 5% so far today while its competitors are up 5%. Go figure…
Aitrader: yeah, I think the Street got those comments wrong.
Changing my thinking on FTO and will almost certainly exit prior to earnings. Looking at how HOC missed and given the fact that FTO will likely miss given the Street’s propensity to not update estimates for the smaller refiners as quickly as they should or to track the internal workings as closely as they should and given the reaction to HOC’s miss (which had some pretty good reasons for missing) I see no reason to stand by a position taken for the move in TSO through earnings. I may buy it back tomorrow…we’ll see.
People not happy with CLR guidance.
VLO CC in 3 minutes
DJIA starting to suffer under $96.70 oil ($2.70).
Sharon Effffferson can hardly speak she is so excited.
DNR – nice Texana!
oil going for $97
Nicky – you are harsh! I’d vote for you to take her job but we’d all be straining to understand Pikey, lol.
Lol – I am sure I could find something bearish to say!
She is a complete pain though – I think she has oil running through her veins!
VLO CC: still on the yada, yada part
HK recovering. This is another one I expect to have a great conf call and report tonight.
N – Who is Sharon Effffferson? I don’t watch the talking heads, so I assume she is on CNBC?
The ad for the position of oil commentator must run something like this –
Hysterical woman required capable of hyper ventilating to order to talk faster than anyone can understand continually from 9 – 2.30. It is not necessary to speak clearly nor do you require any intelligence. You will be reporting on a market you don’t need to know anything about. Speech impediments are not a problem in fact they will be viewed favourably as we are looking for someone to create hysteria.
Aye Samborne. Trust me you are missing nothing! They will put her out to pasture once the run is over!
Is that a h and s I see forming on the wti 1 minute chart?
47 = LOL
VLO
4Q guidance looks pretty “as expected” so far on the call.
maya heavy crude to wti: $15 discount in October, now over $16
Saudi discounts have increased to over $4 per barrel.
This is very good news…because they sound like they expect these discounts to continue.
N – I guess you now understand why I don’t watch the “Talking heads”. I’ll let you go through the pain. LOL
Samborne – they can be a good contrarian indicator although its gone on longer than I expected this time! That said they have now said they are going to discuss oil ALL morning so we are probably getting a bit closer.
VLO says strategic activity level is still very high…sited Tricenda/Tesoro.
Stock buyback for next year: plan to complete the program for 2007, then will re-evaluate at year end. Sounds like a fresh buyback at year end.
I’d rather be subjected to waterboarding!
apbd
N – Re #52 closer to $110 you mean, no doubt?!
APBD – true waterboarding is not torture.
$110 is not out of the question for this wave but I doubt it.
U.S. to Europe arb on diesel. Good prices in Europe…VLO is sending cargoes now.
N – I was kidding $110…I knew you were in cahoots with the Flynn, Kilduff, Efffferson crowd!
97
VLO conf Call – people are really liking what they are hearing on the widening sweet/sour spread.
Yes think I have just found what they are all smoking!
We are in the cycle window for a top – between 5th – 9th November although distillates could stretch to the 19th.
There are many who say it will coincide with options expiration on the 13th.
Z – Question, If a barrel of oil is over $95 when the refiners switch back to gasoline in the shoulder months, what is you estimate on what a gallon of gas will be. Second, would it be prudent to buy the refiners before the shoulder months?
VLO Q&A ?
On balance are you expecting 4Q vs 3Q to be up down or sideways?
…usually don’t give guidance …but cracks are strengthening…markets are recovering … Mars is a record spread, quarter is improving …hard to tell if better or worse than 3Q but man do they sound optimistic. Demand is strong, supply demand remains tight on gasoline, very optimistic.
TRADE: Out COP Nov $80 Calls at average $5.50, up 59%. Still hold the $85s.
Sorry but its the mood I am in – however it seems we are apparently down to our last drop of oil so refiners must be about to go kaput! ie nothing left to refine or am I missing something.
Good morning-
Nicky the greastest contrarian indicator I have heard of was that model Giselle(sp?) demanding she be paid in Euros so she could support her NY lifestyle
I bought uup yesterday
Hi Denise,
I couldn’t agree more. In fact a very good Elliottican pointed out that this maybe the perfect indicator for a dollar low.
They are saying now that they have never seen a more one sided trade.
Sambone: retail price? Probably $3.75 to $4.00 gallon if you were at the front of the change, say February/March.
I’m pretty bullish now. It all depends on crack spreads and right now they are improving. Still listening to the VLO call but they are more optimistic relative to last quarter when margins were much higher (and I was busy screaming that they should come down).
They made a comment on Cushing inventories which makes it sound like inventories there are on the sour side (which would be good for them given their capabilities).
does anyone have a link to dsx’s interview on cramer???..
Afternoon T
http://www.cnbc.com/id/15840232?video=586551550&play=1
re #47, lmfao, the last time i heard her chirping away on the tv in the other room from the office i heated up rusty spoons on the stove and melted my eardrums off
hey its not afternoon yet!
Cramer interviews Dian Shipping’s (DSX) CEO –
http://maddmoney.blogspot.com/2007/11/diana-shipping-inc-ceo-interview.html
Phil/Doc – let me know when you get over here.
VLO JAN 75’s, possibly warming up?
VLO call over…very positive overall. I will sell my Novembers soon and look for a down oil day to add.
NG all of the sudden broke down and is off $0.20 to 7.79.
Ram – think Dec/Jan or both…enter over next few days.
Sambone – any weather forecasts come out that were neg for NG?
What could possibly be the next signal to unload the remaining RIG?
Ram – $100 oil.
Cool easy button!
Palios operates a fleet on long-term charters and they aren’t in the spot markets correct? so obviously he’s stroking his ego for making this strategic decision to not take spot charters and make it seem as thought recent high rates will soon come in, thus making his company look more stable and promising for the extended future to current and prospective shareholders.
In fact, could that also be the flare that others will be unloaded?
Yes, we now offer easy button trading. The ricochet off $100 could be (may very well be intense)…support is not $95, looks more like 92, then round number support at 90 (pretty weak) then strong at $86.
For today, I think they make a run on $97 for the close and then open higher with the expectation of another big draw tomorrow.
No offense with easy button implication. There is nothing easy in deriving your analysis.
oh yea all these CL longs and options n crude are going to all get unwound at the same time
11:58 am EST
Nymex Crude Touches $97 On Supply Concerns, Dlr
By Gregory Meyer
Of DOW JONES NEWSWIRES
NEW YORK — Crude-oil futures surpassed $97 a barrel Tuesday, setting a fresh intraday record high amid concerns about oil inventories and the dollar’s weakening trend.
Light, sweet crude for December delivery vaulted to a new high of $97.07 late in the morning before slipping back, trading recently up $2.69, or 2.9%, at $96.67 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange also posted a new record intraday high of $93.38, up $2.89.
The jump followed the release of U.S. government forecasts that commercial oil inventories held by the world’s major industrialized countries will fall below their five-year average at the end of 2007.
The federal Energy Information Administration also warned that the tightening stocks will be a major factor in keeping crude oil prices high in a volatile market.
“Global oil markets will likely remain stretched, as world oil demand has continued to grow much faster than oil supply” outside of OPEC, the EIA said in a monthly energy outlook.
Analysts are meanwhile predicting a 1.6-million-barrel draw in U.S. stocks to be reported in a separate Department of Energy weekly inventory update due Wednesday. It would be the third straight week of declines.
“The fear is that we could see another big draw tomorrow,” said Nauman Barakat, senior vice president at Macquarie Futures USA in New York.
Heightening worries, a bomb blast damaged a pipeline in northern Yemen Monday, halting oil flow to the Hudeida export terminal on the Red Sea, according to Agence France-Presse. The pipeline has a capacity 155,000 barrels of crude oil a day. Yemen itself produces 380,000 barrels a day.
In the North Sea, some companies have evacuated installations and shut in production ahead of severe weather.
The dollar dropped against the euro on renewed concerns about the impact of the U.S credit crunch. The euro rose to a record high of $1.4571. A weaker dollar makes dollar-denominated oil futures cheaper for buyers in foreign currencies, further driving up crude demand.
Front-month December reformulated gasoline blendstock, or RBOB, was 5.45 cents, or 2.3%, higher at $2.4356 a gallon. December heating oil was 6.50 cents, or 2.6%, higher at $2.6089 a gallon after reaching an intraday record of $2.6170.
—By Gregory Meyer, Dow Jones Newswires
wed: 15,000,000 bl. DRAW! ahhhh!!
#70 ROFL!
Z – weather – all I am seeing is really cold weather sweeping across the country so I am surprised nat gas is off.
Z – agree that 97 is going to provide the magnet for today. Any thoughts on the scenario of a bigger crude draw (expected) but a bigger build in rbob and distillates?
I am still thinking pop and drop.
#87 who mentioned a 15,000,000 draw ? you talking wti tomorrow???
im kidding
N – re the draw …size matters. Need to be 2.5 or so in my book of another leg up.
have not yet looked at product build expectations. I would expect to see smallish build in mogas and a little draw on HO. Will go see what exp’s are.
RIG at $127+ wow.
EOG, CHK, and TLM drifting higher
APC up $2
VLO up nearly $3
even EXM trying to recover, expect good things out of DRYS call to run yesterday’s purchase back well into the green.
Bought nov 40 chk calls @$1.00
Phil
lol – was just trying to imagine how big a pop that would produce!
CHK The report tomorrow is going to blow the door off.
We need to look at SandRidge SD
Mclenden & Ward founded CHK. SD may be discused by McLenden. I think they still are buddies.
”NEW YORK, Nov 5 (Reuters) – SandRidge Energy Inc , an oil and natural gas exploration company based in Oklahoma City, raised $746.2 million on Monday with an initial public offering that priced above a forecast range.
The 28.7 million share offering, increased in size from 26 million shares, priced at $26, compared with a forecast range of $22 to $24, according to a company statement.
Based on its offering price, SandRidge has an initial market capitalization of about $3.5 billion.
The company plans to use proceeds from its offering, which floated about 39 percent of the company, to pay down debt.
Chief Executive Tom Ward, who already held about 34 percent of the company before the offering through various entities including family trusts, said he will buy a further 4.2 million shares at the offering price, according to the company’s statement.
SandRidge is active in exploration in the West Texas Overthrust, where it has tripled its acreage since last year, according to its registration statement with the U.S. Securities and Exchange Commission.
Its foothold in the area likely helped it win investor interest, according to one analyst.
“It is a very hot area, and they (SandRidge) have very large acreage,” said Scott Sweet, managing director of research firm IPOboutique.com.
The company, through a subsidiary PetroSource Energy Companyy, also collects carbon dioxide in the West Texas Overthrust Area, which can be used to extract more oil after traditional methods have been used, according to its filing.
“They are very diversified,” said Sweet.
The company also likely earned investor points for its strong management team, with its CEO being an industry heavyweight — Ward founded industry giant Chesapeake Energy (CHK) — who has carefully recruited other executives, including a new chief financial officer hailing from a career at Goldman Sachs (GS) and Bear Stearns (BSC) .
“He (Ward) has about as good a background as you can have,” said Francis Gaskins, president of research firm IPOdesktop.com. “And he must have extreme confidence in the future of the company,” Gaskins added. “He could have had options issued, but instead he is buying more shares (at the offering price).
“CEOs don’t usually put hard money down on the table. That is a big plus.”
Z – do you mean you think we need to see a build of 2.5 or more or we get another leg up?
And yes absolutely size matters!
Expectations are for a build of 0.2 in gasoline and a draw of 0.5 for distillates.
Phil,
take a look at comments 2 and 3 above. I reviewed SD back in July when the original S1 was filed. Top notch company….but the IPO was hot and it’s 20% today (flat since open) and the stock was marked up before the deal was done last night. If it will come off a bit I’ll take some shares into inventory.
N – that would be draw, not build. could easily happen tomorrow or in combo with next week’s report. While mex should be back for next week TS Noel distrupted traffic earlier this week going towards the GOMex from the Atlantic.
Who is “doc”, I changed my name to avoid getting arrested. If anyone remembers my former posts,it was Drdavis.
Phil
So you are saying a much bigger draw to give us another leg up?
The expectations are for a draw of 1.6. I am seeing comments that it could be as big as 5.5.
Phil…who would arrest likable old you? So did you intend to change your screen name?
N – that’s correct. I don’t see the 1.6 doing it as we are up about $7 since the last report.
I’m gonna change my name to “Pikey”.
Drdavis – Why do you think there is more put volume today in CHK?
Broader market looking ripe for another drop. This move up looks very corrective.
From Baltic today..
‘F.D. Luigi D’Amato’ Transfield relet 2006 180184 dwt dely Cape Passero 2/4 Dec trip via Brazil redel Far East approx $237000 daily – STX Pan Ocean
Chaching!!
Buy drys today my good friends
Any nov call option will do
qmar moving up on buyout rumors indicated price 32 to 39
Z do you have access to dealreporter.com
Mr. Bill, DRYS $125 to far out in your opinion?
Scoop I hope not, I have those!! 🙂
37
i commend the ceo on dsx for not pumping his stock. he tried to give an honest answer
In the us we are so used to a ceo bull shitting us , we expect it.
the rates are unusally high. this wont last forever. The shipping business is cyclical. it takes 3 years for it to correct itself (supply/demand)
So in the short term and intermidiate term, we should be ok. i take that as through 2009.
RIG’s an animal! Up 225% on the 120’s . maybe we roll ?
WNR , dead cat bounce for out options.. looks like the best price to get out .. at most we’ll squeeze another 10 cents out of it.
broader market – we’re dead set in a middle of trading range.. sentiment is 50/50 either direction.. no way to tell right now where this is going.
id go with the nov 115 or 120’s
or even the common stock which you can sell in extended trading after the results are announced.. if you want to day trade it
There could be people selling on the news but I think the probability is an up move.
for you income and takeover players
Im buying qmar
you get a 31 cent dividend while waiting for a takeover rumored to be between 32 and 39
Stock is at 27.
OW – I’m going to be coming out entirely soon (almost out now with only the remaining $120 calls on board) and I will likely not re enter until post deal unless I buy and hold some leaps … near term calls will get whacked upon consummation of the merger given the payout calcs unless their is a big run in the stock that day.
WNR – you are probably right.
OMG there is light at the end of the tunnel – Sharon Efffferson is losing her voice!
quite the underperformance from cop i must say
Mr.Bill, Thank you for sharing your insight.
Z If the RIG calls are going to get whacked why don’t we buy PUTS?
That funny. Got some anti-fan mail from Alaron. Will post the picture of me they superimposed on a chart of oil in tomorrow’s post.
RE COP: true but you can sell the 85s from yesterday at a nice profit and the 80s I punted earlier left up 57% so I can’t really complain about it. I plan on adding more longer date options here soon.
Scoop: good question and my answer would be that last part about a potential run on the day it closes. Plus, since we don’t know when it will close (sometime between Nov 9 and year end) you’d have to get lucky on the timing. And I hate to short cheap stocks/good companies. And their will be confusion and a ticker change …yada, yada, yada it’s easier to just buy DO or take up knitting in the interim.
ive just held them too long for front month options
Alaron told me my blog looks very good. I can die happy now.
Z – Missed #76, nothing on my screens.
FAIR WARNING: FTO back to above breakeven for most here. I’d bet, given the broker inattentiveness to the little fish in the sector, that they could miss. I’m not talking short…but I am going to exit….today.
Thanks Sam.
T – part of COP’s trouble relative to the performance of it’s peers today is NG, which is down 18 cents and for once not being led around by oil.
yea, 8 bucks looked like a nice support level, maybe itll reverse $0.14 of a loss today
FTO, nice run.
FTO …I will be leaving that building soon.
i DEMAND COP to close at $85 AND
change
i sense a nymex rally into close
T – I understand…I sense that also.
Note the TLM at All time High and nice chart…THANKS to I think Jimmy or Jimbo for bringing that back to my attention in late September. Nice 75% move on my April 08s…and it’s still dirt cheap.
Z- what do you use to track coal prices again? i lost my bookmark
Wow CHK
Look for big reserve adds here tonight.
T: try this:
http://quote.barchart.com/quote.asp?sym=QLZ07&code=BSTK
Att. RAM RE.CHK YOUR CONCERN ON Todays PUT VOLUME. mY DD shows that if you look at the $doller volume on puts/calls. there may be a bit more Dollers invested in calls vs puts
Phil
for anyone who’s interested ( i trade cameco from time to time), uranium prices have increased for 4 or 5 consecutive weeks in a row from their bottom of $75/lb made im the summer. ccj is nice and volatile just like we like it in here
uranium is energy i guess, just like coal is
Ram: I’d just add that it’s probably insurance for long holders and not speculators.
Re: uranium thanks and absolutely like that around here. Last I checked the many of the big utility contracts with the uranium suppliers end around 2010. They are still pricing their uranium much lower…it’ll be interesting to see what happens to your power bill three years from now when they have to pay the new prices.
Z are you staying away from btu for the time being?
Thank you Drdavis. I also jumped on the near term CHK’s as well. The assorted cast of characters and their insights/knowledge also is a plus being on the “Energy Brain”. Thanks to all!
T – plan to get back into longer dated options soon on the call side BTU
Ram – it’s a virtual brain, lol.
two minutes to go on crude, still think they top 97
what dd cl close at?
ZTRADE: Entering DRYS December $125 Calls for $9.70. Super risky, earnings tonight.
Busy day
Z or anyone- i have a question that i should know the answer to. when you see a certain volume for an options contract on a certain day does that mean that that is the amount of new interest being added to open interest? or does that just mean some was a mutual close of positions, some was opening ect. im kind of confused on how it works since it is quite different from stocks.
CL closed at 96.67, up 2.69
On my two trading systems, volume from the day gets added/subtracted to/from open interest so open interest is not reflective of current until overnight.
Just bght some RJI
http://www.elementsetn.com/ProductsPage.aspx?subsection=prod5
Sam – a sweedish commodities index…what’s it full of, chocolate?
with the yo-yo-ing that is going on in the sector, it’s almost a given that tomorrow the oil patch is going down.
then again, we will know everything by 10:30 EST
SU at all time new high, up $6 to 113.
think we’ll get a bigger than expected ng draw this week Z?
volume was only moderate today in energy futures.
after the current cold spell weather is due to go back to above normal temperatures again. This continues and it is going to be bearish for distillates and nat gas.
Z Rev # 141 why Dec on DRYS. If report is negative are you thinking the extra month buys you time for a comeback, since if the report is positive the Nov. will increase proportionally more.
Z- OSG and GNK have buy ratings from major brokerages. Any feeling about the tankers here?
latest survey I’ve seen said
crude: down 1.6 mm barrels
mogas: up 0.2
dist: down 0.5
T: I don’t know what they are expecting yet so it’s kind of hard to say. Weather becomes more of a factor for next week’s report and imports were flat with the prior week.
Cattle – Bill has been saying stay away from the tankers for some time. I’m warming up to the idea that their rates are probably at a seasonal low but I have not worked up valuations yet and as it’s a little far afield from what I normally do (as are the Drybulks) I’m pretty cautious.
N – always the bear. Did you get the lovely greeting card Phil Flynn sent me in your email.
Scoop – in a nutshell yes, plus the IV is going to deflate more on the NOVs so even if you get a great number and a rally of $5, you could see the November higher strike options yawn on the action. A bigger rally will help them for sure but the Decembers will inflate nicely.
heres a funny one
>
Burk also noted a “prominent investment TV show” that discussed the stocks late Friday as a possible source for the downturn.
Z – RJI -backed by the Swedish state. Tracks the Rogers International Commodity Index. Came out at 10.00 on October 17. Index is up 26.5% so far this year vs the Dow Jones AIG Commodity Index which is up only 14%. It has 21% in Crude at this time. This is a long term hold to me.
any thoughts on HOC’s continued weakness? i didnt see any mention above.
gnk is not a tanker.
see my late in the day (yesterday) posts on tankers..
short word avoid for now.
Funny the 2 i recommended
were tnp and topt both
the 3 best gainers today are
tnp
tk
and topt
Z – DRYS eps dates varying – thomson shows them as reporting tonight, zacks says 11/19
have seen this w/other shippers as well.
155 forgot the link
http://biz.yahoo.com/ap/071106/sector_snap_drybulk_shippers.html?.v=1
# 141
I like it
the decembers give you some time
Coco – HOC missed numbers and they are not being forgiven. I am cursed to trade that one wrong so I’m not playing. But missing on the day when the industry standard (Valero) beats its numbers is not a good idea.
2:52 pm EST
Nymex Crude Touches $97 On Supply Concerns, Dlr
By Gregory Meyer
Of DOW JONES NEWSWIRES
NEW YORK — Crude-oil futures surpassed $97 a barrel Tuesday, setting a fresh intraday record high amid concerns about oil inventories and the dollar’s weakening trend.
Light, sweet crude for December delivery vaulted to a new high of $97.07 late in the morning before slipping back, trading recently up $2.69, or 2.9%, at $96.67 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange also posted a new record intraday high of $93.38, up $2.89.
The jump followed the release of U.S. government forecasts that commercial oil inventories held by the world’s major industrialized countries will fall below their five-year average at the end of 2007.
The federal Energy Information Administration also warned that the tightening stocks will be a major factor in keeping crude oil prices high in a volatile market.
“Global oil markets will likely remain stretched, as world oil demand has continued to grow much faster than oil supply” outside of OPEC, the EIA said in a monthly energy outlook.
Analysts are meanwhile predicting a 1.6-million-barrel draw in U.S. stocks to be reported in a separate Department of Energy weekly inventory update due Wednesday. It would be the third straight week of declines.
“The fear is that we could see another big draw tomorrow,” said Nauman Barakat, senior vice president at Macquarie Futures USA in New York.
Heightening worries, a bomb blast damaged a pipeline in northern Yemen Monday, halting oil flow to the Hudeida export terminal on the Red Sea, according to Agence France-Presse. The pipeline has a capacity 155,000 barrels of crude oil a day. Yemen itself produces 380,000 barrels a day.
In the North Sea, some companies have evacuated installations and shut in production ahead of severe weather.
The dollar dropped against the euro on renewed concerns about the impact of the U.S credit crunch. The euro rose to a record high of $1.4571. A weaker dollar makes dollar-denominated oil futures cheaper for buyers in foreign currencies, further driving up crude demand.
Front-month December reformulated gasoline blendstock, or RBOB, was 5.45 cents, or 2.3%, higher at $2.4356 a gallon. December heating oil was 6.50 cents, or 2.6%, higher at $2.6089 a gallon after reaching an intraday record of $2.6170.
—By Gregory Meyer, Dow Jones Newswires
rkbos: DRYS is tonight for sure.
http://biz.yahoo.com/iw/071105/0324410.html
crap have to step out for 20
Z- Do you think Rig can get any better within the next week?
wow kia re RIG…it goes higher with oil for now. Definitely tests 130.
I plan to lose my last RIG prior to oil #s tomorrow
you wanted to close FTO today?
That would be the smart thing to do, yes…so far I have not pulled trigger.
when in doubt sell half.
wow, that was a huge day across the board. see you guys in a little bit.
drys up 10 % today while other bulkers were up 5 %
So half the move is in anticipation to todays good numbers
anyone got the #’s on DRYS yet?
DRYS results out..
at least, I think so, I don’t have my Dow Jones up right now.. but I saw a spike in the ask…
CHK reported $0.72 vs $0.60 expected, number is clean, reserves up strong, bid $41. much more later.
DRYS is not out yet
sorry, make that 0.69, not 0.72, still a nice beat.
production up big sequentially.
they are raising 2007 and 2008 guidance, reaffirming 2009,
big ups for reserve numbers.
by the way, check out crude, strong rall to 97 in after market under way.
now DRYS is down 3-4$ ..gotta be out
DRYS: out $2.38 vs 2.34 expected
i think eople were looking for a beat. what was bill saying they were going to report?
Z Think DRYS ‘tanks” tomorrow?
you mean a bigger beat?
I don’t see a point in speculating, they haven’t even had the call yet…the aftermarket is very thin and I don’t see anything in my first run through of the PR that says TANK. The stock has been mostly down but it was up for a little while. Wait until the analysts get hold of this and have their say before panicking tonight when then is nothing you can do about it anyway.
Z You ever think of taking up psycology?
Scoop…yes but I was rejected in my freshman year during the hypotheticals in Psych 101.
I agree Z.
Thank you Dr. Zman Freud.
apbd
Never ever panic in these things.
When the numbers came out a saw bids as high as 121 then as low as 110
i bought a couple thousand shares at 113 and its moved up to 115
tomorrow when the dust settles it will march to 120
the analyst earnings increased from 1.85 to 2.34.
they came in at 2.92 or 2.38 excluding cap gains.
That beats the analyst estimates of 2.34 which were increased from 1.85.
i had expected more but the new rates havent hit fully yet and depr and other expenses were higher than i anticipated.
However, they have done 7.89 vs 11 cents last year 9 mos ytd.
What the hell is wrong with those numbers?
Bill- A-OK & thanks again for the info.
The total fleet avg 45 k per day
current rates for panamax is about 90 and capes 150 or more
The old rates havent fully run off but if you analyze these avg day rates they are the highest in the industry reported to date
todays rates improved
http://www.dryships.com/index.cfm?get=report
any thoughts on hk going into erngs thursday. long jan 12.5 & 20s . they didn’t like clr’s report. sd & dnr kickin it up a notch till oil retreats something which i’m hoping for, to get some better pricing. thx tex
drys q 4 est
the analyst’s have only 3.45 for q4. I have over 5. Someone is wrong and i dont think its me.
My guess is jonathan, natasha,and other analysts will have to raise estimates and reiterate buy rating
Oil just broke 98. Tomorrow’s gonna be interesting!
Ok, CHK post out …great friggin quarter…took me awhile since they basically use their Q as the press release.
Texana: re HK I like it a lot and may add a little tomorrow. They should have a very good 3Q report.
Bill – didn’t see anything in the numbers that would make an analyst shy away now.
AItrader – yeah, bombs in Afghanistan which produces oil from a plant, not the ground and the bombing of a pretty small pipeline in Yemen which actually occurred during the day today are being sited for the late night run on $98. My best guess is that any dray of 1.6 or greater in crude tomorrow and we see trip digits.
Nov 7, 2007 06:56:13 (ET)
DOW JONES NEWSWIRES
Billionaire Kirk Kerkorian’s Tracinda Corp. filed a tender offer to buy 21,875,000 shares of Tesoro Corp. (TSO) for $64 a share.