Thursday – Oil Inventory Day

As expected, yesterday was a low volume trading day for both stocks and commodities. Window dressing is in full swing with the solar stocks (see below) being the must have  item of the season for every fashionable fund manager and I spent the day updating tables and strongly considering taking some profits both there and elsewhere as the energy sector in general continued its now several week stretch of out-performance.  

Commodity Watch

  • Crude Oil: Yesterday's somewhat thin session allowed bulls to run oil up $1.84 to $95.97 with fresh air strikes from Turkey into northern Iraq and another expected draw on crude stocks weighing on traders' assistants minds. Don't rock the boat, go with the flow was the order of the day as oil cruised higher. When the flip-flopping, former perma-bulls brigade gets back from vacation, I wonder if they will suddenly again trumpet $100 oil?! I sincerely hope not as a good many E&P's and major due more than well at current levels. This morning, after a brief period of weakness overnight, oil is trading up slightly over the $96 mark.
  • Benazir Bhutto Assassinated after political rally. Sorry to see her go.
  • Analysts vs Actuals - 4Q Oil Update:
    • Analysts are currently estimating WTI will average $78.97 for 4Q07.
    • 4Q to date average for WTI: $90.06.
    • Of the companies we track, the biggest beneficiaries of the coming "mark to market" for analyst estimates are: (APA) and (DVN) amongst large cap E&P names (Devon was left out of yesterday's rally but has done well of late) and (BRY), (CLR) and (DNR) among the smaller names.
  • EIA Inventory Preview Summary



  • Fog is again expected to trim imports resulting in the 6th consecutive reduction in crude stocks.
  • Distillates are again expected to fall again as the still pretty cool early winter period is burning through heating oil inventories.
  • Natural Gas: Gas waffled around slightly yesterday, trading up 2 pennies at the close just under $7.05. This morning Feb NG is trading just below $7. The January contract expires today and the February contract is trading off a dime to $7.06 at present.
  • Weather Watch: Accuweather is plotting a colder than normal mass of air out West that will reach the heart of the country in its 6-10 day forecast. However, their 11-15 day forecast shows another veritable heat wave covering most of the country. As such I expect gas to get a small run soon based on the next two easy comps for gas storage (the first comes with tomorrow's EIA report) but then be capped by warmer weather (probably not getting into the upper $7's before the end of the first week of January).
  • Analysts vs Actuals - 4Q NG Update:
    • Analysts: $7.28
    • Actual 4Q to date: $7.42.
    • Gassy players are largely hedged so there's no clear beneficiary to the slight outperformance of actuals versus estimates. However, for those that see significant ramps in year end production, like APC, CHK and SWN, where volume additions won't be covered by estimates this difference could provide a little downside security when you're wondering whether or not your favorite gassy E&Ps will make their numbers.


Stocks We Care About Today Watch

Drybulks Continued Fall = Tax Loss Selling + Take What Profits You Have and Run. I have fresh tables on Monday here as I think it is still time to steer clear.

Solar Stocks: Getting more expensive for the most part but they are the in thing to own before year end.



  • The popular names like WFR, FSLR and even ESLR continue to gain, outpacing any movement in earnings estimate increases ...this has to stop at some point by either the stock price reversing or the estimates increasing.
  • The cheaper stocks, see circles in table remain, well cheap, and are outperforming.
  • One last comment: Solar manufacturer and retail outlet operator (SOPW) teams with GE Money to offer homeowners financing on systems. Interesting little $3.50 bulletin board player with not insignificant recent contracts with the state of California for providing solar power to schools. Interesting website at yessolarsolutions.com.

(DEEP) CEO and CFO request a pay cut. You don't see this that often and after a 60% plunge in the shares since the companies April 2007 IPO its a good way of communicating to the Street that you've noticed that people aren't happy. 


Holdings Watch: No changes. 

Odds & Ends

Analyst Watch: (ANR) price target bumped up at FBR. Coal stocks have also seen a strong year end run falling into the "need to be owne" category for fund managers.

96 Responses to “Thursday – Oil Inventory Day”

  1. 1
    Sambone Says:

    8:44 am EST

    Nymex Crude Above $96 On Report Bhutto Killed


    [Dow Jones] Nymex crude is now +19c at $96.16/bbl after reports Pakistan’s opposition leader Benazir Bhutto was killed in an explosion. Prices were trading around $95.50 before the reports. The reports “have turned things around, it’s another spot of instability in a troubled world,” which favors crude oil bulls, says one analyst. (matt.chambers@dowjones.com) [Dow Jones] Nymex crude is steady before key weekly US inventory data due 10:30 a.m. EST that is expected to show crude oil stocks fell for a sixth straight week. Jan crude -5c at $95.92/bbl, holding onto gains made Wed on expectations of the draw. Crude oil is seen falling by 1.3 million bbls, distillates by 800,000 bbls, while gasoline is expected to gain 1.4 million bbls and refinery use is seen up 0.6 percentage point to 88.4% of capacity. Reports Pakistani opposition leader Benazir Bhutto has been injured in an explosion are supporting prices.(matt.chambers@dowjones.com)

  2. 2
    zman Says:

    NG February contract down $0.19 to $6.97. A little surprising since the weather is not markedly warmer and those easy comps are on the way.

  3. 3
    Sambone Says:

    Off subject – Saw this today. I like it!

    (sung to the tune of “Gilligan’s Island”)
    by Michael J. Ross Web developer (http://www.ross.ws/)

    Just sit right back and you’ll hear a tale,
    a tale of an inflating Fed,
    that helped congressional budgets
    go deeper in the red.

    Chair Ben was a money-printing man,
    just like “Green-spin” before.
    They steered the ship “U.S. Dollar”
    far from the golden shore,
    far from the golden shore.

    The markets started getting rough;
    fiscal restraint was tossed.
    While floating in liquidity,
    the “Dollar” could be lost,
    the “Dollar” could be lost.

    The ship’s now sinking faster than
    the other money boats —
    being flooded by enormous waves
    of fiat Reserve notes.

    This is the tale of funny money
    which we all should dread.
    The greenback will most likely drown
    in a deep sea of red.

    The skipper may be counting on
    some “helicopter drops.”
    For inflation à la Weimar,
    they’ll pull out all the stops.

    So save your gold and silver now
    into a mighty pile,
    before your hard-earned wealth is lost
    here on Gazillions Isle!

  4. 4
    jazzkool Says:

    Wow, looked at SOLF’s options—January and February. They are outrageously priced. I haven’t looked at the other solars, although I did buy LDK at a reasonable price when it tanked last week.


  5. 5
    zman Says:

    Not a bad on Sam

    Jazz…the premiums in many of the solar remind one of the bulkers 1 to 2 months ago (which are far more reasonable now).

    A little give back underway at DO…not biting, if at all, until after the numbers, now due out in 30 minutes.

    APA acting nicely, not yet owned but it was also left out of yesterday’s oil run up. PBR giving back a little as well.

    Should we get a 2 mm barrel or larger crude draw today you got to thing the the dips in DO and PBR will be erased.

  6. 6
    scoop006 Says:

    Z Whats up with DRYS

  7. 7
    zman Says:

    oil down 3.3 mm bbs
    gasoline up 0.7 mm bbs
    distillate off 2.8 mm bbs

    utilization was light of est at 88.1%

  8. 8
    zman Says:

    pretty bullish numbers for crude and products.

    Scoop – DRYS no news, could be a Street recommendation I did not see or could be someone got a jump on the new year early and other noticed and followed on. I’m not going to trust it but it might be worth a quick trade or if you go some months out a bet on $100 call is not that pricey now. They’re set to do $4 in the 4q alone!

  9. 9
    scoop006 Says:

    Do you know what day/date DRYS reports

  10. 10
    Nicky Says:

    Morning all. How could they not be talking 100 buck oil Z – Kilduff on this morning saying I told you so!
    Sorry but I don’t see the assassination of Bhutto as bullish – its just another reason to ramp. Terrorism is actually bearish for oil.
    Were nat gas inventories out today or is that tomorrow?

  11. 11
    jazzkool Says:

    Scoop, briefing.com says 2/28 after the market close. Estimate: 4.01.


  12. 12
    zman Says:

    Nicky…ha,ha,ha,ha,ha. So now they’re bullish again. What about PF? I see the assassination as slightly bullish for sentiment / and a non-event on the fundamentals.

    Thanks for the date Jazz.

  13. 13
    Nicky Says:

    PF is bearish.

  14. 14
    benbobby Says:

    Zman, what set HES off?..over $37 in 30 days

  15. 15
    Nicky Says:

    They just talk their book Z and on the days when that doesn’t work they say something else! ie today it is about the dollar again whereas where was the pullback in oil when the dollar rallied? well of course they didn’t even mention the dollar then.

  16. 16
    zman Says:

    Getting close to adding some DO calls, stock off $5 now.

    Oil up 1.30ish to 97.35 now. This drawdown has a little more clout as it came with higher imports

    Sane, if you’re around, any API #s yet?

    Ah, PF called a top at 97 last go and he has hadn’t gone long yet so he’s going to be stubborn about a switch. He would have loved these numbers just a month ago but now because he has “decided” to be a bear he can only spin that way. Last week before the number he said maybe the numbers would provide guidance so we get a 7 mm barrel draw and he writes it off. Same this week too? Then just admit that the numbers aren’t what you care about, mate.

    HES – E&P potential in 2008 I’m told although again I’d say it looks overdone and is pricey to its peers.

  17. 17
    zman Says:

    Nicky re 15 = EXACTLY

  18. 18
    Nicky Says:

    Z – re 16 – too right. He would have been all over this a month ago! I think he will be right but he’s early.

    His trades today:

    Stopped on short February crude from apprx 9200 at apprx 9390. Sell February crude oil at 9750 – stop 9800.

    Stopped on short February heating oil from apprx 26300 at apprx 26750. Sell February heating oil at 26800 – stop 27300.

    Stopped on short February RBOB from apprx 23600 at apprx 24500. Sell February RBOB at 24500 – stop 25800.

    We’re long February natural gas from apprx 72990 – stop 690.

  19. 19
    Nicky Says:

    I am looking for the spx to work its way back towards 1470.

  20. 20
    Nicky Says:

    It seems the increase in OPEC production has yet to show up in the US no doubt due to the bad weather. But they will show up in due course.

    If this is wave 5 then I have a target of 106 but it isn’t going there in a straight line and a pullback is due…

  21. 21
    sane Says:

    Haven’t seen API yet, still waiting

  22. 22
    zman Says:

    hey sane, just got API:

    crude: UP 0.9 mm bbs
    gasoline: DOWN 2.4 mm bbs
    distillates: down 2.7 mm bbs

    so a pretty big divergence this weeks after several weeks of agreement….and still crude runs up, now at $97.50…

  23. 23
    zman Says:

    Nicky, increased OPEC production may be staying at home or going to Asia.

  24. 24
    scoop006 Says:

    z see volume in PBR Jan $115P.Does it look retail or institutions

  25. 25
    Nicky Says:

    This run up in gasoline prices makes no sense when inventories are comfortable and we have had weeks of gains.

  26. 26
    Nicky Says:

    True Z – but OPEC must be eyeing this run up in prices again….

  27. 27
    sane Says:

    My API source has sucked as of late.

  28. 28
    sane Says:


    Driving season starts in 5 months 😛

  29. 29
    zman Says:

    scoop – it looks institutional and strange. many, many OOS (out of sequence) trades…sounds like they have the non-able seaman manning the posts, lol.

    Nicky, they have to get paid something for the gas, given the oil price they have to pay to make it. taking a look at the 6 month chart, gasoline has been underperforming.

    Latest tanker tracker data I saw showed a slight dip in shipments, despite the talk of high of 2007 prod out of Saudi. I was just putting those two together and thinking that more crude must be staying home.

  30. 30
    zman Says:

    Sane = LOL

    for once (of late) I’m glad to be long RIG and not DO. Pure profit taking underway there. You could see a complete DO recovery by end of day in this oddball market.

  31. 31
    Nicky Says:

    The analysts they wheel out can’t have it all ways. If oil stays at these levels and higher as they predict then it will effect the consumer. When it effects the consumer/economy then the demand will fall and oil prices with it.
    So I don’t get the argument. You can’t have a high stock market and a high oil market long term.

  32. 32
    Sambone Says:

    11:21 am EST

    Nymex Crude Above $97.50 On DOE Data, Bhutto


    NEW YORK — Crude oil futures climbed past $97 a barrel Thursday, rising to a fresh one-month high after U.S. crude oil inventories and distillate inventories, which include heating oil, fell more than expected.

    The assassination of Pakistani opposition leader and former Prime Minister Benazir Bhutto, along with a weaker dollar, also contributed to rising prices and spurred fresh talk of $100-a-barrel oil. Light, post-Christmas volumes exacerbated the price gains, traders said.

    Light, sweet crude for February delivery on the New York Mercantile Exchange was recently up $1.25, or 1.3%, at $97.22 a barrel after rising as high as $97.69, the highest intraday price for a front-month contract since Nov. 26. Prices hit an all-time intraday record of $99.29 on Nov. 21. February Brent crude on the ICE futures exchange rose $1.05 to $94.99 a barrel.

    “The market is moving higher on the draws in crude oil and heating oil,” said Kyle Cooper, director of research at IAF Advisors in Houston. “There’s a lack of liquidity helping prices higher and its possible we could print $100. I don’t know who is going to sell tomorrow or Monday.”

    U.S. crude oil stockpiles fell 3.3 million barrels to 293.6 million barrels last week, the Department of Energy said in its weekly report. It was the sixth straight fall and compared with expectations of a 1.3 million-barrel fall in an earlier Dow Jones Newswires survey of analysts.

    Distillate stockpiles, which include heating oil and diesel fuel, fell 2.8 million barrels to 126.6 million barrels, with East Coast heating oil stocks dropping 2.6 million barrels. Gasoline stockpiles rose 700,000 barrels to 205.9 million barrels, compared with expectations of a 1.4 million barrel gain. Refinery use grew 0.3 percentage point to 88.1% of operable capacity, slightly lower than expectations for a 0.6 percentage point gain.

    Traders said while the assassination of Bhutto, who was killed during a suicide bombing attack in the military garrison town of Rawalpindi, doesn’t directly threaten oil supplies, it adds to global instability and a confluence of factors holding up crude oil in thin post-Christmas trading. Crude prices were buoyed Wednesday by Turkish air strikes against Kurdish rebels in Northern Iraq.

    “The petroleum market has never been about fact, it’s been about perception, if people think there is the chance of more terrorism prices can respond, ” said Cooper. “I think that’s happening here.”

    The dollar was pressured by a softer-than-expected November durable goods report and also fell after the attack on Bhutto. A weaker dollar has supported crude oil’s run at $100 a barrel, making it cheaper for trades using other currencies and blunting the effect of dollar-denominated rises on demand in other countries.

    Front-month January reformulated gasoline blendstock, or RBOB, rose 3.96 cents, or 1.6%, to $2.4922 a gallon. January heating oil rose 3.68 cents, or 1.4%, to $2.678 a gallon.

    —By Matt Chambers, Dow Jones Newswires

  33. 33
    Sambone Says:



  34. 34
    zman Says:

    ZTRADE: picked up a small trade position in the DO $155 January Calls for $1.75. I’d don’t think it gets that high but I do think it recovers today’s loss, of $5 in short order.

  35. 35
    zman Says:

    Re – PF and Alaron…they send me some anti-fan mail now and again. I tried to talk fundamentals with them on the way up and on the way back down for oil but to little avail.

    They mostly stick with jokes and arrogant comments like “it’s going there because we say it’s going there” so I filed it under the heading “he who washes an ass’ head wastes both his time and his soap”

  36. 36
    Nicky Says:

    It suddenly struck me listening to CNBC that considering how overly optimistic I normally find americans to be how consumed they are with hypothetical situations which totally flies in the face of their optimism.
    Now aside from the fact that to listen to these guys we are already down to our last drop of oil Pakistan is now going to be taken over by Al Quaeda who are going to attack the US with nuclear weapons – its a done deal to hear them talk. How do these guys sleep at night??

  37. 37
    zman Says:

    PBR mounted another nice run from negative territory today. I’ll likely sell tomorrow if it fails to break 119 or today if it gets there and fails to hold.

  38. 38
    zman Says:

    RE 36. I don’t know how they sleep but given that they talk their book its probably on a higher thread count than I do. WR Hearst would have been very proud to have owned CNBC. It is fear mongering made profitable.

  39. 39
    Sambone Says:

    N – Once again I don’t watch the “Talking heads”. My question is; Are they bullish on the overall market or bearish? We all know they don’t have a clue on energy. Are they saying stay long and strong in 08? “What me worry/Goldilocks”?

  40. 40
    Sambone Says:

    Another Iraq?


  41. 41
    ram Says:

    Can’t access 340

  42. 42
    ram Says:


  43. 43
    zman Says:

    Ram – its a free registration to the latimes. Gist is Sunni controlled Bahrain seeing worst unrest in two decades.

  44. 44
    apbd Says:

    Go Drys. Need 120 by Jan 19th.
    Yes, I’m dreaming!

  45. 45
    Sambone Says:

    Tapis = 101.12
    Louisiana Sweet = 100.82


  46. 46
    zman Says:

    note PBR

    thanks Sambone, mighty sweet prices for the sweet…not good for many of the refiners…note FTO up in here .

  47. 47
    Sambone Says:

    $4.00 gasoline in the spring?


  48. 48
    zman Says:

    Sam – that is still my tune…probably April and if it doesn’t get there on the National Average probably $3.75 is surely will for San Fran…its a good bet TSO has a good 1Q and a great 2Q this coming year.

  49. 49
    Jason Says:

    Z – Big turnaround in nat gas this afternoon. Any news out there? HK and CHK not following the move yet. Maybe a good entry point here?

  50. 50
    Alhambra Says:

    SF is already very close…

  51. 51
    Alhambra Says:

    hmmm… interesting

  52. 52
    zman Says:

    Jason – duly noted … maybe traders are taking note of those easy comps at last…that and the fact that we have expiration at hand on the Jans with two days of not following up oil.

    HK probably sticks with its direction of the morning in this light day but for longer term thoughts sure, good entry here

    CHK I like below $41

    SWN and APC stand to run tomorrow and I’m in the SWN and down slight and not in the APC as of yet.

    SD for the IRA not a bad long term thought.

    All gas Rockies player BBG may be thrust back above old highs if we put on a mid $7s NG move.

    Same what was that beat up gassy player you mentioned last week? I’m drawing a blank but they looked over beat up. Also, you used to follow DEEP, did you see their little stunt yesterday of asking for less money for top management? Interesting.

    Yeah, Alhambra, I guess that was kind of an easy call. Those left coasters could easily see a buck increase between now and June though. Even with the well supplied market, the lack of refining capacity utilization and increasing demand spells higher prices with oil at $90 to $100.

    Note PBR rallying now. Volume picking up in the Jan 115 calls

  53. 53
    ram Says:

    SWN still getting beat up despite NG.

  54. 54
    ram Says:

    Left coasters!??

  55. 55
    Sambone Says:

    West Coast

  56. 56
    Sambone Says:

    West Coast = Left Coast
    East Coast = Right coast

  57. 57
    ram Says:

    See DRYS run! Now only 20 points OTM!

  58. 58
    Sambone Says:

    Part I

    Russian Oil Service Firms Look To Future


    HOUSTON — In the booming Russian oilfield services market, the line between east and west is blurring.

    High oil prices and European demand for natural gas have transformed Russia’s once-sleepy oilfield services sector into a $13 billion business that could become the world’s second-largest market by 2011. Two spheres compete for that business, which includes work done to find and produce both oil and gas: small Russian companies that perform routine drilling and well servicing, and international giants that take the lead on more complex jobs.

    Recently, those two worlds have started to collide. A pair of three-year-old Russian companies, Integra Group (INTE.L) and Eurasia Drilling Co. (EDCL.L), have grown into heavyweights in the sector, with combined revenue of at least $2 billion, or roughly equal to the combined Russian business of international giants such as Schlumberger Ltd. (SLB) and Halliburton Co. (HAL). Now, the Russian firms are looking at the next step — one that is likely to put them into more direct competition with the Western companies. They have a long way to go to match the technical mastery of the international service firms, but both claim their lower costs and ties to Russian producers will allow them to keep their leading positions.

    The stakes are growing every year — just for Russia to keep production steady at 9.8 million barrels of oil a day, the country’s largest producers are expected to increase spending on services by 15% annually, according to consultants Douglas-Westwood. With about 70% of the market still controlled by subsidiaries of the producers or tiny regional firms, analysts see strong growth potential for both international giants and companies like Integra.

    “What you see in Russia is an oilfield service market that is still very fragmented, a lot of inefficient small companies with inefficient management,” said Igor Kurinnyy, an analyst with ING in London. “The idea of a company with Western style management trying to achieve best practices should work.”

    Russian Companies Rise
    The independent Russian oilfield services sector got its start earlier in the decade, as the Russian oil majors began getting out of the oilfield services business. TNK-BP, for example, slimmed down from 82 service companies employing 43,000 in 2003 to six companies and 7,000 employees this year.

    Similar divestitures across the sector allowed Integra to start snapping up the best of the castoffs by the dozen. Integra is run by TNK-BP’s former services chief, but a New York-based investor, John Fitzgibbons, helped found the company in 2004 and serves as chairman. With over 20 acquisitions in a variety of services, Integra zoomed to an estimated $1.1 billion in revenue this year, according to Deutsche Bank.

    The company is trying to establish itself as a Russian version of an integrated service company like Halliburton, offering everything from routine drilling to high-tech seismic exploration, Fitzgibbons said. That will increasingly mean taking on more complex work, such as exploration in Eastern Siberia and managing entire projects, he said.

    Eurasia Drilling got its start the same year as Integra, when a group of investors bought oil producer Lukoil Holdings’ (LKOH.RS) drilling assets. Like U.S.-based Nabors Industries Ltd. (NBR), Eurasia mainly drills oil and gas wells, under the operating name BKE. The company relied on massive pre-existing contracts with its former parent to secure 20% of the market, and still earns 75% of its revenue from Lukoil, Russia’s second-largest oil producer. CEO Alexander Djaparidze said he hopes to lower that figure to 60% within three years.

    Integra went public in February and Eurasia in November, with both listing on the London Stock Exchange.

  59. 59
    Sambone Says:

    Part II

    Although they mostly perform different work, both companies found a niche in satisfying booming demand for basic services, while also touting experienced, high-profile management teams. The latter is still unusual in a sector dominated by small, often corrupt firms or subsidiaries of the producers.

    “Western services can be of higher quality .. but that doesn’t mean people need to use them,” said Rod Westwood, an analyst with Douglas-Westwood consultants in Aberdeen, Scotland. “Most wells are not that complex to drill.”

    It’s been slower going for most Western companies, which with the exception of Schlumberger are just starting to see sales take off. The U.S. firms only found an entry point when Russian oil majors began to run out of low-tech ways to slow production declines. Halliburton has seen 25% compound annual growth in Russia since 2004, though 2007 revenue of about $350 million barely registers on the company’s balance sheets. Baker Hughes Inc. (BHI), which made its first effective push into Russia last year, reported a 58% year-on-year jump in business in its third quarter.

    “I don’t see anything stopping Russia,” CEO Chad Deaton said when Baker Hughes announced earnings in October.

    Catching Up
    Fitzgibbons, Integra’s chairman, doesn’t dispute that Western companies have an edge in Russia when it comes to technology. But he sees Integra and other Russian firms quickly closing the gap.

    “Wherever we can, we’re upgrading,” he said. “Our logistic costs are lower, our personnel costs are lower .. to the extent that our equipment allows us to compete technologically, we’re going to be tough to beat.”

    TNK-BP sees things differently. The country’s third-largest oil producer, which is half-owned by BP PLC (BP), awarded $3 billion in long-term drilling contracts last week, with most work going to Russian companies. But with the announcement came a caveat: in order to “increase competition and introduce international technology and standards,” two U.S. firms, Weatherford International Ltd. (WFT) and Nabors were being brought in.

    “I really don’t understand what they’re missing in the existing services (market),” said Djaparidze.

    Like Integra, Eurasia Drilling is also modernizing. About three-quarters of the company’s 184 drilling rigs date back to the Soviet era, but the company is buying 10 to 12 new rigs a year, and upgrading another 10 to 15 annually from its existing fleet.

    Making Connections
    Although the under-the-table contracting of the post-Soviet era is receding, connections still matter in Russia.

    The intimate driller-customer connection is still common throughout Russia’s energy sector, and how those relationships play out is likely to help determine the chief beneficiaries of the current boom. Schlumberger, Baker Hughes and Weatherford have all purchased stakes in Russian companies in part to buy into relationships that come naturally for Eurasia or Integra.

    Eurasia must also find a way to diversify its roster of clients beyond Lukoil. Integra is more diversified, but with a handful of majors dominating Russian oil and gas production, the client list is short for everyone.

    Djaparidze described the Lukoil contracts as a way for Eurasia to secure its footing as an independent company, and for Lukoil to guarantee a supply of rigs after selling off its in-house drilling operations. Lukoil is looking to change how it hires drillers when its contract with Eurasia ends in 2009, however.

    “It has been a preferred supplier, but the contract is running out and Lukoil expects more diversification in its use of oil service companies,” said Andrei Gaidamaka, director of strategic development at Lukoil.

    —By Brian Baskin, Dow Jones Newswires

  60. 60
    zman Says:

    SWN down early, stays that way as its hard to reverse direction without more names going green on low volume days. Gas was off a dime early and touching $6.95 on the febs so the stocks chose that direction in the morning….usually those kinds of moves just get exaggerated into the close on low volume days with a strong up or strong down market…there’s probably a name for it …I call it the “lemming effect”

    everything in between just stuff you guys fly over. Left coast is really a term of endearment for all of us that don’t live there…really…I mean it.

    COP has a had a beautiful and I must say not unexpected run … I was too much of a spineless wimp to get back in when Sambone called it at 78 two weeks ago.

  61. 61
    zman Says:

    Sam or anyone who had a beat up gassy stock last week…please repeat that ticker, drawing a blank now.

  62. 62
    zman Says:

    Also, has anyone seen the EIA gas number estimate for tomorrow’s draw? tia

  63. 63
    Sambone Says:

    61 – Wasn’t me.

  64. 64
    zman Says:

    Thanks Sam, sounds like I’m going to have to go dig for it then…nice story but it fell off my market watch during a bad reboot and I’m having trouble remember given all the nog between then and now.

  65. 65
    ram Says:

    How about the tadpole list of energy companys that could be a big fish one day????

  66. 66
    zman Says:

    Ram – on my very near term to do list.

  67. 67
    zman Says:

    They are all E&Ps although I have a couple of takeouts in mind in refining for 2008.

  68. 68
    ram Says:


  69. 69
    scoop006 Says:

    Z – Think DO warrants a re-entry here @$142 considering PBR recovered

  70. 70
    zman Says:

    Scoop – yes, see #34…entered I guess a little early when it was down on $5.

  71. 71
    zman Says:

    Got any suggestions for the coming year? Long and medium range stuff, stuff you’d like to hear about or think we should be discussing. Tell me now and I’ll get cracking on it.

    Most of you will probably tune out tomorrow and maybe Monday as well so here’s to a profitable 2008!!!

  72. 72
    freeflow Says:

    anyone know APC earnings date yet?

  73. 73
    Sambone Says:

    Free – First of Feb 08

  74. 74
    Sambone Says:

    They will announce last of jan the date

  75. 75
    zman Says:

    FF – that’s on my list of must owns for earnings and for the run into them for 4Q. Good numbers, record production (for the kept assets post divestiture), good finding costs as they will be booking satellite discoveries around the Gomex for Independence hub, good onshore as well and they can reiterate their big fat 2008 growth targets.

  76. 76
    freeflow Says:

    so they will announce earnings on Jan 31st? Then report on the 1st of Feb?

  77. 77
    Sambone Says:

    Z – Yea, a what if. Ok if Oil hits 100, what does that do to earnings for the large cap, mid cap, etc. Give examples. Also, if we hit a super spike, of let’s say 120 to 130+, what kind of earnings are we looking at. What it RBOB hits 3.50?
    I would like your thoughts on the top ten ideas for 08? Top ten things that will happen in 08, and the top ten that won’t happen in 08.

  78. 78
    freeflow Says:

    Z – I’ve been watching the Jan 65’s double – then triple over the past two weeks. Now it’s come back a little and I’ve added some February’s – thinking I can sell some Jan’s against it when opex gets a little closer.

  79. 79
    Sambone Says:

    Free – Most companies give a heads up (News release) about two to three weeks before they announce. It should be around the first week of Feb.

  80. 80
    Sambone Says:

    when they report.

  81. 81
    Sambone Says:

    Z – Overall market will be interesting the first ten days of trading of the year.

  82. 82
    freeflow Says:

    thanks sambone

  83. 83
    zman Says:

    Sambone: Of course you know its different for everyone. Best way to play up oil from a psych stand point is probably SU. Best from a fundamental is probably APA

    here’s a for instance in the big cap E&Ps:

    I’ll use APA as they have the most leverage to oil at present and $100 should not trigger much of their ceiling swaps.

    For each dollar move above $80 add $0.20 annum to cash flow per share. At present they are expected to make $19.68 CFPS in 2008 with oil expected to average $73.49 (Street est of WTI) by 55 Wall Street suits. So take $0.20 x by $25 and that gives you $5 more to CFPS. If the multiple stays flat that gives you $135 on APA without any upside on volumes which I think they can do. Kind of makes you go hmmmmm.

    I’ll have that list next week but in a little different format. Top 5 E&P, Top 5 little fish, top 5 oil service, top refiner, I don’t due price targets because I think they are just monkey guesses and generally wrong or right for the wrong reasons but I do like generally up and generally down as ratings and I’ll set some levels I think we are likely to see (low and high side) …

    I very much agree on the first 10 days, last year it set the tone for crude going into early summer.

  84. 84
    Sambone Says:

    US Oil Stocks May Be Lower On Tax Strategies


    NEW YORK — U.S. crude oil inventories, down for the sixth straight week, are likely being influenced by companies trying to minimize property tax in Gulf Coast states and should bound back in the New Year.

    The draw in stockpiles Wednesday helped push crude-oil futures above $97 a barrel on the New York Mercantile Exchange, reviving talk that prices could be reach $100 a barrel in coming sessions. Recently, light, sweet crude for February delivery was up 83 cents at $96.80 a barrel, approaching the all time intraday record for a front month contract of $99.29, reached Nov. 21.

    Commercial crude oil inventories fell 3.3 million barrels last week to 293.6 million barrels, according to U.S. Department of Energy data. The fall comes after a huge 7.6-million-barrel draw the previous week and an 8 million-barrel-drop in the week ended Nov. 30. The latest decline, which occurred mainly in Gulf Coast stockpiles, is also proving hard to account for, with imports up slightly, no large increase in refinery use of crude and no surge in stockpiles in other areas.

    “This time of year you tend to see Gulf Coast inventories draw down as much as possible as companies try to minimize their exposure to tax,” said John Duff, an analyst with the EIA in Washington. “I suspect we’ll start to see inventories rebuild at the start of 2008.”

    As prices have surged higher, traders have focused on the weekly EIA numbers for signs of whether high prices are sustainable. Stockpiles have declined in 20 of the past 25 weeks, translating into a net loss of 59 million barrels. For many, this is a sign that prices will stay high.

    Last year, inventories also dipped at the end of the year, falling by 25 million barrels from Dec. 1 to Jan. 5, then adding 10 million barrels over the rest of January.

    Oil companies are taxed on their inventories at the end of the year, based on what they paid for oil. This means that with oil prices up more than 50% so far this year, companies want to reduce any additions to stockpiles they had made. Gulf Coast states such as Texas and Louisiana have higher taxes on inventory than many other states.

    “The draw in crude this week is because of end-of-year tax considerations specifically associated with the law,” rather than it being an indication of increased U.S. demand, said Kyle Cooper, director of research at IAF Energy Advisors in Houston.

    Counting Barrels
    As for why 3.3 million barrels of crude oil seems to have vanished, with no big increase in refinery use or drop in imports, there are no certain explanations. EIA’s Duff said oil shipments likely have been scheduled to arrive at inventories in early 2008. IAF’s Cooper said the decrease could be caused by end-of-year reporting practices conducted by companies with inventories in the region.

    The tax effect has varied from year to year. In December 2006, Gulf Coast stocks dropped 8%, rising by a similar amount in January. Stocks actually built in December 2005, however, and fell only 3% in December 2004.

    This year, the effect on inventories is being exacerbated by the the structure of Nymex crude oil futures contracts, where, for most of the second half of 2008, nearby crude oil futures have been more expensive than months further out. The situation, known as backwardation, has made it unprofitable to store oil and agree to sell it in later months.

    —By Matt Chambers, Dow Jones Newswires

  85. 85
    zman Says:

    Thanks Sam, good article, especially the “vanished” comment and also when you take into account the API, which actually does more leg work on the big three numbers than the EIA does, said crude stocks rose.

  86. 86
    Sambone Says:

    Article does make sense, though.

  87. 87
    ram Says:

    PBR is retreating rather fast.

  88. 88
    zman Says:

    PBR yep, with broad market and everything else

    SAM – I’ve heard it in past years, point is the 10 million they refer to for this past January would only make up for the last 2 reports. I’ll take a look at it graphically in the Friday post.

  89. 89
    Sambone Says:

    2 minutes to “Tini time”. Z- I’ll be here Friday and Monday.

  90. 90
    zman Says:

    Thanks Sam and thanks for the suggestion. I’ll be here both days as well. Monday a half day?

  91. 91
    jy Says:

    Re #61 “beat up gassy stock” from last week. EPEX ~75% gas reserves

    From Wednesday 12-19:
    “Edge Petroleum EPEX, per their press release of yesterday evening “has retained Merrill Lynch & Co. (“Merrill Lynch”) to evaluate and advise the Board of Directors regarding strategic alternatives to enhance shareholder value including the potential sale or merger of the Company. There is no assurance that the review of strategic alternatives will result in Edge changing its business plan, pursuing any particular transaction, if any, or, if it pursues any such transaction, that it will be completed. Edge does not expect to make further public comment regarding the review until the Board of Directors has approved a specific transaction or otherwise deems disclosure of significant developments is appropriate.”

    Seeing that Edge stock has tumbled ~70% this year, most of that drop since the first of October, this may be the best result for the shareholders. The stock has tumbled from $32/share in Jan 2006 to $5+ yesterday.”

  92. 92
    jy Says:

    CORRECTION to #91
    Dang it! EPEX Stock has ONLY fallen from 18.5 to $5+ since first of 2007.

    Not sure where I got that $32/share number.

  93. 93
    zman Says:

    Thanks, JY that’s definitely not the stock I was thinking of though.

  94. 94
    TTupp Says:

    does anyone know if it possible to add a second external monitor to my laptop? i have one plus my actual computer screen , but i was thinking to do this with three independent views (ability to put different things on each of them), i would have to not use the s-video output and get a different video card. has anyone done/ heard of this? i

    have a three screen system on a PC in my hometown, but i spend most of my time through the winter in Vancouver and would like to be able to have three screens.


  95. 95
    zman Says:

    T – The easiest option I’ve found is the new ubisync monitors from Samsung. They have onboard video cards and plug in via a USB 2.0 slot. Literally plug and play the disc that comes with works great in XP.

    Here’s a link to it:

    I paid $340 for the 19″ on AMZN which is about $150 extra but its worth it. You can daisy chain an additional 5 off the first monitor which has its own USB ports. Pretty slick.

  96. 96
    zman Says:

    if you do a search on amazon for ubisync you can buy one now for $324 have it in two days for $340. Not bad. This was supposed to price at $680 in May 2007.

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