In Today's Post:
- Holdings Watch: Add more NFX calls
- Commodities Watch
- Stocks We Care About Today - SWN, NFX (wrap),
- Odds & Ends
Holdings Watch:
CALLS:
- (NFX) -Entered May $65 Calls for $1.35.
PUTS: No trades yesterday
Commodities Watch:
- Crude Oil: traded off $2.24 to close at $116.06, after hitting a mid day low of $114.25 as the euro weakened to a three week low versus the dollar. This morning crude is up on another rumored pipeline attack in Nigeria, a strike in Nigeria, and a potential shut in of North Sea production due to striking refinery workers. This morning crude is trading up $1+ as I go to press.
- Euro Tumbles (Dollar Rallies) And Crude Suffers A Setback. The dollar rallied after a WSJ article cast doubt on continued interest rate cuts from the Fed and a benign weekly jobless benefits report then added to sentiment that maybe things aren't so bad after all. Each time this happens the bears declare oil dead.
Rest assured, there are other factors at play in oil aside from the dollar but I'm not defending $115 or $110 or even $100 oil. I just think it is a little early to: 1) call a recovery in the U.S. equity market that would 2) sap commodities in general and oil in particular, and 3) begin a long-term revival of the dollar based on two whole days of strengthening, a Journal article and a weekly jobless claims report that happened to show a little resilience this week.
- Nigeria Watch #1: MEND Attacks Another Shell Pipeline: No confirmation yet but they usually don't lie about blowing things up. This is the fourth pipeline reported blown up in the past week. In a statement MEND said "Our candid advice to the oil majors is that they should not waste their time repairing any lines as we will continue to sabotage them. We have time on our side and there is so much to be destroyed," I mentioned this would happen as the rebel's leader, Henry Okah, faces trial soon and I expect things to only get worse once he is convicted of treason/terrorism.
- Nigeria Watch #2: Oil Workers Strike Shutters 200,000 Bopd of Exxon Production. No word yet on why the strike had been called since at last word the two sides had worked things out. Exxon said its entire Nigerian workforce in the country has struck.
- BP To Shutter 700,000 Bopd "Forties" North Sea Oil Pipeline Due To Refinery Strike. The Grangemouth refinery is set to begin a 2 day strike on Sunday over a pension dispute. (BP) has to shut in some 70 fields to shut in the Forties system and this will likely have lasting effects as you never want to shut in a reservoir as it may or may not come back at the same rate.
- Al-Sadr Watch: According AP the cleric is contemplating "a full-scale fight against U.S.-led forces".
- Natural Gas rallied briefly after the EIA reported an injection of 24 Bcf, on the lowish side of expectations, but failed to penetrate $11 and sold off in oil price influenced trading to close essentially even on the day. This morning gas is trading up a dime as oil rallies.
Stocks We Care About Today
SWN Reported Strong 1Q08 Results; Guidance Going Up
- CFPS of $0.81 vs $0.66 expected; EPS of $0.31 vs $0.25 expected,
- 1Q Production was 430 MMcfepd, 60% from the Fayetteville Shale
- 2Q Volume Guidance Revised Up 15%:
- Old Range: 395 to 405 MMcfepd
- New Range: 456 to 467 MMcfepd
- LOE remained in check and low at $0.77 per Mcfe.
- Fayetteville Shale Production as of 4/14/08:
- Gross: 400 MMcfgpd (including a small amount of conventional production (11 MMcfgpd) )
- Ne: 295 MMcfgpd.
- Horizontal well laterals getting a little longer:
- drilled in 15 days for an average cost of $2.9 mm, laterals now average 3,285 feet, up from 3,120 feet in 4Q07.
- Pad Drilling Pilot Shows Promise: Only 10 wells with data yet in the Southeast Rainbow pilot but the pad drilled wells (multiple wells from a single surface pad) are coming in for $2.6 mm apiece with average IPs of 2.6 MMcfgpd. By comparison, offset wells within 2 miles of the pad drilled as single shot wells cost $2.8 mm and have averaged IPs of 2.4.
- Other Plays: (SWN) has accumulated 100,000 acres in the Marcellus. First vertical well has been drilled and is completing.
- I'll have more later after the call.
Conference Call: 10 Est.
NFX (1Q Call Wrap), (added to last nights post): These are notes from the conference call and a conversation with management last night which should be read in conjunction with Wednesday night's 1Q08 note.
Favorite Quote Watch: Regarding the Woodford Shale: They've had several recent wells among the extended laterals that have had initial production over 7 MMcfgpd and "a number of wells that have IP'd well north of 10 million per day." NFX went on to point out that its the 100th day and the 150th day that really matter and not the IP and that the recent extended lateral wells are performing well above the plotted 4.5 Bcfe type curve well....I'll say!
Other Notable on the Woodford Shale:
- Dual Lateral To Spud Mid To Late July:
- Cost about $10 million to drill 2 extended laterals. That compares to the recent $6.7 mm for a single horizontal extended lateral well.
- If we assume they achieve the "better than 4.5 Bcfe type curve" in each lateral that's close to (or perhaps better than 10 Bcfe per well).
- Which yields finding costs approaching and perhaps even below $1 / Mcfe. That's easily trip digit before tax IRR at $10 gas and the Street cannot ignore this.
- Half the Street rates NFX as HOLD and that numbers are coming up quarter after quarter after quarter.
Other interesting data from the call:
- Mancos shale test results in next few weeks in Monument Butte. This could be a company mover as this underlies acreage already held by production. They can ramp it up or down as gas prices dictate, not risking capital to acquire leases. 82,000 net acres here.
- Well Design:
- Not just a Mancos Shale Play - Wasatch, Mesa Verde, Blackhawk as well (bailout zones) all in a 16,000 foot vertical well for $4 to $5 million.
- The shale here is 2,000 feet thick so you get the same bang for your buck as you would from a horizontal running along the shale as you do drilling the much cheaper vertical well through it.
- Targets middle Mancos to reduce costs
- 1st vertical well drilling, 2 to 3 planned for this year
- (HAL) is a partner in this well (they alluded to this before with some "logs we've never heard of" talk and they think they can learn things here with (HAL) involved that they may apply elsewhere.
- Frac - smaller fracs, more stages.
- Well cost of $4 to 5
- Bakken test data coming soon; 160,000 net acres here.
- Management alluding to more plays coming soon, can’t talk about yet
- The two GOMEX discoveries in the were each 5 to 10 mm barrel (lower end of the expected range). In late 2009 these should come on at rates of 30 to 40 MMcfepd each gross.
- China discovery - EUR of about 10 mm barrels.
- Stepout South Texas Sarita B-94, a 7,000 foot stepout to the south, boosts the play size. Spudding first of two high impact exploration wells here next week.
DEEP Six Watch: (DEEP)'s CEO and CFO resigned last night. Company has terminated all employees other than those necessary to wind down the business. Possibly good news for (OII) as they can probably pick up 5 or 6 ROV's at fire sale prices.
Odds & Ends
Analyst Watch: NFX raised to buy at Canaccord, price target increased from $55 to $69; ethanol producers (PEIX) and (VSE) cut to hold at Oppenheimer. FBR takes RRC target from $70 to $80.
6:50 am EST
Crude Up More Than $1 On Supply Concerns
By Nick Heath
Of DOW JONES NEWSWIRES
LONDON — Crude oil futures traded over $1 higher in London Friday as growing concerns over crude oil supply disruptions outweighed the impact of further strengthening in the U.S. dollar.
Crude oil traders diverted their attention from the currency markets to fears that some North Sea crude oil flows will be suspended to the U.K. as a result of weekend industrial action at U.K’s Grangemouth refinery, and reports of fresh violence affecting oil transportation infrastructure in Nigeria.
“(Grangemouth) is what is factoring into (crude oil prices) and countering the dollar which was certainly the reason for driving oil prices down yesterday and this morning,” said Simon Wardell, analyst at Global Insight in London. “The Grangemouth outage is pretty significant.”
At 1040 GMT, the front-month June Brent contract on London’s ICE futures exchange was up $1.35 at $115.69 a barrel.
The front-month May light, sweet, crude contract on the New York Mercantile Exchange was trading $1.11 higher at $117.17 a barrel.
The ICE’s gasoil contract for May delivery was up 50 cents at $1,076.75 a metric ton, while Nymex gasoline for May delivery was up 4 points at 301.90 cents a gallon.
—By Nick Heath; Dow Jones Newswires
Morning all. Love the title for this morning’s post Z.
Regarding euro – yes starting to falter, in fact we have now seen 5 waves down complete and are in the process of a correction before what I expect to be another leg down. Its what happens after the next leg down that counts! ie will this just turn out to be a 3 wave correction lower before blast off again or will it be the start of a more meaningful correction.
I agree regarding with your morning comments regarding rotation out of commodities into stocks. Especially as I see another leg down in the stock market should start very soon.
The $ has as yet to give a completed pattern to the downside….
CNBC early this morning were commenting that there is a move afoot to stop the replenishment of the SPR whenever oil is above $75 (when exactly do they think we may see those levels again I wonder???). Apparently they say that it would instantly knock 25 cents off a gallon of gas. Bush saying absolutely no way apparently citing that even when the SPR is full it only holds 100 days supply. Out of interest does anyone know how much is currently in the SPR ie how many days supply and when has it been used of late ie I can’t think of an event since Katrina (and even then I don’t know how much was used) which would have caused it to be so depleted. They seem to have been filling it for months now.
N – read somewhere (WSJ?) that SPR is 97% full. Not sure about the rest.
97% sounds right. It’s average abouve 70,000 bopd which compared to 21 mm bopd the U.S. consumes does not sound like much and the administration is right that does not matter in the big scheme of things but I still think they should back off when oil is high and add more when its low. That whole buy low thesis…
The move is backed by Pelosi so it has no chance. Dorgman (sp) is pushing for a strict cap of no refill over $75 which is too restrictive in my opinion…again, it s not gonna happen.
Makes no sense that the administration continues to worry about inflation and high oil prices and effectively is adding to them!
Energy charts all looking very bullish.
Shell confirmed a 4th pipeline blast … dollar worries? what dollar worries?
Crude back to $117.75, up $1.70.
Nicky – yep, glad I did not panic sell yesterday.
I may take a little more NFX near the open. I had a good chat with management last night as written in the note. Analysts are slowing coming around as numbers rise rapidly, both top and bottom line. The Mancos and Bakken test data will be available in several weeks. The dual lateral economics in the woodford may be the next big thing after that.
Oil at $118.
CIBC sees $200 oil and $7 gasoline by 2012:
http://www.marketwatch.com/news/story/gasoline-could-hit-7-oil/story.aspx?guid=%7B824E895C%2DF649%2D4526%2D89F1%2D50C198A8A0D5%7D
Thanks for keeping me in the game yesterday, Z. It got pretty ugly for awhile. When the market throws a sudden red day at you like that do you get more aggressive taking profits on the rebound?
No $ worries – wish they would stop giving that as a reason as the $ has been firing on all cylinders for days now with oil pretty much ignoring it except for one extremely short spell yesterday morning!
11.00 proving formidable resistance for nat gas but if it can get through there the whole complex could be lifted.
As Mark Haines said yesterday morning on CNBC – at this rate we will be at $200 by the end of this year.
zman:
the Nigerians are always ready to help stabilize oil,
Jason – I’m not saying this is a safe environment on oil and gas investments near term. I just don’t think its the “abandon the sector ” rotation the talking heads are blabbing about. No one ever went broke taking profits.
Morning UOP – yes, they’re on the payroll. I’m guessing all those guns in their frequent photo ops come from Iran.
zman:
who are the talking heads,
or,
do you count blabber M Haines in this ?
anyone on the business channels or interviewed on nightly news. Phil Flynn used to be before he gave up the faith on oil. Haynes is glib but wise.
Guess I should have gone with Scoop and taken the SWN, up 11% this morning. Funny that the outperformance was no better than NFX’s but they’ll run on this “energy day”. I do like the stock and may even chase a bit but will listen to the conference call.
PBR reporting they became a net importer in 1Q bringing in 0.6 mm bopd of outside oil. There’s just oil demand everywhere.
Scoop played follow the leader and did not bite
Well at least the NFx is starting to work Scoop, though not like the SWN.
green group at the open but there is already a little profit taking into the initial surge, stocks tracking move in oil very closely this morning.
Friedman Billings raised their tgt on RRC to $80 from $70. The firm believes RRC is well positioned to announce an increase in 2008 production guidance (currently at 15%). They say progress across Range’s core Barnett, Nora, and Marcellus properties continues to shape up nicely, setting the stage for a strong 2008 and 2009. Firm’s $45/share Marcellus NAV based on the company’s success to date; firm is assuming that 315,000 net Marcellus Shale acres are developed on 80 acre spacing, nets 10 Tcfe total EUR.
Possibly a bit of short covering in energy, is my impression just now. Was hoping for bargains today … so far not much on sale
Isle – thanks for the RRC, saw that and am tempted after the nice quarter, outlook etc….probably at least worth a quick $5 with a favorable market at your back.
Dman – agreed, hard to get out one day and get in the next unless you sell on days like today and buy on days like yesterday.
DO getting hit again, I’m not adding and not dumping yet.
HK seeing a nice recovery. PQ same and they got a borrowing base increase.
I’ll put up the week 3 calendar in about an hour.
9:20 am EST
Nymex Crude Above $118/Bbl On Supply Worries
By Brian Baskin
Of DOW JONES NEWSWIRES
HOUSTON — Crude oil futures are trading higher Friday, as the shutdown of a major North Sea oil pipeline approaches.
Light, sweet crude for June delivery traded $2.09, or 1.8%, higher at $118.15 a barrel on the New York Mercantile Exchange. June Brent crude on the ICE futures exchange traded $1.49 higher at $115.83.
A two-day strike is scheduled to begin Sunday at the Grangemouth refinery in Scotland. An outage would normally depress crude prices by lowering demand, but the refinery supplies steam and power to the 700,000 barrel-a-day Forties oil pipeline system, which brings crude from the North Sea to shore. The strike, as well as labor unrest and a production outage in Nigeria, have kept concerns about supply front and center in the market this week.
“The Grangemouth refinery has been in constant operation for 40 years,” wrote Bill Herbert, an analyst with Simmons & Co. “The logistics of shutting it down and eventually restarting the refinery and the Forties System is no trivial matter, with the potential for unexpected delays.”
The Grangemouth strike’s impact on the market has been uneven, however, failing to prevent a decline in oil prices on Thursday or in overnight electronic trading, but buttressing futures Friday morning.
MF Global’s Ed Meir noted that refinery strikes “tend to be short-lived affairs.” Others pointed out that oil prices had hit multi-day lows twice since the strike first appeared on the horizon, indicating that the supply of Forties crude was not responsible for driving prices higher Friday.
“The market doesn’t need any excuses to continue up,” said Dean Hazelcorn, a trader with Coquest Inc. in Dallas.
The dollar is also limiting crude’s ascent. After trading at a record $1.60 to the euro on Tuesday, the dollar has strengthened rapidly, on poor economic indicators in Europe as well as a stronger-than-expected jobless claims report in the U.S. Investors have put money in commodities as a hedge against the weakening dollar, as oil priced in the U.S. currency becomes cheaper to purchase. That money can leave just as easily, as Thursday’s $2.24 drop proved. The euro is valued at $1.5596 currently, up slightly from a three-week low hit overnight.
Oil prices are likely to see continued downward pressure from the dollar, as economists predict the Federal Reserve is unlikely to make further dramatic cuts to interest rates, a core component of the dollar’s weakening.
“The dollar continues to gain strength against the euro, which .. is causing somewhat of a rotation of commodities and into equities,” wrote Addison Armstrong, an analyst with Tradition Energy.
Front-month May reformulated gasoline blendstock, or RBOB, recently traded up 3.02 cents, or 1%, at $3.0488 a gallon. May heating oil traded 2.52 cents, or 0.8%, higher at $3.2835 a gallon.
Yesterdays question on GE Turbines. Zoltek does not make blades for these. The suppliers are TPI Composites and MFG(Molded Figer Glass)
Thanks reef, neither appear to be positive.
JR – thanks for the indonesian drilling piece, coffee came out of my nose.
zman:
HK has done well, any further,
what your take now on NFX ?
Z…Is it too soon to ease into CLB?
Z Think SWN too much too fast?
Uop – See today’s post and Wednesday night’s post on NFX. Very positive there.
HK – I expect to potentially guide higher on their call in the second week of May. Waiting on horizontal well tests there, should be more on the Haynesville, stock is not expensive, not cheap, think it goes $25+ after the call, more if all three wells IP in double digits at elm grove in the Taylor sand.
SWN got away from me.
DO June $150s, yes still holding, forgot to add on the wiki. Also, the May 135s.
Scoop – yep but I’ll be on the call in a minute.
zman:
i meant buying NFX.
I’m watching the group and the stock come in a little right now and listening to the SWN call. I’m thinking about buying a little more or waiting for Monday. I did add some yesterday. It’s one of those names, like CHK that will perform but generally there is no rush. I had hoped it would open flat to give me a bargain but no joy on that.
Anybody see a broker comment on DO? Getting dropped.
SWN already going to Q&A. New trend in E&P calls seems to be shorter formal, longer Q&A which is a good thing in my opinion.
One area open to bargain hunting this morning is HAL and NBR. both flat to slightly down. I’d add but I’m full up.
SWN call going well. Nothing revelational so far.
CLR chart starting to look like a “breakout about to happen” to me. They report May 5th (a week from Monday)
CHK – yesterday’s downdraft filled a gap on the chart. Expect them to pull more rabbits out of the hat next week on earnings (May 1).
Just listened to the CLB conf. call from yesterday. It was virtually a replay of the last one: strong consistent growth and no nasty surprises.
Analysts asked for a bit of color on the North American shale plays & management gave quite a lot of detail. Their current numbers don’t seem to include any real uptick in that area: they say they’ll be happy to mention it when they see it. These shale plays only make up about 10% of CLB business, most of which is international, so I guess they feel it best not to get carried away about it. But there is obviously some upside potential there.
Random points of Interest from management comments:
– while CHK does their own core analysis, CLB sells high-tech perforating charges to CHK (& virtually all the other E&Ps). So the rapid expansion of CHKs shale plays will benefit CLB.
-particular mention of growth from deepwater Brazil.
– CLB technology pipeline remains strong, underpinning future growth.
Overall, very positive, confident tone.
Diamond Offshore downgraded to Neutral from Add at Calyon Securities
Thanks Dman! – I caught bits and pieces of the call, thanks for the details. Were they not excited about opening a Canadian core eval unit as it relates to the shale?
HK move is impressive and is being influenced by SWN who just mentioned them on the call as gearing up in the Fayetteville, I may take some May calls off the table if it attempts to break yesterday’s high and rolls over. Nothing fundamental for my sell thought but I did not expect such a rapid move back up in the smaller names.
PQ ditto. Here I need to add longer.
Isle – thanks very much. I did not get the sense that most analysts were thinking that way…seemed generally please and the recovery following the call yesterday (immediately after the call) was impressive.
CHK close here would be an all time closing high.
NFX within a stone’s throw of same.
What a difference a day makes.
Oil up $2.30.
SWN Marcellus – seeing some rates that are very encouraging out of horizontal wells drilled near their acreage.
HK at yesterday’s HOD now at 23.70. Watching the bids very closely on my two sets of May calls.
zman:
what is your reasoning for , maybe, getting out of MAY HK and keep JUne ?
Uop – The May’s would get hurt worse than the June’s in the event yesterday’s high had been a ceiling and the stock bounced off of it. That did not happen as we are again cresting 24, up 5.8%. I still may sell the Mays as I have more Junes now and I have continually taken profits and it works for me from a risk management standpoint.
what’s up with NFX
NFX at all time high, over $65 now.
Rumor doing the rounds that US has fired on an Iranian boat…
Z – yes the Canadian centre was mentioned amongst all the detail on shale related business. The fact they are opening it tells you that they must see growth prospects, but they were perhaps just trying not to hype things up. My sneaking suspicion (naturally) is that they will see material impact from Nth Americal shale plays but they are being conservative in their forecasts.
They joked that an analyst was “reading tealeaves” and said that they would be happy to discuss an uptick when it occurs.
One factoid that I recall is that they get $300k of business per shale well.
#48-Just got a quote for Terr Tek shale gas analysis in East Texas Shale Gas play.
Each well 120′ core-$151,000.
Nicky – told you Iran and MEND are in cahoots. This is a coordinated effort to take your eyes off the dollar.
Wonder if CHK saves more than just $ doing the shale analysis themselves. I thought I heard CLB saying their backlog was pushing out return times over 6 weeks which was longer than they thought desirable.
Continuing from #48: CLB management said they see the gas shale plays defining and dominating growth in North America for the next 5 years and they are positioning themselves accordingly. So the Canadian centre is (obviously) part of that positioning.
Thanks D – everything I’m hearing sounds good for service co’s moving into second half of year in North America. May not be so good for the producers but at these prices, well. hmmmm.
Reef – or anyone, any thoughts on my suggestion that shutting in 70 offshore fields producing 700,000 bopd may end up with less production when they come back up. I don’t see anyone in the press mentioning that it’s not great to shut down those North Sea fields. CNBC acts like you just flip a switch. I’d bet many of those fields will never be the same.
U.S.-contracted ship fires toward Iranian boat: report
By MarketWatch
Last update: 11:06 a.m. EDT April 25, 2008Print RSS Disable Live Quotes
NEW YORK (MarketWatch) — According to Reuters, a ship contracted by the U.S Military Sealift Command fired at least one shot toward an Iranian boat. Reuters cited an unnamed U.S. defense official in its report on Friday morning and said that more details were not yet available. Crude oil spiked more than $3 in the wake of the news.
Z – have to hope MEND doesn’t read the blog! If they did get in cahoots with Iran … good for Iran (oil goes up). Good for MEND (OK I haven’t quite worked out what MEND gets out of it). What exactly does MEND get for all their efforts?
I hardly think it warrants a $3 spike but fits the charts perfectly! We should still see wti take out the 19.90 continuation high.
MEND – I’d say they get attention to the plight of the people but it has done little good for them. I’d bet the leaders get to shoot at people and blow stuff up and a generally better life than the civilian population. They are well organized and well funded by someone. Here’s their wiki page:
http://en.wikipedia.org/wiki/Movement_for_the_Emancipation_of_the_Niger_Delta
Nicky – same story different contract. They want $120.
Scoop Re 45: Me. No seriously, the idea that they could take their Woodford play from just under $2 / Mcfe finding costs to about $1 via dual laterals is constructive to the story since higher finding costs have been a burden (in the past) to the name.
Also, Bakken exposure should add further Rockies oil (Montana and North Dakota) and they are partnered in some of these with WLL who has more regional experience, not that far from monster wells being drilled in the play by EOG and others.
Also Mancos Shale potential – still science project but they seem confident.
Also Gomex – nice prospects after two smallish but decline halting discoveries there
Also Malaysia – hitting on all cylinders with the development projects there
Also China – Pearl River Mouth Basin. People had all but given up on them in China following their decision to sell Bohai Bay assets (later retracted) but they have a slew of these structural tests (probably around 10 mm barrels) each to test
Plus back to the States, their S. Tx step out in the Sarita field opens up more Gulf Coast drilling where they have mucho experience in exploiting overlooked reserves.
Street is only half way to seeing this, judging by the number of hold ratings on the name.
Z – re #53 part 2: I was wondering why this wasn’t mentioned in any of the coverage eg. in the UK. Why hasn’t the UK govt. stepped in, given the serious damage that could occur? I guess they prefer happy talk and they are more worried about angry motorists not being able to fill up over the next few days than about long term damage!
53- Wells with a significant watercut like to come back with a higher cut of water at least initialy..
zman:
with this new panic and petroleum prices shooting up, I sold a lot of my may calls at nice profits, keep the longer ones,
it strange: the drillers and refiners use this word OIL, the technology people, we use the word petroleum, I guess they like oil better, its a shorter word.
Uop – in your language, does petroleum include NGL’s?
RE 28, Indonesian Oil Production (for others this was a powerpoint showing a “in ground” refinery made of mud and sticks where distallate is cooked out of crude).
A spontaneous reverse nasal delivery of coffee (usually onto one’s keyboard)is known as a “Snork”.
What MEND gets out of it… Don’t they still finance some of what they do via sales of hijacked barge loads of crude?
WASHINGTON (AFP)–A vessel chartered by the U.S. military fired warning shots
at two speedboats believed to be Iranian that approached it in the Gulf, a U.S.
defense official said Friday.
The incident involving the Westward Venture occurred Thursday morning “dozens
of miles” from the Iranian coastline in the Gulf, said the official, who spoke
on condition of anonymity.
“A couple of fast boats got within a couple of hundred yards from the ship,
and they fired some warning shots at it,” said the official said, adding that
the speedboats then turned away.
(END) Dow Jones Newswires
04-25-08 1144ET
Copyright (c) 2008 Dow Jones & Company, Inc.- – 11 44 AM EDT 04-25-08
zman:
petroleum: all components in it, from methane to bitumen, all what is in the “liquid phase” gets dealt with in refining petroleum, of course there are still gases dissolved (methane, ethane, propane),
the liquids from NG operations are NG stuff BUT of course are processed also with the same type technology.
DO: Triston had at top pick, cut to mkt perform.
Thanks JR. The guys sitting in the shack with their bare feet resting on bare, oil soaked ground, tending the well as they smoke cigarettes is what did it for me.
MEND does hijack crude and gasoline, true.
HK on Fire at all time high.
UOP – that’s what I thought, I think when they say oil they usually mean Texas Tea.
Z- Do you have any thoughts as to why NBR and HAL aren’t moving given their positive outlooks?
11:40 am EST
Crude Above $119 On US Warning Shots At Iran Fast Boats
By Brian Baskin
Of Dow Jones Newswires
HOUSTON — Crude oil futures shot past $119 a barrel Friday as tensions between the U.S. Navy and Iranian fast boats in the Persian Gulf jolted a market already jittery with supply fears.
Light, sweet crude for June delivery traded $3.25 higher at $119.31 a barrel on the New York Mercantile Exchange, after trading as high as $119.50 a barrel. Nymex crude had not been over $119 a barrel since Tuesday, when the front-month contract came within 10 cents of $120 a barrel.
June Brent crude on the ICE futures exchange recently traded at $116.96 a barrel, up $2.62, after hitting an all-time high of $117.56 a barrel.
Oil futures jumped as Fox News reported that U.S. security personnel had fired warning shots on two Iranian fast boats in the oil-rich Persian Gulf. The incident renewed the market’s focus on Iran’s proximity to the strategic Strait of Hormuz, through which one-fifth of the world’s oil passes through on its way to global markets.
Oil prices had already risen on a series of outages and threatened shut-in production topping 1 million barrels a day worldwide.
“The cumulative effect .. is pretty outstanding,” said Brad Samples, an analyst at Summit Energy in Louisville, Ky. “We could easily be headed for $120, if not today, then next week.”
The latest outage, confirmed by Exxon Mobil Corp. (XOM) just before Fox reported the Persian Gulf incident, involved shut-in production in Nigeria following a strike by white-collar workers. Although the company didn’t confirm the size of the outage, a union source told Dow Jones Newswires that 200,000 barrels a day had been disrupted by the strike. Royal Dutch Shell PLC (RDSB.LN) reported an approximately 170,000 barrel a day outage earlier in the week following an attack on an oil pipeline.
The market is also closely watching a planned strike by workers at a refinery in Grangemouth, Scotland. The facility is already shutting down in anticipation of the stoppage, which is expected to begin Sunday and last two days. Once complete, the shutdown will force BP PLC (BP) to halt operation of its Forties oil pipeline system perhaps as early as Friday evening, cutting off 700,000 barrels a day of North Sea crude from shore.
Near-term futures contracts are in one respect playing catchup to the extreme forward end of the curve, Samples said.
Outer-month futures have risen sharply in recent weeks on reports that Russia, Mexico, Saudi Arabia and other producers could have more trouble than expected maintaining or increasing today’s level of output in the long term.
“Constraints in supply have been one of the key factors in crude prices being able to sustain $100 a barrel,” he said.
—By Brian Baskin, Dow Jones Newswires;
VTZ – it seems to have started with SLB weakness this am that never fully righted itself. Don’t think its a concern.
Can the indonesian mud-refinary be exported pronto to Scotland?
Sure, just need an uncapped well head, some bamboo, a bucket or two and your will made out.
Anyone have thoughts on OII? Just broke through and bounced off of 200MA in a nice short term uptrend. Earnings coming 30th.
OFF-TOPIC but re indonesian refiners email: Has anyone seen the “Tiger oil company” email with “Edward ‘Tiger Mike’ Mike Davis”? It has his memos from the 1970s.
I just got it this morning… hilarious.
HK going nuts.
HK – up SWN Fayetteville performance.
HAL – SEC probe in Nigeria being extended.
It’s standard operating procedure to issue bribes to get things done in every country on the planet but because its HAL, the DOJ won’t let it go.
HK busting through $25. Still holding, wow.
Ok, I’m being greedy on the HK, maybe Monday holds a buyout but I doubt. I’m going to kill the Mays here.
js1: Technically OII is looking good. Both 100 and 200 day moving averages have just turned up with the stock sitting just above them. OII bounced off the centre BB line yesterday and today off the 200 day, as you say. Analysts have 08-09 growth at 20% and it has PE of 15.5 on 09 estimates. Not cheap but not outrageous. Could run into earnings or shy away. I prefer to buy in when it has just taken an hit but missed it yesterday. Oops.
Off subject – Sambone’s take “Hey, lighten up”!
Hopes fade for finding balloonist priest in Brazil By STAN LEHMAN, Associated Press Writer
Wed Apr 23, 3:47 PM ET
Hopes dimmed on Wednesday for a priest who vanished after sailing into the air under hundreds of colorful balloons. The cleric’s former flight teacher called his disappearance a “tragedy foretold.”
Paragliding instructor Marcio Andre Lichtnow, who gave courses to the Rev. Adelir Antonio de Carli three years ago, described him as a “headstrong, anxious individual who was always in a rush.”
“After two or three months, I asked him to abandon the course because of these personality traits, which are not the ideal profile for a paraglider,” Lichtnow told The Associated Press by telephone. “So what happened comes as no big surprise.”
The 41-year-old Roman Catholic priest has been missing since Sunday, when he lifted off from the port city of Paranagua wearing a helmet, an aluminum thermal flight suit, waterproof coveralls and a parachute.
But less than an hour in, de Carli told his support crew by satellite phone that he would not be able to complete the planned flight to the city of Dourados, 465 miles (750 kilometers) away, according to team member Jose Carlos Bom.
“He told us he was beginning to descend over the ocean, but never said he was about to crash into the water,” Bom said. “There was never any panic in his voice.”
For the next eight hours, until his phone went dead, de Carli maintained contact with the team, using a GPS device to report his position as he descended.
Searchers went to look for him almost immediately, “but unfortunately we still have no idea where he is.” Bom said.
Rescuers in boats, planes and helicopters continued to search Wednesday off Brazil’s southern coast, near where a cluster of yellow, orange, pink and white balloons was found floating in the Atlantic. Others hunted through coastal forests for signs of de Carli.
“It is getting harder to hold on to our optimism,” said Penha Fire Department commander Johnny Coelho, though the priest had a buoyant chair and enough food and water to stay alive for five days.
The priest hoped his flight would help raise money for a center where truck drivers could stop “to rest and receive the gospel,” said Denise Gallas, treasurer at his Sao Cristovao parish.
Lichtnow said de Carli phoned him days before liftoff.
“I told him that the winds would carry him all the way to South Africa,” Lichtnow said. “He said he had studied everything very carefully and that he would go ahead. I honestly thought he was joking.”
ZTRADES: Out HK May Calls
Sold May $20s for $5, up 245%,
Sold May $22.50s for $2.80, up 133%
Still holding the June Calls
Man – what a difference a day makes.
I’d love to see HK tank a buck now as I buy em back for a Monday morning pop.
Nice work on HK Z. Doesn’t PQ have considerable Fayetteville exposure too?
CLR New High and breakout; featured in Cabot newsletter
Thanks Isle – PQ yes, though non-operated they are going to participate in something like 100 wells here, well above their plan as the operators ramp their schedules. The increase to their borrowing base may be needed or they’ll get AFE’d to death.
Isle – now I feel good about #37 above re CLR.
NFX outperforming a majority of its peer group now.
NG up $0.15 to $10.94
CL up $3.10 to $119.20…dollar? what stinking dollar? We got rebels, we got strikes, oh yes, and we have excellent fundamental performance in the E&Ps.
zman:
well done,
on NFX/upgrade you hold the maycall ?
thx Dman, maybe i’ll grab some with a tight stop at the 200 and hope it runs into earnings. If it does i won’t hold it.
NFX: Holding the June $60s and the May $65s.
You know can always click the Wiki tab above to check current holdings.
Thank you ZMAN.
For what Ram?
zman:
where is CLR heading ?
Today, yesterday, etc.
ZTRADE: July $17.50 Calls (PQGW) for a little under $3.30. I paid up after losing patience. The July’s seem to be a much better deal than the Junes of the same strike and the out of the money calls (higher) have lousy spreads.
Ram – glad its working for you.
Uop – ummm, tough to say. I imagine their conference call is going to be pretty important re the Bakken.
Petrobras Brasileiro discovers oil in offshore Camamu-Almada basin field
Got a link to a story on the PBR, I don’t see it. Thanks.
RE OII, I wonder if they will buy DEEP’s ROVs. Amazing to look at the DEEP presentation from January and see a company with positive EBITDA and quarterly sales north of $50 mm and evidently growing and see it fold tent last night.
PBR was on Bloomberg
Z – Yea, I liked DEEP, but got out. Sad to see. That’s what’s going on in these markets.
PQ taking off soon
zman:
do I remember correctly: DO was downgraded ?
DO downgraded at least twice.
Z – Bloomberg reports that Petrobras Brasileiro discovers oil in offshore Camamu-Almada basin field. Co found oil onshore in the country’s Espirito Santo basin and offshore in the Camamu-Almada basin, Brazil’s national petroleum regulator said. The co owns 100% of the ES-T-364 block in Espirito Santo known as ANP. The co owns 35% of the BCAM-40 block in 52 meters of water in Camamu-Almada and is the operator. Manati SA owns 45%, Brasoil Manati Exploracao Petrolifera SA owns 10% and Rio das Contas Produtora de Petroleo owns 10%.
thanks
Everybody must have went home early since its friday 🙂
I’m still here, just watching these stocks go sideways. Hugely busy earnings week in the energy patch next week, kicks off with FTI but then accelerates. Thursday is unreal for E&P land. I may take a little VLO for Tuesday and OII for Wednesday but not today.
V – Slow day
Yeah I looked at next week and if they largely post strong results we could be in for a rally assuming oil/gas doesnt come off between now and then.
Sam – slow but profitable is ok with me.
I wouldn’t exactly have called today slow until the past hour or so.
zman:
VLO: oil inputinto refinery is more expensive now, what makes VLO to do better ?
zman: the moment you mention VLO, it goes up, you are magic
Uop – VLO has better ops than other refiners on the whole but my thought is that results are going to stink but we all know that and the stocks have paid for it. Wall Street may see this as glass half full, not glass half empty.
HK busting to new highs. I will look at adding some more out of the money longer calls for Monday, thought we’d get a pullback but nope.
Nah, I just happen to think like the herd.
zan: with HK, how far out would you go: june30 or sep35 ?
Gotta love strength in a name like HK. Bidding May and September 30s, for percentage plays. Not for the stock actually getting there, at least for the Mays.
Doesn’t look they will hit my bids
I’m the only guy on the bid in the HK May 30s, you’d think somebody would hit me!
DO: Lehman reiterated overweight rating.
Canned trades in #119…no interest.
ZTRADE: Entered June $30 calls at $0.55. Pretty risky as the stock is up 11% today keying off a green group and the move on SWN earnings (also in the Fayetteville Shale).
Wow @ HK
zman:
nfx almost at 52 week high
It’s a very rare day when NFX or CHK move like this.
I had a pretty good week. Thanks to all.
Have a great weekend. Sasparella thirty time.
apbd
zman:
txs, nice weekend,
my day was quite green.
go play golf now and have a few beers.
z- HK up 11.08%- You might have to deliver on your free subscription!
Tini time
Reef – I would be ecstatic too!
Have a good weekend fellas and gals!
Re earlier post speculating on less expensive vertical wells w/ 2,000′ of shale vs a more expensive horizontal completion.
A frac will always orient itself perpendicular to the plane of least principal stress, ie, it goes OPPOSITE the direction you want it to go, running line with natural fractures.
So, the horizontals can be drilled so as to cross natural fractures at right angles, hence more productive fracs.
There was some prior art on “oriented fracs” but I’m not up to date on the state of the art.
Bottom line, for my money, I’d bet on the horizontals for the extra incremental $.
Jay – I hear ya. NFX says HAL has some tricks up its sleeve in the Mancos verticals, fwiw.
HAL would be the guys to pull it off. GAWD, I nearly went broke hiring them 25 years ago. If they are partners, then everything changes.
I’m noticing that HAL, et al are less and less likely to be working for Mexico (on a fee for service basis) and opting instead to take a participatory role.
This seems to me to be pretty good (like a “stock buyback” confirmation of their confidence in their technology.
Heck, if you get enough Red ‘n Gray trucks lined up I would be the LAST to bet against them, especially with a vested interest at stake.