Monday Morning – More Earnings on the Way

Posted on by zman

 

In Today's Post:

  1. Commodities Watch
  2. Earnings Calendar - Week 4
  3. Stocks We Care About Today
  4. Odds & Ends

Commodities Watch

  • Crude Oil: Oil fell 1.6% to $116.59 last week. This morning oil is trading slightly high on a slightly weaker dollar and more disturbances in Nigeria.
  • Nigeria Watch 1: Rebel leader Henry Okah to be tried in secret. In response, MEND reportedly attacked for a fifth time in five weeks shutting in an undisclosed amount of Shell production. 
  • Nigeria Watch 2: Presidential hopeful Barack Obama has asked MEND for a ceasefire and they are considering it. All I can say is stranger things have happened and its a much better idea than a tax holiday supported by a summer windfall profits tax that has no hope of becoming law and which, if it did, punishes companies for finding more oil.
  • Russia Watch: Production fell for a fourth consecutive month to 9.72 mm bopd in April from 9.76 mm bopd in March. These toppy looking production levels from the second biggest (#1 right now) oil producer in the world are a far cry from the growth Russia has exhibited over the last decade.
  • Natural Gas: fell 3% to 10.78 last week. This morning gas is trading up strongly on a slightly colder than normal weather forecast.
  • Weather Watch: Last week's weather again slightly colder than expected and degree days came in at 74, about double the 36 seen in the prior year week. This should cause one last dip in injections relative to year ago levels.

Earnings Calendar - another busy week.

cal-1q08-week-4.jpg

Also, lots of energy conference coming at the tail end of earnings season:

conferences-may.jpg

Stocks We Care About Today:

CLR Reports Good 1Q08 Results; Guides Toward High Double Digit Growth By YE 2008

The 1Q08 Numbers: 

  • EPS of $0.53 (ex item) vs $0.49 Street Consensus
  • CFPS of $0.92 vs $0.92                "         "
  • Revenues of $228 million vs $218 million expected
  • Production: 30,237 boepd; flat sequentially and 8% YoY.

Guidance:

  • Capital budget going up $167 million or 27% to $783 million. About $100 million of the increase goes to accelerate the North Dakota Bakken program.
  • 2008 Expected Exit Rate: 43,000 boepd, up 42% from average 1Q08 production.  

Red River Units - Southern North Dakota - the company's corner stone play

  • 13,620 bopd, down 3% sequentially from 14,086 boepd in the fourth quarter -  the dip in sequential production was due to conversion of more formally producing wells to injector status.
  • this gets part of the capex boost,
  • 4 rigs vs prior plans of 5 to 6 for 2008.
  • Production is now expected to peak at 21,000 bopd in mid 2009, up from a YE2007 projection of 19,000 bopd in 2009.

Bakken Oil Shale Update: 487,000 net acres - now largest leaseholder and producer.

  • Montana: (under development)
    • Production of 6,678 vs 7,244 net boepd in 4Q07,
    • still at 2 -3 rigs for 2008 ???
  • North Dakota: (emerging potential)
    • Three Forks Sanish (TFS) lies below the lower Bakken Shale - good shows in the first well and it is being fracced today.
    • Moving rig count up to 10-12 later this month and will add a 13th rig in the 3Q, up from 6 -8 rigs  planned as of the last quarterly report. Both totals include those rigs in JV with (COP)
    • Production of 1,532 boepd vs 1,382 boepd in 4Q07,

Trenton / Black River Area - Michigan

  • first 3 wells drilled here are producing 650 bopd gross combined, plan to drill 8 more this year

Woodford Shale - (emerging potential) - 45,000 net acres

  • Testing simul fracs: first simul frac of 4 640 acre spaced horizontal wells resulted in an average IP of 3.8 MMcfepd
  • 4 rigs running now, increasing to 6 by July

New Plays - they allocated $27 million of the expanded budget to acquire acreage in the Haynesville, Marceullus , Huron shale plays.

  • Conference Call at 10 Est. 

(PBR) To Develop Tupi Discovery

  • This is the 5 to 8 billion barrel discovery off the southern coast of Brazil
  • Norway's BW Offshore will supply a compact FPSO for extended well tests
  • Another 100,000 bopd FSPO is being looked into
  • The idea is to get production going as they evaluate a long range development plan 

Odds & Ends

Analyst Watch: None 

138 thoughts on “Monday Morning – More Earnings on the Way”

  1. 8:33 am EST

    Crude Higher; Technicals Encourage Buyers

    By ANGELA HENSHALL
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures rose in London Monday as traders seized an opportunity to buy amid thin volumes during a one-day holiday in the U.K., Japan and Korea.

    “Basically, there is thin resistance to any buying today,” said Glen Ward broker at ODL Securities in London, who added a strong technical picture would encourage traders to “buy the dips,” in anticipation ICE Brent crude would resume strengthening to test the all-time high of $116.75 a barrel later in the week.

    At 1107 GMT, the front-month June Brent contract on London’s ICE futures exchange was up $0.34 at $114.90 a barrel.

    The front-month June contract on the New York Mercantile Exchange was trading $0.37 higher at $116.69 a barrel.

    The ICE’s gasoil contract for May delivery was up $2.25 at $107.875 a metric ton, while Nymex gasoline for June delivery was down 90 points at 295.74 cents a gallon.

    Market participants remain split over whether crude oil futures are poised to enter a corrective phase or whether the market is gearing-up for a third assault on Nymex crude at $120 a barrel, after hitting $119.93 last Monday.

    Oil prices breached various resistance lines Friday, taking out the two previous day highs, giving markets a strong bullish momentum for this week. The underlying strength of the market was particularly impressive following immediately after four consecutive down days.

    Against this strong technical picture there are a number of additional supporting factors set to continue underpinning crude in the coming week — which may see the bulls win out.

    There has been an exodus from commodities asset classes over the last two weeks as investors look to reallocate funds back in to equities. Pension funds, however, remain in it for the long-haul.

    Reports the giant Californian Pension Fund resumed buying commodities towards the end of last week fueled a rally, although it still remains unclear whether the CALPERS buying would have been on bonds or the Goldman Sachs Commodities Index, or on commodity spreads.

    “The combination of renewed pension fund buying and of the high ratio of call-to-futures (options) is a clear upside risk,” said Petromatrix analyst Olivier Jakob, “which is helped by continued disruptions from Nigerian gangs and militants.”

    News of yet another attack on a Shell Petroleum Development Co. -operated pipeline in Nigeria’s oil producing region over the weekend also lends support.

    SPDC operates a joint venture involving Nigeria National Petroleum Corp. with a 55% stake, Royal Dutch Shell (RDSB) with a 30% stake, Total SA (TOT) with 10% and Agip, a unit of Italian oil company Eni SpA (E), with 5%.

    The group that lays claim to many of the attacks, The Movement for the Emancipation of the Niger Delta, said it carried out the attack. MEND has vowed to step-up its campaign against the oil majors it says in order to force the government to give back a greater share of the oil profits to the country’s population.

    The group’s former leader Henry Okah will stand trial for treason and terrorism in the next few days, and increased unrest is widely expected in the Niger Delta if he is sentenced to death.

    Africa’s biggest oil producer will struggle to meet its monthly Organization of Petroleum Exporting Countries quota of 2.163 million barrels a day this month, and with more than 600,000 barrels a day of production currently thought to be out-of-action the crude oil futures market remains sensitive to news of any further outages and further tightening of global supplies.

    -By Angela Henshall, Dow Jones Newswires

  2. Monday Morning Memory Test- wasn’t not long ago that the smart guys played only unconventional gas?(Oil would not flow) Bakken, Barnett Oil, Trenton/Black River..

  3. Reef – absolutely. Did you see that CLR exit rate for 2008. Nice.

    Oil up like a shot suddenly, up 1.50 at 117.84. Anybody smell smoke?

  4. Morning all. I see Miss Eppppppperson is back – agggggggh! The trader she interviewed says he sees the complex lower due to lower demand….and with that we are up over a dollar!

  6. Z -Good Morning, Any thoughts of entering RIG prior to earnings release?

  8. CLR getting a nice pop on the open. Guess the Street likes the exit rate too. Nice results out of new wells on both the Montana and North Dakota sides of the Bakken, nice wells in Michigan and in the Oklahoma Woodford. Conf call in 30 minutes.

  9. Did Efferson give any reason for this pop in crude, now up 2.15, just now? I heard her say traders are moving to the sideline in natural gas b/c it’s getting too expensive to trade.

  11. CNBC reporting that the market is now worried about whether there will be enough natural gas for next winter – are they for real??? apparently traders stepping aside as its too expensive to trade now.

  12. Nicky – her “too expensive to trade” comment makes no sense unless she’s talking about an adjustment to margin requirements. Otherwise, on a just a price being high basis, no one would be trading oil, metals, etc.

  13. NBR at new 52 week high. This is the one service stock I feel most comfortable with based on both valuation and near, medium, far macro trends.

  14. This is an absolutely staggering move in crude since Thursday – but on the back of what exactly?? I can’t seen anything bullish in the news – have I missed something?

  15. Z re #12 – agree – what the heck was she talking about? I don’t think it was margin requirements. But nobody stops trading just cos a price goes up – usual twaddle from her I guess.

  16. Crude – jury is still out until we take out the 119.93 highs but the bearish count is now on very thin ice! It could still be a b wave but if so needs to roll over in very short order…

  17. By Christine Buurma
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Natural gas futures continued to rise Monday, climbing
    with higher crude oil prices and forecasts of below-normal temperatures in the
    Great Lakes and Midwest over the next two weeks.
    Natural gas for June delivery on the New York Mercantile Exchange was trading
    23.7 cents higher, or 2.2%, at $11.014 a million British thermal units Monday
    after opening floor trade 6.6 cents higher at $10.843/MMBtu.
    Rising crude oil prices were helping to boost the natural gas market Monday.
    Natural gas sometimes trades in sympathy with crude oil and related products,
    which can be used as substitutes for natural gas in power plants and heating
    systems.
    Crude oil prices crept higher Monday following a weekend attack on a Nigerian
    oil installation, but the strengthening U.S. dollar limited the market’s gains.
    Nymex crude oil for June delivery was trading $1.60 higher at $117.92 a barrel
    Monday morning after opening floor trade 18 cents higher at $116.50 a barrel.
    Meanwhile, forecasts of cooler-than-normal weather in the Midwest and Great
    Lakes regions were also sending natural gas prices higher. The below-normal
    temperatures were expected to create demand for natural gas for heating.
    “Overnight temperatures in the Midwest and Great Lakes regions in the 6-10
    forecasts are expected to dip into the upper 30s and low 40s over that time
    period, helping boost demand for heating needs and provide support for the
    market to begin the week,” analysts with TFS Energy Futures, a Stamford,
    Conn.-based brokerage, said in a note to clients.
    The National Weather Service was predicting below-normal temperatures across
    the entire upper half of the continental U.S., particularly in the Great Lakes
    region, from May 10 to May 14. Colder-than-normal temperatures were also
    expected in the northern half of the U.S. from May 12 to May 18.
    Increased heating demand could result in smaller injections of natural gas
    into storage. Traders are closely monitoring inventory levels to determine
    whether supply constraints are likely to occur over the summer.
    Large withdrawals of gas from storage over the winter have left inventories
    below the five-year average for this time of year. Total gas in U.S. storage as
    of April 25 was 1.371 trillion cubic feet, 0.2% below the five-year average and
    15.7% below last year’s levels.
    Physical natural gas for next-day delivery was higher Monday, with gas at the
    benchmark Henry Hub up 8 cents at $10.73/MMBtu, compared to early Friday. Gas
    at Transcontinental Zone 6 in New York was 24 cents higher at $11.60/MMBtu,
    according to the IntercontinentalExchange.

    -Christine Buurma, Dow Jones Newswires;
    05-05-08 0944ET

  18. Nicky – only bullish points I see are another bombing in Nigeria over the weekend and a report that Ruskie production keeps sliding.

  19. Re Sambone’s DJ story in in #19, that’s not true regarding switching max capacity that can really switch is about 2%.

  20. EOG and CHK getting a little respect finally.

    HAL making a nice comeback here

    PQ to new highs. – earnings tomorrow.

  21. Japan and UK on volume so they are reporting very light volume which would explain some of the volatility. But when they come back I expect they will want to run this a lot higher…

  23. CLR – Did just enough reading so that I am dangerous to myself. Isn’t the Red River a conventional play and maybe market is reading this as “Success in the Bakken!” get in now! As well, didn’t they hold back 125 K barrels from sale in Q4 that are showing up as revenue now?
    But then again 10% mover and I’m sitting here holding my …

  24. Hey Tater – I don’t think so, not with conventional volumes down. This is guidance first (up 42% year end exit) also, there were a string of good IP rate wells on both sides of the Bakken Play.

    The North Dakota side is getting $100 million extra bucks and the drilling there is not far from where EOG has now drilled a 3,600 bopd well (announced last week) and several 2,000 wells. These are much bigger than the wells drilled by CLR to date. So they’re accelerating activity in better real estate.

  25. ISM non manufacturing data comes in much better than expected at 52.00 so whilst this will most likely cause the $ to strengthen, the oil bulls will no doubt choose to ignore this and point to a stronger economy and therefore greater demand.

  27. Seems like EOG is only one with number that don’t decline immediately, and I was having trouble looking up the location of the CLR leases, not real familiar with the N. Dakota website. So they have Montrail, McKenzie and Pashall leases?

  28. tater – yes, mostly closer to the Missouri river, not as much to the east in Parshall.

    their website has a great map showing the north to south natural of their recent tests

  29. Thanks. Family concern now, so I guess I won’t be listening to call. Looking forward to your notes

  32. recall that PQ is unlikely to beat, at least on volumes as they already warned. This is more about the go forward guidance and story.

  35. CLR : just said in Bakken:

    Rocket Prospect : 1,000 boepd IP in first well, different completion technique. Most of their wells in the Bakken have been 400 ish IP.

    They are completing the Three Forks Sanish well (see post today) with the same plug and packers technique to allow 10 separate fracs.

  37. CLR Conf Call:

    9 New Shale Plays – here a few

    64,000 woodford/atoka Texas Panhandle – 29,000 net acres in the fairway, drilling 1 st well this month. This is where EOG just hit some 7 mm/d

    Anadarko Woodford – drilling later this year.

    Huron – Ohio – acquiring acreage – L. Huron – plan to drill 4 horizontal tests later this year.

    Marfa Basin – Texas – vertical re-entry test encouraging – West Barnett – may have Pinon opportunities (like Sandrigde)

  38. CLR saying they are in a 40 acre pilot with NFX and the results are similar to what CLR has seen in their most recent 160 acre test. Good for both companies.

  39. Z #26 – not sure I buy that when they never sold oil off when the expectations for the economy were much weaker. ie as the economic data weakened so did the $ and oil just got stronger.

  41. Anyway its neither here or there as once again this has just become a technical bubble imo. $130 looks easily possible now.

  42. Looks like you can kiss goodbye to the broader market with oil up here though…

  44. CLR saying they see the Haynesville as having big potential. Further confirmation CHK, HK, PQ, GDP etc.

    They have heard rates over 7 mm/d in the handful of wells, this is “intelligence they’ve gained, not official results” Some of these are certainly CHK wells.

  45. #44 – that’s the first rate I’ve heard out of a company on the Haynesville of real significant size. Rumors are much higher and they did say “over” 7 mm/d.

  46. Good God! This is an $8 billion company up 15%. Now I have to wait 3 months for a retest into the gap up from 44. Wow. Nice work Zman!!!

  49. Today is the justification for all your hard work ZMAN. Thanks. Great day!!

  51. Whilst its great that money is being made I am sure you will forgive me for saying that I hope this doesn’t go on for too long – oil up here is not going to be good for any of us.

  52. HK starting to wake back up. Conf call on Wednesday.

    CLR call going very well. It looks like A LOT of potential from the North Dakota Bakken may get unlocked this year.

  55. CLR Good question on the call:

    How many wells completed with the multistage fracs – finished 5 (2 with sleeves, 3 with perf and plug method which gives better completion). IP’s in the 400 to 700 bopd on 7 day tests. This takes you to an EUR of 400 to 735,000 barrels vs the 335,000 boe seen before (original model was 315 so we are seeing a doubling of reserves per well vs model). They are affecting more rock with the frac, think will see same decline as the earlier wells. Costs a little more: $5.2 mm/ Well, due to the longer 4-6 day frac, in winter takes longer with the fresh water used. These are great economics.

  56. Gary – I’ll be adding more Junes and maybe longer on any good dip…very encouraging results.

  57. Nicky,
    I second your comments!
    Trees do not grow to the sky
    and I am lightening up on my energy and shorting retail
    Too much too fast in my humble opinion

  58. Speaking of trees, FTI got another big sub-sea tree order, this time from APC. Think it was DVN last week. Deepwater demand for parts is one area I really don’t have covered.

  59. Hi Nicky,

    erm… well I have to disagree with #51 really. My energy leverage will outweigh any negative effects on me personally due to high oil prices. On a broader scale, the sooner oil gets to where it is going, the quicker action will be taken on alternatives & conservation. Going back to the personal scale, alternatives & conservation will also provide investable trends. In the short term, if oil gets too high it will cause a recession that will provide time for governments to get their energy act together. OK, maybe that last bit is pie in the sky. But also we’ll get another shot at great energy investments all over again. Just looking on the bright side 🙂

  60. Ram – #34

    DOW JONES NEWSWIRES
    Zoltek Cos. (ZOLT) said Kevin Schott resigned as chief financial officer and
    Zsolt Rumy, chairman and chief executive, is serving as financial chief on an
    interim basis.
    The St. Louis carbon fiber maker is conducting a search for a permanent chief
    financial officer and hopes to fill the post as soon as practicable.
    Zoltek said previously issued financial statements for the fiscal year ended
    Sept. 30, 2007, and for the quarter ended Dec. 31 shouldn’t be relied upon.
    The company recently became aware of errors in those financial statements
    resulting from a payment totaling $175,000 by a unit in September that wasn’t
    properly authorized or reported in its financial records.
    Zoltek also identified a similar payment of $75,000 last January.
    Zoltek said it is working “diligently” to complete its investigation into the
    transactions in the near term. The company said its isn’t currently aware of
    any other unauthorized transactions.
    Shares recently traded at $28.43, up 86 cents, or 3.1%.
    -Veronica Dagher; 201-938-5400; AskNewswires@dowjones.com

    (END) Dow Jones Newswires
    05-05-08 1051ET
    Copyright (c) 2008 Dow Jones & Company, Inc.- – 10 51 AM EDT 05-05-08

  61. 10:25 am EST

    Crude Surges After French Port News

    By David Bird
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures prices surged more than 2% Monday morning after news of a planned port workers strike in France fueled further buying, which accelerated as prices pierced a key chart level.

    Prices soared to an intraday high of $118.99 a barrel, the highest level since April 28, when an intraday record of $119.93 a barrel was set.

    At 10:11 a.m. EDT, June crude was up 2.13%, or $2.48, at $118.80 a barrel. RBOB gasoline blendstock futures were 5.36 cents higher at $3.02 a gallon, while heating oil was up 7.13 cents at $3.29 a gallon.

    Crude was underpinned earlier by news of another attack on Nigerian oil facilities over the weekend, although the Royal Dutch Shell (RDSB) downplayed the impact.

    Rebel group The Movement for the Emancipation of the Niger Delta, or MEND, said Sunday it attacked a Royal Dutch Shell (RDSB) oil production facility.

    Nigeria’s light, sweet crude oil is prized for its high yield of gasoline, particularly at this time of year, as U.S. refiners begin ramping up output ahead of the peak summer driving season. Nigeria has been the fourth-largest oil supplier to the U.S. in recent months, accounting for more than 10% of crude oil imports in the world’s biggest oil consumer.

    Shell confirmed damage to oil delivery lines in the Bonny Light oil terminal and said unspecified levels of production was shut in, but expected the impact on supplies to be limited.

    The latest attack follows the shut in of another 164,000 barrels a day by Shell due to an attack. ExxonMobil workers recently ended a strike which had added further disruption to the vital crude oil stream.

    “It’s all of the above,” said Mike Fitzpatrick a broker at MFGlobal, said of the reasons for the price rally. He said news of the strike by Marseilles port workers corresponded with the price jump in a market already poised to go higher on Nigeria, worries about Iran’s refusal to halt its nuclear program, and expected stronger seasonal demand.

    The port authority of Marseille, France, which includes the terminals of Fos-Lavera, the country’s biggest oil port, said workers plan a 24-hour strike on May 9, continuing industrial action begun on April 17.

    The Fos-Lavera terminals were operating Monday, but nine crude oil tankers, five products tankers and two chemical ships were stacked up waiting to dock, a higher than usual number.

    Tim Evans, analyst at Citigroup, said the news may have spurred some further buying interest, but he said the advanced nature of the ongoing strikes make it unlikely to impact refinery activity.

    — By David Bird, Dow Jones Newswires

  63. Interest is very high on the CLR call. Many analysts asking 3 to 4 questions and then going back into the queue. I would say we are looking at price target and earnings revisions here on multiple fronts. No pesky questions or problems noted at all.

  64. Dman – from what I can tell viable alternatives are years and years away so I am not banking on that right now. In the end it will be the price itself that finally causes the bubble to pop – and with it the energy shares. So eventually with the US in a recession or worse and energy shares going down too I am not quite sure how that can work for you unless of course you plan to short them.
    I personally think that the damage being done by energy up here far outweighs the energy shares that are going up. As we said on Friday its very early days and I believe the effects have yet to be felt.

  65. crude – 120.04. according to cnbc we now have a short covering rally on our hands.

  66. CLR commenting steel pipe prices continue to go up, other costs ok. This jives with what I’m hearing from other players and from a few notes you guys have sent me.

    Oil popped through $120 by the way.

  67. CLR – Conf Call ending, 1 hour 20 minutes long is one of the longest of the quarter so far and most of it was the extensive questions of analysts. My thought is that this goes higher in the near future, nobody is going to have anything to say and there are near term catalysts from a couple of different plays plus the continued news flow from competitors who have yet to report.

  68. Nicky – my answer to #64 is simple: hold options instead of shares and roll them up as the bubble inflates. Trade regularly, reassess regularly, maintain a high cash position. I’m not really comfortable shorting but I do hedge a lot & if I don’t like the overal picture I’ll just get out of the way rather than short. Alternatives *are* years away, so we need to get started 10 years ago. Oops, we didn’t, so I guess now will have to do. Boone Pickens seems to think now is a good time to start. If the Federal govt. followed him we’d be in good shape, but they’re too busy pouring trillions of dollars into the sands of Iraq. Eventually those dollar bills will fossilise and future Iraqis will be able to dig them up as coal. They would have got a better energy return on their investment by burning 3 trillion dollar bills in cogeneration plants. But I digress …

  69. PBR – announcing a test of its Sugar Loaf prospect in the deepwater Santos Basin in block bm-s-8 is about to commence that the the well has reached TD (total depth). This is a neighbor discovery to Carioca (the much hyped 33 Billion barrel “potential” discovery in block bm-s-9).

  71. Ah T Boone – of the people/funds currently responsible for running up the price….and no doubt making billions in the process whilst he covers himself in glory talking about alternatives and what he plans to do. The man is brilliant I will give him that.
    Very funny re the Iraqis digging up coal – its a thought!

  72. Z – #67 “nobody is going to have anything to say” meaning no negative analyst comments?

  74. Okay a stab at the wave count on crude now we have taken out the highs. We are in v up of that I am clear. Within v we have likely completed or are close to completing i which means a period of retracement is due before the next leg up.

  75. Poor old T. Boone was busy fighting energy prices a few months ago, shorting oil & gas. His fund took a 20% haircut for his trouble & now he’s back long. I figure I’ll let him do the experiments & I’ll try to learn from the outcomes 🙂

  76. z- any thought about getting in on rig for earnings? iv is reasonable in the jun contract….

  77. I was with T Boone on the NG short. I’m probably going to just punt the UNG puts and forget about them for awhile.

  78. T – have not given it much thought since Scoop asked earlier. It’s a gamble, don’t really have any feeling or knowledge as to how they will do. DO missed and RIG has higher exposure to the Jackup market. That said, they are fairly cheap and 2010 is still zeroing in on $20 eps. I think the question will be how much they talk about new projects coming on in places like Brazil vs how many projects are getting delayed. I’m going to pass. Probably pass on ATW for Friday as well.

  80. ZTRADE: Out May CHK Calls For $4.70, up 262% since entry in late March. Just raising a little cash into this rally. Still holding the May $55s (probably not for long) and the July $60s.

  82. think they wil blow out earnings? i dont know much about them…. pretty gassy e&p with new exposure to deepwater GOMEX?

  83. Z – re #77 … well I hardly need to mention you sure weren’t *net* short NG exposure. I assume T. Boone must have been very short to get clocked for 20%.

    To clarify, you expect to be soon down to one CHK position?

  84. T – I’m bidding a little right now in those same contracts and thanks for the headsup on me leaving it out of the wiki. ‘

    They are by no means new to the deepwater but are overdue for a big well update there. As far as blow out earnings, hard to say, they should beat based on price. Volumes may be bigger than expected in the Barnett but the well is what I’m looking for – the chuck prospect. It’s not a big position for me but I’m going to make it a little bigger if I my bid will get hit. Kind of a hunch play for me.

  85. Dman – yep, maybe not today. And I will be quick to add longer dates at better strikes if it does come in. And I’m a new common holder to boot, but that’s for the long term.

  86. HK cresting $24. The pattern has been rally into earnings and then jump one way or the other. Could be a nice Monday to Tuesday trade here. Hmmm.

    ZTRADE: DVN June $125 calls added, averaging down with this set taken at 2.45 (DVNFE). Earnings call on Wednesday.

  87. 12:04 pm EST

    Crude Tops $120 For First Time, Up 20% Since Jan

    By DAVID BIRD
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures prices surged 3.3% Monday to top $120 a barrel for the first time amid fresh anxieties about oil supplies at a time of rising seasonal demand.

    Some analysts say technical charts point toward a challenge of $130 or beyond, now that the key $120 level has been breached.

    Just before noon EDT, June light sweet crude was trading up $3.37 a barrel at $119.69, after hitting an intraday high of $120.21 a barrel. That topped the record set a week ago of $119.93 a barrel.

    RBOB gasoline was up 6.96 cents at $3.0360 a gallon, while heating oil was up 9.43 cents at $3.313 a gallon.

    Crude’s surge is nearly identical to the $3.80, or 3.4%, gain on Friday, which followed three days of declines and came on the back of a stronger-than-expected April jobs report.

    Stephen Schork, who edits the Schork Report, in Villanova, PA, said a move through $120 on crude would likely carry prices to $125 and $126.45 would be a key level, above which suggests a jump to $130 and $133.23.

    Crude futures prices were spurred by reports of another attack on Nigerian oil facilities over the weekend, although Royal Dutch Shell PLC (RDSB) downplayed the impact.

    Rebel group The Movement for the Emancipation of the Niger Delta, or MEND, said Sunday it attacked a Royal Dutch Shell oil production facility.

    Nigeria’s light, sweet crude oil is prized for its high yield of gasoline, particularly at this time of year, as U.S. refiners begin ramping up output ahead of the peak summer driving season. Nigeria has been the fourth-largest oil supplier to the U.S. in recent months, accounting for more than 10% of crude oil imports in the world’s biggest oil consumer.

    Tighter supplies from Nigeria come as the Energy Information Administration reported last Wednesday that oil demand in the four-week ended April 25 was up 0.5%, led by a 0.4% rise in gasoline. That’s not a huge rise, but first-quarter oil use was down 2.3% from a year ago, and EIA had earlier projected demand was slip in April.

    Shell confirmed damage to oil delivery lines in the Bonny Light oil terminal and said unspecified levels of production was shut in, but expected the impact on supplies to be limited. The latest attack follows the shut in of another 164,000 barrels a day by Shell due to an attack.

    A planned one-day strike on May 9 by workers at the Marseilles, France port, which could impact operations of the nation’s major oil terminals, Fos-Lavera, also stimulated interest on the upside, traders said.

    Iran’s continued refusal, in the face of Western demands, to halt its nuclear program also underpins the market, traders said. Iran is OPEC’s second-largest oil producers and sits on the edge of the vital Strait of Hormuz, a major transit point for vital Middle East crude oil flows.

    — By David Bird, Dow Jones Newswires

  89. Wiki is updated.

    PBR starting to move on up, no doubt part crude but also due to the solidifying development plans for Tupi mentioned in the post and for the upcoming results from a test near Carioca.

  90. I forgot to mention: the reason crude is up is Cramer’s 5.41 AM announcement that “Food and energy can’t go up much more from here without severe supply interruptions as we seem to have reached some sort of price equilibrium”

  92. CLR – Got about half way through the call. Did they discuss their current hedging strategy?

  93. Tater – not that I heard

    Ram – I was looking over my inventory and I have a quite a bit of the May 22.50s. I may take the $25s but probably not as I’m pretty fully loaded. If I were not, I’d take the 22.50s or 25s for a trade.

  95. Dman – Could you check my work if you have a minute for voodoo?
    CLR Fib retracement (2 day move – low 39.26, high 51.50 = .38 level of 46.85 or .50 level of 45.38 which coincidentally almost collar todays gap)
    Resistance at April 28th close of 46.54.

  97. Z – what would be your go-to name if you anticipated a sudden jump in oil prices accompanied by restricted or zero tanker movements through the Persian Gulf and a precarious military/security situation across all Gulf countries?

  98. tater – the retracement arithmetic on CLR checks out OK. What exactly it means is another question …

  99. Dman – if that happens a blind, one-armed monkey could score throwing spoons at a dartboard but I’d have to say SU for greatest potential % jump.

  100. Good to be in CLR and EOG and not the other big Bakken names WLL – which cut production guidance today and is flat. May be worth a look, checking.

  102. Scoop – Ballpark near term – 3 months – would be $60. I get there by taking the current 2009 CFPS estimate of $5.09 and hiking it a buck to $6. I can get there pretty quick with a higher assumed production profile which carries on from the back end loaded nature of the 2008 production profile. Take a higher oil price than the current 2009 deck of $88 and you could get more pretty quick. Anyway, a 10x of your new CFPS would give you $60 and 10x is pretty reasonable given the high double digit growth we are talking about.

  103. Thanks Dman, just attempting to give myself an entrance point for CLR should it come back. I really don’t like to make trades based on tech analysis without getting somebody to add their two cents.

  104. WOW that would be a grand slam since you first talked about CLR in April 2007. However I was thinking shorter term as in 9 days.

  105. Scoop – no pressure, eh? LOL. I’d think we could get a morning pop on price target hikes but if oil pulls back it may be muted. Don’t see anybody downgrading it. I’ll include a back of the envelope model in tomorrow’s post showing the leverage to higher production on 2009 numbers. Could/should be a lot more than $6 CFPS but I was feeling conservative.

  106. 2:40 pm EST

    Saudi Fears Of High Oil Prices Fade With Demand

    By JOHN M. BIERS
    Of DOW JONES NEWSWIRES

    HOUSTON — For all the benefits of soaring oil prices, Saudi Arabia has historically viewed them with a measure of trepidation.

    Besides the worry that high energy prices could hinder economic growth and eat into demand, Saudi officials have traditionally argued that sky-high crude prices would hasten the development of renewable energy that would displace petroleum.

    But as oil prices have crept up in recent years, from the $20 a barrel range early in the decade to Monday’s record above $120 a barrel, the kingdom has repeatedly used its clout within the Organization of Petroleum Exporting Countries to sanction an ever-higher price deck. At the same time, while Saudi Arabia’s powerful Oil Minister Ali Naimi has at times emphasized price moderation, he hasn’t been as vocal as some predecessors on the worry that high prices threaten the long-term viability of Saudi Arabia’s core asset.

    Interpreting Saudi Arabia’s strategy is challenging, in part because Naimi and other top petroleum officials don’t often speak publicly and choose their words carefully when they do. Saudi oil ministry officials declined to comment for this article.

    Still, some leading energy and Middle East experts perceive a Saudi shift towards greater acceptance of high prices amid surging demand from China and other developing economies. Next to these new sources of demand there is diminished concern about high prices creating greater incentives for competing sources of energy.

    “Many years ago, before the demand side of the equation became so dominant, the view that if prices were lower, alternatives could not survive was accepted,” said James Oberwetter, former U.S. ambassador to Saudi Arabia. “But the dawning of these huge new markets has really dimmed the prospect for lower prices.”

    Rice University analyst Amy Myers Jaffe said Saudi Arabia may be unleasing a dynamic that could harm its long-term interests.

    “They might have been right at $50 oil, but not at $100- and $200-oil,” said Jaffe, a fellow at the James Baker Institute, a Rice think tank. “They’re not right because at $200, almost everything works.”

    Thinking Long-Term?
    The Saudi national most vocal in outliningthe potential threat of renewable energy has been former petroleum minister Sheikh Ahmed Zaki Yamani, who held Naimi’s job from 1962 to 1986. Perhaps Yamani’s most oft-quoted statement was his prediction that “The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.” The comment has been cited as early as the 1970s, but Yamani has continued the mantra.

    Speaking last week, Yamani said his advice to OPEC is “to increase production and lower prices because this is harmful midterm (and) long term to OPEC itself,” according to a report in Energy Intelligence. “It will increase the activities to find alternative sources of energy, and OPEC will remain helpless at that time.”

    Yamani was unavailable for an interview, but the Centre made available its Executive Director, Fadhil Chalabi, who was Acting Secretary General of OPEC in 1983-1988. Chalabi said leading OPEC producers are being short-sighted in seeking ever-higher oil prices. While demand growth has been impressive in developing countries so far, Chalabi warned that China’s use of coal, nuclear energy and other sources will displace oil.

    “It’s a matter of time,” Chalabi said. OPEC officials “don’t care what will happen in 10 or 20 years or more. They are politicians. They care only about what will happen today.”

    “Even Saudi Arabia with these huge reserves is now more concerned about maximizing oil revenues than it is about maximizing long-term recovery of its oil,” said Chalabi.

    Crude oil futures prices surged Monday to top $120 a barrel for the first time amid fresh anxieties about oil supplies at a time of rising seasonal demand. June light, sweet crude was trading at $120.07, up $3.75 in early afternoon trade on the New York Mercantile Exchange.

    OPEC supplies one in four of every barrel of oil consumed globally, which reached about 87 million barrels of a day in the first quarter. After slicing oil production in late 2006 and early 2007, the cartel has kept its daily output unchanged even in the face of oil prices that first breached triple-digit territory on Jan. 2. The group says speculators and a weak dollar are behind the latest move higher in prices.

    Saudi Arabia is the world’s only true custodian of spare capacity. The kingdom is currently pumping a little over 9 million barrels a day, according to Dow Jones Newswires estimates.

    No More “Good Sweatings”?
    If the fear of high prices is one of the defining axioms of the oil market psyche of the recent past, then the nature of Saudi influence is also being redefined. While spare capacity still gives Saudi Arabia unique power to sway the market, the structural shift in global energy demand limits its ability to conceivably push oil prices down to historic lows. This shift towards a higher price floor creates openings for competing energy sources.

    Saudi Arabia’s role in the global oil market has sometimes been likened to the Federal Reserve, calibrating its output depending on market signals. Critical to this unique standing has been Saudi maintenance of a cushion of “spare capacity,” now estimated at about two million barrels a day. For much of the recent period, the kingdom has refrained from tapping into all or most of its spare capacity.

    Within oil industry circles in places like Houston, the Saudi power has also carried a somewhat ominous connotation. Faced with growing production from the U.K., Mexico and other non-OPEC countries in the mid-1980s, Saudi Arabia flooded the market in an effort to drive out high-cost production and reassert its dominant market share.

    The 1986 oil price crash ushered in more than 15 years of mostly-lower crude prices, instilling a memory of economic hardship on the western oil industry that continues to be reflected in Big Oil’s caution during these heady times. The shift to lower petroleum prices also impeded the development of renewable energy for about two decades.

    In his book, The Prize, Daniel Yergin compared the Saudi tactic in the 1980s to power plays by John Rockefeller and other heavyweights in the history of oil who have used a “good sweating” to drive out competitors.

    “No one is worrying about over-supply,” Yergin said in an interview. Instead, the market is preoccupied with meeting growth in China, India and other fast-developing economies.

    “What (the Saudis) have discovered is that the tolerance level in consumers is higher than they thought,” said Thomas Lippman, an adjunct scholar at the Middle East Institute, a Washington research institute.

    Given the specter of higher demand in Asia and the increased cost of bringing on new oil production, many analysts believe the long-term price of oil is in the $45-$60 a barrel range. Recent comments by Naimi suggest the Saudi official sees an even higher floor than that.

    “A line has been drawn now below which prices will not fall,” Naimi said in March in an interview with PetroStrategies, a French energy publication. Citing the marginal costs of biofuels and Canadian tar-sands, Naimi defined the floor as “probably between $60 or $70.”

    Naimi in April said Saudi Arabia was putting off a plan to expand oil capacity beyond 12.5 million barrels because of concerns about demand growth. “Unless we see really genuine demand, we have to pause right now and see what happens,” Naimi told Petroleum Argus.

    Some energy analysts say the Saudi move suggested a more sober outlook on oil prices. “If they see a lot of risk on the demand side then you could see very low prices and potentially a lot of underutilized capacity down the road,” said Ken Medlock, a fellow at Rice’s Baker Institute.

    But former U.S. Ambassador Oberwetter said the pause in the expansion may reflect Saudi Arabia’s view of the limitations in its own supply at a time when all companies, including Saudi Arabia Oil Co., have been forced to spend record amounts to raise volumes.

    “They can do more, but it certainly raises the question of “How much more?'” Oberwetter said.

    (Gregory Meyer in New York and Spencer Swartz in London contributed to this report.)

    —By John M. Biers, Dow Jones Newswires

  107. Nice to see NFX marching back up.

    HK = ditto

    APC conf call tomorrow – I’m laying in wait and don’t own it currently although it should be a great quarter, the stock does not generally pop on the numbers. No doubt this time it will shoot the moon.

  109. maybe WLL headline victim…lower production guidance was due to trust offering; at least that is what I make of the press release

  110. Z – Refiners seem to be holding ground today in the face of rising oil. Good sign or am I missing another piece of info?

  112. Jivey – yep, I’m seeing that too. I have a nearly full plate for Bakken exposure but am looking at them now.

    Jason – got my little toe in there, hard to get excited, products still trailing the move in crude.

    Scoop – can’t really blame people for thinking it bounces lower now.

  113. Z – thanks re. #99. I’ve never traded SU, so I’ll have to get familiar with it.

    I was looking at the analyst estimates for NBR today. Seems to me they expect 12% revenue growth (09 vs. 08) and 22% EPS growth. Not bad for a stock trading below 10 times 09 EPS. Do those numbers seem about right to you?

  116. I think CLR is headline driven today, #1 % gainer on NYSE, lots of press, and a CNBC Flash touting their end of prod figure of 42%.

  117. ZMAN – If HK states the right info., could that drag CHK through the 55 strike?

  118. D – re NBR – numbers still coming up there so its possible the numbers of analysts posting revenues (which will be a lower population) than those post earnings have not yet updated numbers. The difference also implies higher rig rates in 2009 with costs under control. NBR was very specific about being able to staff up on a cost effective basis so this seems reasonable. I would expect numbers to rise slowly for both from here.

    Ram – No short squeeze at CLR. It had 1.2% of the float short as my last data.

    Gary – maybe so but those are excellent headlines and the data and notes from the call were better than the analysts and pms on that call expected. It’s not in the headlines but the ND Bakken getting so much $ speaks volumes, perhaps more than the volumes announced during the call. Also, it doesn’t hurt to have their core peaking at a higher rate than previously expect in the middle of next year. I’ll have a quick and dirty model in tomorrow’s post showing the leverage on that exit rate for CFPS but it is not insignificant. If it adds a buck and you keep the same multiple (8.6x 2009) as you had last night, then that adds %8.60 to the price and the stock is no more expensive, on that basis than it was last night. This is how they will value it so the price targets should be coming up significantly.

  119. more on #118. It certainly is not up due to the numbers, which were in line with estimates to the penny on CFPS. This is about the new model going forward, and the fact that one of their smallest projects in terms of current production is getting $100 million additional dollars to drill wells which are coming in significantly high to their model in both IP and EUR.

    I’d also note again that their comments regarding Haynesville completions were the first I’ve heard from a public company citing anything over the 2.3 mm/d CHK origninally stated. CLR said wells coming in over 7 mm/d. That is is large and the rumors out there are bigger which they sort of alluded to in their comments before the analyst penned them down.

  120. 3:28 EST

    Crude Settles Up $3.65/Bbl After Record High

    By DAVID BIRD
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures prices surged to a record high above $120 a barrel Monday, but settled just below that mark, spurred by renewed concerns over tightening supplies ahead of the peak demand summer driving season.

    Analysts said a settlement above $120 a barrel would be a clear indication of a surge to $125 a barrel and beyond. But the contract settled just shy of the mark at $119.97 a barrel, 39 cents below the record peak of $120.36 a barrel hit earlier.

    The spark was another rebel attack over the weekend on oil producing facilities in Nigeria, a major supplier of light, sweet crude oil especially favored at this time of year for its high gasoline yield.

    “Upwards of 600,000 barrels a day of production is currently offline in Nigeria and a further deterioration of the security situation there will raise concerns,” said Addison Armstrong, an analyst at Tradition Energy, a brokerage in Stamford, Conn.

    Royal Dutch Shell confirmed damage to oil delivery lines in the Bonny Light oil terminal and said unspecified levels of production were shut in, but expected the impact on supplies to be limited. The latest attack follows the shut in of another 164,000 barrels a day by Shell due to an attack.

    Analysts said the market will be closely watching the situation in Nigeria, where the former leader of the rebel group The Movement for the Emancipation of the Niger Delta, or MEND, Henry Okah is scheduled to go on trial this week.

    Nigeria has been the fourth-largest oil supplier to the U.S. in recent months, accounting for more than 10% of crude oil imports in the world’s biggest oil consumer.

    News of a planned one-day strike on May 9 by workers at the port of Marseilles, France, which could impact operations of the nation’s major oil terminals, Fos-Lavera, also stimulated interest on the upside, traders said.

    RBOB gasoline blendstock and heating oil futures posted strong gains, but didn’t reach the record highs of recent weeks, despite crude’s fresh high.

    June gasoline settled up 8.65 cents higher at $3.0529 a gallon after a high of $3.0578 a gallon, the highest since April 28. Heating oil futures settled 8.78c higher at $3.3065 a gallon after a high of $3.3300 a gallon, the highest since April 24.

    — By David Bird, Dow Jones Newswires

  121. Great, Thanks Z, the call was really good, looking forward to your take on the Atoka “stealth” play they got going, along with everything else. It was a great call. Plus, now I know how to pronoune Bakken.

    Have a great rest of the day,

    Gary

  125. Ram – yes, although they won’t have any well results of their own to share on the play so it will have to be more “we heard so and so was drilling big wells” talk.

  129. Hell must have frozen over!!! A CNBC analyst calling this rally for what it is it – what ever next???

    Addison Armstrong (normally an uber bull!) on Fast Money saying he is treating this rally with a huge amount of sceptism until proven otherwise saying it could well turn out to be a suckers rally. Volume was less than half what it has been of late and he cites as ‘humbug’ any talk of Nigeria, Turkey, Iran, France or the dollar, saying they are all baked into the price already. Instead saying that the speculators chose to run it up today in light volume with the UK and Japan on holiday and force the shorts to cover. He did say that the speculators had lightened up their long positions last week so if they wanted to take a run at the market again of course they now had more ammunition to do so but he said be cautious.

    I would love to be able to agree with him but unfortunately the charts do look very bullish. Yes as we all know the end of this leg is in sight but we still have time for an absolute blow off top.

    It still could be a ‘b’ leg but its looking less likely….

  130. ZMAN – Thanks. I saw the APC results – don’t understand the enthusiasm. Can you interpret?

  131. Ram – I’m out of the office at present but APC beat the high end of production guidance for the 1Q and re-affirmed 2008 full year volumes guidance DESPITE the fact that Independence Hub is going to be down for between 4 and 6 weeks (already been about three I think). Will have more in the post but this should be a nice boost to the big cap names like DVN and EOG tomorrow.

  134. dunno must be a while back, i just looked up some of their research for the first time in a long time today,,,, lemme see if i can find when they did

  135. also i should point out that they mostly have their e&P names (not tons, but a lot, roughly have a coverage universe of 40) as market perform– and hk & upl as outperforms. it looks liike they came with the upgrade last Monday. i took calls today…

  136. briefing.com has hk reporting may 8 BMO, whos wrong here? also i noticed your weekly earnings clendars d not have a column for when the co will be reporting ie. BMO or AMC – if you could please could your reincorporate this into your weekly schedule/ calendars? it would help greatly

  137. also z- sorry to pepper you with questions but do you now where that post you did comparing all these md cap gems to one another? like the one with the bubble histograms plotting reserve life vs p/cf ect. i remeber it was pretty good.

  138. HK – according to the company:
    Wed, May 7 at 9 est. from a press release on May 2.

    Re BMO/AMC – there’s no reliable data here as many companies don’t tell plus it would make my calendar too wide. What does it matter if you when the call? You can pretty much figure that its out during non-market hours before the call.

    That graph should be on the E&P tab at upper left.

Comment below here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

s2Member®